All posts by Dan Boudreau

Dan Boudreau has devoted the last 20 years to coaching and mentoring regular folks into the captivating world of business. He authors and facilitates lively, transformative workshops on the topics of entrepreneurship, business planning, and training for trainers. He has inspired thousands of entrepreneurs to become successful business owners and leaders. Launching into his first venture in 1980 with barely enough knowledge to fill the back of a beer cap, he has embraced (and survived) the wide spectrum of business ownership, from single owner home-based enterprises to ventures employing more than 300 workers. Dan's top mission essentials are: laughing, loving, and learning. Armed with the business planning process as a teaching tool, Dan empowers ordinary women and men to create the financial stability and lifestyle they dream of. He is most proud of being acknowledged and appreciated by peers and friends for his ability to bring entrepreneurial ideas to fruition with a nod towards his warm, engaging personable style. In 2006, Dan compiled his knowledge (and bruises) into his first book, Business Plan or BUST! In writing this book, he combined his practical experience as a business owner with his expertise as a lender for an economic development agency, and tossed in his unique brand of wit. The end result: A refreshing perspective and practical style that makes the time-worn topic of business planning easy, fast and fun! When Dan takes those occasional days off from navigating the business world you might find him stuffed into a floating toothpaste tube sometimes referred to as a kayak (rarely right side up), or perhaps coaxing disturbing sounds from his guitar. His ultimate relaxation always involves fresh air, clean water and beaches—from botched attempts to outsmart fish in the rivers of northern British Columbia to flopping around in the waves or practicing applied inertia on just about any tropical sandy beach…
Business Killers

Business Killers Part 2

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Watch out for these common business killers! Here is the second part of the series, with 4 more business killers.

Cobwebs on Accounts Receivable. Avoid extending credit to customers if you can. The problem is, in businesses for which customer credit is the industry standard, the owner gets drawn into play now pay later because all the competitors do it. The model works well for many businesses, but owners who do extend credit have to stay on top of collecting monies owed to them. A good bookkeeper will provide an aging accounts receivable report a few days after each month-end. Receivable collection is not always the most enjoyable part of owning an enterprise, but effective owners understand that cash flow is the lifeblood of the business and that a cash-starved venture has one foot in bankruptcy court. If you must extend credit, make collections a regular practice, factor the cost of an operating loan into prices, and be prepared to ditch customers that persistently make collecting difficult and costly.

Not Paying Bills. When business is going well, owner’s work long and hard; make hay while the sun shines. In a perfect world, business brings in more money than needed to pay the expenses, with a bit left over to call profit. However, the marketplace occasionally throws nasty curve balls that tilt the financial ratios the wrong way and cause businesses to lose money. Business finances are like a house of cards; weak sales or high costs can trigger a wicked chain of events resulting in unpaid bills, from trade accounts to bank loans to taxes. Once the house of cards starts to tumble, an owner has to work even harder to get back on top of the bills. A protracted financial crisis brings on burnout, disillusionment and eventual abandonment. The cure is simple, not always easy; stay on top of your bills and have a rainy day fund ready in case you need it.

Persistent Low Bidding. Any fool can go out and get a lot of work by undercutting competitors. It’s true that most businesses will occasionally slash prices to get a foot in the door with certain customers. However, low-balling is a strategy best left to those with deep pockets. Businesses with solid bookkeeping systems in place will be able to spot low-bid issues early. In the absence of a good bookkeeping system, owners are left to discover low-bid problems at the end of the year when they can’t pay their bills. The simple solution to the low-bid challenge is to increase prices high enough to produce a bit of profit; those who don’t are relegated to struggle or face the eventual penalty of insolvency.

Debt Heavy. Some entrepreneurs grumble about how difficult it can be to get funding, or that lenders are too tough. It’s true that lenders can be a bit tight fisted, but they know the risks involved, and they know first-hand how difficult it can be to squeeze loan payments out of a dying business. Bank loans cost money and create stress on business finances; the larger the loan, the higher the cost. Smart business owners recognize that not all problems are solved with debt and continually seek ways to innovate solutions to problems without increasing debt. They also take care not to run the debt up to more than the business can comfortably repay.

In the next part of the series, we will cover such business killers as bad customer service, financial illiteracy, fumbling growth, and burnout.

Business Growth, Business Killers, Entrepreneurship

Business Killers Part 1

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So, you’ve gone to all the effort to get your venture off the ground and survived the start-up phase. Aside from the fact that you’re too busy to socialize much, or take holidays, your business appears to be thriving. In your circle of friends you might even be a bit of a hero.

Congratulations might be in order. In starting a business, you’ve achieved something that many people dream about but never do. But are things as rosy as they seem?

As a business owner and coach, I am privileged to meet many good people building bustling businesses, but unfortunately too many struggle or fail due the following deadly traps. Here are the most common pitfalls that, if left unattended, will knock your business off the rails and into the gutter.

1.    Too Many Stupid Decisions. It takes a balance of thought and action to be successful in business. Too much thought will cause you to miss opportunities, and yet thoughtless action will lead you into the jaws of bankruptcy. Everyone makes mistakes, but too many blunders will keep a business in the poorhouse. It takes relentless due diligence and a lot of street smarts to succeed. Survivors tend to respect risk, do their homework, learn from mistakes, and keep losses to a minimum.

2.    Aunt Martha’s Whacky Bookkeeping. Scratch the surface of any failing business and you’ll discover they’re either doing their own books or have a flimsy arrangement with some friend or relative who doesn’t know squat about doing bookkeeping. Every once in a while the backyard bookkeeper works out, but mostly it leads to disaster. The bookkeeping system is the foundation for all business decisions. Without timely and accurate financial information, a business owner is running blind and it’s only a matter of time before he hits a wall. Successful entrepreneurs hire competent bookkeepers and treat them like gold.

3. Urinating In the Tax Collector’s Cornflakes. It’s easy to understand why business owners might be at odds with tax authorities. The nice folks from the taxation office always scoop more money than we think they should, they tend not to play nice if you get behind, and they’ll cheerfully take your business down if you can’t afford to pay. Once you’re behind on taxes, you really fall hard because of the deadly two-punch penalty-interest combination that spins a seemingly innocent amount into a blazing concern in no time at all. You don’t have to love taxes or the people that collect them, but you do have to respect them.

4.    No Rainy Day Fund. When a business begins to generate cash flow there are financial distractions. There is a compelling urge to peel off a bit of cash to buy special toys or trinkets. While it’s important to reward yourself for all the hard work, there comes a time in every owner’s business life when a personal nest egg is needed to avoid a financial black eye or even a bankruptcy. The ideal time to save money is when things are going well; the problem is—when business is booming, the last thing on anyone’s mind is saving. If you haven’t already done so, open a savings account and starting saving money today. When that rainy day comes, you’ll be glad you did.

Too many new business owners fall prey to these and the many other traps identified in parts two and three of this article. Stay tuned to learn about other business killers, such as uncollected receivables, high debt, relentless low-bidding, and more.

Business Planning, Entrepreneurship, Market Research

Eight Vital Steps to Proving a Business Case

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After a number of years spent assisting start-ups to write business plans, I believe that the point of all early stage market research is to prove or disprove your business case; that’s what the feasibility does, and it’s best done before you go to the trouble of writing a business plan. In doing a feasibility, you will gather enough information to decide whether to proceed or not, while also collecting most of the data you’ll need to write a business plan.

Here are the main elements of proving your business case:

  1. Validate Customers and Demand. Prove that your anticipated customers truly exist, that they want or need your products and services, and that they will pay for them. This can be done through market surveys, interviews, or focus groups. It can also be determined by studying businesses already in the market.
  2. Confirm The Size Of Your Market. Prove there are enough customers to support a thriving business. For consumer businesses, total market numbers can be found through secondary sources, such as census information, surveys and reports—business-to-business research can be accessed from business databases.
  3. Determine If You Qualify. Prove that you have the skills and knowledge to own and operate the business. This is a matter of matching your skill set to that required by the business or industry. In some cases, you may have to upgrade or get certified before starting the business.
  4. Source Your Suppliers. Identify suppliers and communicate with them to verify availability and costs, including shipping and any duties or tariffs that might apply if you’re moving goods across borders.
  5. Validate Pricing. Prove your pricing will work. This will entail getting clear on the cost of producing and getting your products or services into the hands of paying customers, and researching the competitor’s prices.
  6. Build a Financial Forecast. Prove your financial case—that the business will be profitable—monthly for the first year, less detailed for year two and three. At a minimum, you’ll want to create a sales forecast, a cash flow forecast and a 3-year income and expense projection.
  7. Determine Sustainability. Prove your business will survive and thrive. This includes confirmation of each of the six points above, and taking a close look at your personal situation—ensuring that you can manage the business ongoing in terms of your family, time, money, and energy.
  8. Assess Risks. Prove that you can mitigate risks and meet all of the applicable regulatory requirements. This can be done by talking to those already in business, reading trade or industry publications, and getting involved in relevant associations.

Once you’ve gathered the information above, you will be well on the way to proving or disproving your business case. There may still be other hoops to jump through, such as nailing down financing, building partnerships, clarifying investor strategies, and comparing the investment with other opportunities. As to whether or not to start the business, that is a decision that can only be made by the entrepreneur taking the risk. The eight steps above will prepare you to make the right decision for you.

Entrepreneurship

Publicity, Almost Free and Gets You Viva Voce

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Sometimes the best things in life are free. Publicity and word of mouth advertising are two such things, and they don’t need to cost a lot of money.

Free publicity is attractive because third party comments will usually be taken as having more credibility than paid advertising, and of course, because it’s free. Although we refer to publicity as free, there is usually going to be an investment of time and thought in order to get the buzz going. Here are a few ideas for getting free publicity.

1. First, do a fabulous job of serving your customers so that they tell their friends about your goods and refer them to your business. Called “word of mouth” advertising, this is the most powerful of all.

2. You can approach individuals and ask them to provide you with testimonials. Choose people who have high credibility for your customers and be sensitive; if they decline, accept the “no” and move on. Testimonials can be in written, audio or video format. Videos are most powerful for website promotions.

3. Approach your local newspaper and ask if they will do an article on your business. In order to do this, you need to be newsworthy so it pays to put some time into figuring out what the ‘hook’ is. It’s helpful if your product or service solves a problem in some new or remarkable way.

4. Publish a blog. When you blog, and if you write interesting blogs, other bloggers can pick up your articles and link to them, creating widespread publicity.

5. Support or sponsor a person or local cause. As an example, one entrepreneur sat at the top of a pole in a highly visible location to create publicity and collect funds for a great social cause.

6. Do something outstanding or newsworthy. Climb a mountain, walk or run a remarkable distance, compete in a pie-eating contest, swim a long distance, go without food. If you’re newsworthy, media will write about what you’re doing.

7. Create and publish a top ten list about something to do with your business.

8. Prove a myth or stereotype in your industry wrong.

9. Do a customer survey and include controversial questions. Write about the results.

10. Develop an annual award that you give out to someone in the community or a business in your industry.

11. Offer surprising facts about your industry or business. For instance, if you’re a recruitment firm write an article titled, “The Average Starting Salary of An MBA Graduate is 40 percent Higher Than Their Pre-MBA Earnings.”

12. Create a story that piggybacks off an event, a national story, or something historical.

13. Tell your story, or the story of why you started your business.

14. Be the first, the best, the faster, the cheapest, the most innovative.

15. Build a story around holidays or special days.

Ideally, your publicity efforts will be interesting enough to inspire others (reporters) to write about your business, but don’t hesitate to write up the articles yourself and offer them for use. Most professionals are very busy and will appreciate all you do to make their job easier.