Tag Archive: small_business_success

From Owner to CEO: How to grow as a leader along with your company

From Owner to CEO: How to grow as a leader along with your company

by Susan Caminiti.

Most entrepreneurs start out with a great idea, intense passion, and a willingness to work seemingly 24/7 to make their start-up a success. But what happens when the company begins to grow and expand? Are the skills that define a successful small business owner the same ones needed to run a bigger, more complex enterprise?

In most cases, experts say, the answer is no. But that doesn’t mean they can’t be learned. “In the same way that a company grows, the entrepreneur has to grow and evolve, too,” says Ed Hess, author of Grow to Greatness: Smart Growth for Entrepreneurial Businesses. As a professor at the University of Virginia’s Darden School of Business, Hess has studied entrepreneurs and the various ways they approach and manage change. His conclusion: As a company grows, its owner has to transition from one stage to the next, beginning with doer, moving on to manager and leader, and then finally, coach or mentor.

 

Learn to evolve

While the metamorphosis sounds straightforward, it often proves to be the most complicated aspect of running a company, says Hess. That’s because the transformation from owner to leader taps into primal issues of trust, confidence, and even identity—issues not typically top of mind as most entrepreneurs go about running their companies. “Figuring out the processes of a business is not nearly as hard as figuring out the people part,” he notes. Hess recalls that one small business owner, whom he interviewed for his book, said he felt “more like a psychologist than a business person,” when trying to manage his employees.

 

Evolving from a person who controls every aspect of a company into one that allows others to get things done takes time. “Leadership isn’t just a skill you pick up one day, it’s a journey,” says Suzanne Bates, founder and CEO of Bates Communications, an executive coaching and leadership development firm, and author of Discover Your CEO Brand. “The most challenging inflection points for entrepreneurs are when they realize they have to let go of some of the things that they used to do, and when they have to hire people who are better at certain things than they are. That’s a real turning point.”

 

Find complementary skills

For Michael Uytengsu, founder and CEO of Somersault Snack Co., that moment came sooner rather than later. When he was still getting the business off the ground in 2009, Uytengsu hired an executive who had worked at his family’s snack food business—National Pretzel Co.—to be his president. That decision, says Uytengsu, was made so that he could concentrate on securing financing for the Sausalito, California-based company (he worked for Salomon Brothers in the 1990s) and expanding its distribution,while his president managed day-to-day operations. “I don’t have the patience for the everyday issues and I knew that from the beginning,” he says.

 

Uytengsu is quick to add that although the decision to bring in other senior people to help him run the company was made early on, it was still a challenge for him. “I’m opinionated, but I wanted someone who had skills that would complement mine, and who still reported to me,” he explains. “It’s a difficult balancing act as an entrepreneur, but it’s the only way we could grow the business,” he says, noting that Somersault Snacks are now sold in 5,000 locations, including major retail chains like Whole Foods, Wegmans, and Caribou Coffee. Says Uytengsu: “There are some business owners who feel that they’re in the best position to make every decision about their company and they fail to share financial or strategy issues with their staff. The danger with that sort of approach is that it slows everything down. If I was the one who had to make every decision, that would create a huge stumbling block for getting things done.”

For more info, http://smallbusinessonlinecommunity.bankofamerica.com/community/running-your-business/generalbusiness/blog/2012/09/26/from-owner-to-ceo-how-to-grow-as-a-leader-along-with-your-company

 

What is Your X Factor?

Simon Cowell has, as you likely know, a new show on the air called “The X Factor.” The show was a huge hit in his native England and he brought it across the pond looking for similar success. There are a lot of things one could say about Simon, but one important thing is that he knows a good idea (or product or singer) when he sees one. He knows that someone who has a special quality – something different, that X Factor, makes them memorable.

Of course, having an X Factor is not the private domain of entertainers. Indeed, if you think about it, a great business can usually point to any one of several things that may contribute to its success – good products, a great location, whatever – but I venture to say that their success often comes from one special thing makes them stand out from the crowd. They all have their own unique differentiator that sets them apart.

Example: Not long ago I went with my wife to an idyllic, small little fishing village on the Pacific coast of Mexico where the locals were kind, the beach perfect, and the vibe just right (sorry, its name will remain a secret amigos)! Many mornings we found ourselves at the same great little place for breakfast.

Did we keep coming back there for the huevos rancheros? Well, yes, that was part of it. Was it because of the wonderful waitresses? Yes, it was that too, but that was not the main reason.

The main reason was free WiFi. In a small town like that one, where getting online was a challenge, free WiFi kept us coming back. That was their differentiator. Isn’t that true of your favorite businesses, the ones you frequent time and again? Don’t they offer something unique and out of the ordinary?

There is a bookstore in the Pacific Northwest called Powell’s World of Books. It is a World of Books indeed. The store engulfs one full city block and is four stories high.
In Los Angeles, there is a fun sushi bar on the Westside. I don’t recall its real name because all anyone ever calls it is “Reggae Sushi.” Yep, reggae music all the time mon.
At the Monte Cristo store on 5th Avenue in New York, you can buy just about any cigar made in the world.

These are all X factors. All of these businesses have figured out something special that they do that they could hang their hat on to distinguish themselves from the competition. So the question you should ask yourself is – what is yours? What is it you do that is unique and special that you can tout that will make your business more memorable?

Not long ago I was in Erie, Pennsylvania, giving a speech for the local Small Business Development Center (SBDC). Every year, the SBDC honors local businesses with a banquet, the culmination of which is the presentation of “Business of the Year” awards in various categories. I was fortunate enough to give the keynote at the banquet and meet these exceptional entrepreneurs. As I think back upon the award winners, I would have to say that every one of them had their own unique, memorable distinguishing characteristic.

My favorite: At a time when large drug store chains are putting local pharmacies out of business, Pioneer Pharmacy in Erie is easily the busiest pharmacy in the area, routinely filling thousands of prescriptions a week. When I asked the owner what the secret of his success was, he told me about the usual suspects – a great staff, loyal customers and so on. Then he mentioned what I now see was his X Factor: Free delivery.

Every day he has two full-time drivers who do nothing but deliver prescriptions to his customers for free. “And, I only hire retired gentleman,” he told me. Given many of his customers are ill or even home bound, it’s a brilliant idea.

So that is the question to answer. What do you do that is different and better? What is your business differentiator? Figure it out, tout it, and you will likely find customers will find you and frequent your business more often – if not for the fish tacos then definitely for the free WiFi.

Charting Your Business’s Success

Breakeven Analysis, Pro Forma Forecasting, and Growth Strategy.

by Sherron Lumley.

New Yorker Douglas Tausik is thinking outside of the box. In 2007, he founded Tropix Technology, a business that sells laptop computers to the East African market, specifically in Uganda. His big idea came from a visit to the area and a discovery that fewer than two percent of the Ugandan population owned a computer. “Our ultimate goal is to provide doctors, teachers, and students with computers,” says Tausik.

So far, Tropix has sold 50,000 computers in Uganda, a good start toward bringing computer literacy to the country via affordable computers that are made in China. To stay on track, Tausik relies upon several financial planning tools to help him answer three vital questions that every small business owner must ask:

Will the business be able to make money?
How long will it take until it’s profitable?
How will I know if the business is meeting its goals?

Breakeven analysis, forecasting, and cash flow projections—these are the things small business dreams are made of. Each tool provides a strategic starting point for making the envisioned future a reality.

Breakeven analysis

In Tropix Technology’s case, profit expectations and expenses are kept to an absolute minimum in order to make the computers affordable to Ugandans, lowering the breakeven point. To break even is a simple enough concept: at a certain point, expenses will be covered and the business will start to make money. Breakeven analysis means calculating all expenses the business incurs and determining how much product or service must be sold and at what price to make a profit.

For Tropix Technology, one of the main expenses is providing after-sale service and repair in Uganda, a benefit that has never been available before. “We had to analyze how many units to sell per month to operate the service center,” says Tausik. Some of the elements that go into a breakeven analysis include raw materials, labor, utilities, fuel, marketing, fixed costs such as rent, and variable costs such as shipping, selling expenses/sales commissions, and taxes.

The U.S. Small Business Administration (SBA) offers a link to preparing a break-even analysis provided by Nolo.com, a legal publisher in Berkeley, California. Nolo also provides information on its website on preparing a profit and loss forecast, a cash flow projection and estimating start-up costs.

Pull-Quote.pngPro forma forecasts and cash flow

“We are definitely involved in forecasting and do cash flow projections,” says Tausik. “We have to fund the manufacturing of the computers, then we have to ship, then collect funds, so we have to analyze the cash requirements. Our commitment is never beyond the actual shipment because we do not do the manufacturing. We gather the orders, then when we have enough, we place the order in China,” he says.

The Latin term pro forma (as a matter of form) in business means projecting the future status of the company based on current performance, without including unusual and non-recurring transactions. Pro forma financial statements are similar to regular financial statements, except that they are educated guesses of what will happen in the future, based on the goals of the company and what is known right now. A pro forma balance sheet will include assumptions of future cash flows, assets, and liabilities. A pro forma income statement includes expected sales revenue, cost of goods sold, losses, operating expenses, equipment, depreciation and taxes. A pro forma statement of cash flow will predict inflow and outflow of cash to the business and give insight on potential shortages.

Realistic pro forma forecasts can be helpful to a small business by providing insight into needed course corrections. To make a forecast with any degree of accuracy, some actual data is needed, such as prior revenues and expenses from a known period of time. Typically, three to five years of data is considered a healthy period for discovering trends, but when the market is in mid-swing, a shorter time span may be more appropriate.

Growth Strategy
Just two years ago, Internet service became available in Uganda via a high-speed optical service built by China. The Internet Service Provider (ISP) sector is growing slowly, but in time will develop Internet access for more Ugandans, the majority of whom are still subsistence farmers. With this in mind, Tropix has plans for expansion. “It is an underserved market,” says Tausik. “Currently 30 to 35 percent of the population work in non-farming professions,” he notes, “and there is already reliable Internet service available in the capital city of Kampala.”

Tropix’ initial sales to the civil service sector was met by great enthusiasm from the Ugandan government, which provided a sales office for the company at no cost. Now, attention is focused on the country’s doctors and teachers, with a goal of 80 percent computer ownership. Additionally, there are thousands of incoming Ugandan university freshmen each year with no computers, so students will be an important target market as well. To reach the 80 percent goal the company will need to sell a total of 400,000 computers over the next five years. “We forecast the amount we have to sell each year to reach that goal and then make a marketing effort that corresponds to that,” Tausik explains. Part of the marketing effort is mobilizing a group of teachers to go from school to school.

Becoming familiar with breakeven analysis and pro forma forecasting is essential to meeting small business goals. With the knowledge of expenses and sales, a small business can calculate its breakeven point, forecast future cash flow, plan for profit, and create a growth strategy.

Additional Resources

The U.S. Small Business Administration (SBA) provides a free online business planning course and business plan template that includes breakeven analysis, pro forma cash flow and a full list of items to include in a complete business plan. To learn more, follow the links below to other online resources.

A breakeven analysis will show you where your company begins to make a profit.
The breakeven point determines whether expenses, sales, or prices need adjustment.
Cash flow projections help prepare for shortages that can derail a small business.
Forecast realistically by using recent data considered in the context of the current market.
Pro forma calculations have many uses beyond the initial business plan, including planning for strategic growth.

5 Secrets of Sales Superstars

While I have done my share of sales, like I’m sure you have, I would never call myself a “sales superstar.” Fortunately, in my line of business, I get to meet many people who do in fact fit that description, begging the question, what do they have in common?

Let me suggest it is five things:

Sales Superstar Secret #1: Language is Vital: Brian Tracy, maybe the world’s best salesman, tells the story of how his first sales job was selling soap door-to-door to earn his way to YMCA Camp. He heard rejection after rejection until he oh-so-slightly rephrased his sales pitch. Instead of asking, “Would you like to buy a box of soap?” he said instead that he was selling soap, but that “it was only for beautiful women.” Thereafter he says, getting to camp was a breeze.

Your choice of words is critical, Tracy says.

Secret #2: Know the Most Important Question to Ask: In his great book, The Little Red Book of Sales Answers, author and master salesman Jeffrey Gitomer says there is one question to ask a customer that is critical to sales success:

Ask: “When I say [name of your product], what one word comes to mind?” This tells you what the customer’s hot button or pain point is and allows you to deal with it.

(Gitomer also says that one of the dumbest questions you can ask is, “What will it take to get your business?” You should know.)

Secret #3: Build Rapport: Rapport, once established, will make your sales almost effortless. Once you create rapport with someone, he or she begins to trust you, and with trust, walls and reasons melt away.

There is a sales strategy that suggests that if you quietly mimic your customer’s intonation and physical movements you will subconsciously create rapport. This may or may not be true, but it sure does seem sneaky. Consider instead building rapport the old fashioned way: By being your best self, finding things in common, and being friendly and helpful.

One way to do this is to ask questions, and then actually listen to the answer. Sales king Tom Hopkins says that, “The human body has two ears and one mouth. To be good at persuading or selling, you must learn to use those natural devices in proportion. Listen twice as much as you talk and you’ll succeed in persuading others nearly every time.”

Secret #4: Go the Extra Mile: Because it costs so much more to win a new customer than it does to keep an old one, it behooves you to foster your relationships with your current clientele. Part of that is doing your homework and keeping up to date on where your customers are and what they need. A little extra effort into learning about a customer, for instance, by studying trends in their industry or knowing a bit about a competitor, can go a long way towards impressing that customer and keeping him or her around.

Remember this too – it can takes up to six interactions to close a sale. Going the extra mile means being willing to see a potential customer again and again, continuing to build rapport, until the sale is made.

Finally, going the extra mile also means following up. Sending thank you notes, checking in to see if the product is working out, and that sort of thing builds rapport for future sales.

Secret #5: Sales is Like Golf: If you have ever played even a little golf you know that the harder you try, the less successful you are. But when you ease off the throttle a bit and trust your natural abilities, when you stop trying so hard, that is when the great shots appear.

Well, to a certain extent the same is true in sales. It is a paradox: Just as you make the great golf shot by not caring about the great golf shot, so too can you get the sale by not worrying about the sale. A customer can sense when a sale is your priority, and will back off accordingly. But once he is convinced you are more concerned with helping him solve his problem, rather than being more concerned with selling, you will birdie the sale.