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Sunday, December 26, 2010

Top Ten Business Plan Killers

July 30th, 2010 As a lender, I wish we could approve every loan application that hit our table; unfortunately it’s not possible. We deal with mostly very small businesses seeking small loans, usually less than $250,000. Lending to inexperienced, new business owners is one of the riskiest arenas for a lending agency. Still, we manage to keep our losses to a minimum. The amazing thing about these business plan killers is that they rarely travel alone; they almost always appear in clusters. Here are the top ten business plan killers and what you can do to avoid or fix them:

1. Dreadful Personal Financial Profile

What is the likelihood that one who demonstrates abysmal financial management in his or her personal affairs will miraculously become an effective manager of finances for a business? It’s highly unlikely. It’s a lot more likely that poor practices in one’s personal situation are simply carried into the business. The main difference is that in business a much broader range of people and organizations usually get burned as a result of mismanaged business finances. Red flags pop up in business plans in the form of high credit card financing, garages full of toys (trucks, Seadoos, Skidoos, bikes, boats) 90% financed, poor credit history and no savings.

Strategy One: Tidy up your personal finances before applying for a business loan. Pay down loans, clean up any bad debts, collect some business-related equipment and save some money.

2. Insufficient or Non-Existent Owner Equity or Security

Business is always risky, but new business is infinitely more so. Lenders will want to see you personally “invested” in your business. The part of the business you personally own is called your equity. Another way to describe equity is the amount of cash or equipment you put into the business. A lender wants to see that you are invested to the point that you will not be inclined to walk away when the going gets tough. How much owner equity is enough? The amount varies from lender to lender, but less than 10% is inviting scrutiny while 20% or more will make your proposition more enticing. Any savvy lender will insist on seeing you invested to the degree that any financial complications result in you, not them, laying awake nights stressing over how to pay the bills. Security is the surly sister of equity. Your loan application will be stronger if you bring some sort of asset to the table as security. Lenders will be more attracted to assets with a clear resale value of more than the loan. Inventory is usually less desirable because it tends to grow legs and disappear when the going gets tough.

Strategy Two: Create some equity to bring to the table. Save money, sell some toys, borrow some love money, or get a second job for a while.

3. Inadequate Market Research

Inadequate market research manifests itself in various cruel ways. It can surface in the business plan as an unconvincing business case. It can reveal itself in the form of too much secondary information (from other sources) and not enough primary market research (that which you gather yourself). Lack of market research can lead to a business plan that is too general – not specific enough. Perhaps one of the most common and perplexing indicators is that the entrepreneur has not talked to or listened to the potential customers. A lender will want to see that you have “turned over all the rocks” in search of knowledge about your business. After reading your business plan, if I feel that I know more about your business than you do, I will not be inspired to approve your loan.

Strategy Three: Prove your business case to yourself and to your reader. Persist in your market research efforts until you become “the expert” for your business. You will feel more confident and have an easier time convincing your readers that you know what you are doing.

4. Transmitting and Not Receiving

It’s your responsibility to find that elusive balance between being bullheaded enough to bulldoze your way to success, yet sensitive enough to receive critical information. Your ability to listen to your clients is the key to your success in business. Falling in love with your business idea at the high cost of closing your ears to input will not help you acquire a loan. Business analysts, bankers and customers vote with their money. They have no need to yell at you to get their points across. It’s important to listen attentively when they speak at normal volumes.

Strategy Four: Listen and learn. Listen to those who agree with you AND to those who do not. Listen to all who shoot holes in your business idea, they might just be pointing you toward success. When you think you’ve heard it all, listen harder!

5. Dishonesty, Discrepancies, Inconsistencies

One sure way to cheat yourself out of a loan is to give the appearance, intentionally or accidentally, that you are anything less than above board. Any form of dishonesty in your business plan, or during your dealings with the targeted lending agency staff, is a sure way to have your application rejected. Blatant untruths are the more obvious offence, but it is entirely possible to communication underhandedness in other ways. For example, missing or inaccurate information invites questions and sends the wrong message. Conveniently leaving out some of the less obvious, non-flattering financial information (like unpaid long overdue taxes) is a sure way to a “NO”.

Strategy Five: Be honest, thorough, and accurate.

6. Not Answering the Key Business Questions Clearly

Your business plan is a tool for communicating with others. What is your product or service? Who are your customers? How will you market and distribute your product or service to your customers? Will you make money? Will your business be able to repay the loan? Does your plan communicate these things clearly?

Strategy Six: Answer the basic business questions. Who, what, where, why, when, how. There are many business planning systems (although none surpass the Roadmap!) that will provide a framework to keep you on track. A proper business planning system will provide you with a framework in which to place the assortment of information you will gather. Choose a system and use it.

7. Shoddy Presentation

You can do the best market research on the planet, but if you can’t communicate it clearly and package your business plan professionally, your target audience might not even read it.

Strategy Seven: Provide a professional presentation. Ask a friend or pay someone to proof, get someone to keypunch the plan if you need to, but do a professional job. Demonstrate that you care and you will increase your odds with the lender.

8. Pie-In-The-Sky

Inflated, over optimistic sales forecasts or cash flow projections will derail your loan application every time. A future too bright will blind the lenders and scare them off the loan.

Strategy Eight: Be realistic in your expectations, even if you believe you will be floating on a sea of cash within months. No matter how lofty your financial aspirations might be, know that businesses are usually not profitable for the first while. Estimate your sales conservatively and your expenses a bit higher than you think they will be. Keep that cash flow realistic and be sure to include ALL expenses.

9. Fish-Out-Of-Water Syndrome

This is what happens when someone tries to get into a business they know nothing about. It becomes evident when the owner background reveals that the applicant has no prior experience in the area of expertise that is the main focus of the business. For example, a heavy-duty mechanic might seek to start a small restaurant. Not an impossible leap, just risky.

Strategy Nine: Know your business. It is so important to have a base of knowledge about your business and experience where possible. Many successful businesses arise from disgruntled or displaced employees who feel they can do as good as or better than their employer. Enhance this background experience with solid market research, the Internet, courses, books, tapes, and trade publications. Knowing your business will increase your confidence and enhance your loan options.

10. Too Little Too Late

This point pertains to existing businesses in search of financial assistance after things have already gone sideways. Too often we see the application when the accounts receivable is out of control or major suppliers have already been hung out too long for scary large sums of money. Other aspects of this condition are collectors hot on the trail and long overdue taxes. It’s really difficult to get excited about loaning money to pay for bills that should already have been paid.

Strategy Ten: Be decisive when your business gets into rough financial waters. Make the tough decisions early and then act on them quickly. If your recovery plan involves a loan, you are far stronger coming to the table early with a well thought out plan, than later with a plea for assistance to pay back taxes.

Article Source

About the Author

Dan Boudreau makes business planning achievable, fast and fun. Want to learn more about how to do your own business plan? Subscribe to the RiskBuster Newsletter and instantly download a free copy of Dan’s popular fast-track business plan template.

Sunday, November 7, 2010

10 Things Every Small Business Website Needs

The Web is full of horrendous sites, and we're not just talking about bad design. There are many other elements besides how your website looks that go into making it customer-friendly -- not to mention something that inspires them to actually do business with you.

From thorough contact information to customer testimonials, here are the essentials that every small business website should have for it to effectively help you do business.

1. A clear description of who you are

Someone who stumbles upon your website shouldn't have to do investigative work to figure out what, exactly, it is that you do. That means clearly stating your name and summing up your products or services right on the homepage, says John Zhuang, of Web-design and SEO-optimization firm Winning Interactive.

"Tell people this is the right website that they have been searching for," he says. "[A clear description] will attract the visitor's attention immediately within 2-3 seconds, and encourage them to stay on your website longer."

2. A simple, sensible Web address

Don't make things complicated.

"Your domain name is like your brand. It should be easy for a user to type it into a Web browser or an e-mail address," says Ron Wright, the founder of business Web design and online marketing firm Accentix.

He adds: "I always recommend the .com domain as users are conditioned to type that extension when they enter a Web address. For non-profits or organizations, I usually recommend using a .org domain for branding purposes, but also recommend having a .com version of the domain in case a user accidentally types the .com address."

Wright also suggests avoiding dashes (which can cause SEO headaches) and numbers (which can cause confusion for customers).

3. An easily-navigated site map

Clear links to the most important pages, and a site map, are crucial for guiding visitors to the information they're looking for.

"Be sure your navigation is clearly laid out. I always recommend using dropdowns in the navigation menu so the visitor can see the content under every heading from virtually any page. You want to make it very easy for your visitors to find what they are looking for, or what you want them to know," Wright suggests.

4. Easy-to-find contact information

You wouldn't want to lose a customer to a competitor just because you made it difficult for them to get in touch with you.

"Not every online visitor has the patience to click through every page on your website to find the contact information," says Zhuang.

"The best place for the contact information is the top left or top right corner of the home page," he recommends. "It is also a good practice to include contact information in every page of the website in the footer or side bar or even in top right corner, which helps the visitors to find it more easily."

You should also be sure to include several ways for them to contact you -- phone, e-mail, and a standard contact form, are all good options. Forbes also suggests including your address, and even a link to your location in Google maps.

"One of the biggest mistakes business owners make is to force only one way to reach them," says Wright. "The point is to make it very easy for users to communicate with you on their terms."

5. Customer testimonials

Honest words from others help make your products or services more tangible to customers who are visiting you online.

"They help your potential customers to build trust in you, especially if you are new," Zhuang says. "[And they] help shoppers to confirm whether the product [or] services meet their needs."

"People love to hear stories from real people," he adds. "They help people [find out] other things you haven't said [on] your website."

6. An obvious call to action

"Tell the online visitors literally what you want them to do with clear tones of commend," says Zhuang. "For instance, you may want them to call you now for free quote, or sign up to your exclusively online coupons, or add products to the online shopping cart, etc."

And, he adds, call attention to your suggestion -- by using special buttons or highlighting the text, for example.

7. Know the basics of SEO

Your website won't do you as much good if no one can stumble upon it. Become familiar with the SEO basics to make it more accessible by search engine.

"You don't need to employ mysterious, ninja, black hat SEO types to rank well on the search engines. Simply make sure your website is coded correctly," Wright says.

That means using the correct keywords throughout your text, putting in plenty of links, naming your page titles and URLs correctly, and employing the magic of images and videos.

8. Fresh, quality content

For many businesses, your website is your first impression on a customer. You want to give them what they're looking for, and perhaps even give them a reason to keep coming back.

Wright says, "The user is looking for something. Make sure you give it to them.... [and be] sure your content is original, well written and valuable."

Fresh content is a goldmine for SEO, as well. You can keep your content from getting stale (and give your company some personality, too) by incorporating a regularly-updated blog or connecting in your social media feeds.

9. A secure hosting platform

Having your online information hijacked is a nightmare, and, should it happen to your business, it could cost you customers.

"It is imperative that you have a secure, trustworthy hosting company to keep the bad guys out and your content up and running," says Wright. "It is also very important to keep your content management system updated in order to stay one step ahead of the hackers."

10. A design and style that's friendly to online readers

As Forbes puts it, "Web surfers have the attention spans of drunken gnats."

Zhuang describes it in more detail: "Online visitors often scan through a Web page to sample the content first when they open a new Web page. If they feel like they are on the right page, they will slow down to read the full story. To enhance user's experience on your small business website, you need to organize the content for scanning."

He recommends three style points for online writing to keep in mind:

•Break things down into short paragraphs, with headers if necessary
•Use bullet points
•Highlight important words or phrases.
Wright adds, "In the end, simplicity and basic colors are the best bet. Again, the content is the focus, not dancing clowns at the top of the page."

Wednesday, September 8, 2010

Secrets of Crafting a Top-Notch Online Video

Heed these tips and you'll boost SEO and connect with more customers.

By Starr Hall | September 2, 2010

Online video is now a necessary marketing tool for reaching--and, more importantly, connecting with--followers, fans and customers. By adding a smile and a friendly voice, you can build rapport with your customers quickly and help them relate to your business on a more personal level.

There are several advantages to video marketing. One is its ability to reach all three types of learning styles: visual people who learn by reading or seeing, auditory learners, and kinesthetic learners (who learn best from hands-on methods, which can now be covered in a video via demonstration of a product or service).

Another advantage of video marketing is improved SEO. With video marketing, browsers and search engines spend less time reading through endless web pages of text; instead, they pick up on keywords tagged on videos.

Find Your Perfect Business Automotive Business Svcs. Children's Products/Svcs. Cleaning & Maintenance Computer & Tech Education & Training Food & Restaurants Health & Personal Care Home Products/Svcs. Professional Services Retail Businesses Specialty Prods. Sports/Recreation Travel & Lodging Here are nine tips for creating better online videos.

1.You Don't Need Expensive Equipment: Consider using a Flip Video Camcorder. It's a small camcorder that can shoot a few hours of high-definition video, and it costs a few hundred dollars at the most. It's easy to use, plugs directly into any USB port and even includes editing software to get you up and running quickly.

2.Don't Worry About Being Perfect: Chances are you won't like the first take of any video you create. It's OK to record a few extra takes, but don't let multiple takes slow you down to the point of taking weeks or months to finish your video. Find the key points, rehearse and then speak to your customers from your heart. Your confidence will grow as you get more comfortable in front of the camera.

3.Keep it Short: The less people know about you, the shorter their attention span will be when watching your video. Your prospective customers want to know who you are, what you do and, most importantly, what's in it for them. So give them the message in less than three minutes. Often, 60 to 90 seconds can be enough.

4.Include a Call to Action: So many websites have great videos but no call to action. If you want clients to call you or click on a link, then ask them to do so. You can also ask them to sign up for your e-mail list or visit your blog. If your video is focused on what's in it for them, you'll have their undivided attention. So take maximum advantage of this and prompt them to take the action you want them to take.

5.Make Your Video Visible: It must be on the first page of your website. Don't hide your video on some obscure or deep page an online customer will never find. Including a short video on your home page can keep visitors on your site longer. Make sure you keep your video "above the fold" on your site, meaning visitors shouldn't have to scroll down to view it.

6.Determine Whether You Want Your Video to Begin Playing Automatically: When your customers (or prospective customers) visit your website, do you want your video to play automatically? Your decision comes down to the behavior of your customers. If you're selling a "one off" and customers will only visit your website once to purchase, then a video that plays automatically might work just fine. However, if your customers visit your website multiple times, you may want to consider having your video play on demand, as an automatically playing video could irritate them and make them leave.

7.Include Your URL at the End of Your Video: It's a great way to get additional exposure online, especially if you are posting it to YouTube or Viddler, as there are millions of viewers on these sites. Make sure your URL is in a larger font, and place it at the bottom middle for better viewing and exposure.

8.Upload to Multiple Sites at Once: Uploading your video to all of the video sites available can be time-consuming. There are paid tools and services you can use to upload your video to multiple video sites simultaneously. There are also free sites, such as TubeMogul. After uploading your video, you can log in to your TubeMogul account and track the number of views, clicks and comments on your video. You can also track 10 other videos within the TubeMogul system, so if you're in a competitive marketplace where video is used a lot, this is a great way to see what other businesses are doing.

9.Name Your Video Correctly: Give a relevant name to your video, and your video will show up better in search engine results. Your title should be something that matches what your customers are looking for. For example, if I'm selling widgets, then "Mybestwidget.mov" would be a better title choice than "9077709845wdgt.mov." Use keywords in your title, and search engines will find it much easier to index your video file.

It's important for you to integrate video into your online marketing efforts. Even if you start with a basic video tip on how to best use your product or service, just get it recorded and get it up. Although customers like humor and creativity, messages that help them save time or money--or make their life easier--are what they're really looking for.

Starr Hall is the author of Get Connected: The Social Networking Toolkit for Business , available from Entrepreneur Press. Starr specializes in PR, co-branding, licensing, online branding and building businesses worldwide using the power of social networking.

Thursday, August 5, 2010

Stop Sabotaging Your Success

Get past the self-doubt and stop blaming others if you want to reach your goals.

By: Lisa Orrell | 08/02/2010

Take a moment to consider this powerful quote by Marcus Aurelius Antonius: "The happiness of your life depends on the quality of your thoughts." Not only do I find it to be true, I believe it is the foundational driver of whether you're successful or not.

As a business coach, I see many clients suffering from self-sabotage, yet they are oblivious to it. It's sneaky and comes in many forms, but for the purposes of this article we're going to focus on two of the most common ways people get in the way of their success and happiness. They are:

1.Not taking responsibility for their actions

2.Choosing to be in the "victim" role--both personally and professionally.

Many people are more comfortable in the "victim role" because they can blame everyone else for whatever is not working in their lives or business. And although placing blame on others for your own issues can be quite seductive (it gets you off the hook as far as doing any introspection), it can be more exhausting than simply being honest with yourself. Most important, the victim mentality can make it virtually impossible to realize significant progress . . . yet totally possible to experience consistent breakdowns in making progress within any aspect of your life.

And, no, I'm not referring to major emotional breakdowns requiring medication or hospitalization. I mean those consistent obstacles that get thrown at us all the time in business and life, and that cause us moments of overwhelming paralysis--typically due to self-doubt.

To effectively break through a personal, professional or emotional obstacle, the driving force behind it is taking responsibility for your actions and trusting yourself. Let's look at both of those drivers more closely:

Responsibility: You gain significant empowerment and freedom when you choose to shift your perspective from assigning blame to accepting responsibility. And although you may feel in control when assigning blame to others for challenges you face, the reality is that you are totally out of control. Why? You have given your power to someone else. And even though it may feel like a "relief" initially, it can manifest into more stress later.

You simply cannot resolve personal issues, and have breakthroughs, when the power is not your own. At the point of assigning blame and releasing all responsibility for challenges in your life, not only have you given all the power to others, your "destiny" becomes based on their next move and decisions--not yours.

Being able to shift your perspective to being someone who takes responsibility starts with self-trust.

Self-Trust: Self-trust is the foundation of our being. Lack of self-trust leads to self-doubt. Doubting yourself is a powerful force that can set you up for failure in anything you attempt. Why? Because you already assume that the decisions you make and actions you take probably aren't the right ones, and that they won't provide you with the results you desire.

Think of this in terms of two real-world scenarios:

•Scenario One: You want to make a career change because you're bored or very unhappy with your current occupation or business. If you lack self-trust, making a change could be clouded by self-defeating "doubt" questions like: Am I smart enough to do this? Can I afford to do this? What will my friends, family and peers think? What if they judge me for making this career change?

With those types of questions running through your brain, you can actually talk yourself out of making the career change before you even try. The result is being stuck in a career or running a business you no longer enjoy and wishing you were doing something else--yet never trying to make the change happen.

•Scenario Two: You don't have enough business and you're struggling. But have you really done the work to get more business, or do find yourself blaming the economy, the competition or other outside forces?
I hear clients complain often about lack of business. And when they tell me what their business development strategies have been prior to hiring me, I don't doubt they've been struggling. Posting a couple of blog posts, sending a few tweets here and there, creating a website, and occasionally going to networking events isn't enough. Yet they truly believe the "problem" is all about the economy or other circumstances, and all they want to do is vent about it vs. take action.

However, after we have some honest dialogue together, a perspective shift occurs. They soon realize they need to take responsibility for their lives and business, and they need to stop blaming others for their lack of success and happiness. They have to come up with an overall business development strategy. It can't be the occasional blog post or the odd networking event. Business development has to be planned and managed.

If you can relate to any of this, I suggest you take some time to ask yourself:

1.Are there situations in my life where I choose to assign blame vs. take responsibility?

2.How does assigning blame serve me when I'm trying to break through an obstacle?

3.How can I build self-trust to foster consistent, positive breakthroughs?

4.When I feel paralyzed by self-doubt, what can I do to create a breakthrough vs. a breakdown in making progress?

Your personal success and business success depend on you. You can have the best brand platform in the world, a terrific marketing strategy, have written an amazing book, or offer an amazing product or services, but none of these will get you where you want to go if the demons in your head constantly try to sell you garbage . . . and you willingly buy it.

Lisa Orrell, The Promote U Guru, is a branding and marketing expert, and a certified business coach. Orrell is also an author and professional speaker. She's been interviewed by countless media, including The New York Times and Wall Street Journal, and has appeared on ABC, MSNBC and NPR.

Saturday, May 15, 2010

Six Tips for Women Entrepreneurs

May 5th, 2010 | Peri H. Pakroo J.D.

More women than ever before are grabbing the reins and starting their own businesses. The number of women-owned small businesses is growing approximately twice as quickly as the national average for all start-ups.

For entrepreneurs of all stripes — women and men included — the pre-start-up phase is typically characterized by a flood of questions about what exactly it takes to make it in business. Are there different answers to these questions for men versus women? Not really. Every business needs to be based on a solid idea, aimed at a profitable market or niche, have solid systems in place, and market itself effectively. And of course, the legal and bureaucratic rules facing women entrepreneurs are exactly the same as those facing men.

But as many women business owners will tell you, the road to success for women often involves its own unique set of curves. Surveys of women business owners show that women’s business concerns tend to skew towards issues such as finding work-life balance, start-up (or expansion) financing, and marketing. The following tips address some of the issues and concerns that are most commonly faced by women entrepreneurs.

1. Start a business that works for you and fits with your personal life. There are no rules as to what a “real” business looks like. For some businesspeople, success might mean an international operation with hundreds of employees and annual revenues in the tens of millions. For others, a small consulting firm or artisan business that pays a healthy salary and allows generous personal freedom might be considered the pinnacle of success. The key is to take the time early in the planning process to consider this question and decide for yourself what your ideal vision is for your business and your personal life.

2. Don’t sweat the bureaucracy. A lot of would-be entrepreneurs, women and men alike, find themselves stuck on the verge of taking the leap into starting a business, but confused about how to tackle the legal rules of getting started. This hang-up is always grounded more in fear than reality; the truth is that clearing the bureaucratic hurdles isn’t usually big deal.

You can usually start a sole proprietorship (the legal term for a one-owner business) or a partnership (a business with more than one owner) by registering with just one government office. And for business owners who want protection from personal liability for business debts — often referred to by the legal jargon “limited liability” — the simplest corporations or limited liability companies (LLCs) require only a couple more registration tasks to complete.

Of course, there’s a lot more to launching a successful small business than dealing with bureaucratic requirements. For starters, you’ll need to have a sound business idea, and you’ll need to be able to develop good management skills to guide it to success. This is where you should put your mental energy and good ideas; don’t waste precious brain cells worrying about the legal hurdles.

3. For businesses with moderate to significant overhead, it is crucial to start the business with adequate funds. Starting a business without enough money to ride out the early lean days (described as “undercapitalization”) is the most common reason that businesses fail. Undercapitalization is less of an issue with small service-based businesses that don’t have many fixed expenses. But businesses with overhead such as rent, salaries for employees, utility bills, inventory, equipment, insurance, or other fixed costs absolutely need to plan carefully and pull together enough funding to support the fledgling business as it works up to speed.

Also, though it’s important to start your business with enough capital, that doesn’t mean that every business needs piles and piles of money to get off the ground. Plenty of mega-successful businesses were started on a shoestring: Apple Computer started in a garage; Hewlett-Packard started in the dining room of the Packard home; the list goes on and on. Generally speaking, a business that can find creative, thrifty ways to provide its product or service — especially in its early days — will typically find more success than a business that adopts a “spend more money” approach.

4. If you need start-up or expansion financing, consider sources other than traditional banks. One of the concerns most commonly cited by women entrepreneurs is difficulty finding start-up financing. And it’s little wonder: traditional banks typically don’t lend money to new ventures that don’t have a track record of success or creditworthiness. Instead of focusing on conventional big-chain banks, start-ups should instead look for local community banks, credit unions, and other local financial institutions that have a vested interest in the health of the local economy. Often, their application processes and criteria are softer than the big banks.

Two resources that women should definitely look into are Women’s Business Centers and community development financial institutions. Women’s Business Centers (WBCs) exist nationwide and focus on supporting women entrepreneurs through business training and counseling, and access to credit and capital, among other services. Community development financial institutions (CDFIs), which are certified by the U.S. Treasury, are a fast-growing segment of the business financing market specializing in loans to underserved communities and populations. CDFIs usually — but not always — have a specific focus such as improving economic opportunities in blighted communities or supporting women- or minority-owned entrepreneurs. Both WBCs and CDFIs can be especially helpful for start-ups, businesses with poor credit, and businesses seeking relatively small loans, generally up to $100,000. Even better, they often offer guidance and expertise to your business in addition to financing, which will help your chances of success.

As an example, the fabulous nonprofit where I teach entrepreneurship classes — WESST in Albuquerque — is both a WBC and a CDFI. It offers a wide range of high-quality classes on business planning, financial management, and marketing, plus offers loans and one-on-one counseling. With an organization like WESST on its side, a business gets a major boost in its chances of success.

5. Network like a social butterfly — it is one of the best ways to market your business and create profitable opportunities. Networking involves actively cultivating relationships with people, businesses, community leaders, and others who present possible opportunities for your business — not just as potential customers, but also as vendors, partners, investors, or other roles. Remember, networking is not the same thing as sales! Rather than the simple goal of making a sale, a huge goal of networking is to inform other businesspeople and influential people about what you do in hopes that they will recommend your business to their circle of contacts.

I look at networking more as a self-employed lifestyle than a specific activity. You are “networking” every time you attend an event held by a local trade association, get to know other business owners and community leaders, send an email introducing two of your contacts to each other, write a letter to the editor, participate in an online discussion group, or have lunch with another local business owner.

6. Forge relationships with contacts before you need help from them. For example, if you need the support of a local politician on an upcoming city zoning decision, you’ll have a better chance of getting the politician’s vote if he or she already knows you and thinks favorably of your business than if you place a call to his or her office out of the blue.

© 2010 Peri H. Pakroo J.D., author of The Women’s Small Business Start-Up Kit: A Step-by-Step Legal Guide

About the Author: Peri Pakroo is a business and communications consultant, specializing in legal and start-up issues for businesses and nonprofits. She has started, participated in, and consulted with start-up businesses for 20 years. She is the author of The Women’s Small Business Start-Up Kit (Nolo) and top-selling business books. Her blog is at www.peripakroo.com.

Thursday, March 11, 2010

10 Ways to Waste Your Time in a Networking Group

Referral business from networking groups can pay off handsomely, so make the most of every meeting.

Word-of-mouth marketing is a sure-fire way to generate new business. A single referral can start a chain reaction of new business as positive word spreads. It's no wonder networking groups pay off handsomely in referral business and that membership in a good networking group can be worth a considerable amount of money; especially if you calculate the time you spend each month and the value of that time.

So make your time and efforts worthwhile. Don't squander your opportunity by doing the wrong things in those meetings.

Success in a networking group comes when the rest of the group members trust you enough to open up their best referrals to you. Unless they've seen your work, you have to earn that trust by demonstrating your professionalism to them. Since founding BNI almost 25 years ago, I've seen how people truly succeeded in networks and I've seen how people totally waste their time in them.

Here are 10 mistakes to avoid if you don't want to waste your time in a networking group:

1.Go ahead, air your grievances among your fellow networkers and guests; after all, they really want to hear about your complaints.

2.Wing it in your regular presentations to fellow members--don't worry, you have a mulligan.

3.Use one-on-one meetings to talk about your networking groups' issues instead of learning more about each other.

4.Focus your efforts primarily on selling your services to members of the group.

5.Don't rush to follow up on a referral when someone gives you one. Hey, they know where to find you if they really need you.

6.While other people are doing their introductions, that's the perfect time to think about what referrals you can give that week.

7.Never invite your own guests, just focus on those who show up.

8.Don't worry if you get to the meeting late. No one will notice.

9.Absenteeism, it's no big deal. You can just call in your referrals ... right?

10.Take that phone call and check your messages during a meeting. No, no, it doesn't bother anyone; actually it's a sign of real professionalism that everyone admires.

Imagine how you'd respond if someone in your networking group continually exhibited the behaviors above. Would you be enthusiastic to pass them referrals? Of course not! You'd be hesitant, rightfully, because they've convinced you that they are unprofessional and irresponsible. Of course you'd withhold your valued connections.

We all need to beware of these common pitfalls and take great care to avoid them. They're great reminders that doing business through word-of-mouth marketing requires a special ingredient that only you can supply--commitment.

Commit to the process from the beginning. You have to be an active, responsible, professional, accountable participant and show your fellow networkers the respect, attention, and support that you want them to give you.

You see, the key concept in referral marketing is relationships, and referral relationships don't just spring up full grown--they must be nurtured. Avoid the 10 mistakes on this list because they're detrimental to growing your referral relationships; they will cause the time you spend in your networking meetings to be nothing more than a waste.

Focus on growing your referral relationships by acting in ways that are exactly opposite of what's described above and concentrate on building relationships based on mutual trust and shared benefits. You'll get a lot more out of your group and so will your fellow members.

Remember, if you start putting together your network when the need arises, you're too late. The better way is to begin developing relationships now with the people whose help you will need in the future. Your networking group meetings offer the perfect opportunity and the perfect place to do this. Make the most of this opportunity because there's no room for wasted time. And if you see chronic offenders at your next meeting, print out this list and pass it along.

Called the "father of modern networking" by CNN, Dr. Ivan Misner is a New York Times bestselling author. He is the Founder and Chairman of BNI, the world's largest business networking organization. His latest No. 1 bestseller, The 29% Solution can be viewed at www.29PercentSolution.com. Dr. Misner is also the Sr. Partner for the Referral Institute, an international referral training company.

What to Do When Your Partnership Sours

Even in the best of circumstances, business partnerships can be fraught with conflict. To handle the twists and turns, smart co-owners put a well-drafted partnership agreement in place to act as a road map. Without one, lack of guidance in the event of a dispute can result in a free-for-all for partners, says Jonathan Levitt, a principal with Outside GC LLC, a team of former senior in-house lawyers who act as "on-demand" in-house counsel for clients.

For partners who don't have an agreement, or even those who do, there are a few things they should consider in order to best protect themselves when conflict arises.

First, business partners need to evaluate whether they can mend fences and settle their differences. Difficult issues surface in all partnerships, and they can create stress in the relationship, "but if you work through these issues, you usually have a stronger partnership," says Steven Thayer, an attorney with Handler Thayer LLP in Chicago.
It's important to figure out what's at the root of the friction. Ask, "What is occurring within the partnership that is causing you to make a decision to [want to] sell or liquidate?" says Terry Mackin, managing director at Generational Equity, merger and acquisition advisor for small businesses. It can come down to rifts, family dynamics or other issues. "How are those things affecting the business?" says Mackin.

Business issues such as not making enough money, having too much debt or realizing your business model doesn't work are situations that may require you to adapt and change your business plan to make it work, says Thayer. Of course, fundamental issues that are hard to move past--lying, cheating, stealing or other illegal activity, for example--can be deal breakers and a legitimate basis to terminate the relationship.

Whether conflicts are resolved to make the partnership work is a business decision based in part on each partner's risk/reward tolerance level. "Each partner should regularly assess the risks and rewards associated with their business […] to make sure they are in check," says Thayer.

To that end, ongoing communication and a periodic review of your partnership (especially the agreement, if you have one) is essential. Just as in any relationship, partnerships grow old and co-owners need to reassess how decisions are made, who makes what decisions, etc., says Kurt D. Olender, a corporate attorney in Manhattan.

What do you do if you're unable to resolve your conflicts? At this point, business partners need to determine whether or not one partner buys out the other or both sell out to a third party. In the case of a partner buyout, the two important questions to ask are "Who has the most passion for the business, and who has an immediate cash need that requires them to cash out of the business?" says Steve Nielsen, CEO of PartnerUp, an online small-business networking community. As one would expect, both partners need to agree on the next course of action. In some cases, reaching an agreement may require a good business attorney to act as a sort of "corporate therapist."

Whatever the decision, make sure you hire a good business attorney to help with the dissolution of the partnership. There is too much at stake to use your friend's uncle or some other attorney who is not an expert in business law. Finally, "It is extremely critical that both parties either have their own independent valuations or that they agree on an independent business-valuation expert to determine the value of the business, " says Nielsen.

Most issues, serious or not, can be resolved at the onset through good communication and effective negotiation skills. "Before you resort to the worst case, try working things out by talking," says Nielsen.

Toddi is an award-winning journalist, writer and editor and currently is a contributing writer covering career management issues for The Wall Street Journal.

Thursday, March 4, 2010

Buy a Business Instead of Starting One From Scratch

It is a good time to buy a business, according to Mike Handelsman, the general manager of the online portal, BizBuySell.com. "Many business owners delayed plans to exit their businesses and retire in 2009," he says. "In the latter part of 2009, we started to see clear signs of recovery, and 2010 is now shaping up to be a much more productive year for selling and buying businesses."

Buying a cash flowing business is better than starting one from scratch. It can cost less to buy a going-concern than it does to invest the initial working capital needed to start one up. Furthermore, fixtures, furnishings, equipment and trained employees are all in place when you buy an existing business. There are fewer unknowns and the risk of failure is lower.

But be forewarned that you must do independent research to understand what you are buying because you cannot trust the numbers and descriptions outlined in the business broker's promotional piece. That is why it includes disclaimers and says the broker is not responsible for the information because it comes from the seller.

Furthermore, brokers may not be the best place to begin your search. Many of the best businesses are not listed or advertised for sale.

Begin your search by targeting the industry that matches your skills and background, and has a strong potential for growth. Then, join a trade association where you can meet the industry's business owners. An example is the National Restaurant Association if you want to buy a restaurant. Associations are comfortable places to form personal relationships and spread the word that you want to buy a business.

The recession and credit crunch has turned owners into prospective sellers and they will seek you out. They are burned out because banks refuse to renew lines of credit. Lenders are turning them down for loans needed to replace old equipment or capital for expansion. They are fed up with introducing themselves to strangers every time their bank shuffles loan officers.

Owners dream about a more enjoyable lifestyle. They are tired of supporting employees when there is not enough business to justify keeping them on the payroll. Their jaws hurt from smiling and being polite to rude customers that are looking for bargains instead of quality products and superior service.

You will meet these owners at trade association meetings, conventions and cocktail parties. They will approach you gingerly. They will talk about selling out to a buyer that appreciates their business goals and is willing to carry on the founder's vision. You can become that buyer.

That is how negotiations begin -- by forming relationships.

Over time, the buyer and seller agree upon the selling price, terms and conditions. In the current buyers' market, sellers know that they will have to accept less.

Now is a good time to hook up with a savvy accountant that you will need to help you with due diligence. Add a talented business lawyer to the mix. He or she will structure the legal aspects of a tax-advantaged, lower risk purchase.

Start now or you might miss a window of opportunity while values are still depressed.

Jerry Chautin is a volunteer SCORE business counselor, business columnist and SBA's 2006 national "Journalist of the Year" award winner. He is a former entrepreneur, commercial mortgage banker and business lender. Follow Jerry on Twitter, www.twitter.com/JerryChautin

Follow Jerry Chautin on Twitter: www.twitter.com/JerryChautin

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Cathy Harris is an Empowerment and Motivational Speaker, Non-GMO Health and Wellness Expert, Self-Publishing and Business Coach.