For most people, going to formal school is with the aim of finishing with good grades so that one could land himself or herself with a white-collar job. The call to finish with good grades is usually from parents, relatives, and at times classmates at school.Very few people talk about starting their own business on completion of formal school (at least the first degree). The reason is because majority of people in the world are in paid employment working for very few individuals who have gotten themselves to think outside the idea of working for others to creating employment themselves for others.Majority who work for business owners are very rarely able to think of life as their own boss. They are so used to receiving salary either weekly or monthly that they become relaxed and assume it would continue to remain so.Even though some people dream of becoming their own boss someday, very few are able to actualize this dream. The fear of failure and what people might say is what keeps them hanging on in paid employment.However, Robert Kiyosaki, author of Rich Dad Poor Dad best selling novel said there are two possibilities for folks in paid employment: the first is for one to leave and become his or her own boss and the second is for the employer to ask his employee to leave, and the probability of the second happening is higher for everyone.It takes a great deal of courage for one to leave a steady paying job to enter the rather uncertain terrain of business. One is not sure if what he or she ventures into would succeed, and is therefore not sure of paying his or her bills.But the truth is, how certain is paid employment when one could be asked to go at anytime? With this uncertainty of paid employment comes the desire to increase one’s income by investing in places like the real estate market so that one could have what to fall back on if asked to leave paid employment.But again, whether one likes it or not, a day would surely come when one’s employers ask him or her to leave because he or she is no longer productive and has become a burden on the company’s resources.It is at that stage that many realise they need to get some kind of business running – something they had been avoiding during their younger days. With no business experience, they jump into the next idea that comes into their head and invest their savings and severance benefits.When things do not go as envisaged, which is not uncommon for a start-up business, they become jittery and start looking for another business idea. They continue this way jumping from idea to idea and before long all their savings is gone and they are back to square one with no money and as though they never worked before.Another group of individuals work in organisations that make them look as though they are whiz kids with the Midas touch in business. They are able to analyse business ideas and provide very professional advice that would work if applied.But outside of that office, if asked to start their own business, they would continue to analyse and analyse all business ideas they have and look for reasons why it cannot work.Eventually, they also would not be able to start anything because they are still looking for the best idea with the most ideal conditions under which to implement them. In essence, they are waiting for everything to be right before starting.Fortunately or unfortunately, things cannot be 100% right for one to start a business that would become world class with excellent profits in later years.I say fortunately because history has shown over and over again (though most of us are either unaware or refuse to be aware of this fact) that every successful business started small with many challenges that had to be surmounted.Anyone who applies the same principles would equally achieve success in his or her business endeavour.I say unfortunately because those who want ideal conditions before doing business are living in the wrong world because it cannot happen here. You have to make the conditions right and push yourself in the direction you want to go because that is the way it works in our world.One major difference between paid employment and owning your business is that in paid employment, you have to be there all the time to earn your living, that is, earn as you work.In business on the other hand, you do not have to be there to earn your living because you are making use of other people’s talents and time to achieve the same objective of earning a living.I wish to point out something here. If you say you are self employed and always have to be there for things to run smoothly, that is certainly a job and not a business. You need to put things in place to change it to a business to free you to do other things that are important to you.Of course, it all depends on what your objectives are. Some may argue here that if you are not there, your employees would take advantage of your absence and create problems. But I know that most people would prefer others to work for them than to do it themselves always.We may also wish to ask those who prefer to be there always how successful organisations are run. The owners of such businesses are usually not there and where they have locations in several places, they cannot be everywhere at the same time.So it therefore means there are things they have put in place to ensure smooth operations (it may not be 100% okay in all locations) whether they are there or not.Something else about a business is that there are usually teething problems at the beginning caused by inexperience or lack of finance, but they are certainly surmountable to enable one achieve success in his or her heart’s desires.This is usually the stage where most individuals chicken out because they have a wrong understanding of the word failure caused by their formal school and family experience where failure is a word that should be avoided at all costs.But as motivational speaker Anthony Robbins put it, “Success is the result of good judgement; good judgement is the result of experience and experience is usually the result of bad judgement.”In business, one cannot rule out the possibility of making mistakes. It could mean the temporary end of the business.However, while a business owner that understands this fact would forge ahead with the experience behind him or her and eventually achieve success, most organisations would fire an employee who makes a costly mistake.Notice I used the word temporary because every bad experience can be overcome, every difficulty can be conquered and there is no problem without a solution.Once you understand this, your approach to problems will certainly change from one of fear to one of a valuable learning experience.There is a limit to the amount of money one can earn from paid employment and any increase in employees’ earnings is dependent on the organisation’s earnings because an organisation cannot pay more than a certain amount as salary to enable it meet its other financial obligations.Secondly, one’s earning capacity as an employee is dependent on one’s efforts alone because you are paid for the work you have done for the period under consideration.In business, one’s earnings is dependent on your effort and the efforts of employees and one’s earning capacity is therefore higher because you are the owner and are paid for everyone’s efforts.When one is in paid employment, you are under someone’s supervision and that makes you do things you would not feel like doing: resuming work at the right time to do your job and also putting it the extra hours required to finish special projects.As a business owner, you are free to do your own thing. But there is a time discipline is required at the initial stage similar to when you worked as an employee to allow the business grow.You’ve got to remember this very important point because it would mean doing things when you don’t feel like even though you are the owner of the business and can do things when you want.When you are in paid employment, there is a way things are done that you may not like and you would want a change. If your employers do not agree with your views, there is a limit to the impact you can make, even if it is a positive one.As a business owner, you make the decisions and are free to apply whatever views you feel is necessary to carry your business to great heights. It means you must have vision as the leader of the organisation.But you’ve also got to note that your employees that do the actual job have their own views for you to consider and apply on how to improve the business.It would certainly make them feel as a part of the organisation and would help them come up with better views next time.All said, which of the sides would you want to be found, employee or business owner? If your decision is paid employment, always remember that a day would surely come when your services will no longer be required and you would have to do something to fall back on.You certainly would not want to start working at an age when you should be retiring and resting. No matter how much work experience you have in someone else’s organisation, it may not be sufficient to see you through your own business at the initial stage unless you reached the very top as CEO as an employee.There are certain things required as a CEO who oversees all aspects of the business quite different from someone working in one department.If it is a business owner you want to become or are already one, I encourage you to forge ahead because in your latter days in life, you would always have something to fall back on as an experienced business owner and would hand over to competent hands to carry on when you retire from active work.Great wealth can only be gotten as a business owner for the aforementioned reasons in this piece.(c) copyright Gabriel Ama
Plans are Useless; Planning is Indispensable”Plans are useless; planning is indispensable,” according to Dwight D. Eisenhower, then Commander of the Allied Forces in Europe during WWII. Now, you may be in total agreement with the first part of that statement, but you are really not convinced of the truth of the second part.At this point, you may be tempted to skip writing a business plan altogether, viewing it as an unnecessary exercise in jumping-through-the-hoops, suggested by some old business professor who probably never held down a “real” job anyway. Maybe it’s okay as an assignment for an MBA class, but it would be just too confining and irrelevant for today’s fast-paced business environment. Anyway, you’re ready! You’ve thought about this business venture for a long time and talked it over with friends and everybody agrees it’s a great idea. Best to strike while the iron is hot!Press for SuccessFar be it from me to dampen your enthusiasm, but you should give yourself every opportunity for success. That’s what the planning part of the process of creating your business plan will do. By the time you have pressed your way through it, you will not merely have some neatly arranged document to keep on file, you will have a working tool that addresses the essential factors that influence your future.Besides, your friends may be 100% behind you in your new venture, but, in case you are hoping to involve others who have actual money to invest, you may need to be able to make a convincing case. Wouldn’t it be nice to have anticipated possible questions and be ready with plausible answers? If you are risking your own money, that is perhaps even a stronger reason to do some indispensable planning.Easy WriterIf you are one who is intimidated by the blank page, never fear! There are several good software packages that will guide you through the process, such as Business Plan Pro Complete from PaloAltoSoftware. Business Plan Pro Complete walks you through the entire planning process and generates a complete, professional and ready to distribute plan with a proven formula for success. The planning wizard makes it a snap to get started since you simply answer yes or no questions to create your custom business plan framework. Bplans.com offers free business plan samples and how-to articles as well as a wealth of other information. It is definitely worth taking the time to checkout. Microsoft Office Online Templates also has a variety of free templates to use with their products. The wizard indicates the information you need and you fill it in as you go.You may find that the easiest part is the actual writing of the plan. The real work comes in the data-gathering, which may take you a hundred hours or more, depending on what you already know or have researched. If your new venture is in an area where you’ve been working, you may already know about your customers, your suppliers, your marketing plan, your organizational structure, your financial and cash flow needs, equipment, inventory, and so on. If you know all of these except for Marketing, say, then this is where you will need to invest some time and effort. You can find a wealth of information by utilizing the traditional data sources such as chambers of commerce, major cities’ websites, trade associations, the US Census Bureau, trade journals, magazine and online articles and advertising, etc. Performing keyword searches on Google, or Ask will bring up websites to check out. Following are some places to start:James J. Hill Reference Library (jjhill.org): One of the nation’s premier business libraries to bring you FREE and affordably priced tools and resources you can use to create a better business plan based on relevant and credible data.
U.S. Census Bureau (census.gov): A source for a variety of useful statistics, especially the Economic Census that comes out every 5 years.
American Demographics (adage.com/americandemographics): Just as the title suggests, numerous free reports about consumer demographics in the U.S. nationally and by statistical area.
Internet Public Library – The Census Data and Demographics (ipl.org)/: An especially useful site that has links to information about countries other than the U.S.
Corporate Information (corporateinformation.com): Features information summaries on over 350,000 companies in the U.S. and abroad for competitive analysis.You can find a variety of companies online to help you with your market research. For example: Sundale Research’s (sundaleresearch.com) primary goal is to provide new and mature businesses with objective, accurate industry data and market analysis on a wide range of topics. Their market research is intended to save you time and money while keeping up with industry trends.But your idea may be so new that you may also need to talk to potential customers, host some focus groups, talk to an ad agency, or maybe even make a prototype and float it past some people. Be prepared to spend the time. Remember, it’s not about the Plan but the Planning.Build It on Paper FirstWhether you decide to use business plan writing software or to just follow this guide and create your plan with your word processor, here are the sections of a good plan and the questions that need to be addressed:Cover Page – Show the name of the company, your name, and the date.
Introduction – What is the name and address of the business? Who are the principals, their titles, and their addresses? What is the nature or purpose of the business? What is your launch date? How much start-up and/or operating capital is needed?
Executive Summary – One to three pages that summarize all the information to follow; come back and write this last.
Industry Analysis – How does your product or service compare with what is currently on the market? What is the trend in the overall industry? What have been the total sales in this industry over the previous 3 to 5 years? What new products or technologies have had the biggest impact on this industry recently? What is the future outlook for these and what trends are emerging? Who are the competitors, where are they located, and how are they doing? What advantage do you offer over them? Who is buying this product or service now? Describe the typical customer for this product or service. Are there emerging markets or market segments? Where does this product or service currently perform best? Possible Data Sources: trade associations; trade journals; attorneys & accountants dealing with the industry; industry salespeople; state business websites; focus groups.
Description – What product(s) or service(s) are you offering specifically? Are any patents, copyrights, or trademarks needed? Have they been acquired/filed? What is the size of your business? Where will it be located? Will this require purchasing or building a facility? Will this require leasing a facility? At what cost? Has a lease been negotiated? What personnel will you need? Where will you find suitable employees? What equipment do you need? Will it be purchased or leased? What are the qualifications of your principals? How do their backgrounds promote the success of this venture? Why do they think this will be a successful venture? Possible Data Sources: local Chamber of Commerce; community colleges & local universities; local employee leasing company; real estate agents; US Patent & Trademark Office; US Copyright Office.
Production Operation – If a product must be manufactured, what is the process? Will the work be done on-site or subcontracted? Who are the subcontractor(s)? If on-site, what space, equipment, machinery, production employees are needed? What suppliers are needed? Who are they? How will quality be assured? What is the anticipated production output? What established credit lines do you have? Possible Data Sources: local Chamber of Commerce; yellow pages; trade associations.
Service Operation – If a service is offered, describe it. Will the work be done by company personnel or subcontracted? Who are the subcontractor(s)? If on-site or in cyberspace, what employee qualifications, equipment, and technologies are needed? How will quality be assured? What performance levels are anticipated per employee? Possible Data Sources: local Chamber of Commerce; yellow pages; trade associations.
Marketing – How is the product or service priced? How will it be distributed? How will it be promoted? Will it be promoted by the venture or an outside agency? What agency? How have you determined what amount to set aside for marketing? How have you determined product or service forecasts? Possible Data Sources: on-line searches; Amazon; local outlets; trade journals; industry attorneys & accountants; salespeople.
How is the business structured? Who are the principals and the principal shareholders? What authority does each principal have in the venture? What are management’s qualifications? What is the job description for each position? What does the organizational chart look like? Possible Data Sources: on-line templates for job descriptions & organizational chart.
Risk Assessment – What weaknesses are inherent in this venture? What vulnerabilities face this type of venture? What impact will these have? What new technologies may affect this venture over the next 1 to 3 years? What contingency plans are in place? What level of liability insurance is required? What does it cost? Who is the carrier? Possible Data Sources: trade associations; trade journals; Service Corps of Retired Executives (SCORE); industry salespeople; customers; focus groups.
Financial Plan – What is the anticipated income? What are the cash flow projections? What is the anticipated budget over the next 3 years? What is the break even point? When is it anticipated to be met? What funding is needed and where will it come from? What funding is currently available? What collateral is available? What is the net worth of the principals, if applicable? Possible Data Sources: accountant; accounting software; Small Business Administration; Small Business Development Center; SCORE; banks; venture capitalists.
Appendix – Resumes of principals/management; letters of recommendation from current business associates/customers/suppliers; marketing research data; demographic data; leases or contracts in place or as promised; business licenses; price lists from suppliers; trade or industry articles or data; floor plans; information on subcontractors; liability insurance policies.Impress for Success – Now you have to admit, this is going to make an impressive package! Put it in a binder and you have built something to be proud of – the first of your many business accomplishments. Your potential investors will appreciate the depth of your analysis, but this tool will prove helpful in describing your venture to your employees, customers, and suppliers, as well. After you have been up and running for a few months, you will find that the planning that you have done will sensitize your inner “business compass” and allow you to flexibly adjust to contingencies. And that is indispensable!In SummaryPlanning out your business on paper first gives you long-term benefits with potential investors, employees, vendors, and suppliers. The business plan becomes your roadmap to success, with pertinent data that shapes the course of your business start-up and lets you adjust your journey as contingencies arise. Business planning templates are readily available and data sources abound at your fingertips. You will achieve a solid understanding of your business as you work through each section of your plan.IMPress Action Checklist:Below is a list of the steps that will help you put together your business plan. Check off each step as you complete it to keep track of your progress.Purchase business plan software or download a template
Read over the business plan sections to decide what data you have, what data you need
Gather data via the internet, phone interviews, print material
Fill in the plan’s sections
Write the Executive Summary
Print and Bind Your Plan
I have been involved in franchising dozens of businesses, at last count over 60. Some from concept and some where we converted an existing business to the franchised model and I am really happy to deal with either pathway with one really important proviso.The business owner must have a reasonable understanding on what it takes to run a business successfully – franchised or not.And unfortunately I have concluded this is easier said than done.Done well, franchising does help to structure a business so that it has the best chance of success because franchising helps to put some great business practices in place. Systems and money management being at the top of the list. But overall, I have found that in most businesses, there are some aspects about business success which need to be reviewed and without sound business experience, creating a franchise is not likely to succeed.Understanding how business works is especially important, because you, as franchisor, will often be training less business savvy-franchisees on successful business practice.The most useful way I have found to think about business success is to look at the stages of business growth because it is through this journey that many learn the value of different business skills needed as they grow.The 5 Stages of Business GrowthWay back in the early 1980’s, the concept that businesses grow through defined stages was first discussed in an article published in Forbes by Neil C. Churchill and Virginia L. Lewis. This work is still cited to explain the importance of basic business elements to success.Before I go into the 5 stages, there is one important point to make.Businesses do not necessarily need to go through each stage. It is possible to speed through stages into whichever is your goal. The way to do this is to understand what is required. This is how the likes of Richard Branson create new businesses everyday – Richard will have all his business ducks in a row before he starts. But even his businesses will need to go through some of these stages on the way to creating an empire.In a nutshell these are the stagesStage 1 – ExistenceThis is generally the start-up stage for any business. With no revenue, the focus of the business owner is obtaining customers and delivering the product or service. Inevitably, the owner is definitely working in the business, often alone filling every role. A major concern is having enough money to cover this start-up phase. The strategy here is simply to stay alive.Stage 2 – SurvivalBy now, the business has proven it is workable and can be profitable but it is still simple in structure. There may be a limited number of employees supervised by a sales manager or a general foreman but neither will make any major decisions independently. They carry out the rather well-defined orders of the owner.Systems development is still minimal. Formal planning is, at best, cash forecasting. The major goal is still survival, and the owner is still the business and working in the business. The main aim is to get a return on investment and making the business profitable.However if the business is to grow, it is important to begin to understand the need to systemise and understand how business operates.Some small businesses choose to stay here, hardly making a profit, others choose to move into the Success Stage.Stage 3 – SuccessAt this point, the company is stable and profitable and cash is not a problem. Most telling, basic financial, marketing, and production systems are in place to power effective delegation.Organizationally, the company has grown large enough, in many cases, to have functional managers to take over some duties previously performed by the owner and some planning through operational budgets support this delegation.There should also be some strategic planning in place and the owner and, to a lesser extent, the company’s managers, should be monitoring this in accordance with goals.While cash is plentiful, the main concern is to avoid a cash drain in prosperous periods to the detriment of the company’s ability to withstand the inevitable rough times.Some choose to stay in this phase while others choose to move into a phase of growth.Stage 4 – Rapid GrowthIf the decision is made to grow beyond the Success Stage, then key problems will be how to achieve growth and how to finance it. Growth will return to a phase where cash management becomes critical.Churchill and Lewis report they found the keys to success here are having a sound understanding of delegation and how to manage risk in cash flow.As staff numbers grow, systems need to become more refined to ensure delegation is efficient and both operational and strategic planning are crucial to make sure everyone is on the same page.At this stage, the owner no longer works in the business but does have a strong presence over the way it is run and over things such as stock control.Churchill and Lewis state:’This is a pivotal period in a company’s life. If the owner rises to the challenges of a growing company, both financially and managerially, it can become a big business. If not, it can usually be sold-at a profit-provided the owner recognizes his or her limitations soon enough’Stage 5 – MaturityThe company has now arrived. It has the advantages of size, financial resources, and managerial talent. If it can preserve its entrepreneurial spirit, it will be a formidable force in the market.If not, it may enter a sixth stage of sorts: ossification and death.Franchises often do it betterYes, even in the 1980’s when the Churchill and Lewis first published their article, it was acknowledged that franchised businesses moved through the stages to Success and Rapid Growth better than those not franchised.Why?Because franchises often have the following advantages:First of all, they have, in most cases, a franchisor who really understands, through experience, the essentials of business, making sure clear structures are in place from the beginning to move through Existence and Survival fast.At the very least they will have:
A marketing plan developed from extensive research
Promotion and other start-up support such as brand identification
Sophisticated information and control systems so the whole franchise can be monitored
Operating procedures that are standardized and very well developed so delegation is consistent and efficient
I would add that, if the franchisor has really done the homework, there will also be:
Strong leadership for the group and an understanding of managing teams of equal partners
Good strategic and operational planning which has input from all franchise partners
And a very clear understanding of money management in the franchise group, making sure that all levels of the franchise can be profitable
I have to say, not many business I see have all these business aspects in place when they start to think about franchising. And the franchise process will help to put some in place. Things such as systems will be built and it will be essential to have a sound understanding of money management as the franchise structure is developed. If you are still working in the business though, putting in 60 or 80 hours a week, I think you will find the extra work and emotional energy to do the conversion can be more than a little overwhelming.The Pillars for Successful Business GrowthSo what’s the answer?It’s really quite simple…In discussing the five stages of business growth, Lewis and Churchill identified some skills needed and show that these skills are what are built up through the business growth process.
Delegation, leadership and people management which results in leveraging you out of the day to day of the business
Strategic and operational planning
In my mind, today, there is at least one other skill to be added.
Marketing and your brand
The thing is, I know very few of us, if any, have the individual skill to deal with every business ability to a satisfactory level, so creating a team is an essential component as soon as it is possible. The key is to understand each area and to know who to put into your team to move you and your business forward.So here is some detail.Marketing and Your BrandHaving a good understanding of your target market, what is wanted of you and what your brand should look and feel like is essential from the earliest days of business.If you do not understand how important this is, you need to think about getting help from the beginning.Fundamental today is knowing that people respond to the power of Why. If you do not know of Simon Sinek’s amazing Ted Talk on this then visit Start With Why and listen to what he has to say.Once your brand is sorted, you need to think about how to get your message out into the very different market place of today. Central to this is your internet presence. Businesses without will generally not have the ability to grow beyond their local area if they even manage to reach that level.The foundation of marketing today is the ability to communicate to your people in today’s vernacular and the bitter truth is that’s the killer for 80% of businesses.Money Availability and Its ManagementManaging business through the various growth stages from inception to maturity needs a good understanding of money. How to manage cash flow, what level of risk is good (some is inevitable), expense management and the need to spend to get growth.The other requirement is the need for capital to fund different growth stages. Existence, Survival and Rapid Growth all need capital in one form or another and not having the cash can seriously hinder the process.SystemsSystems are the foundation of a growing business. In the early stages, not so much but moving beyond Survival requires the ability to delegate for which systems are essential.systems, no growth. It’ as simple as that!Delegation and LeadershipDelegation needs more than just good systems. The biggest problem faced by many entrepreneurs is letting go. Ego and thinking no one can do it as well as you is a trap.In today’s business environment, delegation needs to be done in accordance with the three Laws of Type I management – motivating people through their own intrinsic wish to do their best.Outlined by Daniel Pink in his book Drive: The Surprising Truth About What Motivates Us, Pink looks at how the best organisations motivate today in a way that gives their people the drive to take the organisation far.First is Autonomy. Select people who love the job they will be responsible for and then give them the autonomy or ability to do it their way with as few essential boundaries as are necessary.Second is Mastery. Select people with an open mind, who do not see their abilities as finite but rather know they will grow with practice and pain and who love a challenge. Put them into a job where they will always be looking to do things better but not one which will overwhelm. They will then go into the flow and give back to the organisation many fold.Third is Purpose. Human beings seek purpose, a cause greater and more enduring than themselves. Simon Sinek and his ‘Start With Why’ YouTube video will help to see this point.If you can combine profit maximisation with purpose maximisation then this will take you far. As Simon Sinek shows, think of Apple as an example.And finally, remember, leadership requires humility. Yes you need the vision. But the ability to give clear directions at the appropriate level, listen to your troupes, change direction when needed, and really understand what team work is all about is key.Again, Simon Sinek puts it so well in his latest book ‘Leaders Eat Last’. Simon’s central tenet comes from the US Marines where leaders always stand at the back of the line when it comes time to be fed. If there is no food left, it is their bad luck and that is when they rely on their troupes to provide from their share. Would your troupes willingly feed you?Strategic And Operational Planning and Keeping an Eye on Those All-Important KPI’sFinally, this is your job. Especially as the business becomes more sophisticated and grows larger.Making sure you have an eye on the strategic direction of the business and know where it is going. Every leader has a clear picture of this and can give this picture to the team.In ConclusionYes, at the beginning every business owner is in the business doing every task. But as you grow remember, the more you can put in systems and delegate and have some sort of business direction in place, the faster you will achieve the goals you are looking for.Goals are great. Planning how those goals are going to be achieved is better. Keeping an eye on how the organisation is travelling against those goals is best.The more successful your existing business or even a past business, the more likely you have what it takes to create a successful franchise group.Plan and check out how you are travelling with your team regularly.