Are you really in business for yourself or just self-employed?
When you meet small business owners and ask them what business they are in, they will often describe their trade; “I sell fitness equipment”; “I’m a CPA” or “I own a restaurant”. A few questions later, you can get a pretty good idea of whether the owner is really “in business for himself” or merely self-employed.
Take a look at these typical questions asked at networking and social events. Which do you think best differentiates a “businessman” from a self-employed person?
1. How many employees do you have?
2. How many hours a week are you devoting to your business?
3. When is the last time that you took a vacation?
4. How many locations do you have?
5. If you take a vacation, does your business continue to grow? (not just survive)
If your direct contributions are the key to the success of your business; If you cannot honestly answer “yes” to question five, then you are probably self-employed, with your success limited to your own abilities and activities.
As you have probably guessed, the last question is the key to differentiating between a businessman and a self-employed person. It focuses on the key element of being “in business” – the ability to leverage other peoples time (OPT).
Do you have multiple, independent operations contributing to your revenue? Will your business continue to grow and thrive if you are not directly contributing to the delivery of your products or services? Are you focused on the future and how to leverage more of other peoples time?
Congratulations!!! You really are in business.
Jim Tinsley is a BAI Regional Coach based in Charleston, South Carolina
Employee Turnover is a Costly Challenge
Turnover of employees is costly in both time and money. Research shows that it typically costs 30% of an employee’s first year’s salary and 67 days to replace a bad hire. For one employee making $30,000, you will spend about $9,000 and more than two months to hire a replacement.
Turnover can also lead to customer service issues - which may affect future profits. Consistent turnover also affects morale in an organization. If turnover is in operations, now we have quality issues.
What can you do to reduce turnover?
- Set Clear Vision, Goals and Objectives: Clear goals for the company and how each employee fits into that vision allow employees to understand where the organization is going and what part they play. Don’t assume they know.
- Communicate: Ask for your employee’s input. Job satisfaction increases when people feel that their opinion is listened to and appreciated.
- Training: Research shows that for employees who say their company offers poor or no training, 41% plan to leave within a year. Of those that say their company offers excellent training, only 12% say they plan to leave
- Benchmark: Set expectations for each job that are measurable and attainable. If you don’t have data internally, there are outside sources. Look at the motivations for a particular job that achieves success. Hire when there are matching motivations.
Employee turnover is a challenge you can’t afford to ignore. Use the tools available to get the right people in the job and keep them there.
Laura Sims is a BAI AdviCoach® based in Richmond, Virginia.
The First Step: Create a Compelling Executive Summary
They say that the first step toward bringing your business to life should be the creation of a compelling executive summary which will be the single component that serves to convince others to learn more about your business. The potential readership of your summary may include prospective and current investors, strategic partners, distributors, vendors, legal, financial and other service providers. Remember, you only get one first impression. This is very true when it comes to your business plan’s executive summary.
Your executive summary needs to be well conceived and written in a style that is easy to understand. It must be concise, interesting and believable. You want your summary to reflect an exciting and achievable opportunity.
This is not an easy task. You must boil down the essense of your business, to no more than 3-5 pages. And it’s got to be high on the readability charts too! No easy task.
Before you begin to think that you’re done and have created your best effort at a first impression, ask yourself if it communicates the following:
Description of Product/Service
A brief description that focuses on the value of your product/service , not how it performs it. Remember to be focused on what the customer benefits.
Business Objective
What goal do you want your business to achieve? This can be measured in a variety of ways including market share, sales revenue, channel distribution and market leadership positioning. (A combination of these elements works well). Just remember to make sure that it is based upon measurable, believable and achievable objectives. This should be no more than a paragraph that is qualified within the business plan.
Market Size and Opportunity
Succinctly describe who will buy your product/service and at what volume. Make sure that your business plan contains a description of the market to qualify whatever projection you make.
Target Market Description
Briefly describe who will make the purchase decision for your product or service. Remember to always think beyond the reseller channel and describe the end-user too. This will indicate to a prospective investor that you have thought through a comprehensive positioning of your product in the market.
Competitive Advantage
Realism is the key word to bear in mind here. Make sure that you have described the current and potential competitive forces in the marketplace. Once you describe these forces, position your product relative to the competition in the market. Assuming you have a clear competitive advantage, take the description a step further and communicate how your business plans to leverage that advantage.
Management Team
Briefly describe the key executive management team. A paragraph that highlights the individual team members’ accomplishments in your market will suffice. In the event that your team is not completely formed, don’t worry, describe the roles and plan to fill.
What do you need to Succeed?
Don’t be shy about asking for what you need to move your business forward. This usually precedes the Usage of Funds statement, indicating how you propose to allocate funds and resources.
Preliminary Financials
Finally, describe what investors can expect to receive as a result of their investment in your business.
If you have managed to create an executive summary that dynamically expresses the above points in less than five pages, you’re ready to submit it to potential investors.
Creating a compelling executive summary takes a lot of time and thought. Don’t underestimate how disciplined you will have to be in creating this. Make sure it looks professional. Get feedback from respected colleagues. Have an AdviCoach work with you to develop. Refine and refine further.
Your business deserves to make a powerful and positive first impression… after all, it’s the only one it will get.
Stop by the Central Virginia Franchise and Financing Expo
Next weekend (March 1 and 2) will introduce the Central Virginia Franchising and Financing Expo. This will be a great opportunity for you to meet with BAI and over 50 other representatives from top franchises. The expo will be held at the Greater Richmond Convention Center from 11am to 5pm on both Saturday and Sunday. I hope to see you there.
Click here to receive free admission to the exhibit hall and seminars. If you would like to schedule an appointment, click here to send me an email.
The Small Business Owner’s Dilemma
Like most small business owners, you probably went into business because you have knowledge and skill in a particular industry and wanted more personal freedom. It’s also likely that you did not have a clear vision of the business you were going to establish and you have continued to practice your profession or craft with your new business around you. As your business grew, your responsibilities also grew. Now, in addition to your original trade, you are also responsible for HR, sales, marketing and financial management.
Your Internal Challenge
As a small business owner, you are both an investor and the CEO. As an investor, you want a positive return on invested money, time and work. As the CEO, you have a professional and fiduciary responsibility to your shareholders (you) to profitably grow the business.
While both roles want overall success, conflicts may occur. As the investor, you may become impatient and want more money from the business as a return on investment. This reduces the amount of capital which would be available to the CEO to build additional business infrastructure.
You need to recognize the two roles and be aware that the long-term objectives are the same. You need to make decisions that take both perspectives into account.
Maximize Value –Maximizing your company's value should be your core objective — it addresses the needs of all constituencies — investors, managers, employees and customers. To maximize your business’ value, you should objectively address the following when developing and implementing your business strategies:
- Optimize Your Investment (Including Time) –How can I achieve the greatest return on my money, time and efforts? Answer this question as if you had no personal connection to the business.
- Optimize Profitable Revenues — How can I create new revenue opportunities and improve profitability of current revenue streams? Search for the optimal balance of total revenue and profit so that each revenue dollar generates maximum profit.
- Leverage Your Business Appropriately — Borrowing money can provide you with needed capital and doesn't dilute your ownership percentage.
- SYSTEMize Your Operations –Save Yourself Significant Time Energy and Money by creating systems to manage your business. Documented systems support a consistent customer experience, facilitate employee training, define standard operating procedures, and add inherent value to the bottom line. And enable you to exit from the business.
- Minimize Your Expenses — Money not spent goes directly to you. Look for ways to save on production, distribution, advertising and customer service without starving your business.
- Minimize Your Taxes — Find a good accountant who will do more than prepare your tax return. Have them explain the tax implications of your business strategies and decisions, reduce your tax exposure, and they will become an invaluable asset to your business.
- Have An Executable Plan and Live It — Have the map to your destination and follow it. .
Business Advisers International can help you focus on the fundamentals that add real value to keep your business growing in the face of changing economic conditions. Contact an AdviCoach for a complimentary business evaluation.
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