How to Combat External Forces Working against Your Business

April 13, 2011


In the previous post we highlighted external market forces that can drive you out of business if you are not careful. The changes in economy, competition and consumer habits have hurt many small business owners in the last few years and can bring down sales and profit for your small business too.
To be fair, these external forces impact both large and small business alike; however small business owners feel this impact in a more profound way. Also, the small business owners can feel the impact very quickly. After all, unlike large businesses they do not have large financial cushion to withstand the impact. They also have their personal and business lives intertwined with the business. This will make it hard not for themselves; but also for others around them, including spouse, children and friends.
How can small business owners prepare themselves to be able to withstand the impact better than their peers?
[Read more…]

Filed Under: Customers, Management, Operations Tagged With: , , ,

Why Embracing KISS Principle Leads to Happiness

April 6, 2011


KISS -Keep It Simple Stupid.
Many small business owners like to take the road less simple. If a task takes 2 steps to finish they will manage to stretch it to 10 steps. They are wired to think complex. We have pondered on the question for some time – when you are running a small business should you opt for a simple operation or a complex one?
You can see the examples of simple and complex operations in franchises as well. On one hand you have a pizza franchise such as Little Caesar’s – home of $5 Pepperoni Pizza with no delivery. On other side there is Pizza Hut with large number menu items and toppings and it not only has carry out; but also delivery and dine-in. Which one is easier operation to run?
There are number of reasons why you should try to keep things as simple as possible.
[Read more…]

Filed Under: Customers, Employees, Management, Operations, Sales Tagged With: , , , , ,

Divide and Conquer – How to Complete Large Projects

March 30, 2011


Are you one of those guys who are overwhelmed by the thought of completing large projects? You know who I am talking about, right? These are the folks who look at the amount of work needed to complete the project and can’t decide how or where to begin. Their mind is occupied by the thought number of tasks that need to be finished – all interconnected and interdependent; but are unable to take any action to move them forward. Finally, they throw up their hands in frustration and end up not accomplishing anything.
There is a better way to manage these large projects. It’s called – Divide and Conquer. The way it works it you start at the top and start dividing the project in smaller chunks; further refining those chunks into even smaller, easily manageable tasks and so on. Those who are trained in formal project management techniques can relate to this. Unfortunately, not all small business owners are trained to think this way.
So, how does divide and conquer work? Here are some of the techniques.
[Read more…]

Filed Under: Management, Operations Tagged With: ,

Do You have to be a Cook to Open a Restaurant?

March 23, 2011


Yesterday I came across this interesting article by Susan Reid at AmEx Open Forum about why you should stay within 2 degrees of separation when starting a business. She argues that you may end up feeling overwhelmed with everything you’ll need to learn just to get up-to-speed if you stray from 2 degrees of separation.
For the most part we agree with this. After all, there are number of benefits of staying within your comfort zone when it comes to starting a business – you have less of a learning curve; you can operate the business yourself and save on employee cost and most important you will enjoy what you are doing.
[Read more…]

Filed Under: Buyers, Management, Operations Tagged With: ,

Buy or Build? Buying Existing Business vs Building New one

March 20, 2011


Many buyers of small business are dismayed by the money they have to pay to buy an existing business. They think that they can build the same business from scratch at a much lower cost. And this is true. To understand why this is the case you need to know the concept of book value of a business versus its market value. Book value refers to the money you can get if you sell all of the business assets in the market. The market value is usually higher than book value and is a result of goodwill that is associated with the existing business. It is this goodwill that the buyers of existing business are paying extra for. The goodwill is a result of all the work that existing owner has done to bring the business to its current level.
While it is true that you can build a business from scratch at a lower cost; it comes with its own set of problems. You have to understand both sides of the buy vs. build equation before making a decision. Below we have highlighted pros and cons of buying an existing business as opposed to building a new one. You can make your decision after studying this and looking at your own situation.
[Read more…]

Filed Under: Buyers, Management Tagged With: ,

How to succeed in running absentee business

March 13, 2011


Small business owners run their business absentee for variety of reasons. Some owners are still holding full-time job while starting a business. Others have more locations than they can handle themselves. While still others just don’t want to spend their entire time on the business. Our estimate is that while majority of small businesses are owner operated, there are number of businesses that are run absentee for the reasons mentioned above.
While it is possible to run and succeed in absentee owner business you need to be aware of the problems that arise when you are doing so. Ignoring these problems can lead to deterioration and even disaster for your business. The most common issue in running the business absentee is that you may not be aware of what’s going on with your business or at least not to the same degree as when you are present 24×7. Even if you come to know about the issues it may be too late to act on. The issues can surface in all areas of the business ranging from operations, quality, purchasing and customer service.
[Read more…]

Filed Under: Buyers, Employees, Management, Operations Tagged With: , , ,

Improve your Sales with Up Selling

March 6, 2011


“Would you like fries with that?” – We have all heard this while ordering burger at a fast food place. How many times have you answered it with – “sure”? Well, this is the power of up selling. In its simplest form, it is just a matter of asking customers if they want to add more items to their order. In a more subtle form, it could be something like placing a complementary item to the one that you intend to purchase in a grocery store and enticing you to buy it.
If you are not taking advantage of up selling and cross selling opportunity in your business you are probably losing 20-30% of potential sales. Some companies have really mastered the techniques of up selling by making customers buy additional items at a high price. For example, Ford has increased the average selling price of its cars by making customers want and pay for the extra options in their basic cars. When Apple introduced its next generation of iPad on March 3 it also showed a screen cover that will be sold for $39 for basic model and $69 for leather version. Can you imagine what their profit margin is on these items?
[Read more…]

Filed Under: Customers, Employees, Management, Operations, Sales Tagged With:

Do you have what it takes to be Small Business Owner?

March 2, 2011


Small business owners are a special breed. They don’t like to sit still or take orders from others. They also don’t like to stop even when they have become successful or when they have met with failure. That’s why the term serial entrepreneurs – once an entrepreneur; always an entrepreneur.
Many people who have held job for their life dream of owning a small business – either out of frustration with their current job or because they have lost their job and can’t find one in this difficult economy. They think that just because they have a strong desire to be a small business owner they will succeed. While having a strong desire is a good start; it takes more than that to be a successful business owner. Our experience has shown that the success in small business is dependent on a combination of factors including heredity, upbringing, determination, working style and external support.
[Read more…]

Filed Under: Buyers, Management, Operations Tagged With: ,

How to plan for employees leaving without warning

February 28, 2011


For small business owners employee attrition is a fact of life. It is estimated that the annual attrition runs as high as 100% for some types of small businesses; particularly the ones that employ hourly workers! This means that you will not have the same set of employees at the end of the year as the ones you started with. This kind of turnover not only increases your cost in the form of hiring and training; but it may also reduce sales by affecting the quality and customer service.
While you can try to keep your employees motivated and use these techniques reduce turnover; the fact remains that the employee turnover will remain high if you are in type of business that employs hourly workers. My brother, who owns a coffee shop, complains that he always fears a call from an employee who will call him to say he is not going to show up for work because he has found another job. It always happens when he is not able to find any replacement on a short notice forcing him to rush to the business from wherever he is.
While you will not be able to prevent your employees from leaving on a short notice; the next step is to try to mitigate the impact on your business as a result by taking certain steps beforehand. Below we have outlined some steps you can undertake that will help you take care of business even when your employees leave suddenly.
[Read more…]

Filed Under: Employees, Management, Operations Tagged With: ,

Proven Techniques to Deal with Customer Complaints

February 21, 2011


For small business owners (and for large ones too) customer complaints is a fact of life. Every business runs into few customers who are not happy with the service or product or something else. The complaints in and of themselves are not going to hurt your business much. It is how you deal with them that determines how they will impact your future business.
We have heard many business owners say – “but I know that this customer is wrong. He/she is just trying to get free stuff or get discount by complaining and making a scene.” And they may be right; but does it really matter who is right or who is wrong? At the end of the day, it is about who has the power to hurt your future business. It is these customers who are complaining – genuine or sham.
So, is there anything you, as a small business owner, can do to alleviate this problem? Obviously, you cannot stop customers from complaining; although you can reduce the number of genuine complaints by providing excellent products and services. Based on our experience in running multiple restaurants we have come up with these guidelines to deal with customer complaints and mitigate their impact on the business.
[Read more…]

Filed Under: Customers, Management, Operations Tagged With: