Larry on Business

Business Growth: Establishing a C-Corp

2012-02-28T09:54:00.000-08:00

This continues our series on establishing the best legal entity for your business. I am not attorney. Consult with a legal expert.

Investors’ Guide defines a corporation

“Corporations are remarkably different from other forms of businesses in the sense that it is an independent legal entity that is separate from the people who own, control and manage it. Due to this recognition as an individual entity, it is viewed as a legal "person" in the view of tax laws, and can thus be engaged in business and contracts, can initiate lawsuits and itself be sued. It also must pay taxes.”

Definition of a C-Corp

Once again from Investors’ Guide

“A C corporation is a business term that is used to distinguish this type of entity from others, as its profits are taxed separately from its owners under subchapter C of the Internal Revenue Code.

A C corporation is owned by shareholders, who must elect a board of directors that make business decisions and oversee policies. In most cases, a C corporation is required to report its financial operations to the state attorney general. Because a corporation is treated as an independent entity, a C corporation does not cease to exist when its owners or shareholders change or die.

Another major advantage of a C corporation is that its owners have limited liability. Thus, they do not stand personally liable for debts incurred by the corporation. They cannot be sued individually for corporate wrongdoings.”

Benefits of a C-Corp

“Corporations are usually at a lower risk of being audited by the government

Owners and shareholders of a C corporation have a limited liability towards business debts

C corporation can deduct the cost of benefit as a business expense

Can be used to split the corporate profit amongst the owners and the corporation

In a C corporation, there can be an unlimited number of stockholders

Additional funds can be raised by a C corporation by the way of sale of stocks

Foreign nationals have a right to own or invest in a C corporation

Greater number of diverse investors participate in the business”

Carefully discuss the advantages of a C-Corp with your legal counsel to see if it is appropriate for you.

Join me on Thursday when we explore the advantages of an S-Corp for your business

Business Growth: Establishing a Partnership Entity

2012-02-25T12:44:00.000-08:00

This continues establishing the right legal entity for your business. I am not a lawyer. I encourage you to consult an attorney to establish the best legal entity.

The IRS says “A partnership is the relationship existing between two or more persons who join to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business.

The IRS says “A partnership must file an annual information return to report the income, deductions, gains, losses, etc., from its operations, but it does not pay income tax. Instead, it "passes through" any profits or losses to its partners. Each partner includes his or her share of the partnership's income or loss on his or her tax return.”

The IRS offers great charts to “help you determine some of the forms you may be required to file”.

Advantages of a Partnership

How-to-Start-a-Business.com and Inc. Magazine describe advantages of working in a partnership:

Partnerships are relatively easy to establish
Ability to raise money may increase if both partners can contribute more funds
May attract better prospective employees with the offer of a partnership
Two people may complement skills and attributes that enhance business success
Increases cost-effectiveness as each partner focuses on areas of expertise
Provides moral support and creative brainstorming
Pass through taxes that apply to partners not the corporation make filing easier

Disadvantages of a Partnership

Partnerships also create possible disadvantages:

Dissolving a partnership, especially if your partner is a close friend, can be messy
All partners carry the risk and liability of one another
Partners share the profits according to the written (if they are smart) agreement
Shared decision making also creates shared disagreements
Partnerships can dissolve upon death, disagreement, one partner not carrying a load

Many people experience satisfying business partnerships. Many encounter problems, dissolved friendships and lawsuits. Consult an attorney to draw up a general or limited liability partnership. Include sections on liability, protections, disagreement, dissolution, and division of assets.

Come back Tuesday to explore how a C-Corp may help your business—if you qualify

Business Growth: LLCs and Related Legal Entities

2012-02-23T09:46:00.000-08:00

This continues our series on establishing the right legal entity for your business. I am not a legal expert. I encourage you to consult with an attorney.

The IRS defines a Limited Liability Company (LLC) in the following terms,

“A Limited Liability Company (LLC) is a business structure allowed by state statute. LLCs are popular because, similar to a corporation, owners have limited personal liability for the debts and actions of the LLC. Other features of LLCs are more like a partnership, providing management flexibility and the benefit of pass-through taxation.”

Benefits of an LLC

Incorporate.com lists several advantages to an LLC:

“This business structure has many advantages, including:

Owners have limited liability from business debts and obligations.
Owners can report their share of profit and loss on their individual tax returns without filing a separate corporate tax return.
Owners do not need to be U.S. citizens or permanent residents.
LLCs do not need to hold annual meetings or record meeting minutes (though we recommend it).
LLCs can be owned by individuals or other companies.
LLCs do not have the same corporate formalities as a corporation.”

You can establish an LLC quickly and inexpensively for each endeavor.

Disadvantages of an LLC

The IRS states “The federal government does not recognize an LLC as a classification for federal tax purposes. An LLC business entity must file a corporation, partnership or sole proprietorship tax return.”

The Limited Liability Company Center outlines disadvantages to an LLC:

Earnings are subject to self-employment tax
Terminates if 50+% of capital and profit interests are sold or transferred within 12 months
May lose ability to use the cash method of accounting in certain situations
If treated as a partnership cannot take advantage of certain stock options
A lack of uniformity in LLC statutes may confuse entities working in multiple states
Some states do not tax partnerships but do tax LLCs

Consult an attorney to determine if an LLC would offer the benefits you desire without the disadvantages.

Saturday we will discuss the advantages and disadvantages of a partnership

Business Growth: Establishing the Legal Entity for Your Business

2012-02-21T08:26:00.000-08:00

This begins a series about how to legally protect yourself and your business. I am not a legal expert. I strongly encourage you consult with an attorney for better direction.

You may have already established a legal entity for your business. You may, however, use a schedule on your income tax to operate as a sole proprietor. You worry that an attorney will cost too much. You may think you don’t need one. You were able to register your business with your state’s Department of Commerce and get a business license. You may think that you don’t need more. You would also open yourself to risk and losing all you own: your home, your cars, your children’s education funds, and more.

Reasons to Establish a Legal Entity

Attorneys can list a number of reasons to establish a legal entity. I list just a few:

Personal protection: Without the right legal entity, your personal assets remain at risk. Someone may sue you for a variety of reasons: bad advice, injury at your business or from a product you sold, discrimination, or more. If someone sues your business, and you don’t have the right protection, they could lose everything you own.
Professional protection: Not only do you remain at risk personally without a legal entity, you could also suffer professional risk. The chance of lawsuits runs both ways. Your child hits a car and injures a passenger. You could lose your business in the lawsuit.
Reduce the Tax Burden: The right legal entity will reduce your self-employment and other taxes and compensate you in the best manner. A professional can guide you through the labyrinthine tax codes.

Types of Entities You May Establish

We will examine the benefits and guidelines for each of these over the next few posts:

LLC, LPC, et al
Partnership
501(c)3 (non-profit)
C-Corporation
S-Corporation
Trust

I am not a legal expert. I strongly encourage you to consult with a small-business legal expert to determine the protections, structures, and benefits that best suit your business.

Join me Thursday to learn more about LLCs and their related entities

Business Growth: Recognizing the Power of Your Toolbox

2012-02-18T19:42:00.001-08:00

This concludes our series on tools to help grow your business

For the past several months we reviewed and analyzed tools to help you grow your business. You can use some of the tools immediately to assess your current business. You will use other tools to take your business to the next level. You will use still other tools—in the future—when your business reaches a certain size, revenues, and structure. Today’s post will help you inventory the tools you have in your toolbox.

Tools That Provide You Support and Training

First, we’ll review the organizations and programs that will provide training, problem solving, and support. You may find them in the blog archive on the right side of the page:

Service Corps of Retired Executives (SCORE)
Small Business Development Centers (SBDC)
Small Business Administration (SBA)
City & State Economic Development Councils (EDC)
Chambers of Commerce
university centers for entrepreneurship
business consulting firms
Your marketing team
Your mastermind team

Tools That Help You Analyze and Plan for Future Growth

Second, we’ll review the tools any business of any size can use to assess and plan growth:

The 7 Pillars of Successful Marketing (market research, the right message, strategy, campaigns, methods & vehicles, sales, client retention)
Trend analysis to discover and evaluate industry trends
Stakeholder Salience Model (identify and prioritize the stakeholders who have power, legitimacy, and urgency in your business)

SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats)

RACI Analysis (Responsibility, Accountability, Consulted, Informed)
PROACT Decision Making Model (PRoblem, Objectives, Alternatives, Consequences, Trade-offs)
Structure Analysis (should you structure along product, function, or matrix lines of authority?)
Impact Analysis (to analyze the consequences of changes)
Year-end checklists (tax preparation, closing books, client remembrance)

Tools That Help Improve Your Leadership Abilities

Third, I also examined tools that can enhance your leadership skills. You may find them in my other blog www.LarryOnCareers.blogspot.com. You can find them in the blog archives for November 2011-January 2012.

Novations Leadership (how to move from apprentice to director if you want to)
Authentic or True North Leadership
Reflected Best Self Exercise
Kurt Lewin’s 3 leadership styles

I hope you realize the tools you have in your toolbox if you have followed this blog for the past few months. I wanted to summarize the tools for you. Use them to help grow your business. Teach them to others, that will improve your skills to use them more effectively.

I’ll keep adding to your toolbox in the future. I hope it helps you grow your business.

Join me on Tuesday when we begin exploring the various ways to legally establish your business

Business Growth: Impact Analysis

2012-02-16T21:46:00.001-08:00

This continues our series on tools to help grow your business

I talked about change with a good friend of mine. We discussed proposed changes one organization contemplated making in policy and procedures. We contemplated the affect of making decisions without considering all the consequences or impact.

Two sister organizations made similar decisions based on the same model. Flaws in their decision making process became apparent as they implemented the previous changes. The flaws occurred because they only considered the positive impact of their decisions. They neglected to consider many of the negative consequences.

Purpose of an Impact Analysis

The International Council on Monuments and Sites discussed differences between effects and impacts. They define a purpose of an impact analysis.

"An effect is brought about by a causal element e.g. visiting an historic site
gives satisfaction. The impact of that effect is that this satisfaction induces
one to buy some books about the site, to come back another time, or to visit
other similar sites. Thus contained in the word "impact" is the power to
produce change. We could say that an impact is the "effect of an effect", or in
other terms again, that the effect is an action while the impact is a reaction.
It is this reaction that impact analysis wants to capture."

Mindtools says

"Impact Analysis is a technique designed to unearth the "unexpected" negative effects of a change on an organization.

It provides a structured approach for looking at a proposed change, so that you can identify as many of the negative impacts or consequences of the change as possible."

How to Conduct an Impact Analysis

Hank Marquis outlined Impact Assessment in 5 Simple Steps (links go to articles other than Hank Marquis'):

Define the extent of the change proposed
Determine key differences in the changed state (proposed) from a point of reference or the original state
Focus on the possible effects of the key differences from step #2
Sort and prioritize the possible effects (#3) from the key differences (#2) based on risk and possibility (Consider Marquis' 10 Steps to Doing it Yourself CRAMM)
Make a decision using the results

Come back on Saturday to assemble the tools we've discussed into a coherent toolbox

Business Growth: Structure Analysis

2012-02-14T09:47:00.000-08:00

This continues our series exploring strategic tools that can help you grow your business

Today’s post applies to larger companies rather than smaller ones. Since most of our readers own small- or home-based businesses, I will make this a short post. I want to share how a structural analysis can grow and streamline your business. Your business currently might benefit from structural transition, or it may in the future. Understanding business structures now, however, can help you structure it for greater growth. So, read this for your current and future business.

Three Business Structures

Businesses may adopt one of three structures:

Product Structure organizes based on divisions or product lines. For example, a large company with various brands may build divisions that include accounting, human resources, marketing, sales, and IT staff for each brand.

Functional Structure organizes the company grouping functions together to provide services to multiple operations. For example, one human resource function services the entire company, one marketing group sells all products for the company, one accounting group processes all financial reports, and one manufacturing group produces all the product.

Matrix Structure combines product and functional structures. For example, the company may organize along product lines, but support staff within the groups report to both the product manager and their counterparts in human resource, accounting, or marketing.

Don’t miss out Thursday to learn more about how high impact analysis can grow your business

Business Growth: PROACT Decision Making Model

2012-02-11T09:52:00.000-08:00

This continues our series exploring strategic tools that can help you grow your business

Business owners make decisions. You make decisions so frequently, you may not have considered how you make them. Perhaps someone taught you. You may have learned Benjamin Franklin’s famous T Form method where you draw a “T” on a piece of paper and list the Advantages/Benefits/Pros on one side and the Disadvantages/Consequences/Cons down the other side.

PROACT: A Stronger Decision Making Model

PROACT represents an acronym for each component of the model:

PR=Problem: describe what requires the decision (hire a secretary/bookkeeper)
O=Objective: outline what you want (accurate letters, graphs & charts, Quickbooks)
A=Alternatives: list each of the choices (Betty P, Bob S, Sharon W, Sally M)
C=Consequences: assign a value for how well each alternative fills each objective
T=Tradeoffs: weight each (Quickbooks is twice as important as graphs)

PROACT includes elements that T Form and other methods neglect. PROACT encourages you to outline your desired outcomes and determine which objective means more to you. Those elements provide better decision making.

Adolphson Excel Spreadsheet Tools (Free download)

Dr. Donald Adolphson recognized the ability of a spreadsheet to create a PROACT template. Andrew Heiss (Dr. Adolphson’s student) created a reusable template. He told me

“…It's free and open source!

It works in Excel 2007 and 2010. You can download it https://github.com/downloads/andrewheiss/AHP-Monte-Carlo/AHP%20Monte%20Carlo%201.0.zip

See the full documentation, file bug reports, etc. at the project's main page: https://github.com/andrewheiss/AHP-Monte-Carlo
Open "AHP Monte Carlo.xlsm" and you'll notice a new tab on the ribbon called "Decision Analysis" with 3 new buttons. Click on "Build full model" to walk through a full decision model, with any number of objectives and alternatives. The macro will build all the pairwise tables, data tables, and graphs you need. If you only want to build one pairwise table (like if you just want to get the relative weights for a set of objectives or alternatives), there's a button for that too.”

Business owners make big and little decisions. The PROACT model will enhance your big decisions.

Join me next Tuesday when examine the Structure Alignment Strategic tool

Business Growth: Downes’ Three New Competitive Forces

2012-02-09T09:28:00.000-08:00

This continues our series on tools to help you make your business grow

Larry Downes published an article titled Beyond Porter in which he claimed that Porter’s Five Forces, while adequate for the 80s & 90s, did not work in the new millennium. He introduced three new forces that reflected the competitive nature of today’s economy. His theory initially brought criticism. More recently experts incorporate his three forces into Porter’s Five Forces to create a new 8 Forces Model.

Downes’ Three Forces

Digitalization—Growing technology provides more access to information both as suppliers and consumers. He proposes that digitalization will create totally new business models which give people outside the industry power to pressure and change the industry. He cites an example of electronic shopping malls operated by credit cards and telecom companies (think apps stores for example).
Globalization—Improvements in distribution and communications plunge even local distributors into global markets. Technology gives almost any customer the ability to identify and compare prices from vendors anywhere in the world. Downes assert that Porter’s suggestion to position oneself as the price- or quality-leader seems outmoded. Business must develop lasting relationships to an increasingly mobile and transitory audience to succeed.
Deregulation—Decreased government oversight and regulation, claimed Downes, also changed the world Porter described. Technology accelerated, non-regulated opportunities changed the competitive environment. Collusion by competitors was long seen as a weakness of Porter’s framework. Deregulation allowed for even more collusion. We must remember, however, that Downes and his critics wrote their articles in the late 1990s and early 2000s. Their comments reflect the deregulation that typified those years up until the recent reaction to the excesses that led to the Great Recession.

Lack of Implementation Instructions

Larry Downes identified potential holes in Porter’s Five Force Framework. He failed to provide a decent, operational set of instructions to conduct a three forces analysis.

I suggest that you

Incorporate Porter’s 5 Forces with Downes’ 3 Forces into the 8 Forces model pictured above.
Use Porter’s instructions to identify and analyze all 8 competitive forces.

Join me on Saturday when we analyze the PROACT decision making model

Business Growth: Porters 5 Competitive Forces

2012-02-07T09:07:00.000-08:00

This continues our examination of strategic tools that will help you grow your business

In 1979, Dr. Michael Porter, Harvard Business School, developed a model to analyze five forces that impact an industry’s competitive environment. His Five Competitive Forces analysis complements the SWOT analysis. Any business or industry can utilize Porter’s Five Forces structure.

Porter’s analysis helps business owners determine potential for profitability by determining if that industry’s competitive environment makes it attractive or unattractive.

Low competitive forces provide attractive possibilities for profitability
High competitive forces provide unattractive possibilities for profitability

How to Analyze Porter’s 5 Competitive Forces

Analyze each of the following five forces using questions and criteria found at the links listed as Other Sources of Information.

Bargaining power of suppliers—The number and strength of suppliers affects their ability to establish or negotiate costs to your company. Fewer suppliers limits negotiation. More suppliers allows greater negotiation.

Bargaining power of customers—The volume & concentration of customers affects how much they can impose pressure on your margins and volumes. High bargaining power forces you to lower margins. Low bargaining power reduces pressure.

Threat of new entrants—The facility of new competitors to enter the industry affects the number of competing companies. Reacting to new entrants can reduce profitability.
Threat of substitutes—How easily a competitor can substitute your product pressures you to lower prices. Think of the breakfast cereal market and Cheerios substitutes.
Intensity of competitive rivalry—Intensity of competition between existing players also affects profitability. High competition lowers prices. Low rivalry allows prices to adjust. Consider the rivalry among cell phone manufacturers and it's impact on margins.

Others Sources of Information

Discover how use statistical, dynamic, or visual methods to analyze your findings and change pressures:

Dagmar Recklies lists excellent criteria for instructions how to analyze and reduce each of the forces
WikiCFO provides an excellent article explaining how to determine potential profitability, what makes an industry attractive or unattractive, plus strengths and weaknesses of Porter’s framework
Purdue University Extension offers a great tool to help you assess and try to influence a change in each of the 5 forces.

I suggest you analyze the forces the affect your profitability using Porter’s 5 Forces.

Join me Thursday when we share how Downes’ Three New Forces strengthen Porter’s 5

Business Growth: RACI Analysis

2012-02-04T09:43:00.000-08:00

This continues our exploration of strategic tools you may use to grow your business

A RACI analysis can help improve your efficiency whether you 1) work alone, 2) hope to add employees later, or 3) already have employees working for you. A RACI analysis allows you to divide responsibilities appropriately within your organization.

RACI stands for

R=Responsibility for a process or responsibility for improvement
A=Accountability for the process
C=Consulted prior to decisions about improvement in processes
I=Informed after the decision about improvement in processes

How to Conduct a RACI Analysis

The following steps will help you analyze the division of responsibilities. (Refer to the graphic above to better understand these instructions). To conduct the analysis you will

List all the functions you wish to assign to others (either currently or in the future) down the left side of the table
List all the people (either current or in the future) you may assign tasks to perform along the top of the table
Compare each function with each employee

Record the appropriate score depending on the responsibility you wish to assign them: R, A, C, I
Leave the cell blank if the person has no assignment for that function

Evaluate your scores

Horizontally to verify that every function has someone responsible, accountable, consulted, and informed

Vertically to verify that nobody receives too many responsibilities and that responsibilities are not spread among your staff
Overall to enhance the number of people consulted and informed about decisions, identify changes in the division of responsibilities, and to ensure that someone is accountable for decisions

Make changes to improve your organization

Ensure you have the right people doing the right activities
Move people away from the activities they cannot perform well
Consult with the right people before making decisions

RACI analysis can help you even though you may be working alone. It can highlight potential problems if you try to do too much. It can ensure a better division of responsibilities. It can allow you to plan for future growth and employees.

Join me on Tuesday when we explore the Porter 5 Influences test

Business Growth: SWOT Analysis

2012-02-03T08:52:00.001-08:00

This continues our multi-part series on tools you may use to analyze your business (This post should have appeared on Thursday, February 2)

I suggest business owners perform a SWOT analysis at least once a year. SWOT represents the four elements the owner should evaluate: strengths, weaknesses, opportunities, and threats. Traditionally, analysts considered strengths and weaknesses internal to the business and opportunities and threats coming externally to the business. In recent times, however, the field recognizes that some opportunities and threats also arise from within the organization.

How to Conduct a SWOT Analysis

The following steps will help you conduct the analysis and act on your findings

Prepare a list of questions that will help you explore your strengths, weaknesses, opportunities, and threats. Develop additional questions to dig deeper the basics. (You may consider the list of questions on Rob Berman’s Blog on in the middle of Businessballs web site on SWOT):

What are our strengths? Do well? Assets? Advantages? Capabilities?
What are our weaknesses? Disadvantages? What do we do poorly?
What are our opportunities? New markets or products? Trends? Market needs?
What threatens our business? Competitors? Politics? Obstacles? Economics?

List the articles and studies you will study, and the people you will interview

Associations and industry sources typically track opportunities and threats
Ask yourself, high and medium priority stakeholders, staff, clients, competitors, and others

Conduct your analysis by gathering information from a variety of methods

Email surveys using Survey Monkey, Constant Contact or other tools
Phone or personal 1-on-1 interviews
Focus groups
Staff meetings (try this wonderful game)

Compile and analyze the answers

Compile all the answers to each question
Count similar answers and highlight frequent observations
Diagram your findings using a simple 2x2 table or other diagraming tools
Ponder the answers you received privately and discuss them as a staff

Prepare a plan to resolve major problems

Emphasize your strengths
Turn weaknesses into strengths
Take advantage of opportunities
Defend against threats

A yearly SWOT analysis can help you grow your business.

Join me Saturday to discover how a RACI assessment can help you divide responsibilities

Business Growth: Stakeholder Salience Model

2012-02-03T07:48:00.001-08:00

This begins a multi-part series exploring tools to help you improve your business. (This post should have appeared on Tuesday, January 31)

Business owners use several tools and techniques to analyze their operations. Sometimes they have to hire consultants to conduct the analysis. I will share some of the tools that consultants use so you can perform them yourself. You may choose to use some of the tools immediately or in the future.

Today’s tool, the Stakeholder Salience Model, will help you recognize and prioritize the stakeholders affiliated with your business. In 1997 Doctors Agle, Mitchell, and Wood developed the Stakeholders Salience Model. The model recognizes your business may be responsible to more people than just you, the owner. They defined a stakeholders as any party who possesses at least one of three attributes:

Power-to influence the organization or project deliverables (coercive, financial or material, brand or image)
Legitimacy-of the relationship & actions in terms of desirability, properness, or appropriateness
Urgency-of the requirements in terns of criticality and time sensitivity for the stakeholder

How to Use the Stakeholder Salience Model

The steps for managing your stakeholders include:

List all the possible stakeholders for your business
Assign them a priority, and give them attention, according to the diagram above. Assign them a

1, 2, or 3 if the only possess one attribute (low priority)
4, 5, or 6 if they possess two attributes (medium priority)
7 if they possess all three attributes (high priority)
8 if they possess none of the attributes (no priority)

Decide if you think you should help them change their stake by adding other attributes (for example, you may wish a stakeholder who only possesses legitimacy to become more involved, urgency; or you may wish a lender who has power and legitimacy to lose their power and legitimacy by closing the loan)

Try completing a stakeholder salience analysis of your business. It will help you recognize who possess a stake in your business, what kind of stake they possess, and how much attention you should give to their stake.

I will post later today Thursday’s article outlining the SWOT analysis

Other Issues Related to Clients

2012-01-28T09:43:00.000-08:00

This concludes our 3-part series on issues related to clients

Your business depends on your clients. You know that, but how well do you know your clients. We mentioned in our last post that client loyalty depends on relationships more than price or service. Many wonder how to develop relationships in today’s virtual world.

While many businesses depend on the Internet to receive, process, and collect on orders, most do not. Most do not and even most of those that do, still sell more based on relationships. The ability to anticipate, retain, and relate with your clients will increase revenues significantly.

Anticipate Your Client’s Needs

Several years ago, I visited the Temecula Oil Company. I bought 5 bars of olive oil based soap. Almost six months later—the week before I opened the last bar of soap. I received an email from Temecula Oil Company. They asked if I enjoyed the quality of their soap.

They astounded me when they mentioned that we should be using the last bar and asked if we wanted to order more soap online. The email also suggested 4-5 other items (not the whole catalogue). They understood their product enough to anticipate when I would run out. I bought 6 bars of soap plus a bottle of balsamic olive oil. They accurately repeated the process every 5-6 months for the past three years.

Practice Restraint and Do Not Overdo It

Too much contact irritates clients. Practice restraint in your communications. Too many businesses overdo their communications. For example:

1 organization sent me 6 emails in two days advertising just 2 events
2 real estate agents from different agencies send us the same newsletter each month

3 clothes companies each send my wife a catalogue a week—she throws them away

In addition to the frequency of contacts, be careful about the complexity or length of messages. I received 3 email in the past 3 weeks that were so long and so complicated that I could not comprehend the message. Short messages that they can read—and click through—without opening, may win appreciation and sales.

Dealing with Vanishing Client Loyalty

2012-01-28T09:03:00.000-08:00

This continues my 3-part series on soothing client relations

I shared some ideas for calming irate clients last post. I would like to discuss the challenges you may face with today’s views of client loyalty. Technology changed purchasing forever. Amazon, EBay, and other sites allow you to buy books, electronics, and more without leaving your home. Technology also allows people to compare your prices with others with the click of keyboard.

Build Your House of Straw, Sticks, or Bricks

My good friends Jared and Sarah Stewart authored City of Influence. In the book they liken the story of the three little pigs to client loyalty. They liken the pig that built its house of

Straw to owners that build their business on price
Sticks to owners that build their business on service
Bricks to owners that build their business on relationships

Lasting loyalty stems from relationships rather than price or service. Loyalty built on price lasts only until a lower price appears. Loyalty built on service can also be supplanted by better service. As the Stewarts wisely comment “People do business with people they know, like, and trust.”

Personal Experiences

I have pondered this concept the last few months. My daughter-in-law opened my eyes to a saving money on our shopping list. Her approach involves:

A combination of using Internet sites and newspapers to find the lowest prices
Making a list of the items that we want and have lowest prices from each store
Taking the list to Wal-Mart who will match all of the other store’s prices

Yet, the front-end manager, the baker, and the deli manager all greet me by name at the locally-owned grocery store. I keep going back to the local grocer because of their welcome. Relationship truly trumps price and service for a lot of us.

I suggest you read City of Influence. I also recommend Ken Blanchard’s book Raving Fans and Jeffrey Gitomer’s book Customer Satisfaction is Worthless; Customer Loyalty is Priceless.

I will conclude this series on client relationships on Saturday. Don’t miss it.

Dealing with Upset or Irate Clients

2012-01-24T10:09:00.000-08:00

This week we will discuss how to deal with problems with clients

Every business owner deals with clients that become frustrated, upset, or irate. Even the best run companies run afoul of a client every now and then. Several situations can create the problem: poor service, product flaws or delays, miscommunication, unfilled expectations, and more.

Many times your company did nothing wrong. You just happened to be the next person they talked to after a fight with their spouse or partner. Maybe someone cut them off as they were turning into your parking lot. Perhaps they hate their Internet speed and yours was the site that triggered the response.

What to Do When Clients Get Upset

You cannot anticipate every reason a client becomes upset. You can, however, prepare your staff well for when that moment occurs:

Listen to the client and allow them to express their feelings without escalating them

Be sympathetic (acknowledge feelings) and empathetic (feel concerns)
Ask questions to confirm that you correctly understand the facts & concerns
Apologize sincerely when appropriate. but do not assume liability
Thank the client for bringing the situation to your attention

Ask what would satisfy their concern and offer to try (don’t promise) to fix the problem

Gain agreement and verify you both understand what will resolve the situation
Record the incident & agreement so that others understand what happened
Deliver what you agreed to deliver when you said you would

Follow-up with the client later to verify the solution satisfied their concern

Resolve any problems that may still linger
Express appreciation for their continued patronage
Offer a simple gift, discount, or other item to express your gratitude

Additional Sources

Thousands of training programs, books, and other materials exist to help you learn how to work with irate clients. I particularly enjoy the following:

Raving Fans by Ken Blanchard and Sheldon Bowles (Talks about Irate clients and so much more)

It’s the Customer Stupid!: 34 Wake-up Calls to Help you Stay Client-focused by Michael Aun and Jeffrey Gitomer

Join me on Thursday when we discuss today’s challenges with client loyalty

Discern Valid & Inaccurate Forecasts

2012-01-21T10:31:00.000-08:00

Tuesday we reminded you to explore industry future trends and Thursday how to find forecasts. Today we present some ideas on how to decide which forecasts to believe.

You need to discern accuracy amid all the articles, blogs, and broadcasts about forecasts and future trends in any industry. Today I share a few ideas that can help you choose which ones you will believe.

Strong economic forecasting models exist, but most small- or home-based business owners do not have time or skill to process the algorithms of such validation models. I share easier and simpler methods.

By their fruits you shall know them: You may check a forecaster’s accuracy by analyzing their past forecasts. Then, compare their forecasts with what actually happened. You can find their past forecasts by searching their name and the type of forecasts you desire. You can trust them if you find a consistent record of accuracy.
Do the people you trust believe them: Ask people you trust to share who they listen to about industry trends. Do not rely on just one person’s opinion. Ask 4-5.
Do other forecasters cite them: As you read forecasts and trend analysis, look for who they quote. Follow the lead to the source. Of course, ensure that you follow positive quotes and avoid citations of inaccuracy.
Does their projection for future trends match your own forecasts: Do not let your own emotions taint the research. However, you can believe the information if your personal research and information corroborates theirs.
Even accurate sources make mistakes: Even the most accurate forecasters make mistakes. Times and circumstances may change. Outside drivers or restraints may create unforeseen factors. Anticipate the possibility of errors.

Economic and industry forecasting using statistical models function better than fortune telling. Once you find sources that exhibit consistent accuracy, follow them—recognizing that nobody forecasts perfectly.

Next week we will talk about dealing with client problems: disloyalty, irate, & other

Find Future Industry Trends

2012-01-19T09:25:00.000-08:00

Tuesday we explored the importance of evaluating trends in your industry. Today, we discover how to find or identify the trends that will affect your business.

You recognize that you should analyze future trends in your industry. Finding trustworthy sources of information presents more difficulties. A variety of sources assaults the senses. Let me share some the sources of trends. Then, on Saturday, we will analyze how to discern the more credible and trustworthy sources.

Sources of Trend Information

The Internet and ability to access, survey, and analyze data quickly created an explosion of economic analysts. For example, the Internet abounds with 6,910,000 references to “bookstore future trends” alone. So, let me share just a few quick sources (use their search feature to find archived articles):

Your industry association: Most professional and industry associations will track trends for members of the association. Find you local chapter or join the national association.
Marketplace, Money.CNN, Small Business.Fox Business.com, TED.com, and YouTube. Beware of bias and political leaning in all of these.
Kiplinger Newsletters provides one of my favorite trend forecasting. Click on the Your Business tab if you go to the home page. My link takes you straight to Your Business. Don’t miss the Economic Outlook, Small Business Solutions, and other sections.
Wall Street Journal offers trend analysis under the Business tab click on the popup menu rather than rollover the tab to see the widest variety of topics.
Market Watch.com: The web site has and Industries tab that allows you to easily see articles on a variety of industries.
Bloomberg/BusinessWeek can be confusing. I find their format more difficult to navigate. Make sure you use “” on the search or the results may frustrate you.
Google Scholar: Use the more credible section of Google. Type in your industry and the words Industry Forecasters or Industry Trends

These present just a few of the sources of industry trends, however, they will provide enough information for most needs. Start with these, then we’ll share more.

We’ll discuss how to discern good sources from scurrilous sources on Saturday.

Evaluate Future Industry Trends

2012-01-17T09:03:00.000-08:00

You need to evaluate the future trends in your industry. Several incidents recently impressed me with that message. I share two of them with you.

Future Trends of the Printing Industry

The following details indicate that printing companies may need to reevaluate their business. I thank Book Baby.com for sharing the information in their publication eBook-publishing-guide.pdf:

Opening day sales for Dan Brown’s The Last Symbol sold more copies for Amazon’s Kindle than in hardcover.
Amazon announced in July 2010 that its overall eBook sales topped hardcovers.
For 3 months in 2010 Amazon sold 143 Kindle books for every 100 hardcover books.
Amazon announced in January 2011 that it sold more eBooks than paperbacks in the US during the final three months of 2010.
Amazon sold more eBooks than hardcover and paperback books combined during the first six months of 2011.

Based on those statistics what plans should printing businesses make for the future?

Future Trends for Grocery and Retail

My daughter-in-law taught me how to use a web site to evaluate food and other sales and discounts. We use a web site called Pinching Your Pennies to find the lowest prices in all of the local and national stores. I then peruse four papers that come in the mail for coupons indicated on the web site. I write all the products and prices onto one sheet. Finally I take my papers and the newspapers to one store that matches the prices of all other stores.

Recently, I’ve seen many stores offer to match the ads of their competitors. Technology allows people to share prices, and stores match other prices. Client loyalty changes with such price matching.

Based on those trends what plans should grocery and other retail stores make for the future?

Future Trends Will Affect Your Business

Business owners should not ask “If future trends will affect their business?”. They should ask “What future trends will affect my business? How and when will they affect it?” You can find the answers to these questions from a variety of sources.

We will discuss how to find trends for your industry in our post on Thursday

Running a Business Takes Time

2012-01-14T09:25:00.000-08:00

I meet with people who want to start a business—or have already started a business—every week. They frequently describe one of the reasons for starting the business so that they can have more time with their family, on their own, or to pursue hobbies.

Their answer indicates a lack of understanding about starting and running a business. I grew up surrounded by self-employed entrepreneurs or business owners. My brothers-in-law and cousins own their own businesses. Many of my friends and clients run their own businesses. I’ve watched the dedication and time they apply to run their businesses.

Business Owners Fulfill Several Responsibilities.

Small- and home-based business owners do all the work of the business. They

Produce the product or deliver the service
Market the business and make the sales

Process the accounts payables and receivables
Maintain the records, inventory, and contacts
Perform purchasing, receiving, and shipping

I remember when my grandmother died. Her five sons came to the funeral. Three stayed for a week to help their father adjust the affairs of the mother. All three of them had a three-day funeral leave from work and vacation time to spend with their father. The other two stayed for the funeral and had to leave immediately. They owned their own business. Time away from the business reduced money earned.

Multiple Demands on Time

Seldom do business owners start their day later than 7:30am or end it earlier than 7pm. Many women decide to start a home-based business to add to the family income and stay home with children. Many men decide to do the same. They fail to consider the demands of children, neighbors, and others who require attention during work hours.

Many of us start a business while still working full or part-time jobs. Which means that we work 40-60 hours on our job. Then, we work another 15-30 hours a week on our business. We lose sleep working and we lose sleep worrying.

If you decide to start a business, consider carefully the amount of time you will need to dedicate to starting and running it. Every now and then, we need to remember that.

Don’t Forget Your Business License

2012-01-12T09:18:00.000-08:00

I post a very short blog today to compensate for all the very long ones I posted the last three weeks.

I received my business license renewal in the mail last month. I immediately paid it using my online billpay, or so I thought. I distinctly remember paying it because last year I had to pay a penalty for paying the license late.

Four weeks later, I receive a reminder to pay the license. I figure the city made a mistake, and file it for two weeks to go over the next time I pay bills. I pulled the reminder last night. I checked it against the invoice to see if it was paid. We filed the invoice with last years accounts payables/receivables for 2011.

So, instead of pulling the files from last year out of storage (a closet), I decide to check the bank account. I’m certain I’ll find the record of the check or the image of the cashed check. In fact, in some irreverent part of my soul, I anticipated the sweet feeling of revenge for last year, when I prove to them made a mistake in sending me the delinquency notice.

I could find no record of the check or the payment. I could not find a scheduled payment. Evidently, the memory of paying the license account was false. If I’m not careful, I will have to pay another penalty for being late this year.

I, therefore, pass this advice to you. Check your accounting processes. Take a moment at the first of the year to ensure that nothing drops through the cracks—especially your business license.

Join me Saturday when I share some links to training materials on project management

How Others Help Grow Your Business

2012-01-10T09:06:00.000-08:00

We already discussed how participating in a mastermind group and marketing team can help you grow your business with almost no cost. Today I would like to share three others ways that other people will collaborate with you.

Some people doubt my claim that others will help them achieve their goals. I acknowledge that not all people will selflessly share, collaborate, or serve others. I also maintain that a lot of people will help. I ask a simple question “Would you help someone if they asked, you knew that all they needed were a few ideas, and that it would not take too long?” Most people answer that they would help others.

So, if you and others will help others, why do you believe others will not help you?

Focus Groups of Current or Potential Clients

Focus provide one method for evaluating you product, service, or business. A focus group allows current or potential clients to share their answers to questions you prepare. Several organizations will help you run your focus group. You can learn more through

Georgia Tech offers a wonderful PDF guiding you through the process
George Silverman’s Marketing Secrets
Chron.com

Pragmatic Marketing
Waterwiki

Study the web sites. Try setting up your own focus group.

Phone Long-Term Clients, Vendors & Others

You can also involve clients, vendors, and suppliers through simple, short email or phone surveys. You may use MonkeySurvey, Zoomerang, LinkedIn, or even Facebook to prepare and distribute your survey. None of the ones mentioned charge a fee. Phone calls receive better and higher quality responses, but take more time.

Decide what you want to learn from your survey
Keep your surveys short. Keep your survey to less than 5 minutes
Mix your questions with multiple choice, yes/no, with only a few open ended ones
Test your survey with a few clients first. Ask them for feedback on the survey.
Edit it and test it again with the same group, and ask for more feedback
Edit it and test it a third time with a new group of clients
Then, send it to a good representation of your clients

Tours of Your Manufacturing Line

I know groups in several cities that host professional or business associations to hold monthly or quarterly luncheons in their facilities. The simple agenda follows this pattern:

The host provides the meal, or everyone pays for or brings their own lunch
The group takes a tour of the facility before the meal
The hosts takes 10 minutes to ask questions, opinions, and feedback from the guests
The group continues with a speaker, networking, or other activity

All of three of these processes cost almost no money. They involve other people to help you evaluate your business and brainstorm ideas. You would help others with their needs. They will help you with yours.

Join me on Thursday when we share several books that could help you improve your business

Create a Marketing Team

2012-01-07T09:00:00.000-08:00

Bryan Walden Pope, the architect of The 7 Pillars of Successful Marketing, first introduced the concept of marketing teams to me and others 6 years ago.

He suggested that you identify 5-6 people that could help you improve your marketing and sales. You choose people with special expertise you need. You invite them to meet as needed (over a meal you pay for works best). Other than the meal they volunteer and serve without compensation. They give you ideas or brainstorm solutions.

Experience Serving on a Marketing Team

I want to share an experience I had this week that I think could help each of you build your business. Doyle, an owner of a small chain of bookstores in four states, invited me to participate in a marketing team meeting. He also invited five others to participate:

Three of the people own retail stores of various types
One teaches at the Center for Entrepreneurship at a local university
Bryan Walden Pope helps business owners improve their marketing and sales
I work with people who want to improve their business and get better jobs

We met at a restaurant. Doyle paid for all seven breakfasts. He let Bryan Pope facilitate the meeting. They wanted some ideas about how to increase client loyalty in Doyle’s stores and on his web site. The group generated more than 23 ideas in 90 minutes . Those 23 ideas cost Doyle the price of 7 breakfasts. If any of the ideas generate even $4,000, Doyle would realize a 400% return on investment.

All of us felt wonderful about helping Doyle. We cheerfully shared our expertise, experiences, and ideas. Helping a friend gave great satisfaction. Besides, we enjoyed having breakfast together.

Help from My Marketing Team

A marketing team differs from a mastermind team in the focus on your business rather than each member seeking assistance. For example, when I created my marketing team five years ago, I chose friends who worked in

Video production
Pod casting
Book publishing
Social media
Printing

I meet with my full group once a month. I consult with individual members of the team occasionally throughout the month. I consult one of them once a week. They helped me learn how to pod cast and upload my weekly pod casts. Another introduced me to many marketing tools that I use in my business. Another helps me publish my books. Still another taught me how to publish eBooks

None of them ask for compensation except for hard products. I would pay them. In fact, I’ve offered. Just as I would not accept compensation to give them ideas or suggestions, they do not accept it either.

Analyze what expertise you need. Make a list of people you would invite to your team. Then, invite them to a lunch or breakfast. Explain the concept and what you would like. Then, listen. Don’t defend, argue, or contend. Just listen. Write down the ideas. Then, implement the best ones. It works.

Comeback on Tuesday for our 3rd part to learn how others can help you grow your business

Build a Mastermind Group

2012-01-05T23:02:00.001-08:00

This begins a series on involving other people to help you grow your business

A few posts ago, I discussed that business owners sometimes feel isolated and alone. I shared several methods of connecting with people to reduce the solitary nature of running your own small- or home-based business. One of the methods I mentioned included creating a mastermind group. Comments from readers indicated that you wanted more about this concept. So, I wanted to share a little more about mastermind groups.

Personal Experience with a Mastermind Group

I speak from personal experience. Three friends of mine and I formed a mastermind group a little over four years ago. All four of us owned businesses. We meet once a month for 90 minutes. One of us acts as scribe. While each of us records notes, his notebook maintains the official record of the group.

We follow a simple agenda. We each take turns to:

Report on the goals we set in the last meeting, what we did, and the progress we made towards our goal
Share a challenge, question, or idea. The group brainstorms ideas that might help
Set 1-4 things we will do in the coming month to progress towards our goal

Each of us experienced remarkable growth in our businesses, but also in our personal lives. We found strength within our companionship. We got through hard times with our families, businesses, and more. Let me share just a few of the things we accomplished because of our group:

Two of us went back to school and earned graduate degrees
Two of us started brand new businesses that earned even more money than before
One of us expanded his business into a new market niche that has tripled profits
One of us expanded his business into 12 additional states
One fulfilled a lifelong dream to earn a counseling degree and work with addicts to overcome their addictions
One rejuvenated his passion to grow his business and finds more joy now than ever
One created a program to connect people for their personal and business growth

Create Your Own Mastermind Group

You choice of members in your group determines your success. You only want 3-5 people (including you) in the group. Each person must possess a desire to improve. They must believe in the goal setting process. They must accept the ability to change and learn from mistakes without giving up. Sadly, experience proves that mastermind groups consisting of close family members rarely hold together.

Set a time for your meeting that will allow you 90 uninterrupted and undistracted minutes. Many groups hold their meetings around meals or refreshments. If you choose to do so, do not let the meal distract you from the purpose. Ensure that each person takes their time. No one sacrifices their goals for someone else. Each member’s goals share equally.

You can find lots of information on mastermind groups. Some of my personal favorites include:

Napoleon Hill published the concept in 1928 in his work The Law of Success in 16 Lessons and Think and Grow Rich. I first read his book in the 1970s. I’ve read it 3 times since.
Barbara Sher from her book Wishcraft. Pay particular attention to chapter 10 especially pages 228-229.

Others put unique spins on the concept. Evan Carmichael shares Creating Online Mastermind Groups 6 Basic Steps. Ariel Hyatt of Ariel Publicity highlights for all businesses, but emphasizes mastermind groups for performing artists. Articlesbase and Bright Hub provide excellent materials on choosing partners and setting up your group.

Do not waste a moment longer. Create your group and meet this month. Begin to gain the benefits of a mastermind group.

Don’t miss this Saturday’s post on Marketing Teams. I’ll share how one business owner gained 23 marketing ideas for the price of 6 breakfasts.

The New Year is Here

2012-01-03T08:48:00.000-08:00

I’ve been talking for the past month about what to do at year’s end to prepare your business to grow this year. Well, the new year is here. You rang it in. You celebrated. You may have even taken some time off. But, the year arrived punctual as the lunar phases.

Act to Improve Your Business

So, now you need to implement the business plans you made or modified. The following steps will help your business grow:

Keep your accounts payable and receivable posted and current
Begin the process of introducing a new product or enhancing a current one
Act on the marketing strategies, campaigns, methods, and vehicles you developed
Strengthen your sales systems to increase sales per client and dollars per transaction
Take good care of your existing clients with reminders, gifts, contact, and service
Ask your current clients what they like about your product and how to improve it
Discover how to speed up your manufacturing or processing systems to reduce costs
Lower costs by taking advantage of purchasing discounts and less expensive vendors
Hire the right people either as employees, contract workers, or virtual assistants
Consult with professional tax, legal, financial planning, and other experts
Join appropriate business or professional associations and attend meetings
Choose 1-2 new skills to develop through classes, workshops, or conferences

Don’t Try to Do Everything all at Once

The list above includes a lot of things you can do. I suggest that trying to do all of them at once could overextend your time and resources. Select 2-3 a month and focus on them. Add a few tasks to your To-Do List each week. Either try some new tasks or stop doing ineffective tasks that do not generate your desired results.

Anticipate the tasks that will lead to the desired results. Plan which tasks will give you the best return on investment. Evaluate the success of each task to measure progress towards the desired goal.

Remember that obstacles will arise. Not every task will lead to success. Many tasks will require multiple attempts. You may need to revise your plan or try a different approach to achieve your goals. You will require persistence, adaptability, and endurance to accomplish what you want.

You have a year or more to do so. Take advantage of the year.

Please read Thursday’s post about how a mastermind group can accelerate your success

Keep Going When Business is Tough

2011-12-31T15:37:00.001-08:00

Businesses experience seasonal challenges. Some industries like retail and shipping follow annual cycles each year. Others experience seasonal cycles that may last years. Even economies experience seasonal cycles ranging from boom to bust. We currently suffer from a major recession. Yet, even recessions follow 7 year cycles. Though the last few recessions come quicker and go deeper, this is a big one.

In addition to seasonal cycles and economies, individual businesses also experience down times. You may anticipate certain downturns depending on the age of the business.

Startup: It takes time for a business to start generating revenue. Then, the owner needs to plow the revenues back into the business. The startup phase can generate feelings of rejection and despair. It takes time to get the first purchase. It takes even more time to build a strong, sustainable clientele. The continued lack of income breeds uncertainty in the business owner. Their dreams of throngs of clients begging to buy the product or service fade. Absence of sales tempts the owner to close the business. Some businesses should close. Others deserve to succeed.
Expansion: Periods of growth and expansion also decrease the revenues that go to profit. You have to invest revenues into new facilities, staff, and equipment. Expansion also entails risk. Risk increases feelings of anxiety. Paradoxically, many business owners worry the most about their business during times of expansion.
Decline: All products, services, and businesses experience periods of growth, sustainability, and decline. Decline results from expired patents, copies or improvement by competitors , market saturation, or loss of interest. The term “new and improved” represents business owners trying to delay decline. During a business decline business owners may lose confidence. Once again, the temptation to close the doors looms. The decline phase of a business provide opportunities to reassess, explore new options, rejuvenate the brand, or close the business.

Discerning whether to close a business or try to resuscitate it requires objective assessment. Too many business owners blindly make changes without a plan or analysis. If your analysis indicates a change is needed, then make it. If nobody wants your product, either fix it or quit. If your marketing plan contains flaws improve it. If, however, no matter what you do you will not make money. Give up. Do not continue drilling a dry well.

You should not change a strong product, operations, or marketing plan unless you find a flaw in it. Good plans for good products will generate success in time. Reevaluate your plan. Test your product. Refine what you need to. Stick with your business when times get tough.

Modify or Enhance Your Product

2011-12-29T22:47:00.001-08:00

The end of one year and the beginning of another provide an excellent opportunity to reevaluate your product or service. People expect change during these seasons. You also have a brief time to contemplate and ponder possible enhancements.

I am not suggesting that you implement all the changes at once. You may begin the process now and complete it later in the year.

Research What Changes You Want to Make

You want to ensure the changes you make will enhance the desirability of your product or service. You want people to buy it. The following actions can help you make the best decisions possible.

Take time to think through what you want to do
Make a list of enhancements as ideas come to you (I hope you started the list earlier)
Research on the Internet, especially in users groups or client comments, for ideas
Contact your best clients and ask them what changes they suggest for you to make
Review your competitor’s product or service to see what changes they are making

You may also want to introduce a new product or service In addition to enhancing your current product or service. You can use the same steps that you used to consider changes to introduce new products.

You may need to create a prototype of the product you want to change or introduce. Consider where you want to manufacture or outsource the production. Work with local, state, or national economic development organizations to find production and fulfillment organizations.

Modify Your Marketing Plan to Account for Changes

Once you determine the changes or enhancements you will make, you modify your marketing plan. I suggest that you use the structure of the 7 Pillars of Successful Marketing to guide your marketing enhancements:

Conduct the market research on the product (which we already discussed above)
Determine the right message for your new or improved product or service
Develop a new strategy or incorporate the product into your existing strategy
Design new-product or product-enhancement campaigns to introduce your changes
Identify both the methods and vehicles you will use to implement the campaigns
Create new sales systems if you have to, but incorporate existing ones if possible
Capture appropriate client information and survey them for satisfactions & suggestions

The end of the year and the beginning of the next provides excellent opportunities to review, enhance, and introduce new products or services. Make sure you take the time to research the enhancements, verify that your clients will appreciate them, and modify your marketing plan to include them. Remember, you don’t do this all at once, but begin now for the end of next year.

Last Week for Year-End Checklists

2011-12-27T23:19:00.001-08:00

I know that I’ve encouraged you in previous posts to take care of your business now to prepare it for a more prosperous 2012.

Let me take this last opportunity to remind you:

Take care of your clients so they can prepare their businesses for next year
Send a year-end remembrance to your best clients and an email to the others
Meet with your tax accountant and review what you can do now
Meet with your financial planner to review what you can pay down on investments to help with next year
Pay all outstanding invoices to reduce your tax burden next year
Ensure that your books are completely up-to-date and in QuickBooks
Defer income until next year appropriately. Consult your tax expert
Make business related purchases that will position you well for next year
Write off obsolete inventory by giving it away or scrapping it. Track the disposal
Update your business plan, including product enhancement and marketing campaigns
Update your promotional materials, marketing vehicles, and sales systems
Update or start a blog to enhance your position in the market and your expertise
Calendar personal, family, and business activities, meetings, and activities for 2012
Create a list of new clients or others you would like to add to your business
Reduce or eliminate the clutter in your office, production and other facilities
Create a mastermind group, marketing team, business coach, and other supporters

This list may seem intimidating for you during the last six days of the year. That’s why I discussed it earlier in the month.

Choose the things you can do and do those. Good luck.

Merry Christmas & On Earth Peace

2011-12-24T09:15:00.000-08:00

For unto us a child is born,

“For unto us a child is born, unto us a son is given: and the government shall be upon his shoulder: and his name shall be called Wonderful, Counsellor, the mighty God, The everlasting Father, The Prince of Peace.

Of the increase of his government and peace there shall be no end, upon the throne of David, and upon his kingdom, to order it, and to establish it with judgment and with justice from henceforth even for ever. The zeal of the Lord of hosts will perform this.” (Isaiah 9:6-7)

He was wounded for our transgression

“He was wounded for our transgressions he was bruised for our iniquities: the chastisement of our peace was upon him; and with his stripes we are healed. All we like sheep have gone astray; we have turned every one to his own way; and the Lord hath laid on him the iniquity of us all.

He was oppressed, and he was afflicted, yet he opened not his mouth: he is brought as a lamb to the slaughter, and as a sheep before here shearers is dumb, so he openeth not his mouth. He was taken from prison and from judgment: and who shall declare his generation? for he was cut off out of the land of the living: for the transgression of my people was he stricken.

And he made his grave with the wicked, and with the rich in his death; because he had done no violence, neither was any deceit in his mouth.” (Isaiah 53:5-9)

“And the angel answered and said unto the women, Fear not ye: for I know that ye seek Jesus, which was crucified. He is not here

“But Mary kept all these things, and pondered them in her heart.” (Luke 2: 18)

For He is risen, as he said.

I thank God for the gift of His only begotten Son. I rejoice in His birth in Bethlehem.

I praise Him for his grace that saves and redeems me. I know that He lives and sits on the right hand of His Father. I pray that His peace may be upon you this season and all time.

Merry Christmas

On Earth Peace, Goodwill to all

Take Care of Your Employees

2011-12-22T00:13:00.001-08:00

During this season people share gifts with one another. We already discussed the benefits of business owners sharing something with their clients. The good feelings engendered by a thoughtful remembrance translates into good word-of-mouth and possible sales. However, that should not be our purpose. It should always remain a side benefit.

We share gifts, thoughts, and connections to express our appreciation and caring for our fellow being. The holiday season highlights peace and good will. Sincere expressions of gratitude kindle similar feelings in others. They in turn, share better feelings with others. We could change the feelings of the community with sufficient sharing of good for others.

Sincere and Perfunctory Expressions Of Appreciation

The same applies to our employees. We should express appreciation for their work on our behalf. While it is true that we compensate them for the work they do, additional expressions of gratitude and concern enhance the warm feelings we want among out staff.

Let me share two examples:

One of my daughters works for a pediatric clinic. She had surgery in October. Her office arranged for me to text one of them how the surgery went. That person notified the entire office. Flowers appeared at the hospital from the staff. Two of her co-workers visited her at home during her recovery. The company provided a small potluck Christmas part party for the staff. At the party, management expressed appreciation for all the work the team did. They recognized the sacrifice the staff made to take care of the clients. They gave a small gift to each worker. Their expressions lifted the whole staff. Morale increased. Good feelings prevail, even when some of the staff will have to work through the holidays. They asked who would be willing to keep the doors open. The spirit of volunteerism increased because of the sincere expressions of appreciation.
Another daughter works for a school district. Management called all of them into a meeting—not a party—the last day of school this year. They did not express any recognition for the work done by these teachers. They did not acknowledge the sacrifice the teachers make. No sincere efforts were made to bring seasonal cheer to the teachers. Instead, they were informed that they would be working on January 2nd, the national holiday for new year’s eve. They were told that they would not be paid the time and a half normally given for working a holiday. They were told that absences on that day would be strictly reviewed. Then, without a word of appreciation they distributed the teacher’s Christmas bonus—a $1.00 roll of holiday wrapping paper.

Can you guess which of my daughters felt better about her employers. Interestingly, the cost of the gift was not the issue. Both gifts were very inexpensive. The difference came from the expressions, sincere expressions, of gratitude and respect. The gratitude led to staff voluntarily working on holidays.

In the other situation the demands to work on holidays with explicit denial of overtime engendered resentment. The lack of appreciation and gratitude enhanced the feelings. In addition, the lack of sincerity caused the $1.00 gift to feel like slap in the face. The negativity would not have happened with a few sincere expressions of gratitude.

So, this season take care of your employees. Try to be more like “old Fezziwig” rather than Ebenezer Scrooge. You do not need to spend a lot of money. You do need to sincerely thank them for what they do. A small potluck party wouldn’t hurt.

I would like to share a Merry Christmas message to all of you this Saturday

Reserve Time for You & Your Family

2011-12-20T18:24:00.001-08:00

I had a great mentor named Keo Chai. He passed on too soon and left a void when he did. I think of him every year at this time because of some great advice he gave me when I was younger.

Keo served as president of a community program I joined. I had just been made president of the local chapter in the district he governed. He knew the time constraints the assignment entailed because he had also served in the same position.

Many Demands for Time and Attention

He correctly warned me that the assignment would take a lot of time. He also cautioned that people in the organization would assume that I served exclusively at their beck and call. Many of them would call for appointments or meetings at their convenience. Most would expect me to drop everything I had planned to cater to their demands. What he told me then, applies to most small- or home-based business owners today.

Then, he gave me the great advice: at the beginning of the year, and at the beginning of each month, schedule personal time in your calendar. In addition, he counseled, schedule time for your family. Set apart time for your children’s recitals, sports, and school activities. Schedule time to court your wife and for family activities. Put that time into your calendar first. (Remember Stephen Covey’s video from last week on First Things First)

“I’m sorry I already have an appointment at that time.”

Now came the genius of the advice. “When anyone asks to meet during the time you already reserved, just say ‘I am sorry. I already have an appointment at that time.” You don’t need to tell them what the appointment is, or who it is with. Just tell them that you cannot meet at that time. He also reminded me that I would not cancel an appointment with someone else just because another person asked. So, why should I cancel an appointment with my family just because someone else asked.

I followed that advice during my tenure in the leadership of that local chapter. I continued to apply it throughout my career. I shared it with every person I mentored since Keo shared it with me. Now, I share it with you as business owners. Too many business owners find their dedication to their business costs them their family. Long hours, skimping to make ends meet, and giving attention to everyone except loved ones; damage relationships at home.

Follow good advice given to me decades ago—take time this week to reserve time for you and your family for all of 2012.

Make sure to read the blog on Thursday when I share another idea to improve your business

You Are Not Alone if You Get Involved

2011-12-17T08:12:00.001-08:00

Many small- and home-based business owners work alone. They do not have employees. Perhaps they out source all their labor to offshore production facilities or call centers. They usually work out of their homes, a small storefront, or shared office suites. Most business owners interact with clients face-to-face, but many do not. As a result, a large number of business owners experience feelings of isolation and loneliness.

Business owners working alone lack the camaraderie they experienced working in large companies. They lose the sense of accountability to someone else. They miss the banter and small-talk with other workers. They must stimulate creativity and ingenuity on their own without stimulus from co-workers or project teams. They must draw motivation and discipline from within themselves every hour, every day.

Over time, they wind down and may lose their way. I offer a few simple methods for avoiding this mind-numbing isolation:

Join a professional or business association related to your work—and participate in their activities. Most communities maintain a Chamber of Commerce, Rotary Club, or other service organization. Thousands of associations exist to allow manufacturers, CPAs, retailers, home builders, and even clowns to mingle and share ideas. You can find them by searching for a word that describes your work and the word association or using the Encyclopedia of Associations. You need to attend at least 2 activities a month to feel connected.
Form a mastermind group with 3-4 other business owners or friends. Mastermind group consist of 4-5 people who want to move forward and improve their lives or careers. They meet at least once a month for 60-90 minutes. Mastermind groups energize participants to greater success. Groups create synergistic ideas that lift each member. The agenda is simple. Each person in the group

Shares what they goal they are working on
Lists what they did in the last month to achieve that goal and the results of their efforts
Outlines what they plan to do in the next month to achieve the goal
Asks the group to brainstorm possible solutions to barriers or challenges

Eat lunch with others at least twice a month. Bryan Walden Pope spawned an idea called The Abundance Group (TAG). People register on the web site. They invite one of the other members to a lunch or breakfast. Each of the two bring 2-3 other people to the event. Attendees may not solicit business from the others. The purpose remains connecting with interesting people and learning about them. Sharing ideas and opinions. You may also want to read the book Never Eat Alone by Keith Ferrazzi.
Maintain a top 25 list. I learned this technique from Mark LeBlanc the author of Growing Your Business. Review your address book and identify the 25 most important people for you to contact. Add reminders to your calendar to contact each of the 25 at least once a month. You many connect in-person, by phone, email, sending them a gift, sharing an article or good book. But connect with them each month.

You may use any of these methods—or hundreds of others—to connect with people in a non-stressful invigorating way. Connecting with others reduces isolation and loneliness. It stimulates your intellect and social skills. It improves your business. So, as the year ends build a system into your life to connect with others. I know, from personal experience, it really helps.

Avoid Getting Sidetracked

2011-12-15T22:15:00.001-08:00

Business owners must maintain multiple priorities. The smaller the business the more fractured the business owner’s attention may become. Trying to balance accounting, marketing, operations, production, management, and supervision demands constant effort. Frequently, business owners lose sight of their priorities. “Putting out fires” distract them from what they wanted to do.

Stephen Covey gave sound advice with his 7 Habits of Highly Effective People. I suggest you study it again and recommit to make his habits yours. Two of his seven habits help you avoid getting sidetracked.

Beginning with the end in mind means that you know before you begin what you want to accomplish. Our last three posts outlined how to establish the end you wish to accomplish:

Evaluating progress at the end of the year
Setting goals for the next year
Creating a plan to achieve those goals

Putting first things first requires great discipline. Covey presents the graphic that illustrates this post. You place each of your tasks, responsibilities, and duties in the appropriate sector. As challenges arise you assign them to the appropriate sector. You try to reduce the number that reside in sector 1 through effective planning.

You focus on the tasks in the 2nd sector. Dealing with important things before they become urgent allows for the best growth. Delegating those activities in the 3rd sector and ignoring those in the 4th sector assigns your personal efforts to the most important activities that will grow your business.

I recommend you set apart time in your monthly, weekly, and daily calendar to work on the activities assigned to sector 2. Dedicating 1-2 hours a day or week will accelerate your progress. Secure both the time and a place that will reduce interruptions and distractions. I go to a college campus, library, or other tranquil place to work on the most important items.

Roger and Rebecca Merrill, under Dr. Covey’s oversight, expanded on the original presentation of the 3rd habit with their book First Things First. I recommend the book to you. I also found Dr. Covey’s video about adding rocks to your jar on YouTube. I hope you enjoy it. I found it still illustrates this vital habit with humor and visual flair. Watch the video clip and then ask yourself:

Do I find myself trying to pound my big rocks into a calendar full of small pebbles?
Do I push the unimportant activities around thinking that I can create more time?
Do I let all the unimportant things fill my calendar before I act on the important ones?
What do I need to do to change my paradigm to see a different way to act?

On Saturday we will explore how a mastermind team can accelerate your business growth

Year-End Updates to Business Plans

2011-12-13T09:33:00.000-08:00

This continues our series on actions you can take at years end to grow your business next year

Hopefully you have started cleaning up and protecting any tax, legal, and other loose ends before December 31. In addition, you may have implemented your plan to remember and strengthen client relationships. Once you set your goals for next year, you need to update your business plan to achieve the goals you set. I want to help you identify the sections of your plant that need updating.

To achieve the goals you set for next year will require both a plan and action. In a previous post we evaluated the benefits of following your business plan rather than preparing the plan for others. I urged you to ensure that your business plan changes and evolves as your business grows.

Update Sections of Your Business Plan

Year-end provides a perfect opportunity for major updates to your business plan. The changes should lead to achieving the goals you set. You will need to update the following sections of your business plan If you set the goals we discussed last Saturday. You will:

Include new products or services in the summary and operations plan
Add any new competitors or changes they made to the market analysis section
Refine the human resource portion to accommodate labor transformation
Alter the operation plan to include changes to operation flow & production efficiencies

Adjust costs, discounts, prices, or vendors in the purchasing section of the financial plan

Incorporate market research findings into all appropriate sections of the business plan
Add or modify campaigns in the campaigns pillar of the marketing plan
Change monthly, quarterly, & yearly forecasts in the sales section of the marketing plan
Adapt the pricing section with all of it’s overhead and cost accounting to reflect change

Redo the finance sections to reflect new funding and accounting practices

I remind you that these may not represent all the sections of your business plan that will require alteration. I will also remind you that the more you use your plan, the better you will recognize the sections requiring edits based on your year-end goals.

Outline Specific and Clear Action You Will Take

Your changes to the business plan should outline specific actions and tasks that you will either modify or begin performing. You will enhance your success if you include deadlines or milestones in your action plan. Transfer your action steps to your calendar system and incorporate it into your time management system.

We will explore some simple steps of time management in Thursday’s post. Join us!!

Set Goals for Next Year’s Growth

2011-12-10T09:00:00.000-08:00

This concludes our 3-part series on year-end activities to improve next year’s business

The end of the year provides you an opportunity to position your business for growth for the next year. We already discussed what you can do financially to prepare your business for the coming year. We also reviewed actions that show appreciation to your clients. Finally, you set business goals and establish an action plan to enhance your business for the next year.

Set Goals for What You Want to Accomplish

Businesses set multiple goals. You set specific goals for each aspect of the business:

Increase profits your business will generate next year with quarterly milestones
Lift revenues based on specific number of sales with quarterly/monthly forecasts
Improve production for number of units manufactured or services rendered
Reduce costs and overhead through bulk buying, discounts & finding new vendors
Introduce new products or product enhancements to increase client satisfaction
Expand a market niche or open a new market niche based on market research
Increase traffic to your store, web site, or phone bank
Shorten time needed to process accounts payables & receivables

These represent merely a sample of the goals you may set for your business.

Create a Business Dashboard with Benchmarks

In addition to setting goals, you may wish to establish a dashboard for your business. Just as the dashboard of a car allows you to monitor the vehicle’s speed, oil, battery, and temperature. Business dashboards allow you to quickly see the vital statistics for your business. Each business monitors different elements. For example, restaurants monitor how frequently they turnover clients per table per day. Clothing stores monitor the number of times a rack of clothes turns over.

Businesses also use a system called benchmarking. Benchmarks establish the base standard for industries. Benchmarks may include table turns for restaurants, clothing turns, times for auto repairs, and more. Benchmarks allow you to compare your production to the norm in your industry. They also provide the standard you work to improve.

Set SMART Goals

The word SMART in SMART Goals is an acronym for

Specific: Your goal is so clear, specific, and detailed anyone can understand it
Measurable: You can measure when you achieve the goal, usually with a number
Achievable: You can realistically enjoy success because you can achieve the goal
Relevant: Achieving the goal leads to the purpose & direction of your business
Timely: You set a deadline—with milestones—for when you will achieve the goal

You may want to consult KPI Dashboard for additional ideas on goals, dashboards, and benchmarks. Your local Small Business Development Center (SBDC) and Service Corps of Retired Executives (SCORE) can advise you about your dashboard and benchmarks if needed.

Join me Tuesday to continue the series on year-end activities by updating your business plan

Year End Client Retention Activities

2011-12-08T09:28:00.000-08:00

This continues our 3-part series on year-end activities that improve next year’s business

Retaining clients costs less than acquiring new ones. This post assumes you already possess clients to retain. You will have more clients the longer your business operates if you retain them properly. You should take advantage of the generous season to sincerely reach out to your clients. Remembering clients in December can enhance repeat business during the next year. However, your efforts must be sincere, rather than calculated for more business.

Purposes and Practices of Client Retention

We discussed several steps to client retention in Bryan Pope’s The 7 Pillars of Successful Marketing. Some of these activities lend themselves to year-end efforts. This post builds on the concepts share in those posts.

Building the personal relationship with the client so they continue to do business with you remains the secondary purpose of client retention. Building the personal relationship so that you may learn more about the person, so that you may serve them more effectively and efficiently remains the prime purpose.

You must capture information about your clients and put it in a useful data system. The right information enhances your connection with the client. For example, knowing that someone prefers reading historical biographies, See’s chocolate, or dinning out allows you to give them a more personal remembrance.

The end of the year provides an opportunity to reevaluate your client retention methods. You may

Examine the effectiveness of your client management system. Perhaps you should modify or upgrade your system
Analyze the fields of information you gather about clients to verify you gather the right information.
Review the information you have gathered to see what you lack and gather it
Install flags in your system to trigger both personal and business important dates

Reach Out to Your Clients at Year’s End

The holiday season provides an excellent opportunity to reconnect with your current clients. People generally share gifts, cards, meals, and other remembrances during the season. Common business practices also accept the same activities. You need to remember the IRS limit on taxable vs. non-taxable gifts. Examples of year-end methods to reach out to your clients include:

Send a special email with graphics, your logo, or other methods to make it stand out
Call to wish them the best and thank them for their association throughout the year
Send them a card for the holidays perhaps including a gift card for your business or something they value (remember the See’s or dining gift card)
Arrange for a company to send a gift (Amazon sending the historical biography)
Hand deliver a gift with a card
Take the client to lunch or dinner
Invite them to a special client appreciation party or event (one company I knew invited us to a special screening of newly released movie, they rented the entire theater just for their clients)
Give them tickets to a sporting event, theater, or other cultural event. Better yet, have them accompany you.

In addition, you may establish a branded method of remembering clients. For example, a friend of mine, a corporate landscape architect, gives a large poinsettia to clients every Christmas. Another friend rewards his clients with an assortment pack from Harry and David’s. In both cases, the gift immediately triggers the thought of the giver. You can accomplish the same result by consistently giving the same gift every year.

Join us on Saturday when we explore year-end goal and action plan setting

Year End Expenditures & Protections

2011-12-06T09:53:00.000-08:00

This begins a 3-part series on year-end activities to improve next year’s business

As you approach the end of 2011, a few key financial actions can save or protect money for next year. Many business owners know what to do, but don’t do them. Many more do not know the money saving actions they can take. I will try to share the information. You must decide how you will use it. In addition, I strongly encourage you to consult an accounting and financial planning professional to adapt the general ideas in this post to your specific business.

Overview to Year-End Activities

Small Business: Canada published a nice overview of year-end activities that encompasses financial and more:

Get your financial books in order
Determine the current position of your business: finances, goals, and taxes
Plan for the coming year: set next year’s goals, prepare & implement an action plan
Get your tax documents prepared

They also offer several links to help you improve the morale, accounting, and balance sheet.

Year-End Tax Planning

Several experts share ideas for reducing taxes you pay next year. Some of the better ones are Karen Klein’s A Checklist for Yearend Tax Planning in Business Week online. Entrepreneur Magazine published A Year-End Tax Checklist last year authored by Bonnie Lee. The Center for Productivity republished Debbie Gilster 2005 article from Financial Management, Time Management titled Year end checklist for a small business. Sue Clement at Ladypens also share some good ideas. Finally, Business News Daily published 8 Small Business Year-End Tax_ Planning Tips. I’ve combined advice from all of them.

Get your books in order
- Create a 2011 file for all tax information
- Organize your receipts and ensure all vendor information is accurate
- Check your balance sheets, profit/loss, and return on investment
- Take physical inventory of your products & make accounting adjustments
- Verify loan accounts and clean them up if necessary
- Establish 401K or other retirement programs for yourself and employees
- Lookout for local tax credits and other opportunities to reduce tax bills
- Examine your relationship with financial institutions
- Make end-of-year charitable donations, Roth IRA conversions, etc..
Meet with your tax and financial planning pro before the December 31
- Discuss changes in the tax code that may apply to your business
- Deduct the full amount of purchases upfront rather than depreciate it
- Explore tax breaks and deductions from research and development
- The Retained Worker Credit for each retained worker
- Form 1099 reporting extension for payments after Dec 31 (possible repeal)
- Small Business Health Tax Credit for providing healthcare for employees
- New limit for the amount of farming losses a taxpayer has received
- Requiring taxpayers to electronically file federal tax deposits (EFTPS)
- Accelerating deductions and deferring income into next year
- Declare employee bonuses in 2011 but pay them by March 15, 2012
Reexamine your business units to determine which should be closed
- Write a list of all the company’s major accomplishments for the year
- Evaluate marketing efforts & results to decide where to focus next year
- Check all of the links on your website to make sure they are active

Year-End Legal Issues

Nellie Akalp reposted a guest post that appeared on Mashable explaining “5 Important Tasks for the End of the Year”. She provides excellent ideas for year-end legal entity issues:

Close your business before 2012 if you stopped business activity or performance
Create a legal entity (LLC or Corporation) before year’s end if you haven’t already
Ensure compliance to renewals, licenses, and other local requirements to your business
File any amendments to your company (address, phone, etc.) before year end
Tie up any legal loose ends (DBA, Tax ID, trademark) before the end of the year

I want to restate the importance of seeing your accounting and financial planning expert early this month. Do not wait until the year ends before you meet with them. You will miss important deadlines for acting.

Join us on Thursday when we review what to do before year-end to retain your best clients

Pillar 7: Client Retention

2011-12-03T09:07:00.000-08:00

This concludes our 8-part series on Bryan Pope’s The 7 Pillars of Successful Marketing. Visit Bryan’s blog and web site to learn more and order your own copy of An Introduction to the 7 Pillars of Successful Marketing.

All 7 pillars culminate in sales. However, you must conclude with the 7th pillar: Client Retention. As Bryan will tell you—in his own word taken from An Introduction to the 7 Pillars of Successful Marketing—it is less expensive to retain a client than to create one.

Create client allegiance & predictable repeat revenue patterns

“Isn’t it a good feeling to know you have an ongoing income stream you can depend
on from loyal clients who are pleased with the products or services with which you are
providing them? If you’re already there, you know what I’m talking about. If you’re not,
I want to help you get there as quickly as possible. In either case, you have the
opportunity to create a pool of fiercely loyal clients who wouldn’t dream of living
without the products or services you are providing to them.

To make this happen, you need a couple of essential tools.

You need a data capturing mechanism in your business.

If you are a business-to-business product or service provider, chances are good you already capture most or all of the data you need in the process of making transactions with your clients.
If you are a business-to-consumer product or service provider, this may or may not be the case. For instance, a service provider making house calls (like a plumber or carpet cleaner) will likely gather the needed information naturally, while a retail store or restaurant will not.
Think about it, when was the last time you gave your contact information to a retailer or restaurant operator? It’s a savvy few who consistently collect and use such information.

In order to actively nurture a client and help him or her become a loyal advocate of
your company, you have to able to consistently communicate with the client.

Therefore, you need the person’s name, company name (if you’re a B2B company), phone number, address, email address, and any other contact information you feel will be helpful in staying in front of the client.

Once you have this information, helping a client remain active is much like acquiring
the client in the first place.

You need to conduct ongoing market research with your
clients to make sure you’re continuing to meet their needs.
You may adjust your message to existing clients from the one you use to attract people who have never heard of your company before.

You must devise client retention strategies.

You’ll mount client loyalty campaigns. You’ll still use the same methods we discussed earlier—promotion, publicity/PR, and advertising—to help retain your clients, although the vehicles you use to deliver your messages may differ from your prospecting activities.
You’ll still need sales strategies and systems tailored to retaining your clients and keeping them actively purchasing from you, preferably in greater amounts and with more
frequency.”

Questions to Ask Yourself to Retain Clients

Do we have a suitable client data acquisition system in place
to capture all the data we need to stay in front of our clients
with our message?

If “Yes,” what is it?
If “No,” what can we put into place immediately?

Do we have a data management system in place to manage
the data we capture in a serviceable way so we can conveniently
and consistently stay in front of our clients with our messages?

If “Yes,” what are we using?
If “No,” what can we begin using immediately?

Remember to go back to the beginning of The 7 Pillars and use them in creating your
client retention program for your company.

In Conclusion

“There you have it, the most powerful marketing system in the world. It works for any
business—regardless of size or type—in any industry. Do you feel more powerful—more
in control—just having read this short summary? You should! This is the real deal. If you
will apply just what you’ve read in this brief document, you’ll see differences in the
financial outcomes of your marketing efforts almost immediately.”

I enjoyed sharing what I consider to be one of the best marketing programs around. I hope you appreciated Bryan’s sound and simple approach to million dollar marketing on a shoestring. One last time, I encourage you to buy the download and accompanying PDF and to read Bryan’s blog.

Join me Monday when we begin a series on year-end activities to improve next year’s business

Pillar 6: Sales

2011-12-01T09:23:00.000-08:00

This continues our 8-part review of Bryan Pope’s The 7 Pillars of Successful Marketing. As before most of this post comes from Bryan’s own words from An Introduction to the 7 Pillars of Successful Marketing. I still strongly urge you to buy the download with its accompanying PDF for further study. In addition, I think that you will find reading Bryan’s blog very beneficial.

Marketing Must Include Sales

Effective implementation of the first 5 pillars should lead to sales. For that reason, Bryan includes sales as one of The 7 Pillars of Successful Marketing. He recognizes that some people separate sales from marketing. He shares his feelings on why sales is definitely part of marketing.

“Here it is, plain and simple: Sales is part of the ongoing marketing process. If
marketing is everything I do to get people to notice my company and sales is the act of
closing the deal, where does everything else—you know, important things like client
retention—come into play? For that matter, isn’t stellar client service part of my
marketing strategy? It had better be! The bottom line is this: Every truly successful
company is a marketing company. Let me repeat that. Every truly successful company is
a marketing company. The product or service they are offering is immaterial. If they are
on top of the heap, that’s because they understand marketing. And they understand that
marketing starts long before they opened their doors, it goes on long after each
transaction is made, and it pervades every aspect of their business.

So, yes, we’ve done much in the name of marketing to get our potential clients to
notice us and get them to the sales table, but the act of striking a mutually beneficial deal
and closing the client is as much a part of marketing as everything else that will happen
from that moment forward as you nurture that client and help him or her become fiercely
loyal to you and your company.”

Increase Revenues Using Consistent Sales Systems

“First of all, just as you have overarching strategies for your marketing efforts, you
must also have specific sales strategies. Whether that strategy is

Driving someone to a well-crafted website where a final transaction will take place
Getting them to try your product so they realize there’s no way they can live without it
Allowing them to feel left out if they don’t jump on your bandwagon

The sales function…is the entry point of cash into your company—of course it
is wildly important! You can go through all the motions of marketing you want all day
long, but if you fall down on this one, you lose! You won’t make any money, and,
therefore, your existence as a business will be short-lived.

It is also very important to establish sales systems in your business…If you’re stumbling through every sales transaction—whether “sales” in your business means an outside salesperson closing a deal, someone stepping up to your cash register and handing the clerk cash, or any other way that transaction ultimately transpires—you must have systems in place that streamline the process, make it consistent, and allow you to continue to tweak it as you identify better ways to make sales happen for your company.

Some companies have just one or two sales systems in place. Others may have
dozens. Whatever your situation, see these systems as systems and treat them as systems.
Train everyone consistently in using the best practices that have been discovered and
continue to improve your sales systems as new discoveries are made.”

Questions to Help You Establish Sales Systems

What sales strategies do we currently have in place?
Are these the best possible strategies?
What might work better? What is worth testing?
What are the sales systems we currently have in place?
What are some ideas for systems we might test to see if we can improve the
consistency of our sales efforts?
As part of my marketing budget, what expenses do I have related to my sales
strategies and systems?
Is that budget where it should be?
Am I overspending for my return-on-investment?
If I invested more, would I see a greater ROI?

Budget for Your Sales Systems

“There is, of course, a cost to doing sales as well. Establish a sales expense forecast for
your business. Whether that’s travel expenses, meals, etc. for outside salespeople, costs
related to your website as a point-of-sale spot, or any other expenses related to making
sales happen for your business. These expenses will come out of the marketing budget
you’ve established. If you didn’t consider these expenses as part of your marketing
investment, go back and revise your marketing budget.”

Saturday we will conclude our examination of The 7 Pillars of Successful Marketing

Pillar 5: Methods & Vehicles

2011-11-29T09:03:00.000-08:00

Part 5 in our 8-part examination of Bryan Pope’s The 7 Pillars of Successful Marketing

The 5th Pillar of Bryan Pope’s 7 Pillars describes the two key elements of a marketing campaign (pillar 4): methods and vehicles. I quote Bryan himself (with his permission) from his download and PDF An Introduction to the 7 Pillars of Successful Marketing. I strongly urge you to buy them for yourself, study each of the 7 pillars, and implement them.

Overview for Pillar 5

“If you’ve done your marketing right up to this point, you’ve done your research to
find out what your market is really looking for and what they are willing to pay for it.
You’ve developed a message and image that say to your audience, “Hey! This is where
you can get what you’re looking for!” You’ve created at least one, and perhaps multiple,
strategies that clearly state your goals and big picture plan for taking that message to your
target audience. Then you’ve looked at when to get that message out, whether that’s in
short bursts at optimum times, or ongoing for a period of time. You’ve also established
specific campaign budgets and identified the resources you’ll need to make those
campaigns happen.

If you’ve done all that—and only if you’ve done all that—are you ready to start
looking at tactics or, in my terms, methods and vehicles.”

3 Marketing Methods

“When I say “marketing methods,” I’m talking about just three things: promotion,
publicity/PR, and advertising.

Promotions are marketing activities designed to get the cash register ringing with a specific offer, a strong call to action, and a deadline. Those three elements create promotions.
Publicity and public relations are largely the exposure your company gains for free. This marketing method includes such things as distribution of press releases, public speaking opportunities, stories in publications about your company, product, or service, and so on.
Advertising is the one method with which we’re all quite familiar. From
traditional media such as radio, newspaper, magazine, and television advertising, to
billboards, to new media advertising on the internet, through texting, and so on,
advertising is perhaps the best understood marketing method.”

Marketing Vehicles

“Now that you know what the three methods of marketing are, let’s look at some of the
vehicles that fall under those methods. This should be real eye-opener for many people
since these are the very things they think of when someone says “marketing.” Yes, these
are extremely important elements of marketing, but they, on their own, are NOT
marketing! …

You must follow The 7 Pillars completely and in proper order to gain the synergies, power, and success that are waiting for you as an enlightened marketer.

Here is a short list of some of the marketing vehicles you may use in your marketing
efforts as appropriate based on your market research, messages, strategies, campaigns,
and methods:

referral programs
frequent buyer clubs
rewards programs
contests, sweepstakes and drawings
cross-promotions
discount programs
coupons
gifts and premiums
in-store events
educational programs and seminars
newspaper ads
signage
email
word-of-mouth
direct mail
telemarketing
bounce-back offers
press releases
community volunteerism
company newsletters
internet advertising
blogging
podcasting
networking events
banners
joint mailings
sponsorships
point-of-purchase displays
trade shows

…and the list goes on and on.

These, and many other vehicles, deliver your message and facilitate action on the part
of your audience. ”

Questions to Help You with Methods or Vehicles

Which marketing vehicles can I use under the Publicity/Public Relations method to get my message to my target audience?
Which marketing vehicles can I use under the Promotion method to get my message to my target audience?
Which marketing vehicles can I use under the Advertising method to get my message
to my target audience?
(Remember, especially with advertising, to consider the budget you’ve established.)

“Until you’ve found some answers through addressing the first four critical areas of marketing
as represented by the first four pillars, you’re robbing yourself of every opportunity to
make your marketing as potent as it can possibly be. You’re going to spend the time and
money getting your message out there anyway. Why not do it right?'”

Read the blog on Thursday when we assess pillar 6: Sales systems

Pillar 4: Campaigns

2011-11-26T09:30:00.000-08:00

Thank you for joining us to learn how to translate strategy into campaigns
Once you establish your marketing strategy (Pillar 3), you implement the strategy into campaigns (Pillar 4). Bryan Waldon Pope explains more about campaigns in his An Introduction to The 7 Pillars of Successful Marketing. You can learn more by following Bryan’s blog and buying the download.
Campaigns Turn Your Strategies into Effective Tactics
“We’re all familiar with the term “marketing campaign.” But just like “marketing
strategy,” the term “marketing campaign” is often misused and misunderstood. Once we
have established a strategy, or strategies, for our marketing efforts, we need to be able to
carry out actions that will turn those strategies into the tactics that will bring us the
success we’re seeking. This is where campaigns come into play.
A marketing campaign may consist of only one marketing method and one vehicle
delivering that message to our audience; but more often, campaigns employ multiple
marketing methods and vehicles to get our message to our intended audience.
Campaigns can be based on an event; time of the day, week, month, or year; or a
specific marketing goal. Campaigns become a handle we can attach to a group of
marketing activities that are aimed at accomplishing a specified outcome. Here are a few
examples of possible marketing campaigns:

A holiday sale: This type of campaign is mounted a short time before the holiday
(unless it’s Christmas, in which case we see people beginning their campaigns earlier and
earlier). So we may give our campaign a name like our “Annual Mother’s Day Sale” or
the “Deer hunter Widow Sale,” a popular one in many communities for getting women to
spend money while their husbands are away hunting with all that expensive equipment
they bought recently.
A client-base building campaign: If my company were looking to add 10 new
clients to its client base over the next six months, I might launch a campaign called my
“Two New Clients a Month” campaign. Going back to strategy, in this scenario I’ve
obviously set a goal to get 10 new clients in the next six months. I’ve decided that getting them at the rate of a couple a month makes the most sense. Thus, the “Two New Clients a Month” campaign.
End of the Month Deadline campaign: Sometimes involving your audience in your goals can be helpful. Getting client buy-in can be very powerful. One place I see this regularly is in the new car sales industry. The dealer will let his audience know he needs to move 200 new cars by the end of the month. To put a handle on it, we would probably call this our “200 Cars Must Go by the End of the Month” campaign.

Have you got the picture? I hope so. If you need more input on this, or any of The 7
Pillars, involve your marketing team or look at the specific audio program titles I’ve
produced on most of these topics. They go deeper and offer more resources for
implementation.
A few elements that will play into putting together your campaigns include creating
campaign budgets from your overall marketing budget, identifying the elements and
deliverables necessary to mount the campaign, being specific on timelines for each
campaign, and creating a campaign calendar which, for most businesses, should be
looking at least one year ahead.”
Questions to Ask Yourself About Each Campaign

Based on the goal(s) I’ve set and the strategy(ies) I’ve devised, what is one campaign I
can run to support my goal(s) and strategy(ies)?
How much of my overall strategic marketing budget will I allocate for this campaign?
What are the elements and deliverables necessary to mount this campaign?

For example, design and print work, copywriting, mailing services, website-related work, telemarketing service, memberships in associations or organizations, and more)

What is the timeframe/timeline for this campaign?

Remember to create your campaigns in advance, to the best of your ability, for at least
one year. This will result in better quality campaigns, more cohesion between campaigns,
and more control of your marketing budget. A one-year calendar is very helpful!”

Please check back on my blog on Tuesday when we discuss Pillar 5: Methods & Vehicles

Pillar 3: Strategy & Happy Thanksgiving

2011-11-24T22:55:00.000-08:00

Welcome to the fourth of our 8-part exploration of The 7 Pillars of Successful Marketing

Pillar 3: Strategy defines the difference between high-level strategy and operational tactics. As before, the content of this post comes directly from Bryan Pope’s An Introduction to The 7 Pillars of Successful Marketing. I still encourage you to buy the download and accompanying PDF, and to follow Bryan’s blog.

Devise Strategies That Support You Specific Goals

“Your marketing strategy is a high-level picture of both what you are going to
accomplish with your marketing and how you are going to do it. But again, it is high level.
Perhaps the best way to paint the picture of how marketing strategy works is to
liken it to military strategy. Just as the military has a strategy, campaigns to support that
strategy, and the tactical forces in place to carry out the campaigns, marketing, too, has
strategies, campaigns, and tactics, which I call methods and vehicles. We’ll discuss those
later on. So let’s take a look at some marketing strategies so you can get an idea of what a
proper marketing strategy might be.

Market entry strategy: One common strategy among retail store operators is to enter a new market area and low-ball prices until consumers have created new habits and traffic patterns that take them to that store on a regular basis. Once the store is established, the operators will inch up prices until they are back at a level similar to their local competitors.

Notice in that scenario we didn’t talk about when the store will open or where or how
we will get the word out to our audience letting them know about the great deals we have.
Those are all details handled by campaigns, methods, and vehicles.

Strategy is important because at times we may have multiple campaigns supporting a
given strategy, with a number of methods and vehicles supporting each campaign. If we
don’t have a targeted strategy from which we are working, it will become very easy to get
off track with any number of our marketing activities and fail to meet the goal we’ve set.
Although the following list isn’t exhaustive, these are key elements of devising
strategies that will keep our marketing efforts focused:

Set measurable goals: Without goals we don’t know where we’re even
wanting to go.
Establish timelines and milestones: For example, suppose I established a milestone and time of increasing revenues by at least 10% over a one-year period. In that scenario, the strategy established what I’m going to do in one year’s time. However, I would need to set a monthly milestones (For example, establish a 1% increase in monthly sales) to help me know if I’m on track.
Set a marketing budget: When we have meaningful goals set that include timelines and milestones so we can measure our success along the way, it becomes much more realistic to set meaningful budgets. If our budget is simply based on an arbitrary number, how do we know it will support our strategies?
The Path to Advocacy: This is a system that is compatible with any contact management software program (or even paper-based system) that will help you strategically advance people from being leads and contacts, to being qualified prospects, then clients. One of the best things about the Path to Advocacy is that it helps you create advocates out of your clients as well as those who are not, and may never be, your clients. It’s something you really should check into!”

Questions to Ask Yourself to Establish Your Market Strategy

What is (are) my specific and measurable goal(s) with respect to the profit center I’m
working on?
What is the timeframe for the accomplishment of this (these) goal(s)?
What milestones can I establish that will help me know if I’m on track?
What is my marketing budget to support this effort?
What is my product/service offering strategy?
What is my price strategy?
What is my placement/distribution strategy?
Do I have the Path to Advocacy model instituted in my business?

The strategy pillar is also where we address elements related to the strategic makeup
of our products or services, the placement of those products or services, and our pricing
models—all, of course, based on the market research we’ve already done. Do you see
how this approach to marketing builds on itself? Every piece of the puzzle has its place,
and it is only with all the pieces in place that we create a complete marketing picture.

Please read Thursday’s post about how to translate your strategy into marketing campaigns

Pillar 2: The Right Message

2011-11-22T09:53:00.000-08:00

This is the third in an 8-part examination of The 7 Pillars of Successful Marketing

I want to remind you that the content from today’s blog comes directly from Bryan Pope’s An Introduction to The 7 Pillars of Successful Marketing. Once again, I encourage you to buy the download and accompanying PDF. Listen to it multiple times and build your marketing plan using the 7 pillars to guide you. I also encourage you to check Bryan’s marketing blog.

Project a Message that will Drive Clients to Your Business

“Projecting the right message means more than just having a catchy slogan or a sharp
advertising campaign. It begins with a Unique Market Positioning Statement (UMPS)
that identifies clearly what your business is about. This statement acts as the foundation
for all your marketing messages, creating a cohesive image that adds impact to your
efforts delivered through various channels. If you have the right message, everything
from your advertisements and promotions, to the way you answer your phone, to the
experience people enjoy consistently when they are in the course of doing business with
you build on each other and build awareness in the minds of your clients and prospects.

Other elements of developing the right message include having a name and company
image that are consistent with what you are offering and don’t leave people wondering
who or what you might be. Too many people—especially small business owners—tend to
want to become clever with their name, graphical images (logos, business cards,
websites, etc.), and other identifying elements of their businesses. If a play on words or
other device works, no problem. But far too often these witty approaches require
explanation which takes away from their effectiveness. Remember the market research
pillar? It has many uses. Use it to make sure your company name, logo, and other image related
elements really say what you do!”

How to Develop The Right Message

“Your UMPS is built by answering the following questions and then stringing the
answers together into a brief paragraph. While your UMPS will never be used in its raw
form as a marketing message, it will provide a benchmark against which to check all your
marketing messages to see that you are consistently building a brand and appropriate
image for your company. The questions are:

Who are we? (Do people know us by our company name? A brand name?)
What do we do? (What solutions do we provide for our clients?)
Who are our clients? (Build a brief and pointed profile.)
What need/want do we fill? (If there’s no motivation, there’s no sale!)
Who are our competitors? (Who is vying for the same dollars we are?)
Why would someone do business with us? What sets us apart from others?

In addition, ask yourself these questions to enhance the right message (Hint: Use your marketing team to help you answer these questions!)

Is our company’s name and logo consistent with what we offer? Is it clear?
Is there a better name and/or image for our business?
Do our prospects and clients enjoy a consistent, positive experience when interacting with our company and its people? If not, how can we change to make this the case?

Above all, the right message is all about creating a consistent, positive experience for
your clients and potential clients. The activities and elements included in this effort are
numerous. Be aware of this issue and you’ll begin seeing many places in your business
where you are not projecting a consistent message—or even the right message.”

Join me again on Thursday to discover the power of the 3rd pillar marketing strategy

Pillar 1: Market Research

2011-11-19T09:49:00.000-08:00

This continues our 8-part series on Bryan Pope’s “The 7 Pillars of Successful Marketing”

The following comes from Bryan Waldon Pope’s An Introduction to the 7 Pillars of Successful Marketing. Once again, I suggest you purchase the download from Bryan’s web site and follow his blog.

Introduction to Pillar 1: Market Research

“Engaging in market research will begin with establishing a marketing team and
completing a SWOT analysis. Establishing your marketing team is essential to everything
else you do, and it isn’t difficult or costly. Your SWOT analysis (that’s Strengths,
Weaknesses, Opportunities, and Threats) will become an important planning tool in your
marketing.

Most small business owners think market research is too expensive or the results of
such efforts are useless to their business activities. There are simple and cost-effective
ways to determine why your clients do business with you, why your competitors’ clients
do business with them and how to win the long-term loyalty of more of those people in
both camps. Ongoing market research is a vital part of any serious marketing effort.

Under this pillar, we also complete primary and secondary market research. Primary
market research is research you do yourself, directly with your audience of clients or
potential clients. Secondary market research is research that has been conducted by
another party, then sought out by you. Examples of secondary market research include
information from the census, information provided by trade associations, and information
available from list companies. Primary market research can include surveys conducted by
your company, sampling events, and so on.”

Simple Way to Start

“A simple way to begin using market research as a tool for directing your marketing
efforts is to survey your existing clients. A simple survey conducted at the completion of
rendering a service or delivering a product can let you know if you are offering the
products/services that best meet your clients’ needs. Based on the feedback received, you
have the opportunity to adjust your offerings to better meet the needs and wants of your
clients.

You can also simply ask your clients why they do business with you. You may be
surprised at some of the answers you receive. Make sure you take them into consideration
as you develop your messaging, strategies, and campaigns. One other method I like as a
starting point for getting into the mode of being research-minded is to ask clients this
question: “If you were CEO of our company for one day and could make any change or
enhancement you wanted, what would it be?” This approach tends to open people’s
minds up a little more and really share what they are thinking and feeling.

Keep surveys brief and make the information gathered applicable to your specific
goals. The less questions asked and the less personal the information, the greater the
response. Strike a balance that allows you to discover those issues important to you while
leaving your client feeling comfortable. Remember, in-person or on-phone surveys are
considerably more effective than written surveys.”

Begin to Build Pillar 1: Market Research

Ask yourself these questions:

Do I currently have an operable, knowledgeable marketing team?
Have I recently completed a SWOT analysis for my company?
Do I actively conduct meaningful market research with both my existing clients and my prospective clients?

(If you answered “No” to any of the above questions get hold of Bryan’s audio programs on these specific topics and turn those No's into Yeses!)

What questions would I ask my existing clients?
What questions would I ask my potential clients?
Areas I feel I have covered well with regard to market research?
Areas I need to work on with regard to market research?

I hope you act upon this first pillar to enhance your marketing and increase your revenues.

Join my on Tuesday when we explore pillar 2 The Right Message

The 7 Pillars of Successful Marketing

2011-11-17T09:13:00.000-08:00

This begins a 8-part series on Bryan Waldon Pope’s The 7 Pillars of Successful Marketing
Bryan Waldon Pope is the architect for The 7 Pillars of Successful Marketing and the founder of The Abundance Group. I have known Bryan for almost a decade. I subscribe to his monthly download on marketing and team building. His concepts helped me improve my job and my business. His techniques helped me quadruple attendance at our events and maintain desired levels for 6 years.
An Introduction
The comments below all come from Bryan’s An Introduction to The 7 Pillars of Successful Marketing.
“The 7 Pillars of Successful MarketingTM is a system that has been developed over the
past two decades that works with literally any business, of any size, in any industry. And
the reason this is true is that it isn’t a pre-packaged marketing plan or any other such
thing. It’s a principle-based framework that gives you all the tools and direction you need
to develop marketing activities that perfectly fit your exacting needs while improving
your marketing impact and increasing your marketing return-on-investment. This is
exciting, timely, useful, very down-to-earth information that, when applied as directed,
will change your confidence level, action intensity, and success rate in all your marketing
endeavors.”
“Before we go any further, let’s get on the same page as to what marketing is. There
are many definitions of marketing floating around in the business world. Most people’s
view of marketing is based on their past experiences in marketing, so their views are
limited to those aspects of marketing with which they are familiar. I’ve found the more
encompassing one’s view of marketing, the more successful that individual’s marketing
efforts. Based on that belief, my definition of marketing is this:
Marketing is a composite of activities focused on:
• identifying the wants and needs of your clients and potential clients,
• modeling a solution to meet those wants and needs,
• attracting and converting your audience, and
• retaining your clients by filling their wants and needs again and again.”
The 7 Pillars of Successful Marketing

Market Research: Offer exactly what your market is looking for
The Right Message: Project a message that will drive clients to your business
Strategy: Devise strategies that support your specific goals
Campaigns: Develop & implement campaigns that turn your strategies into effective tactics
Methods & Vehicles: Wisely use marketing Methods & Vehicles that support your message and strategy
Sales: Increase your revenues using consistent sales systems
Client Retention: Create client allegiance and predictable repeat revenue patterns

There you have The 7 Pillars of Successful Marketing as designed by Bryan Waldon Pope.I plan to add detail to one pillar at a time for the next seven posts. You can develop your marketing plan if you complete the exercises for each pillar. In addition, you can buy the 7 Pillars from Bryan. I also suggest that you follow Bryan’s Blog.
I hope you sense the simplicity of this system that builds on itself to provide you with more revenues and less stress. As Bryan says “Here’s to your marketing success!”
Join me Saturday to learn more about the first pillar “Market Research”

Home, Suites, Facilities, or Offshore

2011-11-15T09:41:00.000-08:00

Every business owner must determine where to locate the business. In the past, industrial companies required large plants, heavy capital, and factories. Location, location, and location still proves the success of storefront companies in spite of today’s internet stores and shopping carts.

Today, however, business owners may select from a variety of location options. We’ll examine just a few in today’s post.

Base Your Business at Home

You may choose to run your business from your home for the first several years. Several types of businesses do not require a location for clients to visit or a facility to manufacture products. Basing your business at home reduces overhead, but may create other challenges. For example, young families may distract you from business tasks. Isolation also affects business owners who work alone at home. Creativity and synergy decrease from the lack of people in the facility.

Shared Suites/Business Incubators

Many communities now offer shared suites. The shared suites are owned and possibly managed by one company. Different business owners lease an office in the shared suite. Other business owners also lease offices in the suite. The management company provides shared clerical staff, equipment, conference or training rooms to each business owner. Some suites even let business owners lease the offices for just hours a week instead of full-time.

Manufacturing or Office Facilities

Many office and manufacturing companies look forward to moving into big beautiful facilities as soon as possible. Some jump prematurely into expensive facilities they don’t need, nor afford. I do not dispute that some businesses require stores, factories, or offices. If so, they should identify the best possible facility with the right location and the right price. However, if you absolutely do not require a big facility, wait until you need to invest in the big office or plant. Always use a good real estate agent or property management company to consult with you on major property decisions.

Offshoring or Outsourcing

Offshoring or outsourcing provides another option for business owners. Manufacturing companies may find low personnel costs in Asia or locations. Yet, sometimes tariffs, patent and copyright differences, and cultural challenges eliminate possible cost savings. Nevertheless, contracting with other companies to provide call center, customer support, manufacturing, production, and other services. You can find additional information about each type of company through their respective associations.

Other options for physical facilities exist for business owners. I suggest you consult with a facilities consultant from the Service Corps of Retired Executives (SCORE), Small Business Development Centers (SBDC), and real estate professionals. Explore well before you sign a contract.

Leadership Skills Develop Careers

2011-11-15T09:25:00.000-08:00

This begins a multi-part series examining how—& which—leadership skills develop your career

Exhibiting current and potential leadership provides an excellent path to career growth. You can exert leadership as both a formal and informal leader. Your leadership may be a positive or a negative influence on the work team or organization. You may yearn to lead. You may resist leadership with all your might. Whatever you choose, leadership will affect your career growth.

Over the next few weeks we will examine various traits of leadership. Our study will include reviewing concepts presented by Bill George, Jim Collins, Stephen Covey, Paul Thompson, Gene Dalton, and other experts on leadership. We will explore the differences between leadership and management that will help you comprehend the differences between Chief Executive Officers (CEOs) and Chief Operating Officers (COOs).

In addition, we will delve into the roles of leadership including establishing the vision for the organization, adopting and adapting the corporate culture, formulating and implementing strategy, evaluating and improving performance. Once again, we will refer to prominent studies and publications for you to study to better understand these roles.

Finally, we will discuss the models and tools leaders use to enhance and improve the organizations and teams they lead. Tools will include:

Bill George’s True North or Model for Authentic Leadership
Clawson’s Level Three Leadership
Six Steps to Effective Leadership
Agle’s Stakeholder Salience model
Kotter’s Model for Leading Change
Principle Centered Leadership
Jim Collins theories on Built to Last, Good to Great, and How the Great Have Fallen
RACI, SWOT, and Structure Analysis
McKenzie’s Seven S Model
Porter’s Five Forces
Principle Based Negotiation

These concept will enhance your career, earn the biggest raises, and obtain the best promotions. I recognize that they will not apply to all of you at this time. They may in the future. For some of you they may help you understand management better, while you never pursue a career in management or leadership.

In the meantime, I hope you all enjoy our exploration of management and leadership.

Business Owners Must Act

2011-11-12T11:22:00.001-08:00

I have known many business owners who repeatedly tell me they want to improve their businesses. They complain of stagnant sales, reducing revenues, and plummeting profits. Yet they do not act to change their business situation.

Today I would like to share 3 behaviors that perpetuate problems to productivity. I offer them for your consideration. I recognize they do not represent all the possibilities that may limit business growth. They may not illustrate the barriers to your business growth. Or maybe they do. They may stimulate thinking that will help you recognize an obstacle not listed here, but which prevents your business improvement. They may miss the mark entirely. I hope they help.

1. Do the Same Things, But Expect Different Results

I know one business owner whose marketing plans consist of 2 major actions: direct mailers and changing his web site. He sends direct mailers by the thousands to potential clients. He subscribed to include a mailer in the packets most of us receive through the mail. They did not generate the sales increase he desired. He changes the design and programming of his web site every two years. His web site delivers a very small number of clients. For years, neither of these efforts have generated the sales he wants. Yet, he persists in both of these ineffective method of sales for his industry. He does the same thing each month and expects different results.

2. Half-hearted Attempts to New Methods

One small-business owner attended a workshop at the Small Business Development Center. He heard an innovative way to reduce overhead. The six-part approach intrigued him, yet seemed too complicated. He failed to comprehend how all six steps fit together. He selected two of the steps and rejected the other four of this integrated approach. His actions failed to deliver the reduced overhead he desired. Blaming the entire idea, he discontinued the two steps. He never considered what might have happened if he implemented all six steps rather than rejecting four.

3. Always Learning, Never Doing

I belong to a small-business alliance to help one another improve their businesses. Three or four owners who suffer from this obstacle attended the group. Every month they excitedly listened to a new idea. They asked several questions to understand it more clearly. They committed to the other owners in attendance to implement the ideas that month. They consistently reported at the next meeting that they had not done anything they committed to do. Some of them complained that the alliance failed to help them and withdrew. Others continue to attend, listen, and do nothing.

In Conclusion

I hope none of these three potential barriers apply to you. If they do, however, you can change. You can improve. I doubt that every idea you explore will succeed. I know, however, that if you

Discard some ideas that already don’t deliver adequately to try new ones proven to work
Implement good ideas completely and test, test, test them for dependable delivery
Act on good ideas

you can improve your business. The last few posts described programs to help you grow your business. How many of them did you try? Remember, business owners must act to improve.

What experience have had or observed in others with these obstacles? Please comment!

Business Consulting Firms

2011-11-10T09:04:00.001-08:00

This post outlines another source of programs to help you grow your business

So far in this series, I described free to low cost non-profit programs to improve your business. Today we will briefly describe business consulting firms. Business consulting firms offer specific advice and services for fees designed to maintain a profit for the consulting firm. Therefore, their services typically cost significantly more than non-profit services. Many startup and small-business owners cannot afford to pay consulting fees.

However, you may see a good return on investment for consulting as your business revenues and profits increase. For the purpose of this post we do not consider professionals such as Certified Public Accountants or Attorneys as consultants. Every small-business owner should seek the advice of these professionals in the start-up and ongoing growth of the business.

The following tips may help you select the right consulting firm for you.

Analyze why you may need a consultant. While many consultants help business owners analyze problems or obstructions to business growth. You can save high costs by analyzing your own needs first. I don’t mean that you rely on your own understanding for deep analysis. I refer to identifying whether your need help with web marketing, sales, financing. In other words, you identify the general type of problems that requires consultation.
Find the right consulting firm for your business. Most consulting firms specialize in certain aspects of business: market research, business analysis, marketing, production, manufacturing, financing, human resources, payroll, and more. Few try to resolve every problem a business may face.
Research several consulting firms before signing a contract. Explore their reputations for competence and success by talking to your local Small Business Development Center (SBDC), Small Business Administration (SBA), Service Corps of Retired Executives (SCORE), Chamber of Commerce, and other business owners.
Clearly clarify and outline in a written document the services provided and expected results attained of the consulting. Your SBDC usually maintains a library of sample contracts and legal forms for you to review. Talk to other business owners who paid consultants about the contracts they signed.

You may also want to check out these other sources of tips on hiring a consultant: Documents Club Express, Psymesconsulting, Bay View Hunters Point, Social Media Today, and others.

Centers for Entrepreneurship

2011-11-08T09:47:00.000-08:00

This continues our series on community programs designed to help you grow your business

Many community colleges and universities now offer centers for entrepreneurship. Many of the centers open their services to students and non-students. Some even extend their services through distance learning or computer-based venues allowing business owners who live too far away to attend classrooms. Some of the programs receive national rankings from the Princeton Review.

Services Offered by Centers for Entrepreneurship

Typically, entrepreneurship centers offer the following services:

Courses, workshops, seminars, and conferences
Access to grants, angel investors, microfinance and other funding programs
Incubators, JumpStart programs,
Forums, panel discussions, and lecture series
Blogs, articles, libraries, and training tools

You can find the nearest center for entrepreneurship by calling a college or university close to home. You can also Google “Center for Entrepreneurship”. Several variations on the phrase will appear. Adding your city or state to the search phrase will help you narrow your search.

Thursday we will finish our series on programs to help you grow your business

Chambers of Commerce Help

2011-11-05T08:37:00.000-07:00

This continues my series on programs that can help your business grow

Most people recognize the Chamber of Commerce. Each community sponsors a chamber to develop businesses and enhance the community. Chambers lobby Congress, local legislatures, and city councils on behalf of business. Many times they promote large infrastructure issues such as road construction, redevelopment districts, tax changes, and jobs bills.

People in large cities perceive that the chamber focuses almost exclusively on helping global or large corporations. Sometimes members feel their chamber lost sight of main street problems. Frequently, small-business owners feel neglected in the larger chambers.

Chamber Services to Small-Business Owners

The US Chamber of Commerce sponsors Small Business Nation. Their web site defines the mission of Small Business Nation. The site still rings with rhetoric and action on lobbying. For example, ignore the community and take action sections unless you want to get involved in the political process.

I suggest you focus on the training for small- and mid-business owners offered through the toolkits section. At first you can see much of the toolkit information, however, after several views it begins to require a membership username and password. Individual membership costs $125 per year. The toolkit offers articles and tips on the following topics:

Employer explores legal issues related to owning a business like complying with healthcare, paying your employees, benefits for employees, rules and guidelines for your employees, how to get the best from your employees, disciplinary action, firing and termination.
Finances provides information about bookkeeping to managing your credit, growing your personal wealth, and 10+ ready-to-use documents and forms. I liked the forms because you can use them repeatedly.
Government Contracting offers tips on what you need to know to contract with the government, 10 steps to successful bids, what happens in the bid evaluation and award phase, multiple sources that can help you in the bidding process, and the concept of sub-contracting on government bids.
Insurance explains why you need insurance, different types of insurance, how to provide insurance and healthcare to your employees, and insuring you and your office.
Online Solutions describes the essentials of online marketing including your website, email marketing, social media, and online advertising.
Printing and Shipping outlines shipping and printing services (you can’t miss the plug for FedEx), document services, shipping solutions, frequently asked questions, signs, graphics, and photo services.
Purchasing and Inventory begins with a plug for Sam’s Club, but provides information about investing in purchasing and the purchasing process; and articles about inventory control, control systems, security, and quality.
Sales and marketing gave access to information on 5 questions that every business should answer, analyzing the market environment, market research, developing and refining you product, packaging and pricing, promotion, advertising, public relations, and total quality management.
Start Up highlights what to do before you get started, creating your business plan, and financing your business 101.

You can find all of these resources at the national web site for the US Chamber of Commerce. Each local chamber also offers leads groups to network with other business owners, ribbon cuttings for new businesses, Chamber Universities, workshops, lectures, and other benefits.

I also found a web site called ChamberofCommerce.com. I don’t think it is affiliated with the main chamber.The logo, URL, and feel of the web site differ drastically from the US Chamber of Commerce site. However, it accesses local chambers. It also offers Chamber University that includes free videos and articles to help business owners grow their business. Beware, though, that they monetize the site with lots of ads and paid endorsements.

I suggest you find your local Chamber of Commerce and explore what they offer. Join only if you find their focus will give your business a good return on investment.

Economic Development Departments

2011-11-03T09:54:00.000-07:00

This continues my series on programs to help you grow your business

Economic Development Departments work with businesses within their community to grow their businesses. They also work with businesses outside the city or state to lure them to locate in the city.

Almost all of the 50 states and some of the U.S. Territories provide economic development services. Most larger, and many smaller cities, maintain an economic development department or director. The economic development effort for most small cities consists of a possible part-time employee. Other small communities contract with an economic development corporation.

Economic development departments can provide revitalization areas, TradeZones, tax breaks, lower business license fees, and other incentives to entice businesses to their communities or help their local companies grow. They typically reserve their programs for companies that will add a significant number of jobs or money to their community—larger companies.

Start-up or small-business owners should still contact their local economic development director to explore the services they may qualify to receive. You may find the directors by contacting your city management or administration. You may also Google the name of your city and “economic development”.

Join my blog on Saturday to learn more about how Chambers of Commerce help small-businesses

Small Business Administration

2011-11-01T09:42:00.000-07:00

This continues my series on programs designed to help you grow your business

The government sponsors the Small Business Administration (SBA) to stimulate the economy through small-business growth.

Most small-business owners recognize the Small Business Administration for guaranteeing business loans. True, the ensure that businesses that lack the collateral to obtain their own loans can find credit. However, if that is all that you take advantage of, you missed a great deal more.

Services Offered by the Small Business Administration

The SBA offers various services through its web site and other services through local offices around the country:

Articles and helps: The SBA web site provides hundreds of articles under the Starting & Managing a Business tab on their site. Articles are divided under the headings of “Starting a Business” and “Managing a Business”. Each topic contains multiple articles and branches from main articles. In addition, the site provides an assessment tool to see if you are ready to start a business.
- Starting a Business topics include writing a business plan, business law & regulations, preparing your financing, local resources, and licenses & resources.
- Managing a Business topics include leading your company, exporting & importing, getting out, and forms.
Loans & Grants: The main section on loans and grants divides into sections on Small Business Loans, Grants, Bonds, Other Financial Assistance and Find Loans & Grants. These section sub-divide into information about SBA’s role, Disaster loans, The application process, facts about government grants, research grants for small businesses, surety bonds, venture capital, and more topics.
Contracting: This main heading opens an abundance of information about how to get started as a government contractor, working with the government as a contractor, opportunities for federal contracts. It also includes information for contracting officials such as size standards, HUBZones, Non-Manufacturing waivers and more. Small business owners may use this section to contract with the government to provide goods and services including office supplies, park supplies, equipment, property, and training.
Counseling & Training: The SBA provides wonderful online courses and local counseling and training.
- Online small business training topics include starting a business, managing a business, financing a business, contracting, and other featured training. Online training provides streaming video, tools, forms, and more.
- Local counseling & training assistance includes finding a local SBA office, Small Business Development Centers (SBDC), SCORE, Women’s Business Centers, Veterans Business Outreach Centers, U.S. Export Assistance Centers, and Procurement Technical Assistance Centers (PTACs). You may receive counseling, mentoring, and teaching from each of these programs through your local SBA office.
SBA Direct: Leads you to a page with the addresses for your local SBA and related offices. It also contains answers to frequently asked questions.

I hope this gives you a better idea about services you can receive from the Small Business Administration. One more thing, your taxes already pay for most of the services. Shouldn’t you take advantage of the services you already pay for?

Join me Thursday when we explore community economic development councils on your growth

Small Business Development Centers

2011-10-28T23:13:00.000-07:00

This continues our series about programs designed to help you grow your business

When the Small Business Administration found too many of their guaranteed loans failing, they recognized business training for their clients would decrease the number of business failures. So, they partnered with educational facilities in all 50 states to create Small Business Development Centers (SBDCs).

Any small business owner, or potential small business owner, qualifies for services from an SBDC. Small Business Development Centers provide their services free of charge, though they may charge a small fee for workshops or seminars. You can find an SBDC in all 50 states Puerto Rico, and all U.S. territories using the locator on the SBDC association's web site.

Services You Can Receive at a Small Business Development Center

Each SBDC advertises their services on their web site or through other means. Use the locator to find the SBDC nearest to you to find the exact times, dates, and availability of services. SBDC’s provide

Coaching and Counseling in several areas of assistance: capital acquisition, loan package preparation, market research and plans, business operations, accounting, contingency planning, and much more.
Entrepreneur training through live classes, online classes, and web based training. They offer full college courses such as StartSmart, CreditSmart, and others. They also sponsor single attendance workshops on finding funding, marketing, business foundations, and other topics. Some of the training requires no charge, others require small fees.
Mentor/Mentee programs connect successful business owners willing to nurture growing business owners.
Information & Publications remain available to any person. Many SBDCs maintain a library of legal forms, research materials, books, export guides, tools for feasibility analysis, and business plan forms.
Government Procurement counseling and access to government contracts.
Women’s and Minority Business Centers offer collaboration, training, counseling, and training to people who meet the requirements.

I hope that you can connect with the Small Business Development Center nearest you. I remain convinced that you can find the help you need to grow your business.

Join us on Tuesday to learn more about the Small Business Administration.

Share your experience with a Small Business Development Center?

Service Corps of Retired Executives

2011-10-27T09:24:00.000-07:00

This begins a series of blogs on programs designed to help you grow your business

I refer to the Service Corps of Retired Executives (SCORE) many times in my blog on business. I personally benefit from their service. I know hundreds of businesses who also received excellent service from SCORE.

SCORE was formed by the federal government 40 years ago. It partners with the Small Business Administration (SBA) to help small business owners improve their business. They provide

Mentoring: You can arrange for two versions of mentoring:
- You can meet face-to-face with mentors in your community. The SCORE web site provides an easy link to set an appointment with a SCORE counselor. Counselors, either retired or currently working, meet with you multiple times to mentor you on an area of their expertise. You may request different mentors depending on the needs of your business.
- You may also arrange for email mentoring through the SCORE web site. The web site lets you choose the mentoring skills you need, or the industry experience that will help you the most.
Workshops: Once again workshops come in two versions You can find live local workshops by typing in your zip code. You may also attend online workshops offered through the same link.
Blogs: SCORE recently began hosting an exceptional blog on small business success. They use multiple bloggers with different expertise. I suggest you follow them.

All of SCORES services are free. Please take advantage of them.

I’ll share the benefits of Small Business Development Centers on Saturday. Join us then.

Other Sources to Fund Your Business

2011-10-24T23:02:00.001-07:00

This concludes my series on financing your business

We already discussed how you can use angel investors, venture capital firms, and loans to finance your business. This short blog will outline a few other sources to fund your business.

Personal Savings provide the safest, and most difficult way to fund your business. Business News discusses pros and cons from using savings. Unfortunately, inflation prohibits the money saved from growing faster the cost of money during the time saved. WAHM.com shares some good advice suggesting several advantages of using savings including using the funds as needed rather than in a lump sum. Using savings also entice bankers to lend money. WAHM also shares four things to remember.
Family and friends provide most funding for startups. Tim Berry shares his insights on using family funds. He cautions family members from investing money they cannot afford to lose. He also cautions business owners to never spend money that was promised, but has not been delivered. Dunn and Bradstreet discusses that when taking money from family or friends you must decide whether the money is a loan (finished upon payment) or equity investment (the family member retains an ownership, the money is not returned, and the investor receives cash from the profits.)
Credit cards also provide funds to many startups. This relatively new source became fashionable in the last 50 years. Credit cards remain easy to acquire even during the latest credit crunch. Credit cards continue to award high credit limits to most people. Dunn & Bradstreet offers several cautions about using credit cards including hidden costs, high interest, and difficulty in paying off the cards.
Funding with Your 401K appears to be gaining popularity in spite of the high risks. The Wall Street Journal recently cited several concerns about using your 401K including losing your nest egg for retirement and having to pay the high penalties associated to early withdrawal. I especially appreciated Inc. magazine’s article in 2010 outlining both the process and risks of using your 401K.
Financing with Home Equity, long a stalwart of business funding, became more precarious as home prices plummeted during the last few years. The SBA provides an excellent article. Too many people owe more on their home than the value of the home. Therefor, you could not get any home equity for your business.

This blog cannot cover all the sources of funding for your business. I have tried to share the most significant sources. I hope you found it helpful.

Please share the sources you have used, or share some that I missed.

Join me Thursday when I ex[;pre services from the Service Corps of Retired Executives SCORE

Financing through Business Loans

2011-10-21T23:49:00.001-07:00

We return to our series on financing your business with a discussion on loans

Banks, credit unions, and a few other financial institutions loan funds to businesses. While news organizations report credit declines, many smaller institutions, regional banks, and credit unions still have money to lend.

Business Loan Types

Collateral loans require something equal value for the loan. Inc. Magazine published 5 Tips for Using Collateral to Secure a Business Loan. The company forfeits the collateral if the business defaults on the loan. The collateral may be physical assets, cash in hand, property, equipment, and guaranteed contracts. The collateral must equal the value of the loan.

Guaranteed loans do not require collateral. Typically someone else guarantees the loan. In these situations, an organization negotiates for the loan money and guarantees that the loan will be repaid if the business defaults. The Small Business Administration remains the most common guarantor. Most states also provide organizations that guarantee business loans under $10,000 or more than $10,000. The US Treasury Department also offers the Small Business Lending Program and State Small Business Credit Initiative. Agricultural businesses qualify for special loans.

Process for Applying for Business Loans

Competition for the funding remains fierce. Potential borrowers must present impressive reasons to loan them the money. They must also provide financial statements, background, and business plans. The SBA provides a nice checklist you may wish to review. Resource Nation also provides good information about the loan process. You can receive expert counseling, at no charge, from the Service Corps of Retired Executives (SCORE) on applying for loans. Call the chapter nearest you to arrange for coaching from SCORE.

While I recognize the simplicity of my blog. I try to link you to others sources of details that I lack. I hope that you find it helpful. Please let me know.

Join me on Tuesday when we review other sources of financing your business

Growing Your Business!: A Must Read

2011-10-20T22:32:00.001-07:00

I interrupt our series on financing for this special suggestion

Some friends recently suggested I read Growing Your Business! What You Need to Know What You Need to Do by Mark LeBlanc, CSP, CPAE. The author was coming to my home town to speak to the Mountain West chapter of the National Speakers’ Association.

I bought a copy of this small (4”x5”, 77 pages) book for $8.00. I read it through the first time in about two hours. My second reading of the book took longer because I stopped and did every exercise he suggested. He calls the exercises From the Idea File. They impressed me. I completed the exercises directly into my business plan. They improved my business plan.

I gave my copy to a friend who wants to grow his business. I bought a second copy and gave it to another friend. I bought 4 more copies. I gave one to my son who wants to start a business. I gave 3 to colleagues who are starting a business. I’m keeping the fourth for myself to reference to grow my own business.

I hope you sense from my comments how much I regard this book. Mark LeBlanc boils the essence of business development into simple, concise activities. He asks questions that stimulate thinking and a number of “aha” moments. I hesitate to share his concepts for three reasons.

I want you to read the book for yourself
I would not know where to start or end without giving away the whole book
I respect Mark LeBlanc’s work and don’t want to plagiarize it

Instead, I encourage you to buy Growing Your Business!, read it, and complete the suggestions from the idea file. Your business will benefit from it. You will benefit from it. Your business will grow.

I will return to my series on financing your business in Saturday’s post.

Please share your impressions of the book in the comments section below

Venture Capitalists Beware?

2011-10-17T23:14:00.000-07:00

This continues our series on funding or financing your business

The term venture capitalist (or VC) refers to people who provide capital (money) to business ventures. Whereas, angel investors invest without wanting to assume a strong ownership or day-to-day operational responsibility, venture capitalists will quickly step in to correct a struggling business.

Differing Perceptions of Venture Capital Investors
Many people possess bad ideas about venture capitalists. Most heard stories of VCs forcing founding business owners out of office. People hear that VC's look for businesses they can take over. Many know stories of venture capitalists that changed the direction of the business, expanded for global markets, or spending money the business owner never envisioned budgeting.

A closer reality exists. Venture capital investors look for businesses they perceive can give a good return on their investment. In other words, they put their money into companies that will give them back a lot, and I mean a lot, more money than they invested. They do whatever they need to do to get the business showing significant profits. Sometimes, that means changing management that will not, or cannot, make the changes needed.

In addition, venture capital firms focus on firms that can generate a large return. Therefore, they look for businesses looking for $1+ million investments, rather than smaller investments.

How to Find a Venture Capital Investor
The good news: you can find venture capital investors easier than you can find an angel investor. Like many small business resources, you can start with the Small Business Administration (SBA), your local Small Business Development Center (SBDC) and SCORE. The SBA also offers their New Markets Venture Capital Companies. The SBA also maintains a list of Small Business Investment Companies (SBIC). You can also use business magazines like Entrepreneur or Inc. They frequently publish articles analyzing venture firms. Your local economic development agencies also provide information about Venture Capital firms. In addition, even Wikipedia lists major capital firms.

I suggest that you talk to former clients of any venture capital firm to explore their experiences both bad and good. Also, talk to the SBA, SBDC, and SCORE to identify any concerns.

The Venture Capital Process
The Small Business Administration summarizes the venture capital process into the following steps (follow the link to read the details):

Submit Business Plan: the venture fund reviews an entrepreneur’s business plan and talks to the business if it meets the fund’s investment criteria.
Due Diligence: If the venture fund is interested in the prospective investment, it performs due diligence on the small business
Investment: If at the completion of due diligence the venture fund remains interested, an investment is made in the company in exchange for some of its equity and/or debt.
Execution with VC Support: Once a venture fund has invested, it becomes actively involved in the company.
Exit: While venture funds have longer investment horizons than traditional financing sources, they clearly expect to “exit” the company.

Read Saturday’s posting about bank loans guaranteed by SBA or other loans.

Have you had an experience with a venture capitalist? Please share!

Angels with Checkbooks? Perhaps

2011-10-15T10:24:00.000-07:00

Note: Larry on Business now offers shorter blogs (easier to read) more frequently (Tuesdays, Thursdays, & Saturdays).
Today we continue our exploration of funding sources for your business. Please share your experiences.
Definition of a typical angel investor: (1) a successful entrepreneur, (2) that sold their business, (3) with money to invest, that (4) does not want day-to-day operational responsibilities.
Angel investors provide funding to ventures they feel will succeed and give them a high return on their initial investment. Unlike Venture Capital groups angels usually do not want to own or operate the company. They may serve as advisors using their own entrepreneurial experience to guide business owners. You can learn more about angel investors through a series of articles in Inc. Magazine, through Gust, and angel networks.
How to Find Angel Investors

Angel investors tend to network together. Google “angel investment network”. You will find geographic networks “newenglandinvestmentnetwork.com”, special groups “minorityangelinvestornetwork.com”, or industry “Startup Nation’s Food Section”
Talk to your local Small Business Development Center (SBDC), SCORE, Chamber of Commerce, or Center for Entrepreneurship at your local college or university
Google “angel investors in (your state)”

Convincing Angels to Invest in You
Typically, you will present your business idea to a group of investors (remember they like to network). Watch the television program Shark Tank to see real presentations (though they like to be slightly more contentious for the ratings). Most angel groups schedule a certain day each month, quarter, or year (depending on the size) to review presentations. You submit a written proposal for them to review prior to the meeting. You will be given 5-10 minutes to make your pitch. They will interrupt you with questions as they occur to them.
The Tri-State Private Investors Network provides 10 Tips to Appeal to Angel Investors. In addition, you can also find great tips on YouTube for presenting to angels. Carolyn Brown quotes Mike Levinson as he outlines four questions you must answer in How to Pitch to Angel Investors:

Is the business idea simple enough for me to understand and buy into?
Does it solve a problem or meet a need?
Is it a big enough market and customer base for the idea?
Does the entrepreneur have the right people on the team to pull it off.

You can get the angel’s money if you answer those questions better than the other entrepreneurs. Good luck. I hope you get what you want.
Join me Thursday when I review the pros and cons of Venture Capital investors.

Finding Funding & Financing

2011-10-13T21:55:00.001-07:00

Please share funding sources that helped your business
Finding funding remains one of the prime needs for many business owners. News reports over the last few years describe the problems American business owners face obtaining credit or funding. A lot of credit disappeared when CIT Group a commercial lender entered bankruptcy. CIT customers included “a wide swath of the nation’s small and midsize businesses who rely on the company or financing”.
The Small Business Administration provides loans to small-business owners. They offer a variety of programs depending on the needs and qualifications of the business. The SBA does not loan the money themselves. They guarantees loans on behalf of qualifying small-business owners. They require a lot of paperwork.
Business lending continues even though less money and credit remains available to business owners. Interestingly, small or regional banks and credit unions appear to possess money to lend. Check your local or regional banks. However, upcoming problems in the commercial real estate loans may create a new tsunami of problems for regional banks.
Angel Investors usually consist of former entrepreneurs who made a lot of money and now want to invest in other startups or small businesses. Unlike Venture Capital investors, Angel Investors seldom want to own or manage the business. They seek a turnover and high return on investment. You can find angel partners by using Gust.com.
Scalable businesses currently receive 98% of the funding currently awarded to business startups and small-businesses because they offer extremely fast growth and return on investment. I discussed that in an earlier post called Can Your Business Idea Succeed. You can also discover more about funding by reading Steve Blank, author of The Four Steps to the Epiphany, offers amazing tools, books, and other resources to startups.
Our next blog will explore angel investors more deeply.
Help others by sharing funding sources that helped your business

Steve Jobs: We Will Miss You

2011-10-08T22:54:00.001-07:00

Steve Jobs passed away this week. The story circulated worldwide through mediums he helped inspire. Thousands of messages flooded the Internet, news, Twitter, and Facebook. His vision impacted so much of what we use today: mobile phones, movies, music, personal computers (though he would not like me using that term), laptops, tablets, and software development.
He inspired computer users to a fanaticism Bill Gates only dreamed of. To this day, my father reacts to some saying “Would you please close the window?” with “Bill Gates stole that concept from Apple.” Apple users stayed loyal.
For three decades he, with Bill Gates, defined an economic revolution the equivalent of the industrial revolution of the century before they were born. They may not have invented the Internet, Al Gore did. They didn’t invent social media. They created the engines that social media utilized.
Finally, the legend of Steve Jobs and Steve Wozniak creating Apple in a garage inspired a generation of business start-ups.
My eloquence does not match the millions of people who reported the life and death of Steve Jobs. I merely join with them in saying “Steve Jobs: We will miss you.”

Accountants: Worth Their Cost

2011-09-30T11:31:00.001-07:00

Please share your experiences (good or bad) of working with accounts

I know a lot of small-business owners—especially start-ups—that try to do all their taxes and accounting themselves. The cost intimidates them. They don’t consider their business complicated enough to require an accountant. They share lots of reasons. I found the money I spent on a professional once a year saved me 3-4 times what I paid them.

David’s Story

David ran an IT consulting business from his home. He combined project work with consulting for 10-13 mid-sized businesses to provide a comfortable living for his family. He still operated as a sole proprietorship. He used one of the on-line tax systems to prepare his taxes.

One year, one of his clients created a glitch in the payment for a 4 month project. David decided the complication warranted going to a CPA. Not only did the CPA easily resolve what David considered a significant problem. She also asked questions his cousin never asked. The size of the tax savings surprised David. He saved more than 4 times the money he spent on the accountant. The accountant also highlighted liabilities that a sole proprietorship offered that an LLC could prevent.

David followed the advice and went to an attorney to change the legal structure of his business. He also told his cousin that he no longer required his services. David continues to work with his accountant once a year. He remains grateful for the money she saves him.

Why and How to Select an Accountant

Certified Public Accounting (CPA) professionals provide a number of benefits to business owners. I share these courtesy of David Mills Certified Public Accountant:

Recommending income tax planning strategies
Preparing tax returns
Reviewing a company’s accounting system and recommending improvements
Consulting on business problems and advising ways to improve the use of resources
Assisting in the design and installation of data processing & IT systems
Conducting special studies (financing, inventories, cost accounting, credit, & collection) for your business
Helping you apply for loans and credit by gathering and preparing information required by lenders
Working with clients, attorneys, and bankers on mergers, acquisitions, and expansions

Advising individuals on personal finance planning, including retirement & estate planning

Several sources can help you find a CPA. You can find the accountancy board that regulates CPA’s in your state. I like the article the Ohio State Accountancy Board shares with residents. They encourage people to

Verify the license status with the accountancy board
Verify that the accountant maintains continuing education requirements
Interview your prospects. Ask them “What kind of accounting work do you typically perform?”. Compare their answers with your needs.
Ask for office hours and how long they are open (many only open during tax season)
Explore if they participate in peer review, and the date and results of their last one
Use an engagement letter to detail the work to be performed for, who will perform the services, the cost of service, and the duties and responsibilities of the CPA. The Ohio board states “The Board receives many complaints from consumers against CPAs that allege the CPA performed services either of poor quality or incorrectly, and in the majority of these cases there was no engagement letter that clearly described the agreement between the consumer and the CPA. As a result, both the consumer and the CPA can offer only verbal recollections of the engagement's scope to the Board, and the Board is limited in its statutory ability to discipline CPAs for substandard work.”

Avoid Accountants that Can Get You In Trouble

I especially like the this advice: “It is now possible to purchase public accounting services on the Internet. While this appears to be a convenient way to access a broad range of services, it is important to "do your homework" before selecting a practitioner. Keep in mind that because Internet practice involves no face-to-face client contact, it may be easier for unqualified persons to masquerade as licensees. Also, remember a practitioner offering services on the Internet may be physically located anywhere in the world. To provide CPA services to consumers in Ohio, a practitioner should be licensed as a Certified Public Accountant or Public Accountant by the Accountancy Board of Ohio, or must be practicing in Ohio incident to the licensee's home-state practice under Section 4701.15 of the accountancy law. A licensee practicing in Ohio under a home-state license must be a currently licensed CPA in the other state. Check our list of Accountancy Boards in the USA for further information about other accountancy boards.”

You can find additional information at the American Institute of CPA’s. Do not let the perceived expense of a CPA discourage you from taking advantage of their expertise and protection. They will usually save you more money than you pay them. Accountants are worth your money.

Join us next week when we discuss finding funding and financing for your business

Please share your experiences (good or bad) of working with accounts

Virtual Assistants Save Time & Money

2011-09-23T14:20:00.001-07:00

Enrich the discussion. Share your stories about working for, or as, a virtual assistant

Frequently, business owners need to focus on delivering the product or service their 1-person company offers. The billing, correspondence, updating a web site interfere. Many plan on doing those tasks during their “free time”, or having a family member do them on the side. As the business grows, however, neither the family member, nor the free time prove adequate. The business usually cannot support hiring even a part-time assistant to help at this time.

Virtual assistants provide a wonderful and less expensive bridge allowing you to focus on the business, not the paperwork.

Robin’s Story

Robin started an interior design business 9 years ago. In the beginning, she could easily balance meeting with potential clients, designing the spaces, buying the materials, and all the paperwork to keep it running. As the business grew, she found herself spending more and more hours “after work” doing the paperwork. It wasn’t enough to hire someone, but enough to irritate.

Robin met Donna at a community business organization they both attended. Donna, a single mother, with 2 young children ran her own virtual assistant business. She wanted more clients to serve. Her BA qualified her to do accounting work and all other administrative tasks. It took a couple of months to commit, but Robin eventually contracted with Donna.

For three years Donna would stop by Robins place once a week. She would deliver hard copies of the items that Robin wanted: contracts, proposals, etc.. She emailed most items during the week to a special email only Robin saw, because Donna screened and answered 90% of Robins emails. She would file everything for Robin. She highlighted the items Robin needed to act on. She did all the other things that had to be done in the office. After, an hour or two Donna would pick up all the things she needed and took them home to work on them. The only administrative task Donna did not perform for Robin’s company; she did not answer Robin’s phone.

Robin’s business thrived now that she could focus on the service delivery. Donna kept her appraised, but did not interfere. Robin’s business grew. After 3 years she tried to hire Donna full-time, but Donna loved her life as a virtual assistant. So, Robin hired a full-time administrative assistant. Donna accepted a new client that another client referred to her.

Both benefited quite well from the new arrangement.

Benefits of a Virtual Assistant

Virtual assistants reduce the amount of time you need to spend on clerical, bookkeeping, and administrative tasks
They allow you to hire someone—as needed—without making a commitment for a specified number of hours
They work as you need them to work. You only pay for what you ask
You share the costs of a workstation, computer, or other office equipment and supplies with the other clients

Virtual assistants provide a variety of services. I copied the following from Donna’s web site Busy Bee Virtual Assistance:

“A partial list of what we offer:

Database maintenance
Invoicing and collections
Translation services
Creating Power Point presentations
Bookkeeping and bank statement reconciliation
Transcription (charge is by audio hour)
Proofreading services. Never send out another mailing with embarrassing misspellings again!
Website maintenance. We can keep your website up to date and your content fresh.
Newsletters and e-zine campaigns.
Grow your business
Keep in touch with your clients on a regular basis!
Correspondence handling. We can manage both your snail mail and email correspondence, respond to routine requests, and forward items to you that need your personal attention. You save time and money!
Creating and sending out bulk mailings.
Assisting with special projects and seasonal/periodic work overflows.”

How to Find Virtual Assistance

You can find virtual assistants many ways:

Google the words Virtual Assistants or Virtual Assistance: your response will show mostly virtual assistants working outside the United States for as low as $6.00 an hour. While this provides the lowest costs, you must balance the pros and cons with an off-shore assistant.
VANetworking.com impressed me. They bill themselves as “Social Networking for Virtual Assistants and their clients”.

They provide good informational information about what Virtual Assistants can do for your company.
They also offer an easy to use search engine to find a virtual assistant near you.
They provide training and tools if you want to start a Virtual Assistant Business

Entrepreneur magazine published an article in 2004 about the phenomenon. While some of the links at the bottom are dated, they still provide access to virtual assistants throughout the world. (The article is also informative for those interested in become a virtual assistant.

Join me next week when we explore the importance and value of an accounting firm

Enrich the discussion. Share your stories about working for, or as, a virtual assistant

Business Accounting Software

2011-09-16T16:59:00.001-07:00

Please share your experiences with Quickbooks in the comments section

Most people begin a business because they have a technical skill: drafting, graphic design, software development, or other. Typically they lack experience in the “support” functions of business: accounting, marketing, human resources, or information technology. As a result, many fail to process accounts receivables or payables, taxes, payroll, costs, profits or losses. They might monitor cash flow (watch the cash flow in and flow out again, taking what they need to support their family—barely), but cannot tell anyone where it flows.

Mabel’s Story

Mabel, a young single mother of two, ran a craft’s business out of her home. She handcrafted wood lawn ornaments, toll painted nick-knacks, and signs. She bought what she needed from her regular checking account, She deposited her sales into the same account. She paid both personal and business bills from that general account.

She created a set of file folders for her receipts, but rarely filed them. She intended to do so; but the children, meals, making the crafts, and other things distracted her. So, so she put a lot of the receipts into a bowl on the chest of drawers in her bedroom for later filing. Many of the receipts fell out of the bowl and down the back of the chest of drawers. She threw away most of the receipts. She also recorded most, but not all, of her sales in a little NCR receipt book she bought at an office supply store.

She filed her taxes as a sole proprietor with a schedule C with her 1099. She took all the receipts from the bowl, fished them out from behind the drawers, and added them together with the calculator on her computer (no paper). She also added all the receipts in her NCR book. Knowing that she had lost some receipts and did not record many, Mable estimated their value and subtracted some money for costs and added some money for sales. She estimated a lot more costs than sales. The tax process frustrated her immensely.

Then she got audited by the IRS. They did not accept her estimates and rejected most of her expenses, but accepted the sales recorded in receipt book. As a result, they estimated that she owed them at least $1,500 in additional taxes. The interest and penalty brought the number to more than $2,000.

Mabel could have avoided these charges and frustration by purchasing Quickbooks for less than $125 plus another $40 to learn how to use it.

Simple Accounting Tools Reduce Your Stress

Today’s small-business owner benefits from technology’s creation of Quickbooks and other simple accounting software packages. Quickbooks costs from $170-325 depending on the version you purchase. Many Small Business Development Centers (SBDC's) offer courses on how to use it from $0-50. Most people learn it easily. If you struggle, you can find a child, grandchild, or neighborhood teenager to run it for you. Home-based and small-businesses will require 2-10 hours a week to maintain all accounting functions using Quickbooks.

These small-business accounting programs typically perform the following functions and more to help you manage your business more effectively and efficiently:

Create and maintain a chart of accounts for revenues and expenses
Create and send invoices to your clients, and monitor them for payment or collection
Monitor bills you need to pay for prompt payment and to avoid interest or penalties
Calculate costs for products or services including fixed or variable profit margins
Prepare general ledger, and asset, account, and profit/loss statements
Interface with IRS & state forms to simplify sales, income, use, payroll, & other taxes
Remind of fees you need to pay to government, licensing, or other entities

You do not have to understand all the tax or generally accepted accounting principles (GAAP) to maintain accounting documents. Most of the work involves simple data entry into preset forms and printing statements and reports.

Once again the SBDC or mid-size accounting firms frequently offer training at very reasonable rates. Google Quickbooks training and the name of your community to see what they offer in your area.

Business owners feel better when their financial affairs process smoothly, when they understand their financial status, and submit appropriate tax forms accurately and punctually. Quickbooks or other accounting software reduces your stress. While business owners should still consult a good CPA, maintaining good accounting practices improves your profits by controlling expenses and allocating revenues more effectively.

Join us next we outline the advantages of delegating to a virtual assistant/bookkeeper.

Please share your comments or questions about accounting software

No Money Without Sales

2011-09-09T18:50:00.001-07:00

Your comments and experiences will enhance our conversation. Please share your sales stories (successes or failures).

I believe that a good marketing plan includes a sales section. I do not accept that marketing replaces sales. Too many business owners mistakenly count sales and marketing as a cost center. Business success requires that marketing (including sales) remain THE profit center. Your company generates no revenue without sales.

Brent’s Story

Brent owned his own photography business. His photography skills equaled or surpassed every professional photographer in the greater metropolitan community. Revenues and profits from his business failed to meet potential or expectations. He wanted more photo shoots each week.

Brent joined a marketing mastermind group. He subscribed to a marketing newsletter from a nationally recognized photographer whose expertise at marketing created a following. Brent hired a firm to improve his web site. He subscribed to a cross-promotion coupon program with a local car dealership. Every month Brent created a new mailing flier to send to current and potential clients. He increased revenues minimally.

In addition, Brent did not capture information about clients that could be used to generate future sales. He did not send emails or make phone calls in time to photograph clients before birthdays, anniversaries, graduations, births or other events conducive to family portraits.

Active versus Passive Sales Approaches

Brent represents thousands of business owners who confuse marketing with sales efforts. They believe the current philosophy that passive sales approaches succeed:

Sales will naturally follow if they get their message in front of people through the Internet, mailings, advertising, publicity, and whatever method they contemplate
Millions of clients will flow, with credit cards in hand, to a great web site
Search engine optimization (seo) automatically translates into sales and revenues
Automatic telephone messages will simulate people to press the button to buy

I do not contend that passive sales fail in every case. I propose that they succeed in a very low percentage of cases. They generate large sales because they contact 1,000s to 1,000,000s. A low percentage of millions of contacts can overshadow a high percentage of scores of contacts.

Too many business owners think that minimal marketing efforts on their part will entice clients to act. The term “passive sales” refers to situations in which the business waits for the client to act. The term “active sales” refers to situations in which the business acts to help the client agree. Active sales requires that a person become involved with the client.

You must improve either the product/service of your company or your sales strategy if you want to increase revenues. Examine your sales and marketing time. What percent of the time do you spend preparing marketing materials? What percent do you spend talking to past or potential clients? What percent of your time involves overcoming resistance and closing the sale.

Establish Your Point of Profit

I like Enoch Chapman’s term “point of profit”. Your point of profit indicates the action that creates the sale. You must create your point of profit in theory as part of your marketing plan. Your point of profit may be the checkout of a shopping cart on a web site or bricks and mortar in a store. You may designate a form or contract signed by a representative of your company and the client as your point of profit. Your point of profit may be a screen completed by a call center employee.

The purpose of all marketing must lead the client to taking action at your point of profit. Your call to action needs to clearly ask them to act how you want them to act. Many business owners lose sales because of vague calls to action. This applies to Internet sales, phone center sales, retail sales, and sales representatives. Confusing directions may lead your client to someone else. Chip and Dan Heath, the authors of Switch: How to Change Things When Change is Hard encourage companies to remove every barrier to make the path easy to see.

Sales Experts Will Help

The world abounds with experts that teach sales techniques. You may wish to consider the following programs: little Red Book of Selling, The Sales Bible: The Ultimate Sales Resource, and Customer Satisfaction is Worthless, Customer Loyalty is Priceless by Jeffery Gitomer, The Ultimate Sales Machine by Chet Holmes. The the web site All Things Guerrilla by Jay Conrad Levinson, Spin Selling by Neil Rackham, Advanced Selling Techniques by Brian Tracy.

I suggest that you continue your exploration of increasing your sales by studying these programs. Reexamine what percentage of your marketing time prepares materials and makes sales. Remember that you make no money without sales.

Join us next week when we begin our discussion of the financial section with Quickbooks

Your comments and experiences will enhance our conversation. Please share your sales stories (successes or failures).

The 7 Pillars of Successful Marketing

2011-09-02T13:50:00.001-07:00

Your thoughts and experiences will improve our conversation. Please share your comments.

I like Bryan Walden Pope’s The 7 Pillars of Successful Marketing best of all the marketing programs I’ve read. I qualify that remark by saying that the 7 Pillars

Work well with mid-size companies, but best with small- or home-based businesses
Structure the marketing efforts of novices &owners lacking marketing backgrounds
Simplify the complex concepts of marketing into easy to follow steps
Provide million dollar marketing on a shoestring
Apply well to all kinds of businesses: storefronts, internet based, home & more

You should understand, before we begin, that each pillar provides a foundation for the following pillar and sets the stage for the next. So, you want to follow them in order. Also, Bryan never refers to our clients as customers. He appreciates the principles of care, nurture, and protection implied in the term “client”.

So, let’s explore an overview of The 7 Pillars of Successful Marketing

Pillar 1: Market Research

Bryan recommends you establish a marketing team of people, vendors, suppliers, and others whose vested interest motivates them to help you succeed. You will conduct your SWOT analysis as part of this pillar. In addition, you will conduct primary and secondary market research to identify both primary clients and competitors as well as secondary clients and competitors.

Pillar 2: The Right Message

The right message includes your Unique Market Position Statement (UMPS) which drives you to really clarify and define your business, your client, your product, your motivation, what makes you distinct, and what draws your client to you. This pillar analyzes your logo, trademark and image to ensure consistent messaging. Frequent assessment of your message allows you to provide even better experiences to your clients.

Pillar 3: Strategy

Strategy includes establishing the specific and measureable goals for marketing each profit center, including the timeframes and milestones to accomplish goals. Strategy outlines your marketing budget (which you will add to the financial section of your business plan). It builds the high/level product/service, pricing, and placement/distribution strategy for your business.

Pillar 4: Campaigns

You outline each of the campaigns you will use throughout the year to emphasize and highlight your sales. Campaigns cater your marketing plan to seasonal, holiday, or special reasons unique to your product. You allocate timelines, dates, budget, and resources for each campaign. Campaigns have very specific start and end dates. You measure the success of each campaign.

Pillar 5: Vehicles & Tools

Each campaign will use specific methods for making the purchase desirable and vehicles to deliver the message to the client. Marketing methods include publicity/public relations, promotions, and advertising. Marketing vehicles consist of how your will get the message to your client. Vehicles include mailings, radio, Internet, telephone, television, magazines, newspapers, and personal visits.

Pillar 6: Sales

Sales defines how you will convert the client’s interest into a purchase. Each method and vehicle for each campaign within the strategy must lead to a sales point. This pillar includes strategies, systems, and expenses unique to the pillar. Whether a person purchase on the Internet, walking a product to a checkout stand, or signing a sales contract with a sales representative; your marketing plan must define who finalizes the sale, and how they do it.

Pillar 7: Client Retention

Client retention describes how you will capture data about your clients for further marketing. This pillar forces you to determine what information you will capture and how you will use it. In addition, client retention describes how you will use the information, and how you will reveal client satisfaction and suggestions for improvement. Client retention returns you to the first pillar of market research.

Remember, that this is only an overview. There is much more to The 7 Pillars of Successful Marketing than has been packed into this overview. I strongly recommend that you contact Bryan directly and purchase his Introduction to the 7 Pillars of Successful Marketing package. He offers an introductory set of CDs plus more than 53 additional CD’s covering various of the 7 pillars in more detail.

The 7 pillars provide a framework that you can use to structure all the marketing information you gather. I highly recommend Bryan’s approach. I hope you find it as useful as I have. The 7 Pillars of Successful Marketing helped me increase participation in our events 500% over 6 years. I know it can help you to increase your profits and revenues.

Join me next week when we discuss Finding Fun in Sales Calls.

Until then, I’m Larry Stevenson wishing you more money, better living.

Your thoughts and experiences will improve our conversation. Please share them below.

Market Your Business

2011-08-26T11:08:00.001-07:00

The marketing section of your business plan remains second in importance to the operations section. As we discussed last week, without sales and marketing you make no money, but without operations you have no business. Today, and for the next 3 weeks, we will discuss how to generate revenues and sales through good marketing plans.

Sharon’s Story

Sharon and her partner opened the perfect toy store. They envisioned selling delightfully unique toys with an old world feel of quality and fun. They shopped wholesalers from around the world to find just the right toys. They leased the perfect location on one of the busiest roads in town. Their store shared a strip mall with a very popular grocery store, several restaurants, and a health spa that attracted people who would buy high-end, quality toys. They decorated their store beautifully to highlight and exhibit their fine toys.

Unfortunately, they had not paid as much attention to their marketing plan. As Sharon shares today “We proved that if you build it, they will not automatically come". Sharon and her partner could not attract the people to come see the beautiful toys in the delightful store they built. Many of the people who came to look loved what they saw, but did not buy enough toys to break even. The few clients that bought toys did not come back to the store or tell others about it sufficiently to maintain sales. While the community Sharon chose possessed enough potential clients, with sufficient wealth for fine toys, they population did not spend money well. As one marketing expert commented “You don’t do a ‘free pie’ coupon in that community. All they only order the free pie”.

Sharon and her partner tried lots of promotions and sales. Nothing generated the traffic to the store they needed. All too soon, this perfect toy store closed its doors. The community lost a wonderful business that could have delighted thousands.

Marketing Defined

Multitudes of definitions exist for the concept of marketing. Some simple. Some complex. I prefer this one. “Marketing is the process of identifying, attracting, converting, and retaining people to your product or service”.

Identifying=Market Research. We discussed this in my “Can Your Business Succeed” and “Who is My Current or Potential Client” blogs. The better you research your market including clients, the better you can deliver what they want.
Attracting=Bringing Clients to Your Product or Service. You must devise the right marketing message first. Then, you use a variety of methods to attract clients: advertising, cross-promotions, public relations, client referral, coupons, mailings, and more. Too many business implement methods before they create the right message for their marketing. As a result, they spend a lot of time, money, and effort broadcasting a message that does not attract the people they want,
Converting=Sales. While many marketing experts and companies separate sales from marketing. Others, including me, prefer to keep them together. We view sales as part of the marketing process, not a separate function. Marketing success can only be measured by sales.
Retaining=Clients Returning to Purchase More. Studies prove it costs less to retain a client than to create one. Yet, too many business owners neglect their existing clients to attract new ones. You will not make this mistake after following our concepts.

Sources of Marketing Help

As always, the SBA, SCORE, and SBDC’s offer training, coaching, and materials to help you market your company. Excellent books also offer sound ideas and share best practices. I share but a few: Seth Godin’s many books include the classic Purple Cow. Free Prize Inside, Permission Marketing and others. In addition, I enjoyed Al Ries and Jack Trout’s books The 22 Immutable Laws of Marketing, and The 22 Immutable Laws of Branding. In addition, Paco Underhill’s works including Why We Buy gives great insight into why your clients make retail and other purchases. Finally, I really resonate with Bryan Walden Pope’s plan The 7Pillars of Successful Marketing. I find they provide a comprehensive framework for million dollar marketing for much less.

The marketing section of your business plan remains crucial to your success. Marketing (which includes sales) remains the only profit center of your business. Until you attract, convert, and retain clients to your product or service, you make no money. For that reason, we will spend several weeks on this section.

We will examine The 7 Pillars of Successful Marketing next week.

Here’s wishing you more money and better living

Planning Your Operation

2011-08-19T11:52:00.001-07:00

I apologize for the length of today’s blog, but your operations plan takes time and space. (The word “product” refers whatever product or service you plan to sell.)

The operations plan remains the essential, yet often neglected, section of a business plan. Traditionally, businesses consisted of five major functions: accounting/finance, marketing/sales, information technology, human resource/legal, and operations. The first four were called the support functions. Operations drove the company.

Operations produced, processed, and distributed the product or service. The operations function included locations for factories, distribution outlets, warehouses, and support. Indeed, it could be said that without sales & marketing there could be no profit, but without operations there would be no company. Yet, in too many business plans the operations portion remains the shortest section, because the owner writes the business plan for funding sources and not to guide their business.

Grant’s Story

Grant started his business more than 50 years ago. His operations plan accounted for the longevity and amazing profits of his business. Grant loved genealogy. He received a doctorate in it. Printing his dissertation helped him realize that his community offered few resources for printing and distributing small orders (copiers were not common).

He planned to provide several products around the concept of genealogy. He focused on several diverse and closely related key products and services: publishing people’s family histories, printing dissertations and thesis for college students (to very exacting specifications in those days), duplicating and restoring family photos, preparing and printing forms and tools for a growing society of genealogists. Grant planned to start in his basement and move to a retail location as soon as possible. He decided to always purchase used equipment rather than lease. He would save money by learning how to maintain and service the equipment himself and teach his employees.

He planned that his employees would always be college students that required lower wages and would move on before demanding higher wages. He always bought supplies in bulk (from carefully researched suppliers), maintaining some paper inventories for years, to maximize savings. Grant bought and modified an old car wash as the production and retail location. He built a small apartment into the building and rented apartment space to college student/employees to cover the mortgage. He paid off the mortgage on his facility decades early from the rental income. He offered self-serve copying before copy centers developed. He maintained extensive client records that developed loyalty and repeat business for 20-30 years.

Grant’s meticulous planning for his operation made his business quite profitable. His plan guided the growth of the business for 45 years with only one modification to include a growing wholesale market. Currently, the operation uses off-set printing, small-to-very large black and white and color copiers. Some of his printed genealogical tools still remain bestsellers in the digital age. Almost all employees are college students. To this day, the business maintains no debt. Grant’s operations plan allows his firm to still sell printing/copying at 30-50% less than any competitor.

Outline for Planning Your Operation

A well conceived—and executed—operations plan prevents the business from overwhelms the entrepreneur. The Small Business Administration (which offers wonderful resources and templates to draft your business plan) estimates that a comprehensive operations plan could answer up to 198 questions. We will not explore that many topics, but offer an overview with links to other sources of information.

The operations plan outlines the what, how, where, when, and who of your business.

WHAT

What exactly is your product? You described your product in the first section of your business in brief and general terms. You add the details, designs, blueprints, specifications, pictures, prototypes in the operations section. Describe whether you will create it from raw materials, purchase it and add-on improvements, or purchase it and pass it through to others as is.
What materials or elements do you need to prepare your product? Explore all the materials or elements you will produce, which ones you will purchase, and which ones you will outsource. Include a list of materials with quantities in your plan. Outline the copyrights, patents, permissions, or licenses you will need to obtain. Don’t include secret recipes or intellectual property secrets (Think Coca Cola and KFC’s 11 secret herbs and spices).
What will you need to warehouse or distribute your product? Define whether you will produce your product just-in-time or produce large batches that you will store for future sales. Outline whether you will purchase large quantities of supplies and materials or just what you need. Also, include what equipment you will need to warehouse and ship your product.
What will it cost to prepare, sell, and distribute your product? Outline the material, equipment, employee, distribution, depreciation, financing, facility, and associated costs in a spreadsheet. Update the spreadsheet at least monthly in your plan. Ask a cost accountant to review it. Incorporate what you find into your finance and costing plan.
What growth do you forecast in one year, two years, five years? You should set goals for growth and how that growth will impact your business. Increased sales may require greater production than your original plan can provide. On the other hand, you do not want to completely change your production line just as orders explore. Estimating and accounting for growth prevents huge headaches later. Today’s entrepreneur's also have to ask how scalable is my operations plan. They need to research how much explosive growth will impact operations.

HOW

How will you prepare your product or service? Determine whether you will produce the product internally, outsource it to domestic or international production facilities (sometimes the travel, red tape, and other problems prevent China from being the best solution), or other methods.
How will you process orders, shipments, and other paperwork? Outline how customer orders get to production, shipping, accounting, and sales. Decide if you will automate the whole process or rely on human interaction. In addition, determine who will purchase product or supplies from vendors. Identify bulk or other discounts and how you will take advantage of them. Establish processes for monitoring employee time, payroll, productivity, efficiency, effectiveness and quality. Design your production floor for optimal manufacturing if that is the case. Create process flowcharts, blueprints, and critical path charts for all major processes.
How long will it take to produce? Each product takes a certain time to produce: software must be written, tested, and refined; wine requires a certain time to ferment, concrete requires specific time to season. Include how much time a vendor will need to deliver materials or other elements. Failure to plan ahead triggers higher costs for quick delivery. Include tables or GANTT charts in your plan to visually communicate critical paths.
How will you distribute your product? Explore whether you will use ships, trains, trucks, FedEx, UPS, the US Postal Service, or the Internet to get your product to the purchaser. Define the costs each incur and add your decision to the cost spreadsheet above.

WHEN

When will your client buy your product? Define what in the life of your client will trigger a purchase. Does the client have certain seasons or reasons to purchase. Outline the seasonal aspects of your product and how you will establish prompts to contact them at that time. Consider days during the week or times during the day they will probably purchase. Identify what you will have to do to be ready for that time. For example, I know of a certain bank manager that sent most tellers to lunch at the same time their clients ate lunch—and did their banking. He didn’t stay manager for long.
When will you produce the product? Determine whether the inventory cost savings of just-in-time production compensate for making the client wait to receive their order. Some products remain so seasonal that the entire company closes for six months out of each year.
When do you upgrade or improve your product? Highlight when you should be delivering updates or upgrades to your product. Software can upgrade virtually at any time. Installing an upgrade to your client’s automobile becomes more complicated. Your operations plan should include a table for estimated improvements and refinements to your product. You need to include a version control and roll out plan.
When do you need to upgrade or replace equipment? Identify the life span of your equipment. Establish plans to both fund the replacements, but also to avoid costly shutdowns at the worst possible times.

WHERE

Where will you produce the product? Determining where to produce the product requires a lot of research in today’s economy. You will already have explored if you will produce it, buy it, or outsource in the “what” section of your operations plan. Now you need to get to the details of exactly where in the world, your plant, or your home that will be. Economic Development Agencies can help you explore importing and exporting rules, regulations, and options
Where will the client buy the product? Your operations plan describes the buying experience you will offer your client. You describe whether they will call a phone number, walk into a facility, complete an order on line, or have a representative of your business help them place the order in their office. Contemplate how many times they will have to hear about your product before they buy it. The environment or ambience of the purchase location significantly impacts the buyers experience. Consider the difference between the traveling carnival that stops in your town for a weekend, and going to Disneyland. The experience certainly affects how much the client will pay in those situations.
Where will you store the product until shipment? So many options for warehousing exist today. You may store your product in cyberspace or on the cloud. You may purchase a warehouse or store it in the garage of your house. You may request your outsourced manufacturer to store it and drop ship it as orders arrive. All of these options require planning, processing, and cash.
Where will your client receive your product or service? Imagining the location of delivery requires thought. Delivering a 500 pound piece of equipment or furniture to someone’s home requires you to contemplate how they will move it, install it, and dispose of the piece being replaced. Studies prove that placing purchases in nice pastel colored paper bags (with bows) rather than generic plastic bags increase sales at women’s boutiques. Once again, your operation plan describes the clients experience as well as the logistics of buying.

WHO

Who will prepare your product? Once again, the global economy provides many options. You may use local labor and have to provide the facilities as well as labor costs, but maintain excellent control on production and quality (no lead based toys). You may choose to possibly save money by outsourcing to another country. Many companies use local labor, but avoid recruiting, selecting, and maintaining payroll by contracting with a staffing service to provide their labor. Preparation also includes who will purchase materials, who will process orders, who will load and unload trucks.
Who will sell your product? Some companies hire their own sales force to either call, email, or visit their clients. Other companies contract with merchandise representatives or call centers to conduct their sales. Retail companies learned the hard way that you can’t just hire anyone for retail. Circuit City ruined their company when they let go all their older, more experienced (and yes more expensive) sales people just before Christmas. The younger workers couldn’t answer the older clients questions effectively and sales evaporated. On the other hand, Home Depot learned that hiring experienced tradesman who understood paint, lumber, and plumbing increased confidence and sales.
Who will do everything else in your operation? Finally, you must explore the costs and advantages of who will deliver your product. More companies both business-to-business and business-to-client rely on FedEx, UPS, and the US Postal Service. Large manufacturing companies still rely on trucking companies or the railroads. Many turn the whole process over to large logistics companies. No matter how great your product or service problems will occur. Your plan should designate who will respond to problems. You can find virtual assistants and virtual accounting clerks who will do all your clerical and accounting functions.

In conclusion

Managing the operations of a business requires time, talent, and attention. The operations section will be the most detailed section if you use your business plan to run the business. As I’ve stated before, make your mistakes where they don’t count. You will save time and money if make those mistakes on paper rather than in bricks, mortar, and people. Be willing to reexamine and modify your operations plan on a regular basis.

Several organizations can help you with the operations section of your business plan. As always, the Small Business Administration (SBA), Small Business Development Centers (SBDC), and Service Corps of Retired Executives (SCORE) offer inexpensive training, coaching, and templates. Prentice Hall offers a very good (though a little outdated) course on E-Business planning. I especially liked the Top Ten Resources for Writing an E-Business Plan. Ready Business sponsored by FEMA offers good advice not just for business continuity in emergencies but in general. Business Plans Guide provides good articles that help you explore your operation. Amazon offers several books on operations planning. I also recommend Michael Gerber’s book The E-Myth Revisited, and Jim Collin's’ books Good to Great, and Built to Last.

Once again, I apologize for the length of this week’s blog. I probably should have divided it into five separate blogs, but did not want to delay those of you who are drafting your plan.

Join me next week for a shorter examination of Your Marketing Plan

What Will it Cost?

2011-08-05T20:00:00.001-07:00

Establishing the price of your product or service remains one of the toughest—and most important—elements of business success. Let’s learn from Carla’s experience.

Carla’s Story

Carla started a handicraft business. She borrowed on their home to start the business. The equity line of credit gave her more than enough to start the business and keep it going for five years. She produced a better product than most of her competition. She also marketed her business exceptionally well. As a result she tripled here sales each year over the previous year for three straight years.

Unfortunately, she did not conduct a good cost analysis for her handicrafts. She set her price point based on prices for similar handicrafts. She failed to account for why she provided a better quality product. Her materials cost more. She spent more time on her crafts. Her cost analysis failed to account for marketing costs, product placement costs, legal costs, administrative overhead, or taxes. She just based her analysis on cost of materials to produce the crafts.

She did not realize that she lost $1.35 for every $5.00 she sold. She increased the debt of her company by $78,000 in three years. She lost her business. They lost their home.

Three Key Elements to Set Your Price

I suggest analyzing three key elements when establishing the price for a product or service. These suggestions apply very general principles. Establishing the exact price requires spreadsheets and other calculators. You need to consider each of the following elements in establishing the price for your product or service.

Overhead Costs: Establish what it costs to produce, market, support, and distribute your product or service. The SBA can help you understand all the overhead costs.

Begin with production costs. Make a list of all materials you need to use establish how much it costs to purchase the materials. Try to find the cheapest materials, yet maintain quality. Include costs for waste materials, broken products, maintenance costs, and replacement costs for equipment.
Include administrative costs. Remember that your business also needs to pay for accounting, financing, legal, taxes, electricity, gas, water, waste management, computers and other office equipment. Costs will also include insurances, supplies, and more. You need to include these in the overhead costs.
Human resource or personnel costs. Include the salaries you will pay for both exempt and non-exempt personnel (include your salary). Do not forget to calculate employment taxes, worker compensation funding, insurances, withholding taxes, FICA, and the other costs per employee. It may be easier to contract with a staffing or payroll service. They will cover all of that and give a simple estimate.
Add in sales and marketing costs. Remember Internet ISP, web development, market research, advertising, printed materials, mailers, contact management software, and more. Each of these costs adds to the overhead costs.
Contingency costs for emergencies and unanticipated costs. You should also include reinvestment costs. Determine how much you need to put back into the company. Business startups require higher reinvestment as a percentage of revenues than later.

Profit margins: You need to determine the profit margin for your business. The profit margin describes the percent of the price that goes directly to profits.

Research the typical margins for your industry. Sam Walton changed the face of retail by establishing the lowest margins in retail. Some industries have margins as high as 75%. Others can be as low as .05%. You can find typical profit margins by industry at MarketResearch.com.
Calculate what margin you want on each product or service. You may use the calculators at BankRate.com.

What your clients will pay: The ultimate element determining your price point will always be what your clients will pay. The Lean Business Development using the Customer Development teams and pivoting (that we discussed in my July 22nd blog)enhance your ability to determine what you client will pay.

Get Help

You will need help to establish the price of your product or service. You may use the free resources of the SBA, SBDC, or SCORE (Service Corps of Retired Executives). I want to begin by suggesting that you access a cost accounting professional to help you analyze your costs. provide free counseling to get you started.

Do not allow your business to fail or incur unneeded debt because you failed to establish a price for your product or service that both made you money AND that your clients will pay. Analyze all three elements to establish your prince point. Get the help needed to ensure it’s accuracy.

Next week will discuss Planning Your Operation

Please leave a comment or share an experience about setting your price point. The more people who share their ideas, the better all of our experience will be.

Who or What is Your Competition?

2011-07-29T12:14:00.001-07:00

Your competition consists of anything or anyplace where your potential client might spend their money. Especially the money they might have spent on your service or product. Part of the market analysis section of your business plan must address why, or if, they will spend their money on you and not your competition. While regular market research should analyze your competition. You should conduct a major analysis every 2-5 years.

Defining Who Competes for Your Sales Dollar

Once again, your competition includes anything or anyplace where your potential clients might spend the dollar they could spend with you. The following represents a partial list of potential competitors.

Companies in the same industry and the same geographic market: i.e. other bookstores within 15 miles of your bookstore
Online companies (foreign and domestic) selling similar products: i.e. novelty products that may be purchased directly from Chinese manufacturers competes with your local novelty business
Companies in a different industry, but that obviously might take your sale: i.e. people may decide to go to a movie instead of eat in your restaurant
Companies in a different industry, but that do not obviously compete: i.e. instead of going to a movie or restaurant, the family saves money to buy a car
They do not spend the dollar: i.e. increasing prices, stagnant raises, salary cuts, and unemployment eliminated the dollar they might have spent with you

While considering each of these possible sources of competition saves unwise use of time and money, try to avoid analysis paralysis. Gather information about the most significant of source of competition for your business.

How to Find Information About Your Competition

Let’s discuss some methods for finding potential competitors. We favor more cost effective methods. For example, do as much as you can on your own. The Small Business Administration (SBA) also offers free on-line assistance. You may use a free consultant through SCORE to help you. However, you should contract with a market analysis firm if you plan to invest hundreds of thousands of dollars or more on your business.

Sources of information include:

What you already know: Usually, you want to start or improve this business because you have a passion for it. So, you do not enter the field as a novice, but with a background of knowledge and experience. You, therefore, also know the competition. Make a list of who you already know.
Potential Clients: Your target audience may provide the best information about your competition. They report what they feel: good and bad. Interviewing potential clients also provides an opportunity to begin building the relationships that will lead to success.
Chamber of Commerce or Business Associations: most communities claim a chamber of commerce that includes businesses in the community. They can provide a list of competitors geographically located in your market. Business associations include companies (who join) in a national or international market.
Business Profiles: Several web sites like Hoovers, Jigsaw, and others profile larger companies. They provide an overview of the company, financial data, key management, articles, press releases and more. Most offer a free limited program, plus more information for cost.
Industry Search Engines: Several search engines exist on the Internet to find companies by industry. I use an unusual one, Career One Stop, that allows you to find companies by industry, location, and even company size. The results of your search will usually list the name of the company, a key contact person, phone, size, and a link to the companies web site.

Questions to Ask About Your Competition

You must convince clients to spend their money with you, rather than with your competition. Understanding your competition helps you identify the appeal they represent to the client. It helps you recognize the strengths—and the weaknesses—of their product or service. In addition, it highlights the strengths and weaknesses of your product or service. It may even indicate why you should not enter the market. Analyzing your competition provides a foundation to your marketing plan.

Your analysis focuses on finding the answers to the following questions and more:

Who is my competition? Where would people spend their money rather than spending it with me?
Why do they spend their money with my competition? What do they like about it?
What don’t they like about my competition? What would they like improved?
How much do they charge? Why does it cost that much? Can I do it cheaper? Better?
How easy is it to buy from my competition? What paths or obstacles do they create?
How do people make the purchase? Online? Walk into a facility? Phone orders?
How does my competition deliver the product or service? Does it satisfy or frustrate?
How much competition exists? Are there too many? Can the market bear one more?
Does the lack of competition represent an opportunity or indicate a lack of interest?
What makes my product or service more desirable than the competition’s?
Why would anybody buy from me rather than from the competition?

You may wish to use one the variety of competitive analysis models to interpret what you learn: SWOT (Strengths, Weaknesses, Opportunities, and Threats), Competitor Analysis, or Porter’s Five Forces. They, and other models, provide a framework to analyze the information you receive.

A Final Thought: Saving Money May be Your Competition

The current recession generated a possible shift in the American consumer. They began to save again, rather than purchase or go in debt. Economists note an increase in savings. Luxury purchases continue to decline. Part of the shift results from lack of money. A bigger part results from people recognizing that consumer debt entrapped them. You now hear people who used to buy or lease a new car every year or three, brag about the high mileage on their current car. As Dave Ramsey says “the paid off home mortgage has taken the place of the BMW as the status symbol of choice”. Business owners, therefore, must recognize that saving money represents competition.

Once you understand who and what constitutes your competition, you can build a product or service with marketing and delivery portals that appeal to your target client better than the competition's.

Next week we discuss “So What Will It Cost?”

Who is My Current or Potential Client?

2011-07-29T11:39:00.001-07:00

This continues our series on Using Your Business Plan. We realized we needed to define “your client” before analyzing your competition. So, we added the extra blog this week. Enjoy!

The key to business success remains the client or customer. Several businesses use the motto “The customer is always right”. Clients pay the money that create your salary and profit. Understanding and defining your client saves you big money.

Wendy’s Story

Wendy Bird found a unique angle to the jewelry market. She noticed the incredible poverty during a trip to the Philippines. She saw women making beautiful pearl jewelry, but selling it on the streets for practically nothing. Wendy also knew women living in the United States that would love this jewelry. So, she created My Princess Pearls importing the pearl jewelry to the United States.

Wendy also studied her potential clients. She identified a very specific market niche. She focused on middle class women—and their daughters—as her target market. She narrowed her focus to people earning between $45-120,000. She also knew that the people in her market area had generous hearts and gave service freely. Her market niche included women and men who wanted to improve society.

Her marketing plan emphasized not just the quality of the jewelry, but the conditions of the women who made the pieces. She ensured that her clients knew not only that they were getting a beautiful pearl necklace, but that a substantial portion of the lower than usual prices went to help the women who made the necklace get out of poverty. She created a foundation that sponsored clothing and medical drives among her clients to prepare containers of goods that she sent to her manufacturers’ neighborhoods.

Wendy’s understanding of her potential clients allowed her to develop a very successful business and change thousands of lives in the process.

Define Your Client

Too many business owners think that their product will appeal to everybody. They fail to sufficiently define their potential client, so the employ inappropriate marketing venues, messages, and other methods that result in very expensive low sales.

You should define exactly who you want to reach as your market niche. The more specifically you define them, the better you can envision them, the more you understand them. Understanding their buying habits, motivations, places they spend time and money, and more helps you save money by targeting your marketing dollar to the best possible use. It helps you design a product or service they want to use. You will remember that we discussed the Client Development Team and Pivoting process in a previous blog. This helps make that happen. The more specific vision of your client, the better you may serve them.

Questions to Ask

The following questions may help you define your potential client. We divided them into topic areas you to help you create your own questions:

Personal Characteristics

Who would buy your product or service? An individual? A business?

What age would the typical purchaser be? What gender? Race? Nationality?

What does your client do with their money, time, and passion?

How would they use the purchase? Personal use? Give it to someone else? Resell it?
Will they use your product or service in the processing of a different product?

Purchasing Parameters

How much does your potential buyer earn? How much extra cash do they have?

Does your client consider your product a necessity or luxury? Or in between?

How much money will they spend on a product like yours? How often will they buy?

Can your client buy it themselves or do they need someone else’s permission?

Habits

How does your client usually make purchases? Where do they make them?

How and where does your client spend their time? What percent? When?

What do they read, watch, listen to, or attend?

How technically savvy is your client? Do they phone, email, text, or post?

Interests

What does your client need? Do they recognize the need?
What causes, service, clubs, or other association does your client maintain?
What trait about your client uniquely suites them to use your product or service?
What question have you not asked about your client?

From the answers to these questions you will draft the client profile section of your business plan.

Resources for Developing Client Profiles

The Small Business Administration offers a wealth of information for business owners including demographic statistics and articles about client profiling. The US Department of Commerce shares demographic information from the US Census. Industry or professional associations may share information for business-to-business (B2B) clients. You can also Google information about almost anything. Bigger business may also wish to use the Stakeholder Salience Model developed by Brad Agle to more clearly define the stakeholders in your business.

The better you can picture your client, the better you can serve them. Some businesses place pictures representing their typical and actual clients where management and employees can envision who pays their bills, salary, and overhead. Defining your current and potential client focuses your efforts on solving their problems or satisfying their needs.

We hope you enjoyed this extra blog this week. You may continue to read about “Who or What is my Competition?”

Can Your Business Idea Succeed

2011-07-22T13:33:00.001-07:00

Chris’ Story

Chris had a great idea, expand his family’s 50 year old family history publishing house into a one stop shop for people who wanted to tell their family’s story in any kind of format. His publishing house specialized in traditional hard or soft bound books. Their list of publications included more than 450 books.

Chris saw that people told their story using a variety of methods: DVD's, CDs, picture books, calendars, and more. Yet, people had to wade through a variety of publishers, because no one did them all. I will not expose Chris’ strategy. I want to share how he analyzed his idea.

Chris adopted a growing method for exploring his business idea called Lean Startup. It was coined by Eric Ries. Chris explored and refined his idea before he invested a dime.

He researched the idea on the Internet and at conventions. He attended lectures by famous family historians. He asked them questions. He modified his idea based on their feedback.
He shared his idea and asked for feedback from a variety of vendors who sold the products he hoped to offer. He also asked questions from marketing and business groups he attended. He modified his idea based on the feedback he received.
He met with his current clients and with potential clients. He presented his idea and listened to their feedback. He modified the idea and presented it again to the current and potential clients and asked for feedback. He modified it again and presented it again—and again.
Finally, when all of his focus groups said they liked it, he invested the money to make it real. His work paid off, within one week of his announcement clients placed orders. They continue to do so significantly increasing revenues and profits.

Chris’ idea will propel his publishing business into the next 50 years of success. A business tied to publishing books had little future as people choose different options for telling their stories. However, a one-stop business that can help people tell their story in any format they desire will continue to grow. Especially, when the ideas was reviewed and refined not by the business owner—but by the very people it chooses to serve.

Traditional Model

In the past, potential entrepreneurs planned two types of businesses. The majority of businesses were (1) small-business startups designed to provide a better than adequate income to support the owners family(s) or (2) large-business startups designed to copy the Rockefellers and Carnegies by making a huge splash that would make the original team of owners and investors rich.

How potential business owners developed their business idea into a company also differed from today. Then, potential business owners discovered an idea they thought could make money. They developed the idea conducting market research through books (Steven Blank offers an amazing historical bibliography) and interviewing a few potential customers. They wrote their business plan and pitched it to potential investors to get money to build a prototype. The owner did not feel they could abandon a flawed model because the investors paid for that certain business model. They spent the investors money retrying their idea until the investors took over the company. A few avoided this pitfall and flew to success with the original creators still in charge. Most either crashed and burned or were taken over.

Today’s Type of Startup or Enhanced Business

Today’s entrepreneur faces a wider variety of choices. John Richards with the Rollins Center for eBusiness in the BYU Marriott School of Management introduced me to Steve Blank’s work. Steve Blank describes these options in his book The Four Steps to the Epiphany (a definite must read for todays entrepreneurs).

Small Business Startup Entrepreneurship: basically started on one idea that will provide an income to support the family(s). Similar to what we described as traditional. Most existing and startup businesses fit into this category. Small Business startups receive little of the angel or capital investments today. They can still receive SBA secured loans with approved collateral.
Scalable Startup Entrepreneurship: seeks to build a small company into a large company based on a business model (not product or service) that can expand globally quickly. Google, Facebook, Ancestry.com, Omniture and others typify this model. It needs startup money to grow the model quickly. Most of today’s investment money goes into scalable businesses.
Large Company Entrepreneurship: usually stem from existing large companies that spin off a new product or technology. Frequently, these stem from an “intrapreneur” or “skunk works” within a large company. Post It Notes would have been an example of this. Most of the funding for this startup comes from within the parent company or it stockholders.
Social Entrepreneurship: a new brand of “business” where traditional non-profit endeavors such as literacy, microfinance, health, and other social causes adapt business models and processes. While the startup investment may come from grants or donations, usually they come from the founders approach. Ben and Jerry of the ice cream fame used a lot of their money for social entrepreneurship.

These represent the kind of business models for today. Now let’s examine a better, less costly method for getting your idea to market.

Lean Startups with Pivots

Eric Ries and a number of others advocate a different approach for getting your idea to market. Rather than creating the idea, getting the funding, and then implementing the plan; lean startup believes you get massive refinement before you ask for a lot of money. This was the approach Chris used to bring his idea to market.

Lean startup involves concept called “agile development”, “customer development teams”, and pivots”.

Agile development implies that you can change your business idea based on customer development to better respond to their desires. Your agility to adapt prevents becoming mired in an intoxicating idea nobody wants. While the term “agile software development” captures a related method used in the software industry we refer to the broader application to business development.
Customer Development Teams consist of current or potential clients to which you present your idea and solicit feedback. Using their feedback, you refine or drastically change your idea—and present it to the customer development team again. You repeat the process until they completely accept your idea. Then, you begin to implement. Many times customer development team members invest in the idea before it is implemented because they invested themselves in the process.
Pivoting the act of completely changing the business model, product, or service based on the response of customer development team. Frequently, multiple pivots take place before the company officially opens. Pivoting on paper, rather than in reality, saves time and money.

How do you know if your business idea can succeed. First choose the right business model for your business idea. Second, listen to your clients or potential clients. Be able to reject portions of the idea, or the whole idea for what your clients tell you. Make your mistakes on paper rather than making them with cash. Good luck learning more about these.

Join us next week when we discuss Who and What is Your Competition