Monthly Archives: November 2016

Resolutions for Entrepreneurs Top 6 Priorities

The New Year is synonymous with resolutions and promises of making changes. If you are an entrepreneur, this time of year offers you a perfect opportunity to take stock of your business, as emails are probably at an all-time low over the holiday period. Here is my checklist of priority resolutions for all entrepreneurs for the New Year:

1. Review your business plan
One of the most important requirements for any entrepreneur is a business plan; not one that lives in their head or one that is consigned to an office cupboard- but a living business plan. If you have never written one, now is the perfect time to do so. If your business plan is in a drawer, take it out, read it and update it accordingly. Without a business plan, your business is essentially rudderless and you run the risk of not focusing on the key activities that need to be undertaken to bring you success.

2. Run through the numbers
For many people, numbers are not necessarily their strong suit and in small companies without dedicated in-house accounting departments this can result in serious problems. There is an old saying that what gets measured gets managed. So if you are starting a business, it is worth revisiting some of the fundamentals that are vital to your business. If you do not have any metrics in place, now is a perfect time to set them. These can include key financial ratios as well as customer and Web based metrics, e.g. £ value per customer, conversion rates, etc.

Topics to brush up on include:

  • Break-even Point
  • Profit Margins (Gross and Net)
  • Cash Flow Forecasts
  • Profit and Loss
  • Sales Forecasts
  • Cost of Sales
  • Creditor and Debtor Days

It is tempting to delegate the maths to others. However, you need to understand these concepts so you can manage your business effectively. For example Insolvency is one of the biggest threats to companies in the UK, yet cash flow management is an area which many entrepreneurs neglect. By understanding the numbers that are relevant to your business you can ensure that you are giving yourself every opportunity to grow and prosper.

3. Optimise your website
Most businesses set up a website when they start, but many entrepreneurs then ignore it. It is essential that websites are maintained and are mined for information. Where are your customers coming from? What are they looking at? What is the conversion level for visitors? All of these questions, and more, are easily answered using free tools such as Google Analytics. If you have not done anything with your website for some time, you should implement Google Analytics so you can understand more about your customers. Armed with this knowledge you can then tailor your website for the audience you attract and help achieve the objectives that the website was designed for in the first place.

4. Familiarise yourself with Google AdWords
The growing use of the Web is facilitated in large part by the use of Google as a signposting mechanism to resources and as a means to find answers to questions and issues. Google is the dominant search engine in the UK and AdWords is a powerful tool that can be used to target prospective customers. AdWords lets you show your ads only to people searching on a specific phrase related to your business, so it is highly targeted marketing. If you have an AdWords account, the New Year offers you a great opportunity to review campaigns from the preceding months. If you do not have one – set one up. The benefits of the system are excellent, not least in terms of accountability and targeting, but also marketing effectiveness and the ability to generate a good return on investment.

5. Identify a business book and read it
Entrepreneurs are typically very busy people, dealing with a whole raft of different issues and challenges. However, time needs to be set aside so as to consider the bigger picture as wider circumstances impact upon the prospects for businesses. It is important entrepreneurs remove themselves from day-to-day ‘fire fighting’ to assess future strategy. One means to assist this is by reading publications that either relate to the industry you are in or that will broaden your knowledge in a particular aspect of business. There are huge numbers of business books available at any bookstore (many written by business academics) and some will naturally be more relevant to you than others. Again the New Year offers the perfect opportunity to broaden your knowledge base with some relevant business books.

Business SWOT Analysis

The SWOT analysis begins by conducting a review of internal strengths and weaknesses in your organisation. You will then note the external opportunities and threats that may affect the organisation based on your market and the overall environment. Don’t be concerned about elaborating on these topics at this stage; bullet points may be the best way to begin. Capture the factors you believe are relevant in each of the four areas. You will want to review what you have noted here as you work through your marketing plan.

The primary purpose of the SWOT analysis is to identify and assign each significant factor, positive and negative, to one of the four categories, allowing you to take an objective look at your business. The SWOT analysis will be a useful tool in developing and confirming your goals and your marketing strategy.

Some experts suggest that you first consider outlining the external opportunities and threats before the strengths and weaknesses. Marketing Plan Pro‘s EasyPlan Wizard will allow you to complete your SWOT analysis in whatever order works best for you. In either situation, you will want to review all four areas in detail.

Strengths

Strengths describe the positive attributes,tangible and intangible attributes, internal to your organisation. They are within your control. What do you do well? What resources do you have? What advantages do you have over your competition?

You may want to evaluate your strengths by area, such as marketing, finance, manufacturing, and organisational structure. Strengths include the positive attributes of the people involved in the business, including their knowledge, backgrounds, education, credentials, contacts, reputations, or the skills they bring. Strengths also include tangible assets such as available capital, equipment, credit, established customers, existing channels of distribution, copyrighted materials, patents, information and processing systems, and other valuable resources within the business.

Strengths capture the positive aspects internal to your business that add value or offer you a competitive advantage. This is your opportunity to remind yourself of the value existing within your business.

Weaknesses

Note the weaknesses within your business. Weaknesses are factors that are within your control that detract from your ability to obtain or maintain a competitive edge. Which areas might you improve?

Weaknesses might include lack of expertise, limited resources, lack of access to skills or technology, inferior service offerings, or the poor location of your business. These are factors that are under your control, but for a variety of reasons, are in need of improvement to effectively accomplish your marketing objectives.

Weaknesses capture the negative aspects internal to your business that detract from the value you offer, or place you at a competitive disadvantage. These are areas you need to enhance in order to compete with your best competitor. The more accurately you identify your weaknesses, the more valuable the SWOT will be for your assessment.

Opportunities

Opportunities assess the external attractive factors that represent the reason for your business to exist and prosper. These are external to your business. What opportunities exist in your market, or in the environment, from which you hope to benefit?

These opportunities reflect the potential you can realise through implementing your marketing strategies. Opportunities may be the result of market growth, lifestyle changes, resolution of problems associated with current situations, positive market perceptions about your business, or the ability to offer greater value that will create a demand for your services. If it is relevant, place timeframes around the opportunities. Does it represent an ongoing opportunity, or is it a window of opportunity? How critical is your timing?

Opportunities are external to your business. If you have identified “opportunities” that are internal to the organisation and within your control, you will want to classify them as strengths.

Threats

What factors are potential threats to your business? Threats include factors beyond your control that could place your marketing strategy, or the business itself, at risk. These are also external –you have no control over them, but you may benefit by having contingency plans to address them if they should occur.

A threat is a challenge created by an unfavourable trend or development that may lead to deteriorating revenues or profits. Competition – existing or potential – is always a threat. Other threats may include intolerable price increases by suppliers, governmental regulation, economic downturns, devastating media or press coverage, a shift in consumer behaviour that reduces your sales, or the introduction of a “leap-frog” technology that may make your products, equipment, or services obsolete. What situations might threaten your marketing efforts? Get your worst fears on the table. Part of this list may be speculative in nature, and still add value to your SWOT analysis.

It may be valuable to classify your threats according to their “seriousness” and “probability of occurrence.”

The better you are at identifying potential threats, the more likely you can position yourself to proactively plan for and respond to them. You will be looking back at these threats when you consider your contingency plans.

The implications

The internal strengths and weaknesses, compared to the external opportunities and threats, can offer additional insight into the condition and potential of the business. How can you use the strengths to better take advantage of the opportunities ahead and minimize the harm that threats may introduce if they become a reality? How can weaknesses be minimised or eliminated? The true value of the SWOT analysis is in bringing this information together, to assess the most promising opportunities, and the most crucial issues.

Products for Starting a New Business

Starting a business is an incredibly exciting time for any entrepreneur; however it can also be stressful with so much to do in so little time. The start-up phase is also characterized by significant expenditures against a backdrop of uncertain income. However, there are a number of products and services that can help you maximize your chances of success while also saving you considerable time and money. This article aims to introduce you to some of the less obvious ones that are available via the Internet. These products and services can help you set your business on the right path from Day One. While these recommendations will not be appropriate for all, those who need to bootstrap and build their business the hard way will benefit the most.

1. Create a website

Regardless of whether you intend to sell online or not, all new start-up businesses should secure a domain name and create a website as soon as they can. Thankfully, the cost of getting a site set up has fallen significantly over time and there are now a host of different packages and providers to choose from.

2. Download a profile of your industry

The factsheets, reports and guides from Scavenger are essential reading material for anyone starting up a business in the UK. The Business Opportunity Profiles are downloadable reports on specific UK industries. With over 800 reports in total, the range includes everything from ‘Children’s Day Nursery’ profiles to ‘Coffee Shop’ profiles to a profile on ‘Wedding Planners’.

Where: www.scavenger.net Cost: Individual reports cost around £5.

3. Set up your company accounts

One of the big challenges start-up companies face is managing cash flow. Insolvency is one of the main causes of failure for entrepreneurs in the UK. However, with some careful and appropriate financial planning, cash crunches can be avoided. While this in itself is an important reason for buying a bookkeeping package, there are countless other reasons ranging from the ability to manage invoices through to managing payroll. The two main recommended introductory packages are QuickBooks® Simple Start from Intuit® and Sage® Instant Accounts. View online demos before you purchase.

Where: www.sage.co.uk and www.quickbooks.co.uk Cost: From £43.97 at www.amazon.co.uk

4. Download business planning software

When you start up it is important to write a business plan to ensure you adequately plan the future of your business. The very process of creating a plan is beneficial, not least because it forces you to take a holistic view of your company. Business Plan Pro is the best-selling business-planning software available. It is easy to use, saves time, and has over 500 sample plans to get you started. It is also available via download so you can get instant access to it and hence pay no postage and packing.

Where: Business Plan Pro is available from www.paloalto.co.uk Cost: RRP is only £79.99 for the Standard version and £129.99 for the Premier.

5. Save costs on your phone

Using applications such as Skype together with a headset, it is now possible to make telephone calls from your computer at a very low cost. There is no need to commit to a monthly phone contract with line rental. Instead you can just pay as you go. You can also obtain a Skype number so people can call you back. However it is recommended that all start-up businesses do have at least one fixed line number they can be contacted on. Finally, you should also consider getting a portable number that is easy to transfer if you move offices.

Understanding the dynamics of competitors

Background
The pure competition model does not present a viable tool to assess an industry. Porter’s Five Forces attempts to realistically assess potential levels of profitability, opportunity and risk based on five key factors within an industry. This model may be used as a tool to better develop a strategic advantage over competing firms within an industry in a competitive and healthy environment. It identifies five forces that determine the long-run profitability of a market or market segment.

  • Suppliers
  • Buyers
  • Entry/Exit Barriers
  • Substitutes
  • Rivalry

Supplier power

  • Supplier concentration
  • Importance of volume to supplier
  • Differentiation of inputs
  • Impact of inputs on cost or differentiation
  • Switching costs of firms in the industry
  • Presence of substitute inputs
  • Threat of forward integration
  • Cost relative to total purchases in industry

Buyer power

  • Bargaining leverage
  • Buyer volume
  • Buyer information
  • Brand identity
  • Price sensitivity
  • Threat of backward integration
  • Product differentiation
  • Buyer concentration vs. industry
  • Substitutes available
  • Buyers’ incentives

Entry/Exit barriers

  • Absolute cost advantages
  • Proprietary learning curve
  • Access to inputs
  • Government or other binding policy
  • Economies of scale
  • Capital requirements
  • Brand identity
  • Switching costs
  • Access to distribution
  • Expected retaliation
  • Proprietary products

Substitutes

  • Switching costs
  • Buyer inclination to find alternatives
  • Price-performance
  • Trade-off of the available substitute products or services

Rivalry

  • Exit barriers
  • Industry concentration
  • Fixed costs
  • Perceived value add
  • Industry growth
  • Overcapacity status
  • Product differences
  • Switching costs
  • Brand identity
  • Diversity of rivals
  • Corporate stakes

Service

  • Level of service compared to others
  • Added value perceptions
  • Dynamics with other attributes

Power of suppliers
An industry that produces goods requires raw materials. This leads to buyer-supplier relationships between the industry and the firms that provide the raw materials. Depending on where the power lies, suppliers may be able to exert an influence on the producing industry. They may be able to dictate price and influence availability.

A segment is unattractive when an organization’s suppliers have the ability to:

  • Increase prices without suffering from a decrease in volume
  • Reduce the quantity supplied
  • Organise in a formal or informal manner
  • Compete in an environment with relatively few substitutes
  • Provide a product/material that is a critical part of the end product or service
  • Impose switching costs on their customers when they depart
  • Integrate downstream by purchasing or controlling the distribution channels.

How Be an Entrepreneur

In a world increasingly affected by globalisation, increased competitiveness and maturing products, the need for creativity and entrepreneurship has never been greater. Luckily, the attractions of becoming an entrepreneur have never been greater either, especially since a shift from a predominantly manufacturing- to a service-based economy has lowered the cost and barriers to entry for entrepreneurs. The British government has moved entrepreneurship (and support for it) to the top of their domestic agenda. Meanwhile, entrepreneurship has become a hot topic, with conferences, exhibitions, and even TV shows, such as “Risking it All” and “The Dragons’ Den” evidencing the popularity. But while the environmental conditions may be attractive, entrepreneurs still need a workable idea that is commercially viable. This article endeavours to assist wannabe entrepreneurs (wantrepreneurs) in coming up with ‘the plan’ so as to enable them to finally take the plunge into the world of entrepreneurship.

 

2. The environment

Before deciding on ‘the idea’ it is worth assessing the landscape thoroughly so as to consider the broader context and the impact that trends or changes may have on it, i.e. whether it is future-proof, etc. There are three main trends to look at – global trends, national trends and local trends.

Keeping up to date with global developments via The Economist or the BBC will certainly give you a good base to start from. However, to gain a more in-depth understanding of global changes from a business opportunity perspective, websites such as Trendwatching (www.springwise.com) are very useful. In an increasingly homogeneous global economy, it is obvious that what works well in one market can easily transplant into other ones with the minimum of localisation. Between them, these sites give a more in-depth insight into some of the latest emergent business ideas and can be considered in tandem with macro trends affecting us all, like environmental challenges, the increasing cost of oil, volatile currencies, etc.

On a national level, there are a number of trends that we are all familiar with in the UK: increased ubiquity of broadband access, the fact that as a population we are aging, increased expected life spans, growth in the number of single-person households, and so on. The key with all of these trends is to focus on the opportunities associated with these demographic shifts and trends. For example, it is safe to predict that an aging population will increase the demand for certain goods and services, such as home-help services, medication, nursing, and glasses, and that the growth in single-person households will increase the demand for convenience food products and more economical white goods such as smaller fridges and washer/ dryer all in one’s.

On a local level, there are also numerous resources we can use in assessing the local environment and, in particular, the likely demand for our goods or services. Websites such as ACORN (www.caci.co.uk/acorn) and UpMyStreet (www.upmystreet.com) provide extensive free demographic data about areas based on UK postcodes. These enable you to build up profiles of the local population and are ideal when you are looking to set up a shop or service to serve the local community specifically. Of course when it comes to local opportunities, these need to be assessed in conjunction with plenty of ‘on-the-ground’ research: walking in and around the area targeted for the new enterprise.

 

3. The options

 

The big idea

Whilst the majority of new businesses are replicas of existing businesses, some entrepreneurs will strive to create something completely unique. One of the most powerful things the Internet enables us to do is to search for solutions to problems more efficiently than ever before. Goods and services are designed to fulfill the needs of people. In other words, goods and services solve people’s problems; and while your proposed solution may be unique, it is likely the problem is not. Hence, an Internet search focusing on the problem your solution is trying to address is likely to highlight substitutes and competitors, which may all help to shape the nascent idea.

Using the Internet, you can often assess the potential demand for your service by gauging the number of people who search for a term related to the problem that your good or service satisfies. For example, our company, Palo Alto Software, produces business planning software. One way people find us online is by searching for help for their problem: their need to write a business plan. Using the Key Word Assistant on Overture, we can find out how many times “business plan” and other related terms were searched for in the previous month. This data can help us assess whether business planning is a significantly more popular term than “business plan”? If so, we might consider renaming our product “Business Planning Pro” instead of  Business Plan Pro.