Small Business

Whether a small business owner is a one-man show or has a staff of twenty, his business success depends as much on how he manages the business as on any other factor. Management is defined as coordinating the actions of the people in a business to achieve the desired results: high sales, loyal customers, and profits sufficient for personal comfort and business expansion.

The following discussion is about small businesses with more than one person involved, but a one-man business can apply them by realizing he has to fulfill all the different functions until he can hire people to turn them over to.

Running a business is easy if everyone in the business knows exactly what his role is, how his role relates to the other people’s roles, and how to fulfill his role. Management, therefore, consists solely and only of making sure these conditions occur.

Defining Roles

Most roles consist of handling a number of functions in a business. While management training can be very helpful to a manager in determining what functions are necessary to business success, even a brand new small business owner can list the major ones: marketing, production, accounting, customer service, and legal requirements, for example. Only one person can be responsible for any one function: if more than one is, then no one is. The small business owner can have veto power and directive power, but must leave the doing of the function to the person in charge of it.

Example: The owner hires a salesman to be in charge of finding and handling new customers. If the owner then goes out and finds a new customer, he has to turn that customer over to the sales manager to handle. Otherwise, he is not managing, he is being a salesman, and that is not the owner’s function once he has turned the function over to someone else.

When something doesn’t get done that should have, the responsible party is clearly evident, or the action gets added to someone’s role if it wasn’t previously defined.

Relating Roles to Each Other

Accountants tear their hair out over missing receipts and unauthorized purchases. Salesmen scream at receptionists who do not relay messages clearly and promptly. Maintenance men mutter about people who don’t alert them to a group coming in so the room can be prepared ahead of time. Understanding role relations is critical to the smooth operation of any business.

The rule is that every function of a business affects every other function of that business, directly or indirectly.

Outlining every single role relationship by means of written policies and procedures is impossible, and even trying to is fruitless: since there are so many, they would never be learned. What can be done is to distribute all the individual role descriptions to everyone, so each person can see for himself how they all relate. For instance, the maintenance role description includes “Sets up rooms for meetings.” The creative director then knows who to go to when he needs a room set up for a meeting. If he doesn’t give the maintenance people enough warning, the maintenance people tell him, so he will know next time. Thus improvement of role relationship occurs.

Certain universal actions can and should be written up as policies, so they are clear and known: Pick up after yourself, and Turn in receipts promptly, and Tell your boss if you will be absent. These belong in a company handbook, which can start out small and grow as the company grows. For a small company, one or two pages might be sufficient to start.

How to Fulfill a Role

Hiring a salesman who doesn’t know how to sell may or may not be foolish, depending on how much time you want to put into training him. A well-spoken, extroverted, enthusiastic candidate fresh out of high school might sell more than an experienced but somewhat conservative salesman, after you train the recruit for a while. The same goes for any position that does not need professional education, like a lawyer or doctor.

In fact, anyone new to a business needs some training, if only in procedures unique to that business. Part of a manager’s job is to minimize the training time of new staff. Telling someone he is now in charge of shipping and to set up the department however he sees fit is to guarantee the shipping department will take forever to integrate smoothly with the rest of the business. People are very willing to fill roles, when they are told what those roles are and how to fill them. Part of management is making sure those actions occur.

The bottom line is, management is ultimately responsible for how efficiently and frictionlessly a company runs. By following the above guidelines, the task is fairly easy.

America was built on the drive of individuals to follow their own path to success and a better life. Small businesses are a cornerstone of that tradition, and they remain one of the our nation’s most important assets. Unfortunately, however, small business owners face some of the greatest financial risks of anyone. Many lack the financial means of larger business owners, putting their own financial wellbeing at risk for the sake of their company.

If the turmoil of the world economy has affected your small business, burdening you with debt and making the day-to-day operation of your business a struggle, filing for bankruptcy may give you a new start. Rather than marking the “end” of your company, bankruptcy is actually a way to keep your business alive in the face of a floundering economy and rapidly-increasing debt.

Bankruptcy laws are designed to protect the interests of individuals and business owners. Their efforts are essential for our economy, and the government has a stake in making sure they stay in business. By seeking the expert help of a Massachusetts bankruptcy lawyer, you can eliminate many of your debts immediately and make the remainder easier to manage.

For small business owners, there are numerous options available for bankruptcy. You may be able to take advantage of many of the options that would ordinarily only be available to individuals, while also receiving many of the protections that benefit businesses. Depending on the specifics of your business and financial life, you may be able to keep more of your assets safe than you might expect.

Both individuals and businesses are able to file for Chapter 7 bankruptcy. Chapter 7 involves liquidating many of your assets, but there are many exemptions. Small business owners are able to claim much of their property and other assets as necessities for their business. Chapter 11 bankruptcy is usually the course of action for businesses. It involves restructuring your debts and business operations to make sure you can repay your debts. Depending on your circumstances, it may suit you.

Businesses are not able to file for Chapter 13 bankruptcy, but many individuals can take advantage of Chapter 13 protections for a business they have a significant financial stake in. If you own a small business, especially if you have very few or no other employees, the special protections of Chapter 13 may be able to handle many of your business’s debts.

If your small business is struggling because of a fragile economy and heavy debt, you may be able to eliminate your debt and start afresh. To learn how you can find relief from your debt, call the experienced Boston bankruptcy lawyers of Joshua Spirn & Associates today.

Some of the best small niche business ideas out there are ones that focus on catering to students. Students typically have a very busy schedule and a decent disposable income. They are usually willing to pay top dollar for services that will save them time or energy. One great idea I’ve seen is a man who started a dorm storage business, with tremendous success.

At the end of his daughter’s Freshman year in school, he went to considerable time and expense to move her things from her dorm room back to their room. When the next school year rolled around and he had to then take those same items, still in their boxes, back to the same dorm room, he realized there had to be a better way.

The next year when classes were out, he rented an old house. It was very cheap to rent, as most of the students were returning home for the summer. He was able to get several students to rent rooms in the home to store their stuff in. He offered no help with moving, simply a place for the kids to store their things during the summer. With only 3 customers, he made more than 3 times what he was paying to rent the home.

It’s three years later and he now owns 4 houses in the area that he uses for just this purpose. He does almost no work and yet by coming up with a small niche business idea that works, he’s making a huge income.

Creating a small business marketing plan as a subcategory of your overall business plan is vital for evoking and accelerating business growth. When you have a plan, you are able to focus on the right things at the right time and measure your progress toward a goal.

Many business owners are resisting planning. When you’re running a business, you can easily be consumed by your day to day responsibilities. But failing to plan can be a great mistake.

Now, what is the essential function of marketing? To generate qualified sales leads. There are any number of methods that can be used to do that but how do you know which methods to use if you don’t have a plan?

And how do you know what your lucrative marketing activities are? How do you invest in those activities if you don’t know how big your budget is, or know what results you are trying to produce?

A marketing plan doesn’t need to be a huge document. First, start with your business goals for the next six months. You should already have these, for example your target revenue, if nothing else.

Now, what marketing goals align with those business goals? Ok, you want to make 100k. How many leads do you need to generate in order to allow your selling activities to close the deals necessary to reach this revenue target?

Next, what marketing strategies are necessary to meet your business goal? Will you need to get more publicity? Expand into a new market? Reach more people in your current market? Create a direct mail campaign? Create sales partnerships?

You must pick one or two that deliver on what you are aiming for and hit your target revenue. Now, determine what specific activities will achieve your strategies.

At this point it gets a little bit tricky. You must choose from a vast pool of marketing options/activities and you must choose the activities that will work best for the potential customer you want to reach. You might need to participate in trade show events where you get face to face with your market.

You might need to launch a new website, you might need to implement a referral program for current customers. The list goes on and on.

Whatever your activities are, put them together into your plan and create target metrics (e.g. number of leads collected, number of prospects you talked to, etc).

Finally, you end up with your marketing plan.

The next step, your sales plan, tells you how the leads generated by marketing will be converted to customers, and how back end sales will be made to those customers. Sales metrics include conversion rates, overall revenues, or revenue per customer/per square foot/per time spent in the store, etc.

The great thing is that now you have something to measure against and you can review things periodically to see if you are on track or if something needs to be adjusted.

This process or call it small business marketing plan, doesn’t need to take a lot of time but the benefits to your business can be huge. Having a plan will give you a lot more insights into your well oiled business machine or parts of your business that need some tweaking.

If you are a new small business owner, let me be the first to congratulate you. It takes guts to get out there and go for it when everyone around you seems to be talking doom and gloom. One very important part of making sure your small business is a success, is getting the word out to as many people as you can, in an affordable manner. That’s where business signage comes in. Its affordable and more importantly, its effective.

Though there are alot of different signs to choose from, one of my favorite signs is the cartop sign. This sign costs less than $100 and can be working for you all day and all night. Just attach the sign to your car and start driving. In order for this sign to get you the results you desire, you must advertise a great deal on it. People love a great deal.

Now, the sign by itself won’t do you any good. Its all about the message that you have written on the sign. The best way to get peoples attention is with a deal. People love a great deal. Have a 50% off deal or a buy one get one free deal. It really doesn’t matter what it is. Just give the people something they can’t resist.

When people see you driving around with a sign on the top of your car, they will take notice. They will want to read it and see what it has to offer. That’s why its so important that you are advertising a great deal. You want to give people a reason to come to your business.

Another great business sign is the sidewalk sign. It is an extremely powerful sign. In a study done several years back, the results showed that by placing just one sidewalk sign in front of a business could help increase sales by up to 30%. That means you can almost double the amount of money you are making with just one sidewalk sign. Thats amazing.

The important thing to remember is that business signs work. It has been proven over and over. If you want to attract more customer and build brand awareness all at the same time, then you need to invest in a business sign today.

If you want to start your own small business and want to know how or where to start, there are information available online to help you get started on your new venture. Information like where you can turn to get help regarding the appropriate funding for your new startup, advice on the proper marketing approach or strategy, as well as every aspect that you may need to know about getting your small business off the ground. Who knows, you may just put your fledgling business on the right path to success.

The federal government has a lot of small business programs that you can check out. Take a look at the Small Business Administration Government website to see what programs they have to offer you, to help you along the way. They can give you startup tips, as well as provide you with accurate information regarding business taxes. The website even offers advice on how you can properly handle or treat your employees and future customers or clientele as well. Their website is a trustworthy go-to information source when it comes to entrepreneurship and a reference guide on starting your very own business.

If you wish to learn more about starting a small business, you should also try to get information on colleges as well as universities that may offer seminars or workshops and other business programs for new startup entrepreneurs and novice business owners. Many business schools of such universities and colleges offer free or discounted seminars and workshops for non student small business owners who are willing to learn more about starting a new business as well as once going, keeping it afloat. Your willingness to learn more about your field may be the difference between success and failure in the business world.

A non-profit organization known simply as SCORE or Counselors of America’s Small Business Owners, may provide additional help if you wish to learn more. SCORE is a national association that is devoted to helping business owners like you and so many others to conceive and nurture your very own business.

This organization is a recognized partner of the SBA or Small Business Administration of the United States, so you can be sure to get quality advice and help when it comes to starting your own business. They offer free business workshops as well as one-on-one business counseling, so be sure to take full advantage of what they have to offer. It can be good for your business.

You can learn all the techniques, tricks, and procedures of any and every aspect of business, but unless you understand quality, you will always be fighting an uphill battle.

The problem is not that quality is hard to understand, but that most small business owners pay it little attention. When they think about quality at all, either they think they know all they need to know about quality, or they think quality is not all that important: that “good enough” is good enough. They miss the rewards that come with establishing a reputation for quality.

For your own sake, pretend for a minute that maybe you might to some degree fall into this category, and read on.

Quality is about making things better. It is about doing things better, and improving results. In other words, quality is an ongoing action, not an achievement. No matter how good your business is doing, it can be doing better. This is the first and most important thing to know about quality. Whether your business is brand new or well-established, it can improve.

Improvement does not happen by chance. First must come the intention to improve, then the action needed to turn the intention into a reality.

Sometimes the action works as expected; sometimes it doesn’t and a different action is needed. As long as the intention remains intact, eventually the correct action will be found. How quickly an intention is turned into reality depends on how quickly the owner can recognize results and adjust his actions as necessary.

Why a struggling business owner would want to improve his business is obvious, but why would a successful business owner want to improve his business? Because other business owners are always competing with him, doing their best to take his customers and clients away. They are improving their quality, or lowering their prices, or advertising more.

A reputation for high quality leads to customer loyalty, even against lower prices. Panera Bread, for example, is expanding during a recession solely because of its deserved reputation for quality, even though competitors offer less expensive meals.

A reputation for high quality also leads to word-of-mouth advertising, the cheapest and most effective form of promotion outside of a viral internet campaign (which is actually just a form of word-of-mouth advertising).

Many small business owners believe that higher quality is more expensive to produce than “acceptable” quality, and that many customers can’t tell the difference and so won’t pay more for higher quality. The second idea is not entirely false, but it ignores the fact that many other customers CAN tell the difference and WILL pay more for higher quality.

As for higher quality being more expensive to produce, that idea is almost entirely false. While better raw materials and higher-skilled workers do cost more, that cost can be offset by higher volume of sales, and training your workers to higher standards. Learning how to reduce errors and waste (i.e., improving your business) will also keep costs down.

Quality alone is not a magic avenue to success, but when applied as an underlying business philosophy and intention, it comes pretty darn close. Applying the principles of quality to all aspects of your business (management, sales, production, accounting, customer service, etc.) will inevitably lead to expansion and a better bottom line.

The first step is to recognize that no business stays at the same level for long. It eventually either gets better and expands, or it contracts. The second step is to choose which way you want your business to go.

Quality doesn’t mean being perfect; quality only means constantly improving.

What does small business inventory have to do with profitability?

Most small business owners are not inventory management experts and they shouldn’t be. Most of them possess some special skill or knowledge and build their business upon it. At the beginning, it is usually rather simple, even if they sell products – the range of products is small and it’s relatively easy to keep track of them.

But when things go well and their business grows both in size and complexity, problems emerge. And many of those problems will have to do with inventory.

Challenges with small business inventory

You see, most tasks having to do with management and control of a business can be performed relatively easily on a small scale. A program like QuickBooks can help you keep your books in good shape, especially if you hire a skilled and experienced bookkeeper.

But even good bookkeepers rarely have to deal with issues of setting up small business inventory, calculating margins, analyzing product mix, etc. At this point a small business has developed enough to need a higher level of skill: a part-time Controller.

Small business inventory control is absolutely crucial to long-term survival, not to mention profitability. I know many businesses who don’t even have the most basic information about their more complex products – their total cost. Sure, they know how much it costs to buy each component. But once their products get complex enough to require any assembly, that transparency is gone. If QuickBooks isn’t properly set up to track assembly items, their cost will not be known.

“Does that matter”, you may ask? Well, if you want to know your margins, yes, it does.

Small business inventory – margin basics

These days many small businesses struggle with their cashflow. They come to me and ask “why am I not making any money?” “Well, let’s see”, I say, and start looking at their financials.

It’s pretty easy to isolate problem areas with the expenses, the overhead, etc, but it will all mean nothing, if we don’t know the margins. The product margin is simply the price less the cost. If the cost isn’t known, we won’t know the margin. It’s very simple:

Sales less Cost of Sales = Margin

Margin less Expenses and Overhead = Net Profit

And as I said before, once a business starts selling more complex products, their costs are no longer known, if QuickBooks (or any other software a business may be using) isn’t set up to properly keep track of them.

Small business inventory – product mix

Even when you know your margins, do you know what they mean? Do you also look at the mix? ‘What is product mix?”, you may ask.

Well, imagine you have two products:

- Product A costs you $1.00 to make and sells for $2.00

- Product B costs you $1.00 to make and sells for $5.00

Which one is more important to you? It’s not as simple as it may seem. What if the demand for Product A is a 100 greater than demand for product B? What if you can sell a lot more of Product A than you will ever be able to sell of Product B?

If during an average month you can sell 100 Products A and 5 Products B, Product A is generating more margin:

Product A

Sales Price: $2.00

Cost of Sales: $1.00

Margin: $1

Qty sold: 500

Total Margin: $500

Product B

Sales Price: $5.00

Cost of Sales: $1.00

Margin: $4.00

Qty sold: 5

Total Margin: $20

Now things get more interesting. You may want to know a lot more – how much overhead is needed to generate that high margin? Is it even worth it? If it is, maybe you should focus much more of your energies and resources on Product B? Since these products are so diametrically different, maybe we should track their profitability even below the margin level?

Perhaps we need to allocate some of the expenses which can be directly attributed to them so we see their “contribution margin”? Without that information, how can we possibly make the right decisions?

And now imagine that you now have 50-1000 products, all with different margins and different sales levels…

Small business inventory – summing up

All those considerations cannot even be entertained until you know your product costs. You won’t be able to make any intelligent decisions about your inventory mix, advertising, personnel etc. until all this is easily calculated and monitored on a regular basis.

And remember – without accurate costs, your net profit cannot be accurate, either. That’s why I always say to my clients:

“Accurate financial information is power!”

Data from the Small Business Administration reveals some very grim statistics regarding the sustainability of small businesses. For example, did you know that for every small business that opens another one closes? Looking at this statistic through another lens is that every minute in the United States a small business closes.

To avoid being one of those closed statistics, why not return to the basics and use these 3 concepts?

Goals
Attitudes
Self leadership skills

GOALS: What were the original goals that you had established for your small business? Are your goals aligned with your small business plan or strategic plan? Are you achieving those goals? If yes, then what new goals have you established? If no, then what course corrections have you made within your business plan?

ATTITUDES: Have you taken stock of your attitudes and those of your employees? Did you know that 68% of the customers who are no longer your customers left because of bad attitudes that they experienced? Does your training and development focus on hard skills, but fail to address the necessary attitudes and habits for business success.

Remember the question to be answered is not Do my employees know how to do it, but rather Do my employees want to do it?

SELF LEADERSHIP SKILLS: Let’s return to your training and development of your employees. Are you truly developing your employees to have strong interpersonal skills such as:

Communication?
Empathy?
Decision making and problem solving?
Time management?

When you G.A.S. up your small business activities by focusing on goals, attitudes and self leadership skills, you will begin to receive truly extraordinary business results. Simply speaking, what do you have to lose?

Anyone willing to start a small business may feel lost if they do not have any information on how to go about it. Tips on how to run and manage an enterprise are crucial if the venture is to survive long enough and if it is to be productive. Tips are not just essential at the starting point, but all through the life of the enterprise, one needs to be informed on what to do and what to avoid. At the start, its important to know that, the business idea should emanate both form your heart and from your mind.

In other words, the idea of what you want to engage in should be something that you have a passion for, not something you want to do simply because someone else is prospering in the same area. Once you have the idea in place, put it in writing and define how you plan to make it a reality. Once you have started off, you should be able to be committed to the venture. This is both in terms of time and money commitments.

To survive in the market and to keep up with the competition, conduct some market research and get the facts from the ground. From the research you should be able to establish what it is that keeps clients interested and what puts them off. You should also be able to know what your competitors are doing to keep up with business and probably apply the same strategy to your own enterprise.

Last but not least, develop the art of communication with your clients, your partners and members of staff as well. Listen to your clients carefully before responding and keep them interested in your services. For better customer relations, make sure that your business location is carefully chosen.