How To Move Your Business
From Beginning To Success
by Tom Egelhoff
A business is never stagnant. It's always moving in one direction or the other. Either toward success or away from it.
Today I want to discuss how to keep moving toward success no matter what stage of development your business might be in.
You're going to be required to make a variety of business decisions; some will affect the long term life of your business while others will have an immediate impact.
Below are some things to look for at each level of your businesses development.
Before You Start Your Business
The success of any business is in direct proportion to the planning that goes into it.
You don't decide to start a business and immediately quit your day job. There are some things to watch out for during this stage:
- Don't take on a lot of expenses immediately. Don't run out and rent a building if you can do the same job at home.
There will be plenty of time for the building later. Only take on expenses and obligations that are absolutely necessary.
- Research, research, research. Make sure you do your homework. Is there truly a need for this product or service? Is the need really there are do you just think it is?
Before you assume that there is a need test it with as many possible customers as possible without breaking the bank. See: "How To Determine If There Is A Need For Your Product"
- Make sure that you keep your personal finances under control. Don't give up things like life insurance, health insurance, or medical coverage to create additional monies for the business. Retirement will come — think about it now not later.
- Don't get in over your head with loans or other obligations. Many businesses are started with money from credit cards, family members and/or investors.
If you take these on you must be able to pay them back. Keep your credit strong; you'll need it down the line.
- Don't think gross, think net. If you have a product that sells for $20.00 and you sell 100 a month you'll have $2,000. Well, you don't have $2,000; you have $2,000.00 before expenses.
You'll probably have something closer to about $500.00 or less. Even the simplest home based business can have a lot of fixed and variable expenses.
How can you reduce expenses? You'll need to know how much business you must do to break even. For the formula on how to do this see: "How To Do A Break-Even Analysis" and "How To Grow Your Small or Home Based Business To The Break-Even Level."
- Write your own business plan. Nothing you can do for your business is more important than this. Your success depends on it.
Most people spend more time planning a vacation than planning the success of their business. A business plan will force you to look at all aspects of the business before you start.
Without a business plan you'll be making decisions based on how you feel at the moment instead of what is best for your potential business.
If you need additional help with your business plan you can contact your local S.C.O.R.E. (Service Corps Of Retired Executives) who will provide free help and advice.
You can find your nearest office by going to: http://score.org/ Another source is the Small Business Administration at: http://www.sba.gov/
- Make sure you're legal. Don't skimp on business licenses or other requirements to make your business legal. If you want others to take your business seriously you need to take it seriously.
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Getting The Business Off The Ground
This is the most critical part of your business life. It's during this stage that 90% of all businesses fail.
Your money runs out before the business can reach the break even point and become self-sustaining. Just when you thought you had all expenses covered more pop up.
A job is done wrong and must be redone at your expense. A sale you were counting on to finance something else falls through. Sometimes a single incident can put you out of business.
Here are some things to watch out for as your business expands.
- You can't be a one person business forever - Sooner or later you're going to need some help. It's hard to start delegating work to others because you are convinced that no one can do it as well as you.
This may be true but in order for the business to survive it must be done.
- Get organized - As you get busier you will be juggling more balls in the air. Take care of commitments and return phone messages.
- Get paid - If you perform a service you deserve to get paid on time. Don't let account receivables slide. Be tactful and diplomatic in your collection efforts but it must be collected. It's the life blood of your business.
- Get to the break-even point - This is the primary goal. Grow the business to the that point.
The business can't take your money forever. Sooner or later it must be self-sustaining. The sooner this happens the better your life will be.
If your needs are small to make this happen consider the SBA MicroLoan program. They can do loans from $100.00 up to $25,000.
- Be hard to work for - No I don't mean on your employees be hard on yourself. Working at home can be difficult.
It's not a chance to catch up on cleaning and housework. If you wouldn't do it at a regular job don't do it at home. Be disciplined about your workday.
- Reward yourself - All your effort and hard work deserve something. It may be some time before you can afford to pay yourself a real salary.
But I would suggest that you set aside some business money for your retirement. At least pay yourself that.
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Growing The Business Once It's Up And Running
If your business has passed the break even point, congratulations. Now it's time to think about growing the business without letting the growth get out of hand.
You'll have some more decisions to make. Like the Microsoft® commercial, "Where do you want to go today?"
You have the power to decide where you want to take your business and how fast and how you will finance the growth.
Here are some points to consider.
- Make sure you know what growth is - Just because gross sales are increasing doesn't mean that profits are too.
Learn how to read the numbers on your financial statements. For more on this see: "How to Read Your Business Condition" and "How To Control Expenses and Increase Profitability."
- Delegate, delegate, delegate - As the owner of the company your time should be taken up with the bigger decisions affecting the company.
You may need to leave the day-to-day operation of the business to someone else. But, be sure they are on the same page with you about what you want the company to accomplish.
For more on this see: "How To Lead And Motivate: Yourself and Your Employees" and "How To Get Employee Participation In Your Marketing Plan."
- Watch the competition - Your competition probably paid little attention to you when you were small but as you begin to threaten them they're going to come after you.
They're not going to let you take market share away from them without a fight. One of the first things they will probably do is reduce prices in the hopes they can cut into your profit margins.
Trust your instincts - By this I mean don't make decisions based solely on emotion.
Use facts and figures but you have a feeling about the business or industry based on all the research and study you've done.
You know where you want the business to go and have the vision. If your instincts are to move in a certain direction do it.
You may not always be right but you will usually be right more times than you will be wrong.
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Learn, Learn Learn
- Never stop studying - In this age of electronics and information products and industries are changing rapidly.
Don't fall behind in technology that will contribute to the success of your business. Subscribe to industry publications and take the time to read them.
- Join your industry associations and attend trade shows on a regular basis. These are the folks that will keep you up to speed.
Your competition's worst nightmare is seeing you in the same places they are.
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How To Deal With The Tough Times
Ok, you've been in business for a couple of years. Growth has been good but all of a sudden business falls off.
You do less than last year and then less than the year before that. You are losing market share to competitors and employee moral is down.
With bad financials getting money from the outside becomes difficult.
Here are some tips for dealing with these tough times and for keeping your head above water.
- Identify the problem - Is it internal or external? External problems may be beyond your control.
Internal problems may be cash flow problems or quality control. These you have some control over but you can't solve any problem till you know what it is.
- Rally your friends - Business friends are the ones you need during tough times. This is the real beauty of small towns.
Even fierce competitors will often help each other when one gets in trouble. They may lend inventory or even employees is necessary.
If you've been a good customer with your bank, contact them and ask for their help either with loans or a reduced payment for a short time to help you out.
If you've been good in the past they may work with you.
- Self Financing - If times are really tough you may need to turn to yourself and your savings or home equity for the finances to get past the tough times.
- Cut the fat - Loyal employees are worth their weight in gold but sometimes you must release anyone who is not directly responsible for producing profit.
Sometimes employees will accept a temporary cut in pay to help keep the company afloat and to keep their job.
- Learn from adversity - One of my favorite quotes is, "In every adversity there is the seed of an equal or greater benefit."
Learn from your mistakes and move on. Don't dwell on what might have been concentrate on moving on in a positive way.
For more on dealing with bad times see: "Downturns: What To Do During Tough Economic Times."
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The Last Word on Business Success
I believe the secret to success in any business is information.
The more you know about your own business and your industry the more successful you will be.
The person who has the knowledge has the advantage. You and what you know are the biggest asset to your success.
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© Eagle Marketing PO Box 271, Bozeman, MT 59771-0271
http://www.smalltownmarketing.com - (406) 585-0219
Based in Bozeman, MT, Tom Egelhoff is the author of How To Market, Advertise & Promote Your Business Or Service In A Small Town, and The Small Town Advertising Handbook: How To Say More And Spend Less. He is also a seminar and workshop presenter and trainer. He may be reached at 406-585-0219 or PO Box 271, Bozeman, MT 59771-0271
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