Category Archives: Starting a Business

Market Research, Starting a Business

Rubik’s Cube and Market Research

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rubix-cubeA few years ago I received a Rubik’s Cube as a gift, and couldn’t put it down until I learned how to solve it. After the novelty wore off I forgot how until a cube fell into my hands last year and I relearned the solution.

Although I can take a messed up cube and put all the squares back into the right places, I really didn’t’ solve it myself. I simply took the time to learn a few sequences that were developed by others. Yet, to those who don’t know how to solve the cube, it looks almost magical.

What does a Rubik’s Cube have to do with market research? Well, I’ve noticed that during the last couple of sequences of the solution a cube looks wildly messy, like you’ve made it worse rather than better. But if you stick to the plan and follow the procedures, just a few spins later all the coloured squares are back in place – without peeling the coloured stickers off and moving them!

Actually, the Rubik’s Cube and market research have a few similarities:

  1. For the uninitiated, both tasks can seem impossible.
  2. Once you learn the method, what appeared to be impossible becomes achievable.
  3. Until you learn how, you can waste a lot of time spinning in circles and not be any closer to the solution.
  4. The first time is the most difficult. Once you have learned how, it’s easier to repeat.
  5. Those who don’t know how will usually be amazed when someone else does.
  6. The majority of people will never learn to solve the Rubik’s Cube, and most will not take time to learn how to research a business idea.
  7. Rather than learning the processes that make it easy, most people will invest time trying things that don’t work. Fine for playing with a cube, but business opportunities don’t always offer the luxury of enough time to learn by trial and error.

If you’re researching a business idea, there are times when things tend to get real messy. It can be time consuming and stressful – sometimes there is just seems to be too much information, making it difficult to connect the dots. No matter how confusing it gets, the solutions and answers to your questions are usually just around the corner.

The main difference between the Rubik’s Cube and market research is that the latter is useful. Effective market research can lay the groundwork for a lucrative business and even launch you into working at something you love to do. It is your cheapest form of insurance against losing equity you might invest in a business venture. At best, the cube might provide an opportunity to wax philosophical about market research.

Entrepreneurship, Starting a Business

Perseverance is the Key to Small Business Success

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successPerseverance is a cornerstone to all business success; in its absence, many new business owners strike out before getting a chance to hit that cherished home run. Success is determined by your drive to succeed, how hard you’re willing to work to get what you want, and having the patience and endurance to stick with your vision until it either bears fruit or proves to be a bad idea.

Perseverance is never easy. The way never seems to be straight forward or clear. It’s up to each entrepreneur to know whether to hold or fold.

It’s not surprising that many owners cut and run just short of success. The path to business success is littered with traps, including disgruntled customers, cash flow shortfalls, burnout, economic downturns, failed partnerships, plain old bad business ideas, and unworkable business models. These are just a few of the demons faced by business owners as they run the gauntlet.

Business killers can beat an entrepreneur down, opening the dark door to a business failure. Most issues can be remedied, and most failing businesses can be turned around if the owner has the vision and the drive to stay the course.

As always, it’s easy to look at bad situations and shout out remedies, but for those mired in a business, the view can be blurred and it’s sometimes harder to see solutions.

For the average working person, economic survival is always a driver; lack of money is easily a top reason to jump ship. Family problems trigger a number of other business failures. Debauchery, overspending, plain old laziness—there’s never a shortage of reasons to stray from your business plan. Only the entrepreneur in charge can identify what’s truly most important and therefore the right path for him or her to follow.

In The Dip, A Little Book That Teaches You When to Quit (And When to Stick), Seth Godin writes about how those who aspire to become the best must stay focused and go through incredible hardship to reach their goal. He also speaks to the importance of dropping the losers, having the courage to discontinue projects or directions that prove to be duds. This puts pressure on those who tackle long-term goals or aspire to any sort of greatness, because the critic within you will always question whether you’re headed for success or setting yourself up to look like an idiot.

So, how much perseverance is enough? That is something each business owner must decide for himself. Small business owners, particularly start-ups, walk this tightrope every day in the life of the enterprise.

Entrepreneurship, Owning a Business, Starting a Business

What Business Planning Is Not

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Carved-in-StoneAfter reading an avalanche of articles on what a business plan should be, I’ve decided it might be helpful to write one about what a business plan should not be. The topic of business planning is sure to incite a lot of rhetoric and passion, whether or not you believe it to be a useful endeavor.

Even with all the hype there are misconceptions about what a business plan should or shouldn’t be. The poor old business plan is expected to do a lot for business owners. It’s little wonder that some people doubt the validity of the exercise. Here is what a business plan is not:

1. A Business Plan is Not a Tome. I’ve seen business plans ranging from a couple pages to over 200. Rarely should a business plan be more than 20 pages plus attachments; shorter is even better. If lifting the printed version of your business plan leads to a herniated disc in your lower lumbar region, or if it takes any more than 4 guys to carry it into your banker’s office, you’re probably overachieving. Wordy tomes are never read. The people who have to read the plans and make decisions are usually very busy. They will appreciate your efforts to keep the plan clear, simple and succinct.

2. A Business Plan is Not a Business. Delusional folks tend to believe that writing a big fat business plan will get them customers and sell products. Only the greenest of newbies could think the work is done once the plan is written and printed. That’s when the real work begins.

3.  A Business Plan is Not a Guarantee of Success. A beautifully fashioned business plan is no assurance of business success whatsoever. No matter how cleverly crafted the narrative is, or how gorgeous the graphs are, or how dazzling the charts; nor does it make a difference how mouth-watering the financial projections are.

4. A Business Plan is Not a Substitute for a Bad Business Model. If you’re business model can’t deliver the goods to customers in a cost-effective, timely way, the business can’t succeed. No amount of business planning will compensate for a faulty business model.

5. A Business Plan is Not a Substitute for Street Smarts. Great business owners think on their feet. A business plan is a plan, not to be confused with the actions that fill a business owner’s day. Planning done right should result in setting strategy and avoiding some of the obvious traps along the way, but it won’t protect idiots from the impact of bad decisions in day to day operations. Your business plan will not protect you from bad business practices or pathetic personal conduct.

6. A Business Plan is Not a Complex, Time Sucking Activity. If you can’t blaze your way through a business plan in 2 to 4 weeks, you’re probably drilling too deep. In fact, many business plans can be blasted together much more quickly. Of course, the amount of time needed will vary according to the size and scope of the business, the type of business, the owner’s availability to work on the plan, how long it takes to build and test a prototype, and a whole lot of other factors. If your business plan eats up more than a couple months of your life, you’re probably getting way too deep, worrying too much, and procrastinating. Get it done and get yourself in front of customers.

7. A Business Plan is Not a Fix for Abysmal Personal Conduct. Planning won’t compensate for bad judgment. Forecasting is a powerful planning tool that can reveal whether or not your business has a chance of surviving or being profitable. No forecast can counteract the devastation that occurs when the owner continually removes too much money.

8. A Business Plan is Not Just for Owners Who Need Money.

A business plan can open the door to a loan or help attract an investor, but by far the biggest benefit of business planning is the knowledge an owner will gain from the researching and planning. The least understood benefit of business planning is the liberating and illuminating effects of writing about your business. You can’t help but strengthen your understanding and resolve when you dispel your assumptions; write your business description; write your vision, strategy, and goals; and remove the mystique from your revenues and expenses. The power of writing has more to offer the business owner than simply attracting a loan or investor.

9. A Business Plan is Not Etched in Stone. You’ll base your plan on a number of assumptions and you’ll build in buffers and safety factors. Your business plan will help you set parameters, but it won’t enable you to pin-point a precise path to success. In fact, many elements of your business plan will change the second you step into business. A business plan is a roadmap to your envisioned success. A map will not get you to a target; it’s the actions you take and the adjustments you make along the way that get you from your starting point to your cherished destination.

A business plan is just a plan. It’s not to be feared or revered. It certainly shouldn’t be put on a pedestal or parked on a shelf and ignored. A business plan is a living document that should be reviewed and revised as the business weaves and bobs its way through the marketplace. A business plan, providing you do it yourself, is the least expensive, most powerful tool available for taking control of your business and your financial future.

 

Small Business Funding, Starting a Business

Are You Ready to enter the Dragon’s Den?

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Money-Dragon The Dragons are coming to Prince George, BC on January 25th. Are you ready to make your pitch? The following are tips I’ve gleaned from watching the Dragon’s Den and Shark Tank programs. Each time the Dragons come to town a lot of entrepreneurs dream of running the gauntlet. Here are a few things to take in consideration before sauntering in to pitch the Dragons.

  1. You’d better have a product or service to sell. Take a page from the Kevin O’Leary School of Business – 1) Get a patent 2) Sell the patent 3) Collect royalties for the remainder of all time. If you’re selling unpatented widgets that can be copied and replaced at one tenth the cost, you’re going to agitate Mr. Wonderful and bring down thunder and abuse. Not what anyone hopes for when tiptoeing into the Den.
  2. Do a realistic valuation of your business. Pie-in-the-sky valuations will only bring disappointment and get you laughed out of the Den. The Dragons have seen a lot of pitches. You’re not going to fool them, so don’t even try. Here’s how the valuation relates to your ask. If you are looking for $250 000 for 50% of your company, you are essentially setting the value of your business at $500,000. Wild-eyed valuations foreshadow what it would be like to work with you. While you don’t want to sell yourself short, an inflated valuation will turn off investors.
  3. Don’t enter the Den without a dollop of sales under your belt. Prove sales before going under the microscope. From all I have seen, you will not get a deal unless you have some sales under your belt. Profitable sales are even far more enticing. And those sales had best be to real customers (no, not your Mom), as in people who don’t eat Christmas dinner with you.
  4. When the Dragons are talking, shut up and listen! Many times we’ve seen Dragons backing away from a deal because the entrepreneur is talking instead of listening. Why is this important? Well, the Dragons are aware that getting into a partnership with you means they’ll be faced with communicating with you on an ongoing basis. If you can’t listen, you’re probably not going to be a lot of fun to partner with. Besides, the Dragons have a lot of wisdom to share and you’ll miss if you’re trying to do all the talking.
  5. Answer the questions they ask. There are times to be evasive. There are times to hedge your bets and dodge around the answer like when your Mother and Wife are both staring at you from across the dining room table, wanting to know who’s pie you prefer.  There’s no room for evasiveness in the Dragon’s Den. Answer all questions, clearly, directly and concisely.
  6. Be available and plan to do the work. The Dragons have spent a lot of time acquiring wisdom, filling their coffers, and building powerful networks. The lesson? While it’s noble and courageous to work at a full-time job and build your business on the side, the Dragons aren’t looking for jobs, they’re seeking investments that make money. Make sure your plan includes payment for you to jump in and manage the business. The Dragons are selling the knowledge and funds and connections to make things happen fast. They’re not going to build a business for you; that’s your job.
  7. If you’re headed into the Dragon’s Den to sell a mere idea, you’re headed for disappointment and a bit of a thrashing. Ideas are two bucks a ton. Don’t consider yourself ready to meet the Dragons until you’ve at least got a working prototype.
  8. Know what you want from the Dragon’s going in. If you really just need the cash, a bank loan might be what you need. If you’re looking for the expertise the Dragon’s bring, think about who you want to work with. Do you need franchising help? Marketing help? Distribution? Know which Dragon’s you want to work with. Be courteous when turning down offers. Don’t be rude, even to Kevin. It will reduce the other Dragon’s desire to work with you.
  9. Choose the right business model. You’re going to hit a brick wall if you wander into the Den thinking you’re going to build a franchise business when all you really need is to connect with the right distributor. This comes back to knowing your product, your customer, the industry and your competitors. Dare I suggest that you need to do some business planning?

The Dragon’s Den is pure entertainment, usually fun, sometimes painful, always a learning experience. I admire those who have the courage to step into the ring. I’m always rooting for the applicant and I wish success and prosperity to all who take the risk.