Free daily tips, information and advice for people in small business
from someone who has been there, done that in several small operations.
Talking about planning comes naturally to me. I tend to concentrate on where am I headed and what things do I need to do today to clear the pathway there.
I was lucky in that regard. Since I was very young, it has never bothered me to put the past in its place and move on. As long as I kept my eye on the future, the present fell into place--and the past really didn't matter that much.
Don't misunderstand. The past is important. It teaches us valuable lessons. Good and bad avenues have been traveled by all of us--and we owe it to ourselves to learn from both.
But business planning is all about the future. And nothing in the future of your business is more important than the marketing aspects.
Marketing: Your customers determine your future. That outrageously complex computer game you devised will not turn into a business if no one buys it. That new beer you brewed and lovingly bottled will stay stacked away in the back room if no one buys it.
You can find outlines of business plans on the Internet, along with lots of information on the process of business planning. Most of it is written by good writers with good intentions. But, reading between the lines, you can tell they haven't been there, done that.
I recommend starting the planning process with the most important aspect--and that is marketing. Like the good witch says in the Wizard of Oz, the place to start is at the beginning. And the beginning of your business planning is with marketing.
Who are your customers? How to you find them? Is their need a continuing one that you can supply? How will you expand the customer base in the future? Have you accounted for the changes that future technology will impose on your business? Is marketing (and selling) one of your strengths? If not, how do you plan to compensate?
The answers to these questions will help you through the daily grind. The answers also provide the basis for the most important part of your business plan. You can carry it around in your head, or you can write it down--preparing it as a formal document accompanying a request for a loan.
Other aspects: The heart of business planning is marketing. But a formal business plan must cover other aspects of you and your business.
These include long term goals (think at least 5 years into the future), purpose of the plan (for your own eyes? for an investor? for a bank?), background (what's the business history to date?), management background (what are your own strengths and weaknesses?), your products/services and production (what, actually, are you selling?), and finally, the numbers.
Reducing everything to numbers is like wringing the water out of a wet towel. Doing the numbers gets the crap out of your verbiage. Your history to date and your projections into the future--this is where the rubber meets the road.
The numbers give validity to all that you say in a written plan. This is where you convince someone else that they can believe in your marketing projections.
For more about planning, see past blogs--Planning Box, Funding Sources, Business Check-Up, and Daily Planning.
Questions? I retired when I turned 75. You can email me at AlWarr16@gmail.com with your questions. Put BLOG in the subject line so I don't delete. Quick answers from my 40+ years of experience founding and running small businesses. Your privacy is always respected.
Monday, May 26, 2014
Friday, May 23, 2014
Space cost, landlord
Free daily tips, information and advice for people in small business
from someone who has been there, done that in several small businesses.
The first time you lease space for your business, you can negotiate from strength. Toward the end of that first lease, you will be negotiating from weakness.
We are talking leasing space for small businesses here--not bigger companies. Big operations are slow to move, small operations are fleet of foot. What this means is critical to the process of renting space. Landlords know that small businesses can leave at the end of a lease with relative ease, whereas a bigger company finds it harder.
The aim of the small business in the first lease is to get the longest term at the lowest cost. Landlords typically throw in sweeteners upfront to entice you--they offer to fix the door, upgrade the restroom, maybe move an internal wall you don't want.
But keep your eye on low cost and long term. You can assume that the landlord will up the cost when you go to extend or renew the lease. You'll get your best deal upfront. When you go to extend your lease, the base line has already been set.
Before signing anything, now or later, you deserve to check out rents being charged elsewhere for comparable space. This can be difficult because other business owners are reluctant to divulge such information. Real estate agents have this information.
A chamber of commerce or other business organization in your area can be helpful in gathering this information. Also, check out other locations in other areas. You might run up on a better location at the same or lower cost than where you are.
Some landlords oversell themselves on the value of the space they have for rent. They begin to think that the town or neighborhood is on the rise economically, and they begin to lead the way by offering space at higher and higher rents. This thinking on their part can lead to their asking unreasonably high rents, losing tenants, and contributing to economic downturns locally.
Landlords might think that once you move your business into their space, you won't leave. Sometimes, it's true. Think about the costs of moving a spa with all that special plumbing. Think about a machine shop or a printing operation with all it's heavy equipment. On the other hand, law offices and accounting operations can pack up in a briefcase and move to another location.
Always try to make your lease coincide with your plans. Your business plan is very important here. A florist might be planning to expand into greenhouse operations in five years. Negotiating a five year lease on town space now can coincide with expansion into the greenhouse--at another location--in the same five years.
Also, if the space you're considering is larger than you need, try to negotiate for a smaller space with an "expansion" clause downstream in say, a year or two. Many landlords will not consider such a proposition, but in tight economies, they might. You can save a substantial amount of rental cost this way, and the landlord has a "sure thing" in the lease for renting you more space in the future. It can be a "win-win" situation.
See yesterday's blog, where size and location were covered.
Questions? I retired when I turned 75. Today I write and garden. You can email me your questions at AlWarr16@gmail.com. Put BLOG in the subject line so I don't delete. Quick answers from my 40+ years of personal experience in founding and running small operations. Your privacy is always respected.
from someone who has been there, done that in several small businesses.
The first time you lease space for your business, you can negotiate from strength. Toward the end of that first lease, you will be negotiating from weakness.
We are talking leasing space for small businesses here--not bigger companies. Big operations are slow to move, small operations are fleet of foot. What this means is critical to the process of renting space. Landlords know that small businesses can leave at the end of a lease with relative ease, whereas a bigger company finds it harder.
The aim of the small business in the first lease is to get the longest term at the lowest cost. Landlords typically throw in sweeteners upfront to entice you--they offer to fix the door, upgrade the restroom, maybe move an internal wall you don't want.
But keep your eye on low cost and long term. You can assume that the landlord will up the cost when you go to extend or renew the lease. You'll get your best deal upfront. When you go to extend your lease, the base line has already been set.
Before signing anything, now or later, you deserve to check out rents being charged elsewhere for comparable space. This can be difficult because other business owners are reluctant to divulge such information. Real estate agents have this information.
A chamber of commerce or other business organization in your area can be helpful in gathering this information. Also, check out other locations in other areas. You might run up on a better location at the same or lower cost than where you are.
Some landlords oversell themselves on the value of the space they have for rent. They begin to think that the town or neighborhood is on the rise economically, and they begin to lead the way by offering space at higher and higher rents. This thinking on their part can lead to their asking unreasonably high rents, losing tenants, and contributing to economic downturns locally.
Landlords might think that once you move your business into their space, you won't leave. Sometimes, it's true. Think about the costs of moving a spa with all that special plumbing. Think about a machine shop or a printing operation with all it's heavy equipment. On the other hand, law offices and accounting operations can pack up in a briefcase and move to another location.
Always try to make your lease coincide with your plans. Your business plan is very important here. A florist might be planning to expand into greenhouse operations in five years. Negotiating a five year lease on town space now can coincide with expansion into the greenhouse--at another location--in the same five years.
Also, if the space you're considering is larger than you need, try to negotiate for a smaller space with an "expansion" clause downstream in say, a year or two. Many landlords will not consider such a proposition, but in tight economies, they might. You can save a substantial amount of rental cost this way, and the landlord has a "sure thing" in the lease for renting you more space in the future. It can be a "win-win" situation.
See yesterday's blog, where size and location were covered.
Questions? I retired when I turned 75. Today I write and garden. You can email me your questions at AlWarr16@gmail.com. Put BLOG in the subject line so I don't delete. Quick answers from my 40+ years of personal experience in founding and running small operations. Your privacy is always respected.
Thursday, May 22, 2014
Space size, location
Free daily tips, information and advice for people in small business
from someone who has been there, done that in several small operations.
Renting the space you need for your small business can be nerve-wracking. Size, location, image, landlord, cost, length of lease are some of the worries.
Location: Some businesses can be run out of your garage. Others require a high-traffic location. Be honest with yourself when considering leasing space.
Consider locating your new or expanding sporting goods store in a country barn--once you get the word out, your customers will find you, and enjoy the ride in the country. A used car lot might benefit being located on a busy thoroughfare, but a travel agency can attract clients to a website operated out of your home office--most travel clients don't come to an office. A frozen yogurt stand can do well in a mall, but a shop that machines widgets can be just about anywhere.
Two things are of major importance when considering location--your business plan for the future, and pertinent zoning regulations. Is there a location impact in your plans? Is the location in a neighborhood in transition? Are there plans afoot to raze the building in 3 years? Talking with a local real estate professional might provide some answers.
Size: Some business owners walk into a prospective space, make an intuitive guesstimate about the size, and sign on the dotted line. A much more prudent approach is--again--look to your business plan.
If you are opening a restaurant, what's the number of tables you need to generate the income you've projected in your business plan? If you are performing accounting services for clients, how much space do you need working alone--and for those future employees you plan to hire?
The size of the space must be consistent with plans for the future. Can you grow your business here? Is the size big enough for growth but not so big that the growth will take 10 years? What are the "carrying costs" of leasing more space than you need now and "carrying" those costs as you expand to fill it?
Every business requires space--even a virtual business operated entirely on the Internet requires a place somewhere to operate. Translate your current/future business plans into a floor plan that will accommodate today and tomorrow.
In tomorrow's blog, I'll take up landlord, cost, and length of lease for space.
Questions? I retired when I turned 75. You can email me at AlWarr16@gmail.com with your questions. Put BLOG in the subject line so I don't delete. Quick answers from my 40+ years of experience founding and running small businesses. Your privacy is always respected.
from someone who has been there, done that in several small operations.
Renting the space you need for your small business can be nerve-wracking. Size, location, image, landlord, cost, length of lease are some of the worries.
Location: Some businesses can be run out of your garage. Others require a high-traffic location. Be honest with yourself when considering leasing space.
Consider locating your new or expanding sporting goods store in a country barn--once you get the word out, your customers will find you, and enjoy the ride in the country. A used car lot might benefit being located on a busy thoroughfare, but a travel agency can attract clients to a website operated out of your home office--most travel clients don't come to an office. A frozen yogurt stand can do well in a mall, but a shop that machines widgets can be just about anywhere.
Two things are of major importance when considering location--your business plan for the future, and pertinent zoning regulations. Is there a location impact in your plans? Is the location in a neighborhood in transition? Are there plans afoot to raze the building in 3 years? Talking with a local real estate professional might provide some answers.
Size: Some business owners walk into a prospective space, make an intuitive guesstimate about the size, and sign on the dotted line. A much more prudent approach is--again--look to your business plan.
If you are opening a restaurant, what's the number of tables you need to generate the income you've projected in your business plan? If you are performing accounting services for clients, how much space do you need working alone--and for those future employees you plan to hire?
The size of the space must be consistent with plans for the future. Can you grow your business here? Is the size big enough for growth but not so big that the growth will take 10 years? What are the "carrying costs" of leasing more space than you need now and "carrying" those costs as you expand to fill it?
Every business requires space--even a virtual business operated entirely on the Internet requires a place somewhere to operate. Translate your current/future business plans into a floor plan that will accommodate today and tomorrow.
In tomorrow's blog, I'll take up landlord, cost, and length of lease for space.
Questions? I retired when I turned 75. You can email me at AlWarr16@gmail.com with your questions. Put BLOG in the subject line so I don't delete. Quick answers from my 40+ years of experience founding and running small businesses. Your privacy is always respected.
Wednesday, May 21, 2014
Bad debts
Free daily tips, information and advice for people in small business
from someone who has been there, done that in several small operations.
You accept a customer's check, and it bounces. You accept a credit card, and later, the bank backs funds out of your account. You send your invoice to your customer, and it is returned.
If you accept anything but cash, you are extending credit. Every business that extends credit has some of it go bad. Extending credit means taking a risk.
__________
Benefit from these ideas if you are in: *Retailing *Computer Services *Graphic Arts *Florist
*Construction *Manufacturing *Landscaping *Dentistry *Consulting *Crafts
Checks: You need as much information as the law allows on the person writing the check. At the very least this includes name, address, telephone, and other identification (driver's license, etc.). If the check is returned, you'll have some information to help you locate the person.
Company checks are another matter. Check out new companies and call the bank listed on the check. In some cases, you might want the bank to freeze funds in the account to cover the amount of the check--call the bank and take it from there. Be alert to changes in signatures.
Credit cards: I always asked for another form of identification before accepting a credit card. Typically, it's a driver's license or other form of identification that has a photo of the person offering the credit card.
With today's automated systems, you know almost immediately if the card is good. But does it belong to the person presenting it? You don't need the problems associated with stolen credit cards.
Invoices: If your practice is to submit invoices for goods/services sold, work out policy details ahead of time. Your policies should be firm and clear. And don't make exceptions.
Decide your terms. If you expect to be paid in 30 days, state "net 30" on your invoice. If you give a discount for quick payment, state it.
I've used "2 % net 10" to good advantage when dealing with larger companies--they put your invoice on top of the stack in their accounts payable department. The practice of adding penalties for late payment is not as strong an incentive.
If bills are not paid on time, call the customer/client immediately. And continue to call. After all, it's your money they are now using. You never want collections to drift to 90 or 120 or more days delinquent. You must manage payments to avoid bad debts.
Questions? I retired with I turned 75. You can email me at AlWarr16@gmail.com with your questions. Pu BLOG in the subject line. Quick answers from my 40+ years of experience founding and running small businesses. Your privacy is always respected.
from someone who has been there, done that in several small operations.
You accept a customer's check, and it bounces. You accept a credit card, and later, the bank backs funds out of your account. You send your invoice to your customer, and it is returned.
If you accept anything but cash, you are extending credit. Every business that extends credit has some of it go bad. Extending credit means taking a risk.
__________
Benefit from these ideas if you are in: *Retailing *Computer Services *Graphic Arts *Florist
*Construction *Manufacturing *Landscaping *Dentistry *Consulting *Crafts
Checks: You need as much information as the law allows on the person writing the check. At the very least this includes name, address, telephone, and other identification (driver's license, etc.). If the check is returned, you'll have some information to help you locate the person.
Company checks are another matter. Check out new companies and call the bank listed on the check. In some cases, you might want the bank to freeze funds in the account to cover the amount of the check--call the bank and take it from there. Be alert to changes in signatures.
Credit cards: I always asked for another form of identification before accepting a credit card. Typically, it's a driver's license or other form of identification that has a photo of the person offering the credit card.
With today's automated systems, you know almost immediately if the card is good. But does it belong to the person presenting it? You don't need the problems associated with stolen credit cards.
Invoices: If your practice is to submit invoices for goods/services sold, work out policy details ahead of time. Your policies should be firm and clear. And don't make exceptions.
Decide your terms. If you expect to be paid in 30 days, state "net 30" on your invoice. If you give a discount for quick payment, state it.
I've used "2 % net 10" to good advantage when dealing with larger companies--they put your invoice on top of the stack in their accounts payable department. The practice of adding penalties for late payment is not as strong an incentive.
If bills are not paid on time, call the customer/client immediately. And continue to call. After all, it's your money they are now using. You never want collections to drift to 90 or 120 or more days delinquent. You must manage payments to avoid bad debts.
Questions? I retired with I turned 75. You can email me at AlWarr16@gmail.com with your questions. Pu BLOG in the subject line. Quick answers from my 40+ years of experience founding and running small businesses. Your privacy is always respected.
Tuesday, May 20, 2014
Extending yourself
Free daily tips, information and advice for people in small business
from someone who has been there, done that in several small businesses.
In small business, you are always short-handed. Never do you have all the help you need. So you tend to do everything yourself--including taking out the trash and turning off the lights.
You started your small business because you had a passion. Maybe it was baking or yoga. Maybe it was engineering or repairing automobiles.
But the time it takes for you to do everything has become too much. It's cutting into sleep time, and you dare not take a vacation.
You need more help to relieve the pressures. And help is available.
If you cannot afford to add another full time employee, consider a part timer. High school and college students always need a little more money, and you can hire one for 3 or 4 hours a day. Retirees also need more money and want to stay busy--a valuable asset to them and to you.
Alternatively, consider bringing in an intern. Not every business is an appropriate venue for an intern. But a law office, a chef, an insurance agency, a small advertising firm, even a specialty grower of plants, and others can--and do--bring an intern into the operation. Interns work for the experience, and sometimes no pay--or little pay--is involved.
When you do decide to add a full time employee, consider the position carefully. This is another opportunity to extend yourself. It's a time to carve out those activities (that take lots of your time) and turn them over to a trustworthy individual. Or it's a time to bring in new talent--someone who can do things you don't know how to do.
Whatever the case--part timers, interns, or full time employees--you are extending yourself. Now you can concentrate on the parts of the business that you enjoy and the things that are critical to the future of the business. Extending yourself allows you--and the business--to grow.
Questions? I retired when I turned 75. You can email me at AlWarr16@gmail.com with your questions. Put BLOG in the subject line so I don't delete. Quick answers from my 40+ years experience founding and growing several small businesses. Your privacy is always respected.
from someone who has been there, done that in several small businesses.
In small business, you are always short-handed. Never do you have all the help you need. So you tend to do everything yourself--including taking out the trash and turning off the lights.
You started your small business because you had a passion. Maybe it was baking or yoga. Maybe it was engineering or repairing automobiles.
But the time it takes for you to do everything has become too much. It's cutting into sleep time, and you dare not take a vacation.
You need more help to relieve the pressures. And help is available.
If you cannot afford to add another full time employee, consider a part timer. High school and college students always need a little more money, and you can hire one for 3 or 4 hours a day. Retirees also need more money and want to stay busy--a valuable asset to them and to you.
Alternatively, consider bringing in an intern. Not every business is an appropriate venue for an intern. But a law office, a chef, an insurance agency, a small advertising firm, even a specialty grower of plants, and others can--and do--bring an intern into the operation. Interns work for the experience, and sometimes no pay--or little pay--is involved.
When you do decide to add a full time employee, consider the position carefully. This is another opportunity to extend yourself. It's a time to carve out those activities (that take lots of your time) and turn them over to a trustworthy individual. Or it's a time to bring in new talent--someone who can do things you don't know how to do.
Whatever the case--part timers, interns, or full time employees--you are extending yourself. Now you can concentrate on the parts of the business that you enjoy and the things that are critical to the future of the business. Extending yourself allows you--and the business--to grow.
Questions? I retired when I turned 75. You can email me at AlWarr16@gmail.com with your questions. Put BLOG in the subject line so I don't delete. Quick answers from my 40+ years experience founding and growing several small businesses. Your privacy is always respected.
Monday, May 19, 2014
Daily planning
Free daily tips, information and advice for people in small business
from someone who has been there, done that in several small operations.
When your banker asks to see your business plan, there is no need to panic. Business planning is not difficult. You do it all the time.
It's all about customers--present and future. Customers are the foundation of your business. Today's customers and tomorrow's customers tell you where you are headed. The business plan puts this into narrative and numbers.
Pay close attention to your customers. Get to know them. Get to know how, what and when they buy products and services. Find out what else they want--how you might better serve them.
This takes careful attention.
Example: A printing operation can lose additional sales--unless customers are continually reminded of all the other services the company can provide. Customers tend to settle into thinking that the printer is only a printer--other services, like design, mailings and special bindings--might be ignored unless the capabilities are often mentioned.
Keep on top of who your customers are, what their needs are, and where they are headed. A customer who is planning to buy a new home will have lots of needs. If the kids are headed off to college, or getting married, mom and dad will surely be involved and have needs.
Engage your customers in conversations to learn more about them. You can uncover opportunities that won't otherwise come to light.
Then, when your banker asks for your business plan, you will have done some of the legwork necessary to put together the marketing section. All those conversations you've had with customers can be woven into the fabric of future market expectations.
Make this a part of your daily planning. If you haven't talked with one of your customers every day, count that day lost.
Questions? I retired when I turned 75. You can email me at AlWarr16@gmail.com with your questions. Put BLOG in the subject line so I won't delete. Answers from my 40+ years founding and running small businesses. Your privacy is always respected.
from someone who has been there, done that in several small operations.
When your banker asks to see your business plan, there is no need to panic. Business planning is not difficult. You do it all the time.
It's all about customers--present and future. Customers are the foundation of your business. Today's customers and tomorrow's customers tell you where you are headed. The business plan puts this into narrative and numbers.
Pay close attention to your customers. Get to know them. Get to know how, what and when they buy products and services. Find out what else they want--how you might better serve them.
This takes careful attention.
Example: A printing operation can lose additional sales--unless customers are continually reminded of all the other services the company can provide. Customers tend to settle into thinking that the printer is only a printer--other services, like design, mailings and special bindings--might be ignored unless the capabilities are often mentioned.
Keep on top of who your customers are, what their needs are, and where they are headed. A customer who is planning to buy a new home will have lots of needs. If the kids are headed off to college, or getting married, mom and dad will surely be involved and have needs.
Engage your customers in conversations to learn more about them. You can uncover opportunities that won't otherwise come to light.
Then, when your banker asks for your business plan, you will have done some of the legwork necessary to put together the marketing section. All those conversations you've had with customers can be woven into the fabric of future market expectations.
Make this a part of your daily planning. If you haven't talked with one of your customers every day, count that day lost.
Questions? I retired when I turned 75. You can email me at AlWarr16@gmail.com with your questions. Put BLOG in the subject line so I won't delete. Answers from my 40+ years founding and running small businesses. Your privacy is always respected.
Friday, May 16, 2014
Changing direction
Free daily tips, information and advice for people in small business
from someone who has been there, done that in several operations.
Back at the beginning of the 1900s, automobiles were arriving on the scene. Vehicles were replacing wagons and buggies--and the horses that provided the power.
The venerable Studebaker company had been making wagons for decades. Management decided to begin manufacturing automobiles. The company changed direction.
Meanwhile, the marketplace adjusted to the lessened demand for horses. As time passed, there were fewer and fewer wagons and buggies--and fewer horses needed to pull them.
Farmers who produced the grains eaten by the horses suddenly found themselves with a surplus of grain. What to do with the glut?
The response of the marketplace was to change direction. Those grains that the horses once ate became the breakfast cereals that humans still eat today.
There are valuable lessons to be learned from all this. When the marketplace changes, your business must change with it. You can change what you produce, like the Studebaker company. Or you can change how a product or service is perceived and purchased.
Example: Food is on everyone's mind. Not only must we eat, but today the concern has moved to what we eat. A farmer can make a living growing and selling fresh produce in the local market--I know several who do. One of them is bringing to market a product new to his offerings. It's the flower buds produced in spring from last year's kale. It's fresh, it's kale, it's new--all the elements to excite the marketplace. Use them by throwing into an omelet--the same can be done with milkweed buds or day lily buds.
Local farms are typically small businesses. They are in the ideal position to be on the leading edge of marketplace demands. You might not change horse feed into breakfast cereal, but lots of room exists for innovation in fresh foods.
Questions? I retired when I turned 75. You can email me at AlWarr16@gmail.com with your questions. Put BLOG in the subject line so I don't delete. Quick answers from my 40+ years experience founding and growing small businesses. Your privacy is always respected.
from someone who has been there, done that in several operations.
Back at the beginning of the 1900s, automobiles were arriving on the scene. Vehicles were replacing wagons and buggies--and the horses that provided the power.
The venerable Studebaker company had been making wagons for decades. Management decided to begin manufacturing automobiles. The company changed direction.
Meanwhile, the marketplace adjusted to the lessened demand for horses. As time passed, there were fewer and fewer wagons and buggies--and fewer horses needed to pull them.
Farmers who produced the grains eaten by the horses suddenly found themselves with a surplus of grain. What to do with the glut?
The response of the marketplace was to change direction. Those grains that the horses once ate became the breakfast cereals that humans still eat today.
There are valuable lessons to be learned from all this. When the marketplace changes, your business must change with it. You can change what you produce, like the Studebaker company. Or you can change how a product or service is perceived and purchased.
Example: Food is on everyone's mind. Not only must we eat, but today the concern has moved to what we eat. A farmer can make a living growing and selling fresh produce in the local market--I know several who do. One of them is bringing to market a product new to his offerings. It's the flower buds produced in spring from last year's kale. It's fresh, it's kale, it's new--all the elements to excite the marketplace. Use them by throwing into an omelet--the same can be done with milkweed buds or day lily buds.
Local farms are typically small businesses. They are in the ideal position to be on the leading edge of marketplace demands. You might not change horse feed into breakfast cereal, but lots of room exists for innovation in fresh foods.
Questions? I retired when I turned 75. You can email me at AlWarr16@gmail.com with your questions. Put BLOG in the subject line so I don't delete. Quick answers from my 40+ years experience founding and growing small businesses. Your privacy is always respected.
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