Small Business Development Center
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Category Archives: Best Practices

Think carefully before entering into partnership

By Chemeketa SBDC

What do you think of the idea of a couple of friends going into business together? It’s a good question and unfortunately a pretty tough subject. Some good reasons to choose partnership include shared dreams, financial agreements, shared workload, advantages of support, etc.

But think carefully! These reasons need to be discussed fully before you actually finalize any agreement. Many business partnerships begin with a promise and progress just fine. However, this is the exception and not the rule. Any agreement, expectations, and “what if” scenarios need to be in writing. By having a written agreement and having all partners agree to key issues you have a specific and concrete document to refer to if (and inevitably when) there are any conflicts or disagreements in the future.

Oregon does not require a partnership agreement but it is an essential tool for success. The terms of agreement for a general partnership do not have to be formal but have it signed by all partners and notarized. It is up to you (and your partner) to decide what shape the agreement will take. An attorney can help you focus on issues and suggest possible solutions but you and your partner must make the basic choices – not the attorney.

The following checklist should help:

• What name will be used?

• What happens to the name if the partnership is dissolved?

• How much capital will each partner contribute and what percentage of ownership will each person have?

• What contribution of time, service, and property will each partner make?

• What are the functions and responsibilities of each partner?

• When will owners’ draws be taken, how much and when?

• Are bonuses to be granted? By whom and when?

• How are profit and losses to be shared among partners?

• What will the duration of the partnership be? What guidelines are provided as to how the partnership will be dissolved?

• If a partnership is terminated, how will the business be valued and how will the sale or transfer to a new partner take place?

• Are there any restrictions on the activities of the partners outside the partnership?

As with most legal agreements, it is probably best to consult and attorney and a CPA. Keep in mind that you can change the agreement at any time and you don’t have to start from scratch, but if there are changes, sign and notarize again.

You can find template forms online that you can use as a starting point but you must personalize it. Not to end on a negative point but think of all the things that can go wrong and plan for them up front.

 


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.


Business owners should get comfortable with the numbers

By Chemeketa SBDC

How do you feel about math and numbers? If you’re like a lot of business owners you either don’t like them, don’t understand them, or don’t pay attention as closely as you should. You know you should have a handle on all of this but can’t find the motivation to get any further.

Lots of business owners have some form of math anxiety. Couple that with an aversion to accounting and you’ve got a real problem on your hands.

But here’s the raw truth: your business runs by numbers and if you don’t know how to read them you are flying blind. It’s time for you to step up and make the decision to get the training and knowledge you need to make that happen. You need to understand what the numbers mean and what the relationships between them. You don’t need to love it, you just need to be competent. And you need to do it now!

You already know that numbers will tell you if you’re making a profit or not. But numbers will also tell you whether you can afford to buy a new piece of equipment or hire someone. They’ll tell you how your marketing campaign is contributing (or not) to your bottom line. How good your sales are. Whether your costs are increasing, etc.

You can’t sit around and wait for your bookkeeper or your accountant to bring you up to speed on these things. It’s your responsibility. You need to dive into your financial statements and bring these things to light yourself. So how do you do that?

First, decide that it’s worth your time and attention and that it’s a priority. Really, isn’t it more than time for you to know this stuff? Consider all the decisions you’re making now based on guesses and hunches, and then imagine making those same decisions based on hard facts. What might you do differently? I’ll bet probably plenty.

Second, look around for educational opportunities. Community colleges have accounting, bookkeeping, and other types of financial courses. There are free online sources like educational websites. Hit your public library and check out one of their books on any of these subject areas. They have lots of titles; find one that’s written so you can understand it. Google a term like “cash flow” and then go to a site that looks to have lots of definitions. Look up the concept on Wikipedia. Ask people you know who are good at this and see if you can’t get a little tutoring.

Keep working on this a little at a time. You’ll be amazed at how even a small increase in your understanding in this area will transform your thinking as a business owner. Your business will thank you.

 


Is now the right time to sell your business?

By Chemeketa SBDC

Is the timing right for you to sell your business? Perhaps you’re a baby boomer who is eyeing retirement. Or maybe you’ve built a solid business and your employees want to take it over. There’s even a possibility of a private equity group looking to deploy their cash reserves to make purchases and looking for a business just like yours.

What would it involve to prepare your business for such a sale or transfer? Usually a two-to three-year plan is required to position a company for an optimal sale. Your company and your books may still be recovering from the recent difficult years. But as the economy improves your bottom line is probably looking brighter. Consider that a high point in earnings is an excellent time to look towards a sale.

To properly gauge the value of your business you must put yourself into the shoes of a potential buyer. This is no small trick! You are no doubt partial to your business and probably see it with rosier glasses than a buyer would. A better option is to find an objective adviser, business broker, or other professional to assist you with reasonable valuation.

And then move on to ask for help in identifying areas you can enhance in order to increase that value. Look into the issues of your changing customer mix and the marketing messages you are using to reach those folks. Are you reaching the right people with the right information? What about your workforce, are they skilled and ready to start fresh with another business owner? If not, what needs to be added to their knowledge and skill base to make them so?

Look also to your products and services and ask yourself if you are keeping up with the pace of change and innovation. Is it time to make some new starts or modernize? What about your internal systems, are they up to speed? Your information systems? Can a new buyer walk in and find everything? Can he or she assume control right away, or will there be a steep learning curve?

Getting your house in order prior to a sale will make you more attractive to buyers and improve the odds that you’ll get top dollar for all you’ve built. The time might just be right.

 


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.


Three great surprises when you sign up for our new newsletters!

By Chemeketa SBDC

We are customizing the information we send to you based on your business needs.

To get up-to-date tips and information about upcoming SBDC events, follow this 4-step process:

1. Click this link
2. Enter your email address and click continue
3. Enter your first name and choose the list that best suits your business needs
4. Click Sign up

Sign up before March 25th to be entered to win one of the following three prizes:

1. Lunch with our director, Marcia Bagnall
2. $25 Amazon gift card
3. Collection of three great business books

Each month you will receive tips on topics relevant to your business needs (marketing, human resources, accounting, customers, management/leadership, etc.).

 

 


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.