Tag Archives: Growth

Trends to Watch in Small Biz For 2013

In mid-December, small business owners are thinking about year end numbers and whether their companies will meet the annual goal(s). Advisers to small business owners are thinking about tax liabilities, the expiration of certain programs favorable to their clients, and whether the upcoming year will be better for their own businesses. What is little discussed but super important is what the future holds. In preparing to answer that very significant question, the small business leadership team is thinking proactively about strategy, innovation, and how to turn today’s customers and competitive advantages into a plan for sustainable success.

American Express publishes a blog under the OPEN Forum brand. One of its leading bloggers is John Jantsch of Duct Tape Marketing. A few weeks ago, he identified the following top 5 trends in business for 2013:Futuristic conference room

1. “Crowdsolving” becomes a hot innovation trend. Some of the greatest challenges we face in the world..are being tackled in unique ways. Instead of relying on the existing machines and organizations to address problems, innovative organizations such as the X Prize Foundation are creating competitions that reward disparate groups of individuals to collaborate and create innovative solutions in ways that had not previously been possible..This form of what is being called “crowdsolving” will make its way into the mainstream of business innovation. Asking our customers, vendors and employees to act as a community think tank will become one of next year’s hottest innovation trends.

2. Technology evolves to assist human contact. ..Instead of a world lacking human connections, these.. innovations have actually made it easier for some to create real human contact—one-to-one. For example, medical-monitoring devices provide the opportunity to create better doctor patient relationships and care; new scheduling and meeting services make it easier to connect in real life; and sharing ideas in virtual space leads to a greater desire to connect offline in social settings.

3. Content-filtering becomes a significant marketing practice. ..Moving forward valuable content must include insight, and filtering should be a central practice in order to help people and prospects get what they need when they need it. Service providers will be chosen based on their ability to find and share the good stuff in addition to making sense of the changing stuff.

4. Visual simplicity becomes the desired communication method. From a design standpoint you don’t need to look beyond sites and services such as Pinterest, Pinvolve and The Fancy to see that people want visual content. The current trend in Web design takes a cue from this desire for visual scanning and marries it with the need for simplicity and white space. 

5. Tablet optimization becomes the mobile standard. ..The new generation of mini tablets are going to impact responsive design and what we’ve been calling mobile devices. Tablets and mini tablets will see a tremendous jump in server logs and become the de facto design standard for mobile content. That doesn’t mean mobile phone size browsers aren’t important, it means there will eventually need to be a divide in how we address tablets vs. phones.

How you apply these trends to your own business is a big decision. Let’s take the trends in reverse order. If you have a website, it is simply inexcusable any more to not have it prepared to be read on multiple platforms/types of devices. Secondly, please take a look at your website and consider how to make it more simple, visually appealing, and written with the mindset of the user in mind. Everyone has content available–come up with a strategy of how you are going to share it with others professionally, opportunistically and systematically. Work with your leadership team to use technology to make your business more personable. When you encounter problems that need solving or innovation that needs to occur, outsource the brainstorming to others related to your business–they will be glad you thought to involve them and your ideas will be stronger as a result!

 

 

 

Becoming an Overnight Artisan Success in Only 5 Years

When someone is touted as a wunderkind in any line of work, many line up to try and figure out how success was achieved. So many become disheartened when their passion or education does not produce immediate results. While most recognize that success does not come over night, it is not at all uncommon for an artist or artisan to go from unknown to well known in a short amount of time. Achieving recognition, however, is a cumulative process. How does one go about doing so on a shortened time horizon?

Fundamentally, an entrepreneur in this space must be willing to undergo wholesale change. It’s not enough to become masterful at creating great designs; without the corresponding strategies to maximize business operations and processes, success will be hard to come by. Too few artisan entrepreneurs take the time and make the effort to understand that sweet convergence of operational, artistic, and marketing opportunities. Those who do create value that is appreciated by the target market.

If you seek to identify and serve target buyers with relevant offerings, create cross promotions with other artisans and handmade entrepreneurs, and craft an airtight plan to execute your strategies, you will be far ahead of the average artisan. Hopefully, your artisan start-up will resonate with the target market, sales revenues will provide the opportunity to grow your team, and you can become strategic about roles and responsibilities. In addition to your design, production, and sales efforts, you will need to task team members with the following responsibilities:

  • strategy
  • vision
  • marketing
  • advertising
  • social media
  • partnerships
  • scheduling
  • logistics

artisan potterObviously, one person cannot handle all of these important roles for very long. That’s precisely why a focus on sales, production, and design early will help create the capital structure to build a team.

If the skill sets listed above are foreign to you as an artisan, you are not alone. Those with degrees in the fine arts, and related disciplines have been prepared to pursue a skill, but not necessarily a business. More importantly, planning, confidence, and diligence go a long ways towards helping you execute on your idea. Since many artisans are not prepared through educational instruction to be proficient in such things as negotiation and team work, they have to learn these things from a mentor. Please find a suitable mentor with a background different form your own who understand business principles well enough to guide you into disciplines that are needful but likely unfamiliar!

Basic business principles in marketing, communications, customer service, selling, and relationship management are undervalued in the art and design community. Disciplining yourself to learn and apply nest practices in each of these principles will yield wonderful results. Very, very few artisan entrepreneurs are able to transition from hobby to avocation to employing others. For you to be more successful, you must work on the business side of your brain, engaging more left brain convergent thinking.

Friends who have been successful in the arts community have told me that, not unlike big businesses, change is hard for an artist. The willingness to tinker with what you make, how you describe it, who you make it for, how you determine who will buy it, how you promote your wares, how you replicate success, and how to transition from sole proprietor to small business are all based on being able to hold your talent with an open palm. Objectively stepping back from your creations to seriously consider who may appreciate them will, by nature, cause you to think differently about what you are making, how you are making, and what it will take to sell enough to pay not just yourself but others.

Best wishes on your journey!

 

 

What Matrix Guides the Artisan Entrepreneur?

Recently, I read the story of a graduate student in her first arts entrepreneurship course. She recounts that the first assignment her class had to complete was to analyze The Matrix with a view towards entrepreneurship. The instructor wanted the students to analyze a.) four key components that converged, and b.) the value created as a result of the convergence. The four components were:

  1. factors within our control,
  2. ones outside our control,
  3. inspiration, and
  4. time.

MatrixUnderstand that the paradigm from which the class was operating had far less to do with the thought of a start-up business venture than the combination of behaviors, attributes, qualities, propensities, and actions requisite to think entrepreneurially. Prior to the assignment, the students had come to a place of agreement that key qualities of the mindset would likely include innovation, discipline, vision, and leadership.

In yesterday’s blog post, we studied the comparative mindset of artisan versus opportunist entrepreneurs. Clearly, the ability to recognize an opportunity is critical to either group to attain optimal revenues. In like manner, organizational skills with regards to people, tasks and ideas are important to possess or acquire. Planning, which is envisioned differently in the mind of some, is a discipline that helps the entrepreneur anticipate and become prepared. Thinking of both conventional and unconventional ways to fund the pursuit of the idea is also generally agreed to be important.

As you look at the paradigm, mindset, skills, and habits listed above, a system emerges. Yet, the system relies on the artisan entrepreneur’s ability to observe a competency model that is unlike any at work in corporate HR circles. This competency model values:

  • intellectual and personal entrepreneurial skills,
  • basic professional skills, and 
  • a general understanding of arts culture, policy, and management.

Students in the class mentioned above pursued their respective competency models through a series of exercises administered by the professor. They were encouraged to develop a vision, produce a comprehensive feasibility plan, write a series of process papers, and prepare “pitches” of their proposed ventures to mock audiences of various forms. The assignments became more challenging when the students found out that they had to work interdependently with one another for the work products. For the average participant, this was an unwelcome wrinkle, as most artisans enjoy their individualism. This is not unlike other types of entrepreneurs, but is a personality trait that we documented in the artisan versus opportunist dichotomy that becomes significant when you think about the components the students had to analyze in their Matrix project.

In order to address factors outside one’s control, there has to be a letting go that is ever so hard for an entrepreneur. Without admitting defeat, one must admit the need for help. Realizing that help may be needed forces the individual to think in terms of team development–not just development, but additional sub-processes like recruiting, training, nurturing, and vision casting. If you’ve had no prior experience doing these types of things, they can become your undoing in an enterprise.

The factors that appear to be within one’s control seem not to present a problem. Yet, as we think about these factors, we realize that we must be delusional to honestly think that, as complexity arrives on the scene in terms of additional team members, the external demands upon the enterprise, and the need to divest ourselves of tasks that don’t match out motivated ability, even the internal environment becomes dicey.

Inspiration seems to come naturally to the creative mind. Finding a way to balance newness and executing on prior thoughts is significant, because being able to do so can determine ultimate success versus floundering. Time is an asset that gets swallowed up despite out best intentions. As we build teams, boards, advisory experts, etc, we are able to free up time to focus on the truly important. 

Value has been created, but not without some proverbial “blood, sweat, and tears.” Please don’t be dismayed. You can do this–but you need to embrace a competency model that guides the members selected for your team to collectively represent the diversity you will need to pursue your vision!

Iterate Instead of Analyze for Innovation Success

Intrapreneurship is needed in large companies.  Commonly, these companies tend to have plenty of data that has been collected to document market dynamics. Whether it is corporate strategy or corporate development, larger businesses have departments that constantly evaluate opportunities for growth–be they organic or inorganic.  Encouraging innovation and breakthroughs can be hard. The main reason big business becomes stagnant is that the mindset required for disruptive advances is very different than the risk management and mitigation approach of many market leaders.

Kevin McFarthing, who leads the Innovation Fixer consulting firm, suggests in a recent blog that “These companies also have a very rational approach to the assessment of investment opportunities. Of course, they find that the expenditure line has a much higher level of confidence than either the timeline or the scale of revenue. For that reason large companies want to increase the level of confidence in the income stream. Various techniques are used; for example, many consumer goods companies will undertake a fairly standard sequential program of qualitative and quantitative market research. This will relate to a database of similar products launched in the past. So, as long as you do the market research correctly, you can reduce your uncertainty and proceed.”

As is pointed out above, the traditional analytical tools used to evaluate comparable opportunities are somewhat like the comparables sought out when buying a new residence: intended to estimate what already exists instead of what has never been built. Relying on historical information rather than anticipating future demand is like driving down the road only looking in the rear view mirror!

On the opposite end of the spectrum, small businesses being run by visionary entrepreneurs tend to rely far less on the projection techniques of their larger counterparts. These start-ups rely on gut instinct, passion, and drive rather than systems. Instead of evaluating a market based on dozens of data points, the executive teams of thriving young businesses gather market information, develop a proof of concept, test it on a limited basis, revise the offering, and are nimble in their adjustments to feedback so that they can quickly bring something new to the marketplace. 

leap of faith

Large companies find what is done in the entrepreneurial space to be akin to a leap of faith. It’s very hard for a corporate type to operate from a place of judgment rather than logic. The willingness to produce something that is not perfect is much less in an organization with extensive quality initiatives.  The whole concept of try…try…try again that is the mantra of an entrepreneur is eschewed in favor of taking calculated risks. While it sounds stereotypical, it is not at all uncommon for the large company approach to be one that avoids undertaking projects without tons of documentation and extensive project and/or product planning down to minute details.  This predictable approach has severe shortcomings in an environment where responsiveness can make the difference between producing an offering that resonates versus one that is a “me too” alternative.

Instead of performing market and buyer research that resembles a canned, rote methodology, what is needed is flexibility, customization, and the ability to constantly iterate. Instead of sequence and a step-wise stage gate process, truly innovative organizations are far more willing to engage in trial and error.

McFarthing says that many large organizations lack the right mindset to explore potential. Changes he advocates that they make to become more innovative include: 

–   Rely much more on judgment to move projects ahead rapidly;

–   Don’t apply the same criteria to incremental and radical innovation;

–   Use a fast and iterative sequence of prototyping and market testing to learn and reduce uncertainty;

–   Go to market as soon as you can, don’t wait for all the facts.

Follow these suggestions and you will change your culture to become more intrapreneurial!

 

 

 

Sell Your Business Even if Others Can’t

In reading about the issues facing small businesses in the United States since the recession began in late 2007, I have heard about many sectors that have fallen behind historical performance levels. One that I hadn’t considered very much until this week is what is called the “business-for-sale” sector, which has seen a huge drop-off in comparison to all metrics known prior to the recession. While many have spoken about the large amount of private equity not in circulation, many of the reasons it is being withheld translate to other types of business buyers.

Whether you are representing an equity firm or your own personal business interests, it is likely that you have been trying to figure out when the economy may turn around. In classic business theory, it would be ideal to buy at a deflated price right before the economy picked up so that your investment could piggyback onto the general trend of successful recovery. Such market timing could make your investment produce very high–perhaps unprecedented–returns.

Since the economy appears to have stabilized, though not surged forward in a demonstrable way, what are these people who would otherwise be buying small businesses thinking? Observers of the business-for-sale sector wonder when they will see a positive change. They are anxious to see more acquisition activity.Buy sell dice

Hindrances to Business Sales

Whether you listen to political pundits, talk show hosts, or economists, all would concur (at least publicly) that small business is key to the overall recovery. Yet, if small businesses are not churning ownership, it is hard for them to obtain the necessary working capital to fund growth and operations. BizBuySell.com conducted a survey of 260 business brokers from around the country to attempt to determine whether market conditions were improving. A whopping 70 percent indicated that financing for business acquisitions has not improved since 2011. These findings and percentages are consistent with survey results from last year, showing a trend of stagnation.

With commercial loans harder to come by (according to the survey), many buyers can’t get the financing they need to do deals.  Business brokers say that banks have made the loan process even more difficult in 2012, decreasing the chances thereby that buyers will begin investing in businesses for sale. Mike Handelsman, group general manager for BizBuySell.com and BizQuest.com, reports that borrowing is particularly difficult for new or young entrepreneurs. Since banks and similar entities have taken the position that a track record of success is one of the top determinants of future success, newcomers to the small business arena–either startups or acquirers–are handcuffed. 

Handelsman cited other factors of concern to business brokers from the survey. Concerns about the U.S. national debt,  political deadlock (re: the fiscal cliff), long-term unemployment and small business/personal tax rates (14%) also appear to diminish buyer confidence. However, he did offer some tips for sellers:

Seller financing is not necessarily the right strategy for all business succession scenarios. But under the right circumstances, a seller’s willingness to finance a portion of the sale can dramatically increase the number of potential buyers and create more advantageous sales terms (e.g. a higher sale price). Sellers also need to plan for the sale, and make their businesses as attractive as possible to buyers.

Here are a few ways to plan for the sale and make your business attractive–

  • Install an outside board of directors, with positions filled by non-competing entrepreneurs rather than the typical CPA, attorney, banker, and family friend.
  • Stop paying executive perks out of business accounts–clear separation will help show your commitment to professional management.
  • Document the tasks and procedures performed by the executive team. When it has been documented, the business is worth far more money because it is no longer dependent on the personalities.
  • Have a CPA review your financial statements–audit if you can afford it–especially if you have never had it done before.
  • Work with a transactions attorney to advise on deal structure and terms so that you can think through tax implications that may cause you to accept certain types of offers.

Chin up! If you follow these best practices, you will be one of the first ones to sell your business, regardless of whether many others sell theirs at the same time.