Time to hire

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     for managing and growing your small business.

     You are always short-handed in small business. Never do you have all the help you could use. So you tend to do everything yourself--including taking out the trash.

     You started your business because you had a passion. Maybe it was baking or yoga, 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 could use a vacation. You are absorbing too much of the activity. 

     If you cannot afford to add a full time employee, consider a part timer. High school and college students always need a little extra money. You can hire one for 3 or 4 hours a day. Retirees also need more money and want to keep busy--a valuable asset to them and you.

     You might 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 bring interns into their operations. Interns work for the experience and little pay is involved compared to a full time experienced employee.

     If you decide to add a full time employee, consider the position carefully. This is an opportunity for you to extend yourself. It's a time to carve out those activities that take up lots of your time and turn them over to the new person. Or it's a time to bring in new talent--someone who can do things that you don't know how to do. Whatever the case, write down the things that you expect the new person to do--and then talk it over with them.

     Whichever path you take--part timers, interns, or full time employees--you are extending yourself. Then, you can concentrate on the parts of the business that you enjoy and the parts that are critical to the future of the business. Extending yourself allows you--and the business--to grow. 

     It's time to hire when you get yourself overworked. Just make sure that your new hire fits into your long range plans.

     New employees need to be trained. I've found that I can train a person to do just about anything. What you look for is someone who knows how to apply himself/herself to the tasks at hand, comes to work on time, has an interest in your business, and shows self discipline and integrity.

Going for loans

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     with examples from small businesses.

     All this week I've talked about business planning. People in small businesses are always planning, but it's usually short-term. The nature of your operation means you are continually thinking about tomorrow, next week and next month--not next year. 

     Long-term planning is frequently put off. It's not an immediate concern. But it should be done from time to time. Get yourself in a quiet place and think about next year and beyond.

     Every business needs funding to expand and grow. Unless you generate excess cash internally, you go outside to find capital. 

     Small banks have traditionally filled this role. They were the go-to place for expansion funding. But that is changing.

     Galloping technology is providing another answer. Other players have moved into the loan market. There are dozens of lenders out there who will loan you money, either personally or for the business. Do a Google search "Business Loans" and a long list of these firms will fly back at you.

     Example: Lending Club does personal loans up to $35,000 and business loans up to $300,000. This is not some questionable upstart--it has a history dating back more than 5 years. Lending Club is a peer-to-peer lender that made its debut on the New York Stock Exchange this week. It is an online marketplace that puts people like you in front of prospective investors. You agree to a fixed rate for 1 to 5 years of monthly repayments. The funding agreed to shows up in your bank account in a few days. You apply online and get approval in as little as 5 minutes. Yes, fees are involved and an interest rate applies, but these can be less than you pay on credit cards and banks. This is not a recommendation; rather, it is a possibility for you to thoroughly check out before taking any plunge. Go to LendingClub.com for more.

     Example: Another possibility is Prosper Marketplace. This company offers fixed rate unsecured loans from $2,000 to $35,000 with a 3 to 5 year payback. Rates and choices can vary depending on your situation. There is an online application and turnaround is faster than you might expect from your local bank. Again, this is not a recommendation; rather, it is a possibility for you to thoroughly check out before agreeing to anything. For more information, go go Prosper.com.

     Example: OnDeck is another online lender, providing loans to small and medium-sized businesses only. No start-ups, just operations that have been in business at least one year and have $100,000 in revenue. Fast decisions here and fast funding. This company launched operations in 2007 and makes loans in all 50 states. Again, I am not recommending this company; rather, it is a possibility for you to consider and check out yourself. For more information, go to OnDeck.com. 

     There are many others. If you have funded your business using credit cards, you might be able to consolidate at a lower interest rate than you are now paying. Or, if you need funding to grow and expand your business, check out the online lenders. Whatever you do, make certain that any arrangement you agree to fits into your long-range business plan. 

     Developing your business plan gives lenders confidence that you know what you are doing, that you know your market, and that you'll be able to pay them back. Local banks have been the traditional source for loans to local businesses. Today, more possibilities exist. You deserve to check out whether or not these work in your situation.  

      

Even more about planning

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     with examples from small businesses.

     The heart of business planning is marketing. I've written a lot about this in the past in this blog--especially over the past two days. 

     When you apply for a loan, however, the lender wants as much information as you can provide. A formal, written business plan must cover other aspects of you and your business.

     Example: In one of my own businesses, I once applied to a bank for a substantial loan. They wanted to know all of my personal history as well as the complete background information on my company for the previous five years. So much for yesterday. Then, they wanted to know how I had arrived at the $100,000 I was requesting--they wanted to know the future. How would I spend the funds? How did I know I was requesting enough? How would I pay them back? How would I handle sales problems as they surely would arise? How would I handle competition? How would I ride through a general economic downturn? How well did I know my industry? The questions seemed endless, but I had to admit they were pertinent. After all, the bank was considering putting $100,000 on the table, and they wanted assurances that I could be trusted and would pay back the loan. Then came the kicker. Not only did they want answers to all their questions, but they wanted everything turned into numbers projected forward for five years.

     Reducing verbiage to hard numbers is like wringing all the water out of a wet towel. When you do the numbers, all the crap disappears. 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 market projections. 

     For more on planning, see previous blogs--Planning Box, Business Check-up, Daily Planning, etc. Don't neglect the planning part of running your small business. It's some of the most important work you will ever do.  

More about planning

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     for small business with examples from small businesses.

     Planning comes naturally to the small business owner. You tend to concentrate on where you're headed and what needs to be done today to get to tomorrow.

     The past is important. It teaches us valuable lessons. Good and bad avenues have been traveled by all of us. We owe it to ourselves to learn from the past.

     But business planning is all about tomorrow. And nothing in your future is more important than the markets you serve.

     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 bottled will remain on shelves if no one buys it. And you grow tired of looking at all those pictures you painted that stare back at you in your studio.

     Start your planning process with the most important aspect--marketing. Like the good witch says in the Wizard of Oz, the place to begin is at the beginning. And the beginning of your business plan is with marketing. Today's marketing.

     Who are your customers? How do you find them? Is their need a continuing one that you can supply? How will you expand the customer base in the future? What's the competition? Have you accounted for the changes that future technology will impose? Is marketing and selling one of your strengths? If not, how will you 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. Writing it down will bring new questions to mind. 

     Writing a business plan is not difficult. Start by jotting down ideas and thoughts as they occur to you. I've done this in the past--I simply collected the pieces of paper in a box and after a month or so, picked through them. Those ideas that made sense I put together into a brief write-up. This is the beginning. Do this several times, and you'll see a business plan emerge for your future business. 

     This gets you started on a business plan. Tomorrow, I'll write more about this and the next step. Stay tuned.

     Don't neglect planning. Whether you do it in your head or on paper, it's some of the most important work you'll do. Ultimately, you want to know where you're headed so you can take some steps to get there. Otherwise, your business will meander along and your daily work will gradually lock you into a path that you might not want. 

Business planning

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     with real life examples from small businesses.

     Every small business needs to construct a business plan. You deserve the benefits that a business plan can give you.

     The business plan forces you to face your future. It becomes a sounding board for you as you move forward. It can help you stay on track toward the successful operation you have in mind. It can help you put all the day-to-day distractions into a longer range perspective.

     All of these are valuable. So how do you prepare your very own business plan?

     You can find many business plan outlines by doing a Google search. Some are free, others are come-ons to get you to buy into additional services. 

     Business plans, no matter the cost and no matter who does them, basically boil down to one thing. Business planning is all about the market.

     Your business sells products/services. You target a market and the market responds. Defining that market is where you begin.

     Who are your target clients/customers? How will you attract them? How will you price your products/services? How much will they spend? Why will they keep coming back? 

     When you've answered all the market questions that are relevant, you're ready for the next step. Turn everything into numbers.

     A business plan is much more than words. When you turn your wordy answers into numbers, reality sets in. Numbers bring brutal honesty to the process.

     This is not to disparage intuition. You can feel in your gut a market developing. You want to serve and exploit the possibilities. But translating your intuition into hard numbers can put a better face on your business plan. And save you from some disasters.

     Only if the numbers work do you proceed to put your plan into operation. If the numbers identify a glitch, then this must be solved before proceeding. 

     For example, you might identify a market segment that works on paper, but it is not big enough to justify going entirely in that direction with your business. It might be a sideline or an additional source of revenue to your business but not much of a business in itself. If this emerges on paper with the numbers, then you don't want to head off in that direction. Sidelines can be important in any business, and they might develop into full businesses in the future, but it's a watch and wait proposition. 

     My father ran a large dairy farm. He did all his planning in his head and he was very successful. But as I was growing up, I sometimes saw him sitting bent over a piece of paper--doing the numbers. It was a lesson that has stuck with me. 

       

Raising prices

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     with examples from small businesses.

     Most small businesses operate on a thin margin. Income scarcely exceeds expenses, leaving little to grow and expand. 
     
     If this describes your situation, you might give some thought to your pricing. You might be letting your competition guide your pricing, instead of the marketplace.

     The market for goods and services is all over the place. You can price low and attract the bargain seekers. You can price to meet the competition and struggle to bring clients and customers to you instead of your competitors. Or you can price higher and attract a higher end market segment. 

     Example: A baker will not sell many cupcakes carrying a price tag of $100 each. But that same baker can sell a creatively designed cake for a special occasion at $100--or more. 

     Example: A hairdresser can struggle to make a living pricing haircuts at $10. Raise the price to $50 and the bargain seekers will go somewhere else. Raise the price again, and you'll define who seeks you out for that special haircut. 

     These two examples show what can happen when you target a certain market segment. Your pricing tends to position your business in the minds of your potential customers. Higher pricing tends to attract a different group of people.

     Figuring out and targeting your client/customer base is crucial to growing a healthy business. Adjusting your pricing to a particular market segment helps you do this. You want clients/customers who appreciate--and will pay for--your quality product/service and your superior customer service. You price to attract these people.

     Example: A fabric artist who designs and sells women's accessories priced competitively with WalMart will struggle to make a living. By raising prices for a scarf to $75 or more, the WalMart shoppers are weeded out in favor of a more selective and appreciative crowd. 

     Example: A pet groomer who offers an inexpensive grooming service can double or triple prices by offering a little more. Get the word out: drop your dog off on the way to work and pick up after work. The groomer not only grooms but "babysits" the dog all day. The client will pay much more for the convenience.

     Figure out what market segment you want to serve. Then price accordingly. Price too low, and people think your product/service is not worth much. But by moving to higher pricing, you define the market you want to serve--and you end up with a much healthier business.

     Pricing must match the quality of your products/services. Without quality, you can't expect people to pay more. But shoppers are astute--they know what they are paying for. And they'll gladly pay more for quality, creativity, convenience, and good customer service.      

Small restaurants

     Free daily tips, information and advice for people in small business
     from experience--been there, done that in several small operations.

     Small restaurants and cafes can go through difficult times. They are among the first businesses to feel the pinch in bad economic times.

     They can become neighborhood gathering places and this can be the bedrock on which these operations grow and expand. 

     Kick-starting small restaurants and cafes to the next level takes careful planning. You don't want to mess with the success you already have, but you need more customers.

     Example: Bob decided to add music. He contacted a local Irish music group and found that several members played traditional Irish musical instruments--they got together to practice and this presented them with a problem. Bob offered them exposure at his small restaurant on Sunday afternoons--no payment was involved. Soon, the word spread and a house full of new customers arrived. They came on Sunday afternoons, and they came on other days as well.

     To solve your own problem, think outside the box. Sometimes, by solving someone else's problem, you solve your own.

     Example: Jackie took an approach that involved her love of different cuisines. Her cafe sat less than 50 people. She was busy at breakfast and lunch, but there was little dinner traffic. She decided to add an International Night on Thursday evenings. She offered a Jamaican night, a Casablanca night, and a Tex-Mex night. By that third week, every seat in the cafe was filled with diners clamoring for more. The idea has generated traffic not otherwise possible, and people are referring others.

     Every idea you try might not work. And what works for one place might not work in another. But you never give up.

     Example: Frank wanted to expand his restaurant to become the "go-to" place for parties and gatherings. He began putting out the word to organizations, companies, and other groups. Everyone, it seemed, needed a place to hold small gatherings, and he had a large room off the main dining area. Frank could serve up food at a nominal price for big gatherings. As word spread, other people wanted to hold other events at Frank's restaurant. Soon, the place was booked most nights (and some daytime events) with private parties, corporate meetings, birthday celebrations, retirement events, reunions and the like. 

     You never know where an idea for change will lead you. But you stay on top of your game by thinking through and testing every idea that holds promise.

     Owners of small restaurants and cafes can expand the business by making use of downtime and unused space. And, if you are clever about it, it won't mean a large outlay of expansion money. Work with what you have to grow the business. And remember, when you add excitement, the word spreads in the community and referrals come in.