It’s all about the execution

They say the road to ruin is paved with good intentions so how do you stop your goals falling by the wayside?

Don’t you just love that moment of finishing a plan?  You’re energised, got some great moments of clarity and really focused on what you need to achieve – but what then?  All too often those goals remain front of mind for days, even weeks, then life tends to get in the way…it throws you a few curve balls or you get busy on a project and before you know it your goals feel very far away and you’re not quite sure how to get back on track.  So how do you stop this happening to you?  Here are four top tips to keep you on the straight and narrow

1)     Be realistic

You know those new year’s resolutions that involve going to the gym six times a week when the closest you’ve been to a gym in the last year is to pick up the free paper?  You need to be honest with yourself.  Where are you today?  What resources do you have? What resources do you need?  It doesn’t mean aim low but goals that are unrealistically high will discourage you and risk you giving up before you’ve really got started.    Continue to aim high but maybe it’s more realistic to get there in 12 months rather than six or two years rather than one. 

2)     Break it down

It’s important to know not only where you want to go but also how you’re going to get there.  Say you have a revenue goal of 15% for the next financial year.  How are you going to get there?  How does that translate into new customers? Does it mean raising prices? Don’t wait until you’re nine months in to realise there’s no way you’ll make up lost ground in the final quarter.  Know where you need to be at the end of each month or quarter so that you can adjust your activities, tweak your plan and go hard if you need to catch up.

3)      Keep yourself honest

I’ve always found that the best way of making goals real and ensuring that I stick with them is to talk about them.  Pick someone to share your goals with and to discuss your progress as you go.  It can be a trusted friend, business advisor or mentor.  But pick carefully, there should be mutual respect and someone who will encourage you as well as keep you on track.  If you’ve shared your goals you can’t hide from them.

Another way of keeping yourself honest is to keep your plan visible.  A plan in the drawer in your office doesn’t leave you any closer to your goals.  Keep key goals where you can see them whether that’s up on a whiteboard on your office or pinned up on your noticeboard keep it where you can see it. 

4)     Celebrate success!

Last but definitely not least make sure that sure you take a moment to celebrate the wins along the way.  Pick a reward for yourself as you start hitting your milestones and it will encourage you to keep going.  You need some carrot with your stick.

So how do you best keep yourself on track with your goals?

This article was also published on flying solo http://www.flyingsolo.com.au/startup/setting-business-goals/four-tips-for-achieving-your-business-goals 

The $4.2trillion internet economy

As well as predicting the extraordinary growth of the internet economy by 2016, a report released by business strategy consultancy The Boston Consulting Group (BCG) identified five ways for SMEs to leverage value from the online world. What are these opportunities and how can you make the most of them in your business?

1.        Geographic expansion

As many soloists already know the Internet has broken down many of the historical barriers.  You don’t need to be located in the same city, or even the same country, as your clients.  You can both access and service an expanded customer base through email, Skype and whole host of other virtual services.  Use this advantage to think creatively about your assessable market.

 

2.       Enhanced marketing

The beauty of online marketing is that it reaches that holy grail of marketing – measurability.  Whether you are marketing online through SEM (Search Engine Marketing) or display ads such as banners you know exactly how many users interacted with your ad.  Even the controversial area of group buying, if managed well, can bring fantastic exposure to a group of customers you wouldn’t usually be able to access.

3.       Improved  customer interactions

The growth of independent user reviews allows your customers to let you know what they think of your business (good and bad!) with an immediacy and a reach that goes far beyond what was previously possible.  Your online reputation is important, as is dealing with disgruntled customers who now have a far bigger audience than just you.  But the upside is that great reviews are gold.  Increasingly, potential customers use social media to seek out recommendations from their friends or professional network and those recommendations hold significant weight in a purchasing decision.

This increased interaction also can even allow to you refine and improve your service or product.  Some of the biggest companies in the world release beta versions of their product and then refine, refine, refine.  Do this and you’ll be quick to get to market plus you learn and adapt your product through real customer experience and feedback.

4.       Leveraging the cloud

There is a whole raft of functionality which used to be beyond the reach of small businesses.  From file storage and sharing, customer relationship management, ecommerce and online payment gateways you don’t need to be one of the big boys to have access to the tools and infrastructure that lets you be more effective.

5.       Easier and quick staff recruitment

You don’t have to be an employer to take advantage of this lever.  It’s now easier to recruit suppliers and outsource business functions by tapping into a global market.  You can source, set up and manage virtual teams anywhere in the work through specialist websites like freelancer and odesk as well as sourcing recommendations and advice through professional networks such as LinkedIn and social networks such as Facebook and Twitter.

So what can you start doing today to unlock the value of the Internet Economy?

This article was also published on Flying Solo http://www.flyingsolo.com.au/working-smarter/innovation/unlock-the-value-of-the-internet-economy

Smart Sourcing

It’s challenging out there at the moment.  And as the attention turns towards costs it’s important to think strategically about the types of costs you occur.

There are three basic types of business costs and it’s important to understand them before you can become more efficient and more critically start to smart source.  Take this as an opportunity to review how you source your supplies so that you are picking the optimum solution for your business, making sure that it stays agile and flexible.

Overheads

The costs of “keeping the lights on” (eg. rent, insurance, office supplies and support staff). These don’t change with fluctuations in revenue or only change with significant movements in business activity.  They can be the hardest to rationalise because they can be contractual or fixed, but here are some ideas to consider.

1. Take advantage of virtual office support services

Outsource your front desk or reception to a virtual office service which is shared between a few companies

Outsource support functions such as IT support, data entry or basic book keeping.

Make best use of your office space by working on a hot desk model and supporting staff working remotely where practical.  With cloud based crm, finance and data storage systems this has become more effective than ever

It is important to note that the decision to outsource functions or move to a cloud supported solution is one that shouldn’t be undertaken lightly.  The objective in reviewing your cost and support requirements has to take into account efficiency, value and risk.  However recent developments in both outsource and cloud providers and the maturity of the market have meant that SME’s can benefit from the scale of these operations which they would be unable to resource in house.

2. Consider bringing some support functions in house if volume makes this more effective.  Paying an hourly or daily rate to a third party is expensive if you are using it in a full time capacity.

3. Sublet part of your office space if you are not using it at capacity.  There is an increasing need for co-working space by solo entrepreneurs or micro businesses.

4. Offer meeting room space for rent or for evening industry events.  There is the added benefit of publicising your business as well as generating extra revenue.

5. Negotiate volume discounts on stationery supplies or telephony costs

6. Downsize your mobile phone plans or the number of phones in the business if you have excess capacity.

7. Renegotiate the terms of your loan with the bank

8. Renegotiate other supplier contracts.  Even if you are only part way through a contract it may be worth raising with suppliers particularly if you have a good relationship with them and are a regular customer.

Revenue generating costs

The costs have an impact (directly or indirectly) on the revenue that you bring into the business so proceed with caution here…..  The tricky thing is correctly identifying revenue generating costs.  Direct costs, for example staff working on specific projects, are relatively easy to identify.  Indirect costs can be trickier.  For some companies their first “go to” for cost cutting is marketing which can be dangerous or at least a missed opportunity.  Continuing to spend effective marketing dollars can benefit the business in the medium and long term.  The key is making sure that your marketing is highly targeted and you have a clear strategy.

So how can you streamline without hurting the business?

1. Staff costs

Extend the virtual team concept to these team members.  Think about maintaining a core permanent team supplemented by a virtual team based in Australia or overseas depending on your business needs.  Your workforce costs can then flex in line with your business activity.  There are other smart sourcing benefits too.  One of my clients uses this model very effectively.  Despite being a small business they can offer 24/7 responsiveness by having team members based in Australia, the UK, South Africa and India.  That’s smart!

2. Variable material or consumables costs

Renegotiate existing contracts or put them out to tender

Look for new entrants into the market who may be willing to be more competitive on pricing

3. Marketing

Review your SEM (Search Engine Marketing) Spend.  Can you use SEO (Search Engine Optimisation) more effectively to replace some of these costs?

Are you targeting your spend where the results are most measurable?

Discretionary costs

These costs are the easiest to cut but in today’s bootstrapped environment they are usually few and far between.

1. Cut non essential travel.  Use videoconferencing or Skype instead where possible

2. Save money by booking flights direct rather than through an agency

3. Save money by booking accommodation through hotel deal aggregators like wotif.com, expedia.com.au or lateroom

4. If your business requires substantial travel to one location negotiate for preferential rates with a particular hotel in return for using them exclusively, the same can be done with car hire firm

5. Scale down staff entertaining costs to make them less regular or less extravagant.  It’s important to keep having these events particularly if staff are working extra hard but small savings still add up.

6. Review your newspaper and magazine subscriptions.  Do you need all of them?

Finally, these smart sourcing reviews should be a regular part of your business operations and not just something to be done in tough times.  Keep an open mind on new ways to operate, regularly review existing contracts and stay agile.

Valuation – Art or Science?

Well it’s both and where it sits on the scale depends on the approach and the approach depends on the kind of company being valued….

DCF valuation….

This is the “science” part and in an ideal world how you would value all companies. The Discounted Cash Flow (DCF) method relies on forecasting the cash inflows and outflows over a period of time and then discounts these amounts over that period depending on how much more valuable $1 is today compared to in x years’ time.

The problem with this method is that “scientific” as it is its accuracy relies on how well these cashflows can be estimated. For an established company in a mature industry this is somewhat easier but for a lot of media and digital companies, particularly those at an early growth stage or innovating heavily these inputs can be hard to forecast accurately 12 months out let alone the 10-15 years that a traditional DCF valuation requires.

Revenue multiple…..

The methodology here is based on valuing a company by taking its revenue and applying a multiple based on what the market has paid for comparable businesses. In theory if you know that a company has recently raised financing based on a valuation of say 10x revenue. However there are a few obstacles. Firstly it can be very difficult to find comparable data in the market – actual valuation numbers are rarely disclosed publicly following funding rounds and the PE multiples of associated with publicly listed companies in the same industry can be extremely broad. Bill Gurley of Benchmark Capital wrote a great article “All Revenue is not created equal” analysing the inherent issues in simply applying an industry revenue multiple without properly analysing the underlying qualities of the revenue.

The Venture Capital Method….

This methodology effectively reverse engineers the valuation based on the required Return on Investment (ROI) for angel investors or VCs. If you know the ROI you want to make (say 15% to 20% – angel investing is a risky business) and you can estimate the value of the company when the investor exits in say 5 years’ time you can work out the valuation from there.

But whilst this method is useful if you’re the investor you may find that as a company this valuation this produces will be at the lower end.

It’s worth what the market will pay…..

Because a valuation is only one factor in getting a deal done. Five different valuation methods will produce at least five different valuations. There are other important factors to consider…

How many parties are interested in what you are selling? – the more investors that are interested the more negotiating power you have. After all how much more interesting does something look when you know others want it too….

How well do you tell your story? – how robust is your pitch and do you present your company and the opportunity in the best possible light. Does your presentation have all the information an investor needs to make a decision and more importantly to believe in your business…..

How easy are you to buy? – think carefully about who your likely investors are and make it easy for them. Make sure your corporate structure, financial records and legal documentation is tidied up. Yes it’s housekeeping and not razzle dazzle but by taking care of it upfront you’ll make the process much smoother and there’s value in that.

So it’s art, it’s science….and it helps to have a poker face….

How to stop “getting bigger” getting in the way of your growth

It’s an oxymoron right? How could getting bigger possibly get in the way of your growth?  Well it can and it quite often trips companies up.  Why?

Getting bigger is different from growth.

You can get bigger in terms of sales, customers, staff but that doesn’t necessarily translate into growth for your business.  And by growth I mean growing margins, growing profitability and growing in the right strategic direction for your company.

It’s all about focus and getting the maximum return for your efforts.  But to get the maximum return for your efforts you need to know where to focus.  For all lot of start ups and smaller businesses the initial years are about being across all the details and being involved in every decision however small.  It’s not so much about processes or reports…..and that’s a good thing.  You need to be a generalist and you need to be across every detail and at a certain size that’s possible even with very little process or reporting because you’re at the coal face – you know exactly what’s going on because you are there.  But as you grow this isn’t possible without processes and a way of focusing on the important indicators within the business.

Product or service margins – which are your most profitable revenue streams?  Are there areas of the business which are consuming a disproportionate amount of resources?  This includes your own time.  You’re the most important resource in the business – are you spending it where it counts?

Profit margins – is your business scaling?  Where can you get more efficient?

Strategic direction – do you need to invest strategically in order to achieve your business goals and do you have the framework to monitor these initiatives?  Equally do you need to stop investing in certain parts of the business in order not to spread your resources too thin and to remain true to your business’ vision?

Cashflow – Are you keeping a tight rein on your cashflow as you grow?  Are you managing your cash inflows so that you are always able to pay your debts as they fall due?  Many a company though profitable on paper has stumbled and folded due to lack of cash.

It is far easier to set up the processes and tools you need to keep on top of these key indicators before there is a real issue.   These tools will help you focus and allow you to keep working on the business not only in the business.

Adapt or die

kodak   When I read about SOPA and Kodak’s bankruptcy filing this week it struck me that the issues have a lot in common.

Kodak’s bankruptcy filing comes after years of trying and failing to adapt to the increasing digitisation of the photography business and SOPA is the entertainment’s world heavy handed approach to protect its own business from the threats unique to the digitisation of entertainment.

Just to be clear where I stand. I agree with the intention underpinning the entertainment industry’s concern. The illegal sharing of creative content is theft and I don’t want to see us going down the road where the only films released are Hollywood blockbuster sequels because they are the only with any chance of making money….goodbye interesting, quirky, creative films….

But spending millions on lobbying for a bill which tries to legislate against the issue rather than using the funding to a) invest in technology to digitally protect your content from illegal distribution and b) find smarter, commercially viable ways to both distribute content out to a hungry public who want to consume it and creatively exploit your content through non traditional revenue streams seems obstinate in the extreme.

The irony (or is it tragedy?) is that the legislation won’t stop piracy any more than King Canute managed to stop the tide rolling in.

There have been a number of good case studies and articles about why Kodak failed from such a strong leadership position and Fujifilm continues to thrive. This article in The Economist is particularly good in its analysis of the issues. Arguably both saw the landscape changing and realised the future was digital but their approaches differed. Kodak tried to hold off the inevitable…. “Wise businesspeople concluded that it was best not to hurry to switch from making 70 cents on the dollar on film to maybe five cents at most in digital” (Larry Matteson, Kodak) whilst Fuji embraced it, diversifying its business streams and overhauling its operations. Adapt or die….and do it quickly.

For the time being SOPA has been withdrawn but it will be back and it remains to be seen – in the entertainment world who is Kodak and who is Fuji?

New Year New Start

I love starting a new year.  It always seems so fresh with promise and possibility.  And so it should be in business as in life…..

Do you have a plan for how your business is going to develop this year?  More importantly have you documented it?  As with New Year’s resolutions it’s far too easy to have grand plans at the beginning of the year but if it’s not documented and if you don’t keep checking back to remind yourself what you planned to do it’s far too easy to get side tracked.

The planning process, the statement of your intended goals and your map of how you are going to get there is critical to achieving success.  Things will change through the year as new opportunities present themselves and new obstacles need to be overcome and you will need to adjust your plan for those but documenting your goals and the planning process itself will ensure that you always have the end goal in mind.

Have you made your plan for 2012?  If not get in touch and see how we can help