Business Start-ups

Avoid those killer start-up errors

Are you planning to start a new business?  There are many hazards that might be faced and avoiding these can help improve the chances of success.

Here a few hazards new entrepreneurs should try to avoid.




1. Under financing: lack of sufficient funding is probably the most common reason new businesses fail. Many entrepreneurs fail to assess the burn rate of the capital they have. One costly step is hiring too many people. Try paying people with equity rather than salary, you will end up with a much more committed team and preserve cash. Don’t overspend on equipment and technology you really don’t need to get going.
Also, many start-ups fail to realize that few customers pay promptly; this can severely impact cash flow.

2. Starting without a plan: enthusiasm over a good idea is over-rated. An idea is only an idea and without a well-developed business plan chances of success are minimal. It is also very difficult if not impossible to raise financing without a plan.

3. Fear of Failing
It is natural to have some fear that the business will not succeed and certainly problems will arise and challenge your business acumen. However, if the concept is strong and validated you should not let fear of failing stop you from trying to live your dream.

4. Inflexibility: with start-ups you have to be prepared to change on the go. Rarely does the plan get executed without a hitch. Marketplace dynamics, competitive behaviour and economic conditions can dramatically impact the plan. Ability to react and change plans may be a key to survival.

These are some hazards you may face in starting a business. There are others but avoiding these may help improve your chances of a successful start in business. I hope this helps you get underway. Let me know.
gerry@polarisgroupmc.com

Business Management

Leadership Principles Worth Following

There are universal principles at work behind every choice, every interaction, every word that is said and every action that is taken. Understanding these underlying principles will help you grow and prosper as a leader and as a person. Here are a few to consider:




1. Fairness
Fairness is a principle that’s understood by children everywhere, but as we grow up, we each may develop our own individual concept of what is and isn’t fair. On your team, there needs to be a common understanding of fairness, and it needs to be defined, communicated and demonstrated by you as the leader every day.
When you make decisions, be open and honest about how they were made and why. People may be resentful or mistrusting of decisions that have been handed down arbitrarily or without input and explanation.

2. Honesty, Integrity and Trust
The people on your team want and need to trust you. They want to know that you’ve given them all of the facts and that nothing is being hidden. The way to gain that trust is by being honest and living with integrity.
When you do make a mistake or a bad decision, disclose it. Don’t blame someone else, lie or pretend it didn’t happen. Be honest about it and move forward.

3. Potential
Everyone is capable of being and doing more than they are now. Everyone on your team – whether they’re a rookie or a subject matter expert – needs to feel that you see his or her potential to grow, acquire new skills and develop.
People look to a leader to evoke that from them, inspiring and allowing them to grow, evolve and fulfill their potential. Don’t restrict their growth by assuming they’ll adhere to your predictions of how they’ll act, think or talk.

4. Respect and Dignity
Respect is difficult to earn and easy to lose. Adopt the “golden rule” – treat people how you want to be treated. Treat each team member with respect and dignity for who they are and for the work that they’re doing. Recognize and embrace their differences and diversity.
Earn respect by acting with dignity and showing that you have respect for yourself. Be a role model and hold yourself to a higher standard on a daily basis.
Reward people in public and correct them in private. This will protect their dignity and reinforce that they can take risks. They’ll know that if they do make a mistake or fail they won’t be publicly disgraced for it.

These ideas can help develop your leadership skills. Please consider them as you develop your business.
I would enjoy your comments. gerry@polarisgroupmc.com

Business Management

Business Ethics

One of the more important attributes for small business success is practicing with carefully developed principles of high ethical standards. When practiced throughout the organization it becomes part of the image of the company and can be an important factor in overall success and how the community views the business.

In the research study, "Does Business Ethics Pay?" by The Institute of Business Ethics (IBE), it was found that companies displaying a "clear commitment to ethical conduct" consistently outperform companies that do not display ethical conduct.

The following are excerpts from that study that I believe merit consideration:

1. Be Trustful: Recognize customers want to do business with a company they can trust; when trust is at the core of a company, it's easy to recognize. Trust defined, is assured reliance on the character, ability, strength, and truth of a business.

2. Keep An Open Mind: For continuous improvement of a company, the leader of an organization must be open to new ideas. Ask for opinions and feedback from both customers and team members and your company will continue to grow.

3. Meet Obligations: Regardless of the circumstances, do everything in your power to gain the trust of past customers and clients, particularly if something has gone awry. Reclaim any lost business by honoring all commitments and obligations.

4. Have Clear Documents: Re-evaluate all print materials including small business advertising, brochures, and other business documents making sure they are clear, precise and professional. Most important, make sure they do not misrepresent or misinterpret.

5. Maintain Accounting Control: Take a hands-on approach to accounting and record keeping, not only as a means of gaining a better feel for the progress of your company, but as a resource for any "questionable” activities. Gaining control of accounting and record keeping allows you to end any dubious activities promptly.

6. Be Respectful: Treat others with the utmost of respect. Regardless of differences, positions, titles, ages, or other types of distinctions, always treat others with professional respect and courtesy.

Recognizing the significance of business ethics as a tool for achieving your desired outcome is only the beginning. A small business that instills a deep-seated theme of business ethics within its strategies and policies will be evident among customers. Its overall influence will lead to a profitable, successful company.

I believe there is merit in the values expressed in this study. Please let me know what you think.

Gerry@polarisgroupmc.com

Small Business Management

Issues Facing Small Business




There are a variety of issues facing new and growing businesses. Here are a few to owners should be aware of to ensure growth continues.



1. Cash
Finding it and managing the cash flow. It’s hard to get and there is never enough. If you are a fast growth company you can rapidly outgrow your available sources, if you are an under performing company you can’t get it. The majority of companies don’t manage it well.
Most businesses experience some problems getting paid on time by their customers and with debt recovery. Good credit control helps to prevent this becoming a serious problem.

2. Lack of a Clear Plan
Most businesses don’t know how to plan. Lack of a plan worsens the cash problem by wasting cash chasing tempting diversions, and throwing money at problems. Equally important is revising your plan according to changing economic and business conditions and to ensure your survival in weaker economies.

3. Ineffective Leadership 
This issue takes many forms. It is frequently in the form of depth of leadership. The founder of the company is too much hands-on and a) does not concentrate enough on his primary role as a leader rather than a manager; and b) fails to enlist support of competent managers and staff behind him or her either through recruitment or by outsourcing. This eventually causes the company to stop growing and eventually could lead to failure. Directors should always remember their core role and responsibilities.

4. Sales/Marketing Effectiveness
This leads back to planning and leadership. Many businesses have not taken the time to decide what their USP is. They try to compete in conflicting areas, such as lowest price and highest service. One takes away money and the other adds cost. Part of the planning process for a new product should include a very clear answer to one simple question, “with all of the products and service available to my customers why should they buy from me?”

I trust these ideas provide thoughts to resolving some issues faced daily by many businesses as they strive to develop and grow.
Please share your thoughts. gerry@polarisgroupmc.com

Make Effective Decisions

Effective executives do not focus on making a great many decisions but rather try to make key decisions well founded. They concentrate on what is important. They try to find the constants in a situation, to think through what is strategic. They want to know what the decision is all about and what the underlying realities are which it has to satisfy.



Here are a few steps to consider to improve decision making for the organization.

1. Classify the Problem
Is the issue unique, exceptional or generic? Or is it the first instance of a potentially recurring situation. A fundamental issue may generate a decision process different from a single stray event.

2. Define the Problem
What is this all about?” “What is pertinent here?” “What is the key to this situation?” Questions such as these are familiar. But only the truly effective decision makers are aware that the danger in this step is not the wrong definition; it is the plausible but incomplete understanding of the facts to consider.

3. Make the Right Decision
The effective executive has to start out with what is “right” rather than what is acceptable precisely because a compromise is often necessary in the end. But if what will satisfy the objective to be decided is not clear, the decision maker cannot distinguish between the right compromise and the wrong compromise. There has to be certainty in what the objective is and goal to be accomplished.

4. Provide an Action plan to execute the decision.
What does the action commitment have to be? Who has to know about it? A decision will not become effective unless the action commitments have been built into it from the start. In fact, no decision has been made unless carrying it out in specific steps has become someone’s work assignment and responsibility. Until then, it is only a good intention.

These are but a few considerations that I hope help a business structure strong, positive decisions to improve operations.

Let me have your thoughts: gerry@polarisgroupmc.com

Let’s Increase the Value of our business

Most businesses with under $1 million in revenue (which is most businesses) sell at a very small multiple of earnings when their owners decide it's time. Typically they get two or three times their pre-tax profit, if they're lucky. How can you get more juice out the company you've spent years developing?




Here are a few ideas that may help grow that important valuation.

1. Recurring revenue: demonstrate that your customers come back to purchase regularly and you'll drive up the value of your business because buyers will have confidence your sales will continue long into the future.

2. Revenue growth rate: acquirers will look at your top line revenue growth and project how large your business will grow in the future. Revenue growth rate may be even more important than profit growth for driving value. Buyers know how to squeeze margin to increase profitability but it is difficult to replicate the formula you have that makes someone want to buy your product.

3. Positive cash flow: if your company takes in money before it has to spend it, buyers will pay more for your business. Acquirers look at opportunities by measuring the return they'll get on the money they need to invest. If your company generates cash, they will not have to put much of their own into funding your day-to-day operations. The less cash they inject, the better the potential return on their investment.

4. Succession: You may want to consider firming up plans for a successor to your leadership position. Having a second-in-command will help you show the business can continue on successfully without you. If you can't afford an entire management team, at least find and groom your right hand person.

5. Differentiate: you'll get a higher multiple for your business if your product or service is truly unique in the market. Acquirers will graft your product onto their distribution channels and estimate just how big your company could be in their hands. That only works if you have a truly different product or service.

I hope these few tips provide some insight into steps you may take to present a positive opportunity as you reach a stage where you may want to move on to newer challenges.

Business Management

Challenge Employees for Growth

Managers should never manipulate employees to attain a certain level of performance and the challenge is knowing how to ethically motivate and encourage behavior that produces the results any company hopes to achieve.




Here are a few ideas to help employees perform to their highest potential.

1. Why
Employees need to know why the work needs to be completed, what the goal is, and how they can contribute. Management should share their vision and how each employee contributes to the overall success.

2. Develop
Opportunities to advance usually correlate with improved performance. Allowing employees to determine how they can improve their job and build challenges for the future should be encouraged. This can raise overall standards.

3. Clarify compensation
Performance increases when employees understand their work is compensated commensurate with contributions made to the business. Communicate with employees so they understand how performance is measured and rewarded.

4. Seek Input
Management does not always have to develop the answers. If you enlist support from employees that will generate increased enthusiasm and commitment.

5. Build employee confidence and loyalty
Encourage positive communication among all employees and eliminate where possible negative criticism of staff and their work. Develop goals that challenge staff without creating unreasonable demands and trust employees to participate in goal setting. If employees own the objectives they will gain greater feelings of achievement and this buy-in also develops stronger loyalty to the firm.

6. Include opportunities to learn, fail, and grow.
Employees are motivated by learning. Sometimes this involves taking risks and perhaps failing. This can be a positive experience for the business and the employee if the lesson learned helps move the business forward in an atmosphere where employees are encourage to continue efforts to improve.
These are but a few opportunities to provide a work environment that can challenge employees to play an increasingly important role in growing the business. Take the opportunity to grow the business and employees together.

Let me know your thoughts: gerry@polarisgroupmc.com