More is Needed Before You Get too Comfortable!

The conflict for most small businesses…

    What the owner wants vs. what the business needs!

Michael Gerber – The Emyth

Much of what is recognized as a “small business” is a project started by someone who is looking for a way to earn
money via a recognized area of talent and passion. Someone may have the ability to make some aspect of art and
craft, for example; or he or she may be able to cook very well, etc.

This person goes into business and becomes excited by the prospect mainly because people see him or her making
the most wonderful product as indicated by current popular feedback from the circle of acquaintances.
This individual may be guided to go into business being assured by the model indicated
above – the typical entrepreneurial outlook.

The model suggested you should have uncommon passion for the area of “expertise” (along with talent in this area) then
have the resources (usually meaning money) and have a market opportunity- a ready market for the idea.
This is the classic case for self-employment in the sense of a one-man band. It has worked over the years and provided a
living for many.
The problem is that it is not the strategic way to build a business. By this I mean that it is not focused on innovation and
growth – the means by which a business will eventually free up the entrepreneur to have a life outside of the business
and, perhaps, to be able to take it to a level where it may be sold as a strong, dynamic, profitable going-concern.

The model says whenever your passion for an endeavor is coupled with the right resources of money to deal with costs and
expenses and you add to that the identification of a ready market you have a winning combination. The resulting overlapping
area is the desired area of operation – that “sweet spot” that optimizes the excitement, returns and initial growth.
After the initial growth however, there comes a period of reckoning. At the start, no one is concerned that there
is not a lot of marketing because “that will come”.

No one is concerned about the accounts because everyone knows the small business has to “rough it” for a while and
have little record-keeping. Salaries and benefits are low because everyone knows that the small business has little money.
The entrepreneur does most of the work because everyone knows that the small business has very little administrative work,
little money and has to concentrate and doing the production work to the standards that made him or her admired for the
quality of craftsmanship over the years.

Then taxes and returns begin to come due. The bank and suppliers want documentation reports and evidence of structure.
People start to sell their services to the entrepreneur, encouraging him or her to look at this and that market and marketing.
Then slick salespersons start to woo the operator, showing how much sales can be achieved with the buying into this or that system.
Then there is the need to get onto social media and other networking opportunities. They all seem so attractive, so enticing, so promising…

But how does one reconcile that nice graphical overlap of passion, resources and market opportunity? How may it all come together?
Depending on the matter at hand, the charisma or persuasiveness of the person selling some service to him or her, the entrepreneur may
buy in, especially if it suggests that the service being sold will prevent him or her from doing some of the unsavory aspects of entrepreneurship.

This situation can last for a long time, even in cycles, where the business person gets another loan, hires some promising new people over time,
change locations, change products, etc., in an attempt to become unstuck, but keep coming back to square one. He or she may even get
to the point of believing that being in business for a few years is an indication of success, even if they are losing their finances, time or peace of mind.

At this stage the person may consider that what he or she wants (or how it is being approached) is not in sync with what the business
needs for success. Hopefully that does not take too long to be recognized but this is the “unnatural” part of the start.
It is where the business needs help to start right and it is where the foundation may be laid for a more thorough consideration of
what will be needed – beyond passion, money and a perceived market opportunity.

The basis for success starts with an understanding that comes with appropriate mentoring and coaching.

This may be the most productive investment at start-up.

Your Strategic Plan is not Your Usual “Business Plan”

Check with most people who are about to start a new business and they will be preoccupied with
the proverbial business plan. This of course will be topped off by some “marketing plan”.
Generally, the level of input and commitment will be dependent on the reason for the plan.
The bank may want one to justify why they should lend money, or the aspiring entrepreneur, having
done some business courses, may also use the experience as encouragement for doing a plan.

Few would refer to it as a “strategic plan” because the term may seem too highfalutin or, it is
not the common “with it” term so it is the “business plan” that is pursued. In addition,
you may find someone who is willing to write the business plan for you and have it nicely packaged in the best colours and on the “right” paper, etc. Most times it is set aside after the initial phase.

Yet I believe that in times like these, when resources are scarce and there is the need for innovation, we should
focus on a strategic plan for our business. This plan may be one to start out or one that emanates from a current business that is being revamped to suit some purpose. It is hard work. Not in the sense that it is difficult, but it involves many areas and so it is not the route many would go. You can get some queer scrutiny in trying to promote the
idea of a strategic plan. Your strategic plan requires time and insight and if comes down to it, paying someone
to help you write it can be of great benefit, even if it is one of your significant start-up expenses.

A strategic plan for the small business should be designed to give it a chance. It is as simple as that!
By strategy I mean that one aligns the entity with what exists and what is anticipated, in order to achieve a significant future goal. This is where you try to separate matters that are tactical from those that are long-term and foundational – strategic. Tactical is usually more appealing, more short-term in nature and easier to get done. Strategic planning requires a vision, requires sacrifice and also recognizes what is bad for the foundation.

Some years ago, someone told me, as he was about to partner in his start-up, that he was about to give 110% to the venture. Within two months he was off to visit his family abroad, for three weeks, for no reason other than that he no longer had to apply for vacation. That is bad for the foundation and he is longer in business.

Your strategy is essentially about the reasons you expect the business do carve out a profitable niche. It is the framework for connecting your capabilities with “what is”. Your typical marketing plan is not the basis of your strategy, and is insufficient. Inherent in your overall strategy is your marketing and other strategies because how you market is not based on one aspect but on the multiple aspects of your business and its environments. Hence it flows from your strategy, and how you execute depends on the realities you face.

Which is not to say that you are doomed to fail without a proper strategizing process.

No!

Some businesses will have some amount of success without it and some will fail in spite of it. A war could be lost by an army that prepared well but did not anticipate an earthquake. So strategy is about giving yourself a good chance.

Superficial courses on “entrepreneurship”, doing a few business-related subjects, jumping onto the latest fad and seeking networking opportunities because it is popular will not insulate you from business failure. Your business requires a strong strategic foundation and if you have your connections, your advantages and so on, that mean it has a better chance of success.

Therefore, a purposeful approach to strategy will incorporate a model that is dependent on a number of aspects of the business:

- A clear vision
- Your strategic objective
- Your organizational strategy
- Your management strategy
- Your people strategy
- Your marketing strategy, and
- Your systems strategy
Depending on the nature of the business, some aspects may be emphasized over others but it is a fallacy to think
that any one of them can exist by itself, leading to a successful plan, and a viable modern business. It is because of
this misconception that over 60% will fail within the first two years.

These ideas are not always easy to grasp and their appreciation depends on the personalities, propensities and vision of the individual business person. This is why some entrepreneurs, for example Ray Kroc who made McDonalds a global
force, were relentless in addressing all aspects of the list above.

Mentoring and coaching is useful because some of the aspirants don’t “get it” at the start.
The more you can think strategically and the more you can act on purpose, the more chances you give your
business to succeed. It can be learned.

Business Ownership: A Conversation with Yourself or Your Partners

Business Ownership: A Conversation with Yourself or Your Partners

A critical aspect of business strategy and survival is the matter of ownership.
Many people who go into business do so because they have had enough of not being
in charge and in full control of their fortunes. Hence ownership provides an opportunity
to take full responsibility.

Not surprisingly, some people propose a business idea because they have had some interaction
with others with whom they feel some level of synergy and cooperative spirit. This spirit may be real
real, but it can die very rapidly. Collaboration in business is a vital way to minimize start-up costs because
very often the resources needed to employ specialized skills are not available. This is even more evident when
one considers that the passion, organizational skills and raw capability are not easily encountered
in one person. Many ventures would not have been given a chance without collaboration.
Yet, like most relationships, partnerships in business are challenging and perhaps
because there is a tendency to judge commitment when some level of imbalance
in efforts is detected, things often fall apart.

And at times partnerships fail because of success! When the venture is successful and one party
starts to wonder if he or she would not be better off on a personal basis if he or she were working
only for himself or herself, then that threatens the bond. Collaboration soon brings out suspicion, stress,
insecurity and failure. What is the reason for this paradox? Why is it that the same thing that
created the opportunity for success leads to the venture’s demise? Not to mention the demise in
friendships, relationships and finances that sometimes follow. There are many reasons why people
want to get out of being in business together, too many to mention in a limited space, but
there are many reasons for supporting a partnership too.

This is something to consider carefully as a part of the strategic deliberation before the start
of the venture. Many people recommend things like partnership agreements, complementing
skill-sets and so on. And these are good ideas. Yet, one aspect that is seldom explored is the matter
of the heart and soul of the partners.

Economic doldrums are common nowadays. The way out is to have more entrepreneurship and that
invariably means more partnering. But going blindly into partnership is risky. The answer does not
lie in neatly packaged solutions. A big factor is cultural and the new approach to the overall topic,
especially from a macro-perspective is to be aware of the cultural challenges confronting partnerships.
People will make reference to what the “Chinese” or “Indians” do and why we cannot do this or that.
Cultural factors are latent and few people are aware of them or understand what is happening.

The big question is profound. Why would anyone not want to partner – share ideas and risks – in an
area of life that is almost guaranteed to drain you of your life’s energy and peace of mind if things go wrong?
If the common complaint about “capital”, “skills” and so forth are correct, why do we make such a big
effort to make it harder on ourselves by avoiding collaboration?

A big part of your business’ strategy is to start right. Even if you are a single business person
you have to have a conversation with yourself. What am I getting into? What am I prepared to give up?
How long a time might I give myself to achieve certain goals and how I am likely to respond
to the rigors of the task or the need to divert time to or away from other life issues?

If you are partnering you still have to have the same talk with yourself and your partners-to-be. This is about
the area I refer to as the heart and soul. It is not about your financial contribution. It is not about turning up
for meetings and agreeing to be a Director or a Manager. No, the answer lies, in an undefined way,
in the area of that aspect of your being that I call the heart and soul. If it is not detected, don’t bother
to start the relationship and / or the business, it will almost certainly lead to disaster.

This is why mentoring / coaching is useful and important. It is not so much the technical skills
of the mentor/coach that are important here, it is the ability to understand what is necessary and to
make it clear to the subject, the aspiring entrepreneur, what is important for success. Many
successful athletes do not have coaches that are athletic in appearance or abilities…it is not
about appearances.

So before you do anything, have this talk with yourself or with your partners-to-be. It does not
matter what else you do about business ownership and survival if YOU cannot depend on YOU!

Alrick
“we understand the small business”
www.smallbusinessmentorja.com

 

Start with the End in Mind

The Bible said, “In the beginning was the word…”

I say, regarding business survival, “In the beginning was the strategy…”
That shows confidence in the outcome. So it is appropriate to start here.

Now this may not seem sexy and appealing but it is the key to business survival. One important thing that has to be
learned is to pay attention to substance and be wary of the hype.

One of the local success stories is a company that is relatively young, Jamaica Money Market Brokers, JMMB- one of the youngest local institutions of its kind.
One can see that this firm started with strategy and a vision of what is possible.

Now go back in time and reflect on the general communication, image and standards of this business and you don’t see sexy, you see purpose. You feel how everything comes together.
Developing business strategy is extremely difficult. It is not really surprising that significantly more than 60% fail in the first two years and many of the survivors drain their principals over time, keeping them hanging on to their pride, after having lost their way.

The difficulty arises for several reasons,. Many people take a high level of ego into entrepreneurship and they believe that because they have ”invested” in a business no one can tell them anything – especially if you don’t have a big name. Add to that the matter of ignorance. Many people do not know what they don’t know, leading to waste of resources and shattered lives. Because when the capital has seeped out over time, the chances of recovering gets less and less as the weeks pass by.

But maybe the biggest reason of all, encompassing all others, is that businesses usually are started badly. Only a very small number of people know, by instinct or experience, that a business must be placed on a sound strategic footing. The usual thing nowadays, especially with the internet hype, is that many with a following have become experts. They show you how to promote this and that and they look at the appealing aspect of selling and promotions, group it as “marketing” and then promise that they can stay from a distant and sell you a “system” to manage your business.

This may work for some businesses based on selling intellectual property (with high appeal and low overheads) but a business that is selling tangible products whether via manufacturing or trading needs to meet the realities of the process and environment and simply receiving a package of DVD’s or links to a web site is not likely to be helpful. Added to that is the fact that the sizzle from the
promotion soon dies and very few entrepreneurs will have the time or the will to go through such material when their business and life situations vie for their attention.

Hence the hard but necessary thing is to start right. I cannot tell you from exact knowledge but I would wager that in starting, JMMB would have considered a development model that include most of, or all of the following:
- A clear vision of what is intended, including the founder’s primary aim (note that the founder has since died and things still seem to be on track!
- A strategic objective
- An organizational strategy
- A management strategy
- A people strategy
- A marketing strategy
- A system’s strategy

These may be as simple or as complex as one wants and, yes, they are also important for a business starting out as a one-person unit.
If what is intended is a “business”, then this framework can evolve into one, which does not have the founder as a constant part of the day-to-day operation.
If it intended to be a “self employment” venture, that can work too but it is important to know the difference.

Next time I will discuss a framework that is being passed around which is not necessarily helpful and later go into the difference aspects of the strategy as indicated above.

I part with this question: what gives one the authority to be a teacher here?

The answer is awareness. But that may seem simplistic.
The group Black Uhuru has a song with a line that says, “…suffering makes you realize what it takes and how to be a Natty Dreadlocks…”

Suffering here means, of course, the ills, discomfort and failures that accompany an experience. Later, reaching a level of success, it means you have taken the lessons from them.
There are, as I said before, a few people who know by instinct what to do. Many of us suffer into this knowledge.

Let me help you to minimize them.

Contact me for more information on how I can help.