There are 10 key strategic imperatives every business needs to understand if it’s to be successful.
In all of your marketing material, emails and social media, clarity is the foundation of selling. Avoid jargon, speak in simple language and don't assume that your prospects have an encyclopedic knowledge of industry terms. Be concise; get to the point and be relevant. Speak in terms of the prospects’ needs.
To people who find your message relevant, you can be a godsend. They need you and they want what you're offering. To everyone else, you're spam. For example, if you're selling car wax, people who own luxury cars will probably be glad to hear from you. But those who drive cheap cars just to get to work probably don't spend a lot of time waxing them. Know your customers and where to find them.
The best sales people qualify their prospects and only sell to people who are ready to buy. This is more specific than just finding the right market. You're looking for people within that market who need precisely what you're offering.
Make promises that you can deliver on more often than not and...
A business that delivers on its promises will thrive without having to spend millions on advertising. Playing it straight with your customers' expectations isn't just ethical – it's also profitable.
This will allow you to find out what you're doing right so that you can keep doing it – and what you're doing wrong so that you can make changes where necessary. If you're not going to make the necessary changes – don't bother gathering data in the first place.
Growing as a small business doesn't mean opening additional premises you can't afford. Growing means improving profitability, for example, by exploring an untapped market or discontinuing unpopular products. When you think of growth, think strictly in terms of profit margins and customer satisfaction.
If your business is costing you more than it earns or if it's just breaking even, it's not a business, it's a hobby. Taking out a second business loan and maxing out your credit cards is not cashflow. Be realistic about how much you need to stay in the black and how you're going to keep that money coming in.
Where are your shortcomings in terms of skill level, experience, customer service, marketing, etc? Spend some time thinking about what you could be doing better and how to improve on it. That could mean improving your knowledge when you have time or (if you can afford it) hiring someone who can bridge that gap for you while you get up to speed.
Successful entrepreneurs build something bigger than themselves. Building a business takes a lot of work; it can be both exhilarating and exhausting. Almost nobody has the energy to work for years without having a day off. So, one of your goals – and something that you should write into your business plan – is an opportunity to take some time to yourself. Whether your aim is a month-long vacation or selling the business, you need your business to be able to run without you.
Whenever you're faced with a decision in your business, double-check the 10 points above. With enough experience and education, you'll absorb these imperatives. They'll become second nature. Until then, whenever you feel uncertain about a business decision, check back and make sure that your ideas are financially and strategically sound.
Copyright © 2014 William Buist. William Buist is the owner of Abelard Collaborative Consultancy and founder of the exclusive xTEN Club. He is also the author of At your fingertips and The little book of mentoring.
Would you like your business to reach £1m turnover? Most business owners would answer yes, but 96% of them will fail. Only 4% of businesses reach £1m turnover.
Why so few? Well, it has a lot to do with how you started the business and what pillars you have in place to allow you to reach that level.
Having worked with hundreds of businesses over the past few years, I have discovered that there are some striking differences between the ‘micro’ business owner and the owner of a £1m enterprise:
Starting a business requires no formal education or qualification. The process of going online and registering a new company is easy.
This ‘low bar’ to start also means that most people assume that what they know is likely to be enough. They then spend the entire first year bravely finding their footing and ‘learning to walk’.
The skills they develop at this early stage will influence their ability to break through the £1m mark later on.
Most businesses hit a ceiling because the way they began means further improvement and growth is too complex for them to handle and pursue.
Effectively, the business becomes trapped in what is sometimes called the ‘Hindu Rate of Growth’ – an average growth rate of around 3% each year – just enough to keep pace with inflation.
To break through this ceiling, new systems need to be employed to allow for growth to happen, while at the same time managing the increasing complexity of the business. What allowed many entrepreneurs to run a successful small business simply cannot support larger, more complex teams and issues.
It is at times like this that it helps to have an outside party shine fresh light on your business processes.
Every entrepreneur – ideally at the start-up stage – needs to become fluent in the language of business. This language is all about numbers; profit, sales, cashflow, receivables, assets, equity, ROI, average value sale, conversion rate – these are all numbers that the professional business person not just understands, but is also able to leverage for every business decision they make.
In marketing, sales, team management and leadership there are key metrics to measure, estimate and average to evaluate and justify decisions that will lead to sustainable growth.
If you want your business to break through the £1m threshold, review your techniques and decision-making processes now. Don’t wait until you hit the ceiling and get stuck.
The excuses for not buying now are many: too small, too big, too soon, too fast, too slow, too expensive, too complicated. But sometimes hesitancy to buy is not about the seller and the seller’s service, but the buyer’s internal thought processes.
More specifically, I am curious about why people don’t buy into a process that they know, in their heart of hearts, is one that they not only want, but also need for the development and growth of their business.
The need for what is called ‘strategic planning’ is recognised as being a cornerstone of developing, running and growing an organisation. There are plenty of trite quotes, such as, “failing to plan is planning to fail” and so on. However, at the core it is pretty much universally recognised that it is better to have a plan than no plan. And it is better to have considered the various options while being aware of the changing pressures in the business environment. I call it making your mistakes on paper.
Despite strategic business planning being almost like “motherhood and apple pie” (in other words, a good thing, something that is required), I’m still astounded at how so many people manage to delay or put off the process. This is madness, because a little bit of thinking and reflecting can help to direct and focus one’s actions on what is important and understand one’s priorities.
Copyright © Robert Craven 2014. Robert Craven is a keynote speaker and author of business bestseller Kick-Start Your Business. His latest book is Grow Your Service Firm.
He also runs The Directors’ Centre, helping growing businesses to grow.
Three brief case studies. Three businesses that had to ‘wake up and smell the coffee’, or go bust! Knowing what to do is not the same as taking the necessary action.
To turn around their fortunes, three separate magazine publishers became obsessed with the triad of strategy, marketing and teams.
All the publishers had made their money from subscriptions and sales revenues. Both of these revenue streams fell by about 70% in 2009. The entire landscape of their very different markets and industries had changed.
The solution was to reinvent the businesses. One used its incredible database to run conferences; one contracted by 70% and only kept its premium high-value work while slashing costs; one reinvented itself by focusing on editorial and content relevant for a very specific age range.
All three businesses became more profitable than they were when they hit their respective brick walls.
The moral of the story: sometimes you have to reinvent yourself. There is no other choice. Death by a thousand cuts is not a pleasant way to die.
Copyright © 2014 Robert Craven, business coach and consultant, and author of Kick-Start Your Business and Grow Your Service Firm. Robert also runs The Directors’ Centre, which helps businesses to grow. Watch a five-minute video of Robert live at PSA London.
Ideas mean nothing unless you make them real. Real entrepreneurial ideas get turned into products and services and are sold to customers to make a difference. Yet, entrepreneurs are often not implementers, nor project managers. They’re often distracted by the next idea, development or new opportunity. Here are my 10 tips for entrepreneurs on how to become a better implementer…
Firstly, have clear goals. If you can’t tell everyone what you are doing, quickly and with passion, why would they care about it? If the picture you paint is of a future that makes the effort worthwhile, people will yearn for it and fight for it, with you.
There is the work that directly creates our idea and makes it real, and then there is the planning and administrative work. That indirect work is an ‘overhead’. Many entrepreneurs treat overhead tasks as something to do as you go. However, by doing them early you’ll save a lot of time later.
You’ll need some time to adapt and change on the journey. Work expands to fit the time available too, so be realistic when setting the goal. If there are critical dates you need to hit, those should be clear at this point, so expectations are properly set.
Look at the work one quarter at a time. Identify what would have had to have been delivered three months before the end date, six months before the end date and so on. By doing that your team can see what they’ll be building.
Now create monthly goals for the next two quarters and weekly goals for the first month or so. But do not go further. Great teams rely on the ability of everyone to plan their own work within the framework.
It’s now useful to plan forward and look at what could be done this week, this month and this quarter. This can show you where there are opportunities to win now and get ahead of the game.
If necessary – take a step back. Do some work on the project, deliver some elements of it and then look at where that takes you and how to plan further from there. Project planning should be no more than a few minutes each week, once the original plan is put in place.
In any project there will be times when you need specific essential materials or resources, so each week and month take a look ahead, check what resources you’re expecting to need and make sure they’re on track for delivery.
It’s important to recognise and reward incremental successes within the team. Let them know that it’s on track and going well. It will help ensure that this and every implementation easier.
In reality, every task in a project has probably been done before in a different context. The mistakes have been forgotten, making them easy to repeat, with shortcuts forgotten, too. This step is not for this time, it’s for next time. You’ll get quicker and can move on to the next idea ever faster.
Implementation brings your ideas to the world and when it’s done brilliantly it’s because of attention to detail and great planning. It builds on past experience and creates the foundations for future success. Brilliant products and remarkable companies implement brilliantly.
Copyright © 2014 William Buist, owner of Abelard Collaborative Consultancy and founder of the exclusive xTEN Club, an annual programme of strategic activities for small, exclusive groups of business owners.
A recent survey carried out by business software provider Exact suggests that more than a third of the UK’s 4.9m SMEs don't have a business plan and “they could be missing out on an extra 20% of profit as a result”.
Of the 34% of respondents who didn’t have a business plan, 68% said they didn't see the need for one, while 23% were "too busy" to prepare one, 8% “didn't have anyone to help them” and 5% “weren't comfortable with numbers”. Should we be surprised by these findings and are business plans as key as some start-up experts would have you believe?
In fact, some experts would tell you that start-up business plans aren’t worth the paper they’re written on. Last year, author Paul B Brown wrote a piece for Forbes.com called Why Business Plans Are A Waste Of Time. He’d come up with the idea for a new book that sought to offer insight from the original business plans of highly successful US entrepreneurs.
But there was a problem. As Brown explains: “Most of the business plans had nothing to do with what the businesses eventually became. People who said they were going to specialize in developing new computer hardware ended up in software, for example. In a surprisingly high number of cases, what was in the business plan ended up having very little to do with what the company ultimately became.”
After writing about entrepreneurs for more than 30 years, Brown believes that creating a “painfully detailed business plan really doesn’t make much sense. The first time you encounter something you didn’t expect, the plan goes out the window. Things never go exactly the way you anticipate.”
A few years ago, (“former banker, small-business investor and veteran entrepreneur”) Kate Lister wrote a piece for Entrepreneur.com called Myth of the Business Plan. She highlighted research from Babson College (“regarded as having one of the top entrepreneurship programs in the country”), which found “no statistical correlation between a startup's ultimate revenue or net income and the supposedly requisite written business plan”.
The study found that: “"Some of the heroes of today's would-be entrepreneurs, such as Steve Jobs, Bill Gates and Michael Dell, did not have business plans when they embarked on ventures that changed the world”.
Lister said she was “all for having a business plan in the verb sense. I'm just not a big believer in the noun form”. She continued: “Writing a formal business plan invites the paralysis of analysis. It distracts the entrepreneur from slaying dragons and thinking big thoughts. And it's largely a waste of time. The result usually is a long-winded missive that's out of date almost the moment the ink dries. Great business plans may earn you an A in business school, but in real life you only get A’s for achievement. So stop dotting your i’s and crossing your t's and go out there and slay something.”
Andy Fox is the founder of “award-winning independent car service and repair specialist” iAutoUK. Recently, he wrote an article for the Huffington Post called “Why You Don't Need a 40-Page Business Plan to Launch a Successful Company” (sic).
“I've never had a business plan,” he admits. “Despite this, in three years my company has reached a turnover of over £1m, with £100,000 annual profits. For your business to thrive you instead need a 'Success Plan'. This is an evolving strategy consisting of three elements. No 40-page business plan needed. In fact, you can write a Success Plan on one sheet of A4.
“Firstly, you must understand your market place and how your business is distinct from competitors. Secondly, the Success Plan must have 'Leader’s Objectives' and you must communicate them to your staff. The final element is to make sure you make money! You must have a system that provides you with daily earnings information, and which can monitor cash in the bank and in the pipeline.
“Such a Success Plan is a short, relevant, real-world document. I believe a Success Plan is more appropriate than a traditional business plan.” Dryly he adds: “Look at companies such as Comet, Blockbusters and Jessops. I'm sure their business plans didn't include going into administration! Had they had a Success Plan, perhaps their futures may have been different.”
Beliefs drive reality and they are intrinsically linked to our values – the things that are most important to us. What you believe to be true you make right by finding evidence to support it.
So, if you believe that your target market is struggling at the moment and has no money to spend on your product, you’ll easily be able to prove that to be correct. And yet if you were to say to yourself that your target market is making more focused buying decisions, you’ll take a different approach to your next sales or marketing conversation. Whatever is true doesn’t really matter. It’s the attitude and energy you take to it that will make the difference.
“If you believe you can, or you believe you can’t, you’re right” – Henry Ford
Thank heavens our brains are wired to filter information according to relevance. Without that filtering we’d have more than two billion bits of information flying at us at any given second. How paralysing would that be?
Because of this filtering, we’re wired to focus on what we decide is important – our values. This focus drives behaviour and therefore business results. So, what we believe – and then say to ourselves is the truth – can mean that we don’t see evidence to the contrary. This can act as a positive or a negative, depending on what your beliefs are.
To make sure you are doing all that you can in this area to create success, begin to notice whether your beliefs are acting as ‘cheerleaders’ or ‘critics’ by considering these questions:
“What are the beliefs that you are running in terms of your customers, your product, your team or the market in general?” Grab some paper, make a list and then ask yourself…
“Are these beliefs building strong foundations and motivating me and my team to grow the business or are they looking for flaws and reasons that things go wrong?”
Whatever your beliefs are you have choice. You can make a change. Change your thinking and change your reality.
It’s natural to see your competitors as the enemy. In reality, though, they’re not (ignorance and blindness-to-change are what you should really be watching out for). At Cartridgesave.co.uk, we’ve found that building relationships with our competitors has been invaluable in terms of support and knowledge sharing, while being fun, too. Here are the top five things we’ve learnt along the way.
Each business has very few real competitors. Operating in the same market as another business does not automatically make you rivals, because it's rare that you will ‘play’ in exactly the same space, targeting the same demographics with the same model, products and/or strategy.
Furthermore, it’s unlikely you’d disclose a secret that will unlock the key to your kingdom, even after one drink too many. This is because it’s not that easy to copy a business. Even when imitators try to rip off your business model, they’ll often copy the wrong thing, because they are not privy to your informed thought process.
Once you’ve pushed these two assumed ‘cons’ to the side, you can embrace the ‘pro’, which is, by creating relationships with businesses similar to yours, you develop a network of contacts you can speak to when you need to talk through issues affecting you both.
Social media channels LinkedIn and Twitter provide great ways to test the water. You can’t guarantee that your approach will get a good reception, but they allow your recipient the opportunity to politely decline without either of you losing face.
However, you need to be clear on what you’re trying to achieve when you first approach a competitor (usually just a chat/social in our case). A few years ago, on our first ever meeting with a competitor, the owner had misunderstood our intention and thought we wanted to acquire his business. Needless to say, that was a mistake we haven’t made since.
Industry-relevant exhibitions provide a great backdrop for meetings. You’re both there already, so the pressure is off and no one has had to make a special journey. Plus, you’ll both have a packed itinerary, so grabbing a quick coffee between other appointments will keep things nice and informal.
Organisers release delegate lists in advance, so you can scour these to get an idea of who is going. Then all you need to do is drop them a quick ‘be good to meet up’ line via LinkedIn.
Over the course of your business life, you’ll meet a number of like-minded entrepreneurs who you’ll not only respect, but also get on well with. Make sure you keep in touch. Not only will they make great company when you fancy a drink after work, but they may become invaluable at key times.
Keep these meet-ups casual. On most occasions you’ll find yourselves sharing the gossip over a drink. But you’ll find these contacts important sounding boards for problems, lead-generation, knowledge sharing and even mentorship over time. For example, at The Sunday Times Fast Track event, we met an MD whose business (on the surface) had little relevance to ours, until we got chatting and discovered he ran a massive call centre. His advice, over the course of that night and a few subsequent meetings, has really influenced and improved our customer service provision.
Most importantly, don’t be afraid to ask your contacts for help. We’ve found that people are flattered when called on for advice. The key is making sure you have a relationship in place before you make the call. It’s for this reason you need to grow your networks with people who can offer informed advice that is relevant and based on their own experience.
Blog supplied by Cartridgesave.co.uk
Would you be interested in working harder and smarter on your business if you knew that it would be very easy to do better than 80% of the people in your sector?
Factually, right now, about 60% of the people in your sector are only doing OK and 20% are struggling. This means that by stepping up and standing out, you could be in the 15% that are doing very well and if you really excel, you could be in the 5% that are exceptionally successful.
So how can you achieve this?
Most people think small and therefore play small; there is less competition for bigger goals. You just have to act with courage. So whatever you’re thinking about doing right now, what would a goal that was ten-times larger look like?
Obvious and not news, but you need to recognise at the start that this is your business’s most useful asset, so spending some time at the start thinking about what information you need and how you plan to use it, will be time well spent once your business is up and running.
Instead, be a marketer of your business. The most successful business owners market their business in equal or greater measure to “doing” within the business. Every interaction you have going forward is an opportunity to market yourself. Use every opportunity.
Most new business owners are procrastinators who don’t spend the time doing the stuff they really to do to make their business successful (the frog!). Deal with the thing you need to do first thing in the morning, to make your business successful and then get on with your day. (Clue – if it isn’t generating sales or marketing related, you’re still doing the wrong thing!)
It is not your customers’ responsibility to remember to come back to you, it’s your job to remind them you exist. And don’t give up. Regular contact will bring you business, but in some cases it might take years to land a target client.
I once heard a brilliant marketer say he had a mantra – “If I had to do X by Y or else I would die, could I get it done?” I’ve never missed a deadline by using it.
Blog supplied by Anne Mulliner, author of Empowered! – How to change your life in your coffee break (RRP £12.99 Panoma Press). She is an award-winning executive coach and leadership development expert, who works with clients all over the world, sharing her passion for getting them to access their full potential. For more information visit http://www.jdicreativesolutions.co.uk/
As the recovery begins, it's a sobering thought that because they have become reconditioned by a common ‘batten-down-the-hatches’ approach to recession, few companies are likely to be engineered for growth. The repercussions could be fatal.
The danger is no longer 'boom and bust' - but ‘boom and rust’. Proactive organisations will grow, but more pedestrian businesses risk stumbling into terminal decline. There is the real possibility that if business owners/managers remain in a risk-averse mindset, they will preside over organisational paralysis that not only prevents growth, but also allows competitors to seize market share.
After five years of surviving it's an understandable response, but it leads to an uncomfortable truth – many UK businesses have forgotten how to grow.
So, as the 'green shoots' of recovery begin to take root, what should businesses be doing to reinvigorate themselves and create a platform for growth? Experience suggests that many will be doing the very thing they should most avoid – focus solely on profit.
The alternative approach will send chills down the spines of accountants the world over, no doubt, and it may appear to defy common business logic, but the best advice for business owners seeking growth through the upturn is don't just focus on profit.
There are tried-and-tested ways to keep your business small and stressful and the most common is to obsess about profit as the markets recover and hold on too tightly to the P&L. This approach will prevent you from creating the headspace required to innovate and grow. You may well stay profitable, but you'll also stay small.
In the longer-term, the most successful businesses will facilitate a fundamental shift from a focus on profit to a focus on 'multiple'. They'll look at the long-term value of their business and switch attention from the P&L to the balance sheet. And crucially, they'll shift their focus from income to assets. After all, income follows assets.
As well as traditional 'balance sheet' assets, there are ‘intangible assets’. And the key to long-term growth - and driving the value and multiple in a business - is to focus on the intangibles.
Intangible assets generally boil down to culture, talent and systems. They're the people and processes that drive equity value and combine to form your intellectual property. The challenge is to structure your business culturally and organisationally so that it drives value, grows sustainable revenue streams and supports your long-term ambitions. Creating and building upon the right cultural platform to empower staff to deliver these common objectives - leaving senior management free to plan for tomorrow - is critical.
The economic upturn should present a clear catalyst for growth - but business owners must not allow their desire for short-term profit to dictate caution about long-term planning and investment. Now is not the time for 'logical' product innovation and extension based on understanding today's marketplace – taking baby steps will only keep you small. Today's green shoots represent the ‘teenage years’ - and to exploit them, businesses need bold innovations if they are to capture whole new markets and appetites.
To progress, owners should consider pursuing an asset-based strategy. The challenge is to understand the ‘rocket juice’ in your business – the core intellectual property that powers your current product and channel. Once you identify it, you'll be well placed to innovate into radical new product areas and channels that are more lucrative and less competitive.
The most successful companies at this point in the economic cycle will always be outwardly-focused - and they will look for partners that can help stretch and stimulate their thinking. Business coaching can provide an independent perspective on how companies can invigorate their core intangible assets to drive value, increase their multiple and stimulate sustainable growth.
The most common way to keep your business small and stressful is to focus obsessively on profit. But there are also innovative ways to engineer growth and the best is to concentrate on intangible assets, and to work with a partner that can help to revitalise your company and create new platforms for growth. After years of austerity, UK businesses may well have forgotten how to grow, but they need to get their memory back - and quick.
Blog supplied by John Rosling, CEO of business growth consultancy Shirlaws (UK) Ltd.
Running your own business can be exciting, draining, liberating, stressful and satisfying – all at the same time. Doing it without outside investment can be a risky proposition, but with risk comes reward. While some people might view having a small budget as a disadvantage when starting a business, in my experience it proved highly beneficial in the long run.
I started market analysis consultancy White Space with my business partner Nick using just our individual hard-earned savings and no investor support or bank loans. We’ve now been running for eight years, rent a large office in central Oxford and work for more than 70 of the world’s most recognisable companies. There are many positives to funding your own business, and here I’m going to share some of my experiences and provide practical tips on how to overcome any disadvantages.
As a business owner, you’ll be under constant pressure to make decisions that are critical to the growth and direction of your business. Make sure you are clear about your overall strategic direction by applying the following principles:
Self-funding your business will cause you to reassess and prioritise your personal expenses. In the early stages, you will be surviving off very little, without the comfort of a steady income. Many financial survival tips are obvious, such as ‘save money wherever you can’. Here are three that are less obvious, but just as important:
Despite wanting to conserve your cash without any major capital outlays, there comes a time when a business needs to accelerate. A steady growth model is far more scalable and allows you to fully test the market before expanding further. You are also much less likely to fall victim to the cycle of ‘boom and bust’.
The right time for growth is when your business is in the middle of a successful period, with a few strong months just gone and a couple more forecast to follow. Be aware that expansion will eventually require additional resources to succeed, including labour, equipment, finances and more micro-management.
My experience has shown that the old adage – ‘revenue and staff numbers for show, profit for dough’ – still rings true. It can be exciting to feel like you are expanding, but never take your eye off the bottom line. For the vast majority of start-ups that are not expecting to be the next Twitter, this is the only true measure of success.
Self-funding your business can provide many advantages, from enormous personal satisfaction to being able to take a greater share of the spoils when your business succeeds. Making sure you have the right business proposition, the passion to make it happen and being realistic about what you can and can’t achieve are key to a successful and scalable business start-up model.
Blog supplied by John Bee, managing director of Oxford-based market analysis consultancy White Space.
Ideas are in abundance. We all know people with passion, vision, ambition and a real desire to make a difference with their new ventures.
It’s been an honour for everyone involved in my organisation, Entrepreneurial Spark, to assist more than 300 start-ups, to help them realise their goals and turn some of these ideas into business. However, in this time we have also seen some stumble and their ideas dissolve away. Lack of effective execution is the number one reason for this, in our experience.
So what are the Top 20 business founders' fundamentals to enable successful transition from idea to business?
Recently I had the pleasure of meeting David Grevemberg, CEO of Glasgow 2014 [next year’s Commonwealth Games]. He has a deadline that cannot slip. He can’t shift the whole schedule a couple of days because of unforeseen circumstances or because “it’s not perfect yet”. He must execute with precision and his team are totally aligned to this goal. If we want success and a legacy, we must behave the same way.
Blog supplied by Brian McGuire, co-founder of Espark.
All entrepreneurs are self-reliant. I know – I’m a serial offender! But almost everyone who starts a company cannot make much of it without support from a whole range of people – both in the company itself and outside.
These people are always chosen to be the best, most reliable, the most trustworthy. So how does it come about that dynamic self-starters with handpicked teams frequently not only make mistakes, but costly wrong decisions too?
Part of the explanation comes from our personality profiles. The kind of people we are not only affects how successful we are with the outside world (customers, suppliers, the authorities and so on). It also impacts on relationships and effectiveness within the company itself. In my book, Decide – Better ways of making better decisions, I have included advice from acknowledged experts and a guide to the main personality types, and how you can cope with difference and similarity – and importantly pick successful teams.
But decision-making is not a straightforward process, and so-called Decision Traps lie in wait for the unwary. Below I list some of the most lethal. You may well be able to identify examples from your own experience.
The decision-maker is so excited about a potentially exciting outcome (the upside) that he/she seriously underestimates how bad the downside could be if everything goes wrong. Most of us are optimists and it’s natural to be enthusiastic. But wise decision-makers always weigh up reward and risk, and it’s often sensible to turn down an option (however glittering) if the downside could be disastrous enough to break you.
A group of really bright people cannot believe they can ALL be wrong! But it can happen – particularly if the balance of personalities in the room is skewed on the positive side. Ten people are as capable of being wrong as one. There is a related trap called ‘Confirming Evidence’ – when we are prejudiced in favour of people who think like we do. The trick is to make sure it is always someone’s job to be the devil’s advocate, and ensure frequent reality checks.
Sometimes it is tempting to go ahead and make a decision even before we have all the data we need. And it can be fatal to press the button before you have all the necessary information and research. But this is where judgement comes in. It can be almost equally wasteful to insist on having more and more information to the point that the opportunity has been lost. That is ‘information overload’.
This is a polite term for a hasty decision that can come back to bite you. Governments and ministers do it all the time. We are all inclined to kid ourselves we have thought things through when we haven’t.
Really bad this one – making the same mistake again and again.
David Wethey is author of Decide – Better ways of making better decisions, published by Kogan Page.
A business plan is the equivalent of a roadmap for businesses. It is a document that provides vision, goals and benchmarking. It creates momentum and also provides an opportunity for a reality check – what worked last year, where the gaps are and what next year is going to look like.
Many start-ups fail because they lack a map to guide them through their new business venture. A research study conducted by simplybusiness.co.uk with 400 British entrepreneurs shows that 54% have no written business plan and more than two-thirds make decisions based on gut instinct alone. According to the Federation of Small Businesses: “Britain’s best performing small companies are being hampered by a failure of the planning system to allow them to expand”.
Writing and maintaining a regularly updated plan can have a profound impact on business success, helping to demonstrate the viability and value of a business to potential investors and illustrating how investment will be used to grow sales and profit. It also provides a useful reference point and motivational tool for the business owner.
In terms of content, a plan should document objectives and strategy across three key business areas; marketing, operations and finance. These aims should be quantifiable and split between short term (next 12 months) and longer term (next three years). Other sections can include:
In summary, a business plan helps to focus clear roles and goals and motivates business success. As Matthew Brearley, former board director of Vodafone, said: “With a great plan you can engage others with a sense of direction and purpose, align all activities and review progress."
John Davis is managing director of Business Centric Services Group.
When you start a business, you need to be a raging optimist. That’s because, frankly, it’s hard and many people don’t succeed. So to stand a chance, you really need to have a sunny view of the future.
However, you also need to be a realist. A friend of mine was working in a new start up. He asked me if I was interested in investing, so I took home a sample of his product. In the meantime, he had managed to place it with a couple of major high street chains. I tried it with my wife and daughter who were in the target market. Neither of them liked it, so I declined to invest.
The business in the meantime continued. A while later they were back to the drawing board, because the product hadn’t sold through the retail channel at all and had been dropped by the retailers. Fortunately they have now completely changed the offering and are doing okay, albeit on a much smaller scale. My friend is no longer involved.
Another business planned to sell a website monitoring service to small companies. After a few months of selling, it was clear there wasn’t much of a market. The management team changed direction and started selling to big corporate sites instead. This was a raging success and several years later they still have a razor focus on the same market. I was happy and this time invested in the company when they changed direction.
What are the lessons from these stories? It’s about realism and facing the facts. The lesson isn’t to chop and change, as the second company had to stay their new course for several years. However, the quicker you face difficult facts the better, particularly when it comes to customers.
The most important thing any start-up can do is to get some happy, paying customers. If the prospects won’t buy or don’t like the product after they do, don’t try to tell them how they’re wrong. Instead, change direction and provide something that they want. Then press on. A dose of realism is worth a ton of investment. In fact, having the money to continue backing a losing strategy can be the biggest disaster.
Would you ever consider setting off on a long, unfamiliar journey without your SatNav or road map and only a dribble of fuel in your tank?
You might make good progress for a while, but before too long the roads will narrow, your fuel gauge will hit zero and your mobile will show no signal. HELP! Oh, if only you’d bothered to plan ahead!
Funnily enough, business planning is just like going on a journey. You know your destination, that fine place called Success. But knowing where you want to end up isn’t enough because you need to plan your route, too. And you must be vigilant, watch out for obstacles and steer clear of roadworks – not to mention bad weather and mile-long traffic jams.
If you’re serious about starting a business, you need to be serious about planning. You must focus on your ultimate goal – fabulous success – and determine your route towards it. This ranges from the grand plan right down to what might seem like insignificant details. If you plan for all eventualities – however small – you’ll know exactly how to deal with them when they, inevitably, crop up.
I took this approach in starting and running Diva Cosmetics and it quickly brought me success and wealth. Now, having moved on, I feel that passing on my knowledge called Seven Business Disciplines to budding entrepreneurs like you will bring you success. If strategic planning (my first discipline) is about visualising your destination, then business planning (discipline two) is how to plan your route to get there.
Let’s look at planning basics. What is a business plan? In a printed form, it’s a surprisingly slim document. Only 25 or 30 pages with a front cover carrying the business name and logo. Inside, the business idea is thoroughly investigated and includes supporting facts, figures and research. The writing style is easily readable within bite-sized paragraphs and technical jargon and waffle are banned. Titles and headings are concise with the overall structure being simple, focussed and well-organised and there are, of course, no errors (whether spellings, grammar or figures).
If the thought of sorting out your business planning sounds daunting, long-drawn out and too demanding of your scarce time, you should take comfort in the fact that this initial burst of effort will pay real dividends. This one document – and all the research that you’ll need to carry out for it – will help you decide whether or not the idea will fly. It will signal your chances of success and how to go about achieving it.
What are the key elements you need to include?
Once you’ve dealt with these elements you’ll be in a position to write an executive summary, a two-page summing up of your start-up. It should be convincing enough to excite potential investors, as well as boost your own confidence. Although this is written last, your summary should be at the front of the plan, where it needs to pack a powerfully persuasive punch.
When you’ve finished that first draft, you need to step away from the process. Return to it a couple of weeks later and read it several times. Make notes, gather more data and rework parts that don’t read well. Double check your facts, especially your figures, because they need to stack up and be impressive. Make sure the tone of the document shouts the right message. Does it ignite your passion? If not, revisit the words you’ve used and choose more dynamic, proactive, positive language.
Ask a business colleague, mentor or supporter to review it. This must be someone you trust, who has good judgement, knows you professionally and has an insight into your industry. Ask them to be honest and use their comments to hone what you’ve already done. After all that hard work, don’t allow it to languish on your desk. Instead, actively use your plan for reference, it will help you make good business decisions, take fewer risks and keep customers in the front of your mind.
At Diva Cosmetics, right from start-up, I updated my business plan regularly and used it to keep ahead of the competition. By focussing on the business, I was able to make decisions about staff requirements, how to expand the team and in what areas. I was able to review costs, check suppliers and understand the implications on the business should anything go wrong. I would undertake a full competitive review each year and adapt the marketing strategy on the basis of it.
My advice to you is to make your business plan a “living” document that evolves and adapts as you progress on your journey. Remember that planning is a necessity and if you want success you can’t afford to ignore it. So, I hope your journey into business is a smooth one – no collapsed drains or muddy old tractors up ahead for you – and do make sure you check your fuel gauge!
Starting a business for the first time is undoubtedly one of the most exciting things you can do (if you enjoy business!). However there comes a point where customer demands can weigh on your ability to progress. Here are five tips on how to keep your customers happy during the start up stages.
1. Be honest
Some business owners feel that they have to present their company as bigger than it is, which can lead to customers placing greater expectations in terms of support and business development. It would be better to be honest with your customers and for you to tell them exactly how big your business is, if not understate your size. This is not suggesting that you slack on customer service. As a customer, if you know the size of the business you would rather be told that your problem will be dealt with tomorrow and then have the issue dealt with well, rather than the issue being sorted today and receiving a half hearted response. Having a set policy (see point number two) to customer support will make customers used to what to expect, it could be argued reliability is more important than punctuality and if done right it can buy you time.
2. Have customer service processes in place
Having a process (between yourself and however many employees) in place allows you to know what to do when an issue is raised. An example could be a customer calls and has a problem, the query is logged and then the customer is told how long it will be before they receive an answer based on number of problems in front. If the issue is an emergency/urgent (this can be difficult to distinguish as some customers may claim it is urgent, but in the grand scheme of things their query can wait) being able to fast track it will be important. It can be hard when customers get angry at you, however as long as you communicate why their query is taking a while to resolve then at least they will not feel left out in the cold.
3. Get your hands dirty
Despite point number one, it is important that you get involved in sorting out customer queries, even if you happen to have raised enough money to employ someone to handle customer support. Following this rule will also allow you to have a feel for your customers' needs plus it will allow you to identify your earliest customers. That sort of recognition towards a customer from a CEO or MD is greatly appreciated. How can you make sure that you keep your original customers close? Consider having a separate email address for them (even if it is not you responding to their queries). A phone line could be going a step too far as you don't want to be held back from the day to day running of the business.
4. Have a time to shut off
Have a time to shut off from customer problems so you can focus on another area of the business each day. It all comes back to the principle of focus, if you can break your day up into focused segments you will get each segment done better than if you try to multi task by doing a little bit of everything. Read this post on how to become a better mono tasker.
5. Listen, don't ignore
Always listen and never ignore the customer. Even if you do not feel that the customer is right or cannot act on what they have said this instant, by listening to them you will be aware of the issues that your customers are raising. If you simply shut out your customers in pursuit of growth you could end up with a backlash that brings about your downfall. Little and often should prevent customer enquires becoming overwhelming in the start up stages, it's a better approach than letting them mothball and ultimately build into an uglier beast. If you have been abiding by point three you will be able to prioritise your customers and keep the major ones happy.
Nick Braithwaite, Clear Books Small Business Accounting Software
Entrepreneurship is all about making things happen and turning ideas into a profitable business. However, it’s impossible to have all the skills and attributes in one single individual- no matter how motivated or how working one can be, to turn an idea into a long-term profitable proposition requires a team of people who complement each other.
I realised a while ago that I could do with bringing into the team someone who has the skill sets to help me really get the numbers behind the forecasts right, and to help me negotiate with banks, funders and other possible stake holders. Someone who can help me turn the forecasts into a reality; in other words, an experienced, trustworthy financial director.
It was time for me to call in the experts. I came across an organisation which offers the services of a “virtual” or part-time FD who will work with a company for a minimum of 1-2 days per month and helps with all the financial strategic stuff. I met with the regional director of that organisation and my FD-to-be if we will take things further. It was a pleasant, purposeful meeting, and I felt I could trust the guy. They call it the “barbecue test”, in other words, would you invite the person to a barbecue. We will go to the next step and meet for a full day to discuss the business past, present, future and financial strategy.
I think this model will be the affordable way to bring an experienced helping hand to complement my winning team and turn my proposition into a reality.
You can find out more about Marcela on the new interactive business website www.inafishbowl.com
I recently interviewed Dan Germain, the Head of Creative at Innocent Drinks.
A jovial, bright eyed, bearded chap who clearly loves working at (read: being one of the driving forces behind) Innocent 10 years on. We had a great chat, and he shared a lot about how the team at Innocent have managed to make it all work.
In fact, he's the guy responsbile for the packaging on all of Innocent's products. He now has a team of people working with/for him, but the very different packaging is his baby.
We had an interesting conversation about being different. And Dan's view is that you don't actually need to be different. You just need to be better than the other guy. So in the case of Innocent Drinks, they aspire to offer the best smoothies on the market, alongside a whole bunch of other "bests". Best distribution. Best packaging. Best communication etc etc.
Interesting theory which I could spend some time debating (largely with myself). My view is that whether you aim to be different or better could just boil down to semantics and how you view the world. But the key thing (which applies in equal measure to both "differentiation" and "being better than") is to ensure that you stand out from your competitors thereby getting the attention of the people you want to buy from you.
Watch this interview in our upcoming Business Startup series on yourBusinessChannel, which we'll publish soon.