Wednesday, January 28. 2009
Another one straight out of the Harvard Business Review, this time from well before I was born! The authors of this article assert that there are five stages of growth in a business, and that they are non-linear in nature. Not all companies will go through all stages, and the stages don't progress in the same order for every company. Here they are: - Existence - getting customers, meeting their needs. These two things mean that a company exists.
- Survival - Switching focus from existence to the relationship between revenues and expenses. Here is where you worry not only about whether you can make money or not, but whether you make more than you spend!
- Success - This isn't the end of the road, by any means. By the time you're here, you've created a viable business that brings in sufficient profit. You have two things that you can do:
- Use the success of the company to finance the owner's lifestyle/other activities, or
- Use the success of the company to finance further growth.
- Take-off - After making the decision for more growth, your primary concerns are managing the growth and financing the growth.
- Resource Maturity - The authors say that this is the point at which you have "arrived" in your business. Less than one percent make it here, but that is by choice for most. Here, you must take hold of the business after its high growth stage, and implement systems to help control the company.
The authors were kind enough to point out eight "key management factors," half company-specific and half owner-specific. They are as follows: - Company Specific
- Financial Resources (cash and borrowing power)
- Personnel Resources (how many people, how awesome are they, what level are they)
- Systems Resources (Business Process Automation, planning/control systems, info systems)
- Business Resources (customer relations, manufacturing/distribution processes, reputation, etc)
- Owner Specific
- Owner's personal goals and business goals
- Owner's operation abilities
- Owner's managerial abilities, and willingness to delegate
- Owner's strategic abilities
The interesting thing about these "key factors" is that they are ALL important, but that in each stage some are more important than others. According to the authors, here is what you should focus on in each stage: - Existence
- Business resources - what little you do have needs to be quality.
- Owner's operation abilities - your ability to do what the business does.
- Cash - For without it, nothing survives.
- Matching personal and business goals - if your business goals and your personal goals are dissonant, get out now.
- Survival - at this stage, doing what your business does, and keeping an eye on revenue & expenses is your focus.
- Owner's operation abilities
- Cash
- Success - There are two sub-stages here, disengagement and growth.
- Disengagement
- A little less on your ability to do, but that's still the #1 focus.
- Of the eight factors, all are rising in importance but cash, ability to do, and business resources.
- Growth
- Matching business and personal goals. This is a risky and stressful time, make sure you really want it!
- Operational abilities
- All of the rest are important here, but not the PRIMARY focus.
- Take-Off - It's ALL important in this stage, but here's the order of focus according to the authors.
- Cash - if you can't finance growth, you'll fold
- Strategic planning - You must have the road map to get there.
- Systems and controls - Since you can't do everything personally in a high growth stage, you must have systems in place to bring you the results you're looking for.
- Business/Personal goals
- People - Do you have the right kind of people, in the right positions? How's your culture here?
- Delegation - if you can't delegate, you carry the weight of the world on your shoulders. Your people are there for you, to do what you tell them to. Give them things to do, and let them!
- Your ability to do - Since you're delegating and focusing on growth (strategery), you shouldn't be in the day-to-day of doing what your business does. It's less important, but since you're a teacher in this stage (delegate!), it's still important.
- Business resources - these are becoming increasingly a natural byproduct of business operations. Manage your relationships, but don't give it all your attention.
- Resource Maturity - in this stage, the systems are in place. Most things are important, but managed - not a CRUCIAL focus. The only crucial focus is:
- Strategic planning. Many companies forget that the market moves with or without the company, you might as well move with it.
The points that I think every young entrepreneur should remember are: - Every business goes through these stages differently. Some stages may even be skipped or not touched.
- Use this as a guide to what you should be thinking about in the future. If you're in the Survival mode now, but you intend on getting into the Growth stage, make sure you account for the crucial factors of the growth stage.
- When considering advice from other business people, consider how their businesses evolved. The evolution of Wal-Mart was not the same as the evolution of Facebook, so Sam Walton's and Mark Zuckerberg's advice about the same business issue may vary quite a bit.
I'm interested in hearing comments about this article. For those of you who have a business, how did your company go through these stages? Did you notice that you were in one stage with respect to one part of the business, while in a completely different stage in another regard?
Monday, January 26. 2009
Developing a business brochure is a great idea for the young entrepreneur. The content of the brochure answers a lot more questions about your business than the typical business card. Sometimes it’s hard to get a face to face meeting set up with a potential client and a brochure filled with information about your business can be a great door opener. A brochure is even better than a phone call because time is so valuable these days. The content of your brochure can answer questions and even generate new ones, which leads to sales. The brochure actually can be the catalyst for setting up an initial meeting. The phone call and email communication are just tools to reinforce what the brochure has expressed.
Now that you have done some initial leg work such as collecting different brochures, identifying your target customer and doing some market research and evaluating your business from the inside out it’s time to write the content for the brochure.
The words you used for the content are tools to sell the idea. It’s sort of like selling the sizzle and then selling the steak later. Choose words that are descriptive and imaginative, so the reader can get a mental picture in his mind. Most of us form ideas and beliefs around the words we read, so pick words that send a positive message about you, your business and exactly what you want him to do.
So when choosing words remember to:
Use words that create a positive mental picture for the reader.
Be descriptive about you, your business and product, but don’t be confusing by using long sentences or big words.
Be positive in the way you format the words. Tell the reader what you want him to do or what he should do after reading the brochure. Everybody needs direction and a purpose in order to act or react.
As you write the words form a mental picture and tell that story in the brochure with visual content you use. The brochure must make sense to you, before anyone else can form an association with it. Use simple photos that develop a story that reinforces the word content of the brochure. Some people won’t read the words; they will just look at the photos or sketches and draw an opinion about you, your company and product. As the old saying goes; a picture is worth a thousand words, and as far as brochure content is concerned that's a reality.
The next step or it may even be the first step depending on how your mind works, is to develop a color story. What color print will you use? What color are the pages? Do you format one page of print and one page of words, or do you put the print under the words? Others brochures can give you an idea of what each format looks like and then you can decide what works for you.
First impressions are lasting impressions, so the front cover, as well as the back cover, is a key factor on whether the reader ever opens the brochure in the first place. The print size, its color, the visual development of the front and back must say: read more, open me. Everyone is motivated by different factors but the content of the cover and back cover set the mood for the reader. The reader will form an idea about what’s inside based on what he see outside. Your job is to convince him that the content of the brochure is worth the time he spends with it. That can be done in many different ways, but the most effective way is to believe in what you are doing and then get some impressions from people who will give you honest feedback. The feedback does not necessarily mean that their approach is better, but it gives you the option to combine approaches or look at an aspect of the development that you missed. Feedback helps you do a more focused job.
Creating and developing effective brochure content pays off in many ways. It has no expiration date and your business will grow in many different directions because of the brochure. It’s your expression and your creativity so enjoy the experience, because once you have created one, another one is just a thought away.
Wednesday, September 24. 2008
I have an acquaintance with an excellent business idea, enough funding to be getting on with, and excited companies ready to buy his product, and yet is making $0 in sales. I have another acquaintance who hesitated submitting numbers that had too much speculation involved in them. Yet one more person I know doesn't like getting involved with anything until he knows everything about it. What do these three people have in common? I think the answer is that they are waiting for an event that can never happen. Many young entrepreneurs get pretty wrapped up in their product or service. They insist that it must be just right before it is capable of making money. The truth is that it's better to have a mediocre something making a difference in people's lives than it is to have an excellent something making a difference in nobody's. For instance, I've developed a piece of software for websites that makes keeping your website up to date as easy as sending an email. I made it just for myself, and had no intention of selling it. I had a few people that found the same problems with their websites as I had with mine - they were time consuming to update. Having this program that I made, I was able to help them along with their sites. The software is nothing spectacular, it simply gets the job done. If I didn't release the software because I wanted it to be perfect, I don't think I would have ever completed it. It is more valuable being available to people in its simple form than it is not being available at all because it's not yet perfect. If I can impress upon you any single piece of advice for your company or idea, it's this: DO IT. Don't wait for some idea of perfection. Make it good enough to have value, and get it out there. If you're capable of making it fantastic in the same time period, then do that too. Then, let your customers tell you what there is to improve, and improve!
Friday, September 5. 2008
It is well past the point that companies get to decide on whether they will get a website or not. If you are thinking about starting a business, make sure to include the website in your planning process. If you have already started a business, your website should either be in development, or already be done. Not having a website can severely impact your ability to reach customers. Google's VP for Online Sales and Operations says that "Small businesses are increasingly going online to better connect with both existing and prospective customers," and that "over 92 percent of adults regularly or occasionally research products online before buying them in a store." Having a website will not by itself guarantee customers, but not having one will mean that 92% of people will find several of your website-owning competitors before finding you offline (if they ever find you). Since you know how important having a website is for a young entrepreneur's business, now it's time to think about which kind of website will you need. Will yours be informational, entertaining, or an online store? A hybrid, maybe? There are several types of websites, and each one is useful for different things. Determine what works best for your company at its current stage. At the minimum, have an informational site where future partners and investors can get to know about your business! Buying a domain name and putting up a "This site under construction." page with your logo on it is not enough. That's simply a more expensive way of not having a website. Take the initiative to get your business on the Internet as soon as possible, and reap the benefits of being seen by those 92% - not to mention potential investors and partners.
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