One thing that all entrepreneurs know, you have to keep growing and learning to stay relevant. That is one of the many reasons why I'm so excited to take an online course on social media and marketing. Thank you Corsera for the Northwestern University class on social media with Randy Hlavac and Judy Franks as professors.
I'll keep you posted on how social media and marketing has evolved from 2010 to 2019.
Friday, September 27, 2019
Friday, July 24, 2009
To Franchise or Not to Franchise: What are the considerations?
There are several ways to start a business. You can have an idea and run with it on your own. You can buy an existing business, or you can purchase a franchise.
According to Merriam-Webster dictionary, a franchise is, “the right or license granted to an individual or group to market a company's goods or services in a particular territory.” When we think of franchises, we often think of McDonalds, Burger King, and 7-11. However, there are all types of Franchises. You will find everything from cooking schools for children Young Chef’s Academy, Energy Efficiency Consulting, Energy Doctors, there is even one to provide business coaching services and advice, AdviCoach! In short, there seems to be a franchise for everything.
Why are there so many franchises? Turning a business into a franchise is easier than ever before and franchising is a good way for the owner to expand their business without supplying all the needed capital investment. However, not all businesses that become a franchise are ready for the expansion. Before it is ready to franchise, a business should be operating with solid profits for several years and have multiple locations running on a set system. Too often, a business’s success relies on the expertise of the owner, rather than the systems that are in place. Since it is the system (along with the rights to sell the products/ services) you would be buying, make sure that it works independently of the original owner. In my opinion, a good franchise model is Five Guys, which started in 1986 and did not start franchising until 2003.
Purchasing a franchise can be expensive. In addition to the initial purchasing fee, a franchise usually requires ongoing royalty and advertising fees, based on a percentage of the franchisee’s profits. Thus, as the franchisee makes more money, so too does the franchisor. This creates a strong incentive for the franchisor to help the franchisee.
One of the most important considerations when deciding to be a franchise owner is the level of entrepreneurial freedom. If you own a McDonalds, you cannot put hot peppers on the hamburgers just because you like them. You have to sell the stated items in the manner prescribed to you. If you like following set procedures, this is great. If you are creative and entrepreneurial in spirit, make sure you understand the limitations set by the franchisor. The franchisee’s inability to change the system can also be detrimental. Like any other business, increased competition, changing consumer habits and changing costs structures can all affect the bottom line for the franchisee. The difference being that it is more difficult to change what and how you sell if you have a franchise because someone else, the franchisor, is making the decisions. An interesting case example of the impact of changing trends and increased competition is the meal assembly market. This is a good cautionary tale of how a franchise may not work.
Factors to Consider:
• What are the start-up costs and royalty fees? How long until you break-even? (Do your own math!)
• Does the business fit your experience and interests?
• What do you get from the franchise (i.e. training, site selection, territory, name recognition, advertising)?
• How solid is the franchise? How old is it? Are sales increasing or decreasing?
• How many franchisees are there? How many are leaving/ why did they leave?
• Will the concept work in your geographic area?
• Can you start a similar business without purchasing a franchise?
Do not do it alone. Have a lawyer review the purchasing agreement with you before you sign.
Owning a franchise can be a great way to become an entrepreneur and make a lot of money. However, like any business venture, it is risky. Remember to do solid research on the franchise, write your own business plan, and get help from experts.
According to Merriam-Webster dictionary, a franchise is, “the right or license granted to an individual or group to market a company's goods or services in a particular territory.” When we think of franchises, we often think of McDonalds, Burger King, and 7-11. However, there are all types of Franchises. You will find everything from cooking schools for children Young Chef’s Academy, Energy Efficiency Consulting, Energy Doctors, there is even one to provide business coaching services and advice, AdviCoach! In short, there seems to be a franchise for everything.
Why are there so many franchises? Turning a business into a franchise is easier than ever before and franchising is a good way for the owner to expand their business without supplying all the needed capital investment. However, not all businesses that become a franchise are ready for the expansion. Before it is ready to franchise, a business should be operating with solid profits for several years and have multiple locations running on a set system. Too often, a business’s success relies on the expertise of the owner, rather than the systems that are in place. Since it is the system (along with the rights to sell the products/ services) you would be buying, make sure that it works independently of the original owner. In my opinion, a good franchise model is Five Guys, which started in 1986 and did not start franchising until 2003.
Purchasing a franchise can be expensive. In addition to the initial purchasing fee, a franchise usually requires ongoing royalty and advertising fees, based on a percentage of the franchisee’s profits. Thus, as the franchisee makes more money, so too does the franchisor. This creates a strong incentive for the franchisor to help the franchisee.
One of the most important considerations when deciding to be a franchise owner is the level of entrepreneurial freedom. If you own a McDonalds, you cannot put hot peppers on the hamburgers just because you like them. You have to sell the stated items in the manner prescribed to you. If you like following set procedures, this is great. If you are creative and entrepreneurial in spirit, make sure you understand the limitations set by the franchisor. The franchisee’s inability to change the system can also be detrimental. Like any other business, increased competition, changing consumer habits and changing costs structures can all affect the bottom line for the franchisee. The difference being that it is more difficult to change what and how you sell if you have a franchise because someone else, the franchisor, is making the decisions. An interesting case example of the impact of changing trends and increased competition is the meal assembly market. This is a good cautionary tale of how a franchise may not work.
Factors to Consider:
• What are the start-up costs and royalty fees? How long until you break-even? (Do your own math!)
• Does the business fit your experience and interests?
• What do you get from the franchise (i.e. training, site selection, territory, name recognition, advertising)?
• How solid is the franchise? How old is it? Are sales increasing or decreasing?
• How many franchisees are there? How many are leaving/ why did they leave?
• Will the concept work in your geographic area?
• Can you start a similar business without purchasing a franchise?
Do not do it alone. Have a lawyer review the purchasing agreement with you before you sign.
Owning a franchise can be a great way to become an entrepreneur and make a lot of money. However, like any business venture, it is risky. Remember to do solid research on the franchise, write your own business plan, and get help from experts.
Tuesday, July 21, 2009
How to Twitter
Like everyone else, I have been hearing about Twitter.com for a while. At first it was a gentle buzz, now I am hearing about it everywhere. After months of arguing that it wasn't for me, I decided to check it out and see what the fuss was about.
The basic idea behind twitter is that you type continual updates, short pieces less than 140 characters, very frequently. The more you update, and the more interesting your posts, the more followers you have. You can also follow other people's updates and learn about topics that interest you. For example, I am following several start-up entrepreneurs and a small business procurement expert. Like other types of social media, it is yet another way for people to get to know you and your business.
After almost a week of being on Twitter, I am surprised at how much I like it. I have been posting on small business and health care reform. I find it a great way to share interesting articles, thoughts, and ideas on those topics. Please follow me at http://twitter.com/smlbizadvice.
I also recommend trying it out for yourself. This is a great video explaining how to get started. Once you are up and running, let me know what you think.
Monday, July 13, 2009
Networking for Clients
Networking is the best way for small businesses to get clients.
Fundamentally, everyone wants to do business with those they know, like, and trust. How do you get people to know, like and trust you? The answer is as simple as it is complex, network. There are many ways to network both in person and online. Social media sites such as FaceBook, Twitter and LinkedIn are all ways to network online rather than face-to-face. Although I understand and like social media sites, nothing substitutes meeting someone face to face.
For the past month or so, I have been networking within my local small business community. It is something I should have started earlier, but like so many entrepreneurs, I was caught in the, “I can’t do this until I’ve done that” trap. For me it was, I could not network until I have a website and logo. Finally, I decided that I needed to get over it. I went to vistaprint.com and got inexpensive business cards with only my name, contact information, business name and tag line. Because the cards were so inexpensive ($15 for 250), I am comfortable printing a new batch once I have my website completed. In the meantime, I am getting out and letting people know about my business.
While working for others, I always enjoyed going to women networking groups the most. Although I have clients who are both male and female, I find that women networking events tend to be more casual and welcoming than their mixed gender counterparts. Once I got comfortable with networking for my business by going to several women entrepreneur events, I moved to larger mixed gender groups. Still, it is not easy to walk into a room of strangers and try to make connections at a business and personal level.
In order to walk in to the room with confidence remember to arm yourself with a nice outfit, business cards, a smile, and your elevator speech, also known as your thirty-second pitch. Imagine that you have stepped into an elevator, the doors have closed, and riding with you is your perfect customer. You have between the ground floor and the second floor to state why they should purchase your product or service. This is your elevator speech. It is not as easy as you may think. Now try doing that before a room of 30. Newsweek has a good article about the importance of elevator pitches. When preparing yours, remember to say it aloud to hear how it sounds to you. Which words do you stress? Is it interesting? How long is it? Do not forget to include information on why your customer should choose you and what is in it for them.
Once you have your elevator pitch and business cards, shop for a good networking group. I have found some great opportunities on meetup.com. I would also recommend looking at your local chamber of commerce, professional associations, and local volunteering opportunities. It depends on your business, but a structured group such as BNI may also work for you. Initially, go to as many different types of networking groups as possible. See which groups are a good fit and which are not. Once you have a good idea of the opportunities in your area, try concentrating on a few different groups that seem to fit your interests, business goals and target market.
Once you have selected a few groups, become active. Relationships are built over time, and it is therefore important that you stay focused on a few groups rather than put your effort all over the map. When you meet someone who you want to do business with, remember to follow up. Send them a quick email the next day and schedule a coffee meeting. It is a nice way to get to know the other person on a personal level.
Although it can be intimidating at first, networking is the best way to get to know other business owners. It is also a good way to make friends, gain self-confidence about you and your business, give back to your community and help others make connections. So, what are you waiting for? Print out our business cards and get started.
Fundamentally, everyone wants to do business with those they know, like, and trust. How do you get people to know, like and trust you? The answer is as simple as it is complex, network. There are many ways to network both in person and online. Social media sites such as FaceBook, Twitter and LinkedIn are all ways to network online rather than face-to-face. Although I understand and like social media sites, nothing substitutes meeting someone face to face.
For the past month or so, I have been networking within my local small business community. It is something I should have started earlier, but like so many entrepreneurs, I was caught in the, “I can’t do this until I’ve done that” trap. For me it was, I could not network until I have a website and logo. Finally, I decided that I needed to get over it. I went to vistaprint.com and got inexpensive business cards with only my name, contact information, business name and tag line. Because the cards were so inexpensive ($15 for 250), I am comfortable printing a new batch once I have my website completed. In the meantime, I am getting out and letting people know about my business.
While working for others, I always enjoyed going to women networking groups the most. Although I have clients who are both male and female, I find that women networking events tend to be more casual and welcoming than their mixed gender counterparts. Once I got comfortable with networking for my business by going to several women entrepreneur events, I moved to larger mixed gender groups. Still, it is not easy to walk into a room of strangers and try to make connections at a business and personal level.
In order to walk in to the room with confidence remember to arm yourself with a nice outfit, business cards, a smile, and your elevator speech, also known as your thirty-second pitch. Imagine that you have stepped into an elevator, the doors have closed, and riding with you is your perfect customer. You have between the ground floor and the second floor to state why they should purchase your product or service. This is your elevator speech. It is not as easy as you may think. Now try doing that before a room of 30. Newsweek has a good article about the importance of elevator pitches. When preparing yours, remember to say it aloud to hear how it sounds to you. Which words do you stress? Is it interesting? How long is it? Do not forget to include information on why your customer should choose you and what is in it for them.
Once you have your elevator pitch and business cards, shop for a good networking group. I have found some great opportunities on meetup.com. I would also recommend looking at your local chamber of commerce, professional associations, and local volunteering opportunities. It depends on your business, but a structured group such as BNI may also work for you. Initially, go to as many different types of networking groups as possible. See which groups are a good fit and which are not. Once you have a good idea of the opportunities in your area, try concentrating on a few different groups that seem to fit your interests, business goals and target market.
Once you have selected a few groups, become active. Relationships are built over time, and it is therefore important that you stay focused on a few groups rather than put your effort all over the map. When you meet someone who you want to do business with, remember to follow up. Send them a quick email the next day and schedule a coffee meeting. It is a nice way to get to know the other person on a personal level.
Although it can be intimidating at first, networking is the best way to get to know other business owners. It is also a good way to make friends, gain self-confidence about you and your business, give back to your community and help others make connections. So, what are you waiting for? Print out our business cards and get started.
Friday, July 3, 2009
An Economic Case for Health Care Reform
Healthcare reform in the United States is making a comeback. President Barack Obama has made healthcare reform a top priority for his administration and has linked its success, rightly, with the long-term financial health of the nation. If things stay at the status quo, healthcare costs will hurt the American economy by draining public funds and make US companies less competitive globally. There is an additional hidden cost to the lack of healthcare access for individuals, a decrease in labor mobility towards entrepreneurship. As a society, we must realize that health care reform is not an option it is a necessity.
Health care costs are an increasing drain on the US Federal budget. In 2007, the Federal Government spent $760 Billion on Medicare and Medicaid[i]. By 2017, Medicaid and Medicare combined will make up 6.9% of the US’s GDP.[ii] The inclusion of Medicare part D, although a positive social change, only increases the overall costs of these programs. Without a way to increase the risk pool, negotiate prices with pharmaceutical companies, increase true competition, and lower overall administrative costs, the Federal Government will shoulder the burden of paying for an unsustainably expensive system. With exponentially increasing debt, the US Federal Government will have to make difficult decisions about where to cut costs and/or how to raise taxes unless the current system is fundamentally changed.
In addition to the cost of healthcare at the Federal level, soaring costs are cutting into the profitability, and even the survival, of large and small businesses. Even well established businesses are struggling to pay health insurance for their current, and often, past employees. In order to stay afloat, business often transfer the extra cost to the consumer. This may work in a domestic market, but it creates a disadvantage when competing in a global market where direct competitors do not have the extra costs. Further, as the price of health insurance continues to increase, more employers are requiring their employees to cover a larger portion of their premiums. Thus, even as salaries increase, the take home pay of employees stay the same and may even diminish. With costs going up, and wages staying flat, consumers are purchasing less and hurting the nation’s primarily service-based economy.
While the negative effects of healthcare costs to the Federal Government and businesses are commonly acknowledged, one outcome rarely discussed is the impact the current healthcare polices have on entrepreneurial activities. With the majority of people getting health insurance through their employer, the question remains how many people are staying with their employers rather than starting their own venture so they can obtain health insurance. With small businesses generating 60 to 80 percent of net new jobs annually over the last decade[iii] the question is not trivial. If the current healthcare system is decreasing the amount of entrepreneurial activity in the US, then the economic consequences could be much greater than otherwise thought.
With the economy of the nation so closely tied to healthcare costs, it is important that legislatures look at healthcare reform not only as an important social undertaking, but also as an economic necessity.
[i] National Health Expenditure Data Fact Sheet, Last Modified: 03/11/2009 10:33:47 AM http://www.cms.hhs.gov/NationalHealthExpendData/25_NHE_Fact_Sheet.asp
[ii] Medical news Today, Article Date: 21 Oct 2008 - 11:00 PST http://www.medicalnewstoday.com/articles/126123.php
[iii] The Small Business Administration, Advocacy Small Business Statistics and Research, Source: U.S. Dept. of Commerce, Bureau of the Census and International Trade Administration; Advocacy-funded research by Kathryn Kobe, 2007 (www.sba.gov/advo/research/rs299tot.pdf) and CHI Research, 2003 (www.sba.gov/advo/research/rs225tot.pdf); Federal Procurement Data System; U.S. Dept. of Labor, Bureau of Labor Statistics.http://web.sba.gov/faqs/faqIndexAll.cfm?areaid=24
Friday, June 19, 2009
Tips for Surviving this Economy
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.
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.
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!
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