Recipe For Success

Solopreneurs and owners of small businesses can benefit from what can be called a basic recipe consisting of time-tested business practices that will put you on the path to building a profitable enterprise that will make you proud.

Business strategy

Every business needs a strategy and a business plan is a very helpful tool that supports you as you implement your strategy to develop and launch your venture.  A complex strategy or business plan aren’t necessary to achieve success.  A one-page business strategy and a five-page business plan may do the job, as long as both are well thought out and executed.

A good business strategy (and plan) defines and drives the activities and behaviors of the entire organization. Without it, the business becomes a rudderless ship, lost at sea.  A well-conceived business strategy and properly written business plan reflect and support the business model and always address marketing, operations, finance, staffing and customer service, at a minimum.

Business model

The business model is the plan for how your company will generate revenues and make a profit.  The business model answers the question “Who is the customer and what does that customer value?” As a result, your business model must also spell out the company’s value proposition and what differentiates your products and services from those of competitors.

The business model will keep company leaders focused on the core markets and measuring success as defined by the business strategy.  Here you’ll detail a step-by-step action plan to operate profitably within your marketplace.

Marketing

In order to develop a realistic and potentially effective marketing strategy, it is essential to thoroughly research the most likely target customers for the venture.  What problem or goal will be solved with your products or services—what is the customer’s motive for doing business with you? How much will potential customers pay to obtain the solutions that your venture will offer?

Finding out which competitive products target customers now use to get their needs met is another essential marketing research function.  As well, you must learn the type of marketing and information gathering outreach that potential customers will find and trust.  An effective marketing strategy addresses how you will:

  • Identify target customers
  • Identify the products or services now used  (competitive products)
  • Describe how you will promote your products and services to those customers
  • Explain the positioning strategy for products and services
  • Discuss the branding strategy
  • Describe the sales strategy—how will you sell to customers
  • Address the pricing strategy
  • Identify advertising and social media marketing activities

Sales

The sales strategy that you adopt will depend on your target customers, your access to those customers and the competitive landscape.  You may be able to build referral arrangements and strategic alliances that allow you to generate enough sales to be profitable.  On the other hand, cold calling may be the most effective way to generate sales for your organization.  Will you sell in a physical location, or online? Will customers pay immediately, or will they be billed? The preferred selling approach a company uses is defined in the marketing plan.

Operations

Predictable, practical and streamlined business operations processes are a must.  The customer experience is closely linked to what happens in the behind-the-scenes delivery systems of products and services.  Think of it this way—when you go to your favorite breakfast place to get a muffin and coffee, you expect to receive what you’ve ordered with a minimum of fuss. That is how you start your day because it’s convenient and it makes you feel good.  You, business owner and leader, must create a similar experience for your customers if you intend to retain them.  Smooth business operations also play a role in building good word-of-mouth for your business.  Fail to develop a good operations plan and things could blow up in your face as disappointed customers spread the word about your shortcomings.

Unfortunately, many businesses give short shrift to the operations section of their business plan.  The purpose of thinking through operations processes is to increase business productivity and reduce costs as you offer the same (or better) outcomes to each customer, time and again.  There may be some trial and error along the way, but most of all it takes thought and planning.

Successful business leaders understand the need to continually improve business processes, to become more efficient and productive and able to respond to market changes faster, all the while providing excellent service to customers.

Technology

While technology is important, it needn’t be complex or costly to be effective.  Up-to-date technology products enable upgrades within any number of company functions: product manufacture, delivery of services, inventory management, payment systems, sales and distribution, marketing campaigns, quality control and customer service.

Finance

A realistic financial plan is the cornerstone of building a profitable enterprise.  Every business requires a financial roadmap and budget, along with the discipline to follow it.  You must anticipate and plan for business start-up or expansion costs,  projected sales and assisted by a break-even analysis, project that point in the future when the business will be positioned to make a profit.

The financial plan ensures that the business owner recognizes the most likely sources of business launch or expansion capital (will a bank loan or a partner be necessary?). A financial plan reminds owners where and how to spend money and it provides ways to measure progress, promote healthy cash-flow and warn of impending shortfalls.

Customer service

Smart business leaders treat customers well, because they are aware that there can be no business without customers who make purchases that create revenue and lead to profits.  Integrate customer service into your business practices and review those practices frequently to ensure that they are having the intended effect of facilitating customer satisfaction, repeat business and referrals.

Thanks for reading,

Kim

Image: One scene in a mural displayed in the Templo Mayor Museum in Mexico City, where thousands of artifacts were excavated from the ruins of Tenochtitlan, the former capital of the Aztec Empire (now called Mexico City).

 

Advertisements

Plans For Your Business

Whatever the health and condition of your Freelance business venture, you will at some point benefit from planning.  Business planning of any type provides a roadmap that will help you to successfully achieve your business goals.  Business planning can be instituted when sales are tanking and you need to find a way to improve billable hours.  Or you may have decided to aim for larger assignments  or roll out new services and need to figure out how to make it happen.

I’ve taught business plan writing for 7 or more years and I’ve also developed a one-day business plan writing workshop. As I see it,  the process of writing a business plan gives the writer (or the team) many opportunities to think things through and  get the magical thinking out of one’s head. The business plan shows us first,  if the dream is potentially viable and second,  how to make the dream a reality.

The plan you write will depend on what you set out to achieve.  If you’re launching a start-up that will involve significant outside investment,  then you’ll need a very detailed plan that focuses on financial projections;  marketing plans that delve into customer acquisition, the competitive landscape, the product or service launch, messaging,  sales distribution; and operational aspects such as manufacturing,  staffing and quality control.  Freelance consultants will mostly focus on marketing, in particular defining the target clients,  client acquisition; providing the right services; appropriate pricing; and the budget to pay for their marketing strategies.

Whether your plan will be used to launch a big venture and attract outside money,  or is a boutique style service provider, include the following elements in your plan.  Even if you’ll be writing what amounts to an extended marketing plan used for a one-person shop,  it will be a good exercise to include these elements, because you’ll be encouraged to think seriously and strategically about your mini-enterprise.

EXECUTIVE SUMMARY

Present the business mission statement. Include as well the date when the business was formed; key management personnel; your unique credentials or experience that make you especially suited to start and successfully run the venture; the business legal structure (LLC, Sole Proprietor, or Corporation); the products and services; one or two key competitive advantages (maybe you have a patent?); sales projections; and the amount of capital needed (if you’re looking for investors).

BUSINESS DESCRIPTION

It’s traditional to present a brief description of your industry and its outlook,  nationally and regionally. give the details of your products and services and competitive advantages. Identify whether your venture is B2B, B2C, or B2G. If you hold a patent,  detail the competitive advantages that it will convey. Have there been any technological advances that will help or hinder your business?  Divulge here.

MARKETING

The category is a big tent that encompasses sales, product or service distribution,  competitors, advertising,  social media, PR,  networking,  branding, customer acquisition and pricing. The plan written for a mall organization will essentially consist of an extended marketing plan, because for Freelance consultants,  success hinges on identifying and reaching clients who will pay as well as pricing the services advantageously.

FINANCING

Whether you’ll self-finance because you’re wealthy enough,  or the venture is small and  not especially demanding of capital investment,  you nevertheless need to know with a reasonable degree of certainty how much you’ll need to spend to carry out the plan ( that could be a new product, or the purchase of something big, or a marketing plan, for example).  If your strategy is to attract investors,  they’ll need to be convinced by your projected sales revenue figures,  because they’ll want to know when they’ll be paid back or know when to expect profits if they are made co-owners of the business.  A break-even analysis, projected income statement, projected cash-flow statement and projected balance sheet are required by those who will need significant money.

OPERATIONS

How will day-to-day business processes function?  Tell it here,  along with providing the organizational chart,  the business location,  the method of producing that which you sell (if you are,  say,  a Freelance book editor or  graphics specialist,  you produce the service yourself),  your sub-contractors (if you are a special events organizer,  who is your usual caterer, florist,  limo service, etc.?) and quality control methods.  This element is about logistics.

For more information on writing a business plan,  visit the Small Business Association website https://www.sba.gov/tools/sba-learning-center/training/how-write-business-plan

Thanks for reading,

Kim

 

 

 

 

 

 

 

 

 

 

Business Model = Profit Engine

Hatching an idea for a business involves much more than inspiration.  Your entrepreneurial idea must also include a strategy for making the idea profitable. That strategy is known as the business model. The function of a business is to provide products and/or services that help clients solve their business or consumer needs.  In addition, your business must work for you  and generate a reliable and abundant revenue stream from which you derive your annual income.

Before we go any further, let’s clarify the meanings of business model  and business plan.  Your business plan  is a document in which you describe the mission of your business; the target customers; the marketplace and competitive environment in which it will operate; its marketing, financial and operations plans; and the legal structure it will be given.

Your business model  will detail how the venture will attain and sustain profitability. The cornerstone of a good business model is a competitive analysis, which will help you verify target markets (customer groups) and establish your expected value-added in the presence of enterprises that offer similar products and services.

The primary element of your competitive analysis is customer knowledge, something that regulars to these posts know that I encourage frequently.  Information-gathering is a vital and ongoing business function.  James King, Director of the New York (state) Small Business Development Center, notes that “…customer purchasing patterns change rather rapidly and if you’re not ahead of your customers, you’re not making sales.”  Along with your selection of products and services to provide and customer acquisition strategies, operational aspects — that is, the process of how your products or services will be delivered — must meet the often fluid expectations of customers and will therefore figure into your venture’s business model.

Once you’ve developed a proposed business model, find a trusted potential customer or business owner or colleague and ask for a review.  Discovering and closing immediately obvious gaps is something you’ll want to do before your business is up and running.

King recommends that aspiring entrepreneurs “Sit down with someone who doesn’t have a vested interest and ask that person to poke holes in your model. If they do a good job, you’re going to be better prepared for any eventuality. The more risk you can eliminate, the higher the probability that you’re going to be successful.”

One is advised to revisit the business plan and business model every couple of years, or at least when changes in your industry, local business environment or technology have the potential to impact your sales revenue or how your do business. This practice will also give you the benefit of reviewing your projections as regards expected vs. actual target customers and allow you to refine planning for growth and expansion, as you create strategies for sustainable business success.

Thanks for reading,

Kim

Build A Winning Business Model

Whether you are considering the feasibility of launching a business or you are on the leadership team of a business that is several decades old, the business model for the organization is the hub around which all activities revolve. The business model is the blueprint that details how you will create and sustain a money-making business venture. It is the engine that drives revenue. Fail to identify a winning business model and you fail to build a business that will succeed over the long-term. Creation of a profitable business model is a multi-disciplinary exercise that encompasses marketing, sales, strategy, operations and finance.

Identify your primary customers  (Marketing)

If you will focus on B2B clients, describe who they are: for-profit or not-for-profit organizations, Fortune 1000 companies, start-ups. If you plan to focus on a particular industry, specify that and specify also the department(s) in which you will find your decision-maker and/or key purchase influencers and the job title of the person who can green-light your contract. Detail also the services or products that you will provide to your target clients.

Detail the business processes  (Operations)

Where will business transactions take place? Will you have a physical location and will clients visit you there? Will your business be primarily online? Will you have a consulting practice and perform most of the work off-site on your computer? How will clients pay—by check or credit card at the time of purchase, or will you bill them? Must you ship products? Describe how and from which location you will provide or deliver your products and services and the system of payment.

Identify the resources necessary to operate  (Finance)

Before your business is up and running, what must be available? Along with business cards and probably a website, computer, smart phone, and maybe a tablet, you may decide on print collaterals as well. You will need a business bank account and you may need a process by which you can accept credit cards as a merchant. Must you rent commercial space? What will the construction costs be for the build-out of your office space? What will insurance, special certifications and utilities cost you? How much product inventory does it make sense to have? Must you hire help? Determine how much you must spend and have on hand before you can commence business operations.

Define the value proposition  (Sales)

Make the case as to why your products and services are superior to what competitors offer. Learn what motivates your target customers to seek out the products and services that you will provide. How are target customers getting the job done now? Perfect your selling points and learn to neutralize the most common objections that prospects will raise.

Determine key business partners  (Strategy)

Will your business success be greatly helped by getting referrals from a particular source? In other words, if you plan to become a florist or a caterer, it will make a lot of sense to develop relationships with event planners. Referrals are always crucial to building your client list, so figure out which types of businesses you can build a mutually beneficial relationship with—what can they do for you and what can you do for them?

Build and fill the sales pipeline  (Marketing)

Describe the various methods you expect to use to build awareness of your business and find prospective clients. Social media will provably be used, but which platforms can be expected to have the most resonance with your target clients? Teaching, conducting webinars and networking will serve you well in the early stages of your business and throughout. Client testimonials, referrals and case studies will support you as your client list grows and you develop a track record.

Expect to fine-tune and innovate  (Strategy)

Until you begin to welcome paying customers, you will not really know if your proposed business model adequately meets their needs. Expect a reality check and build innovation —that is tweaking —into your business model.

Thanks for reading,

Kim

Doing It Better: Operational Efficiency = Competitive Advantage

Many of you may know that I teach business plan writing.  I will begin another session of my three-part  (total six hours)  workshop series  “Become Your Own Boss: Effective Business Plan Writing”  at Boston Center for Adult Education on Wednesdays February 5, 12 & 19 5:30 PM – 7:30 PM  http://bcae.org class ID # 10573.  

I recently upgraded the operations segment of the workshop because like too many business plan resource providers,  insufficient attention was paid to those issues.  For example,  the business plan template displayed on the Small Business Association website does not include an operations segment.  Operations is an important element of every business plan and business,   including those organizations that sell intangible services.  The inclusion of an operations segment to my business plan writing workshop is a quality control/operations upgrade that allows me to better  meet or exceed client expectations and gives me a competitive advantage.

What do we mean by operations?  Operations is the process by which the items we sell,  whether products or services,  tangible or intangible,  are obtained or produced and made available for sale.  The operations component of a business plan  (and operations departments)  accounts for a wide variety of responsibilities,  including distribution of the product or service to the marketplace  (sharing that responsibility with sales; operations oversees shipping and handling);  inventory management;  quality control;  maintenance of the place of business;  maintenance of business equipment;  workplace safety;  and risk management (sharing that responsibility with finance;  operations oversees aspects other than financial).   A business model includes elements of operations and marketing functions.

Recently,  I suggested to a client a way to use social media to create an operational efficiency that will result in a competitive advantage for her business.  Outreach made by her staff to targeted populations will soon become faster and the number of potentially successful contacts will increase,  as the time and cost of doing so will decrease.  The organization will more easily and inexpensively meet or exceed its clients’ expectations.  This new operational efficiency can be promoted to prospective clients in the talking points of a sales pitch and used as a means to bring in more business.

It is to a Freelance consultant’s advantage to learn how to create operational efficiencies and provide services of the greatest value faster and less expensively.  The time and money saved can be used to directly increase revenue and/or promote the business.  The operational efficiency that I created as I became more experienced and proficient in writing these weekly blog posts caused me to receive the paid opportunity of editing a colleague’s monthly newsletter.

Operations processes are different for every category of business,  so I cannot give specific recommendations of how to create efficiencies within your venture.   Overall,  be mindful of how you source  materials for products that you manufacture,  the wholesale costs of  items that you sell at retail,  or what you pay for supplies.  As your business grows,  look for ways to buy in volume so that you can minimize the cost of goods sold.  Look also for ways to cut production time of products or services that you create and always strive to provide a product or service that meets or exceeds customer expectations.

Thanks for reading,

Kim

Eight Leadership Styles. Which One Is Yours?

When assuming a leadership role,   one does what is required in that position at the time.   There is no road-map because leaders must respond to events as they occur,   as they simultaneously champion projects developed by members of their team,   push through selected personal initiatives and follow through with worthy projects that started before their regime.   Most of all a leader must be versatile,   possessed of good judgment and more than a little lucky.

Nevertheless,  we all have our strengths.   Some of us are super strategists,  or change agents.  Others are great with process and operations,  we intuitively know how to get things done efficiently.  Still others are master communicators: deal-makers,  negotiators or coaches.

How does one rise to leadership,  take the reins and succeed when certain key projects call for talents outside of the natural skill set? Good judgment will encourage the leader to recognize what is beyond his/her expertise and delegate such tasks to better qualified team members.   Further,  the leader is advised to acknowledge team members who step up,  because recognition builds loyalty and the productive can-do spirit of a high-functioning team.

Leadership development specialist Manfred F.R. Kets de Vries,   author of “The Hedgehog Effect: The Secrets of Building High Performance Teams” (2011),   has identified eight leadership competency archetypes for us to ponder.   Do you recognize yourself in one?

The BUILDER approaches leadership as an entrepreneurial activity.  This leader longs to create a tangible legacy.

The CHANGE AGENT loves to ride in on a white horse and clean up a mess.   Re-engineering is the preferred activity.

The COACH derives great personal satisfaction from talent development and knows how to recognize the strengths of team members and get the best out them.

The COMMUNICATOR,  like former presidents Bill Clinton and Ronald Reagan,  loves being on stage and knows how to influence people.

The INNOVATOR is able to sort through difficult problems and devise creative,  yet practical solutions.

The NEGOTIATOR is highly gifted at recognizing,  selling and bringing to the organization lucrative new business opportunities.

The PROCESSOR is an operations expert who will make the organization run like a well-oiled machine.  This leader will institute systems that support the organization’s objectives.

The STRATEGIST has the vision to recognize which goals and strategies the organization would be wise to pursue to ensure its future growth and sustainability.

Merry Christmas and thanks for reading,

Kim