Posts Tagged ‘Growth’


What You Can Learn from the Businesses in Mumbai’s Dharavi Slum

2-5 Dharavi Mumbai smallIn January, I had the opportunity to visit India. One of the most eye opening parts of the trip was the half day I spent at the Dharavi slum that was made famous by the movie, “Slumdog Millionaire”. It sits in the middle of Mumbai, the financial capital of India and is the second largest slum in Asia. Dharavi is only one square mile, but is home to over 1M people. The density of the slum grew over the last 100 years because of the expulsion of factories and residents from Mumbai and the rural poor migrating to the city. 

This slum is big business. Dharavi has an active economy with approximately 10,000 household enterprises that mainly employ residents. Being so densely populated, many of them sleep and work in the same place. Dharavi exports buffalo leather, fabric and pottery products around the world. The total “reported” annual revenue of all the small businesses in the slum is estimated at over $665M per year. Most people I talked to believe it is actually over a billion dollars per year.

There is a lot that American entrepreneurs can learn from these business owners. They include:

  1. Find a niche by doing what others won’t. A lot of the work done in the slum is what others in the rest of Mumbai do not want to do. There is a big business of recycling all types of plastics and metals. These need to be sorted by hand which is labor intensive. Many materials also need to be dried manually in the sun afterward. Lesson: What can your business do that customers need, but other people don’t want to do? Go do that at a profit.
  2. Always be testing (ABT). There are no long term business plans written here. People simply find a job that needs to be done and start doing it. Alternatively, they set up shop outside their home or the one restroom that serves 1,000 people daily and see what people buy. If their product or service does not sell well, they adjust the next day. Lesson: Prototyping and testing are an important part of growing any business until you find want your customer will buy over a long period of time.
  3. The highest price is what people actually pay. There is a tremendous amount of competition in Dharavi since there are so many people. They still focus on the value a product or service brings. For example, there is always a “tourist” price which is the highest since they are willing to pay more than anyone living inside the slum. Lesson: Find customers that value your products the most so you can sell at a top price for maximum profit.
  4. Relationships still matter. It’s not only about price, but who you know and have trusted to work with in the past. In Dharavi, historical ties, religion and geographic location within the slum play an important role in the supplier and customer relationships. Lesson: Everywhere in the world, people do business with who they know, like, and trust. Think about the actual basis of your relationships with your suppliers and customers. If it’s not based on trust, then it is more fragile than you think.

What have you learned about business traveling outside the U.S.?


Mondays with Mike: How To Fall In Love With Your Business All Over Again

Candy heartsIn a lot of ways running a business is like a marriage.  There are similar stages:  apprehension – when you’re not sure it’ll work out; infatuation – when you can’t get enough of the relationship; and resignation – when you realize that every business, just like every marriage requires hard work.  While there’s no avoiding the hard work, falling in love with your business again can help you sustain the energy that being a successful entrepreneur requires.  Here’s how to do it:

  1. Get back to your purpose.  Remember why you started your company in the first place.  Were you working to fulfill a need?   Did you see something you wanted to change in your industry?  Had you identified a way you could improve your community?  Let’s face it:  it’s easier to work for someone else and earn a consistent paycheck than it is to start your own business.  You did it for a reason, and you need to keep that reason in mind.
  2. Reconnect with your core values.  When we’re working in harmony with our core values, we feel good.  When we’re working against them, we feel tired, frustrated, and wrung out.  Simply making sure your company is working in support of the things that matter most to you can help you rededicate yourself to your business.  Identifying your core values can also help you ensure the staff you hire is in alignment with your mission.
  3. Focus on more than the money.  A Princeton University study has confirmed what we’ve been told our entire lives.  Money doesn’t buy happiness.  Specifically, the study found that once basic needs can be met – which they determined is at around the $75K income mark – additional money did not result in additional happiness, at least not in and of itself.  What did make people more happy was doing things they valued with that money.  Whether it’s charitable work or using funds to spend more time with your family, remember that your bank balance alone isn’t a measure of your happiness. 
  4. Make the world a better place.  One of the most rewarding aspects of entrepreneurship is the ability to effect change in your community.  When you have to slog through the hard work of running your business, knowing your work makes your community better can help sustain your efforts, help make it feel worthwhile.
  5. Realize your importance to your employees.  Not only does your company support your family and your community, but it also sustains the families of your staff.  Seeing the very real effects of the business you started and realizing how many people depend on your dream gives you concrete reasons to keep going.  We thrive on being needed, and entrepreneurs fuel our economy and support countless families.

Just like a marriage, running your own business doesn’t stop with the honeymoon.  It’s great to enjoy the first flush of starting a new project, but sooner or later, you must settle in and get down to the hard work of sustaining and growing that business.  Adjusting your perspective and getting back in touch with all the important reasons you had for striking out on your own can get you through the tough times.  


7 Keys to a Successful Barter Arrangement

1-30 Business Bartering smallCash flow is always an issue for entrepreneurs. It often seems to go out more quickly than it comes in.  So, how can you get creative with your finances?  Part of it boils down to using other currencies- aside from just money- to help you run and grow your business.  In fact, your products and services have great value that you can “spend” through barter arrangements.

Done correctly, you can use barter partnerships (shall we call them “barnterships”?) to meet your company’s needs without an excessive cash outlay, while building great relationships in the process. However, without proper preparation, you can also lose your shirt in a deal or even face unexpected tax bills.

Here are seven basics that you need to know before entering into your next barter agreement.

1. Pick the Right Partner

Make sure that your “bartner”- aka your barter partner- has a good reputation and shares your overall values. This means seeking out past business associates with whom you have a good relationship or seeking recommendations from others you trust. If you expect to barter regularly, consider joining a barter group that verifies or rates participants, or even a barter exchange that intervenes in negotiations.

2. Establish a Fair Exchange

Even in barter arrangements, the dollar remains the core standard of value, so both parties need to set (and agree to) a firm dollar value for the goods and services they’re exchanging.

Then, make sure that you establish an equal-value trade, such as a medical office entering into an agreement with a law firm: four free medical checkups in exchange for four free contract reviews, with a value of $1,000 for each party.

Think twice before entering into an arrangement that exchanges goods or services of dissimilar value or type. If your beauty salon tries to exchange free haircuts with a law firm, you may find yourself cutting the same head of hair until long after it turns grey in order for the exchange to equal out. 

Also, stay clear of lopsided arrangements that seem to benefit you. You don’t want the other party to do a lousy job or feel like they are being taken advantage of- that can impact the quality of the trade and the relationship.

3. Start Small

Successful marriages commonly begin with a first date over dinner before moving on to more … uh … interesting activities. Keep your first barter with a new partner like first date – small and low-risk.

This is not the time to bet the farm. Even if you both have honorable intentions, things can go south, often due to different contract language interpretations or lack of follow through. Until you know that you can really work with and trust this partner, keep it small.  Start with a small exchange and build upon that over time if it works out.

4. Put it in Writing

The idea of bartering typically brings to mind a hand shake over the fence. A hand shake is technically a legal contract, but try proving it in court. A barter agreement is just as complex as a cash-based arrangement. You need to identify every possible detail, write it all down and sign on the dotted line.

Document every detail thoroughly. And if you create a product or service collaboratively (such as working together to create an email list), specify what happens at the end of your agreement. If your barter partner takes full ownership and you can no longer use it after a defined time period, perhaps you should agree to supply fewer names than your partner.

5. Establish Clear End Dates

Your agreement may last for a week, a month or longer, but not forever. It absolutely needs a defined end date. Even if you enter into the identical arrangement many times in the future, it’s best to create a new contract each time. If your first agreement worked well, creating the next one will be a simple matter. But, if you discovered that some provisions didn’t work as expected, you can tweak the next version the next time.

6. Communicate Frequently

Don’t wait until the final deadline date to find out how things are going. Define key milestones with your partner and check in on those dates to ensure that you’re both on track and maintaining appropriate quality levels.

Naturally, when unexpected issues arise, don’t wait for a milestone date to speak up. A setback on one side can affect the other side. Plus, an informed partner may have a solution to fix the issue.

7. Educate Yourself on Tax Consequences

As long as you trade goods or services with a cash value, the taxing bodies generally want their share. So, do not enter into a barter agreement before checking with your accountant.

At the very least, the IRS typically requires that you report barter arrangements on your tax forms. If you exchange like goods or services, however, you gain and lose valuable assets. So, you may not need to pay excessive (or any) additional taxes if you properly track both sides of equal-value exchanges. But, the IRS valuation rules can be complex. It’s worth repeating that the advice of a knowledgeable accountant is essential.

Using your know-how as a currency can be a big boost to your business, but take it one step at a time and do your homework upfront so that you reap the full benefits and minimize the risks.


Why No One Wants to Be Your Mentor

Small business owners frequently cite that having a mentor is one of their top keys to success. So why don’t you have one? It’s because you have misconceptions about what a mentor looks like and how they can help.

Here is why people don’t want to be your mentor:

  1. They don’t know you. You won’t find mentors by reaching out to strangers since they don’t know you and won’t invest time in helping. Instead, look around at the inspiring people you are already interact. Your mentor needs to be someone who believes you are worthy of helping. Ask who in your network already fits that profile.
  2. You ask for mentorship. “Will you be my mentor?” Sheryl Sandberg explains that, “If someone has to ask the question, the answer is probably no. When someone finds the right mentor, it is obvious.  The question becomes a statement. Chasing or forcing that connection rarely works.” When looking for a mentor, author Ryan Holiday says don’t even use the word. A mentor is a label that can only be applied to someone over time, and by the time that label can be applied, it is already very clear what that person’s role is. Just like any other relationship, it has to grow and transform into what you both want it to be. Let them develop slowly over a period of time.
  3. You take without giving. The “mentor-mentee” relationship needs to be a mutual exchange. While at first it may seem like you have nothing to bring to the table, this is not the case. Give your time by finding articles, links, or news that can benefit your mentors. Make connections for them to your network. Tweet their posts, comment on their blogs, and share their updates. Ask how you can be of service to them.
  4. You are a drag to mentor. Take a closer look at yourself. Are you somebody you yourself would like to mentor? Are you eager to listen, learn and committed to implementing the advice you receive? People don’t want to mentor those who are sensitive to criticism and stuck in their ways. Arguing with all feedback is a major red flag to a potential mentor that you aren’t worth their time. Excuses are also a barrier.

Be great at what you do. Work hard and be dependable. Go out and become that person that others would love to support and nurture in business.

1-22 Business mentor small


Is Your Passion Enough to Start a Business?

1-21 passion into business smallPassion is an overused term in business. You keep hearing “do what you love,” but you need to be thinking about whether your passion is truly sufficient enough to start a successful business. To create a business you must provide a product or service people are willing to pay for. Maybe you love knitting baby booties, and want to make millions doing so. I’m sad to tell you: unless you employ about 10,000 other baby-bootie knitters, you will likely never reach that financial goal.

It’s important that you assess whether your passion has a profit center before you start that business. By making sure you can actually make money you’ll ensure that your business will be able to weather an economic crisis and other bumps in the road. You also need to be able to scale that profit center beyond what your own two hands can create.

Assess Your Passions

Start by looking at what you’re passionate about. Your list will likely include things you can quickly mark off your “possible business” list, like “watching WWE fights or The Food Network.” You simply aren’t going to be able to build a business around that!

Maybe you’re an avid bike rider who’s passionate about taking kids on long cross-country bike treks. Or you love animals and have a knack for training them. Maybe you are good at helping friend pull together a killer look or update their wardrobe. These are passions you can build a business around.

But go beyond those obvious passions, like what you enjoy doing in your spare time, and look at the abstract. You might enjoy working with small teams, or planning events. You might love closing a sale, or have an eye for home design. Some of these passions may be worth considering starting a business around, while others may simply be useful as you develop your business.

Consider Your Goals

Going back to that baby bootie example. If you’re content knitting 25 hours a week and making enough cash to take a vacation, leaving you ample time to spend with your kids, this could be a sustainable business model. You have to look at your resources (at this point, that’s just you, the knitter) and determine whether you can accomplish what you want with them.

Maybe you’ve got money squirreled away, and could hire your knitting club to triple your production of booties. Now you’re talking! You could create a virtual network of knitters (say that 5 times fast) and grow your business from there.

Passion is a great place to start in becoming your own boss, but it’s not the only factor to consider. You also need to be able to make enough money to hit your goal, while maintaining the type of lifestyle you desire. Profit is how we keep score in business, so just make sure you are honest with yourself about whether or not your business concept can actual make money.


Nextiva Tuesday Tip: Are You Ignoring Your Returning Customers?

1-20-15 customer rewards smallHave you ever had this experience: You see an ad or offer for some amazing deal for a company of which you’re a longtime customer—something big, like “50% off a year’s membership.” Wow, you want to take advantage of that! But you can’t because there’s only one catch: The offer is for new customers only. “Hmph,” you think. “What am I, chopped liver?”

Many small businesses make the mistake of ignoring their biggest source of income: recurring customers. OK, maybe not “ignoring” them completely, but giving them the short end of the stick when it comes to attention, special offers and prime treatment.

It’s natural that getting new customers should be a key part of your business strategy. After all, every company needs new business in the pipeline to survive and grow. But the bulk of your time and attention should go to your existing customers. Why? Here are just a few reasons:

  • They’re already loyal customers.
  • It costs less to keep them satisfied (and buying) than it does to replace them.
  • Keep them happy and they’ll tell friends about your business.

What can you do to provide better treatment for your returning customers? Here are some ideas:

  • Hold special sales or events just for loyal customers.
  • Offer them early access to new merchandise or services.
  • Give them the chance to lock in current prices for the coming year or when they renew.
  • Use automation tools such as a CRM system to track details about your customers so you can personalize your customer service, offers and interactions. You can even greet them appropriately when they call your business!
  • Use technology that creates a record of customer service interactions so that when recurring customers contact you with problems, you can quickly access their histories.
  • Investigate loyalty programs for small businesses. There are many affordable options that integrate with your marketing, enabling more targeted outreach to returning customers.

It’s OK to create special offers and deals for new customers only—just be sure you provide equivalent or better rewards for customers who have shown their loyalty to your business. 


7 Things Successful People Never Ever Do

happiness & freedomIn a business person’s day, there is always more tasks than hours. The key to being successful is not to do more multitasking in an effort to cram more into each day. It’s not to work harder with longer hours to get everything done. What separates very successful people from the rest of the pack is not what they do, but actually what they never ever do. For example:

  1. Never hold on to the past. Successful people don’t let the future get shaped by what happened in the past. They don’t hold a grudge. They evaluate results of their success or failure, let go of it and move on within 24 hours of any event. Successful people realize that there is more opportunity in the future than the past.
  2. Never make big decisions. They never bet the company all on one action. They prevent this by making small incremental choices. Successful people test every result and then make another small decision to get to where the business needs to go.
  3. Never focus on perfection. It costs too much to achieve and there is that constant nagging feeling of failure. They would rather be done than have the job be perfect so they can learn from the results. This doesn’t mean successful people ever do a bad job, but rather, they do 100% and then move on to the next opportunity.
  4. Never do it all themselves. Successful people know that small business is truly a team sport. They know how to leverage each opportunity using other people and outside resources to accomplish their goal. Successful people realize that this is the key to building a company that is not just about them.
  5. Never say yes to every customer request. They know what their company is good at and carefully choose the problems they solve for their customers that will show the most value. As a result, they are able to honor existing commitments. In addition, successful people do not work with every interested customer and fire the ones that don’t match their culture.
  6. Never multi-task. Successful people know that multitasking only gets more things done poorly. They focus on the tactic at hand and then move on to the next one. They know how to block out common distractions like email and social media notifications.  Successful people can intensely focus for short periods of time.
  7. Never hang out with “Negative Nellies”. Successful people don’t keep company with other folks that are constantly telling them why something can’t get done. They don’t feed the neurosis of complainers who always want to say that the sky is always failing. Instead, successful people work with a team that has a can-do attitude where anything is possible.

As a successful person, what do you never ever do?


Mondays with Mike: What You Can Learn From Hyper-Startups

1-12 business plan smallThere are time-tested procedures for starting a business – from writing elaborate business plans to generating sales projections.  While we can learn a lot from following traditional paths, there’s a host of new entrepreneurs who start their businesses in a flash – moving from idea to implementation in a matter of hours.  These hyper-startups are volatile, flexible, and sometimes unstable, but there’s a lot we can learn from them.

  1. Reach out to customers right away.  While traditional models would have you create a prototype and run alpha and beta testing with a sample of potential customers, hyper-startups rope their customers in right away.  Using crowdfunding and crowdsourcing sites, entrepreneurs can solicit startup funds, feedback, and suggestions from end users before a product is even produced.  Bonus – when you do have a product to take to market, you’ve already established a list of potential buyers.  You’re researching and marketing all at the same time!
  2. Let your best customer find you.  Now, I’m not suggesting that you won’t need to do any marketing in order to reach customers, but what is worth pointing out is that by assuming you already know who your customer is, you may be missing out on your best customer.  Keep an open mind in terms of who will be excited about your product, and even about new or unexpected uses for your product or service.  Hyper-startups know to listen to the chatter.  Don’t limit yourself by thinking you know it all.
  3. Be mobile and be ready.  As more and more business is done on iPads, smartphones, and tablets, the speed with which a savvy entrepreneur can move from idea to income has become mindboggling.  Being ready and able to work wherever and whenever inspiration strikes makes you more effective and more efficient.  Integrating social media with your startup right away lets you make changes and share news anytime, anywhere.
  4. Ride the wave – and know when to throw in the towel.  Hyper-startups can flourish in a flash and fail just as rapidly.  Keeping abreast of trends and market shifts is essential if you’re going to make hay while the sun shines.  Not only does staying up on what’s hot keep you profitable, but it can also permit you to shape trends, in addition to reacting to them.  Encourage your customers to stay connected and keep in touch about their experiences and needs.  Not only are your vocal customers key in keeping your offerings current, but they’re also your best marketers, bringing in new fans every day.
  5. Plan for success (and prepare for failure.)  So you’ve got a brilliant idea.  Are you prepared for what you’ll do if it’s a crazy success and you have more business than you can handle?  Make sure you have a plan for how to scale up production and delivery just in case you’re a big hit.  Also, have an exit strategy, a stop-loss point at which you’ll cut your losses and move on if the startup doesn’t flourish.

Hyper-startups are inherently volatile.  They depend on the changeable desires and interests of notoriously fickle consumers who seek out the new and noteworthy.  That doesn’t mean hyper-startups are all bad.  It’s possible to make a lot of money in a very short period of time, provided you’re prepared.  Even if you choose a more traditional route to starting your company, there are elements of these rapid developers you can use to make your efforts more effective, even long-term.


Breaking Bad Business Habits

1-9 breaking bad habits smallSmall business owners are among the hardest-working people in the country. They get in early and stay late, handle every business detail and bend over backwards to meet and exceed the needs of their clients and customers. On the surface, these traits are admirable. But they can also stifle the future of your company. Here are five habits to kill so that you can work smarter, instead of harder, and maximize your success.

Working Non-stop

When you turn your computer off at the end of each day, it re-starts completely fresh in the morning.  When you don’t, it starts to work sluggishly and sometimes, it even crashes.  Don’t you think that your mind needs the same break? A little R&R (and a good night’s sleep) gives your brain a chance to process the previous day’s events. And, since it’s not uncommon to go to sleep with an unsolved problem and wake up with the solution, you can sleep guilt-free, knowing that you may continue to work after you hit the sack.  Even just taking some time to exercise, watch television or engage in a hobby allows you to be your best self and in turn, that makes you better in your business.

Short-term Thinking

With cash-flow a common issue for small business owners, it’s tempting to chase every dollar. Granted, you’ll get a quick hundred bucks now if you take on a two-day special project for a client. But, those two days might be better spent going on sales calls to acquire new business or starting a large project that will realize major income, even if you won’t see it until next month.  Or perhaps you have a temporary solution to a business issue that doesn’t take into account future issues that the new solution might cause to your customers.  Don’t just think about today; be focused on your ultimate goals.

Doing Everything Yourself

Most entrepreneurs wear all hats in the early days of their businesses, but during times of growth, they have to learn to let go of the daily minutiae. At some point, you need to outsource or delegate, even if you don’t think others can handle every task as brilliantly as you do it. You definitely should continue to monitor the progress of all business operations, but let your employees, contractors and/or service providers do things in the ways that they are comfortable while you focus on the aspects of your business where you can add the most value and be best utilized.

Addressing the “Urgent” Rather than the “Important”

The squeaky wheel may get the grease, but a wheel might make no noise before falling off of the car. So, even though Customer A is yelling the loudest — or yelled most recently — Customer B (or even a new customer that you are courting) may have more important issues.

Your job is to correctly prioritize every task and stick to your decisions. If newer issues are more important than others on your to-do list, place them higher on the list. This simple method allows the most trivial issues to naturally fall to the bottom of the list (which, by the way, might help identify great tasks to delegate).

Being a “Yes Man” (or Woman)

Every business owner needs to learn how to say “no.” You can only take on so many projects at once. You can lose your reputation and clients if you have to cut so many corners that you turn out less-than-stellar products or services. Before taking on new work, remind yourself of your end goals as a business and use those goals as your litmus test. If you’re already short on time and responding to a request does not further those goals, you need to turn it down.

Let your business habits match your business cycle. The habits that served you in the early days of your business do not necessarily make sense as your company becomes more mature. Don’t be constrained by the “I’ve always done it this way” attitude. Take a little time to determine the best ways to use your time and resources to take care of your business and yourself. 




 
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