A BUSINESS PLAN CAN SAVE YOUR LIFE!

Most of you know that I am a big proponent of business plans. Here's a great video about how a plan can save your life and your business.

Click Here!

3.5 REASONS FOR USING CONTRACTORS TO HELP LAUNCH YOUR BUSINESS

In a recent post, I highlighted 5 deadly sins that entrepreneurs make, and one in particular was titled "Don't Go-It Alone!" . I know this is a tough one because start-ups are almost always cash-strapped, and the thought of hiring an employee just doesn't make sense, yet.

Generally, it makes more sense to bring in a contractor/consultant when you don’t have enough steady work to justify a permanent position.

Here are the top three reasons to hire contractors instead of employees:

• You have specific task that requires a specific skill-set: Even though you would never admit it, as an entrepreneur you may not have a specific skill and you don't have time to learn it. Here is an example: You bring in an person to assemble a piece of machinery that you purchased to produce inventory. Or, you need an IT expert to set up a new server and an office network.


• The task is short-term: The specific job at hand will take a few weeks or months to complete. Here is an example: You need extra techies on hand for the launch of your website.


• The workload fluctuates: The flow of work is not consistent enough to warrant creating a permanent staff position. Examples: You need an accountant who can put in 180 hours a month during tax season but only 50 hours in June, or you bring in a landscaper to plant in front of your shop every spring, but there’s very little for her to do in fall and winter.

Now, you might be thinking that these are obvious. However, here is Reason number .5 ...

• I've made the mistake of having multiple tasks to accomplish such as launching a new website, merchandising the front of a store, managing taxes, building equipment, etc. So, what did I do? I hired an employee to help me. Bad idea, because the employee wasn't very good at anything except the taxes, so everything else was mediocre...at best. Additionally, I started with a motivated employee and turned them into a demotivated employee. Why, because people generally don't like to work in a position where they are only good at 10% of it.
  

To wrap up: I suggest using independent contractors as frequently as you can until you feel that your business is ready for employees. My rule of thumb is if a person can spend at least 60% of their time doing work they enjoy, then go ahead and hire'em. Otherwise, bring on the contractors!

(By the way, take a few minutes discussing contractors with your legal counsel. It's worth the 5 minute phone call to be sure you can use them legally)

SQUIRRELS HAVE THE ANSWER TO BUSINESS...NEWS AT 11!

There is no such thing as a squirrel-proof bird feeder. Why? Because squirrels spend all day and all night, 7 days a week, 365 days a year focused on how to get into your bird feeder.

What's the key concept to learn from squirrels in this example?

Focus! Squirrels focus their attention and intention. This is a great start-up business lesson. As entrepreneurs, we can learn something from these wise and fuzzy little creatures.

Are you focused? If not, what can you do to re-purpose your actions to ensure you get into the bird feeder?

THE FIVE DEADLY MISTAKES - #4

#4 - Being Overly Attached to Your Initial Idea (it will change)

This is a tough one. Entrepreneurs, including myself, tend to fall so deeply in love with our initial concept, product idea, or target market, that we can wind-up sending the business into a nasty tail spin. Resist this with every fiber of your entrepreneurial being.

What if you find out that your initial idea isn't compelling enough? What if it doesn't solve the complete customer problem that it was intended to solve? Should you throw the baby out with the bath water? Of course not. So, how about an exercise in changing your perspective? How about getting a fresh look at the problem?

Okay, so here's story from the book "Thinkertoys" by Michael Michalko. Back in the 1950s, experts proclaimed the ocean freighter industry was dying. Costs were skyrocketing and delivery times kept getting pushed back later and later.

Executives at the shipping companies kept focusing on ways to cut costs while ships were sailing. They developed ships that went faster and needed fewer crew members to run.
It didn't work. Costs continued to spiral out of control and it still took too long to get the merchandise shipped.

Then one day, a consultant changed the perspective. Rather than ask the question: " In what ways might we make ships more economical while at sea?" executives asked: "In what ways can we reduce costs?"

Ships are big money-sucking machines when they aren't at sea actually doing their job -- shipping merchandise. And when aren't they working? When they're sitting in port being loaded and unloaded.

So, the industry came up with way to preload merchandise on land. Now a ship comes in, the container carrying the cargo rolls off, a new container already loaded with cargo rolls on, and the ship heads back to sea.

That one innovation saved an entire industry. And it happened because shipping executives changed the way they viewed their problem.

Creativity Exercise -- Change your perspective (http://www.theartistsoul.com/)

So, how can you change your perspective and solve your business/marketing problems?
Try what the shipping industry did and change the question.

Instead of looking at a narrow part of the problem ("In what ways can we make ships more economical while at sea?") broaden the question ("In what ways can we reduce costs in general?")

Here's another example:

Maybe your question is "how can I land more clients?" What if you started broadening the question:

* How can I find more customers?
* How can I grow my business?
* How can I make more money from my business?
* How can I make more money period?
* How can I tweak the product to fit the needs of a more focused customer group?

Maybe one of those questions is a better place to look for a solution. Because maybe one of those questions is the "real" question you want to solve, but since you never took a step back to look at the big picture, you've never discovered the right question to ask. And, if you don't ask the right question, your intuition and experience will never give you an answer that actually solves your problem.

For more ideas about using your creativity check out http://www.theartistsoul.com/

Your intitial business idea will change. Your start-up business is dynamic and you must also be dynamic along with it. Mark your calandar to spend at least a few hours per quarter honestly assessing the business and asking "how can it be improved?" Also, use your advisors!

As entrepreneurs, often we let our egos run the show. Don't forget, ultimately, the customer runs the show because they make the choice to pull money out of their wallets and put it into yours.

What else can you do to ensure you don't make this mistake?

THE FIVE DEADLY MISTAKES - #3

#3 - Failure to Address the Competition

Inevitably, and almost without fail, when we are talking with a new entrepreneur he/she will tell us that their new product/service offers something so innovative that they don't have any competition. CALLING ALL ENTREPRENEURS...CALLING ALL ENTREPRENEURS! BE ON THE LOOK OUT FOR A BUSINESS WITHOUT COMPETITION...

I hate to break it to you, but there is no such thing. Even if you're new product or service is very innovative your customers still have a choice to spend money on your offering versus spending it on someone else's. Her's an example:

We work closely with a start-up called TriTowels, LLC. The creator has "invented" a towel that triathletes use when racing in a triathlon. Apparently, triathletes all use a towel of some sort in their race transition area. This towel is used to sort their gear such as running shoes, hat, sunscreen, etc. It is also used to wipe off their sandy, wet feet when they come out of the water after the swim to get on their bikes. Until TriTowels came along a triathlete just used an old beach towel for this purpose. Now, with TriTowels, they can have a unique towel with fun and cool designs on it, as well as quotes from legendary athletes such as Lance Armstrong. There is currently no other product on the market, so one might think they don't have any competition. However, a triathlete still makes the choice to drop the cash on the towel versus using their old beach towel. They could then spend that extra money on some other piece of gear they might need. So, there-in lies the rub. The creator of TriTowels has to constantly create a message to the triathlete community that intices them to want their unique product.

So, whether or not you have direct competition, your business idea still has to pass the "Wallet Test." I encourage entrepreneurs to make a list of several reasons why a customer would take money out of their wallet and buy their product or service. I also recommend they make a similar list of some things the customer could spend money on instead of buying their product or service. In other words, there is ALWAYS competition. The key to creating sustainability is to ensure your idea is compelling enough to get customers to take money out of their wallets.

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THE FIVE DEADLY MISTAKES - #2

#2 Failing to Assess Your Leadership Skills

Aaaaah...entrepreneurs...the embodiment of passion, creativity, bravery, insanity, and leadership. Wait...leadership? Yes, that's right...leadership. This is an area that is often overlooked and will cause all kinds of problems if not considered. Many entrepreneurs have management and leadership background, and some the extent of their management experience is parenting. However, your new start-up venture will almost certainly require a different kind of leadership approach and new set of skills than your corporate management position. Here's why:

There are several ways to classify the natural life cycles of a business or industry. They go as follows:

• Start-Up (chaos/organized chaos. Figuring out everything)



• Early Development Stage (We have proof-of-concept and are now moving fast with a focus on top-line growth and maybe market share, and definitely CASH-FLOW)



• Harvest (We are focused on EBITA or some variation of Net Profit, which means our operations are focused on optimization of processes)



• Rebirth (Something has changed our industry and customer behavior. We have to focus on change managment and reinventing ourselves)



• Start-Up (Again)
  

Each of these natural cycles requires a different leadership approach, as you can probably imagine. For example, based on your past experience you may have developed a natural leadership style that is perfect for a HARVEST company. This type of leader is probably required to rally their troops around making small tweaks to a system that is known to work. HARVEST leaders generally don't work in environments that are fast-paced (although, they would argue that point, but then again most of them haven't worked in a start-up where they've had to change their business model 5 minutes prior to an investor presentation. Not to mention, living off of mac & cheese and drinking, heaven forbid, tap water, but I digress...) However, a START-UP leader is generally required to rally the troops around a vision of what we think/hope will work. This requires different communication, decision-making, coping, selling, and general management skills than the other cycles.

Here's and exercise that you should do:

Get out a blank sheet of paper, a pen, and a cup-0-coffee. Make a list of all of your personal leadership skills and characteristics. For example: charismatic, able to see the big picture, people-oriented, etc. Now, make a list of all the different skills and characteristics that a leader needs to run your new business. This list may be quite different than the first list, but do not be afraid because now you are SELF-AWARE. Next, flip that piece of paper over and create an action plan of how you can begin to adapt to the leadership needs of your new business. This exercise won't take very long and is worth every second that you put into it. (you can also take a Visionary Leadership Assessment by emailing strategy@startupsmart.net)

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THE FIVE DEADLY MISTAKES - #1

#1 Don't Go-It Alone!

I would consider myself to be an avid cyclist. I race my bike pretty frequently in the summer months. When friends ask me about cycling and racing they are generally surprised to find out that it's a team sport. A racer needs others from his/her team to help with drafting (sharing the work), strategy & tactics, bringing water, etc.

Starting a business is much the same. Many entrepreneurs make the mistake of trying to do everything themselves when in reality, to be successful, it's a team effort. Even if you're low on cash/capital you still need to use your visionary leadership skills to create interest in your start-up business or idea. Tap into your passion to help communicate your concept to people that can help you, such as friends, family, other entrepreneurs, vendors, etc. Don't make the mistake of trying to "go-it alone." Get creative about rallying the troops and don't be afraid to reign in the ego and admit you need help. Someday you may be able to return the favor as you walk the streets with a wad of cash in your pocket!

Mistake #2...Join the RSS Feed and Get It Direct!