Category: Business planning

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The Leader-Manager Entrepreneur


One of my favorite books on leadership is the late Stephen Covey’s: The Seven Habits of Highly Effective People.

Covey’s articulation is top-class. He convinces you that there are two almost independent spheres: One for the leader and another for the manager. Could one person juggle between the two? Covey didn’t particularly recommend that, stressing that a leader should not be consumed by the day-to-day details of the business. Rather, he or she should be totally focused on vision, mission and long-term objectives.

While this can be true in corporations, when it comes to small businesses and entrepreneurship, the lines between the two worlds become rather blurry.

One day, your main focus would be on the five-year strategy of your marketing plan, the next you find yourself under a desk plugging Ethernet cables, or sorting out receipts of recent purchases. And that is the beauty of the whole thing, of the one-man-show adventure. That’s how it starts, and sometimes, that’s how it continues to run. Having said that, I do strongly recommend starting with a credible partner, who would stick with you the whole journey. Loneliness could be tough when the winds are not behind your sails.

In the previous article, Risk and Reward: The Two Vital R’s of Business, we talked about how an entrepreneur must evaluate their RT before delving into the ocean of business on their own. Here we explore how that is tested on the ground, in the midst of it. Now you know how much risk you can bear in order to reap a reward you had seen before you started!

On the lighter side of things, one would need suits and overhauls in their closets. Black, shiny shoes and thick, sturdy work boots. Fine perfumes and grease-cleansing hand soap.

This is not living two personalities. On the contrary, this is extracting the best of your God-given talents and putting them on the line.

Switching between the two roles becomes natural over time. A new, well-rounded personality, rooted in a character of offering true value and sincerity, evolves out of the continuous interaction with challenges and finding intelligent solutions.

Another aspect of this dual responsibility/multiple hats dynamic is being able to focus entirely on the one task at hand, no matter how different the previous or the next task would be. For example, you could be in a meeting with business stakeholders to discuss your product strategy. While in that crucial meeting, you remember that afterwards you must take care of an urgent maintenance issue in the office. The stakeholders meeting calls for your leadership presence, while the maintenance problem requires handyman skills. Being able to focus and then shift is key here. You could think of other interesting and fun examples that fall into the same realm.

Is there a special training for such interactive talent? I don’t think so. The best training is on the job, by actually trying, making mistakes, and learning, till the pool of skills is honed to almost perfection.

Enjoy!

The Wealth Maker

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Risk and Reward- The Vital Two R’s of Business


We are risk takers by nature, all of us, in varying degrees. But marching into the unknown is a human instinct that manifests itself in obvious, as well as mysterious ways. Every hour of every day we take risks. You may allow your mind to explore this idea and find examples. Traveling to a new country, hiking an unmarked trail, buying a gift for a loved one, tasting a weird- smelling food, going to war, getting married, asking for forgiveness, climbing the Himalayas, camping, skiing, driving, falling in love, leaving home, and doing nothing is also a form of taking risk, yet indirectly.

For the sake of our topic, let’s narrow down that endless list to just one: Starting your own business and deciding to become an entrepreneur.

Why do people leave the comfort and security of a guaranteed pay-check, and go on their own? For starters, that comfort has become unattainable lately. Downsizing, mergers, acquisitions, financial crisis, to name a few, have made job security a thing of the past.

But that is not the main reason entrepreneurs go out and face the world alone. It is something within each and every one, a calling if you will. I bet you’ve heard this before and you might be thinking: “OK, a calling, but what is the percentage of success of that calling? Show me the money!”

True, no matter how strong a calling was, and how enthusiastic the person would be, a business venture must yield financial results. In other words: Money 🙂

That’s why, before delving in the ocean of entrepreneurship, one must evaluate few traits that are vital to making that journey a pleasant and fruitful one.

So what are those traits? The first that comes to mind is risk tolerance. I’ve talked about this, giving it an acronym of RT in several posts about investing, and it still applies here, probably more so. A low RT isn’t going to help here. A very high one would result in taking too much risk, and again that is dangerously dangerous 🙂

We are looking for a healthy RT, which on one hand drives the entrepreneur to explore new, uncharted frontiers, most of the time alone and with little knowledge and tools, and on the other, keeps him/her aware of the potential challenges, and do enough research and preparation ahead of, during and after taking the risk. What is that called in plain English? Wisdom combined with courage. And in eloquent English: Courageously wise or wisely courageous 🙂

The heart of our discussion here is the following:

‘Risk and Reward are proportional: The more risk one takes, the higher the probability of reward. The opposite seems to be true, most of the time.’

Let’s start with a simple example: If you decided not to teach your four-year old child how to ride a bike, fearing the risk of injury, you denied him/her the rewards that come with riding a bike. One of them is innocent joy!

To get any reward, we must do something, right? And any doing involves taking a risk, no matter how small. That’s why they are related proportionally.

Raise the level of one, the other gets a boost. The challenge is to find that threshold where raising too much would result in unwanted results rather than rewards. And that threshold differs depending on the situation.

In the example above, rushing the learning curve increases the risk of injury. Taking the matter way too slow may delay the reward or even prevent it from happening.

We need to be patient with the whole process. We start by taking small risks and observe our emotional and mental reactions, just like building, you start with a foundation, then keep adding to it.

Another aspect of this building process is appreciating the results, no matter how small.

When it comes to building a new business enterprise, the principle would be the same, however, the application is different.

Does that mean you start with a tiny little venture then expand gradually? That’s one way to approach it. Say open an online store with only one product line, give it your best till it starts making profit, then add a second product line, and so on.

Nevertheless, if you know that your RT is high enough to get into bigger business adventures, especially if you know you have good financial and practical backing by trusted partners, then you may want to create a vision that would lead to more aggressive plans. For example, starting an eCommerce platform, where small business owners can open their one-product-line stores.

The web is full of tools and articles on how to assess your RT level. Here’s one, which I have no affiliation with, and can’t guarantee its results, but you may want to give it a shot, or look for something else in that line of tools:

http://www.moneycontrol.com/personal-finance/tools/risk-assessment-tools.html

In conclusion, know thyself before starting a new business. The time, money and energy spent doing that is worth the clarity that result from being aware where your next step will hit the ground.

All the best,

The WEalth MAker

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StoreFour: Continuous Enhancement


Launching an online store requires a great deal of planning and attention to detail. From selecting the theme, to designing the logo. What will be the static content? How about navigation, payment processing, shipping rules, taxes, and a lot more.

Then once that’s been taken care of, comes one of the most important decisions to make at this point of store building: What exactly are we selling here? Is this going to be a general merchandise or a niche-oriented online experience? Who are the customers, and why would they buy from us?

Down the line from that is product strategy: What products should this store showcase and for how much?

As you move from one stage to the next you realize new understandings and, of course, learn new things.

The final ‘product’ just before the launch will never be perfect, and you know it. But does that mean you keep improving while delaying the launch? No! Continuous enhancement must hold a permanent place-holder on your project plan, just as sales and marketing. Failing to do so means choosing to fail in this fiercely competitive landscape.

Since the launch back in May, StoreFour has gone through several reviews, the last being just very recently. The depth and breadth of each review vary, but they all keep asking some essential questions:

  • In exchange for revenue, what value does this store offer?
  • Do current products serve that value?
  • Is there a clear line of sight between the products and the vision/mission of the business?
  • Are customers satisfied? How can we measure that, then improve it?
  • What products to keep, modify and/or delete?
  • What products to add?
  • Are marketing and sales efforts fruitful so far, and if not, why? How can they be enhanced?
  • What are the short and long-term objectives of this store?
  • Are the store’s design, look and feel expressive of its message and brand?
  • Is it easy to navigate and find information?

As you you can see, the questions do not follow a specific order. In these reviews, you capture questions as they arise, randomly. I like to use a large poster and a bunch of colored markers to write down whatever comes to mind. Then gradually move to a mind-map, before finally creating an action plan on a digital tool.

Casually writing down thoughts, questions and ideas allows something interesting to emerge: Clarity!

While just before you’d started your mind was processing everything simultaneously, and rapidly, now it can observe patterns and priorities, reasons and results. It’s much easier now to find answers and chart a new course, or adjust an existing one.

During the last review, which concluded around mid October, I realized that we need to have more focus on our brand, which means redefining or resharpening the concept behind that brand.

While the message has been to ‘Be, Love, Create and Live’, the products didn’t clearly trace back to it. The four dimensions sit on the titles of four product collections. However, when reviewing individual products, it wasn’t very obvious how each one would serve that message.

We finally came to an interesting conclusion: Let’s not try to find ‘Love’, or ‘Create’ products per say, but rather look a bit deeper and ask: Can a ring, for example, help the customer promote love in her or his life? How about a wallet or a bag? does any have a link to ‘Live’ or ‘Create’? And isn’t ‘Be’ a common thread underlying all others?

Of course, another concern is: What is the market pulse for any product we offer? On the one hand, we definitely want to provide true, authentic value. Yet on the other, the business must meet its financial objectives in order to continue serving that value and progressing to even higher levels of success.

From that understanding, and to bring more focus to the product offering, we decided to keep the main theme, but rename the collections: Rings, Bags, Wallets and Digital.

With few specs about what products to choose for every collection, including high-quality, trendiness, and usefulness, we did an extensive research and decided to have only nine products under each collection. This is a major shift from 30 or so products, some didn’t clearly reflect the theme. Now when a customer clicks ‘Rings’, she or he will only see rings under that collection. The same applies to Wallets, Bags, and Digital.

It’s logical and natural after feeling that comfortable with the content of your store to turn to marketing with a renewed will and a fresh determination.

On that, StoreFour now has its Twitter and Pinterest storefronts up and running, with new content and interaction on a daily basis. Facebook already showcases StoreFour, and all are ready from another round of ad campaigns.

We are very pleased to share these exciting developments with our readers, and as always, happy to hear your questions and comments.

Till the next post, be open to new, enriching ideas!

The Wealth Maker

© Image Credit: StoreFour, https://storefour.ca All Rights Reserved

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More on Budgeting


 

We started our discussion about budgeting in the last post. The question we concluded with, was: What is a budget? I like to keep things clear and simple. We could spend pages defining a budget, but that’s not our purpose here.

A budget is a spending plan! That is it. The more you have to spend, the more important having a budget becomes. It could be a simple spreadsheet, or it could be a 500-page volume.

The budget categorizes your spending, so it becomes easier to track. Then based on historical data (the accounting software we talked about earlier is handy here), the budget “allocates” a portion of the expected income to each category.

Now this is all projection. Why is it important? If you went spending without a plan, without some guidelines, you would, most probably, exceed the limits. Even worse, you might spend more on less-important categories than on essential ones.

Let’s have an example. What is more important than your children’s health? Without allocating enough funds to that category, you may end up taking some of that money to cover a less important area, such as eating out.

This leads to a very vital aspect of a good budget: Weights and priorities. Not all spending categories were created equal! Factor that in right from the start. Let your budgeting software know those priorities as it allocates the funds.

The other important element is allocation. How would you decide that, say, groceries would need $2000 this month? The easiest way is to track your spending for a period of time, that is relevant to the budget’s span. Therefore, if you were budgeting month-by-month, then track your spending for a full month, to get an idea how much you would need for the coming months.

Finally, a budget has a lifetime, like everything else! If you were responsible for creating the US government’s budget, then you would need input concerning, at least, the next 10 years, then prepare the current year’s budget accordingly.

Our focus here is personal/small business. In that environment, your budget should take into consideration your overall mission statement (personal, family and/or business), objectives, values and roles. Budget for a year, and have monthly sub-budgets to help you track more effectively.

Always put your investment money aside before you start this process, as if it never existed. We had talked about this before, but it is worth repeating here: Deposit a monthly percentage of your income in a separate account, which is dedicated to investing/growing your wealth.

 

The Wealth Maker

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Wealth Maintenance – Budgeting


The reason you need to know where the money comes from and where it goes to is to plan for the future. That is called budgeting.

In the last article, we touched on the practice of tracking the sources of your income. Similarly, keep track of your spending. This activity is so vital for budgeting. As you know the spending categories, the amounts, the patterns, you start drawing your budget’s draft.

You don’t have to do this with paper and pencil anymore. Invest in a good personal/small business accounting software. They have become so sophisticated and fun to play with.

I’ve had some experience with Quicken. The features are overwhelming: You can track your spending down to the penny, enter your financial institutions’s details, download your transactions from those institutions to the software (so you won’t need to manually enter each spending), create cash flow charts, and most importantly to our discussion here, create budgets!

As the software becomes familiar with your spending patterns, your income, and your liabilities, it helps you create a professional budget very quickly and effectively. Of course, you must be aware of what the software is doing, and guide the processes to your special preferences.

Quicken is not the only software out there. Microsoft has Money, and there are few others. Do not use a 2nd tear software for this task. It’s worth a $70 or so investment.

Once you have your budget in place, you can use it to guide your spending from now on. But what is a budget? That’s what we’ll talk about next time. One important tip before we wrap this up: Always prepare your budget, especially the personal one, with your significant-other. She or he must be involved to avoid conflicts down the road. But more importantly, sharing this is a sign of mutual respect, and hopefully, love 🙂

The Wealth Maker

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The Wealth Algorithm (9) – Conclusion


 

So far, we’ve covered two out of the four steps mentioned in article (6) of this series. Namely, the business plan and funding options and processes.

One quick note about the funding options presented in the last article. Most of those organizations are based in the US. They offer their “services” to US citizens or US permanent residents only. Before you start working with an online funding entity, please make sure it supports your country. The concept is fairly new. It might not be available everywhere. It’s starting to emerge in Canada as we speak, but it’s more established in the US so far.

Assuming you’ve found the right source of funding for your venture, and prepared your business plan, now you need to work with the funding institution to present the business plan and obtain the funds.

If you went the route of online funding, most of the work would be electronic: Emails, completing online forms and applications, and probably by the end, some phone conversations. Be prepared to answer a wide range of questions, including personal questions. To some extent, this process may be more demanding than job search.

As long as you clearly know what you want (your intention), and how to achieve it (your business plan), you’ve already covered more than half of the distance!

Keep in mind that funding organizations are business-oriented. They want to make sure that by investing in your idea and your plan, both parties would create a profitable business. This insight needs to be clear throughout your presentations. You are not asking for loans or charity. You are a business partner, who is ready to use the offered capital to generate a positive outcome for both parties.

Once a verbal agreement is reached, the details must be documented in an Investment Partnership (TM) Agreement (IPA). The IPA would become the “constitution” of the project. It specifies the objectives, the parties involved, the timelines, rights and responsibilities, the way profit and/or loss are shared, and so on.

Carefully read the agreement in full, and check if you agree on all its provisions, before you make any commitment. If something is ambiguous, or contrary to your original understanding, never hesitate to voice your concern, till you and the funding party reach a mutually agreed-upon formula. This is your right as a business partner..

Next, as you start receiving the funds, you begin executing your business and action plans, day in and day out, till you attain your clearly set intention, and successfully satisfy the terms of the IPA.

I’m not promising you that the road will be rosy all the way. There would be some challenges. Use your capacity and wisdom to convert those challenges into new opportunities. This is easier said than done. Deal with them, one by one, as, and if, they come.

All the best,

The Wealth Maker

 

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The Wealth Algorithm (8) – Funding


 

We covered step one of your tasks in the previous article, which was creating a business plan. The post didn’t write the plan for you. It rather gave you the fundamental building blocks of that activity. The rest is yours to do, following those guidelines. If there was interest to give a full example of a business plan, I’d do that, but I’d need to receive such quires from the readers. You could easily post a comment under any article of this series.

Today I’ll continue to step two: Finding your business partner.

Few articles ago, we excluded friends and family, for obvious reasons, as well as banks. So what’s left? Had this question been raised thirty or more years ago, the answer would have been: None!

However, nowadays, investors and entrepreneurs have almost untapped sources of online funding. With the proliferation of social networking, an era of business financing has been emerging.

Your first stop would be your social networks: Facebook, Twitter or Linked-In. The last is more professional-oriented. If you happened to be a member of Linked-In and have good and trusted connections, you might want to start there. Look for someone with a background in business management, investing, financing, etc. On the other hand, this person is honest and trustworthy. How would you know that? The simplest way would be to visit their profile and see what kind of connections they have. You could do more research and “investigation” till you feel satisfied.

The next stop would be to explore the following new resources of online funding. I’m presenting the three most popular here, but you could find more.

One example is referred to as “Crowd-Funding (CF)”.  Another is “Internet-Assisted angel investing (IAAI). A third is “Accelerator Programs (AP)”

Those are online resources, originally inspired (and to some extent created) by social networking. They are interested in funding new, and potentially profitable, ventures, against some guarantees from the investor.

Below are the definitions of the first two, as given by Wikipedia.org:

(1) “Crowd funding or crowdfunding (alternately crowd financing, equity crowdfunding, social funding or hyper funding) describes the collective effort of individuals who network and pool their resources, usually via the Internet, to support efforts initiated by other people or organizations.[1] Crowd funding is used in support of a wide variety of activities, including disaster relief, citizen journalism, support of artists by fans, political campaigns, startup companyfunding,[2] movie[3] or free software development, and scientific research.[4]

Crowd funding can also refer to the funding of a company by selling small amounts of equity to many investors. This form of crowd funding has recently received attention from policymakers in the United States with direct mention in theJOBS Act; legislation that allows for a wider pool of small investors with fewer restrictions. The Act was signed into law by President Obama on April 5, 2012. The U.S. Securities and Exchange Commission has been given approximately 270 days to set forth specific rules and guidelines that enact this legislation, while also ensuring the protection of investors.[5]“

(2) “An angel investor or angel (also known as a business angel or informal investor) is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. A small but increasing number of angel investors organize themselves into angel groups or angel networks to share research and pool their investment capital.”

The following website is one of the pioneers in the area of AP: http://globalacceleratornetwork.com. Click on ” about” to get the following definition:

[Note: The definition below is the property of  http://globalacceleratornetwork.com. The author is not promoting or supporting any part of the definition. It’s given here as an example of this kind of online funding. There are other potential options that are worth looking at during your research].

(3) “The Global Accelerator Network consists of independently owned and operated organizations that utilize a mentorship-based startup accelerator model. It provides networking opportunities, training, special perks, and ongoing support for members of the network.

Championed by TechStars, the Global Accelerator Network was created in 2010 under the management of top accelerator programs and alongside the White House’s Startup America Initiative. In the spirit of supporting more entrepreneurs around the world, the Network’s mission is to ensure that 5,000 successful and experienced entrepreneurs and investors will mentor and support 6,000 promising young entrepreneurs. The goal is to increase their success rate tenfold and create 25,000 new jobs by 2015 as well as a sustained engine for growing these figures over time.

Our vision for the Global Accelerator Network is to empower entrepreneurs and accelerators, resulting in an increase in the pace of innovation and the ability for more communities to cultivate entrepreneurial success. We believe the proliferation of this model is very positive for entrepreneurs, investors, and start-up ecosystems. By bringing programs together to create and share best practices, resources and knowledge, we can increase the success of member programs and improve entrepreneurial ecosystems across the globe.

The Global Accelerator Network is a proud supporter and partner of The Startup America Initiative, the White House’s program to celebrate, inspire, and accelerate high-growth entrepreneurship.”

–End of definitions—

The above are only definitions, although they offer a good amount of details to start from. You need to research each one enough to see the full picture, then decide on the one that’s best for you and your selected venture.

Please post your questions and comments below.

All the best,

The Wealth Maker

 

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The Wealth Algorithm (7) – Business Plan


 

In the last post, we concluded by listing few steps you’d need to take, in order to finance your dream via a partnership.

Before you can engage a potential business partner in the process, you must be ready in terms of your plan and strategy of developing the capital to reach the intended result.

According to Wikipedia.org, “A business plan is a formal statement of a set of business goals, the reasons they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals.”

In our case, there’s only one “goal”, which is the intention we clearly defined. Next, you need to explain “the reasons you believe that intention is attainable”.

There could be different reasons to different people. Imagine your potential partner asking you this question: “Why do you believe that you are able to grow this “X” amount of money into, say, one million, over the course of the plan”?

Here, one should look closely at his/her skills and talents related to managing money, and financial assets in general.

If you feel you don’t have what it takes to succeed at this task, don’t be disappointed, you’re not alone. That’s why lifelong learning is so important, not only for our bank accounts, but also for our physical and mental health.

Keep things simple, pick one or two methods from the ones we’ve covered here. Make sure you understand the ins and outs of each one, then use that in answering the above question.

Let’s assume you were interested in building an online store. After reading and fully understanding the article, expand your knowledge further. Do more research. Try to actually build a simple online store and see if your interest was still the same, more or maybe less. Take all of that into consideration while writing your business plan.

Once you’ve answered that question, the rest is much easier. You want to do your best to prepare a plan that is precise, presentable and convincing. Include a step-by-step action plan that specifies the activities, the desired accomplishment from each activity, the time-frame, and the resources you may need (financial, human, etc).

A good way to start would be to use a “template”. This is available online. Pick one that you understand and can fill out effectively, in light of our discussion above.

The following points cover major areas of a business plan as described on the BDC™ site (Reference: http://www.bdc.ca/EN/articles-tools/entrepreneur-toolkit/templates-business-guides/Pages/business-plan-template.aspx):

  • Business overview: A brief description of your company and where it stands in the marketplace;
  • Sales & marketing plan: The sales & marketing strategies that will be used to target your customers;
  • Operating plan: A description of the physical aspect of your business operations;
  • Human resources plan: Details on your key staff, HR policies & procedures;
  • Action plan: The planned actions of the business over the next 2 to 3 years;
  • Executive summary: A summary of the reasons you are seeking financing, together with a summary of your business operations;
  • Financial appendix: The facts and figures that back up what you say in your plan.

 

All the best,

The Wealth Maker