Wednesday, July 29, 2009

BUSINESS LIFECYCLE STAGES

Just like phases of life, all businesses, and in particular small businesses go through various stages of growth and decline. By recognizing and understanding the stages of their business, the small business owner is better equipped to employ strategies that will maximize the capital required for the business; the human resources needed to achieve the business goals; and most importantly, the equity growth for the owner and shareholders.

There are five fundamental stages to every business:

STAGE 1-START UP

Key Issues:
Need for working capital
Tight financial controls
Ill-defined administrative systems
“Crisis management” mode
Choosing the correct type of entity (Corporation, S Corporation, LLC, etc.)
Tax issues related to becoming self-employed
Strategies:Personal Protection Plans
Liability Coverage
Operational Plan
Contingency Planning


STAGE 2-GROWTH

Key Issues:
Focus on sales
Lack of financial planning
Inadequate organizational systems
Delegation of important functions
Proper tax planning
Strategies:
Employee Benefits
Group Retirement Plans
Formal Business Plan
Create Marketing Engine
Branding
Key Performance Indicators

STAGE 3-DELEGATION

Key Issues:Increasing profitability
Capital investment
Emergence of key employees
Formalized administrative functions
Strategies:
Employee retention-Elevated Employee Benefits
Estate Planning
Tax Management Plans
Enterprise Requirements Planning
5-Year Strategic Plan


STAGE 4-EVOLUTION

Key Issues:Increasing bureaucracy
Standardized compensation
Changing culture
Focus on profitability
Strategies:
Wealth Protection Plans
Wealth Distribution Plans
C.I.P. Continuous Improvement Planning
Team Building
Proper attention to Tax Planning


STAGE 5-TRANSITION

Key Issues:
New resources of growth
New direction
Stagnation
Exit plans
Should you actually wait until the end of the lifecycle to think about Transition and Succession Planning? Should it be considered back in the Delegation stage?
Strategies:
Wealth Protection Plans
Wealth Distribution Plans
Income Management Plans
Succession Planning, including the tax efficiency of the plan

Many times successful business owners remain in stage 4 or stage 5 because they become comfortable in their industry or their niche. Stage 4 and 5 can also be called the declining stages. If a business is not growing, it’s declining and mature companies can plateau in stage 4 and 5 and begin the spiraling decline into non-existence because of comfort and complacency.

If a business is not cycling between stage 2 and 3 throughout its life, it’s time to reevaluate their vision, mission, goals and strategies to maintain relevancy in an ever changing marketplace.

Thursday, July 16, 2009

Cash Flow: The Pulse of Your Business

Cash flow is the life-blood of every business. A healthy cash flow is as important as (if not more than) your business’s ability to deliver its goods and services. If you fail to satisfy a customer and lose their business, you can make modifications to better deal with future customers. But, if you fail to have enough cash to pay your suppliers, creditors, or your employees, you’re out of business.

Cash flow is concerned with the timing of the movement of money. Inflows occur when you make a cash sale, collect on receivables, have investment income, or borrow money. etc. Outflows are generally the result of paying expenses such as payroll, inventory, taxes, purchasing fixed assets, etc. Cash Flow is not the same as “profit”, which is a snapshot of income and expenses at an event or over a certain period of time. You can make great profits, but if it’s all in accounts receivable, you have no cash to pay your daily expenses.

Four basic but important components to examine:
1. Accounts Receivable Collections: The longer it takes for your customers to pay on their accounts receivable, the more negative your cash flows will be. Stay on top of your collection efforts.
2. Credit policy and terms form the blueprint you use when deciding to extend credit to a customer. The correct credit policy is necessary to ensure that your cash flow doesn't fall victim to a credit policy that is too strict or to one that is too generous.
3. Inventory: An excessive amount of inventory hurts your cash flow by using up money that could be used for other cash outflows.
4. Accounts payable and cash flow: Without payables and trade credit you'd have to pay for all goods and services at the time you purchase them. For optimum cash flow management, you'll need to examine your payables schedule.

Four tips on managing your cash flows:
1. Contingency plans. You should keep three plans at hand. (1) Cash flows requirements when business is going according to plans (2) when business is slightly lagging (3) when business is hit hard (such as during these economic times).
2. Cash Forecasting. Forecast, make a budget, stick to it. Modify your budget only after thorough ongoing reviews of your cash flows and remember to include expenses that may not be due each month, such as annual insurance premiums.
3. Spending Controls: Make sure you carefully negotiate leases and solicit price quotes. Frequently analyze operations.

4. Add Employees cautiously: Actively seek ways to maximize your and your employee’s productivity. You may also want to remember to consider alternatives such as outsourcing .

Cash Flow is the lifeblood of every business. The concept is much broader than that of profit, alone. Close monitoring is critical to success. Just as you need to maintain a healthy heartbeat by eating right, exercising and consulting your physician, you must have a firm grasp on carefully monitoring and managing the cash-flow pulse of your business.

4 Steps to Powerful Networking

For those who are not familiar with networking meetings or one-on-one (sometimes called face-to-face) meetings networking is a formalized effort to connect individuals interested in obtaining referrals from other individuals also wanting to get business referrals while one-on-one meetings are intended for getting to know each other’s business thus providing a more qualified referral to each person.

During the time I have been networking I’ve seen a number of techniques demonstrated during the meetings and while conducting one-on-ones. Some individuals will spend time flying around the room handing out business cards and spewing all sorts of information out to anyone that will listen. Others will hold back and not engage anyone unless they are recognized first and then proceed to spew out information and provide a business card because they believe that is the reason for networking. During one-on-ones they’re primed to maximize the time together so they can’t wait to start talking to tell you all about the great things their product or service will provide you or your customer/client.

If you want to maximize your networking effort and get people to know, like and trust you enough to give you referrals then you should get to know the etiquette of networking. Yes, that’s right, there is certain etiquette you should observe when networking. Before you can have any success at networking you should understand what occurs during a networking process, instead of what generally happens.

Current Approach vs. New Approach

Common Approach: Go into the event with the intention of finding someone who will buy your product or service. Result? You might as well try to win the lottery.

New Approach: Go into the event with the intention of bringing abundance to everyone you meet by getting them connected to the individuals and groups that will give them what they need now, or set them on the path that will result in manifesting their dream. THEN, after effectively doing this, tell them what you do and ask who they know who could use your product or service. Result: A wide open door of willingness to buy your product or service, or connect you with someone who will.

There are two ways to approach networking:

One: "I am going to be SO INTERESTING by what I say, how I look, how well I talk about my product or service, and exude so much charisma that people will be so impressed that they will want my product or service NOW and will tell everyone they know about it! I will just get better and better and better at this and inevitably become rich and successful.

Two: "I will be SO INTERESTED in everyone I talk to, in what they do, in what they need now, in their dream, that I will inevitably create abundance for everyone I meet by connecting them to the people and groups that will contribute to their success. I will get better and better and better at this and inevitably help others become rich and successful. I will not expect anything directly back from anyone I help. But as I am wise enough to see that this path will surely guarantee my business, financial and personal success, I will become fulfilled in all areas of life.

Interest Levels Other People Have in What You Do:
What goes through an individuals mind when you first meet them for the ultimate purpose of getting quality referrals? The success you have in converting a person into a referral partner may have to do with what interest level they have for your business offering. Let’s look at how this interest level might be scaled.

0) I do not know anything about you or your business and am not interested.

1) I know I will have no interest and I don't want to start a conversation or want this conversation to end ASAP.

2) I will listen long enough to get the opportunity to tell you what I do.

3) I will listen long enough to scan my memory to see if anyone I know can use your product or service and tell you I will let you know if I think of anyone.

4) I will listen because maybe if I do you will help me or buy my product or service.

5) I think there is a good chance you can help me so I will focus on our conversation. You are a key person that can and probably will help me in my business.

7) You have definitely helped me and I want to stay connected with you because I can expect more help from you and I want the opportunity to help you.

8) I see you have helped many others and me so I will bring other people to you.

It is your responsibility to get as many people as possible up to levels 5 - 8. To have success networking you have to talk to people at levels 5 - 8. You will get everyone you meet up to levels 5 - 8 when you conduct the 4 Steps to Powerful Networking.

4 Steps to Powerful Networking

1. FIND OUT WHAT PEOPLE DO.
First, greet them and ask for their business card. Have a pen so you can immediately start taking notes on their business card, starting with the date and location you are meeting them. (Have some blank business cards with you in case their card is shiny and you can't write on it.) Date and venue are important because this will help jog your memory about them later as your network expands and you connect people to your network. At first you may believe it is obvious what someone does. You can often look at their business card and get a general idea. This is not sufficient. Find out what makes them, unique. Expect to ask them ten questions or more.

2. HAVE A NETWORK.

Have you ever heard that everyone knows 250 people? This includes YOU! Even though you may know 250 people it is unlikely you will always think of the right people at the right time. Probably your network (of 250 people) will be too vague to be useful while networking.

Don't ever feel embarrassed if you can't immediately give someone a contact and don't ever feel you don't really deserve a lead. Just create a REAL NETWORK.

3. FIND OUT WHAT THEY NEED NOW.
SO now you know exactly what makes them unique and have defined their ideal client. Now you need to find out what they need to take their business or dream to the next level. Again, expect to ask ten or more questions to get this clarified. They won't be expecting these questions and this much continuing interest. Most people they talk to don't really care. You might have to work at finding out exactly what they need now. And as they are not used to going into much detail, it is often not very clear to them. Find out!

4. CONNECT THEM TO YOUR NETWORK and ADD THEM TO YOUR NETWORK.

Remember, don’t feel obligated to give someone a referral, but if you are carrying your business card binder and you feel comfortable connecting them with your network you can pull out the cards and give them to this person right now or follow up with them in the next couple of days. Ideally you want to collect four business cards for each contact in your binder, so you don't run out. But if you have only one card, just fill in the information on an extra blank business card if you are handing it to them. Blank business cards are also good if someone doesn't have a business card. You can give them one to write down their information.

This person will remember you.

You are in a completely different category, when you conduct the 4 Steps to Powerful Networking, than everyone else who is "just there to sell their product or service." You have helped the most important person in the world (them) achieve what their attention is absorbed in: "How can I sell more of my service or product?"

If you focus on being INTERESTING you will actually be mostly unseen and unheard. If you focus on being INTERESTED and deliver valuable help, the door will swing wide open to being seen and heard.

Sunday, July 12, 2009

"I Caught One, Now What?"

Okay, so this week it's a bit of a rant with a rave chaser. Hope that keeps you riveted to my topic and glued to your chair. One of the things that I find most fascinating is how hard some Businesses work to attract customers and then practically chase them out the door once they arrive. Unlike the various ways you can fish, acquiring a customer is not a "catch and release program".


What is often misunderstood by many Business owners is that the relationship with the customer is just beginning with the first transaction. It actually seems quite bizarre to go to all the effort of identifying your target market, design and create effective marketing campaigns, then only to have a mediocre experience when they make first contact with your organization. Probably one of my biggest pet peeves is to encounter a poorly trained and less than enthusiastic employee. I don't blame the employee either, the fault lies squarely on the shoulders of management for abdicating an essential part of their Business development and training process.

Oh, Oh, I feel another metaphor coming on. Imagine if you treated each customer like it was a first date and you were looking for that perfect soul mate, a partner for life. How might you treat them now? Would you be thinking about the next time you would see them? Would you maybe put your best foot forward and be on your best behavior? Would you call the next day to ask if they enjoyed their experience with you? Would you be thinking of more ways you could impress them with your expertise, caring and various talents? Or must I use the most obvious dating metaphor as to how most customers are treated? I will resist the urge to go there. Just imagine a world where customers loved and appreciated all that you do. A world where customers would tell all their friends and associates about you and would look forward to their next visit with excitement and anticipation. You on the other hand, would constantly be working on ways to WOW your customers and would always be letting them know how much you value and appreciate them. Sounds like the perfect match, wouldn't you say?

So what seems to be so difficult with this seemingly simple concept of following up with your customer to find out if they are pleased with your products or service? I remember asking one client why he didn't follow up with his customer's with a letter or a call and his answer surprised me. He said, "what if they didn't like the work and wanted it redone"? , "AND"? Which means, why wouldn't you want to make them happy rather than have them ranting to others about your poor service? Often times an unhappy customer can be turned into a raving fan by how well you deal with the challenge they had.

Please keep this one very important thing in mind. You don't have to stand on your head to be different than your competition. Often it's only the little things that make you unique. I consistently get a call from our car dealership, next day, after having our automobile serviced to ask how we enjoyed the total experience with them. Twenty years later and hundreds, possibly thousands of other car maintenance experiences they are still the only one that calls. Start to brainstorm some ideas today about the things you could do that would please and impress your customer in such a way that they would feel compelled to tell someone. Remember, it costs five times more to find a new customer than to keep the one you have.

One last thought around the future of your Business. The main reason for starting a Business for most people is to create a lifestyle that the Business can support, provide financial freedom and the ability to be in control of your life, right? Then one day you hope to sell your successful and profitable enterprise for a significant amount of money, enough to retire in comfort, sound about right? So hold that thought during your next customer transaction and thank your most valuable asset as they walk out the door. Oh, and call or write them a thank you card the very next day too!

Saturday, July 4, 2009

Good Help is Hard to Find

You hear it all the time from business owners… “Good help is hard to find.” Sure – it has its variations, such as “I work harder now that I own my own business than I did before as an employee,” or “in today’s economy, people don’t stay at the same company very long,” but it all means the same thing.

Is there an answer… of course! With a little preparation, you CAN find a great employee. First of all, have a prepared job description, including duties performed, education, experience, and ability requirements for the position ready before you start. Secondly, rather than a standard ad, try this - ask for EXACTLY what you want! Thirdly, take your time in the interview process to find the exact person. If you look for someone with the right attitude toward being a team member and they are reasonably intelligent you can always train someone to your standards. In fact, training someone to your standards generally insures they won’t have any bad habits picked up along the way in other jobs. Also, using analysis tools such as DISC during an interview process can improve your chances of putting new employees into the correct job.

Finally, once they’re hired, rather than a pat on the back and a hearty “good luck” when they start, take some time to review the position, set goals for them, provide a mentor (you’ve heard of them, they help employees learn the ropes in the organization) and train them.

Remember the maxim, “Slow to hire and quick to fire.” Stop doing the opposite!

Thursday, July 2, 2009

What is a Professional Business Coach?

A professional business coach is an expert in various areas and processes of business. In practice, a coach takes the time to understand the owner’s business completely and provides systematic development strategies that help the owner reach his or her goals. A business coach works to develop the whole business on a continuous basis, in contrast to a consulting engagement where expertise is typically focused on a specific stand-alone issue. A good business coach is a skilled mentor in the development of areas such as leadership skills, marketing, sales training systems, development of customer service systems and human resources, as well as financial analysis and intelligence.

Business coaches engage with, among others, new ventures and businesses having difficulties. A coach can prove highly effective in proprietary businesses, especially when the management is planning to expand, achieve yearly objectives, or sort out day-to-day problems. They also work extensively with business owners who are quite successful. These owners invest in coaches to help them achieve and maintain even greater successes. Many well established businesses find working with a business coach to be a highly profitable investment with an incredible Return on Investment. In fact, a study conducted by Michigan-based Triad Performance Technologies, Inc. cites an average 10:1 return on investment in less than one year!

As well, fast growing businesses need to constantly recruit new employees and acquire sufficient capital to support this expansion. Very often, expansion creates problems related to workforce management, resource allocation, and delegation of authority and responsibility. Over time, these problems can escalate and start to seriously affect productivity and profits along with the competitive advantage the business had in the first place. The owners of these fast growing enterprises often have little time to manage the recurring, daily problems. A business coach can address these issues as well as work with the owners to enable them to prioritize their objectives and allocate time and resources to each component of productivity in proportion to their relative contributions.

Businesses that have failed in the past and are starting out fresh can also greatly benefit from professional business coaches. These trusted advisors can assist in identifying and breaking free from inefficient management practices, and create positive new ones. A business coach can also offer a fresh point of view and an unbiased opinion about the business as well as provide competent strategies and tools. In fact, many failed ventures occur because the owner, such as an electrician or IT specialist, has great technical skills related to the product or service they sell, but limited business and financial skills. A business coach works with these owners to assure they have the requisite knowledge and savvy for sustained success.

Working with a coach is challenging, exciting and focused. A professional coach’s goal of fostering dynamic, continuous progress creates incredible business momentum. Combined exhilaration and remarkable success!