Work Life Balance

Posted on June 18, 2011 by admin

Balance

Achieving balance while building a business is very challenging. The rule of thumb when starting and growing a business is that you will work much, much too hard in the initial stages. It’s better to come to terms with that reality going in, make your peace with it, and just buckle down and put in the effort required to get the business up and running.

If you are constantly beating yourself up because you are not living the perfect balanced life featured on the magazine covers, you are not helping the cause. Those ideal versions of life are mostly fantasies or one-in-a-million stories.

Starting and building a business, especially in the initial stages, requires huge amounts of time, energy and focus. It is important to understand that going in. It is very important that those important to you, those in your support network, understand that going in. If you and those around you are not fully in tune with the resource, time and energy requirements of starting and building a business, the psychic and emotional tolls that ensue can destroy your business, your relationships and your life.

I will say this again: Starting a building a business, especially in the initial stages, requires huge amounts of time, energy and focus. Don’t diminish any of those three by fighting a running battle with yourself or those around you regarding this issue.

Having said all of that, it is important to carve out some moments for yourself and for your life on a regular basis, even in the early days of starting your business. Make a point of taking a few minutes to do something just for you and something just for those around you. Have a plan, and stick to it, of gradually increasing those moments as the business gets up on its feet.

Once your business is operational, things change. No business model is valid if it is based on heroic effort by those involved. If the only way your business works is if you neglect yourself, those around you and your life, then the business model is flawed and it is doomed to failure in the mid- to long-term. Once your business is operational, you must be in balance or the business will fail; it’s only a matter of time. You simply can’t sustain an unbalanced energy and time investment in a business at the cost of all other aspects of your life. It will eventually kill the business, kill your life or kill you. For a business to be sustainable, you, and everyone else associated with the business, must be in a reasonable state of life/work balance.

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Diverse Offerings

Posted on June 15, 2011 by admin

This challenge is one I see a lot while providing management consulting, mentoring and coaching to entrepreneurs and startup teams.

For example, a business plans to offer the following products and services:

web design
web site maintenance
web design instruction
instructional packages for website owners
life coaching
photography
public speaking
writing
professional skating instruction

You can make the case that 1-4 are related products and could be complementary offerings.

You can also make a case that public speaking and writing can address any of the other offerings.

However, you cannot make a case that attempting to sell all of these diverse products and services is possible in a brand coherent, much less an energy and capital efficient, manner.

I have personally been a professional photographer, public speaker and writer. I know, first-hand, how much time, energy and marketing focus is required to be a success in any one of those three endeavors.

And that is really the point here. It is tough enough to build a successful business around any one, single offering, much less nine, and especially nine that are either completely disparate or tenuously related.

Each offering you sell has its own set of development, maintenance, delivery and support requirements. Each offering has its own market and customers, each requiring very specific value propositions, brand positionings, marketing messages, sales channels and execution.

Each business is a bucking bronco in its own right.

Photo: Meralain via Flickr

Trying to ride multiple horses at once is tough enough as a rodeo trick.

It is not a valid business model.

You need to pick a horse and ride it.

Pick one horse, one market, one set of customers, one value proposition, one brand position, one marketing message, one sales channel and one business model to execute.

Find a market niche and own that niche. Then expand from there.

Nine horses is too many to ride.

Before you build a business plan, pick a horse and ride it.

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Getting Money to Start My Business

Posted on June 15, 2011 by admin

Your biggest business challenge this week: money to start my business idea

Capitalizing a new business is one of the largest challenges to overcome.

However, most entrepreneurs focus too much on this factor. They think that their business idea is so foolproof, all they need is some money to bring their idea to market and the business is guaranteed success.

In fact, that is very rarely the case.

Only one in 10 new businesses survives a decade. The failure rate is the highest in the early months and years.

Although a primary cause of business failure is often attributed to “lack of capital,” the real reason is that the failed businesses ran out of time. They ran out of time because most of the new businesses burned through their available money trying to figure out a viable, sustainable business model.

The moral of the story is, before you go seek capital for a new business, be sure you have a proven business model. Take your idea and make a prototype. Do some tests with real customers. Make some sales or get signed letters of commitment to purchase your product or service once you have it ready to sell.

The key to success in business is selling something people want to buy. That is true whether you are tying to start an enterprise B2B company or a local retail business. The only way to ensure that the money you are seeking is going to build a business that sells something people want to buy is to prove that idea before you invest the big amounts of money.

To accomplish that goal, one task I recommend, developed by Dr. Rob Adams, is the 100 Customers Test. Talk to 100 prospective customers first, before you do anything else. You will learn more talking to those customers that you will by obtaining and spending just about any amount of money in the early stages of your business.

Prove your idea and your business model first, then seek and inject capital to scale the business model.

If you need money to prove your business model, start by talking to 100 Customers first. That will cost little to nothing and will almost certainly guarantee that when you do build a business, it will be selling something people want to buy.

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Accounting

Posted on June 15, 2011 by admin

Accounting

Your accounting resource will be one of the most important vendor relationships in your business. An accountant often provides day-to-day tactical support via bookkeeping resources (or referrals to same). In addition, your accountant is a critical strategic resource for tax planning, networking and referrals into their network of professional services providers such as legal, consulting, business brokers, banking, etc.

Consequently, it is very important to have a solid, mutually beneficial relationship with your accountant.

Start by asking other business owners for referrals. Ask people who run businesses that you aspire to emulate for a referral. That immediately puts you into a network of professional and business suppliers that will match your business as you grow. If you start by asking business owners at the size and scale you are now, you can end up with an accounting resource that cannot scale with you as you grow and whose network is not well matched for your aspirations.

Next, talk with at least five potential accountants by phone and meet personally with at least three. Do not settle for anything less than a good to perfect fit with your accountant. In particular, it is critically important that you share common values related to integrity, honesty and trust.

Your accounting and bookkeeping resources can literally make or break your business, so choose them wisely and with due time, effort and consideration.

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Sales

Posted on June 15, 2011 by admin

“Nothing happens until somebody sells something” – Zig Ziglar

It’s a fundamental rule of business that sales drive everything. If you don’t have any sales, then you don’t have a business—pure and simple. You might have a charity or a hobby, but if you don’t have sales that drive sustainable profitability, you don’t have a business.

“Sales” is what happens when a customer’s perceived needs match your value proposition.

Your value proposition is more than just the specific product and/or service and its price that most people consider when they think about sales.

Your value proposition includes:

Brand
Time
Benefits
Features
Capabilities
Price

Of all of these factors, your brand carries the heaviest load. It stands for your reliability, trustworthiness, and, very importantly, aspirational value. For instance, what’s the difference between a Timex and a Rolex? Both tell time. Only one tells an aspirational story.

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Starting a Business in a Tough Economy

Posted on June 8, 2011 by admin

Your biggest business challenge this week: the economy

Answer:

The economy falls into the category of business factors called “macro external forcing functions.” Macro external forcing functions are things outside of your control that affect your business. They almost always affect other businesses around you and typically also affect the personal lives of the people in your community. Depending on the factor, they can also affect your state, region, nation or the entire world.

The key phrase in all of that is: “things outside of your control that affect your business.”

By definition, an external forcing function is one that is outside of your business and outside of your control.

It’s important to keep that in mind, as, at least for me, the most frustrating thing about having my business affected in this way is that I feel powerless to do anything about it. When we’re running a business, we usually want to at least have some level of belief that we’re mostly in control of our own destiny. A macro external forcing function, whether it’s the weather, new regulations, the unemployment rate or a commercial credit crisis, reminds us that we are often not in control of our own fate.

What can you do?

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Owning My Own Restaurant

Posted on June 8, 2011 by admin

Owning my own restaurant.

Answer:

As you’ve probably heard a million times by now: “80% of new restaurants fail.”

The people in the restaurant industry dispute that number, but it is a solidly entrenched urban legend at this point, so it will be challenging for them to turn it around.

Numbers vary widely about new business rates of success in general, and restaurants are no exception. Even so, most sources of data about new business rates of success/failure do show restaurants to be less successful as new business ventures than other types of startups.

Why is that?

When you dig into the numbers you find out that most people who start failed restaurants had no previous restaurant business experience and many had no prior entrepreneurial experience.

I can relate to those numbers because Stephanie and I have often had the, “If we had a restaurant, we’d…” discussion ourselves. Note that we have zero, nada, nil, none, zero restaurant experience, yet we’ve seriously entertained the idea–and we know better than to do so.

One of our kids is a gourmet chef. Even he is wary of starting his own restaurant because he knows very little about the “front of house” operations aspects of the business model. He’s an industry veteran and even he’s leery of launching a restaurant. There’s a lesson there.

So, the first prerequisite to owing your own restaurant is to go work in the restaurant industry. Work in the back of the house and the front of the house. Get some management experience. Get some experience hiring and firing. Get lots of experience on the financial side of things. Learn where the costs are and where the profits are. Learn about different markets at different price points at different day parts. Learn about location, location, location. Learn about permits and licenses and inspections and regulations. Learn about marketing and sales and promotion. Learn about procurement and suppliers and deliveries. Learn about buildings and codes and real estate and leases and zoning. Learn about loans and investors and financing. Learn about LLCs, corporations and partnerships. Learn about your strengths, weaknesses and passions.

Learn all of those things and then you’ll be in a position to have a much better chance at success in the restaurant business.

It may sound daunting, but you can get there. If you’ve already been working in the restaurant business, you’re already down the path. If you haven’t, you could learn all of that in three to five years if you really want it.

Get that industry knowledge first, and while you’re doing that part, spend some evenings taking some business management or entrepreneurial classes to be ready to do it on your own.

The track record of people who say “I want to own my own restaurant” is dismal. You can either end up like most who try to start one with little to no knowledge of the industry or you can invest some time and energy to get to know the business, as well as build a network, before you start. The former choice offers immediate gratification. The latter offers lots of hard work and dedication with a much greater chance of sustainable success.

It’s your choice.

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Finding a Business That Will Work

Posted on June 8, 2011 by admin

Finding a business that will work

Answer:

I’ve personally had a few businesses that didn’t work. I had some that worked and then stopped working. I had some that never worked at all.

What I learned from those experiences was:

Just because a business works now doesn’t mean it will work forever. All of the factors that make a business viable: market, customers, products / services, brand, value proposition, available resources, external forcing functions, etc., all change all the time. A business’ viability is actually a lot more tenuous that we think when we’re at the controls and everything seems to be working. What we don’t realize is that any of the key factors that makes the business viable can disappear or radically change overnight. That’s why businesses that survive long-term typically reinvent themselves every five to seven years. They have to reinvent themselves in order to adapt to the ever-changing conditions.
Just because an idea sounds great, seems great and makes a fantastic diagram on a bar napkin does not make it a viable business. Every business that didn’t work at all for me was an idea I had that I was convinced was a “can’t miss” opportunity. Every one of them missed. What I didn’t do, that you must do, is start by identifying an unmet need in the marketplace and then meet that need. That’s the definition of a business: Filling an unmet need in the market in a sustainably profitable manner. The piece I missed was the “unmet need” part. I was convinced my ideas were so awesome that need wasn’t required. I was wrong.

So, my advice to you about finding a business that will work is:

Identify an unmet need in the market.
Test to see if you can meet that need in a sustainably profitable manner.
Do so.
Never, even for one millisecond, assume that just because the business is sustainable today that it will be tomorrow.
Enjoy the ride!

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Startup Funding

Posted on June 8, 2011 by admin

To have enough money to start; I have a small amount

Answer:

The absolute best source of money is customers.

The more time you spend with your customers the more you will understand their needs and what they will pay for. If you provide a product or service people want to buy, you have instant cash flow and a proven business model.

A proven business model that has cash flow, and maybe even profits, is a lot easier to fund than an unproven idea.

If you don’t have enough existing capital to provide the initial product or service, then invest in market research—talking to and surveying customers—to document and prove market demand.

Proven market demand with survey results, web site tracking data, signed letters of intent or provisional purchase orders is a lot easier to fund than an unproven idea.

Some basics on funding:

If you don’t take in any external money and retain 100% of the company it’s called “bootstrapping.” Bootstrapping is a very viable option for many business models.

The biggest downside to bootstrapping is that it is extremely challenging to win a big market opportunity unless you take in external money.

The reality of bootstrapping is that it is very hard to build a business through profits alone, even in the best of times.

Most businesses need to take in external funding at some point in their life.

There are two basic types of external funding:

Non-Dilutive
Dilutive

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