Posted by ben at 14:19
The start of the year brings a new mind set, a fresh start. As an entrepreneur its the perfect opportunity to renew your passion and enthusiasm for the business that you are running or are looking to start. Many would be entrepreneurs will take this opportunity to get your business plan written, find the business finance that you need or look for that business partner that will get you past the obstacles you have been facing thus far.
In many ways this is also the best time to forget about failures and ensure you move on and improve the way you do things the next time round. Its time to evolve as an entrepreneur. And that needs to start now!
So what are some of the resolutions you may be making?
Focus on the client
Relentless focus on what the client wants will ensure that you not only take time to understand your clients but also that you give them WHAT THEY WANT. To often do we get caught up into what we want to/can provide while not focusing on what the client wants. Whatever your views on clients - they are the source of revenue for your business so they have to come first.
Take a Risk
Over the past two years, it may have felt that every business decision you made was a risk. Since the market was topsy-turvy and the stocks were diving, you might have felt that just being in business was success enough. It’s not. If you want to thrive in your market, no matter what it is, you need to step up, take a deep breath, and take a risk. You need to do something or say something that NO ONE else has thought of. Or you might want to just do something so insane that people can’t help but talk to you. Risks are exactly why you became an entrepreneur…stop playing things safe this year.
Be Ready for a Stormy Day
That said, having some funds saved up for a rainy day is a good idea too. You want to take risks without having to resort to Ramen noodles for your meals. Each time you get paid, pay your savings account first, then the rest of your bills. It’s going to seem like a lot at first, but once you see that nest egg grow and your blood pressure go down, you’ll see just how important it is to stop spending it all today. You want to have a future, don’t you?
Know Your Market
If you don’t know your market by now, you need to start yesterday. Each and every person that comes to your website, your store, or your Facebook page needs to be someone you know. Even if you don’t know what their middle name is, you need to know their hopes, their dreams, their education level, their income, etc. You need to know who you’re trying to persuade to buy your products. If you don’t know who you’re selling to, you may not be using the most effective sales tactics. For example, if you’re trying to market to a group that’s never on Facebook via a Facebook fan page, you’re not going to get a lot of return on that investment. Get to know your customers through surveys, market research, and talking to loyal customers.
Adapt, Adapt, Adapt
You can’t simply put something out into the market and expect it to be perfect forever. You change, the market changes, and the world changes. For example, today, you can buy your books to read on an e-reader. While this doesn’t seem like a big change, this also means that you should sell any informational products in that e-reader format since that’s what customers will be looking for. Be aware of the changes in your market, adapt your services to them, and see what happens. You don’t have to change your entire business to stay effective.
Look at what the market wants, what the market has, and how your business can stay caught up.
If the last few years taught businesses anything, it’s that you need to spread your marketing out. You need to make sure that you’re not just advertising via mailing lists, but also on Facebook, on Twitter, etc. There are a number of ways you can post your information in all of these spots at the same time, so don’t think this is going to take up a lot of your time. That’s not an excuse. What you will want to do is to find as many social media markets as possible and make sure that your company message and brand are there. You can’t be singularly minded anymore.
Take some time to think of and put an action plan in place to ensure you resolutions are not left behind the first time the going gets tough. Entrepreneurs are a hardy bunch and if you are really passionate about your business you will start TODAY!
Posted by ben at 05:59
Every day we read about new and exciting new businesses in the press or online. Just yesterday there was a story about Amazon buying LoveFilm. LoveFilm, Europe’s leading movie subscription service, for an undisclosed sum, but a figure of around £200 million. Amazon already owned 42 percent of Lovefilm. The LoveFilm service and website will remain live, but no other details of Amazon’s plans for the service have been released. If only you wrote that business plan and looked for business finance two years ago when you thought of your great idea the first time then who knows what could have been!
Lovefilm is the top DVD-rental subscription service in Europe. As with Netflix, users sign up for a subscription online and then request DVDs, which are sent by mail. A digital streaming service to PCs, Internet TVs and the Playstation 3 is also available. LoveFilm offers 70,000 titles and has nearly 1.6 million members across the UK, Germany, Sweden, Denmark and Norway.
You also may have been reminding yourself of what could have been by now if you started that great idea you thought of a few years a ago. If you could only get the money together to actually start the business then you may be the next business attracting interest from Amazon or Google or Yahoo, who are all seemingly interested in buying promising start-ups at the moment. So how do you go about it? Where do you get the business finance you need?
Here is a list of four suggestions that have helped me and will help you be successful when raising money from Angel Investors:
Honesty: Angels, partners and investors appreciate frankness when talking about the business they might invest in. Being an optimist is good, but give honest answers, even if it may hurt your chances of having them invest. Bad news is always better than no news or incorrect news.
Communicate: Go out of your way regularly to communicate after investment. Too many people raise money and then fall of the Earth. Investors are left guessing (unless they call a lot) how things are going. It’s is better to over-communicate about the up’s and down’s of your business. No one likes bad news – but surprises are even worse. Take the time to keep your partners updated with exactly what is going on in your business. This takes a lot of discipline as it is easy to fall out of the habit. If you are willing to keep up with it, and your partners make money, then it will be more much more likely they’ll invest with you again.
Understand before being understood: Before trying to get someone to understand your perspective, first try understanding their perspective. Many entrepreneurs only see the up side to their company and its future value. They tend not to see the down side of their idea. Keep this in mind when you are coming up with potential partnership structures. The risk really should equal the reward. I read recently about an angel that owned 100% of the companies he invests in until a certain return is achieved. Once reached, the Angel converts to 20% permanent equity and hands the business over to the entrepreneur as the instant 80% owner. Although some may hate this idea, it’s this type of creativity that may attract angel investors for your new business idea.
Cash is king: No matter how much time and effort you put into a business it will never be worth more than cash. Never. You will be in for a tough sell with any respectable Angels if you try to convince them that you have a lot to lose (your time and effort) if things don’t go well. This is crap! You will feel hurt, disappointment and some pain, but you can get a job or start another company and they are left with a hole in their pocket. Be respectful of this fact and you will be more successful in your negotiations.
Make sure your business plan is well researched and chances are you will actually get the funding you need. Who knows what may lie on the horizon for you and your business?
Posted by ben at 09:19
Growing your business will be what you have in mind once the business starts to show potential of getting beyond the start-up phase. Most entrepreneurs would have dreamt of business grown long before it even started and when it comes to growth there will need to be serious consideration as to what the strategy will be to get to where the business wants to be.
There will be key challenges that you face when growing your business. Here are a few of the most important ones and suggestions of how to overcome these issues.
1. Lack of capital Lack of capital is often the most critical challenge that a successful SME faces as its very success creates this and it quickly becomes a vicious circle.
2. Without very diligent cash flow management and/or raising of more capital, including debt, the business often is constrained by capital as it grows. Often the profit in one operating cycle is insufficient to fund the extra working capital required for the next operating cycle.
3. This is especially the case where a business is either inventory or receivables intensive and/or the operating cycle is a long one. (The operating cycle is the average time that it takes from the first receipt of inventory to when the customer pays for the goods sold.)
4. This can be made even worse where capital goods are required to process the goods and the company cannot finance the acquisition of these capital assets. Many capable entrepreneurs cannot overcome the obstacles in their businesses cash flow cycle and cannot understand why bankers and other lenders often cannot provide the financing as the SME often does not have the security to support the debt.
5. The solution is often easier than most entrepreneurs realize. It often starts with a plan to see what your cash needs are and when your cash needs arise. Then one is in a position to manage it and focus on the cash management techniques most likely to be successful in your business.
6. Lack of management skills Lack of management skills is a problem that is very difficult to deal with in most SMEs as the size of the senior management team is necessarily limited. These areas of weakness could be in finance, human resources, marketing â€¦ any area where the current management does not have the expertise, or the time to deal with the issues.
7. The solution is to determine what those areas of weakness are and then to develop a plan for dealing with those challenges. Once you spend the time to recognize a weakness -- as long as it is not in a core area for the specific business -- it often can be compensated for without a lot of time, effort or money.
8. Solutions can be as simple as assigning the responsibility to an existing manager with a requirement to watch for the obvious pitfalls, to hiring a person part-time or a consultant. The solutions are often obvious if one spends a little time planning and assigning responsibility. And yes, it often is effective to assign that responsibility to yourself as you then know that you have to deal with the issues rather than waiting for an issue to become a real problem.
9. Lack of information about what is - and isn't - working Lack of information about what is working, and what is not working, in the business can be an issue. Often companies do not measure their results and when something specific causes a blip (positive or negative) in results they do not know what has caused the success or problem.
10. Implementing a process for measuring and tracking key performance indicators (KPIs) on a weekly, or at least monthly, basis is key to enabling management to react to challenges and opportunities alike. The old saying that you cannot manage what you do not measure is so true. If nothing else, it often alerts you to a change from the norm much sooner than waiting until you otherwise become aware of it. Once awareness is established, solutions are easier to find.
11. Lack of a plan Lack of a plan is often a fundamental problem for many SMEs. The arguments for planning are many and irrefutable and yet this is a very common failing for most SMEs except those that are enjoying very rapid growth.
12. In my opinion there are three very fundamental reasons for implementing a planning process:
1. If your plan sets out certain objectives you are much more likely to achieve - or exceed - them than if you just keep barreling along. Research has often shown this to be true and it stands to reason that having a plan will enable you to often think through and implement the steps necessary to achieve that plan;
2. Most SMEs spend so much time dealing with the "alligators" that are snapping at their rear end that it is difficult to recognize the steps necessary to achieve your long-term objectives. A plan disciplines you to look "beyond the weeds" from time to time; and
3. A plan can often alert you to inconsistencies that need to be managed e.g. a lack of capital or other resources necessary to fund the growth projected. Once recognized you are in a position to better manage the limiting factor.
13. Poor procedures Poor procedures are a constant challenge for a SME trying to manage with limited resources. Most entrepreneurs do not realize that the procedures in place for managing the business need to be well designed to reduce the incidence of errors. Error correction is often a major waste of time and particularly management time.
14. Good procedures with a little time and effort invested up front will usually pay enormous dividends in time and cost savings on an ongoing basis.
15. Ignoring risks in their assessment of alternatives and opportunities Many entrepreneurs ignore risk in their assessment of alternatives and opportunities. A business is about taking managed risks and one cannot insure for or avoid risk if one is in business. However in my experience few, once they have chosen a course of action, pause to consciously think of ways to manage the risk and determine procedures or steps that can be taken to reduce the risk and increase the chances of success.
16. Often, this is as simple as "diarizing" to follow-up on an issue so that it does not get forgotten or having a second person review something to reduce the risk of error.
17. Lack of focus Lack of focus is often a real challenge for an entrepreneur in a SME as there are constant changes in priorities, issues that need attention and other fires to be extinguished. Often opportunities present themselves and it is difficult to say "no" to a short-term opportunity that will distract you from your long-term goals.
18. Be clear on your long-term objectives and the opportunities that will facilitate your achieving this. Then evaluate other opportunities by the extent to which they draw resources away from your ability to achieve those long-term goals.
19. Failure to plan for issues absorbing the majority of your time.
Each of the above potential mistakes are common and are often encountered in businesses that could do lot better. However, the greatest failing that I encounter is an owner/manager not pausing to plan for the issues and solutions that are absorbing so much of his/her time and energy.
20. Probably the scarcest resource in most businesses is the time of the owner/President and a little time developing a strategy can often free up the opportunity to focus on real priorities.
Make sure you consider these issues carefully in your business plan. There are a number of business support bodies in South Africa which may be able to provide support. Seda, the IDC, SAVCA, Investors Network and SA Business Plans are all organizations geared towards supporting entrepreneurs. If you need support, don't be to proud to ask.
Posted by ben at 15:11