Business Thinking by Melvin Feller MA
Melvin
Feller Business Group provides these quick tips for new business
owners. From testing your idea to formulating relationships, each of
these are important to consider when laying the foundation for your
business. Having been in business for over 40 years and having started
over 30 businesses over the years. Melvin Feller MA offers free advice
and consulting for minority and women-based businesses along with the
educational classes taught on a rotating basis!
Before
starting your business, considering a few basic concepts and questions
can help clarify your expectations. Understanding your market and
industry, knowing your skill set, formulating a business plan and
understanding legal, financial and communications issues are all key to
laying a foundation for success in the early years of your business.
Test your business idea:
Understand the industry: Do your homework
Assess your management skills
Formulate a business plan
How much money will you make and how much do you need to get started?
Investigate legal issues relevant to your business
Identify and develop key business relationships
Who are my customers and how will I reach them?
Test your business idea
Speak to friends and associates: How do they react to your idea? Listen to their input and modify your approach appropriately.
Questions to Ask:
Would you find this product or service useful?
Do you think the product package or service name successfully addresses the target market?
Understand the industry: Do your Homework
Make sure that you have a thorough understanding of the industry.
Questions to Ask:
How big is the industry?
Is it growing?
Who are the key players?
How do they compete?
Assess your management skills
One
key to a successful business is getting the right people to work with
you. Hire appropriate people to complement your skills.
Questions to Ask:
What key management skills are required?
Do I have these skills?
Are there courses I can take to learn them?
Will I need to bring on a partner with these skills?
Formulate a business plan
Successful businesses use business plans. A successful business plan contains the following information:
The nature of your business
The management and ownership details
The market for your products and services
The products you offer
Operation
Historical and/or projected financial information
Questions to Ask when creating a business plan:
What are my personal goals?
What are my business goals?
Are my personal and business goals compatible?
How much money will you make and how much do you need to get started?
As
you start formulating your business plan, crunch some numbers to
determine how much money you will make running this business and how
much capital you will need to get your business off the ground. Plan
realistically.
Questions to Ask:
How much money will I need?
What sources of capital are available to me?
Will this be enough for the lifestyle I envision?
Investigate legal issues relevant to your business
Do
a name search. Think about the legal structure of your business: are
you starting a sole proprietorship, a partnership or a corporation?
Investigate the options available for structuring your business and the
implications of each. Register your business name and investigate all
other regulatory compliance requirements to run your business.
Questions to Ask:
Are there municipal bylaws, such as zoning, that I need to consider?
Am I going to run a sole proprietorship, a partnership or a corporation?
What are the legal implications of each?
Identify and develop key business relationships.
These
relationships might include suppliers and professionals such as
lawyers, accountants and bankers. Investigate the benefits of joining a
trade association or another networking venue.
Questions to Ask:
What benefit will I receive from each key relationship?
In what areas of specialization do I need support?
Who are my customers and how will I reach them?
Knowing
who your customers are and how to reach them is key to business
success. Before you open for business you should have a number of key
customers identified and ready to buy your product or service.
Questions to Ask:
How do I hook people?
If I advertise, what medium should I use?
What is my image? Is it consistent?
Having
clearly defined goals and measuring your progress as you move toward
them is essential to making your business a success. But how do you
determine what’s realistic to achieve in a given amount of time?
The
founder of Melvin Feller Business Group, Melvin Feller points out that
important planning tools can help any and every business. A management
dashboard keeps track of your performance so you can see how it evolves.
Bench-marking helps you compare your performance to that of other
industry players. Both tools will help you keep moving forward as you
take your business to the next level.
Management dashboard
A
speedometer and gas gauge give you critical information that helps you
get where you’re going safely and on schedule; you wouldn’t drive a car
without them. In the same way, all businesses should monitor certain
types of information to ensure that they stay on track. The management
dashboard gives you current, objective data about your business, which
you can use to make informed decisions.
This
tool is also known by many other names, including executive or
performance dashboard, key performance indicator (KPI) summary and
business scorecard.
Essentially,
it is a way for managers to get an at-a-glance view of the most
important aspects of their business. It brings together, in a single
place, a summary of data collected from various sources across your
business. It can include an overview, spreadsheets and graphics such as
bar charts or pie charts.
The
management dashboard can be created using specialized software packages
that give you real-time information updates. But it can also be
designed with simple tools like spreadsheet or word processing software,
which help you manually track important data on a regular basis.
- The benefits of a dashboard are many. It translates goals into measurable data and provides speedy access to objective information. Graphics make quick assessment easy and allow early identification of negative trends or problems in projects or departments
Make the most of your dashboard
To
maximize the benefits, you get from your dashboard, it must be
customized for your business. To decide what aspects of your business
you should monitor, review your key business goals. These should be as
specific as possible. For example, do you want to increase the number of
repeat clients or find more new customers? Is improving cash flow a
priority? Maybe you want to fill orders faster or reduce the number of
returned products?
Based
on your business goals, determine which KPIs you want to measure
frequently to track progress on these goals. These KPIs should be SMART:
Specific, Measurable, Achievable, Realistic and Time-bound.
Monitor your data
The
data for the dashboard should be collected constantly and reviewed
regularly. Studying the dashboard is best done as part of your schedule.
Over time, you will be able to spot new trends or anomalies quickly.
What you could monitor.
If
improving your number of repeat customers is important, you could
measure the number who submit a second order within a specific period of
time (3, 6 or 12 months). If finding new customers is a goal, you might
measure the proportion of leads and referrals that turn into orders
within 12 months. If your priority is improving your business’s cash
flow, you can start tracking the number of accounts that have an excess
of 30 days payable. You will quickly notice any increase in unpaid
accounts. By acting immediately and doing some collection work, you can
correct the situation before it affects your cash flow.
E-dashboard
Dashboard
software usually presents your data in easy-to-understand formats, such
as charts, gauges or warning lights. You can also download dashboard
widgets — graphic tools that collect information and display it on your
desktop. Like any desktop icon or window, each widget can be moved
around your desktop, rearranged or deleted.
If
you are considering buying software, know your business requirements.
Determine if it accommodates the KPIs you want to track and if you need
additional software to collect the data.
Verify whether it spans several
business areas or is specific to one (e.g., human resources). And
ensure that as well as being flexible and easy to customize, it
integrates with your other systems, such as client relationship
management (CRM) and accounting software. Finally, see if you can change
how the reports are created, e.g., by region, by sales rep or by
product.
When
you have determined what you need, budget for the costs of purchase,
installation, training and yearly maintenance. Factor in the costs of
updates or additional components. You may also wish to develop a
purchasing plan to spread the costs over time.
Bench-marking
Knowing how other companies in your industry are performing will help you develop insight into your own business practices.
Financial Ratios are often available that allow comparisons to industry averages and medians.
Leading
and innovative firms can also act as models for other companies.
Bench-marking means identifying the best practices (achieved results) of
industry leaders and then comparing your own business performance with
them.
A benchmark can help in virtually all areas of your business and be a useful tool in a business’s program of improvement.
Benefits
Comparing
your performance with other businesses also allows for enhanced
strategic planning, more efficient operations and improved products and
services.
Bench-marking steps
There are 6 basic steps to successful bench-marking.
- Identify the area you want to improve
- Measure your performance in that area
- Decide which companies or industry you would like to benchmark
- Determine how you will collect the data on your target
- Compare data collected to your performance
- Develop an action plan to close any gaps you may discover
Make comparisons
Bench-marking
and best practices should be viewed as a means to gain insight into
your own business processes. Make sure you understand why your target
was successful before emulating it. Practices that work for one company
may not necessarily work the same way for others.
Therefore,
you should carefully evaluate whether a best practice can work for your
business, which may be a different size or have different markets or
strategic orientation. Practices should act as a source of inspiration.
You can then adapt them to reflect your own realities and needs.
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