Building Business Success Blocks

Denver Based Restaurant Consulting Firm Announces the Expansion and Rebranding of its Organization

2011-10-27T10:59:00.000-07:00

We’re excited to announce:

http://www.send2press.com/newswire/2011-10-1026-004.shtml

Business Plans - The Real Story

2011-10-24T13:11:00.000-07:00

So why should you go to the trouble of a business plan? Why not just move forward with your idea and take things as they come? If you are starting a new business, the first thing to keep in mind is that it takes more than a good idea or a good product to make a successful business.

The first thing you need to do is validate if your business is feasible. Will you make money at it? How long will it take before you start making money? Do you have enough funds to start your business or will you need outside funding? How will you take your product/service to market? The list of questions goes on and on.

Let's just focus on the feasibility of a new business. You should have in mind some number as far as revenue or units you expect to sell in the first year. You will need to compare that number to the market as a whole. You can get a lot of information on the internet. Just google your product/service and similar products/services to see what marketing analysis already exists. It makes sense to invest in a good market analysis report on your industry. From that you need to figure out what your total market is and compare that to your sales projection. Is your sales projection reasonable?

For instance, you plan to sell 10,000 units in the first year, 15,000 units in year 2 and 20,000 units in year 3. Your market analysis tells you the entire market for your product (or similar products) is 7,500 per year. Obviously, the market doesn't currently exist for the product you intend to sell. What if the market was 100,000 units per year? You may say, "Great, let's go!", but you then need to ask yourself if you think you can gain a 10% share of the market in year one. That's pretty aggressive even in a market that isn't competitive and if you are in a competitive market, then it may be next to impossible. This doesn't mean you need to give up on your idea, it just means that you need to figure out how to penetrate the market and based on that, you need to come up with a realistic (tough, but not impossible) annual sales goal. That along with price and cost information will start to give you an idea of how much money your business will generate and when.

It's all about turning the unexpected into the expected! So, go forth and research your market!

Is a formal business plan necessary?

2011-10-07T13:34:00.000-07:00

Much has been written about the necessity (or not) of writing a business plan. I will always advocate taking the time to develop a plan before you dive into any new business or opportunity and then on an ongoing basis (usually annually) as long as you continue the business. I advocate this simply because you will have a greater chance of success if you think through the who, what, when, where and how of your business before you embark on it. This turns "the unexpected" into "the anticipated and prepared for".

Do you really need a bound, footnoted, discertation with charts and graphs to accomplish this? Most of the time, you probably don't. Your audience will dictate the formality or lack there of, of your final plan.

If you need traditional funding, then you will definitely need a formal well written plan to submit with your SBA loan application. It should be professionally bound and follow the formal business plan format - table of contents, executive summary, business section, financial section and appendices or supporting documents. The bank's biggest concern is how and when will you be able to pay them back?
If you are going after venture capital, you will also need a well documented plan, but you have more leeway in the presentation, content and format. You will always need a thorough and detailed financial plan if you are seeking funding, but one of the things I really stress for venture capital is creating and building excitement around your idea and business. The VC's biggest concern is what are the excepted returns for this business? The bigger the better!
If it's just for you and your management team, you have even more leeway. It just needs to fit into your company style and culture, but it does need to be documented, used and revised on an ongoing basis. Whatever format best achieves your biggest concern which should be success!

But that just focuses on the presentation of the plan and quite frankly, that is not the real purpose of doing a business plan. As with most things in life, it's not the end result that is the most important thing, but the process in getting there. More on that in the upcoming weeks!

Growth in Tough Times

2011-09-09T14:14:00.000-07:00

While the Economists have told us the recession is over, we all know that the job market and unemployment are still terrible. For small business owners, this usually translates to lower sales and profit. So, what are we to do in these tough times?

Know your target client - I have always advocated taking the time to describe your ideal client in detail - what are their demographics, what do they like to do, where do they live, what makes them unique? In this economy, you should also ask yourself if you need to modify your target customer. You want to target a market that is spending money.
Reach your target market - Once you are satisfied that you have defined your target customer, you need to figure out how to reach them. Are they internet savvy, do they use mobile devices or print? Where do they go for recreation? Where do they work? Are there leads services or groups you can join that will target them? Are your marketing activities directed at reaching them?
Provide exceptional customer service - People often think that price is the determining factor in awarding a job, but providing exceptional service - going above and beyond, carries a lot of weight. If you can demonstrate that you are responsive, eager to do whatever it takes and then some, and that you are honest, customers will usually pick you over your competitors.
Differentiate your company - Figure out what sets you apart and above your competitors and promote that with the public at all times. Publish referrals that highlight your strengthens. Come up with a tagline that communicates the same message. Always be "on" when it comes to promoting your business and your efforts will be rewarded.

Regardless of the economy or job market, there are companies that are still growing. Following these steps should help you do the same.

Why Plan?

2011-05-04T09:27:00.000-07:00

I was at a meeting this morning of 30+ business owners. The presenter asked who in the group had a sales and marketing plan. Other than me, I think one maybe two other people raised their hand and I'm being generous in that statement.

How many people plan their vacations? I think more people would have raised their hand if that had been the question. Why do we spend more time planning one to two weeks of our year than we do for the remainder of the year? Isn't our family's livelihood more important than that?

Planning helps you:

Achieve your goals.
Know whether or not you are accomplishing what you set out to do.
Establishes clear direction for your activities.
Increases your chance for success.
Actually reduces the amount of time spent on any given activity.

If you are presented with the opportunity to answer the question "Do you have a plan?" - be sure you can say YES!

When was the last time you celebrated?

2010-03-08T16:20:00.000-08:00

Being in business for yourself can be tough. We are our own worst enemy. We tend to be more critical of ourselves than anyone else and we are quick to chide ourselves for errors or missed deadlines. But what about all the times that you get it right? What about completing a major project like opening a new store – I bet you celebrate that with a grand opening. What about projects that are just as important or even more important than a story opening? Projects that aren’t that glamorous. What do you do when you’ve completed your business plan or developed a budget or a sales and marketing calendar? Do you celebrate then? Do you treat yourself to something special?

If we are our own worst enemy, than we sure as heck better be our own best friend. The last step of every project that I work on with my clients is “Celebrate”. That is probably the most important thing to get right. So next time you finish a task or project regardless of how glamorous (or not) it is, be sure to treat yourself. You’ve earned it.

If you had 2 years to build a successful business...

2010-03-02T14:37:00.000-08:00

If you inherited a business that you knew very little about and had 2 years to make it successful, where would you start? There are so many different things that need to be addressed. What should be tackled first, second, etc. Here's my list. I encourage you to weigh in on the subject.

1.    Cash Flow – no business can operate without cash, so my first priority is to understand and project cash flow for the business.
2.    Compliance – is the business in compliance with all federal, state, and local laws governing that business, including licenses, permits, insurance, taxes, etc? If a business has cash, the next biggest risk is the government shutting them down due to non payment of taxes, no licenses, etc.
3.    Sales/Profitability – Are they selling the right products @ the right price? Do they understand the cost structure of their products/services and are they priced correctly for the market? We all know the danger of selling things at too low of a margin or even below cost. It links back to the focus on cash and revenue stream.
4.    Expenses – does the owner understand their cost structure and how to control expenses? What benchmarking information is available for comparison? Out of control expenses are the quickest way to burn through cash.
5.    People – Are the best people doing the right jobs? Are they compensated fairly? Are they a cohesive team? Do they hold dear the same values and business ethics as the owner? Do they compliment the owners strengthens and weaknesses? Numbers are numbers, but you can’t run a successful business without people. Having the right people can mean the difference between getting by and excelling in business.
6.    Sales/Marketing – Is the owner actively marketing the business? Do they have a sales and marketing plan? If not, then create one and implement it ASAP. The best way to increase cash is to increase sales.
7.    Assets – Does the owner have the right amounts of inventory and equipment? Is there too much cash tied up in non working assets or old inventory? Do they have controls in place to evaluate and assess what the correct levels are? Do they have idle equipment or are there bottlenecks that will prevent them from growing?

Wow, I was going to stop a 5 items, but I kept thinking of more and more things that are important to making a business a success. I could have kept going, but I didn’t have time nor do you probably want to read a book at this point. So what do you think, what would be your priorities and why…

Why Budget?

2010-02-22T17:21:00.000-08:00

I recently had a client ask why it was important to budget or more accurately, I had a client state that he didn’t see the value in budgeting. Having been in business for many years without doing a budget, I guess I can understand why he would say that. Budgeting reminds me of using a map or a GPS to get to somewhere new. Have you ever tried to go some place new without having looked up the place on MapQuest or keying it into your GPS? Of course not, that would be ridiculous! You’d get lost or would make a lot of wrong turns; it would take you a lot longer to get there; and you might even drive right past the place and not even know you’re there.

Hmmm, sounds like trying to run your business without a budget, doesn’t it? Following are 5 reasons off the top of my head on why I think budgeting is important:
1.   It defines your annual goals in measurable, time bound terms. You can’t get much more specific than months and dollar amounts for your businesses sales, expenses, cash flow, assets and liabilities.
2.   If your business is cyclical, it helps you prepare for valleys and peaks and let’s you know where you need to be year to date to stay on track. This is something that would be very hard if not impossible to track in your head.
3.   It lets you know when things are slipping and by how much. It could be any of the items mentioned in #1. As trends develop, you are able to adjust your behavior to prevent a disaster. It gives you early warning signs.
4.   It lets you know where you are excelling – if sales are up or if you a doing an excellent job of containing your costs, it may indicate to you that you can invest more money in advertising or technology or equipment.
5.   Most importantly, it defines success in black and white terms. At every point in the year, you will have an objective measurement system to let you know if you are succeeding or not. It doesn’t candy coat your failures and it reminds you to celebrate your successes.

So take the time to put together a budget, it doesn’t take long and it is probably one of the most important tools and measurement systems in a business owner’s arsenal.

Understanding Goods & Services Profitability

2010-02-15T15:56:00.000-08:00

One question I always ask my clients is, do they know what their most profitable service and/or product is? If they say yes, then I ask them how they know that. More often than not, small business owners either don’t know or if they do, they base their knowledge on a gut feel. I’m here to tell you that your “gut feel” may be good for picking your dinner, but it typically isn’t accurate enough to put money on when it comes to understanding your business.

So why is it important to understand the profitability of your different products and services? Following are some things that come to mind:
1.    It helps you prioritize/decide where to spend your marketing dollars – promote your high profit margin items.
2.    When you are talking to customers and potential customers, you should be promoting the higher profit margin items as well. These are typically your value-added goods and services. Your customers believe in their value – be sure to highlight that fact.
3.    If you are planning to grow your business, focus on how to grow your most profitable items – don’t spend your time or money trying to grow the less profitable ones. If they happen to grow along with the profitable ones, fine, but don’t make them your focus.
4.    What is it about your higher profit items that are different from your lower profit margin items? Can you change something about your lower margin items to increase their profitability? Increase your mark up, reduce their real cost, change their packaging, change your customer’s perception of their value, etc?
5.   Can you change the way you provide a service to increase the profitability of that service?  Can you hire less experienced labor for certain jobs, can you automate steps in the process, so it takes less time?
6.    Can you consolidate like items and eliminate the lower margin one(s) – do you really need to sell 15 different types of widgets or will 10 do just fine?

These are just the tip of the iceberg when it comes to what you can do with profitability information. It is extremely powerful, so be sure your systems and records are set up to capture this data accurately from the beginning.

How To - Developing a Marketing Program

2010-02-08T08:39:00.000-08:00

We live in a world where instant gratification is a way of life. We get irritated by red lights and lines at the supermarket. The other week, my microwave died and I had to cook my dinner using the oven – it took 30 MINUTES!!!!! I was totally peeved that my dinner wasn’t ready in the usual 5 minutes. I mean seriously, how did people live before microwaves?!?

Yet not everything in life is instantaneous. Take growing a garden – I plant the seeds and nurture the seedlings starting in mid February. I harden off the plants in April and transplant them to the garden during the month of May. I am rewarded with some crops as early at June, but most aren’t ready until August. That's seven months – I work and wait 7 months for the taste of a fresh tomato on the vine – but there is there’s nothing like it in this world!

Marketing is like growing a garden – there isn’t much instant gratification involved and there is no silver bullet that I’ve found. In order to succeed, you need to have a systematic approach and a system in place to measure and monitor your responses. In other words,
1.    Pick the marketing tools that fit your personality, your customers and your budget.
2.    Develop an annual calendar of your marketing activities including time and cost.
3.    Set up a system to track where your customers heard about you.
4.    Tie that back to your marketing activities.
5.    Throw out the ones that don’t work for you and stick with the ones that do work for you.
It takes time and effort to build a good marketing program. It’s an ongoing process – not something you can do once or twice and then stop. Remember the sweet taste of a home-grown tomato.

Musings of an Older Entrepreneur

2010-02-02T15:49:00.000-08:00

I remember when I struck out on my own into the wonderful, but very foreign world of the "entrepreneur". People said I was brave – that it took a lot of courage to start my own business. I never really looked at it that way. I spent my entire career "climbing the ladder" to senior management before it dawned on me that I was living my father's dream. My dreams involved more autonomy, creativity and at least the perception that I was making a difference. So in a manner pretty consistent with how I make decisions (when I decide, I'm all action), I woke up one day and said “enough is enough” and I resigned.

Okay, so I won’t recommend that course of action for most people. I looked at my financial situation, what my future commitments were and how much leeway I had. I was lucky in that I could afford to take sometime to figure things out. I thought long and hard about what would make me happy. I read and did the exercises in What Color Is Your Parachute? by Richard Nelson Bolles (if you are contemplating a change, this is a must read!). I compared my personality & skills to what is required to run a consulting business. I talked to a lot of people doing consulting. I researched, I planned, I budgeted and I dove in head first. I did all this right before one of the worst recessions in the last century.

So where am I today? Well, I’m not rolling in the dough, but I’m getting by and my business is growing rapidly, so the future is bright. The most extraordinary thing of all has happened, however… I’m happy and I love what I’m doing. Seriously, I look forward to working and best of all, I'm making a difference. I'm helping people improve their businesses and their lives.

Why am I sharing this with you? I guess to point out that it’s never too late to change.

Know Yourself and Your Competition cont...

2010-01-25T17:33:00.000-08:00

Last week, I wrote about the characteristics of successful sales people and I asserted that in order to succeed, you need to understand the environment you are working in, who you are up against, who your customers are and what they need before you can go out and capture their loyalty and their business.   To that end, you’d better start by doing your homework. Following are some key points to cover as you build a sales plan:
1.   Identify your competitive position – Identify your competition and gather as much information on them as you can. Use the Internet, the library, professional publications, groups, etc. Based on your research answer this question: How do you measure up and what sets you apart from your competition?
2.   Identify your niche – Now that you have identified what sets you apart, use this information to define your niche. Your niche is your competitive advantage. It could be your service/product; the way you provide the service/product; it could be pricing or value. The possibilities are limitless, but it must be something that will capture your customer’s attention and that they are willing to pay for.
3.   Describe your targeted client base - Based on the researched you have done so far and what you know of your product/service, describe your targeted customers. What are their demographics, likes and dislikes, hobbies, how do they stay abreast of news, where do they hang out, etc. All these things will be critical to building an effective sales and marketing campaign.
4.   Describe what you will offer these clients – This may seem like a silly step. You know what you’re selling, but write it down in detail. List out everything that comes to mind about your product or service. All the features and functionality no matter how small.
5.   Identify what you will tell your clients about your product/services – Now take the information from the previous step and write out what exactly you will tell people about your product or service. What is the benefit that your service or product is providing? What are people willing to pay you for? Remember, you aren’t selling a button; you’re selling a clothing closure device.

So, you’ve done all this, now what? Well, you should now have an idea of how you will market your product/service. You should also know who your targeted customers are, as well as, where and how you might contact them. It’s time now to use this information as the basis for your sales and marketing plan. A good sales and marketing plan will increase your chances of success and it’s all about Building Business Success!

Know Yourself and Your Competition

2010-01-18T15:00:00.000-08:00

Recently, I was asked to speak to a group of sales representatives. This is a group of folks who historically had gotten all their leads from “Corporate” and their new boss was trying to educate them on the advantages of developing their own leads and growing their business through other avenues. So, how to talk to a group of sales representatives, typically social, outgoing, ADD types about the not too exciting subject of planning and business strategy. I mean, let’s face it; most people would rather have a root canal than listen to someone talk about a systematic approach to business growth.

As I was thinking about it though, it dawned on me that the most successful sales people I have known have one thing in common. That is, they run their territory like a business. When you ask them a question about their territory, they typically respond with facts and figures. They know their competition and how they stack up. They know their sales goals as well as their historical sales. They know their customers - who pays on time and who stretches their terms; who requires more attention and what their hot buttons are. They know what factors affect their commissions and have a pretty good idea of what their future income will be. They do more than go out and convince people to buy their product or service. They follow up after the sale. They insure that the delivery was on time and that the pricing was accurate. They are a one stop shop and an invaluable resource for their customers.

So, how did they get to be the end all for their customers? The same way any business owner does it and it all starts with research. That’s right, you first need to understand the environment you are working in, who you are up against, who your customers are and what they need before you can go out and capture their loyalty and their business. Next week I'll give you some pointer on how to do this.

Plan, Monitor, Repeat continued...

2010-01-11T15:14:00.000-08:00

Last week I told you a story about my failure to plan for, of all things, my vacation - gasp!!! I pointed out that "everyone" plans their vacations, but a vast majority of business owners don't plan for their own businesses' future. Here are 7 simple rules for successful planning in business that will give you a distinct advantage:
1.    Set clear specific goals. Keep them simple, measurable and time bound. You don’t need or want too many goals and you shouldn’t make them unobtainable. Make them a stretch, but realistic and keep the number of goals to those you can realistically work on.
2.    Define the detailed tasks that will be required to accomplish your goals. Now that you have set your goals, what are the things you are going to do that will make them a reality. How much will it cost? Who will do them? What effect do you expect them to have toward achieving your goals?
3.    Develop a task timeline. Develop a simple annual calendar that lists when you will complete each task that you have identified. Be sure to include the cost, so you can plan for the expenditure in addition to the time it will take. Try to get at least the high level tasks on a one page calendar, so you can review the upcoming year at a glance.
4.    Set up a system to measure the results of your efforts. Are the tasks having the desired affect on your goals? Remember, your goals are measurable and time bound. So measure them!
5.    Constantly review your progress towards your goals. If you are making progress toward your goals, understand what is causing it. If you aren’t making progress, understand that as well.
6.    Adjust your activities as necessary to ensure you achieve your goals. You’ve gone to all this trouble, now do something with the information. Are your tasks having the desired results? Do you need to shift resources away from what’s not working towards what is? Do you need to come up with new ideas? Have things changed so much that you need to rethink your original goals?
7.    Repeat! Remember, nothing is ever perfect.

Taking a systematic approach to planning, goal setting, measuring and monitoring your progress will greatly enhance your chances of success in today’s competitive environment. You have to remain flexible and responsive to what is going on, if you expect to succeed. And at the end of the day, that’s one of the reasons we’re in business, isn’t it?

Plan, Monitor, Repeat

2010-01-06T14:41:00.000-08:00

I woke up one morning last month with the overwhelming desire to take a vacation. I just needed to get away from it all, so I packed a bag, kissed the hubby and the dog goodbye and jumped in the car. Suddenly, I realized that I hadn’t made any plans for this little excursion. Actually, this dawned on me as I was packing. I didn’t know where I was headed, so it was hard to figure out what to pack. I just packed my favorite clothes – what I liked to wear when I was having fun. Now I was faced with my second decision – how to get wherever it was that I was going… I headed for the airport.

I have to admit I got some pretty strange looks when I asked the ticket agent (yes, I actually had to stand in line to buy a ticket) what flights they had leaving in the next couple of hours and where they were going. Needless to say, it took a long time and I got a lot of dirty looks from fellow travelers, before I had purchased a ticket and was on my way to Waco, Texas. Waco, Texas, you might ask? Why the heck would someone go there?!? Well, I had packed my favorite clothes, I had decided to fly and that I wanted to leave in the next few hours, so, in short, I had limited my choices. I could go to Waco or Anchorage and I didn’t have the clothes for Anchorage.

Okay, so at this point or more than likely by the end of the first paragraph, you were probably a little skeptical about my story. As you should be, who in their right mind would go on a vacation with no planning? I mean, really, we don’t get nearly enough time to enjoy ourselves, so why wouldn’t we take the time to research and plan for our enjoyment. Right?!?! Yet the truth is, a vast majority of business owners don’t take the time to research and plan for their business the way they do for their vacations. They put more planning effort into what they will do with one week of their time than they do with the remainder of the year. And it is the remainder of the year that feeds and clothes them and their families. Seems a little backwards, doesn’t it?

The moral of the story? Plan, plan, plan for your business future! Statistics show that companies that plan have a higher chance of success than those that don’t. Tune in next week for 6 simple steps to successful planning...