1. Moving Your Business Ahead
You want to move your business ahead—but what that means to you might differ based on your plan. Moving ahead might mean expanding your existing service offerings. It might mean tapping into a new demographic. It might mean taking a brick-and-mortar business online in a supplementary fashion, or vice versa.
It might mean dismantling your online store altogether for a more traditional store, based on your clientele. One thing is certain, and that is that change is imminent. The sooner you embrace it, the better.
In our survey, the percentage of people who said their business was growing as expected or slower than expected was identical-each with 43.8 percent.
The other 12.5 percent noted that their business was growing faster than expected. Some of those who noted slower growth indicated that they blamed the economy; others indicated that their own expectations were inaccurate. One insightful participant noted that education and experience were very important to growth, as well as producing high-quality, consistent results.
1.1. Evaluating Competition
To get started with your advance into new markets, your changing demographic, your modified business practices, and your new products and services, you need to do another evaluation—take a fresh look at your existing products and services and at your competition. What do you want to offer and where is that market base currently going to get it? Are they going to existing competitors or new ones? Document your findings carefully. You may need to go through the funding process again, after your business is established, to get additional income for your added growth potential. If you have earned income you can reinvest in the business, you will want to get another accurate assessment of your new market and new opportunities so you can hit the ground running with the best information. Even if you don’t find yourself having to seek out additional investors and funding, it is advisable that you update your business plan to reflect your change in goals and update the section on where you are starting from. This will also help you figure out where you’re going—which is essential to actually getting there. It also helps to motivate you when you look back and see where you’ve been.
1.2. Knowing Your Market
One traditional way to “know your market” and know your business is with an “old school tool” we call a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. First described in the 1960s (I told you it was antiquated!) by Edmund Learned, C. Roland Christensen, Kenneth Andrews, and William Guth in Business Policy, Text and Cases, the SWOT analysis became more popular and widely used when the General Electric Growth Council used a similar assessment in the 1980s. Notably, according to NetMBA. com, experts indicate that it has the most impact when you have very little time to analyze a very complex problem or situation, so you should use it when you need to grow rapidly and foresee or notice a problem or issue standing in your way.
Taking it at its simplest form, you would do the following for a SWOT analysis:
First, look at the internal workings of your business. Identify the strengths and weaknesses of your company—your particular business operation. Think about your desires to move forward, too, and consider whatever might hinder that growth as a weakness. Then look at the external environment. Look at opportunities for your business, and threats to your company. This makes up the SWOT profile.
When you do an internal and external analysis, I highly recommend that you bring your team together—your partners, colleagues, and those people you trust—to give you honest advice. This process can produce a lot of information, and much of it may not be relevant. Part of your job is to sort through what is and what isn’t.
Now here is the key—use the strengths to build on from a foundational perspective; use them as your competitive advantage. Look at those internal weaknesses that may keep you from realizing this full benefit, advantage, or competency in the marketplace. When you identify weaknesses, it is vital that you determine their threat level. If they are a significant threat, it is time to brainstorm
with your team and trusted partners on how to avoid disaster. If it is minor, you can probably move through it with small modifications to your business plan or product.
Look at the potential threats as well as opportunities; minimize the threats by taking a proactive approach and capitalize on all opportunities. This is a good time to revisit your business plan and verify that the fundamental assumptions you documented haven’t changed.
When you do the internal (strengths and weaknesses) analysis, you are going to want to focus on many things. Here is a list from NetMBA to get you started:
- Image of your business
- Your key staff
- Natural resources you have access to
- Brand awareness
- Market share
- Resources—think of everything from human to financial
- Exclusivity—contracts, patents, trademarks, trade secrets, and so on
(I highly recommend going through the NetMBA.com website for more information on a variety of these topics.)
Now you move on to the external analysis. You want to understand everything that could be not only a threat, but a perceived threat—often equally, or even weighted more importantly as you grow your business. This is where you look at things like the external environment, taxes, market conditions, technology that may change your business, political climates, regulation and legislative practices (those in effect now and those expected down the line), partners, societal changes (including generational differences), and so on.
When you decided you wanted to be an entrepreneur, you probably knew you’d need to be flexible. Just how flexible you can be is dependent on a number of things—your human and capital resources, your current efficiencies and capabilities, the marketplace in which your business is operating, and so on. To determine how flexible you can be, you will need to assess many things, including:
- How much available capital you have
- The amount of resources you can spend on your business’s advancement
- How much of your profits you can pour into new ventures
- Your cash reserves
- How conservative you wish to be in your advancement
- Your understanding of the areas you want to expand into
- The knowledge of your team—and if you don’t have one, whether you will need one to grow
- Your personal situation, individual or familial needs, and what you want out of your work
Once you assess these components, you can create a strategic plan that will allow you the flexibility as well as the growth path to be successful.
2. The Role of the Global Markets in Today’s Economy
Global markets have had a significant impact on all businesses in the United States and abroad; there is a good possibility that whatever business expansion you are planning will involve an overseas market that is as yet untapped, a new area for you, one that builds on increasing sales, or one that stems from a weaker dollar.
Throughout 2007 and 2008, as interest rates decreased or stalled, we saw the value of the dollar fall (with some months as exceptions) compared to the British pound and the euro, as well as most other currencies. As a result, overseas demand was a major factor in keeping GDP up for the 2007 and 2008 government reported numbers.
Some consider this to be frightening and damaging to their business; others know how to capitalize on it. I want you to be in that latter group—so here is how you do it!
First, realize that the value of the dollar will rise and fall based on a number of factors. These include, but are certainly not limited to: interest rates set by the Federal Reserve (the Fed or FOMC), interest rates set by other world banks, expanding demand in other nations, and the global demand of commodities. Know that today’s well of wealth could dry up tomorrow and we could be back to a U.S.-based market, so you should be constantly reassessing where you are strategically and where your demand is coming from.
Once you begin to expect the unexpected, as the saying goes, you’ll be better prepared for whatever growth strategy you decide to move forward with.
2.1. Demand from Overseas
Demand from other nations has been consistently rising for many years; some economists say decades. This is bound to continue as many countries become more capitalistic and democratic. I recall visiting a small farm town in China three years ago that had state-of-the-art computers, but illness-invoking food and water. It was a dichotomy of all dichotomies. They had relatively quick Internet access, great computers, but I couldn’t drink the water. This is an example of how much these areas are growing in the demands for commerce, and trade with the United States.
Many of these nations are not only experiencing record demand for U.S. products (and our dollar dropping in value increases this demand because it makes
our products cheaper), but they’re experiencing incredible inflation within their own countries. Strong global demand is coming from China, Brazil, Russia, Mexico, Asia, South America, and the Middle East among many others.
In November 2007, BusinessWeek had a fantastic article written by James Cooper about this foreign demand helping U.S. businesses just when they needed it. The demand helped turn around a trade gap we had been experiencing for years. You need to be prepared for and take advantage of this.
How do you do that? Good question! Answers will follow!
2.2. Working with International Clients—No Matter What
The first thing you need to realize is that you will probably be working with international clients no matter what you do. Whether you are a wood supplier or a farmer or a supplier of office printers, global demand will impact you.
If your company is offering products, you need to be able and capable of fulfilling and handling overseas clients and customers. To do this, you need to be able to ship to their countries. It seems simple enough, but many U.S.-based small businesses feel that overseas customs and shipping requirements are daunting. Thankfully the USPS, UPS, and FedEx have made this much easier by providing online forms for small businesses. Don’t let shipping deter you.
Next, you need to be able to accept credit cards. You also need to ask your bank how they calculate foreign exchange rates, and then decide what your pricing will be for international customers based on that exchange rate. For instance, if the value of a peso to a dollar is 11:1, the bank may give you 13:1 or use a different index altogether. Find out what they’re using, and find a different merchant to process international orders if you aren’t getting a decent price.
Remember that Canada and Mexico are the United States’ two biggest trading partners, and small businesses are no exception. Shipping to these areas and working with these clients may mean developing a Spanish version of your website, too. Think globally!
What is selling overseas? Primarily products that have an American stigma, such as Coca Cola, Nike, Levi’s, and so on. But the service sector is rising fast, and particularly in business services, education, and medical treatment. These are strong areas for businesses in the United States to grow internationally.
2.3. International Customs and Cultural Expectations
When you work with anyone internationally, you will need to work within their culture and expectations. Rather than get a feel for this on the fly, I recommend that you read up on each particular country you intend to market to or do business with, and make an educated determination as to how you will handle these clients’ expectations. You can do this in advance, or as the need arises. Here are some tips on common international business etiquette that will help you realize just how sensitive you need to be to other cultures, and how different it is doing business abroad than doing business in America.
When doing business in Germany, meetings are always formal. Greet your fellow attendees with a firm handshake. Titles are very important and require a high level of respect, particularly for those high up on the food chain. You should always greet people by using their title, followed by their surname, unless you are invited to address them otherwise by their first name.
Moving on to Thailand—much of the etiquette and traditions of doing business in Thailand are products of Buddhism. The Thai culture traditionally uses first names over surnames, with “Khun” placed before the first name, which is a formal address for both men and women alike. There is also a formal bowing, with how low you bow being dependant on your status in relation to the other person. You should always wait for your host or hostess to introduce you to all other parties present, allowing time for everyone to understand your status, and you theirs, based on this formal greeting. Some of these rules, like the name usage, even apply to online correspondence.
Business conducted in Australia is generally very relaxed. A simple handshake and a smile will often suffice when meeting. Nonnatives should refrain from using “G’day” or “G’day mate.” A simple “Hello” or “Hello, how are you?” is more appropriate.
Want to know more? A fantastic resource for many countries that you could potentially need information on can be found on the Kwintessential Cross Culture Solutions website, at www.kwintessential.co.uk/resources/ country-profiles.html.
2.4. Using the Internet to Grow an International Business
One question I hear from entrepreneurs a lot is “How the heck am I going to let those international customers know I’m out there?” Walk on stage—get on the Internet! The Internet is your friend in growing your business internationally. Consider creating a multilingual site, supporting multiple languages via e-mail (you can hire out for translation if it’s a big area of business for you), and accepting credit cards from all countries.
Of course, we already discussed shipping—working internationally means you need to build your shipping rates into your website, too. One way to do this is similar to the eBay method—you input the dimensions and weight of an item, and then the buyer can enter their ship-to information, which then generates an accurate shipping price and delivery date. It also allows the buyer flexibility with regard to pricing and delivery.
3. Checks and Balances
In the strategic planning process you will go from your original mission and objectives to a new understanding of your current situation and the strategy you wish to implement going forward. Ultimately, this all leads to control of your business and movement forward.
Remember that your objectives will be fairly static—they should not change much over time. They need to challenge you and your business but should be stable enough to serve as a checks-and-balances routine for your new endeavors. If you measure a new opportunity against your business objectives, you can decide if that move is right for you or not.
In the implementation phase, you may need people. You will certainly need marketing, you may need public relations assistance and production or service expansion help, and you will need information systems. Consider all of these when looking at how to implement your new business endeavors.
3.1. Evaluating Your Progress
When do you evaluate your progress? Continually and through the control mechanism of strategic planning. Once you go for a specific strategy, you need to be sure you’re meeting your own standards and taking any action necessary to realign your business for success. You can do this by evaluating your critical success factors, such as:
- Pace of growth
- Interest from your new target market
- Your competitors’ success compared with yours
Another way to plan for progress is to plan for specific scenarios. In this model, you try to determine each possible deviation from your expected end result and goal, and then determine what contingency plan you will enact as a result. You will want to identify every possible event—macro and micro, large and small—to build into your planning process.
What is a macro event? Something that affects more than just you—economic downturns, taxes, and so on. What is a micro event? Losing a key employee or having a supplier raise prices on your products.
When you do plan for specific scenarios, you will need to assign a probability of the event occurring. I like to keep it simple and use a 1 to 10 scale. Focus on those events that are most likely or most probable first, and then decide how you will or want to handle them, should they occur. You also need to determine what the impact of each occurrence will be on your business, and what you will do to compensate for that impact should it occur.
3.2. Goal Realignment
You may notice that what you thought would occur as you advanced your business in fact did not. When that happens, it’s time for goal realignment. To do this, you must identify where you currently are and where you want to be, and
then figure out if the new opportunity you thought was there in fact is. If it is, then look at what is standing in your way. Is it capital? Revisit Chapters 6 and 7. Is it human resources? Revisit our sections on staffing. Is it a lack of ideas? Consider hiring a marketing firm. The key is to make goal realignment a continuous improvement process.
Some entrepreneurs don’t find this area of the business very fun. Unfortunately, that is what happens when we feel our creative sides are stifled by business decisions. Nonetheless, in order to get back to the creativity, this analysis must occur.
This planning process is only one of many you may go through. For instance, you may go through the scenario-planning method discussed briefly above, in which you note multiple contingencies and how you will react to each. All of this is important, because when an event occurs, you need to be acting and not just reacting. You need to consider everything—from losing key staff to losing valuable efficiencies, from new entrants into the marketplace to legislation that dampens your company’s capabilities and profits.
4. Outsourcing Opportunities Even for Small Businesses
Even small businesses have outsourcing opportunities. What does this mean?
It means two things—you have the capacity to be the company others outsource to, and you have the capacity to outsource work if you get overwhelmed and need help fast. It also means you may be able to outsource product assembly and supply to other nations and take advantage of the same benefits that larger companies offer.
From automotive parts to retail products, if you need it manufactured or assembled, chances are you will find a company that can handle your order in China, no matter how small or large it is.
Manufacturing China is one such company. According to their website, www. ManufacturingChina.com, they are a family-owned business with factories in Fuzhou and Ningbo. They have worked with the smallest of business owners in the production of children’s toys, all the way up to working on progressive tooling with companies like GM and Honda.
If you want to search for products or services by category, visit www. B2BChinaSources.com. With products and services categorized by genre, you can pick and choose from thousands of options. On this site you can literally sift through hundreds, if not thousands, of manufacturers in China. Don’t see the product that you need? Find a similar product and contact the manufacturer. Inquire as to whether or not they would be willing to be contracted for a new product.
You may also find yourself taking on work as an outsourcing supplier. For instance, say you are an accountant running a firm. No doubt many bigger companies need accountants, but cannot afford to hire any more. They turn to outsourced partners—much like companies have done with information technology for years. Another potential area for growth is marketing yourself as a solution to larger companies that need added hands for less money.
Here are some statistics from our study that might be useful for putting your potential income and your methods of growing your business into context. In the survey, the following was the income breakdown of the participating businesses in gross revenue, in U.S. dollars:
- 26 percent make $10,001 to $30,000 (many noting they were in startup phase)
- 17 percent make under $10,000 (most noting they were in startup phase)
- 15 percent make $30,001 to $50,000
- 11 percent make $150,001 to $300,000
- 8.7 percent make $70,001 to $90,000
- 6.5 percent make $120,001 to $150,000
- 2 percent made $1 million to $3 million, 2 percent made $3 million to $5 million, and 2 percent made over $5 million. Way to go!
Source: Babb Danielle (2009), The Accidental Startup: How to Realize Your True Potential by Becoming Your Own Boss. Alpha.