Module 11:  Putting it All Together

         BUILDING YOUR WINNING BUSINESS IN NORTHEAST ARIZONA

What do you have so far?

Hopefully at this stage you have a pretty good draft of a business plan.  And you have some knowledge of basic small business concepts which may be helpful to you as you progress with your business.  This puts you miles ahead of most small businesspeople who start without a plan and without any of the basic training you have received.

This Module deals with some loose ends that will hopefully help you tie things together to make yours a winning business.  There are some final points, and words of advise presented here that will hopefully help you develop your ‘small business vision’ which can guide your success.  All the good advise in the world may not help if you don’t have a sense of purpose, and principals to guide the way.

How to catch an angel

In the last Module we spoke of the value of an angel as an equity partner.  One technique that I have observed small business people use successfully involves an active search for an angel using a ‘low key’ sales approach.  In this scenario you make copies of your business plan to ‘share’ with influential, mature business-people in your community.  You don’t ask them to invest in your company.  You do ask them to review your plan and give you the benefit of their considerable experience.  They will be flattered and not recognize this as a sales effort.  Once they have read your plan, they may see your potential and recognize a good investment opportunity.  I have seen this approach used successfully on a couple of occasions, and in both instances the investor funded their whole project.  The downside risk of this scenario, by the way, is that you end up with nothing but some good business advise.  You can seek out prospects from all walks of life; your church, the local Chamber of Commerce, wherever.

The value of service companies for those with little cash

Do you still have the notion that you can’t start a business today without a mountain of cash?  In certain industries this can be true enough.  But if your pocketbook is light you might consider a service industry.  Unlike retailers or manufacturers you don’t require a large investment in inventory or plant, machinery or equipment.  And this is one of the most rapidly growing segments of our economy today, which represents more opportunity.  Often people find that they don’t have to have a lot of experience in the field to excel either.  You may be able to get into a franchise and get the training you need, also.  A large contingent of service businesses have been started by employees of others who decide to take their skills ‘public’.  Your former employer might eventually be your best customer, finding it preferable to pay you hourly for the same job you were formerly paid a salary for.  The advantage to you will be working with other clients to make more money, and the freedom of working independently as your own boss.

Franchising vs. Building your own

Franchising is one of the best opportunities for a start-up to be successful.  The failure rate for franchise outlets is much lesser than for independents within the same industry.  A franchise will often provide an economy of scale in providing supplies, inventory, advertising and promotion and staff training that an independent cannot equal on their own.  In certain industries it is difficult to compete with the successful franchises, such as fast food restaurants.  Customers prefer the franchise outlets because they are a known variable, and independents will vary from operation to operation.  On the other hand, franchises are more expensive to start.  Rarely are you able to start a franchise as cheaply as an independent, and the fees paid a franchiser are usually based on sales and can be substantial.  In your deciding whether to go franchise or independent it is good to study the franchises and look at your industry.  How successful are independents in general?  Do the franchises dominate?  These factors, along with your individual marketplace and start-up capital, can weigh heavily on your decision.

On working for your people, for your customer

The philosophy I’ve tried to impart throughout this book has been the importance of empowering and leadership in working with employees.  It is more important than ever to be customer driven in todays competitive environment.  This goes beyond providing excellent customer service, which must be a given.  We are talking about exceeded the trend of exceeding customer expectations, which is also becoming a necessity.  Closer to a partnership, you must anticipate your clients next need.  Work with them to develop their next purchase to their specifications and then exceed their expectations in doing it.  The only way you will make this happen is with a cadre of employees who represent your company as their own.  Territories and old management structures have no place here.  Your people must all act in the best interest of the company, in the best interest of its customers.  You should settle for nothing less.

Golden Rules for Success

I have collected some ‘truisms’ over the years that seem to apply to small businesses.  This list is not, by all means, all inclusive or even representative of the wisdom of the ages.  It is, however, the observations of the author, applied to small businesses and advise that might be applicable in some of your situations.

·        Don’t quit the day job.  The cessation of income while your new business is in the formative stages can often lead to a premature death to a good business.  You need to give most new businesses more time to be successful, and the pressure to make an immediate ‘living’ is often too much for the business and entrepreneur. 

·        It will take more money than planned.  This is nearly always true for small business start-ups.  Double the amount you originally plan for capital costs and you will often come closer to the ultimate price you will have to pay.

·        Starting off with too little or too much money is a curse.  Too little money is often better than too much money for a start-up.  You will still have to learn the lessons of financial control when you start with too much money, but the lesson will not begin until you have spent your original nest egg.  Too little money will never allow your business to achieve its full potential, and you will never be able to reach a critical mass.  With many capital-intensive businesses this is critical to success.

·        Sweat the little stuff.  An attention to detail is one common thread to all successful small business owners.  They keep their eye on a narrow range of key areas that allow them to correct the business course when things need fixing.

·        The means will justify the ends in the long run.  The concept of hard work and straight thinking will ultimately lead to success is not dead.  Doing the right thing, given enough time and nurturing, will ultimately lead to victory.

·        Quality is more a state of mind than a condition.  The larger corporations all talk about quality and have sophisticated programs to assure their quality is tops.  Small businesses need to have an instinct, an intuitive knowledge of what quality is.  It will show in their every action and make for a better product in the long run.

·        Let your market and customers determine your expansion plans.  The best laid plans are fraught with problems and inaccuracies.  If you will trust your customers and markets, they can lead you, often in a self-correcting fashion, to business success.

·        It can always be done cheaper, given the time for scrounging.  If you can take the time for deeper digging, you can often cut through barriers of capital cost and lack of equity.  Creative scrounging is a lost art.  This attitude of finding a way can make it happen for you!

·        Service is more important than price in the long run.  Even in competitive industries the higher quality service will lead to greater success, all other things being equal.  Most industries are making a flight to quality.  The flight to service takes this to the next level.

·        An organization is only as strong as its lowest level personnel.  The person who answers the phone, makes the estimates, or sales calls is the most important person in your company.  Consider turning your organizational chart upside-down, to put the customer on top, and the contact employee next in terms of importance.

·        Business success is most significantly measured by the opportunities created by people.  How you define success is rarely as meaningful in terms of dollars.  Making opportunities for people (including yourself) to succeed is the best goal for any small business.

·        Change creates opportunity in the long run.  It’s difficult to see this when you have just lost your job, but change is usually good for people and organizations over time.  Find ways to re-examine your methods and challenge your people to change for the better.

·        Have a “stop loss”.  Sometimes things just don’t work out.  No matter how hard you try, things just don’t work out as planned.  It’s a good idea up front to consider how deep you’re willing to go.  In the “heat of battle’ you might decide to put a second trust deed on your house to keep the business afloat.  Too many people have invested their retirement savings on a losing proposition.  Have a figure in mind ‘up front’ on how deep you’re willing to go, and stop there.

Ten Commandments of Small Business Success

This is excerpted from Jane Applegate’s “Succeeding in Small Business:  The 101 Toughest Problems and How to Solve Them” [1].  You can hang the list up and refer to it regularly for guidance.

Ten Commandments of Small Business Success

1.  If you use what you have, you have what you need.

2.  Before buying anything, ask yourself:

          Do I really need it?

          Can I buy it used?

          Can I borrow or rent it?

3.  Every day, tell yourself:  “I can’t do it all.”  Then get help.

4.  No matter how busy you are. take a break for lunch.

5.  Every day, see your business as others see it.  Walk out of your office and

     walk back in again.

6.  Thank everyone you work with.  Thank customers, clients and vendors

      for doing business with you.

7.  Use first names if it’s appropriate.  People like the personal touch.

8.  Take a few minutes at the end of the day to praise yourself for all you

      have accomplished.

9.  Forgive yourself for all your mistakes.

10.  At the end of the day, write down all the things you’ve completed.

       Then, list the things you need to tackle in the morning.

Where do I go from here?

This is a good start, but remember it’s the beginning of a way of life, not the completion of a course.  The skill of business planning is one that you should continue to utilize in your daily business.  I wouldn’t recommend rewriting your plan weekly, however.  You may wish to do a rewrite annually and to do adjustments or addendum’s quarterly.  Take your monthly financials and review your annual plan at the end of each quarter.  If appropriate, involve your people in this process and work with them to pursue the course corrections that are often necessary.  And keep doing this process year in and year out!

I would like to personally wish you the best as you go forward in starting your business, and hope that yours will be a winning one!

-Mark Engle