Archive for the ‘strategic planning’ category

6 Myths About Starting a Business

July 17th, 2013

Lots of people decide to take the entrepreneurial path and start their own business. The idea of being your own boss, making it big, and having a company that you can point to as your life’s work is very appealing. But the realities of starting up a small business are sometimes overshadowed by myths which make it difficult to deal with the real challenges that arise in those first few years, resulting in unreasonable expectations, frustrated entrepreneurs and potentially a failed business.

Here are some small business startup myths that might keep you from realizing your vision:

1. You should spend a lot of time preparing a detailed business plan
A client of mine in Gardena believed, as many business owners believe, that they should spend a lot of time preparing a detailed business plan, and that the business plan needs to include lots of what-ifs and elaborate financial projections. A grain of truth obscures a much larger point here. Yes, it’s smart to have an overall strategy in mind before diving into a business of any kind.  However, it’s very possible that by the time you finish your do-all-end-all business plan, the market will have changed so much that it will be about time to start on a new one. Business plans are especially important in the initial phases, as it is essential your businesses road map includes your goals. It is also important that you refer back to your plan every few months, check these goals, and add or change them accordingly.

The problem is that detailed plans work best when you are pursuing a fixed goal, such as losing weight or sticking to a budget. In these cases, a planned sequence of steps will best accomplish the goal. In business however, the goal is meeting consumer demand, which is often a moving target. Look at all the businesses (like Google) that are now doing something radically different from their original plan. So create your business plan, and then get busy developing a product and trying to sell it. Then resolve to be open-minded and react to opportunities as you see them emerge.

2. You have to develop the coolest, most innovative product
Many entrepreneurs think they have to develop the coolest, most innovative product. Entrepreneurs are often creative-types, dreamers and inventors, and they get so caught up in the coolness of their product that they forget that they need see if anyone will actually pay money for it.

What you do need to do is get your product to market as soon as possible, to start generating revenue and gain customer feedback. All companies, large or small, need to be more customer-oriented than engineer-oriented. You have to take into account customer demand, and develop products based on that feedback. Too many entrepreneurs so endlessly improve their products before starting to sell them that by the time they finally do, they’ve run out of capital and have to shut down.

Get a workable product out the door and fix the bugs as you go along. That way you also get valuable feedback about its strengths and weaknesses, for the market doesn’t necessarily agree with you about what’s perfect.

3. You’ll have more time to do what you want
Yes, you do own your time. By, ironically, you will find yourself using more and more of this time to run your business. Whether this hoped-for scenario actually pans out, is largely a function the business you are in and how much time you devote to it up front. Early on, you will almost definitely not have more time on your hands.

As a client of mine in Manhattan Beach found, there are many benefits (personal and financial) to having your own business, but plenty of free time is not one of them. You will probably have a little more flexibility, as many small business owners choose to work late at night so that they can spend time during the day with their families; but there are still some major sacrifices, such as sleep. Starting up a small business requires that you work until the work is done, without exception. Those fantasies of taking long vacations while your business grows itself are just that, fantasies.

None of this is to say that you will not ultimately have more freedom as a result of running your business. However, to expect a lot of it in the early days would be an exercise in self-delusion. So prepare yourself for immense demands on your time.

4. You’ll be able to write everything off
Absolutely not, unless of course, you have a desire to get audited. I can’t tell you how many clients have come to me over the years for help getting their books in order only to have to be told that even with a complete set of transactions and reconciliations, their books won’t be clean until we remove all the personal expenses they’ve burdened their profit picture with. Personal expenses should not be expensed to your company, and the business expenses you do incur should be clearly connected to the business you’re running. While it’s true that business owners can write off more than employees can, there is great risk in taking this too far.

Typical real expenses can include your computer and business operating and account management software, rent, employee salaries, money paid to independent contractors, advertising costs, and your business phone bills. You probably will not get away with deducting 100% of your car payments, nor gas and repairs. You can write off the portion of auto expenses that you can document as being essential to your operations. The key word here is “document”. Keeping good records is critical. Basically, if you cannot document it and cite a clear connection between the write-off and the operation of your business, your attempt at a write-off could trigger audits, fines or worse.

5. If you build it, they will come
Despite the Field of Dreams reference, setting up shop and getting your startup ready for business, doesn’t mean that the world will beat a path to your door. A former client in Torrance found out the hard way that today’s consumers have an endless array of choices, meaning simply “building it” will not cause customers to walk through your doors and snap up your products. No matter what type of small business you choose to start, it will rarely, if ever, be sufficient to open up shop and idly wait for business to start pouring in.

You still need to market and advertise your business strategically. That means having a plan and a budget.  It also means researching the most effective methods for marketing and advertising. There is no shortage of ways to waste money in advertising, as a client in Lawndale discovered, and it can end up being a huge financial drain on a fledgling company. No matter how good you are, there is lots of competition and your small business has to establish a presence and reputation to go along with your talent.

Consider your number one priority after opening your doors to be spreading the word about your product to your target market as much as possible.

6. Starting a Small Business is Rewarding
One other common myth about starting a small business is that it can be an incredibly rewarding experience. But unlike the myths presented above, this one has great potential to become true.

The independence and the satisfaction of turning a business idea into a successful enterprise are probably what most small business owners find the most rewarding. And there are all kinds of other satisfactions, including creating a successful new product or service as a result of solving unforeseen problems, or from customer feedback. So don’t let the myths of starting a small business put you off; the reality is so much better.

Small business is one of the most exciting arenas for earning a living.  There is plenty of creative potential, and a chance to really make something tangible for yourself and your family. But doing so requires more than just the vision and determination of a bold risk-taker. You need to be intelligent about how your business is framed in the marketplace, and what obstacles there are to overcome. You also need to be aware of the tools and support that you have at your disposal. Staying focused on these realities, and avoiding the myths that many fall prey to will only increase the chances of success and longevity in your small business.

 

5 Ways to Improve Your Biz in 2012

December 7th, 2011

It’s a new year, a new cycle and a new beginning. And that means it’s a good time to put into place the strategies, techniques and tactics that will move your company’s position forward. You know you want to make it happen, so get ready to make some changes. Here are five good ways to make 2012 the best year ever.

1. Stop multitasking. The fact is that multitasking causes you to be less productive, not more. Your brain can only do one thing really well at a time, and being good at multitasking is really only just being good at switching back and forth quickly. Focus all your attention on the one task at hand and only switch to the next when it’s completed.  Try turning off everything that distracts you in your office for at least part of the day, and then don’t just get busy, get working.

2. Stop doing everything yourself. Change your organizational structure from a wheel to a hierarchy. Your business can’t grow if everyone works for you, and all decisions need to come through you.  Create an organizational chart with you at the top and your employees, contractors and consultants below you in a tree-structured hierarchy. Who are your “captains” and who are your “soldiers”? But remember, no matter what title you bestow, everyone is “hands-on”, because after all this is small-business.

3. Once your business has grown to the point of needing employees, you will want to continue to grow it by establishing a superior team. Only hire the best people, and pay them well. This is your best place for leverage so plan on paying more. If you want to get the best people, typically, you need to pay in the top 10%. And to keep them you’ll have to challenge them, motivate them and demonstrate your appreciation. Yes, you will be a manager.

Take your time hiring the best person for the job. If an employee is not working out, fire them in the first month. With proper training, few people’s general effectiveness changes after a month. Remember the old adage, “Be slow to hire and fast to fire”.

4. Stop trying to use social media to sell your products or services. Use social media for customer service and to build prospect relationships by answering questions in your company’s area of expertise. Use your social media properties to establish yourself as the go-to authority in your niche. The business will search you out. Then put on your salesperson-hat and close the deal. Don’t expect anything more.

5. Do not outsource the math. Commit to understanding every number in your three key financial reports; the profit and loss statement, balance sheet and cash flow statement. Insist that your accountant explain and review them with you every month. If you do not understand where your business has been, you can’t forecast where it is going. It’s better to make all your business decisions based on the hard facts of you company’s performance, not a hunch or your “feel” for where you are. 

8 Ways to Reduce the Cost of Your Small Business

July 29th, 2011

 

Cutting costs can be a great way to increase profitability, or to afford the assets essential for growing your business. The problem is, when you’re running a small business things are usually happening so quickly that you can’t take the time to analyze your spending and determine if you are really acting as wisely as you think. However, it’s more likely that a small business will experience a noticeable increase in profit due to a series of small cost-cutting strategies rather than by the acquisition of a new client.

Cost cutting strategies don’t have to be complicated; they just require that you pay attention to some of the more mundane aspects of your business.

1. Make a Budget and Stick to It
Budgeting is an inseparable component of reducing business expenses. When you don’t know exactly where the money is coming from and going to each month, you cannot make smart and effective financial decisions. A proper budget for your business is a powerful tool to reduce business costs.

2. Make Better Use of Technology
Technology can turn out to be a real money saver and can advance your business in many ways. Technologies like teleconferencing services, online payment services, open-source software and remote desktop applications make a great contribution in reducing small business costs.

For example, consider remote applications such as using the fully compatible Google Docs instead of Microsoft Office. It’s a small move that will dramatically improve efficiency. You can access Docs from anywhere and from any device. Sharing documents is much easier, so collaboration becomes even more efficient. Depending on how many employees you have, this can cut thousands of dollars or more out of your annual software expenses.

3. Shipping & Delivery Services
Shop for the best deal on your shipping and delivery services. As the amount of items you dispatch increases, ask for rate reductions from your shipping company. If they won’t reduce your rates, offer your business to other shipping companies. Shipping is very competitive and there are always rate saving deals to be made.

4. Product Stock and Business Supplies
Continually research the prices you pay for the product stock you sell to customers and the supplies you need to operate your business. Don’t compromise on quality, but keep an eye out for similar, or the same, products at lower cost. As the amount of business you do increases, ask your suppliers for discounts. Plus, ask your regular suppliers for other similar products that could satisfy your customer demand but at a lower cost. You may just stumble upon a new fast moving product line.

Whenever possible buy in bulk, not only for your product stock, but also for the items that your business uses on a continuous basis. A good way to do this is to observe which office supplies you always seem to be running out of. Shop around for the most attractive price. When you buy large amounts at once, you will usually get much larger discounts.

5. Embrace the Paperless Office
Businesses often overlook the expense incurred by having hard-copy documents. If you could reduce, even by half, the amount of paper, ink, mailing supplies, postage, etc., that your business consumes, it would surely be a noticeable amount. You don’t have to go completely paperless, and probably can’t as there are always some records and other documents that must exist in the physical world. But most need not. Surely you are already sending all your invoices by email, and the ones you receive probably don’t need to be printed out. Almost all important paperwork can be kept in digital format and stored on a computer rather than in a filing cabinet 

6. Promote Your Business Online
You are probably already marketing your business online, as that has become a crucial component in attracting customers. You’ve been building your brand and establishing your presence on the Internet ever since you set up your company website, but you need to keep going in that direction. Your money is better spent on starting a business blog, leveraging your social media properties and advertising with the appropriate online sites and tools, as opposed to the old print media methods. This will invite quick responses from new and established customers at a lower cost and a higher volume per dollar spent.

7. Premises
Your premises may be one of your most expensive overhead items. If you are just starting out, don’t lease a place of business until it’s absolutely necessary. If you can work from home, continue to do so for as long as possible. You already pay the various utilities at home, so running your business there will only increase these bills by a small percentage. Don’t add rent or mortgage payments to your expenses until it makes proper business sense. Even then, try to find a facility that minimizes your cost exposure by perhaps renting some of the space to another business or looking for a location where you may pick up some passing retail trade.

Business places are often expensive but, in many cases, you can reduce these costs to a great extent. By looking for a co-working arrangement, a sub-lease, a temporary office or temporary storage site for product inventory, or by setting-up a home office, you can reduce the cost of your premises.

8. Get an Accountant
Save money in every way possible but keep in mind that a good accountant will save you the money you pay many times over. Good businesses fail on the back of poor advice. Good businesspeople are cleaned out and demoralized by the unforgiving tax man, also due to the lack of good advice.

Even if you don’t have your accountant doing all your bookkeeping and compliance work, you should still have up-to-date information at all times. So when establishing a business use software from the start, and if you can get into the practice of recording every transaction more or less as it happens, you won’t wind up with a backlog of work to complete. The information your system provides can be used by your accountant to give you the analysis and reporting you need to make good business decisions, and should in-turn reduce your annual expense.

The Bottom Line
It’s impossible to run a business without some overhead. But these costs can be minimized or eliminated in many cases, leaving you with more profit in your pocket. The cost savings process may seem obvious, but even the best organized among us forget, or put off, our cost saving procedures. However, continually analyzing and reducing costs will not only dramatically increase the chances of your business succeeding but, if implemented on an already successful business, they will seriously increase profits.

Cool Product: myWorkTime

June 17th, 2011

myWorkTime

for iPad, iPod & iPhone
by
Tús Nua Designs

 

myWorkTime is a Task Management tool to help log and keep track of time spent on tasks. 

Tasks can be grouped by Client and by Project. The app allows for an unlimited number of Clients, Projects, Tasks and Work Logs. You can have multiple running tasks at one time, and there is even a nice feature to allow you to quickly start and stop a defined default task.

For more information visit the website: http://www.tusnuadesigns.net

10 Important Small Biz New Year’s Resolutions

December 1st, 2010

The approaching new year provides small business owners with an opportunity to reflect back on the previous year and make an objective evaluation of the state of their business. Everyone should conduct this exercise, but however it turns out, what’s done is done, and the only thing to do is to move forward and onto greater success and/or to make the appropriate course corrections to improve their operations and change their fortunes. Here are ten improvement projects every entrepreneur should undertake.

1. Develop a Strategic Plan
An extension of your original new company business plan, the strategic plan is it’s annual revision based on the realities and discoveries that have occurred over the past year. You won’t be able to get where you want to go unless you know where you want to be. Be sure to let your employees know as well.

2. Constantly Promote Your Business
You can’t execute just one marketing effort each year and expect your business to grow. Plan marketing efforts quarterly or even monthly and plan time for follow through and tracking of results. 

3. Survey Your Employees
Sometimes the biggest employee dissatisfactions are the easiest things to fix. Know what changes your employees would like to make in their work lives, and do your best to improve the quality of their work life, as this will usually have a positive impact their productivity as well.

4. Create action plans for each person in your organization
Make sure every employee knows how his or her job relates to the company’s overall vision, and that each has individual objectives and goals with measurable standards and timetables.

5. Survey your customers and your suppliers
Maybe the way you are doing business is costing you relationships with suppliers and customers. Know what will make it easier for them to do business with your company.

6. Produce only the key indicator reports from your business performance measurements that you need to run your business
Don’t waste your time and staff time compiling reports you never use. Know what you need to know to run a successful business, study those reports every month, and use them to take action.

7. Determine your level of compliance to all applicable human resource laws
Unless you have an HR department, you are likely unaware of all of the compliance laws regarding employees that can put you in serious legal trouble. Have an audit done by an outside professional and prevent problems that could result in million dollar lawsuits by unhappy ex-employees.

8. Know your top 10 customers well
List your top ten customers by sales and let everyone in your organization know who they are. Are they in a particular geographic region, of a particular type, and what is similar about them? What more can you do for them? Where can you find more just like them? Do everything you can to build on those relationships.

9. Get a coach or mentor, or join a business support group
Build accountability into your own personal planning by asking others to help you turn your dreams into reality. Enlist people who you can trust to give you objective feedback and create deadlines for your planned successes.

10. Make a list of the year’s accomplishments and celebrate your successes with your employees
Don’t forget to acknowledge and celebrate each of your milestones as they are achieved throughout the year. The best part of creating a plan is to know when you’ve reach your goals, allowing some time to pause and appreciate the accomplishment, and begin to create your next set of goals.