Send Lynette a Confidential E-Mail
As our economic challenges continue with the official unemployment rate soaring to 9.4 percent, more people are contemplating taking the start-up plunge in response to a lack of available jobs. If “entrepreneur” is atttractive as your new title, be realistic about what can kill a company — even one with exceptional products, services, and market potential.
- Capital cave-in. If you don’t have the cash or access to sufficient credit to fund your dream launch, scale back. This morning I had an e-mail from a reader doing success-building work with youth, which she wants to convert to a business. It’s a terrific idea. She’s going to bootstrap the business so she’ll need to start creatively from her home and utilize various low cost facilities for the life-enhancing classes she provides. Lack of capital need not be a deal breaker. Often it simply means designing a different path.
- Financial folly. You’ve got to be realistic about money. Head-buried-in-the-sand approaches only lead to more stress later. Figure out what it’s going to cost you to run your business. Be honest. If you manufacture products, take yourself through every tiny step from raw goods to customer delivery. Compute costs. If you have scrap that can be sold to a recycler, also project income from that extra transaction. If you provide a service, go through all the many processes involved. Add costs. (Yes, this includes labor.) You must know your cost of goods sold (COGS) to be able to price accurately. Sales minus COGS equals gross margin. Remember, you’ll discount for volume, early payment, and promotions. Too often it turns out that COGS plus enough profit to grow the business is a higher price than customers will pay. You want to know before you launch so you can self-correct rather than end up in financial freefall.
- Accounting absentmindedness. You’re busy; you’re wearing way too many hats. However, you must keep accurate financial records. If you know you won’t do it, hire someone. There are bookkeeping services or, if you’re truly strapped for both cash and time, consider what you can trade for professional help. Find an innovative solution. Accept: it’s essential to maintain impeccable records and pay your bills on time (or early) to build an excellent business credit rating.
- Marketing malaise. Since my early days as a marketing executive, I’ve said, “No one will beat a path to your door if they have no idea there is a door, don’t know the door’s location, or why the ‘mousetrap’ behind your door is better than your neighbor’s.” Call it branding, positioning, product or corporate marketing. Just know you must do it. You see little storefront businesses open in strip malls with no fanfare. Often the signage doesn’t communicate what the business does. And usually it’s inconvenient enough that you never stop to find out. They close after a few months. The same process happens with Web-based companies. Marketing your business does not need to be pricey. Simple Web sites-in-a-box can be launched by most people and hosted for less per month than one nice restaurant dinner. Or hire a friend’s computer whiz kid to do it for you. In your community, there are high school students who would love that gig. For a local business, speak before every civic group in your area — not as a sales pitch but as an expert who tells them how to solve a problem that’s important to them. People like to hire experts. Some audience members will hire you and they’ll tell their friends. After a few successes, call your local paper. Tell them about your customers. That’s the interesting story: Your customers’ successes. For national reach, learn to write compelling, attention-grabbing news releases. Distribute them when you have real news. Make your website a must visit. Use new media — Facebook, YouTube, Twitter — as is appropriate for your customers. Be an expert in your field. Approach your market in fresh and audacious ways. In this media savvy era, ignoring marketing is akin to a suicide wish for your company.
- Mediocre measures of success. Several years ago, I was working on a turnaround project for a Chicago manufacturing software company. As I analyzed parts of the business, I discovered an odd habit that turned out to be a problem indicator. When you called their company phone, no one answered. They were paying me to develop solutions for significant problems, but I was often unable to reach them via phone. My initial report started with this recommendation: Answer your phone! Sometimes little things reveal a lot. In this case, much that was important to customers was being ignored – from phones to product capabilities. Examine your business, every day, as your customers do. Are you committed to excellence? Do you deliver it? If not, change. There’s way too much competition to believe mediocre is good enough. It’s not.
Your small business concept may be perfect for building a long, successful future. Monitor these key issues as you move toward your success-focused goals.