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What is the Purpose of Business?

Kevin O’Connor gave a lecture at an Alpha Kappa Psi event last week, and he asked a fundamental question: “What is the purpose of business?” Now, if you do not know, Alpha Kappa Psi is the oldest and most prestigious business fraternity in the world. Its alumni range from Ronald Reagan to J. Willard Marriott. So, in a room full of bright, business-minded university students, why did it take three tries to reach the correct one?

We often lose sight of the one important factor that answers both the question of what the purpose of business is and whether a business should exist at all. The purpose of a business is not to make money but rather to solve a problem. Money and revenue come second to helping people ease certain pains. Just take a look at Pinterest: zero revenue, and yet investors still throw money at it because it solves a problem for customers, thereby generating a huge user base.

Steve Blank, serial-entrepreneur and leading founder of the Customer Development methodology, teaches that most startups do not fail because the founders fight or because the market is overdeveloped and there are too many competitors (although those certainly account for some of all failures). Rather, it is because there are no customers.

Often times, founders will get so excited about their idea that they forget about the fact that for a business or product to succeed, customers need to feel that whatever they offer is a “must have” solution instead of just a “nice to have” one. Instead of solving a problem and creating a product, an idea that sounds great in your head may very well turn out to just be a feature for someone else’s product. Blank describes something called the Minimum Viable Product (MVP), which is essentially a calculated launch strategy that gets product to market as efficiently as possible. When first launched, an MVP should only function simply and without too many or any features. That comes later with product development.

So before you start comparing venture capital firms, and applying to business incubators, it may be worthwhile to do some customer development and make sure that your customers actually exist. If you don’t know how or where to get started, you should check out Steve Blank’s free course on Udacity, How to Build a Startup. Though it will not give you the same experience as learning it from himself (he teaches at Stanford, Berkeley, Columbia, and CalTech), it certainly has valuable lesson to offer.

by Conrad Yu http://www.findthebest.com/ an unbiased and data-driven comparisons engine for anything from business to electronics, to travel & lifestyle.

5 Business Model Components Every Entrepreneur Needs

Is your business on a collision course with a train, but yet you’re 100% focused on getting more people to like your Facebook page or follow you on Twitter?

Let me enlighten you: Big mistake.

If your core fundamentals are out of whack, so is your business.

Danny Iny, Founder and CEO of Firepole Marketing, is a guy who sees this everyday. And because of this, he is on a mission. As he stares down the face of one business failure after another, he sees major flaws in the way entrepreneurs are taught. And yes — he is taking action to change it.

Dubbed the ‘Business Ignition Bootcamp’, Iny’s focus is to help business owners break through the madness and escape failure.

And guess what? Iny opened up the first module of his bootcamp so I could take a peek and share it with you.

Based on the 5 key Business Model Components from the best selling book ‘Getting To Plan B’ by authors Randy Komisar and John Mullins, module one addresses the importance of these 5 components on your road to entrepreneurial bliss:

Component #1: Your Revenue Model

In a nutshell, this is your strategy to generate revenue. What you plan to sell, and what will convince people to buy. Value propositions, positioning, effective messaging, product/market fit. For example, when I say “Victoria’s Secret”, what comes to mind? Yes — good or bad they have a clear understanding of their revenue model and communicate it well. Although most business owners get the importance of this in theory — why do so many struggle? Perhaps because they really don’t get it after all. Do you?

Component #2: Your Gross Margin Model

Yes — important for you to know how much of the pie you get to keep from each sale. Do you know your piece of the pie? For example, Walmart and Costco know they run low gross margins. Their value game is one of low pricing, so they can’t mark up their products by an exorbitant amount and still play the value card. However, let’s look at the legal service industry. It has, on average, a gross margin of 93.22 percent, according to Butler Consultants. Although I am not advocating you jump into the legal game, it’s critical for you to understand your own gross margin model. Can you see why?

Component #3: Your Operating Model

If you’re Costco, it’s slash and burn the expenses. Which is why they operate out of huge bare warehouses with pallets stacked high of goods. No thrills, no frills, stack ‘em high, watch ‘em fly. However, if you’re in the legal service industry, it’s all about high style and lavish surroundings. Ever visited a big law firm on the top floor of a downtown New York highrise where both the views and service is breathtaking? Both businesses operate and make decisions based on the knowledge of their operating model. Do you have a clear understanding of yours?

Component #4: Your Working Capital Model

Indeed, ‘cash is king’. Do you understand your cash flow requirements? As you may or may not know, cash flow is significantly different than ‘revenue’. For example, if you operate a bricks-n-mortar retail store on the main street in your town, you experience first hand the need for cash. You must spend cash to fill your store with product so it’s available when a customer walks in ready to buy. Thus, inventory sucks up a tremendous amount of your working capital. However, if you’re an author who strictly sells downloadable books online, your need for working capital is significantly different. Laptop, pair of pajamas and an account with Amazon can theoretically produce millions of downloads to create a significant cash river.

Component #5: Your Financing (or Investment) Model

Number one roadblock I hear business owners complain about is lack of capital. Yes — it sometimes does take money to make money. But not always. So to understand the difference is key. For example, say you want to build a better hotel chain than Marriott or Hilton. Well, I can tell you this — you’re going to need some serious upfront financing to even stand a chance to pull it off. However, let’s say you plan to change the world by teaching people how to play the ukulele. Buy a video camera, launch a WordPress website and watch your video lesson series at $79 a pop take off like wildfire. Total capital investment? About 500 bucks.

Yes — extreme examples here. But your success is greatly dependant on your understanding of these 5 components of your business model.

So back to Iny and his ‘Business Ignition Bootcamp’. In my conversation with him last week, he plans to accept 200 entrepreneurs in the 6 week program at zero cost. And why is he doing this? Great question and it’s the same one I asked. Iny put it like this:

Because my goal is to help change the face of adult business education. When I hear of someone who cannot even afford to pay a small amount to learn, it breaks my heart. So this is both a way to give back and a test to see what we can learn on how to teach better.”

by Eric T. Wagner, http://www.forbes.com/sites/ericwagner/

3 Ways to Use LinkedIn to Grow Your Startup

As if making the transition from student life to the working world wasn’t hard enough.

In March, the unemployment rate among 18- to 29-year-olds was 11.7 percent, more than four percentage points higher than the national average of 7.6 percent, according to the millennial-advocacy group Generation Opportunity.

But here’s an interesting twist: Nearly half of the college students surveyed in a new report on millennials out today aren’t using the professional-networking site, LinkedIn. That survey called “The Student Employment Study,” which was produced in by Gen-Y research firm Millennial Branding and AfterCollege, an online career network for college students and recent grads, found that 46 percent of students don’t use LinkedIn.

That’s hardly a recipe for professional success. While using the professional-networking site is a no-brainer for career seekers, it can also be a valuable resource for intrepid young entrepreneurs. By utilizing three key features, budding entrepreneurs can maximize their potential and even grow their businesses.

Here’s a rundown of those features and how young founders can use them most effectively:

1. Build instant credibility.

LinkedIn “Endorsements” provide a forum for the network’s users to endorse and commend colleagues, praise counterparts and ask for feedback. While this discussion board promotes referrals and substantiates rapport for the average professional, it can be a massively effective networking tool for young entrepreneurs.

When recommendations are posted, business owners are instantaneously deemed more relevant. That enhanced status can cause entrepreneurs’ credibility to skyrocket and possibly help them establish themselves as active leaders within their respective fields.

With consistent usage, both actively soliciting recommendations from relevant business partners and returning praise, users can rapidly garner attention from both potential customers and other professionals within the industry. At the same time, by reaching out to those who demonstrate high level knowledge and come highly recommended, young entrepreneurs can learn from that contact’s expertise, as well as amass a strong network.

2. Gain intel on competitors and toot your own horn too.

Unlike Facebook’s pages or corporate-run Twitter feeds, LinkedIn’s “Company Pages” can often illuminate, say, a competitor’s moves or industry trends, as well as provide industry specific knowledge. Plus, you can use it to help fulfill your company’s goals too. Whether advertising openings, publicizing new leadership accolades or announcing major happenings, LinkedIn’s company pages can offer a valuable outlet.

By regularly checking in on industry partners, entrepreneurs can glean critical insights into what makes their counterparts successful and ultimately parlay that into beneficial strategies within their own organizations. That being said, it is wise to remember that just as you are keeping tabs on your competition’s page, they are likely tracking yours too.

3. Generate contacts and sales leads.

The “Who’s Viewed Your Profile” feature, located on the lower right hand side of your LinkedIn homepage, keeps track of users whom you may or may not be connected to, that have recently viewed your profile. While non-premium users can only see a few of their profile’s recent visitors, this tool allows for what are essentially, warm introductions.

Once an entrepreneur has determined who has been viewing their information, they can classify each user as potential customer, possible recruit, their competition or otherwise. If they are one of the initial two, an introduction comes almost naturally as they are likely intrigued by the entrepreneur’s company, background or expertise.

As you explore the power of this feature make sure you frequently update your profile’s heading and use relevant keywords within your profile, optimizing it for searches and increasing viewership.

by Brendan Brandt, founder and alumni of Coast & Canter and The Brandt Group. He is a leading social strategist with an emphasis on integrated digital solutions. http://www.youngentrepreneur.com/author/bbrandt/

The Risks of Family Funded Startups

Funding remains one of the most pressing problems faced by business startup owners. More often than not, entrepreneurs find themselves thinking where they would get that money that would help them establish their respective businesses. And while there are a lot of funds available out there for business startups, the reality is that not all entrepreneurs get the financial support coming from angel investors or venture capitalists.

In the end, a lot of business owners who need financial backing rely on the easiest source of funds that they can think of – their family and friends. Initially, this idea is seen as a very good solution to the money problem. After all, relatives and friends are often seen as best people who can support someone who has started his or her own business. But is it really wise to ask your relatives or friends to invest in your business? For most experts, the answer is no.

Entrepreneurs are often advised that they should never mix their personal lives with their professional ones. Doing so would often result in problems concerning the overall performance of the business. A lot of professional entrepreneurs believe that asking for investments from family and friends are not good for the business due to the risks that could lead to serious relationship problems.

Business startups are not always successful. In fact, some studies note that only 25 percent of startups actually expand and become successful. For the remaining 75 percent, it means failure – and loss of lots of money. Such events, while usual for seasoned investors, are not often experienced by your relatives and friends. Unless they are fully aware of the risks, relatives and friends should not be asked for financial investments in business startups.

Moreover, rifts between those involve in the business can arise once the startup begins expansion. With the entry of secondary and more professional investors, the issue of profit often becomes a sore point.

History shows that a lot of businesses failed because of the problems arising between family members. Thus, business startup owners are advised not to get their family and friends involved in their businesses if they have other alternative to get financial resources.

by www.funded.com

Freelancing – What You Need To Know To Succeed!

Freelancers are doing it for themselves…

Freelancing can be a struggle and the odd economic crisis doesn’t exactly give you a helping hand. Don’t be surprised when I tell you this but there are quite a lot of successful freelancers out there! How do they do it? It’s not magic…there are tips to keep in mind if you want to join them and succeed yourself!

Talk people’s ears off…

No one is going to know anything about you unless you start telling them – take every single opportunity to tell people what it is that you do. People will remember who you are and what it is that you do putting you at the front of their minds if they get the chance to recommend your services!

Get your business cards ready…

You can talk to people and tell them what it is that you do but what happens when you part company – give them your business card and they can be reminded of you when they get home and empty their pockets.

Make sure your contact information is clear – include a phone number, website, email address and most importantly your name.

Network…

If you were a bit uncomfortable at the last networking event that you went to then fear not because we aren’t stuck in the nineties anymore – there are options!

For a start make sure you attend the right networking event for you! There are modern networking events aimed at people from many walks of life so I’m sure there will be one out there suitable for you.

You will have more confidence to approach people at these events if you take some time to practice your pitch – just make sure your pitch is short because a boring pitch will put people off.

Social networking sites are also a great way of getting yourself known without having to leave the comfort of your pyjamas – Facebook and MySpace are great ways of getting yourself known for free and without much hassle.

Web…

It’s very nice having a website with nice, shiny buttons and great information but if no one knows where it is then it’s just a waste of time.

Take some time to research about how to get your website featuring on the first page of a search engine, like Google. Search Engine Optimisation (SEO) is a technique that every freelancer should be aware of which gets your site noticed before most others.

Give away everything?

It might sound like a bit of a ridiculous move but it is actually proving to be a great way of promoting yourself and building bridges with potential clients.

It is the equivalent of a restaurant giving away a taster – if you like what you tasted then you go back to the restaurant and spend lots of money.

Don’t start throwing out everything that you know for free…no one will buy the cow if the milk is free so make sure you aren’t giving away any advice or information that you would normally charge for, just give a taster.

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Choosing A Minimally Viable Co-Founder

If you’re starting a company, one of the most important decisions you’ll make early on is the selection of a co-founder. Some might advocate just “going it alone” because finding a great co-founder is hard and fraught with risk. It is hard and it is fraught with risk. But going it alone is harder — and riskier. Startups are very challenging and having someone to share the ups and downs with, to be a great sounding board for ideas and to just help get things done is immensely valuable.

One additional thought: I’m an introvert. I don’t enjoy being around people very much. If you’re like me, the notion of just doing something all by your lonesome might seem appealing. And, it is — but I think it’s a mistake. Even for introverts, having someone on your side is useful and fun.

Another consideration is speed, captured well by this African proverb: If you want to go quickly, go alone. If you want to go far, go together.

So, you might be wondering: “Hold on there! As a startup don’t I want to go quickly? Isn’t it all about speed? Why should I wait to get started…I should go NOW!”

These are reasonable sentiments. Great entrepreneurs have a proclivity for action. I’m not suggesting that you stop everything and spend all of your time on the holy quest for the perfect (and mythical) co-founder. I’m suggesting that part of what you’re doing should include being on a deliberate lookout for her. And, I’m saying that when you find someone that is awesome, resist the temptation to worry too much about things like dilution and control and what-not. If it’s the perfect person, none of that will matter. Back to the African proverb. Yes, you want to go as quickly as you can, but what’s more important is going far. You want to build a company that attracts amazing people and solves important problems. A company you can look back on and be proud of. There are very few experiences in life that can match that feeling.

So, I’m going to assume for a minute that I’ve convinced you (or you were already convinced) that a co-founder is a good idea.

Choosing A Minimally Viable Co-Founder

1. You trust them and they deserve to be trusted. Not just in the “he won’t cheat me” sense, but in the “if I’m being a dolt, she’ll call me on it” sense. And in the “even when I can’t be there, he’ll keep my interests in mind” sense. By the way, as it turns out, this need for trust is not an abstract thing. During the course of your startup there will be many occasions where you are vulnerable and dependent on the integrity of your co-founder. You want to find someone that is constitutionally incapable of screwing you.

2. They have to be brilliant at building or selling. They’re exceptionally good at building something people want or they’re exceptionally good at selling something people may not know they want yet. And by exceptionally good, I mean, they’re one of the best you’ve ever met. Also, I mean they’re good at of one those things not just good at convincing you they’re good at hiring people that are good at those things. You don’t want someone that can manage [X] but actually do [X]. Example: You don’t want someone to manage product development or even the better sounding “own” product development. You want someone that can actually do product development. Same with selling.

Related note: In my opinion, marketing can be selling. If you find someone that can “sell” by simply writing exceptional content that pulls people in to your business, and then writing great copy on a landing page that converts them to customers — that’s awesome, and it counts. Being brilliant at selling doesn’t necessarily mean talking directly to humans and selling. It means getting customers to pay you money.

3. They’re committed to the company, not just the current idea. Anecdotal data suggests that as fantastic as you may think your idea is, your idea will likely change. A great book to read is “Founders at Work” by Jessica Livingston. It’s a great collection of stories from some great entrepreneurs and you’ll see a recurring pattern. Even spectacularly successful startups ended up changing their idea along the way. If your co-founder is married to a specific manifestation of an idea, trouble will brew when the company is no longer pursuing that exact idea in that exact way. You need a co-founder that’s committed to the cause — and committed to you.

4. They are likable. You and others enjoy spending time with them. You’re probably going to be spending more waking hours with your co-founder than you are with your friends and family. (You might even spend some non-waking hours with them too — some founders I know sometimes dream about their startup. No, it’s not weird at all.) So, it’s imperative that you like the person and enjoy spending time with them. If you dread having meetings with them. If you can’t have a 4 hour dinner with them. If you can’t see yourself locked in a room with them for a weekend. There’s something wrong. Beware. Another reason that them being likable is important (outside of the “life is short and you want to maintain your sanity” argument) is that it’s imperative for others to like them too. Future members of the team that you’re trying to recruit. Maybe investors. Maybe customers. They don’t need to be cruise-director level nice, but if you join forces with a jerk simply because they are dazzlingly brilliant at something, you will likely fail. And it won’t be fun. Don’t talk yourself into it.

5. They do stuff, not just think about stuff. They do a lot of stuff. They do whatever is needed to move the company forward. This includes unpleasant things. This includes banal things. This includes things they didn’t go to MIT or Harvard undergrad for (like ordering pizza). Startups are not just about the fun stuff. Not just about the building and the selling and the late nights cranking. At some level, a startup is still a business. It exists in the physical world, and as such, it often requires doing boring things (like opening mail and paying bills and such). You should try to minimize that ugly stuff as much as you can, but any task should not be beneath any of you.

6. They crank and grind. They are not working under the delusion that there will be work-life-balance in the startup. There are two kinds of co-founders in the world. The kind that work maniacally, just like you do, and the kind that you’re likely going to resent someday. I also don’t think there’s such a thing as a part-time co-founder. Sure, there are people that are willing to help you in the early days. Maybe they’re just wrapping up their day job and figuring out how to exit and come on board full-time. That’s fine. But they’re not a real co-founder until they’re fully committed and cranking.

7. They’re reasonable, rational and realistic. A surprising number of startups die because one of the co-founders gets some weird notion in their head. Causes vary. Sometimes it’s ego. Sometimes it’s insecurity. Sometimes it’s greed. Sometimes it’s just pure schmuckiness. Whatever the cause, the situation becomes toxic creating much unhappiness. Remember, competition is much easier to contend with than co-founder conflict. One way to address this issue early on is to have some of the hard conversations up front. A good place to start is my article on the questions co-founders should ask each other. Have those discussions early. Even though you may not get to closure on all of them, it’ll give you a sense for how you both deal with difficult situations. And, be prepared for some surprising reactions/responses to those hard questions.

That’s all I’ve got. I know I’ve set a pretty high bar for what I labeled as a “minimallly viable” co-founder. There’s a reason for this. If you get it wrong, you can get a bunch of other things right and you’ll still likely fail. If there was ever a time to be selective and spend some calories — this is that time.

What do you think? Any other criteria you’d put in the “bare essentials” bucket? Any positive or negative experiences you’ve had with co-founders?

by Dharmesh Shah, Founder, HubSpot Blogger, OnStartups.com

Expand your business with these 3 tips

“What do I do now?” If your business has enjoyed some success and you’re asking yourself that question, then this article will help you navigate the foggy world of expansion. Expansion is not easy because it is uncharted territory for you. In this article, you’ll read about 3 tips that can help you take the right steps even if you don’t know what those steps are!

There is an old saying that holds true even today: “Success breeds success.” In the early days of your business, you were likely concerned with simply staying afloat. Lining up consistently paying customers may have been difficult and you may have gone for long periods with little business.

However, something happened since then that caused you major success. You may have signed a deal with a very important client. Perhaps word of mouth advertising spread. Maybe you were simply in the right place at the right time. Whatever the reason, you are now successful. In fact, you may be reaching the limits of what your company was designed to do. The next logical step seems to be expansion. However, unguided expansion can lead to innumerable difficulties, even causing the business to fail. Here is what you need to know to expand your company responsibly.

Tip #1: Consult Your Business Plan

If you have a well-written business plan, use it to guide your company’s growth. Keep your mission statement and vision statement in mind at all times. Re-read your long term goals and objectives and develop a short-term plan for expansion that fits with your long range objectives. If you do not yet have a business plan, it is critical that you write one at this time. There are many guidelines available on the internet to get you started. Remember that your business plan will shape not only your current expansion but your company’s long term growth. Consider utilizing the services of an expert to make your business plan the best it can be.

Tip #2: Perform Market Research to Target Expansion

Whether you are considering adding a new product to your line, opening an office in a new city or simply producing more of what you already make, it is important to understand your market. The costs associated with expansion are often high and can be crippling to the company if the expansion does not do as well as expected. You must understand who you are targeting, what their specific needs are, how you will meet those needs, what you will offer and when the new offering will become available. Employing an outside market research firm can be extremely helpful at this time.

Tip #3: Outsource

Once you are ready to go forward with your expansion, your workload will dramatically increase. Allow yourself the time necessary to develop your company’s expansion by outsourcing many of your day to day tasks. You can outsource some of the work to a virtual assistant and some of the work to freelancers and consultants, depending on the projects.

Expanding a company can be an exciting and profitable venture. However, without guidelines and controls in place, it is easy for the company to lose its focus and ultimately become spread too thin. Use your business plan and market research to create targeted slow growth that will be able to be developing properly. Outsource as many daily tasks as possible in order to focus on your new expansion. With proper care, your company’s expansion can flourish, breeding additional successes.

by Heather Villa http://hireheathervilla.com/

New Year Resolutions for Better Business in 2011

The upcoming festive break is a great time to reflect on what’s working in your business and what’s not.

Was 2010 a good business year for you or, as in the case of many others, tough going?

And will you be merely hoping that 2011 will be better – or are you setting and committing to the kind of goals that will make a real difference by using the holiday period to work out exactly how you are going to achieve them?

With the right motivation, your New Year Business Resolutions will provide a formidable platform on which to build success over the coming 12 months.

Based on some of the most popular personal self-improvement commitments, here’s a guide to the kind of pledges which will give your business a powerful 2011 makeover.

1. Find a Better Job

If your business isn’t performing as you’d wish and you are beginning to question whether its worth plodding on, take time out to consider your business model. Could you reinvent your business online or re-energise your company through alliances with affiliate businesses with different market access channels? Could technology make your business more agile? Most of all, think about what could you add or take away from your business offer to make it more relevant, easier for customers to do business with you and more exciting for your market. Ponder if you are the person to lead this change – or is there someone else in your team with the skills and knowledge to rise to the challenge while you concentrate on the areas you enjoy the most?

2. Find Your Soul Mate

It can be lonely at the top – particularly if you are a sole trader. Having a mentor, or simply someone you can trust to bounce ideas off or share your problems with, gives you a sense of perspective. Your soul mate may work in a completely different sector or be your business partner. Wherever you find them, look out for people whose mindset complements your own. If you are an ideas person, look out for someone who loves delving into detail. If you are a people person, look out for someone who loves facts and figures.

3. Learn Something New

Owning and running a business is an education – and no amount of business school lessons or business books can teach it how it is for you. True entrepreneurs are always the curious type. Investigate new tools, get to grips with what’s happening online and make sure you are up to date with customer and marketing trends even if you don’t always adopt them. If you are facing new business problems, maybe it’s time to try something new. If you are facing the same old business problems, it is definitely the time to try something new

4. Quit Smoking

Do you have some bad business habits? Perhaps you waste energy on vanity clients with a track record of infrequent small orders or customers who may place a large order but soak up your time and that of your staff in un-costed product support or additional service requests. Make sure all your products and services are properly paid for. Consider tailoring prices upward for customers you know will incur additional cost to service or revisit your standard contract and ensure your clients or customers always know upfront that additional requests equal additional costs.

5. Shape Up and Lose Weight

Take a long hard look at everyone in your team. Is every team member making the kind of contribution you need in today’s marketplace? Are they showing the right kind of attitude and do they have the right kind of skills and knowledge? Real dead weights need to be jettisoned – but before you do this, check that you’re not simply misusing their skills. Could they make a better contribution in a different role? Do they have knowledge and skills you’re failing to tap into? Perhaps some additional training is in order or greater input from you in ensuring they are motivated to succeed and working to the right priorities.

6. Stick to your Budget

Are your sales targets realistic? In an uncertain economic climate It’s just as easy to be too pessimistic about sales as it is to be too optimistic. Whatever your sales income targets, keep a close and regular eye on performance. Whenever sales stray from forecast, ensure you identify and understand the reasons why. If there’s a major dip, take quick action to address your cost base. What opportunity is there to switch fixed costs to a rental or pay-as-you-use basis. How flexible are your staffing and office costs?

7. Reduce Debts

Cashflow problems are the single biggest cause of small and early-growth business failure. It’s vital that you are always paid in full, on time – and up-front if you have any doubts on customer credit worthiness. One of the best ways to ensure financial health is to credit check all new customers and have a complete handle on who owes you what and when the payment will be made. Only then can you properly manage outgoings and trading terms. When was the last time you reviewed your payment terms? What percentage of your customers are paying on time? Has there been any payment slippage over the past few months? In tough times it’s easy to be tempted to cut major customers some slack when it comes to payment periods but ensure you understand the ramifications in terms of paying your own suppliers. Consider prompt payment discounts or late payment surcharges. Watch for warning signs of problems ahead – if a significant bill to a late-paying customer goes bad, can your business survive?

8. Enjoy More Quality Time with Family & Friends

Unless you are a sole trader, a business is by definition a company of people in regular contact with people at customer businesses. It’s a truism that in business-to-business transactions, people buy from people. Professional relationships are important and while not every contact will result in a sale, staying top-of-mind by being in regular contact and taking an interest in the working life of key individuals both within your business and at customer companies will pay off.

9. Volunteer and Help Others

It’s been a hard year for many businesses – customers as well as suppliers. Giving support and service doesn’t always involve a financial commitment and often, it’s the givers who later get. What knowledge could you share with your customers that might make their lives easier and what extra value could you add to your products or service that involves no cost? Perhaps a simple ‘thank you’ email with every order or an advice newsletter or blog spot that helps customers get the most from what they buy from you. Providing customers with a consistent positive experience of your company by giving them a little more than just your product or service is the foundation of long term customer loyalty and valuable word-of-mouth marketing.

10. Get Organised

Being able to find the information or documentation your need is a pre-requisite of being organised but having it instantly to hand is preferable to having to rifle through filing cabinets or travel back to the office to pick it up. With the aid of a secure online connection, these days you can ensure every aspect of your business is never more than a click away no matter where you are or what time of day. Being organised means you will be more productive, more focused and less stressed – as that’s exactly what you need to be more profitable.

Article Source: EzineArticles.com/Darren_K_Francis

Do You Have What It Takes To Be An Entrepreneur

Every year, thousands of Canadians from all walks of life respond to the call of entrepreneurialism. Young people fresh out of college or university, mature executives who have been set adrift by their corporations, parents who are raising children at home, and new immigrants are part of this growing force of independent business people. The majority of these people have no experience in buying or running a business.

Not everyone is cut out to be an entrepreneur and it is better to find out sooner rather than later if that is the case. Many people romanticize about going into business and believe they could run so much if they were running the show. But when the time comes to cash in their equity, mortgage their home, and write a cheque for a relatively large investment, their confidence often rapidly disappears. It is not unusual for first time buyers to lose confidence in themselves at any stage of the buying process, particularly in the final stages of closing. Before you go any further, ask yourself:

Should I even consider buying a business?
Am I doing this for the right reasons?
Do I have realistic expectations?

Although it is important to be optimistic you must also have realistic expectations. Don’t go into this with blinkers on by overestimating the potential rewards and overlooking the demands of running your own business. It is possible that you will earn far less from a business than you think and find yourself working a lot harder than you have ever done before. Realistic buyers understand that the rewards are achievable, but for a price.

Family Support

This is the time to be totally honest with yourself. If you think that going into business for yourself will allow you to spend more time with your family then you should reconsider your decision. Buying a business and running it during the first couple of years can place a real strain on your marriage because of the time and emotional commitment. If you are going into business for yourself it is critical to have the support of your family. It is extremely important to discuss everything openly with your spouse as once you have purchased the business the risk of loss, security and the temporary affect on your life-style becomes a family affair whether you like it or not. You and your spouse may have different goals and a lower tolerance for risk than you may. The following guidelines should help in this area:

Explain to your spouse your reasons for wanting to go into business.
If they have any objections, try to zero in on exactly what their objections are. Don’t try to overcome their objections until you are sure you fully understand them. They may actually share some of your concerns but because of the reasons discussed earlier, it may be a bigger obstacle for them.
Be prepared for some give-and take in a few areas such as the level of financial risk or the amount of time you wish to commit to the business.
Invite your spouse to participate in the search and negotiation process. Have them attend and participate in meetings with lenders and professional advisors.
Seriously consider if you have the full support of your family and ask yourself what pressure this will place on your relationship before you proceed.

Acceptable Level of Risk

As the failure rate for businesses is high, there is a degree of risk inherent in the purchase of any business. What level of risk are you prepared to accept? Contrary to the stereotype that entrepreneurs are gamblers; the risks involved in business are often moderate due to the amount of planning and due diligence. Yet, many people who want to go into business take a look at the high failure rate of independent businesses and decide that the risk is unacceptable. Although the statistics vary amongst the various government agencies and private companies that track the performance rate of businesses, it is generally accepted that 30% of new business fail in the first six months of operation, 75% fail within 5 years. The good news is that buyers of established healthy businesses have far better odds as four out of five businesses that are still in business after 5 years succeed.

The Untouchables

Having a clear understanding of what you could lose and coming to grips with how much you are willing to risk for a business can reduce the stress level considerably. The following four tips will help you to achieve this.

Divide your personal assets into “Touchables” and “Untouchables”. Put assets such as your home, automobile, and around 50% of your personal savings (including RRSPs) into the “Untouchable” group. Place the remainder into the “Touchable” group, which are the assets you are willing to risk on a business. You might wish to modify these groups and percentages to suit your own situation but it is important to do the exercise.

Set a limit for how much personal liability you are prepared to expose yourself to assuming the worst situation possible and stick to that limit. Wherever possible, limit your personal liability on any loans or lease agreements necessary to buy or operate the business. In some instances, you may have no alternative but to provide a personal guarantee if you wish to buy a business; however, it may be possible to either limit the guarantee amount or have an agreement that the guarantee is removed or reduced after a certain period or upon the occurrence of other events (e.g. a certain amount of the loan has been repaid).

Consider the situation from a risk/benefit perspective. The prospective benefits must far outweigh the financial risk.

Talk to your accountant and lawyer about how you might shield some of your personal assets from potential business liabilities. Any actions to protect your personal assets must take place before you incur any debt.

Take A Personal Inventory

Surprisingly, there are a lot of people who invest their life savings into a business who give little consideration as to whether they have the skills to run the business. Most people start a business without ever completing an honest, thorough personal assessment or personal inventory. Without this self-appraisal, your personal success in business could be limited.

This section is intended to assist you in focusing on your strong points, identifying your weaknesses, and dealing with areas that need improvement. This will enable you to clarify your personal and business goals. To get the most out of your self- assessment, you should be free from distractions and take as much time as necessary.

Your personal inventory is divided into three parts: (a) knowledge, (b) skills, and (c) traits.

Knowledge

In addition to being profitable and providing a good return on your investment, a successful business must be something that you enjoy doing. Generally, what we enjoy doing goes hand-in-hand with what we are good at. Conversely, we are not usually good at doing things we don’t enjoy. However, there is a difference between aptitude and knowledge. You should eliminate most businesses for which you truly have no ability. It is possible to acquire most knowledge, although it may come at a cost and require more time than you have available.

It is important to understand the difference between knowledge and skill. Knowledge can be obtained through study, whereas skill is something you actually do and comes from practice. While it is reasonable to assume that most people can obtain a reasonable amount of knowledge by studying a subject, there is no guarantee that a person can become competent in a specific skill merely through practice or repetition. For example, you could study and gain a fair knowledge of art but you may never have the skill to become an artist regardless of how much you practice. It is fair to say that over time you may improve with practice, however your level of skill may only improve marginally over time. Understanding the distinction between ‘knowledge’ and ‘skill’ is very important when you consider the necessary requirements to run a business successfully. If you are lacking in knowledge (particularly product knowledge), you can usually overcome it, however, if are deficient in a skill (e.g. mechanical), it may be difficult, if not impossible to overcome it.

Write down and rank in order the five things that you feel you know the most about. Don’t limit this list to your work experience as you may have education or specialized training that is not readily apparent from your work experience. Include hobbies, sports and other recreational pastimes as they may point you in a direction you have never considered but one where you might be successful and enjoy what you are doing.

Write down the five things you feel you have the least knowledge about. Most people find this list easier to develop.

Skill

The next step is to do the same exercise with your skill set. Whereas knowledge relates to things that you know, skill relates to things that you can do.

Write down the five things you feel you can do better than most other people.
Write down the five things that you feel you do poorly.

This exercise will help you to identify your skills as well as your deficiencies.

Traits

Traits are things you are, rather than things you know or can do. Traits can be described as personality characteristics. Numerous studies have demonstrated that successful entrepreneurs tend to have several traits in common. A number of these traits are described below under ‘Mental Traits’. You have no doubt seen or heard several various entrepreneurial traits described in clichés such as risk takers, self-starters, highly motivated, positive thinkers, team builders and people oriented. Generally, the traits of an entrepreneur are remarkably similar to the traits of any good businessperson i.e. good work habits, creativity, focus, and an element of risk taking. Conversely, successful entrepreneurs can also be outgoing or shy, workaholics or absolutely lazy, introverts or extroverts, people oriented of totally arrogant.

It is also important to note that the term ‘entrepreneur’ used to be exclusively applied to someone who actually created a new enterprise business. Recently, it has tended to be used to describe anyone who runs his or her own business. There are no tests or checklists that can guarantee your success or disqualify you from owning your own business with the possible exception of one common denominator, which is a driving passion for the business. Nothing was ever achieved without desire. So, do not be overly concerned if you do not possess all, or even the majority, of these qualities. The key question is how significant the missing traits are to the type of business you are considering and your business goals. Understanding your personal strengths and weaknesses will allow you to compensate for them by hiring employees, bringing in partners, or taking additional training.

Traits can be subdivided into two categories: Physical and Mental.

Physical Traits
The majority of traits are mental, however, you will obviously a high level of stamina and energy is important to meet intense demands and ongoing pressure of running your own business, especially during the first few years. In addition, you will need to be able to handle any specific physical demands that the business requires.

Mental traits
Total commitment, determination and persistence A strong determination to succeed and achieve your personal and business goals regardless of personal sacrifices can overcome many obstacles. It can also compensate for weakness in other areas. This requires your total dedication and commitment to the success of the business

Ability to deal with setbacks
Even though you might feel disappointed at times you don’t allow yourself to be discouraged by minor setbacks. You need to have the ability to treat failures as learning experiences so that similar problems can be avoided in the future. Successful entrepreneurs view setbacks as temporary barriers to achieving their goals.

Willingness to accept calculated risks
Successful entrepreneurs have the ability to identify risks and weigh their relative dangers. They prefer to take calculated risks that are high but realistic.

The ability to delegate
Although the business owner must be in overall control of the business it is impossible for one person to perform every task. The ability to delegate some tasks is very important.

Able to handle stress, ambiguity and uncertainty
An entrepreneur must be able to live the uncertainty of job security and the guarantee of a regular paycheck. This is the complete opposite of the corporate world. Stress and ambiguity are woven into the very tapestry of a new business; new employees whose jobs may not be totally defined, new customers, and unpredictable revenues. Successful entrepreneurs accept uncertainty as an integral part of being in business and take it in their stride. You will have to be able to handle temporary failures without panic.

Strong goal orientation
Entrepreneurs set clear goals that are challenging but attainable. They have the ability to focus their energies their energies on achieving their goals and not get sidetracked. In order to be successful, you will need to continually re-evaluate and adjust your goals to ensure they remain consistent with your business objectives. Rather than being content at the attainments of new goals, successful entrepreneurs enjoy the challenge that setting new goals brings.

Seeking and using feedback
In order to know how well they are doing, and how they might improve their performance, successful entrepreneurs constantly seek out and use feedback from employees, their management team and professional advisors or mentors. Not only does this provide instant feedback, it also stimulates the people whose advice is solicited.

Self-determination
Successful entrepreneurs have a strong belief in themselves. They believe that they are personally responsible for controlling their own success or failure, and that it is not decided by luck, circumstance or external events.

Versatility and resourcefulness
Entrepreneurs are capable of dealing effectively with many subjects or tasks simultaneously. The ability to multi-task effectively is particularly important for new business owners, as there may be fewer employees available to handle all the tasks.

Team building and human relations
Entrepreneurs have strong leadership qualities. They have the ability to lead by example and can interact well with people of varying personalities and values. This is especially important when dealing with employees, bankers, investors, partners, suppliers or customers and is reflected in characteristics such as sociability, consideration, empathy, cooperation, tact, and a sense of humor.

 

Balancing Part-Time Business with Full-Time Job

When you have a part-time business while employed full-time, there will times when both will demand your undivided attention. Here are some tips to help you achieve a successful balancing act when trying to start a business while working on a job full-time.

Imagine this scene: your deadline to submit the completed project to your biggest client from your part-time business is tomorrow and you plan to work all night long to finish the work. However, your boss from your day job tells you that a rush project came along, and that you may need to go on overtime to finish the work for a management presentation at 8:00 am the following day. If you do well on this assignment, a promotion is guaranteed!

Oppps! How do you now divide yourself to do both tasks one from your job, and another from your part-time business that have the same deadline and same level of importance?

This is simply one of the myriad challenges that a part-time business owner faces. It is not easy to balance full-time work with the demands of a new business.

The ideal situation would be to have a job that provides enough leeway and time to allow you to dabble on a business on the side. Alas, that is not always the case. You will often find yourself faced with seemingly insurmountable odds when you try to do both at the same time.

Below are some tips to help you achieve a successful balancing act when trying to start a business while working on a job full-time:

1. Be open to your boss at work about your business. It is best to tell your bosses about your business. Of course, owning up about a sideline business depends on the dynamics of your relationship with your boss. Generally speaking, however, conflicts and problems can be avoided if there is no secrecy about either job. Make sure that you reassure your boss that your business will not affect your productivity at work, and that no resources of the company will be used for your business.

In many instances, telling your boss about your business demonstrates to them that you have other skills and capabilities that are not being tapped in your present job. With the new knowledge, better opportunities may open for you that will make use of your previously undisclosed talents.

2. Do not compete for clients. One cardinal rule of balancing full time work with part time business is that you must not compete and steal your day job’s clients (unless you want to be booted off). Doing so violates an important rule of work ethics; and breaks the trust of the management.

3. Schedule and plan your time accordingly. The toughest part of starting a business while working is finding enough time to do both jobs well. It is particularly difficult when you face tremendous pressure in your job to provide the highest caliber of performance, particularly in situations when you are up for promotion or you have just been given additional responsibilities. If your job demands that you work 12 hours every day, it may be extremely tough to provide your part-time business with the attention it needs.

Take a realistic look at your work schedule. Make sure that your working hours do not overlap. If you do need to check on your business during your working hours at your job, do so discreetly. You boss may give you leeway, and even support your business, if he knows that your work is not affected and you are still able to give a good performance. You may be able to check your answering machine and make some phone calls to clients (from your own cell phone, of course) during slack time. Or you may be able to use your lunch break to check and respond to the emails that you received from your business.

4. Keep your commitments realistic. Assess your schedule and ensure that your commitments to deliver services or products are realistic. You will often find yourself walking on a tightrope, trying to balance the need to deliver fast and quick service on one hand, and the need to provide high quality work on the other. Accept the fact that you will always have a limited amount of time that you can spend on your part-time business.

Understand how your tight schedule can affect your capability to cater to your customers. There will be times when you will be pressured to deliver the product or service to the client just to meet the deadline, without putting in the time needed to ensure that your product is of the best possible quality. Customers are usually impatient, and if you’re slow to produce, your company’s reputation could be compromised.

5. Seek the support of your family members. Discuss with your family your plans to continue working at your job full-time while starting a business on the side. It is important that your family members know and understand the impact of working at basically two jobs. They should be aware of the pressure, commitment and risks of having dual work schedules. If you get their support, you may even expect your family to help you run the business and delegate some operational aspects to them.

6. Use technology to help you run your business. If you are trying to balance work with business, technology should be your best friend. Make full use of available technology. Answering machines, cell phones, fax machines, email and other technological devices can make your life easier and much more manageable. Clients from your business can reach you (discreetly) during on-the-job hours.

Make sure, though, that you are using YOUR own machines. To the extent possible, avoid using your company’s fax machine to receive your personal faxes and do not give out your work email to your personal clients. You should also be aware of your company’s policy regarding the use of personal email accounts during business hours. Many companies are now monitoring email use of their employees, and some have even banned access to free email sites like Hotmail and Yahoo.

7. Take care of yourself. The demands of a full-time job and a part-time business can take its toll on you. Your fatigue and stress levels may hit stratospheric proportions at times, and you better be prepared for this. Get enough sleep as much as you can. If you stay up late at night working on your business and then go to work at 7 am the following day, it will soon catch up with you. Your productivity will go down, affecting your full-time work and the chances for success of your part-time business. Worse, your health can also be affected. Learn when to push yourself, but also learn to listen to your body when it tells you to rest.

It is possible to be an employee of a company, while starting your sojourn to self-employment. However, this balancing act requires coordination and careful planning. Otherwise, you run the risk of losing your job, or failing in a business that is yet to take off the ground.

by Lyve Alexis Pleshette


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