Starting a simple small business is very much like a roller-coaster ride. It has many ups and downs, twists and turns and sometimes heart pounding excitement. It is definitely thrilling and scary at the same time. In the midst of hundreds of things to do for a new start-up, one can get lost in unnecessary tasks or even lose track of the important things. In order for start-up founders not to lose their sight on important things, it is imperative to have a business plan. Even if that business plan is on a napkin or a single sheet of paper.
Business plans are like roadmaps or blueprints. They provide start-up founders with a direction, and necessary information to form correct action plans to use at different stages of the business.
Many business books and business scholars talk about why you need a business plan and how to go about creating one. The rule of thumb seems to be to ask the creator to predict the future and to create a five-year plan describing everything that will happen in detail. However, a lot of successful start-up founders today will disagree with this approach. Simply because five years is too long to create a definite and certain plan (see “How To Create a One Page Business Plan“). This approach just doesn’t take ‘uncertainty’ into consideration.
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Many people have a problem with accountants’ jargon and often get confused between the terms “profit margin” and “markup” which are often bandied about freely or used interchangeably. Although these two terms are used to express different things, they are also, in fact, two different ways of analyzing the cost and profit of a product or service in your small business .
Let’s explain in simple terms.
Say you bought an item for $50 and could sell it for $100, doubling your money.
In this case your markup would be (the difference between selling price and cost price) divided by the cost of the item and multiplied by 100 to bring it to a percentage.
ie ($100 – $50) = $50(difference). $50(difference) / $50(cost) = 1 x 100 = 100% (here “/” stands for divide)
Your markup was then 100%.
When you look at the profit margin on that sale, that would be (difference between selling price and cost price) divided by the selling price and multiplied by 100 to bring it to a percentage.
ie ($100 – $50) = $50(difference). $50(difference) / $100(selling price) = .5 x 100 = 50%
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Starting a small business can be one of the most rewarding and fulfilling things that you ever do, or it can turn into a huge nightmare if you let it. You greatly increase your chances of success by having a simple one page business plan created as your starting point.
There is an old saying that has proven itself over and over again and it is especially true in the business world. The saying goes like this “If you fail to plan, you plan to fail”. Having a simple business plan is like having a road-map, guide or cheat sheet to help you get from where you are today to where you want to be some time in the future.
If you are planning on starting a multi-national major corporation, then you will benefit from having a full-blown 20 page business plan that outlines your companies strengths, weaknesses, market opportunities, marketing strategy, mission statement, competitor’s strengths and weaknesses, etc…
However, if it’s just you or just a couple of people working together, then a one page business plan is really all you need to get you started.
This one little step can mean the difference between starting a business that never actually achieves any real level of success or starting a business that eventually becomes hugely successful.
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I have been told that I am an overly sensitive and emotional person. This is a trait in which I fully believe I inherited from my grandmother. In some cases it has been a hindrance, especially when it comes to running a simple small business. I am a people-pleaser and my feelings can be hurt very easily. However, in most cases it is that exact characteristic that helps me to genuinely care for others and have a deep desire to assist in their well-being. This has also been a key factor in the success of all of my businesses.
You are probably asking yourself right about now, “Okay, what does this have to do with running my simple small business and customer relations?” It has so much to do with what I think is the single most important thing in customer relations. Empathy. Unless you have empathy for your clients and customers, how can you even begin to offer them a product or service that meets their needs? You have to be able to put yourself in their place and connect with them emotionally to fully understand what is driving them to even consider purchasing a product or service from you.
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I own and have owned many businesses in my life. Some were failures, but many were successes. After thirty years of diligently practicing this game we call business, patterns begin to emerge. When looking back, it is easy to see what I did right and what things I did that were downright stupid. I can state without any hesitation that every successful business I wound up with were successful because eventually systems were created and implemented. Based on that, I would argue until the sun goes down that if you want your small business to really be successful you need to start creating, documenting and implementing systems.
Keep in mind I always distinguish between being self-employed and being a small business owner. Neither one is necessarily better than the other. If your desire is to keep everything simple, never hire more than one or two people and to always be the main producer or service man, then being self-employed is a much less stressful way to go. But as a small business owner, the business will take on a life of its own. Like a child it needs rules to regulate how it acts or before you know it, the spoiled child will take you down, hard! Systems are the rules for your child.
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Running to catch up, but never quite getting there.
As small business owners, we all know what it is like to lie in bed at night or get up early in the morning to add to our list of all the projects that we want or feel we need to accomplish that day. If you are an optimist you will often think, “Today is the day I get a lot of things done on my list, then I can take a day to relax”. But by the end of the day, you feel like you are further behind then when you started.
It is a common issue with small businesses owners and even CEOs of large corporations. The sad fact is, if you are running a business there will always be more than enough to do. There really is only one way to get a handle on this problem that can lead to burn out and even depression. Learn to decide every day what the one thing is you want to accomplish before the day is over. What is the one thing that will move your business just a little closer to your goal? It is a mental game that you must learn to play by yourself every morning and ask yourself the following question. “If I could only accomplish one thing today, what would it be?” (read more about focus)
Yes, it is important to keep that priority list and naturally you will continue to add to that list. But, if you only have one thing to complete, anything else that gets done is simply icing on the cake.
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For a Clue as to How to Weather the Storm, Look at Those Who Have
Almost every business feels it when the economy takes a down turn and we all hear the little voice that says, “what if ?” But taking a cue from those companies that have sailed through the Tsunamis, not just once but many times, just may hold the key to your survival.
Kimberly-Clark, Philip Morris, Walgreen’s, Kroger, Gillette, Abbot Laboratories, Wells Fargo, Pitney Bowes, Wal-Mart and Walt Disney are only a few companies that have sustained growth through good times and bad over the last fifty to more than 100 years.
- They all became and were known as the best at something.
- They all focused on hiring good people and then not micro-managing these people.
- They all had very specific goals for the company and everyone knew those goals by heart.
- They all had core values that went beyond just making money.
- Every decision that these companies made were determined by their goals and their core values.
When times get tough, it may be more important than ever to find something in which your business can become known as the best.
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