How to Get the Results You Want!

One of the greatest enemies of getting the results you want is disorganized thinking and unfocused actions. Look at the image on the left.

What do you see?  Disorganized thinking and unfocused actions. When operating in this mode, there’s lots of activity, but little is accomplished.

To get the results you want, those assets and actions have to be aligned and directed, like the image on the right. Look at the strength and power these two elements add.

Entrepreneurs tend to have lots of good ideas, usually function at high energy and are often impulsive. But what has the potential for a solid business often falls apart for lack of organization, structure, focus and direction. Actions are frequently taken haphazardly and sporadic without a goal or a plan.

The objective is to align assets and actions so they all go in the same direction – toward your goals. The sequence of steps is to identify and organize your assets (the value you provide to the marketplace), create a clear message and then strategically plan and take calculated, directed actions designed to lead to your goals.

In order to get the Results you want, you must align your Goals, your Strategy, your Plan and your Actions. Actions implement the Plan, which carries out the Strategy, which leads to your Goals. Therefore, Actions ultimately should lead to Goals. To the extent that Results match Goals, your Actions have been on-target and successful.

Answer the following questions to begin organizing and structuring a framework that will get you on track toward producing the Results you want.

Goals:

What results do you want from your efforts?

Total Revenue?

Sell X Number of products/services?

Generate X% revenue from New Market?

Strategy:

How do you plan to achieve your goals?

Identify and develop an untapped market?

Redefine our brand for New Market?

Plan:

What are the specific tasks to be accomplished? Who is responsible? When does each need to be done?

Actions:

When do you need to start and complete these tasks?  What is the sequence? What is the timeframe for each?

Results:

What are the measurable outcomes from your Plan and Actions?

Compare actual Total Revenue to Revenue Goal

Compare actual Number of products/services sold by target date to Product Goal.

Compare actual percent of Total Revenue from New Market

How close are the Results to the Goals? What succeeded; what didn’t? Each time you repeat the process, you get better at producing the Results you want.

Let’s look at a case in point.

With a background in retail merchandising, Jennifer started her business by purchasing quality overruns from women’s plus size manufacturers and opened a small store near another retailer of plus size clothing. Her intent was to capture some of the traffic attracted by the other store. She took out expensive ads in local papers and the yellow pages, but after six months still wasn’t getting the traffic or the sales she had hoped for. She wasn’t even covering her expenses. She knew she had a product that was needed and desired by her target market; she just wasn’t bringing in enough business.

Of course, Jennifer didn’t really have Goals, a Strategy or a Plan. Her actions were sporadic and without research. She was feeling very frustrated and considering giving up when she made the decision to organize her thinking and focus her actions.

To help organize her thinking she created a Market Research campaign and learned where and how her target market could be reached. Based on this research she created a marketing campaign that included specific, measurable Goals, a Strategy and Plan and specific Actions to carry out the Plan. Here is an excerpted picture of her process.

Goals: (for one year period)

1 – $2,500,000 in revenue

2 – A customer database of 10,000 and 20,000 transactions at an average sale of $125.

Strategy (excerpt from Marketing Plan)

1 a)  Create incentive for existing customers to bring or refer a friend.

   b)  Add online catalog.

2 a)  Hold fashion show and invite the press.

   b)  Capture customer info, including e-mail address and send monthly promos.

Plan:

1 a)  Offer high end accessory item for one referral, 10% discount on merchandise for second referral.

   b)  Use existing online catalog service and start with top 20% of items in each category (to test online market)

2 a)  Select show date, assign coordinator and write plan for show (to include online show).

   b)  Offer raffle of high end accessory in exchange for attendee/visitor info.

Actions:

1 a) Jennifer selected incentive item, ordered enough for marketing purposes, wrote and sent an introductory promotion to a targeted e-mailing list and existing customers. The incentive promotion was added to all marketing materials and promo coupons.

   b)  Jennifer directed research to find a suitable online catalog. Upon selection, she hired a web designer to design the page layout and a developer to set up the shopping cart and manage the site.

2  a)  Jennifer assigned the Assistant Manager the job of coordinating the fashion show, which took place in the early Spring, prior to the Easter Holiday. The show plan included both an in-store and online fashion show of featured items.

   b)  Coordinator developed a data gathering form and had it created in print (for in-store) and online. Database was updated to capture info being gathered.

Results:

1 a) Total revenue the first year was just under $2,000,000. (80% of Goal)

   b) Total number of customers in the database was 9,800 (98% of Goal) with 15,500 transactions (78% of Goal) and average sale of $129. (103% of Goal)

2 a) The fashion shows (using customers as models) received some media attention and produced 380 transactions at an average sale of $115.. A fall fashion show using the same format produced 300 transactions at an average sale of $128.

   b) E-mail promotions using the customer database attracted increased web traffic to the catalog. 60,000 visitors produced 1,650 transactions and 280 new customers. 11% of revenue came from online sales.

Conclusions:

Revenue results were 80% of Goal. Part of the shortfall was attributed to the fact that the online catalog took longer to develop than planned. Catalog revenue (11%) was less than expected. Average sale tended to be very close to target, so this can be used as a good gauge for future revenue projections. With early positive results from the online catalog, expansion of the catalog items and the overall product line should offer potential for additional revenue.

Jennifer was able to get her business on a solid footing with strategies and plans that she knew could produce the Results she wanted.

You, too, can organize your thinking and focus your actions to get the Results you want. Let’s schedule a complimentary phone conversation to talk about your business, your situation and what you’d like to accomplish.

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.

5 Fundamentals of Business Success

We have discussed why it’s important to build your business on a solid foundation, but it’s equally crucial to maintain certain fundamentals throughout the life of your business.  As the captain of your ship you are responsible for reaching your destination. You need to be in command as much as possible, so it’s important that you know and can apply the fundamentals of business success.

Set your compass using these 5 basics which, with the right care, will assure your small business will reach its intended harbor and be prepared for many more profitable voyages.

  1. Accurate Finances

It’s okay to admit if you’re not the best with numbers. If this is the case, consider investing in a professional to manage the books because it’s one of the most important components of your small business. You not only need a good accountant, you need someone who can help you interpret what the numbers mean. Access to this information will significantly improve your ability to make good business decisions. Sailing without a compass and checking status along the way will surely find you off course at some point.

  1. Customer Values

In the early stages of your business, it’s important that you identify who your customers are and what they want. But once you find your target, don’t stop. Every sale is an opportunity to understand a little more what matters to your customers. What products and services do they need to improve their daily lives? What expectations do they have of your business? What would they like but don’t yet have?

  1. Strong Crew

Don’t skimp on attention to detail when it comes to your crew. Whether your staff is large or small, ensure that you’re giving it your all from recruitment to training, incentives and promotion. Hire a staff diverse in skills and experience and foster a positive onboard experience for them to thrive in. Ask them to share their observations. Employee feedback is as important as customer feedback so be sure you’re keeping eyes and ears open at all times.

  1. Identifiable Brand

Your brand should have a personality that fits with your corner of the market. It should be something that resonates with your customers and becomes an identifying representation of what you offer; not just your products and services but your customer service and business values. Read our article on “How to Identify Your Brand” to gain more insight on the steps involved in brand development.

  1. Outside Help

The value of outside help is being able to gain an objective perspective and possible suggestions which you might not think of on your own.You can seek help at any stage of your business.  Seek a “mentor” with similar business experience or a captain’s coach who can help you navigate around the shallow harbors and keep you on course.  Getting help to safely sail through potential storms will minimize negative impact on your customers, employees and products. Save yourself from making avoidable mistakes by asking for help before it’s too late.

Marian Banker, MBA, trains today’s Business Captains. She works with small business owners who want to learn and practice the skill of leading a successful business.

 

The First Step in Creating a Successful Business

Successful Business blueprints and 3-D chartBy now you know how important it is to create your business goals, strategies and plans as the precursor to taking action. But there is something that comes before all that; it’s your business Vision.

Think of it as if you were going to create a painting or build a house. You would envision what the end result would look like. You’d know what you are going to create before you started. You’d think through the details. The same is true in building the business you want; one that will satisfy your needs and fulfill your dreams. So how do you get started with that?

Close Your Eyes and Imagine… Five years from now, what do you see? An expanding, bustling empire? A business just as small as the day you started it? Do you have hundreds of employees or just one? Have you already cashed out to lay  on the beach, drink mai tais and reminisce about business ownership? Or are you actively working in the business either full time or part time? If you don’t know the answers to these questions, you’re not ready to move past this part, so get creative. Let your mind wander, see yourself and your business as you would like to be. Consider the kinds of services or products you’ll be offering, who will be your customers, your work environment, the support services you will have, the bottom line profit you will make. You might even consider writing yourself a personal letter from the future (5 years from now) detailing all of your business successes. Or just write freely about your hopes and dreams with regard to this venture and see what comes out that you didn’t already know.

When All Else Fails…Use the Q & A method. Entrepreneur.com suggests asking yourself some straightforward questions if you’re still having trouble with your Vision. Questions such as:

  1. How much am I willing to sacrifice to see this succeed? My own money? Long work hours and no vacations? No income for possibly years?
  2. If this venture doesn’t work out, then what?
  3. What annual revenues do I expect this business to make?
  4. Will this serve a niche market or sell a broad range of products and services?
  5. If I decide to delegate responsibilities, which will remain mine and which will I share?
  6. Could I work with a partner or investors? How comfortable am I under authority?
  7. Do I want to keep this business in the family and private or do I want it to someday go public?


Test Your Idea Against Two Major Components

Financial: If your business makes no economic sense now, it likely never will. Put your idea against financial challenges such as whether or not ( and when) you expect to see a return on your investment, what the projected profits over time might be and if you can devote yourself wholly to this venture monetarily.

Lifestyle: Your business will require a big commitment from you, but if you feel comfortable once you’ve figured out the details, you’ll know what you’re in for. Consider where you’ll live, what might happen if you get sick, if you’ll earn enough to maintain your desired lifestyle and if your family is on board with your choice.

Don’t Waver! If you can make it past this envisioning phase, then you’ll also have tested your commitment (and passed!), so remember that when things feel overwhelming. Having a clear Vision of where you are going with your small business can exponentially improve your odds of success, so take one step at a time and stick with it. Don’t lose sight of your Vision.

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Want professional guidance in creating a Vision with potential for success? In 30 minutes you will have a Vision that will motivate you and become the guiding light for your future success. Request your free 30 minutes here.

If you’re experiencing challenges in your business and not sure where your priorities should be, consider downloading the Business Challenges Checklist help you see where you need to focus now.

4 Things to Do Before Starting Your Own Business

Starting a business of any kind comes with its challenges, but if you’re passionate about what you’re offering, meeting your initial challenges will be easier. Even better, these actions will help give you a better understanding of your product or service, thus giving you more confidence as you head into this new adventure. Here are four things to do before starting your business.

Understand the Law

There are some general laws that apply to any new business, but your particular industry may have a set of its own as well. Determine what kind of insurance or licenses you will need, the tax information you’ll need to file and grasp the necessary details of human resources if you’ll be hiring staff. Be sure you understand the practical, legal and  strategic aspects now rather than later.

Write a Business Plan

Putting your overall business idea, marketing intentions and future goals on paper is a great place to start. Are you filling a void in the market, allowing customers a shopping experience or product they wouldn’t get otherwise? What will make your business different than others that may offer the same product or service? Answering these questions and organizing them into a business plan will provide an “operating plan” that will be a solid foundation on which to build a strong and profitable business.

Get Help

Entering this new world alone is tempting, but it may not be the best idea. There are many things to factor in to creating a business and it might be best to seek the help of an expert, someone who’s been there before and has helped others build successful businesses. Think of the time and money you’ll be saving by having things in place from the beginning.  There will be lots of questions. Having someone who has been there to help you identify what’s important and how to make the right decision will keep you from making costly mistakes.

Choose a Location

Luckily, technology today makes it easier for businesses to operate without a physical location. But that all depends on what type of product or service you offer. Consider the financial aspects of overhead; rent, utilities, taxes. If you don’t need it, look into how you might be able to set up shop online and ship your products. Maybe for your business, a healthy combination of both is needed. Don’t skimp on the research, make sure you’ve examined all of your needs and options before making a choice.

Addressing these starter challenges will put you in prime position to get your business off the ground on a good foundation. Remember that many have come before you and it’s a good thing to seek the advice of someone who can help you tackle problems before they start. Good luck!


If you’re just starting a business and would like a reality check as to whether you’ve covered all bases, send a Contact request and I’ll be in touch.

Challenges of Transitioning from Executive to Entrepreneur

We love a good small business success story here at Prime Strategies, and open forum’s telling of Charles Henagan’s is a great example of someone moving from executive status to becoming a successful entrepreneur.

Embarking upon what appeared to be his dream job, Henagan was tasked with bringing new life to a legendary brand of vodka. Nearly 50, he was given new life with his exciting schedule of travel, meetings and strategy sessions while staying connected to his younger colleagues over post-work drinks.

Only 6 months into his new role, spirit sales began to sink internationally in response to the recession. As a result, Henagan was let go, leading him from the work force to becoming an unemployment statistic.

Henagan decided against looking for another corporate job in such delicate economic times, so he established Market Edge International, a New York City-based consulting firm that helps clients create sales teams and marketing strategies.

Henagan laments “The U.S. economy is changing so dramatically that in most industries, even when things pick up, the management structure will be fairly flat.” He felt exiting that scene and starting his own company was the most logical and dependable solution.

Not all victims of the down-turned economy have landed on their feet. Flexibility and long-term experience saved Henagan from the unemployment line but for some, starting their own business with a corporate executive mindset is slightly trickier. Most at the executive level are used to collaborating on big decisions and spending corporate money. Having sole responsibility for all decisions and tasks, can be a difficult mindset to accept. Plus it’s tough to deal with the loss of status. Some even experience anger, denial, depression, and so entrepreneurship is not for every transitioning executive.

Henagan, however, considers himself lucky to have made a smooth transition into entrepreneurship as opposed to pursuing another corporate job. He’s busy at work applying his acquired skills and new knowledge to his growing business. It works for him.

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If you’re an entrepreneur seeking help with planning for 2014, Prime Strategies offers One-Day Fast-Track Planning  to guide you in creating a solid Action Plan that will lay the foundation for a successful and profitable year.

10 Common Mistakes Made When Handing Down the Family Business: Part 1

Family Business Handoff helpIf you’re beginning to plan for the days ahead when you finally retire and allow the next generation to take over the family business, take heed to these first 5 of 10 common mistakes business owners make during the handoff.

1.  Not planning early enough for your succession

Passing down your family business is something that needs time and attention in order to run smoothly. You might be anticipating retirement, but to ensure a successful transition, plan even further ahead in case of illness, disability or even death. Since the success of your business handoff relies heavily on your family’s participation, experts suggest planning several years in advance.

2.  Assuming your kin will mobilize automatically

You can’t jump to conclusions about the next generation’s desire to take over the business. They may want to break from tradition and start their own business, or enter a new field entirely. Avoid presumptions and have open talks about all of the possibilities well enough in advance.

3.  Not seeking professional guidance in your exit planning strategy

As a business owner you should know when it’s important to seek out advice from professionals or people who may be better equipped to handle such circumstances. The end of your career as the owner or president of a company should be treated with the same delicacy and attention as any other part of it. There’s a lot to consider for yourself, for the business and for the family members who will continue to run it. Consult someone with experience in this spectrum who can help guide you through the transition making sure all your bases are covered.

4.  Filling key positions based on family politics

Deciding who will fill what role won’t be easy. This is where family life and professional life collide and it’s a tricky situation to be in. You want to be open to peoples’ differences and allow their strengths and weaknesses to find their way into the perfect role to help move your business forward.  Don’t be shy about making your choice based on what counts: who’s right for the position. Your son may want to be president but he might not have what it takes. Don’t let emotion overrun your professional thinking.

5.  Expecting the same passion as you have

You built this business from the ground up with your own blood, sweat and tears. This business consumed every aspect of your life and your dedication went into making it the success it is today. Your family might be excited to step in and continue the tradition but they may not have the same fiery passion that you have about it. While it won’t be easy, you’ll have to be accepting of that. See things from their point of view and trust that what they can bring to the table will be enough.

Handing off your family business is something that takes time, planning and a lot of consideration, but you’ve come this far so you know you’ve got what it takes. There are more mistakes to be wary of during this adventure so join us next time as we complete the list.


If you’re a late-life entrepreneur seeking support in business planning and management techniques, Prime Strategies can offer the necessary guidance and expertise to help you reach your goals.

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.

 

BUSINESS LEADERSHIP SERIES:

Analyze Your Business – It’s Easier Than You Think!

In the previous article in this series we discussed solidifying your business vision. You envisioned what you want your business to become and you wrote it down to give it the strength of being visual. If you haven’t done this for your business, consider doing so before you start to analyze, so you’ll have something to compare your findings against. Your vision is your point of reference.

By analyzing the state of your business now, you can begin to see  where you are in relation to where you want to be. These two points will allow you to create a direct line between them. We’ll talk more about creating the strategy and developing your plan of action in a later article.

Here are the questions I suggest you ask yourself to determine where you are.

What is your vision for your business?

Do you have a “mission statement?” If so, what is it?

Do you have an annual operating plan?

Do you have a marketing plan? Is it in writing?

If so, when was the last time it was updated?

List your products/services in descending order of their contribution to total revenue.

Who is your target market for each product/service listed above? These may be the same or different.

What marketing activities are you conducting?

What sales activities are you using?

Who are your high gross margin customers? What characteristics do they have in common? (Gross margin is the difference between income and cost to produce or provide.  General operating expenses are deducted later to leave net profit margin.)

What would you say are the main strengths of your product or service?

What are the weaknesses? (Be honest here — this is meant to be a learning tool)

List your 3 primary competitors and their main strengths.

What were your total revenues in your last fiscal year or calendar year?

If you are in business less than a year, what are your revenues to date and your projected revenues for this year?

Which of the following numbers do you monitor monthly?

___Total Revenue

___Returns/Credits

___Accounts Receivable (if applicable)

___Aging of Accounts

___Expenses

___Fixed

___Variable

___Frequency of Unexpected Expenses

___Inventory (if applicable)

___Turnover rate

___Cost per Unit Sold

___Cash Flow

___Cash Reserve or Debt

___Profit or Loss

Which of the above are your greatest concern and why?

What other concerns do you have?

Oh, by the way, are you having any fun? What do you enjoy most about your business?

What do you like the least?

By answering these questions you’ll have a pretty good idea of where you are. Have you identified some areas that need attention? Were you surprised about the personal questions at the end? Since you’re the most important element in your business, your personal state of mind is a critical element to success. Review your answers and summarize the current state of your business.

If you aren’t already doing so, I’d suggest you create a monthly spreadsheet that covers at least the financial elements listed above.  It’s simple to do using any accounting software that allows you to create a one-year spread sheet.  Set it up listing your financial elements along the left vertical axis and each month across the top of the horizontal axis. Then you can monitor and compare your numbers on a month-to-month basis, calculate percentages and see your cumulative income and expenses at the end of each month. Of course, you will add any other numbers that are meaningful to your business.

If you’re a relatively new business, your most important number is cash flow. You need to have enough monthly income to cover monthly expenses as they occur. Otherwise, you’re eating into your working capital. Meeting your expenses should be your primary objective. You’ll also want to know how many units (product or service) you need to sell at what gross profit margin to cover expenses. If your gross margin is 30% you need to sell and receive payment for $10,000 to cover $3,000 in expenses and profit.

Do you have months where you don’t cover expenses? Are you not selling enough units or not making a large enough margin on sales?  Are accounts receivable backed up? Try to identify the primary problem and take action accordingly.

If you’re in a business that has a long lead time between sale and receipt of payment, you’ll need extra working capital to carry you through that time period. If you are on an accounts receivable system, be sure to bill on a timely basis and follow up so you don’t run into collection problems. This has been the downfall of many an extinct business.

Analyzing your business can seem a daunting task, but it’s a matter of learning to monitor the key elements on a regular basis using accurate data. Your assignment between now and the next article is to analyze your business. Put together the spread sheet using the specific elements for your business and monitor the results for a month. If you have questions as you work on your analysis, feel free to drop me an email or call 212-679-1209.

Next time we’ll look at what constitutes business fitness – that elusive place of stability and profitability every business owner seeks.