It's hard to believe that we're in December already. It seems every year most people start with good intentions for life changing behavior and major self improvements. The problem is that most people jump in on January 1st and hit their wall on the 3rd.
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Most entrepreneurs go into business thinking they are going to have a jump start, be successful and build their empire. Reality dictates that this is a rare occurrence. Even young companies require time to incubate and grow into thriving businesses, profitable or not... If you are a visionary starting your business you are likely taking time to make the right decisions. At BayRisk Insurance Brokers, we have the opportunity to see many businesses come and go; to succeed and fail. In speaking with some of our clients that have succeeded and learning from those that have failed we have concluded that most wish their hindsight was better in these areas:
- Doing Enough Research Before Launching- Every new business is excited to show themselves off and hit the ground running, but without the proper research you could be making a premature move. Your business has plenty of brain power, but hiring independent consultants that are experts in market research and demographics could be the best investment you could make early on. Not only will you learn how to market and to whom, when and why, but you could learn that yourr your demographic is not quite ready for your product or service. Don't be the next Apple Newton (yes, even Apple can make mistakes).
- Paying Enough Attention to Market Trends- So you've done your research and launched because the world is ready. All too many businesses have failed because they do not prepare themselves for market trends. If you are selling a product or providing a service, be ready to change. It's easy to get tunnel vision when times are good, but not paying attention and adapting to change is a recipe for failure. One day your widgets may be talk of the town and you go through rapid growth, but unless you plan for constant improvement or added products or features, you may be hosting a garage sale to make money with your widgets in it.
- Investing In the Business- Some businesses get off to a great beginning then start spending on new staff, new office space, fixtures and furniture.Before they know it there is no retained earnings and no capital toreally grow the business. They may look for private or angel investors, but then make themselves vulnerable to losing equity and possibly control of their company.
- Hiring Practices- Many business owners make great visionaries. However, just because they can start a company doesn't mean they make good Human Resources managers. Hiring the right people can be a science and this is a costly area to make mistakes. Consider using a staffing firm or hiring one person as your HR manager that can assist with hiring, management and firing if necessary. Employees are your most valuable assets, but sure you hire wisely and manage just as wisely.
- Having the Right Insurance- Come on you had to know I would throw that in the mix. Many businesses fail because they fail to protect themselves. The cost to defend your company in a lawsuit could be enough to put you out of business. Smart business owners work with smart insurance brokers to get the right coverage. A local and knowledgable insurance broker can help you avoid accidents from happening and protect you if they do.
We rarely see a Bay Area startup go from Bootstrap to Bugatti overnight, but love to see it happen. Don't let hindsight get the best of you and keep you from being the next success story!
I always laugh about my first business venture. It's a great story, but also reminds me of valuable business lessons learned early. When I was 12 years old I was presented a interesting opportunity. There was a family acquaintance in Texas who was selling ceramic escargot culturing pots (I kid you not). His problem was that they don't have a lot of snails in Texas... I was contracted to collect snails, put them in empty milk boxes with enough food to be shipped back to Texas. I was to get 25 cents for the large snails, 10 cents for medium and 5 cents for small. Here are some of the lessons I learned about business and scaling:
1. Take care of your customers. I decided that I would pay for shipping since I wanted to make this as streamlined as possible for my buyer. This was a hard decision for a 12 year old, but with some guidance from my business savvy step-father, it made perfect sense.
2. Take care of your product. If snails died during shipment I would not get paid - simple. Therefore, I made sure to pack the milk containers with fresh lettuce and not over crowd my precious "es"cargo. I also paid for expedited shipping to ensure safe and fast delivery of goods.
3. Maximize your opportunity (in other word - scale). After a couple of shipments, my buyer was very pleased, in fact he was in need of more snails. Unfortunately my turf was getting dry as I has scoured my neighborhood for snails at peak times. Therefore, I recruited some school friends as sub-contractors. I paid them 50% of the rate I was making and they we able to source their blocks to keep my shipments regular (we were also keeping the neighbors very happy by riding them of garden pests). One of the worst things that can happen in business is not being prepared to grow.
4. Retain profits. It's easy for a 12 year old to take what might seem like easy money and blow it on baseball cards and video games... I was making approximately $75 per 2 week shipment depending on the pull and this went on for some time. I hate to sound like a geezer, but that was a lot of money at the time and for someone my age. I have always been money conscious and knew it would be smart to save most of my earnings. It was a good move. I bought Microsoft stock at age 13 and held (later, teenage me decided a car was more important than stock so I sold MSFT at age 17, but that's another story).
Don't get me wrong, I'm no Warren Buffet or business guru. The point is that there are lessons to be learned from every level of business. Even a lemonade stand can implement the concepts above to be successful. Every business should regularly be thinking about how to scale their business appropriately for optimization. If you're not, I guarantee your competitor is. If you're in a field with no competition then YOU are the only thing holding you back. Sometimes even the snail business can move fast if you take the right approach.
Where did the year go? Is it shaping out like you had planned? Did you plan? Hopefully you do business and personal planning and goal setting to help give some direction to your coming year. We are in insurance so we tend to be cautious and like planning... All BayRisk staff will be heading to a group planning meeting soon with professional assistance and this article by Inc. perfectly ties into how we wanted to share with you the benefits of planning...
If you're not planning for the coming year then you better believe that your competitors are. Here are three solutions to get you going before it's too late.
Hooray! The election season is finally done. The holidays are close behind, and 2013 is just around the corner. And yet a good many companies still don't have a formal strategic plan on the books. Many don't even have a meeting scheduled before the end of the year to create a strategic plan and align their team. Often executives will manage for the current quarter with little consideration for three to five year objectives or even a one year plan. Sadly, as the executives of these companies try to navigate uncertain times, they will wonder the following:
- Why aren't we hitting our goals?
- Why aren't we all on the same page?
- Why can't our people execute without having to ask questions at every turn?
- Why aren't we more prepared?
The answer is simple... procrastination. That sounds harsh but those of you regularly reading this magazine and website have seen plenty of material about the value of long term strategy. You have heard experts such as Collins and Peters, tout the benefits of long term strategic planning and alignment. Many of you know other successful companies who plan and execute consistently. So there is little question that you are just putting off what you know must be done. But perhaps there are solid reasons for your procrastination. Allow me to identify and resolve some of them for you.
Maybe things are going well for you. Or at least they seem good enough. I am sure that's exactly what your competitors are thinking too and none of them are developing strategyon how to steal your customers and gain market share. Keep telling yourself that and soon you'll find out the hard way that your business is always vulnerable to others who strategically plan and can out-execute you. This why many businesses fall into what Jim Collins calls the "Doom Loop" as outlined in his book Good to Great. Why be lazy? Taking a long-view approach in your business will insure you are ready for the next disruptor in your industry and can remain competitive.
Perhaps you would like to execute a strategic plan for the company, but can't focus because you aren't really clear about where you personally want to be in life. Perhaps you spend too much time thinking about what you want to DO in your life, and not enough about who you want to BE. In fact many companies miss their mark because their management team doesn't focus enough on individual objectives beyond the company's goals. If your people are not clear on who they want to be and what motivates them to contribute, the results will suffer and you will likely wander off course. But this is resolvable. Ask everyone "Who are we as a company and where do you see your role in five years?" See if his or her answers align with your perceptions. Taking time to consider your own future might be a good start and better prepare you to lead strategic talks for your executives and your company.
So many executives are constantly battling with competing priorities. As my father always says: "When you are up to your rear end in alligators it's hard to remember that your primary directive is to drain the swamp." It's very difficult to make the transition from working IN the business to working ON the business. But one thing is for sure. If you don't start prioritizing strategic planning you will forever be letting the business run you. The sooner you make your strategy and alignment a priority, the sooner you'll achieve goals effectively and create efficiencies that will free up time and resources in your company. You don't have to be the CEO of a company to raise the priority of strategic planning. Any individual can drive the process and show their value to the company at the same time. Here are the first three steps.
- Set a date for a 2-day planning retreat before the end of the year. If you don't do it now, you'll forget. Once the date is set you can figure out all the other details.
- Hire a facilitator or a coach. For a successful retreat, you need methodology and objectivity. A good facilitator can provide both of these things and is well worth the money.
- Engage your team. Email them this column right now. That way you'll demonstrate your commitment to strategic planning as a priority and get the conversation started. Share the pressure of accountability and you are assured of getting a long term strategic plan in place before year end.
Execute on these actions and you'll surely surpass your procrastinating competitors.