Most entrepreneurs hate dealing with the most important part of their business, the finances! A successful business owner must understand how much money is coming in and how much is spent. In a downturn economy, it is even more critical to keep an eye on the cash flow. This is true for both retail and consulting business models.
The overhead costs for retail businesses can be crushing. Regardless of the number of customers that walk in, the rent and utilities must be paid. An article, Strategies for an Economic Downturn, put together by Virginia Small Business Development Center (SBDC), has a checklist of steps to take in order to stay viable even when sales have slowed. Although truly relevant for business owners struggling to stay open, the advice is a good reminder for all business owners about the importance of tightening your cash flow cycle, targeting your marketing, and staying on top of your business. When struggling to make ends meet, business owners tend to run around doing everything just to stay in business. Remember to give yourself the time to stop, breath and really look at your business model and finances. Are their ways to improve how quickly you get paid? Can you negotiate to lower your rent? Have you contacted your most frequent customers with incentives to come in? Rather than work frantically in your business, think about ways to cut costs, tighten efficiencies and do low cost marketing.
Although they do not have the overhead of their retailing counterparts, consulting businesses are also struggling to find clients. The second article, Structural Improvements, from CFO.com, discusses ways that professional services can restructure their payment processes to make it easier on cash-strapped clients. Although the article is looking at just a few professions, it is good to think about how your payment structure can attract clients. Remember, everyone is cash-strapped right now. Try to figure out ways that let clients distribute costs over time, or plan for a fixed cost, rather than an hourly rate. The more you work with your client to create a win/win payment system the more they will want to do business with you.
Friday, June 19, 2009
Wednesday, June 3, 2009
It’s All In the Timing
Is now a good time to start my business? The answer to that question, unfortunately, is, “It depends.” Like so much else in life and business, the answer is affected by factors both within and outside your control.
For me, the answer was easy. I know what I love to do, help small businesses. With no jobs available that would allow me to pursue my interest, I had little choice but to start my own business. I am also lucky because my business has low start up costs and my husband’s job provides health insurance. To start my business, I bought a computer, some business cards, and invested time in the basics: networking, identifying potential power partners and research on local small businesses. Not everyone is so lucky.
Some factors to consider before starting a business in any economy:
- Do you have a cash reserve/ way to pay the rent while you are waiting for your business to take off?
- Do you have enough money and equity to get the capitol you need to start, and succeed?
- Do you have the necessary experience? If not, can you work for someone else to get it?
- Is your family supportive of your decision? Are they comfortable sharing you (and your time) with the new venture?
I usually include a line about willing to work hard and live with insecurity. However, in this work environment there is no guarantee that a job is more secure than starting your own business or that you will work fewer hours. Still, if you possess a secure job with reasonable hours, consider the change of lifestyle before deciding to start your business. You will work 24/7 if not directly, than because you will constantly be thinking about your business. (Yes, I have literally dreamed about helping small businesses.) It can also be a stress on relationships. Where are you in your life? Can you dedicate that much time to something new?
If the answer to the first two bulleted questions was “no,” lack of cash does not have to stop you from starting your business. If you can’t save to start your business, or win the lottery, try starting your business slowly. For now, we will discuss ways to start your business without serious investments (bank loans or outside investors). I recommend, “Moonlighting,” starting your business slowly while keeping your day job. This is not always possible, but with a little creativity, you can often start your business before investing in serious overhead costs. When you feel you have a solid product/service that has good demand and enough clients to financially sustain you, quit your day job. Although ideal financially, this scenario is not easy.
Eilene Zimmerman, from the New York Times wrote an article describing the perils of moonlighting including: increase in stress, difficulty in life/work balance and the need to separate the two jobs. Depending on where you work, and what you want to do, your employer may not allow you to moonlight. Her conclusion is if you must moonlight, do something that is different from your primary job. For example, if you have a job where you sit a lot, find something active to do. The article is good, but it is looking at moonlighting as a way to bring in extra cash. I am recommending moonlighting for a different purpose, a short time period in order to remain financially solvent while your business grows.
Another way to sustain yourself while your business takes off is to find a part time job. This is particularly true if you can get work in a related industry. You can also try to work part time at your current place of employment. If you want to start consulting in a field similar to your current area of work, talk to your current boss. I have had many clients start their consulting business, and their first client is their old employer!
Think hard before you start your new venture; is this the right thing for you, right now? If so, plan, get ready, and jump!Friday, May 22, 2009
The Name Game
One of the most difficult steps in starting a new business is picking its name. Although a name can be very important, I also know, from firsthand experience, how long you can spend searching for the perfect name instead of starting your business. In retrospect, I should have spent less time hunting for the perfect name and correlating free domain name. I tried multiple ways to create my name, everything from creating a list of 50 words describing my business, making up words, to just smashing two words together. Finally, I asked my advisory board, a group of friends and family whose opinion I trust, for help. My friend found a free domain name -bizadvicecenter.com. I liked the name because it fits with my long-term goal of creating a chat forum for small business owners to exchange ideas and advice. I also liked that it was easy to remember, and not hard to spell. To make it even easier to locate, I grabbed both bizadvicecenter.com and bizadvisecenter.com. Yet, despite all the time and effort that went into finding a name with a corresponding website, I have yet to create the actual site. Which begs the question, should I have limited my name to those with open domain addresses? I don’t know. I guess I will find out in the long term.
All this work in creating my business name came in very useful when an old friend asked for my advice on choosing a name for his financial advisory business. He had several options and wanted my input. As I went down the list of options, I realized that before giving a good answer I needed some background information:
• Who was he trying to attract with his name?
• How large does he want to his business to grow geographically?
• Does he plan to expand his current set of products?
• What sets him apart? Is there a way to highlight the benefit in his name?
The first step is not picking out your business name, it is thinking through your business model. While trying to tackle the name question for myself, I spoke to several successful entrepreneurs. One entrepreneur, a consultant, said that she had spent almost six months working on her business name, logo and website. Later, she realized that her clients where spelling her name wrong anyway! Her clients worked with her because she is good at what she does, not because of a catchy name. By marketing directly to her potential clients through networking and word of mouth, she became the de facto image and name of the business. In that case, the business name was practically irrelevant.
However, if you have a retail space or want a business with many employees, then the business name becomes the identity of the business. A name is also important for an on-line presence or store. Ideally, try to pick something that is descriptive, easy to spell and easy to remember. To see if the website you want is free, check out www.godaddy.com, www.register.com or www.myDomain.com.
What makes a good name is somewhat subjective. I like names that sound like words but are not, “Verizon” is a great example. It captures the sense of future or “horizon” as well as high tech. The word is also unique, easy to pronounce, and feels like it should be real. Made up words can create a life of their own. “Google” is now a verb in our every day lexicon, “to google.” I also like names that are descriptive such as Kentucky Fried Chicken. The name sums up what the store sells. A descriptive name is also good for key word searching on the web. However, it can also lock you into certain products or services. KFC is introducing a grilled chicken product line. This expansion might work well for a company with so many marketing dollars, but could be very difficult for a small business. Who would go to Sam’s Fried Chicken shop for a healthy veggie sandwich?
Another name concern is how geographically centered your business will be. My friend was thinking of putting “dolphin” in his business name. That is great for San Diego where he lives, but makes no sense in my location of Cambridge, MA. You could also sell your uniqueness point in your name. For example, the name Jiffy Lube expresses what the company sells and how they do it, in a “jiffy”.
Once you have a name that you like, I always recommend researching if your target market likes it. For example, if you plan to sell jewelry to13-25 year old women, ask as many women in that age bracket what they think of your potential name. While you are at it, see if they like your logo, products, and price point. If they don’t like your name, no problem. One of the great things about being an entrepreneur is that you can always change!
Here are some other useful blogs on choosing a business name:
http://www.business.com/guides/naming-a-business-51
For some good thoughts on ways to use the internet to help brainstorm a business name checkout: http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P01_4800
Here is a great article on how to choose a domain name. Remember that your domain name and your business name can be different. http://www.seochat.com/c/a/Website-Promotion-Help/Choosing-the-Domain-Name-of-Your-Dreams
Once you have a business name, make sure there is not copyright on it. For more information, check out the US Patent and Trademark Office: http://tess2.uspto.gov/bin/gate.exe?f=tess&state=4010:cjpqsg.1.1. On a related note, you should consider protecting your new business name, logo and tagline. This is especially true if are planning to spend a lot on branding your name and logo. If you are interested in protecting it, talk to a local intellectual property or small business lawyer.
All this work in creating my business name came in very useful when an old friend asked for my advice on choosing a name for his financial advisory business. He had several options and wanted my input. As I went down the list of options, I realized that before giving a good answer I needed some background information:
• Who was he trying to attract with his name?
• How large does he want to his business to grow geographically?
• Does he plan to expand his current set of products?
• What sets him apart? Is there a way to highlight the benefit in his name?
The first step is not picking out your business name, it is thinking through your business model. While trying to tackle the name question for myself, I spoke to several successful entrepreneurs. One entrepreneur, a consultant, said that she had spent almost six months working on her business name, logo and website. Later, she realized that her clients where spelling her name wrong anyway! Her clients worked with her because she is good at what she does, not because of a catchy name. By marketing directly to her potential clients through networking and word of mouth, she became the de facto image and name of the business. In that case, the business name was practically irrelevant.
However, if you have a retail space or want a business with many employees, then the business name becomes the identity of the business. A name is also important for an on-line presence or store. Ideally, try to pick something that is descriptive, easy to spell and easy to remember. To see if the website you want is free, check out www.godaddy.com, www.register.com or www.myDomain.com.
What makes a good name is somewhat subjective. I like names that sound like words but are not, “Verizon” is a great example. It captures the sense of future or “horizon” as well as high tech. The word is also unique, easy to pronounce, and feels like it should be real. Made up words can create a life of their own. “Google” is now a verb in our every day lexicon, “to google.” I also like names that are descriptive such as Kentucky Fried Chicken. The name sums up what the store sells. A descriptive name is also good for key word searching on the web. However, it can also lock you into certain products or services. KFC is introducing a grilled chicken product line. This expansion might work well for a company with so many marketing dollars, but could be very difficult for a small business. Who would go to Sam’s Fried Chicken shop for a healthy veggie sandwich?
Another name concern is how geographically centered your business will be. My friend was thinking of putting “dolphin” in his business name. That is great for San Diego where he lives, but makes no sense in my location of Cambridge, MA. You could also sell your uniqueness point in your name. For example, the name Jiffy Lube expresses what the company sells and how they do it, in a “jiffy”.
Once you have a name that you like, I always recommend researching if your target market likes it. For example, if you plan to sell jewelry to13-25 year old women, ask as many women in that age bracket what they think of your potential name. While you are at it, see if they like your logo, products, and price point. If they don’t like your name, no problem. One of the great things about being an entrepreneur is that you can always change!
Here are some other useful blogs on choosing a business name:
http://www.business.com/guides/naming-a-business-51
For some good thoughts on ways to use the internet to help brainstorm a business name checkout: http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P01_4800
Here is a great article on how to choose a domain name. Remember that your domain name and your business name can be different. http://www.seochat.com/c/a/Website-Promotion-Help/Choosing-the-Domain-Name-of-Your-Dreams
Once you have a business name, make sure there is not copyright on it. For more information, check out the US Patent and Trademark Office: http://tess2.uspto.gov/bin/gate.exe?f=tess&state=4010:cjpqsg.1.1. On a related note, you should consider protecting your new business name, logo and tagline. This is especially true if are planning to spend a lot on branding your name and logo. If you are interested in protecting it, talk to a local intellectual property or small business lawyer.
Saturday, May 9, 2009
Taking the Leap. . .
The first major hurdle to starting my business was taking that first step, the leap of faith, and learning to trust myself. For some lucky entrepreneurs, trusting oneself is a lot easier than trusting a market, large company, or boss. For me, the leap, plunge, take off, whatever you want to call it, was far more difficult than it sounded.
After sitting in an office giving advice to hundreds of entrepreneurs, I decided that it was time to hop to the other side of the desk start my own business. The reasons were simple.
A) After working with so many entrepreneurs, I wanted to try it for myself.
B) After moving during this horrific economy, I struggling to find a job and I wanted a way to make some money.
C) Every time I pass a “for Lease” sign in an empty window, I know a small business dream has been lost. I love small businesses and wanted to share my hard-won expertise to possible help save dreams (and life savings!).
This all sounded good in theory, but first I had to start my business and learn how to feel like a real business owner.
Working with small business owners, I have seen the metamorphosis take place. When they first walk through my door, the would-be business owner looks a little shy and a little hesitant. More often than not, they lack the confidence so necessary in the business world. After a while, I watched as their heads go up, and their shoulders straighten. I enjoy watching them give their elevator speech with confidence and talk about their new business naturally. When a friend asked me about my would-be business, I knew that I was on the before vs. after part of the change. Even though I knew that I had made hundreds of entrepreneurs happy with my service in the past, because it was for someone else, I had no confidence.
According to my entrepreneurial friend, a business owner must believe in his or her own propaganda. You know that your product/service is great. That is why you want to turn it into a business. My biggest problem was convincing myself that I have value. After reading the wonderful book, “Secrets of Six-Figure Women” by Barbara Stanny, I gained a bit more confidence in myself.
My first step was talking to strangers about my potential business. Strangers are the best. If my pitch did not go well, I would never have to see them again! I started talking to any small business owner I could find.
At first, I had to fake the confidence. I try to remember the praise of my clients and remember that they were happy with my service others will be too. Another suggestion is imagining you are your favorite celebrity, put your shoulders back and speak with confidence. Practice makes perfect and the more you talk about your business the more it becomes real.
Soon, you will find yourself wishing that you had business cards, even without a perfect logo or a website that is up and running. By talking to people and gaining confidence, you have found your first potential client. Welcome to the world of entrepreneurship!
Stay tuned for future postings…
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