Running a Business

Six Areas to Assess

by Henry McCabe-
A blog for businesses with 20 or fewer employees or for people planning on starting one.

In my October 10, 2013 post I suggested that in order to plan for growth, you need to assess where you are now in order to identify what you must change to make it happen. Assess the following areas of your business by answering a few questions about: Goals, Management, Marketing, Sales, Operations and Finance. In this I write about the first three. I'll address the last three in my next post.

1. Goals. Do I have a clear set of goals for the business and for what I want the business to do for me? Do I have both long term and short term plans for how I will achieve the goals? Am I lost because I do not know where I want to go and do not have a map for how I will get there? If the answer to the two first questions is no and to the last is yes, then one way to foster growth is to do some planning. Create personal and business goals, a strategic plan and a business plan. The plans would address the five topics that follow.

2. Management.  Have I defined my role as manager and the respective roles of each of my employees? Do I consistently act in my role as manager before I just do business? Do I conduct periodic evaluations of my strengths and weaknesses and those of my employees? Have I developed corrective action plans to overcome identified weaknesses, especially my own?  Do I have an organized way of recruiting, interviewing, background checking, and training new employees? Do I provide clear directions and work schedules for my employees? Is the business on auto pilot with nobody really managing it?  If the answer to any of the first six questions is no and to the last is yes, then  one way to foster growth is to become a professional manager. Create employment policies, job descriptions, performance evaluations, corrective action plans and most of all commit yourself to manage the business rather than let it manage you.

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3. Marketing. Do I have a marketing plan for the business? Do I have an advertising plan for the business? Do I understand the difference between the two? Do I have specific measurable goals for each advertising campaign? Do I have a campaign for retaining my current customers? Do I collect data on the results of the campaigns and compare them to the goals? Are my promotional campaigns bringing in enough new customers? Am I sure my prices are not too high or too low? Are my sales shrinking, stagnant or growing so slowly that I barely notice? If the answer to any of the first eight questions is no and to the last is yes, then one way to foster growth is to develop a plan for bringing in new customers and retaining existing ones. Create a unique selling proposition,  brand identity, pricing policy, advertising plan and budget and the other elements o f a marketing plan.

Planning. The only thing we know for sure about any plan we make is that actual events will turn out to be different. We must not let the attempt to create a perfect plan get in the way of completing one at all. An imperfect plan is better than none at all.

Definition Quiz. What word describes everything  a business does?

Answer to last quiz: Unique Selling Proposition

Starting a Business

Five Marketing Concepts

by Henry McCabe

In my October 3, 2013 blog I suggested that you begin your new business planning by identifying a need that needs to be met and a way to meet it.  In this blog I expand upon the idea.

1. Needs. Potential customers have requirements fundamental to their existence. Food, clothing, shelter, transportation and security are among basic needs of consumers. Customers, image, premises, means of distribution and record keeping are among the basic needs of businesses. You can build a very nice business around satisfying one of these.

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2. Wants. Potential customers also have desires for things that improve the quality of their existence. Tasty food, attractive clothing, fancy transportation and security from a host of threats are among basic wants of people. Lots of customers, an image that grabs, a high traffic location, fast and cheap distribution and easy foolproof record keeping are among the basic wants of businesses. As you can see, wants are based on needs but go beyond what is needed for mere survival.  You can build a very nice business around satisfying one of these.

3. Benefits. Any product or service that meets a want or need does so because it has attributes that fulfill a want or need. The attributes provide the benefit that a consumer or businesses seeks. Basic foodstuff provides the benefit of life to an individual. Tasty and varied foodstuff does the same,  but has the added benefit of improving the quality of life. The same is true of products and services that businesses buy. Defining the benefits of your offering makes it much easier to present a successful pitch to prospects.

4. Features. The attributes mentioned above are the tangible or intangible characteristics of a product or service that produce benefits. Plain steamed brown rice provides the benefit of sustaining life because it contains proteins, carbohydrates, vitamins, and minerals. Add flavor and variety by  cooking it in chicken broth, adding some vegetables or spices and you have a meal that not only sustains life but makes it pleasurable. Defining the features of your offering that create benefits makes it much easier to present  a successful pitch to prospects.

5. Marketing Message. By taking these theoretical concepts and applying them to your thinking about why  customers would want to buy your products, you can come up with a marketing message that addresses their wants and needs. The message should form a logical argument. You want or need 'something'. My widgets have 'the following benefits' that satisfy your need. That is so because my widgets have 'the following features' which create the benefits. The basic message should be simple, short and be written in language you would use in person with a prospect. Three sentences or phrases.  It can be expanded when required for more  impersonal communications. One technique that can help the process is to create a three column, five line table. The columns are Want/Need, Benefit and Feature. The lines are  individual wants or needs and their corresponding benefits and features.

Planning. The only thing we know for sure about any plan we make is that actual events will turn out to be different. That is why we must learn and adapt as events unfold.

Definition Quiz. What phrase describes a simple spoken marketing message?

Answer to last quiz: Channels of distribution.

Running a Business

Running a Business

3 Steps to Prepare for Growth
by Henry McCabe

see My Sep. 14th Sun Column

I've yet to meet a person running a small business that does not want to grow sales and profits. If you want to grow, follow an orderly process to put into place the changes needed to bring that about. Here is where to start. As you read on you will think that is a lot to do for a small business. It is, but worth it if you really want to grow.

Step 1. Write mission and vision statements. Mission and vision statements are the means by which you define what you want your business to accomplish. The terms are often used interchangeably, but as I use them a mission statement has an external focus and a vision statement an internal focus.  A mission statement describes what it is that your business will do for your customers. A vision statement describes what it is that your business will do for you. They should be simple and direct. Your mission statement should describe the product or service you sell and how it will benefit your customers. Your vision statement should describe your aspirations for the size and profitability of your business and how that would benefit you, your employees and your vendors. One to three sentences each should be sufficient.

Step 2. Evaluate your current situation. In order to make a plan for the future, you need to critique where your are now. That way you can identify weaknesses that stand in the way of growth and strengths that will support growth. Both can be found within the business and outside the business.  Internal elements that should be assessed are marketing, sales, operations and finances, and the management of all of those. External  factors are changes in product demand, competition, regulation, channels of distribution and sources of supply. You can perform an internal and external assessment  by using a checklist or questionnaire covering critical elements of each topic. Two other techniques are SWOT analysis- a grid assessing strengths, weaknesses, opportunities and threats; and PEST analysis- a grid assessing the political, economic, social and technological environment. Variations of these can be found in books or on the internet or you can look for future blogs on this right here.

Step 3. Prepare strategic and tactical plans. A strategic plan sets forth goals for your business to achieve over the next five to ten years in specific, measurable, action oriented, realistic and timely terms. It fleshes out the mission and vision statements for the business with specific qualitative and quantitative goals to be achieved over specific time frames. A small business can set forth its strategic plan in a one or two page memo including a few tables. It should be updated every few years. A tactical plan sets forth specific actions to be taken during the next one or two years to accomplish the strategic goals and describes the results of those actions.  A ten page memo including tables and financial projections covering marketing, sales, operations, finance and management should be sufficient for a small business. It should be updated every year.

Planning. The only thing we know for sure about any plan we make is that actual events will turn out to be different. That is why we must learn and adapt as events unfold.

Definition Quiz. What phrase describes how products or services get from a business to a customer?

Answer to last quiz: Marketing

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Starting a Business?- Start with these Five Steps

By: Henry McCabe

Step 1- Identify a need that you can fill. Many nascent entrepreneurs start with a particular product or service in mind and set out to build a business to sell it. By doing so they start with blinders on, potentially ignoring better business opportunities.  A better approach is to make a list of some needs that consumers or businesses have, and to then develop a business around the best one of them. Include the idea you started with, but do not rule out others.

 Step 2- Identify a way to fill the need. With your list of needs in hand, come up with a product or service that might fill each. One technique is to create a chart for each idea that matches the benefits and features of a product with the need that it will fill. The one with the strongest match is the one to pursue.

Step 3- Identify people with the need you can fill. Describe for yourself the important characteristics of the consumers or businesses that are likely to buy the product or service because they may have a need for it. There are three basic groupings of characteristics: psychology, geography and demography. I will delve into these factors in a future post.

Step 4- Figure out how to contact your prospects. Based on the general descriptions of prospective customers you have come up with, make your best guess as to how they gather information. Is it through traditional media, social media or personal interaction? There are hundreds of choices within these groupings to choose from. Select ones that best seem to fit as the place to promote your offer to them.  

Step 5- Convert steps 1-4 into a marketing plan. If you have completed the first 4 steps, you have the basis of a marketing plan. Consolidate the information into 1-3 pages of narrative and charts describing what you will sell, who will buy it, why they will buy it and how you will bring it to their attention so that they will buy. You then have the core of a business plan.

Planning

The only thing we know for sure about any plan we make is that actual events will turn out to be different. That is why we must adapt as events unfold.

Definition Quiz

What word or phrase is defined by the following? An organized set of activities designed to bring about a mutually beneficial commercial transaction between two parties.