Browsing Date

May 2014

Mondays with Mike: Why You Should Ignore Your Business Plan

By May 19, 2014 No Comments

Several years ago, I attended a seminar at MIT.  It was geared toward entrepreneurs, and I was in illustrious company – I was in the audience along with the founders of Burt’s Bees, TicketCity, and 1-800-GOT-JUNK, among others.  The speaker – a venture capitalist – asked everyone to stand up.  Then he asked those of us who’d used outside financing to start our business to sit down.  Not a single person did!  Finally, he asked us to sit down if we’d actually followed our business plan to guide our decisions.  Again, not a soul sat down.

Now don’t get me wrong, many of us had developed and written specific business plans, which isn’t necessarily a bad idea, especially if you’re trying to get financing from a bank.  But what’s so telling is that once these plans were written, they were largely useless to us – the entrepreneurs.  Why is that?

  1. Irrelevant Financials.  Let’s face it, if I could accurately predict exactly where my business will be in the future, I’d probably be sitting in the Cayman Islands, trading stock and making millions.  The fact of the matter is that our company’s revenue and expenses can vary because of significant factors we have no way of predicting.  Now that’s not to say that you shouldn’t make an attempt to follow a budget (a completely different animal,) but I am saying that you can’t necessarily rely on the figures that fill out your business plan.
  2. Your Dream Team.  A portion of your business plan is devoted to the people who plan to help you along your way to brilliant success.  Here’s the trouble:  not a single member of your dream team matters as much as you do.  You’re all in; they’re not.  I’m not discounting the importance of having a great management team or looking for sage advisors.  What I’m saying is that relying too heavily on your supporters can be your downfall.
  3. Defining Your Niche.   Finding your niche is key to the success of your business, but the problem is that truly finding that niche – your ideal customer – often relies on real-world selling, rather than trying to predict the future.  If you pigeon-hole yourself too early, you can waste a lot of resources trying to appeal to a market that might not be best for you.  You’re much better off letting that organic niche create itself, rather than chasing an idea just because it’s what your business plan predicts.

The exercise of creating a business plan can be extraordinarily useful in terms of helping you crystallize and articulate your vision, but it’s a mistake to let a document meant to start a business turn into a manual that you continue to use even after it’s outdated.  Entrepreneurship relies on innovation and a willingness to capitalize on opportunity, even if – or especially if – that opportunity didn’t exist when you started the business.  Don’t let yourself or the growth of your company be limited by your business plan. 

?????????????????????????????????????

Share:

Business VoIP ‘s Time Has Come

By May 16, 2014 No Comments

In the early to mid 1990’s, the Internet was a cool thing. Unfortunately, extremely slow and unreliable Internet Service Providers made it little more than a gimmick for most people. Not too long ago, smartphones with web browsers gave us a glimpse at portable computing, but it took the iPhone and high-speed wireless data plans to integrate them into the mainstream. VoIP is another technology that has taken many years to mature, but its time has finally come. Smartphones and VoIP are rapidly pushing traditional phone lines out of our homes, and all the signs point to the same happening in the business world.

I’ve been reviewing business technology products for the past seven years, and I started paying attention to VoIP services targeting business in 2009. At the time, my office was using a traditional Nortel phone system with AT&T phone lines, and I absolutely hated all of it. The phones were stupidly expensive and the functions were counter-intuitive. We also had to pay an IT guy to setup a new phone every time we made a new hire. When I read that business VoIP phones were less expensive, more flexible, easier to use and required no special IT skills to configure, I was excited to try them out. Unfortunately, when we started testing the products, the reliability and call quality was so poor that we couldn’t justify making the switch in our own office, let alone recommend other business owners purchase the products.

Over the next two years, the business VoIP companies invested heavily in their data infrastructures as well as the VoIP technology itself. The data compression technology that the companies developed dramatically decreased the amount of bandwidth that the phones needed to provide clear reception. Some companies also started creating redundancies with their servers and data, so if systems failed in one location, a backup would automatically take its place. These and other technological and process improvements dramatically improved VoIP’s call quality and reliability.

Stocksy_txp0e3537cfRr5000_Small_177711Our company finally made the switch to business VoIP in 2011. Everything worked as advertised and the features and cost savings were substantial. However, as we grew, we found that the lower equipment costs and monthly per line costs were eventually offset by the fact that every phone had to have it’s own dedicated line. Rather than paying for 4 rollover lines with AT&T, we were paying for 20 lines with our business VoIP carrier (one line for each employee and 2 conference rooms), but most of our employees only needed the phone a few times per week.

Over the last six to nine months, VoIP companies like Nextiva have started to offer customized plans based on each individual company’s needs. You can get dedicated lines, shared minute plans (VoIP’s equivalent to rollover lines), virtual extensions for mobile employees, and any combination of these in order to pay only for what you need.

Like high-speed wireless and smartphones, VoIP technology isn’t perfect. VoIP phone service still isn’t as reliable as a traditional landline, but its dramatically improved reliability combined with flexible pricing plans, incredible features and flexibility have leveled the playing field. The telecom industry recognizes that VoIP is where businesses are heading and the quality is only going to get better. For many businesses, it’s already a much better option than old school landlines.

 

Leo Welder is the Founder of Zilker Ventures, which owns and operates a family of websites focused on business technology. The company’s latest website is FindAFax.com, which is dedicated to online fax and Internet based communications.

Share:

4 Mistakes that Will Get the Government Calling You

By May 15, 2014 No Comments

?????????????????????????????????????????????????????I can still remember the day the Department of Revenue shut my company down.  It seems that we had not done a timely job of remitting the sales tax that we had collected from our customers and this government agency wanted their money. My bookkeeper had apparently ignored all their warnings by mail. When they arrived, they put a big sticker on our door, telling all our customers and employees that we had to "pay up to open up". It was a similar story when the IRS was concerned that we were not remitting employees' collected payroll taxes in a timely period of time. This situations happened because as a new owner, I did not know all my tax responsibilities.

Here are four mistakes that can get the government calling on you and maybe even putting you out of business:

  1. Non payment of payroll taxes. Each pay period, a company deducts from the employees paycheck taxes that are due to the government. If a company is doing this themselves, this money needs to go into a separate account and get sent to the appropriate agency.  A better way to do this is to use a payroll service that will withdraw the taxes and pay the government automatically. With this service, there is no temptation by  a "cash strapped" small business owner to spend payroll tax money they collected, but belongs to the government.
  2. Non payment of sales tax. With each transaction, a company collects sales tax for  the government. It is then the companies responsibility to remit these funds to the appropriate agency. A company should ensure that theses taxes get posted to a separate account so the money is there to send at the end of the month.
  3. Non payment of use tax. This is a tax that a company assesses on themselves for product they purchased for their own use where they should have been charged state sales tax, but weren't. This needs to be send to the state typically every quarter.
  4. Health code violations. Run an office that is unhealthy for employees or a location unfit for customers? Inspectors will shut that company down on the spot and lock the doors. This gets much stricter when serving food and beverage or a hotel

In the days when a company's online reputation is critical, getting shut down like this will do nothing but hurt your Yelp and TripAdvisor ratings.

Share:

Nextiva Tuesday Tip: How Do Your Employees Really Feel About the 24/7 Workplace?

By May 13, 2014 No Comments

Is your small business using technologies that enable employees to stay connected to work even outside of work hours? If so, are you concerned your employees might feel overloaded by the need to check in with work when they’re off the clock?

Well, stop worrying. According to a recent Gallup Poll of full-time U.S. employees, nearly 80 percent of them feel somewhat or very positive about being able to use computers and/or mobile devices to stay connected to their jobs outside of normal working hours.

???????????????????????????????????A cynic would say perhaps one reason so many people feel good about being able to check in with work after-hours is that most of them don’t actually do it. About one-third (36 percent) frequently connect with work online after-hours, while 64 percent admit to doing so occasionally, rarely or not at all. (Apparently, they just like knowing the option is available.)

However, don’t be so cynical just yet. The study also reveals that 86 percent of those who regularly check in with work of their own accord, and 81 percent of those whose employers require them to do so, think it’s a positive development.

Of course, employees like being able to connect with their jobs outside regular working hours because it enables them to do things like attend their children’s school functions, take time off or work flexible hours. But work-life balance can quickly tip out of balance, as every small business owner knows from experience.

How can you ensure that the ability to work after-hours continues to have an upside for your team? Here are 3 tips:

  • Pay attention. If you notice employees seem like they’re starting to burn out, grumble or complain, assess what’s going wrong. Sometimes the ability to check in 24/7 can lead to a compulsion to do so.
  • Encourage downtime. Make sure employees have “disconnect” time to recharge their personal batteries by unplugging from their devices. Model this behavior yourself.
  • Pull back. Even if you require employees to be available and check in after normal work hours, try to set reasonable limits. For example, you could say that employees must be available up until 10 p.m and after 7 a.m. Even if employees have to be available 24/7, try staggering that responsibility so everyone gets some days off. 
Share:

Mondays with Mike: The Blend Strategy – Building Innovative Businesses

By May 12, 2014 No Comments

The difference between entrepreneurs and “normal” people is that normal folks may actually believe that it’s all been done before, that the good ideas are already taken.  Entrepreneurs know different.  We entrepreneurs believe that there’s always a fresh approach to a field or a product that can be profitable if it’s launched the right way.

One of the most effective ways to put a fresh spin on a business is by combining, or blending aspects of two different businesses.  Whether it’s as simple as combining peanut butter and jelly together in one jar, or as complex as blending drive-thru fast food service with the wedding industry to create Las Vegas’s drive-thru wedding chapels, creatively fusing two industries can give you an edge and set you apart from all of your competitors.

I’ve found two clever ways that entrepreneurs have used blending to create profitable ventures, and I’m sure there are more!

  1. Shared spaces.  Okay, this concept isn’t classic blending, but it certainly employs elements of the strategy.   The key concept of shared spaces is to place your business in proximity to other businesses so that you get a crack at their existing customers. Here’s how it works.  Grocery shoppers hit the in-store Starbucks for a $5 cup of coffee to sip while they shop.  Grocery shoppers also handle all of their banking needs at the in-store bank at the front of the grocery store.  From February to April, you can even have your taxes done in the grocery store!  My favorite example of shared spaces, though, is the Lowe’s Stocksy_txp7fd1b2b2qB5000_Small_39017hardware store near my house.  There’s a guy with a hot dog stand just as you head out of the exit, after you purchase your light fixtures, bird seed, and drywall.  He’s there 365 days a year – in fact, you can smell the sauerkraut before you get to the door.  It’s genius.  He sells more hot dogs than you could imagine – whether it’s to hungry contractors near lunchtime, or to hungry kiddos helping their parents shop for weekend projects.  Shared spaces can be a great way to get your business started.  The bonus is that your new small business lends added value to the existing store as well!
  2. Duplicating an existing method of delivery.  The Vegas drive-thru chapel fits this technique, as do drive-thru banks, pharmacies, dry cleaners, and – my personal fave – drive-thru liquor stores.  Seeing a model of service delivery that works in one business and adapting it to another can be a goldmine.  Think about Ebay – they found a way to combine online product sales with the concept of an auction, complete with all the excitement of worrying about being outbid.  Their marketplace blended online sales with garage sales and added an auctioneer.  Look around you at your local businesses and see if there’s a unique delivery method that you can adapt to suit your vision.

Entrepreneurs are some of the best out-of-the-box thinkers around, and I’m constantly amazed by the innovative blends that smart business owners develop and market to become great success stories.

Share: