Budgeting

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Budgeting is one of the biggest challenges facing small businesses. Often times the person that starts a small business is good at whatever type of business they start but when it comes to the financial end of it they fail. This is why lack of capital and bookkeeping are two of the biggest reasons why a business will fail.

The All Business Blog has a great entry on 8 Budgeting tips for Small Business.

Since yesterday we talked about technology, one of the important things to remember is that budgeting should be easier than ever today with the software that is available in the marketplace. While items such as Quickbooks Pro is very popular Intuit the maker of Quickbooks also makes a version of the personal budget software called Quicken Home and Business that many small companies could use.

The great thing about these software programs is that they are easy to learn and use. There is no excuse for not having some basic budgeting software on your computer.

One area I will agree with is number 5 that says don't budget to the last penny. I feel you need to start with zero add in your revenues then subtract out your expenses. Not doing it to the last penny will leave some fidget room that could lead to problems in the long run.

One thing I would add is to be conservative with your numbers. It is much better to be conservative with your budget that too optimistic. If you are conservative and do better that is good thing but if your too optimistic you could end up hurting yourself.

Many transit agencies across the nation are figuring that out after budgeting for sales tax increases because numbers were good for many years running and were caught with their pants down when numbers tanked in the recession.

The success of your business depends on how well you budget. Your success depends on your budget.

What are your technolgy needs?

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The Small Business Technology Blog has a link to a Wall Street Journal Blog entry about the technology needs of small businesses.

Technology Basics for Business

The article is actually an excerpt from the book by the Wall Street Journal about the technology needs of small businesses.

It wasn't that long ago that small businesses did not have to worry about technology that much. For most a basic desktop computer and printer was pretty much all they needed. Today we live in a world surrounded by technology and to need to be more aware of what is happening in the technology field to stay ahead.

That is not to say you need to run out get an iPhone, iPad, and every other next big thing to come along. What you need to do is stay aware of the technology and find what is going to improve your business and make your more productive.

You also need to be aware of the latest software that is available for your business. As the article points out software services via the web are becoming a viable solution to actually buying "boxed" software which has been done since the first days of the PC.

In the late 90's and early 2000's we saw dramatic changes in personal computers. In the last few years we have seen dramatic changes in about every other area when it comes to technology. Today it is harder than ever to stay ahead of the changes and find the right technology for our businesses.

Losses are Increasing from Theft...

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Losses from theft has been increasing recently due to the economy and other factors, so in the future I will dedicate some space to talk about what I am currently observing so that you as a business owner or company can be sure to be looking out for these and try to prevent them.

A few entries ago I mentioned how you have to look out for that employee you would not expect theft from. Today I am going to tell you some of the what I am seeing going on in stores today that will cause you theft if you are not careful.

One of the things that you always have to watch for is the decoy or distraction. This is a person that is designed to distract those looking for shoplifters or other thieves. The decoy will carry in the backpack and just walk around the store looking suspicious while someone else is actually going through and shoplifting.

The other is the person designed to distract employees. This person will find an employee and try to distract them from the person doing the shoplifting. While this is been happening for years what is on the rise recently is the number of people using their daughters or sisters to be the distraction.

The girl will dress up in tight jean shorts or something else design to provoke the male employee to be distracted and not pay attention. The sad part of this is some of the girls have been in the 12-15 year old bracket and dressed up very provocatively.

The latest incident I saw the young woman who was in the aforementioned age bracket dressed in the jean shorts and showing lots of cleavage distracted the teenage male employee while the brother stole hundreds of dollars in game console games. They then headed to a waiting car being driven by the father who was running the ring.

Parents are not just using their teenagers to steal for them. Another disturbing trend is parents sending their young children in to steal for them. Since kids are often ignored unless they are destroying something or in a toy department, the kids will be instructed to walk around the store and pick things up.

A recent incident I observed was a 10 year old who went around picked up some clothes, changed in the fitting room then walked out to the car to the waiting parents.

I wish I could say the above incidents where isolated events but I have seen reports and the incidents in many locations for myself.

Of course you always have to be looking out for credit card fraud and stolen cards. Once case is people are going into stores buying lots of gift cards and clothes and trying to use a stolen credit card. When it comes up as needing authorization the people will tell the cashier an authorization number that will work and they go off. This means that people ringing customers up need to be more prepared than ever for these kinds of attempts.

These days you need to be more aware that ever to ensure that your company doesn't take serious hits in theft.

Have Trouble Saying No?

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Do you have problems with saying no?

As a small business owner or even an employee if you wish to succeed it is often hard to say no. You feel that if you say no to anything you have the possibility of loosing a customer or not being eligible for the next promotion.

However, not saying no may be doing more long term damage than the no would be. First of all you may be taking on too much and not doing the best possible job. Also, you could be carrying so much on your shoulders that some important things may fall by the wayside. You are also putting additional stress on you that could leave to long term health problems.

I know from personal experience how hard it can be to say no.

When I was working for other people I was afraid if I said no they would think I was not good enough to move ahead but I wasn't able to take on every task that came along. As a business owner I am afraid that if I say no it could mean one less important customer.

The Zen Habits blog has some simple ways to say no:

7 Simple Ways To Say “No”

To perform at your best you need to learn how to say no at the right time.

Renting or Buying?

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The New York Times has a blog done by a business owner that talks about the decision of whether to rent or buy a building.

While buying worked for this particular person, each business owner must look at his own needs and decide what is the best option for you.

Once thing you need to consider is expansion. If you own your own building and your business out grows the location, will you have move to a new location, or will you have the room to expand your business at the place you own.

If you own the complex and need to move, you have the complications of not only moving the business but finding a new place to buy and selling your existing facility. On the other hand you may be able to expand your existing location but at what cost? what disruption your business? and will the current zoning laws allow for it?

On the other hand if your renting you need to know what restrictions you have on using the building, what improvements or changes you can make, if you have a purchase option (often more expensive than buying direct), and what expenses you are responsible. I would also find out what other tenants think of the landlord and how they take care of the property.

You will also want to do a cost benefit analysis of each option and see which one will work out for you in the long run. Like anything when it comes to running a business, it does not come easy and there is some difficult questions to answer before you make any move.

Are you looking for Magic Pills?

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The Positivity blog has another great entry, this time for those people that seek those magic pills. Either it is a book, tip, or something else that is going to magically turn their life and business around.

Four Healthy Reasons to Stay Away from Magic Pills, and How to Do It

Another example of magic pills is the get rich quick schemes. Everyone thinks they can find a magic pill and presto they will be rich. As anyone who has made will tell you it takes lots of time and smart money management.

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The Six Disciples has a great entry on change in 2010.

Seven Steps To Effective Change in 2010

The year is now more than half over and its time to sit down and evaluate the year so far.

What has gone right, what has gone wrong, what did you do that benefited the business, what could you have done better?

The most important thing to do is be honest with yourself. Do not look through rose colored glasses or be extremely negative.

Once you evaluate the first part of the year decide what you want to accomplish in the second half of the year and what you can do to make it happen. Take a look at the Six Disciplines blog and get some ideas to a better second half of 2010.

Employee Theft

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One of the things we don't like to think about but must is the possibility that one of our trusted employees is stealing from us. However, during tough economic times employees that may not have consider stealing in the pass may do so now.

Recently I dealt with a case were an employee with a company for 17 years was caught stealing magazines, books and dvds. The person had been a good employee for many years but started stealing about 3 years ago.

While a few dvds and magazines here and there don't seem like much they can add up. In fact this person caused annual loses of maybe ten or more thousand dollars.

You need to protect yourself and your company. Now I am not saying you need to paranoid, but extra vigilance should always be taken to protect your company.

The Risk and Business Blog has more on this subject.

Beware of work place theft

Relaxing on Vacation

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The Positivity Blog had a great entry a few days ago about relaxing on vacation.

The Short and Simple Guide to a Relaxing Vacation

I know, as a small business owner vacations can seem like a daunting task with so much on your plate. However, you must take a vacation in order to recharge your batteries and have time away from the headaches of day to day operation of your business.

One of the hardest times I have on vacation is relaxing. I normally put so much on the plate I come back as tired if not more tired than when I started out.

However, on my last vacation I did not schedule anything. I did spend a few days in a hotel were I was not pressured to go out and do too many activities. It was nice have a nice relaxing vacation and I did feel revived when I came back.

So got out and take some time off...

Looking for a web designer?

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Are you looking for a web designer? Then the Small Business Branding blog has some questions that you will ask any web designer that you are looking to design your site.

10 Critical Questions To Ask A Web Designer

While the task of designing a website may be daunting for those that have not experience in it, you need to remember the KISS principle when it comes to web design: Keep It Simple Silly. Some web designers what to put all the coolest stuff onto your website but all it does is drive away traffic.

While your website is under design, make sure to get feedback from your customers on what they think of the proposed design. If a sampling of your customers is negative, you need to go back to your web designer and find out ways to make it better for your customers.

You do not have to become an expert in web design, but become familiar with what constitutes a good website so that you can ask good questions and insure that your designers do not go overboard with what they design.

Inspiration

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One of the more favorite blogs that I just love to read is the Zen Habits blog. The blog always has something on it that can inspire you. One of the more recent blog entries from the blog is about inspiration.

What actions do you take to inspire you? One of the ways I found to stay inspired is have certain items around that inspire me. Above my desk is a picture of the new Ford F150 Raptor. That picture inspires me to try harder so that I can purchase one of those and go to Moab.

Need some help with inspiration? Take a look at the Little Guide to Inspiration on the Zen Habits Blog.

Changing Public Perception

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If you are going to be successful in the long run in your business you are going to need to change public perception.

Now what public perception am I talking about?

The perception that the small business is inferior to large businesses. People have the misperception that small businesses have high priced, are run down and are an indication that the place you are located is going down hill.

Now in some cases this perception has been earned. There is plenty of examples of small businesses that have let their place run down and not took care of things. But then again I know of a major grocery store chain that sold several of their stores recently most of which are less than 5 years old and the new owners that are local are spending thousands of dollars in repairs for non-existent maintenance.

It is ironic that many people complain every day about the lack of service and poor quality at some of the major chains but continue to purchase the same products for those stores because they are "cheaper".

So how do you change this perception?

First of all this is not a perception that is going to change overnight. It has taken years for the perception to become ingrained in peoples minds so don't expect it to change tomorrow.

Second you need the power of word of mouth. If people experience that your business is clean, has friendly employees, and is taken care your customers will tell their friends about you.

Third, if your area has a locally owned business organization such as Local First Utah that is a group of small businesses working together to promote locally owned business you need to join. If your area does not have this type of organization think about creating one.

Not only will the organization is a way to market your business, but it is also an excellent opportunity to network with other small business owners to learn from their successes and mistakes.

You need to change the perception about small businesses.

The Vendor Balancing Act

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While most people think that one of their more difficult relations is with customers, in the long run they may find that their most difficult relationships will their vendors. In a perfect world the vendors would treat you like you are truly THEIR customers but in reality many vendors act as though it is the other way around.

Of course some vendors are much better than others and it will take some experience to find out who the better vendors are.

Then there comes the balancing that you will have to perform. If you find that a vendor is taking advantage of you, what do you do? In most cases you would assume that you drop the vendor and find someone that will treat you better. The problem arises when that vendor is the only source of an important product.

Let’s use electronics as an example. Let’s say that you currently stock brand “A” electronics which is one of the more popular brands in the industry. However, “A” products does not allow you to return defective products to them causing you to eat the product. Now you will have to analyze if the amount of sales created by having product “A” in your stores is enough to justify you losing some money on returns.

If the amount of sales justifies you keeping that product then you will want to plan for a certain amount of returns that you will have to mark off. Of course you can probably find a technical school that would love the donations of the defective product in order to let students experiment with them and thus giving you some goodwill.

On the other hand if the amount of sales and the hassles created by them do not justify you taking the losses on their product then dump them and find another vendor. However, I would let the company know why you are going to drop them and see if they will do anything for you.

In addition, vendors used to have reps that would come and visit local stores, building displays and building relationships with the companies that sold their products. However, these days’ vendors have been cut so severely that they may only visit major stores once a month or have cut out some altogether so the chances of them coming to your independent store may be slim and none.

You will defiantly want to cultivate a relationship with any vendor that does take the time to come visit you. They are an excellent source of information and if they take the time to visit you then they are probably a vendor you will want to focus on.

Also, depending on the products you sell; look for smaller vendors that may not have the name but will have the ability to service you better.

Remember, you are the vendor’s customers so find vendors that treat you that way.

Evalutating your Goal Setting

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How are you doing with setting goals?

Hopefully by now you have started writing your goals on a regular basis. At first your excited to do it but it is also hard to get in the habit of doing them on a daily basis until you get in a rhythm and start seeing some success with them.

After you have been setting goals on a regular basis for a couple of weeks, it is time to review your progress. See how many goals you are setting on a daily basis and evaluate how well you are performing.

If you find that you are accomplishing all your goals in a couple of hours and it feels like no effort at all, then you are not setting goals that are tough enough. After a short period of time you will have no sense of accomplishment because your goals are not set high enough to give you that “I did it” feeling.

On the other hand, if you reach the end of the day and most of your goals have not been checked off, then you may be setting your goals too high or trying to accomplish too much in a period of time.

While you want to set high goals, you also much remember that your goals need to be realistic. Your goals need to be reasonable or else frustration will set in and you will quickly abandon the goal setting process.

What it comes down to is that not only will you have to set your goals and write them down on a daily basis, but you must also evaluate your performance and make changes in order to perfect your system and get the most out of your goal setting.

Yes, goal setting does take effort but over time that effort will pay off.

Here is another video on how to start a small business which comes from Australia. The video is just under 7 minutes but gives some good information in that time.

Are you Outsourcing?

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The word outsourcing will make most people cringe including myself because of what some companies have been outsourcing, but outsourcing should not be a bad word but you have to do it right.


Outsourcing has gotten plenty of publicity lately especially with so many companies outsourcing their customer service functions to places like India. Recently I had issues with my Internet Service Provider and it turned out the company I go through has outsourced everything to India. This is where the problem arises because the guy on the other end of the line only knew what the computer told him to do; by the end of the day I changed ISP’s to a company that does not outsource their customer service functions.

That is where many companies are absolutely failing when it comes to outsourcing. Instead of outsourcing functions that do not directly affect the customer, they are outsourcing their direct link with the customer and putting their customers and their futures in other’s hands.

So what should you outsource?

As a small business owner there is plenty of areas that you can outsource that will not affect the service your customers get but improve your operations and finances.

An example of outsourcing that a small business owner should seek is accounting services. While I have extensive experience with numbers, many small business owners are not numbers people and should try to find someone that could do their paperwork better than they could.

Another popular source of outsourcing for small businesses in the last few years is virtual assistances. Virtual Assistants do a large range of tasks that will free your time to build the business.

In other words outsource tasks that someone else can do better than you can or that will free up your time to be more productive. What you do not want to do is outsource anything that will affect the level of customer service that your customers will receive.

There are other side benefits of outsourcing including giving business to your fellow small business owners, having more people who know about your business and if you treat them right will talk about your business, and finally another source to network with.

So by all means outsource, just make sure you do it right.

Prioritizing your Daily Goals

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Now that we have talked about the importance of goals and the different time frames, we will discuss the daily goals in a little more detail.

As mentioned last time you should have long term goals, medium range goals, and your short term goals that should be broken down even farther into monthly, weekly, and yes especially daily goals.

You should get up every morning, or better yet write down your goals for the next day before you go to bed. So that you can see the big picture I suggest that on divide a piece of paper with several columns with sections for the priority, what the goal is and most important how that goal relates to your long range goals. That way you can see how accomplishing that goal will build you toward the place you want to be in five, ten years or more.

You will also want to write down the goals you have for the day that may not directly tie into your long range goals but before long you will see that everything you plan to do that day will start fitting into those long range goals.

The next item on the agenda is to prioritize your daily goals in order of importance. I usually letter them A, B, and C. If something is a lower priority than a C, then it really is not important at all and should not be a goal for the day, correct?

Next take a look at the A category. Is there anything on there that is something you’re not looking forward to doing? Then do that item first so that it is over with and you do not have to think about it for the rest of the day. Do the same thing for the other three categories of priority so the stuff you’re not looking forward to is done and over with first.

At the end of the day go through your goal list and note anything that you did not accomplish that day. Figure out what you did get that goal accomplished:

1. Will it take longer than done day to accomplish, then try dividing the goal up into several sections and completing a section each day.
2. Something that you were trying to avoid, once again get this done first so that you do not have to think about it the rest of the day.
3. Too many goals for the day? We will go over this next time.

As Rick Pitino says in his book “Success is a Choice” you need to go through your goals and not what you accomplished and figure out what you did not accomplish and figure out why and how you can do things differently tomorrow.

If you are seeing to many A or B items not get done then you should evaluate what is keeping you from accomplishing important things. Are you getting distracted? Are you being interrupted by outside influences? Trying to bite off more than you can chew?

After a few weeks you will have a better idea of how a goal setting system will work for you and get you on the road to accomplishing more.

Being a smart shopper for your business

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Too many small business owners fall into the trap that they have to have the biggest and the best equipment to operate their business.

Whether it is buying the latest and greatest computer, having the new, trendiest office furniture, or going out and leasing the copier that will do everything for you including make coffee; many small business owners fall into the got to have it trap.

I am not saying that you should go out and buy cheap crap that will not last you however; you need to become a smart shopper.

Let’s take a look at office furniture. If your customers will not see your office, then there is no reason for you to spend thousands of dollars on new office furniture. The desk I am currently using was purchase for just over a hundred dollars and has served me for more than 6 years now.

If your business is in an industry where clients or customers will see your office then you will want to find something a little nicer. However that does not mean you need to go out and buy new furniture.

There are plenty of stores around that sell used office furniture that will look nice but not cost you an arm and a leg. Another great source for furniture is on line ads. One of our local television stations provide classified ads and has become a major source of good used items at really good prices.

It comes down to figuring out your true needs for the next couple of years then being a smart shopper and finding the best product for your money. Don’t spend more money than you need to in order to get the furniture and equipment you need.

More on goal setting...

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Last week I discussed the importance of having goals. Today I will go over the different ranges of goals and how they interrelate to each other.

First you have your long range goals. These are goals that are more than five years away. While it seems like a long time, your other goals are ones that build up to these goals. For example you can have a goal that in ten years you want to be able to sell your business and retire. Another long range goal could be to have a certain amount of money in the bank for your retirement.

On the personal side you could set a goal to have your child’s college education funded by a certain time. Another example would be that you plan to have your dream home in 7 years.

You need to take the time to deice where you want to be in 5, 10, 20 years and so on and what it is going to take to get you there.

Next down the list is your short range goals. These are goals that you want to achieve in 5 years but will not be accomplished in the next year. They are goals that are stepping stones to reaching your long range goals.

For example, if you set a goal to have enough money in the bank to retire in 20 years, in 5 years you need to have a certain amount of money in the bank. Or you can set a goal to be debt free in the next 2 years that will set you on course to hit your big goal of retiring without having to worry about Social Insecurity.

You could set a business goal that in five years you want your business to be making 2 million dollars or you want to move into a new building in 3 years.

Finally you have your short range goals. If the medium range goals build you toward your long range goals then you probably can figure out that short range goals build you toward your medium range goals. These are goals that you plan to accomplish in the next year.

Short range goals are broken down even further to year goals, monthly goals, weekly goals, and daily goals. Once again you look at where you want to be in the next year and plan your goals accordingly.

What do you have to do this month in order to reach your one year goal? Once you know what you have to do this month, you want to break it down and figure out what you will have to do this week.

Of course you know what is coming next, once you figure on what you need to accomplish this week then you want to break it down and figure out what you have to do today to reach that goal this week and so on.

At this point you probably feel overwhelmed. It will take too much time to set all these goals, and you don’t have the time.

You will be amazed what you can accomplish when you are actually setting goals for yourself on a daily basis. You begin to realize what is important and what you just do not need to do.

Other great thing about short range goals is that they get you excited. When you hit that short range goal it energizes you and the next thing you know you are busting out the next you and the one beyond that.

Now there will be days that you are just hit with multiple road blocks and it seems that nothing will go right. You have your goals but you just cannot hit any of them that day. That is when you need to take a look at your long range goals to get some motivation. Also take a look at what goals you have accomplished to see how far you have come.

Starting a small business video

Are you thinking about starting that small business? Here is a short video I found that may have some helpful information for you.