The Last Step Before Making a Decision

Are you searching for new ideas? Hoping to find something that will boost your business? Or maybe you’re at the point of considering known options, needing to make a decision soon.

We get caught up in the day-to-day and become ingrained in the culture of our business and our industry. It can be difficult to see beyond what we know. Of course, it’s critical to do your research and analyze possibilities. There is, however, another step we often overlook or dismiss because it’s not academic or scientific. After gathering all the pertinent information and analyzing the options, the next step is to remove yourself from the situation and environment and allow your mind to relax. From that place you can get a sense of how you “feel” about the choice you are about to make.

Business descision on a starry night.Those who have spent long periods of time on the sea say that time alone on the deck on a starry, moonlit night is a great place and time to allow the mind to wander. If you’re a business captain, without access to the real ship deck, the next best thing is to find a place where you can be alone, have the time to relax, and feel inspired by the environment. It might be as simple as the deck on your home or apartment, in the woods, or at the beach. The key is to be alone so you can relax your body and mind. Your objective is to relax and become as mindless as possible. No thoughts about anything. Some might call it a meditation.

To prepare for this time alone, think about the options before you. Ask yourself if there might be another option that you hadn’t thought of before? Ask if the decision you are about to make “feels” right. Then go to be alone for at least an hour. Just open your mind to your environment, relax and see what happens.

I talk a lot about structure, systems and analysis. That’s what the Prime Strategies are mostly about. These are definitely important aspects of any business. But for new ideas or making decisions, allowing your subconscious, your intuition, to kick in can produce some amazing results. If you don’t feel that an option is right, don’t go with it even if the analysis says it’s right.

Before I make any important business decision, I give myself time to look at all possibilities, then check to see how it feels. Checking with your gut is a wise step before finalizing any decision.

This technique works for finding new ideas and resolving problems as well as making decisions. In the Prime Strategies Captains School training, you will learn how to use this technique in your business development and decision-making activities. Once you learn to use it you’ll never be without it again.

How Can I Save This Sinking Ship?

Sinking ship with crew member bailing it out. Business metaphor.What causes a ship to sink? A leak in one of the systems? Too much weight? Hit by an unexpected object?

You’re on the high seas on the way to deliver a valuable cargo. Suddenly you get word from below that the ship has developed a leak that unless stopped could, over time, cause the ship to sink. What’s the most effective first reaction? Plug the leak? Find the source or cause? Protect your valuable cargo?

Or perhaps in your exuberance to maximize your profits you’ve taken on more weight than the ship can manage. It’s riding so low in the water that eventually it will be pulled down below the surface.

Of course, it could also be an undetected iceberg.

As captain of your business (your ship) you may be faced with similar situations.

A System Leak?

A business leak might be an employee skimming from revenue. I once had a client whose bookkeeper loved to gamble and would “borrow” money from the incoming cash, and of course, never pay it back. These kinds of leaks are insidious in that it’s often hard to even know there is a leak until things become bad. The business owner needs to have systems in place that match products and/or services provided to expected income. Yet, many small businesses do not.

Too Much Weight?

An overweight business has more expenses than income. It’s easy to forget that often the money doesn’t come in until well after the expense must be paid. If not corrected early, the business will find itself sinking deeper and deeper each month. At some point it’s too late. This business ship can be saved by preparing a monthly budget, observing expenses and income on at least a monthly basis. Considering the long term effect, it’s imperative that expenses must be brought down until the income can match them. Additional capital funding sources may be a short term answer, but eventually it has to be paid back.

An Unexpected Hit?

Then there’s the big lucrative client who had been buying from you for years. Suddenly, there’s a better mouse trap somewhere else and they are gone. Of course, you can try to get them back, but meanwhile the expenses go on. Having a strategy for dealing with the unexpected will help you get to the issue immediately.

These situations deal with systems, budgeting and crisis management. Every business at some point will likely experience similar situations. The answer to all of them is the same:  having a solid business management system. That means having time-specific measurable goals, a clear plan of action, consistent monitoring and decision-making based on results.

Now, don’t panic. This stuff is not hard to do. It’s just a matter of learning the techniques and tactics to run your business proactively rather than reactively. I’ve packaged a new six-month semester course called Captains School, which covers the gamut of what it means to function as captain. It provides the training, tools and support to give you the confidence to consistently make sound business decisions.

Aren’t you tired of bailing water?

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Don’t wait until it’s too late. If you’re getting that “sinking” feeling, send me a note and I’ll be in touch to schedule a phone call.

BUSINESS LEADERSHIP SERIES:

Financial Planning in Action

Once you have chosen the actions you believe will produce the results you want, it’s time to determine both the projected income from those actions and the expenses that correspond to your plan. This is one of the most important steps in the planning process –and the one where many planners fall short.

Before creating the financial projections for your year’s operations, make sure you’ve researched the costs of carrying out your plan. Let’s say your strategy is to increase the percentage of prospects that are converted to a sale, thereby increasing sales. You not only want to project what that will mean to total sales, you’ll also want to know when the income (cash) can be expected.

Consider the time between sale and delivery (whether goods or services). Let’s assume there’s a one month lag time between sale and delivery. If you carry Accounts Receivable and it takes 60 days from delivery and invoice to receipt of payment, you’ll have a 3 month span between sale and receipt of payment. If any of these are longer, you’ll need to make adjustments accordingly. See why it’s so important to know the timing on each aspect?

Staying with this example let’s make some arbitrary projections based on our plan. You have decided that by increasing the conversion rate of sales you’ll be able to increase gross income (revenue) by $60,000. Your plan to accomplish this is to improve your sales materials and provide specific training to your sales staff and management. The materials need to be created first so the training can take place using the new materials. Here’s the amounts and timing as we’ve determined.

Projected Income (Cash) from Plan       $60,000 ($15,000 each month Dec. thru March)

Costs:

Improved Materials       $10,000  (Costs incurred in June)

Sales Training                  10,000  (Costs incurred in July)

COGS *                           20,000  (Salaries, Product & Service Costs)

Sales Costs                       13,000  (Commissions & Related Sales Costs)

Total Costs of Plan         $53,000

Return on Investment          $  7,000 (11.6%)

*Cost of Goods Sold – This is the cost to provide the product and/or services. It includes related payroll costs plus all other related costs to deliver product or service.

 

By calculating all this in advance you can determine if the return is worth the investment. In our example our return is projected at 11.6%. If you think that is an adequate return, you’ll go forward. If not, you may want to rethink how you can either increase return or reduce costs.

Since the materials and training costs will occur before the income is to be realized, it’s helpful to plot this out by month to see how cost will be covered.

 

                   June              July            August        Sept.          Oct.           Nov.         Dec.

Income                                                                                                                                   $15,000

Expenses    $10,000(a)    $10,000(b) $  5,000(c) $  5,000(c)  $  3,000(c)

COGS                                                                                      $  5,000     $  5,000   $  5,000

                  January         February    March

Income      $15,000        $15,000      $15,000

Expenses   $         0        $         0      $         0

COGS       $  5,000        $         0*    $         0*

(a)    Sales Materials,   (b) Training,  (c) Sales Costs

* In February and March we’ve already completed the services from the initial sales and are finally realizing the return from our earlier investments.

Note: This chart represents CASH outlay and income for the projected period. Sales took place in September through December, but with a one-month delay in delivery and billing and a two month lag on receipts the first cash doesn’t come in until December from a June and July activity.

This is why financial planning is so critical. We’ve got to know how we’re going to cover the up-front costs pending results from our expenditures. We may need a credit line, a loan or possibly an infusion of outside capital. By calculating all this in advance we’ve got time to take whatever action is necessary to cover the costs. Or we might decide to make adjustments in timing so that our up-front costs fall in a part of the business cycle that typically has a higher margin. By playing around with timing, costs, sales and receivables we can create the most cost-effective plan and be prepared for the results.

Of course, you’ll need to do this with each aspect of your plan. It’s helpful to determine cost per unit sold for each different item you sell. And it’s probable that the costs are incremental. Once the fixed costs are covered, the variable costs (such as sales costs and COGS) may become less expensive per unit as the volume grows.

You’ve now created the budget that corresponds to your next year of operations. You have your plan of action with timing of the related costs and income.

The next step I recommend is to enter them on a financial projection spreadsheet that’s also set up to monitor your actual expenses and income as they occur. This gives you an easy way to manage your cash and see how you’re doing against your plan.

Once you’ve made sure you have the means to support your plan, you’re ready to put your plan into action. Yes, that’s our topic for next time.

BUSINESS LEADERSHIP SERIES:

Business Strategy: The Framework for Your Plan

Business Leadership Series photo with charts and a strong cup of coffeeAs prologue to this article, the steps we’ve taken to this point are as follows.

We’ve clarified and documented our vision. We’ve based our mission on the business we’ll conduct in pursuit of our vision. We’ve assessed our business to determine how close we are to the definition of business fitness. Business fitness is an encompassing measure of dynamic stability, so it’s one we’ll definitely want to consider as we develop our thinking for the future.

Since all these concepts: vision, mission and fitness are abstract, our next steps should be actions directed toward manifestation.  In most instances it will take several years for us to realize our vision. It’s very helpful to define what our business will look like when we reach that level. This definition might include revenues, profits, market share, business scope and product portfolio. What’s important is that we create a mental image of this business and our role within it when the vision has been reached. As such, our longest term goal is to realize, materially, what we have envisioned mentally. We could be talking 3 years, 5 years or more. It’s hard to know how long it will take. We just need to use our best judgment.

If this sounds like a meaningless exercise, think again. Thought is the first step in the manifestation process. Anything created consciously by a human is based on a specific and clear thought. An artist must see the completed painting in his mind, an architect must see the building, an engineer must see the machine and envision its working parts.

Once you have a clear picture, write it out as your long-term goal and be sure to create a benchmark to acknowledge goal achievement. You’re saying “when ‘this’ occurs I will have reached my goal.” Of course, you’ll be moving your goals ahead over time, so it won’t be an end, just a benchmark to acknowledge that you’ve reached your goal.

Now, the question becomes, HOW do you get from where you are to where you want to be? This is where we enter the realm of strategy. Think of strategy as being the system you’ll use to frame your plan. In military strategy, it’s about movement of resources and use of intelligence. In business it’s pretty much the same.

I have a client whose long-term goal is to sell his business so he can retire to a different lifestyle and use the income stream from the sale to partially support his new lifestyle. One of his short-term goals is to maximize the value of the business prior to sale. So he needs two strategies: one to maximize the value, the other to sell the business. They will have different timeframes, but there is an overlap.

His strategy to maximize the business value is to identify and set a plan to increase high-margin clients while reducing low-margin clients.  His benchmark is a specific new high in revenue for fiscal 2013. How he plans to achieve that will be addressed in his plan.

His strategy to sell his business is to transfer stock over time to his senior associate, whom he will groom to move into the role of CEO. She’s already handling most of day-to-day operations. The plan will need to include specific actions that he and his associate must carry out with timeframes for each.

The strategies that you select to reach your goals will have a strong influence on the outcomes you will realize. In determining your strategies it can be helpful to call upon the knowledge of others who know you and your business. These can be your business associates (including strategic alliances), your coach and even your customers. And don’t overlook the value in gathering information from your front-line staff and supervisors. They have a wealth of knowledge that often gets overlooked and strategic planning is where it can be particularly beneficial.

Because vision is realized over several years of business operation, you’ll be setting annual goals and selecting specific strategies to help you achieve them. It’s the achievement of these annual (short-term) goals using strategy and planning that lead you, one step at a time, to realizing your long term goals and vision.

Next step? You guessed it – planning. Stay with us. We’ll pick up on that next time.

 

Partnership Problem: Common Serious Problems

Strategy: When all else fails, get outside help!

Here are some of the more serious situations I see most often in partnerships. These can be devastating to the business if not addressed quickly and professionally. If you’ve been unsuccessful in resolving any of these problems it may be time to ask for outside help.

One partner feels like he’s carrying the bulk of the workload (or a partner is falling down on the job).
This may have happened because there wasn’t an agreement about who would do what. Job roles, access to needed resources, responsibilities and accountability have not been discussed. This is bound to lead to problems.

Expectations are not being met.
Expectations may be quite different for each partner. When expectations aren’t met, it’s a set up for negative feelings. It’s important that each partner knows what to expect from the other(s).

Partner has lost interest in the business or changed thinking.
Over time new attractions and options will continue to present themselves to all partners. When a partner becomes disenchanted with how the partnership is going, she is more likely to lose interest over time. .

Can’t talk to each other.
Communication is so critical to maintaining a viable partnership. When partners get so busy doing their own thing that they can’t find time to sit down with the other(s), they will likely start to feel less engaged. An unresolved issue can also lead to partners being unable to talk about certain things.

It’s a wrong partnership.
Sometimes the partnership has been a bad match from the beginning, but it was maintained for a variety of reasons. When the primary reason for the partnership was based on personal needs more than on business needs, if those needs aren’t fulfilled, the partnership will flounder. Maybe one partner thinks and acts fast and the other wants to research things in great detail. These people may never be able to function well together. Basic behaviours and traits will not likely change even if the person tries.

Are any of these your concern? If so, how should you open the subject of improving the relationship for the good of the company? To learn the steps I recommend for making positive changes to your partnership arrangement read my article, Help! I Want to Dissolve My Partnership. It’s the most popular article on the website.

I have personal and professional expertise with partnerships So if you need more help, go to the Contact page and send me a message giving the details of your situation. We’ll schedule a no-obligation time to talk.

How Are You Managing the Economic Downturn?

Over the past few weeks I’ve received quite a few cold calls and introductory e-mails from small businesses. I wondered if this was in response to the economic downturn. So I decided to ask a representative sample of small businesses by contacting my LinkedIn network to ask “how are you managing the downturn?”

Less than 20% have responded so far, but I wanted to share with you what I’ve learned as soon as possible. Hopefully you’ll gain some new ideas and perspectives to help you in strategizing for your own business.

The primary strategies initiated by early respondents fall into three basic categories: rethinking, leveraging and streamlining. I’ve organized the responses accordingly.

Rethinking

Many companies are not just being more aggressive, they’re being strategically aggressive. Some are offering new monetary or other incentives. Some are focusing on a redefined or diversified target market. [Read more…]

Ask for Help!

In a recent interview I was asked what I thought was a common thread for all my clients. Without thinking, I answered, “They’re ready and willing to ask for help”. I knew it was true before, but I hadn’t put it into words. Understanding and acknowledging this I can now focus on finding those who are ready to ask for help. That’s a great insight. I can simply ask prospects if they are ready to get help.
Entrepreneurs by nature don’t like to ask for help. An independent and sometimes stubborn lot, we tend to think we can do it all. There are many kinds of help we can ask for, from getting administrative support to calling on expertise beyond our own to accomplish something that would require ramp up time for us. That includes getting feedback on our ideas, helping us monitor our milestones and keeping us focused on our goals. The place to go for help is where the payoff is the biggest. If we haven’t clearly defined exactly what results we want, we may want to start there and get help to define them.

It’s much easier, and certainly more pleasant, having someone help us sort out the issues, get focused on goals, offer solutions, function as a partner and be a friend. Enter — the coach.

How do you know if you’re ready to ask for help from someone like a coach? Here are a few responses I’ve heard more than once.

– Tried unsuccessfully to do it myself
– Feel stuck and tempted to give up
– Want to grow my business but don’t know how
– Finances are out of control
– Staff is not productive; I end up doing it all
– Have great ideas, but don’t know how to develop them
– Want to create a strong brand; need guidance
– Frustrated with my business partnership or family business

With those kinds of answers you can’t afford NOT to get help. Humans were meant to help each other. It’s an honor to be asked for help. It reinforces our sense of being valued.
Asking for help does not imply weakness. I’ve found that those who ask for help when they need it are much more likely to succeed than those who keep putting it off, continuing to hope they can do it themselves. That can lead to total frustration and could be the beginning of an unwanted downhill spiral.

Is it time to get help in making critical decisions or setting a strategic course of action? Don’t be afraid to ask. I’ll bet you’ll be glad you did.

Go to the Contact Page, and tell me how I can help.

If you’re ready to cut through all the “stuff” and move your business onto the fast track to success, join us for the 9 week Fast Track Intensive, starting April 27th. First session is F*R*E*E.

What is a Strategy? Wikipedia defines strategy as “A long term plan of action designed to achieve a particular goal, most often “winning.” Strategy is differentiated from tactics or immediate actions with resources at hand by its nature of being extensively premeditated, and often practically rehearsed. Strategies are used to make the problem easier to understand and solve.”

My definition is a bit simpler, and hopefully, easier to understand. I consider developing a strategy as the “thinking” part of the process. It’s where you gather all the pertinent information, analyze it, and then make “informed” decisions based on what you learn. A strategy is an informed decision that provides a framework for actions.

From “How to Create a Marketing Strategy That Delivers“.

​Are you Suffering from “Entrepreneuritis”?

Today a client introduced me to a new term, “entrepreneuritis”. Since I hadn’t heard the term, I asked her what it was. She said it’s that syndrome that says “I can do it all myself; I want to do it all myself, I have to do it all myself. These are all my ideas, my way of doing things and no one else can do it as well. And I’m feeling overwhelmed because I need to grow my business but I’m so busy doing everything myself, I don’t have enough time to do the things that bring in business.”

Being curious, I decided to do some research myself. There seem to be varying definitions of entrepreneuritis. Robert Sher in his blog article, The Path between Entrepreneuritis and Myopia. says “Entrepreneuritis is where you can’t stop yourself from jumping on every new business idea that pops into your head. Having a clear definition of your business will aid you in steering the course between entrepreneuritis and myopia”. He also warns, “avoid being too rigid in your niche. If you’re not growing your business in some way you’re in trouble”.

The Blue Jeans Virtual Assistant in her blog article, Do You Have Entrepreneuritis? says, “As a small business owner I must learn how to do everything myself (spending countless hours learning it sometimes) and must grab on to each new idea that comes my way or through my inbox, learn it and move on to the next thing. As a result most likely I have a list of unfinished projects on paper, in an idea journal or on the computer.”

Donna Maria calls it Entrepreneur’s ADD and defines it as 1) too many ideas at one time, no execution of any; 2) can’t think what to do with an idea. In her article, 3-Step Cure for Entrepreneur’s ADD, she actually offers some tactics she used to cure herself.

I think all entrepreneurs occasionally have bouts with entrepreneuritis, even if they didn’t know what to call it. Of course, when it becomes chronic, it can become a problem and really hold back your business. Part of the argument I often hear is “I can’t afford to hire someone to do other tasks”. They don’t have the money to pay someone else now, so they just keep doing it themselves. Bottom line: you can’t grow your business until you can begin to hand off tasks. It’s like the chicken and the egg.

I remember the first time I hired someone to help with my e-mail communications. I didn’t really have the money to pay her, but I decided to make the investment in my business. I quickly learned how valuable it was to be able to hand off tasks that had taken me hours to do. Now I had more time to spend on what only I could do in the business.

For some alternatives to doing it all yourself, read my article, Delegation and Teamwork, for some ideas and examples of how to start letting go a little bit and giving yourself the solid support you need to grow. If you’re really serious about getting your business to the next level, don’t let entrepreneuritis keep you down.

7 Strategies to Prepare for Recovery

Road to Recovery.  No matter our circumstances, we all have been affected by the deepest recession in our lifetime. This summer seems to be even tougher than usual for many small businesses.

Now is a great time to take a hard look at the realities that exist, get help where needed and rethink our business strategy in preparation for recovery.

Here are seven strategies that will help.

1. Open a dialog with those you know. Mutually beneficial relationships are now, and always have been, a key to success. Reconnect with former customers, former prospects, business colleagues and friends. Ask about their plans and their challenges. How have things changed for them and what do they need now?

2. Identify your personal value and offer to give that on the terms of your choosing. Incorporate your personal values into your business. Support programs you believe in. Join selected organizations and find a way to contribute your personal value.

3. Expand your network. Seek to connect with those who are either in your target market or do business within it. Be sure to have a follow-up plan for all new connections. Limit time on social media and networking activities to only those that produce results for you. The volume of information and interactions in online networking can be overwhelming, so be ruthless with sticking to your strategies and plans.

4. Consider alliances, joint ventures and partnerships with those already in your network. These are typically low cost, high return arrangements if structured to the benefit of all parties. Such business relationships can provide flexibility, new resources and stability in a sea of chaos. For more information on growing your business using partnerships review my recent webcast,

5. Make informed decisions and take calculated risks. Before making any decisions gather all pertinent information from your business, your market, your community and the economy in general. Take calculated risks based on all the pertinent information you have gathered and analyzed. Consider the risk vs. reward relationship. You’re bound to come up with new options. As some doors close; new ones will open.

6. Remain flexible. Test your ideas on a small scale. Adjust and modify based on what you learn. Make small investments in new ideas. Set very short term goals and determine early what works and what doesn’t. Innovative ideas that prove themselves now could position you to lead in a recovery.

7. Provide yourself with ongoing support. Create a small, close network to help provide perspective. Get feedback on your ideas and concerns. Find out what others are doing that is proving successful. Ask for what you want and need.

These are actually good business strategies for building a strong business in any economy, but they are especially important in maintaining and growing a healthy business now. It’s how many small businesses are taking the lead in creating a recovery for themselves and the economy.

To learn more about business success strategies and actually apply them to your business check out the Business Success System Course. It’s the Prime Strategies self-study program that walks you through the fundamentals of building a strong and profitable business.

Planning: The Roadmap to Success

Think of a plan as a map. It’s meant to be a guide. The planning process helps us focus on the “how” of what we want to accomplish. It organizes our thinking, identifies the steps and gives us tools to monitor how we’re doing.

Those who create and write plans have a much better chance of success, yet so many people don’t follow through. Why not? We may think there’s little value in spending the time to create a plan. Also, it’s unfamiliar territory and we’re not sure what we need to do. We may carry the plan in our head, but it’s always in an abstract state. We want to take it from the abstract to the next stage of realization – putting it in writing.

Let’s assume you have taken the steps that lead you to the point of needing a plan.
After you’ve decided what you’re going to do (goals) and how you’re going to do it (strategy), you’ll need to decide the specific actions that will fulfill your strategy and lead you to your goals.

How do you know what actions to take? Keeping in mind your goals and strategy, together with the business intelligence you’ve gathered and evaluated, brainstorm a number of possible actions. You might review these with key staff and advisors; then select those that seem to have the most potential to produce desired results. At this point it might be a good idea to discuss your plans with the people who would be involved in carrying out the actions. This could save you money, time and unproductive actions. [Read more…]