Questions to help you mind your business... Question #3

August 08, 2017 by iamgpe in Execution

This is the third in a series of thoughts and opinions by Graham Edwards and Renée Cormier — click here to read the backstory and inspiration (if only for the entertainment). It should be noted that neither of us have seen or discussed our answers before they are posted, which in our mind makes this all the more interesting.

In this blog series we will attempt to answer ten different questions business owners may need answered, using our individual and unique perspectives and approaches. It is our hope that this series will inspire both action and interaction. Please feel free to comment and ask more questions.

Question #3: Do I need a plan for my business?

Graham —

Answer: Yes (full stop).

iamgpe

PS: Whenever the discussion of business plans (or any plan for that matter) comes up there is always the same collection of considerations that make their way into the conversation…

i) One day Alice came to a fork in the road and saw a Cheshire cat in a tree. “Which road do I take?” she asked. ”Where do you want to go?” was his response. “I don’t know,” Alice answered. “Then,” said the cat, “it doesn’t matter.” — There is no need for a plan unless you know where you want to go.

ii) Plan format may depend on your audience (and in many cases they will tell you the format they prefer), or you can just download the “best business plan template ever” with a Google search — they all pretty well consist of the same components. The following nine plan components came from Guy Kawasaki of Apple fame and have worked as a nice framework when pitching a business plan to interested parties and investors:

i. The Problem — describe the pain that you are alleviating with a goal of getting the audience to “buy into” the situation. Avoid looking like a solution searching for a problem, and minimize citations from consulting studies about future size of the market.

ii. The Solution — explain how you alleviate this pain, and clearly illustrate what you sell and your value proposition.

iii. The Business Model — explain how you make money and who pays you; what are your channels of distribution and what your gross margins are. Generally, a unique, untested business model is a scary proposition for many so if you truly have a unique revolutionary business model, explain it in terms of familiar ones.

iv. Underlying Magic — describe the technology, “secret sauce”, or magic behind your product or services. Less text and more diagrams, schematics and flow charts work better; referencing white papers and objective proof of concept are helpful.

v. Marketing and Sales — explain how you are going to reach the market and your marketing leverage points. Convince the “audience” that you have an effective go-to-market strategy that will not break the bank.

vi. Competition — provide a complete view of the competitive landscape and never dismiss your competition. Everyone (customers, investors, employees) wants to hear why you’re good, not why the competition is bad.

vii. Management Team — describe the key players of your management team, board of directors and board of advisors, as well as your major investors. Don’t be afraid to present less than a perfect team — what’s important is whether you understand that there are holes and are willing to fix them.

viii. Financial Projections and Key Metrics — provide a five year forecast containing not only dollars but also key metrics such as number of customers and conversion rate. Do a bottom up forecast and take into account long sales cycles and seasonality. Making people understand the underlying assumptions of your assumptions (of your forecast) is just as important as the numbers you have “fabricated”

ix. Current Status — Explain the current status of the business (product and service), what the near future looks like, and your investment/OPEX considerations. Share the details of your positive momentum and traction, and align it with the vision of the business.

iii) “No battle plan survives contact with the enemy” (Helmuth von Moltke) or “Whatever can go wrong, will go wrong” (Murphy) — in other words, no matter how much time and thinking went into your plan, the moment it is implemented (and enters the real world) stuff will happen that wasn’t planned for, anticipated, or simply wasn’t thought of. This is a reminder to anyone formulating a plan (or asked execute it) that it is important to be adaptable, resilient, and have a sense of humour (because the universe sure does).

iv) Point iii) does not negate the need for a plan and its importance (see point i)) because you simply will never build what you want or get the support you need (i.e. investors, employees or customers) if you don’t have one. What is proving out time and time again however is that a top down plan (with all the executable trappings) just falls apart as the real world rushes in — mostly because the people on the front line are expected to follow the original plan when the situation suggests it is no longer the best course of action. More and more leaders are articulating a plan framework with a vision, goals, guiding principles of the business, and then empowering their employees; they are creating an environment that lets people rally their efforts around this framework (instead of a hard plan) and in doing so achieve creative and very successful action.

v) Your plan will most likely come in a number of different forms such as a document, a PowerPoint slide deck, or an elevator pitch. I want to add that you shouldn’t underestimate the importance of a well-rehearsed elevator pitch because when you tear away all of the formality of a plan it simply starts with the question, “So, tell me about your business and the opportunity?”

Renée —

Answer: Many moons ago, I was selling business coaching services and met a guy who started a communal office space business. At the time, this type of business was still very novel and he probably could have made a real success of it, but he didn’t. I wasn’t surprised to find his business failed within a year or two because when he told me about his business, he also told me that he wrote his plan on the back of a napkin. Now, I understand how your enthusiasm can make you believe that is a good idea, but it really isn’t. I’m quite certain that if he had actually taken the time to properly plan for his business, he would have created something worth replicating, or at least worth selling. Instead, he lost everything.

I know what you are thinking. There are plenty of small business people who never plan, never use advertising or social media and are still somehow successful. That is true. I call these people accidental business people. They are lucky enough to be profitable in spite of themselves. They have a good product and a market that seems to work for them, but they are still leaving a lot of money on the table. In fact, if you ask them a few questions about their business, you will be surprised to discover how unaware they are of the inner workings of their own business.

I once worked for a guy who paid me a good salary and when I asked him how much I needed to sell in order to justify my pay, he had no idea. I actually negotiated a salary and he didn’t even know for certain if he could afford to pay me! I soon discovered his receivables were a mess, he was paying to store old inventory in a dust free facility, the industry he worked in was facing serious decline, and the list goes on. I made him aware of a few of his problems so he was able to stay in business a little longer. Today, the side of the business I managed is closed and he continues to work his other niche, in spite of himself. I am quite certain that if he ever really took the time to properly plan for his business, he would have found better markets, more appealing products, developed efficient systems and ultimately would have created a more stable and profitable business.

When it comes to business plans, I can tell you that there are good plans and bad plans, and the amount of paper used to print them up has no bearing on their value. A good plan is concise, strategic, has time specific objectives and above all, is realistic. Any loan manager at a bank will tell you how frequently people submit business plans that have ridiculous financial objectives. A plan to double your sales in one year may not be realistic, but a 10 to 20 per cent increase may be perfectly attainable, depending on your strategy. Having said that, a weak strategy and/or poor execution won’t likely net you any growth. Work the Plan: Secrets to Successful Business Execution is a post I wrote about how to execute your plan. Since that is a huge part of the business battle, I suggest you take the time to read it. After all, a plan that gets stuffed in a drawer is as useless as a plan that is written on a paper napkin, or one that is not written at all.

So what can a plan really do for you?

Done properly, a plan will make your business stronger by allowing you to do the following:

1. Get a complete understanding of your business and its industry.

2. Analyse your competition.

3. Discover opportunities.

4. Develop clear cut objectives.

5. Develop a strategic approach to growth.

6. Help you drive the right initiatives.

7. Save time by not wasting your effort on fruitless tasks.

8. Integrate efforts to achieve common goals across your company.

9. Save you money.

10. Make you money.

11. Unite your workforce.

In my opinion, every business plan has to be based on research. Taking the time to assess your market and competition will prove invaluable. I know that can be a pain in the neck, but you need to do it. You also need to include a SWOT analysis (strengths, weaknesses, opportunities, threats) and set goals based on what you have uncovered as opportunities. Sorry for going crazy on the acronyms, but goal setting basics include a SMART requirement (specific, measurable, achievable, relevant and timed). Once you have those two elements in place, the rest flows more naturally.

Business Development Canada (BDC) offers a free business plan template and sample kit that you can download. I like this kit because it is quite comprehensive. I don’t need to reinvent the wheel for you. It’s been done, so if you want an excellent template to follow, just download it. If you need some help with your plan, let us know. That’s what Graham and I love to do!

Thanks to the social media platform beBee, Renée Cormier & Graham Edwards developed a business relationship and friendship that typically involves regular meetings, goal setting sessions, etc. Our meetings often provide the fuel for plans around business strategy, blog ideas and more.

Questions to Help You Mind Your Business... Question #2

August 01, 2017 by iamgpe in Execution

This is the second in a series of thoughts and opinions by Graham Edwards and Renée Cormier — click here to read the backstory and inspiration (if only for the entertainment). It should be noted that neither of us have seen or discussed our answers before they were posted, which in our minds makes this all the more interesting.

Question #2: Where should I spend my money?

Graham — This is one of those questions where you already know the answer will be “it depends”.

It depends on the stage of the business, the business goals, strategies and plans, the current needs of the business, current business problems and opportunities, available cash, ability to attract investors, revenue growth expectations, OPEX considerations, et cetera, et cetera — so ultimately it depends on the current situation and the current state of the business, as well as the overall vision of the company.

Now let me attempt to steer this away from becoming a 500 word “non-answer”.

Although there are never any guarantees, consideration to spending on the following does increase your chances for success:

Product Research and Development — Development of products to expand the business’s product offering, product diversity, or re-enforce your business’s value proposition. (Also applies to services)

Sales and Marketing (Commercial activities)— Activities to promote the company, its value proposition, or increase revenue.

The Customer Experience — How you make it easier and more satisfying for the customer to engage with your business and increase the likelihood for repeat business.

Et Cetera — situational.

It should be pointed out there are a number of truisms that accompany any discussion that involves the spending of money:

Truism #1: Money is like a toddler in a china shop — he has lots of potential but if you don’t pay attention to what is happening the little guy will cause great havoc. *

Truism #2: Leaders and managers will be “judged” on their ability to manage the money they are responsible for.

Truism #3: Business leaders and investors tend not to like surprises— they particularly don’t like surprises when it comes to money.

The money you spend on any business activity should be part of a well thought out business plan and aligned with the goals you want to achieve; just as important, you need to have systems and processes in place to assure your OPEX is well managed and does not exceed your OPEX plan.

Because here’s the thing, if your OPEX is out of control, the discussion as to where to spend your money will probably be “moot”.

Iamgpe

* I know this to be true because I was once given an assignment in another life where it was quickly pointed out that the department was $1,000,000 over budget in the previous quarter (yes that is the correct number of zeros). When my finance partner and I dug into the situation, the only reason we could come up with as to why OPEX was out of control was simply because no one was paying attention to what was being spent.

Renée— In business, the question of where you should put your money is a rather important one. For the purpose of this post, I feel I must state that both the question and the answer assume that the business in question is turning a healthy profit. The act of putting money into a failing business isn’t usually seen as a wise move, so I prefer to leave that alone.

When deciding where to invest money in your business, you should ask yourself the following questions:

1. How will this increase productivity?

2. How will this increase efficiency?

3. How will this save me money?

4. How will this increase sales?

5. What will be the return on investment?

6. How long will it take to see a return on my investment?

If the product or service you wish to purchase provides you with a satisfactory answer to any one of these questions, then going ahead makes good sense. The truth is, most seasoned business owners have no difficulty figuring out where to spend their money. What they may be unaware of, however, are the many ways to fund their business that will not deplete their own cash reserves.

The fine art of using OPM (Other People’s Money)

I first read about the concept of using other people’s money to make money, several years ago through Richard Kiosaki, author of Rich Dad, Poor Dad. I later discovered that rich people never use their own money to fund anything, even when they can well afford to. Warren Buffet, Oprah Winfrey and Peter Drucker all use other people’s money. In fact, Peter Drucker’s very definition of business is “other people’s money”. That says a lot. Use other people’s money to create a business and sustain it. The following are some sources of other people’s money you may not have thought to access.

Government grants and loans: This is one of my favourites. The Canadian government provides a multitude of grants and guaranteed loans to support businesses. For example, if you want to purchase a small business, the government will give you a guaranteed loan of $375, 000 to make improvements, purchase equipment, etc. and up to $1 million if you are also purchasing the real estate. The beauty of this, is that if things go sideways, you are only on the hook for 25% of the debt. The government will give the remainder to the bank and you will owe nothing more. My brother did this 12 times while building a very lucrative fitness chain in British Columbia, so I know it works very well.

Business owners can also access $10, 000 per employee to pay for training programs, so there is no excuse not to invest in that! You can also hire more employees and access subsidies for wages for employees under the age of 30, minorities, immigrants, people with disabilities, marginalized citizens, summer students, etc.

If you would like to expand your product line by developing something new, grants are available for research and development, and innovation. Likewise, you can also get free money for adopting green initiatives, developing green technologies, purchasing hybrid vehicles, retrofitting lights and much more.

If you are interested in exporting your product to other countries, the Canadian government will also give you up to $90,000 to help you build business relationships abroad.

The Canadian government even provides equity investment to Canadian businesses. In fact, there are so many funding opportunities provided by our government, you should really check this Government of Canada website before you look anywhere else for money.

Angel Investors and Silent Partners: If you are planning to take your business into a whole new realm but need a little help from someone who would gladly provide funding with little interference, then you should consider accessing angel investors or a silent partner. There are not-for profit organizations that help entrepreneurs find investors and there are venture capitalists who also provide the service of matching business owners to investors. You could also check with business lawyers, accountants and investment bankers to see who they have in their network to help you out.

Crowd Funding: People use crowd funding sites for all sorts of things. We often think of crowdfunding as a way for ordinary people to get in early on a developing technology, but crowd funding can be a lot of different things to a lot of different people. The trick to successful crowd finding is in how you position your plea and how well you leverage your existing social network. Offering something to contributors is better than offering nothing, unless you are donating to a charity. You need to be very creative with crowd funding initiatives because the space has become quite crowded and the novelty of helping people out for nothing is wearing off. I get requests from LinkedIn contacts all the time to contribute to campaigns, but I rarely see any compelling reason as to why I should. Should the first interaction you have with someone through social media be about getting money from them? Not at all, and that is why you need to really strategize a complete approach to your crowd funding campaign. Asking won’t necessarily lead to getting.

Bank Loans: Sometimes working out a bank loan for something that will help your business is still a pretty good idea. Shop around for the best rates and see who really takes an interest in supporting your business. I’m going to put another plug in for the Canadian government here. BDC is a bank that is a crown corporation set up to support Canadian businesses. Since they do not have the revenue targets that the other banks have, there is less pressure to sell you something you don’t need and a greater inclination to actually help you find a better business solution. There was a time, when many business owners did not find BDC to be very helpful, but I have been hearing a lot of good things about them lately from different business owners who have used them. They are much easier to deal with than before, so don’t discount the value of paying them a visit.

In summary, I guess the answer to the question, “Where should I spend my money?” is really to not spend any of your money at all. Use other people’s money, instead!

Questions to Help You Mind Your Business... Question #1

July 25, 2017 by iamgpe in Execution

A Blog Series by Graham Edwards and Renée Cormier

This is the first in a series of thoughts and opinions by Graham Edwards and Renée Cormier — click here to read the backstory and inspiration (if only for the entertainment). It should be noted that neither of us have seen or discussed our answers before they are posted, which in our mind makes this all the more interesting.

Question #1: How can I create a fuller picture of the nature of my business?

Graham — In my mind there is a much bigger (and more important) question hidden within this question:

”What is the nature of my business, or what is my business?”

I put this out there for no other reason than I keep asking myself, “How can you ‘create a fuller picture’ if you are not really sure what the nature of your business is?” I have now started to morph this into something that could get very big and very complicated, so let me anchor all of this with the customer — because in the end, who else would we be creating a fuller picture for?

There may be more but I have found there are four types of customers that come into the sphere of consideration for any business:

The end user who purchases your goods or services
The employee(s)
The community that you are in (I also include regulators here)
The shareholder or investor (current and future)

This now allows us to align “the customer” with what the business is, and more importantly develop language to communicate and paint a picture for the customer; this language defines the business and needs to be developed in such a way that it can be articulated easily and clearly (be it to one person or one million). There are a number of strategic vehicles that will develop the language of what the company is, as well as create the framework for strategic thinking and execution. I believe these are the four most important:

The business’ vision: the company's road map indicating what the company wants to become and the guiding transformational principles which set the company's direction. This should be developed into a written statement. *

The business’ mission: the organization’s purpose, identifying the scope of its operations: — what kind of product or service it provides, its primary customers or market, and its geographical region of operation. This should be developed into a written statement. *

The value proposition: the benefits customers get when buying a particular product or service from the business. It should convince consumers that this product or service is better than others on the market — this can lead to a differentiating value proposition*

The business plan: a formal statement of business goals, the market, reasons they are attainable, and plans and activities for reaching them. It is important to have a detailed financial perspective associated with your business plan. *

This can be all be done on a piece of paper, a 20-slide presentation or a 100-page document but in the end it is important to have it written down — getting your business down in black and white makes real, easier to communicate and minimizes creative interpretation of what the business is really all about.

Creating a fuller picture of the nature of your business comes down to three areas:
Understanding your customers.
Determining your Vision, Mission, Value Proposition, and have a Business Plan.

Align (and effectively communicate) your business to the appropriate customer segment, while ensuring the core message of your business is the same no matter who the customer is.

I suppose you could argue that the more marketing channels you use to communicate your business the fuller the picture of the business will be, but then again, if the aspects of the business are unclear then really all you get is a picture of the business that is fuzzy.

And besides, having done the business plan you will have realized your marketing plan is rather limited when it comes to OPEX so you will have to get very, very creative.

Your investors will definitely appreciate that.

Iamgpe

* A little help from Wikipedia.

Renée — Before I answer this question, I think I may need to clarify why you may want to be able to see your business from a fuller perspective. The answer is simple. We tend to miss opportunities when we don’t take the time to fully reassess our position. If you don’t want to stagnate, you need to regularly take the time to step back and realign your objectives. Interestingly, this works in both business and in day to day life.

In order to create a fuller picture of the nature of your business, you really need to understand it from every angle. I know, it’s your business and you probably feel like you know it inside out (and you most likely do), but there are things larger companies do that smaller businesses could really benefit from that allow you to see your business from a different angle. Sometimes being able to look at things from a different perspective is the best way to figure out what’s missing.

Below are some things you can do to help you get a fuller understanding of the nature of your business and hopefully kick up your results a notch.

1. Conduct a Competitive Analysis: Understanding the strengths and weaknesses of your competitors allows you to be more strategic in how you run your own business. I could write an entire blog on that, but don’t have the luxury of space in this post. This link to Edward Lowe Foundation provides you with great information on how to conduct your own competitive analysis. The information you garner about your competition from following the suggested steps will prove to be highly valuable. Trust me when I tell you that knowledge is power.

2. Conduct Market Research: Market research doesn’t have to involve hiring an expensive marketing firm to find out what your customers think. There are many inexpensive online tools and questionnaires that you can send out to anyone who has made an inquiry or purchase from you. Are you collecting customer data? You’d better start soon. That information is like gold to your business. You can’t assume your customers are getting everything they need from you, and what about the people who don’t do business with you? Why are they taking their business elsewhere? Inquiring minds want to know.

3. Develop Customer Profiles/ Buyer Personas: Use the information from your market research to develop buyer personas. A “who, what, when where, why and how” approach will help you paint a very clear picture of who your customers are and give you the chance to really see where you are missing out. I recently wrote a post about buyer personas on beBee. Here’s the link.

4. Conduct a SWOT Analysis: The best way to get a 360 degree view of your business is to start with a SWOT analysis. SWOT, is an acronym for strengths, weaknesses, opportunities and threats. Provide as much information about your business as you can under each heading. Use the information you gather from your competitive analysis and market research to help you understand more about your business.

5. Understand Your Unique Selling Proposition (USP): All businesses sell something and many businesses offer the same products and services, so you need to figure out what makes you unique. Some companies will use price as their USP, but that isn’t always the draw for customers. Let’s face it, sometimes you don’t want to be the cheapest alternative in your industry, either. Your USP could be your return policy, your stellar customer service, quality product, or any number of things. You may already believe you know what your USP is, and you could be exactly right, but you could also be completely wrong. Use your market research to figure out what your customers like the most about you. If it turns out to be different from what you’ve been telling everyone, you may discover you have an even bigger opportunity in front of you.

Once you’ve assembled all this great information about your business you can identify a specific business objective. Clarity has a way of inspiring action and producing better results. In one of our upcoming posts we will be discussing the importance of planning. Stay tuned…