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MIND YOUR OWN BUSINESS!
That was a slogan of the Continental Congress during the infancy of our great nation. Whether you are thinking of starting a new business, expanding an existing business or struggling to manage your existing business, STOP! Where is your business plan?
No one plans to fail in business. They just fail to plan. That is why we see so many business failures in today's economy. I don't care if your business is a $50,000 company or a $5 Billion company, not having a sound business plan and FOLLOWING that plan, staying tuned to strategic business indicators, is the number one reason for business failure.
Unfortunately for the average small business, the only time they even think of a business plan is when a lender asks for one and in most cases it is not worth the paper it is written on.
Before venturing out in a new business, or expanding your existing business, stop and ask yourself WHY. What is your rationale for wanting to do this? If you don't have a passion for what ever it is that you want to do, you will probably either fail at the onset or get so caught up in the day to day work that you won't own a business, you will only own a job. Are you committed or only determined. Determination only lasts just so long before it wears. On the other hand, one who is committed to the cause of their passion will find obstacles as challenges to be overcome and will reach the end of the tunnel that much stronger.
Once you have justified the reasons that you want to be in a particular business and are satisfied that this is where your passion lies (and not just looking for a way to make enough money to quit your job) then you have taken the first step. Next, look to see where you have a competitive edge. What is the compelling reason for someone to want to do business with you instead of someone else who maybe can offer a similar product for less money. Whatever this is, this is what you need to capitalize on and focus your marketing and operational strategies. A wise man once said, know what business your in and stick to it. Stay focused.
Know your competition, your location, your product or service and most of all, know your market. People buy from you, not statistics and not fancy advertising. It is said that knowledge is power, but knowledge without action is useless.
Know in advance what you want to sell, who you want to sell it to, and how you want to sell it. Put your plan in writing and honestly try to shoot holes it it. Are you being honest? Once you have this down, start crunching numbers. Do a series of best case and worst case scenarios to see exactly how much you need to start your new business or expand your existing one. Know where this money will come from and have at least a year staying power. Plan for the unexpected. Remember, this plan is for you before you even decide to speak to a bank or other lender or investor. Expect cycles and be prepared for the slow times. Plan in advance how to price your products or services. If you are selling a service one of the biggest problems is selling yourself too cheap. Sure, you might stay busy, but what do you do when a really good client comes in the door and your too busy to handle it. Take the job and you fail by spreading yourself too thin. Don't take it and keep working for peanuts. Lose-lose. You own a job and not a business.
Plan for staffing and support. Don't think you can do all the work yourself. Know in advance what good help will cost and build that into your plan. If you are selling products, know your suppliers, prices, credit terms and shipping schedules. Know how much inventory to have available and when to reorder.
Get to know your lenders. Spend time with them at lunch or dinner or social occasions. Be honest with them. The worst thing you can do is sell the banker a bill of goods to get the loan and then fall behind in payments.
Most of all, don't think that just because you did a plan once you don't need to do it again. Your plan should be alive. It should evolve. You need to review this plan on a regular basis. Know what worked and why, and what did not work and why. Quickly change what needs to be changed in order to improve your success. Know your numbers. One big problem with most small businesses is that they rely on their accountant or bookkeeper to mind the store. They have no idea if they are making money or not until it is too late. With today's computer systems there is no reason for a small business owner not to be able to record cash transactions in real time so that this information is available in real time.
A word of caution. Most small business owners claim that they can't afford to hire a business coach or planner. I say you can't afford not to. If you don't build this cost into your analysis and plan, you are handicapped from the start. Hire someone who will work all the aspects of your plan, from operations, finance, marketing, advertising and public relations. A business planner needs to work with you, not for you. A real business plan does not come out of a kit with your name put on it. The person or firm you retain should be an integral part of your business, not only at the start, but throughout the life of the business.
Remember, Mind Your Own Business!. If you don't, no one else will. Your future depends on it.
Powers & Company is available to enhance your success through Entrepreneurial Management Advisory Service engagements for new and established businesses. We will help you with your business plan and model during the incubation and start up phase as well as on an ongoing basis.
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