Category Archives: Entrepreneurship

How Do Successful Businesses Manage Their Operations?

After working hard on the marketing plan and the financial plan, successful executive teams develop operating plans to implement them. These are the plans that ultimately result in successfully bringing one’s idea into the marketplace–and profits into the owner’s pocket. Staffing, office administration, and work flow supervision are the primary needs. Successful businesses anticipate problems and take steps immediately to improve workflow efficiency. Supervisors and budgets are assigned to control costs. If necessary, outside fractional help is secured to make sure that appropriate resources are allocated to the best potential outcomes. In addition, the top executive may recommend steps financial and marketing teams can take to enhance overall productivity–and, by extension, profitability. For example, organizations that offer and sell the same or similar goods or services over and over usually see fewer cost overruns and therefore generate more profit per unit of sale.

Staffing a business with the correct number and types of employees makes your workplace both productive and more enjoyable. Sprinkle in some training and development and you demonstrate care and concern for your people. Create feedback loops and engagement will soar. Successful organizations increase or decrease staff levels as operating plans require. Outsourced human resources–whether through independent contractors, fractional professional staff, or subcontracting–allows your company to optimize human resources for any level of work necessary. Making preparations to finish existing projects while beginning new ones and documenting how the work will be accomplished will focus your efforts.

Administering a variety of initiatives simultaneously places certain demands on office staff as well. A successful executive team thinks through the documentation needs of the organization and assigns responsibilities to appropriate personnel. Institutional knowledge is thereby captured for the benefit of all and adjustments become easier to make. Well-organized files–physical and electronic–are another vital component to smooth business operations and can eliminate wasted time and effort, as well as reinforce best practices!

Successful supervision of field (or plant or billable or development) personnel involves more than simply the “management by walking around” approach of yore. Think about technology as a means to do more with less. Creatively brainstorm as to how to maximize the benefits of being face-to-face versus virtual–it’s a trade-off of time, money, and precious additional resources. Recruiting and hiring should reflect an effort to add to the team those who are the best cultural fit rather than simply strong technicians who may undermine the esprit de corps. Compensation and performance management systems should reinforce your value system–not stand separate from it. Think of processes like equipping, quality management, customer service, coaching, mentoring, motivating as key factors in your success. When you do, plans can be made to enable your organization’s operations to become efficient and profitable.

How Do Successful Businesses Manage Their Finances?

Once the marketing plan has been developed and the product (service) mix defined, successful executive teams develop a financial plan to determine whether their offerings are economically feasible. Such financial considerations as sources of funding, cash availability, and marketing investment need to be evaluated.

Again, no department or manager can operate in a vacuum during this planning process; it is highly likely that staff in the marketing, finance and operations areas will collaborate on the development of plans for their respective areas, as well as on all aspects of an overall business plan. When a new project, product, or service is contemplated, the finance and accounting staff, in conjunction with the business owner(s), head of marketing, and head of operations should evaluate the company’s ability to:

  • get the initiative off the ground,
  • fund it during development and launch, and
  • continue to support it through sales process and beyond.

Successful businesses are always careful to perform all necessary analysis of these three aspects of innovation. They never assume the financial capability to launch a new idea guarantees success; rather, it is understood that the ability to begin a project is of no value if momentum cannot be sustained through the point of post-sale customer service and satisfaction. The cash required to pay overhead and ongoing obligations when no revenues are coming in from the new initiative can put a company into bankruptcy if not anticipated beforehand.

Securing capital sources is another step in sound business financial planning. The timing and amounts of cash infusions are critical considerations within the overall plan. Sometimes, the lure of a large project or contract can cloud judgment. Without adequate preparation for the cash impact of “ramping up” for new scopes of work, sales volume can become a curse. In fact, some businesses become specific in their growth goals so as to not outstrip precious capital reserve allocation guidelines. (This is not to say, however, that financial instruments such as contract financing are not a way to “have one’s cake and eat it too.”)

Making sure that the business has the wherewithal to “scale” to fit customer demand is important. There will invariably be times when the requirements to pay down payables balances will be instituted by lenders or investors. Likewise, receivables balances cannot become too large too quickly without causing alarm as to the liquidity of the business to meet obligations. Creating a working capital account that is adequately funded to weather fluctuations in business volume–in either direction–is wisdom. How one goes about pre-funding it is “science!”

Businesses that plan for their monetary requirements at every stage of innovation will consistently make more money than those that “fly by the seat of their pants.”  Developing financial plans that support marketing and operational plans is essential for profit maximization. The results of this planning are recommendations to either scrap, revise, or move forward speedily with exciting projects that can lead to increased brand awareness, market share, revenues, and profitability. However, one would do well to remember that no going concern has ever gone broke because its executive team did not start a new project. 

How Do Successful Companies Market?

 

Businesses on the leading edge of industry trends and developments are market-driven. Thus is not to say they manage their financial and operating efforts poorly; rather, the financial and operating efforts serve as strong support bases for the marketing power from which they derive most of their profits. Possessing a thorough understanding of the various markets in which a business competes, top companies are able to identify which exact product offerings, features and characteristics are most desirable for their target customers in each market sought. Having identified these key characteristics, top performers direct aggressive marketing campaigns at the universe of prospects who meet the general description, letting them know what they plan to offer, when, how and where. Further marketing efforts are focused on developing consultative conversations to entice this target market to purchase, usually including a solid follow-up process for keeping in touch with potential buyers.

Continual market research is essential for small business success, helping the successful executive team to develop a feel for the target markets. You need to know who your ideal client will be–and create corresponding prospective buyer profiles. By studying the types of prospects who visit your website and those of your competitors, it is not hard to get a feel for who your prospects are. What other constituencies should be studied?

  • Competitors
  • Distributors or referral networks
  • Sales channels–online and other
  • Demographic groups and their buying patterns
  • Prior customers and their feedback

Knowing as much as possible about the purchaser of your offering helps successful companies design aspects of the offering that fulfill unique needs (think about how Starbucks creates an environment in which we pay three times as much for a hot beverage as the prior source). By thinking through the offering thoroughly, savvy companies gain a competitive advantage over the competition through informed development decisions. From the same marketing information gathered about prospective buyers and their habits, a business can determine pricing and sales techniques that should lead to higher revenues and profitability. This research process gives you a distinct leg up on those who do not put in adequate effort to understand customer needs.

Putting information to the best possible use is a skill that further distinguishes the successful enterprise from its competition. Selective–and effective–advertising and promotional campaigns can be carried out on even the smallest budget. Social media outsourcing companies will do a phenomenal job for you for as little as $500/month. Other forms of promotion should not be ignored, however, as many traditional approaches are still valid, perhaps none more so that one-to-one networking with the right people. Successful executive teams realize that marketing is all about building a conversation–online and in person. Good information sets the stage for the conversation, but we still must create an open two-way dialogue with people who matter. 

Successful businesses also develop marketing plans that lure prospects into asking to be contacted. For example, if your company can offer better terms than the competition, that needs to be promoted. Sales or promotions can drive short-term traffic, but are not your best long-term tactic for profitable growth. Better, think about bundling and cross selling opportunities to entice a customer to sample more of your wares. The intent is to create a symbiotic relationship wherein they see you as a trusted provider of multiple things they need and value. There are more ways to attract and optimize customer interactions, the common thread being that you need to think through how you make your offering “sticky” enough to hold someone’s attention in a day when so many other messages are competing for it. Motivate prospects to buy your offering over the competition’s!

 

How Successful Businesses Plan For Growth

Every business wants to obtain a strong market position within its target niche(s). How does one company achieve success when others lag behind (and some even fail)? The answer is surprisingly simple–successful businesses share the following six qualities:

  • They plan for growth constantly.
  • They market effectively.
  • They manage their finances shrewdly.
  • They supervise their operations watchfully.
  • They generate positive cash flow consistently.
  • They maintain positive company morale unwaveringly.

How Do Successful Companies Plan For Growth?

Companies that fail to plan for growth (or for downsizing, if necessary) are companies that operate out of control. By sheer luck, you may be able to make money for a season or two without planning. In most situations, however, luck and proactive planning must work hand in hand to make a business successful. Many companies aiming to be an industry pacesetter miss the mark because they allow one area of the business, be it marketing, operations, technology, or finance  to control the actions taken–or not taken–in other areas. Successful companies realize that planning the company’s direction is a far-reaching enterprise: the executive (team) must utilize information and resources from as many sources as possible. consider the external environment, and develop tasks to be accomplished within established schedules.

Without  a doubt, effective planning requires work. However, every business should consider planning for growth a positive challenge. On the other hand, if a company slows down or even stops growing, the executive (team) can still apply many of the principles applicable to business planning for growth.

Planning must first be understood in its proper context. Successful entrepreneurs understand that planning is not an annual event to be dreaded and feared, but rather the ongoing process of anticipating what will happen in the future and developing a strategy to respond to these events. Therefore, smart folks plan on a regular, even daily basis. In addition, their plans are not developed as dogmatic, end-all solutions to company problems or challenges from here to eternity. They understand that a plan by nature is subject to change and revision. Being flexible in the way one develops, implements, and modifies plans creates much greater success than those who do not plan at all–or those who only develop plans on an “as-needed” basis.

Furthermore, planning in successful operations is not arbitrarily limited to one area of the business. Effective planning encompasses all three of the primary functions of a profitable business: operations, finance, and marketing. Additionally, the preferred order for planning is not as some would imagine. For example, operations can not be allowed to determine the organization’s finance and marketing goals.

Most business executive teams plan only in so far as they make a schedule for the completion of various seasons of the year. Such small-scale planning is useful, but one must also develop a better feel for the “big picture”–the combined approach of marketing, finance, and operations that will generate desirable results in the next week, month, year, and decade. Many successful companies therefore draft their marketing plans first, outlining the number of units (whether of time if a services firm or items if a products firm), design/features, locations/markets, prices, and means of promotion. The financial plan then accounts for the obligations that will be undertaken as a result of the marketing plan. Finally, the operating plan discusses how customer/client needs will be met and what resources will be employed to make it happen.

Ideas to Spur Startup Success in NC

Whether through consulting or working with non-profits who serve entrepreneurs, I am very committed to seeing jobs created through business creation. In my work, I am often scouring research publications to find data and resources that point to trends and patterns. The North Carolina Small Business Technology Development Center publishes data on small business and entrepreneurship trends across the state. The 2012 (results through 2010) report highlighted some interesting trends:

Not only has the number of new employer businesses declined, but so
have sole proprietorships. Only three times in the past four decades
has the total number of non-farm proprietors in North Carolina
decreased from the previous year – twice in the early 1970s and
again in 2008. The only reason there wasn’t a decline in 2010, was
likely due to the growth of the state’s population. NC’s proportion of
business owners to total residents dropped in two of the last three
years – and 2009 was mostly unchanged.

We don’t know exactly who is and isn’t starting businesses in North
Carolina. However, the 2011 Global Entrepreneurship Monitor noted
this trend for the US as a whole and looked deeper into the problem.
Their surveys showed a disturbing decline in entrepreneurship among
young adults. This could be from a lack of interest, knowledge/training,
or capital (unemployment and debt are high among those under 25).

The reason this is potentially troubling is because the experience of
youth entrepreneurship is essential to the pipeline of successful startup
businesses in this country – often created by those in their 30s to
50s. If this trend is real and sustaining, the economic effects could be
felt in years to come.

While the concern about national declines in entrepreneurship among young adults is a valid one, our experience in the Research Triangle area is that more technology start-ups than ever are being initiated by this demographic. What seems to be missing, however, are start-ups from that same age group that are in the category of “Main Street” businesses. Businesses like real estate brokerages, boutique professional services firms, personal services, healthcare related companies, and construction companies or other labor-intensive enterprises are simply not popular among young folks.

Instead, the Baby Boom generation seems more likely to start Main Street businesses. At the Cary Innovation Center in Cary, NC, for instance, virtually all of the entrepreneurs in residence are over the age of 40. They share a common background of having spent years in industry, having developed a little bit of a nest egg, strong skills in unique disciplines, extensive business networks within their industry, and a desire to be self-employed the remainder of their productive work years. 

Perhaps we need to actively engage the 20 somethings in some type of entrepreneurship fair that would expose them to the lower risk/better quality of life aspects of the types of businesses that are residents at the Cary Innovation Center (events planning, a digital marketing company, a career outplacement firm, etc). Most of these businesses require far less capital to get off the ground than their venture-backed and angel-backed peer start-ups. Furthermore, it is easier to generate revenues earlier in the life cycle of these types of companies. 

Alternately, we need to realize the wonderful phenomenon that is spreading throughout the more seasoned crowd. We can–and should–celebrate their excitement about entrepreneurship as a second career.

In short, national trends need not determine our experience. We have an opportunity to be better than other parts of the country if we encourage more of what is working, champion alternatives for younger entrepreneurs, and give them all a lot of support in the form of education and mentoring.