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Future-Proof Your Business NOW

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Freelancer friend, when did you last update—upgrade—your office technology? If it’s been more than five years since you’ve purchased hardware or software to modernize and optimize your company technology, let the warning bell ring and signal that it’s time to re-think your tech capabilities. While you’re at it, you can also research security solutions to defend your company against cyberattack. It is time to put on your strategic planning hat and future-proof your IT systems.

Think about it—if positioning yourself as a thought leader is an element of your marketing strategy, you cannot fully inhabit that role when the organization you lead is limping along on a seriously outdated, inadequate, IT infrastructure. Cyberthreats have become increasingly brazen and persistent, from high-profile data breaches to incursions into everyday life, such as a recent email that was sent to me by an alleged employee of an organization that has a name and email address similar to a company with whom I do business. The email message requested that I sign and return the attached “vendor contract and forms.” That message was the inspiration for this post (and it’s been deleted).

Updating and upgrading the technology that runs the business is an element of your risk management strategy and intended to protect your business by eliminating vulnerabilities. An updated IT system will bring many benefits to how you do business, including support of agile business practices, enabling operational efficiencies and facilitating a seamless and pleasing experience that not only keeps your customers coming back, but also inspires them to refer your company to their friends. Using the right technology is an affirmation of your brand promise.

So, whether it’s to strengthen IT security measures, or streamline business operations and enhance customer service and customer experience protocols, it will benefit you to rethink how you can optimize your use of technology, a reimagining that will likely cause you to consider Artificial Intelligence tools, cloud-based solutions marketing automation (which is now AI-powered) and customer relations management software.

Surrendering to avoidance behavior that makes you shy away from investing time and thought to considering goals you might pursue over the next 12-36 months or so, as well as researching potential tech solutions that are capable of supporting those goals, is costing you more than you think. The longer you plod along with outdated IT systems that no longer adequately serve your business, no matter that they’ve become familiar and comfortable, represents a risk—to the security of your data and to your ability to operate in an agile and efficient manner, for starters. Keeping up with Microsoft or Apple updates can only help so much—they are band-aids, a helpful short-term fix but not a comprehensive IT solution. Modernizing the technology that enables your business to function is not to be confused with buying the coolest and newest mobile phone. Your IT system is not a vanity project.

What technology does a Freelance consultant need?

Freelancers and other small business owners need hardware and software that serves both front-end (user facing) and back end functions (data management, processing, storage). A well thought-out IT strategy will function as a roadmap that outlines your technology needs and how to achieve them, including the budget and timeline. At top-of-mind must be that Freelancers are often in the B2B sector and work remotely; Work From Home demands a tech set-up that facilitates teamwork when team members are in different locations, maybe in different time zones, maybe on different continents.

Collaboration and communication tools that facilitate productivity and team cohesion are paramount for Freelancers and will include videoconferencing, team chat and project management. Also expected to be high on your IT shopping list will be AI tools and the hardware required to accommodate them and cloud-based solutions that will likely include CRM software, data protection and data retention.

A 2022 survey found that 61% of respondents whose companies upgraded their communication technology in the previous year primarily focused on streamlining processes, reducing costs, saving time and improving productivity to support the overall goal of making business operations more efficient. Those priorities will surely figure prominently in your IT upgrading decisions as well. Still, investing in customer experience tools has the potential to deliver tangible returns.

Let’s end with reassuring news—your IT upgrade needn’t be done all at once. The project can be structured to make it more affordable and manageable than you might expect in terms of time, money and decision-making stress. Your company’s IT infrastructure can be updated and upgraded step-by-step to replace obsolete equipment with modern solutions that align with your current strategies and will likely support your plans for future growth. Every wise and courageous action you take to move your company forward will deliver immediate benefits and also lay the groundwork for further progress.

Just remember that avoidance behavior will do you no favors and, in the end, will be more costly and stressful. Do yourself a favor and commit to starting the process within 30 days; if you’re in the midst of a big project, get started on your IT makeover within 30 days of wrapping things up. You will receive great satisfaction, among other rewards, by avoiding the drama of a hacking or other crises. The longer you put this off, the less control you’ll have over your time, money and satisfaction derived from your role as a company leader.

Thanks for reading,

Kim

Image: Courtesy Wikimedia Commons (1994)

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Close- Up: Revenue and Profit

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Does the thought of managing finances more complicated than your household budget fill you with fear and loathing? You are not alone! Many share that sentiment but in the world of Freelancing, getting your arms around the management of company finances comes with the territory. Outsourcing your bookkeeping and accounting functions can be a smart move that allows you to focus on client acquisition and retention or other things that only you can do, for example, but you cannot afford to be in the dark about what’s happening with your money. You can’t plan and execute a marketing campaign or an expansion strategy until you know how much money will be available to carry it through.

You can ask your bookkeeper or accountant to suggest a reasonable budget for your plan, but it’s better if you have the answer before you ask the question. In order to know how much money you’ve got, you’ll need to get comfortable with reading your Income Statement, also known as the Profit and Loss (P&L) Statement. The P&L details all the money that is earned (sales revenue) and expenses paid, e.g., rent, utilities, professional association dues, or payroll.

Financial management is a big topic so today we’ll limit our focus to money that comes into the business—revenue—and the money that remains after expenses are paid—profit. The two categories are very similar and are frequently used interchangeably by those of us who are not accountants or bookkeepers, but there is a subtle difference between the two and it makes sense for Freelancers to grasp what each term says about your entity.

Revenue

Revenue is money generated through the sale of products and services plus other money-making activities that take place within the business. The initial tally of revenue indicates what’s been generated before expenses are deducted. Calculate revenue by using this equation:

Revenue = Price x Quantity sold

Sales generated when clients pay for your products and services, along with other income streams if applicable, is classified as revenue derived from normal business operations. However, since a business may generate revenue from different sources (income streams) it’s useful to consider each line of business separately, so that you can scrutinize how each performs. When you separate revenue by source and type you’ll quickly see which is lucrative and which is lagging—and you’ll be positioned to make smart business decisions.

So if you begin to regularly teach a class in addition to your Freelance consulting work, you can record that revenue separately, as it’s own income stream. If you also sell a tangible physical product in addition to your intangible B2B services, you can record revenue from your tangible products and intangible services separately. Or maybe you own a restaurant? If so, you’ll separate and analyze each revenue source by categorizing your menu offerings: side dishes, main dishes, appetizers, nonalcoholic and alcoholic beverages.

As well, you can separate your revenue into operating and non-operating sources. Operating revenue represents sales from a company’s core business. For instance, in a restaurant, operating revenue is derived from the sale of food and beverages to customers.

  • Annual Recurring Revenue

Another category of revenue that you would be wise to record and examine separately is known as annual recurring revenue (ARR). ARR is revenue that is associated with subscription agreements or other contractually dependable, expected revenue streams. Documenting ARR is critical because it provides companies with a predictable revenue stream. There is nothing sweeter than money you can depend on!

  • Non-operating Revenue

Non-operating revenue is sort of like selling an add-on—it’s revenue earned from sources outside of the primary (core) function. So in your hypothetical restaurant, non-operating revenue might represent sales of loyalty program cards, gift cards, branded T-shirts, or mugs, for example. Non-operating revenue might be unpredictable or mostly seasonable (associated with Valentine’s Day, or whatever) and is considered nonrecurring. Selling an asset is also categorized as non-operating revenue. Maybe you bought a non-fungible token (NFT) art work that’s now worth big money and you’ve decided to sell?

Revenue vs. Income

For an intermezzo we can also consider income, which in the world of accounting is distinct from revenue, despite the obvious similarities—-both categories mean money in your pocket. Recall that revenue represents money earned from core business operations, that is, the sale of your products and services and also ARR and money classified as non-operating revenue. Income is the money that (thankfully!) remains after all fixed (operating) and variable (sales, marketing, professional development, etc.) expenses have been paid. Income has more in common with net profit, or earnings, than with revenue.

Profit

Profit describes the total gain (or loss) of money that a business has at the close of the period (e.g., month). As is the case with revenue, there are various aspects of profit to calculate and consider. Gross profit, operating profit and net profit are three metrics recorded on your P&L Statement. In general, profit is calculated by subtracting the total fixed and variable expenses, taxes and calculated amortization and depreciation values from total revenue. Calculate profit by using this basic equation:

Profit = Revenue – Expenses

  • Gross profit

The amount of money brought in from the sales of products and services, minus the acquisition or manufacturing costs of the products or services that were sold, is known as gross profit. The number reflects the Cost of Goods Sold (product or service acquisition or production costs, including direct labor) but does not reflect the impact of fixed or variable expenses. Calculate gross profit by using this equation:

Gross Profit = Revenue – Cost of Goods Sold (COGS)

The interim assessments of profit, in addition to gross sales revenue (also called the top line) allow you to scrutinize the numerous expenses incurred between the top line (gross sales revenue) and the bottom line (net profit) and expose points of profitability weakness (i.e., worrisome expenses) in the acquisition or production of the solutions you sell, all of your fixed and variable costs and even taxation, of your business. In fact, if your top line number is strong but your bottom line number disappoints, an adjustment of COGS or fixed or variable expenses could remedy the problem.

  • Operating profit

Operating profit is the next step in the P&L progression toward the big reveal that is net profit, the bottom line. It’s similar to gross profit but includes three more categories of expenses. Calculate operating profit by using this equation:

Operating Profit = Revenue – COGS – Operating Expenses – Depreciation – Amortization

Depreciation and amortization are also values you’ll want to understand as one who manages money, even if you outsource to a bookkeeper and/ or an accountant. Depreciation reduces the actual value of equipment or vehicles due to time or use—wear, tear and age. This calculation puts a numerical value on the asset’s cost versus its operating and residual value.

Amortization refers to the value of intangible assets, such as patents or trademarks and is calculated in the same way that depreciation is calculated. Both of these accounting methods exist to spread out the cost of assets over their useful lives and provide a more accurate picture of a company’s expenses and profits.

  • Net profit

Net profit is the final assessment of actual profit and it’s calculated by subtracting all fixed and variable expenses, plus taxes, amortization and depreciation, from your total revenue. Net profit illustrates the overall health and profitability of the entity. It is the final word and is found on the bottom line of your P&L Statement. You can calculate net profit by using this equation:

Net Profit = Gross Profit – Total Expenses – Taxes– Depreciation – Amortization

Differences between revenue and profit

These very similar values are calculated in different ways and each tells a somewhat different story. Revenue reflects your company’s sales and market share growth. Profit is the company’s indicator of financial health. Another difference between these two values is the potential for fluctuation throughout the year. Revenue is prone to fluctuate from month to month because it is subject to marketplace demand which, for example, can be seasonal. In contrast, profit tends to remain more stable over time.

Finally, net profit earnings may also be known as net income or net earnings. Net earnings may be the most important number on your P&L Statement not only because it comprehensively shows the company’s total earnings performance but also, the value is carried over to your company’s Balance Sheet and Cash-Flow Statement.

Thanks for reading,

Kim

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You Can Scale During a Pandemic

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Unlikely as it may seem, it is possible to scale a business during the COVID era or any difficult economic times, including war. Some businesses enjoyed unexpected increases in market share and sales revenue as a direct or indirect consequence of the shutdown and there were no lay-offs. Virtual communications platforms, liquor stores, grocery stores chief and delivery services have prospered.

Ripple effect revenue has accrued to tech specialists who set up and manage virtual conferences. Real estate agents who handle choice suburban and even rural locations are selling more properties, the result of affluent professionals who now work searching for residences that are spacious enough to accommodate his-and-her home offices and children’s schooling and play rooms. Teachers who administer private lessons to small groups of children have created pod learning environments. Elegant picnics are the new pivot for caterers, who provide food, wine, flowers, candles, stylish ground coverings and cushions to create al fresco dining experiences for those who shy away from restaurants.

If sales are increasing at your organization, celebrate the good fortune by maximizing the opportunity. Seize the day, plan your strategy and scale.

Operational efficiencies

When an organization grows, everything gets more complicated. How can the company deliver its products and services to twice as many customers? Building in operational efficiencies is an essential component of preparing a company to scale successfully. Business owners or leaders must ensure that the processes of acquiring or manufacturing company products and providing services are seamless and meet consistency and quality control expectations. E-commerce functions, the shipping method, invoicing or other payment system and customer service protocols must be secure, dependable and user-friendly.

An HR workforce specialist and/or operations/process improvement expert can guide company owner/ leaders to identify additional job functions that will be needed to support the scale, as well as the ideal employee qualifications for those positions and what to include in the job specs.

Upgrade marketing strategies and campaigns

So the company is generating more revenue and that has given you the confidence to scale—great! How about pinpointing who these new customers are and learning how and why they discovered your business? Are certain products or services suddenly more popular and if so, what’s driving the phenomenon? Or did a customer make a referral to someone with a big budget?

A more sophisticated and comprehensive marketing strategy is another key component of a successful scale. Update the company marketing strategy and campaign tactics to attract and welcome more of the new customer demographic. A website refresh or an entirely new site may be in order. The usefulness of content marketing, perhaps in the form of case studies, a monthly blog or newsletter or white papers that are posted to the website and selected social media platforms may become apparent. Include a short survey on the website (and also on certain social media platforms) to pose questions that reveal why customers choose to do business with your company and what might encourage them to continue doing so.

Revisit the company brand story and promotion strategy and incorporate language that builds trust, conveys expertise and encourages a sense of community and shared values with customers. Values are a growing priority and customers are inclined to patronize companies that support what they themselves support. Sponsoring local events may be a good way to communicate company values (and sending press releases that announce company participation to select media outlets may result in beneficial publicity).

Monitor the results of the marketing tactics used to learn what customers, both the new and the loyal friends, respond favorably to. The goal is to constantly fill the sales pipeline with good prospects. Make marketing personal by inviting customers to fill out profiles that provide name, email address, physical address and birthday, so that they can receive notice of new merchandise, special sales, birthday wishes and holiday greetings.

Ensure customer service

In fact as the company scales, owners and leaders should take on the perspective of both a curious prospect and a repeat customer, to gain insight into how to create a satisfyingly memorable customer experience. Good word of mouth is the best advertisement and often results in referrals. Positive reviews on Yelp, Angie’s List, or other online rating sites are effective marketing tools that bring in customers.

Remember that data security is also an important facet of good customer service. If an e-commerce feature is part of product or service distribution, hire a web designer to add an SSL certificate to the website, to obtain encryption that protects credit card and other personal data (and as a bonus benefit, gives the company a boost in search engine rankings). While speaking with the web designer, make sure that the page lay-out is intuitive and easily navigable. Consider adding a chat bot so that visitors can ask (anticipated) questions and receive answers ASAP, which saves time.

Finally, make product returns and exchanges efficient and painless. Have adequate staff to answer phone calls and emails, so that customers will not become frustrated. Use Facebook and/or Twitter to further support customer service and have adequate staff to update information, monitor activity and address and resolve problems and questions.

Thanks for reading,

Kim

Photograph: Kim Clark. A lift helps workers scale and work at the Christian Science Mother Church in Boston’s Back Bay neighborhood.

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Business Building Essentials

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While you’re thinking about how to give your business an injection of growth hormone, uniquely formulated to push your billable hours up and out of the doldrums, it’s also a good idea to reconsider some ground level business building essential practices that will confirm what you’re doing right and reveal what needs an edit.

Business founders must perfect not only the functionality and value of the products or services that are sold, but also create the organizational structure that will launch and support those products or services. You, founder and owner of the company, must ensure that you have your arms around each of these six elements discussed here. If ownership is shared by partners, then the responsibilities will be divided between you.

One division of labor method can be based on the percentage of the business owned, governed by abilities and preferences. Another method is to let ability and preference rule and choose a Managing Partner. That individual might own the largest share or the smallest share of the business, it doesn’t matter.

Managing Partners are compensated for the work they do, beyond the share of profit (or loss) that their ownership share entitles them to. Whether the business structure is Inc. or LLC, a W-2 salary can be paid to the Managing Partner. Discuss the matter of partner duties and compensation with your business attorney and put the agreement in writing.

A third option for monitoring and managing these responsibilities is to hire a W-2 employee or a 1099 Freelance consultant. There is no shame in calling in outside experts.

Positive cash- flow

The responsibility for positive cash flow belongs to the Finance Department, but the Sales Department is responsible for generating the revenue that keeps the business solvent. The Finance expert will monitor Accounts Receivable and Payable and enable a healthy cash-flow. In addition to generating sales, invoicing on time is critical to the process.

Operations

Inventory, quality control, managing employees and Freelancers, product manufacturing, delivery of core services, insurance and licenses and permits all land in this far- ranging category. IT, the telephone system and HVAC are other responsibilities that land in the Operations in- basket.

Operations functions are the nuts and bolts, where the rubber hits the road, hands-on aspects of the business. Excellent organizational ability is the key factor in successful operations management. Ownership of these duties can be assigned to whomever is best qualified to handle them. Sharing of theses duties by the partners and/ or hiring outside experts to oversee specific sectors will be wise.

Metrics to measure

The metrics used to measure business performance will change over time, but do some research of similar organizations and get insight into what numbers you should follow and the story they will tell, separately and together.

Plan to pivot

Doing business is so volatile now, it’s safe to say that a pivot is on your future, so why not anticipate it? Think about potential Plans B and C. Should your business venture falter, whether a flashy and well-funded competitor moves in or, gasp, you must contend with an unheard-of government mandated shutdown of your enterprise, how might your organization retool, pivot and survive?

You can help yourself by engaging and communicating with your customers to confirm why they buy from your company. You can also find out what competitive products and services may be appealing and why. In this way you can learn what you might adapt and hold on to customers should the business environment change. Staying abreast of new technologies on the horizon, new legislation, new competitors and even changes in local zoning

Culture and values

Bake into your business practices integrity, the expectation of excellence, first-rate customer service and, when necessary, the willingness to admit that a mistake has been made and an apology and/or a do over is in order. Let your customers, partners, suppliers, vendors, employees, Freelancers and most of all yourself see your humanity and your humor, too.

Coaching and mentoring

The founder(s), C-Suite leaders and staff deserve opportunities to sharpen their skills and even discover and nurture new competencies. Company sponsored professional development benefits a business in so many ways. Employees (and leaders) who feel confident about their skills and career possibilities and trajectories are nearly always happy to give back and do their best work.

Thanks for reading,

Kim

Photograph: Kim Clark. Construction site on Ipswich Street adjacent to Fenway Park.

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Guiding Light: Your Business Plan

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Business plans and email marketing have something in common. The two stalwarts have often been declared dead by so-called experts, yet both continue to demonstrate value to current and aspiring business owners. Despite the naysayers, business plans are the foundation of business success, for the unavoidable reason that many new businesses fail.

Of the 400,000 companies started in 2014, 44% had failed by year four and just 18% of first-time Entrepreneurs were able to launch and sustain a successful entity. As the saying goes, “No one plans to fail. They just fail to plan.” Don’t let that be you, Dear.

The primary reason for aspiring Freelance consultants and Entrepreneurs to write a business plan is to test assumptions about the viability of the business idea against credible information that reveals the likely demand for the product or service and customer groups that have the money and possible motive to buy those products and services. The potential viability of a business is revealed in factors such as the size of the market (i.e., those with money and motive to buy), the founder’s access to potential customers (a big factor in B2B and B2G sales), competitors who sell an identical or similar product or service (are they thriving or just hanging on?) and the amount of money required to set up shop and start doing business.

A second compelling reason to write a business plan is to develop strategies that provide a roadmap, or blueprint, that will guide the founder as s/he builds and launches the venture. Confirming target customers, identifying possible niche markets, choosing the pricing strategy and the sales strategy; creating the financial plan, the operations plan, a realistic business model and selecting the most advantageous legal structure will also be thought through in advance of the company launch.

During the process, the founder will make discoveries that may persuade him/her to refine certain aspects of the products and services intended to be sold, or adjust perceptions of who the ideal customers will be. This information may have the power to substantively improve the venture’s chances of success and sustainability.

A third reason that motivates aspiring Freelance consultants and Entrepreneurs to write a business plan is the need to seek financing for their venture, whether the funds will be used to launch or scale the company. The financing source may be a bank or credit union, a micro financing organization, private investment (friends and family), or even self-financing. Those holding money will use the business plan to make funding decisions, so founders would be wise to develop a realistic financial blueprint that projects three years into the future, as well as a credible marketing plan that accurately defines target customer groups and identifies key competitors.

In sum, a powerful business plan needs to be three-dimensional, so it distills lessons from the real world and allows the founder(s) to test and when necessary revise assumptions. This ongoing process will give the business the highest chance of success while also increasing your credibility with investors, your team and most of all, yourself.

Thanks for reading,

Kim

Image: © Ubisoft Entertainment SA, artist’s rendering of the Lighthouse of Alexandria. The lighthouse stood on the island of Pharos, guiding ships as they entered the harbors of Alexandria, Egypt on the Mediterranean coast. The structure was built during the reigns of Ptolemy I and II, c. 300 – 280 BC. With a height of over 330 feet, the lighthouse was so impressive that it was named one of the Seven Wonders of the Ancient World. Now lost, the lighthouse was a welcomed navigational aid for over 1600 years.

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Recipe For Success

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Solopreneurs and owners of small businesses can benefit from what can be called a basic recipe consisting of time-tested business practices that will put you on the path to building a profitable enterprise that will make you proud.

Business strategy

Every business needs a strategy and a business plan is a very helpful tool that supports you as you implement your strategy to develop and launch your venture.  A complex strategy or business plan aren’t necessary to achieve success.  A one-page business strategy and a five-page business plan may do the job, as long as both are well thought out and executed.

A good business strategy (and plan) defines and drives the activities and behaviors of the entire organization. Without it, the business becomes a rudderless ship, lost at sea.  A well-conceived business strategy and properly written business plan reflect and support the business model and always address marketing, operations, finance, staffing and customer service, at a minimum.

Business model

The business model is the plan for how your company will generate revenues and make a profit.  The business model answers the question “Who is the customer and what does that customer value?” As a result, your business model must also spell out the company’s value proposition and what differentiates your products and services from those of competitors.

The business model will keep company leaders focused on the core markets and measuring success as defined by the business strategy.  Here you’ll detail a step-by-step action plan to operate profitably within your marketplace.

Marketing

In order to develop a realistic and potentially effective marketing strategy, it is essential to thoroughly research the most likely target customers for the venture.  What problem or goal will be solved with your products or services—what is the customer’s motive for doing business with you? How much will potential customers pay to obtain the solutions that your venture will offer?

Finding out which competitive products target customers now use to get their needs met is another essential marketing research function.  As well, you must learn the type of marketing and information gathering outreach that potential customers will find and trust.  An effective marketing strategy addresses how you will:

  • Identify target customers
  • Identify the products or services now used  (competitive products)
  • Describe how you will promote your products and services to those customers
  • Explain the positioning strategy for products and services
  • Discuss the branding strategy
  • Describe the sales strategy—how will you sell to customers
  • Address the pricing strategy
  • Identify advertising and social media marketing activities

Sales

The sales strategy that you adopt will depend on your target customers, your access to those customers and the competitive landscape.  You may be able to build referral arrangements and strategic alliances that allow you to generate enough sales to be profitable.  On the other hand, cold calling may be the most effective way to generate sales for your organization.  Will you sell in a physical location, or online? Will customers pay immediately, or will they be billed? The preferred selling approach a company uses is defined in the marketing plan.

Operations

Predictable, practical and streamlined business operations processes are a must.  The customer experience is closely linked to what happens in the behind-the-scenes delivery systems of products and services.  Think of it this way—when you go to your favorite breakfast place to get a muffin and coffee, you expect to receive what you’ve ordered with a minimum of fuss. That is how you start your day because it’s convenient and it makes you feel good.  You, business owner and leader, must create a similar experience for your customers if you intend to retain them.  Smooth business operations also play a role in building good word-of-mouth for your business.  Fail to develop a good operations plan and things could blow up in your face as disappointed customers spread the word about your shortcomings.

Unfortunately, many businesses give short shrift to the operations section of their business plan.  The purpose of thinking through operations processes is to increase business productivity and reduce costs as you offer the same (or better) outcomes to each customer, time and again.  There may be some trial and error along the way, but most of all it takes thought and planning.

Successful business leaders understand the need to continually improve business processes, to become more efficient and productive and able to respond to market changes faster, all the while providing excellent service to customers.

Technology

While technology is important, it needn’t be complex or costly to be effective.  Up-to-date technology products enable upgrades within any number of company functions: product manufacture, delivery of services, inventory management, payment systems, sales and distribution, marketing campaigns, quality control and customer service.

Finance

A realistic financial plan is the cornerstone of building a profitable enterprise.  Every business requires a financial roadmap and budget, along with the discipline to follow it.  You must anticipate and plan for business start-up or expansion costs,  projected sales and assisted by a break-even analysis, project that point in the future when the business will be positioned to make a profit.

The financial plan ensures that the business owner recognizes the most likely sources of business launch or expansion capital (will a bank loan or a partner be necessary?). A financial plan reminds owners where and how to spend money and it provides ways to measure progress, promote healthy cash-flow and warn of impending shortfalls.

Customer service

Smart business leaders treat customers well, because they are aware that there can be no business without customers who make purchases that create revenue and lead to profits.  Integrate customer service into your business practices and review those practices frequently to ensure that they are having the intended effect of facilitating customer satisfaction, repeat business and referrals.

Thanks for reading,

Kim

Image: One scene in a mural displayed in the Templo Mayor Museum in Mexico City, where thousands of artifacts were excavated from the ruins of Tenochtitlan, the former capital of the Aztec Empire (now called Mexico City).

 

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Plans For Your Business

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Whatever the health and condition of your Freelance business venture, you will at some point benefit from planning.  Business planning of any type provides a roadmap that will help you to successfully achieve your business goals.  Business planning can be instituted when sales are tanking and you need to find a way to improve billable hours.  Or you may have decided to aim for larger assignments  or roll out new services and need to figure out how to make it happen.

I’ve taught business plan writing for 7 or more years and I’ve also developed a one-day business plan writing workshop. As I see it,  the process of writing a business plan gives the writer (or the team) many opportunities to think things through and  get the magical thinking out of one’s head. The business plan shows us first,  if the dream is potentially viable and second,  how to make the dream a reality.

The plan you write will depend on what you set out to achieve.  If you’re launching a start-up that will involve significant outside investment,  then you’ll need a very detailed plan that focuses on financial projections;  marketing plans that delve into customer acquisition, the competitive landscape, the product or service launch, messaging,  sales distribution; and operational aspects such as manufacturing,  staffing and quality control.  Freelance consultants will mostly focus on marketing, in particular defining the target clients,  client acquisition; providing the right services; appropriate pricing; and the budget to pay for their marketing strategies.

Whether your plan will be used to launch a big venture and attract outside money,  or is a boutique style service provider, include the following elements in your plan.  Even if you’ll be writing what amounts to an extended marketing plan used for a one-person shop,  it will be a good exercise to include these elements, because you’ll be encouraged to think seriously and strategically about your mini-enterprise.

EXECUTIVE SUMMARY

Present the business mission statement. Include as well the date when the business was formed; key management personnel; your unique credentials or experience that make you especially suited to start and successfully run the venture; the business legal structure (LLC, Sole Proprietor, or Corporation); the products and services; one or two key competitive advantages (maybe you have a patent?); sales projections; and the amount of capital needed (if you’re looking for investors).

BUSINESS DESCRIPTION

It’s traditional to present a brief description of your industry and its outlook,  nationally and regionally. give the details of your products and services and competitive advantages. Identify whether your venture is B2B, B2C, or B2G. If you hold a patent,  detail the competitive advantages that it will convey. Have there been any technological advances that will help or hinder your business?  Divulge here.

MARKETING

The category is a big tent that encompasses sales, product or service distribution,  competitors, advertising,  social media, PR,  networking,  branding, customer acquisition and pricing. The plan written for a mall organization will essentially consist of an extended marketing plan, because for Freelance consultants,  success hinges on identifying and reaching clients who will pay as well as pricing the services advantageously.

FINANCING

Whether you’ll self-finance because you’re wealthy enough,  or the venture is small and  not especially demanding of capital investment,  you nevertheless need to know with a reasonable degree of certainty how much you’ll need to spend to carry out the plan ( that could be a new product, or the purchase of something big, or a marketing plan, for example).  If your strategy is to attract investors,  they’ll need to be convinced by your projected sales revenue figures,  because they’ll want to know when they’ll be paid back or know when to expect profits if they are made co-owners of the business.  A break-even analysis, projected income statement, projected cash-flow statement and projected balance sheet are required by those who will need significant money.

OPERATIONS

How will day-to-day business processes function?  Tell it here,  along with providing the organizational chart,  the business location,  the method of producing that which you sell (if you are,  say,  a Freelance book editor or  graphics specialist,  you produce the service yourself),  your sub-contractors (if you are a special events organizer,  who is your usual caterer, florist,  limo service, etc.?) and quality control methods.  This element is about logistics.

For more information on writing a business plan,  visit the Small Business Association website https://www.sba.gov/tools/sba-learning-center/training/how-write-business-plan

Thanks for reading,

Kim

 

 

 

 

 

 

 

 

 

 

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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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Build A Winning Business Model

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Whether you are considering the feasibility of launching a business or you are on the leadership team of a business that is several decades old, the business model for the organization is the hub around which all activities revolve. The business model is the blueprint that details how you will create and sustain a money-making business venture. It is the engine that drives revenue. Fail to identify a winning business model and you fail to build a business that will succeed over the long-term. Creation of a profitable business model is a multi-disciplinary exercise that encompasses marketing, sales, strategy, operations and finance.

Identify your primary customers  (Marketing)

If you will focus on B2B clients, describe who they are: for-profit or not-for-profit organizations, Fortune 1000 companies, start-ups. If you plan to focus on a particular industry, specify that and specify also the department(s) in which you will find your decision-maker and/or key purchase influencers and the job title of the person who can green-light your contract. Detail also the services or products that you will provide to your target clients.

Detail the business processes  (Operations)

Where will business transactions take place? Will you have a physical location and will clients visit you there? Will your business be primarily online? Will you have a consulting practice and perform most of the work off-site on your computer? How will clients pay—by check or credit card at the time of purchase, or will you bill them? Must you ship products? Describe how and from which location you will provide or deliver your products and services and the system of payment.

Identify the resources necessary to operate  (Finance)

Before your business is up and running, what must be available? Along with business cards and probably a website, computer, smart phone, and maybe a tablet, you may decide on print collaterals as well. You will need a business bank account and you may need a process by which you can accept credit cards as a merchant. Must you rent commercial space? What will the construction costs be for the build-out of your office space? What will insurance, special certifications and utilities cost you? How much product inventory does it make sense to have? Must you hire help? Determine how much you must spend and have on hand before you can commence business operations.

Define the value proposition  (Sales)

Make the case as to why your products and services are superior to what competitors offer. Learn what motivates your target customers to seek out the products and services that you will provide. How are target customers getting the job done now? Perfect your selling points and learn to neutralize the most common objections that prospects will raise.

Determine key business partners  (Strategy)

Will your business success be greatly helped by getting referrals from a particular source? In other words, if you plan to become a florist or a caterer, it will make a lot of sense to develop relationships with event planners. Referrals are always crucial to building your client list, so figure out which types of businesses you can build a mutually beneficial relationship with—what can they do for you and what can you do for them?

Build and fill the sales pipeline  (Marketing)

Describe the various methods you expect to use to build awareness of your business and find prospective clients. Social media will provably be used, but which platforms can be expected to have the most resonance with your target clients? Teaching, conducting webinars and networking will serve you well in the early stages of your business and throughout. Client testimonials, referrals and case studies will support you as your client list grows and you develop a track record.

Expect to fine-tune and innovate  (Strategy)

Until you begin to welcome paying customers, you will not really know if your proposed business model adequately meets their needs. Expect a reality check and build innovation —that is tweaking —into your business model.

Thanks for reading,

Kim

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Doing It Better: Operational Efficiency = Competitive Advantage

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Many of you may know that I teach business plan writing.  I will begin another session of my three-part  (total six hours)  workshop series  “Become Your Own Boss: Effective Business Plan Writing”  at Boston Center for Adult Education on Wednesdays February 5, 12 & 19 5:30 PM – 7:30 PM  http://bcae.org class ID # 10573.  

I recently upgraded the operations segment of the workshop because like too many business plan resource providers,  insufficient attention was paid to those issues.  For example,  the business plan template displayed on the Small Business Association website does not include an operations segment.  Operations is an important element of every business plan and business,   including those organizations that sell intangible services.  The inclusion of an operations segment to my business plan writing workshop is a quality control/operations upgrade that allows me to better  meet or exceed client expectations and gives me a competitive advantage.

What do we mean by operations?  Operations is the process by which the items we sell,  whether products or services,  tangible or intangible,  are obtained or produced and made available for sale.  The operations component of a business plan  (and operations departments)  accounts for a wide variety of responsibilities,  including distribution of the product or service to the marketplace  (sharing that responsibility with sales; operations oversees shipping and handling);  inventory management;  quality control;  maintenance of the place of business;  maintenance of business equipment;  workplace safety;  and risk management (sharing that responsibility with finance;  operations oversees aspects other than financial).   A business model includes elements of operations and marketing functions.

Recently,  I suggested to a client a way to use social media to create an operational efficiency that will result in a competitive advantage for her business.  Outreach made by her staff to targeted populations will soon become faster and the number of potentially successful contacts will increase,  as the time and cost of doing so will decrease.  The organization will more easily and inexpensively meet or exceed its clients’ expectations.  This new operational efficiency can be promoted to prospective clients in the talking points of a sales pitch and used as a means to bring in more business.

It is to a Freelance consultant’s advantage to learn how to create operational efficiencies and provide services of the greatest value faster and less expensively.  The time and money saved can be used to directly increase revenue and/or promote the business.  The operational efficiency that I created as I became more experienced and proficient in writing these weekly blog posts caused me to receive the paid opportunity of editing a colleague’s monthly newsletter.

Operations processes are different for every category of business,  so I cannot give specific recommendations of how to create efficiencies within your venture.   Overall,  be mindful of how you source  materials for products that you manufacture,  the wholesale costs of  items that you sell at retail,  or what you pay for supplies.  As your business grows,  look for ways to buy in volume so that you can minimize the cost of goods sold.  Look also for ways to cut production time of products or services that you create and always strive to provide a product or service that meets or exceeds customer expectations.

Thanks for reading,

Kim