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Category Archives: Business

Find the Proper Business Idea

proper-business-ideaOne of the biggest struggles I had in starting my business was actually coming up with the idea. I wanted something that was scalable as well as needed in our society. I combed through hundreds of ideas before settling on my current venture. Through this discovery period, I uncovered what I believe are the five most important concepts in determining what makes the perfect business idea.

So, what is a perfect idea? Each individual entrepreneur has their concept of the perfect business. While Google is a great business for the founders of that company – it may not be a great business for others that are non-tech savvy or who do not want to run such a large organization.

Therefore, each perfect business is defined by the business owners. Keeping this in mind, let’s start on my five concepts of finding the perfect business:

# Understanding your customer

This might seem strange to start here as how do you know your customers before you have a business idea in place. The answer is simple – your customers make the business, therefore without customers there is no business. If you have a business idea don’t try to develop the idea around what YOU think potential customers will like or need, but find out what your customers actually desire. Too often business owners get an idea in their head and jump right in with both feet. However, they soon find out that their target market does not want what they are offering. Spending both time and money on a project just to see it languish is not the perfect business idea.

Moreover, let’s say you don’t already have an idea – getting out and understand consumers (those who will eventually become your customers) may lead you to the perfect idea. Knowing what potential consumers need and building products to meets those needs will get customers beating a path to your door – that is a perfect business idea.

# Passion

Passion here does not mean being fanatical about your product or service. But, it does mean having some interest in what you do. More times than not, you will be spending 15 to 18 hours a day working on your business in the beginning – usually for the first 12 to 18 months (more like 2 years in this economy). You have to constantly be thinking about ways to improve and grow your business as well as be out talking about it to everyone, everywhere. If you end up starting a venture that you don’t have passion for, something that does not make you jump out of bed each morning, it will be very hard to put in the hours and energy to make it successful – thus not a perfect business idea.

# Understand Your Competition

Every business has competition – either direct or indirect. Think about movie theaters. They have direct competition from video rental stores or at home television. They also have indirect competition from any other activity that consumers spend their disposable income on like bowling, paint ball, golf, etc. Anything that people do in their spare time.

Further, some competitors are ruthless. Meaning that if you promote and offer a product that is similar to theirs but at a lower price, these competitors will just lower their price to match or beat you. If they are already established businesses – they may be able to undercut your price enough to drive you out of business.

If you don’t know your competition – what they are willing to do to keep you out of their market – you may be spending more of your time in a pricing war then growing your business – not the perfect business idea.

# Cash Flow

Lots of entrepreneurs enter the business world with great ideas but very poor understanding of the capital it will take to get their venture off the ground. Most will prototype their product or service and understand what it takes to make the product or provide the service but they don’t understand the capital it takes to manage the rest of the organization – including marketing (very expensive but extremely necessary), employees (more than just salaries or wages), insurance or supplies and all the little miscellaneous expenses that add up very quickly like phone, internet, computer services, etc. Knowing your total cash flow will help ensure that all of your costs (variable and fixed) can be covered by the business – the perfect business idea. I have seen way too many businesses with great products fail because they could not cover simple expenses like rent or utilities.

# You

Know who you are. Know your strengths and weaknesses. Know that you are ready, willing and able to do what it takes to make your venture a success. I have worked with many business owners in the past that think all they have to do is hang out their shingle and they have it made. Thus, when it comes down to actually running the business day-to-day – they are unwilling to invest the time, energy or money necessary for success. Thus, know how hard you are willing to work.

Moreover, know your personal financial situation and what you need the business to generate to cover your lifestyle. If you think your business will pay you a great salary from day one – it will not. And, if you need it to, it is not the perfect business idea for you. Take away outside distractions like your personal financial situation – get those in order – thus, when your business concept does materialize – you will be able to solely focus on its conception and growth. In the end providing you the financial security you are seeking – it will be the perfect business idea.

Regardless of the level of your desire for your business – a lifestyle mom and pop operation or a multi-national conglomerate – if you develop a business idea with these five concepts in mind – your idea will be the perfect business idea for you.

Evaluate Business Ideas Tips

Ideas are a dime a dozen. Everyone gets them. Some of them are good, but most of them are bad. In fact, Alfred Noble once quipped, “If I have a thousand ideas and only one turns out to be good, I am satisfied.”

The curious nature of ideas, however, is that good ones often follow bad ones. It may take a little massaging, but that’s what ideas are for. And that’s why you should never ditch a bad idea.

How to Evaluate an Idea

One of the most important things for a business person to learn how to do is evaluate an idea. How will you know if an idea is good if you don’t analyze it, kick it around a little, and learn what it’s made of? Perhaps the bad idea you see on the surface is the outer shell of a good idea waiting to be revealed.

Before you do anything with an idea, first do a little research to see if anyone else has come up with that idea. This is how great innovators operate. Professional inventors spend a lot of time evaluating products that are already on the market because the exercise can often lead to a moment of discovery where the problems solved by the products already in existence leave a void of unsolved problems that need a solution. Where there is a problem without a known solution there is an idea waiting to happen.

Some patented products never make it to market because inventors and manufacturers realize before it’s too late that those ideas don’t really solve a problem, or the opportunity passes to solve a problem and newer innovations solve them better. A little research can reveal this before you get too vested in your idea.

If an idea has been thought of multiple times before, that may be a sign that it has merit. It just needs to be improved upon. However, if there is no record of your idea existing before, then it may be that others have discovered its weaknesses and chose not to pursue it. That’s why you should spend some time evaluating your ideas before adopting them, but don’t ditch the bad ones because they still have some usefulness.

Before getting too far with your idea, try talking to a few people to see if they have the problem you are trying to fix. This alone can save you a ton of time and money. If no one has the problem you want to fix, your idea may not be so good.

Guide to Start a Business Without Going Broke

# Develop another income stream

If you need to leave your present employment, is there a skill in your toolbag that you can resuscitate and put to work without a significant expenditure of time or energy? Is moonlighting or freelance work an option? Virtual e-lancing websites (such as eWork.com, Guru.com, and e-lance.com) may be worth looking into for short-term professional services opportunities.

Examples: A community mental health worker transitioning to private practice used his conflict resolution experience to sell a training package to public schools. A woman transitioning out of an insurance brokerage created and sold seminars on long term care financing at local retirement centers.

# Continue to draw a (reduced) salary
Leaving your current employment in order to develop your new business may look like the only option, based on an assumption that you won’t get approval for reducing your hours. While this may prove to be the case, asking yourself why and how your company will profit from retaining your skills and experience for a transitional period can provide the basis for approaching your employer. Be sure to do your homework first, however, and be able to back up your request with a solid rationale.

Also consider the issue of timing. You want to weigh informing your employer of your wish to leave with being prepared to leave if the answer to your request is no.

# Reduce expenses
Apart from fixed expenses – mortgage, taxes, insurance, etc. – are discretionary expenses that make up the larger part of budgets. Doing a careful analysis of these expenses and choosing what you can forego for awhile can often save thousands per year.

Carefully analyzing hidden expenses – credit card interest rates, bank charges, late fees, auto debits, phone plans – or “lost money” from low interest rates on savings may generate several thousand more per year.

# Borrow
It isn’t necessary to wait to borrow for start-up costs until you have a well-documented idea to submit for a business loan. Refinancing a home or taking a line of credit are relatively low-cost ways of generating capital. Depending on your credit rating, you can also get time-limited low-interest loans from credit card companies.

If you choose this option, applying for loans or refinancing packages while you’re still employed is strongly advised. Your rating as a borrower declines quickly once the regular paychecks stop.

You don’t have to wait!

Get started on your new business idea while you’re still employed. Several of the all-important first steps (below) can be started while standing in the grocery line or running on the treadmill. They involve asking yourself some questions and doing some informal research to get crystal clear about your idea. This can take weeks off your actual start-up time.

# Identify your niche
Think about the services you’re uniquely qualified to provide, as well as the ones you most enjoy providing. Be specific! Write them down! Then think about what group of people would get benefit from those services and have the ability to pay for them. Again, be specific: age, where they congregate, habits and values, how they define the problem your services are going to solve. If you don’t know, ask. Find someone who fits your “ideal client” profile (s/he may be on the treadmill next to yours at the gym) and get permission to ask some questions. People generally love to be helpful.

# Create your marketing plan
Don’t be intimidated by the term “marketing plan”. While what you need from a marketing plan will get more sophisticated as your business develops, for now it simply means answering the question, How is my business going to make money? What is the product or service you’re going to sell? How will you describe it so people quickly recognize the value? How will you package it? (fee for service? by the project? on retainer?) How will you price it? (What’s being charged for comparable services? What “feels right” to you?)

# Manage fear!
For most people, anything involving money involves some level of fear. It’s important to acknowledge to yourself and to others that you are taking a risk, and you’ve decided it’s a risk you want to take. So consider the fear natural, and find ways to manage it.

Getting support from people who believe in you and in what you’re embarking on is #1 in fear-management tactics. Don’t assume that you’ll get it from the people closest to you, or that if you don’t have it you shouldn’t proceed. They’re probably the ones most impacted by your decision and so may be least ready to offer support. Their consent – a willingness to go along with your plan – is helpful, but support may have to come later.

It’s also helpful to set a goal (and a date for completion) that’s key to your new venture – arrange financing by a particular date, or sign a lease – and announce it to at least one person. You’ll find that making that commitment, saying it out loud, and following through will in turn generate more confidence and more forward momentum.

To all of you who are tired of marching to someone else’s drum and are eager to go solo, these strategies should help you take prudent but positive steps toward realizing your goal.

Good luck!

Build Email List?, Here Its Tips

Thinking of purchasing a list of email addresses? It might seem easy, but it will make things harder down the road. Follow these best practices to build your email list and put your program in a position for success now and in the future.

# Build or buy?

Email marketing’s track record as a high-ROI online marketing tool makes it tempting for marketers to purchase mailing lists to extend their success. Unfortunately, there’s often a big difference in results between in-house and outside lists. The damage to your reputation as a sender—in the form of SPAM complaints—can have long-term consequences and impact the deliverability of future messages. When that happens, even people who specifically asked to receive your messages may wonder why your emails are ending up in the Junk folder. The best way to ensure optimal ROI and to protect yourself from SPAM complaints, is to build and maintain your own email list.

# List building takes teamwork.

Many organizations use a variety of tools to help manage the relationship they have with their customers, and to insure that information is being shared throughout the organization. Make sure that the email address field is on the initial data entry screen, and that the individuals collecting this information from customers are actively encouraged—perhaps even incentivized—to ask callers for their email address and permission for the company to send email to them in the future.

# Customer Forms

Most companies have a wide variety of forms that customers fill out in order to do business or conduct a transaction. Add an entry field for email in a prominent position on these forms, along with a checkbox to opt-in to company email communications. You can collect a large number of new email addresses this way

# Point of Sale

If you’re in a retail environment and use a point of sale system with a keyboard, your vendors may have already incorporated an email field into their system. If not, it may be easy for them to add the field. Strongly encourage staff, or incentivize them, to actively request and capture this information. Many customers have good results when they offer employees a monthly reward of a $25 gift certificate for the employee who gathers the most names

# Website

If you have good web traffic, your website is one of your best sources of email addresses. Add an email capture field on your front page, but don’t request any additional information. Your email capture rate will increase 30-40% compared to asking a customer to fill out a lengthy form. If you want to collect additional data after the email address is entered, you can take that user to a second page, or followup with them in the future to obtain the additional data.

# Sales People

Many sales people have already captured customer email addresses, and even if they are not in the contact management or CRM system, they maintain them on either a personal database, their email list, or even a handheld device. Strongly encourage sales people who have built such a list to add them to the database with the customer’s permission.

# List Maintenance

A clean mailing list is more cost-effective and efficient. It affects your professional image and the delivery of future emails. Keep track of email addresses that can’t be delivered (hard bounce), those that generate automated responses (soft bounce) and those whose recipients never open your emails. Remove or suppress them from your list. They skew your response metrics and add incremental cost to your programs.

Manage Business Tips

As a business expands so does its associated needs. Get in front of the curve. Take time to lay the foundation for your company’s growth. Our tips will help you support the growth you’ve worked so hard to achieve.

# Plan for growth

Your business plan is the roadmap to your company’s growth. It should reflect the overall company vision as well as the strategy and goals of each functional area: sales, marketing, finance, operations, IT, human resources, etc. Annual updates are recommended, but during periods of rapid change more frequent revisions may be required to ensure the plan is directing growth.

# Manage your cash flow

Insufficient cash flow is one of the key reasons businesses fail. To manage your cash flow, set up a forecast for day-to-day expenses. Things like rent, utilities, lease payments, payroll, supplies, etc. The more variable your sales and revenue, the more frequently you should update your forecast. When you’re in the enviable position of surplus cash, use your forecast to help determine the most effective way to invest it.

# Revisit your margins

Are your prices and profits optimized? Gain a solid understanding of what your business offers relative to your competition. The more unique or advantageous your products and services, the greater their value. Make sure your prices and profits reflect the market, the value your company provides and your overall business plan.

# Improve your cash flow

When you need to increase your cash flow, creating incentives to increase sales may not be the answer. A quick spike in sales may actually increase demand for cash, depending on your type of business and receivables timeline. Consider the following:

  •  Negotiate with your suppliers on terms
  • Compare suppliers to reduce costs or improve terms
  • Actively manage your accounts receivable
  • Consider incentives for customers to pay quickly
  • Consider accepting payments via credit card
  • Ensure you have an effective process to collect on overdue bills
  • Renegotiate or decrease interest rates on loans

# Invest in productivity

The demand for improved productivity continues through times of growth or decline. An investment in productivity, whether it’s training, research, planning or technology often contributes immediate benefits to the bottom line.

# Watch for opportunities and threats The pace of change is faster than ever.

Keep track of changes in your industry both globally and locally that affect your business. Look for opportunities you can capitalize on, and threats to avoid or counteract.

# Plan for growth They say growth is the best problem a business can have.

The faster the growth, the more quickly its challenges must be addressed. To stay ahead of the growth curve, planning is essential. Here are some key impacts a growing business should plan for:

  • Increased supply of products and/or delivery of services
  • Expanded distribution/sales channels
  • Finding, screening and hiring the right people/partners
  • Preparing/training your existing workforce to handle growth that may include changes in responsibility and reporting
  • Increased space, equipment, infrastructure
  • Greater demand for cash, as growth almost always leads sales/profits
  • Increased need for short- and long-term planning across business functions
  • Expanded need for communication across the business
  • Revised procedures and policies

# Stay informed

What happens when business realities don’t follow the business plan? When setting goals, invest some time in discussion of contingencies. Identify the top threats and risks to your goals and how to monitor them. If a threat increases, you’ll have an “early warning system” to help deal with the situation before it becomes a crisis.

# Keep growing

Change is inevitable. Try to embrace change as opportunity. Keep seeking new learning, new challenges and never stop growing—as a business and as an individual.

Grow Your Business Tips

It’s possible to build on your success even in challenging economic times. The basic principles of staying focused on delivering real customer value while remaining true to your goals become even more important. If your business is growing, or you’d like it to, here are some ideas and resources to help you.

# Customers first.

Celebrate your customers and align any growth plan around protecting your existing relationships. Sustainable business growth depends on keeping your customers happy, just as it did when you started your business. Consider creating customer reward programs (discounts, extended payment terms, etc.) to ensure customer loyalty.

# What makes your business unique?

Being able to express your business’s core principles and values will help you choose appropriate growth strategies. If you haven’t done so already, create a polished 20 second “elevator speech” that summarizes your business’s products and uniqueness. This summary will help you focus branding and marketing efforts, and will provide the core for conversations with those you reach out to.

# Sell solutions, not widgets.

Ramping up sales is easier when you focus on this reality: you’re selling a result, not a thing. Avoid “feature dumps” that emphasize the characteristics of your product rather than how it benefits your customer. The most effective sales conversation begins with questions to determine if your prospective buyer has a need for what you’re selling. The goal is to match your products and services to what your prospect needs. If you can’t make a match, move on.

# Growth? Look out!

A challenge for many small business owners is shifting their perspective from inside their business—the daily details of running the business, to outside the business—developing a strategy for growth, researching markets, understanding competition and so on. Need help? Reach out for resources. Look for ways to harness the expertise and experience of others through networking. As time permits, join associations and attend meetings. It takes time, but can yield benefits without requiring capital.

# Marketing.

Complementing your sales efforts with marketing is key to growth. It helps you get your message out to more prospects, creating demand for your products or services. It’s important to develop your branding and incorporate it in all your marketing. If you haven’t done so already, determine a look and feel (type style, graphics, color scheme, logo) and stick with it. Always include a “call to action” telling prospects what you’d like them to do. Your marketing pieces should also include a compact version of your “elevator speech” for consistency and branding.

# Working the numbers.

When your new business level requires expanded facilities, new equipment and increased staff, how will you pay for it all? If you’re “growing slow”, can you “self finance” these requirements through profits? If not, when you’re considering loans or mortgages, check out the Small Business Administration website in the US, or the Canada Business Network website for information on loans and grants. While you’re there, surf around. There’s a wealth of free information on a broad range of topics like writing a business plan, business law and regulations and finding local resources.

# How many people does it take to create success? As your business grows, the workload becomes more distributed, requiring more employees. Controlled growth means adding these employees slowly and deliberately. If you’re not sure you’ll have sustained revenue to support direct hire employees, consider temporary contract employees. It’s a great way to harness a skill you may only need temporarily. And “test driving” an employee is a great way to find if you have a good fit for longer term employment. 8. You’re the engine. Everyone in your business impacts sustainability and growth. Make sure all employees understand and can implement everyday operating procedures. Keep to your organizing principles, focus on your customers and engage help when you need it. Good luck!