Archive for the ‘business plan’ category

Growing Your Small Business: Consider This…

January 16th, 2015

Coffee Shop OwnerAs a small business owner, you may have plans to grow your company. Before you put your foot on the accelerator, take the time to decide whether (and how much) you should grow your company.

What do you really want?

You believe you have the entrepreneurial drive to build your business into a larger one? Do you want to scale a business? Have more employees to help carry the weight? Have the potential to make more money? Create something that is worth a great deal of money, or that changes the world?

Do you need to grow to appear competitive in your market? To have the budget to get the word out, make more sales, and become an industry leader?

Can you be successful as a “boutique” operation? Sometimes less is more.

Do you want a business that comfortably supports you and also leaves time for you to be with family, pursue other interests or take vacations? You may want to grow but to control the growth so that you can enjoy what some people call a lifestyle business. While this term has been used condescendingly in entrepreneurial circles, there is also an increasing recognition that a solid lifestyle business can indeed be a great business to run.

Potential

What potential does your business have to grow? Some businesses are like finely tuned sports cars. They aren’t working at full capability unless they are on the track, racing forward. They are built to move fast and make things happen. Other businesses are engineered for steady travel instead. How about your company? And are you happy with that Chevy or Lamborghini your company is today? Or do you want to reengineer your business for a different driving experience?

Responsibilities

In a very small business, you do nearly everything yourself. As your business grows, you will delegate some tasks. As you grow even more, or scale the business, your responsibilities are likely to change from doing or a blend of doing-and-managing to higher level managing.

Before putting your dreams of growth into practical steps, consider whether you like doing or managing or some blend of the two, and also whether the satisfaction you get from business is from the rush of entrepreneurial growth or from the day-to-day running of the company you have today.

Money

Depending on how you grow and what type of business you have, you have the potential to make more money as the company gets bigger. Generally, this is one major motivation for growing a company.

It should be recognized that there are times when the larger business is not more lucrative for its owner. As you take on more employees, more infrastructure and more risk, you also have more potential areas for poor performance and resulting reduced financial returns. Which brings us to risk.

Risk

Big leases, big loans, shared equity, a larger staff, and other potential demands of a growing business carry with them higher risk alongside higher prospective reward.

A fast-growing business typically brings some loss of control as well as challenges maintaining quality, assuring profitability, and managing your (potentially also large) competition.

Be aware not only of your best-case scenario but also your worst. Are you ready to deal with risk?

Saleability of company

What will you do with your company when you are ready to retire or move on? Will your children run it? Will key employees buy it or take it over? Will you sell it? Will it end when you stop working?

Size is one consideration in this matter. Many small business advisors recommend that you fund your retirement while you are working, in the event that “you are the company” and that the business “dies with you.”

A business that is not overly dependent on you, and that can continue to make money after you move on, is typically a more saleable enterprise.

Unless you have a novel technology in hand, cash is king when it comes to selling a business, so if making a lot of money from the eventual sale of your company is a key consideration in your planning, you may indeed want to grow the business aggressively.

Small businesses that can run without you can be salable, too, since people frequently prefer to buy an existing business rather than starting their own. However, the proceeds are likely to be lower.

As a business owner, you have a unique opportunity to make conscious decisions about growth, based on the market for your services or products, and on balancing pros and cons of large versus small, considering your own management style, and reviewing how you want to blend business and life goals.

Whatever you decide, you have the privilege and the pride that comes with running a business. So many people would like to do what you are doing every day.

 

 

 

Tips for Starting a Service Business

November 17th, 2014

Service Business 2Many entrepreneurs are people with specific marketable skills and know-how. Taking the step to self-employment by starting your own services business can take the value of those skills to an entirely new level. But starting and building a business requires an all together different set of skills and know-how. So, if you are thinking about being your own boss, here’s some advice to get off on the right foot.

Write down your business plan

Writing a business plan may seem like a pointless and onerous exercise, but don’t skip it. Putting your plan in writing will force you to think clearly about your new business, your opportunities and your challenges. It will help you set realistic goals and keep yourself accountable. A well-written business plan is also critical for securing financing for your service vehicles or other major expenses. One great resource to help you develop your business plan is the U.S. Small Business Administration. Your local chamber of commerce is another excellent place to ask for help.

Seek advice

Starting any business involves risk. You can minimize yours by taking advantage of the experiences of others. A good mentor, or two, can help you avoid the pitfalls, as well as show you best practices that will get your new service business on the right foot. Mentors can also introduce you to other influential people and help you establish your own business network.

Your business mentor can be a coach or consultant you hire, or a more seasoned businessperson who takes you under their wing. One excellent place to look for no-cost or low-cost expert business mentoring is SCORE, a nonprofit organization dedicated to helping small businesses.

If you are looking for advice specific to your type of service business, it pays to go online. Many professionals in your field will happily help you out on industry chat boards or LinkedIn groups. All you need to do is ask.

Track everything

Business is a numbers game, in more ways than one. Most new entrepreneurs know enough to track income and expenses at the very least. But the most successful ones don’t stop there. Tracking and analyzing everything in your business will allow you to make better decisions, avoid wasteful practices and realize greater profits.

One example of tracking used to advantage is your vehicle fleet. Instead of simply tracking expenses, take it a step further and track fuel economy per vehicle or per driver, time on the road and location of every vehicle. Knowing these parameters will allow you to manage your fleet for maximum efficiency and productivity.

Develop systems for your business

Imagine if your entire business ran at 100 percent efficiency. It would be so much easier to make a profit, wouldn’t it? No business is 100 percent efficient, but developing systems will get you as close as possible. Once you’ve figured out what works, write it down, and make sure every employee knows it’s standard procedure. If the procedure you’ve developed involves multiple steps, create a checklist for employees to follow. Even little things like making a habit of placing tools back in their proper spot when a task is finished can save countless hours of wasted time in your business.

Your business will probably have unique aspects that require you to develop some of your own systems. But look out for ready-made tools and systems that can help systematize your business. Accounting software is a good example. So is a GPS tracking system that can help you track and analyze your business fleet.

Don’t undervalue existing customers

As you acquire customers, take good care of them and keep in touch. Develop relationships and earn loyalty. It’s much easier to sell to existing customers than to someone who has never done business with you. Anything you can do in your service business to encourage customer loyalty will keep your repeat business flowing, and it will also bring in the best free advertising possible — word of mouth.

Expect to make mistakes

If you can’t acknowledge, learn from and apologize for your mistakes, then you’re doomed. Part of becoming successful is learning to handle and recover from mistakes. You will make them. If you think you won’t, you’d best keep your day job.

Starting your service business will require a lot of dedication and hard work. But by following business best practices you can avoid many of the pitfalls experienced by new entrepreneurs. Take these tips to heart, and you will improve your chances of developing a rewarding and profitable new enterprise.

 

Short is Sweet for Today’s Business Plans

October 22nd, 2012

It’s not just entrepreneurs who have come to the realization that exhaustive business plans may be overrated. Venture capitalists, angel investors and bankers are also in favor of stripping down such documents. Many say they simply have no time to read a 100-page plan, even if they were so inclined, and that there is little value after the first few pages.

The modern business plan is a dramatically distilled version of those from five or ten years ago. The best ones today address market opportunities and how the venture will pursue them, in a few well-written paragraphs. That’s it.

It’s not that people shouldn’t incorporate planning into the process of starting or growing a business, it’s that the process and final output has changed. No entrepreneur should spend 6-8 months writing 100+ page business plans. Instead, they should write down some notes to define the following:

1. The problem they are solving

2. Their solution to the problem

3. Who the target customer is and the size of the addressable market

4. Current competition or alternative solutions to the problem

5. Estimated costs and revenue

6. Key partners & resources needed to run the business

7. Sales channels and planned marketing activities

This first pass at a plan should be no more than 1-2 pages. Entrepreneurs should then set out to validate their assumptions: Do potential customers really have the problem the entrepreneur thinks they have? Do potential customers think the solution is a good idea? Are they willing to pay? Etc.

Based on this early customer feedback, the plan can be revised and expanded. It’s much more of a “plan as you go” approach where the entrepreneur keeps the plan alive and is constantly refining it as they learn more about their customers and their business.

Those longer plans, that used to be the standard, may signal hesitancy or doubt about a concept’s viability. A shorter plan, on the other hand, signals a bias toward action and away from planning. This is not to say that planning is unimportant, but a lot of people get stuck in the paralysis of planning and never actually do anything.