Developing a business requires a plan. There has to be a channel for the ideas and goals of the business to pass through. Unless you can define on paper what the business goals are and how they should be achieved you should not start a business. The plan becomes a vehicle of achievement that takes a vague idea or desire and turns into a successful business venture.
Despite the importance of a business plan, many entrepreneurs drag their feet when it comes to preparing a written document. They argue that their marketplace changes too fast for a business plan to be useful or that they just don't have enough time. But just as a builder won't begin construction without a blueprint, eager business owners shouldn't rush into new ventures without a business plan.
The basic components of a business plan includes a current and pro forma balance sheet, an income statement, and a cash flow analysis. A written business plan helps to allocate resources properly, handle unforeseen complications, and facilitate the business decision process. Because it provides specific and organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan application. Additionally, it informs sales personnel, suppliers, and others about your operations and goals.
Ninety percent of new businesses fail. Most do so because they lack specific direction. In one survey, out of 29,000 businesses started, 26,000 of them failed. Of the failures: 67 percent had never written a business plan; 57 percent had no outside guidance; and 71 percent hadn’t taken any business courses.
Question the value of your business development ideas before implementation.
Some questions to ask and answer:
Is the business idea a good one?
What is the best business model to use?
Is the business model manageable?
Is there adequate funding for the business?
What is the long-term business strategy?
What is the exist strategy?
The answers to these questions will put you a path to building a strong business.
Showing posts with label Business. Show all posts
Showing posts with label Business. Show all posts
Thursday, March 24, 2011
BRAND IDENTITY IMPACTS BUSINESS PERFORMANCE
Brand identity refers to the concrete symbols for the feelings the customers have about a company, such as a name and design scheme. Feelings are created by continued exposure to a specific product or service, both directly relating to its use, and through the influence of advertising. A brand is all the information connected to a company, product or service. A brand serves to differentiation between companies and their product or service. A brand is used to encourage customers to be loyal, help a business build its position and long-term viability.
Brand is everything. Brands are not simply products or services. Brands are the sum total of all the images that people have in their heads about a particular company and a particular product or service. Brand often includes an explicit logo, fonts, color schemes, symbols, which are developed to represent implicit values, ideas, and even personality. The brand, and "branding" and brand equity have become increasingly important components of culture and the economy, now being described as "cultural accessories and personal philosophies.
The brand identity of a small business is essentially the same thing as a larger corporation, the only differences being that small businesses usually have a smaller market and have less reach than larger brands. Some people argue that it is not possible to brand a small business, however there are many examples of small businesses that became very successful due to branding. Starbucks is one company that used almost no advertising and over a period of ten years developed such a strong brand that the company went from one shop to hundreds.
"A great brand raises the bar -- it adds a greater sense of purpose to the experience, whether it's the challenge to do your best in sports and fitness, or the affirmation that the cup of coffee you're drinking really matters." - Howard Shultz (head of marketing for Starbucks and formerly Nike)
We often underestimate how long brands can hold on to a negative association. The Web has increased the consuming public's ability to rant or rave about a company or service. Smart companies now recognize the necessity of being responsive to the criticisms, in real-time, and of making sure the brand is consistent—and is as good as it can be—wherever it shows up, and even after the sale has been made. The tools the salespeople use to sell it, public relations efforts and follow-up customer service all must reflect brand values and impart a consistent brand image.
Most Web-based retailers still don't fully understand merchandising, particularly from the branding identity perspective. A lot of brands are pulling their hair out, especially over some of the unauthorized sites that just say, "Here is the item or the brand, and here is the price," and do nothing to explain—much less leverage—what makes that product unique. To make matters worse, lots of consumers are looking for information and brand cues, and Web retailers that fail to deliver those will lose the sale to someone who does. Price is not everything.
Manufacturers must also recognize the value of brand identity, and stop making one product and shipping it to just any outlet with price as the only major means of differentiation. Eventually, price points and profit margins collapse and the brand gets hammered because the value proposition in the minds of the consumer has been destroyed.
Some business owners think brand identity comes first and the company's success follows. In fact, when you look at most businesses, the products came first, they built their infrastructures, and their brands evolved along with the success of the products and services over many, many decades.
Without product and infrastructure all the brand identity in the world is no good. You have to build that infrastructure. It's expensive, and it takes a long time to develop a brand into a presence in people's lives. It isn't an instant conclusion, but it is essential, so be patient and persistent.
A brand makes a promise: "If you buy this product or buy from my company, you can rely on me because of the attributes attached to the brand identity."
A new kind of brand identity is emerging. It is a customer-centric branding where the promise is, "I know you as an individual customer better than anyone else, and you can trust me to assemble the right products or services to meet your individual needs."
Most product companies can go a significant distance toward enhancing their customer focus, especially given the capabilities and technologies available on the Internet. But there are limits. At some point, a company is going to have to make a fundamental choice: What business is it really in? A company will have to decide whether it is prepared to sell a competing product if that is the best solution for a particular customer. Once that bridge is crossed, it stops being a product company and becomes a customer relationship business that has a greater potential to build a deeper customer-focused brand identity because its promise moves beyond product.
Brand is everything. Brands are not simply products or services. Brands are the sum total of all the images that people have in their heads about a particular company and a particular product or service. Brand often includes an explicit logo, fonts, color schemes, symbols, which are developed to represent implicit values, ideas, and even personality. The brand, and "branding" and brand equity have become increasingly important components of culture and the economy, now being described as "cultural accessories and personal philosophies.
The brand identity of a small business is essentially the same thing as a larger corporation, the only differences being that small businesses usually have a smaller market and have less reach than larger brands. Some people argue that it is not possible to brand a small business, however there are many examples of small businesses that became very successful due to branding. Starbucks is one company that used almost no advertising and over a period of ten years developed such a strong brand that the company went from one shop to hundreds.
"A great brand raises the bar -- it adds a greater sense of purpose to the experience, whether it's the challenge to do your best in sports and fitness, or the affirmation that the cup of coffee you're drinking really matters." - Howard Shultz (head of marketing for Starbucks and formerly Nike)
We often underestimate how long brands can hold on to a negative association. The Web has increased the consuming public's ability to rant or rave about a company or service. Smart companies now recognize the necessity of being responsive to the criticisms, in real-time, and of making sure the brand is consistent—and is as good as it can be—wherever it shows up, and even after the sale has been made. The tools the salespeople use to sell it, public relations efforts and follow-up customer service all must reflect brand values and impart a consistent brand image.
Most Web-based retailers still don't fully understand merchandising, particularly from the branding identity perspective. A lot of brands are pulling their hair out, especially over some of the unauthorized sites that just say, "Here is the item or the brand, and here is the price," and do nothing to explain—much less leverage—what makes that product unique. To make matters worse, lots of consumers are looking for information and brand cues, and Web retailers that fail to deliver those will lose the sale to someone who does. Price is not everything.
Manufacturers must also recognize the value of brand identity, and stop making one product and shipping it to just any outlet with price as the only major means of differentiation. Eventually, price points and profit margins collapse and the brand gets hammered because the value proposition in the minds of the consumer has been destroyed.
Some business owners think brand identity comes first and the company's success follows. In fact, when you look at most businesses, the products came first, they built their infrastructures, and their brands evolved along with the success of the products and services over many, many decades.
Without product and infrastructure all the brand identity in the world is no good. You have to build that infrastructure. It's expensive, and it takes a long time to develop a brand into a presence in people's lives. It isn't an instant conclusion, but it is essential, so be patient and persistent.
A brand makes a promise: "If you buy this product or buy from my company, you can rely on me because of the attributes attached to the brand identity."
A new kind of brand identity is emerging. It is a customer-centric branding where the promise is, "I know you as an individual customer better than anyone else, and you can trust me to assemble the right products or services to meet your individual needs."
Most product companies can go a significant distance toward enhancing their customer focus, especially given the capabilities and technologies available on the Internet. But there are limits. At some point, a company is going to have to make a fundamental choice: What business is it really in? A company will have to decide whether it is prepared to sell a competing product if that is the best solution for a particular customer. Once that bridge is crossed, it stops being a product company and becomes a customer relationship business that has a greater potential to build a deeper customer-focused brand identity because its promise moves beyond product.
HOW to DEVELOP A BUSINESS MODEL
A business model explains the source a company's revenue. It also explains the how much these sources pay and how often. So it's not enough to say that a company sells PCs or burgers. You need to be able to explain the structure of how the dollars are earned.
Does the business include franchises or company-owned outlets? Does the company own the outlet real estate, or does it lease the space? Does the company generate most of its money through direct sales, or does it sell via retailers?
The business model also details how the product is delivered. Does the company sell one of its component products at cost to sell more profitable add-on components. Or, does the company's product require that the money is received upfront, rather than from a stream of add-on sales.
The business model also details how the product is delivered. Does the company sell one of its component products at cost to sell more profitable add-on components. Or, does the company's product require that the money is received upfront, rather than from a stream of add-on sales.
Times change and so do business models. For rexample; Kodak and the camera business. For years Kodak generated revenue from film cameras and the rolls of film used by the cameras. But new digital cameras did away with film sales and processing fees. So, in response, Kodak had to create a new business model. The company has established digital printing centers, where users can have their digital camera pictures printed on genuine Kodak paper. The business model that was once based on film sales and processing has become a model based primarily on photograph printing.
So how do you know whether a business model is any good? Examine the bottom line. Is the company making money? What about the comparison of last year's sales to this year. Examine the operation of the company for trends. What is the competition doing?
The Business model must demonstrate a realistic method for generating revenue and profits. Profitability is the real determiner of whether or not the business model makes sense. A business that is burdened with high operating costs because of a cumbersome business model will not last long.
There will always be costs associated with doing business. The way the company does business is a function of the business model. The objective is to operate in such a way as to be as efficient as possible while delivering value to the customer. How to get and relate to customers is also part of the business model. The customer is the mechanism by which we are paid. The customer is the goose that lays the golden egg. Your business plan should always have the customer in mind, because the ease with which the customer is able to do business with us is a function of the business plan. The mechanisms of doing business should be as simple as possible. The easier it is to do business, the greater the liklihood of a positive cash flow.
Evaluate the maketplace continuously. Look for trends. Don't be afraid of change.
Wednesday, March 9, 2011
MAKING MONEY WITHOUT MONEY
A little short on cash? Take heart: most entrepreneurial success stories involve one person with little or no money matching ideas, drive, determination, hard work, and other attributes with other people's money. Never let the lack of money (or good credit) hold you back. If you have a reasonably sound business plan and sufficient commitment to your plan, you can obtain the money you need to make it happen! Let's deal with finding the money you need to finance a new business, to reorganize, expand, or diversify your present business, or to buy an existing business. If you happen to have capital and/or good credit, so much the better, but if you're starting from a "disadvantaged' position, that's okay too.
MONEY ALONE ISN'T THE ANSWER
Money is not going to be your problem. But it is not going to be your solution either.
If you can't make money without money, you won't make money with money either.
The business battlefield is littered with the skeletons of entrepreneurs who erroneously believed that a big chunk of cash would solve their problems. It's a stubborn belief in cash as a cure-all that gets a lot of people in trouble. The challenge is to take nothing and make it into something.
The most successful entrepreneurs are like the main character in the television show "McGyver." McGyver was always getting out of a jam by creating some incredible gadget with whatever happened to be lying around. Entrepreneurs, too, sometimes have to turn thin air, spare parts, and other people's discards into resources with which empires can be built. Drop one of these McGyver-type entrepreneurs out of an airplane into a strange city with nothing else but the clothes on his or her back and $5 cash, and he or she will have an office or store opened and be doing business by the sunrise.
The story of Doug W. exemplifies this kind of unique resourcefulness that successful entrepreneurs need. Doug went broke in a big way in a direct sales business and wound up sitting in his bare house, all the furniture gone, and nothing left but a box of 48 copies of the book, Think and Grow Rich, and a dozen broken down auto-dialing (telephone marketing) computers. Doug had used these machines to set up appointments for his salespeople in his now-defunct business. He knew they could work and he believed in them. He had used the books in his classes to
motivate his salespeople.
Doug asked himself what resources he could draw on to get some cash. He repaired the auto-dialers so they could be sold as used but operable equipment. Then he got on the phone, calling insurance salespeople, real estate agents, and other salespeople, inviting them to a free seminar on using auto-dialers to increase business. He offered a free copy of Think and Grow Rich to anybody who came to the meeting.
Doug called and invited hundreds. About a dozen salespeople showed up. He nervously stood up in front of the group, explained how auto-dialers worked, how he used them successfully, and how others used them. Then he gave a demonstration and offered a unique "rent-and-try-then-buy" offer on the machines he had in stock. That evening, Doug sold eight machines; in the first month he collected $800 from rentals. He discovered that he had a knack for selling this type of equipment.
In short order, Doug found a manufacturer of auto-dialers and convinced him to sell the machines at wholesale as Doug needed them, without an inventory requirement, franchise fee, or other up-front payment. In the next few years, Doug built a large business, with national advertising and sales representatives, selling these machines. He also used some of the profits from that business to invest in a new idea for computer software, and that, too, turned into a very successful business. Doug went from bankruptcy to big money without borrowing a nickel.
Doug is in the process of grooming replacements to run his companies, personally working two weeks a month, and sailing the Caribbean on his yacht the other two weeks of the month.
WHAT ABOUT RAISING MONEY?
In most cases it is necessary to "use other people's money" to get a business from some stage to another. I'm not suggesting that you go through your business life avoiding borrowing or raising capital, but I have seen a lot of people borrow huge amounts of cash suffer from the erroneous beliefs in the power of that cash. By itself, cash cannot change things for the better.
The bottom line is that there's no point in getting money before, unless, and until you have a solid plan for matching and merging it with other resources for productive purposes.
MONEY ALONE ISN'T THE ANSWER
Money is not going to be your problem. But it is not going to be your solution either.
If you can't make money without money, you won't make money with money either.
The business battlefield is littered with the skeletons of entrepreneurs who erroneously believed that a big chunk of cash would solve their problems. It's a stubborn belief in cash as a cure-all that gets a lot of people in trouble. The challenge is to take nothing and make it into something.
The most successful entrepreneurs are like the main character in the television show "McGyver." McGyver was always getting out of a jam by creating some incredible gadget with whatever happened to be lying around. Entrepreneurs, too, sometimes have to turn thin air, spare parts, and other people's discards into resources with which empires can be built. Drop one of these McGyver-type entrepreneurs out of an airplane into a strange city with nothing else but the clothes on his or her back and $5 cash, and he or she will have an office or store opened and be doing business by the sunrise.
The story of Doug W. exemplifies this kind of unique resourcefulness that successful entrepreneurs need. Doug went broke in a big way in a direct sales business and wound up sitting in his bare house, all the furniture gone, and nothing left but a box of 48 copies of the book, Think and Grow Rich, and a dozen broken down auto-dialing (telephone marketing) computers. Doug had used these machines to set up appointments for his salespeople in his now-defunct business. He knew they could work and he believed in them. He had used the books in his classes to
motivate his salespeople.
Doug asked himself what resources he could draw on to get some cash. He repaired the auto-dialers so they could be sold as used but operable equipment. Then he got on the phone, calling insurance salespeople, real estate agents, and other salespeople, inviting them to a free seminar on using auto-dialers to increase business. He offered a free copy of Think and Grow Rich to anybody who came to the meeting.
Doug called and invited hundreds. About a dozen salespeople showed up. He nervously stood up in front of the group, explained how auto-dialers worked, how he used them successfully, and how others used them. Then he gave a demonstration and offered a unique "rent-and-try-then-buy" offer on the machines he had in stock. That evening, Doug sold eight machines; in the first month he collected $800 from rentals. He discovered that he had a knack for selling this type of equipment.
In short order, Doug found a manufacturer of auto-dialers and convinced him to sell the machines at wholesale as Doug needed them, without an inventory requirement, franchise fee, or other up-front payment. In the next few years, Doug built a large business, with national advertising and sales representatives, selling these machines. He also used some of the profits from that business to invest in a new idea for computer software, and that, too, turned into a very successful business. Doug went from bankruptcy to big money without borrowing a nickel.
Doug is in the process of grooming replacements to run his companies, personally working two weeks a month, and sailing the Caribbean on his yacht the other two weeks of the month.
WHAT ABOUT RAISING MONEY?
In most cases it is necessary to "use other people's money" to get a business from some stage to another. I'm not suggesting that you go through your business life avoiding borrowing or raising capital, but I have seen a lot of people borrow huge amounts of cash suffer from the erroneous beliefs in the power of that cash. By itself, cash cannot change things for the better.
The bottom line is that there's no point in getting money before, unless, and until you have a solid plan for matching and merging it with other resources for productive purposes.
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