Technology / Office , 3 Comments

Work From Home and Be Productive

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There is an art to working from home and not everyone is able to master the craft.  Working from home is a luxury that saves much time and money,  but if you are not disciplined,  you will be foiled by constant distractions and nothing will be accomplished.  Working at home is most successfully practiced by independent self-starters who are comfortable working alone. “The level of discipline it takes to work from home and generate solid results is intense and most people fail at  (working from)  home because of this one fact”,  warns business and sales strategy expert Grant Cardone, author of If You’re Not First, You’re Last (2010).

In the 21st century,  working at home does not mean simultaneously juggling business and personal responsibilities while in your pajamas.  Telecommuters and Freelance solopreneurs save commuting time and expense and give themselves more potential working hours in which to maximize productivity.  Control over one’s time is a huge benefit.  There will be no impromptu meetings to destroy one’s schedule or long conversations by the water cooler to talk about last night’s game,  but those who live with others may have to fight to enforce boundaries and eliminate constant interruptions.   Freelance solopreneurs also realize a tremendous cost saving through by-passing office space rent.   Make the most of your home office experience and follow these tips:

I.   Create an office space

If you are able to have a room in your home to use as an office,  so much the better.  City dwellers may have a small desk or writing table in a corner of their bedroom.  Keep your workspace clean and organized,  as suggested by feng shui experts.   A good environment really does boost productivity and make one feel more comfortable.

2.  Establish boundaries

If you live with others,   teach them to respect that when you step into your office space,  you are at work.  You cannot referee spats;  you cannot chat with your husband or your mother;  you cannot drive anyone to the mall.  Shut the door and work.  Do take normal workday coffee and lunch breaks.

3.   Keep regular work hours

Go to work every day.   You have the luxury of working longer or shorter hours,  mornings or late nights,  according to your biorhythms and the projects on your desk.   Resist the temptation to be either a workaholic or a slacker.

4.   Dress for success

The popular image of those who work from home is of someone who’s in a bathrobe all day,  or sweats.  Remind yourself and those with whom you live that you are a professional who takes your work seriously.  Take a daily shower,  brush your teeth,  comb your hair and dress for work,  whether in business casual attire or jeans and T-shirt.

5.   Stay connected

Working at home is isolating and it is important to maintain professional contacts.  If you telecommute,  set up and participate in conference call meetings that keep you in the loop at the office.   Write reports that document your work and contributions to your team.   Meet regularly with clients,  whether you are a telecommuter or Freelance solopreneur.   Join and visit professional networking groups and attend conferences.  Nurture relationships with professional colleagues.

Thanks for reading,

Kim

Professional Development , , , , 3 Comments

Listen and Learn

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“We have two ears and one tongue so that we would listen more and talk less.”   –Diogenes

We love the sound of our own voice,  so much so that we sometimes don’t know when to shut up.   Talking is lots of fun,  especially for the extroverts among us.  Silence can be uncomfortable.   But we all know that listening is an important communication skill.  When we allow others to express themselves and tell their story,  we demonstrate that we care about them and that we value the quality of the information that they are sharing.

The benefits of good listening skills are significant.  Everyone loves a good listener and one invariably learns a lot by listening,  including who is worth listening to!  People will open up and sometimes say the darndest things and all we have to do is be there and show that we are paying attention.  It is ironic that saying and  (mostly)  doing nothing is such a vital component of relationship-building.  Yet listening is the foundation of bonding;  silently,  one demonstrates empathy,  telegraphs that another human being matters and creates rapport.  Fortunately,  the art of listening can be learned.

Attention, please

When listening,  give the speaker your undivided attention.  Nothing else demonstrates the level of respect that you have for another than this one act.  Let the phone go to voicemail,  close the laptop lid.   Sharing your valuable time with another and focusing your attention on that individual is so validating.  It is also a defining element of charisma.  Charismatic people are known to make whomever they are listening to feel as if only the two of them are in the room.   Demonstrate your laser focus with eye contact,   smiling or showing concern,  nodding your head and declining to interrupt,  except to ask a question or two that ensures that you understand what is being said.

Risk acknowledgement

As noted above,  when people start talking,   you might be floored by what is revealed.   No matter how you feel about what has been said,   maintain your cool.   Show that you are worthy of the trust that has been extended to you by way of the revelation.   Appreciate and acknowledge the risk that was taken by the speaker when the decision was made to confide in you.

Take notes

Always take notes when in a business meeting.   When you write as someone talks,  you demonstrate that the subject of the conversation is important to you.  The note-taking process also allows you to ask questions to ensure that you understand what has been said.  Within 24 hours,  send an email in which you thank that individual for meeting with you and confirm the agreed-upon next steps.

Achieve understanding

Stephen Covey (1932-2012),  author of the timeless self-help classic The Seven Habits of Highly Effective People  (1989),  noted that most people listen not to understand,  but to reply.  Be careful not to jump to conclusions or hear only what you want or expect to hear.  Perfect the art of listening and minimize miscommunication problems that can lead to costly mistakes or hurt feelings.

Listening is an art form that unfortunately,  is underrated.  Regardless,  the most compelling leaders,  the most successful sales professionals,  the most powerful negotiators,  the most charismatic people and those with whom we develop the most satisfying relationships are all active listeners.   Follow the advice of Diogenes and sharpen your listening skills by employing patience and self-discipline to your business and social conversations.

Thanks for reading,

Kim

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A Sponsor To Propel You Forward

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At almost every stage in life we can benefit from a mentor,  a special friend who has walked the road ahead of us and is willing to help us along by suggesting strategies for creating a successful journey,  choosing an alternate path,  or overcoming roadblocks.  Mentors encourage us,  challenge us,  guide and advise us.  They help us to recognize and evaluate career opportunities and consider the likely outcomes and consequences of our choices.

But when it’s time to move forward on goals,  one needs a different kind of relationship.  To shift into execution mode one needs a super-mentor,  a sponsor,  a well-connected advocate who believes in you and your potential.  Sponsors are influential and powerful people who have the clout to open doors,   make connections and recommend you for plum assignments and promotions.  They take an interest in you and your career,  but their chief role is to develop you as a leader,  a leader who will become an ally.  A sponsor sees furthering your professional success as a way to further their own and to give themselves bragging rights when you succeed.  Mentors prepare you to make a move; sponsors make it possible for you to realize your goals.

When considering who might make a good sponsor for you,  do not look for a role model to admire and emulate.  Look instead for a powerfully positioned rainmaker.  You seek not so much a friend,  as an ally.  Next,  make a brutally honest calculation of the value-added you can offer to your prospective sponsor.  Very rarely will a sponsor go out on a limb and call in favors to advance the cause of another without a powerful incentive,  which can be acting as the backer of someone who shows the ability to climb to the top.  This is a quid pro quo strategic alliance.  To attract a sponsor to open doors for you,  make that individual proud to be affiliated with you.  Exceed expectations,  meet deadlines,  hit a home run every time.  Furthermore,  you must be unfailingly loyal to your sponsor.  When he/she needs backup,   you are the first to stand up and deliver the ROI.

Where might a Freelance consultant find a sponsor?  Network in places where powerful people congregate.   Get involved with activities and work yourself up to earning a leadership role,  where your prospective sponsor can witness your enterprising ways,  ability to motivate and work with a team and ability to get things done.  A not-for-profit organization board,  fitness center or yoga studio,  or place of worship are all good networking venues.

Separate yourself from the pack by honing your communication skills.  Learn to excel in verbal communications,  interpersonal relationships and rapport building;  give excellent presentations;  sharpen your writing skills;  show empathy,  good humor and a willingness to collaborate.  People think that those who communicate exceptionally well are good leaders and smart (whether or not that is the case).  When you’ve identified prospective sponsors (there can be more than one),  work on developing a relationship and allow it to grow organically.

Time will be involved and much will depend upon mutual trust that develops and the boundaries of your prospect.  The clock may be ticking on your plans,  but if you are perceived as pushy,  the relationship will be lost forever.  What you want are opportunities to talk,  so you can let this individual know what you’d like to do.  You can even state that you’re looking for help.  The prospect will either offer the help,  or will not.  If that person does not come through,  either he/she has no influence in that realm,  or would rather not risk extending it to you.  Your prospective sponsor either values you or does not.

Tribalism matters.  Mentors and sponsors tend to bond with those who remind them of themselves and relationships often form within gender,  racial,  ethnic or religious categories.  Your communication skills,  when honed as advised above,  may help you to transcend boundaries.   Also,  in our increasingly global society,  your sponsor may decide that diversity will be advantageous when cultivating allies.

Thanks for reading,

Kim

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Proposal Writing Primer

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Periodically,  a Freelance consultant must write a proposal.  Some organizations,  especially government entities,  will publicly announce that a project is available and request bids that must be submitted in proposal form.  Occasionally,  one may receive a direct request for a proposal  (RFP)  from an unknown party.  Experience will eventually teach you to not respond to a surprise RFP.  Invariably,  an unexpected RFP is sent by a phantom client who is either fishing for pricing information,  or seeking to obtain additional proposals when it has already been decided who will be hired for the project in question,  but company policy mandates that a certain number of proposals must be reviewed.

Submit proposals only after you’ve spoken with the decision-maker and received an invitation.  If you’ve set it up right,  the proposal will serve as a confirmation letter that spells out project details that have been previously discussed and agreed-upon.  See my March 26, 2013 post on unsolicited RFPs  https://freelancetheconsultantsdiary.wordpress.com/2013/03/26/the-unexpected-rfp/.

A proper invitation to write a proposal is an opportunity for you to shine.  Showcase yourself,  your brand and your expertise and write a powerful document that reveals your analytic ability,  writing ability,  practicality and creativity.

Study the requirements

If there is a written RFP,  study the requirements and make note of the submission deadline.  Is the project a good fit for your organization?  Do you have time to write a worthy proposal? If you meet with the client to discuss the project,  take good notes and confirm that you understand the goals,  specifications and expectations involved.  Do you have the expertise and resources to do the job?  Can you achieve the goals within the time frame?  Can you do the job within the budget?  Must you subcontract work out and if so,  will you be able to make a profit on the project?

Confirm the desired outcomes

Interview the client and confirm the desired and expected outcomes of the project and assess what achieving the project goals means to the organization.

Evaluate your proposed solution

Make sure that your approach to producing the deliverables will please the client.  What is the primary criterion for the proposal?  Is it speed of completion,  price,  or something else?  Present a methodology that reflects what means most to the client.

Outshine competitors

Be advised that a proposal is a sales document.  Highlight your strengths in the context of project goals and address any potential reservations that might prevent your proposal from being accepted.

Proposal must-haves

Some proposals specify that a certain format must be followed.  If there is no such rule,  include the following elements:

  • Give an overview of the current situation that has given rise to the need for the project.
  • State the goals of the project,  expected outcomes or deliverables.
  • Describe why you and your organization are uniquely qualified to successfully complete the project.
  • Describe your proposed methodology for achieving the aims of the project.
  • Explain the timeline and cost  (the justification of your proposed fee).
  • Describe the benefits associated with achieving the project goals,  outcomes,  or deliverables.

Finally,  make sure that your proposal addresses all elements of the RFP or client needs.   Check your spelling and grammar.  Go on-line and view examples of proposals;  find a format that visually communicates you and your brand and make that your template .  If hard copy must be submitted,   print your document on good paper stock.

Thanks for reading,

Kim

 

 

 

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The Break-Even Analysis: Find the Pricing Sweet Spot

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To continue the topic of pricing,  in this case pricing a new product or service,  it is a must to know when fixed costs will be covered by unit sales at a given price and determine when in time the item or service breaks into profitability.  Performing a break-even analysis will reveal how many units must be sold,  or how many times the workshop must be delivered,  at a given price,  before production costs are behind you.  Integral to that question is unit selling price.  Costs are recouped faster when selling at $100.00 rather than $50.00.  Also related to pricing is what customers expect and agree to pay.  Appropriate pricing can increase profits faster than increasing sales volume.  One can sell fewer items and make more money per item.  Conducting a break-even analysis is Step 1 in locating your ideal price range.  Here’s the Break Even Volume (BEV) formula:

Fixed costs                                                      Fixed costs

BEV     = ______________________________        =         __________

Revenue per unit – Variable cost per unit                         Unit margin

Let’s add some numbers to the formula and assume that the fixed costs associated with delivery of your service is $5, 500.00: $1,700.00 went to the graphic artist for Power Point slides; $1,300.00 paid to the wordsmithing wizard for marketing collaterals used for promoting the service; and $2,500.00 for the wholesale value of your labor,  the time you spent crafting the intangible service.  These costs are fixed because they will not change,  no matter how many times the service will be delivered.  Variable costs associated with service delivery would be printing hand-outs for participants ($50.00) and the advertisement placed in an industry newsletter read by the target audience ($400.00),  meaning that the unit variable cost =$450.00.  If the service is priced at $750.00,  the profit,  or unit margin,  is $300.00 each time the service is delivered at that price.

$5,500.00

BEV     =        _________     =   18.33

$300.00/unit

At a per unit price of $750.00,  the service must be delivered 18+ times before a profit will be made.  From there,  a series of  “what if”  scenarios can be floated.  Chiefly,  what are competitors charging or is there a spike in demand that makes the product more valuable and can you increase the price?  Also,  can you lower fixed costs and obtain graphics services for a couple of hundred dollars less?  What if the marketing collaterals text was produced in-house by you and not outsourced?  How much will that increase the price of the time you spent developing the service,  another fixed cost?

Let’s say that you find graphics services for $1,500.00 and ask a marketing communications wizard to edit text that you write yourself for $800.00 (your personal labor increases: 6 hours writing at $50.00/hour = $300.00 + $2,500.00 = $2, 800.00).  Now,  the fixed cost is $5,100.00 and you think that $950.00 is a price that clients just might accept.  The variable costs will remain unchanged at $450.00,  because your printer is good,  his price is right and you’ll definitely need to advertise since you may want to charge more for the service.  At a unit price of $950.00,  the unit margin would be $500.00.   As shown,  by raising the price of the service by $200.00,  fixed costs are covered by delivering the goods 10+ times,  rather than 18+ times.

$5,100.00

BEV=             ________      =   10.2

$500.00/unit

As you can see,  the impact of other values such as increased advertising or higher quality materials or labor,  can also be assessed for impact on the pricing sweet spot and timeline for reaching BEV.  When bringing a new product or service to market,  take steps to identify the ideal pricing structure.

It is also useful to calculate the profit margin,  that is the percentage of sales revenues retained after all expenses are paid,  for each product and for the total line.  From the P & L Statement,  divide net profits by total sales revenues  (bottom line divided by top line).

 

Thanks for reading,

Kim

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The Less Than Zero Pricing Tactic

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Psychology counts when pricing a product or service.  Take note that in every store,  the price of items always ends in .99,  .98,  or .95 and never .00.  Number psychology research has persuasively shown that buyers do not like zeros.  Stores do not sell items for $100.00,  they sell them for $99.95,  because customers associate zeros with premium prices that they’d rather not pay.

Furthermore,  the phenomenon called the left digit effect causes our brains to misinterpret that $99.95 as having a value closer to $99.00,  instead of $100.00.  Lindsay van Thoen,  columnist for The Freelancer’s Union,  says that our clients are like any other consumer and Freelance consultants should bear that in mind when pricing contract proposals.

When we are invited to submit a proposal,  we are all excited.  Here comes money!  The last thing we want to do is to wind up in a wrestling match with a client who wants to nickel and dime.  We take pains to itemize the major components of the project and provide the rationale for the total project fee.  Nevertheless,  haggling may ensue.  According to van Thoen,  Freelancers are wise to follow the lead of retailers,  cut the zeros from our proposals and make it easier for clients to agree to our price.  Resist the temptation to price your project at $5,000.00.  Instead,  price the project at $4825.00 or $5175.00.

Unfortunately,  clients sometimes feel that Freelance consultants pad price quotes,  even when an itemized accounting is provided.  A figure that does not appear to be rounded-off,  but appears to be specifically customized to the service requested and contains few zeros that may imply that we’ve  “rounded-up”  the fee,  can be more trust-inspiring and believable to certain clients.

Other ways to make it more palatable for clients to accept our proposals are to  1.) Ask the client for the project budget and work with them to provide services that you can afford to provide within that valuation and  2.) Provide three levels of service: good,  better and best,  so that clients can choose services according to needs and budget.

Pricing pundit Rafi Mohammed,  founder and CEO of the consulting firm Pricing for Profit in Cambridge, MA,  offers two valuable pieces of advice to keep in mind about pricing.  First,  prices must reflect the value that clients place on the service.  Second,  different clients place different value on a given service.  Offering  “good, better,  best”  options allows the client’s need for the service to be met in a way that is in line with the value placed.  A good pricing strategy is an important part of your marketing plan.  It sets the stage for building a profitable enterprise.  It is imperative to set prices that reflect the client’s value of what we sell and,  equally important,  to help the client perceive that listed prices are trustworthy.

Happy 4th of July!

Thanks for reading,

Kim

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5 Start-up Must-dos

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Peter Russo, Director of the Entrepreneurial Management Institute at Boston University,  wisely points out that avoiding mistakes is not quite the same thing as doing the right thing.  Avoiding mistakes is being on the defensive,  the yin side of the equation.  Doing the right thing is proactive,  on the offensive,  the yang side of the equation.  Here is Peter Russo’s list of essential must-dos for those who plan to launch a business venture.

1.   Know your goals for the venture.  “A lot of people see an opportunity without ever asking themselves what they’re doing it for.  Are you trying to make a quick buck?  Create a legacy?  Afford a certain lifestyle?  It’s critical that you know from the beginning what your goals are,  because everything else is going to revolve around that.”  Launching a full-time venture that is expected to grow exponentially and generate for the owners ever-expanding  profits is not always a goal.   Some people start a business to generate some income by leveraging a creative ability.  For many years my father,  who had a day job,  worked in a landscaping venture that was started by my mother’s uncle after he retired.  The two worked evenings and Saturdays for about 15 years.  My father and great-uncle understood that it was not practical to attempt to expand the venture into a full-time endeavor,  for any number of reasons and so they didn’t.  But they made money and that was their goal.

2.   Recruit and hire the best people.  “It sounds almost like a cliché to say that I’d rather have an A team with a B idea than a B team with an A idea.  The right team can fix a lot of problems.  If you don’t have the right team,  you don’t have much of a chance.  Get the best available people at the time.”  Hiring friends and family who need a job is not the way to staff your start-up.  You need experience and talent,  creative and resourceful professionals possessed of an excellent work ethic and who are a good cultural fit for the organization.

3.   Develop a forgiving strategy.  “Things are going to go wrong.  They’re going to be harder,  take longer and cost more money than you think.  You have to have a strategy to survive.  A lot of people put together a plan that will work only if everything goes right.  It’s not going to.”

4.   Be honest with yourself.  “Acknowledge shortcomings,  weaknesses and problems immediately.  Do not ignore them or try to talk yourself out of them.  Address them head-on.”  So if you have production problems,  distribution or quality control problems,  fix your system.  If business is distressingly slow,  then re-think your business model—do you have a viable concept?  Or might you have been too optimistic about market potential,  or your ability to enter and win customers?  Should you step up your marketing efforts?

5.   Commit to the business.  “You can’t really do anything significant without fully committing yourself to it.  A lot of people try to dabble.  They think they’ll do it part-time and see how it works out.  If you plan to be successful,   you have to commit.”  Refer back to #1—what are your goals for the business?  Plenty of people operate successfully as part-time caterers,  musicians,  wedding photographers/videographers,  website designers,  etc.  They start a business to generate some money by leveraging a creative ability.  It takes a great deal of energy,  discipline and focus to launch and sustain a part-time business while simultaneously working a full or part-time job.  You must commit to the business if it is to succeed.

Thanks for reading,

Kim

 

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Sidestep Start-up Screw-ups

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Presented for your edification are the final five elements of the start-up advice recommended by John Osher,  former CEO of Dr. John’s Products, Ltd. and an entrepreneur extraordinaire who started three businesses from the ground up and sold each at huge profit.

13.   SEEKING CONFIRMATION OF YOUR ACTIONS, RATHER THAN SEEKING THE TRUTH

“This often happens: you want to do something, so you talk about it with people who work for you.  You talk to family and friends.  But you’re only looking for confirmation.  You’re not looking for the truth.  You’re looking for somebody to tell you you’re right.  You have to learn to give more value to the truth than to people saying what you’re doing is right”.

14.   LACKING SIMPLICITY IN YOUR VISION

“Rather than focusing on doing everything right to sell to your biggest markets,  you divide your attention …trying to be too many things at one time.  Then your main product isn’t done properly because you’re doing so many different things”.   I have been guilty of this and maybe you have,  too.  I was trying to hook as many customer groups as possible using every skill set that I owned.  As a result,  when I would tell someone what I do,  they would sometimes get this confused look on their face.  Eventually,  a networking group colleague told me that he was having trouble trying to categorize me,  couldn’t figure how to remember me for referrals.  A couple of years ago,  I finally found the courage to pare down my offerings,  to simplify and sharpen the focus of my suite of services.   Referrals eventually increased and business got better.   This is a business model issue.  Sometimes,  less is more.

15.    LACKING CLARITY IN THE BUSINESS PURPOSE AND GOALS

“You should have an idea of what your long-term aim is.  It doesn’t mean that won’t change,  but when you aim an arrow,   you aim it at a target.  What are you trying to do?  If you want to create a billion dollar company with a certain product,  you may not have a chance.  But if you’re trying to create a million dollar company,  then maybe with that product,  you’ll have a chance.  Clarity of your business purpose is very important”.

16.    LACKING FOCUS AND IDENTITY

“This list was written from the viewpoint of building a company as a valuable entity.  Remember that the company itself has an identity,  a brand.  Do not go after too many things at once and end up with a potpourri of products and services,  rather than a focused business entity.  When you go into business,   it’s important to maintain a focus and an identity.  You must be focused on who you are and what you do and you build power and credibility from that”.

17.    LACKING AN EXIT STRATEGY

“Have an exit plan and create your business to satisfy that plan.   You may build a business that you feel will start fast and make a good deal of money and for that reason will attract a lucrative buy-out.   Maybe you figure that you can make lots of money for about two years but after that,  competitors will enter and you won’t be able to protect yourself from them.   So after the first year,  you watch the marketplace very carefully and keep a close eye on inventory.  Another exit strategy can be to hand the company to your kids someday.  The most important thing to do is build a company with value and profits so you have all the options open to you;  keep the company,   sell the company,   go public,  raise private money and so on.   A business can be a product, too”.

Next week,  we can examine five things to get right as you build your business.

Thanks for reading,

Kim

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Don’t Screw-up Your Start-up

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John Osher has business in his blood.  During his 7 years as an undergraduate college student,  Osher started and sold a vintage clothing store and an earring outlet.  On his way to building ConServ,  his first major business venture,  he worked as a cab driver,  plumber and a carpenter.  Second venture Cap Toys,  where sales volume reached $125 million,  was sold to Hasbro in 1997.

When formulating the strategy for his third venture,  which became Dr. John’s Products,  Ltd.,  Osher wanted to start the perfect company and so decided to make a list of everything he had done wrong as he built the previous two.  In 1999,  he used this list when he started Dr. John’s SpinBrush,  an electric toothbrush that retailed for $5.00.  Maybe you had one?  The SpinBrush became wildly popular and in 2001,  Proctor & Gamble bought him out for $475 million.  Enough said!  Below are more pearls of wisdom from John Osher’s list of start-up screw-ups:

7.    FAILING TO HAVE A CONTINGENCY PLAN TO ADDRESS A SHORTFALL IN SALES PROJECTIONS

“Even if you’ve been realistic about your ability to enter and penetrate your market,  sales projections and start-up and operating expenses,  there are things that happen when you start a new business.  These aren’t a result of poor planning,  but they happen.  Bank rates could go up.  There could be a strike.  You need a Plan B to cover yourself should things not work out within the timing that you want.”

8.     BRINGING IN THE WRONG OR UNNECESSARY PARTNERS

“There are certain partners you need.  If you need money,  you’ll need money partners.  But too many times the guy with the idea takes on his friends as partners.  Many people don’t provide strategic advantages.  Before people are made partners, they have to earn it”.

9.      HIRING EMPLOYEES FOR CONVENIENCE RATHER THAN SKILL

“In my first business or two,  I hired relatives,  but in many cases they were wrong for the job.  It’s hard to fire relatives and friends.  Spend time to handpick people based on skill requirements.  It bogs you down when you hire people who can’ t do the job”.

10.    NEGLECTING TO MANAGE THE ENTIRE COMPANY AS A WHOLE

“You see this happen all the time.  They’ll spend 50% of their time on something that represents 5% of the business.  Too often, the business owner doesn’t have a view of the whole company.  They get involved in part,  but don’t manage the whole.  Whether I handle this aspect or another,  whether I hire someone to do what I can’t,  I consider how it all fits into the long-term and short-term big picture.  Constantly try to see your big picture.

11.     ACCEPTING THAT “IT’S NOT POSSIBLE” TOO EASILY, RATHER THAN FINDING ANOTHER SOLUTION

“I had an engineer who was very good,  but with every product we developed,  he would say  ‘You can’t do it that way’.  I had to be careful not to accept this too easily.  I had to look further.  If you’re going to be an entrepreneur,  you’re going to break new ground.  A good entrepreneur is going to find a way”.

12.    FOCUSING ON SALES VOLUME OVER BOTTOM LINE PROFIT

“Too much of your management is often based on sales volume and market size.  There’s too much emphasis on how fast and big you can grow the business,  rather than on how much profit you can make”.

I’ll conclude with the final five elements next week. Thanks for reading,

Kim

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17 Start-up Screw-ups

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Serial entrepreneur John Osher has developed numerous consumer products,  including an electric toothbrush that became America’s best-selling toothbrush in just 15 months.  He also started several businesses,  most notably Cap Toys,  where he built sales to $125 million a year and then sold to Hasbro, Inc. in 1997.

Osher’s most important contribution to American business may not be the companies he’s started and profited handsomely from,  but rather the business advice that he’s willing to share. His list  “17 Mistakes Start-ups Make”  became a Harvard Business School case study.  See what you can learn from his entrepreneurial experiences and use it to create your version of the perfect Freelance consulting business.

  1. FAILING TO ADEQUATELY RESEARCH THE IDEA TO ENSURE IT IS VIABLE

“The most important mistake of all.  I say nine out of ten businesses fail because the original concept is not viable.  You want to be in business so much that you don’t slow down and take the time to do the up-front research,  so the business is doomed before the doors open.  You can be very talented,  but your business will fail because the concept is flawed.”  Go to the library and do your research.  Read blogs,  journals and newsletters that pertain to the industry you plan to enter,  so that you’ll know what’s going on.  Develop a credible business model.

  1. MISCALCULATING MARKET SIZE, TIMING, EASE OF ENTRY AND YOUR POTENTIAL MARKET SHARE

“Most new entrepreneurs get very excited about their concept and don’t look for the truth about how many people will want to buy what they they’re selling.”  Take the time to research and understand targeted customers and get to know why they will want to buy from you or hire you.  Calculate your potential to penetrate the target market and grow a client list you can live on.

  1. UNDERESTIMATING FINANCIAL REQUIREMENTS AND TIMING

“Based on inadequate research noted in Mistakes #1 & #2,  fledgling entrepreneurs operate from the premise of over-stated market size and their ability to enter it.  They then start spending more money than they should on start-up costs,  creating costs that require those inflated sales projections to be met,  so they run out of money”.

  1. OVER-PROJECTING SALES VOLUME AND TIMING

“You have already miscalculated the size of the market.  Now you over-project your portion of it”.  Always another way to run out of money, no?

  1. UNDER-PROJECTING EXPENSES

“Cost projections are often far too low.  Part of the problem is that you’ve projected market share and sales volume that are too high.  There are always unknown reasons that come up to make expenses higher than planned”.

  1. OVER-SPENDING ON AN OFFICE, OFFICE EQUIPMENT AND EMPLOYEES

“Now you’ve got lower sales,  higher start-up costs and then you layer on too-high operating costs.”  I have seen colleagues maintain fancy offices when they have the ability to run the business from the kitchen table at home.  If you can take clients out to a restaurant for meetings,  then why pay for office space?  You can get a telephone answering service to personally take messages,  so it looks like you have a secretary.  I’ve done it for a dozen years.  Besides,  no one answers the telephone these days,  especially not in major corporations. When you need another pair of hands to take on a big project,  hire in another Freelancer and spread the wealth.

More next week.  Thanks for reading,

Kim