"The only irreparable mistake in business is to run out of cash. Almost any other mistake in business can be remedied in one way or another. But ... when you run out of cash, they take you out of the game." - Peter Drucker
Finance deals with analysis of past and present data for the purpose of deploying or investing the organization's monetary and capital resources to greatest advantage.... and dealing with this area is one of the least favorite things a business owner wishes to do.
BUT, they must deal with it and plan because if they don't they will never be successful and survive.
Most small businesses do not go under because they are not profitable but rather because they lack capital and have poor cash management.
Accounting and financial issues tend to be unpopular among entrepreneurs. This is somewhat strange because MONEY is important to most entrepreneurs – they are often obsessed with it. They struggle to raise it, they save it, they borrow it and they spend it.
Some entrepreneurs find the financial issues behind money tedious. Others find it intimidating. The result is that many entrepreneurs do nothing. Finances in many businesses become the state of the checkbook each morning. If there’s cash, the business is still around and if there’s no cash, the business has major problems.
To be successful businesses MUST attend to the numbers and attend to the most important number of all – profit – closely, diligently and professionally.
In order to be successful, we must sell our goods at a profit and satisfy our customers.
As Steven Covey says, "No profit, no mission."
“Civilization and profits go hand in hand.” Calvin Coolidge (1872–1933), U.S. Republican politician, president.
If YOU are a business owner who hates dealing with finances... hire someone who does and listen to them.
Fostering the entrepreneurial spirit!
Monday, February 24, 2014
Friday, February 21, 2014
For the Family Business: The Family Retreat
Trying to plan a business strategy during normal office hours is almost impossible. Plan a family business retreat to discuss the goals of the individual family members and the goals of the business.
The first retreat should focus on reviewing the firm's history, defining family and business values and missions, creating a statement about the future of the business and reviewing areas that need more attention.
The purpose of the retreat is to provide a forum for introspection, problem solving and policy making. For some participants this will be their first opportunity to talk about their concerns in a non-confrontational atmosphere. It is also a time to celebrate the family and enhance its inner strength.
A retreat usually lasts two days and is held far enough away so you won't be disturbed or tempted to go to the office. Every member of the family, including in-laws, should be invited. Begin plans for your retreat about six weeks in advance. Note: If you have a trusted business advisor have them work with you on your agenda and planning
Once you have picked a time and place, establish a tentative agenda. Your actual agenda will be tailored to meet the unique needs of your family and business. Usually families will identify some of the following issues for discussion at their first retreat:
A family creed or mission statement.
Management succession.
Estate planning.
Strategic business planning.
The reward system.
Performance evaluation.
Communication within the family.
Preparing adult children to enter the business.
Transition timing.
Exit and entry policies.
You may consider using a retreat facilitator, a professional experienced in helping family-owned businesses. The facilitator helps identify issues for discussion before the retreat and keeps the atmosphere non-confrontational during the retreat. The facilitator does not solve the family's problems but guides the family in doing so.
The retreat is the beginning of a process. When a consensus is reached by the participants, policies should be set, courses of action planned and responsibility for implementation assigned. When agreement cannot be reached, further discussions should be planned, possibly with the continued assistance of the facilitator.
One important outcome of the retreat should be plans for periodic family meetings and retreats in the future, so the dialogue will continue. Open communications will enable the family to come to grips with problems and issues while they are fairly easy to solve. Once family members have reached a consensus on the continuity of the firm and their roles in it, you can begin planning for succession.
The first retreat should focus on reviewing the firm's history, defining family and business values and missions, creating a statement about the future of the business and reviewing areas that need more attention.
The purpose of the retreat is to provide a forum for introspection, problem solving and policy making. For some participants this will be their first opportunity to talk about their concerns in a non-confrontational atmosphere. It is also a time to celebrate the family and enhance its inner strength.
A retreat usually lasts two days and is held far enough away so you won't be disturbed or tempted to go to the office. Every member of the family, including in-laws, should be invited. Begin plans for your retreat about six weeks in advance. Note: If you have a trusted business advisor have them work with you on your agenda and planning
Once you have picked a time and place, establish a tentative agenda. Your actual agenda will be tailored to meet the unique needs of your family and business. Usually families will identify some of the following issues for discussion at their first retreat:
A family creed or mission statement.
Management succession.
Estate planning.
Strategic business planning.
The reward system.
Performance evaluation.
Communication within the family.
Preparing adult children to enter the business.
Transition timing.
Exit and entry policies.
You may consider using a retreat facilitator, a professional experienced in helping family-owned businesses. The facilitator helps identify issues for discussion before the retreat and keeps the atmosphere non-confrontational during the retreat. The facilitator does not solve the family's problems but guides the family in doing so.
The retreat is the beginning of a process. When a consensus is reached by the participants, policies should be set, courses of action planned and responsibility for implementation assigned. When agreement cannot be reached, further discussions should be planned, possibly with the continued assistance of the facilitator.
One important outcome of the retreat should be plans for periodic family meetings and retreats in the future, so the dialogue will continue. Open communications will enable the family to come to grips with problems and issues while they are fairly easy to solve. Once family members have reached a consensus on the continuity of the firm and their roles in it, you can begin planning for succession.
Wednesday, February 19, 2014
OED Brings the LBAP to You!
OED's premier Small Business Outreach is the Local Business Assistance Program. This summer, we're rolling out a big push to increase the number of small businesses receiving services under the LBAP.
Beginning today, with our social media campaign rollout, we're working to:
Generate awareness
Address major issues all small businesses face
Match entrepreneur with OED Certified Advisors for one-on-one support!
So get started! This program is open to ANY small business, including brand new start ups and 1-3 person businesses, each often considered too small for even small business benefits. (What's that about, by the way?)
Go to www.oedglobal.org/LBAP for information and to submit your question & request!
Beginning today, with our social media campaign rollout, we're working to:
Generate awareness
Address major issues all small businesses face
Match entrepreneur with OED Certified Advisors for one-on-one support!
So get started! This program is open to ANY small business, including brand new start ups and 1-3 person businesses, each often considered too small for even small business benefits. (What's that about, by the way?)
Go to www.oedglobal.org/LBAP for information and to submit your question & request!
Monday, February 17, 2014
Time Management for the Home Entrepreneur
One of the biggest obstacles for home-based businesses is Time Management, ESPECIALLY if you have a family. Your children see that you are now available to chauffeur them and your spouse wants you to run errands. For those without family around friends and relatives can become distractions with every phone call becoming an adventure.
If you don't lay down some ground rules for yourself as well as your friends and family, you will soon find yourself back at that J.O.B.. you fled from! Here are some tips and strategies to help you manage your time more effectively:
1. Have an area designated as your office. Keep the tools you need right there, even small things like paper clips. The better situated and equipped your office is the better your success will be. Yes, many successful businesses were started at the kitchen table but before they made the leap into the “big time” most did actually buy a desk.
2. Schedule your days. Set up a Daily Method of Operation that is your daily To-Do List. This will include what times of day you will check your email, return phone messages, schedule new appointments, etc. If it's absolutely necessary, schedule in things like soccer practice, but also make sure you set "Start" and "End" Times for your work day.
3. Stay focused. Keep a running "To-Do" list that you can jot down ideas on and come back to later. If you're reading email and get a great idea for a new ad, jot it down, and come back to it later at the appropriate time in your daily schedule.
4. Don't be afraid to say "NO". If you are too busy to handle additional requests, save everyone time and frustration by saying no at the beginning. People respect you more for being honest about what you are capable of handling.
5. Use Voicemail. It is not necessary to take all of your calls
immediately just because the phone rings. Let the caller leave a message and return the call later.
6. Delegate tasks. Figure out what you make an hour. If you can make $200 per hour selling your product or services, then why WOULDN'T you pay someone $25 an hour to clean your house, do your taxes, etc.?
7. Know your Priorities. Small, one- or two-person operations cannot do everything in a single day. Plan your day according to what MUST get accomplished. Break larger jobs down into small tasks, and complete these tasks to achieve an end result.
8. Set Your Goals. This is replacing that "Deadline" your old boss gave you. It will also help you to determine if your current activities are on track to helping you achieve those goals.
If you don't lay down some ground rules for yourself as well as your friends and family, you will soon find yourself back at that J.O.B.. you fled from! Here are some tips and strategies to help you manage your time more effectively:
1. Have an area designated as your office. Keep the tools you need right there, even small things like paper clips. The better situated and equipped your office is the better your success will be. Yes, many successful businesses were started at the kitchen table but before they made the leap into the “big time” most did actually buy a desk.
2. Schedule your days. Set up a Daily Method of Operation that is your daily To-Do List. This will include what times of day you will check your email, return phone messages, schedule new appointments, etc. If it's absolutely necessary, schedule in things like soccer practice, but also make sure you set "Start" and "End" Times for your work day.
3. Stay focused. Keep a running "To-Do" list that you can jot down ideas on and come back to later. If you're reading email and get a great idea for a new ad, jot it down, and come back to it later at the appropriate time in your daily schedule.
4. Don't be afraid to say "NO". If you are too busy to handle additional requests, save everyone time and frustration by saying no at the beginning. People respect you more for being honest about what you are capable of handling.
5. Use Voicemail. It is not necessary to take all of your calls
immediately just because the phone rings. Let the caller leave a message and return the call later.
6. Delegate tasks. Figure out what you make an hour. If you can make $200 per hour selling your product or services, then why WOULDN'T you pay someone $25 an hour to clean your house, do your taxes, etc.?
7. Know your Priorities. Small, one- or two-person operations cannot do everything in a single day. Plan your day according to what MUST get accomplished. Break larger jobs down into small tasks, and complete these tasks to achieve an end result.
8. Set Your Goals. This is replacing that "Deadline" your old boss gave you. It will also help you to determine if your current activities are on track to helping you achieve those goals.
Friday, February 14, 2014
Going Into Business
You are thinking of going into business. This can have advantages and disadvantages.
As one frustrated entrepreneur (who had still kept their sense of humor in tact) was heard to quip – “The only thing more over-rated the natural childbirth is owning your own business.”
Running a business of your own will bring a sense of independence, and a sense of accomplishment. You will be the boss, and you can't be fired, though there may be days when you would welcome it. You will experience a pride in ownership - such as you experience if you own your own home. You can derive great satisfaction from offering a product or service that is valued in the market place. By being boss you can adopt new ideas quickly. Since your endeavor undoubtedly will be a small business - at least in the beginning - you will have no large, unwieldy organization to re-direct if a change is needed. This opportunity for flexibility is one of small businesses greatest assets.
These are some of the advantages and pleasures of operating your own business. Now take a look at the other side. As one small business owner attending a conference put it: "When I came here, my business lost the services of its chief executive, sales manager, controller, advertising department, personnel director, head bookkeeper, and janitor."
If you have employees, you must meet a payroll week after week. You must always have money to pay creditors - the man who sells you goods or materials, the dealer who furnishes fixtures and equipment, the landlord if you rent, the mortgage holder if you are buying your place of business, the publisher running your advertisements, the tax collector, and many others. All of these must be paid before you can pay yourself.
You must accept sole responsibility for all final decisions. A wrong judgment on your part can result in losses not only to yourself but, possibly, to your employees, creditors, and customers as well. Moreover, you must withstand, alone, adverse situations caused by circumstances frequently beyond your control, To overcome these business setbacks and keep your business profitable means long hours of hard work. It could very well not be the work you want to do. As someone else's employee you developed a skill. Now, starting a business of your own, you may expect to use that skill 40 or more hours a week. Instead, you must perform the management tasks as well. You must keep the books, analyze accounting records, sit back and do long range planning, jump and handle the expediting and, when everyone has gone home and you finally have caught up with the paper work, you may even have to sweep the floor.
As your business grows and you become more successful, you may not do some of these activities. As an owner-manager, however, you must - at least at first - give up the technical aspects you know and enjoy doing, and focus on the management aspects. To get your business off to a successful start, you must be a manager not an operator. As one small business owner attending a conference put it: "When I came here, my business lost the services of its chief executive, sales manager, controller, advertising department, personnel director, head bookkeeper, and janitor."
You will never be entirely your own boss.
No matter what you choose - manufacturing, wholesaling, retailing or service business - you must always satisfy your customers. If you don't give the customers what they want, they'll go somewhere else and you'll be out of business. So every customer, or even potential customer, is your boss. Your creditors will also dictate to you, and your competitors' actions may force you to make decisions you don't want to make. National and local government agencies will insist that you meet certain standards and follow certain regulations. The one thing you can decide yourself is how you will satisfy all of these bosses.
All these things considered more and more people are starting their own businesses everyday – many of these businesses will be the Microsoft’s of tomorrow!
As one frustrated entrepreneur (who had still kept their sense of humor in tact) was heard to quip – “The only thing more over-rated the natural childbirth is owning your own business.”
Running a business of your own will bring a sense of independence, and a sense of accomplishment. You will be the boss, and you can't be fired, though there may be days when you would welcome it. You will experience a pride in ownership - such as you experience if you own your own home. You can derive great satisfaction from offering a product or service that is valued in the market place. By being boss you can adopt new ideas quickly. Since your endeavor undoubtedly will be a small business - at least in the beginning - you will have no large, unwieldy organization to re-direct if a change is needed. This opportunity for flexibility is one of small businesses greatest assets.
These are some of the advantages and pleasures of operating your own business. Now take a look at the other side. As one small business owner attending a conference put it: "When I came here, my business lost the services of its chief executive, sales manager, controller, advertising department, personnel director, head bookkeeper, and janitor."
If you have employees, you must meet a payroll week after week. You must always have money to pay creditors - the man who sells you goods or materials, the dealer who furnishes fixtures and equipment, the landlord if you rent, the mortgage holder if you are buying your place of business, the publisher running your advertisements, the tax collector, and many others. All of these must be paid before you can pay yourself.
You must accept sole responsibility for all final decisions. A wrong judgment on your part can result in losses not only to yourself but, possibly, to your employees, creditors, and customers as well. Moreover, you must withstand, alone, adverse situations caused by circumstances frequently beyond your control, To overcome these business setbacks and keep your business profitable means long hours of hard work. It could very well not be the work you want to do. As someone else's employee you developed a skill. Now, starting a business of your own, you may expect to use that skill 40 or more hours a week. Instead, you must perform the management tasks as well. You must keep the books, analyze accounting records, sit back and do long range planning, jump and handle the expediting and, when everyone has gone home and you finally have caught up with the paper work, you may even have to sweep the floor.
As your business grows and you become more successful, you may not do some of these activities. As an owner-manager, however, you must - at least at first - give up the technical aspects you know and enjoy doing, and focus on the management aspects. To get your business off to a successful start, you must be a manager not an operator. As one small business owner attending a conference put it: "When I came here, my business lost the services of its chief executive, sales manager, controller, advertising department, personnel director, head bookkeeper, and janitor."
You will never be entirely your own boss.
No matter what you choose - manufacturing, wholesaling, retailing or service business - you must always satisfy your customers. If you don't give the customers what they want, they'll go somewhere else and you'll be out of business. So every customer, or even potential customer, is your boss. Your creditors will also dictate to you, and your competitors' actions may force you to make decisions you don't want to make. National and local government agencies will insist that you meet certain standards and follow certain regulations. The one thing you can decide yourself is how you will satisfy all of these bosses.
All these things considered more and more people are starting their own businesses everyday – many of these businesses will be the Microsoft’s of tomorrow!
Thursday, February 6, 2014
Mistakes of Home-Based Businesses
In this day and age of cloud-storage, VOIP PBX's, and countless ways to work anywhere from anywhere, a growing number of people are choosing to start their businesses by going... (wait for it) ... no where.
From a corner in a finished (kind of) basement to the spare bedroom down the hall, office spaces are popping up in homes across the US at a rapid pace. Sure, it's a great way to keep overhead down, but are you falling into some bear traps and bad habits as well?
We love this post from Entrepreneur.com titled "8 Mistakes to Avoid When Starting a Business from Home." From the 24/7 work schedule to spending too much time home alone, we really encourage you to check out this traps and the tips to get on a better, much more effective path.
From a corner in a finished (kind of) basement to the spare bedroom down the hall, office spaces are popping up in homes across the US at a rapid pace. Sure, it's a great way to keep overhead down, but are you falling into some bear traps and bad habits as well?
We love this post from Entrepreneur.com titled "8 Mistakes to Avoid When Starting a Business from Home." From the 24/7 work schedule to spending too much time home alone, we really encourage you to check out this traps and the tips to get on a better, much more effective path.
Monday, February 3, 2014
Do You Need a CEO?
As a provider of insight, guidance and education to small business owners via our Local Business Assistance Program, we at OED couldn't help but notice this question posed on Entrepreneur.com.
Read more: http://www.entrepreneur.com/answer/229769#ixzz2ruUzkG8A
Read the article for advice, and contact us to see what pro-bono, highly experienced support OED can make available to you!
How Can I Find a CEO for My Startup?
How can I find someone to lead the way for my startup healthcare website? The website is completed and has had great reviews in beta testing with family and friends. I need investment capital, business organization and someone with knowledge to secure an initial workforce. I have some initial funds to help start the process but not the experience or time to do it by myself. I’m stuck. Any ideas?
Read more: http://www.entrepreneur.com/answer/229769#ixzz2ruUzkG8A
Read the article for advice, and contact us to see what pro-bono, highly experienced support OED can make available to you!
Friday, January 31, 2014
Is the Super Bowl good for Small Businesses?
With Super Bowl Sunday just around the corner, we're looking up from our grocery lists and stepping away from cleaning polishing the pilsner glasses to pose this question:
As a small business owner, would you want the Super Bowl in YOUR community?
Don't answer as a fan, eager to see the game in your market. Think about it from the impact it may have on your business. Will clogged hotels help or hurt you? Do you see logistics concerns from crowded roads? Will additional security checks in your area slow your pace of business or your employees access to work? Are you in a business that benefits from the tourist trade?
We're posing these questions because every year, there are stats hyping the economic benefit to a city as host. They are almost as predictable as the economic hype brought out during Olympic bid times. Yet time and again, these estimates seem to fall short for the cities. So we'd like to take it down to the small business community and see if you think it would be happy days or headache and hangover.
This year's game is in NJ, with NYC touted as either host city, co-host, or city taking all the attention, depending upon whom you ask. Many other potential host cities hover over neighboring markets, that could be a bounty for a city happy to accept overflow, or a nightmare equivalent to a neighbor having a 3 day house party right next door to you. For some perspective from the Jersey side of the Hudson, this article in The Star Ledger provides some food for thought. We suggest a read for the good, the bad, and the seemingly missing revenues before you answer!
As a small business owner, would you want the Super Bowl in YOUR community?
Don't answer as a fan, eager to see the game in your market. Think about it from the impact it may have on your business. Will clogged hotels help or hurt you? Do you see logistics concerns from crowded roads? Will additional security checks in your area slow your pace of business or your employees access to work? Are you in a business that benefits from the tourist trade?
We're posing these questions because every year, there are stats hyping the economic benefit to a city as host. They are almost as predictable as the economic hype brought out during Olympic bid times. Yet time and again, these estimates seem to fall short for the cities. So we'd like to take it down to the small business community and see if you think it would be happy days or headache and hangover.
This year's game is in NJ, with NYC touted as either host city, co-host, or city taking all the attention, depending upon whom you ask. Many other potential host cities hover over neighboring markets, that could be a bounty for a city happy to accept overflow, or a nightmare equivalent to a neighbor having a 3 day house party right next door to you. For some perspective from the Jersey side of the Hudson, this article in The Star Ledger provides some food for thought. We suggest a read for the good, the bad, and the seemingly missing revenues before you answer!
Thursday, January 30, 2014
Heading off the Fears
Excellent article today on Inc.com about ways to get past some of the common fears many small business owners face. Scott Elser is right on the mark:
Worst FearsYour company's success depends on staying ahead of key growing pains.
Worst FearsYour company's success depends on staying ahead of key growing pains.
"Lots of successful people do well because they attack every day with the core belief in their own Midas touch. That 'can’t fail' mentality enables them to embrace each and every thing they do with an infectious sense of confidence. They wake up every day wondering which mountain to climb next. They are, indeed, the personification of the word "entrepreneur."
I’m not that guy. I am far more likely to wake up in the middle of the night with the fear that everything we built will fall apart. While confident enough to understand that these fears are somewhat irrational, this DNA drives me to a very different view of the world, and my business. Rather than always looking toward the next peak to summit, I am constantly looking to ensure that Launchpad remains relevant and ready for tomorrow. ..."
Can you relate? Read the full article here for his excellent guidance!
Friday, January 24, 2014
Winter Weather's Not Done- Protect Yourself
Many parts of the country have been slammed with snow this winter. Just this week saw much of the East Coast receiving anywhere from a wintry inch to snarl Southern roads to over a foot to hold up Northeast corridor. Snow days (pr days due to any extreme weather event for that matter) can pose a real challenge for small business owners, often unclear of what the law calls for vs. common sense. Many an OED Certified Advisor has spoken to a small business owner both revelling in and frustrated by the privacy of their empty office when he or she has made it over hill and dale.
To help you sort out the issue of what you should do as well as need to do, we recommend you brush up on Susan Healthfield's article on About.com. It is not intended as binding legal advice, but rather education to make you aware of certain twists and turns in HR issues thanks to weather fiascos.
So if it's still cold where you are, grab a hot cup of coffee and take a reading break. If you're laughing away from the Sunbelt, quit laughing. Hurricane season for you is but six short months away and brings some common challenges.
Read the article here. Stay warm!
To help you sort out the issue of what you should do as well as need to do, we recommend you brush up on Susan Healthfield's article on About.com. It is not intended as binding legal advice, but rather education to make you aware of certain twists and turns in HR issues thanks to weather fiascos.
So if it's still cold where you are, grab a hot cup of coffee and take a reading break. If you're laughing away from the Sunbelt, quit laughing. Hurricane season for you is but six short months away and brings some common challenges.
Read the article here. Stay warm!
Wednesday, January 22, 2014
Not too late for resolutions
We came across this great post from Forbes.com regarding small business resolutions and wanted to share. It's not too late to set resolutions for your small business just because we're late into the month. If you have, let's be honest-- like a lot of us, you may already need a friendly nudge to get back on track!
Check out these great points by Jason Zickerman, president and CEO of The Alternative Board. Forbes.
Check out these great points by Jason Zickerman, president and CEO of The Alternative Board. Forbes.
Monday, January 20, 2014
Who needs a Plan?
Anyone who starts or runs a business. It’s as simple as that … no ifs, ands, or buts.
Don’t think that you or you business are any different. Successful companies all have plans … unsuccessful companies don’t.
Why do you need a business plan?
The main reason is you!
A good business plan will help you:
Writing a business plan is difficult or daunting as you might think and even if it were... it is something you must do!
There are a few things that you can do right now to get started.
1) Think about the background and history of your company. Write a general description of your business, how long you have been in operation, and some basic financial details.
2) Write a few paragraphs about the nature of the products or services you offer. Use language that a non-expert will understand. What do you sell? How is the product used? What need does it serve?
3) Think about your competitive position in the market. Write out answers these few basic questions: What are the advantages of your product (cheaper, better quality, unique features, etc.)? Are there any disadvantages? (be honest!) Who is your competition? Describe their products, advantages and disadvantages.
4) Next think about your customers. Write a description of your typical customer. Who are they? Where are they? Why do they buy? When do they buy? Who makes the decision to buy?
5) Write a clear statement of your business objectives. What are your goals, in terms of sales, profits, traffic to your website, etc.? Set some objectives for 3 months, 6 months, one year, and two years. Start by thinking about your one year goals, and then work backwards to formulate the benchmarks you need to reach at 6 months, and 3 months from now.
These are just a few of the considerations that need to go into a powerful business plan, but even these five points will get you started. Spend some time on your business plan; you owe it to yourself and your business.
Don’t think that you or you business are any different. Successful companies all have plans … unsuccessful companies don’t.
Why do you need a business plan?
The main reason is you!
A good business plan will help you:
Writing a business plan is difficult or daunting as you might think and even if it were... it is something you must do!
There are a few things that you can do right now to get started.
1) Think about the background and history of your company. Write a general description of your business, how long you have been in operation, and some basic financial details.
2) Write a few paragraphs about the nature of the products or services you offer. Use language that a non-expert will understand. What do you sell? How is the product used? What need does it serve?
3) Think about your competitive position in the market. Write out answers these few basic questions: What are the advantages of your product (cheaper, better quality, unique features, etc.)? Are there any disadvantages? (be honest!) Who is your competition? Describe their products, advantages and disadvantages.
4) Next think about your customers. Write a description of your typical customer. Who are they? Where are they? Why do they buy? When do they buy? Who makes the decision to buy?
5) Write a clear statement of your business objectives. What are your goals, in terms of sales, profits, traffic to your website, etc.? Set some objectives for 3 months, 6 months, one year, and two years. Start by thinking about your one year goals, and then work backwards to formulate the benchmarks you need to reach at 6 months, and 3 months from now.
These are just a few of the considerations that need to go into a powerful business plan, but even these five points will get you started. Spend some time on your business plan; you owe it to yourself and your business.
Friday, January 17, 2014
Letting Go While Still Keeping Control
As more and more business owners of the Baby Boom generation beginning thinking about "what's next," we at OED are seeing an increasing interest in issues like business turnover and generational planning.
In realty, many active business owners often put off thinking about how to pass their business on to a child, or other family or non-family successor, because they don't want to think about retirement--just like they don't want to consider the possibility of premature death.
Yet this failure to carefully plan for their succession, both as regards management control of the business as well as business ownership assets, is cited as the main reason why only 30% of family-owned businesses continue into the second generation and only 10% make it as far as the grandchildren.
One major dilemma owners face is determining how to pass along operational control to the successor they've been grooming while still maintaining the ultimate ownership control of the business. For estate planning and other reasons, family business owners know that there are important tax reasons for gifting ownership interests to those offspring who ultimately, will own the business when they are gone. Yet they also want to be sure that they and their spouses will have financial security when they retire.
In some cases, the owner may not be sure whether offspring have the interest, or competence, to run the business--and may want to maintain control until that issue has been settled.
Strategies For Building a Secure Future
• By creating two classes of stock--a class of preferred stock with voting rights and a fixed dividend and a class of common stock without voting rights--the owners can retain the voting stock even as they pass along the non-voting common stock shares to offspring chosen to succeed them in the business.
In effect, they pass along equity ownership but without surrendering control or the right to a guaranteed annual income stream as long as the business is health.
• Non-successor offspring can be provided for equitably by gifts of non-business assets, or through the use of insurance trusts that will allow those remaining in the business to eventually buy out siblings and other relatives.
• However, parents who want all their offspring to benefit from the growth of the business may decide to gift non-successor children stock equally with those who they are grooming to succeed them. Buy-sell agreements that allow the successor heirs to buy out their siblings' or cousins' interest after the parents are gone is a workable strategy for achieving this.
• Detaching real estate assets from other business assets, with the parents retaining ownership of the real estate and negotiating a long-term lease with the business is another way to ensure a stable income stream.
• By retaining control of the Board of Directors, while leaving day-to-day management of the business to offspring, the owner is able to intervene in the most important strategic decisions and will also be in a position to approve all major investment decisions.
• Also, the owner can continue to serve in a consulting capacity to the business, perhaps with a long-term contract providing fee income--after retiring from board involvement as Chairman. This will allow the owner to continue to keep an eye on the business, while also keeping active in ways satisfying to himself and helpful to children.
• Asset diversification should also be part of the strategy. If the owner has built up sizeable non-business assets through retirement plans, real estate investments and the like, there's apt to be less financial concern over passing control of the business on to offspring.
(Of course, there may also be other concerns, including the ownership interests of other children or an emotional commitment to making sure the business continues as part of the family legacy.)
Active owners in good health often want to stay involved in business. Yet if they don't provide offspring with the opportunity to take charge of the family business, and make the inevitable mistakes, they limit the successor's ability to grow in the business.
• With a sound estate and business succession plan, owners can protect the business' assets while still allow offspring in management enough control to learn how to run the business.
• For example, if they chose not to remain involved because of other post-retirement interests, or if they worry that their involvement would be resented, they might consider bringing in an interim CEO, while also adding outside specialists to the board, to mentor the family successor during the transition period.
Letting go of the business in a manner that will secure the financial and other interests of the owner--while also satisfying the needs of other family members and offspring wanting to take over the business--will require very thorough and skillful review of a number of estate planning options. Considerations include the pros and cons of different kinds of trust arrangements, insurance plans along with the estate and business tax consequences of the various planning options.
In realty, many active business owners often put off thinking about how to pass their business on to a child, or other family or non-family successor, because they don't want to think about retirement--just like they don't want to consider the possibility of premature death.
Yet this failure to carefully plan for their succession, both as regards management control of the business as well as business ownership assets, is cited as the main reason why only 30% of family-owned businesses continue into the second generation and only 10% make it as far as the grandchildren.
One major dilemma owners face is determining how to pass along operational control to the successor they've been grooming while still maintaining the ultimate ownership control of the business. For estate planning and other reasons, family business owners know that there are important tax reasons for gifting ownership interests to those offspring who ultimately, will own the business when they are gone. Yet they also want to be sure that they and their spouses will have financial security when they retire.
In some cases, the owner may not be sure whether offspring have the interest, or competence, to run the business--and may want to maintain control until that issue has been settled.
Strategies For Building a Secure Future
• By creating two classes of stock--a class of preferred stock with voting rights and a fixed dividend and a class of common stock without voting rights--the owners can retain the voting stock even as they pass along the non-voting common stock shares to offspring chosen to succeed them in the business.
In effect, they pass along equity ownership but without surrendering control or the right to a guaranteed annual income stream as long as the business is health.
• Non-successor offspring can be provided for equitably by gifts of non-business assets, or through the use of insurance trusts that will allow those remaining in the business to eventually buy out siblings and other relatives.
• However, parents who want all their offspring to benefit from the growth of the business may decide to gift non-successor children stock equally with those who they are grooming to succeed them. Buy-sell agreements that allow the successor heirs to buy out their siblings' or cousins' interest after the parents are gone is a workable strategy for achieving this.
• Detaching real estate assets from other business assets, with the parents retaining ownership of the real estate and negotiating a long-term lease with the business is another way to ensure a stable income stream.
• By retaining control of the Board of Directors, while leaving day-to-day management of the business to offspring, the owner is able to intervene in the most important strategic decisions and will also be in a position to approve all major investment decisions.
• Also, the owner can continue to serve in a consulting capacity to the business, perhaps with a long-term contract providing fee income--after retiring from board involvement as Chairman. This will allow the owner to continue to keep an eye on the business, while also keeping active in ways satisfying to himself and helpful to children.
• Asset diversification should also be part of the strategy. If the owner has built up sizeable non-business assets through retirement plans, real estate investments and the like, there's apt to be less financial concern over passing control of the business on to offspring.
(Of course, there may also be other concerns, including the ownership interests of other children or an emotional commitment to making sure the business continues as part of the family legacy.)
Active owners in good health often want to stay involved in business. Yet if they don't provide offspring with the opportunity to take charge of the family business, and make the inevitable mistakes, they limit the successor's ability to grow in the business.
• With a sound estate and business succession plan, owners can protect the business' assets while still allow offspring in management enough control to learn how to run the business.
• For example, if they chose not to remain involved because of other post-retirement interests, or if they worry that their involvement would be resented, they might consider bringing in an interim CEO, while also adding outside specialists to the board, to mentor the family successor during the transition period.
Letting go of the business in a manner that will secure the financial and other interests of the owner--while also satisfying the needs of other family members and offspring wanting to take over the business--will require very thorough and skillful review of a number of estate planning options. Considerations include the pros and cons of different kinds of trust arrangements, insurance plans along with the estate and business tax consequences of the various planning options.
Monday, January 13, 2014
Finding a Mentor
A mentor is important to all business people but especially the entrepreneur. A mentor will help the entrepreneur avoid the pitfalls (and pratfalls) of owning a business and serve as a strong rudder when the water gets rough.
There are mentors everywhere – no matter where a person starts a business they can find a mentor. How?
Look for a person you can or do admire – someone is living the lifestyle your wish to live. Write them a note and then call them. Tell them you respect them and would like to buy them breakfast. Meet with them and let them know you would like them to serve as your mentor and why. Most people will be flattered and accept readily.
What is often not discussed is that BOTH the mentor and their “pupil” benefit from a good mentoring relationship. Mentors will learn and grow along with their entrepreneurial students.
There are mentors everywhere – no matter where a person starts a business they can find a mentor. How?
Look for a person you can or do admire – someone is living the lifestyle your wish to live. Write them a note and then call them. Tell them you respect them and would like to buy them breakfast. Meet with them and let them know you would like them to serve as your mentor and why. Most people will be flattered and accept readily.
What is often not discussed is that BOTH the mentor and their “pupil” benefit from a good mentoring relationship. Mentors will learn and grow along with their entrepreneurial students.
Friday, January 10, 2014
Social, Mobile, Content, Healthcare... Top SMB Trends for 2014
USA Today contributor Steve Straus continued his Annual Trend series on Jan 8 with this look ahead for the year in small business. No argument from us on some of his suggested trends, since many of us are seeing it already.
Worth a few minutes to read and assess your positions now, rather than being steamrolled in August when you're zigging in the face of everyone's zag!
"One of the best things about being in business today (or worst, I suppose, depending upon your point of view) is that it is always changing; not only do you need to be a savvy entrepreneur now, but you better be a life-long learner as well if you are going to stay in business.
Back in the day, a businessperson could be just that. Know your products and customers, be good at marketing and have a few other tricks up your sleeve and you were good to go. Not so now. In today's world you have to be a jack-of-all-trades, and then some. Business, technology, social media, marketing, SEO, outsourcing -- it all comes into play now... (jump to full article)"
Worth a few minutes to read and assess your positions now, rather than being steamrolled in August when you're zigging in the face of everyone's zag!
"One of the best things about being in business today (or worst, I suppose, depending upon your point of view) is that it is always changing; not only do you need to be a savvy entrepreneur now, but you better be a life-long learner as well if you are going to stay in business.
Back in the day, a businessperson could be just that. Know your products and customers, be good at marketing and have a few other tricks up your sleeve and you were good to go. Not so now. In today's world you have to be a jack-of-all-trades, and then some. Business, technology, social media, marketing, SEO, outsourcing -- it all comes into play now... (jump to full article)"
Wednesday, January 8, 2014
How to Beat Business Burnout
Burnout -- and the boredom that results -- constitutes the No. 1 reason small business owners pack it in and either sell out or shut down. According to market research published in Family Business, burnout is the primary motivator in 50 percent of all business divestitures.
It makes sense. Successful business owners don't just commit themselves to their companies...they become consumed by the quest. Many put in long hours. They neglect their health, families and outside activities; then end up physically ill, emotionally depressed, even divorced. Ironically, a major cause of burnout is success, achieving a single goal long sought. That's why many owners get restless, discontented, bored.
Fortunately, it doesn't have to be that way. To beat burnout:
1. Separate work and play...and be sure to take time to play. Make it a household rule not to discuss business after 7:00 P.M. Or make the kitchen or family room and, most definitely, the bedroom a "No Business" zone.
2. Get adequate sleep...no less than six hours a night. Long-term sleep deprivation can distort thinking and reduce productivity. But adequate sleep can enhance stamina and clear-headedness.
3. Devote time to mental regeneration every day. Some business owners meditate, others read the Bible or review inspirational books.
4. Exercise daily, even if its only half an hour of walking while working out a business problem.
5. Have a mission...a sense of purpose. This goes beyond mere objectives. A mission describes (1) what you want to achieve and (2) why you want to achieve it.
6. Believe in what you're doing. There's nothing more exciting or challenging than being a business owner. What you do benefits your customers, your employees and, most of all, your family. Don't lose sight of that.
7. Be organized. Maintain clear objectives and activity plans for the year, quarter, month, week and day.
8. Work smarter...not just harder. An hour of planning can save ten times that in increased productivity. Follow the carpenters rule: Measure twice, cut once.
9. Don't settle into success. Repetition of a successful process or activity can lead to mind-numbing boredom. Take at least one calculated risk each year.
10. Maintain your priorities. Business is important...but not at the expense of health and happiness. Also, remember that it is relationships that give true meaning to what you do.
It makes sense. Successful business owners don't just commit themselves to their companies...they become consumed by the quest. Many put in long hours. They neglect their health, families and outside activities; then end up physically ill, emotionally depressed, even divorced. Ironically, a major cause of burnout is success, achieving a single goal long sought. That's why many owners get restless, discontented, bored.
Fortunately, it doesn't have to be that way. To beat burnout:
1. Separate work and play...and be sure to take time to play. Make it a household rule not to discuss business after 7:00 P.M. Or make the kitchen or family room and, most definitely, the bedroom a "No Business" zone.
2. Get adequate sleep...no less than six hours a night. Long-term sleep deprivation can distort thinking and reduce productivity. But adequate sleep can enhance stamina and clear-headedness.
3. Devote time to mental regeneration every day. Some business owners meditate, others read the Bible or review inspirational books.
4. Exercise daily, even if its only half an hour of walking while working out a business problem.
5. Have a mission...a sense of purpose. This goes beyond mere objectives. A mission describes (1) what you want to achieve and (2) why you want to achieve it.
6. Believe in what you're doing. There's nothing more exciting or challenging than being a business owner. What you do benefits your customers, your employees and, most of all, your family. Don't lose sight of that.
7. Be organized. Maintain clear objectives and activity plans for the year, quarter, month, week and day.
8. Work smarter...not just harder. An hour of planning can save ten times that in increased productivity. Follow the carpenters rule: Measure twice, cut once.
9. Don't settle into success. Repetition of a successful process or activity can lead to mind-numbing boredom. Take at least one calculated risk each year.
10. Maintain your priorities. Business is important...but not at the expense of health and happiness. Also, remember that it is relationships that give true meaning to what you do.
Monday, January 6, 2014
Small Business Outlook Mixed for 2014
Has 2014 left you somewhat optimistic and somewhat pessimistic, all at the same time? In case you missed this article from the Washington Post last week, it appears you're not alone. A poll of Small Business owners shows that while 23 % see a more favorable outlook, 28 % say there's cause for concern. The half in the middle are a blend of cautious optimism and just good old caution.
Check out the full story for breakdown of info here, and let us know via comment, FB, Twitter, or LinkedIn what your thoughts for 2014 look like.
Check out the full story for breakdown of info here, and let us know via comment, FB, Twitter, or LinkedIn what your thoughts for 2014 look like.
Friday, January 3, 2014
Key Deadline Extended for US Chamber Dream Big Award!
The U.S. Chamber of Commerce has extended the nomination deadline to January 13, 2014 for it's Dream Big Award. This is a $10,000 cash prize, sponsored by Sam's Club, open to businesses under 250 employees and under gross revenue of $20 million in 2011 and 2012.
If you know of a worthy small business and would like to learn more about helping them get the recognition they deserve, visit the US Chamber site for details.
You may apply for your own business as well, using the application at the same link through February 3, 2014.
If you know of a worthy small business and would like to learn more about helping them get the recognition they deserve, visit the US Chamber site for details.
You may apply for your own business as well, using the application at the same link through February 3, 2014.
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