Archive for the ‘Business startup’ Category

I am offering my “Starting Your Own Business 101” course listed on the frontal page of my blog — for FREE… NO CHARGE.  Read over the course outline. I will send you the material and you can read the material and develop your business plan.

I will mentor you through your business planning phase. I can review your business plan and help you populate your financial forecasts.

Take advantage of this offer.

 

 

I started a new discussion group on LinkedIn and the focus is on small business, start-up business and family business. I hope to attract members who wish to join the group who are business owners or wish to start a business of their own.

Check it out and if you are thinking of starting your own business feel free to join.

 

As I stated in my previous post, the first five years are the hardest in the chronology of a family business – any business for that matter! The new business is trying to create a name for itself ( develop goodwill) in its market. The proof will be – the bottom line. Is it profitable? When? Can the profits be duplicated and sustained?

The next 10 years may be the years where the most growth occurs and possibly the years where the scion of the small business feels most stressed. Growth is a good thing but ancillary issues arise:

  • Growth necessitates more office or production space.
  • Growth requires more staff.
  • More staff can result in more headaches if the right staff aren’t hired.
  • Growth necessitates better management. Specific skill sets (ie: marketing and selling, operations, finance, technical, IT etc.)
  • A serious review of the organization structure should be on the agenda.
  • Oh yes… lest I forget .. growth means having the resources (cash flow and financing sources) to handle the growth.

I am excluding the family business that remains relatively stable and whose size (or staff) doesn’t change. Maybe, in the long run, this types of family business wins the tortoise vs the hare marathon?

Growth is the desired outcome for family business owners. It builds a legacy and creates an opportunity for family members to join “the firm.” It can be improperly managed and can create a lot of problems later on. The six bullets above underscore a failing that many family business owners fall prey to” Micro-management.”

Micro-management is understandable given the genesis of the family business itself. Two spouses doing the lions share of the work and trying to do the lions share of the work even as the business expands beyond their capabilities or beyond a typical small business work week – closer to 60 hours per week vs 35-40 everywhere else.

There should be a segregation between strategic and operational management.  In a family business there isn’t. Marketing and business development are put on the back burner because the business has more work than it can handle.  Supervising staff becomes the game plan.  It is not surprising to me but most small business owners don’t have written job descriptions for key staff. It’s simply a matter of: .. do what I say.

This type of management is not strategic. The focus is short term. I have been involved in many family businesses with this management style. It is called crisis management.

Into this inner management sanctum comes the next generation.

 

The first step is easy.

Posted: September 12, 2013 in Business startup

It would appear that the important first step in entrepreneurship – deciding to start your own business – isn’t that big a deal.  I’ve taught several classes to individuals who paid to attend and I am not certain whether they actually started their own business.

The first step is easy. If you decide that you want to start your own business that’s the easy part. Following through isn’t. We all have distractions and even.. sober second thoughts.

I have come to the conclusion that most small business ideas are work-from-home part-time businesses. That isn’t easy either but this is less risky than Plan A.

So, you have decided to start your own business? Before you go about preparing a business plan, here are some basic questions you need to answer:

  1. Do you have a name for your business? This isn’t as easy as it seems. You may have chosen a name only to find out later on that someone else uses it and has registered the name. Can you find out if this name isn’t taken?
  2. How will you operate? A proprietorship or a corporation?
  3. Will you work from home or rent an external office?
  4. How is the local (micro) economy in your immediate market? While there is never a wrong time (or best time for that matter) to start a business, the conditions of the local economy must be analyzed. If you plan to start a contracting business in a town with no growth, well — be careful.
  5. What is the state of your personal finances? Most small businesses are under-capitalized. The slow-to-arrive revenue must be financed somehow. Usually by your own resources. How good are they? If they aren’t good, be very cautious about starting an energetic business venture.

Okay, if you have all of those bases covered, the hard stuff begins….. preparing a 3-5 year business plan.

So, you weren’t scared of the low probability of success of start up businesses and you are still in the game? Okay,  the next step is to do the following:

  • Clearly articulate in 250 words or less the type of business you want to start.
  • What type of business will it be? Retail? manufacturing? Service?
  • Why is this business a good idea?
  • How do your qualifications dovetail with the business idea?
  • You should prepare a 1 to 2 paragraph “business bio” on yourself. This is not a resume but one of the foundations of your planning process. You may not have had the direct experience in this type of business as an employee but you may have had managerial or supervisory experience, marketing or finance experience and have had exposure to budgets and forecasts.

That is enough to keep you busy for a while. Here is a very good exercise that may curb your enthusiasm for a new business venture or possibly give you pause to do more in-depth research on your business idea. Each of the first four bullets above should have the words so what? added after.  This should give you time to reflect on your possible venture.

For example, you might say: “I plan to open a small business accounting business.” Okay, … so what? This will force you to add some features that will make your new venture stick out. You might add that the prices charged clients will be less than local full service bookkeeping businesses and certainly less than the rates offered by public accounting practices. You can add that your business will focus its marketing activities on businesses from 1-10 employees. This adds a massive market to your potential client list.

The next so what should deal with why the business will be attractive to possible clients.  The next so what might cover your academic credentials and prior experience in both private enterprise and public accounting. I think you see my point here.

By answering the so what questions you are narrowing your focus and concentrating on the key questions that possible clients would want to have answered.

Try it with your business idea. If there are more questions unanswered this isn’t bad. You need to do more research before you open your doors to a market that you might not have understood beforehand.

 

I have seen this sticker on many  semi-trailors on major highways: Don’t drive like you own the road, drive like you own the company. It is an important seguay into this (first in a series) of my blogs on entrepreneurship.

First, the sombre facts: over 50% of all start-ups fail in the first five years of operation. The reason – management! Now that this is out of the way, we can proceed to other realities that you must come to terms with:

  • Being an entrepreneur is different from being an employee. You can go through the motions as an employee and still pick up a paycheque every two weeks. As a self employed entrepreneur (in a proprietorship) your income is based on your ability to find enough revenue to cover your expenses and then hopefully have enough left over to cover your personal living costs.
  • You must never stop looking for business opportunities. You many be fully occupied with existing clients/customers but must always be on the lookout for new customers.
  • You must take a long term view despite the factoid #1.

You should do a personal assessment.

  1. Why do you want to go into business for yourself?
  2. What personality type are you?
  3. Can you handle stress? (Business will be stressful at times).
  4. Do you have a family? If so, they should be consulted with and advised about your plans. Do not come home on a Friday evening and announce to your spouse that “I’ve quit my job and decided to start my own business.”
  5. Are you aware of the constraints this can impose on your personal life?

Business owners work long hours but some people look at them and are jealous that they can come and go as they please or drive a flashy car. They think the entrepreneur has it all. Not true! Many entrepreneurs I consult to work 50-60 hours per week, open and close their doors each day and their flashy car may be the only perq they have.

So put the horse before the cart. Do a serious evaluation of your personality type and why you want to go into business – even before you go into business. You will have a leg up on other would be entrepreneurs.

More posts on this topic will follow.

 

There usually is never any question about succession in a family business. The newest (family) members will take over – some day! I’ve worked around family businesses most of my career and here are some of my observations:

  1. The new family members assume their positions by virtue of DNA, not ability. This isn’t a critique as much as a statement of fact.
  2. The new members may bring some new and fresh ideas but they are usually marginalized by the scion of the family.
  3. There isn’t a clear time frame for the current family ownership to transition out.
  4. The mantra is “follow my lead.”

The key issue in any family business transition is the preservation of the family business name. It should be to ensure the business can survive and prosper going forward. What worked for Dad or Grandpa’s era may not (and probably doesn’t) work in Junior’s era.  There is too much information and too much choice now.

It seems ironic that most well run businesses spend a lot of time scrutinizing the resumes of prospective hires for managerial positions yet don’t perform the same due diligence when a family member joins the firm?  There are different sets of rules of course and this could signal the end of the business.

I recommend that the newest family member “learn the ropes” by getting to know how the business operates. It could entail wearing blue jeans at the loading dock or getting dressed up in a suit to meet key clients. That’s the probationary period.

Then, I recommend assessing the shortcomings and making sure that they get proper training. This training could be expensive but it will pay dividends in the long run. The big issue is whether current family management thinks that training is an investment or a cost.

More in a future post.

 

Yesterday I had the privilege and opportunity to participate in a “garage mentoring” session with a couple of Ottawa and area start ups. The two businesses that presented themselves were varied but have potential. They haven’t started active operations but have products for their markets.

The presenters were passionate and ambitious. The one shortcoming was their lack of understanding of their market. This is not a criticism just an observation. I was fortunate to be with a marketing consultant and he offered suggestions for the entrepreneurs to find their market niches.

The entrepreneurs who are behind both of these businesses are working on their business plans. It has been my experience with numerous local businesses that an understanding of a market is critical to the success of a business venture. Once you understand your market then you can direct your selling efforts to generate revenue.

I am an accountant by profession. However I advised these entrepreneurs to find their target markets and customers and establish a pricing strategy – then I can help them with the financial forecasts.

It was a great session. It is nice to see that entrepreneurship is thriving in Ottawa.

 

The previous posts have all led to this post. Your “Google Map” is your business plan. It should be a written description of where you want your business to be in 3 years.  Why 3 years?

  1. The Canada Revenue Agency (CRA) has ruled that a business must have a reasonable expectation of profit. Simply put: one cannot use business losses continuously to offset other income. The CRA will reverse it.
  2. Most start-up businesses fail within 5 years of start-up. Unfortunately many fail within 3 years.
  3. If you are attempting to generate a full time living from a money losing venture, you will be destitute after 3 years if your business continuously loses money.

You must be a visionary when creating your plan. Your plan will place you on sounder footing than the business that starts without one. The business plan components should be properly researched, and with realistic financial forecasts. The financial forecasts are the acid test of a business plan. If the forecasts (income and cash flow) don’t look reasonable – well – reload and rethink your assumptions.

I have developed a very comprehensive 9 module “Starting Your Own Business 101” course. Check out the table of contents on the front page of this blog.