Three Business Credit Myths Debunkeded

A lot of people don't understand the consumer credit system, and many more don't understand the business credit system. Today I'm going to cover a couple of common business credit “myths”, and explain the truth that can be learned from them.

Myth #1: Business Credit is Just Like Personal Credit

This sounds like it ought to be true, but it just isn't. Sure, the credit systems are similar. However, there are some very major differences that can seriously affect your business. For starters, the consumer credit system has, both in court and in congressional testimony, been demonstrated to be fairly anti-consumer. The system works against consumers in many cases, is prone to errors, and tends to resist the correction of any errors by consumers or their advocates. (In one example, even after a credit bureau was sued and lost in court, they continued to refuse for months to remove the incorrect information from the person's credit reports.) The business credit system is quite different. It is not anti-business (or anti-consumer), it is less prone to errors, and when there are legitimate errors, they are generally easier to get corrected.

Myth #2: It Doesn't Hurt To Use Personal Credit In Place of Business Credit

This is a problematic way of thinking that can lead to big problems down the road. Using personal credit for business purposes puts your personal credit at risk for the sake of your business. By using personal credit for business, you limit the resources available to you personally and to your business, and the end result could be disastrous. Imagine when your business credit needs exceed your personal credit capacity--and when YOU need to use your personal credit and can't because it's been tied up by your business. No matter how you spin it, in the end using your personal credit for business is a bad idea.

Myth #3: Business Credit and Personal Credit Are In No Way Related

While using your personal credit for business use is a bad idea, we can't exactly separate business credit and personal credit completely. In many cases, especially when starting out with business credit, an owner of the company will be required to provide a “personal guarantee” for the business credit loan or line of credit. When providing a personal guarantee, the company extending credit will not only check your business credit, but will check your personal credit history. While the business account won't show up on your personal credit report, the personal guarantee could eventually affect your personal credit in the event that the business fails to meet its obligations. Obviously, you should aim to avoid that scenario (and certainly can) by careful planning and smart use of business credit.

Why Do I Need Business Credit?

Imagine having the ability to access $50,000, $100,000, even $250,000 for your business. Now imagine doing this with NO personal credit check and NO personal guarantee. Your success in business will be determined based on your business credit profile and score. With a good business credit profile you will have near unlimited borrowing power. Without having a good business credit profile it will be a difficult path to success without having access to working capital and funding.

That is why almost all Fortune 500 companies use their business credit to secure funding. It’s not that they need the money to operate. Successful companies use funding as leverage to grow their business. Business Credit is the best kept secret in business. Over 90% of all business owners know nothing about business credit or business credit scores. But when you do discover the power of what business credit can do for you and your business you will be floored at how easy it is to get money and grow your business. One of the many benefits of business credit is that you can obtain funding with no personal credit check.

With a strong business credit profile, lenders will lend you money based on your business credit, not your personal credit. This is excellent if you have personal credit issues as you can still qualify for funding. Even with exceptional personal credit, business credit gives you DOUBLE the borrowing power. You can get approved for much higher funding amounts using your business credit than you would if you used your personal credit to qualify.

Another great benefit of business credit is there is no personal guarantee required for much of the funding you obtain. This means you can be approved with no personal liability. So if you ever do default, the creditor can’t pursue your personal assets like your home or personal bank accounts. Business credit adds more value to your business and gives your business credibility. Stakeholders, partners, lenders, even potential buyers of your business will see more value in your business if you have a strong business credit profile built.

Most importantly, by having a good business credit profile built you have security. It is much easier to run your business when working capital is easy to come by. If you want to begin building your business credit today, give us a call or email us or you can click the ‘buy now’ button on our website.

3 Big Differences Between Personal Credit Scores and Business Credit Scores

There are many differences between personal and business credit scores.

One fundamental difference between consumer and business scores is the time frame over which the scores gauge someone's risk of default. A business credit score is a mathematical model that is used to depict a business's risk of going 90 days late on an account within the next 12 months. A consumer credit score is a mathematical model that is used to depict a consumer's risk of going 90 days late on an account within the next 24 months.

Another big difference between consumer and business credit scores is what the score actually represents. A consumer credit score reflects an individual's likelihood of defaulting on an obligation. A business credit score reflects the business's likelihood of defaulting on an obligation, not the business owner's. The business credit score is based on how the business obligations are being paid, not how the business owners pays their personal obligations.

Another major difference between business and consumer credit scores is the score range. Consumer FICO scores range from 350-850 with 850 being the best score you can obtain. Business credit scores typically range from 0-100 with 100 being the best score you can obtain.

These are three of many major differences between consumer and business credit scoring. Call us or email us to find out more.

We all hope for a better tomorrow

When you study the history of the New Year celebration, you find that it goes back some 4000 years to the ancient Babylonians and was tied to the Spring Equinox. The tradition evolved over the millennia and today some form of New Year celebration takes place across many of the world's major religions and cultures - although not all on January 1st.

But the one thing I find congruent; the one thing that I see on the faces of every image I search related to this renewal celebration.....is Hope.

 

 

Whether it is Chinese New Year, Rosh Hashanah , or Times Square on December 31st at 11:59PM, all of the revelers seem to be full of hope when standing at the precipice of an unknown future. And that gives ME hope.

In today's modern world, mankind's shortcomings seem to take center stage in the news and on social media. However, during this time of year and more specifically, during this New Year celebration, we humans reveal something wondrous in our coding. We reflect that unique ability to hope. Each person displays that he or she has an expectation and desire for a more peaceful and prosperous tomorrow. In that instant, we are all in tune. The only thing that remains is for each and every one of us to go out there and make that wonderful tomorrow happen. :-)

Happy New Year! I hope your reflections on yesterday prompt growth and I hope your expectations of tomorrow prompt action.

Will

Phone or Family?

“Dad, can we play?”

“Dad, can we read this book?”

“Dad, how big is Neptune?”

If you have children, you’ve heard similar promptings from your children inviting you to engage with them and participate in their lives. And, if we’re being honest, we’ve all had those moments – head buried in the cell phone – where we’ve mechanically responded, “not now, honey” or “give me a few minutes.” 

While the occasional distraction is necessary, it is far more of an epidemic in our tech-savvy society than we would like to admit. How many times have we been out to dinner and seen a family disengaged, heads in their cell phones? Maybe you are that family and don’t realize it.

Psychologists and other experts all agree that this is sending a hurtful message to our children: “you’re not important”. And our kiddos agree. Fifty four percent of our children said they think we (parents) check our phones too often. And thirty two percent said we make them feel unimportant when we do this.

Dr. Jenny Radesky of Boston Medical Center, observed that smartphones and handheld devices were interfering with bonding and parental attention. Radesky said, “They (children) learn language, they learn about their own emotions, they learn how to regulate them. They learn by watching us how to have a conversation, how to read other people’s facial expressions. And if that’s not happening, children are missing out on important development milestones.”

Now I don’t need an expert or sociologist to tell me I’m disappointing my child. Their faces say it all. And since I don’t intentionally want to disappoint them and because of the higher emotional intelligence of my wife, who recognized this long before I did, we have implemented rules regarding usage of cell phones when we’re together. When I get home, the cell phone is put away out of reach and is not pulled out again until the kids go to bed. When we are together as a family, eating, playing, driving, the rule is: no cell phones. The odd thing is that I find myself having a Pavlovian response wanting to check it, as if I will miss something important. And I’m sure you do too. 

But I suggest, as someone who has made his fair share of mistakes when it comes to this point, that the only thing you’re missing is that precious time with your child. It has taken me getting older to realize that I can’t go back. Maybe that reality has hit you too. 

I love the convenience of technology and the benefits my smartphone afford me in business. But whenever I am tempted to neglect those sweet little moments in trade for some cell phone time, I remember the story a friend told my mother-in-law. A mom with four small kids was packing up to leave the beach. If you have ever had small children, I don’t need to say any more. And as the frazzled mom walked past an elderly couple sitting nearby, she overheard the women say to her husband:

           “I miss those days. I wish I could experience that one more time. I tell you,

           the days are long, but the years are short”

That changed our friend’s perspective and it changed mine too. I hope you give it some heed the next time you reach for your cell phone. 

Thanks for Reading

Will

Just try it today....

Good morning work force nation. Congrats to you for getting up, doing your thing, and making time to improve your professional awareness by checking out LinkedIn.

I know you have things to do, so I'll be brief. I just wanted to say that I decided to test a particular maxim yesterday and found that it worked wonderfully well.

The adage? "Smile and the world smiles back at you (or with you for those checking me)."

Now I am not a particularly gruff individual; many would call me jovial. However, I get 'caught up' in my own head when I am out in the world and I am not very aware of my visage....until yesterday.

Yesterday I purposed to smile at others. Not a creepy, lecherous smile (ha), but a sincere and engaging smile. And what did I find? You guessed it. People smiled back!

Most of the time, there was about a two to three second delay before they realized that my smile was directed at them. But, when it hit them, I noticed their face turn from austere (probably in their own head too) to radiant. Which made me happier. I felt like in my own little way, I was affecting change in my small corner of the universe.

We begin to see the first fleeting smiles in babies as young as three weeks old. And body language experts tell us that smiling is one of the oldest forms of communication. As our ancestors approached a stranger they would smile to say, “I am harmless. Don’t pick up your spear and kill me.” It showed a desire to cooperate.

Studies have proven that smiling releases endorphins and serotonin into the blood stream. The more endorphins your body releases, the better equipped you are to fight off illness. And serotonin is a natural anti-depressant. Simply put, it just feels good.

So, equipped with this knowledge, why don't you try it out today? Have fun with it and conduct your own mini, social experiment. Please come back and post your findings if you are so inclined. I know I would be interested and I'm sure that many others out there on LinkedIn might be interested too.

Have a great day!

Will

TOP 7 THINGS YOU SHOULD BE DOING IN YOUR BUSINESS (that others aren't):

1. Make a plan or set a goal – know your metrics – Almost every business owner knows that they should plan, but few often do it enough or do it properly. Yet most business owners agree that a ship should never set sail without a navigation system, a plane should never leave the ground without a flight plan, a teacher should never start a school year without a curriculum, or a sports team should never hit the field without a game plan….you get the idea. So why the disparity between what they know to be right and the application of that principle? I’m not sure. Excuses range from being too busy to a lack of understanding on the importance of planning. Either way, experts agree it is one of the major reasons why small businesses fail – it makes the list every time. 

I believe what makes this process a little daunting for the average business owner is that there are parts of the planning and goal setting process that are emotional and not quantifiable; things like determining what success is to them and identifying what parts of the business make them truly happy. It’s also very enigmatic to visualize you and your business 1, 5, and 10 years from now. 

Yet, other parts of the business plan need to be very transactional, quantifiable, and the methodology for calculation must be sound. These are the metrics, or KPIs, that drive the business and typically the things that most stakeholders want to see. 

So for the creative types and the dreamers, part one is a cinch. Part two is a challenge and requires a focus and attention to detail that seems boring and insignificant to most with this personality type. And obviously the analytics thrive on part two – to the point of analysis paralysis. However, they will often neglect part one because they see it a being useless and illusory.

If you are to embark on this journey of being primarily responsible for your own income (that includes you sales folks), you need to be able to capture both parts in your plan. You have to identify what are the metrics that will get you to your ‘happy’ and how many of those metrics it will take daily, weekly, and monthly to push you to point B. Once you have this, you can develop a plan of action that includes calendaring and behaviors that will help you execute and achieve these metrics. 

One footnote to this is that there is a universal metric that all entrepreneurs need to know: the value of their time. Once you know your metrics and the income producing activities that drive your business, you can calculate how much you get paid for each sale, close, transaction, etc. From here you can calculate how many of these occur within a given time frame and then deduce your hourly value. This is very important in determining what activities occupy your day (see Admin and Calendaring below).

 

 

2. Have a clearly defined E.O.S .– Explanation of servicesWhat do you do for a living? A question heard by almost everyone, everywhere: soccer games, network events, at church, and dinner parties. It’s the quintessential ice-breaker. The answer can often tell you if you are talking to a W2 employee or a business owner/entrepreneur. 

The employee will typically give you a short and succinct answer that includes job title and possibly a brief overview of job duties. Example: “I’m an HVAC service tech. I work for ‘XYZ’ company and I service large commercial and industrial HVAC systems here in Nashville.” 

The business owner, entrepreneur, or salesman, on the other hand, will try to give you a sales pitch within their description. Example: “I’m a Real Estate agent for ‘ABC Real Estate Group’. I help people find their dream homes. The market is really hot right now and rates are still really low. It’s a great time to buy or sell a home. If you know anyone who happens to be looking I would love to talk to them and show them how we can help them.” That ‘pitch’ is guaranteed to make someone run for a refill quickly. While that is an abbreviated and hyperbolic example, for the self-employed individual, there are facets of a poor ‘elevator pitch’ in almost every description of what they do.

Tom Love spoke at a seminar I attended recently and he described to the audience the importance of the EOS (explanation of services). EOS is a term Tom coined to refer to this cumbersome question about ‘what you do for a living’. Its roots are firmly planted in Simon Sinek’s highly lauded Ted Talk – “Start with why”. If you haven’t heard it – you must. 

Simon’s exposition changed Tom’s life and the way Tom described his life’s work to others. Rather than rambling on about what he does and detailing a rapid-fire list of product features, benefits, or related services, Tom begins with what he believes. Here is the process for a would-be entrepreneur to follow when developing the pitch:

1.      Always lead with what you believe not what you do.

2.      Tell me why you believe it.

3.      Tell me what it is you really do – reduce it to the ridiculous.

4.      How do you do it differently than everybody else?

5.      Who have you done it for?

6.      What is stopping us from doing business together? We both believe the same things.

Tom won’t say he’s been selling insurance and financial products for the last thirty five years. Instead he will start the conversation by saying:

 “In everything we do, we believe….. “ (speaking about himself and his team)

There is a fundamental difference in presenting someone with your core belief system and the reason behind why you get up in the morning versus telling them about the hottest new widget you have in your inventory. If your audience believes like you do and they can sense your passion, they will buy you. The product is ancillary. Try it out. Develop a solid EOS and see if it changes your business.

 

 

3. Hire an Admin – I once walked into a locally owned pizza shop in the Greater Nashville area and developed a rapport with the owner. They had the best gluten-free pizza and the freshest ingredients by far over the competition. The product was superb, I promise. But they are no longer in business. Closed in a little over a year. 

Why? I don’t have all the answers to this business failure but I can guess one for sure. When I first met the owner, I asked about what led him to start the business and what he was doing before. We’ll call this proprietor ‘Al’. Al told me that he used to be a regional manager for a pharmaceutical company – I know from our conversations that Al did really well in this position and made well into the six figures. What was he doing now? The work of a $10 an hour cashier and pizza maker.

I’m not suggesting that Al should not be involved in his business. What I am pointing out is that Al traded a six figure salary for a poverty-level position. This is a problem. And the fact is that most business owners are doing this very same thing daily. The self-employed are doing the work of an admin during a majority of their day rather than focusing on the IPAs (income producing activities) that keep the company alive and thriving. 

The word corporation has its origin in the Latin word corpus or “body”. You must treat your business as an entirely separate entity. Thus, it is very hard for the corpus or body to support itself and another person –specifically the owner. In the early stages, much like a newborn child, the corpus needs more resources and support to sustain itself. Without the influx of sales, capital, and the other life giving metrics that make the system go, the company will flounder. 

Al was spending time working ‘in’ the business rather than ‘on’ the business. He was not planning, marketing, steering or adding revenue; he was an employee doing menial tasks. Every dollar that came in the door had to be split between Al to support his household and the business to support operations.

My point? At every stage of the business, it is critical to make certain you are not doing work that you could pay someone else to do. Remember when you calculated your hourly worth above? You goal is to drive that hourly rate up and you can’t do that when you are filing papers or performing administrative tasks. You drive up that rate by doing what you do best: plumbers plumb, sellers close, coaches coach, and consultants advise. 

Take a lesson from Al. Don’t pay yourself to be a ‘cashier’ in your own business. A successful entrepreneur once told me: “If you wait until you can afford to hire an admin, it’s too late.” And if you can’t afford one right now, then make that one of your goals in step one. Calculate how many widgets you need to sell to be able to duplicate yourself and make it happen. In the interim, don’t spend your day doing administrative work – save that for the off-hours (see calendaring below). Instead, make sure you are spending a majority of your day on the IPAs and driving your hourly rate up and you will be able to hire an admin in no time.

 

 

4.      Hire a business coach and set up a life’s B.OD. – One of the main things missing from the lives of most business owners I speak with is accountability. Being the boss is awesome – awesomely cool at some times and awesomely crappy at others. But as mycoach says, “you can’t see the frame if you are in the picture.” That is why most self-employed individuals lack the benefit of perspective and accountability. They become stagnant in their thinking, complacent in their vision, and sloppy with their discipline. I cannot emphasize enough the value of a business coach and a life’s Board of Directors. 

The selection of a business coach is critical. Find someone who has achieved the kind of success you want to achieve – whether that is money success, awards, business growth, etc. Don’t pay for someone to teach you to climb a mountain who has never put on a climbing harness. Also, find someone who resonates with you personally. If you are a family person – look for someone who exemplifies the family/business life balance you are looking for. If you are a person of faith, look for someone who incorporates their faith into their business model. If you lack discipline, find someone who has demonstrated the ability to teach others discipline and who demonstrates discipline in their own life - both business and personal. 

I also want to see my coach being coached. You can call it coaching, or training, or guiding. Whatever you call it, it should be a relationship where there is a constant transfer of knowledge you did not have before, coupled with a plan of execution for your success, with regular accountability and follow-up for that plan. Everyone needs a coach: A pilot needs to be coached, a running back needs to be coached, your accountant needs to be coached, and every business owner should be coached.

My business coach is Michael Burt and his program Monster Producer gives me everything I need. He has a program and a system. He challenges me to look at my business from a different perspective. I get the benefit of others in the group giving me ideas. Everything is designed to give me the edge I need and the support and accountability when I need it; especially when I’m having one of those crappy days. 

Whatever you do, invest in yourself and hire a coach. I can guarantee your competition is and I promise you that if you don’t find the value in investing in your own success, others won’t either. 

Finally, put in place a life's board of directors. I typically suggest having one person you admire who operates in your industry, one from outside your industry, and one non-business person like a pastor, teacher, friend, etc. to round out the Board. You should schedule time with your Board individually for coffee at least once a quarter to talk about your vision, challenges and goals to get their feedback.

"No man is an island entire of itself; every man is a piece of the continent, a part of the main..." John Donne. Make yourself better, invest in yourself, invest in a coach, and assemble a life's board of directors. When you begin to operate 'as if' you were already successful by doing what the successful in business already do, you will begin to see the results you are looking for. But you'll still have those crappy days from time to time.

 

 

5.      Collect and publish testimonials – There are a lot of articles written about humanization of your brand and reputation management. However, most small to medium-sized businesses aren’t even aware of these concepts let alone putting them on their list of priorities for the year. Yet, testimonials remain one of the most effective ways to build trust and overcome skepticism according to Entrepreneur magazine. “They aren’t salesy” and they stand out as a beacon of credibility on your site and on your marketing collateral. 

If you look at how you operate as a consumer, I bet a majority of you will often read reviews before going to a restaurant, buying a car, selecting a computer, or downloading an app. These reviews are nothing more than captured testimonials – both good and bad. Your clients are looking for the same thing from you. A recent article on business2community.com summarizes it skillfully:

    “Any time a customer is being sold to, they are on their toes for deception. It’s only natural. Nobody wants to spend their hard-earned dollars and cents on a product presented as far more valuable than its reality. As consumers, we’re all more willing to believe in what’s being advertised if we can identify with the source of the information. Testimonials can provide the perfect way to bridge that gap.”

Make it a priority to ask for and capture testimonials after a job or service well done. You have earned that right. It will not only help you identify what you’re doing well but it will also help you identify when you have misstepped. This can go hand-in-hand with asking for a recommendation after the completion of a sale or service. Become adept at collecting, identifying, and posting the right testimonials for your business.

 

 

6.      Utilize a good calendaring system – How many entrepreneurs do you think plan their week using a block calendaring system that will help them achieve their weekly, monthly, and annual goals laid forth in step one? Do you? I suggest it’s probably a small percentage considering the first year failure rate for small business start-ups. 

I still struggle with this if I’m being honest. I have the system set up, but I’m operating at about 65% execution rate when it comes to weekly planning and calendaring – that’s one of the reasons I have Coach Burt. Let’s face it, I like most of you, am an entrepreneur. And an entrepreneur is a unique mix of drive, ambition, creativity, risk taking, with a bit of impatience, procrastination, and distractibility sprinkled in. Thus, my calendar is the first line of my accountability defense.

I explained to a friend recently that there is “Will the boss” and “Will the employee”. “Will the boss” needs to plan on Sunday for the week ahead so that “Will the employee” doesn’t get off task. I also find it very helpful to block activities to allow for fluidity within the calendar while providing the opportunity for momentum on any given task.

For example, you may choose to do marketing on Monday morning from 8AM to 10AM, Sales calls from 10AM – 11:30AM, follow up from the prior week from 1PM – 2PM, and so on. Many productivity experts advocate the block calendar system since it allows for focus on a particular activity for short bursts of time. You should even calendar email checking and other non-income producing activities during non-business or non-green time hours. 

Green time hours are the hours you shine. It’s when you customers are available, when your business can generate activity. You don’t want to buying napkins for the break room during these times and a well structured, blocked calendar can make certain you don’t do this by providing a time when you can.

 

 

7.      Schedule time off – The blessing of being the business owner is you’re the boss. The curse….you’re the boss. If you’ve been self-employed for any length of time, you understand that working for yourself is not as glamorous as the W2 world believes it to be. Yet there is nothing I would rather do than work for myself. Because of this, I know I have to keep the passion for my business and go to bed every night happy about what I do.

To achieve this, I schedule personal time off for myself. I’m not necessarily suggesting that you have to have several weeks off a year – although many would argue and prove out that we are more productive just before and after taking vacations. But you can schedule in mini respites away from your business. For example, maybe you can go home after lunch on Wednesdays, or go in later on Tuesday’s and Thursday’s so that you can go to or have breakfast at home with your wife or family. Whatever your family’s schedule, make time for yourself and for them.

Don’t think this is important? According to the Harvard Business Review (https://hbr.org/2015/08/the-research-is-clear-long-hours-backfire-for-people-and-for-companies) it has been proven that there is a point of diminishing returns for someone who overworks. There are health and family problems that follow. 

The point is that you not only have to love what you do, but your family and your spouse do as well. You can kick against the proverbial goads and second guess this, but you will find that your life has to have a balance between the things that make it meaningful – such as family time, personal growth, physical health, money/business pursuits, spiritual time, and whatever else makes up the spokes on your life’s wheel. 

Make time for yourself and develop a balance for the things that matter most in your life and you and your business will grow in ways you couldn’t have imagined.

4 UNMISTAKABLE LESSONS LEARNED ON WHY YOUR SMALL BUSINESS COULD FAIL

1.  JUMPING IN TOO QUICKLY WITHOUT ALTERNATIVE SOURCES OF INCOME

I want you to pretend with me for a moment that you needed to support your family playing the violin. You have never played the violin before, but you need to play concert style compositions to make enough to support your lifestyle needs. And you must learn it in a short amount a time – at least in a month so you can cover next month’s bills. Does this sound like a Sisyphean task? 

Of course it does! Yet this is what most would-be entrepreneurs do. They jump into a business very quickly without another source of income. Thus, they have burdened themselves with all the intricacies of learning the business - its customers, its competitors, the regulatory environment, the suppliers, the metrics, the opportunities, etc. – all while trying to deliver the products and services that make money. The worst part is that even if the business starts to cash flow immediately, the resources are drained and diverted into the personal accounts of the owner. 

Most solo-preneurs jump in way too fast and count on their new venture as their only source of income. I’m not saying I haven’t seen it done, but statistics prove that new business startups fail more often than not. I believe that one of the primary factors is that the propagator of the venture relied solely upon this new ‘corpus’ to provide a personal revenue stream. 

If you’re going to dive into working for yourself, make sure you have other sources of income apart from business operations. A part time job, retirement income, or other passive income that is not derived from business operations can make sure that you continue to eat and that your business has all the funding it needs. 

 

2.  NOT HAVING A CLEARLY DEFINED GOAL

Most entrepreneurs I talk to, speak of something called the entrepreneurial curse. To me, it has become synonymous with “I’m distracted”. I will consider every opportunity, and I will begin new business ventures, segments, and ideas without perfecting or even being profitable in the one I’m in.

New entrepreneurs are known for this. In my business, I ask simple questions of the principal: “How will you make your money today? What will your business be known for? What is the quickest path to the dollar? How do you do ‘x’ better than anyone else?” I tell them, especially in the early stages, that you need to be an innovator and not an inventor. Being an inventor early on can often cause you to run out of time and resources before you identify a market large enough that is willing to pay for your new invention.  Find an existing need…. a big enough need….and find a way to deliver it better than anyone else. 

If you’re the guy who has a great idea to broker scrap metals, while growing a trucking business, and a real passion for developing a janitorial company, which will feed the retail side of your new and improved ShamWow product…. you’re on the road to failure. The scattered approach that is synonymous with most start-up ventures is a sure-fire way to tax mental capacity, drain financial wells, and put your business on a road to nowhere that will ultimately end up in your brand fading into obscure oblivion.

 

3.  NOT KNOWING THE NUMBERS

Pastor: “Good morning church. I would like to ask for your kind donations to the new building fund”

Parishioner: “Sounds great. How much do you need?”

Pastor: “I don’t know”

Parishioner: “How long will it take?”

Pastor: “I don’t know”

Parishioner: “How many more people will the new building seat”

Pastor: “I don’t know. But how much are you willing to give my dear friend?”

Parishioner: “I don’t know….”

This exchange is simply a silly illustration to spotlight the callow thinking of newly ordained business owners. Most of the new entrepreneurial flock I have encountered have no idea about their margins, what their break-even point is, their close ratios, their weekly prospecting targets, or any other relevant metric important to the business. 

There are numbers everywhere in business. Numbers related to inventory, sales, profitability, debt servicing, cash flow…you name it. And a successful proprietor should be familiar with most them.

However, if you don’t have the time in the beginning to do an in-depth analysis, you should at minimum be familiar with:

  • What does the business need to earn in revenues this year to keep the doors open. This will consider net earnings, so you will need to know cost of goods sold, tax rates, salaries, and other general and administrative expenses. Then, work backwards from there to develop a weekly revenue target.
  • How many people do I need to talk to hit that revenue target. This will consider your close ratio which can be affected by your industry, the target demographic, the competitors in the market, and your skill-set, among other things.
  • Based on the numbers above, when will I be able to hire an admin, buy more inventory, invest in marketing, etc.
  • Monitor your sales and revenue numbers weekly, monthly, and quarterly. Identify trends. Make certain to keep good records so you can make correlations between your activities/behaviors and upward or downward trends.

I could continue with a laundry list of relevant metrics. But the point to take away is to be familiar with the numbers that drive your business and your industry. Proceeding without this information would be like endeavoring to construct a building without ever considering a single number.  

 

4  GOING IT ALONE!

My business coach, Michael Burt, often says “you can’t see the picture if you’re inside the frame.” I couldn’t agree more. Most of the clients we sit down with in our consulting business are highly intelligent and highly creative. There are some that are successful millionaires. However, they all need the benefits of having an objective eye placed upon their business.

Most thriving and larger businesses have many objective eyes: leadership coaches, management consultants, CPAs, Attorneys, marketing agencies. The companies that leverage the knowledge and expertise of others are often the ones that have achieved or are achieving success. 

Still, most solo-preneurs will never understand their own need for outside resources. And these resources don’t necessarily have to cost money to engage. They can be a former colleague, an interested spouse, someone you met at a networking event or on social media. Either way, it is very strategic to have a knowledgeable person consider your operations, your brand, and your focus, in order to help you avoid the wasted time and resources of the usual pitfalls.

Plus, having another person consult with you opens you up to their network and their common body of knowledge. Yet, XYZ LLC company will often see its owner trying to be accountant, marketer, HR specialist, IT support, and practitioner all at once. And that is usually never a successful proposition. 

 

Thanks for reading,

Will