Core Business Solutions Advice

Finally we've reached the last of the 'Top 7 Reasons Businesses Fail'.

So far I've touched on:
1-A Lack of Planning(No business plan), 2- Starting a Business for the Wrong Reasons, 3- Insufficient Capital, #4-"No Website" , # 5 Poor Management and #6 Location. So here we go- the last of the top seven reasons businesses fail is: Overexpansion



A leading cause of business failure, overexpansion often happens when business owners confuse success with how fast they can expand their business. A focus on slow and steady growth is optimum. Many a bankruptcy has been caused by rapidly expanding companies.
Why?

If a company expands too fast:

1. Cash flow can be severely limited which can hinder daily operations
2. Additional debt and the accompanying debt service can severely reduce daily financial needs
3. The new focus on growth(new products, increased production) can negatively impact the culture of the company
4. Employees feel the pressure of change and morale can suffer and then quality and customer service begins to drop
5. In the rush to expand, overall profit margins become secondary, or worse, ignored and the money disappears to handle the required growth in payroll, equipment and the other expenses
6. Taking on a new product line or new business and focus could be lost on the core business that brought you to success in the first place

However, I'm not talking about wanting to repress growth. Once a business has an established and solid customer base and a reliable cash flow, one can then allow the success to help you set a measured pace for your growth.

Some indications that an expansion may be warranted may include:

• the inability to fill customer needs in a timely basis
• the employees are having difficulty keeping up with production demands
• the demand in new markets is obvious
• a real synergistic companion business is possible without a large capital outlay for equipment or manpower

If Expansion Is Warranted, how should you proceed? It's all about due diligence!

Here are the steps:

1. Review your current business plan with a trusted objective business advisor to see exactly where you are with your current business financial objectives
2. Bring in your CPA, your banker and other objective trusted business advisors to review your growth plans (Get a second opinion!)
3. Create a business plan for your business growth especially if it is a new product line or new service you are adding to your current ones
4. Carefully research, analyze and review what equipment you will need to grow the business
5. Completely understand what the financial risks are in terms of upside and downside(be brutally honest with yourself)
6. Carefully review and identify exactly who you will need (managers, line employees, etc.) in place to grow the business
7. Write down each step and proceed forward steadily step by step

With the correct systems and the correct people in place you can focus on the growth of your business.

Remember- Focus on growing your business, not on doing everything in it yourself.

So, there you have it! The Top 7 Reasons Businesses Fail:

1-A Lack of Planning(No business plan)

2- Starting a Business for the Wrong Reasons

3- Insufficient Capital

4-"No Website"

5- Poor Management

6- Location

7- Overexpansion

As I mentioned at the beginning of this series a significant percentage of new businesses do fail. Expert opinions abound about what a business owner should and shouldn't do to keep a new business afloat in the perilous waters of the entrepreneurial sea, especially in the economic uncertainties that surround us all.

However, if the seven key factors listed above and discussed in this Core Business Solutions blog series are considered, reviewed and properly positioned, a new business or even an expanding business has a much better chance at success.

Remember- "Well done is better than well said" ~Ben Franklin~

"To get your business to the top, you have to get off your bottom" ~Walt Morey~

Get out there and make things happen!

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In 2 weeks or so I'll cover another subject designed to provide business owners with information they can use to help them work "on" their business.

Until Then Please:

Live Simply.

Speak Kindly.

Care Deeply.

Love Generously.

All The Very Best...Always,

Walt Morey - Executive Business Advisor- Accredited by the Institute for Independent Business
http://www.corebizsolution.com/

The past 5 blogs in this series have reviewed the first five of the seven areas that I think contribute greatly to business failure. The first five were 1-A Lack of Planning(No business plan), 2- Starting a Business for the Wrong Reasons, 3- Insufficient Capital, #4-"No Website" and # 5 Poor Management.
Number six in our top 7 countdown (Casey Kasem anyone?) of the reasons businesses fail is the Location of your business.

Location, Location, Location...Isn't that a real estate axiom that a property's location is one of the most critical selling points? Actually is was William Dillard, an American Businessman and the founder of Dillard's Department Store who said it many years ago when asked why his stores were so successful.
Well, when you have a business, the location of your business can both negatively and positively impact your success.
Your college professor was right -- location is critical to the success of your business. Whereas a good location may enable a struggling business to ultimately survive and thrive, a bad location could spell disaster to even the best-managed enterprise.

But consider this: Does your business really need a physical location? I've seen many service oriented businesses fail because the owner really, really, really wanted a physical place, office, building or location for their business. In the management consulting segment alone I've seen business owners struggle to be profitable because they had to have a nice big office in an office building or some other place and the monthly expense and time, etc, was more than they could handle. They just had to have a 'Bricks & Mortar' location to feel like they really had a going concern. Remember, your business is you, not an office or a location. You are the engine that makes your business run. Lets face facts, all businesses have monthly expenses (marketing, travel, advertising, websites, supplies, etc, etc.) that must be paid before anything else. It's been called "making your nut". If you can operate your business without renting office space, do it. Adding the weight of another $400-$1,500 per month expense (plus what you have to buy to fill and furnish the office) can drag a business under very quickly. I know many service type businesses (Computer Repair, Financial Planning and Insurance Sales, Photographers, Consultants of any type, and many more) that do very well working out of a home office scenario. The key is to have a separate room to use for the business and to have the discipline to work in it and not get involved in any daily household activities that could interrupt your business processes. [I'll get into that issue in a future posting to this blog]

However, if you absolutely need a physical location because your customers need to find you to buy your product or use your service then here are some factors to consider:

• Where are your customers? Select a location that's closest to your customers and one that can be found easily. Does it have visibility. What are the signage possibilities?
• Look at traffic, accessibility, parking and lighting. Is the location attractive both outside as well as inside?
• Location of competitors- Are your competitors nearby? If yes, is that problem? It may not be. Sometimes you can get sales from customers from a nearby business that has a similar customer demographic. Customers may want to try something different or new.
• Will the office and location really suit your needs? Don't settle. Get what you need. You'll not be very happy after you've signed a long term lease and it's just not right. Have a trusted advisor review you plans and your location for an objective viewpoint.
• Condition and safety of the building obviously should be a large item for consideration. Is the building up to code? Is the inside well lit? Can you say 'liability'?
• Sometimes there are local incentive programs for business start-ups in specific targeted areas of a town or city that provide financial assistance if you make improvements to the property. Contact local officials and inquire or talk to other business owners in the area to see if there are programs to help.
• The history, community flavor and receptiveness to a new business at a prospective site is important to know. I once knew a restaurant owner that opened in a location that in the recent past was the location of a poorly managed restaurant that never really succeeded. Just putting a sign up saying "Under New Management" is not going to change most potential customers' perception. You may have to spend much more in marketing costs to attract your customers than would at some other more favorable location.
• What are the lease terms. Monthly plus, plus, plus? Or are all the utilities and cleaning services included. Are there advantages to leasing for a stated term versus month to month. Can you make a deal with the landlord?

The bottom line is if you have to have an office or business location, do your homework!

A little extra due diligence upfront can save you a huge heartache and headache.

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My past 4 blogs have reviewed the first four of the seven areas that I think contribute greatly to business failure. The first four were 1-A Lack of Planning(No business plan), 2- Starting a Business for the Wrong Reasons, 3- Insufficient Capital and the last reason reviewed was #4-"No Website". Of all the top 7 reasons businesses fail, #5 -"Poor Management" is high on my list in terms of frequency.

So what's the big deal regarding managing a business?

Many reports on business failures cite Poor Management as the number one reason for failure. Why?

The reason is that business owners (especially those who come from a corporate environment) lack expertize or even basic knowledge in areas such as:

• Finance
• Purchasing
• Production
• Marketing
• Hiring & Managing Employees
• Selling

Unless they recognize what they don't know or what they can't do well, and most importantly, seek help, business owners will soon face disaster. Each of these areas must be covered in detail in the business plan. Business owners must also be educated and alert to fraud, and put into place measures to avoid it.

Neglect of a business can also be its downfall.

Care must be taken to regularly study, organize, plan and control all activities of business operations. This includes the continuing study of market research and customer data, an area which may be more prone to disregard once a business has been established. This is precisely why the Business Plan (see #1 in this series) must be a living document that is reviewed at least quarterly or monthly for new businesses and annually after 2 years in business.

A successful manager is also a good leader who creates a positive work environment that encourages productivity. This means the business owner must always approach everyone working in the business with an upbeat manner. Any employee performance or attitude issues should be handled in private, away from the work area and documented.

A professional manager has a skill at hiring competent people, training them and is able to delegate. Remember: the definition of management is: 'getting things done through other people'. So you must find the best people which means hiring people better than yourself and letting them do their job. Avoid micro-management, set proper expectations and measure the results. Believe it or not, good employees want to know how they are doing, so be sure you have the correct reporting tools to let them know how they are doing, both as a group and individually.

A good leader is also skilled at strategic thinking, able to make a vision a reality, and able to confront change, make transitions, and envision new possibilities for the future. Change is a constant in business so embrace it and get it done!

In Stephen Coveys " 7 Habits of Highly Effective People" he describes how to "Think with the end in mind." So what's the end result you have in mind? How will you achieve it?
I strongly encourage anyone who owns a business to read Covey's book. It's a terrific road map to being an effective person in business and also in your personal life.

"You're at the top when your pleasant to the grouch, courteous to the rude & generous to the needy." - from Zig Ziglar

Next time I'll review the 6Th of the 7 Top Reasons Businesses Fail.

In the mean time:

Live Simply.
Speak Kindly.
Care Deeply.
Love Generously.

All The Best...Always,

Walt Morey - Executive Business Advisor- Accredited by the Institute for Independent Business
http://www.corebizsolution.com/

In my past 3 blogs in this series, I reviewed the third of the 7 areas that I think contribute greatly to business failure. The first three were 1-A Lack of Planning(No business plan), 2- Starting a Business for the Wrong Reasons and the last reason reviewed was "Insufficient Capital".

"Poor Management" was to be the next topic, but after a discussion with one of my clients recently, I decided to change the next topic for discussion.

The next top 7 reason businesses fail I'll cover is:

No Website

Simply put, if you have a business today, you need a website. PERIOD!

In the U.S. alone, the number of Internet users (about 70 percent of the population) and e-commerce sales (about 70 billion in 2004, according to the Census Bureau) continue to rise and are expected to increase with each passing year.

Since 2004, the U.S. has led the world in Internet usage.

At the very least, every business should have a professional looking and well-designed website that enables users to easily find out about their business and how to avail themselves of their products and services. Later, additional ways to generate revenue on the website can be added; i.e., selling ad space, drop-shipping products, or recommending affiliate product and others as well.

Remember, if you don't have a website, you'll most likely be losing business to those that do. And make sure that website makes your business look good, not bad -- you want to increase revenues, not decrease them.

When it comes to the success of any new business, you -- the business owner -- are ultimately the "secret" to your success.

For most successful business owners, failure was never an option. Armed with drive, determination, and a consistently positive mindset, these individuals view any setback as only an opportunity to learn and grow.

Here is an interesting fact: Most self-made millionaires possess average intelligence.

What sets them apart?

A-They have an openness to new knowledge and new ideas.

B-They have a willingness to learn whatever it takes to succeed.

C-They seek guidance and help from experts.

So, if your business does not have a well designed and positioned website, you are falling behind your competition every day and losing money. Invest in a website for your business. Remember, it takes money to make money.

Next time I'll cover another reason(#5) of the Top 7 Reasons Businesses Fail.

It was Napoleon Hill who said it best : "Success Requires No Explanations---Failure Permits No Alibi's" [From 'Think and Grow Rich']

Have a great day and most of all...Have a Great Time!

All The Best,

Walt Morey - Executive Advisor- Accredited by the Institute for Independent Business

http://www.corebizsolution.com/