Tag Archives: starting a business

Entrepreneurship, Self-Employment, Starting a Business

Hone Your Small Business Skills before Tackling Venture Capitalists

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While Dragons’ Den is educational and entertaining, I hope the theatrics don’t scare off too many wannabe small business owners.

After being in business for 30 years, I’ve almost forgotten what it’s like to have to report daily to a job or punch a time clock. I’d like to see more people enjoy the thrill of owning a small business.

Entrepreneurs need to invest the time and effort needed to learn the business trade before attempting to attract investors like the Dragons. And the most effective way I know of to learn about business is to own one. Like every other discipline, the road to success is littered with tough lessons, long hours and a lot of determination.

The Dragons sift through a lot of pitches in order to find a few investment-ready high growth opportunities. For every idea that hits the jackpot, there are several that simply don’t meet the standard set by the investors.

There’s no doubt in my mind that each of the Dragons have earned the right to sit in an elevated chair and cuff the spit out of the gutsy hopefuls who dare to venture into the Den. However, as some of those rejected souls scurry from the set with their shredded egos in tow, I find myself hoping they don’t give up on their dreams. A rejection isn’t necessarily the end of the trail. A “no” doesn’t always mean the business idea is a throw away. It might only mean the idea isn’t enticing enough to tempt these particular investors.

The Dragons come from a wealthy perspective. Most of them already have more money than they could possibly spend in this lifetime. They are seeking partnerships that assure high rates of return. It’s all about money and partnering with great people. They simply don’t need to take on projects or people that are at the wrong end of the learning curve.

Whatever else can be said about the Dragons, they offer an absolute goldmine of business know-how and each episode is a terrific opportunity to learn. Here are three lessons that that stand out with every session:

  1. Investors buy into people. The business concepts and numbers have to work, but ultimately it is the quality of the people that attract or turn them away.
  2. There’s plenty of money available for savvy people with the right ideas. The Dragons are just a handful of investors in a big, big world full of funding options.
  3. Applicants must prepare for the big investment league by starting small. Learn to run a tiny business before tackling a large one.

The marketplace is full of perfectly healthy small businesses that never grow beyond employing the owner and a handful of workers, and there’s nothing wrong with that. Scads of business ideas might not appeal to fire breathing billionaires and yet still be perfectly suited to meet an entrepreneur’s financial needs.

Dream big, but start small—and one day you too might slay the Dragons and walk out of the Den with a pot of gold.

Entrepreneurship, Self-Employment, Starting a Business

Are You Ready to Own a Business?

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While most people like the idea of starting a business, many have no idea what’s really involved, and relatively few will actually take the leap of faith or do what it takes to succeed. It’s not easy to champion a business. It’s challenging to plot your way through the maze, especially if you’ve not done it before. Here are a few questions that will help you navigate the hurdles to opening day.

Are you ready to run a business? For the most part, your business’ success will depend on you. Do you have what it takes to succeed as a business owner? Will the business bring in enough money to support your personal financial needs? Is your family ready to support a crazy, fist-clenching entrepreneur? Are you ready to live with the risk a business will bring? A few moments of reflection will let you know whether you’re on track and what you need to do to prepare to run a business.

Is your business idea feasible? Is your idea really a business or is it just a hobby? Do you see examples of similar businesses in the marketplace? The fact that a business exists or occupies an office doesn’t necessarily mean it’s successful. Business success takes many forms—paying the bills, fair treatment of employees, creating satisfied customers, providing a valuable service to the community, not mucking up the environment, and profitability. Will your business pay you enough to survive and earn a profit? If not, perhaps it’s just a hobby.

Will your concept work in the marketplace? To figure this out you’ll need to develop a business plan, a task best done by the one taking the risk–you. The business planning process will guide you to understand the industry you’re getting into, to clarify which products and services you will offer, to be an authority on your customer’s needs and wants, and to determine whether you’ve got the right attitude and experience to run the business. While it may seem like a lot of work, a business plan is a great way to prepare for the rigors of business and it will definitely save you from making a lot of costly mistakes.

Will your business make money? As you learn about your business, you’ll gather the information needed to forecast your sales and expenses. A necessary part of proving your business case is determining whether or not the business will earn a profit. A sound financial plan should include a sales forecast, a cash flow forecast, and a pro forma (future) income statement. The sales projection tells you how much revenue you can expect. A cash flow forecast clarifies what your expenses will be and whether you need a loan, while the income statement tells if the business will be profitable.

While many people dream of owning a business, only a few are really prepared to jump in. One of the biggest benefits of owning a business is the joy of working at something you love to do. At the end of the day, when the dust settles and all the numbers are in, the most important business question we all need to answer is, “Do you enjoy what you’re doing each day?” If you can answer yes to that question, you’re well ahead of the game. It’s necessary to pay the bills and it’s grand to earn profits, but if you don’t enjoy what you do each day, is it really worth it?

Ready to unleash the small business within you?

Business Planning, Self-Employment, Starting a Business

Don’t Waste Another Dollar on Business Planning

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If you’re starting or growing a small business and throwing a lot of money into business planning, you might want to read this before spending another dollar.

Talk to almost anyone in the business development or lending arena, and they will tell you flat out that you need a business plan.

True enough. You need a plan.

What’s less well touted is that almost all of the benefits of business planning accrue from researching and writing the plan yourself.

So, let’s cut to the chase. Individuals setting out to start small or micro-businesses are far better off to take up the mouse and keyboard themselves than to outsource the development of a business plan. Anyone can write you a story, but nobody can read your mind or predict whether or not you’ll succeed in business.

And guess what – you stand to lose everything if the plan doesn’t work out.

Of course, you also stand to gain everything if your business gains traction and succeeds.

So, here’s the rub. If a consultant could create a business plan that is guaranteed to succeed, why would he do it for you for pennies? Why wouldn’t he simply start the business himself? Here’s why – because 99.9% of the work is not in the planning; it is in the implementation of the business plan. And only you can assess whether or not you are able and willing to take on the work and make the business succeed.

Anyone who knows a few words can write a story. Anyone with those skills, a hint of imagination, and a bit of business knowhow can write a fairly convincing business story. But is that person in business? And specifically, unless that person is buried in your business up to the neck, the business plan isn’t going to be worth the pdf it’s written on. And if that person is in the business already, he isn’t going to help you in to the market place just to compete with him.

So, where do great business plans come from? They arise from the mind of the entrepreneur putting assets on the line, tempered with a few hours of research to validate any assumptions. That’s it. The only business plans that are worth a pinch of muskrat muck are those that are brought about through the blood, sweat and tears of the person who’ll be paying the taxes once the business is rolling.

So, suck it up and research and write your own business plan. If you have a roadmap to follow, it’s not such a bad thing – fact is, you might even enjoy the planning process once you get past the initial fear. After all, in planning a business, you are mapping out the next leg of your personal journey. You are laying the groundwork for an optimistic future, possibly improving your financial status and getting into a lifestyle you want.

What could possibly be more enticing than that?

Business Planning, Financials, Owning a Business, Starting a Business

Forecasting Isn’t the Same as Accounting

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There’s no doubt that forecasting or attempting to predict the future in any way, is considered by many to be a mild form of insanity.

Forecasting is one area of business planning that entrepreneurs tend to resist. There are many reasons for this.

  • Beyond spending, many people simply don’t like to deal with money matters.
  • Unless you’ve previously owned a business, the entire business financial arena tends to be a vast, spooky mystery.
  • Those who have weathered a financial black eye in their personal lives are inclined to be apprehensive about tackling the management of business finances.

Many people assume that forecasting is the same as accounting, and that it should be left to highly skilled professionals, such as bankers, accountants and MBA’s. And yet, the process of forecasting is sure to be a healthy learning experience for owners and anyone thinking about starting a business.

To dispel myths and misguided fears about forecasting, it is helpful to clarify what it is… and what it isn’t. One way to do this is to identify the ways that forecasting differs from accounting.

  1. Forecasting is an educated guess at future scenarios, while accounting is a detailed compilation of past transactions.
  2. Forecasting takes place prior to a period of business, while accounting happens after commerce is done.
  3. Forecasting provides an approximate picture of the future, while accounting shows an accurate record of business past.
  4. Forecasting is built upon safe assumptions and conservative estimates, while accounting is built upon precise records and receipts.
  5. Forecasting is usually best done by the small business owner, while accounting should almost always be entrusted to an accountant.

The truth is, most entrepreneurs have no crystal ball skills whatsoever, and most will never be accountants. Any yet, small business owners need to have a certain level of confidence in the future of their enterprises. A rationally constructed forecast can give you the confidence needed to move forward, while arming you with the information necessary to weather upcoming threats.

As surely as the business owner must pay taxes, he or she should take on the responsibility of forecasting. You can hire someone to foretell your future and you can certainly turn your business records over to an accountant for compilation, but at the end of each year it is the business owner who pays for any mistakes made and who reaps the rewards when things go right.

While attempting to predict the future might seem a bit crazy, the real insanity is trying to run a business without the benefits of forecasting.