The Power of Negative Thinking

Why bother planning? There’s so much uncertainty! Here are a few guidelines

Why bother planning? There’s so much uncertainty!

Good article in Wall Street Journal! Will make your blood boil! Or maybe you’ll say, “Hmmm, I see the value in that.” A few key ideas that excite me:

“Many successful business people reject the idea of setting firm goals.” They reject the value of setting big, audacious SMART goals—“specific, measureable, attainable, relevant, and timely.”

Things are too uncertain for this. Instead of choosing a goal and then making a plan to achieve it, look at the means and materials at your disposal, then imagine the possible ends.

Use the “affordable loss principle.” Instead of focusing on the spectacular rewards from a venture, ask how great the loss would be if it failed. If the potential loss seems tolerable, take the next step.

Use “defensive pessimism.” Just thinking in detail about worst-case scenarios can sap their anxiety-producing power.

Since I lead planning workshops, why would this excite me? We try to accommodate these ideas in our planning:

— Get your plan done on just one sheet of paper. If you can’t write it on a page, you can’t do it in a year anyway.

— Focus on your toughest challenges, uncertainties, dilemmas, choice points. Any plan that ignores these is bound to fail.

— Balance between business and the rest of your life is a key goal. Build it into your plan.

— Plan for how you will deal with uncertainties. The more uncertainty, the more flexibility.

— Be steadfast pursuing your goals—until it’s time to shift. When a goal has been left behind by events, change it. It’s deadly to stick with it.

Our Small Business Success plan workshop helps you get your plan for the year done and presented to others for their feedback.

Planning for Small Business Growth

Five tips for getting your 2013 business plan done

5 Tips for Getting Your 2013 Plan Done

Business owners have a love/hate relationship with planning. We know that regular planning Small business success workshopboosts our chances of success. But it’s hard to carve out time to get it done. Here are five tips for getting it done without making a big deal of it.

Tip #1. JUST DO IT! Get it down in writing. “I’ve got my plan right here in my head” just doesn’t cut it.
Too many business owners let planning slide. Do it every year, or more often if need be.

Tip #2. Be concise. I tell people in our plan workshops that if you can’t write it on a page, you can’t get it done in a year anyway.

Tip #3. Be practical. Write a plan for yourself, that you can follow and achieve. Don’t write a plan to look good for others. Don’t set blue-sky goals just to “push yourself.” Set no goal without doable action items that will get you there.

Tip #4. Tackle your biggest dilemmas, choice points, uncertainties–not just the positive stuff. Any plan that neglects how you will handle these challenges is bound to fail.

Tip #5. Follow up. Build in a plan to review your progress periodically. And it’s best to involve others in this, so you can’t fool yourself. My clients present their action plans to each other and get feedback. This forces them to think things through and clarify their assumptions, so they can defend their goals. Thus, they achieve their goals!

And one bonus tip:

Tip #6. Stick to your plan–until it’s time to change it. Things change during the year, and you need to shift your targets and strategies to accommodate. Balance steadfastness and flexibility in your planning.

Get Your Plan Done in one day at our annual planning workshop. Get 2013 started off right! First session is coming up–Monday, December 17, in San Rafael. More sessions in January–including a virtual session available to people anywhere.

Save 50%! If you’ve taken the workshop before, you get a 50% discount.

Recruit a colleague and both you and they get 25% off. Please forward this to your friends.

How to Finance a Second Location

Financing your 2nd location. Checklist of expensive things that small biz owners often overlook.

From a question on LinkedIn by Arthur Goldhaber

Q: What cost items get left out when store owners are figuring out what size loan they need to open a second location?

A: Here are some expensive items that owners often overlook. I have several small business clients that have recently gone through this—a restaurant, a bakery, and another company that moved to a larger facility. They were good at figuring the new operating costs, lease and facilities cost, and tenant improvements, but there were several ways they underestimated the cost of the expansion:

The cost of expanded inventory. Some owners try to purchase expanded inventory out of current cash flow rather than making that part of the new-facilities investment, and they soon go into cash crunch. Their cash reserves won’t carry them through the time between when they must pay for new inventory and when they get cash from selling it.

Hiring and training a top manager for the second facility. Assume the owner currently runs the first location, and has an assistant manager. If the assistant manager is not skilled or experienced enough to step into being manager of the second location, then a new and more expensive manager will have to be hired and groomed for some period of time. That is strictly an overhead cost.

Help for owner. Since the owner will be totally absorbed in getting the new place going, someone must take over many of his or her regular responsibilities. This may require hiring extra people. (But may be combined with hiring the new manager.)

The cost of getting needed approvals, negotiating a lease, designing the new interior, overseeing the tenant improvements. These things take a lot of the owner’s time, but they also may require hiring expensive professionals: engineer, consulting contractor, lawyer, architect.

Cost of changes in location #1. The original store may need an upgrade to bring it in line with the snazzy new place. May need changes in the back office to accommodate admin for two locations. They discover that their old systems are completely inadequate, and need an upgrade: POS, inventory control, employee time tracking, accounting, plus the computers and networking—all integrating multiple locations.

Hiring and training staff for the new location before it opens, and before it has positive cash flow.

“Stuff happens” funds, to cover delays, glitches, cost overruns. For example, “At the last moment, the city required us to upgrade our handicapped access.”

The cost of capital. They may neglect to factor in the cost of borrowing the capital they need, paying interest on the investment until the new location is profitable.

Get the right kind of loan. Some businesses try to finance expansion with their revolving line of credit, which must be repaid every year. This can actually force you out of business! You must get a term loan for 5 to 7 years, which allows you to repay out of the profits of the expanded operation.

Never finance long-term needs with short-term capital!

Don’t use revolving line of credit, credit cards, or vender credit–except for quick turnover items or as a receivables bridge.

Do use term loans (including a personal loan), equipment leasing, funds from second mortgage or your own savings.

 

The good news is, once a company gets its #2 location up and running successfully, #3 and 4 are a lot easier. And since you’ve proven you can do it, it’s easier to attract capital.

How to Get it All Done This Holiday Season

Hire a personal assistant–a concierge–to handle all the little things, allowing you to focus on big stuff, and to have a life.

“We’re trying hard to balance our busiest work time with the never-ending to-do list. How to stay balanced and sane.” Amy Graver, question on LinkedIn.

My answer. Two levels, Amy.

1. Right now. Hire a personal assistant, someone like a concierge, who will handle all small issues for you with competence and aplomb–both business and personal. If you’re busy doing year-end billable work for your best clients, and you have someone else running around for you, picking up your cleaning, writing addresses for all your holiday cards, replacing the color toner cartridges, dealing with the caterer, getting your invoices out, you will be so-o-o happy. Plus rested and better off financially.

2. Planning ahead. All my clients do an action plan for the coming year. Goals, strategies, and action items. The action items are spread out over a year calendar. But first I have them write in their busy times, vacation times, etc. If holiday season is a crunch time, then they make sure they don’t pile extra things into that period.

The first things to enter are your personal “have a life” things. Why? Because the reason you are in business is to get to do the things you most want in life, including “have a life.” If you don’t do this, you might as well have a J-O-B!

Happy holidays! And may the new year bring you health, prosperity, and relaxation!

Would a Free Marketing Plan Help Your Business?

Whenever I see a “free” offer of something I know is costly, I suspect it’s just an introductory come-on. Nothing wrong with that, unless . . .

My answer to a LinkedIn question by Travis Holt

Whenever I see a “free” offer of something I know is costly, I suspect it’s just an introductory come-on to lead me to purchase something later on. Nothing wrong with that, UNLESS I know it’s something that is too good to be free. Like a marketing plan. I also offer people a free marketing plan*, but it’s something they complete for themselves. If they need my help to complete it, and to come up with a useful guide to their own activities, that’s too much for me to give away.

I think people know this. They want “free” but if you offer too much for free, they are suspicious.

Also, in my experience, people who always want “free” don’t make good customers. I would prefer somebody who said, “You know, I tried to use that free marketing plan, but it just didn’t do it for me. I realize I need to hire somebody to help me think this through. After all, this is the future of my business I’m working on!”

But here’s a fundamental rule, and this may be what you are doing:
“Tell ’em how to do it for themselves, so that they will hire you to do it for ’em.”

*Mine is called “Shortcut to Cash Flow Marketing Plan.” Two pages, 11 questions. Ask me for it, with your name, company name, and email.

 

Growth Plans for Small Business–Some Rules

A successful plan is brief, dog-eared, marked up, covered with coffee stains, because it gets regularly reviewed and revised.

Plan for what you can. Then plan how you’ll deal with all the things you can’t predict–i.e., the uncertainty.

Dilemmas, choice points, open questions. Any plan that does not address these is bound to fail.

A successful plan is brief (just one page), dog-eared, marked up, covered with coffee stains, because it gets regularly reviewed and revised.

Targets must be achievable–and changeable.

Be firm on your vision, but flexible on means. (Steve Jobs)

Create a practical plan of action for your business in our annual plan workshop “Success in 2012.”

Sample short business plans

Q: I’d like to see some sample short business plans to use as models

A: Shorter is better. My rule: “If you can’t write your plan on a page, you can’t get it done in a year anyway.”

We conduct plan workshops every year, to help business owners complete their Action Plan for the coming year. They devote a day to review their past year’s performance, clarify their long-term business trajectory and how business fits into their life goals, what they must accomplish in the coming year. We use a 70-page workbook with questions about every aspect of running a small business, but by the end of the workshop people reduce it to one sheet.

Note that this is an “action plan” that guides your action. It’s not intended to convince someone else they should put money in your business. Once you have this brief, basic plan, however, it’s much easier to convert it to a strategic plan needed to attract financing. My rule: Plan of action comes first.

If you ask me, I’ll email you several pieces:

– Template showing how it looks

– A handful of questions you can answer to get your plan started

– A Project Tracker that helps you add detail to central goals of your plan

While this plan is aimed at guiding your actions for the coming year, it can also serve to show a potential financier.