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The Unintentional Entrepreneur

April 21, 2012 By Leave a Comment

Have you ever thought of starting your own business? Perhaps you feel you can do things much, much better than your current employer. Or you are an academic or a student with a great idea and a path to commercialization by participating in an entrepreneurship program or entering a business competition.

Then again, some of you are unemployed. Or, as I like to say, “displaced,” due to the economy and, perhaps, some gaps or shortcomings in your skill set as well as the ability of your former employer to generate revenue.

You become an unintentional entrepreneur. Then again, you view your displacement from the labor pool as an opportunity to become your own boss and follow your own vision.

Follow it.

With passion, commitment and discipline.

Here are five items which should be at the top of your to-do list when starting your own business. And revisited at least annually as you move forward.

  1. Your Business Model is critical to the future success of your company. Although you may have started your entrepreneurial endeavor from your kitchen table, garage or basement, start with the end in mind. What is your exit strategy? Are you going to license your technology, franchise your idea, start a small and enduring business, or get bought out by a larger entity?
  2. Your Business Model is yours, not theirs. Many older entrepreneurs base their business on companies they worked for in the past. You have an opportunity for a fresh start. Make sure your business model isn’t based on the dysfunction, workarounds and baggage rampant in many mature small businesses. What is going to make your small business successful involves what works for you and your business goals, not what was present (and possibly not working) at your former employer’s facility.
  3. Participating in business plan competitions with your local business incubators can provide a means of polishing your messages and value propositions. These competitions are also a means of receiving some timely pro-bono consulting from the mentors who are assigned to your company. And learning what matters to investors is a valuable experience in growing your business acumen.
  4. Where are your customers? While it’s great to hang out your shingle and start your own business, you need folks to purchase your products and services. Avoid being seduced by former customers who tell you they look forward to working with you at your new company. They won’t. Not because they don’t like you. Because change is uncomfortable and disruptive. You are changing venue and, as a result, are asking them to change their choices as well.
  5. Learn how to have customer conversations that provide value to prospects. This is perhaps the most difficult aspect of entrepreneurism that most people have. And it’s because of their personal experience with the sales process in their former lives. Sales and selling comes at the middle to end of the business development process. Business development is part of everyone’s job description, technical or not. And it starts with customer conversations that focus on industry, trends, technology and economics – you know, the subjects you are most comfortable with anyway. Business development doesn’t sound like a door-to-door peddler. So get rid of that mental image and take responsibility for learning to have those conversations yourself. Don’t leave the most critical part of the success of your business to someone else who may be coming from an outmoded sales paradigm with a status quo sales spiel.

Have I just described you? Let me know.

Keep in mind: you may be an unintentional entrepreneur. However, you are not alone.

 

Filed Under: Business Development, Business Plan, Entrepreneurship, Sales, Small Businesses Tagged With: , , ,

Are Mature Small Businesses 2nd Stage Entrepreneurships?

February 7, 2012 By Leave a Comment

I had coffee last week with one of my colleagues, the CEO of a venture capital firm.

We compared our experiences working with student and adult entrepreneurs and ended up wondering out loud if mature small businesses were similar to second stage entrepreneurships.

Read on….

What would you show me if I asked you for your business plan? If you have one, it’s probably the document you put together to gain initial funding from a financial institution (compared to an angel investor or a venture capital fund, as is the case with high tech entrepreneurs, for example). Is this crucial document, the manifesto of your idealism and business passion, now collecting dust? Many mature small businesses figure that if they have a positive cash flow, are winning contracts, have a back log of work and can make payroll, they are in good shape. And so it goes.

Perhaps you own a business or are thinking about starting one. Some of you have been in business for 10 or more years, and have weathered – and successfully survived – a financial storm or two. Well done! So what is/was your business plan, other than a great idea that has some durability?

A business plan is a diagnostic tool for your business, like an annual physical exam. It lets you know whether your company is in good shape to move forward, diversify your product mix, purchase capital equipment to target a new market or technology, or partner with another company on a larger project.

Flash forward 3-5 years. When I ask clients what their “business looks like” they describe the environment built up to support their habits so they maintain positive cash flow – whether it makes sense or not.

They describe their status quo, not a business plan.

And if they have a business model to begin with, guess what it looks like now? Yup, their status quo, or the way things function to maintain their current rate of cash flow. What happened to that start-up passion and idealism?

Once cash starts rolling in, that status quo mindset is preserved at all costs - even if it prevents growing your business to the next level.

Second-stage entrepreneurial ventures have been in business for a while, too. Investment groups require these companies to fulfill milestones to protect anticipated return on investment. Their business plans are not allowed to collect dust and their business models pivot during this process. Ideally, these companies are coached to stay on task.

These second stage entrepreneurial ventures have products, sales coming in and peaks and valleys in cash flow, focus, marketing, business development, supply chain, and just about every aspect of running a business. The CEOs of these mature start-ups wear their sales hat to win business, swap that hat for the engineering hat to design the solution, put on the General Manager’s hat to outsource for production, and put on a firefighter’s hat when there’s a quality issue or when they have to take their place on the assembly line to get the product out the door. Oh, and then they put on their accounting hat to invoice their customer, pay bills and create payroll. It’s not always smooth sailing.

Does this sound like your own company – and I’m talking about small businesses with 3-20 employees and annual gross revenue of less than 1– 7.5 million USD.  That's a wide business range, but the profiles are similar.  If you looked at your financials and business model for the past years you’ve been in business, would you find yourself in the same place or ahead of the game…. And by how much, really?

We can all learn a lesson from the technology start-up community. These companies are coached so they don’t fall into those bad habits  reinforced when cash starts to flow. Yes, they still get tsunami’d by all the stuff they have to do to stay afloat. But their business plan and model is always part of the goal.

Perhaps you should be asking yourself “what does the status quo look like for my business?” You may find your loyalty to preserving the status quo holds you back from achieving the next stage of business growth.

Your thoughts?

Interested in learning more about how the status quo may not be the formula for perpetuating your career or your company? Go to www.doyoumeanbusiness.com and sign up to receive updates for my book, Do YOU Mean Business? Technical/Non-Technical Collaboration, Business Development and YOU, scheduled for release March 2012.

Filed Under: Business Plan, Entrepreneurship, Small Businesses Tagged With: , ,

Your Website Represents Your Business. Make It Professional.

March 15, 2011 By Leave a Comment

Profile-480x480Guest Blogger: Doug Yuen, Efficient Websites

Doug Yuen is the owner and CEO of Efficient Websites, a web design and hosting company specializing in search engine optimization. Efficient Websites designs, maintains, and hosts WordPress websites.  http://efficientwebsites.com, doug@efficientwebsites.com.

 

Do you hire an accountant for your business finances? You can learn how to do it yourself, and keep current with each year's tax changes, but is it worth it? You could be spending countless hours trying to keep up, and your mistakes could cost you thousands of dollars. If you keep employees on payroll, offer a 401(k), or have complicated expenses, you probably aren't handling it yourself - unless, of course, you're an accountant.

The same is true with your website. You can learn how to build a website by yourself, but at what cost? How many hours will you need to put in? Fifteen years ago, you could get away with just learning how to write basic HTML. Now, you need a much bigger skill set to produce a respectable website. If you want a decent design and features like social media integration, contact forms, or photo galleries, basic HTML just isn't going to cut it.

Professionals Should Have Professionally Designed Websites

In most cases, a prospective customer will look at your website before he or she even considers contacting you. If it doesn't make a good impression, how many customers are you losing because of it? What is that worth to you?

Deciding which platform to use for your website is critical. At Efficient Websites, we build websites exclusively on the open source WordPress platform, which allows us to make extensive customizations to design and functionality. Although WordPress is known for its blogs, it can be used to build and customize any kind of website. A wide variety of themes and plugins can be used to enhance your site. Since WordPress is open source, a knowledgeable developer can edit the underlying code, making your website look and perform however you want. Furthermore, it is easy for you to edit your content on a WordPress website.

Launching Your Website Is Just the Beginning

Do you have the technical expertise to handle upgrades and fix code if things go wrong? Do you know how to keep your website secure, and fix it if hacked? Do you back up your website regularly? How quickly can you restore to a previous version of your website? If you don't have a good answer to these questions, you are leaving your website very vulnerable.

Hiring a professional to build and maintain your website will almost always save you a lot of time and effort. But one of the most important things to consider is how you will edit your website after launch. If you have to pay your web designer to make every update for you, the costs will add up quickly, and you may be faced with a long turnaround time for each request. And if you don't update your website regularly, your visitors may start to question if your business still exists.

If your website is built on WordPress or a similar platform, you will generally be able to edit your content (text, photos, etc.) by yourself. It is faster, since you don't have to communicate the changes or wait for someone else to get back to you. It is cheaper, as you don't have to pay anything extra for changing it yourself. And it is more reliable, since you don't have to worry about losing anything in translation via phone or email. It is often practical to contract a web designer for changing the design and configuring certain features. However, the bulk of the changes to your website, which usually contains the time-sensitive items, should be under your control.

Don't Underestimate the Value of Professional Expertise

In addition to designing your website, a professional can advise you on how to optimally design your site for your visitors. If you build your website by yourself, you may not even realize that you are using amateur techniques. Some common design mistakes include: using unprofessional-looking fonts like Comic Sans, laying text over background images, using unintuitive page names and hierarchies, and duplicating content across multiple pages. Similarly, there are many poor construction choices that inhibit SEO, such as: using the same title on every page, using JavaScript-powered navigation menus, building a website entirely in Flash, and putting important text in images instead of in the body. If you don't take your website design seriously, you could be doing more harm than good.

Why spend potentially hundreds of hours learning how to do something you may never need to do again, when you could just hire someone who can do it better and faster? In most cases, it won't even cost you that much.

Filed Under: Business Development, Business Plan, Engineering, Personal Branding, Sales, sales engineering Tagged With: , , ,

Your Financial Plan is Your Business Pulse

February 1, 2011 By Leave a Comment

My client looked at me and threw his arms up in the air, exasperated, and said:  “We have a ton of business!  But I just don’t know if we really are making any money.”

His statement saved me a lot of diplomatic build-up to the topic of our meeting.

We’d been working on his Business Plan. One of his larger clients, long sought-after and finally won, had requested his Business Plan before they awarded him a large, long-term project which he perceived as being lucrative.  Our work commenced, starting with establishing  that his annual strategic plan wasn’t the same thing as his Business Plan. Then we started the archeology of identifying  the financial information needed to produce the Financials section of this Business Plan.

I reviewed 15 years worth of financials (yeah, I have to admit, I kind of got into things).  It was a fascinating exercise because I see this same financial pattern emerge time after time when working with my clients. They begin their business with high energy and a small amount of cash.  They churn and burn. They build up their client base, often by acquiring customers who place  small-scale custom orders that eat into time, materials and manpower. The business owners call this “paying their dues.”  Their bottom line increases, they feel elated. And they maintain that pattern, calling the business that continues to flow in their “Word of Mouth”.  Or they grow their business by “diversifying” - adding larger, long-term custom orders which take forever to be awarded that inflate their bottom line over multiple years while eating into operating margins.  And they fill gaps in their revenue stream by maintaining their loyal base of small-scale “Word of Mouth” orders that continue to eat into their profit margins.

After all, this pattern of business has kept them in business. And after several economic  tsunamis, who wouldn’t feel this is a well-deserved feather in their caps?

BUT THEY ARE STUCK.  Where they’ve always been. And they are perpetuating a bottom line that is not in touch with where they want to be. And they don’t understand what they need to do in order to move the dial up a notch or two.

These businesses are stuck in more than a rut. They are mired in a network of business habits that need drastic improvement. Processes that become reactions to blips in their status quo rather than a mindset that starts at forecasting and strategic planning.  Crisis management and corrective actions based on the assumption that everyone knows what they were doing rather than proactive project planning.  Dropping everything when a large project comes through the door and focusing all hands on deck to that project… and then expecting folks to pick up where they left off with their other responsibilities. Accounting and a 12 month perspective rather than financial forecasting and a CFO mindset (both are needed, by the way).

Sound familiar? This is not the exception in many small businesses. This is the rule. And it is keeping small businesses from moving to the next level. And making money.

The reality of the situation is that these types of business are not making any more money than they were 15 years ago. Except that the money they are making now is worth less than what it was worth 15 years ago.  Their bottom line and financials look the same today as they did 15 years ago. Except they have more customers now than they did then.  And single digit – instead of double digit - profit margins.

The recommendations I’ve made to many of my clients? Go back to square one and re-learn how to crawl before they walk much further into 2011. Deconstruct how they do business to understand how and why they got where they did. And reassemble the same elements, with a completely different emphasis. Include some education in that mix, please.

Not a pretty tale but a sobering,  realistic one. And an exercise I strongly suggest you take the time to do for yourself and your company.  And for you entrepreneurs? Build it right from the ground up and you may avoid deconstructing later on.

The buck does, indeed, stop with your business financials. They are the true read on where your company has come from and where it is going. Take your business’s pulse, understand your options, and make a diagnosis to grow healthy in 2011.

Filed Under: Business Development, Business Plan, Entrepreneurship, Startups Tagged With: , , , ,

Got an Operations Plan or are you making it up as you go along?

January 17, 2011 By Leave a Comment

You’d be surprised how many companies – and I mean large as well as small entities – appear to be “winging it” when the rubber meets the road.  And I’m not talking about companies with Lean Processes which allow flexibility and reconfiguration as needs arise. At least there’s a plan in place to make that happen. An extremely solid plan with buy-in from all those concerned (or at least we hope there’s buy- in).

One of the essential elements of a solid Business Plan is your Operations Plan, including your Key Operational Processes. And your Operations Plan should reinforce your Business Model.

So how would you succinctly describe yours?

Most small to mid-sized companies struggle with lack of sufficient human assets to apply against whatever their business model is supposed to be. Hence, their Operations Plan, when pressed to describe it, resembles everyone rolling up their sleeves and doing whatever it takes to get the job out the door. Sound familiar?

And while we all have done this at one time or another, present company included, it won’t get you to the next level. So if you are jazzed by the energy and urgency of always operating in crisis mode, feast or famine, 11th hour deadline mentality, then that’s great. (Hint: sort of like advertising agencies).

However, if this modus operandi is getting old, and you find that your annual earnings and profitability have been stuck around a certain bottom line for the last 15 years, then it’s time to revamp your Operations Plan. Especially if you are thinking of starting your own manufacturing or service business or engaging in an innovative venture that may require external funding or perhaps transferring technology outside of an academic setting.

First and foremost, ask yourself what are your Key Operational Processes. These aspects of your business may include, but are not limited to:

1.)    Marketing and sales – new customer acquisition and retention of existing customers (not the same, by the way)

2.)    Accounting - includes purchasing, overhead and employee  / vendor compensation

3.)    Customer Service – follow up on all of the above and more, a critical function

4.)    Quality Control – testing, checks and balances on all aspects of your business, even the “soft” stuff, and analysis against established benchmarks for your company (if you don’t have these in place, please establish them)

5.)    Manufacturing Processes – including assembly and production, shipping and receiving

6.)    Supplier Acquisition and Qualification – identification of sub-contractors for various aspects of your processes

7.)    Employee training – continuous improvement doesn’t happen in a vacuum although many small companies train employees on an as-needed basis depending on the project they are trying to acquire

8.)    Documentation and Contracts – maintaining and updating quality and project manuals in compliance with standards

Second of all, ask yourself whether you have enough staff on board to credibly describe your Operations Plan and Key Operational Processes to potential customers. It’s hard when there are only two of you. Or perhaps one. Because potential customers are concerned about contingency and your ability to complete a project in the event of unforeseen circumstances. Which means:  do you have enough collaborators with whom you complete projects on an ongoing basis so that you and your company will be solvent and viable for the duration of the project?  In other words, do you have an established track record, credibility and some aspect of longevity?

Now for entrepreneurs, this last paragraph is painful. Because the honest answer, in most cases, is that you don’t have any of the above.  And for many large companies, the issue is one of fiefdoms and a siloed infrastructure which, in essence, isolates departments and prevents the internal network responsible for innovation and collaboration to take that organization to the next level.

Your blueprint for successful business development mandates that you identify individuals with whom you can collaborate for successful, and repeated, project completion. And your blueprint for success also involves being able to succinctly describe your collaborative network from the git-go so that you do not always feel like you are describing The Little Engine That Could.

I cannot tell you how many small businesses struggle with this aspect (e.g., their version of “I am not worthy.”) Trust me, if you do not have a solid business plan, and an extremely well-thought out and articulate Operations Plan, this area of business acquisition will be your stumbling block. You will dread getting to this aspect when you present to new and existing customers.

So get over it and address it immediately when you are creating your Business Plan. Because your Operations Plan is your barometer of whether or not you have your cart before your horse.

I don’t need to tell you that we operate in a demanding, highly competitive business economy where there is little room for error.  Having your blueprint for success hinges on the ability of your infrastructure – Operations – to support and deliver on a consistent basis.

Winging it may be exciting from time to time. At least be aware of whether or not you have a robust operational infrastructure before you make promises.

Think about it.

Filed Under: Business Development, Business Plan, Entrepreneurship, Startups Tagged With: , , , ,

If you are doing your 2011 Marketing Plan now, you are way too late…

January 3, 2011 By 1 Comment

Another important area of a well-structured Business Plan is your Marketing and Sales Plan. And here’s a clue card: Marketing and Sales are not sprinkles on the cupcake. They ARE the cupcake: the front end of cash flow in the order-to-cash process.

For all of you technically oriented businesses (my client base) who are operating under the mis-perception that:

a)      everyone knows who you are;

b)      you are in a niche business and, um, er, everyone knows who you are;

c)       you’ll market yourselves when you need to, in 6 months perhaps, because your pipeline is now full because, well, you know, everyone knows who you are;

d)      your pipeline will remain full because – yes you’ve guessed it – everyone knows who you are; and

e)      your sales folks are constantly beating the bushes for new business because all doors are open to them because, well, you know the rest of that sentence….

I’ve got news for you…….. Stop burying your head in the sand.

It doesn’t matter that everyone knows who you are and how to get a hold of you if they think they need you.  They won’t. So please don’t be that presumptuous.

I’m sure  you’ve created an image and brand of yourself as the personification of your company AND your company as the go-to folks, haven’t you? And that’s a 24/7 job, not a matter of business lunches, meetings, conferences and golf outings.

A well-structured Business Plan requires a well-structured Marketing and Sales Plan. And most folks in the industrial and manufacturing arenas regard marketing plans as the equivalent of throwing spaghetti against the wall from time to time and hoping it sticks. Particularly small-to-mid sized companies.

Marketing plans need to reach out to your target audiences to provide WHAT they are looking for, WHERE they are looking, WHEN they are looking via STRONG and CONSISTENT marketing statements.  Marketing plans are the tactical implementation of a series of strategic initiatives. Not a four-color (expensive) ad here and there in a reputable industry journal (preaching to the choir) when your budget (non-dedicated) permits. Not a Tweet here and there when you think of it.

Based on your annual Industry Analysis, your understanding of your Customer Base, and your Competitive Analysis you should have a constant finger on the pulse of what makes your business tick. Determining the best marketing initiatives to support the efforts of your sales people become critical to keeping your company top-of-mind in front of not only current customers but also new customers and industrial and high-tech emerging markets.

The best salesperson and marketing spokesperson you have for your business is your website. Your website is your unpaid 24/7/365 advocate operating across all time zones simultaneously.  Is your website current? Do visitors to your website have to struggle to understand the navigation (hint: the fastest way of getting that person to hit the “back” button and go elsewhere).  Does your website look like it’s been created by your sister’s 17-year-old son during Christmas break? Can you track activity down to the site of the incoming URL, location of the company and see which pages have been traversed by visitors? Do you understand why people are coming to your website (in response to recent advertising, participation in a trade show, sales blitz in a particular region?).  Do you even regard your website as a critical tool for business development?

Are you advertising on Google via ad words? Do you trust the traffic that’s reported as going directly to your website? Where’s that traffic coming from, anyway?  Is your engineering and manufacturing niche capable of generating enough traffic that will result in enough business? Because not everyone who looks at the  ad words or goes to your website is in buying mode. Which means your sales folks have to identify these leads and engage them in meaningful business development discussions. And we know that some sales people only want “qualified leads” which means they only want to work with prospects ready to sign on the dotted line with minimum development work on the part of the sales folks. No such easy button here.

Are you advertising on engineering and manufacturing-specific websites such as ThomasNet, Global Spec, Kelly Search, and others who have well-developed traffic and keyword search navigation? Another hint here: not all of these sites I mentioned offer the same benefits. Because when it comes to Word of Mouth, the Internet provides the most buzz with the greatest momentum and potential for business development.

Are your sales folks and sales engineers delivering marketing and sales messages about your technical deliverables that are consistent with what a visitor to your website and online advertising is reading? Buying ad words which link to a website which doesn’t deliver against what is promised is a very good way to discredit your marketing and sales efforts.

And asking your sales people to commit to soaring sales quotas which your company has not supported by an aggressive and consistent marketing campaign is like asking them to give you something for nothing.

Which is why starting to think about your marketing and sales plan for 2011 right now is way too late,  regardless of when during 2011 your fiscal year starts. Your marketing and sales plan is your battle plan.  And your battle plan allows you to be proactive, responsive and nimble in the market place.

So where do you stand on the 2011 battlefield?

Think about it.

Filed Under: Business Development, Business Plan, Entrepreneurship, Startups Tagged With: , , , ,

The time has never been better to do a Competitive Analysis…

December 27, 2010 By 4 Comments

As we skip merrily through the areas of focus for a real live Business Plan we land on Competitive Analysis.  This subject can separate fantasy from reality very quickly.

If you ask your boss (who may be yourself) who your competition is, typically one rattles off the names of three or four firms who always seem to be bidding on the same projects you are. Hint: those aren’t necessarily your competition.  They may be companies who are stuck in the same rut you are.

If you ask your COO or CFO who your competition is, they may provide a list of three or four – or more – companies with some degree of overlap from the CEO’s list. However, their list will be based on their professional context. Perhaps these are the companies who produce the most efficient and cost effective, profitable solutions compared with the slickest, edgy and trendy ones.

If you ask a middle manager the same question and even the business development/sales folks, guess what? The list of perceived competitors grows.

While you may know the names of the big and little guys and gals who dominate your industry, they may not be your actual competition. Some of these “competitors” are simply too big – or too small -  to handle projects of a certain size.  Which means they need companies like you as collaborators. So there’s a niche for you.

Take a look at your gross annual revenue and profitability. Those numbers are your company’s pulse. Take a look at the typical size of a project and it’s duration. You will begin to get an idea of the size of your realistic playground.

You know, there’s nothing wrong with being a niche player within the small to mid-sized competitive arena.  It’s just that most companies are so hung up competing – in their own minds – against the “big boys” that they don’t recalibrate, realistically, and understand their true competitive reach.

Who are the best-in-class among the players in your market space? In your engineering space? As defined by the true competitive playing field in which your company operates.

Yes, I know you feel you can go toe-to-toe with the giants. However, if you had to put together a team to provide all of the resources a giant can provide, what type of management, financing,coordination, efficiency and profitability would actually result?

A Competitive Analysis, first and foremost, involves looking at your strengths and weaknesses as a company and deciding how to capitalize on your strengths within a realistic marketplace you have defined. You start by looking inward at yourself, not outward to a blurry horizon where the nebulous “competition” lives.

Understanding what your company does very, very well, consistently, provides you with your competitive arsenal.  This understanding also allows you to evaluate what and how to present to  new and existing clients.  This information is your Competitive Advantage. Hint: your competitive advantage does not involve providing excellent customer service and responsiveness and on-time, cost-effective delivery (soft advantages) unless you can dollarize just how these catch phrases translate into positively impacting your customers’ bottom line.  It takes more than just being identified as the feel-good company. Or the Little Engine That Could.

Armed with these insights, I can guarantee it will be time to decide who your competitors really are: both direct competitors and indirect. Your list may change, allowing your company to become more successful competing in the right engineering space against the right types of competitors. And success will allow your company to move to the next level, because you will understand the factors – and barriers – impacting your success. Not theirs. Yours.

Because sometimes, your greatest competitor is yourself.

Time to get your company on the same page?

Think about it.

Filed Under: Business Development, Business Plan, Entrepreneurship, Startups Tagged With: , , , ,

Done a Customer Analysis lately?

December 15, 2010 By Leave a Comment

It gets pretty interesting when I work on a Business Plan with my clients, whether they are entrepreneurs or mature businesses. We get to the part where I ask them who  are their customers, what industry segments do they work in, and what are the customer needs within each segment.

You know, Voice of the Customer kinds of questions.

I haven’t met anyone yet who could rattle off succinct answers.  It’s not easy and a lot of us take longevity in the marketplace as a sign of “success.”  Well, we’ve survived, but that’s hardly a rationale for not knowing your Customers.

And again, engineers, IT professionals and technical folks, I am talking to you.  Just because the guy or gal you are talking to also is an engineer, like you, doesn’t mean they think the same way that you do. You might be incredibly far from being on the same page and never know it. Never make that assumption.

I don’t need to tell you that the business development process is changing.  Solutions selling without adequate knowledge of the offline factors influencing the decision making process at your prospect’s company will not shorten your sales cycle. So why would you ignore understanding what makes customers “tick” in the industrial spaces in which your company plays?

Think of it as taking your clients’ pulse every year.  I do. Right after the start of the new year.  And that includes a) current clients, b) former clients, and c) non-clients. 

Why speak with all three types of clients and not just your current client base? Well, for one, only speaking with your current clients is like wearing blinders and looking at yourself from the inside-out. You are preaching to the choir. Did it ever occur to you that your current client base may not reflect the Voice of the Industry Segment you are trying to capture and possibly own? You may just tend to attract a certain type of client for a particular reason. You need to determine what attracts your current client base to you and be prepared for answers that potentially are not what you want to hear. Or are not where you really want your business to be.

While it really seems daunting to approach former clients, I find these usually are the most insightful conversations.  You may feel that you are going to get blasted with criticism. Most of the time my former clients have apologized for not being able to continue their contracts with me due to the economy. They perceive their inability to manage their business to include this line item investment as their fault. I don’t need to tell you how this type of conversation has led to renewed business. Especially when I am talking to them about industry trending and reinforcing my role to their business as a thought leader, rather than crawling to them, hat in hand, mea culpa.

Then there are those customers who, well, never became customers in the first place. There’s a reason and they certainly don’t expect you to want to discuss the matter with them.  While you are not exactly calling them out about it, these discussions can be amazingly fruitful in determining the offline factors that impacted your non-customers’ reasons for not making the decision to do business with you. And yes, be prepared for some rejection. Again, however, they really may not have been the decision maker in the first place or they have been acquired, etc.  You need to determine why you or your company does not appeal to the non-customer. There are a number of reasons and these factors are important for you to understand when acquiring future business.

The ultimate result of talking to your customers is to generate a list of Customer Needs for each type of customer: current, former and non.  What are the areas of overlap across all three customer segments? What are critical areas of juncture between them? Can you or your company be all things to all customer types or is the barrier to entry not worth the time to acquire certain types of customers?

Finally, look at your Top 10 Customers. Determine what criteria make them your Top 10 Customers.  These criteria should include consideration of a) total gross revenue generated, b) total profitability, c) total number of projects/year, d) number of years they have done business with your company, e) risk factors associated with this client (Do they make your life miserable during each project? Are they on shaky financial ground? Are they a pleasure to work with and extremely collaborative? Etc.).  How do the needs of your Top 10 Customers compare with the Voices of the three customer types you have been researching?

Taking a two-week time period to have these types of data-gathering exercises can contribute to a solid Business Plan that is based on knowledge rather than conjecture and assumption.

Wouldn’t you like to point yourself and your staff in the right direction from the git-go each year?

Think about it.

Filed Under: Business Development, Business Plan, Customer Focus, Engineering, Entrepreneurship, Startups Tagged With: , , , ,

Have you done an Industry Analysis lately?

December 6, 2010 By Leave a Comment

If someone asked you what was your take on your industry, would you know what they were talking about? There’s something called “industry analysis” which is an important component to any business plan. And basically, it should be the reason why you are in business… or are working for a company who feels it is competitive within your industry.

Otherwise your business development efforts may resemble, well, er, a crap shoot. 

In other words, you shouldn’t be in business based on what you – and perhaps nobody else – thinks is a great idea.

Have you ever heard anyone in your company talking about the latest industry trends? Hint: the marketing and sales departments, aka “business development folks", might be a great place to find this type of information. And if you are in the engineering, IT or other technical departments, wouldn’t you like to know that you are pointed in the “right” direction? So yes, even you need to read this stuff.

Oh, you are just a two person firm (or less)? Surviving on outsourced contracts from your former employer or perhaps your local network? I hope you don’t think this is a valid excuse for not knowing the trends and issues for your industry’s marketplace.

Understanding what makes your industry “tick” is critical to your professional development as well as establishing your value to your company and your clients. It’s up to you to find out these issues. No one’s going to hand this information to you on a silver platter.

What astounds me is the number of small to mid-sized businesses with whom I work that really don’t have their hands on this type of information. These companies have been “successful” by anyone’s definition: they’ve survived the recession and have a stable customer base who sustain them from year to year within usually single digit, occasionally low double-digit, growth.

Think about what a little insight into industry dynamics might mean to your company’s bottom line. This information may be just what it takes to move your company into double digit growth as the new status quo.  If you are thinking about resting on your laurels, your competition isn’t. And your competition may be on another continent.

OK. I’ve made my point.  You need to understand the market overview and your particular niche market’s size. Otherwise, how do you know which types of customers to target?  Without this type of information, business development may feel like Ready-Fire-Aim each year. Wishin-and-a-hopin’ will not cut it if you are targeting double digit growth, let alone survival.

Now where to find this information.  For starters:

  1. Professional associations will have annual reports about the state of the industry in which they operate and behavioral, technological and professional patterns within their membership. Start asking your local and national associations about this information.
  2. Your local, and national, government offers reporting on industry trends.
  3. Industry magazines often hire third party entities to conduct research and issue various reports on a number of subjects which provide historical, as well as current, trending.
  4. Google what you are looking for. There are a number of reports – for purchase - issued by various data banks which offer an extremely granular analysis of data for your industry. Some of these reports run over $3000. (Yes, you read that correctly.)  Some of these reports are more modestly priced and offer  a lot of relevant information without becoming info overkill. Depending on what your goals are, these reports may be worth the investment.
  5. Participate in webinars and seminars on these subjects to get your ear on the rail and determine what is going on in your industry. These venues offer books, resources, references and individuals who walk the talk and are approachable and quite willing to point you in the right direction.
  6. Ask your LinkedIn network for information, references and resources. That’s what your Network is there for. It’s not just about networking for a job search.

Even if you are working for an established firm (aka “we’ve always done business this way and everyone knows who we are”), maintaining the status quo is not an option if you are targeting stability and growth.

Determining a) what makes your industry tick; b) what the marketplace looks like in terms of overall dollars generated per year and various market segment opportunities; and c) what the relevant size of the marketplace is for your company provides insight on where to place your time, efforts and resources for business and talent development.

Your company may be trying to be all things to all people. In fact, your company may be capable of offering all things to all people. And if you are a small firm, you may be desperate to drum up business, any type of business.

Take a step back and a deep breath and put some method into this madness. Focused talent, resource and business development initiatives require discipline and a knowledge of your industry.

Think about it. This doesn’t have to be a crap shoot at all.

Filed Under: Business Development, Business Plan, Entrepreneurship, Startups Tagged With: , , , ,

What’s your Business Plan? Do you even have one?

November 15, 2010 By Leave a Comment

Have any of your clients ever asked you whether you had a business plan? And whether you could provide them with that business plan?

What did you say? What did you do?

Having a business plan, and re-visiting it every year, is one of the most important aspects of running your business efficiently and effectively. And I don’t mean the annual strategic planning exercise where everyone sets goals and expectations with wiggle room that either a) are met or b) have to be revised.

I’m talking about a Business Plan.

A business plan lets you know where the money is coming from and where it goes each year, based on prior years’ activity and performance. A business plan helps you quantify what you qualify to your customers day in and day out. It’s the basis for why your doors remain open and why customers should want to work with your company. It’s more than a business plan. It’s a business platform.

You use it for obtaining financing and you use it for being acquired, if that’s your plan. Your Business Plan is your credibility.

For all you engineers, IT professionals and technology folks who bemoan what they didn’t teach you in engineering school, or wonder whether to get an MBA or an MEng or PhD, here’s a clue: understand what it takes to produce a business plan.

Whether you are an inventor, a start-up, a newly funded company with venture capital and state funding or a mature business who wonders why you can’t move to the next level, a lot of your future has to do with how you view the data from the past. And your ability to combine that knowledge into a solid Business Plan.

You can Google the term "business plan" and find templates all over the internet. So this information is available to you. What usually isn’t available is the expertise on how to craft the business plan effectively and convincingly so that you, your employees and perhaps potential investors understand who you are and where your company is going. In essence, your business plan is a road map for everyone to confidently follow. So get yourself a coach or a consultant to assist you in producing this important document.

The elements of a Business Plan include:

  1. Business Overview (Executive Summary)
  2. Marketing opportunities and drivers
  3. Competitive analysis
  4. Business Model
  5. Management Team
  6. Financials (or the pace of getting things done, including your exit strategy)

If your organization already has a business plan, ask to see it. Your career development hinges on being able to understand a business plan and potentially write one. You need to understand where you fit into the organization and what makes your organization “tick” within the competitive marketplace. If you understand your company’s business plan, you can determine where your skill sets best fit in as you take the steps to develop your career.

What’s your Career Plan? And how does it fit into your organization’s Business Plan?

Think about it.

Filed Under: Business Development, Business Plan, Entrepreneurship, Startups Tagged With: , ,