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?

=====

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.

How to Identify Your Brand

Man standing in boat on water outside of city, how to identify your brandThere are many components of your business that need to be hashed out before you even open the hatch or sign for a loan. From the initial concept, to the goals you wish to achieve, to creating an actionable plan, you’ll need to have at least a rough draft of your brand first and foremost.

Here are some questions to ask yourself while identifying it.

What’s my business mission?

If you were a ship owner your vessel would have a name and it would have a mission. It would carry cargo or people, or it might be an Arctic icebreaker, or a defender with tools to serve its purpose. It may be out to explore new places or gather information. Your mission will help you determine your brand.

Having launched your business, you must have a strategy to address the market climate and determine where there are holes to be filled. What has you excited about embarking on this voyage? What do you plan to offer? How will your customers be served?

Beyond understanding your own destiny, consider those of your customers: who are they and what are they searching for? Develop a customer compass that identifies their personalities and lifestyles, what they spend most of their time doing, what they like and dislike. Whatever is important to your business is what you should be seeking to learn about your market.

What’s my brand personality?

Your brand (ship) should have a unique personality to set it apart from others, the same way your personality sets you apart from other people. Start exploring what your brand will convey, remembering that it goes beyond what your business merely looks and sounds like, but in fact embodies the core values of what you offer your customers.

Choosing a name, a look and a logo for your brand will either be the most fun or the most stressful part of the journey. You’ll want to go with an image that represents your products and services well; something that catches attention, is easy to remember and tells the right story about your brand (ship) while being relatable to your customer.

How is my brand communicating?

Your brand (ship) will be the first impression you make on prospects. It also gives a long-lasting impression to returning customers. You want it to speak to them in a consistent tone of voice, serving as a constant reminder of your business’ character.

An elevator pitch can serve as an oral representation of your brand (ship); a 30-second-or-less statement about your business’ mission, goals and values. Strength is in the brevity of your pitch as you’re forced to narrow down your services to just the specifics. This will help you greatly when networking with others who may soon develop a great interest in your brand.

Your brand is important because it cultivates trust between you and your customers early on in your business relationship. Without it, there might not be a relationship to follow. It’s important to not gloss over the details, but to clearly understand what impact your brand will have on the future of your company.

__________________________

Are you seeking help with identifying your brand? Prime Strategies offers the necessary guidance and expertise to help you develop your brand and create a strategy to build it into your own fleet. Ask for a complimentary session to get you started.

Challenges of Becoming a Late-Life Entrepreneur

The statistics are overwhelming; now more than ever before, those near retirement age are looking to start their own business. The reasons vary. Some can’t bear the thought of an idle retirement, while others need to supplement their income to continue paying the bills.

If you’ve considered turning your life-long passion into a business, are interested in testing your limits with a second career, or are simply looking to be our own boss, you’ve come to the right place. Let’s discuss some challenges you may experience as you begin the process and how you can overcome them.

An Overwhelming Start

Whether you have prior experience or not, starting your own business can feel overwhelming. There’s a lot to consider: from financial planning to goal setting, marketing ideas to leadership approaches. Rather than see that as a negative, I prefer to see it as encouragement to get you started on the right foot. Planning is a key factor in the success of your business so avoiding feeling overwhelmed by starting slow. This may not be the most fun part, but it is the most important.

Creating a Business Strategy

Business plans give you a direction and that’s a good thing to have when you’ve got nothing else. Defining a clear strategy gives you something to quantify and qualify so you can keep track of your progress and make sure you’re on the right path. Use the simple, yet powerful, Prime Strategies Business Success System to help you get started. Outline your vision, define your mission, understand your objectives and what you think the best ways to fulfill them may be. Then work out a budget; what kind of finances do you need to get started? What kind of preliminary inventory and supplies do you need? What is your monthly income versus monthly expenses? Once you have those questions answered, you’ll be ready for action.

Management Technique

Learning the ropes of management and mastering a good set of skills can be tricky. Is your family involved with the business or have you hired from outside? This could make all the difference in your approach. The biggest difference between family and non-family workers is family workers will require that you set a boundary dividing family time and work time. What family and non-family workers will both demand of you is consistency and leadership. You’ll have to train your employees in the specifics of the industry or, at least, according to your own business structure. But managing people takes a certain finesse that will pay off tenfold if you master it.

Starting a business can be overwhelming, but don’t let the details stop you from accomplishing your goals. Creating the right plan and taking the right first steps can be a major help.


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:

Action:  Following Your Plan

Wow! Look how far you’ve come. You’re actually ready for action. Let’s just do a quick review to see how we got to this point.

You started with the abstract concept of your business – your vision. You were able to see it with your mind’s eye. You identified and quantified what it would look like as a mature business. Then you took a snapshot of where you are now and how you are operating. Since there was a difference between the two, we determined the size of that difference and how long we thought it might take to get from where we are to where we want to be.

If our timeframe realistically is five years we’ll need to work backward from that place we want to be in five years. The more this can be quantified, the better, because we need some benchmarks along the way to show us how we’re doing against our ultimate plan. These benchmarks correspond to our goals, which we set on an annual basis in an order that gets us closer to our vision with each passing year.

From the goals comes the strategy for how we’ll accomplish them. From the strategy comes the specific task list – our plan. In order to support carrying out our plan we need to know when we will undertake each task, what resources will be required and what the expected result/reward will be – and when we can expect to see those results. That was the subject of our last article on financial planning.

At this point, you’ve got an operating plan and a financial plan, both of which have addressed the timing issue. From your financial projections you know when your expenses will occur from month to month. So the next step is to apply your plans to your daily calendar on a month-by month basis. It’s good to include your revenue, expense and projected profit goals also. It helps to have the list available to help keep you on target.

Then you place each task in one of the four weeks of the month, where they seem to be most logical. Obviously you don’t want to pile them all in the same week. Consider the time each will take and use your best judgment about where to include them. Once you’ve transferred to the weeks you will be ready to transfer to the daily calendar as each week comes up. Now you’re at the day-to-day operating level. This is where your plan is being carried out. If you aren’t doing it here, it isn’t happening.

It isn’t hard; it just means taking the time at the beginning of the month and each week. At the end of each week, see what you accomplished from your list and what has to be carried forward or dropped. Make any adjustments to your monthly plans based on what has transpired during the past month.

Using our plan to increase gross income (revenue) by $60,000 for the year, let’s see what happens on a month to month basis. In June, we pay for our sales materials. (June projected expenses are $10,000).

We’ve projected $10,000, so we know that’s our budget. In the planning phase we would have probably started working on our sales materials and finding someone to provide them in April. That’s how we knew how much to include in the financial plan for sales materials. We put that plan into action by adding “finalize sales material provider” as the task to be completed for week one of April. Then week two might be to check initial drafts and return for changes. Week three will likely be sign off on proposal and week four or five would be when we’d receive the materials.

Based on this we’re ready to start our training in May. That means we’ll have to start preparing that in April also.  We’ll be paying the provider of our training in July in accordance with our plan. We plan to do a campaign in August and September also which we’d include in our sales costs in August, September and October.

Now you can break up the tasks in each of these months by week and you’re implementing your plan.

We’ve translated our plan into action and have a way to check to see how we’re doing. Next we’ll look at the management aspect of the business. That’s where we see if what we planned actually happened and if not, why not? We can also see how close we are to our projected budget. Now it gets interesting.

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.

Partnership Problem: Unforeseen Situations

Strategy: Plan to talk and talk the plan!

Most people, who start a business, know they can’t plan for every problem. As a solo entrepreneur they either have to resolve the situation alone or ask for outside help.  In a partnership the problem strategy needs to be regularly scheduled meetings to not only talk about business in general, but to use the time to also discuss problems and concerns.

But what about the problems that occur on a daily basis?  This is the best time to cash in on the perks of partnership!

There are going to be problems that need immediate answers… like disgruntled customers, shipping problems, etc.  Regardless of which partner or employee handled the issue, even if the outcome was less than desired, there must be transparency and detailed communication about the problem. Emotions come into play when things seem a bit out of control, so this needs to be kept in mind when opening discussion on an issue. Regardless of the field or industry, policies are needed to make certain every problem gets handled in a way that gets best results.

If you find your partner resisting or “forgetting” about these critical opportunities to communicate with each other, I’d suggest you take command of the situation and create a plan for operations the way you believe is best. Present it to your partner for discussion. You will find more interest in such a meeting.

In addition to these regular strategy meetings, having a planned “go to” list of who best can solve which kind of problems, will help resolve problems more quickly and with better outcomes.

Sometimes it’s helpful to get an outside perspective on problem resolution.  Asking for help or ideas is never a sign of weakness; in fact it shows how dedicated you are to the business getting to the top!  I specialize in working with one or more partners to put them in command of their partnership and their business. My mission is to help you and your partnership business succeed.  Read more Partnership articles on the Prime Strategies blog.  

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.

Prepare for Recovery: Think Like a Leader

As most of you already know, my mission is “transforming business owners into business leaders”. As the economy moves into the next phase of recovery, it will be those who think and function as leaders who will be the winners. Leaders will have identified pertinent opportunities and prepared themselves for advantage as things improve.

Are you thinking like a leader? Let’s see.

1 – A leader accepts responsibility for business results. As a leader it’s your job to recognize and solve problems, make good decisions and take effective action. The more you can systematize the process the easier it will be. But the final outcome, success or failure, is up to you.

2 – A leader is Vision/Mission driven – Do you know what you want for your business? Do you have a clear mission? If not you’re just flapping your sails in the wind. You won’t be going very far very fast. The clearly thought-out vision is the magnet that pulls you forward. And the clearer, the better. You’ll be less likely to get off track, but when you do, the vision will be there to help you get back on track.

Your mission is what you do to achieve your vision. Business leaders have strong missions that take into consideration accomplishing something of value beyond themselves. [Read more…]

Common Business Challenges: You’re Not Alone

If you’re in business, you’ve got challenges. Some are priority; some can be deferred. Some will take time; others can be handled quickly and easily. Some will require a financial investment; some will not. They are all business challenges because they are holding you back in some way.

Rather than see a challenge as a negative, I find it’s helpful to think of it as an opportunity. It usually means choices must be made, and that’s where it can get sticky. Sometimes we feel stuck because we’re unsure about the right course of action. When the problem continues, we feel the stress and so does the business.

Some of the types of challenges I frequently hear about from small business owners are:
– sales – how to get more
– time/organization – not enough time, chaos mode, overwhelm
– cash flow – unpredictable and uneven income and expense
– staffing – conflicts, poor delegation and job matches
– technology – not adequately supporting operations

Anything sound familiar?

Even though the specifics are unique to your business, thousands of others experience the same kinds of challenges. The great thing is you don’t have to deal with these all alone. You can learn from those who’ve been there.

There are also experts in each of these areas who may be able to help you better see the issues and create a smart strategy. Even getting their perspective can sometimes trigger a new idea or technique that will let you move forward.

As entrepreneurs, the buck stops with us, so we need all the help we can get. I’m happy to share with you my perspective, suggestions and case studies. Let this be a point of reference for your next steps.

Sales

If you’re struggling to make sales, something needs to change. Sales happen when the perceived value is equal to or greater than the cost. Of course, it’s a matter of timing also. A customer may not need computer repair today, but sooner or later they probably will. The key is to be there, at top of mind, when they do.

You may benefit from an outside perspective on how to better reach your target market, pre-qualify or follow-up. Don’t continue to sink resources into something that isn’t working. Find out how others have addressed this type of challenge. Talk with a sales consultant, trainer or specialist to help you see things from a different perspective. At least you’ll know you have options.

Sylvia was a publicity and public relations consultant who increased her sales dramatically when she changed her marketing strategy from shotgun to rifle focus. She decided who were her best clients and focused her efforts on finding what they wanted.

Time/Organization

Who has enough time? It’s a challenge for every small business owner.

Analysis, organization and systematizing operations are the key to making the most of your time and that of all your staff. With organization and systems to support the operation of your business, time will be on your side.

Most businesses have “predictable” activities, many of which can be automated to some degree. In the process of putting this in place you are forced to review the actions of your business. You’ll also become aware of areas that can benefit from streamlining.

Yes, bringing time under your control will likely require some more invested time, but the payoff can be huge.

For Gus, owner of a bakery products distribution company, creating a system to track movement of his inventory saved him many hours of searching for information when he needed it. There was a financial investment for purchase of computer hardware and software, but he was able to break even in less than a year and has knocked 4-5 hours/week off his own job.

Cash Flow

Both new and well-established businesses often find themselves in a difficult cash situation and don’t know what to do about it. The answer, of course, is cash planning. In order to do that, you will need accurate and timely financial information and know how to interpret what you see.

Good cash planning requires review of historical financial information, including a look at business cycle and sales cycle. Credit policies and practices, marketing plans, periodic expenses, debt and cash access need to be considered as well. The concept is to control what can be controlled and to manage what can’t.

Erica, owner of a wellness center, was able to move into a bigger space because she knew her cash flow would support it. Using her past 2 years cash history, the results of a recent marketing campaign and a change in patient planning strategy, she was able to project more than adequate cash inflow to cover the expected increase in expenses.

Staffing

You may have difficulty finding or retaining qualified help. Your staff may not be onboard with your goals. There may be interpersonal conflicts. The real problem with unresolved staffing issues is it will hold back the growth of your business. Until you can get your people, as well as your systems, to support your operations, any potential growth is in jeopardy.

It may not be difficult to identify where the problems are. Reaching the right resolution, however, may prove to be more difficult. Certainly, until you are totally clear about where you’re going and have a plan to get there, your staff won’t be able to provide consistent support.

Adam was an engineer who owned and managed an 8 person company. He had an assistant who just wasn’t performing at the level he needed and expected. In a focused interview he learned she had no idea what her job was supposed to be.

His steps were to wrote a job description discuss it with her, get her agreement, include some of her suggestions, show her the critical nature of her role and help her set personal goals.

Some follow-up and reinforcement was necessary, but in less than 3 months he was able to delegate management of the administrative portion of his jobs. This, of course, freed him to spend more time seeking new business.

Technology

Every business must first define and streamline its business practices and processes, then seek the technology to carry out and support operations. Correctly applied, technology makes information more available and useful, helping small firms better manage their finances, sales, prospect development, customer relationships, inventory, etc. A good marriage of business and technology saves time and money. expedites workflow and provides accurate and timely information.

When Jonathan transitioned from being head of a division in a mid-size company to opening his own business, he knew this was the time to introduce technology that could streamline his operations.

After being in business only six months he researched and chose a paperless system that allowed him to scan and archive the numerous forms and documents that are required to be maintained as part of his operation.

He estimates the business saves 1-1/2 to 2 hrs. (20-25%) daily in time previously spent on filing and retrieving paper. And the cost of storage is practically non-existent.

These are certainly only some of the more commonly reported challenges. Consider which of these areas need your attention. If something else is more urgent, by all means, address it first.

And don’t forget, you’re not alone. Ask for help when needed and find out what others have done in similar circumstances. Use this information to help you gain the confidence you need to make a commitment to a strategic course of action.

 

7 Strategies to Recession-Proof Your Business

We don’t yet have confirmation that we’re in a recession, but the media are certainly leading us to believe it’s imminent. I’ve spoken with a number of small businesses who are already starting to feel a slowdown.

That tells me every small business needs to take a hard look at the status of their business to make sure it can withstand a downturn. The secret is to have your Plan address spots where you may be vulnerable. Prevention now definitely beats fixing things after they become difficult to turn around.

Following are top strategies for weathering a downturn. They are actually good business practices in any economy.

1. Get your house in order.
Start by solving as many problems as possible n0w. Unresolved problems hurt even more in difficult times. Get your cash under control. Choose strategies that conserve and manage it. If you need help, get it ASAP. [Read more…]