Are you wondering what the future holds for your business? Whether you want to predict your future or prescribe an outcome of your choosing, you'll have plenty of company!
Throughout history, we humans have tried many ways to predict the future, from reading palms to stargazing. Today, we refer to these as descriptive methods when we attempt to describe objectively what the future will be or could be.
On the other hand, prescriptive methods focus on determining what the future should be. These techniques can help us clarify our preferences and values so we can create a vision of what we would like to see in our lives, businesses, or communities.
Once we understand what we would like the future to represent, we're better able to take the actions required to implement it. Ideally, that future will align with our passions, gifts, and what we (or our companies) can really be the best at doing. This article suggests a two-stage process for achieving that goal.
First, Identify Your "Hedgehog Concept"
So, what can you be the best in the world (or at least in your community) at doing? This thought-provoking reflection is one of many from Jim Collins' "Good to Great: Why Some Companies Make the Leap...and Others Don't."
Collins' team examined 1,435 companies to see which ones made substantial gains in profitability and sustained those improvements over 15 years or more. Since the 1970s, only 11 companies had risen from mediocrity to greatness and stayed there -- topping many other prosperous firms that lacked the same staying power.
Of eight characteristics these companies shared, all held an unshakable adherence to becoming the best in the world at whatever they did. Each company committed to doing only those things and nothing else. That sometimes meant dropping their core businesses to pursue other things at which they could become the best in the world.
Collins and his team coined the term "hedgehog concept" to reflect a single-minded determination and focus that, similar to that of the hedgehog animal, attempts to do only one thing really well, such as curl up and roll. A hedgehog concept actually represents the intersection of three areas:
1) What you're most passionate about
2) An understanding of what you could be the best at doing, and
3) A metric that drives your economic engine and helps you measure results.
Keep in mind that according to Collins, this concept is not a goal, strategy, or plan, but an understanding of what you can and can't be the best at doing. Until you develop your hedgehog concept, you won't know your true vision, mission, or purpose.
Next, Define Your "Business Success Criteria"
Do you have a crystal clear idea of the types of business undertakings that align with your gifts, talents, passions, and strengths? In that same context, have you thought about whether your business can be the very best in the world at doing those things?
If the answers are "yes," you are in an excellent position to choose the ventures that can give you the greatest satisfaction and results.
If you're not yet totally clear about the answers to these questions, developing a set of "business success criteria" can enable you to select worthwhile endeavors with much deeper insight, and thus set the conditions for successfully pursuing them. A hedgehog concept thereby represents part of the formula you can devise to identify and choose among your very best options.
Why is this so important? It's not uncommon for people to wander into businesses, projects, and professions opportunistically, which means that they often select the next available and convenient thing that comes along. At times, this may be necessary for financial reasons. But unless we understand our underlying success criteria, we might not recognize the options that truly fuel and inspire us -- those that are best suited to our passions and strengths.
Some of your criteria could be practical considerations, and others more lofty ideals. But all of your criteria will be essential to achieving balance, fulfillment, prosperity, and higher contribution in your life.
In conclusion, a set of carefully crafted success criteria fueled by a potent hedgehog concept provides an unbeatable strategic advantage, and an excellent direction-finder for prescribing your future!
About The Author
Adele Sommers, Ph.D. is the creator of the award-winning "Straight Talk on Boosting Business Performance" success program, and specializes in helping people align their life passions with their business purpose. To learn more about her tools and resources and sign up for other free tips like these, visit her site at http://LearnShareProsper.com
Wednesday, September 10, 2008
Tips for Prescribing a Future for Your Business
How I Generated More Revenues Without Having a Sale!
You want more revenue and you want it fast. The marketing experts tell you to “create a compelling offer.” You immediately think “Sale.”
You wonder how big the sale should be. How much can I afford to give away before the sale starts costing me money? How will I word the sale materials so customers don’t take advantage of me? The worries start and you realize you have a huge task to pull off this sale and generate real revenue.
Unfortunately, in our crowded market place, a compelling offer has become synonymous with a “sale.” There are other, better alternatives to motivate customers to buy from you.
This article will show you six options that will accomplish your goal of getting more revenues. These options will build a stronger relationship with your customers that the sale will not accomplish.
The Limitations of the “Sale”
The fundamental problem with most sales is that they are good for the business but not necessarily good for the customer.
A sale usually starts with a business problem you want your customers to solve for you. You need more cash. You have excess inventory. You need to meet sales quotas. You want to get ready for new merchandise. Your sale is asking the customer to solve your business problem.
There will always be customers who don’t mind being used. Their agenda coincides with your agenda. Quid pro quo.
When you create your offering around something they really value, however, they look on your offering differently. It becomes more than just a customer transaction. It is the start or the continuation of a relationship that will result in sales now and in the future. The customer’s primary concern is always how the product or service benefits them and makes their life better.
Six Alternative Offerings
Convenience
Structure your offering around customer convenience and you have a motivation that does not require sales or discounts. At my daughter’s school recently, the uniform company came to the school to sell uniforms. The parent’s alternative was to drive 30 miles into the city to purchase the uniforms at the company’s store. Parents were lined up forty deep to purchase the uniforms at regular prices. This store made convenience a motivator for the parents to shop.
Enhance Your Expertise
If your customers are buying your expertise, by enhancing that know-how you give them additional motivation to buy your product or service. Suppose you were in the copywriting business. You announce to your customers that you had just completed a copywriting campaign that generated thousands of dollars for a particular business. Customers now see doing business with you as even more desirable. No discounts; no sales!
Self-Esteem and Praise from Others
Those who market golf equipment say the main motivation for customer purchases is praise from others. “Great shot, Bob. You’re really driving the ball well!” If your product or service involves these types of motivations, repackage your offering to foster self-esteem and praise from others. It has more power than a sale!
Tapping into Social Issues (Idealism)
I recently worked with an acupuncture clinic. This form of Chinese medicine can heal many ailments and injuries. We chose to focus their acupuncture marketing on the treatments on athletic injuries because of the current scandals involving the use of harmful drugs and steroids. We presented their offering as a safe and natural alternative to more harmful drugs. By presenting an ideal alternative to a current social issue, no sale or discount was required. You can appeal to your customer’s idealism.
Popularity
People want to be part of the “in-group.” They want acceptance. By repackaging your offering to emphasize the popularity of your product or service, you give people another motive for wanting to buy from your business.
Scarcity
Scarcity is another motive that drives customers. It can be expressed in limited product or service quantities; limited editions; selective lines of products; preferred customer programs; limited time; or taking advantage of opportunities. There is some greed in all of us. If we feel we are going to lose out, we get very motivated.
Conclusion
This article has shown you six alternatives to generate more revenue that don’t involve a sale. When you need a compelling offer, start with the motivations that drive your customers to buy from you and then emphasize these motivations. You will find these motives are just as effective as a sale. They will also help you build a better relationship with your customers because you’re doing it for them!
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About The Author
Jonathan Marino an internet marketer and founder of http://www.cblinkus.com,new internet marketing concepts newsletter to discover the REAL strategies and Insider Tips
Will You Ever Have to Pay a Deficiency Judgment From a Foreclosure?
When a foreclosure is finished and the home is sold or assessed by an appraisal, for the loss on the mortgage, the deficit amount the bank will not get back from the mortgage balance and expenses due, is called a deficiency. In most states, the lender has an option to get a judgment in this amount against the borrower and this is called a "deficiency judgment". In addition to the loss of the homeowner’s home he also has the potential of having to repay this judgment in the future.
Even if the bank accepts a "deed in lieu of foreclosure" they can still get a deficiency judgment against the borrower. The borrower is the one responsible for the mortgage or deed of trust payments and he may or may not be the homeowner. If the homeowner has a co-signer, the co-signer will be as legally responsible as the borrower to pay back the deficit due. Depending on whether the foreclosure is judicial or non-judicial, and the specific terms of the mortgage, the bank may not be able to seek a deficiency judgment. These laws vary state-by-state and should be reviewed carefully to determine which applies to the reader.
The bank doesn’t just have the amount of the unpaid loan balance due but also legal fees, accelerated interest payments, back principal payments, in some cases pre-payment penalties, and other expenses as part of the judgment amount. This is why a homeowner who has had his mortgage a couple of years could owe more than he borrowed originally. As an example, the homeowner borrowed $200,000 in June of 2006 and in January of 2008 he goes into foreclosure and the final judgment against him could be $218,000! This is because of the additional expenses and the fact that he pays mostly interest in the first 10 years of his mortgage.
The largest loss the lender has is his loss of the ability to loan about 7 - 10 times the unpaid mortgage balance. This is because the Federal Reserve requires the banks to put cash into a non-interest bearing account to cover potential losses. Since the bank can no longer use these funds to get additional loans from the Fed, he is losing tremendous loan power. This loss of revenue to the lender can not be passed on to the homeowner or borrower.
The major factors in deciding whether the lender will pursue a deficiency judgment are whether the lender feels he can collect the judgment and the cost to collect it. In the process of working with the homeowner, the lender pulls his credit and can see what other outstanding bills he has and whether they are being paid timely. The lender can not see what assets the homeowner has but can sometimes see where he works. The homeowner will be asked to fill out a Net Worth Statement ("NWS") which will disclose these assets to the lender. This document is a major part of the decision to pursue the judgment or not. If the lender has no reason to believe the homeowner has extensive assets, they will issue the IRS Form instead. A note of caution - falsifying the NWS can be bank fraud in some states so be careful if you intend to return the NWS to the lender.
The deficiency judgment is determined by the court-approved "Final Judgment" amount in most states. However, in some states, the property must be sold or an appraisal done to determine the "expected" net loss. If your state does this procedure by appraisal, contest the appraisal and have the judgment lowered if you believe it was not correct.
The lender usually chooses not to get a deficiency judgment and instead report the loan deficiency amount on IRS Form 1099. The result to the homeowner is a "phantom income" requires him to pay income taxes on this amount. In this situation the final cost of the guarantor’s foreclosure is the amount of income taxes he pays the IRS instead of the entire deficiency judgment. This is a substantial savings to the homeowner and the lender also benefits because there is no collection on his books that is counted as a liability. Unless there is suspicion of fraud in the original loan, the lender will issue a 1099. In December of 2007 legislation was enacted that allows a maximum exemption amount a homeowner who resides in his property can write off for this deficiency amount.
Carefully weigh your rights and options when you make a decision to allow your home to be lost to foreclosure, as there are solutions besides foreclosure and deed transfer to the lender. Do not be paralyzed with fear that the lender will follow you forever to collect the deficiency judgment, as you have a number of options to fight this including attacking the validity of the original loan.
About The Author
Dave Dinkel is the author of http://www.StopMyForeclosureMess.com "32 Ways to Quickly Stop Foreclosure and has helped thousands of foreclosure victims for nearly 33 years. If you are facing foreclosure, visit http://www.StopMyForeclosureMess.com StopMyForeclosureMess.com for guaranteed solutions.
Monday, September 8, 2008
Manage Debtors And Creditors To Improve Liquidity
Sales turnover and net profits may follow a rollercoaster pattern familiar to most business but when the cash flow dries up the game is over. Urgent attention to the management of working capital can provide every business with the cash resources to exploit its potential
Most businesses will experience periods of lower sales and times when losses may be incurred as expenses exceed sales income. The situation is recoverable by producing higher sales and reducing costs and expenses. A business that runs out of cash resources is dead in the water.
Debtors and sales income management
The objective is to obtain payment from customers as fast as possible improving cash flow and minimising the risk of bad debts and not being paid at all.
Payment terms offered to customers should be clearly stated and fixed as standard accounting figures according to the amount of funding the business is prepared to offer its clients. Because that is exactly what credit terms to customers is, free cash funding in exchange for eventual sales income.
Consideration should be given to using a cash discount system to encourage sales invoices to be paid faster. In some businesses it would be appropriate to obtain up front deposits and scheduled payments. Review this practise to obtain a greater proportion of payments faster to improve liquidity.
New customers should be subjected to a strict credit check. All new customers where credit check details are not available should be invoiced by the accounting function on a pro forma basis. Any businesses who fail to meet the highest credit score required should remain on a pro forma invoice basis.
The credit control function needs consideration from the first step of issuing customers with a sales invoice, producing customer statements of the debt owed and a set procedure of credit control letters and telephone follow ups that actually achieve the end result of getting the cash in. An essential process in the credit control procedure would be to ensure the accountant or bookkeeper always issues sales invoices and customer statements promptly.
Incorporate into the terms of trade a set of rules to invoke interest payments for late payment and late payment debt recovery costs. In the UK the Late Payment of Commercial Debts (Interest) Act 1998 sets out the statutory rights of business to claim interest and costs.
Consider the possibility of factoring sales invoices due from debtors either by selling the sales invoices to a third party or raising cash on the value of those invoices pending payment. Factoring has the disadvantage of often not being cheap but does have the advantage of generating a regular stream of cash.
Bad debts have a double impact on any business and all possible steps should be taken to reduce the risk. A bad debt not only uses valuable resources in chasing the debt with the negative impact on cash flow and liquidity but also is a straight loss to the net profit and a strong indicator that the accounting function is failing the business.
Creditors and expenditure management
The objective is to extend the time allowed for payment of expenses the business incurs.
Consider the frequency of all payments made to suppliers. Small business have alternative payment terms available for the payment of taxes. In the UK value added tax can be paid quarterly or monthly, vat cash accounting can ease the tax liability due in critical periods and paye payments can be paid quarterly rather than monthly for smaller businesses.
Every opportunity should be considered to improve liquidity and that would include the frequency which employee salaries and wages are paid. A sensitive area since it involves the most important people to the business success but adopting a payment period to coincide with the receipt of cash from customers may in some circumstances balance liquidity.
General creditors are a major area to be addressed in terms of both the amount of credit received from suppliers and the time required to pay those creditor accounts. Larger orders on extended payments terms creates a risk area should the goods not be used but can greatly assist cash flow as the business is effectively borrowing free cash from its suppliers.
Stock levels are crucial to financial management of the creditor total. High stock levels use valuable working capital which is offset in part by the level of creditors. Higher levels of stock financed by free credit from creditors lowers the cash flow requirements on the other parts of the business.
About The Author
Terry Cartwright designs UK Accounting Software at http://www.diyaccounting.co.uk/ on excel spreadsheets providing complete Bookkeeping solutions http://www.diyaccounting.co.uk/smallbusinessaccounting.htm for small to medium sized businesses
How To Write A Successful Business Plan
Whether you are planning to start a brand-new business, expand an existing company, or get financing for a business venture, you will need to write a business plan. A business plan not only lends your business a sense of credibility, but also helps you to cover all your bases, increasing your chances of success.
Although writing a business plan can be a lengthy, intimidating project, it is not necessarily difficult. Here is an overview of how to write a successful business plan.
What to Include in Your Business Plan
Your business plan needs to demonstrate that you have thoroughly considered all aspects of running your business. To that end, the standard business plan has nine major sections, covering everything from your business’s mission statement to a detailed financial analysis.
Executive Summary
The first – and most important – section of your business plan is the executive summary. This section is so important that it should literally be the first thing the reader sees – even before the table of contents! However, it should also be written last, as you’ll have a better understanding of the overall message of your business plan after you’ve researched and written the other sections.
One of the most important parts of the executive summary is the mission statement. The mission statement is only three or four sentences long, but it should pack the most punch out of everything else in your business plan: Those four sentences are responsible for not only defining your business, but also capturing the interest of your reader.
The rest of your executive summary should fill in the important details that the mission statement glosses over. For instance, your executive summary should include a short history of the business, including founder profiles and start date; a current snapshot, listing locations, numbers of employees, and products or services offered; and a summary of future plans and goals.
This section is a candidate for a bulleted format, which allows you to list main points in a manner that is easy to scan. Avoid using too much detail – remember, this section is a summary. A page or two is usually sufficient for an executive summary.
Market Analysis
The next section of your business plan focuses on market analysis. In order to show that your business has a reasonable chance for success, you will need to thoroughly research the industry and the market you intend to sell to. No bank or investor is going to back a doomed venture, so this section is sure to fall under especially close scrutiny if you are looking for financing.
Your market analysis should describe your industry, including the size, growth rate, and trends that could affect the industry. This section should also describe your target market – that is, the type or group of customers that your company intends to serve. The description of your target market should include detail such as:
• Distinguishing characteristics
• The needs your company or product line will meet
• What media and/or marketing methods you’ll use to reach them
• What percentage of your target market you expect to be able to wrest away from your competitors
In addition, your market analysis should include the results of any market tests you have done, and an analysis of the strengths and weaknesses of your competitors.
Company Description
After your market analysis, your business plan will need to include a description of your company. This section should describe:
• The nature of your business
• The needs of the market
• How your business will meet these needs
• Your target market, including specific individuals and/or organizations
• The factors that set you apart from your competition and make you likely to succeed
Although some of these things overlap with the previous section, they are still necessary parts of your company description. Each section of your business plan should have the ability to stand on its own if need be. In other words, the company description should thoroughly describe your company, even if certain aspects are covered in other sections.
Organization and Management
Once you have described the nature and purpose of your company, you will need to explain your staff setup. This section should include:
• The division of labor – how company processes are divided among the staff
• The management hierarchy
• Profiles of the company’s owner(s), management personnel, and the Board of Directors
• Employee incentives, such as salary, benefits packages, and bonuses
This goal of this section is to demonstrate not only good organization within the company, but also the ability to create loyalty in your employees. Long-term employees minimize human resource costs and increase a business’s chances for success, so banks and investors will want to see that you have an effective system in place for maintaining your staff.
Marketing and Sales Management
The purpose of the marketing and sales section of your business plan is to outline your strategies for marketing your products or services. This section also plans for company growth by describing how the growth could take place.
The section should describe your company’s:
• Marketing methods
• Distributions methods
• Type of sales force
• Sales activities
• Growth strategies
Product or Services
Following the marketing section of your business plan, you will need a section focusing on the product or services your business offers. This is more than a simple description of your product or services, though. You will also need to include:
• The specific benefits your product or service offers customers
• The specific needs of the market, and how your product will meet them
• The advantages your product has over your competitors
• Any copyright, trade secret, or patent information pertaining to your product
• Where any new products or services are in the research and development process
• Current industry research that you could use in the development of products and services
Funding Request
Only once you have described your business from head to toe are you ready to detail your funding needs. This section should include everything a bank or investor needs in order to understand what type of funding you want:
• How much money you need now
• How much money you think you will need over the next five years
• How the money you borrow will be used
• How long you will need funding
• What type of funding you want (i.e. loans, investors, etc.)
• Any other terms you want the funding arrangement to include
Financials
The financials section in your business plan supports your request for outside funding. This section provides an analysis of your company’s prospective financial success. The section also details your company’s financial track record for the past three to five years, unless you are seeking financing for a startup business.
The financials section should include:
• Company income statements for prior years
• Balance sheets for prior years
• Cash flow statements for prior years
• Forecasted company income statements
• Forecasted balance sheets
• Forecasted cash flow statements
• Projections for the next five years – every month or quarter for the first year, with longer intervals for the remaining years
• Collateral you can use to secure a loan
The financials section is a great place to include visuals such as graphs, particularly if you predict a positive trend in your projected financials. A graph allows the reader to quickly take in this information, and may do a better job of encouraging a bank or investor to finance your business. However, be sure that the amount of financing you are requesting is in keeping with your projected financials – no matter how impressive your projections are, if you are asking for more money than is warranted, no bank or investor will give it to you.
Appendices
The appendix is the final section in your business plan. Essentially, this is where you put all of the information that doesn’t fit in the other eight sections, but that someone – particularly a bank or investor – might need to see.
For instance, the market analysis section of your business plan may list the results of market studies you have done as part of your market research. Rather than listing the details of the studies in that section, where they will appear cumbersome and detract from the flow of your business plan, you can provide this information in an appendix.
Other information that should be relegated to an appendix includes:
• Credit histories for both you and your business
• Letters of reference
• References that have bearing on your company and your product or service, such as magazines or books on the topic
• Company licenses and patents
• Copies of contracts, leases, and other legal documents
• Resumes of your top managers
• Names of business consultants, such as your accountant and attorney
Writing a Successful Business Plan
Despite the quantity of information contained in your business plan, it should be laid out in a format that is easy to read. Just like with any piece of business writing, it is important to craft your business plan with your intended audience in mind – and the bankers, investors, and other busy professionals who will read your business plan almost certainly won’t have time to read a tedious document with long-winded paragraphs and large blocks of text.
Business plans for startup companies and company expansions are typically between twenty to forty pages long, but formatting actually accounts for a lot of this length. A strong business plan uses bullet points throughout to break up long sections and highlight its main points. Visuals such as tables and charts are also used to quickly relay specific information, such as trends in sales and other financial information. These techniques ensure that the reader can skim the business plan quickly and efficiently.
Think of your audience as only having fifteen minutes to spend on each business plan that comes across their desks. In that fifteen minutes, you not only have to relay your most important points, but also convince the reader that your business venture merits a financial investment. Your best bet is a well-researched business plan, with an organized, easy-to-read format and clear, confident prose.
About The Author
Jason Kay is a former professional business plan writer and provides business start up advice. He contributes to business magazines and websites such as http://BudgetBusinessPlans.com, which provides business plan writing services and business plan samples.