Written by Dave Lavinsky on Tuesday, February 12, 2013
One of my friends works for a multi-billion dollar cable company. And his role is extremely interesting. Specifically, he's charged with figuring out what the company needs do to now so that it will be competitive ten years from now.
Imagine that? 10-year planning. For most businesses, it's inconceivable to do this. But for a cable company, it could take years to implement changes such as installing cables to hundreds of thousands of homes. So, he spends his days researching, analyzing and theorizing over what the world might look like in 10 years and what the company needs to do today to start preparing for it.
And I'd like to think that he, and perhaps those before him, have done a great job at this. Because while 10 years ago I only use my cable company for television service, today I pay my cable company for television, internet access and phone service.
Break-Even Thinking Doesn't Work
But what about your business? Do you need to plan 10 years into the future? The short answer is "no." But it's important to point out that any planning is significantly better than no planning.
In fact, for most small businesses, planning generally tends to be more along the lines of thinking "what do I have to do to have enough revenue to pay the bills for the next month?" Missing from this thinking are the critical long-term decisions and directions on how to grow the business, increase its revenue, and expand market share.
And what inevitably happens is this: if your immediate focus is just trying to break even, your business often ends up just struggling rather than growing.
The solution is to develop a five-year plan, and using it to guide daily operations.
How It Works
A five-year plan is not a set of financial pro-forma statements and twenty pages of text and history on your company. Rather it must incorporate real thinking about 1) what goals you want your company to achieve, and 2) what goals every key division of your company must achieve.
Specifically, you must document the revenues and profits your company seeks to achieve in 5 years and then set similar goals (with different metrics as appropriate) for each operational area (e.g., marketing, fulfillment, etc.).
This in turn becomes the basis of the roadmap you'll use to grow our organization.
Use The Map
Ironically, after putting considerable time and effort into building a 5-year strategic plan, many business owners and managers never look at it again.
To avoid this, work backwards and document shorter term goals. Let me explain. Now that you know what you need to achieve within 5 years, determine what you need to achieve this year in order to make solid progress towards your 5 year goal.
Next, figure out what you must achieve this quarter to progress to your annual goal. You can break this down even further to figure out what you must accomplish this month to reach your quarterly goal.
This process allows you to set monthly goals that progress your business. Document these goals and share them with your team so you can accomplish them.
And importantly, use these short-term and long-term goals in your daily decision making. For example, is forging a relationship with a new partner in line with your goals? Or is it another distraction that will take time and prevent you from reaching them?
Also, use the shorter-term goals to measure your success. Are you meeting revenue goals? Do you have the amount of clients you projected for this time of the year? Use objective measurements that will not allow you to fudge your results. Your shorter-term goals give you a black and white, hopefully not red, assessment of where you stand in accordance to your goals.
Keeping your five-year plan alive is like having an up-to-date, accurate map of a foreign city when first walking its streets. It allows you to not just think about breaking even, but to reach specific performance targets and goals.
When people have a clear idea what to strive for and how to get there, even when challenging, they perform better. That translates to improved operations which also eventually improves revenues and profits for your company.
A five-year plan and periodic short-term goals also does away with complacency. When a business is in the "break-even" mode, it's only thinking about the immediate demands, never pushing to do more than just what's needed to meet the given threshold. Processes become routine and complacency sets in.
Your 5-Year Plan Must Be Updated
It's important to remember, however, that your five-year plan needs to be updated regularly. Markets, environments, customers and regulations change over time, all of which have an impact on a business and its profit margins. For example, the recent healthcare laws enacted by the federal government impose new health plan requirements on businesses of a certain size. Clearly, businesses did not consider this regulatory change in their five-year plans back in 2010.
So, update your five-year plan annually to reflect new changes, new ideas and new goals.
Finally, your five-year plan is only as good as the effort you put into it. The components, goals and targets have to be well thought out so as to be realistic and achievable. When you do this, and when you break down your 5 year goals into annual, quarterly and monthly goals, you will know precisely what to do to grow a thriving business. For help with this process, download my strategic planning template.
Written by Dave Lavinsky on Sunday, February 10, 2013
The last time you needed to drive to a place you had never been before, what did you do?
Did you the load the specific address of your destination into your GPS, determine the best route, and then follow the directions?
Or, did you print out and follow your directions?
Or, did you do the opposite, that is, did you aimlessly follow random roads hoping that eventually you would arrive at your destination?
Sounds crazy, right that someone would consider this? But, that is exactly what millions of business owners do every year and it is the reason that less than 20% of businesses succeed long-term.
Building a successful business is not a collection of random acts of guess work and blind decisions. To realize your dream of a successful business you have your make your destination a part of your current reality.
Know Your Destination
When Alice was in Wonderland she asked the Cheshire Cat which road she should take. He asked her where she was going. Alice replied that she didn't know. Then came the much quoted Cheshire Cat reply of, "Then it doesn't matter which way you go".
That may work very well in fiction or for a day of exploring a new hiking trail. But it doesn't work that well in business. Most business owners don't start a business thinking "Okay, I'm going to sink all my money, time, and effort into this venture, play it by ear, and if I lose all my money that is perfectly okay."
Businesses are typically born out of a goal or a dream, such as "to be the best Italian Restaurant in the Tri-County area and be booked 3 months in advance" or "to grow my consulting business to $2M in revenue by my fifth year in business."
These aspirations and reasons for even starting are also the destination -- and they cannot be forgotten or buried in the frenzy of daily operations.
Your destination must be known and visible every day. It must be at the core of every decision you make.
Large corporations don't have a vision and a mission just as a fad. They have these plastered all over the walls because knowing your destination helps assure you will get there.
The same way you would enter the precise address of your destination on your GPS, so it is in running your business. Know your goals and keep them front and center to make sure you are in route to achieve them.
Importantly, take time to review your business plan or your 5 year strategic plan. What were the main objectives of your business? How do you describe your end-game?
When planning a long road trip, you typically break it down into small pieces. You study the map and learn the paces you will drive through. For example, when going to New York to Las Vegas, you may map stops in Ohio, Missouri, and Colorado. Because you prepared, and know what to expect along the way, and you know that if you see a sign that says "Welcome to North Carolina," you have veered off course.
Marking key places in your road map to business success is equally important. If you determine that for your business to thrive, you need to have 100 new clients by December, then reasonable milestones would be 25 by March, 50 by June, and 75 by the end of September.
By planning milestones in advance, you know whether or not you are on track to meet your goals. If by July you only have 30 new clients, you know you are off track, and need to reconfigure. On the other hand, if you have 80 new clients by August, then you know you are ahead and can consider revising your goal upward.
So review your strategic plan, and then break down your goals into shorter term objectives. Identify specific, objective measurements that you can take at precise intervals and map them out. These milestones can take many forms such as sales, revenue, profit, clients, etc. The important part is that you use quantifiable data that will tell you clearly if you are on track.
Institute Scalable Systems
People, especially business owners, dream of success. They have very vivid visions of the day they will "make it big," but so many are not really prepared for success. Very often a business owner will successfully pitch their product only to have to turn down a lucrative deal because they don't have the production capabilities.
Take the "Wal-Mart Catch." Inventors of new products salivate to have their product on the shelves of every Wal-Mart in the country. However, when Wal-Mart puts in an order, it's not for 100 units. It's for tens of thousands of units. Inventor after inventor has lost their distribution contract because they did not have the systems in place to allow them to quickly scale up their business. They did not have the manufacturing support to produce so many units.
They knew the destination, but were unprepared to arrive.
What is your end state? Do you have the systems in place to support having your dream come true tomorrow? Be prepared. Know exactly what it will take to run your business such as it will be at the end of your 5 year plan, and have all the partnerships, alliances, agreements, channels, support staff, and raw materials identified and ready to access when needed.
If you want outrageous success, you have to be outrageously prepared for it.
Your Destination is Your Reality
Your everyday business operations need to be focused on your destination. When you are driving to the mall, you are driving to the mall. Every turn you take, every road you choose has one purpose, to get you to the mall. The same applies in your business. Every product you manufacture, every service you provide, every relationship you cultivate must align to your target end-state.
Avoid falling into auto-pilot. Actively work toward your "end" every single day. Be conscious of how every sale gets you close to hitting your next milestone.
Carefully measure your progress. If you are off track, don't wallow. Make adjustments and keep moving forward. If you are ahead, pin-point the actions that are giving you an advantage, and do more of that!
Keeping your destination alive and visible in your daily functions will keep it as your current reality and help you prepare for the success that comes with arriving!
And make sure you have a written strategic plan that maps out your end-vision and your periodic goals and milestones. If it's not written down, you can't achieve it. My strategic plan template allows you to quickly and easily get your plan down on paper.
Written by Dave Lavinsky on Wednesday, February 6, 2013
This is a true and pretty ridiculous story that happened to me at my first job. It was about 20 years ago and I was working at a market research firm.
After working in the job for nearly 6 months, I had an idea for a new product. You see, our company had been selling access to a large database of information to our clients. My idea was to better package the information.
Specifically, my idea was to create pre-defined reports from the information that allowed them to access key
pieces of data quickly and easily. This would not only help existing clients, but it would open the door to new clients who only wanted the specific information rather than paying for full database access.
Instead of asking approval to launch the new product, I used my spare time to actually create it. I then showed it to the VP of my division.
So what do you think happened?
I got yelled at.
Seriously, the VP was angry at me. He questioned my immediate boss as to what
I was doing and why I had invested time in creating something new.
Obviously this was not a very entrepreneurial company.
But what I found most interesting about the event was how much face time I
got with the VP.
You see, that VP was what I consider to be a "stealth manager." That is, he pretty
much sat in his office, door closed, day after day after day.
So he really had no idea what everyone was doing. So he didn't know that I created
the new product after hours, and that between 9 and 5, I was accomplishing all the regular tasks assigned to me.
In fact, he didn't know much about anything that was going on.
And the result -- the employees were not inspired. We were not motivated. We lacked a clear vision of what the organization was trying to achieve.
And all this resulted in lackluster performance.
We didn't go out of business. But we certainly weren't growing like gangbusters like we should have been.
Think about your days. Are you a stealth manager? Are there others at your organization who are stealth managers?
Stealth management doesn't work. Effective leaders and managers walk around and speak to their employees. They listen to them. They inspire them. Because effective leaders know that it's the employees who make or break their companies. They (the leaders) are the conductors of the orchestra -- without the players (the employees), there is no music.
Here are 5 things you can do TODAY to quickly break out of the "stealth manager" mode (and make your team more productive).
1. Walk around the office
Simply walk around to see what everyone is up to. Don't make it seem like you're Big Brother checking up on them. But rather, be very casual about it (the next points will give you some talking points to help with this).
2. Ask people what they are working on
Ask people what they are working on, and then really listen to their answers. Ask them why they are completing a task a certain way, and as appropriate, suggest another way they may accomplish it. Not only will they appreciate this mentorship, but you could improve their performance.
3. Tell someone/several people they're doing a good job
Tell at least one person that they're doing a good job. Let them know you found real value in something they accomplished recently.
4. Buy cookies
I don't know many people who don't like cookies. Come back from lunch with cookies, and either hand them out or put them in a main area. In either case, let everyone know that you bought them "just because." Even those on a diet who refrain from eating them will appreciate the gesture.
5. Picture each of your team members as they looked when they were toddlers
This will force you to smile when you see them. And that smile alone will brighten their day.
Great companies are not built by one entrepreneur. They are built by entrepreneurs who inspire their employees to accomplish great things. Make sure you keep this top-of-mind, since if your employees don't succeed, neither can you.
Written by Dave Lavinsky on Tuesday, January 29, 2013
The lifecycle of most businesses from the owner's perspective is generally the same. First, you start or buy the business. Then, you grow the business. And finally, at some point, you exit the business.
During these second and third phases the differences between higher quality and lower quality entrepreneurs is really apparent. Specifically, the best entrepreneurs are able to maximize the value of their businesses and exit them at a price substantially greater than the price they paid to acquire or start the business.
So, what do these entrepreneurs do that increases the value of their businesses to themselves and potential acquirers. Here are the eight most common things they do.
1. They position their companies in a clearly-defined niche
Your business must be the best it can be at what it does, without trying to be everything to everyone. A business that knows its customer segments, their needs and language, and how to solicit a response from them is a lot more valuable than one that is a mixture of everything, or an unknown in its market.
2. They coach their teams to run the business without them
Could other people ever run your business without you? They'll have to, if you're selling! So why not make this your goal from Day One?
Make an organizational chart of how your business will look when it's time to sell it. List all the various workers in marketing, operations, and those they report to. It's okay if it's just you or a handful of people currently filling all those roles. Doing this will help you organize who is going to do what in your business before you hire a new person.
Then, over time, you can find other people to fill those positions one by one until you're out of the picture.
3. They build relationships with customers
Goodwill, such as your reputation and brand in the minds of your current and prospective customers, is considered an asset on your company's balance sheet. You build this over time by treating people right and maintaining good relationships.
If you intend to sell your business someday, or if you just want to have the option, this is something you have to make a priority throughout the business's life. You can't just start doing it well suddenly in the final year. Relationships and recognition take time.
4. They make sure their businesses are stable
Make sure you're not overly dependent on any one customer, vendor, employee, or anything else. Diversify your strengths. If you have any "whale" customers that make up a large portion of your business, try to get at least 80% of your business from other people.
The new owner does not want to take the reins and have revenues drop in half in the event your biggest customer leaves.
5. They maximize their revenues
This one's self-evident, but deserves to be repeated. Make sure you leverage the 4 proven ways to increase your revenues: getting more customers, increasing your average order size, get customers to buy more frequently, and finding new ways to monetize your customers and visitors.
A company with higher revenues and which shows growing revenues will be more valuable and attractive to buyers.
6. They hold expenses accountable
You boost your net profit (and therefore the value) by reducing your expenses. However, no one ever shrank themselves into wealth. You're not going to grow your business by keeping expenses lower-but the numbers will increase as it grows.
Your goal is to keep the percentages the same, such as keeping advertising at 20% of your revenues whether earnings are $100,000 or $1,000,000 per year.
Basically, you'll want to make sure that budgets are made and followed, to keep spending within projected limits and to avoid costs creeping up that don't generate more revenue in return.
7. They keep great records
Keep excellent records of everything for the new owner-your files, databases, customer communications, marketing materials, financial records, employee agreements-everything.
Committing to do this now will make your life so much easier between now and the time you sell. Keep good records for your own efficiency, protection, and to make your business look a lot more attractive to buyers than one where all the records are filed away in the old owner's head.
8. They develop a plan for when it's "done" and ready to sell
I don't want you to have plans on top of plans, but each of these will take certain actions to make them happen. So here's what to do: Add these end results into your existing business plan, and use your best judgment when choosing how to make each of them happen in your company.
When it's all said and done, the next few years are going to go by whether you maximize your business' value or not. At the end of, say, 5 years, would you rather have a stable, attractive, polished business ready to sell for top dollar, or be left taking what you can get for what you have?
If it seems like a lot, remember you have until the time you sell to take care of these things. You don't have to do it all now! Just add these elements I described to your vision of what you want your company to be, and keep your eye on it until the big day finally comes.
Written by Dave Lavinsky on Sunday, January 13, 2013
Venture capitalists (VCs), unlike angel investors, are professional investors that invest other people's money. Similar to angel investors, their goal is to earn a solid return on this money. In fact, VCs are judged and compensated by the performance of their investments. As a result, they are extremely rigorous in their investment decision-making process.
Here's how VCs earn returns for their investors:
1. Finding high growth companies
2. Making investments in them at favorable terms
3. Guiding and nurturing them
4. Enacting a liquidity event. This typically occurs by selling the company or taking it public.
VCs swing for the fences and only invest in companies they think can give them a "10X" return or 10 times their money back. This is because even with all their relevant experience, the average venture capital firm will lose money on half the companies they invest in and only break even on a third. Where VCs make their money is on the approximately 20% of companies they invest in that see explosive growth and provide remarkable returns of 10 times or more on their investment.
So, the first criteria when seeking venture capital is that you can offer the potential of a 10X return to them.
The second criterion is that is your company must have significant market potential of $50 million, $100 million or more. Now, you might think that if a venture capitalist invested $100K in your company and got back $1 million (a 10X return) that they would be happy. This is not the case. This is because venture capitalists like to be "hands on" on their investments and help the companies they fund (called "portfolio companies"). And since each partner in the venture capital firm can only nurture so many portfolio companies, they want to invest in fewer companies, each of which can provide not only a 10X return, but a check of $50 million or more when it reaches liquidity.
To summarize, when approaching venture capitalists, remember the 3 hurdles:
1. Their primary goal is to make significant money from investing in you
2. You need to show them how they can earn a 10X return
3. You need to show them how your company can eventually be valued at $50 million or more
Now, if you meet these criteria, you should be a good fit for venture capital. But, raising this type of funding it is virtually impossible if you don't know what you're doing and haven't done it before. So follow this plan:
1. Develop a list of VC firms.
Start by creating a list of venture capital firms.
2. Narrow your list.
Each venture capital firm invests based on particular characteristics (e.g., some only invest in software firms), so you need to make sure your list only includes VCs that are interested in your type of venture.
3. Make sure the VC is active.
Many VC firms that have websites aren't active. That is, they aren't making new investments. You don't want to waste your time contacting and talking with these firms.
4. Find the appropriate person to contact.
This is critical. Venture capital firms are comprised of individual partners and associates. If you contact the wrong one, you'll be dead in the water.
5. Send the VC partner or associate a "teaser" email.
You don't want to send the VC a full business plan or executive summary initially. Rather, you need to send them a "teaser" email to see if they are interested. You don't want to "over shop" your deal.
Once the VC "bites" on your teaser email, the next step is generally to send them your business plan. Following that you'll do an in-person presentation(s), receive and negotiate a term sheet, and then sign a formal agreement and receive your funding check.
The venture capital raising process is a lot of work, but once you receive their multi-million check with which you can dramatically grow your company, you'll agree it's worth the effort.
Suggested Resource: In Venture Capital Pitch Formula, you'll learn exactly how to find and contact venture capitalists, exactly what information to include in your presentations, and how to secure your financing. This video explains more.
Written by Dave Lavinsky on Saturday, December 29, 2012
Isn't it funny how doing less can sometimes be the best way to get a handle on things?
Maintaining a healthy life balance is vital; not only for your health and overall well-being, but also for increased productivity in your growing business! If you're a balanced person, you are very likely to achieve your long-term goals. Because the odds are, you're going to run into both ups and downs over time. That's business.
So what would a balanced life look like for an entrepreneur? Can you recognize when one is or isn't? How can we have a balanced life when our schedules are so overwhelming?
Fortunately, there are some tips and tricks that will help you regain balance and control of your life. When you will see the first results, you will be a lot more motivated to work hard (when it's time to work), and play hard during the time you choose to reserve for that vital part of living.
The secret lies in changing one thing at a time; you need to make small adjustments in order to see what works for you and what doesn't. Slowly but surely, you will get a brand new set of positive and healthy habits!
Here you will find 9 simple yet effective tips that will help you regain control of your life:
1. The weekend is all yours!
As soon as Friday afternoon comes, simply get away from everything that bothers or stresses you. I've heard all sorts of excuses - I know it's hard, trust me, but try to do it completely at least one day per week.
You will be amazed to see how good you will feel without the hustle and bustle of projects and to-do's. Spend some time with your close friends and family: a nice dinner, TV/movies, and even some board games will help you relax after a tensed week at work! I figure it will be waiting for me Monday, so why not tackle it in a relaxed state of mind?
[Note: if your business operates on weekends, figure out your slowest day and at least take that one day off; you need time off!]
2. Make a selection
Write a list and get rid of everything you do not need or that does not add value to your business or life anymore. Simply eliminate everything that has become a stress factor for you and is no longer worth the investment...no mercy!
3. Don't neglect your health!
Everybody knows that it is better to prevent than to treat, so make sure you pay attention to your health. Stress can have devastating effects on both your physical and mental health, and that reflects on your life. Eat healthier, sleep more than you used to, and do some kind of fun, physical activity regularly-your customers and clients will see the difference in no time!
Importantly, put your health into your routine. For me, everyday after work I head straight to the gym or go for a run outside. Because this is part of my daily routine it's easy to do, and I always do it.
4. Get rid of toxins
The term "toxins" refers not only to what we eat or breathe, but also to those toxic people that surround us. Keep an open mind and gather positive, cheerful people around you. Their positive energy is addictive!
This also includes avoiding toxic people; not always easy, but it has to be done.
5. Spend some time alone
If you have a busy schedule like I do, then you certainly know how difficult it is to spend some time on your own. As difficult as it may be, spending some time alone is of utmost importance-it not only relieves stress, but it also encourages creativity! Do something relaxing, something you enjoy doing. You deserve some time for yourself.
6. Strengthen connections with friends and family
They are the most important people in your life and they deserve a place in your busy schedule. Talk to your friends and family, invite them over for dinner, have a cup of coffee with them. Your loved ones are the constants throughout the fast changes of your growing business.
No successful person has ever told me they wish they had spent less time with their friends and family during their careers. Rather, it's the opposite, they all wished they had spent more time.
7. Treat yourself! You are important, never forget that
Get a new haircut, buy a new shirt, get your nails done, schedule a massage, or go shopping! Isn't that why we got into business in the first place...to have some perks here and there? Being dedicated to your business doesn't mean being austere. Being dedicated to your own well-being, however, will absolutely help you perform at work.
8. Expand your horizons
Leaders make better decisions when they have knowledge in a variety of fields and topics. Try to know more about the world that surrounds you-take a stroll in the park, visit a new town or country, attend a local performance, read or watch something outside of your norms. Try something you haven't done before!
9. Last but not least, remember to laugh
Laugh as loud as you can! Have fun, play or learn new jokes and you will see how beautiful life really is! Being a successful entrepreneur is a long and hard journey; you need to laugh and have fun along the journey!
Keep these nine tips in mind as you celebrate the New Year, and make them part of your life in 2013 so you achieve more and have more fun doing it!
Written by Dave Lavinsky on Tuesday, December 25, 2012
One problem many entrepreneurs and small business owners run into is that they are simply thinking too small. I often have readers writing to me asking for help getting their business ideas off the ground. I also often hear from folks who have run their small businesses into the ground.
You may have heard of the expression "Shoot for the moon...even if you miss it you'll land among the stars." Plan big and even if you only get halfway there, you're still further than if you planned small.
Here are five key areas where it's possible to think too small - and doom your business to failure.
1. Too Small of a Niche
Is your niche too small? Finding a popular market for your business to target is critical to your success, but sometimes people narrow down their niche too much.
For example, while doggy dental products could be a wonderful niche (as almost any dog owner can attest) you could narrow your focus down to a certain type of dog (such as German Shepherds). But going for one specific breed might be taking it too far, as it would reduce the pool of available buyers by 90% or more (my best estimate on dog breed ownership percentages :).
2. Too Small of a Target Market
Is your target market too small? If you are looking only at one community or small geographic region then you may well doom your product or service to failure.
It is far too easy to saturate a small market and for any marketing mistakes to end your campaign before it gets off the ground. In today's economy, with the availability of global marketing you need to think bigger when you are planning your target market.
Even if dominating your local market is your initial goal, make sure that you're ultimately heading for something greater or you might become a big fish in an inadequately small pond.
3. Too Small of a Budget
Is your budget too small? You don't need a million dollar advertising budget, but you should have some seed money to get your business and its marketing campaign off the ground.
It is possible to build a business from nothing but it is also a lot more difficult and you might find yourself making some mistakes that cost you a lot more down the road than putting a little money up front.
In fact, when planning a project or borrowing money, come up with a figure of how much you'll need and then double it! No one wants to come back to the well later when they run out.
4. Too Small of a Schedule
Is your schedule too small? Do you have enough time to devote to your business? Starting, running, and growing a business takes time. Some people get swept up in the planning and dreaming stages and never really start their business. Other people start before they have completely planned everything out and quickly get mired down by unexpected difficulties.
Some others do everything right in the planning and startup but once the business is running they get overwhelmed by day-to-day business and never think about ways to improve and grow their business.
Schedule some time right now to work on growing your business - launching whatever the next project is that will increase your profits and/or the value of your company.
5. Too Small of a Mindset
Is your mindset too small? You need to open up your mind's eye to see new possibilities, and continually seek new opportunities to find new customers, new potential partners, new ideas for products/services, and new marketing opportunities.
Flexibility and adaptability are key to survival in today's rapidly-changing business climate and you always need to have new ideas cooking to grow and expand your market and your business.
This means raising your head up and out of the trenches once in a while. Yes, you might need to dodge the occasional missile lobbed your way but this is the only way to see those opportunities.
If you do your best to avoid these 5 ways of thinking small, you'll have removed the single largest obstacle to growing your business...yourself.
Written by Dave Lavinsky on Thursday, December 20, 2012
"I always knew I'd be a millionaire by age thirty-two. In fact, I am going to be the richest black woman in America."
Oprah Winfrey said this in 1987.
And then it took her 19 years to accomplish this goal.
So, how did Oprah achieve this incredible feat and become one of the richest and most successful people in the world.
Well, the first thing she did is set her goal. Seems simple enough, but the vast majority of entrepreneurs don't have concise goals that they physically write down (or type and print out).
Do you have a written goal for your company? If not, create one now using these two guidelines:
1. Be specific. Of course you would like your company to be successful. But how successful? Do you want it to generate $5 million? $100 million? Do you want to eventually sell it? If so, for how much? And when?
The more specific you are with your goals, the more likely you will be to achieve them. And, because they are specific, you will be able to measure your progress towards achieving them.
2. Make your goals realistic. This does not mean you can't set a goal of taking your company public with a billion-dollar market capitalization. But such a goal would be unrealistic if you're running a single restaurant with no plans to develop new locations.
So, make sure your goals are realistic with respect to your business. And go ahead, be aggressive. As Donald Trump said, "As long as your going to be thinking anyway, think big."
Once you've set your long-term goals, the key is to break them into smaller pieces that you can attain in shorter periods of time. For example, over the past year, one of my key goals was to publish my book, Start At The End. In doing so, I created a series of smaller goals including:
- Write the book proposal for the publisher
- Outline the chapters
- Write chapter one, chapter two, etc.
- Edit the book
- Send copies to reviewers in seeking testimonials
- Create the interactive workbook
- Create that book website
Completing all of these tasks took hundreds of hours over many months. But it got done, because I laid out the steps and methodically completed each one.
To do this in your business, figure out what you'd like to accomplish in the next year that will progress you towards your long-term goal (that you developed above). The key question being: what portion of your long-term goal can you accomplish in just one year?
For example, if you ultimate goal is to get to $20 million in annual revenues, what must your revenues be 12 months from now? And if you envision ultimately having 200 employees, how many must you hire and train within the next year?
Once you do this, you'll know what your ultimate goals are, and your goals for the next year. From here, you must continue to work backwards. What are your goals for the next quarter, next month, next week?
By creating your big goal and then breaking it down into smaller goals, you can ultimately figure out what you need to accomplish each and every day to move closer to achieving it. Because that's all you can control right now -- what you do today. And then tomorrow, you can control and do what needs to be done tomorrow. And so on.
As the New Year approaches, make sure you determine the ultimate goal for your business and your goals for next year. Then figure out your goal for next month. And then do whatever you can to accomplish that goal next month.
After doing that, you might adjust your ultimate and/or annual goals. That's fine. You will have made real progress, and whatever your goals, you will have moved closer to achieving them. Just like Oprah Winfrey did every day, week, month, quarter and year for 19 years.
If you'd like additional guidance on setting your ultimate goals and working backwards to create shorter term goals and an action plan for achieving them, pick up a free copy of my book, Start At The End: How Companies Can Grow Bigger And Faster By Reversing Their Business Plan.
Written by Dave Lavinsky on Wednesday, December 12, 2012
The Jumpstart Our Business Startups Act (called the JOBS Act) was passed with support from Republicans and Democrats alike and signed by President Obama in April 2012.
In this article, I will give you an overview of the JOBS Act and most specifically its potential for equity-based crowdfunding, and give you an update on what's occurred since April.
[And for a little trivia, the term "the skinny" as used in my title was coined during World War II. During the war and for years thereafter, military orders in the Marine Corps were copied on paper that resembled the skin of an onion. It was extremely thin and fragile, and translucent in appearance. Orders written on them were referred to as "the skinny."]
The JOBS Act makes equity-based crowdfunding much easier
The JOBS Act makes it possible to raise funding from investors and donors through certain crowdfunding sites in exchange for equity in your company.
If you have tried to raise funds in the past by going a public offering, you'll know that it's expensive. Being able to bypass this is huge, especially if you are raising smaller amounts of funding.
The passing of the JOBS Act also means you won't have to seek out accredited investors specifically (people with incomes of $200,000 or more, or a net worth of $1,000,000 or more-not including their residence). You can receive funds from people of all income ranges, which makes the pool of potential investors MUCH bigger.
What's happened since April
When the JOBS Act was past in April, the SEC (Securities & Exchange Commission) was given until January 1, 2013 to propose the specific terms by which equity-based crowdfunding would operate.
For example, the SEC wants to make sure standards are in place with regards to how much money individual investors can invest (e.g., what portion of their annual income), the type and amount of information companies must show prospective investors, how to monitor the amount of money raised by individual companies, measures to protect against fraud, etc.
However, with just a couple weeks left before January 1, the SEC has not come to an agreement on how things will operate.
One key event which is probably both good and bad is that current SEC chairman Mary L. Schapiro announced last month that she will step down this month. Elisse Walter, one of the agency's commissioners is expected to fill the position. The bad news with regards to this changing of the guard is that it will most likely slow the finalization of equity-based crowdfunding laws beyond January 1st. The good news is that once Walter takes the helm, we can expect the SEC to come to decisions more quickly.
Massive Spike in Crowdfunding Websites
In January 2012, according to the North American Securities Administrators Association, there were less than 900 websites whose names included the word "crowdfunding" in them.
Today, there are nearly 9,000 of them. So, once equity-based crowdfunding laws are set (probably within a few months), there will be many, many websites upon which entrepreneurs will be able to raise crowdfunding dollars.
Preparing for Crowdfunding
Whether you want to raise crowdfunding today via rewards-based crowdfunding, or wait until 2013 for equity-based crowdfunding, here are some things you can do:
1. Broaden your network: the key to Crowdfunding is marketing; the more people that trust and like you, and/or who are convinced you have a winner, the more money you will raise. So continue to network both online and offline to expand the network of people who know and like you.
2. If you're already in business, keep growing it: As with any kind of funding, you will be in a much stronger position to ask for funds if you can demonstrate success in the past. So keep doing whatever you can to progress your business without funding.
3. Work on your business plan: Make sure you have a solid plan for how much funding you need, how you will spend it, and what effects it will have on your operations and revenues. You don't want to raise too much or too little, and once you raise your funding, you want to most effectively use it.
Crowdfunding is an extremely interesting and exciting new way to fund your business. It has grown dramatically as a funding source over the past two years and is poised to grow even more in the coming months and years once the JOBS Act laws are finalized.
Written by Dave Lavinsky on Sunday, December 9, 2012
There are several reasons why you'd want to build systems and processes in your business. The main ones are:
1. Precision and consistency. By having set processes for how tasks should be completed, you will get consistent quality results.
2. Time and money savings. When employees know precisely how to do something and do it the same way each time, they eventually become much better and faster at performing the task. This saves time and money, and gives you a competitive advantage.
3. Scalability. When you have set processes for completing tasks, it's much easier to hire and train new employees and grow your business.
4. Free your time and build business value. Developing and implementing systems allows your business to run without you. This frees up your time to focus on building your business further (and taking time off) and makes your business more attractive and valuable to potential acquirers (because it's not dependent on you and the acquirer can see how the business could continue to scale and provide value).
Each of these are compelling reasons to build systems and processes in your business, and is why building systems is one of the pillars of an 8-figure business.
Here are 4 simple steps to follow to develop systems in your business:
Step #1: Look at your current business processes
In developing your business systems, you should first look at the key tasks and processes your company performs on a daily basis.
For example, if you operate a laundry business, your business processes will include cleaning the laundry machines, managing customer drop-off orders, sweeping the floors, paying the bills, ordering supplies, etc.
Next, assess each of these processes to figure out which ones to focus on systematizing first. For example, figure out which processes, if improved, could most improve customer satisfaction, revenues and/or profits.
Step #2: Develop your business systems
Once you've identified the initial process(es) to improve, it's time to develop your business systems. In developing your systems, start with the outcome, that is, how should the task or process look at the end when it is completed flawlessly.
Then work backwards to figure out the best steps to achieve that outcome. When doing that, and comparing this to your current processes, try to look for the most efficient steps and eliminate any unnecessary ones.
Importantly, in doing this, you must write down the system on a sheet of paper. Yes, it's as simple as "Step 1, do this" and "Step 2, do that." The key is to make it easy and foolproof so any of your employees could follow it.
Step #3: Test and redesign your system
When I develop a new system, I like to complete it myself a few times in order to test it.
Importantly, when doing this, I look at the most challenging and/or time consuming parts of the system and then brainstorm ways to improve it. Consider this: if you create a process that allows a task to be completed in 9 minutes instead of 11 minutes, and that task is done twice a day by two employees, that improvement will save your company 49 hours of labor each year.
Also look for routine things that can be automated, such as the payment processing. For instance, manually writing customer receipts might take a minute while an automated register could create a receipt in seconds.
Step #4: Test-run with the team
Once you're done with redesigning your first business system, now is the time to implement it. To make teaching others faster, it helps to prepare as much as you can, and to actually demonstrate or allow them to see a demonstration of how the work is to be done.
If you're there in person, show them or have them watch someone in action to model going through the system. If it's work that is done on a computer, create a screen recording so others can watch to learn it.
The best way to train employees is by having them perform the process on a real-life order or project. Then the work that needs to get done is completed, and you get to see their performance and give feedback.
Then, over time, encourage your employees to try to improve your existing processes and systems. Have your checklists and flow charts readily available so they can follow them and propose new ways of doing things. Because as more and more of your business' processes become systematized, and your systems become better and better, your revenues and profits will soar and your business will be the envy of your market.
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