Monday, May 16, 2011

Does your Plan Contain the Top 7 Components?

As a business start-up consultant, I have spent more than a decade evaluating business plans. As you can imagine, they come in an endless variety of formats, lengths and styles. No matter what the industry or business type, however, at my initial review, I look for these three critical components in every plan:

• A clear description of the target customer, because it’s the customers, not a business consultant, who really decide if a business idea is a good one
• A clever competitive advantage: done well, it demonstrates knowledge of company and personal strengths, an understanding of customer psychographics, and completion of thorough competitive research
• Profit potential: you would be surprised how many aspiring business owners don’t appear to be interested in making profit, which begs the question, Why bother?

Without these three components clearly defined, and woven together with compelling rationale, the hundreds of other essential details in a business plan instantly become unimportant; it’s time to rethink the business model.

When target customer, competitive advantage and profit potential are in place, the next four I look for are:

• Owner investment: there is no investor who will finance 100% of a start-up; the owner’s passion and perseverance is what will get the company through the demanding start-up period as well as every other roadblock in the years ahead; personal investment in the business is how this passion and perseverance is demonstrated
• Realistic sales targets: the fine line between over-zealous optimism and targeting at least the minimum revenue to keep cash flow in a healthy state
• Investment in marketing: the vast majority of start-up and early-growth businesses underestimate the challenge of advertising, in terms of creativity, cost and time, and therefore don’t budget for the variety and relentlessness that makes for a successful marketing campaign
• Healthy cash flow: businesses can fail because of a shortage of cash even while profitable, so profit potential mentioned above is not enough

Once these Top 7 are in place, then I can look at my secondary checklist - the other fifty or so critical components that allow me to determine feasibility of the concept. And this is where the real fun begins!

Monday, May 2, 2011

Selling your Expertise

If you’re in the business of selling your expertise or ideas, getting past the launch period and moving into a stage of sustainable growth comes with unique challenges. When your primary product is knowledge, that is, your personal brainpower (comprised of education, industry experience, intelligence, gut instinct) your customers are hiring you. You can’t hire and train people to do what you do, because your service offering is not a trainable or transferable skill. That means that traditional business growth strategies such as refining processes and implementing systems may not work for your business.

So exactly how do you grow a knowledge-based business, such as a consulting firm? Your company needs to be something that can run without you personally doing all of the consulting with clients. You need to switch from being the front-facing client contact, to being the visionary and marketer. You will be responsible for branding the business, developing the staff, and implementing the strategic plan.

Consultant or Owner of a Consulting Business?
So, do you want to be a self-employed consultant, or do you want to own a consulting business? If you want a business, you need to hire talent who can do the consulting; and you’ll need to sell your firm’s expertise – not yours – to your clients. The downside to this is that you probably chose this business specifically because you are passionate about working directly with your clients, and you won’t get to do a lot of that anymore. The upside is that you’ll have a true business that can run itself if you decide to spend a morning on the golf course or – just imagine – take a vacation. You’ll also have a scalable business that potentially can be sold, further securing your future.

Being a self-employed consultant is an honourable profession; just be clear that it is a very different thing from being a business owner.

Small Business Month State-side

May is Small Business Month in America. Here are 31 small business success stories, one for every day of the month:

http://www.inc.com/31-stories-of-small-business-success/index.html?partner=newsletter_Success

Royal Loot Bags

I wouldn’t call myself a fan or follower of the British Royals, but I have been, let’s say, curious over the years. In fact, the marriage of Charles and Diana in 1981 might be one of the first world events in which I remember exactly where I was and what I was doing when it happened. So, while I certainly didn’t get up at 5am on April 29th to see the spectacle of William and Kate’s wedding, I tuned into the repeat broadcast later that evening, and various TV specials over the weekend.

Until now, I didn’t know anything about the Middleton family, except that they were “commoners”, so when I heard via Biography channel that Kate’s parents had started their own business which has had great success, I was both delighted and perhaps not surprised at all. While most micro businesses provide a modest living for their founders, there are a few gems that propel the proprietors into a socio-economic state fit for a king (or in this case, future queen.) The Middleton family business was described as an Internet-based business, and that made even more sense as a type of business that could grow very quickly. Still, I was curious about exactly what type of products and services the Middletons sold. I continued to catch bits and pieces of various shows over the weekend, and finally my persistence paid off.

Kate’s mother, Carole, frustrated by the time-consuming task of preparing loot bags for her daughters’ birthday parties, recognized this task as bothersome, and came up with an online solution for other mothers struggling with the same chore. Loot bags! A simple concept, with lots of complicated details. (The Brampton Enterprise has had a number of aspiring loot bag sellers over the years, and operational planning was always more complex than the fun idea would suggest.)

But there it is – the foundation of launching a business – just the same half way around the world as in Canada: fulfill a gap in the marketplace.

• Step 1: identify the problem;
• Step 2: come up with a solution;
• Step 3: conduct market research to ensure there are prospective customers who share the same issue and are willing to pay for a fix;
• Step 4: creating a vision: Carole wanted other young mothers to be able to create birthday parties for their children that would be fun, magical and memorable.

So, to all my clients and future clients who have a seed of an idea for a business, keep plugging away at it! While there are no promises of a fairy tale ending, this is proof that sometimes it does happen.


A few articles with a brief mentions on the Middleton’s enterprise:

http://www.partypieces.co.uk/

http://www2.macleans.ca/2010/11/22/an-uncommon-princess/

http://news.yahoo.com/s/ac/20110215/en_ac/7860484_kate_middletons_family_business_party_pieces

http://www.telegraph.co.uk/news/uknews/royal-wedding/8474828/Middleton-familys-website-plugs-street-party-essentials-days-ahead-of-royal-wedding.html