Eagle’s Wings

We’ve all heard the phrase, “on the wings of eagles.” But what does this mean?

Few are aware of the fact that an eagle knows when a storm is approaching long before it breaks. The eagle will fly to some high spot and wait for the winds to come.When the storm hits, it sets its wings so that the wind will pick it up and lift it above the storm. While the storm rages, below the eagle is soaring above it. The eagle does not escape the storm. It simply uses the storm to lift it higher. It rises on the winds that bring the storm.Think about how appropriate that picture is in today’s business climate. Are we not facing a variety of storms? -Economic storms, political storms, sociological storms and even cultural storms? Continued war, the burst of the dot-com bubble, corporate and political misconduct, downsizing and corporate cutbacks dominate local and national newspaper headlines. How is this affecting your business or your ability to maintain and grow your business?Let’s face it, many of today’s small business owners started their businesses amid economic prosperity and have yet to experience such raging storms. With this in mind, I’d like to propose some strategies that can help all of us weather the storms and rise above the clouds not unlike the eagle.

Ignore the Hype – First and foremost, experts say, don’t panic. It’s important not to buy into the hype but to be realistic about our business environment. For me that means staying away from the TV news, and the local papers. They are filled with doom, gloom and dread and short on facts or suggestions for improvement. Instead I read the Wall Street Journal, the On-line agencies, Fast Company, Business Week, Kiplinger’s and other business publications.
Diversify – According to the Small Business Administration, Southern California, because of its diversity, is well-poised to weather economic storms. Other good news is that even though Southern California is experiencing a slowdown, the economy is still growing, just at a much slower rate. “It’s like we were going down the highway at 80 miles per hour and now we’re going about 30,” I heard a colleague say recently. “It feels pretty darn slow, but the fact is, we’re still growing.” So think about what you can do to diversify. What new markets can you address? What new products or services can you begin to test? What new areas of service can you begin to employ?
Think Strategically – To strategically outwit economic storms I recommend that small businesses incorporate an economic outlook into their strategic plan. Each company must examine its strategic focus and ensure that it’s pointed in a compatible direction with the economy. While companies often have the strategic answers they need, it is sometimes difficult for small business owners to be objective. A consultant can help companies examine and validate their strategic focus in relation to the economy. Step two, is for small business owners to focus on managing the business. Small companies often grow at a rapid rate and spend most of their time focusing on fulfilling customer’s needs instead of managing the business. Small business owners should manage the company’s financial statements, look for things that are out of line, make sure there is no excessive waste and ensure correct company procedures are being followed. Entrepreneurs are probably the worst offenders in becoming too focused on the marketplace and not focused enough on management. Often they need to either step back and take a hard look, or empower someone else to inspect the management process for them.
Be Proactive – Weathering storms also requires having safeguards in place prior to the start of hard times. For example, instead of waiting until you need cash, a line of credit or other resources, have these items in place prior to the start of a storm. Make certain your human and financial resources are intact at all times – in good times as well as bad. Make sure you save money out of your business and put your credit line in place while times are good, then you’ll have these resources in the event that you lose a key client or the economy slows down. Also, don’t put all your eggs in one basket. It’s OK to have a niche, but it’s important to not be so specialized that if one area of your business gets slow, you can’t survive. If a business has one client that represents more than 30 percent of the company’s revenue, that company is vulnerable and needs to work on gaining additional clients.
Establish Budgets and a Contingency Plan – I am continually shocked at the number of businesses that are operating without any type of budgeting contingency plan. Or they may have budgets but they rarely adhere to them. When times get a little tough many of these entrepreneurs respond by slashing the highest expenditures. When reducing expenditures, small business owners shouldn’t blindly cut budgets such as marketing and advertising. Instead, review the budgets for these activities and try to determine return on investment. These may be the very activities that will keep you alive in a storm!
Build Relationships – Relationships with customers are critical at all times, but particularly during slow economic times. During these times, everyone is looking to reduce expenses, so your customers may be looking to other suppliers. Be prepared to justify the cost of your products and services by being able to explain the benefits as opposed to the features of your products and services. Create loyalty by providing extras that don’t really cost you more, but give the customer more. On the plus side, such storms often result in new business opportunities, particularly in the area of outsourcing. With larger businesses downsizing, outsourcing may become a more attractive alternative. Small businesses may find themselves in position to provide a product or service to a larger entity. In addition to building relationships with existing and new customers, building peer and colleague relationships is important. You should always have a network of peers and colleagues in place so you can draw on their resources and expertise. Get these networks in place when times are good. Work as smart when things are good as when things are bad, and you’ll be ready when the storm breaks out.

In short, unstable times create opportunity. Remember you are not alone. Your competitors are also going through this downturn. Spend more time and be willing to invest in ways that you can differentiate yourself externally as well as manage your internal business more effectively and you will get the jump on your competition. In this way, you, like the eagle, will be able to ride the trade-winds as you soar above the raging storm below.

Outlook bright for Small Business

A new survey of small business owners from FedEx shows that they remain positive about the prospects of future growth, despite the current economic climate. While owners acknowledge a current drop in profits due to reduced consumer and business spending, they expect things to turn around, and 47% plan to actually increase their marketing efforts in 2009.

This is good news for the 47% that invest in their future, which is the topic of my most recent article.

Take your foot off the brake!

Have you ever driven your car on an icy road?
What happens when you jam-on the brakes?
That’s right, you slide off the road and maybe end-up in a ditch or worse.

That is exactly what is happening to many people today. They are spending entirely too much time watching, reading, listening and talking about how BAD things are in this economy. They are focusing on blaming Bush or Obama or the Fortune 100 CEOS or whoever. As a result, they can’t help but react with fear by jamming-on the brakes.

To read more about why maintaining your marketing efforts is important even in a down economy, please read my latest article.

Diversity

It were not best that we should all think alike; it is difference of opinion that makes horse races.

-Mark Twain

While reading an essay from Seth Godin’s “The Big Moo” I was struck by the concept being proposed that efficiency in business is being calculated in all too narrow a manner. Typically, we look at how we can streamline our processes- remove any and all waste, come up with uniform ways of doing things, and then calculate our efficiency solely based upon the resources we put in and the output we get based on said input. So a typical efficiency equation is we put in X resources (usually boiled down to a dollar amount) and we get back Y units of production in return. From a pure numbers standpoint, this seems to make a lot of sense. It is the justification used for offshoring jobs, moving manufacturing facilities, and for encouraging teams of workers that all think alike and do everything in the exact same way. Studies have shows that this type of environment will maximize your traditional efficiency.

How does this work in an ever-changing business world? Just ask the airlines, or telecommunication companies, or municipal electrical companies in California- the world changed on them, and they were stuck with very little diversity of thought in their organization. All that efficiency went out the window overnight when they found that their old line business practices just didn’t work anymore. The airlines still haven’t figured it out save for a few, telecommunication companies are offering the United States products that Europe and Asia passed by years ago, and our electric companies in California are stuck waiting for fractions of pennies on the dollar from fraud settlements with Enron.
Perhaps if they had not been so intent on maximizing efficiency in the traditional sense, they could have been more adaptable. One client of ours was in the mail order catalog business. They would send out X number of catalogs, and get Y orders in return. Sounds very traditional- they maximized efficiency on these offerings- to an extent. They also were constantly thinking of other business models, and encouraging diverse opinions from their employees. When they mailed a million catalogs on September 9th, 2001 their existing business model evaporated overnight when the mail shut down. Yet they were able to very quickly transform their business to one that is a telesales operation focused on Fortune 500 companies, and have an even more profitable business now than before. Had they completely maximized their traditional efficiency, they would not have tested new methods of doing business- and they would be out of business now.

How can one justify sacrificing efficiency when financial types will want to look at the black and white numbers of it all? We must reconsider what the equation used to determine efficiency consists of.

What if the change our organization faces were given a risk factor? Let’s call it R, for risk. This shall represent the downside- perhaps we have a 2% chance per year that the market will change drastically and our current business would no longer work. There might also be a higher percentage chance, say 20% that things will change to an extent that we must make changes in our business to keep up.

Now, the things that cause inefficiency in our business I will call F, for friction. Traditional business methods will stress minimizing F to the point it is eliminated. I would suggest that you keep a small amount of it around. Now, our efficiency equation becomes X (resources) goes in, and we get Y (output) minus F (business friction). I will call the efficiency E for short.
This can be stated as: E=(Y-F)/X. Now if we add the risk factor into the mix, we can figure out a way to actually increase our efficiency to the point it is greater than before we included risk and friction in the equation!
Let’s state that the efficiency only works in an unchanging world- so the left side of the equation actually becomes E (Efficiency) times the chance that things will remain unchanged, or 100% minus R. So our new efficiency equation can be stated as:
E*(100%-R)=(Y-F)/X. Which by simple algebra becomes E=(Y-F)/(X*[100%-R])

Let’s put some numbers in as a quick example. A factory spends $1,000,000 a year to produce 1,000,000 units. This yields a traditional efficiency of 1 unit per dollar. If they were to encourage some diverse practices, they may find that their yield goes down to 900,000 units for the same dollar amount, so their friction (F) is 100,000. If their risk factor is 20%, plugging this into our equation we get an efficiency of 1.125 units per dollar!

This may appear complicated, and in some ways it is, but if you can find the proper balance of Risk factor and Friction in your business, you can not only avoid catastrophic business failures, but also be more adaptable to change.

All too often in business we strive for uniformity. Uniformity of thought, or practice, or opinion can be stifling to the ability of a business to adapt to the changing needs of the marketplace. So go out, find diversity in your business, and embrace it for what it is- an asset to your business.
This article was written by SBA Network Sales Technology Specialist Matt Walker. He may be reached at mwalker@sbanetwork.org.

Develop A Marketing Plan

One of the greatest needs of managers of business is to understand and develop marketing programs for their products and services. Business success is based on the ability to build a growing body of satisfied customers. Modern marketing programs are built around the “marketing concept,” which directs managers to focus their efforts on identifying and satisfying customer needs – at a profit.
Marketing continues to be a mystery to those who create it and to those who sponsor it. Often, the ad that generates record-breaking volume for a retail store one month is repeated the following month and bombs. A campaign designed by the best ad agency may elicit a mediocre response. The same item sells like hotcakes after a 30-word classified ad, with abominable grammar, appears on page 35 of an all-advertising shopper tossed on the front stoops of homes during a rainstorm! The mystery eludes solution but demands attention. Your marketing results can be improved through a better understanding of your customers. This approach usually is referred to as the marketing concept. Putting the customer first is probably the most popular phrase used by firms ranging from giant conglomerates to the corner barbershop, but the sloganeering is often just lip service. The business continues to operate under the classic approach – “Come buy this great product we have created or this fantastic service we are offering.” The giveaway, of course, is the word we. In other words, most business activities, including advertising, are dedicated to solving the firm’s problems. Success, however, is more likely if you dedicate your activities exclusively to solving your customer’s problems. Any marketing program has a better chance of being productive if it is timed, designed and written to solve a problem for potential customers and is carried out in a way that the customer understands and trusts. The pages that follow will present the marketing concept of putting the customer first. Marketing is a very complex subject; it deals with all the steps between determining customer needs and supplying them at a profit.
The Marketing Concept The marketing concept rests on the importance of customers to a firm and states that: All company policies and activities should be aimed at satisfying customer needs and profitable sales volume is a better company goal than maximum sales volume. To use the marketing concept, businesses should: 1.             Determine the needs of their customers (Market Research); 2.             Analyze their competitive advantages (Market Strategy); 3.             Select specific markets to serve (Target Marketing), and; 4.             Determine how to satisfy those needs (Market Mix). 5.             Market Research In order to manage the marketing function successfully, good information about the market is necessary. Frequently, a small market research program, based on a questionnaire given to present customers and/or prospective customers, can disclose problems and areas of dissatisfaction that can be easily remedied, or new products or services that could be offered successfully.
Marketing Strategy Marketing strategy encompasses identifying customer groups (Target Markets), which a small business can serve better than its larger competitors, and tailoring its product offerings, prices, distribution, promotional efforts and services towards that particular market segment (Managing the Market Mix). A good strategy implies that a business cannot be all things to all people and must analyze its markets and its own capabilities so as to focus on a target market it can serve best.
Target Marketing Owners of small businesses have limited resources to spend on marketing activities. Concentrating their marketing efforts on one or a few key market segments is the basis of target marketing. The major ways to segment a market are: 1.    Geographical segmentation – developing a loyal group of consumers in the home geographical territory before expanding into new territories. 2.    Product segmentation – extensively promoting existing best-selling products and services before introducing a lot of new products. 3.    Customer segmentation – identifying and promoting to those groups of people most likely to buy the product. In other words, selling to heavy users before trying to develop new users. Managing the Market Mix There are four key marketing decision areas in a marketing program. They are: 1.    Products and Services 2.    Promotion 3.    Distribution 4.    Pricing The marketing mix is used to describe how owner-managers combine these four areas into an overall marketing program.
Products and Services Effective product strategies for a business may include concentrating on a narrow product line, developing a highly specialized product containing an unusual amount of service.
Promotion This marketing decision area includes advertising, salesmanship and other promotional activities. In general, high quality salesmanship is a must for small businesses due to their limited ability to advertise heavily. Good yellow-page advertising is a must for small retailers. Direct mail is an effective, low-cost medium of advertising available to small businesses.
Price Determining price levels and/or pricing policies (including credit policy) is the major factor affecting total revenue. Generally, higher prices mean lower volume and vice-versa, however, small businesses can often command higher prices due to the personalized service they can offer.
Distribution The manufacturer and wholesaler must decide how to distribute their products. Working through established distributors or manufacturers’ agents generally is most feasible for small manufacturers. Retailers should consider cost and traffic flow as two major factors in location site selection, especially since advertising and rent can be reciprocal. In other words, low-cost, low-traffic location means you must spend more on advertising to build traffic.
Marketing Performance After marketing program decisions are made, owner-managers need to evaluate how well decisions have turned out. Standards of performance need to be set up so results can be evaluated against them. Sound data on industry norms and past performance provide the basis for comparing against present performance. Owner-managers should audit their company’s performance at least quarterly. The key questions to ask are: ·      Is the company doing all it can to be customer-orientated? ·      Do the employees make sure the customer’s needs are truly satisfied and leave them with the feeling that they would enjoy coming back? ·      Is it easy for the customer to find what he or she wants and at a competitive price? How to Develop a Marketing Concept Source: Managing a Small Business Unfortunately, there is still a misunderstanding about the word marketing. Many people, including top executives, use it as a sophisticated term for selling. Marketing representative is commonly used in ads to recruit salespeople. Actually, marketing is a way of managing a business so that each critical business decision is made with full knowledge of the impact it will have on the customer. Here are some specific ways in which the marketing concept approach differs from the classic, or sales, approach to managing a business. ·      In the classic approach, engineers and designers create a product, which is then given to salespeople who are told to find customers and sell the product. In the marketing approach, the first step is to determine what the customer needs or wants. That information is given to designers who develop the product and finally to engineers who produce it. Thus, the sales approach only ends with the customer, while the marketing approach begins and ends with the customer. ·      The second major difference between the sales and marketing approaches is the focus of management. The sales approach almost always focuses on volume while the marketing approach focuses on profit. In short, under the classic (sales) approach the customer exists for the business, while under the marketing approach the business exists for the customer. The marketing concept is a management plan that views all marketing components as part of a total system that requires effective planning, organization, leadership and control. It is based on the importance of customers to a firm, and states that: All company policies and activities should be aimed at satisfying customer needs. Profitable sales volume is a better company goal than maximum sales volume. In order to conduct a successful marketing concept program you must be able to answer the following questions: What type of business are you in (manufacturing, merchandising or service)? What is the nature of your product(s) or service(s)? What market segments do you intend to serve? (Describe the age, sex, income level, and life-style characteristics of each market segment.) What strategies will you use to attract and keep customers? 1.    Product 2.    Price 3.    Place 4.    Promotion 5.    Persuasion (personal selling) What is your unique selling proposition (USP)? Who is your competition, and what will you do to control your share of the market?

Business Planning

Success in business comes as a result of planning. You must have a detailed, written plan that states your ultimate goal, the purpose behind your goal, and each milestone that must be passed in order to reach your destination.
A business plan is a written definition and series of operational instructions for achieving your goal. This list of instructions will form a complete business tool with which to define your basic product, income objectives, and specific operating procedures. You must have a business plan if you hope to attract investors, obtain financing, or preserve the confidence of your creditors. Your plan for business success will serve as the background information and supporting details of any financial proposals you submit to lenders, creditors, or investors. Many entrepreneurs are under the mistaken impression that a business plan is the same as a financial proposal, or that a financial proposal constitutes a complete business plan. This is a misunderstanding of these two separate and different business success aids. Let’s describe the difference between them. The business plan can be considered a long-range map to guide your business toward the goals you’ve set. This plan details the what, why, where, how, and when of your business the steps to ultimate success for your company. Your financial proposal is a request for money based upon your business plan. It describes your business history and objectives, recounting those details that make you an especially attractive investment for a creditor. The financial proposal draws information from the complete business plan to develop an attractive offer to the investor. Understand the differences between these two important terms. They are closely related, but are not interchangeable. Writing and putting together a winning business plan takes study, research, and time. Don’t try to do it all in one or two days. The easiest way to begin your plan is with a loose-leaf notebook, plenty of paper, pencils, a pencil sharpener, and several erasers. For your first session, choose a quiet place to work, away from the distraction of ringing telephones, the interruptions of others, and the incessant droning of the television set. Focus your thoughts on your business your hopes, dreams, and ambitions. Let your mind race through the myriad of possibilities that you could accomplish given the capital investment, personnel, location, etc. Jot all these ideas, thoughts, questions, etc. on the paper in your notebook. Over the course of the next several days, it will be a good idea to carry a pocket notebook and jot down those business ideas as they come to you ideas for sales promotion, recruiting distributors, and any other thoughts on how to operate and build your business. Later, when you actually sit down again and begin working on your business plan, you can compile all your notes by category financing, sales, distribution, advertising, etc. Then evaluate your ideas, rework them, refine them, and integrate them into the overall picture of your business plan. Title a separate page with each subject area of your plan and describe each thoroughly. The subjects must identify your present position, present your ultimate goal in clear, concise language; include a step-by-step description of how you will proceed; have a specific date set for the attainment of the particular goal. Developing a set of questions to answer about your business forces you to take an objective and critical look at your ideas. Putting it all down on paper allows you to change, remove, and refine everything into a form that will best meet your needs. You’ll be able to spot weaknesses and strengthen them before they develop into major problems. Overall, you’ll be developing an operating manual for your business: a valuable tool that will keep your business on track and guide you in its profitable management. Because the plan contains your ideas for your business, it’s very important that you do the planning. You must be the one to develop the plan and put it all down on paper just the way it should read. Seek out the advice of other people. Talk with, listen to, and observe others who are operating similar businesses. Enlist the advice of your accountant and attorney. At the bottom line, however, don’t ever forget that this must be your business plan! Statistics show the greatest causes of business failures are poor management and lack of operational planning. No one will ever succeed without a clear-cut knowledge of where to focus his or her attentions. The best business plans for even the smallest of businesses run twenty-five to thirty pages or more. The suggested outline below is a logical organization of the information every business plan should cover, and should serve as guide for the development of your own plan: 1. Title Page 2. Statement of Purpose 3. Table of Contents 4. Business Description 5. Market Analysis 6. Competition 7. Business Location 8. Management 9. Current Financial Records 10. Explanation of Plans For Growth 11. Projected Profit, Loss, and Operating Figures 12. Explanation of Financing for Growth 13. Documentation 14. Summary of Business & Outlook for The Future 15. Listing of Business & Personal References On the very first page of your plan (the title page), place the name of your business with the business address underneath. Skip a couple of lines and write in all capital letters: PRINCIPAL OWNER followed by your name (if you’re the principal owner). For example: ABC ACTION 1234 SW 5th Avenue, Anytown, USA 12345 PRINCIPAL OWNER: Jack Jones That’s all you’ll have on that page along with the page number. Following the title page will be your “Statement of Purpose.” The page title should be in all capital letters, centered across the top of the page. Skip a few lines and write the statement of purpose. This should be a simple sentence or two summarizing your primary business function. For example: “We are a service business engaged in the direct marketing of business success manuals, books, audio cassettes, and other information by mail.” Make the statement direct, clear, and concise. Next, skip several lines and flush with the left hand margin of the paper write out a subheading in all capital letters: EXPLANATION OF PURPOSE. Beneath this subheading briefly explain your statement of purpose. Keep your Explanation of Purpose” short – no longer than one paragraph. Very few business purpose explanations are justifiably more than a half page long. Example: “Our surveys have found most entrepreneurs to be sadly lacking in basic information that will enable them to achieve success. This market is estimated at more than 25 million, with at least half of these actively seeking sources that provide the information they need and want. Combining our business, advertising, and publishing experience, it is our goal to capture at least half of this market of information seekers by utilizing our publication Entrepreneurs’ Reports. Our market research indicates we can achieve this goal and realize a profit of $1,000,000 per year within the next five years.” Now you will present the “Table of Contents.” Don’t really worry about this one until you’ve got the entire plan completed and ready for final typing. It’s a good idea, however, to list the subjects (chapter titles) as we have above, and to check off each one as you complete that portion of your plan. By having a list of the points you want to cover, you’ll be able to move around and work on each phase of your business plan as the ideas or interest in organizing that particular phase stimulate you. Thus, you won’t have to make your thinking or your planning conform to the chronological order of the individual chapters of your business plan. Your “Business Description” will begin where your “Statement of Purpose” leaves off. Describe your product, the production or procurement process, who has responsibility for what division of the work, and, most importantly, what makes your product or service unique and gives it an edge in your market. You can also briefly summarize your business beginnings, present position, and potential for future success. Next, your “Market Analysis” will describe the buyers you’re trying to reach, why they need, want, or will buy your product, and the results of any tests or surveys you may have conducted. Once you’ve defined the market, go on to explain how you intend to reach the buyers how you’ll alert these prospects to your product or service and induce them to buy. You might want to break this chapter down into sections such as “Publicity and Promotions,” “Advertising Plans,” “Direct Sales Force,” and “Dealer / Distributor Programs.” Each section would then be an outline of your plans and policies for that subject area. The chapter on “Competition” will identify who your competitors are, their weaknesses, and strong points. Explain how you intend to capitalize on those weaknesses and match or better their strong points. Talk with as many of your indirect competitors as possible those operating in different cities and states. One of the easiest ways of gathering a lot of useful information about your competitors is by developing a series of survey questions and sending these questionnaires out to each of them. As they respond you will be able to develop a perspective on the market forces aligned against you. As an indirect result, you will later be able to compile the answers to these questionnaires into some form of directory or report on this business that you can sell. It is advisable to contact the trade associations and publications serving your proposed type of business. For information on these associations and specific publications, visit your public library. Ask for the librarian’s help, explaining exactly what you are seeking. Reading through the available publications in the field will give you an idea of what additional sales angles your company can take to reach an increased share of the market. The chapter entitled “Business Location” simply states the present location of your business, the size of the operating area, number of offices, floor plans or designs, types of furnishings, machinery, tools or materials necessary for operation, proposed expansion plans, possible sites for building new headquarters, and future possibilities for growth in present location. This chapter will help you determine if the available space of your present location will satisfy your future needs or if a move to a different location will be necessary. “Management” should be a description of the necessary jobs for successful operation of your business. Describe the management hierarchy that actually runs the business, names of individuals, their job titles, duties, responsibilities, and include a resume for each. It’s important that you paint a strong picture of your top management because the people coming to work for you or investing in your business will be investing their time, money, and lives in these individuals as much as in your product ideas. The individual tenacity, mature judgment under fire, and innovative problem solving characteristics of good managers have won over more people than all the AAA Credit Ratings and astronomical sales figures put together. People becoming involved with any new venture want to know that the person in charge knows what he’s doing, will not lose his cool when problems arise, and has what it takes to make money for all involved. After demonstrating the strengths of the top person, go on to outline in descending order the other key positions within your business. If you’ve been in business for a while, the next chapter, “Current Financial Records,” is a picture of your current financial status and a review of your operating costs and income from the beginning of the business to the present date. Generally, this is a listing of your profit and loss statements for the past six months, plus copies of your business income tax records for each of the previous three years the business has been an entity. Entitled “Explanation of Plans For Growth,” Chapter Nine is simply an explanation of how you plan to keep your business growing a detailed guide of precisely what you’re going to do and how you’re going to increase profits. These plans should show your goals for periods covering the coming year, the next two years, and a complete three-year cycle. By breaking your objectives down into annual milestones, your plans will be accepted as more realistic and will be more understandable as a part of your ultimate success. Next, itemize the projected cost and income figures of your three-year plan in the chapter “Projected Profit, Loss, and Operating Figures.” It will take a lot of research (and most likely a good deal of writing, editing, and rewriting), but it’s very important that you list these figures based upon thorough investigation. You may have to adjust some of your plans downward, but once you’ve got these two chapters on paper, your complete business plan will fall into line and begin to make sense. You’ll have a precise map of where you’re headed, how much it’s going to cost, when you can expect to start making money, and what percentage you can expect that profit to be. Now that you know where you’re going, how much it’s going to cost and how long it’s going to be before you begin to recoup your investment, you’re ready to talk about how and where you’re going to get the money to finance your journey. Title this chapter “Explanation of Financing for Growth.” Unless you’re independently wealthy, you’ll want to use this chapter to list the possibilities and alternatives of future financing. Make a list of possible investors you can approach and induce to put up some money as silent partners. Compile a prospect sheet of those people you might be able to sell as stockholders in your company. In many cases, a company can sell up to $300,000 worth of stock on a private issue basis without filing papers with the Securities and Exchange Commission. Check with your corporate or tax attorney for more details. To further prepare for future financial needs, this chapter may also contain a list of relatives and friends who might help you with a non-collateralized loan for the development of your business. Next, search out and identify possible venture capital organizations that will lend money to a business such as yours. Visit the Small Business Administration office in your area and pick up the application papers for an SBA loan. Read and study them carefully, even fill them out on a preliminary basis then compare the costs on such a loan with other sources of financing. Determine in which business publications your advertising would be best displayed if you were seeking a partner or investor. Write an example of the ad you’d want to use if you did decide to advertise for monetary help. With a listing of all the options available to meet your needs, all that’s left is to arrange these options in the order you would follow when the time came to seek additional capital. While you’re researching these money sources, you’ll save time by noting the name of the contact person to deal with when you want money. If possible, develop a working relationship with these resources in advance. In your “Documentation” chapter place a copy of all legal papers relative to your business. You should include a credit report on yourself. Use the yellow pages or check at the credit department in your bank for the nearest credit reporting office. When you get your credit report, look it over and take whatever steps are necessary to eliminate any negative comments. Once these have been taken care of, ask for a revised copy of your report to include in your plan. This will help insure potential investors of your credit worthiness. If you own any patents or copyrights be sure to include copies of these in the chapter. Any and all licenses to use someone else’s patent or copyright should also be included. If you own the distribution, wholesale, or exclusive sales rights to a product, include copies of this information as well. You should also place copies of any state county, or city business licenses, all leases, special agreements, or other legal papers that might be pertinent to your business. In conclusion, write out a brief, overall summary of your business. Entitled “Summary of Business and Outlook for The Future,” include in this chapter a summation of each of the preceding chapters. Briefly recap when the business was started, the purpose of the business, what makes your business different, how you’re going to gain a profitable share of the market, and your expected success during the coming five years. The last page of your business plan is a courtesy page listing the names, addresses, and telephone numbers of personal and business references persons who’ve known you closely for the past five years or longer, and companies or firms you’ve had business or credit dealings with during the same period. This will provide resources with which potential investors or creditors can check to verify your financial statements and personal integrity. That’s it: your complete business plan. Before you have a final draft typed out, read the entire plan over once a day for a week or ten days. Make any changes or corrections to the plan; rewrite portions that seem unclear or weak. Finally, have each chapter reviewed by an attorney and an accountant. It would also be a good idea to have it reviewed by a business consultant serving your business field. After these reviews and any last minute changes, the report will be ready for its final typing. Hire a professional typist or word processor to type the entire plan on ordinary white bond paper. Make sure you proofread it against the original. Check for and correct any typographical errors. Then, reread through it for clarity and the perfection you desire. Now you’re ready to have it printed and published for whatever use you have planned: for distribution to your partners or stockholders, as the business plan for putting together a winning financial proposal, or as a business operating manual. Take it to a quality printer in your area and have three copies prepared. If it was typeset on a computer, print your copies on a laser printer for greater clarity. Have a copy professionally bound if you wish, place one in a file for safe keeping and as a master from which to make any future copies, and one to use to periodically reassess your goals or use as a daily and weekly guide to business operation. Make the plan as useful a tool as possible for complete business success. Now you can relax, take a break, and feel good about yourself. You have a complete and detailed business plan with which to operate a successful business of your own. You have developed a plan you can use as the basis for any financing proposal you may want to submit. You have formulated a precise roadmap for the attainment of real success, marking out the milestones to pass on the way. Congratulations. Best wishes for the total fulfillment of all your hopes, dreams, and ambitions!

Advantages and Disadvantages of Open Plan Offices

From time to time I ask other members of our network to submit an article that is valuable to entrepreneurs seeking to improve their performance. This week Paul Smith from searchofficespace.com provides this article.

When choosing how to plan an office, you are faced with the decision of an open plan or separate offices. This is a difficult decision for many, and there are advantages and disadvantages of both. Here are some of the most important advantages and disadvantages of open plan offices.Advantages:

Open plan offices are more economical. You are able to provide more work spaces and place more employees in an office.
Studies have been done to show that the cubicle type working area does not affect productivity as of yet, and estimate that the cubicle area could even be up to 21% smaller without affecting productivity. With a closed plan office, the amount of workspaces and employees is less.
Communication is obviously easier between workstations and departments. There is no time wasted between offices because everyone is in the same area. While this advantage wouldn’t make a huge difference in the well being of a company, it might save employees some frustration during the course of their day. When employees work in a closed office space, they can run themselves mindless with small tasks that are unnecessary in an open plan office.
Things are easier for the supervisors, as everyone is in a centralized area. There is no need to track someone down from office to office. Normally, with an open office plan, managers and senior managers are in constant contact with the staff. While running through to deal with one thing, managers and senior managers can deal with any other issues or employees. This makes handling issues and problems go much faster. With the employees being in constant contact with managers and senior managers, they are able to reach management more quickly and deal with issues. This means that issues get resolved faster, and this leads to more productivity.
Open space offices are more economical when it comes to money that is put out for air conditioning and electricity. One centralized area is being heated, or cooled, and lighted. This is opposed to several different rooms, each having to be heated or cooled separately. This means that the company saves money.
If the layout of the office needs to be changed, it can be done quickly and with minimal effort. If a closed plan office layout needs to be changed, serious issues can arise the way they never will with open office plans.

Disadvantages:

Open space offices are noisier and can be more chaotic than closed plan offices. Employees are in one large area, and phone conversations or conversations between employees will be overheard easily. When there are several conversations happening at one time, it can get quite noisy. This can lead to employees becoming distracted which may lessen productivity.
People passing to and fro can also cause distraction of employees. In a closed office plan, disturbances like this wouldn’t happen as much.
In an open office space, security is reduced. Each employee lacks a lockable door like they would have if each one had a separate office. This can lead to risks and issues that the company may not want to face.
Privacy is difficult to obtain with an open office plan. If family members call, or if a confidential call needs to be made, it can be difficult. With individual offices, these things are more possible. Employees may feel uncomfortable being in such close quarters with their coworkers when confidential calls need to be made.
Sicknesses and infections can spread like wildfire in an environment like an open office plan. When flu season hits, you can bet that most employees will catch it.
Lighting, heating, and air conditioning to suit all of the employees’ tastes can be difficult to achieve. With a closed office plan, employees are able to keep their individual offices the way they like them.
Senior staff or employees which have been with the company longer than most will most likely feel as if they are entitled to a private office. This can cause problems among the employees, which can damage productivity and employee relationships.

There are advantages and disadvantages to an open office plan, and normally the risks need to be assessed and the pros and cons weighed against each other before a decision is made. However, with a closed office plan and an open office plan, you will find supporters and people who are against both. Ultimately, the decision needs to be about what is best for the company or business.Article by Paul Smith. Paul is part of the SearchOfficeSpace.com serviced office London team. Visit http://www.searchofficespace.com to search for serviced offices, executive suites and office space rental throughout the World including the UK, America, Europe and Asia Pacific.Please listen to our weekly radio show at 4PM Pacific Time this Friday. To tune in, simply go to our website at www.markdeo.com. We will also be taking calls from our listeners to help with any problems you may be experiencing in your business. Call in to speak with us at: 1-323-443-6878. Then enter code: 226287 to get on the air!Have a great week!

12 Step Business Growth Plan

Running a small business requires having the right knowledge and applying self discipline on a daily basis. For this reason I have prepared what I call the “12 Step Business Growth Plan.” Like the Alcoholics Anonymous 12 step plan, it is the core of what we need to do to keep us focused on proven management practices. I recommend that my students, listeners and clients print them and post them in their work area to review daily while planning for the next days activities.

1. Set Specific GoalsGoals must be specific. Saying that you’re going to get more customers is not good enough. How many? By when? What type of customers? These are the kind of questions you need to be asking yourself. Put your goals in writing. More than 90% of people that write down specific, realistic, deadline oriented goals actually achieve their goals! Finally, visualize yourself in the future. Most people think in pictures. As you begin to right down your vision place yourself in the future and make it seem real. You will be amazed at the results.2. Seek Out ChangeLet’s face it change is the only constant. The longer you “do what you’ve always done,” the harder it will be to do something different. It is ideas that bring change about in our world. Nearly every great invention, system or model was born from the idea of a lone entrepreneur. Psychologists are now saying that creativity is a “learned trait.” Experiment with creative ways of doing things. Don’t just settle for the “easy way.” Do this daily and watch your creativity grow and your business soar!3. Focus on BrandingBranding is not merely for the BIG players. Entrepreneurs and small business owners can also differentiate themselves with this kind of branding strategy. In fact it is even MORE important for smaller organizations to set themselves apart, particularly if they are competing with the BIG GUYS! Remember, your customer’s perceptions of WHO you are is all that matters to them. Often times your reputation is wrapped up in what advertising guru, Bill Bernbach called the Unique Selling Proposition (USP). What sets you apart from the crowd? What do you do that no one else does? This is far more important than the quality or price of your product or service. Everything that we do or say both internally and externally should revolve around this.4. Be an Influencer NOT a SalespersonOur goal is not to SELL our customers but rather to influence them. When we SELL them, they move away from us because they are fearful of being coerced into making the wrong decision. Ask more questions. Find out what’s important to them. Find a way to get them to look up to you. We must earn the right to influence customers by aligning ourselves with them in a way that sets us apart as a friend, advisor and confidant. Then we will become the ONLY solution to their needs.5. Speak in Terms of the Customers InterestAs the great master of human relations, Dale Carnegie said, “[we must] speak in terms of the other person’s interest.” The reason people are running away from you is that you are trying to TAKE. Be willing to give. “What can I give?,” you ask? If nothing else, give them an education. That’s right EDUCATE your prospect and you will create a customer for life! Ask plenty of questions. Show that you really care. You will learn more, build stronger relationships and get more business. Oh yeah, you’ll have more fun too.6. Develop a Practical Sales and Marketing PlanA sales and marketing plan creates the kind of attention you need to get in front of the right type of organizations. It is what attracts people to you! A good sales and marketing plan implemented cost effectively, efficiently, and consistently, will eliminate the need for “cold calls!” Your marketing plan should also include a sales plan. There’s no other sure way to guage the financial growth and progress of your business. You need a realistic map for where the sales will come from, how they’ll come and from whom.7. Know Your CustomersChanges in your customers’ preferences and your competitors’ products and services can leave you in the dust unless you get to know your customers well. What is it that they are looking for today? What will they likely want in the future? What are their buying patterns? How can you be a resource for them even if you don’t have the right products or services for them right now?8. Manage Your Cash DailyOnly cash flow can keep a company alive. No matter how impressive your company’s profits might be, if you run out of cash, it’s over! Learn the importance of aligning performance measurement goals to gross margin. Learn about various pricing strategies, contribution margins and how to stay on top of your cash position every minute of the day if necessary.9. Be a LeaderJack Welch, CEO of G.E. loved the small business model so much his first step in turning around G.E. was to break up the giant into 350 smaller companies. He told Business Week Magazine, ” Most small companies are simple informal and grow on good ideas. Think small,” he said. Understand your role as the leader of your organization is to inspire, simplify processes, drive the company toward their vision, spread the gospel and admit your mistakes, and keep things ever moving forward.10. Get HelpGet an advisory board or a mentor! Sound crazy for a small operation? It’s not! The board can be family members that you trust, or even friends. Ask them to be your board of directors and review your business plans and results with them. Having someone to bounce ideas off and get an objective opinion is critical.11. Communicate ClearlyYou might be the key to everything BUT you cannot DO everything and grow at the same time. Even modest success can overwhelm you unless you hire the right staff and delegate responsibility. Good communication skills are the key to winning strong relationships. Learn to listen in an active way. Stop thinking about what you are going to say next and put the focus back on the customer.12. Don’t Give Up!Some of the most successful entrepreneurs failed several times before doing extremely well. So, if you’re failing, fail. And fail fast. And learn. And try again, with your newly found wisdom. Do NOT give up. In a recession such as we are experiencing today, only the persistent will thrive!

Rule #5- Strategic Rejection Makes Us More Attractive

This is the fifth of 15 short video lessons I’m making available that cover the topics discussed in my upcoming book, The Rules of Attraction. I hope you find it valuable.

Just Say No!

Rule #5: Strategic Rejection Creates Attraction

There is one word that business leaders are always frightened to say to a potential customer:
NO!

The word no can become the most strategic word in your lexicon. The more people you reject, the more attractive you become to the discrete market you have identified.

As right as it feels sometimes, when you continue on the mission to add more business at any cost, regardless of how these new prospects match your target profile, you risk devaluing your market position and reducing your competitive worth.

I have seen many occasions where management, in pursuit of meeting ever-increasing costs, will do whatever it takes to land a new customer, any new customer. Fast forward into the future; if this behavior continues, that company will end up with a large number of new customers and a support nightmare. Too many different versions of a product mean support, development, and customer services are impossible to maintain. As precious resources are sucked away, the next release of a product or service is constantly delayed. Furthermore, the company may develop a number of features that the market does not want, and the company ceases to be exclusively important to anyone. A “jack-of-all-trades” is important to no one.

Finally, the profitability for each customer goes down significantly as new features are added only to close deals. In the end, businesses die from one of two reasons: (1) having too few customers or (2) having too many of the wrong kind. The more experienced and disciplined strategy is to identify the gap in the marketplace and then develop a solution that fits this need so perfectly that a customer would feel ridiculous to consider any other inferior solution.

Check out the video below for more details.

To pre-order the book at Amazon.com, click on the image below.

Rule #3- Create an Exclusive Community of Superusers

The Fender Stratocaster is the most popular electric guitar ever made. From Jimi Hendrix to Eric Clapton to Buddy Holly, guitarists have used it to change the world of music. The “Strat” as it is known, is an icon for an exclusive community of musicians who have become superusers. I know, I’m one of them.

Fender has kept this tradition alive with their many Stratocaster user groups. The entrepreneurial lesson learned is that we can create our own community of superusers by building “specialty” into our products and services. We can make them so valuable to a SMALLER market that they are initially shunned by the masses. Our superusers will evangelize our products and services for us just by using them!

Apple has done it with the Mac and iPhone. Mel Gibson did it with the Passion of the Christ. Even new Harry Potter editions need to be delivered in armored cars because they are so magnetic to their target audience that the rest of the world now clamors for them as well. We can do the same. Check out the video below for more details, or click here to watch it in high defintion.

To pre-order the book at Amazon.com, click on the image below.