Tag Archives: performance

5 Keys to a Successful Business Plan

Bill Warner, in a blog post on the Raleigh Emerging Designers innovation incubator website this week, shares the following about successful business plans:

If you were to ask twenty experienced business people what it takes to have a successful business plan, chances are you will get many of these answers and more. Here is my view of what a successful business plan is made of.

“Most importantly, have the passion for your business.”

  • Confirm that your entire heart and soul is behind the business.
  • Insure you have family and friends supporting you.

The Challenge: Having the passion for your business means it is something you may want to do for the rest of your life. It is not a sideline until the job market improves. It is not something you can manage part-time while you are looking for a “real” job. You may not be passionate about the idea initially, but if you don’t become passionate as you do your research, beware. Sometimes, your passion will be the only thing that will keep you going.

“Define your market.”

  • Focus on large and growing opportunities.
  • Intimately understand your buyer’s wants and needs.

The Challenge: A market is a group of buyers that have common buying wants and needs. Business owners need to understand if the market is big enough to go after and whether or not it is reachable. Many small businesses fail to define their market, lack emphasis on customers and groups of customers (market segments), and how to reach buyers in those market segments. Your market definition should include market size, growth rate, market trends, market influencers, number of buyers, buyer wants and needs, competitive analysis and regulatory influences. Test your definition by meeting with other companies in your market segment and with potential buyers.

“Ensure you have a winning business model.”

  • Understand everything that affects your market segment.
  • Determine if your business will produce results.

The Challenge: A business consists of a market and a product or service; not just an operation or a product. You must define both. Export-import is not a business; rather, “importing decorative candles for sale by mail-order to wealthy collectors of oriental art” defines a business. You need to understand how your business will coexist in your selected market segment. How will your business operate within an environment of suppliers, manufacturers, distribution channels, competitors and buyers? Put the whole picture together so you know how your company fits in.

“Know how to beat your competitor(s).”

  • Understand their strengths.
  • Exploit their weaknesses.

The Challenge: New businesses need a creative concept. Sometimes they just follow the pack; thus have no competitive advantage. New businesses cannot ignore the competition. You must look for underserved niches in the marketplace. The creative concept does not have to define a totally new class of business, but rather a “twist” on an existing business may be adequate.  Know all about your competitors and clearly understand how you will beat them. With a product that is uniquely differentiated and satisfies the buyers need, you will win more than you lose.

“Create a winning product or service.”

  • Provide what the buyer wants and in the way they want it.
  • Have a plan to expand to new opportunities.

The Challenge: There are three strategies for success in dealing in a competitive environment: lowest cost (not lowest price), best product and market focus. The first two are difficult or impossible to achieve for most small businesses. The third, focus, requires management discipline and overcoming the urge to do too many other things. If you really understand your buyer and know what it takes to win against competition, your product or service will be easy to sell. Anything less will lead to failure.

Reverse the Mentoring Stereotype

In its most common context, mentoring is understood as someone with experience (and a few grey hairs!) showing someone younger how to perform key job functions. Yet, one of the hottest trends in human resources is termed “reverse mentoring.” Whether due to job loss and the need for new training, or “Second Act” entrepreneurship, or simply the precipitous amount of change being introduced in organizations trying to compete globally, there has arisen a need for this practice where younger workers are now showing the older ones “the ropes.”

While the concept is that exposure to those outside the corporate suite may be good for staying in touch with the values held by newer workers, there are several other benefits. Higher employee retention rates among younger workers are cited as an unexpected, but welcome outcome. Exposure to management issues and how decisions are made are additional upsides.

When Jack Welch was the CEO of General Electric, he  was mentored on how to use the internet by a young employee in her 20s. He saw such promise from the process that he mandated that 500 of his top executives reach out to younger employees to do likewise. These days, mentees are learning how to use social media effectively from their younger mentors. Even at top ad agencies like Ogilvy & Mather, a worldwide managing director admitted that his more youthful mentors had shown him how to enhance his Twitter posts to be less boring. His eyes have been opened to new possibilities and he now plans to utilize Skype and videoconferencing to facilitate distance mentoring across the firm’s 450 offices. HP & Cisco also have reverse mentoring programs in place.

Michelle Rafter, in a blog post entitled “8 Ways to Make a Reverse Mentorship Work For You,” suggests the following guidelines:

1. Find a compatible partner –someone with skills in areas you’re lacking

2. Set expectations- create ground rules for what you want out of a partnership, such as how often you’ll meet and what both parties will get out of it

3. Get your boss’s OK- A lot of reciprocal mentoring can happen on an informal basis. But if you want or need to set up a formal program, you’ll need your manager’s or company’s approval.

4. Be open to suggestions and criticism- learn in days from someone else what one could take decades otherwise by having a thick skin

5. Make it more than just about tech- maybe a younger person could help you learn about sushi, Chinese, popular music, or even how to lead the next generation more effectively

6. Give as much as you get-the relationship should be mutually beneficial

7. Experiment with approaches– a single department, a program that crosses departments, and a multitude of variations

8. Don’t stereotype- not every 45-year-old has the same knowledge or expertise, so don’t assume every Gen Y worker does, either.

Better Mousetraps Require Divergent Thinking!

One of the people I follow in leadership blogs is Dan Rockwell, aka Leadership Freak. His post this morning cautions against working hard versus working smart:

It doesn’t matter how hard you work if you’re working on the wrong things.

He goes on to discuss how doing business without thinking strategically can be harmful to your business and personal health. While it’s needful to get work out the door (think lawyers focusing on billable work, carpenters hammering nails), to only do so is to lose sight of the bigger, value adding activities that distinguish great businesses from ordinary ones. Your efforts are not as productive as they could be because you are displacing the benefits of your focus and inertia that could be applied to thinking about what would make you more successful and pursuing those activities that promise reward for another day–not just the current one!

Some of the activities that suffer when you are not working on your business include:

  • Planning
  • Goal-setting
  • Brainstorming
  • Delegating
  • Organizing
  • Dreaming
  • Alliance building
  • Networking

When our attention is shifted to “working on the business” (thanks Michael Gerber for the E-Myth insights), we are thinking innovatively. Our efforts are building something that will stand the test of time. Net worth/business value soars as we are refining the business model instead of just trying to work harder. Think about franchise systems. The value is in the documented processes and controls. Even if you never plan to sell through a franchise agreement, you would do well to consider the genius behind the movement. Instead of being the person who only makes money off the sweat of his or her brow, you find a way to make money off others’ labors.

Rockwell suggests the following to help you get unstuck and more productive in creating a business with greater value:

  1. Create a weekly “working on” appointment with yourself. Identify and take a next step.
  2. Make small adjustments. You’ll never shift toward working on your business in one giant leap.
  3. Find new eyes. Discuss systems, strategies, and vision with experts outside your field.
  4. Listen. Many leaders and business owners have too many answers and too few questions.
  5. Try something. Waiting for stunning success prevents progress.
  6. Delegate more even if it takes longer at first.
  7. Follow-up and follow-through. Frustrations inspire conversations regarding improvements but follow-through changes things. Perhaps some form of accountability would help?

For entrepreneurs, mentors can be extremely valuable in holding one accountable to a process like the one commended.  Going it alone, without the benefit of outside advice and counsel, makes us technicians without hope of escaping the rat race.  You can change your future today–be daring to do so!

Secret Entrepreneur Weapon

In a January 26, 2012 article for Entrepreneur magazine (Mentors: A Young Entrepreneur’s Secret Weapon) Adam Toren writes,

…to take advantage of the most powerful weapon an entrepreneur can have, find a mentor.

A good mentor helps you think through a business idea, suggests ways to generate that startup capital and provides the experience and savvy you’re missing. You’ll get praise when you deserve it and a heads-up when trouble comes — probably long before you would have noticed it yourself.

Instead of mentoring, many entrepreneurs “hang out” with peers, attend fun/trendy events for start-ups, and make presentations at conferences and forums. While there is a place for many–if not all–of these activities, they do not take the place of a relationship with someone who has knowledge or expertise in areas that are not your own strengths. Often, the mentors even know of others who can be helpful in additional disciplines so that you are able to become surrounded with wise counsel and advice. EntreDot is a mentoring organization that has seen the need for this type of service and is creating and implementing programs via innovation centers and in conjunction with strategic allies to foster entrepreneurship in the Raleigh-Durham area of North Carolina.

Entrepreneurs — especially young ones — tend to tap their friends for business advice. But that can be a mistake. The reason is, friends tell you what you want to hear. For what you need to hear, rather, a mentor is often a better bet.

A mentor could be a professional who advises entrepreneurs for a living or someone working in a related industry who is willing to help you. And unlike your friends, mentors are typically more removed from you and your business. So they tend to be more comfortable delivering bad or critical news and advice. And since many of them have either started up businesses in the past or have worked in industries that you’re trying to shake up, mentors can also fill experience gaps, as well as impart their wisdom on how to handle specific business challenges.

The above quote was taken from another article in Entrepreneur magazine, this one by Martin Zwillig last week (A Good Mentor Will Tell it Like It Is). The gist of his insight is that mentors can come from a variety of backgrounds, but their key role is to warn you of missteps rather than cheer your every decision. The good mentors can help you identify steps to success and stand by you to follow them when challenges would distract you from executing your plan.

Zwillig concludes by suggesting 5 Qualities That Are a Must in an Ideal Mentor:

  • Pragmatism.
  • Fortitude. 
  • Stamina.
  • Connections.
  • Perspective. 


Hope you are successful in putting your own secret weapon to strategic advantage!

 

Put Your Money Where Your Mouth Is

Do your customers feel like you have “skin in the game?” Many times the answer to that question is not an affirmative one. Professionals who bill by the hour or some other common fee arrangement are perceived by their clients as making money whether the clients do or not. Ad agencies, law, CPA, architecture, engineering, consulting and advisory firms all face this uphill battle to demonstrate their understanding of the client’s economic model while simultaneously delivering a service of their own at an acceptable profit margin.

Take the advertising world as an example. The old model was charging clients a percentage of the paid advertising spend. When clients pushed back against the pricing model as a disincentive to do necessary promotion, some agency execs switched to an hourly billing model. There was a disconnect under this model in terms of quality and outcomes. Jaynie L. Smith describes the migration to a new model by Andy Berlin, co-CEO of WPP agency Red Cell this way:

     He stunned advertisers and agencies alike at (a) management conference of the American Association of Advertising Agencies by suggesting a radical change in the way advertising is priced. It boils down to pay for performance: The better the ads do for the buyer, the more the agency gets paid.

     When you stake your claim on your own ability to come through for the client, you and your firm take a calculated risk. Doing so will transform your service delivery model. No longer will “good enough” be acceptable when the client’s success is the focus. By making the client successful, your firm becomes successful as well. Getting your people to make the cultural shift to this paradigm will require strong leadership, courage, and perseverance.

You carve out an enduring competitive advantage when you are bold enough to depart from the strategy of the category killers and pursue client focus and concern. Differentiation on your own terms rather than price or something that undermines rather than builds up your company’s financial position is good business!

To have “skin in the game” means to have greater commitment than anyone else. Show your commitment to your clients by going above and beyond the call. By letting them know that you won’t get paid unless they receive what they seek, you have told the clients that you have their backs–that you are watching out for what’s best for them. That is unique and sustainable and gives you the ability to win people over with whom you would like to do business.