Do You Have Enough Money?

We have been walking through why Small Business fail and this is one of the big questions.  In a technical context, I would argue that most startups are undercapitalized.  They don’t really have enough money to start their company and struggle before it can become profitable.

Why is that?  So many people that I talk to don’t have any financial background and have little interest in learning.  This means that they are unable to create an estimate for the startup costs of their business.  I normally run into them when they have an idea and ask me to work for a percentage of the company or for free/barter.  I know that you are now thinking, “Is it that he has not been able to demonstrate a value proposition?”  That may be true some percentage of the time, but I know many cases where they just did not have the money.

Let me give you an example.  I met with a Woman who wanted to start an Alzheimer’s Care Center.  This center would be located on a farm so that they could grow their own food.  This was to provide the residents with animal interaction and organic food.  I asked if she had a property in mind.  I was not sure that such a property would be available for sale and she might have to build.  I also was unclear on the insurance and liability issues involved by mixing two industries as she wanted to.  Her plan was to keep her full-time job and run this facility.  She needed her job to pay bills while this facility was starting up.  In the back of my head, I expected that this would take $5M – $10M to start.

Now I recognize that this is an extreme case, but I have a multitude of lower end examples.  They ask for my help in developing and sometimes writing the business plan.  When they find what I charge for this, they turn white and say thank you.  I know that I am not unrealistic in what I am asking.  They are asking for anything from 10 – 100 hours worth of work and want me to take less than $5/hour.  If you are in that situation and cannot afford to get professional help in areas like bookkeeping and website development, then you need to consider whether you are doing the right thing.

So, if you don’t know how to create a budget and estimates for a 2 – 3-year ramp-up phase of the business, then expect to hire an expert (like me) to do them.  Unless you are my personal friend, don’t expect my help for free.  If you cannot afford that help, do something else until you can afford it.

Thanks, and have a great day!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!

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Perspective

Last time I talked about the elements of Change and a model for evaluating Change.  This week I want to talk about Perspective.  There are two Perspective viewpoints that I think are really important here.

The first is Distance.  When I work with Business Owners, I know that they care deeply about their business.  This passion leads them down the day to day execution of what is in front of them.  It is one of my jobs to pick their head’s up and look at the environment that the business is operating in.  Doing fine is fine.  However, if the economy and your industry are expanding, are you expanding faster, at the same rate or slower?  Here in Sonoma County, we have had 3 major changes over the past few years:  The opening of the Graton Casino, The expansion of the Sonoma County Airport, and the Wildfires in 2017.  Almost everyone has thought about this last.  I have run into few if any business owners if these other changes have been considered in their business.  I am not saying that there will be an impact that everyone can take advantage of.  But if someone is spending $1B in your county, you might want to think about how that will change things.

The second is Objectivity.  The passion that I mentioned earlier creates another problem.  The other external group that Business Owners need to evaluate is competition.  How does the business compare to its competitors?  Why do prospects buy from others?  I have seen many Owners declare themselves the best at what they do.  They then turn around and complain about the capabilities of their competitors.  I can help Owners see their business as the rest of the world views them.  This can be a harsh lesson for many people who view themselves in a very different place than they actually are.  How do the products and services really stack up in the market?  How do the company’s policies and people compare to what else is out on the market?  There are many questions that Owners don’t want to face.

The reason I can bring that is similar to the Bacon and Eggs analogy.  In a Bacon and Eggs breakfast, the Chicken is interested but the Pig is committed.  By having that detachment from the business, I can be interested in the success but not have the emotional attachment.  Emotion is the reason that many bad investment decisions are made whether that is in a single negotiation, an investment or in a business.  By being that cold splash of reality, it can help many Owners make good decisions.

 

Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!

A Formula for Change

In pursuit of understanding why business owners are not always able to fix their businesses, I want to start with a Formula.  In fact, it is called Gleicher’s Formula.  This is a way of judging whether any change will happen within an organization.  Let me use what is a simplified form called the Dannemiller Version:

D  x  V x  F  >  R

Where D stands for Dissatisfaction;
V stands for Vision;
F means Fist Steps;
and R is Resistance.

Now if I apply this formula to most business books, they are really clear on the Dissatisfaction.  Most of these books are single topic-oriented about how to grow a company or have better employees or have customers lining up for your products and services.  Readers will self-select books around topics that are of interest to them.  There are over 20 Millions solo entrepreneurs in the United States, so there is a good sized market.

The Vision is generally pretty clear as well.  “Would you like to be able to never advertise your Products, Click Here to Find Out How!”.  Some books are not quite as clear about this, but they generally miss the point of Vision anyway.  Vision is all about how whatever change impacts the rest of your life.  Nobody wants to address this, because it is intensely personal.  A book can not interact with a business owner and find out how their life is different because of a change.  So, instead, it is all puppies and rainbows.

Finally, most books are very unclear in First Steps.  They talk about a grand idea of some sort.  But leave the implementation of the idea up to the user.  It is one reason that I actually have a very small number of books that I recommend to people.  I want to recommend books that don’t just sound good but give you a roadmap for implementation.  And it is an implementation where books very often fall short.  Well, it is not really their fault.  Books fall down because things happen in our business and our life.  Momentum gets lost and there is nobody to force us to carry on with implementing a change.  The change becomes forgotten and washes away.

So, you can see how many well-meaning books can simply fail to get results.  This is true even if they offer excellent ideas and information.

Have a great day!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!

Books about Business

I was thinking the other day about Business Books.  I have read many as have many of you.  Lots of innovative ideas, tips, and thoughts are in these books.  So, I ask myself:  “Why do businesses still fail?”  I think this is a fair question.  I want to explore this notion over the next several posts and talk about it.

I want to start with my business.   I work with several smaller businesses and meet many more.  When most people talk to me about their business what they want is a different result.  That part I understand.  They want More Revenue, Better Employees, More Time, or a Business Exit.  Pretty simple.  What many of them are unwilling to do is change what they do.  It reminds me of the saying by Albert Einstein, “The definition of insanity is doing the same thing repeatedly and expecting different results.”

Transformation of results is about Change.  Change is a much scarier prospect than failure it seems.  The good news that Change is a way to make things happen.  You can take control of what you want by planning a Change.  All good Coaches of any sort want to look at what will be achieved and helping people define that.  That is why we all focus on Goals and Vision.  Get a person or a business to define what they want and make it meaningful for them.  Once that is done, we just must help come up with a reasonable plan and ensure that there is progress along that plan.

I think that Sports Coaches are all about that.  What makes one team better than the other?  Talent is a key factor.  But so is motivation and the willingness to work toward a common goal.  We have all seen groups of people be a team.  We have also all seen them be a group of individuals.  That ability to get them to pull in one direction is Leadership.  Helping a group become a team and pull in a common direction is what a Coach does.  This includes Business Coaches like myself.

Have a great day!
Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!

Time and Process

One of the ways to make a business grow is to make it more efficient.  One method for that is to look at the processes within your business and seeing where the most time (and potentially dollars) are spent.  By optimizing your business processes, you will improve your focus on those items that are most important to your business.

Even the smallest businesses have at least 3 processes:  Attracting Customers, Delivering Products and Services, and Administering the Business.  For most small businesses will spend the vast bulk of their time in the first of those two processes.  They are either landing business or delivering it.  Business Owners spend a lot of time on what they do in their business and the industry that they are in.  I am going to attack the other primary process of all business Attracting Customers.

Attracting Customers really consists of 3 sub-processes:  Marketing (turning the Audience into Prospects), Sales (turning the Prospects into Customers), and Customer Retention (receiving additional Revenue from Existing Customers).  Each of these is somewhat independent of the other but can be improved by ensuring that the processes line up.  But let me focus down simply on the Marketing sub-process.  Are you clear on the channels that you use to market your business and how you expect the audience-at-large to become Prospects?  About how many Prospects per month are you expecting from each Marketing channel?  What is the out-of-pocket cost is there for each prospect?  What is the time required to receive the prospect?  How often does each type of prospect become a customer?

When you examine the results of these questions, you can begin to put numbers on the business.  By doing that, you can direct your time (the most valuable resource that you have) towards Marketing channels that give the best results.  Those efforts can, in turn, be understood in metric terms (How many appointments do I need to set in a week?).  You can see how you can look at your business and understand how the things that you do every day can drive bottom-line results.  Those best activities become those things to focus on for the future.  Lesser activities can be outsourced, re-engineered, or eliminated.

Doing that in your business gives you a head start on doing the most important things in your business.

Have a great day!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!

An Announcement

This week in lieu of my regular blog post, I am going to be talking about a new service that I am offering.  This service is called Board Room.  Board Room is a specific kind of Coaching Service aimed at smaller enterprises.  As I have worked with many of them over the years, I have come to understand that they value the Trusted Advisor that I bring to the table when I show up at their door.  Board Room is my way to encapsulate this service.

The core of Board Room is an Advisory Board.  This Advisory Board reviews a standard Board Package each month.  This will include Financial Results, Initiative Updates, and Key Events.  Once per quarter there will be a Strategic Planning add-on to the standard meeting.  These Strategic Updates are Annual Budget, SWOT, Marketing, and Operations.  Each of these sessions will help ensure that the forward-looking portion of the business is being managed efficiently.

My vision for Business owners is that they end up with a Strategic Partner to help them navigate the tough decisions and changing business environment.  By bringing in an outsider perspective, the owner can ensure that they are having a 360-degree view of their business and its state.  This will allow the CEO to make the best possible decisions for the business.

I know that the active Board process is new to many people.  To help businesses down this path, I will provide a Board Ramp-Up Package as a first step.  This will be separate and can be bought and used by businesses on their own.

By putting Strategic Review through Board Room in place, CEOs do not have to go it alone.  They can have a timely, efficient way to review and manage their Business.

I plan to offer this package in both month-to-month as well as annual subscriptions.  If you have any questions or want to get started, contact me at jim@jimsackman.com.

Have a great day!

Jim Sackman

Focal Point Business Coaching

Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!

Inorganic Growth: Go it Alone?

I hope through this series that I have given you some ideas about this notion of inorganic growth.  There is a lot of potential value here.  Business Growth is absolutely attainable.  So why do so many small businesses not go through this path?  The answer is the risk.  There are so many true stories of failed acquisitions that people are gun shy.  And the truth is that this is a risk.

So what is the best way to mitigate the risk?  The best thing to do is get good help.  Let me go over the elements involved in the process to make sure you know where to go.

There is the Strategic Planning Element.  You might have a Board of Directors or Advisors.  Those are great people to talk to first.  If you don’t have this kind of help, you may consider it.  The viewpoint of an external observer can help provide a different perspective on any plan.

There is the Deal Element.  Each transaction is a significant effort in valuing the business and performing due diligence.  Do you really want to read every contract?  Do you have the time or proficiency to go through the Financial Statements?  There are M&A Advisors out there that can help make sure that you are getting the right deal.

There is the Execution Element.  Assuming you have a good plan put together, you might wish to hire a Project Manager with M&A Experience.  This helps keep all the things that have to change on track.  This goes from the large as Communications Plans to the minute like Address Changes.  If you don’t have the extra time, then you might want to consider getting help.

All of these advisors can be built into what are called Deal Costs.  Anytime there is a transaction like this, there are costs incurred.  There is nothing for free.  But the help involved above is well worth the price of getting the deal right.

I am one of those Advisors who can help companies in any of the 3 elements.

Have a great day!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!