Tips To Being A Successful Small Business

There are a variety of reasons whey small businesses fail. After working with hundreds of small business through the years here are a few that RISE TO THE TOP.

NO MARKETING PLAN

NO MARKETING CAMPAIGNS

NOT TESTING MARKETING EFFORTS

NOT MEASURING MARKETING EFFORTS

Too many business owners look at marketing as an EXPENSE when it's actually one of the best INVESTMENTS you can make for your business!

You can't open the doors of your business and expect customers to find you. I have seen businesses spend tens of thousands of dollars on a new retail location and/or to build a new shinny website and then EXPECT customers to find them. You can have the best website in the world but if no one knows about it or can't find it how will increase sales?

ATTENTION ALL BUSINESS OWNERS!

Marketing is ONLY a Expense if you are doing it incorrectly! Maintain active marketing campaigns and make sure you can MEASURE all of your marketing efforts. Don't just throw money at your marketing and think its going to work itself out. Test your marketing and advertising and measure everything. Large corporations can afford to throw money at marketing they can't measure but most small businesses can't afford this.

Successful businesses only risk a small amount in testing an idea with a high potential return .... e.g. adwords to get traffic to a squeeze page or survey .... then only do they create the product if the test indicates it is profitable else they fail quickly. They only take major risks like renting a shop or hiring staff when they have a proven idea that is cashflowing well.  Successful businesses plough 10% of turnover into building the business and another 10% into personal & professional development of manager & staff.


Most startups fail in year 1 by developing a product before discovering there is a market for it .... and taking large risks like opening a store for low returns (physical goods have a margin of 10-20%) or risking their home for a loan.

Year 2 taxation is the biggest killer of startups because employees are used to spending all their income once they have it.  But when switching to a business taxes are not due till the end of the year. Forgetting to pay themselves first (instead of last) compounds the issue.

Year 3 loss of focus causes problems because too many business owners use a business plan as just a tool to get money from friends, family & fools instead of as a working guide.

Year 4 + the biggest traps include failure to do what only you can do & delegate the rest resulting in burnout.

Business owners are outsiders in society because they have not accepted the social conditioning of working hard for others for 40+ years in the hope of getting a pension of less than half of what was not enough to support your life while working.   So they need a support network from successful business people.

A business plan is needed based on the owner's requirement for funding his desired lifestyle *10 ... to give the minimum target profit level of the business.

The successful people/businesses have different accounts and budgets for asset building 10%, education 10%, contribution 10%, play10%, long term saving (eg for new car) 5%, savings/debt reduction 5%, necessities 50%.  In other words, budget all your expenses, needs, and desires and stick to it.  

Above is not a "Does It All" recipe for business success but should at least give you a few tasty dishes to sic your teeth into.

The Importance Of A Business Plan

Having volunteered with SCORE and Micro Mentor in this venue for several years, I am convinced that the value of a business plan as a means to assess and manage risk is the principal answer to "how to be successful".

I urge small business to test the water, and try out the business model before launch by taking it through the proof of concept offered at the links below.

I have heard many critical of business planning say that it is cosmetic, drives more work than it is worth in terms of obtaining financing and similar commentaries.

The fact remains that among the 5,000 plus cases I have handled in the last 7 years the vast majority of those who plan succeed and many who fail to plan do not.

I ask the simple question, "How are you going to do it if you cannot plan it?"

I have not met many small business owners who have enjoyed the business planning process in answering my question but I have not met any who have regretted it once they have completed their plan.

This is especially true when the plan yielded a road map they had confidence in, a communicative vehicle to slide with confidence across the table to a banker or an investor and a risk reduction process of genuine value.

Writing A Business Plan

Sample Business Plans

Courtesy Of Kenneth Larson

Critical Questions To Ask When Creating A Business Strategy

The best guidance on this topic can be found in an article entitled, "Are Your Prepared to Succeed in Business" from the Biz Info Library.

The article can be downloaded in its entirety free of charge at the second, vertical Box Net "References" cube in the left margin of this resource ....

SmalltoFeds

Here is an excerpt .....

"How should you plan strategically? First of all, a distinction must be made. Business planning and strategic planning are not one and the same.

A good strategic plan will cover all areas of business, focusing on ....

Why a particular market, product, or service makes sense.

How a business might unfold and how its industry will react to it.

A good business plan will incorporate strategic thinking and planning emphasizing:

What the business will do.

How and when the business will deploy resources to generate revenues and profits."

I've seen a lot of businesses large and small with BAD or neglected strategies, but most people try and have some kind of overall plan.....

You need to have the standard approach:

- Vision
- Mission
- Goals
- Market and Competition Analysis
- SWOT
- Overall strategic approach
- Methods
- Implementation management plan (inc. sales and marketing)

Very standard, loads of templates around to download.

A Business Plan should be a "living document" in the sense of an interactive set of documents or even emails or intra-sites that let the plan evolve over time. It must NOT be a static document, written by a consultant and parked on a shelf and forgotten. The management plan needs to link directly to budgeting and into accounts in order that strategy and what follows is amended by interaction with real results.

Remember, "winging it" leads you straight down the tube ........

A Witch Or A Watch, A Strategic Plan Or A Business Plan Or...

Do you remember the game "This is a witch, this is a watch" from when you were a kid? Everyone sits in a circle and you passes one object one direction and the other object the other direction, everyone repeating the "This is a witch - a what - a witch" mantra (or watch depending on where you sat in the circle). Then when one person receives both objects at the same time and the cross-over begins....well....pandemonium reigns. This same reaction frequently occurs when small business owners grapple with which tool might best suit their current situation: strategic plan, business plan, feasibility study, or annual operations plans. I get a deer-in-the-headlights look when I suggest one tool as compared to another. Is it a witch or a watch; a strategic plan or a business plan?

Understanding the unique role that each of these tools plays is key. And as often as I’ve described these tools to people, nothing helps to crystallize their roles more than a visual. As you can see in the graphic, strategic planning is where the visioning takes place, values are articulated, and resources are brainstormed. What you want to be known for and what you stand for are key considerations. This graphic shows that strategic planning takes the long view, thinking 10 years into the future. Some strategic planning experts will tell you that with today’s rapid pace of business that it’s no longer realistic to plan 10 years out and have shifted this timeline back to 3 to 5 years. No matter the timeline, strategic planning is a great tool for “big picture” thinking.

Once you’ve developed your big picture, its best to test your direction. This is accomplished with a feasibility study. You’ve moved from forming the dream to articulating scenarios that will have the dream become reality. The feasibility study helps you to uncover roadblocks and determine which scenario provides the greatest likelihood for your success.

Following the feasibility study, a business plan is prepared to operationalize your best-case scenario. Business plans are usually prepared for a 3 to 5 year period. When you are looking for financial resources, funders may require 5 year projections, but also give a nod to the fact that anything beyond 3 years is hard to project with accuracy.

The final planning tool is the annual plan which, as its name might suggest, is prepared annually. You take a look at the year ahead, determine what your goals are, who has responsibility for them, when they will be accomplished and how much each goal costs. This provides accountability for your goals and a means to check in on them through the year to see how you’re progressing.

The process I’ve just described starts from the very beginning of a venture and moves through as though your business is a start-up. These tools are also applicable at various times throughout your business growth. Feasibility studies are good tools when developing new products and services. A strategic plan is a great tool if you’ve lost momentum in your business and need to renew early energy. Business planning should be engaged in regularly as your business grows. You’ll find that once you’ve prepared an initial business plan, renewing it is a much easier task. If your market changes or the economy changes, it’s also smart to redo your business plan to take the new conditions into consideration. So, whether it’s a witch or a watch, knowing which tool to use and when can move your business forward just when you need it.

Tips For Creating A Professional Business Plan For A Small Business

A business plan can be several thousand dollars and up while taking months to complete. The time factor however, is really a reflective measure of how fast you can prepare and supply the continual data that is required throughout the process.

Here's a few reasons why companies want to create a business plan .....

1. Because that is what they’ve been taught or learned and it just seems like the right thing to do. These people are few and far between and really are not creating for the purpose of achieving goals as much as just completing the task.

2. Create for the purpose of obtaining money/working capital . . . and that’s what the bank/SBA says must be done. Again, while true that it takes a plan to obtain a business loan, the plan itself has very little shelf life as it’s not being created to drive the business, only the loan application.

3. To impress a new incoming partner. In this case a plan should be created jointly with the new partner.

4. The best reason .... To expand your business and make more money, etc. This is the best because you are creating it for yourself. You’re the one getting up early in the morning – this tells you why. You’re working hard – this tells you where. You’re selling products all day – this tells you to whom. You’re wanting more customers – this tells you how many.

The cost is a function of the time of the personnel involved. I do not advise hiring someone else to do it for you. That has not worked in my experience.

A business plan is the vehicle by which you conduct the research for your market, decide which individuals to involve in the sales of your product and validate your revenue and expense financial forecasts. It is the means by which you will convince first yourself and then others who can help you that your company has a road map to success.

New entrepreneurs should go to the SBA web site at SBA that guides them through the business planning process. They should follow the site presentation and note the factors to consider in starting a business.

For examples of business plans go to Sample Business Plans

Entrepreneurs can also choose a counselor at Score who is experienced in their industry and that they feel can help them. They should their plan out on the counselor. The counselor will put on a banker's or investor's hat and give them a reaction, then make suggestions to improve the plan and how to communicate it to a financial institution.

I suggesst you examine the guidance here and layout your own proejct plan, pricing the resources required based on what you see and your estimate to complete it once you have it scoped.

Above all - PLAN --- to Succeed!