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?
Thursday, January 22. 2009
For those believing that you will get ahead through the sole use of our pleasant technological advancements of today, I’ve only got two words for you, “Get Real!” Technology is the single-most hazardous substance available in your young entrepreneur toolkit: technology bites hard and draws blood; approach with extreme caution.
To understand this concept fully, examine our rapidly advancing technological breakthroughs for exactly what they really are:
- People Replacers
- Money Grabbers
- Time Wasters
Before jumping to the promoted conclusion that technology will please all people by saving money and time, consider the fact that our largest age-class of consumers are soon to be senior citizens; people who expect and demand human contact within business dealings.
It is impossible to tell a senior aged person to change their expectations to suit you, this is disrespectful, and they will simply take their money (that you want) to a user-friendlier person. As our dominate society member’s age, issues and resources will realign to benefit the largest number of people… people who hate your automated phone systems.
While I understand that some young entrepreneur endeavors do not plan to market in the age-class of consumers that holds the most people and money, business is still all about money. With simple technologies, an office can function for years at “x” dollars while profits are pocketed. New technology requires constant upgrades, each more expensive than the last, putting a young entrepreneur further and further away from profits.
Another concern seen in keeping up with the rapidly changing new technologies is that somebody is constantly taking time away from their business duties for computer training and skills-upkeep classes… or, they are forced to hire an expensive professional to run the programs that are devoted to saving money and time. After the hours and money spent on keeping up with constant new technologies to run a business, who has time to go make any money?
And, this is how technology can kill your business. Young entrepreneurs often forget to view the total picture before running happily off to hop onto that media promoted merry-go-round of newer = better. If newer is always going to equal better, there is never an end to the cash and time outlay necessary to keep up with that lifestyle.
As Aldous Huxley once said, “Technological progress has merely provided us with more efficient means for going backwards.” To move forward in your business people must understand technology for what it is and stay away from the pitfalls that are associated with using it. Newer technology will never beat using your brains and some good ol’ fashioned hard work.
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.
Tuesday, August 26. 2008
I've seen it a million times, and at least several hundred thousand times in my own little projects or ventures. I often find that the hardest part about doing something big is taking the first step. I look back at all of the sizeable things that I've accomplished and realize that when I took the first step in doing them, I didn't even know I was taking a step! This blog took almost no time to set up, and as of this moment I've been working on it for about an hour. It doesn't yet seem like I have much time or energy put into it, but what I do know is that I am taking the first step right this moment - the First Post! I can't say with certainty exactly what this blog will contain, because I am the type of person that lives each moment not for the failures or successes, but for the experiences. I can say with certainty, though, that I will try and whip up a little something here and there about the things that I have learned and am learning - about how an entrepreneur can be better tomorrow than he is today.
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