Thoughtful Thursdays - On promotion before sales

The majority of the people I work with agree that referrals and word of mouth will play a very important role in the development of their business. If they are fortunate to have an established network, it is likely the business will achieve sales faster and once you have the mouths, the word of mouth will start happening.

It is a taller order to build a network from scratch, but is it really from scratch is the question I will ask. Here are a few tips to get you started on building or growing your network. It may be easier than you think.

1. Make a list of everyone you know - I mean everyone
2. Get in touch with each one to say hello and let them know that you are in business
3. Tell them how your business helps your target market - not what you do, but how you help
4. Ask them if they know anyone that may be interested in the benefits you are offering
5. Ask them if they would mind introducing you to these prospects - don't push it, ask politely for their help

You will get contact information and at this point it will be up to you to follow up. Each new prospect can be a source of another. Remember to ask everyone you talk to if they might know someone who might be interested. Prospects often come from the most unlikely sources.

You are not selling your products or services at this point so don't even try. You are beginning to build your network. Trust has to be established and the simplest way to loose trust is to sell prematurely. If you are selling anything it is yourself.

At the same time, research networking groups and start attending events. It is not a contest to see how many business cards you can collect. Your challenge is to develop mutually beneficial relationships with new people. This takes time, so be patient. Being patient does not mean taking days off, there are endless opportunities to network. Be discerning and consistent with your decisions. Follow your business plan focus on your target market.

Once your promotional activities begin to generate prospects then you can start thinking about your sales process,

Good selling,
Richard

Thoughtful Thursdays FAQ - Why do businesses fail?

One of the subjects we often get asked about by people wanting to start up businesses is why so many start-ups fail. We would rather talk about the ingredients for success, but let's examine the question as asked by our customers.

When the dust has settled, the reason why businesses fail is that they run out of money. Of course there are many reasons this can happen. Before we get into some reasons let's make some assumptions:

1. The business idea has been researched, a market for the proposed product and/or service exists and proposed pricing supports the idea.
2. Sufficient capital is available to fund anticipated start up costs
3. A sound business plan has been written.
4. Going out of business was not by choice.

The point here is, if everything is on the up and up, what can go wrong? Let's look at the reasons a business runs out of money. If we examine cash flow, there will probably be a growing negative monthly balance eventually leading to an overall negative cash situation. In other words more money is going out than is coming in.

On a basic level, the combination of  sales or the collection of monies owed is being outstripped by expenses.

What can cause poor sales?
Why are accounts receivable not being collected?
What is costing so much?

The earlier you discover the bad news, the better. Keep good records and review the finances on a regular basis. If sales are not coming in as expected, review your targets and develop a plan that will accelerate the sales cycle. If the sales cycle is longer than expected, develop a plan to increase prospect generation.

If receivables getting out of control, don't be afraid of placing delinquent accounts on credit hold. Get out and start collecting what is owed. Consider hiring a service to help. Review all accounts and set high credit exposure limits.

Examine your expenses carefully and determine where money can be saved. Control petty cash expenditures. Rank your suppliers in order of dollar volume and set a goal to reduce costs by a chosen percentage starting with your largest supplier.

There are numerous reasons businesses do not succeed. Minimize the chances of being a statistic by paying attention to the numbers and taking the time to know the details.

Don't be the last to know there is trouble on the horizon.

Good selling,
Richard

Thoughtful Thursdays - Can you function in isolation?

A previous post titled "Honey, can you pick up the kids", talked about the pros and cons of setting up shop in a home office. We talked about keeping personal and business activities separate and ways that might be accomplished.

We did not talk about how working from home can sometimes be a lonely job, especially for those who have not had the opportunity to work on their own.

The water cooler conversations just aren't as much fun when there is no one to exchange stories with.

Here are a few activities that may help avoid the feeling of being alone in your business.

• Plan your activities at least a week in advance. Remember that time in the office is time you are not in front of your prospects and customers.
• For days that you must work in the office, go out for lunch and take your regular breaks.
• Meet with a business advisor, mentor, colleague, peer or friend on a regular basis to talk about how things are going.
• Join a relevant business association or entrepreneurial group and attend the regular meetings. You may want to consider working on a committee.
• Start your own group.

Launching or running a business on your own can be overwhelming at times, but there is little reason to do it all on your own.

Good selling,
Richard

Thoughtful Thursdays - Honey, can you pick up the kids?

A common response to the question "Why do you want to start your own business?" is "So I can work from home."

Whether you are self-employed or working for someone else, working from a home office definitely has its advantages. There are also many drawbacks that might result in an unproductive and sometimes frustrating business environment if you have undisciplined and/or unclear communicated work habits.

It is tough enough to work in isolation and when you add distractions that come with working from a home office, it can become very challenging. One of the most frequent concerns I hear about is: "My family thinks that because I work from home, I am home and not working."

Here are a few tips that may be useful when working from a home office:

• Designate work space or an office that is for business only - you live in your home, you work in your office
• Have separate phone and fax lines for business
• Have a separate computer for business
• Set office hours and stick to them
• Schedule regular breaks
• Discuss these business hours with your family and have them respect your need to have uninterrupted work time
• Be clear that you may not have the time to go shopping, cut the lawn or pick up the kids without sufficient advanced notice
• Some find it useful to close the office door when they do not want to be interrupted

It is my experience, with people I have worked with, that those who have barriers to working productively at home have greater difficulty resolving them in the long term. The situation often comes down to not having sufficient space at home to dedicate to the business.

The solution for many was to find an office away from the home thereby making it much easier to separate business and personal activities. Productivity increased as did satisfaction with the business.

Remember that you are still employed when you are self-employed, your business needs you to go to work.

Richard

Image credit: examiner.com

Thoughtful Thursdays - Is your business documentation in place?

Today's thought is directed towards, but not limited to, entrepreneurs in the start up phase of their businesses. It is often a task that gets taken care of after receiving the first order. Do you have all the necessary documents in place to process the order?

The downside of not being prepared can have disappointing consequences. These can vary from a lengthening of your your sales cycle to not being paid for products and/or services provided.
These consequences may be it is avoided with some forethought.

It is great to get the first orders, it is also beneficial to have a flawless transaction.

Do you have what you need?

• Applications for establishing credit
• Sales agreements
• Certificates of compliance
• Material Safety Data Sheets
• Instructions for use of the product
• Estimate forms
• Order forms
• Invoices
• Packing slips
• Bills of lading
• Customs paperwork
• Purchase orders
• Delivery receipts
• A way to keep it all organized

As basic as it may seem, it is surprising what is forgotten and left to chance. Be sure of your processes. In closing, it is also a good idea to test your processes before taking them live.

Good selling,
Richard

Thoughtful Thursdays - Why Leave YOUR Money on the Table? - A Rant for Canadian Small Business Start-Ups

Today's thought is more of a rant.

It always puzzles me when an owner of new small venture, operating as a sole proprietorship, resists setting up a basic business infrastructure at the outset. To be honest it really disappoints me when I hear the excuses. Here are two I have heard more than once.

• I'm waiting to get my first order before opening up an account for the business
  
• I don't have to participate in the GST, my sales are or will not be $30,000 a year

In my opinion, both are signs of a lack of commitment to the business idea. I have a lot of difficulty getting my head around the first one and the second is a huge red flag.

I agree that if your sales are below an annual rate of $30,000 the Government of Canada says you do not have to participate in the Good and Services Tax. What kind of message does that send to the customer? They aren't stupid, they will know you are a very small business and chances are you may not be around for long, especially if you expect the business to be self-sustaining. What is worse is that you are probably leaving money on the table - your money!

And what about HST? It is coming July 1, 2010.

Unfortunately many of the people that fall into this category are the ones who can least afford to throw money away, not that anyone can. Perhaps you think you are doing your customers a favour? You might be, but why at your expense? What happened to your value proposition?

If you are serious about starting a business and are thinking of not setting up a proper infrastructure for any reason, think again. Would you plant a garden, not water it and expect it to flourish?

Good selling,
Richard

Is Self-Employment For You?

If you had to make a decision about accepting a project with significant upside and knew the following before making the commitment:

• It was going to cost you more than you estimated
• The return on your investment would not be as high or as fast as you thought
• The project would take much longer to get off the ground than you estimated
• The level of work required would be much more than you thought
• You would have to spend more time on non-enjoyable tasks than anticipated

Would you still take the project on?

If you answered yes, maybe self-employment is for you. Contact our Advisor on Call and find out how TBDC can assist you in all phases of a business start up.

Richard