• Freedom
• The ability to make their own decisions
• Not having to answer to ‘the boss’
• Building a business by design, from the ground up
• Taking holidays when they want
• Spending more time with their family
• Making more money

What they actually get in too many cases is…the complete opposite. If you think about it, a business needs the following 5 functions working well to thrive and prosper:

1. Product or service development — it needs something to sell
2. Marketing — a means to connect the product or service with its likely buyers
3. Sales — a process to turn the marketing into money
4. Technical expertise — the ability to make or deliver the product or service to the end customer
5. Support functions — administration; finance; people who ensure the wages are paid and the lights are on

It is extremely rare to find all of those skills in one person.

And this is the primary reason why the majority of businesses fail within 5 years and fewer than 5% make it to $10 million revenue.

For starters, what can you do?

1. Play to your core strength

Firstly, figure out what you are very, very good at. It could be product development. You might be a crack salesperson. Or perhaps you are an excellent ‘delivery’ person. Whatever it is, isolate your core strength (for there will usually be one of the five areas that stand out above the rest).

A big business is rarely anything more than a small business that did the right things well.

It is important to figure out what processes you have to get absolutely right early on in the piece. I admonish all small business owners to spend serious time on this.

To quote the late, great management thinker, Peter Drucker:

“There is nothing so useless as doing efficiently that which should not be done at all.”

I recommend a timeless classic to all budding and existing entrepreneurs who are serious about building a proper business rather than simply creating a new job for themselves. The book is called The E-Myth Revisited by Michael Gerber.

It is a quick and easy read and will give you powerful insights into HOW you can take my concept of isolating your core strength and apply it to your business.

Essentially, Gerber helps you create an organisational chart for your business and put names in every box. As you can imagine, if you are a sole proprietor or have just a small team at present, your name is going to appear in a lot of the boxes. That’s OK – you just need to put together a plan to gradually remove yourself from the boxes that do not represent your strength.

2. Get serious with numbers

Many business owners get stuck because they do not understand the financial implications of the decisions they take. For example, how many customers can I afford to lose if I put up my prices? Should I hire an assistant to expand the business, or am I better off doing everything myself and keeping the profit? Should I remain as a sole proprietor, or would I benefit from a partner (or vice versa!)? What happens to my family if something happens to me?

If these are the sorts of issues that are on your mind, get professional advice. You’ll find that a proactive accountant, for example, could really put your mind at rest with assistance in these areas and, as such, can fast track the support function of your business.

Source: http://myob.com.au

Do you grow your company as fast as you can by acquiring customers, or do you focus on breaking even first and making a profit, or neither?

There’s a great business saying which can be very focusing for business owners. It goes like this:

Revenue is vanity. Profit is sanity. 

I wholeheartedly endorse that, but I admonish you to consider this important addendum:

Cash flow is reality.

Generally there are 3 business models that anyone starting up in business should have in mind.

1)    Sole proprietor. The owner does all of the work. Overheads are very low so the owner keeps most of the profit.

2)    Small, boutique business. Often these emerge from a startup. The owner gets frustrated doing everything so he or she hires a small team — perhaps a salesperson or someone to look after the finances and administration.

3)    A larger business. Remembering that a big business is nothing more than a small business that did the right things right, the owner systematically and progressively grows the business by hiring a team of people, creating new products and/or services and considering new locations.

So which is the right approach? Well, it depends. What’s right for one person may be totally unpalatable for someone else in exactly the same industry. To determine the most appropriate approach for you, start with your objectives. Why are you considering starting your own business?

So back to the question: growth or profit? Growth relates to top line — revenue. Profit relates to bottom line — what is left over after you have paid all of your expenses. Let’s look at a simple case study to make some informed judgements on this.

Jenny decided to start her own business offering hairdressing and beauty services. She was well known in her local area, great with her customers, and enlisted the help of her brother, Mike, who brought marketing skills to the party.

In year 1, Jenny’s business looked like this:

In year 2, Jenny decided she needed to attract more customers.

She figured that if she worked 50 weeks a year, 6 days a week, she could see 7 customers per day, so her capacity should be 2,100 transactions. She decided to discount her prices by 10% to attract more customers.

This was the result:

By year 3, all seemed to be going well so Jenny decided to continue the push to fill up her capacity.She decided to offer customers a 14 day account, rather than asking for cash upfront. 50% of customers took her up on this offer.

 Her business in year 3 now looked like this:

Here is the most important table of all:

In year 3, Jenny was working over 30% harder and generating the same cash as in her first year of trading. It doesn’t look good. She also found in year 4 that, because of her inability to enforce the 14 day terms, her receivables blew out even more. She had to hire a part-time person to take care of them, which incurred more cost. And because of her cash flow problems, she was unable to pay one of her key suppliers on time with the result being that the supplier shortened its own terms of trade, hurting Jenny’s cash flow even more.

Don’t do it yourself. Go to a great Web design firm, and then follow these tips to make sure it’s a happy collaboration.

I’m going to go out on a limb here and assume that if you clicked on this article,you’re probably not the one who’s going to do the website building and you’re not looking to learn code anytime soon either.

You’ll go to a Web agency and work with a designer, developer (sometimes more than one), a site architect, and an account manager or salesperson. Building a quality website involves a lot of people and I’ve found at my Web design company, many clients come in and don’t know the basics of how to deal with a Web agency.
With so many people, how do you get everyone on the same page–and working toward your goal? Here are a few strategies to remember as you build the perfect website:

1. Know what everyone wants from the project.

As a client, you want your site done correctly, quickly, and inexpensively. The designer and developer want to finish the project fast, the architect wants to ensure the site will lead to conversions, and account managers want to make a strong sell. Knowing that each person in the equation has different goals can help you to be sensitive to their needs and avoid unnecessary road bumps along the way.

2. Don’t bring a proposal.

Most Web design agencies prefer clients don’t attempt to spell out functional specifics of the site. Clients should present their overall business goals and target audiences, not pencil sketches, wireframes, or examples of other websites. Come in with a marketing plan, not a development plan. If you’re working with a good agency, you’ll get their product and their ideas, which are often much more valuable than just the product itself.

3. Bring your branding elements.

Plenty of clients come in without this, and it’s a huge no-no. Present designers with your company’s brand style guide, including logos, colors, and any other branding elements to help designers form the proper strategy for your needs.

4. Ask for a logic model.

Ciplex just started providing these for clients last month. Logic models take in an understanding of your business goals and target audience, allowing you to look at every design and development decision in terms of primary goals and target audiences. It can help you to connect small decisions to larger goals.

5. Be willing to learn.

You’re not the expert, the Web design agency is. Have an open mind. Be willing to learn about the process and what goes into building websites the proper way before attempting to push your ideas through the door.

6. Be ready to work with many people.

Websites are complex. That means they require having a lot of hands in the project all at once. Be communicative with every team member, not just the developer or the designer. Each person has a very different role, and avoiding disconnect during the process is key for creating the highest quality site.

7. Be human.

Too many clients end up making harsh demands of their Web designers. Don’t be one of them! Remember, your Web team is on your team. If you make them hate you, they’ll push out the final product quickly just to get it (and you) off their plate. Be human, and treat designers as your teammates if you want the best results.
Remember, creating a great website takes many steps. If you can’t be a helpful and cooperative client, your final product–and ultimately, your business–will suffer.

Source: Inc.com

Make sure your staff understands how money flows through your company. You’ll improve the bottom line.

Throughout many of my financial roles, It wasn’t common for me to tell anyone anything about the company’s financials. I understood how the money needed to be spent and I was positive that by disclosing specific dollar amounts, employees would spend money haphazardly.

To be honest, I had experiences with employees that didn’t reinforce my trust in their ability to make good spending decisions. While boarding a flight to Sydney, for instance, I realized one of my more senior contractors had booked herself in first class. I have also had employees try to expense everything from dental floss to mascara.

So, if I let on the amount of money we were making and planning to spend on a project, I wondered if they would haphazardly spend the money just because it was there.

But in order to grow the company, I knew I had to start telling others about our finances. I was a bottleneck to growth because I was the only one who understood how money flowed through the company.

Divulging a Little Is Not Enough

My first step was to speak about broad numbers, similar to how a fundraising campaign is tracked. I converted our high level goals (sales quotas and invoicing for example) into percentages. For example, if we were targeting $1 million for a given quarter, I would represent that number as 100%, and then let on the percent of achievement throughout the quarter. My hope was that this would be enough to help employees make decisions about how or if we could spend money. Unfortunately, this didn’t help. The broad percentages were not real enough to be understood.

Specific Numbers Align the Organisation

After taking a very deep breath and then reading about the success of open book management at other organisations, I started to relay more specific dollar amounts to the team. Our budgets are now based on actual numbers, not just percentages, so the team can track progress toward our financial goals. The results have been amazing.

By opening up the books and allowing others more transparency, more people on the team have a deeper understanding of how the company makes and spends money. And because key employees now know the budgets and review them regularly, we have organisational accountability. I created a true “controller” role. We have been able to save us a lot of money by taking a close look at our spending, negotiating better rates with our vendors on expenses like office supplies, and implementing better tracking of expenses and billings.

I had to learn through trial and error. But now, with more disclosure, I am not the only one who is aware when spending on a line item or project is inappropriate. I also learned that when department heads are aware of what their group’s “cost” the company, they are more motivated to keep spending in line.

You’ll See Results–Fast

We made no more revenue last year than the year before. In fact, the company spent more money building out new research about development and media convergence and holding a virtual conference. But it was profitable because of closer attention paid to where dollars were being spent. If it hadn’t been for increased awareness of the dollars involved, we would have lost money.

I was reluctant to peel back the curtain and expose the numbers.

Yes, I had an issue with control; it’s common among entrepreneurs. But in the end, being transparent with my employees has given them the tools they need to stay on track.

Back in October, Google announced the limited beta release of Universal Analytics as a way for businesses to understand the changing, multi-device customer journey. Today, Google are excited to welcome and invite all Google Analytics customers to try Universal Analytics.

The benefits of using Universal Analytics to businesses are:

• Understanding how customers interact with your businesses across many devices and touch-points,
• Insights into the performance of your mobile apps,
• Improvements of lead generation and ROI by incorporating offline and online interactions so you can understand which channels drive the best results,
• Improved latency on your site by reducing client-side demands.

I am an efficiency guy. I love to build systems and put processes and procedures in place to do the work that needs to get done.

Every once in a while, though, I’m reminded of how important people are to that equation.

I was hired recently by a company to advise them on a problem they were having with one of their systems. Some of their sales representatives were entering call tickets into a tracking system incorrectly and the owner thought it was a system issue.

After spending a few days on site with their employees, I realized it had nothing to do with the system. If you followed the system, it was actually physically impossible to enter the transaction incorrectly. The problem had everything to do with how he was on-boarding and training his new employees.

Here are some tips I have seen work for adding people to your processes and making both sides of the equation more successful:

Put Like Groups Together

When you’re building a company, it’s hard to organize everyone into “like” groups. You should try, because the benefits are powerful. Employees learn from each other when situated closely to one another. Overhearing others handle problems around them, even if they are not directly involved, is a great way to learn the ropes.

Pair New Hires with a Mentor

Make mentorship a part of your senior staff’s job description. Often, even senior staffers won’t do something like this unless they’re specifically asked to. So roll out a formal mentoring program that encourages regular check-ins and a level of accountability between senior staff and those new to your organization. This is a great way for new employees to get to know the senior staff in a meaningful and non-threatening way.

Give People Some “Blah” Space

In a world of highly-scheduled days and back-to-back meetings, when your teams work on projects together, it can be difficult for them to pick up where they left off last time. Make sure you include some space or place for teams to leave projects while they are in process. It’s much easier for the team to walk-in to an immersive environment and pick up where they left off than to start over cold.

It’s also a great way to show any visitors to your company work in progress and give them an idea of how your company arrives at the final product.

Don’t just do things the way they’ve always been done, and don’t rely on systems without human input. Take some time to consider the people who will be doing the work and build components that help to assure their success.

Tax season.

It’s the time of year business owner’s dread. Writing a check to the IRD is never fun, but the process of sorting through receipts and compiling coherent financial reports can be excruciating–unless you have done a decent job maintaining your financial records throughout the year. With good bookkeeping, tax preparation can be a relatively painless process.

From a bookkeeping perspective, selling a business is similar to tax season. The more time and energy you invest in maintaining good financial records before the sale, the easier it will be to prepare required financial documents and accurately present your business to buyers.

Solid financial records are a critical part of the sale process because your company’s financials will either validate or disprove the claims you present to sellers. For example, if you tell buyers that the business has a five-year track record of year-over-year growth, you better be able to provide earnings statements and balance sheets that support the company’s growth trend.

Understandably, shoddy or incomplete financial records raise red flags for potential buyers. Typically, sellers who lack proper financial records experience longer selling cycles and receive lower prices for their companies than those who are meticulous about bookkeeping and financial reporting.

Even if you don’t plan to sell your business for several years, you have a lot riding on the quality of your bookkeeping and financial reporting routines. Here are a few tips to help you prepare your books for a sale–whenever the sale occurs.

1. Prioritise investments in bookkeeping and financial recordkeeping.

Small business owners wear many hats in their organisations and it’s easy to push bookkeeping responsibilities to the backburner. But what many business owners don’t realise is that poor financial records have a bottom line cost, both at tax time and when the business is sold. If you don’t have the time or skills to maintain your company’s financial records yourself, invest in a part-time bookkeeper and/or accounting solution to ensure the integrity of your financial records.

2. Organise financial documents early in the sale process.

Perception is everything in a business sale. If your financials aren’t prepared and formatted for the marketplace, buyers may begin to question whether the business is a good candidate for acquisition. For sellers, it’s essential to begin the organisation of financial documents early in the process and to avoid taking the business to market until all relevant financial records are in place.

3. Create a high-quality financial records package for buyers.

Present buyers with a well-organised package of high-quality financial documents that contains key information about the business (e.g. inventory and staff lists, a current client list, tax returns, etc.). To determine and assemble the right financial documents package for your company in your situation, speak with your business broker or accountant. However, here are some of the documentation records that are universal to nearly every business sale:

1. Current and past financial statements
2. Records of business purchases and bills of sale
3. Statement of seller’s discretionary earnings or cash flow
4. Financial ratios and trends
5. Accounts payable/accounts receivable reports
6. Non-disclosure or confidentiality agreements
7. Marketing plans and samples of marketing material

Good books are the sign of a well-managed business. By maintaining financial records on a consistent basis and preparing a first-rate financial package for buyers, you can project confidence in your business skills and assure buyers that your business is worth every penny.

Lessons from how founder and CEO Jim McCann scaled $330 million (market cap) 1-800-Flowers.com.

I was reading an agenda at a business conference talking about innovation. On the line-up to cover operations was the founder of 1-800-Flowers.com.

He said it’s critical in small and growing companies to ensure that every activity taking place at your company is focused on achieving a specific, targeted goal. Jim’s company had a simple objective: to sell more flowers. And Jim did something at his company that I challenge all of you to try, too.

Simple Way to Grow Your Online Company
Walk down the hall, pick any random employee, and ask him exactly what he is doing right now. Then ask him how that helps “sell more flowers.” If that person can’t answer that question right away, tell him to put down what he is doing, and go do something that helps sell more flowers. Today, 1-800-Flowers.com is one of the world’s largest florists.

The first step in achieving this level of operational efficiency is to define your specific goals and document them clearly. Make sure you have goals that are quantifiable, and therefore, measurable. Everyone on your team needs to know where he stands.

Ever seen one of those thermometer charts in an office before? It tracks progress against a fundraising goal by using a red line that rises like the temperature as progress is made. Anyone walking by can instantly see where the company stands, and what still needs to be done.

Define Quarterly Goals
Once you set your goals for the year, break them down into 90-day chunks. A year is too long to wait to feel like you’ve achieved something. A month is too short. Quarterly objectives work best.

Then, post your goals everywhere. Hang them on posters on the wall. Create some kind of thermometer even. Make sure the goals are communicated to everyone. Call a company-wide meeting and get everyone’s buy-in. Employees are more motivated and more fulfilled when they can see that they are gradually approaching your goals. A football team playing in the championship game always knows what the score is. Your team should too.

Now take each specific objective and make a list of the tasks required to achieve that goal. It’s very important that you define the relationships between the tasks people are doing and the goal or objective that those tasks support. I call it “linkage.” Linking the daily workload of your employees to those numbers posted on the wall helps make employees feel productive and valued.

Take the Flowers Test
Once you’ve defined your goals, communicated them to your employees (everywhere), and linked specific operational tasks to the long term goals they support, you’re ready to take the flowers test.

Jim can walk down the halls of his company and ask people how the work they are doing at that moment helps sell more flowers. After all, that’s why his company exists. Try it at your own company. And keep doing it until every time you ask an employee what she is doing and how it helps sell more flowers, she can answer you quickly and clearly. That’s when the company will be ready to scale efficiently.

While you’re at it, maybe send some fresh spring flowers to the employee whose work contributes the most.

In social media terms, the future is rarely predictable. Many people were caught unaware by Pinterest’s explosive growth over the last year. There will always be surprises, but there are also some emerging and continuing social media trends that we can both track and predict with a certain degree of confidence.

Emerging Markets

Social media usage is set to rise everywhere over the next couple of years but growth will continue to be far higher in emerging markets, as Internet penetration and more sophisticated forms of online engagement continue to catch up with those in more established markets.

The two single biggest emerging markets in 2011 and 2012 were India and Indonesia according to eMarketer figures. In 2011 the two countries experienced a massive social network user growth of 51.5 percent and 51.4 percent respectively. Compare this to the US and UK markets, which grew by only 9.8 percent and 9.9 percent.

In 2013 India and Indonesia are still expected to see the biggest growth, at 37.9 percent and 28.8 percent respectively. The established markets will pretty much plateau, with usage in the UK predicted to rise by 7 percent and the U.S. by just 4.1 percent.

By region the Middle East and Africa, Asia-Pacific and Latin America will see the largest growth rates. The implications for social media marketers are pretty clear: get into emerging markets before they catch up with the rest of us.

Mobile Growth

In its September 2012 filing to the Securities and Exchange Commission (SEC), Facebook said: “While most of our mobile users also access Facebook through personal computers, we anticipate that the rate of growth in mobile usage will exceed the growth in usage through personal computers for the foreseeable future and that the usage through personal computers may be flat or continue to decline in certain markets.”

Many commentators have marked 2015 as the year when mobile search and online activity will overtake overall static usage worldwide. For social media the tipping point might arrive sooner than that.

Nielsen’s Social Media Report 2012 found that 43 percent of U.S. users said they now use smartphones to access social media, with 16 percent connecting via a tablet. Apps were particularly prevalent, with users having increased their social app time by 76 percent compared to 2011. This meant they were now spending seven times more minutes on apps than on the mobile web.

Mobile engagement only looks set to soar even higher this year. The International Telecommunications Union 2012 report found there was still a “huge divide” between broadband penetration rates in developed and developing countries.

In emerging markets mobile access is still often more affordable and more reliable than static connections, meaning mobile social media is often the norm. And, once these usage habits are formed, they’re unlikely to change radically as broadband infrastructure catches up.

In developed markets, meanwhile, the advent of 4G will make mobile Internet faster and more versatile than ever before.

Multimedia Engagement

According to the Nielsen report, more people are engaging with social media while watching TV. This can spike during events with a global appeal, such as the London 2012 Olympics.

Sixty-three percent of users in the Middle East and Africa use social media while watching TV and 52 percent in Latin America do the same. People aren’t just chatting while they do so. They’re also shopping and looking up relevant program and product information.

Established Giants vs. Niche and Local Networks

Back in 2009 there were 17 social networks that were the market leaders in at least one country. Last year it was a much more homogeneous picture according to this map (based on figures from Alexa) by Italian blogger Vincenzo Cosenza.

Not only were there just five market leaders in 2012, social media giant Facebook now dominates in all but 10 countries. In the past year, it has overtaken the likes of Mixi in Japan, Zing in Vietnam and other local competitors in markets as diverse as Armenia, Kyrgyzstan, and Latvia.

China, where Facebook remains officially banned, represents one obvious stumbling block in Facebook’s quest for complete worldwide domination, while VKontakte and Odnoklassniki remain popular in Russia.

Twitter and LinkedIn held the second spot in many countries but the huge rise of Pinterest and Instagram demonstrated that there’s still room for new niche players, especially ones with a unique and innovative hook.

A lot can change in the next 11 months, but the continued overall growth of social media on a global scale shows no sign of slowing down just yet.

Source: Search Engine Watch