Archive for the Strategy Category
Does this sound like you? You and a close friend have decided to go into business together. After all you get along so well what could possibly go wrong? What is the worst thing that could happen?
Many things could happen not the least of which is the friendship dissolves and one of you takes legal action against the other. Here are 7 tips of what to consider or do before you go into business with friends.
- Think long and hard about the potential loss of the friendship. Can you weather losing the friendship. Is a successful business worth this price?
- Strengths & Weaknesses Analysis: Each of you needs to create a list of what you’re good at, what you like to do, what you aren’t good at and what you hate to do. Then compare to determine where there are gaps.
- Develop a list of critical tasks, activities and functions you will need accomplished in the business.
- Divide up the responsibilities using the lists you developed under #’s 2 & 3. Make sure you equally distribute what people don’t like to do and give people the responsibilities they are good at. Anything left unassigned represents where you will need outside help.
- Develop an exit strategy. Today, before the business has a value, discuss and establish how a founding owner will be bought out. This is often referred to as a Buy/Sell Agreement. This needs to be done while cooler heads prevail and there is no emergency situation.
- Establish how the owners will be paid. How and when will money be withdrawn from the business by an owner. What constitutes a legitimate expense or cost that triggers reimbursement. It needs to be equitable and not allow any one owner to put the business in jeopardy.
- Create a “Business Prenuptial” which is a written document that sets out the what, where, when and how of your ownership with your friend. It is the culmination of the considerations under Tips #3-6. Anything that is ambiguous is an opportunity for disagreement and adverse consequences so resolve them now. Include a provision for when you will review and update the information.
In the course of completing these tasks don’t be surprised to find out you are better as friends than you could be as joint owners.
What additional tips would you suggest?
For many of us 2009 was a challenging year. Now is the time to focus on your accomplishments, rather than focus on what didn’t get done. Celebrate what you achieved.
Here are a few suggestions to get you started:
- Becoming more nimble and flexible in the way you do business as the economic environment worsened and then seemed to get stuck in a holding pattern. Along the way you learned a few things.
- Learning to do what you dislike. Be it calling customers to collect past-due amounts or tightening customer credit to protect cash flow. It wasn’t always easy but it was necessary. Your business is stronger for it.
- Re-focusing the business services back to core competencies even at the risk of disappointing certain customers. Overall operations will be more efficient and profitable.
- Parring expenses to what was needed to operate not what was desired. Yes the belt tightening was annoying but the cost of not surviving was even more annoying.
- Cross-training staff to both economize on labor and develop employees’ latent skills. Without realizing it you created a training program that will help you to grow in-house talent!
- Using down-time wisely to create new product and/or service offerings and to shore up systems and procedures. With the “luxury” of time you invested in your business future.
- Exploring the world of social media and determining what makes sense for your business and the customers you need to attract.
- Interacting live with your customers and listening to what they need from your business to be successful. You have enhanced the relationship.
- Asking for help. Perhaps you joined a CEO forum or formed an advisory board. The important point is you stopped trying to go it alone.
What else have you done that you can share with us? Leave a comment and let us know.
Wishing you a Merry Christmas!
The Wall Street Journal today reported that some small business owners so accustomed to hunkering down to survive are failing to see the economy is recovering and remain unprepared. This is a reminder that failures will continue well into the future due to recession-related stresses and failure to prepare.
What can you do right now? Here are a six ideas:
- Network. It’s the holiday season, reason enough to go out to meet and greet customers, prospects and referral sources. If you can’t get out, pick up the phone. Stay away from email…this requires the human touch.
- Visit your Banker. Yes credit is still tight. If you want any chance for a loan it’s important your banker remember who you are. Invite the banker to your offices. Take time to explain what’s changed and for the better.
- Update Marketing Materials. Even if you simply rework the old materials, do something to make it look revamped and new.
- Verbal Branding. Make sure all your staff can articulate in as few words as possible what differentiates your company from competitors. Say just enough to capture someone’s attention and curiousity. Talking less not more to explain what your company does. To learn more visit Melanson Consulting.
- Finalize Key Policies & Procedures. I specifically recommend your credit policy. Failures will continue. Not all new customers will be good customers. While you’re at it review and revise how you process purchase orders. Never hurts to make sure the right employees are approving the right purchases and your CFO will appreciate it.
- Trade Shows & Conferences. Consider previous trade shows and conferences attended. Evaluate which ones are worth your time. More importantly research the new ones you need to attend…new events where you might meet a better quality customer and/or referral source. Plan your attendance now, get it on your calendar and schedule when to make the necessary reservations to minimize cost.
