Are you thinking about starting a small business or a in home business? Take a look at these small business success factors before you begin . Take them to heart and make them part of your start up plan.
- A formal written business plan
- Effective control over costs
- Strategic pricing of goods sold
- Promotion of a well planned public image
- Implementation of technological aids
- Professional advice listened to and taken to heart
- Reduction of small business taxes through tax planning
- Proper coverage when it comes to insurance
- Superior product quality
- A killer sales department
- Ongoing employee training and retention of key personnel
- Keen insight of competition
- Prediction and adaptability to market trends
- Proper start up funding
- Accurate and timely financial records
- An excellent–high traffic location
- Two-way communication with family members
- Acceptance of a partner for the correct business reasons
- Establishment of a working relationship with a local banking officer
- Operation under the proper strategic legal form of business
- Learning how to learn, school is never out for the pro
So what is the #1 reason small businesses fail?
According to the Department of Commerce 8 out of 10 new businesses will close their doors in the first 5 years of operation. Did you get what you just read? – 8 out of 10 would be ENTREPRENEURS become ENTRE-MANURE in the first 5 years.
Holly COW! , what an alarming statistic – that so many people in pursuing the American dream will not succeed . Why is that?
The “text book” answers of why businesses fail include the following:
- Lack of a business plan
- Not enough working capital
- Bad Location
- Poor Management
- Taxes-and the failure to take advantage of small business tax deductions.
Question: Who started the business without proper planning?
Who started the business without enough working capital?
Who chose the terrible, stupid, bad location?
By the way, who was the poor management?
Answer: You, you, you, the business owner , the would be super-star entrepreneur did all of that and made all those rotten decisions . It’s you, period. What in the world were you thinking?
Now don’t be too hard on yourself, most people are no better off than most of you when it comes to operating your own small company . This is difficult stuff to do.
But here is the TRUE #1 reason why most businesses fail.
Most small businesses are not FEASIBLE from the get go .
In other words the business could never generate enough sales, to pay for the cost of sales, to pay all the operating expenses, to pay the notes and have enough green cold hard cash left over in order to pay the owner a reasonable salary.
That’s it in a nutshell; most small companies just can’t succeed because they are not feasible to become a viable profitable operation from day one .
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Now that you have developed your Marketing Plan, you can put it into action through the Strategic Plan and Sales Plan. This overview of the Strategic and Sales Planning Process is divided into Eleven Sections, which are presented in a particular, building-block order.
Potential Problems and Company Objectives: First direct and rank your Potential Problems in your Company Operations: Cash Flow, Market Changes, Competition, Costs, Distribution, Productivity, Employee Turnover, Regulation, Market Acceptance, Pricing, Quality, Capital, Service, Control Systems and Facilities are some of the areas you should examine in identifying potential Problems. With your Problems identified and ranked in importance and severity, you can develop Company Objectives you aim to obtain. These Objectives should strive to minimize and manage the identified Potential Problems, while emphasizing your Company’s Strengths.
Risk Analysis: Building on your Potential Problems identified in Section One, this Analysis produces Expected Risks. Look at Litigation Threats, Liabilities, Regulatory Issues, Major Risks and Problems and answer the following questions: When are Problems expected to occur? What can you do to mitigate the potential risks and problems? How will you deal with these problems? The last part of the Risk Analysis looks at how you can turn these problems into opportunities, which parlays into the next Section.
Company Strategies, Strategic Tactics and Strategic Programs: First develop your Strategies, then the relating Strategic Tactics and then the resulting Strategic Programs.
- Strategy is Focus. Strategy consists of key factors that distinguish your Company and are most expected to contribute to your success. It is important that your Company Strategies complement each other so you are not sending your business in separate directions.
- Tactics are used to implement strategies and relate to a specific Strategy.
- Programs are specific business activities which have concrete dates, assigned responsibilities and developed Budgets. Programs relate to Specific Tactics of a Specific Strategy.
Sales Strategy: Remember that sales close the deals which Marketing opens. Sales are dealing directly with your Customers. Develop the Sales Strategy as it specifically relates to the Marketing Strategies you have set forth. identify and develop the different sale methods and channels you will use to sell your Products and Services. Determine your Sales Goals and your Sales Process. Develop an effective Salesperson Training Program and Compensation Structure. You should also look at order processing optimization, sale milestones expectations, price maneuvering, sales leads propagation, distributor roles; credit and collection policies; how the Internet will be utilized; and so forth.
Sales Programs: After developing your Sales Strategies, it is time to define your resulting Sales Programs. The Sales Program addresses how your Sales Strategy will be implemented. Once implemented, you should have systems in place to measure the Strategy Implementation and support your sales efforts.
Strategic Alliances and Joint Ventures: Define your Keystone Strategic Alliances and Partnerships. Identify and develop Co-Marketing and Co-Development Opportunities; Product Help; Commission, Cooperative and Product / Service Agreements. Is the fate of your Company tied to another Company? Explain how these Alliances help your Company and any integral risks.
Operating Budget — Rolling Monthly Outlook (Yearly Basis): The Operating Budget is a Planning and Control Mechanism which helps you develop the next section, the Sales Forecast. It should be on a Rolling Basis, Outward looking for one year and the format on a Monthly Basis. Rolling Basis means after each quarter you Budget for the next three months. The Budget should be twelve months forward looking. You should have a Target and Actual Column so you can track results and adjust throughout the year as necessary. Your Operational Budget should directly reflect your Strategic Planning Goals. Determine whether it is best to use a Top-Down, a Bottom-Up or Blended approach for your Operational Budgets. Ask yourself: How will your Budget be used as a Control Measure? How will your Budget be used to judge Company, Management and Key Employee Performance? Your Budget is a of value tool to use for Employee Management, Education and Delegation; Managerial and Executive Goals.
Sales Forecast: Based upon your developed Sales Strategy and Programs, along with your One Year Operational Budget, develop a Five Year Projected Sales Summary Forecast. This Forecast, in turn, will be used to develop your Detailed Profit & Loss Statement in the Financials Section of your Business Plan. If you are an existing business, be sure to highlight your Historical Sales Trends going back three years. It is important to show how you will fulfil your Annual Sales Volume Goals, and the Assumptions used to develop the Sales Forecast. What Growth Rates are you projecting and expecting for your most Vital Products and Services? What are the major driving forces behind the Forecast? Is your Sales Forecast believable? What risks are involved? It is very important to show how your Sales Forecast relates to your Market Analysis, Target Market Segments, Sales Strategy and Marketing Strategy. This ensures your Marketing Plan is a direct influence on your Strategic & Sales Plan, resulting in a Synergistic and Focused Company-Wide Strategy.
Milestones Table: Provide your Future Company Goals, Milestones and Strategies, along with your Marketing and Sales Program rollouts. For each Milestone Event provide: Quantitative and Qualitative Descriptions; Start and End Dates; Budget Numbers; Manager and Department Responsibilities. During the Milestone Table Development, it is important to answer the following key questions:
- What are the decisive Checkpoints as your Business develops?
- What specific Milestones will mark the lowering of risks due to the increased viability of your Company?
- If you need to deviate from your Plan, can your resources surmount these plan variations? What contingencies are built into your Strategic Plan?
- What Systems are in place to gauge your Company’s progress in achieving the prescribed Milestones?
- How are your Milestone Analysis & Goals an integral part of your day to day Management and Planning Process?
Control Mechanisms: What Mechanisms for Control of each critical Skill and Resource are available to you? Is direct ownership necessary for your Resources and Skills or can they be Outsourced and at what cost savings? How can you build upon Incentives for Cooperation with your critical Resource and Skill Providers; what are the Benefits? These are just some of the questions to address when identifying Control Mechanisms for your Strategic Plan’s Resources.
Strategic Planning Advisors: Strategic Planning is such an important part of running a Successful Business, we highly recommend to retain a competent team of Professionals, Advisors, Experts and Consultants. An Experienced Business Consultant can be a very important part of your Strategic Planning Team, ensuring your Strategic Plan is not just effectively developed, but most importantly, effectively implemented throughout your Company Operations. After your Strategic Plan is implemented, an experienced Business Consultant can also help you ensure the Strategy stays on track, reaches its goals and / or is adjusted as necessary due to market changes and unforeseen problematic events.
In conclusion, a Successful Strategic and Sales Plan starts with your Products and Services Development, then moves into your Marketing Analysis and Plan Development; this in turn, is a direct influence on your Company’s Strategic Plan. Flow Charts reveal these important development steps and their relationships:
Products and Services Development => Market Analysis and Segmentation => Market Trends => Market Growth => Competitive Analysis, Positioning and Edge => Marketing Strategy: Positioning, Pricing, Promotion and Distribution Strategies => Marketing Strategy Profit and Loss Projection => Marketing Programs = An Effective Marketing Plan.
Marketing Plan => Strategic Potential Problems and Risk Analysis => Company Strategies, Strategic Tactics and Strategic Programs => Sales Strategy => Sales Programs and Alliances => Company Operating Budget => Sales Forecast => Milestones and Control Mechanisms = Successful Company Strategic & Sales Plan.
Company Strategic and Sales Plan => Company Profit and Loss Statement Projections = Believable Financial Forecasts.
About the WRITER
Frank Goley is a Business Consultant for ABC Business Consulting and has been helping companies to succeed for many years. He is an expert in developing business plans, marketing plans, funding plans, strategic plans, turnaround plans and project specific business plans. Frank is also a business coach and business turnaround consultant . Frank is author of The Comprehensive Business Plan Workbook – A Step by Step Guide to Effective Business Planning, and he has over 30 published articles on business success strategies. He also writes the Business Success Strategies blog.
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Business consultants have the power to strategize. Every business needs a strategy and contacting a business consulting firm to find out the best areas for this can be very beneficial. Having a strategy in place is one thing, but being able to carry it out is another.
A business consultant can come up with a strategy for cutting costs. Companies need to be able to keep their profits up and losses to a minimum. There are ways to cut back and save thousands, the key is knowing where to look. A consultant can look at every area imaginable and see which areas the company would benefit from is cost with reduced.
Having a sales strategy is also critical. A company has to know what to sell, who to sell to and how much to sell a product for. A consultant can look at how much it costs to provide a product and make sure that it is priced appropriately so that the company makes a profit. Sales are crucial to the growth of a business.
There are many things to keep in mind when expanding . Expansion is a huge decision and a company needs to make sure that they can benefit. A business consultant can do research and see if the location the company will be located in is profitable. If the expansion is taking place within the company, with no relocation, the consultant will make sure that they business can stay afloat.
Business consultants can also come in and figure out funding strategies. If a company needs to borrow money for a project, the consultant can make sure all of the essential paperwork is done. Every lender will require something different or their rules may be different. This can be a lot to keep up with. A consultant can treat every aspect of that.
When it comes to strategizing, business consultants are the best. They will look at the situation, find the pros and cons, and then put their strategy into motion. This can be a huge stress reliever and can save the company valuable time.
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Summary:
Biases in meetings can undermine the effectiveness of strategic planning and the subsequent strategy the company chooses to follow, particularly when a strategic company decision is to be made. This article offers strategies to effectively managing biases in meetings. Advice given is to begin by including a diverse group of members to increase the level of critical thinking. Diversity of backgrounds, cultures, area of expertise, and ideas will broaden the range of perspectives and feedback.
Before the meeting takes place, be sure to assign homework to participants that includes collecting sufficient and accurate data from which to base decisions upon. Perhaps creating fact gathering teams charged with developing opposing hypothesis and actively discussing the key points.
Creating a “peer-like” atmosphere is yet another tip in managing bias by allowing members an opportunity to share experiences or data-driven opinions. In this atmosphere, encourage expressions of doubt and create a climate that recognizes reasonable people may disagree when discussing difficult decisions.
There will be better success if, prior to the meeting, leadership ensures members understand the purpose of the meeting (to make a decision) and the criteria needed to make the decision. In this stage, using the “postmortem technique” of looking ahead and imagining that the outcome has failed and then listing possible causes for the failure will help identify weaknesses in the proposal.
Article Quote:
“For the portion of the meeting where a decision is going to be made, keep attendance to a minimum, preferably with a team that has experience making decisions together. This loads the dice in favor of depersonalized debate by eliminating executives’ fear of exposing their subordinates to conflict and also creates, over time, an environment of trust among that small group of decision makers.”
Link: “Taking the bias out of meetings”
Member diversity, creating an atmosphere that allows for data driven opinions, and postmortem techniques are all useful tips in taking the bias out of meetings in order to make better strategic decisions. It is very important to keep the focus of any meeting on outcome and action. In this case, the outcome focus in on making a decision, but the very next and equally important step is to develop an action plan that is in line with the strategic effort, resources, and ability to successfully carry out the action plan.
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Strategic planning is something all businesses should participate it if they want to improve results. Strategic planning is a process of defining goals or outcomes, then developing a plan of action to reach those outcomes. A review process should be implemented in order to measure results and make course adjustments as needed.
The video link below gives an overview of three components of strategic planning. It is a helpful video for anyone new to strategic planning.
Click on this link: What are the three components of strategic planning?
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Summary:
The US Government Accountability Office (GAO) issued a report Feb. 19, 2010 titled Food and Drug Administration: Opportunities Exist to Better Address Management Challenges, which criticized the FDA’s efforts to fully use practices for effective strategic planning and management.
The report highlights five major management challenges the GOA believes could affect FDA’s ability to carry out its mission:
1. recruiting, retraining, and developing its workforce
2. modernizing its information systems
3. coordinating internally and externally
4. communicating with the public
5. keeping up with scientific advances.
The GOA made the following recommendations: Develop a strategic human-capital plan and issue an updated workforce plan; Work to make FDA’s performance measures more results-oriented; Following the creation of more results-oriented sets of performance measures, direct FDA’s centers and offices to track their workload by strategic goals; Direct each of the agency’s main centers and offices to clearly align their program activities to FDA’s strategic goals in documents such as the budget request or center- or office-level documents; Build FDA’s capacity to collect and analyze performance information by expanding training for managers on topics related to performance information.
Article Quote:
“The GAO said that FDA has aligned its three major activities—premarket review, production oversight, and postmarket surveillance—and uses employee performance plans to link individual activities to its strategic goals. However, only four of eight centers and offices that GAO reviewed clearly document alignment of their activities to FDA’s goals, and only two clearly linked their resources to the agency’s goals.”
Link: http://pharmtech.findpharma.com/pharmtech/Regulation/GAO-Report-Criticizes-FDAs-Strategic-Planning-and-/ArticleStandard/Article/detail/663378?contextCategoryId=35097
As mentioned in the recommendations above, strategic planning initiatives must focus on outcomes. You should know the intended outcome before jumping into any action plan. That is not to say that the action plan must remain static. If adjustments to the action plan need to be made, and often they do, then make the necessary changes. Measure progress often because in doing so, you will gain insight into what is working and what may need adjusted. However, the focus should always remain on the intended outcome.
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Summary:
Sir Martin Sorrell, CEO of WPP; Randy Komisar, a partner at Kleiner Perkins Caufield & Byers; and Anne Mulcahy, Xerox’s chairman and former CEO, have all made strategic decisions throughout the course of their careers. This article provides comments from each and highlights a critical challenge: striking the right balance between thorough, unbiased decision-making processes, on the one hand, and timely action, on the other.
WPP’s Sir Martin Sorrell, believes that everyone makes mistakes and that decision makers should learn from these mistakes and listen to feedback in order to be able to react rapidly and grasp opportunities.
Randy Komisar, of Kleiner Perkins Caufield & Byers learned early in his career that rather than tuning out the natural bias we all possess, he focuses on recognizing, encouraging, and balancing bias within effective decision making. Mr. Komisar makes the comparison of how President Kennedy ran his cabinet: assemble the smartest people he could, throw a difficult issue on the table, and watch them debate it.”
Xerox’s chairman and former CEO, Anne Mulcahy, offers five suggestions for other senior leaders: cultivate internal critics; force tough people choices; force tough R & D choices; know when to let go; and strike the right risk balance. For a complete explanation of these suggestions, please follow the link below.
Article Quote:
“While there’s no silver bullet, taking concrete steps to cultivate internal critics, safeguard diversity of thought, clarify assumptions underlying different points of view, and force tough choices between business priorities can help.”
Link: https://www.mckinseyquarterly.com/Strategy/Strategy_in_Practice/How_we_do_it_Three_executives_reflect_on_strategic_decision_making_2541?gp=1
A challenge for all leadership is striking the right balance between timely action and the need for thorough, unbiased decision processes. The leaders in this article each have a different approach, yet the underlying theme appears to be challenging the people around you with voicing their opinions and insights while possessing the leadership skills needed to recognize personal bias.
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Summary:
The economic crisis experienced over the past couple years has forced most management teams to focus on the present and manage by crisis. However, crisis management doesn’t prepare your organization for future growth and opportunity. Planning your business’s future is no longer a discretionary decision. If you want to control the destiny of your business then you need to create it!
Strategic planning is a multi-step process encompassing vision, mission, objectives, values, goals, and specific action steps. Once the work of creating the plan is complete, action must be taken to ensure it succeeds.
Leadership should be fully behind and support the plan before presenting it to the organization. Conviction that the plan is going to add value to the company and presenting it in a positive light is essential. However, management needs to be clear to employees that this is the direction leadership is taking the company and it is everyone’s responsibility to do their part to see the plan to completion. Not only will this increase accountability from individuals, but it also fosters as sense of ownership in the company and its ability to thrive and outshine the competition.
Article Quote:
“Take a moment and be honest. Do you have an actionable strategic plan for your business? Do you know where you want to take your business one year from now, five years from now? Do you want to learn how to better manage the inevitable fires while focusing on growth opportunities? Make the commitment with your management team to develop a strategic plan now as your future results depend on it!”
Link: http://www.resourceassociatescorp.com/blog/2010/03/strategic-planning-is-no-longer-a-discretionary-decision/
Executing a strategic plan requires the objectives of the plan to be measurable. Leadership should continually review progress updates and decide if adjustments need to be made. It may be that additional resources are required for specific objectives or that parts of the plan really aren’t adding the value originally hoped for. The ability to make timely course corrections will ultimately save the business from wasting valuable resources.
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Summary:
Strategic planning and strategic leadership styles vary just as the employees and business owners of companies involved in the planning process vary.
Today, more than ever, the ability to gain instant access to news and information has changed the way many companies do business. However, the necessary skills to effectively manage others has not changed that much. Today’s work force is much less tolerant of bullying by management, and instead are looking for qualified and genuine leaders to work for.
Strategic planning seeks to answer the questions where are we, where do we want to be, and how are we going to get there. When deciding on strategic goals, keep it lean with only one to three goals as this will help keep the plan uncluttered and focused.
Next, come up with a tactical plan that easily translates into daily or weekly tasks. that chip away at the completion of key goals. This step also requires developing a budget to allocate the necessary resources.
Article Quote:
“Strategic planning isn’t just for corporations. Small businesses, even a sole proprietor, benefit from making strategic plans on an annual basis.”
Link: http://www.ilabstech.com/info-blog/strategic-leadership-focuses-your-strategic-planning.html
To insure companies meet their goals, strategic planners include responsibilities, timelines and accountability in the mission statement. Change within the organization is often met with some type of resistance. Therefore, present the plan with clear expectations of each individual so they understand their role in bringing the plan to reality.
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Summary:
Strategic planning, more than anything else, is what gives direction to an organization. It is the process of developing and implementing plans to reach desired goals and outcomes. Involvement and buy-in from key personnel is essential for successful implementation. Employees are far less likely to buy into a strategic plan if leadership isn’t fully behind the plan.
Once a solid strategic plan is developed, implementation of the plan requires clearly defined and specific objectives that can be translated and broken down into daily objectives. Once objectives are set, accountability for achievement is critical.
A few of the key ten common mistakes in strategic planning include: A Dart Board approach that generates numerous initiatives but no means for implementation; Failure to involve employees form all levels of the organization; Developing vision, mission and value statements but no real actionable foresight as to what the business needs to look like 5 to 7 years into the future; Failing to make the tough choices and holding people accountable; and Lacking specific Key Performance Indicators (KPIs) and measuring only what’s easy, not what’s important to the success of the strategic plan. For a complete list of the ten common mistakes to avoid, see the link below.
Article Quote:
“Strategic planning is a creative process the starts with the visionary creativity of the owner or CEO. The fresh insight it engenders might very well alter past initiatives.”
Link: http://www.smallbizupdate.org/strategic-planning-key-success-factors-and-how-to-avoid-ten-common-mistakes/
The best strategic plan won’t get far without a “roll out process” that includes maintaining accountability, visibility of the plan and a centralized effort by leadership to see the plan to fruitation.
Present the plan so that everyone in the organization understands not only what the strategy is, but also their role in executing the strategy.
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