Small Business Development Center
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Category Archives: Small Biz Management

Now is a Good Time to Look for Operational Changes

By Chemeketa SBDC

Even though we’re on the other side of the recession there are questions about the future direction(s) business will go. But the nature of business owners is to “do something”. So — rather than waiting and watching, now is a good time to look at opportunities for change. Regardless of what is happening around you – it is always a good idea to be examining and adjusting your operational strategies to remain current and profitable.

If you have a sense that your company has had inconsistent results from your product lines or types of service, then you may want to consider working out a plan to correct and strengthen your company’s position. The most effective strategy would include:

1. Conduct an operational analysis by type of product/service or type of customer and determine where profits or losses are derived. Don’t be surprised if you isolate an area that is totally draining your cash reserves. Be careful here; consider all the implication of actions to correct the problem. Is the service or product actually a draw to customers and once they are in your shop, they purchase goods from you that carry a healthy profit? If this is the case then your loss may be, in reality, an advertising cost rather than a loss. Analyze.

2. Spend your time, money and energy on those areas of your business that bring in the best return. Advertise and sell the products that make the profits you need. You do not need to “slash prices”. You must learn to go after your best customer, not just anyone who may happen by. Identify and sell to the customers that are truly the key to the future of your company.

3. Consider contracting out the business that shows borderline or no profits. A business that specializes in your unprofitable product or services may be happy to act as your subcontractor and you may both be able to see profits from the venture. You can increase cash flow simply by selling out inventory and equipment of an unprofitable line in order to concentrate on what you do well.

4. If you must terminate a phase of your business, do it over time and help your customers find alternative vendors. Good customer service requires advance notice. Don’t just take action abruptly. You may very well undermine your customer’s faith in the ability of your company to provide support for those lines you do keep.

5. Promote what your business does well. Your company has a story to tell. It includes who you are, how you came to be where you are now (a strong, profitable company) and what you do well. Consider your business story and make sure that your public image is consistent with these facts. Accentuate the positive. Tell your story in words and actions. Brand yourself.

 


Five things to do when money is flowing out the door

By Chemeketa SBDC

If you’re a business owner and your books are full of red ink and your bank account is bone dry, here are some issues to consider going forward.

Take a hard look at your resources. Is it really true that you have no money, or is it true that you just aren’t willing to rob Peter to pay Paul? Does it mean that you’re not going to hit revenue targets, or that you don’t anticipate having cash on a certain date? If you can honestly and accurately describe your situation using numbers (without drama) it won’t solve your circumstances, but it will give you a true picture of where you truly are so you can start working toward solutions.

Do a thorough assessment of your internal capacity. Running a business is a serious matter, and it can leave a business owner feeling burned out and exhausted. You may feel like you have nothing left to give, but do you perhaps have almost nothing (meaning there’s a little bit left)? There is a difference between truly being at the end, and almost being there. If there’s something left, then keep going. If not, make peace with it and move on to your next opportunity.

Look at your worst-case fallback plans and consider doing them. These are the ones you might have thought about in the early days when you were getting your business started. They include things like getting a job in order to sustain your business, taking out a second mortgage, selling your home and living with relatives. These are drastic measures, but is it time to think about implementing one of them? If you haven’t engaged one of them, then ask yourself why not. Either times aren’t desperate enough, or your heart’s just not in it. Ask yourself the tough questions.

Consider what you would do in a difficult life situation where money was flowing out the door. Take your passion for your business dream out of the equation and look at the situation from the standpoint of its being a medical emergency or a job loss. What would your options be? How crazy would you be in trying to solve things?

Put your last efforts into a killer marketing campaign. You need customers and cash flow, so right now is likely the time to double down on marketing. If your business needs to be pulled out of the fire, then throw caution to the wind and go for it.


Five character traits that define an innovative business owner

By Chemeketa SBDC

We all have heard of wonderfully innovative business owners, and I’ve always been curious about what they seem to have that the average person doesn’t have. What do they know that the rest of us don’t know? How do they achieve a mindset that turns towards innovation?

People with an innovator’s mindset seem to have a string of successes to look back on. They have a belief in their own abilities to work through problems and come up with clever solutions. They manage to create luck by noticing opportunities, they expect good things to happen to them, and they resist negative thinking.

So how do they do it? Here are five characteristics of such people. The good news is that you too can develop this mindset, and your business will thank you!

• Innovators are curious. They focus on questions, and enjoy wandering through mazes of what-ifs. They challenge the “way we’ve always done it” at every turn because that’s a dead end (and they don’t like ends, they like beginnings). They are always using the words “what if”?

• Innovators are willing to take chances. They don’t mind being wrong (which they often are because they take risks). They are willing to dive in and get their hands dirty. They are willing to look foolish, to act without ego, to make mistakes. They know that trial and error is the ways things get done.

• Innovators are wide awake. They notice what’s around them, they observe changes and trends. They take note of how things interact. And then their brains go to work on all that information.

• Innovators take pleasure in trying new things. They enjoy playing, testing, learning, and seeing something new in ordinary things. They relish being surprised by discoveries.

• Innovators have the drive to face challenges. To solve puzzles and problems. They desire to change things, to create value by creating something new. They are driven to make a difference.


A road map to creating the all-important business plan

By Chemeketa SBDC

The most frequent questions we get at the Small Business Development Center are, “What is a business plan?” and “Do I need a business plan?”

The business plan can be used in many ways over the life of your business. It can provide you with the information you need to make critical decisions such as a “go” or “no-go” decision. It can function as a management tool to describe the way you intend to commit your resources and measure the success of your business. It can be the “selling tool” you use to convince your banker or investors of the worthiness of your ideas and of your business.

The business plan is the “road map” you’ve designed to make informed, strategic choices throughout the life of your business. It also should allow you to be flexible and respond to the changing needs of your market.

Developing a business plan is an intensive process and requires dedication, research and a commitment of time from you. So, let us look at a way to “begin the business plan.” For purposes of clarity and simplicity, concentrate on the following four major areas and the five questions assigned to each area:

I. The Business

• What specific product/service will I offer?

• What experience do I have in this field?

• What skills will I need that I do not have? Where/how will I get these skills?

• Specifically, who will perform what duties?

• Where will I locate my business? Why?

II. The Customers

• Who is my customer? (age, gender, income, occupation, location, etc.)

• Why will my customer buy my product/service?

• How often and in what quantity will my customer buy my product/service?

• How many potential customers are in my market area?

• How far is my customer willing to travel?

III. The Competition

• Who are my major competitors?

• What are their strengths? Weaknesses?

• Are the numbers of competitors growing?

• Have any gone out of business in the past two years? Why?

• Is demand expanding/shrinking? Why?

IV. The Financial Plan

• How will I fund my business? (Personal, loan, other.)

• What are my start up expenses?

• What are my projected sales for the first twelve months?

• What are my projected expenses for the first twelve months?

• What is my projected monthly profit?

 


Pick your outside management team wisely

By Chemeketa SBDC

Studies show that 3 out of 5 small businesses fail within the first year. Causes vary, but the primary reasons can usually be traced to insufficient management skills and poor planning. Paying attention to choosing the best advisors can significantly increase the odds of success. You will have at least four important “partners” — an attorney, an accountant, a banker and an insurance agent. These “partners” are your outside management team.

Step One: Make A List

Generate a list of potential partners in each of the four areas. Look for leads online, get personal referrals, get other business owner referrals, check with the local, state or national associations, check with suppliers, or vendors for your industry.

Step Two: Research

Establish reputability. Check with the state commission and/or regulatory board of the profession and find out if they have a referral and/or an ethics board. A person who does not follow the rules of his/her own profession may not handle your business properly either. The team member does not have to exclusively specialize in your exact business, but should have knowledge of your industry and special challenges facing small businesses.

Step Three: Interview

Once you have narrowed down the list, arrange for a personal consultation with each. (It is wise to ask whether they charge for the initial consultation – many do not.). Before the meeting, write down a clear statement of what you expect the person to do for your business. Be open and honest. State that you are in business (or starting a business) and are looking for an attorney (accountant, banker, insurance agent) to work with you over the life of your business. Some specifics to cover at a first interview:

• Accessibility – How quickly can they respond to your needs? Will it be two to three weeks before you can get an appointment? Is this acceptable to you?

• Costs – You won’t get exact costs but you should get a range of fees for the types of service/products you need.

• Experience – What percentage of clients in your industry does this specialist serve? If they have none, you probably don’t want to be at the beginning of the learning curve.

• Personal chemistry – Does this person listen to you? Does he/she present a variety of options and explain them to you? Are you comfortable working with him/her?

Look for people who have experience in small business. Look for partners who are willing to help you learn how to do much of the “up-front” work. Look for professionals who are willing to discuss costs associated with services. And finally, look for individuals who are willing to do an annual evaluation of the services you use/need.

This outside management team can make a big difference in your ability to minimize the risk and maximize the opportunities for your business success.


Keep motivation for your business growing

By Chemeketa SBDC

Small business owners are required to wear many hats, often at the same time. It is not uncommon for the business to drain you of energy and motivation, regardless of how much you enjoy it. When that happens, remember these tips to help you remain motivated in your work and living.

Find your passion. As you reflect ask yourself, “Why did I start my business in the first place?” When you tap into the real motivation that’s driving you, you’ll become more eager to take action. Staying focused on this purpose will feed your imagination, and drive and enthusiasm.

Appreciate your customers. Customers are the reason you have a business. If you empathize with them, understand why they seek out your products and services, your customers will notice, patronize you, and bring you more customers.

Set honest goals. A critical step to remaining motivated setting reasonable and achievable goals for yourself and your business. Create a list of goals that are both longer and short term. Then prominently display your short term list, along with an inspirational quote, in a place you can see them, so that you are reminded to strive for them daily.

Schedule your days logically. There are certain times of the day that you are going to always be more productive than other times. Get to know your most successful work schedule and then plan your days carefully to make the best use of that time. Once you establish a daily rhythm, you will stay happily motivated by your work.

Limit distractions. Distractions are one of the most problematic things when it comes to staying motivated. Keep your work area clean and organized, check your email, Facebook and other distracting sites on a specific schedule, with designated times to keep these manageable.

Treat your team with respect. No business grows without a team and the business owner is the team leader. At its simplest, a wise truism emphasizes that if you keep doing what you’ve always done, then you will keep getting what you’ve always gotten. If you want your business to grow, then you need to motivate it.


Lead Generation Strategies

By Chemeketa SBDC

If you’re a small business owner, you know that generating new customer leads is a continual process. You always need new potential customers coming into your pipeline. So how do you find these folks? Here are five strategies to consider.

  • Focus and prioritize lead capture. This may sound obvious, but if you don’t have a system for doing this (and if you’re not working the system you might have), then it won’t happen. You need a standard process to capture lead information during any interaction that you or your staff have with any potential customer. If you’re interested in direct responses then use coupons or other discounts that bring a customer to you. You can capture customer information on your website with forms (which a customer would fill out in order to get something of benefit from you). However you do it, get that information so you can communicate regularly from then on.
  • Amp up your online presence. Review your SEO (search engine optimization) practices. Use tools like Google Places. Pay attention to Google key word protocols. Engage with influential (preferably local) bloggers who have the ears of your potential customers and offer to write a guest blog post on those sites. Make it easier and faster for leads to come across you online.
  • Divide your contact database into segments and tailor your marketing messages. A well-aimed message will get forwarded and passed along (because the folks you target associate with people similar to themselves). This is a way to have your current customers become a referral source for you.
  • Create alliances and partnerships. What businesses around you offer complementary products and services? How can you collaborate with them in a way that benefits both partners, and gives access to the other one’s customer base? The key here is creating added value for both of your customers.
  • Develop and implement a referral strategy. Besides complementary businesses, who else in your sphere of influence could benefit their customers and clients by referring them to you? Reach out to those people, make an intentional effort to know them and have them know you. Be willing to refer your customers to them as warranted (remember, you are providing a solution for your customer when you do this, and that’s good for everyone involved).

Remember that these strategies are not one-time solutions. Marketing is a continual process of doing the same things repeatedly (sorry!) and there are no easy fixes. You may not see much progress at first, but stick with it and the results will start coming in.

 


Business Reinvention

By Chemeketa SBDC

It’s January again, and time to take stock and make plans. How’s your business doing as we head into the new year? Has the economy turned your business model upside down? Does something need to change or you’ll go out of business? Are you restless and know you want something else?  Something more, something less? If something isn’t quite right, it’s probably time to reinvent.

But what does reinvention mean? The good news is that it doesn’t mean you have to throw the whole thing out and start over from scratch. Reinvention needs to be big enough that it’s transformational, not just a small series of tweaks here and there. Yes, you will be making major changes, and no, you don’t have to do them all at once. If you know your current business practices aren’t working, or you feel lackluster even if they are, trust your instincts and investigate that.

The first step in the process is to look at every aspect of your business and ask what needs a makeover. What is it that you really want? What parts of your business are not leading you in that direction? This could be your marketing, your products or services, your employment structure or employees, your size, or anything else that is getting in the way. Where are your biggest headaches coming from? What will give you the results you are looking for? Do some brainstorming and list every idea that might help. Get out of your comfort zone, consider all possibilities no matter how farfetched they may seem. Think big.

Then prioritize these areas in terms of what will give you the greatest return for your investment—your time and money. Ask for help from other business owners, your employees, a business coach, or anyone who you think will add value to your conversations and your processes.

Next, create a master plan for how and when the changes will happen. Decide what you will start with and when you will move on to the next item on the list. Make sure to include who will be doing what, how much things will cost, and the results you expect when you make the changes. A realistic timeline is important; a rollout that is too fast will shock the system and may backfire.

Then garner support from family and business associates for the new plan. Major changes can get derailed if you don’t have enough energy behind them, so build a supportive team. Change, even desired change, can be uncomfortable, so go easy on yourself and the others involved.

It is important to chart your progress as you move forward, so create a series of metrics to do this. Focus on the benefits of the new arrangement (you’ll need to continually focus on this to stay on task). And celebrate milestones when you achieve them.

And, if in your investigation you discover that reinvention for you means selling the business, going out of business, or some other track that steers you away from being a business owner, listen to that as well and devise a similar plan for recreating your life.

 


Maximizing Contact with Customers After a Sale

By Chemeketa SBDC

Right after your customer buys something from you is the perfect time to give them love and attention. Don’t let them fade away. Be sure to remind them how great it was to buy from you (and not from someone else) and how pleased you were to have them as a customer. Here are five ways to do that, how many more can you add to this list?

• Congratulate them. Better than thanking them, a congratulatory “wow, you made a great choice!” or “congratulations on your new membership” lets them know not only that you appreciate their purchase, but that you approve of their decisions.

• Send a thank you that’s interesting and different. Instead of a regular thank you card, use something else that can be sent through the mail such as an envelope containing puzzle pieces. Or a small box with a surprise in it. Make the thank you memorable in some way.

• Ask another staff member to come over and thank the customer at the point of sale. A manager is best here, but any other staff member will do. This lets the customer know that the whole team appreciates the purchase.

• Create ways for customers to let their friends know about the purchase. This is easy these days with social media. But you can go beyond that by having a wall (a real one or a virtual one) where customers can post pictures of themselves with your products. Or space on your website for customers to pose with you and your service providers. Think of ways you can make your customers the stars of their own shows (and yours).

• Have exclusive events that only your best customers are invited to, and make sure they know that not just anyone has been invited. Offer tasty snacks and entertainment.

Please email me your great ways to keep contact with your customers post-sale, and I’ll write them into another column soon.

Marcia Bagnall is Director of the Chemeketa Small Business Development Center and instructor of Small Business Management Program . The Small-Business Adviser column is produced by the center and appears each Sunday. Questions can be submitted to SBDC@chemeketa.edu. Visit the SBDC at 626 High Street NE. in downtown Salem or call (503) 399-5088.


Customer Awareness is Vital to Success

By Chemeketa SBDC

If your business (bricks and mortar or virtual) is going to be successful in the long run, you must focus on serving your customer’s needs and desires. The essence of marketing rests on your clear understanding of your customer and delivering a unique product that he or she cannot get anywhere else.

A Customer Analysis helps you predict which items will appeal to your customers and make a dramatic impact on how you spend your advertising dollars. Do you have answers for the following checklist?

1. Who are your target customers and what are they seeking from you?

2. Have you profiled your customers by age, income, education, occupation, etc.?

3. Are you familiar with your customers’ lifestyles?

4. Should you try to appeal to the entire market or just a segment?

5. Are there new customer segments or special markets that deserve attention?

6. Do you know where your customers live?

7. Do you use census data from your city or state?

8. Are you aware of the reasons why customers shop with you? (Convenience, price, quality products, etc?)

9. Do you stress a special area of appeal such as lower prices, better quality, wider selection, convenient location or convenient hours?

10. Do you ask your customers for suggestions on ways to improve your operations?

11. Do you know what products your customers most prefer?

12. Do you know what seasons and holidays most influence your customers buying behavior?

13. Have you considered using customer questionnaires to help you in determining your customer’s needs?

14. Do you know at what other types of stores your customers shop?

15. Do you visit market shows and conventions to help anticipate customer wants?

And, finally, what do you do with this information? Just gathering data is not enough. The answers to the above questions will now give you the opportunity to make true management decisions about your business. You now need set your business goals based on the analysis of your customer. Reminder — make all goals SMART (specific, measurable, achievable, responsible (person), and with a timeline).

Marcia Bagnall is Director of the Chemeketa Small Business Development Center and instructor of Small Business Management Program . The Small-Business Adviser column is produced by the center and appears each Sunday. Questions can be submitted to SBDC@chemeketa.edu. Visit the SBDC at 626 High Street NE. in downtown Salem or call (503) 399-5088.