Category Archives: Business Strategy

Long range, big picture, macro

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Business Model = Profit Engine

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Hatching an idea for a business involves much more than inspiration.  Your entrepreneurial idea must also include a strategy for making the idea profitable. That strategy is known as the business model. The function of a business is to provide products and/or services that help clients solve their business or consumer needs.  In addition, your business must work for you  and generate a reliable and abundant revenue stream from which you derive your annual income.

Before we go any further, let’s clarify the meanings of business model  and business plan.  Your business plan  is a document in which you describe the mission of your business; the target customers; the marketplace and competitive environment in which it will operate; its marketing, financial and operations plans; and the legal structure it will be given.

Your business model  will detail how the venture will attain and sustain profitability. The cornerstone of a good business model is a competitive analysis, which will help you verify target markets (customer groups) and establish your expected value-added in the presence of enterprises that offer similar products and services.

The primary element of your competitive analysis is customer knowledge, something that regulars to these posts know that I encourage frequently.  Information-gathering is a vital and ongoing business function.  James King, Director of the New York (state) Small Business Development Center, notes that “…customer purchasing patterns change rather rapidly and if you’re not ahead of your customers, you’re not making sales.”  Along with your selection of products and services to provide and customer acquisition strategies, operational aspects — that is, the process of how your products or services will be delivered — must meet the often fluid expectations of customers and will therefore figure into your venture’s business model.

Once you’ve developed a proposed business model, find a trusted potential customer or business owner or colleague and ask for a review.  Discovering and closing immediately obvious gaps is something you’ll want to do before your business is up and running.

King recommends that aspiring entrepreneurs “Sit down with someone who doesn’t have a vested interest and ask that person to poke holes in your model. If they do a good job, you’re going to be better prepared for any eventuality. The more risk you can eliminate, the higher the probability that you’re going to be successful.”

One is advised to revisit the business plan and business model every couple of years, or at least when changes in your industry, local business environment or technology have the potential to impact your sales revenue or how your do business. This practice will also give you the benefit of reviewing your projections as regards expected vs. actual target customers and allow you to refine planning for growth and expansion, as you create strategies for sustainable business success.

Thanks for reading,

Kim

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A High-Five Finish for 2015: Your One Page Action Plan

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Happy September! Summer is de facto over, even if Labor Day Weekend is as late as possible this year.  We are back to business as of today. There is one month left in the third quarter. Start your estimated tax form today and mail it no later than the 15th. Then for your next project, lay the groundwork for a strong finish to the year and develop an Action Plan that you can roll out as the fourth quarter rolls in.

To get started, revisit your long-term goals—maybe you developed those last December or January?—and pick three that stand out as priorities that deserve attention in the near term. These goals will become your focus. Ideally, you will select goals that will substantively impact the success of your organization.

Examples of good focus goals  include operational changes that streamline how you deliver services; customer service changes, such as billing system improvements; hiring an intern or an employee; lead generation initiatives; or a marketing campaign designed to enhance sales or up-selling opportunities. I suggest that you limit your focus goals  to a maximum of three, so as not to overwhelm yourself. The idea is to make a positive impact on your organization within 90 days.

If you have in your employ a leadership team that shares in decision-making, be certain to include them in the selection of focus goals.  It is important to seek out other perspectives when determining goals that will be given priority.  Moreover, the Action Plan will be less successful if you fail to Involve the leadership team and get buy-in for its aims and implementation.

Once you’ve settled on your focus goals,  agree upon which outcomes will constitute their successful achievement. What will signal that you’ve crossed the finish line? Those outcomes will become your success criteria,  milestones that can be objectively and quantitatively measured.

An assignment from a new client; a marketing campaign that has been launched; a new operational efficiency that is in place; an employee or intern who has agreed to`a start date; or a process to bring in new, high-ranking leads that is ready to roll would be first-rate and quantifiable markers of success criteria  for your focus goals.  Give yourself two to four success criteria  for each focus goal.

Identify also one key performance indicator  KPI  for each focus goal  that will allow you to easily determine if you are on track to meet that goal and as well give you time to consider refinements to your Action Plan, if needed. For example, if hiring an intern or employee is a focus goal,  completing the first round of interviews with three or four candidates by a given date would make a useful KPI.  If improvements in your billing system would involve the purchase of new software, the purchase of that software by a given date would represent a quantifiable KPI.

The last step in the development of your one page Action Plan is to create action steps  for the focus goals  and choose reasonable completion dates. Consider what you can or must do to substantively impact each one. Lastly, with your leadership team, decide who will “own” and assume responsibility for carrying out each action step.

Thanks for reading and enjoy Labor Day Weekend.

Kim

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Business Strategy Consulting: Two Client Success Stories

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Little did I know that a phone call would make me feel so good! A client with whom I worked only twice in 2014, because his cash flow was limited, called to tell me that he has brought his dream into reality and I am thrilled. This gentleman has been a fundraiser at a Vermont prep school; a television cameraman; and he is now a successful documentary filmmaker. His 2015 film, Passage At St. Augustine, tells a pivotal and largely unknown story of the American civil rights struggle in the 1960s. Please see the trailer:

I have previously written about how I work, to help you understand what business strategy consulting means. I work with small businesses, mid-sized not-for-profit organizations and self-employed professionals and help them find ways to leverage their skills and competitive advantages to make money. I get called in when clients are stuck, or when they have a goal, but insufficient staffing to achieve it.

Defining reasonable goals is a big part of what I do. Like a doctor, I sit with my “patient”, the client, and examine obstacles, competitive advantages and critical success factors — that is, those things that must fall into place in order to create success. The client and I discuss what the desired goals mean in terms of sustainable business success and confirm the likelihood that the chosen goals will serve that purpose. Should other options be considered?

We then decide which goals are reasonable and appear to be attainable. We identify action items and create a time-table. We choose milestones that mark progress and keep the client motivated and on his/her path. We schedule a date to meet again, so that we can assess what has been done and the outcomes of those actions. We fine-tune the plan and scrap altogether those actions that do not bring about the desired results, or prove to be unworkable for some reason. Rinse and repeat. It’s an approach that yields tangible results for clients.

Over a much longer period of time, I’ve worked with another member of the creative class and helped her to achieve success that she could scarcely imagine. I’m pleased to tell you that this client referred the filmmaker to me. She is a successful painter and collage artist whose stature has grown greatly over the three years that we’ve worked together.

She’s illustrated a children’s book that will be released in September 2015 and there are three more book illustration projects in the pipeline. Please see the press release and scroll through to view the illustrations: http://www.scribd.com/doc/261028903/Voice-of-Freedom-Fannie-Lou-Hamer-Press-Release#scribd

Working with a business strategy consultant can be very useful for leaders of organizations large and small. At some point, we all need to sort through the clutter and find our way to the path that leads to sustainable success.

If you are thinking about how to effectively evaluate and pursue business opportunities; overcome business obstacles; or reach the finish line of an important project at your organization or Freelance venture, you may have thought about consulting with a business coach. Business strategists and business coaches are not interchangeable, although each will be beneficial in certain circumstances. Please give a read to a post I wrote in March 2015 to help yourself make an informed decision.  https://freelancetheconsultantsdiary.wordpress.com/2015/03/24/business-coach-or-business-strategy-consultant/

Inviting a knowledgeable independent professional who has both corporate and consulting sector experience to sit down with you and your team to examine your unique business environment to consider how to evaluate business opportunities; mitigate organizational weaknesses; avoid threats from competitors; and achieve desired profitability and other business goals may be just what the doctor ordered. Every once in a while it is necessary to reach out to someone who can introduce fresh perspectives that like sunshine will burn off the fog so that you can see all that you can do.

Thanks for reading,

Kim

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High Impact Brand Appeal

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Business researcher, businesswoman and author Wendy Lipton-Dibner is a highly successful woman who has led highly successful enterprises and has made lots of money by not focusing on money. Yes, that is correct. This brave iconoclast says that the right product or service and a business model that is not quite like what they teach in business school, is the blueprint for building a long-lasting and lucrative business venture and she has the data to prove her claim.

Lipton-Dibner studied 1000+ organizations that covered a wide spectrum: global, small business, for-profit and not-for-profit. She has also operated several business enterprises herself. What her research revealed runs counter to the holy grail of business management, which is 100% focus on generating profit. From product development to customer service, it is taken as gospel that minimizing costs and maximizing sales are the things to do and every aspect of a business must be aligned around the singular goal of making money.

Yet Lipton-Dibner discovered that the most successful and long-lived companies are those that “make a difference” in the lives of their customers. Think of the distinctive, sometimes revolutionary experiences created by Disney, Ford Motor Company, Microsoft, Hermes and Whole Foods Markets. Each of those companies offers products or services designed to help their customers lead more fulfilling, efficient, productive, healthier and/or enjoyable lives. She asserts that there are two types of business enterprises: those that focus on making money and those that focus on making a measurable impact on people’s lives and it is the latter approach that makes the most money.

Ethical growth strategies that position the company to make a positive impact on the lives of customers reap the most success, especially over the long-term. So how can a Freelancer or small business owner integrate this philosophy into his/her operation? As always, everything begins with the customer.

Ask current and prospective customers how your product or service and its delivery mechanism might be adjusted in ways that would make it more user-friendly. Can you design and deliver the ideal customer experience from start to finish and make those who do business with you so happy that they’ll tell co-workers and colleagues, who may eventually become your customers as well? That is the power of your brand appeal and impact.

As you make the changes that will give your customers The Best Experience Ever, you may find that certain adjustments in your business model, operations processes, quality control, or service offerings may need updating and that is to be expected. You’ll also learn how to refine your marketing messages and sales strategy along the way, because you will be much more tuned-in to what resonates with your customers, promoting trust in what you do and making customers happy to do business with you.

Wise fiscal management of your enterprise will continue to be a requirement, but centering your strategies and actions on  the pursuit of the biggest profit margin and net profit often does not pay off in the end. Finding the balance between what it takes to gain and keep customer loyalty and the necessity of sustaining a money-making enterprise is the road to success.

Thanks for reading,

Kim

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What Do You Know? Knowledge Mapping and Management

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Have you taken stock lately of what you know and the potential value that your knowledge can bring to clients? Those of us who work in the Knowledge Economy are advised to periodically examine, catalogue, package and communicate to prospects, clients and referral sources the types of knowledge that we provide and the value of that knowledge, that is, the benefits that would be received by clients who pay to receive the knowledge.

Martin Ihrig, Associate Professor and Director of the Strategic and Entrepreneurial Management of Knowledge Initiative at the University of Pennsylvania’s Wharton School of Business and Ian MacMillan, Professor of Innovation and Entrepreneurship at the Wharton School, encourage Knowledge Workers to take an accounting of the full spectrum of their strategic knowledge assets: core competencies, talents, intellectual property, areas of expertise and deep experience. In order to effectively present ourselves to prospective clients, we must first understand and communicate what we offer to them and why it matters.

Step 1 is to list your strategic knowledge assets and group them according to categories. For example, if selling is the basis of your consulting practice, then your categories of core competencies, expertise and experience would likely include sales skills training, management of sales teams, sales distribution expertise, developing and nurturing client relationships, the success of new product launches, both individually and of sales teams that you’ve led, etc.

Think also in terms of your structured and unstructured knowledge. Structured knowledge that you possess would include your educational degrees and certificates; specific job experience; quantified intellectual property; technical proficiencies (maybe you speak another language, or are fluent in a certain relevant computer software); or specific methodologies used to provide services. Unstructured knowledge usually centers around your experience and expertise. Unstructured knowledge would, for example, include the deep experience you possess that allows you to accurately and relatively quickly grasp the big-picture as well as the nuances of challenges and opportunities that clients typically hire you to address.

Step 2 encompasses the primary goal that Ihrig and MacMillan assign to cataloguing and categorizing your knowledge asset categories, which is to enable you to visualize and consider them fully and position your consultancy for maximum profitability and sustainable growth. How can you advantageously leverage what you know? Are your categories primarily stand-alones, or might you combine them in ways that make you better able to meet the emerging needs of current and prospective clients? In Step 3, examine the business model for each of your high-level categories and the organizational systems and practices that you currently follow to efficiently enable their delivery.

If you love geometry, in Step 4 you can map your structured assets along the x-axis and unstructured along the y-axis (or the reverse, if you like). Simple list-making works, too. As stated above, you may discover ways to combine competencies, structured or unstructured, that will add to the services that you provide, or you may reconsider a seldom used structured or unstructured competency and realize that it may now be marketable.

Once you’ve listed your mission-critical knowledge assets, the challenge is to decide how best to package, message and promote them. If you carefully map and manage your knowledge portfolio, you may discover lucrative competitive advantages that otherwise may not reveal themselves to you.

Thanks for reading,

Kim

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A Capital Campaign for Your Enterprise

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Businesses are powered by capital and the “capital” includes all resources that contribute to the success of the business.  The emerging field of corporate sustainability, which translates the goal of long-term business growth that is simultaneously respectful of stakeholders inside and outside of the business venture into pragmatic action items and encourages business owners and leaders to recognize and quantify forms of capital, in addition to financial capital, on its own terms.

Mark W. McElroy, PhD, consultant, author and educator in the field of corporate sustainability and founder of the not-for-profit Center for Sustainable Organizations in Vermont and Martin Thomas, former head of global strategic planning at Unilever, recently developed the MultiCapital Scorecard, the first and only context- and capital-based integrated measurement, management and reporting system. Using the Scorecard, business leaders and owners of any size organization can assess company performance in terms of impact on all types of capital used.  Which resources is your organization maxing out, which are under-utilized and how do these practices impact prospects for sustainable growth?

1.  Economic capital

All financial resources, including access to investment capital,  credit and loans and also the value of the brand the business possesses.

2.  Human capital

The combined expertise, experience, knowledge, motivation, focus and discipline that you and your employees and consulting specialists possess and your shared intellectual capital.

3.  Relationship capital

The extended team you work with, including any networks, strategic partners, your informal business advisory board, referral sources and in addition, your reputation as a professional.

4.  Constructed capital

The infrastructure that we depend upon, including transportation, electricity, heating and air conditioning, the internet, effective and appropriate laws and regulations, public safety and available places where business commerce might take place.

McElroy and Thomas advocate for the MultiCapital Scorecard to be used to create a sustainable vision, mission, goals, management and business practices for organizations. They recommend that the organization first identify its internal and external stakeholders and the duties and obligations owed to them. Next, define the ideal standards of performance and apply context-based metrics to measure your organization against those standards.

Small businesses and self-employed Freelancers can make use of the Scorecard to account for the various types of capital that is available,  measure the use of each form of capital and better understand how to manage and nurture resources.  Goal-setting will become more obvious as priorities surface and opportunities and weaknesses emerge. The stage will then be set making plans that usher in sustainable growth and profits.

Thanks for reading,

Kim

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Industry Growth Trends 2015 – 2017

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Growth  is always on the minds of entrepreneurs,  business owners and Freelance consultants.  Growth is essential for the survival of a business and it can take many forms,  from an increase in current and potential customers,  to a greater number of employees,  higher profits,  or the number of products or services available for sale.  Here are projected industry trends and B2B small business growth projections through 2017 that are based on expected demand,  meaning that there will likely be more current and potential customers ready to spend money in these industries.   The list was compiled by Jackie Nagel,  author of the blog “Oh, The Places Where Your Small Business Can Grow”.

Industries expected to outpace the overall growth of the US economy are:

Technology    42% growth projected

Health care    28% growth projected

Finance          14% growth projected

Retail              14% growth projected

HR Services

Human Resources is an exceptionally broad field and all aspects are expected to show growth over the next 12 – 36 months.  Executive search,  benefits management,  payroll management,  training/ professional development/ executive coaching and compensation specialists can all expect many opportunities to expand their client lists and generate more billable hours.

Internet Security

Freelancers and small business owners do not always pay attention to the many occurrences of internet data security breaches that hackers have visited upon several large corporations.  Be advised that recently,  I was one of many who received a phishing attack email that a hacker sent illegally from the address of a colleague.  The email address lists of all recipients were at risk.  No one wants the embarrassment of a hacked email bearing our business name sent to our client list.  Internet security risks are a real concern and the need for protection is growing.  It’s time to call in a professional and set up a firewall.

Marketing Services

Small business owners often have ambitious marketing plans,  but execution can be a sticking point.  Freelancers who specialize in helping small businesses to launch their marketing strategies will be needed to bridge the time,  talent and strategy development gaps faced by many small organizations,  for-profit and not-for-profit.  The demand for social media strategies,  videography and podcast development,  website development and content marketing expertise will likewise remain strong.

Technology Services

Small business owners and Freelancers continue to explore the benefits of cloud computing for data storage,  real-time document and secure data sharing and videoconferencing.  Entrepreneurs are in search of technologies that will help them to quickly scale-up a business.  Which apps will help entrepreneurs to efficiently grow and manage their enterprise and can it all be mobile?  Demand for technological advances such as 3 D printing and online eyeglasses and contact lenses that let customers virtually try on lens ware are big new entries to the scene and the trend will be upward.  Video game and app development continues to lure talented techies into entrepreneurship as does television and home theater installation.

Green and sustainable building construction

Architects,  structural engineers,  general contractors,  electricians and manufacturers of solar panels are expected to have lots of business through 2017.  Saving money on heating and electricity with energy-efficient buildings are big priorities that real estate developers,  current homeowners and prospective buyers are willing to pay for.  Even landscapers get into the act when they design attractive alternatives to water-sucking lawns.

Boutique mind/ body fitness studios

Overweight and over-stressed Americans are ever optimistic about a new regimen to cure what ails us.  Boutique cycling,  personal training, Pilates,  yoga and meditation studios will continue to proliferate in metro areas.  These studios are less expensive to operate than traditional fitness centers primarily because participants do not perform aerobic routines in big,  mirrored studios,  nor are lines of treadmills and ellipticals needed.  Rather,  participants are confined to a mat,  stationary bike or compact training studio that is stocked with  a well-curated choice of exercise equipment.  Boutique fitness studios even use proportionately less water than traditional fitness centers because participants typically shower at home.

Thanks for reading,

Kim

 

 

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Change We Can Believe In

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Change is inevitable.  Change is good.  Be the change.  Just because everything is different doesn’t mean that anything has changed.

Change is inevitable because tomorrow will be another day.  Change can be positive or negative but unfortunately,  change often brings with it undesirable consequences.  In my experience and observation,  change is frequently something that the powerful foist upon the less powerful.  Change based on self-aggrandizement or an opportunity to enrich oneself at another’s expense is needless,  damaging,  unethical and the source of much stress for its recipients.

On the other hand,  change can be a positive and life-sustaining process that we ourselves control.  When the changes made are an adaptation to a new set of circumstances that allow us to explore new people and places,  avoid a threat,  or capitalize on an opportunity,  then change is a blessing.  This kind of change helps us to grow and prosper.

No life or organization can escape the inevitability of change.  Our only defense is learning how to manage change as gracefully as possible by formulating plans to minimize the negative and maximize our access to whatever is positive.  Guiding change may be the ultimate test of our inner resources and leadership ability.  Please consider the following Critical Success Factors for instituting change,  developed by retired Harvard Business School Professor John Kotter and detailed in his 1996 book  Leading Change.

1.    Acknowledge or create a sense of urgency. 

  • Identify and discuss current or potential crises or major opportunities.

2.    Assemble a coalition to guide the process.

  • Recruit a team whose members have sufficient skill and power to lead the change initiative.

3.    Create a vision of what the change will bring.

  • Create a vision to help direct the change process.
  • Develop goals,  objectives,  strategies and action plans that will achieve and manage the change.

4.    Communicate and gain acceptance of the vision.

  • Employ all available methods to communicate the vision to those who will be impacted.
  • Teach behaviors that reflect the change,  demonstrated by the guiding coalition.

5.    Empower the coalition to create the vision.

  • Eliminate obstacles to the change: lack of understanding or trust,  administrative and financial constraints.
  • Reconfigure or eliminate all systems and procedures that can undermine realization of the change.
  • Encourage risk-taking and nontraditional ways of thinking and actions.

6.    Identify popular and visible goals that are achievable in the short-term.

  • Plan for visible performance improvements that can be reached in the short-term.
  • Acknowledge and reward guiding coalition members and others involved in achieving those improvements.

7.    Use the credibility and support gained from short-term successes to move forward and promote the vision of the change.

  • Increased credibility is the green light to change or eliminate systems,  structures and policies that do not align with the new vision.
  • Continually reinvigorate and reinforce the change process with projects and people who support and validate it.

8.    Institutionalize the change.

  • Articulate and communicate the connections between the change and the enhanced success of the organization.
  • Develop a succession plan to ensure the ongoing presence of leadership that supports the change.

Thanks for reading,

Kim

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Arranged Marriage: Propose A Strategic Partnership

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On numerous occasions throughout the life of this blog,  I’ve urged readers to create strategic partnerships as a way to grow and sustain their enterprise.  Strategic partnership can bring great advantages to the entities involved.  But if poorly conceived and executed,  the partnership will be an expensive and frustrating disappointment.  You know which scenario you want,  so let’s talk about how to get there.  Freelance consultants and small business owners will likely have one of the following goals in mind when contemplating a strategic partnership:

  • Expertise that is project specific or ongoing
  • Labor needed for the short-term or intermittently
  • Access to a certain target market
  • Increasing sales in existing markets
  • Sharing resources, e.g. office space or technology

Define goals that you can reasonably expect to achieve via the partnership.  Your need may be as simple and short-term as finding a talented and reliable graphic artist to design a save-the-date card,  invitation and program book for a nonprofit agency fundraiser that you are planning or a photographer to capture special moments at the event.  If you produce many events,  you will want to form ongoing strategic partnerships that will create a team of suppliers on whom you can rely.  If a long-term arrangement is your goal,  consider carefully the expected benefits to your organization in terms of market penetration,  access to bigger projects and clients,  increased revenue,  or other pertinent factors.  Project how long you expect it will take for your organization to realize progress towards the goal.

Well-defined partnership criteria will help you to pre-sort candidates in advance of approaching someone.  You won’t know until you have a meeting,  but learning about the potential candidate’s business model,  client list,  business goals,  business practices and organizational culture are important deal-makers or deal-breakers.  The more alignment between the participating organizations,  the better the chance for success.  Prepare and prioritize your list.

Next,  think about potential partnership candidates and your relationship with those individuals or entities.  Look for a firm where a complementary aspect exists with yours,  as noted above in the example of an event planner in search of a photographer or graphic artist.  Will organizations that offer any competing products or services be disqualified?

If it’s a long-term partnership that you will propose,  prepare a partnership worksheet for each candidate,  to ensure that you approach only those with whom you are likely to partner successfully.  Be specific about what you want the partner to provide and the responsibilities of each entity.

As you consider partnership candidates and develop the worksheet,  confirm and learn to articulate the expected benefits that would accrue to an entity that would partner with your own,  attainable over the short and long-term.  How long do you project it will take for the partner’s organization to realize progress towards the goals? Seeking feedback from a knowledgeable and neutral third-party might be helpful at this stage,  to eliminate excessive optimism on your part.

You are now ready to enter the recruitment phase of your search.  This process can be formal or informal,  depending on your familiarity with the organization leader.  You might run into that person at the grocery store and suggest that the two of you sit down over coffee and talk a little business.  If you’re not so chummy,   send an email and set up a call time or a face-to-face.  If the proposed arrangement will be complex,  provide your prospective partner with a copy of the partnership worksheet.  The worksheet will make you look super-prepared and can only raise your stature in the eyes of the candidate.

Especially if your intended has a bigger and more prestigious organization than your own,  providing the partnership worksheet should be a good tactical move.  The worksheet will also help you to launch discussions of organizational priorities;  clarify the perceived benefits, of the partnership;  anticipate obstacles;  reveal alignments or disconnects in business practices;  and give insight into organizational culture.

If at the meeting the partnership seems like a good fit,  propose or answer any questions that would constitute due diligence as you develop a formal partnership agreement.  The two of you must agree in writing to the specifics of the partnership:  its goals,  expectations,  services provided,  resources shared,  responsibilities,  fee schedules,  deadlines,  effective date and how success will be evaluated and other factors that would impact the relationship.

Thanks for reading,

Kim

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Howdy, Partner!

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It is said that two heads are better than one and that is often true.  When two people join forces to work on an important goal,  expertise and resources are shared and the goal is reached more quickly.  Moreover,  there is someone available to help make decisions,  someone to vent frustrations and celebrate victories with.  Human beings are social animals.  Most of us have an intimate partner in our life,  or would like one.   Many aspiring business owners and entrepreneurs would like to have a partner in their enterprise,  as well.

A life or business partner can bring many advantages to a relationship,  or can bring disaster.   Most business partnerships fail and nearly 50% of marriages end in divorce.  Your marriage partner and your business partner must each be chosen with care and an eye to the future.  Opposites may attract,  but they are usually unsustainable affairs.  Shared values,  goals,  priorities,  expectations,  vision for the enterprise and complementary skills are the ties that bind.

Before you start talking partnership with your presumed intended,  catalogue the resources that the business needs to reach and sustain profitability.  Consider what you are willing to give up to obtain those resources.  If you need start-up or expansion capital,  approaching a lending institution may be the best strategy.  If your financial projections indicate that business revenues generated will allow you to repay the borrowed money within 5 years and also your credit is good,  talk to your accountant and banker and figure out a loan strategy.  If specific expertise is what the business needs,  then write-up job specs and hire employees.

If money is the primary issue and you prefer to finance privately,  then some form of partnership is your money-raising strategy.  Calculate the optimal amount of capital investment required and ask your accountant or business attorney to estimate how much ownership you will likely have to relinquish to your investing partner.   If it appears that you cannot afford to keep at least 51%,   then consider taking on two partners and giving yourself controlling interest.  Never split 50 – 50,  to avoid becoming deadlocked on important decisions.  In my business plan writing workshop,  I emphasize that you have to know yourself when you’re in business.  Think objectively about how much of a presence of others in your business you can tolerate.  Your personality type may lead you to seek a limited or silent partner arrangement,  a partner who mostly wants to make money and believes in your ability to operate the business wisely.

However,  you may conclude that you need a general partner,  one who makes both a monetary investment and contributes expertise and business acumen.   You will then have to accept that there is more than one way to view challenges,  opportunities and risks and that decision-making will be shared.   Those realities are always big adjustments for the founding partner.  Additionally,  you and the partner must carve out your respective roles and responsibilities in the business.  Be sure also to address the amount of time the partner plans to contribute weekly.  Can you live with that?  The division of labor must be established and written into the partner agreement.   Check also the presumed partner’s financial history.   Do not form a partnership with one who carries heavy debt.

Finally,  include an exit strategy in the partner agreement.  Sometimes things don’t work out and someone wants out.  Protect the business and yourself with a partner buy-out option and provisions for the divorce,  illness,  or death of a partner.  Make sure you don’t wind up in business with an ex-spouse,  surviving spouse,  or the partner’s children.

Thanks for reading,

Kim