Archive for the ‘Strategic Planning’ Category

Notes from our meeting on February 5th.

The way to effectively use of Social Media is very similar to traditional networking activities.

• Decide what we want to accomplish before we invest time and money in any activity
• One purpose might simply to stay in front of our prospects and clients so they do not forget us
• Use the social media vehicles our targets are using
• Stay within the culture of the social media we are using
• The more we focus on helping others rather than trying to sell, the more effective our efforts will be

If we have a mass market you are trying to reach, then Facebook and Twitter might be viable alternatives.

If we are looking to connect with professionals, then Linkedin might be a good choice.

Facebook has the best viral component tool and is also an easy way for non-technical types to provide visuals.

The vast majority of people who start their own business consulting practice do so for the same reason I did. We got tired of the corporate rat race and wanted to have our own business where we could set our own hours and decide how much we wanted to work and earn.

If you want to save a lot of time and frustration, you should decide quickly what type of consultant you want to be. Generally, business consultants fall into one of three categories:

•  Independent Contractor – You are basically filling a role that would be filled by an employee, but are not on the payroll. This type of consultant is the easiest to migrate to from the corporate environment.
• Specialized Business Consultant – You have a particular skill set that makes you an expert in one specialized field. To be successful starting a specialized business consulting practice, you should have or develop tools and systems that would not be generally available and used by your clients.
• General Business Consultant- You have a broad business background that you want to use to help entrepreneurs. To be successful starting a general business consulting practice, you should have or develop tools and systems, such as MyBizPath, to help business owners achieve their goals by making changes across their business.

Becoming an independent business consultant is no different that starting any other business. Planning and thinking through the different possibilities shortens the time to success.

Last Saturday, I had the honor of being a guest lecturer at an Entrepreneur class at Wake Tech. Many of the students were considering starting a business with a partner. 

I shared with them both my personal experience and the experience of many of my clients over the years.

Having the right partner can make being an entrepreneur less lonely and less challenging. But having the wrong partner can kill your business and/or if the partner was your friend, kill your friendship.

There are at least three criteria you should use before deciding to bring in a partner:

1. You can trust the prospective partner with your wallet and checkbook.
2. The prospective partner brings something to the business that you are lacking.
3. Both you and the prospective can agree upon a defined set of responsibilities and how decisions will be made.

If you know your prospective partner well, this process can go very quickly. If you do not know him or her well, consider “dating” for a while before a decision is made on becoming a partner.

After my discussion, at least half of the students who wanted to bring in a partner early decided to hold off on that decision until they did some due diligence. Perhaps my Saturday morning talk saved at least one budding entrepreneur from making a terrible mistake.

Customer concentration is a major issue when more than 10% of revenues come from one customer or when more than 25% of revenues come from the top five customers.

This situation may create several major concerns to prospective buyers. The biggest one is that only one or two decisions from customers can turn the business from profitable to unprofitable. From the buyers’ viewpoint, this becomes much more likely after the seller leaves the business.

Buyers will typically discount the amount they are willing to pay for a business with high customer concentration by 30-50%. Worse, many buyers decide not to make an offer at all if the customer concentration is too high.

Sellers who face this issue must invest the time and money in sales to increase the number of customers and to find ways to increase the revenues to other customers.

Look closely at the profitability from top customers and make changes as appropriate.