Tag Archives: Keys to Success

Adventures in Self-Publishing

Do you have an idea for a book? Unless you can find a traditional publisher to fund it (no small feat) your only alternative is to self-publish. There are essentially no standards to what can be self-published. Of course, you fund the project yourself. For an overview of self-publishing see http://www.sfwa.org/other-resources/for-authors/writer-beware/pod/.

There are several companies that offer packages for on the order of $4,000. I used iUniverse out of Bloomington Indiana. For one’s investment, one gets the book ID (ISBN), the style of the book and delivery of a print-on-demand (POD) copy. An alternative is to print offset, a process that runs in quantity. With this you get into the inventory management business.

Few authors get by with the standard package. The publisher’s marketing resources all cost extra and it seems to me that they were a total waste. With offset there are also warehouse fees. The average self-published book sells 250 copies over its lifetime. In addition the eBook competes with the hard copy.

I made a terrible mistake, aided by misinformation about royalties from my book representative at iUniverse, and printed 2,000 copies of my book. For information on the book see https://www.jbv.com/8steps. This site also contains a link to purchase the book. After I realized the mistake I tried to back out, and the vendor was extremely uncooperative. I took them to small claims court and got close to half of my purchase returned.

So, what advice would I give? Don’t print offset. Live with the POD even though the return is less. Do more research than I did; there are less expensive alternatives, particularly if you are comfortable managing your own marketing. Choose an underserved topic; mine is about business startup and the selection is huge.

Entrepreneurial Career Consulting

The following is excerpted from Careers in Entrepreneurship, http://careers-in-business.com/en.htm. If you find it overwhelming, consider entrepreneurial career consulting. There are sources of free consulting such as SCORE, http://www.score.gov.

Entrepreneurs start new businesses and take on the risk and rewards of being an owner. This is the ultimate career in capitalism – putting your idea to work in a competitive economy. Some new ventures generate enormous wealth for the entrepreneur. However, the job of entrepreneur is not for everyone. You need to be hard-working, smart, creative, willing to take risks and good with people. You need to have heart, have motivation and have drive.

There are many industries where wealth creation is possible be it the Internet and IT, personal services, media, engineering or small local business (e.g., dry cleaning, electronics repair, restaurants).

But there is a downside of entrepreneurship too. Your life may lack stability and structure. Your ability to take time off may be highly limited. And you may become stressed as you manage cash flow on the one hand and expansion on the other. Three out of five new businesses in the U.S. fail within 18 months of getting started.

It’s important to be savvy and understand what is and is not realistic. The web is chock-full of come-ons promising to make you rich. Avoid promotions that require you to pay up front to learn some secret to wealth.

Look for inefficiencies in markets. Places where a better idea, a little ingenuity or some aggressive marketing could really make a difference. Think about problems that people would pay to have a solution to. It helps to know finance. It’s a must to really know your product area well. What do consumers want? What differentiates you from the competition? How do you market this product?

A formal business plan is not essential, but is normally a great help in thinking through the case for a new business. You’ll be investing more in it than anyone else, so treat yourself like a smart, skeptical investor who needs to be convinced that the math adds up for the business you propose starting.

John B. Vinturella, Ph.D. has over 40 years’ experience as a management and strategic consultant, entrepreneur, and college professor. He is a principal in the business opportunity site jbv.com and its associated blog. John recently released his latest book, “8 Steps to Starting a Business,” available on Amazon.

Franchise Business Consultant Service 2

A franchise is a continuing relationship between a franchisor and a franchisee in which the franchisor’s knowledge, image, success, manufacturing, and marketing techniques are supplied to the franchisee for a consideration. This consideration usually consists of a high “up-front” fee, and a significant royalty percentage, which generally require a fairly long time to recover.

Here are some statistics about the industry (http://www.azfranchises.com/quick-franchise-facts/):

• There are an estimated 3,000 different franchisers across 300 business categories in the U.S. which provide nearly 18 million jobs and generate over $2.1 trillion to the economy.

• Franchises account for 10.5 percent of businesses with paid employees; almost 4% of all small businesses in the USA are franchises.
• It is estimated that the franchise industry accounts for approximately 50% of all retail sales in the US.

• The average initial franchise investment is $250,000- excluding real estate; the average royalty fees paid by franchisees range from 3% to 6% of monthly gross sales.

Franchising offers those who lack business experience (but do not lack capital) a business with a good probability of success. It is a ready-made business, with all the incentives of a small business combined with the management skills of a large one. It is a way to be “in business for yourself, not by yourself.”

Franchises take many forms. Some are simply trade-name licensing arrangements, such as TrueValue Hardware, where the franchisee is provided product access and participation in an advertising cooperative. Some trade name licenses, particularly in skin-care products, are part of a multi-level marketing system, where a franchisee can designate sub-franchisees and benefit from their efforts.

Others might be distributorships, or manufacturer’s representative arrangements, such as automobile dealerships, or gasoline stations. It could be Jane’s Cadillac, or Fred’s Texaco; the product is supplied by the franchisor, but the franchisee has a fair amount of latitude in how the business is located, designed and run. The franchisor will frequently specify showroom requirements and inventory level criteria, and could grant either exclusive or non-exclusive franchise areas.

The most familiar type of franchise, however, is probably the “total concept” store such as McDonald’s. Pay your franchise fee, and they will “roll out” a store for you to operate.

The advantages can be considerable. The franchise fee buys instant product recognition built and maintained by sophisticated advertising and marketing programs. The franchisor’s management experience and depth assists the franchisee by providing employee guidelines, policies and procedures, operating experience, and sometimes even financial assistance. They provide proven methods for determining promising locations, and a successful store design and equipment configuration. Centralized purchasing gives large-buyer “clout” to each location.

The large initial cost can be difficult to raise. The highly structured environment can be more limiting than it is reassuring. Continuing royalty costs take a significant portion of profits. You may wish to use a franchise business consulting service. Several small business periodicals evaluate and rank franchise opportunities. There are now several franchise “matchmaking” firms who can assist in the evaluation process.

How do you choose among all the available franchises? Does it complement your interests? Even if you hire someone to manage the business, expect to spend a lot of time with the operation. Is the name well known? If not, what are you paying for? Is the fee structure reasonable, and all costs clearly described?

Is the franchisor professional? Evaluate them on the clarity of the agreement, and how well your rights are protected, the strength of their training and support program, and their commitment to your success. Be sure to talk to current franchisees about their experiences. Beware of a franchisor committed to a rate of growth that exceeds their ability to manage; they may not be sufficiently interested in the sales they have already made.

Is a franchise a sure path to instant riches? Is it the only hope for independent firms in today’s market? Can Jerry’s Quick Oil Change compete with SpeeDee? Does the franchise deliver business that we might not have gotten anyway? Is it really entrepreneurship; did I go into business or did my money?

This is excerpted from “8 Steps to Starting a Business.” See https://www.jbv.com/8Steps

Market Research Plan Consultant

Market Research Plan Consultant

From an ad for Ground Floor Partners (https://groundfloorpartners.com/market-research/ )

Accurate market research is the foundation for every business or marketing plan (https://groundfloorpartners.com/marketing-plans/) Ground Floor Partners can help you gain a much deeper understanding of:

• market opportunities

• existing customers

• prospects

• competitors

• employees

• industry trends

• environmental or regulatory risks

We Help You Focus

Large market research firms research specific industries and generate standardized industry reports. The problem for most small businesses is that very few of them fit neatly into these industry categories. That’s where we come in. Instead of generating canned industry reports, everything we do is customized for each client.

• Effective marketing is all about targeting and focus. Better targeting means less waste, lower expenses, and higher profits. Some more examples of the kinds of market research we do for our clients:

• Conduct a comprehensive market opportunity assessment – Assess your markets and current market positions (market size and share of market, channels, growth trends, threats, and opportunities)

• Identify customer needs and determine which market segments hold the most, and least, attractive profit potential.

• Find out what customers and prospects think about your new customer service procedures, your sign-up process, your newest product, your new tag-line, your invoicing process, etc.

• Identify regulatory, political, and demographic trends that could create problems – and opportunities – for your business.

• Develop a thorough understanding of competitors – Who leads and who follows in this space? How much market share does each player have? What are their strengths and weaknesses? How do they differentiate themselves? How does their pricing strategy compare with yours? How do they market their products and services? How does their brand equity compare to yours?

• Identify opportunities to use your strengths and exploit competitor weaknesses.

Business Valuation Service Industry

If you are considering buying or selling a service industry business you need to start with an evaluation. This can be very complex and the use of a consultant can often give you a value that you can easily defend. The following article outlines the process, and is extracted from FBB Group Ltd: https://www.fbb.com/company-information/recentarticles/how-to-value-a-service-business.

Business Valuation Service Industry

Service businesses run the gamut, from accounting firms, to drycleaners, to janitorial services, engineering, public relations firms, and many other options. Despite their disparity, they all have one thing in common: offering a service to clients.

By their nature, service businesses don’t have much in the way of tangible assets, making EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), for larger businesses, or SDE (Seller’s Discretionary Earnings), for smaller businesses, multiples typically lower than manufacturing businesses. Generally, the smaller the service business, the lower the SDE multiple.

Valuing a service business involves many factors – a tidy, one-size-fits-all formula doesn’t exist. That being said, sellers should recognize that buyers will be particularly interested in certain characteristics for most service businesses.

Normally, valuation is based on several criteria, including: history of profitability, cash flow, overhead, intellectual property, company reputation, number of years in business, opportunities for further growth and added profits, stability of key employees/management team, and customer diversification.

Further consideration goes to whether the company can add more services. Value increases when a service business offers something unique, especially in a growing industry or market. These industries include rapidly growing service sectors, such as: internet/web-based or cloud-computing services and information technology. Relocatable, internet-based businesses with low overhead are particularly attractive due to scalability. Also, the ability for a business to be operated from anywhere increases the number of prospective purchasers – which increases the business value due to higher demand.

In addition, companies with a large recurring monthly revenue stream (for example, when a high percentage of clients are signed up for automatic bill pay each month) will command more value. Examples include alarm companies or website/email-hosting companies that have monthly auto bill pay from clients. Such a consistent revenue stream impresses both buyers and lenders alike.

Other crucial areas for valuation include intellectual property, ongoing relationships with clients, and having a good team in place – ensuring the company will retain its competitive edge, even when the seller (who typically drives new and repeat business) leaves.
Without significant capital assets, key customers and employees are critical. A strong management team adds to the value of a service business (often more so than in manufacturing) and, conversely, it can detract from value when there’s a poor or inexperienced team.
Another measure of value may include the amount of market share. Companies that provide a niche service and don’t have much, if any, competition will command higher multiples of value.

Within the industry, B2B (business-to-business) companies generally command more value than B2C (business-to-consumer). For both, however, client-base diversity commands value – more medium- or small-sized clients being preferable to a few large clients. With low customer concentration, financial risk is reduced. If one client, for instance, cancels a contract or goes out of business, the service business remains financially viable.

Although contrary to an owner’s instinct, businesses command higher value when they’re not dependent on the owner’s personal relationship with clients. If the owner generates a substantial amount of revenue versus the other employees in total, the business could be at risk after the sale. Service businesses are more valuable when customer relationships are readily transferrable: as customers of a drinking-water delivery or HVAC service business don’t usually care who the company’s owner is, for example. Also, keep in mind that seasonal businesses, due to their cyclical nature, have lower value.

Cash flow is “king,” so the primary consideration for bankers is a buyer’s ability to stay current on loans for acquisitions and working capital. Banks focus heavily on reliable cash flow for service businesses, given that there is little, to no, collateral within the service business itself.

Whether you’re in the market to buy or sell, understanding the various considerations of valuation for a service business will make the process smoother and increase the probability of a more successful transaction.

John B. Vinturella, Ph.D. has over 40 years’ experience as a management and strategic consultant, entrepreneur, and college professor. He is a principal in the business opportunity site jbv.com and its associated blog. John recently released his latest book, “8 Steps to Starting a Business,” available on Amazon.

Raising Entrepreneurial Capital

This writer, with Dr. Suzanne Erickson, is co-author of the book “Raising Entrepreneurial Capital.” The second edition of the book is currently published by Elsevier.

Raising Entrepreneurial Capital guides the reader through the stages of successfully financing a business. The book proceeds from a basic level of business knowledge, assuming that the reader understands simple financial statements, has selected a specific business, and knows how to write a business plan. It provides a broad summary of the subjects that people typically research, such as “How should your company position itself to attract private equity investment?” and “What steps can you take to improve your company’s marketability?”

Much has changed since the book was first published, and this second edition places effects of the global recession in the context of entrepreneurship, including the debt vs. equity decision, the options available to smaller businesses, and the considerations that lead to rapid growth, including venture capital, IPOs, angels, and incubators. Unlike other books of the genre, Raising Entrepreneurial Capital includes several chapters on worldwide variations in forms and availability of pre-seed capital, incubators, and the business plans they create, with case studies from Europe, Latin America, and the Pacific Rim.

Here is how one reviewer evaluates the book:

“I have been an entrepreneur, venture investor or venture capitalist most of my 30-year professional business career and have been involved in the startup of over 40 companies, some very successful and some not so successful. After reading Raising Entrepreneurial Capital, my only regret is that I did not have access to this book of business knowledge at the beginning of my career. Most of the lessons I learned on the job (many the hard way!) trying to raise money, every way known to man, are in this book and I find it amazing how much of it is accurately covered in depth by the authors. It will be a great textbook for teaching entrepreneurial finance. I have never seen a book that covers everything one needs to know in such great depth. This book should be required reading for anyone thinking about starting up a new business. It will save a lot of wasted time and heartache for a new entrepreneur.”

— Kent L. Johnson, Chairman and Managing Director, Alexander Hutton Venture Capital, Chairman of the Advisory Board of Seattle University’s Entrepreneurship Center.

John B. Vinturella, Ph.D. has over 40 years’ experience as a management and strategic consultant, entrepreneur, and college professor. He is a principal in the business opportunity site jbv.com and its associated blog. John recently released his latest book, “8 Steps to Starting a Business,” available on Amazon.

Consulting for Case Study

Hubspot suggests that “Earning the trust of prospective customers can be a struggle. Before you can even begin to expect to earn their business, you need to demonstrate your ability to deliver on what your product or service promises. Sure, you could say that you’re great at X, or that you’re way ahead of the competition when it comes to Y. But at the end of the day, what you really need to win new business is cold, hard proof.

One of the best ways to prove your worth is through compelling case studies. When done correctly, these examples of your work can chronicle the positive impact your business has on existing or previous customers.”

It can be advantageous to use a consultant to prepare the case study. In addition to saving your time the consultant will be objective.

Kissmetrics describes why a case study can be effective:

“People enjoy reading a story. A great case study will allow someone to really get to know the customer in the case study including:

• Who is the sample customer and what do they do?

• What were the customer’s goals?

• What were the customer’s needs?

• How did you satisfy those needs and help the customer meet their goals?

A final thing you could do is simply follow up with the customer in the case study and update your case study a few months down the road to show how your products / services are continuing to have long term benefits for the customer. This would give readers the opportunity to see that your goal is not only to help with immediate needs, but also to ensure long term results.”

John B. Vinturella, Ph.D. has over 40 years’ experience as a management and strategic consultant, entrepreneur, and college professor. He is a principal in the business opportunity site jbv.com and its associated blog. John recently released his latest book, “8 Steps to Starting a Business,” available on Amazon.

Entrepreneurship Knowledge Services

For many businesses their competitive edge lies in their knowledge. Entrepreneurship Knowledge Services offer a way to maximize your advantage. The Canada Business Network expands upon this concept:

What Is Knowledge In a Business?

Using knowledge in your business isn’t necessarily about thinking up clever new products and services, or devising ingenious new ways of selling them. It’s much more straightforward.
Useful and important knowledge already exists in your business. It can be found in:

• the experience of your employees

• the designs and processes for your goods and services

• your files of documents (whether held digitally, on paper or both)

• your plans for future activities, such as ideas for new products or services

The challenge is harnessing this knowledge in a coherent and productive way.

Existing forms of knowledge

• You’ve probably done market research into the need for your business to exist in the first place. If nobody wanted what you’re selling, you wouldn’t be trading. You can tailor this market knowledge to target particular customers with specific types of product or service.

• Your files of documents from and about customers and suppliers hold a wealth of information which can be invaluable both in developing new products or services and improving existing ones.

• Your employees are likely to have skills and experience that you can use as an asset. Having staff who are knowledgeable can be invaluable in setting you apart from competitors. You should make sure that your employees’ knowledge and skills are passed on to their colleagues and successors wherever possible, e.g. through brainstorming sessions, training courses and documentation. See the page in this guide: create a knowledge strategy for your business.

Your understanding of what customers want, combined with your employees’ know-how, can be regarded as your knowledge base. Using this knowledge in the right way can help you run your business more efficiently, decrease business risks and exploit opportunities to the full. This is known as the knowledge advantage.

BASIC SOURCES OF KNOWLEDGE

Your sources of business knowledge could include:

• Customer knowledge – you should know your customers’ needs and what they think of you. You may be able to develop mutually beneficial knowledge sharing relationships with customers by talking to them about their future requirements, and discussing how you might be able to develop your own products or services to ensure that you meet their needs.

• Employee and supplier relationships – seek the opinions of your employees and your suppliers – they’ll have their own impressions of how you’re performing. You can use formal surveys to gather this knowledge or ask for their views on a more informal basis.

• Market knowledge – watch developments in your sector. How are your competitors performing? How much are they charging? Are there any new entrants to the market? Have any significant new products been launched?

• Knowledge of the business environment – your business can be affected by numerous outside factors. Developments in politics, the economy, technology, society and the environment could all affect your business’ development, so you need to keep yourself informed. You could consider setting up a team of employees to monitor and report on changes in the business world.

• Professional associations and trade bodies – their publications, academic publications, government publications, reports from research bodies, trade and technical magazines.

• Trade exhibitions and conferences – these can provide an easy way of finding out what your competitors are doing and to see the latest innovations in your sector.

• Product research and development – scientific and technical research and development can be a vital source of knowledge that can help you create innovative new products – retaining your competitive edge.

• Organizational memory – be careful not to lose the skills or experience your business has built up. You need to find formal ways of sharing your employees’ knowledge about the best ways of doing things. For example, you might create procedural guidance based on your employees’ best practice. See the page in this guide: create a knowledge strategy for your business.

• Non-executive directors – these can be a good way for you to bring on board specialized industry experience and benefit from ready-made contracts.

EXPLOITING YOUR KNOWLEDGE
Consider the measurable benefits of capturing and using knowledge more effectively. The following are all possible outcomes:

• An improvement in the goods or services you offer and the processes that you use to sell them. For example, identifying market trends before they happen might enable you to offer products and services to customers before your competitors.

• Increased customer satisfaction because you have a greater understanding of their requirements through feedback from customer communications.

• An increase in the quality of your suppliers, resulting from better awareness of what customers want and what your staff require.

• Improved staff productivity, because employees are able to benefit from colleagues’ knowledge and expertise to find out the best way to get things done. They’ll also feel more appreciated in a business where their ideas are listened to.

• Increased business efficiency, by making better use of in-house expertise.

• Better recruitment and staffing policies. For instance, if you’ve increased knowledge of what your customers are looking for, you’re better able to find the right staff to serve them.

• The ability to sell or license your knowledge to others. You may be able to use your knowledge and expertise in an advisory or consultancy capacity. In order to do so, though, make sure that you protect your intellectual property.”

Business Planning Overview

The purpose of the business plan is to recognize and define a business opportunity, describe how that opportunity will be seized by the management team, and to demonstrate that the business is feasible and worth the effort.

The successful entrepreneur is generally more inclined, once a business idea is selected, to sharpen the concept by a detailed planning process. The result of this step is a comprehensive business plan, with its major components being the marketing “mix”, the strategic plan, operational and logistical structures, and the financial proposal. The purpose of the business plan is to recognize and define a business opportunity, describe how that opportunity will be seized by the management team, and to demonstrate that the business is feasible and worth the effort.

The business plan is the “blueprint” for the implementation process. It focuses on the four major sub-plans: marketing, strategy, operational/logistic, and financial. While the business plan often goes through some revision, it generally represents a rather advanced stage in the planning process. The primary product or service to be offered, based on the results of the market research, should be determined.

Whether the business will be a start-up, purchase of an existing business or a franchise should certainly be firm at this point. Often, a specific business location is indicated, or at least a rather specific area.

Time estimates in a business plan should allow for meeting all the necessary regulatory requirements and acquisition of permits to get to a “customer-ready” condition. The amount of funding required and a general approach to raising these funds should be determined. Marketing mix issues focus on how the product or service is differentiated from the competition.

A business can differentiate itself on any of what are often referred to as the “four P’s” of marketing: product characteristics, price structure, place or method of distribution, and/or promotional strategy.

Strategic issues relate broadly to the company’s mission and goals. Every venture must continually assess its strengths and weaknesses, the opportunities to be seized, and any threats to the success and plans of the business. Operational issues relate to company structure, and the scope of the business. The operational plan addresses tangible items such as location, equipment, and methods of distribution. Decisions on these issues largely determine startup costs.

The financial proposal includes an estimate of the amount of money needed to start the venture, to absorb losses during the start-up period, and to provide sufficient working capital to avoid cash shortages. It projects sales and profitability over some period into the future, generally 3 to 5 years. Where outside funding is sought, it also describes distribution of ownership of the venture and methods of debt repayment and/or buyback of partial ownership.

Where implementation of the plan requires participation of lenders and/or investors, the plan must clearly and convincingly communicate the financial proposal to the prospective stakeholders: how much you need from them, what kind of return they can expect, and how they can be paid back. Many entrepreneurs insist that their business concept is so clear in their heads that the written plan can be produced after start-up; this attitude “short-circuits” one of the major benefits of producing the plan. The discipline of writing a plan forces us to think through the steps we must take to get the business started, and, to “flesh out ideas, to look for weak spots and vulnerabilities”, according to business consultant Eric Siegel.

A well-conceived business plan can serve as a management tool to settle major policy issues, identify “keys to success”, establish goals and check-points, and consider long-term prospects. The plan must realistically assess the skills required for success of the venture, initially and over the long run, and match the skills and interests of the team to these requirements. Test the plan, and an accompanying oral presentation, on friends whose business judgment you value. Let them assume the role of a prospective investor or lender.

John B. Vinturella, Ph.D. has over 40 years’ experience as a management and strategic consultant, entrepreneur, and college professor. He is a principal in the business opportunity site www.jbv.com and its associated blog. John recently released his latest book, “8 Steps to Starting a Business”, available on Amazon.