Category Archives: Starting a Business

Everything Starts With a Dream

DayDreamingEverything starts with a dream!

Whenever I got in trouble in elementary school, it usually had something to do with dreaming. Apparently I spent too much time daydreaming, gazing out the window, cruising somewhere out there, light-years from the topics our instructors were diligently trying to teach.

I managed to get myself into enough hot water that I eventually came to view dreaming as a waste of valuable time and a negative thing. The culture I was born into insisted that I adopt a more mechanical, left-brained approach to life. And it appears that this was all facilitated with my best interests at heart. By the time I reached adulthood, I had buried my dreams deep inside.

I was in my late thirties when I found myself ensconced in a workshop participating in an activity that required me to write a list of my dreams. I was stumped! I looked around in amazement while others vigorously scribbled out their lengthy lists. I drew a blank. Continue reading Everything Starts With a Dream

Does Your Business Plan Prove Your Business Case?

soldA little diligence in planning can save time, money and energy as your business grows. Unfortunately, some people back away from business planning because it appears to be a lot of work. Although it can be a demanding task, it doesn’t have to be overwhelming, and the benefits can be remarkable.

In order to be of maximum value, a business plan must prove supply, demand and the financial case.

  1. Demand. Each business has a sweet spot, a certain number of customers to keep the doors open, often referred to as the break-even point. Signed contracts can be the kiss of life for some types of business. Where contracts are not possible, surveying potential customers can help to validate demand. Friends and family promising to buy your stuff forever may be a wonderful indication that people love you, but in no way should their flattering claims be interpreted as a reliable indication of demand. The purest proof of demand is sales of products or services. Regardless of the method used, an entrepreneur must be convinced that demand exists before starting a business.
  2. Supply. Once satisfied there is a demand for products, an entreprenuer will want to confirm ongoing access to the materials and talents that enable the business to serve its customers. A product producing business, such as a furniture manufacturer, needs a reliable supply of wood. A housecleaning service must be able to find and hire suitable workers. Most businesses need a combination of materials and skills. Restaurants, for example, will need a steady supply of food products, a rollicking good chef, and a team of cheerful servers to keep customers satisfied on the front end.
  3. Financial Case. Profit is probably the best measure for proving a financial case. For example, a planner will need to validate the supply costs, determine how much customer’s will pay, and project the quantities of products and services to be sold. Miscalculating any of these items can erode the forecast’s reliability. When building a financial case it’s important to forecast sales a little lower than anticipated and estimate expenses a bit higher than expected. Diligence in confirming financial items builds a reliable profit projection.

Those faced with creating a business plan usually wonder how many pages the plan should be. Paper weight isn’t much of an indication of the value of a business plan. The business information might be summarized for some audiences in a couple of pages, while a business analyst will need more detail and scads of supporting information in order to evaluate a loan request. The same amount of background research is necessary even though the plan’s thickness will vary according to the needs of the reader or audience.

The true value of a business plan arises from what it teaches the owner about her business, and the usefulness is gained from the benchmarks it provides for owners working forward. Businesses really flourish because of the actions the owner takes once the plan is done.

Be Nice To The Gatekeepers You Meet

As you start or grow a business, you will come across a few gatekeepers. Gatekeepers are bankers, business analysts and managers of government or other programs that might provide grants to your business. While they are responsible to protect their employers’ funds, they can also play an important role in making opportunities possible for entrepreneurs.

A gatekeeper’s first order of business will be to perform the due diligence necessary to determine if your business idea is viable. She will evaluate whether or not you can live up to all those amazing promises made in your business plan, before taking your proposal forth to run the gauntlet with her boss or the decision making committee. The experience can be daunting to a newbie, but it really shouldn’t be.

As you work with gatekeepers, they invariably help you build a stronger business plan. Often they are highly knowledgeable generalists who research and evaluate a broad range of businesses. They can usually recognize whether you’re off or on track, and can become tremendous allies in your business endeavors.

Here are nine tips for working effectively with gatekeepers:

1. Be curious, be a learner, and be coachable!

2. Prepare for your discussions and meetings; manage the time efficiently.

3. Be on time for appointments, return phone calls promptly and honour all the promises you make.

4. Know your business plan thoroughly but accept that you may not have all the answers. When asked questions for which you don’t have answers, commit to finding them and follow through with that commitment.

5. Without being a know-it-all, try to anticipate which questions the gatekeeper might ask and have your answers ready.

6. If she seems to be negative about your business plan, ask questions until you understand the problem and what you need to do to fix it.

7. If your application is declined, determine if the decision is final or whether you can fix the problems and reapply.

8. Whether you reapply or not, use the gatekeeper’s input to strengthen any weaknesses in your business plan.

9. Say thank you. Whether you get the loan or not, express your gratitude for the time invested and the feedback.

The gatekeeper who appears to be laying roadblocks in your path is assessing you and your business idea to determine the level of risk. If you meet her requirements, you might just win the loan or grant and with it, the opportunity to start or grow your business.

Ten Points to Consider When Choosing a Business Location

LocationThere’s an aged saying in the business world, “There are three rules of marketing—location, location, location.” If you want to catch fish, you need to position yourself where there’s fish. If the fish can’t find your bait, if customers can’t find your shop, you’re out of luck and probably out of business. No customers, no sales, no go.

Selecting the right location means different things to different businesses. Here are a few things to consider when choosing the right location for your business.

  1. Clarify Your Business Vision. Determine what you see for your business in 1, 3 and 5 years. Envision what size it will be, what sort of traffic you want and who you want for neighbours.
  2. Identify Your Target Customer. You need to know who your customers are in order to pinpoint your business location. High foot traffic doesn’t automatically convert to lots of customers. Ensure the foot traffic is comprised of folks who match your customer profile and who will stop by to throw money into your cash drawer.
  3. Determine Where The Customer Traffic Is. And then place your business there. This is as true for physical locations as it is for virtual positioning. Whether you’re hoping for foot or click traffic, your business has to be visible to customers. Fish where the fish are.
  4. Locations Can Change. If you position your retail store between a major bank and a Starbucks because of the high foot traffic numbers—the game can change if either business closes, possibly triggering moving or upgrading costs for you.
  5. Consider Delivery Accessibility. While locating near customers is critical, accessibility to offload or pick up goods can be equally important. Is there a loading dock, and is it covered?
  6. Speak With Other Small Business Owners. Once you’ve narrowed your search to a few locations, check in with neighbouring leaseholders. They may have insights to help guide your decision.
  7. Assess the Location’s Impact on Your Marketing Costs. The less visible your location, the more it will cost to get customers to your site. While a highly visible mall location will have higher lease payments, a remote, free-standing location with lower rent payments is sure to have higher marketing costs.
  8. Check Your Neighbours. Determine whether the neighbouring businesses will be complimentary to yours and assess whether they will have an effect on your business once you’re set up. Will the anchor businesses attract the right traffic for your business?
  9. Assess Other Costs and Concerns. Will you be responsible for paying for signage and leasehold improvements? Make sure the location is zoned for your type of business, and that you’ll have access to washroom facilities, parking and sanitation services. As well, check out the crime rate in the area and familiarize yourself with any restrictions on hours of operation.
  10. Scrutinize Lease Agreements. Lease agreements are usually thick and thorny enough to warrant having your lawyer review them to ensure your interests are covered.

Setting up in a new location is not an inexpensive endeavor. It is sure to take a bite of your time, money and energy. The points above will help ensure you make the right choice and get your business on the path to success.

Rubik’s Cube and Market Research

rubix-cubeA few years ago I received a Rubik’s Cube as a gift, and couldn’t put it down until I learned how to solve it. After the novelty wore off I forgot how until a cube fell into my hands last year and I relearned the solution.

Although I can take a messed up cube and put all the squares back into the right places, I really didn’t’ solve it myself. I simply took the time to learn a few sequences that were developed by others. Yet, to those who don’t know how to solve the cube, it looks almost magical.

What does a Rubik’s Cube have to do with market research? Well, I’ve noticed that during the last couple of sequences of the solution a cube looks wildly messy, like you’ve made it worse rather than better. But if you stick to the plan and follow the procedures, just a few spins later all the coloured squares are back in place – without peeling the coloured stickers off and moving them!

Actually, the Rubik’s Cube and market research have a few similarities:

  1. For the uninitiated, both tasks can seem impossible.
  2. Once you learn the method, what appeared to be impossible becomes achievable.
  3. Until you learn how, you can waste a lot of time spinning in circles and not be any closer to the solution.
  4. The first time is the most difficult. Once you have learned how, it’s easier to repeat.
  5. Those who don’t know how will usually be amazed when someone else does.
  6. The majority of people will never learn to solve the Rubik’s Cube, and most will not take time to learn how to research a business idea.
  7. Rather than learning the processes that make it easy, most people will invest time trying things that don’t work. Fine for playing with a cube, but business opportunities don’t always offer the luxury of enough time to learn by trial and error.

If you’re researching a business idea, there are times when things tend to get real messy. It can be time consuming and stressful – sometimes there is just seems to be too much information, making it difficult to connect the dots. No matter how confusing it gets, the solutions and answers to your questions are usually just around the corner.

The main difference between the Rubik’s Cube and market research is that the latter is useful. Effective market research can lay the groundwork for a lucrative business and even launch you into working at something you love to do. It is your cheapest form of insurance against losing equity you might invest in a business venture. At best, the cube might provide an opportunity to wax philosophical about market research.

Perseverance is the Key to Small Business Success

successPerseverance is a cornerstone to all business success; in its absence, many new business owners strike out before getting a chance to hit that cherished home run. Success is determined by your drive to succeed, how hard you’re willing to work to get what you want, and having the patience and endurance to stick with your vision until it either bears fruit or proves to be a bad idea.

Perseverance is never easy. The way never seems to be straight forward or clear. It’s up to each entrepreneur to know whether to hold or fold.

It’s not surprising that many owners cut and run just short of success. The path to business success is littered with traps, including disgruntled customers, cash flow shortfalls, burnout, economic downturns, failed partnerships, plain old bad business ideas, and unworkable business models. These are just a few of the demons faced by business owners as they run the gauntlet.

Business killers can beat an entrepreneur down, opening the dark door to a business failure. Most issues can be remedied, and most failing businesses can be turned around if the owner has the vision and the drive to stay the course.

As always, it’s easy to look at bad situations and shout out remedies, but for those mired in a business, the view can be blurred and it’s sometimes harder to see solutions.

For the average working person, economic survival is always a driver; lack of money is easily a top reason to jump ship. Family problems trigger a number of other business failures. Debauchery, overspending, plain old laziness—there’s never a shortage of reasons to stray from your business plan. Only the entrepreneur in charge can identify what’s truly most important and therefore the right path for him or her to follow.

In The Dip, A Little Book That Teaches You When to Quit (And When to Stick), Seth Godin writes about how those who aspire to become the best must stay focused and go through incredible hardship to reach their goal. He also speaks to the importance of dropping the losers, having the courage to discontinue projects or directions that prove to be duds. This puts pressure on those who tackle long-term goals or aspire to any sort of greatness, because the critic within you will always question whether you’re headed for success or setting yourself up to look like an idiot.

So, how much perseverance is enough? That is something each business owner must decide for himself. Small business owners, particularly start-ups, walk this tightrope every day in the life of the enterprise.