5 Keys to a Successful Business

Business owners are some of the most optimistic, and often the craziest people in the world. No-one starts a business believing that it will fail. We are all absolutely convinced that our idea is a great one, that we will be successful (where others have failed) and that this business will change our lives for the better. If we did not feel that way, we would never take the risk to invest our own money, or borrow from others to start our business. The reality is however, that, according to the SBA, most businesses eventually fail and more that 50% do not survive beyond the first 3 years. Even if you manage to get that far, things can still go horribly wrong, as many seasoned business owners found out during the recession which hit us during 2009 to 2012.So, does this mean that you should not start a business at all? Absolutely not. I believe that your business can be an outstanding success, if you approach it in the right way, avoid repeating previous mistakes and impose discipline on yourself as the owner. Here are some of my suggestions on how you can make sure that your business succeeds:Discipline:Lets start with you. Successful business owners are disciplined people and more often than not, businesses fail because their owners fail. Your business must compete to succeed. There is always someone out there, trying to win over as many of the customers that you are targeting. Business is competitive and if you do not intend to work hard and discipline yourself, then don’t get into the arena. Anywhere there is competition, there must be discipline. You could have the most unique skill, or the best product idea, but your business will never achieve its full potential, if you do not have discipline.Discipline is a determination to work hard to get it right. It is not settling for mediocre results but rather working until you achieve the qualities and results that you need to compete. No-one will buy your product if it is substandard, or hire your services if you cannot deliver what you promise. Business discipline requires an eye for detail. I learned a valuable lesson very early on in my career. I was once required to do a financial presentation to a senior executive and felt that since I knew this stuff, I could get by with a minimum amount of research and preparation. I went to the meeting and had my presentation ripped to shreds. I was unable to answer questions that were obvious and fell way short on the detail needed to be credible and convincing. I left that meeting upset and angry, not with the executive, but with myself and vowed that this will never happen to me again. As a business owner you will not get things right every time. You will make mistakes and mess-up on occasion. But if your product or service fails, let it not be for lack of effort and discipline on your part, or that you were too lazy to do it right.Due Diligence:”A fool and his money are soon parted” – Dr. John Bridges
“All that glitters is not gold” – William Shakespeare
“There is a sucker born every minute” P.T. Barnum.These old sayings are trying to warn us that not everything we think is an opportunity or a good business idea, is likely to succeed. There are many con-artists out there, whose sole purpose in life is to deceive you into making financial commitments and who have no problem in robbing you blind. It is therefore foolish on your part not to do proper due diligence on any business idea, franchise or entity you intend to buy or invest in. This is where many business failures occur. At the very beginning.

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Due diligence is a serious matter for start-ups as well as on-going businesses. Large successful businesses are constantly doing “due diligence” on their internal processes (systems review, business process improvement, financial and strategic planning) as well as on any expansion thrust or acquisition they may contemplate. Start-ups need to do this as well, before they invest significant funds. Be wary of taking advice from people with vested interests in your decision. For example, you may be considering investing in a franchise. Don’t rely solely on the advice of the franchise vendor with its polished website and a persuasive story, to tell you what a great opportunity this is and how much money you will make. Get independent advice and do your homework before you invest.Many people start businesses based on a personal passion. While this a great plus factor for success, because your passion drives you to overcome obstacles, it does carry the risk of making business decisions with your heart rather than your head. Sometimes we are too close to the project to be objective and we become emotionally committed too early. This is where an independent expert like an experienced business coach or adviser comes in handy. Some would-be business owners need to hear the brutal truth (in a compassionate way), before they go on to make the mistake of their lives. “Faithful are the wounds of a friend” (Proverbs 27:6). Finally, don’t be taken in by those who pressure you into investing in “a once in a lifetime, limited space available” opportunity. Anytime someone says that to me, I take a step back, and take a good hard look, to see what I’m missing about the offer. It is better to miss out on a “limited offer” opportunity than to rush in and lose your money.Marketing:A well thought out and researched marketing plan is one of the most important ingredients that you need to succeed as a business owner. Unless you happen to own the only source of water in the desert, don’t expect people to automatically think of you and come flocking to your doors to buy your product. I worked in a corporate career as a CFO for many years before going off on my own. One of the biggest challenges that I faced when I decided to start my own consultancy business, was how to market my services. That is because, for many years, my job was about cleaning and cooking the fish that someone else caught. All of the businesses I worked for, had large, well staffed marketing departments, whose jobs it was to go out there and win customers. My job was to manage the money and make business decisions. That works fine if you are a part of a large well structured business. If however, you are the owner of a small business, marketing is not a secondary pursuit to be left to others, it is your primary point of focus. You may have a brilliant product or service to offer, but if you do not have a winning marketing plan, no-one will know about your business or care about what you sell. So, whether you are a small or large business owner, you must get involved and often drive the marketing function. You need to know the following:What specific need does my product or service meet?
Who are my customers, what do they want and how much are they willing to pay for it?
How sustainable is the demand for my product or service?
What is it about my product/service that makes it unique? How can I take advantage of this?
Who are my competitors and what are they able to do better than me?
How do I reach out to potential customers to persuade them to buy my product /service?
How much money do I have available to promote my business?
What specific marketing/promotion activities will work best for me?Answering these and other marketing questions would help you understand your product/service customer appeal and market potential and how it ranks against your competitors’ offerings. This forms the basis of your marketing strategy and business plan and is critical to your long term success.Capital:Raising sufficient capital to start and develop the business is very often the biggest challenge that entrepreneurs face. I have seen many, potentially successful businesses, grind to a halt because the owners did not have capital to take it from start-up, to sustainability. A business needs capital to acquire productive assets and fund its operations until the business itself can generate enough positive cash flow to continue as a going concern. Say as an example, you decide to start a restaurant. You would need capital to buy cooking equipment, furniture, renovate the premises to suit your needs, buy inventory, secure licenses and so on. This is what many people understand capital to be used for, the initial investment to start or acquire the business.However it may take a while for your restaurant to become popular and attract enough clients to provide the revenue to fully fund operating costs. In the mean time you have overheads to pay such as monthly rent, wages to employees, advertizing costs, replenish inventory (drinks you sell and food ingredients you serve) and so on. This is where many businesses fail. The owners hope that the sales they generate in the future will cover their operating costs from day one and do not properly estimate the time it would take for the business to become established, during which the owner needs to have additional capital to carry the business.Underestimating the point sustainability or “breakeven point” is a common and fatal mistake made by both seasoned and novice business owners. Before you start your new venture, you have got to realistically project your future cash flows and determine if you have sufficient capital to succeed. Here is what typically happens if you don’t do this. You start your new business by investing your life savings. Things go well for a while, but you soon realize that it is taking longer for the business to become established than you anticipated. Customers are coming in, but not in the numbers you first expected. A lower number of customers means less revenue to pay expenses and you quickly find yourself running out of money to pay suppliers and bills as they fall due. Next comes the juggling act of trying to figure out which suppliers to pay first and which ones you will stretch out far into the future. The calls begin to come in from creditors and you now find yourself working for free for a business that you love, but which is slowly dying, because it ran out of capital before it became sustainable. This is the most common reason for business failure and it supports the SBA statistic that it takes 3 years for a business to fail. That is the time the owner takes to realize the painful truth, that he/she never had sufficient capital to start the business in the first place.

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Faith:These four items, Owner Discipline, Due Diligence, Marketing Strategy and Adequate Funding are the main, universally applicable business ingredients needed to operate a successful business. There is however one more ingredient, which is personal to each business owner, and that is “faith”. I said earlier that business owners are either the most optimistic or the craziest people on earth. That is because we take risks with our capital as an act of faith, hoping for a successful outcome. It takes faith to start a business. But what is faith? It is an expectation that things will work out, or materialize, as we hope or believe. It is what gives substance to our hopes and dreams. The Bible tells us that “Faith is the substance of things hoped for, the evidence of things not seen”. (Hebrews 11:1).As believers in Christ, we have already established a platform of faith in our lives. We believe that an unseen God, who controls the universe, has a plan and a purpose for our individual lives. This plan is made real in us as we place our faith in our Lord Jesus as our personal savior and leader. Now, to everyone else, this is absolutely nuts. But to those of us who have taken this step of faith, it is as real as the air we breathe. Once we get to this point, every additional thing we do that requires faith, is built on this platform. As a result, our decision to start a business, is not based on an abstract optimism that things will somehow work out, but on the trust we establish in our Lord Jesus to lead and guide us.I believe that when we become reconciled to God through faith in Jesus, an eternal destiny opens up to us. We who were all once distant from God, now draw close to Him and get plugged into His purpose for our lives. Our purpose for our businesses also transitions from simply being a source of personal wealth, to a tool that God uses to bless us and to bless others. As we actively cooperate with God as an act of unselfish faith, He leads us into decisions and opens doors for us, that we ourselves could not open, all according to His will and purpose. Being Christian business owners does not guarantee that we will all be rich and “successful”. It does however give our businesses and our lives an added dimension and very often, if we are committed to God’s processes, things work out to our benefit. Our role is to trust God for the unknown, follow His leading, even when this conflicts with our personal agenda and build our businesses on Biblical principles. When we take this approach, we have the assurance “that all things work together for good for those that love the Lord and are called according to His purpose” (Romans 8:28). This hope applies to our all aspects of our lives, including our businesses.I hope this information was useful to you and I encourage you to contact me if you have any questions about your business.Robert.
Website: http://www.christiancfo.com Email:rfullerton@christiancfo.com.

Planning For Results – A Process Tool To Build A Successful Business

Business Plan:Proper Planning is an important and effective tool in financing your project or a business, and shaping its future. It is important to understand how planning process and Business Plan can be applied to your business.”Conversation would be vastly improved by constant use of four simple words: ‘I do not know’ ” – Andre Maurois Planning is an attribute or character of Management that assists and motivates a leader to make things happen, rather than not doing anything or allowing things to happen. Management may be an individual, family, business owner, principal, or project manager that organizes the finances for a project or business.
“At a presentation I gave recently, the audience’s questions were all along the same lines: ‘How do I get in touch with venture capitalists? What percentage of the equity do I have to give them?’ No one asked me how to build a business!”–Arthur Rock, Founder and Chairman of Intel Corporation.Surprisingly, many business owners do not consider a Business Plan as an important factor in building the business and raising money. They consider that they might be better of just sketching out basic financial projections. For a start-up project, it is necessary to prepare a full Business Plan. This includes organizing financial with three years of projections and describing detailed goals and strategy and why the business will be successful. It also helps in creating a good impression with stakeholders and lenders/investors. Once a full Business Plan is prepared (which may initially take three to four weeks), it may be appropriate to spend one or two days every few months updating it. This will also assist in evaluating earlier decisions and improving or fine tuning the business model.A Business Pan is only as good as the quality of efforts that go into the planning process and preparing or documenting the same. In general, a Business Plan is the end result of planning process. Successful planning process involves management in a manner where they take responsibility of the organization’s own actions (or in actions) and final results–with a goal to succeed and willingness to take necessary actions that address risks and avoid failure. Business planning requires one to develop goals and strategy that address all probable eventualities or risks that one’s business could face in the future. It helps to determine the best number of action-steps necessary for the management to reach its business goals, and avoid, minimize or overcome foreseeable hurdles.

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Proper planning is an important and effective tool in building and financing one’s project or business and shaping its future.Business planning consists of two key elements: The Business Planning Process and The Business Plan.The Business Planning Process:The Planning Process is a step-by-step approach that helps to build by “thinking-out” management’s plan on how to achieve goals or desired outcomes. The professional skills of gathering and analyzing information, setting realistic and challenging goals, how to meet competition in market place, and sound decision-making at every step are utilized in this process. Today’s business environment is very competitive and full of uncertainties, so management should pay adequate attention to the Planning Process. This process improves the chances of success for the project as it also minimizes chances of failure.
Management should address a series of relevant questions that help clarify business’ past, present situation, the future a business desires, the means of achieving the future, and the systems of organization, delegation and controls or accountability necessary to track and sustain the progress. The Planning Process may require periodic revisions. Management should decide how often it should be revised or updated depending on the value it derives from effort and expenses incurred. As management proceeds through the planning process, it scans through the possible end results of different courses of actions. During this scanning process, management is forced to confront issues relating to the goals, purpose, vision, mission, core values, strategy, customer perception, and priorities of the business.For example, when developing a Business Plan, management may decide not to invest more than certain amount of capital in the business in order to provide owner(s) adequate resources to pursue family, personal or other investment goals. One must acknowledge that, given the management’s decision, it cannot expect to receive the same business development considerations as someone willing to invest triple the amount of capital. Every business may have different goals that will involve investment of resources and sacrifices (opportunity costs). For example, an opportunity or benefit may be lost or “foregone” for the sake of pursuing an alternate use for the same resources. Organizations may sacrifice business success or developmental opportunity, while someone else may sacrifice alternative investment. The business planning process brings these factors in to the deliberations, and realistically assesses the trade-offs necessary for the management team to finalize the business goals.The Business Plan: The end result of the Planning Process.The Business Plan is the final document that defines management’s perception of the game-plan as of a specific date, and is a final output communicating management’s planning process for the project or business. It is a document that states the core assumptions, goals, and strategies that management has decided to pursue by investing the necessary resources in terms of time, financial resources, and action steps that will be necessary to achieve the goals. The business plan is derived from the management’s deliberations and the series of final decisions of the planning process. The written Business Plan also serves as an important controlling tool for regularly monitoring actual vs. plan on different parameters and the corrective action to be taken so that the overall success is achieved for the business or project. The parameters that are monitored could be time, cost, resources, quality, Return On Investment, employee morale, etc. Facilitating the planning process that generates the Business Plan requires expertise in both the financial and general aspects of management and the business planning process itself. The value of a Business Plan is in the decisions it influences during the Planning Process as well as the monitoring of progress–ultimately, how cash flows in and out of the business’ bank account and achieves the stake holder’s objectives over a period.

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How I utilized Business Planning:A company in California manufactured a range of engineering products with a good technology base. However, for various reasons, the business had become stagnant over last few years in terms of revenue and profitability. I evaluated the business model and management infrastructure, and facilitated restructuring of the business with a focus on achieving growth. This planning process involved producing additional revenue streams, improvement of production processes, replacement of machinery, and relocating the plant. The new Business Plan and Presentation Package made it possible to raise additional business loan of $4 million dollars. This was utilized to triple the revenue over a three-year period and also resulted in increasing the number of employees. The business is now on a progressive track, doing well and is expected to achieve its goals.