Quick List: Why Plan and Budget?

Business by Design

When you have a small business many times you just do what you have to do on a daily basis.  Spending a bunch of time on planning and budgeting seems crazy since “you” are “management” and “the board” in most cases.  Even so I believe having an annual plan and budget is valuable for many reasons.  Here are my ideas:

            The Benefits of Creating an Annual Plan

1. Makes you review your current and past performance providing objective information on the health of your business.
2. Taking the time to make projections provides you with insight into what your business will look like if you just keep going day to day.
3. Planning done right forces you to think out of the box and look for incremental opportunities.
4. Understanding the growth opportunity directs you to what resources you will need to support the growth i.e. people, capital, etc.
5. Gain confidence in your ability to achieve when you see that you planned and it happened!
6. Your team has an opportunity to provide knowledge and input to the overall direction of the business.

And the Benefits of Having an Annual Plan

 

7. Having a plan provides goals and a bar to achieve for both you and your team.
8. Having a plan gives you something to measure your performance against – did we do well this quarter?  Compared to what?  Last Year and Plan.
9. Gives you an objective tool for accountability.
10. The plan helps the team understand the direction of the company and improves buy-in.
11. By comparing performance to plan it provides ongoing direction for prioritizing time and resources throughout the year.

And It’s Uses with Outsiders

 

12. Vendors see how you plan to promote their business and provide better pricing, support, etc.
13. Provides your sources for capital (i.e. banks, investors) with support for their loan or investment.

 These are just a few benefits to the planning process especially for small businesses.  We are in the last quarter of the year so now is the time to begin planning for 2010.  If you haven’t ever created an annual plan and budget, and want some help, we have templates that can get you started and/or we can guide you through the process.  Email me (suemiley@crossroadcoach.com) or call me (225-341-4147) for a complimentary 30 minute call to get you started and/or see how we may be able to help.

Questions for Christian Small Business Owners

I am working on an e-book about integrating our faith with our business.  There are many concerns that Christian business men and women have trying to own and operate a business that glorifies God and that is successful enough to stay afloat and to support our families.  I really want to focus this book on the real issues and questions of Christian small business owners.  If you have a few minutes and could answer a couple of these questions I would really appreciate it.

• What does it mean to Glorify God in your Business?
• Is it okay to pray for business or financial success?
• Does God care about your business?  Your finances?
• What do you do differently in business because you are Christian?
• How does your faith affect your business decisions?

Either respond in the comment section or feel free to email me at suemiley@crossroadcoach.com.  If you know any other small business owners that may be interested, please forward this post.  Leave your email address too and I will send you a free copy of the e-book when it is finished.

When Things are Slow What are You Going To Do?

All of us have slow times in our business.  When business is slow it is difficult to keep out of the cycle of worry.  Seasonality can play a part and of course an economic downturn can impact us.  There have been many articles that speak of business opportunity (I have written one) and others that talk about cutting back.  Seriously though, have you given much thought with how to actually spend your time productively?    If you are like many christian small businesses who unfortunately don’t start marketing or networking until business is slow, you will obviously get on the marketing band wagon to build your business back up.  But you know as well as I do there are still some extra hours available.  Worrying doesn’t count in the “productive” sense.  What can you do to use this time aside from your normal marketing efforts and business building efforts?  Here are some boring, yet practical, suggestions and a few creative, frivolous ideas:

1. Get organized.  You know all of those piles in your office and the randomly saved files on your computer.  Do you remember saying you didn’t have time to deal with it?  Well, now is the time to start cleaning house.  It needed to be done when you were busy and it will still be a mess when you get busy again, so go ahead and take care of it.  Look at processes and opportunities to streamline your business.
2. Revisit your vision.  Remember you went into this business for a reason.  Hopefully it was a calling.  If God gave you the vision, then review and pray about it.  When you were called to this business what did you want to accomplish?  Have you stayed true to the vision?  Now is a time to readjust back to His path if you have lost your way.  If the vision is still clear, maybe it is a new strategy that is needed.  Lift this up to the God that gave you the vision.  Pray for renewed energy and His Holy Spirit to guide your path.
3. Create a new product or service.  It is difficult to remain cutting edge when you are overloaded.  This may be the perfect opportunity to get a big post it pad or download some free mind mapping software and begin to plan and design your newest cutting edge product or service.
4. Invite other business friends to start a Mastermind Group with you.  A christian business mastermind group is a group of individuals trying to accomplish the same goal.  I am sure there are others that have experienced downtime in their business or are right now struggling with the economy.  Get together for coffee or lunch and share your knowledge, ideas, and encouragement with each other. 
5. Do your taxes.  I know it isn’t April but you know there are some of you who filed extensions like I did.  And yes, I finished pulling everything together finally.  Of course my accountant is probably on vacation now.
6. Catch up on promises to your kids.  When we are busy we make all kinds of guilt promises to our kids.  “I am too busy right now, but when things slow down we can….”  If you can’t remember any just go to your kids and ask them to fill in the blank.
7. Schedule your own mini-retreat with God.  This could be packing up your bible, a journal and your favorite pen and finding a quiet place to read, pray, write and, most importantly, listen to our Heavenly Father.  It is awfully hot in S. Louisiana but if you are an early riser it is still cool.  I suggest bringing the above list plus a blanket and a nice Grande coffee from Starbucks (maybe iced) to Highland Park and picking a beautiful oak tree to sit under and commune with the God of the Universe.
8. Interim Performance Reviews with your staff.  Things are slow and the staff feels it too.  What better opportunity to spend quality time with your team.  Give them an honest assessment and take the time to work with them to create individual development plans for how they can be an even better contributor in the coming year.
9. Go on vacation.  Obviously everyone else is!
10. Make a commitment to take three positive strides each day.  1.) Pick one thing you can do to encourage someone today. 2.) One thing you can do to work “on” your business today. 3.) One thing that you can do to add extra value to a customer today.

What if it isn’t seasonality and something is really going wrong in your business?  Well I still think that if you do most of these things you will have more clarity and sense of direction for the next steps in your business.  Getting organized will help you identify problems and opportunities.  Reviewing your vision will help you fine tune your plans.  And spending time with God and the people closest to you will renew your Spirit and provide a sense of purpose.  It also will put idleness and worry out of your mind!

Obtaining Credit for Your Business

As we know, there are many reasons for the credit environment we find ourselves in today.  Regardless of the “whys”, we are now in a new era of lending, and banks have changed much about how they conduct business.  Understanding what the banks are now looking for in the credit underwriting process is critical as you approach your lender to fund your cash needs.  It is far more difficult to find available financing today than any other time in the last few decades.

Many years ago when I was a credit analyst at local bank, the review and extension of credit was relatively simple.   We reviewed financials, prepared cash flow projections and calculated a number of ratios to support the credit decision. However, a good bit of the decision to make the loan had to do with the integrity and reputation of the individual in the community.   This approach clearly demonstrated the “relationship” banking we knew at one time.

Today, lenders do consider your integrity and reputation, but more emphasis is placed on whether the credit fits into certain risk parameters.  In this environment, banks cannot afford losses, and therefore making loans is a less subjective process.  The key issue is your ability to repay the loan based on facts and circumstances.  So, what are the repayment issues lenders are concerned with?

1)      Cash Flow from Operations –   Have you demonstrated the ability to generate sustainable cash flow from operations?  Is there reason to believe that you will generate cash flow from operations in the future, necessary to pay off the debt and interest on the loan you are requesting? 

2)      Guaranty – If the primary borrower (your company) is unable to pay, what other sources of income do you have that can be used to retire the debt? What other resources (liquid assets) do you have to repay the loan?

3)      Collateral – Although depended upon as a source of repayment, banks look to collateral as a repayment of “last resort”.  Banks are requiring appraisals, and their loan to value ratio has fallen to 75 – 80% from the 90% norm in previous decades.  Will liquidity of the collateral be an issue?  Will the asset continue to hold its value after the loan date?  Is the asset controllable, and can be found if the bank has to foreclose?

Before visiting with your lender, there are many things you can do to increase your credit viability.   You will want to visit with your business coach or CPA to make sure that financial data is accurate and presentable.  As banks have less money than credit opportunities, possessing good financial data will increase your chances in obtaining the loan.  Here are some recommendations: 

1)      Make sure you have the necessary financial information required, presented in a clear, easy to understand format.  Confusing or inaccurate data will cause the lender to question the integrity of all of the information you are presenting.  Most banks will require three years of profit and loss statements, balance sheets and cash flow statements. Also required will be three years of income tax returns, both for your company and personal.

2)      If possible, prepare profit and loss and cash projections for the next 12 to 24 months.  Make sure these projections are realistic based on historical evidence.  If you are embarking on a new product launch, be sure you are conservative with the revenue and bullish on the expenses relative to this new product.

3)      The bank will request an aging of receivables or a billing schedule.  They will want to know your customers and whether your receivables are collectible. A history of customer write-offs or credit adjustments may be requested by your lender.

4)      Check your personal credit reports once a year to make sure they are accurate.  The Bank will obtain a current credit report.  The bank may also check with the credit bureau for your business credit rating, or obtain a Dun and Bradstreet rating depending upon the size of your business.

5)      Because the bank will try to ascertain your industry market conditions, be prepared with industry information demonstrating your product or services’ market viability.  Possessing information concerning your company’s market share is extremely valuable.  Industries go through life cycles, as do products within certain industries.  Where on the life cycle schema does your product / industry fall?

6)      The lender will want to view its potential collateral in order to make sure that there is reasonable control over the asset, as well as proper accountability. Make sure your location / site is clean, and inventory and fixed assets are in good condition. 

7)      Provide the lender with your organizational chart in order to demonstrate the depth of your management team.  Management quality is assessed during the credit decision.

Most importantly, be able to communicate clearly the needs of your business, specific use of the loan proceeds and why you are a good credit risk.  Being prepared will bring you closer to obtaining that loan.

Also, be sure to check out Streamlining Your Business Assessment if you need assistance in making that meeting with your lender count!

CHECKLIST: Components of a ROCK Solid Business Foundation

A  few weeks ago we introduced the 5 Keys to Building a Rock Solid Business Foundation.  This week we have added a checklist of some of the components of these building blocks.

In addition to pouring your slab, which we call the Culture and Core Values of our business, we believe there are at least four other key building blocks to creating a strong business foundation.  They are money systems, people systems, operational systems and Sales/Mkt systems.  Here are some potential foundational pieces, or a checklist, that fall under these building blocks:

Money systems:

1. Separate checking account for your business
2. An accounting system like QuickBooks or Microsoft Accounting to track your revenues, expenses, assets, and liabilities
3. Merchant accounts to accept credit cards
4. Return policies
5. A business loan, line of credit, company credit cards
6. Policies on appropriate business spending for employees
7. An Accountant to estimate quarterly taxes and prepare your annual tax returns

People systems:

1. Consistent hiring policies and procedures with the proper forms to fill out
2. Consistent benefits for each employee with stated holidays, sick days and vacation policies.
3. Procedures in place for paying quarterly payroll taxes.
4. Procedures for bonus pay, car allowances, cell phone use, etc.

Operational systems: This really is determined by what type of business is being operated.

1. Could include a Point of Sale System, Fulfillment System, Customer Contact System
2. Should include a time management system with calendar and task management
3. Each step of your operation should be document for easy review and training of new employees.  This ensures consistency in service or fulfillment.

Sales and Marketing Systems:

1. A written marketing plan – the majority of small businesses implement what I call “roller coaster marketing”.  Roller coaster marketing is when we hustle and employ all of our marketing efforts in a flurry until we get a big sale or a couple of new clients.  Then we don’t do any marketing until we finish the sale or need clients.  A written marketing plan consistently implemented will provide a pipeline of new sales or customers.
2. Written procedures on how to execute a marketing or sales tactic.  An example, if you mail out product information to a prospect, however, do not follow-up with a phone call or visit in a timely manner, the response to your materials will be low.  If you follow-up timely with predetermined follow-up steps you should have a better response or at least know that it wasn’t your execution causing the program to fail.

Again, if you need help assessing your business foundation, we have an comprehensive assessment that is tailored specifically for you business.  Check out our Streamlining Your Business programs, or call us at (225) 341-4147.

Have You Tried Google Reader?

I had a friend recently suggest I write a blog post on Google Reader.  I thought I was the late bloomer, since I just discovered it about 6 months ago, but maybe there are others like me out there.  It is definitely worthy of mention since it has saved me tons of time keeping up with my favorite and most informative blogs. 

 

In order to describe Google Reader to you I went online to look up definitions and descriptions, however, they all sound overly complicated.  This is the gist of it – Google Reader is a tool that you can subscribe to all of your favorite blogs and keep them organized and read them in one place.  If you are reading a blog and want to remember it, instead of saving it as a favorite, you can save it to your Google Reader.  Many blogs now have a button to “subscribe” and then you pick the Google Reader Icon.  Or, on Google Reader you can add the url and it will begin showing past posts to that blog site.

 

I like Google Reader because:

 

• The dashboard is clear and easy to read.  You can see all of your subscriptions.
• It has a cool “trends” feature which shows you how often they update the blog, how often you read it, how often friends read it, etc.  This can help you understand how often to check it and may help you clear out ones you obviously have lost interest in.
• It also has a share feature that allows you to easily share your blog subscriptions with friends.

 

It’s easy to use.  No real instructions are needed.  I just click on things and find new features, however, they do have a Google Reader Blog (www.googlereader.blogspot.com ) , a twitter account (www.twitter.com/googlereader ) and a facebook fan page (www.facebook.com/googlereader?_fb_noscript=1 ) for tips.

 

How do you find Google Reader?

 

I found it by going to www.google.com and signing up for a free account.  I don’t use the gmail account for anything else.  I have enough email accounts.  Then look under the tab “more” and look for Google Reader.  It is that simple.

If you have any questions, please post them in the comments below.  If I don’t know the answer I will find out!

P.S. For other business tools I use in my own business check out our recommended business resources.

Five keys to a Rock Solid Business Foundation

Many business gurus and small business trainers will concur that building a foundation for your business is a first step.  Most entrepreneurs start out with an idea and in the entrepreneurial spirit go try it to see if it works.  We don’t set up systems, document procedures or even necessarily balance the checkbook.  In some cases, the idea never takes off or we lose interest and the lack of foundation doesn’t matter.  Actually, we saved a lot of time by not setting up all of these systems.  But, on many occasions, our business idea works.  What I mean is we try to sell a product or service and people actually start buying it.  Then the lack of foundation can cause a good idea to fail.  Let me repeat that.  The idea is good and you are achieving initial success, however, without systems and procedures you cannot keep up with the growth or your quality quickly begins to suffer.  Not having a foundation for your business is like building your business on sand, not rock.  If there is any rough sea or major wind, the sand will erode or blow away. And our business goes with it.  So what is building a foundation? I would categorize the slab and the building blocks of your foundation as:

Core values and culture:  This is the slab or the main foundation of your business.  Jesus said in Matthew 7:24-27

Therefore everyone who hears these words of mine and puts them into practice is like a wise man who built his house on rock.  The rain came down, the streams rose, and the winds blew and beat against that house; yet it did not fall, because it had its foundation on the rock.  But everyone who hears these words of mine and does not put them into practice is like a foolish man who built his house on sand.  The rain came down, the streams rose, and the winds blew and beat against the house, and it fell with a great crash.”

The bible tells us specifically that if we hear God’s word and don’t follow it, we are headed for trouble.  Jesus tells us to build our house on rock so we can weather the storms of life.  This includes our business.  If we only follow God’s will for our lives outside of our business, our business will not be on a firm foundation.  This means integrating your faith and beliefs into the culture and core values of your business.  Values like integrity, glorifying God in our work, helping others, not making money a God in our lives.  Build your business’ culture on your Christian values and you will have a strong foundation to build the rest of the framework of your business.

Money systems – we are called to be a good steward of the resources God provides.  Today we have tools, systems and procedures available to manage the cash flow and financial reporting of your business.  This includes a separate checking account, an accounting system like Quick Books, company credit cards, loans, quarterly tax payments, etc.  Make sure the tools are in place so you can exercise your stewardship in a Godly way.

People systems – we are called to love others as ourselves.  If we have that in mind when we build our team, the team will reflect our efforts.  It is expensive to hire employees and turnover in our team is even more costly.  Even small businesses need procedures for consistently interviewing, hiring and firing employees.  We all need policies on paid holidays, how many sick days/vacations days, do we provide maternity leave paid, do we share in insurance cost, what is our overtime policy, etc.  I think if we are employing a culture of Godly values, we will desire to be consistent and fair in our hiring, benefits, management, and sometimes firing of our employees.

Operational systems – This is more dependent upon the type of business you run, however, all business should document key procedures of the operations of their business so that new employees can more quickly be trained correctly and ensure consistency in quality of output.  Some businesses need automated systems such as point of sale, distribution, or customer contact management.  Many will set goals on how much output they expect or require from operators, salespeople, etc.

Marketing/Sales systems – the majority of small businesses implement what I call “roller coaster marketing”.  Roller coaster marketing is when we hustle and employ all of our marketing and sales efforts in a flurry until we get a big sale or a couple of new clients.  Then we don’t do any marketing until we finish the sale or need clients again.  A written marketing and sales plan consistently implemented will provide a pipeline of new sales or customers.

This is a brief description of the slab and four main building blocks to a rock solid foundation.  These four building blocks have many components and, although not complete, we have a checklist of the components for each of the four key building blocks.  Which of these components do you have set up in your small business?

Also check out our Streamlining Your Business Assessment if you need help identifying the best tools for your business and a partner to assist you in creating and documenting these foundational policies and procedures.

What I am Learning about Finding Services on the Internet!

I totally embrace the opportunity we all have to find information, education and services on the internet.  Since I have been working on it myself, I know how much time and energy it takes to market your services effectively on the internet.  I have also written and read many articles and books on working “on your business” not just “in your business”.  Conceptually I really do get it.  However, what I am noticing, or actually experiencing, is many internet service providers who may be effectively reaching people through their internet marketing, yet not effectively providing the service they are marketing.

I have experienced the following:

• A service provider charging my credit card yet never following up at all to deliver the service.
• An internet service provider who said that they did have experience in certain services and then when hired and given these tasks, did not make it happen. 
• Another that sold me an expensive assessment and then the assessment was just something free they got off of the web and the time was on selling me the ongoing program.
• Others that have not returned phone calls or followed up on things they committed to.

My normal writing style can be flip at times or at least I feel that I try to find the humor in stressful situations.  I am not adding any exclamations or personal remarks because this is serious to me.  I am a business coach to small businesses.  I believe customer service and quality of product/service is paramount to long-term success.  All of these internet service providers are small businesses.  I cannot envision long-term success for them, for myself or for you if we cannot balance the equation of marketing our business to gain clients or customers and effectively implementing our service.  Great work without clients doesn’t get a business anywhere.  Effective marketing and poor quality of product or service is worse.  You may not help anyone, but you are also not hurting anyone with the first scenario.  Being a small business you should understand how important it is that the money you invest for services be well spent.  We usually have limited budgets.

You may just be thinking that I need help in more effectively choosing service providers.  I won’t completely deny that.  However, with the amount of people offering services on the web and the time it takes to understand the differences and what is right for my business, the cost of procuring services becomes almost a deal breaker when I add my time and the risk.

So what am I learning about finding services on the Internet??

1. Ask for examples of their work, not just affirmation from them that they have experience.
2. Ask for a professional reference from other clients that have used their service in the past 60 days. (Not just testimonials on their website.)
3. Ask if they have a money back guarantee on their product and/or service.
4. Understand fully what it is you are purchasing.  If they don’t want to tell you about their service in enough detail for you to understand the deliverables, then just pass.

I will say that I have also had the pleasure of doing business with some incredible businesses that I work with online or have found on the internet.  They stand behind their product, their service is impeccable, and they deliver what they sell.  Although I risk leaving someone out, since this is such an important issue to me I want to tell you who these really great service providers are:

• Dr. Larina Case         Business Coach and Author      www.pascoaching.com
• Milana Leshinsky    The Bliss Factor/Coaching Millions    www.milana.com
• Erin Blaskie               VA Services             www.bsetc.ca
• Sara Straub                Graphic Artist – The Fae Group   www.thefaegroup.com

These small businesses market their businesses effectively and they deliver what they promise with excellent customer service.   This is the same integrity that CrossRoads Professional Coaching bases our mission upon.

I hope this helps other small businesses remember the importance of both “working on” and “working in” their business and I pray that those looking on line for services may learn from my rocky path and hopefully always receive value for their hard earned money.

Six Ways to Save Money in Your Business Now

I really believe that the best way to create profitability in a business is to grow the top line – that is increase revenues.  Cutting expenses can help you hang on longer, but this strategy will not grow your business.  That being said, it is still a tough economy and we need to be good stewards with our resources.  There are always ways to make wiser spending decisions or to pay less for the same product or service.  Here are a few you may want to check into:

1. Start with the phone bill.  Phone companies change programs and offer promotions all of the time.  But, guess what, they don’t call their current customers and tell them how they can save money.  If you call them though they will give you any and all current promotions and options.  If you haven’t checked in with your phone company in at least 6 months, start there.  This is both OFFICE and CELL phones!!
2. Go back to the phone bill.  Are you losing all of the phone lines?  Do you need multiple internet connections?  Do you make international calls?  When you have them review your programs start from scratch.  Tell them what you need, not necessarily what you have.
3. Get competitive bids for service vendors.  Again, don’t go overboard or spend to much time.  There is something to be said for continuity of service and working with suppliers that you have a relationship with.  But today there is an incredibly competitive environment.  If you get competitive bids, hopefully your current vendors will come out on top.  If they are much higher, make sure the bid is on a competitive service (meaning apples to apples comparison).  If they are higher and you do not see an added value in the service, bring it to the attention of your current supplier.  They will most probably match the bid if they value the relationship. 
4. Meet with your accountant to plan tax strategies for 2009.  Even if your accountant charges you a couple of hundred dollars for the meeting, it will probably save you significant ly more in tax dollars.  In 2008 there was a 50% bonus depreciation on qualifying new business assets.  After Hurrican Katrina there were various tax rebates.   See what opportunities are available in 2009 so you can keep more of your hard earned revenue.
5. Find business efficiencies that reduce labor costs and overtime.  Most small business have many manual and redundant processes.  By automating processes and eliminating rework, fewer labor hours are required to get the work done.  This will keep you from having to hire additional help as soon, reduce overtime costs, or eliminate unnecessary positions that can be utilized in other revenue producing areas.
6. Call vendors to ask for special payment terms.  This could be an opportunity in two ways.  Either ask for a discount if you pay more quickly or ask for extended terms so that you can earn money with your cash for longer.  Your company’s cash flow situation should drive the strategy on this.  Low cash flow go for extended payment terms.  Strong cash flow ask for discounted pricing for quick payment.

These are just a few opportunities I have seen frequently for many entrepreneurs to streamline their business.  I am sure there are many more.  This is what I call low-lying fruit.  They should be easy with minimal time investment.  If you know of others please post in the comments section.  I would love to pass on other savings opportunities to the small business community!

Basecamp = Project Management!

I recently read about a project management tool on someone elses blog – it is called BaseCamp and can be found at www.basecamphq.com.  They have great introduction videos that show you all of the features to the program and they have a 30 day free trial.  I signed up for the free trial and have spend a couple of days playing around in it.  So far, here are my initial comments:

• They allow unlimited # of users in every package which is great.  I set up projects for my clients and I can invite all of the contacts in the company that I want to participate. 
• It is very intuitive.  I was up and running immediately.  There were some features I could not find, but they may not have them.
• The visual appearance of the dashboard and the pages are crisp and clean.  Easy to read.  Logical in format.
• It includes a message board, file sharing,  milestones, to-do lists and a concise overview page.
• I can’t figure out if you can add times and dates to the to-do list items; however, you can add comments.
• You are also able to link to your Outlook or ICalendar and sync your milestones with your calendar.

I am liking it so far, and the basic plan is only about $24/mos.  They also have another program called Backpack which is more of a shared calendar, task list, and discussion board – an intranet for your business.  I added it today, but I think Basecamp is for me.  I will keep you posted. 

If you check it out, let us know what you think of the program.  Also, they have apps that will bring Basecamp to your Iphone.  I will let you know about that when I get to it.  Hope this is a tool that can help your business!