100 Ways to Be a Better Entrepreneur (Part 3/6)
Learn how to run and grow your business more effectively and efficiently.
Provided by Entrepreneur.com
23. Follow the Rules
If you think most rules were made to be broken, you may want to think again. Sometimes thinking outside the box can produce surprisingly positive results, but generally not at the expense of tried-and-true rules for effective marketing. Case in point: Recently, an e-mail marketer got dismal results from a mailing to a previously well-proven list. What went wrong? The solicitation was 500 words long, had a nebulous subject line and offered only a dull white paper. Next time, this entrepreneur will do well to play by the rules-with a 250-word maximum, a clear subject line that lets recipients know what the e-mail is all about and a more compelling offer.
If you think most rules were made to be broken, you may want to think again. Sometimes thinking outside the box can produce surprisingly positive results, but generally not at the expense of tried-and-true rules for effective marketing. Case in point: Recently, an e-mail marketer got dismal results from a mailing to a previously well-proven list. What went wrong? The solicitation was 500 words long, had a nebulous subject line and offered only a dull white paper. Next time, this entrepreneur will do well to play by the rules-with a 250-word maximum, a clear subject line that lets recipients know what the e-mail is all about and a more compelling offer.
Thanks to the billions of dollars businesses invest in advertising every year, all aspects of it have been studied. For instance, we know that in magazine ads, one central photo or image works better than several small ones, while in newspaper ads (particularly those that feature product sales), several photos work well to capture the attention of readers. Often, marketing is not a do-it-yourself job. If you're unsure about the rules for each medium, it's a good idea to hire experienced professionals.
24. Focus Your Marketing Efforts
Casting too wide a net is a mistake often made by entrepreneurs with big appetites and small budgets. They want to try a little bit of everything-advertising in multiple magazines and newspapers, online ads on a variety of sites and a list of special events-but with limited budgets, they end up with a tiny presence in each. As a result, ads and promotions get minor attention and their entire marketing budgets are wasted.
Casting too wide a net is a mistake often made by entrepreneurs with big appetites and small budgets. They want to try a little bit of everything-advertising in multiple magazines and newspapers, online ads on a variety of sites and a list of special events-but with limited budgets, they end up with a tiny presence in each. As a result, ads and promotions get minor attention and their entire marketing budgets are wasted.
When it comes to advertising, bigger is usually better. Large, four-color magazine ads generally produce better results than small, black-and-white ads. To maximize results from your marketing program, narrow your media choices and consistently run larger ads with enough frequency to get noticed.
Similar advice holds true for special events. Instead of taking a small, obscure booth in a half-dozen community events, purchase one or two major sponsorships per year to ensure that everyone who attends the events will be exposed to your message.
25. Makeover Your Marketing
Have you recently had flat or lackluster sales? If you're predicting more of the same in the coming months, it's time to reassess your marketing strategies.
Have you recently had flat or lackluster sales? If you're predicting more of the same in the coming months, it's time to reassess your marketing strategies.
· Study your audience. The clearest sign that your marketing needs a makeover is when it stops resonating with your target audience. The first step is to understand your customers' hot buttons by reviewing published articles and research. Look beyond how and what your prospects buy. It's also vital to have input from B2B customers. Visit their job sites to discover the challenges they face and what they hope to gain by working with you.
· Add value through innovation. Entrepreneurial companies excel at innovation. New products and services are created and old ones are tweaked. So shake off your stagnant marketing approach and find new ways to communicate the value of your company's innovations to your target audience.
· Set the competitive pace. Does your competition define your marketing strategy? If you spent recent years reacting to your competitors' marketing messages, it's time to start setting the pace. Monitor their innovations and how they market, but develop your own campaign that addresses your audience's hot buttons and focuses on adding value.
Making Time for Time Management
26. Filling Your Time
It's essential that you make time tangible because it moves so fast and it seems so amorphous. But if you think about it, managing your time is identical to organizing your space. A schedule really has boundaries; it has edges. If you start to think of your schedule as a container into which you need to fit a limited number of objects-your tasks&3151;you start to get more selective about which you'll put in. And if you group similar tasks by category, you can have a better handle on the kind of balance you're achieving.27. Preparing for Tomorrow, Today
At the end of each workday, take a blank sheet of paper and write down everything you must accomplish tomorrow in the order the tasks should be done. The next day, you won't have to decide what to do first, and crossing off the things you accomplish will give you great satisfaction. Don't let the simplicity of a to-do list fool you; it's one of the best time-management tools ever invented.
It's essential that you make time tangible because it moves so fast and it seems so amorphous. But if you think about it, managing your time is identical to organizing your space. A schedule really has boundaries; it has edges. If you start to think of your schedule as a container into which you need to fit a limited number of objects-your tasks&3151;you start to get more selective about which you'll put in. And if you group similar tasks by category, you can have a better handle on the kind of balance you're achieving.27. Preparing for Tomorrow, Today
At the end of each workday, take a blank sheet of paper and write down everything you must accomplish tomorrow in the order the tasks should be done. The next day, you won't have to decide what to do first, and crossing off the things you accomplish will give you great satisfaction. Don't let the simplicity of a to-do list fool you; it's one of the best time-management tools ever invented.
You should create to-do lists each day or at least weekly. This will give you an overview of what to expect each week and give you time to make any changes in advance. Use it in combination with a calendar, and keep in mind that to-do lists are for tasks to be completed, while a calendar is for recording appointments.
28. Is This Worth My Time?
Throughout the day, periodically stop what you're doing and ask yourself if what you're doing is the best use of your time. Ask yourself these few questions:
Throughout the day, periodically stop what you're doing and ask yourself if what you're doing is the best use of your time. Ask yourself these few questions:
· Is the task you're working on a top priority?
· Is the task going to increase your business or income?
· Does the task correspond with your goals?
· Is it a task that someone else could handle, leaving you free to handle more important tasks?
If you answered no to any of the questions, switch to another task or delegate the task to someone else.
29. How Long Will It Take?
One skill entrepreneurs should tackle first is the skill of estimating how long things take. And that's a very simple skill to develop; you just have to concentrate on it. If you ask the best time managers to do anything, they say, "How long is that going to take me? I have to gather the equipment. I have to set it up. I have to check for batteries. I have to sit down and think a little bit." If you go through this process, then you're in the position to make smart decisions about which tasks you will do, which tasks you won't, what you should delegate, and how you can create shortcuts. It's a breakthrough skill.30. Where Does the Time Go?
Examine where your working hours are going each week. You'll need to keep a log of your time for several weeks. Once the log is complete, sit down and evaluate where the time went. Upon reviewing the log, for each entry ask yourself: Is the task necessary? Then, if it's necessary, ask: Should I be the one who performs it? Immediately drop from your future schedule those unnecessary tasks, as well as any undertaking that doesn't contribute to the business in a real way.
One skill entrepreneurs should tackle first is the skill of estimating how long things take. And that's a very simple skill to develop; you just have to concentrate on it. If you ask the best time managers to do anything, they say, "How long is that going to take me? I have to gather the equipment. I have to set it up. I have to check for batteries. I have to sit down and think a little bit." If you go through this process, then you're in the position to make smart decisions about which tasks you will do, which tasks you won't, what you should delegate, and how you can create shortcuts. It's a breakthrough skill.30. Where Does the Time Go?
Examine where your working hours are going each week. You'll need to keep a log of your time for several weeks. Once the log is complete, sit down and evaluate where the time went. Upon reviewing the log, for each entry ask yourself: Is the task necessary? Then, if it's necessary, ask: Should I be the one who performs it? Immediately drop from your future schedule those unnecessary tasks, as well as any undertaking that doesn't contribute to the business in a real way.
For the other tasks, make a simple T chart. In one column, list the really important stuff that only you should do. In the other column, list the work that should be done by others. Finally, delegate those duties that should be done by others.
Get a Grip on Your Finances
31. When to Hire a CFO
Does your company have the adequate resources to handle tax planning, capital raising, cash management and all the other financial functions of a company? Or more simply: Is it time for your company to get a CFO? Of course, it varies from company to company, but answering some fundamental questions may indicate it's time to hire a CFO. Is the bill from your accounting firm surpassing the salary for a seasoned financial manager? Most entrepreneurial businesses turn to accounting firms for everything from taxes to raising capital, at a price tag of at least $150 an hour. "A good financial strategist will cost at least $90,000 a year, so do the math," says Steve Enright, president of SJE Partners, a Richmond, Virginia, HR consulting firm.
Does your company have the adequate resources to handle tax planning, capital raising, cash management and all the other financial functions of a company? Or more simply: Is it time for your company to get a CFO? Of course, it varies from company to company, but answering some fundamental questions may indicate it's time to hire a CFO. Is the bill from your accounting firm surpassing the salary for a seasoned financial manager? Most entrepreneurial businesses turn to accounting firms for everything from taxes to raising capital, at a price tag of at least $150 an hour. "A good financial strategist will cost at least $90,000 a year, so do the math," says Steve Enright, president of SJE Partners, a Richmond, Virginia, HR consulting firm.
Do you need to raise equity capital to fund further operations? According to Hackeman, if your business wants to go beyond just regular bank loans for funding to the likes of VCs, private investors, the public markets or anyone else looking for a piece of the company, then it may be time to bring in a full-time financial expert.
Is your company beginning to do complicated financial transactions? While raising capital can certainly get complex, there are other financial factors that can drive an entrepreneur to seek out a full-time financial advisor. One may be that his or her company is in the process of buying other companies. Another is that your business is beginning to set up deals with suppliers, customers or both that demand financial structuring outside the realm of common sense.
32. Costly Cost-Cutting Errors
When times are tough, you may be tempted to cut every expense under the sun to keep your business afloat. Beware, though-cutting the wrong things could end up hurting your business in the long run. Here are the cost-cutting measures that could ruin your business: Mistake No. 1: Choosing cheaper materials for your product. Mistake No. 2: Cutting back on advertising and marketing. Mistake No. 3: Not doing inventory or financial reports when times are lean. Mistake No. 4: Cutting R&D during the start-up stages. Mistake No. 5: Cutting anything that keeps a customer satisfied.33. Smart Spending for Surplus Cash
If you find yourself with extra money, the first thing you should do is sit down with your CFO and accountant to do some serious projections. Look at the operating cycle of your business and how much cash you're expected to turn under normal circumstances. Make sure the extra money really is excess and not a one-time bump from an unusual sale or savings from a one-time cost cut. Then sock away enough money in an interest-bearing account or low-risk investment vehicle to last several months-anywhere from three to 12 months, depending on your industry-should the economy contract and customers be unable to pay. Then, if you have extra savings, pay down debt. Once that's done, look at improvements that won't add a fixed future cost, such as employee bonuses and one-time improvements to technology or other essential machinery.
When times are tough, you may be tempted to cut every expense under the sun to keep your business afloat. Beware, though-cutting the wrong things could end up hurting your business in the long run. Here are the cost-cutting measures that could ruin your business: Mistake No. 1: Choosing cheaper materials for your product. Mistake No. 2: Cutting back on advertising and marketing. Mistake No. 3: Not doing inventory or financial reports when times are lean. Mistake No. 4: Cutting R&D during the start-up stages. Mistake No. 5: Cutting anything that keeps a customer satisfied.33. Smart Spending for Surplus Cash
If you find yourself with extra money, the first thing you should do is sit down with your CFO and accountant to do some serious projections. Look at the operating cycle of your business and how much cash you're expected to turn under normal circumstances. Make sure the extra money really is excess and not a one-time bump from an unusual sale or savings from a one-time cost cut. Then sock away enough money in an interest-bearing account or low-risk investment vehicle to last several months-anywhere from three to 12 months, depending on your industry-should the economy contract and customers be unable to pay. Then, if you have extra savings, pay down debt. Once that's done, look at improvements that won't add a fixed future cost, such as employee bonuses and one-time improvements to technology or other essential machinery.
If your business still has a surplus after putting away cash and making improvements without fixed costs, then consider making more significant changes, such as adding staff, expanding to another location, or purchasing a building for the business if you're currently leasing.
34. How Banks Can Help
If you've worked hard on preventing cash-flow issues, but still find yourself with an unexpected problem, what can you do about it? If you haven't been planning on this happening, you may face some painful choices: Borrow from your personal funds, delay paying some vendors, delay payroll, try to convince a customer to pay their bill early, etc.
If you've worked hard on preventing cash-flow issues, but still find yourself with an unexpected problem, what can you do about it? If you haven't been planning on this happening, you may face some painful choices: Borrow from your personal funds, delay paying some vendors, delay payroll, try to convince a customer to pay their bill early, etc.
A much better plan is to have a close relationship with your banker. Treat your banker as a partner, and send them frequent financial reports. The more a banker knows about your business, the more confidence he will have in you, and the more willing he will be to help out if you get in a cash crunch. Another important tool is a line of credit from your bank. Think of this as business overdraft protection for your checking account. If you've got that in place (and the time to look into this is not the day you need the money!) and a customer is slow to pay, you can draw on it until your invoices come in.
35. Basics of Cash-Flow Management
If there's one thing that will make or break your company, especially when it's small, it's cash flow. If you pay close attention to your cash flow and think about it every single day, you'll have an edge over almost all your competitors, and you will keep growing while other companies fall by the wayside.
If there's one thing that will make or break your company, especially when it's small, it's cash flow. If you pay close attention to your cash flow and think about it every single day, you'll have an edge over almost all your competitors, and you will keep growing while other companies fall by the wayside.
Let's take a look at some basics. What does "cash flow" mean, anyway? For the moment, don't think about profits and losses, your balance sheet, gross margins, etc. Perhaps the simplest way to think about cash flow is to just think of the balance in your checking account. Will that balance be enough to pay your bills when they come due? That's the point of this whole concept-the further out you can predict your bank balance, the further out you can see a problem, and the longer you have to deal with it.
As you start to think about it, you'll realize that you can pretty easily forecast most of your expenses, at least for the next few months. Once you have that in mind, add the revenue that you believe you'll receive, and do the math.
Beefing Up Your Negotiation Skills
36. Good Things Can Come From Bad Deals
Have you ever made a really bad deal? Admit it. We all have. It may not be taught in any school, but deal-making is a core competency in life-particularly in the business world, where wealth and success are a fetish. Your negotiating ability directly affects your income, your relationships and, ultimately, your station in life. That's why making a bad deal can be so hard to live down.
Have you ever made a really bad deal? Admit it. We all have. It may not be taught in any school, but deal-making is a core competency in life-particularly in the business world, where wealth and success are a fetish. Your negotiating ability directly affects your income, your relationships and, ultimately, your station in life. That's why making a bad deal can be so hard to live down.
It's possible you did everything right. Sometimes, bad deals just happen, even to the best. But more often than not-and whether or not you're big enough to admit it--you probably had something to do with it. Don't avoid the post-game wrap-up. It's the only way to shave strokes off your score. Ask yourself the tough questions: How did you contribute to the problem? Did you miscommunicate? Did you forget something? What will you do differently next time?
It's important to think deeply and introspectively. Why did you make the mistakes you did? Were you too arrogant to ask for help? Were you too easily cowed by this opponent? Were you too greedy? Did you let things get too personal? If you can, find a good friend to help you debrief.
37. Get Tough
Toughness is partly about your game face, but it's also about technique. When you're called on, or choose, to take the hard line, here are some ways to strengthen your game:
Toughness is partly about your game face, but it's also about technique. When you're called on, or choose, to take the hard line, here are some ways to strengthen your game:
· Don't talk too much. Be terse. The less you say, the less you reveal about your own position. The less you say, the more you can listen for weaknesses or opportunities.
· Be stingy with your concessions. It can really grind your opponents down. If you must give, give just a little, and get something back in return-even if it's their agreement to take an issue off the table.
· Be firm. No means no. If you don't want to give a point, make your opponents feel like they just hit the wall. You will not be perceived as a jerk, so long as you offer a plausible explanation for your position.
· Keep things moving. Don't let your opponents backtrack on you. Once an issue is settled, it's settled. Be supremely efficient and businesslike. Your opponents must feel that your time is precious and that you do not suffer fools at all.
· Stay focused. In detailed negotiations, mental stamina is a tremendous asset. Victory goes to the dogged. The last person standing at the bargaining table is the one with the greatest power of concentration.
· 38. The Ugly Side of Negotiation
For whatever reason, deal making often brings out the ugly side of commerce. At the drop of a hat, parties polarize, one side vilifying the other. Principal players are overcome by fear and greed. Egos clash as the insecure become blustery, then arrogant, then insufferable.
For whatever reason, deal making often brings out the ugly side of commerce. At the drop of a hat, parties polarize, one side vilifying the other. Principal players are overcome by fear and greed. Egos clash as the insecure become blustery, then arrogant, then insufferable.
Problems like these are unavoidable. As with medicine, early screening and detection are key. What vibe do you get from your opponent at first contact? Of course, some will fool you, but your gut is often smarter than you are. Watch for goofy or unreasonable demands early on. Listen carefully to what their own professionals say about them-and especially look for that omnibus euphemism "difficult personality."
Think of difficult negotiations not as a hassle but as a challenge. The experience will only make you better at handling others, but better at handling yourself. Don't become distracted by your opponent's antics, however outrageous. Stay focused on your goals and on the actual issues. Don't escalate hostilities, lest you get caught in a senseless cycle of verbal violence. Let it roll off you. After all, it's not about you; it's about them. You should also remember that "craziness" can be feigned as a tactic to manipulate you. If that's the case, consider calling your opponent on it, whether tactfully or bluntly.
39. Getting Your Fair Share
Whether it's a commission, a participation, a royalty or equity, when deal makers talk about taking "a piece of the action," they usually mean some kind of percentage. It may sound simple, but in the real world, cutting someone a fair slice is not. Here are some things to think about:
Whether it's a commission, a participation, a royalty or equity, when deal makers talk about taking "a piece of the action," they usually mean some kind of percentage. It may sound simple, but in the real world, cutting someone a fair slice is not. Here are some things to think about:
· Is it justified? Percentages can mean big upsides. Reserve these rewards for those who really bring value to the table-usually the people or companies that are key to the venture, or those taking an unusual amount of risk.
· Would an hourly rate or a flat fee be less expensive than a percentage? This is a common theme when professionals are involved. If they'd perform the same service either way, run the numbers to see which is better for you.
· What's the percentage based on? Is it on everything or just a part? Is it on gross or net? If it's net, what comes off the gross to get there? Make sure you understand how a percentage is calculated. Crunch some numbers. If your opponent has any skills, he's good not only at counting the beans, but also at hiding them.
· Is equity involved? Stock is complicated, so you must get professional help. The formalities are legion, and the pitfalls nasty. The actual number can mean little without taking into account voting rights, classes of stock, buyouts, vesting schedules, conversion rights, registration rights, dilution and the like.
· For how long is it payable? Certain deals can go on for years. That percentage income stream can be well-deserved passive income or a total boondoggle, depending on who is getting it and why. Ask yourself: Should these payments go on forever? If not, when do they stop?
· Who's rushing me? The percentage players in a deal often have a strong incentive to close quickly. No deal, no percentage; and the faster they get there, the better. This is a predictable current in many negotiations-it's up to you to swim with or against it.
40. Overcoming Your Resistance to Negotiation
An entrepreneur who doesn't like to negotiate is like a chef who doesn't like to handle knives. Bargaining ability is a key business skill. If you resist learning and using it, you have a serious deficit-not just at the bargaining table, but also in life.
An entrepreneur who doesn't like to negotiate is like a chef who doesn't like to handle knives. Bargaining ability is a key business skill. If you resist learning and using it, you have a serious deficit-not just at the bargaining table, but also in life.
Some people feel it's degrading, like they're begging the other side for scraps. For a few, the problem is systemic. These are the pathologically shy, who wilt at the prospect of any kind of confrontation-they can't get to yes, and they can't just say no. For most people, however, the problem is not about some organic weakness in their psyches. It's the natural awkwardness of facing a new opponent or a new situation. The solution is simple: Learn and practice new skills. Ask a colleague to coach you. Thumb through one of the many good books on negotiation. Take a seminar. Bring someone along to pump you up or step in if you get stuck. Make an ongoing commitment to become a better negotiator. Even the average consumer can save many thousands of dollars over a lifetime if he or she has a few good moves at the bargaining table.
Tax Tips
41. Off to a Good Start
One of the most aggravating aspects of being in business is taxes-understanding them, keeping up with them and, worst of all, paying them. But there are some things you can do as a new business owner to make the process a little less painful, including these four tips:
One of the most aggravating aspects of being in business is taxes-understanding them, keeping up with them and, worst of all, paying them. But there are some things you can do as a new business owner to make the process a little less painful, including these four tips:
1. Understand the various taxing entities. All levels of government-local, state and federal-impose taxes. Be familiar with the requirements of each.
2. If appropriate, preserve your independent contractor status. If you operate as an independent contractor, protect that status by using written contracts and controlling how and when you do your work.
3. Keep good records. Good records help avoid trouble with the IRS and give you an accurate idea of how your business is performing.
4. Understand what's deductible and what's not. A deduction is an expense or the value of an item that you can subtract from your gross income to determine your taxable income and reduce the amount of tax you pay. Even if you have someone else prepare your tax returns, take the time to learn what you can deduct so you keep the right records and file an accurate return.
No comments:
Post a Comment