For Start-Up, It’s a Tweak Here, an Experiment There (NYT)

For Start-Up, It’s a Tweak Here, an Experiment There

By BRENT BOWERS

This is the third in a series of three articles about start-ups and their founders’ hopes for the year ahead. The first appeared Dec. 13 and the second on Dec. 19. This column will return to all three after six months, and again after one year, to compare their achievements with their original goals.

Jeff Takle’s philosophy about starting a business comes down to this: Take your time.

He and a friend officially formed a company, RentingYourHome.com, at the end of 2006. Ever since, they have been tinkering with it, learning the laws in more and more states as they expanded the company’s Web-based tools for property management for landlords.

“We viewed 2007 as a trial period, a time to experiment and refine our product,” said Mr. Takle, who is 33.

At the start, investors showed scant interest in their company, and potential customers were wary. Revenue for the year will be well below $50,000. But Mr. Takle says he has learned enough lessons in the last year to write a book. This coming year will be the real test of his product, he says.

Other people in the property management software business are not as optimistic about Mr. Takle’s business plan. Janet Portman, managing editor of Nolo, a provider of legal information for consumers and small businesses, and the author of several books and a column about real estate issues, said she believed he would have a hard time expanding his offerings to all the cities and states he is aiming at. His goals for the year ahead struck her as optimistic, at best.

Mr. Takle remembers taking only one entrepreneurial initiative as a child — pestering his pastor to let him do more around the church. But his drive manifested itself at Boston University, where, he says, he was one of the smallest wide receivers in the school’s history, and in the Marines, where he commanded a platoon.

He started a business, HGrail, in 2003 while still in the service, to manage half a dozen rental properties, having learned the basics from handling several he had accumulated as the result of job transfers.

“I tried to come up with solutions to the most annoying aspects of being a landlord,” he said. “I came up with a customized lease template,” he said, unlike the generic versions on the market. “I wanted a water bed addendum.”

At some point, he decided that instead of managing properties for other people, he should develop Web-based software for them to do it themselves. So he closed HGrail and teamed up with an old Marine friend, Daren Dewbre, a code-writing whiz, to create RentingYourHome.com in Somerville, Mass., aimed at owners of one to 20 rental units.

His software, he says, helps them do advertising, run credit checks, collect rents, find good plumbers and perform other once time-consuming chores at the click of a button and at a fraction of the fees charged by traditional property managers.

Property management software has been around for 20 or 30 years, Mr. Takle says, and landlords have hundreds of programs to choose from. But until now, it has not been economically feasible to provide such a wide array of services to small-scale landlords at a profit, he says. Rapidly evolving technology has changed that, providing an opening for upstarts like himself.

“Millions of homes are not managed profitably or efficiently,” he said. If his software catches on, he said, he hopes to increase revenue to $10 million to $15 million within three to five years.

Mr. Takle acknowledges that that is brave talk. But, he adds, that is where the importance of tinkering comes in. The lessons they learned, he said, are invaluable.

He noted, for example that he and his partner spent a lot on direct-mail advertising and got almost no reaction. They then turned to the Internet to advertise their software, and quickly acquired customers.

Perhaps their biggest challenge was their expansion from their home base of Boston to 35 states and many more cities. Suddenly, they faced a mind-boggling (and often shifting) jumble of regulations on tenant rights, rent limits, security deposits, lease clauses and eviction procedures.

His solution, he believes, is strategic alliances.

“We have formed relationships with people who are familiar with all the different state and local regulations and codes — law firms, property-management companies, real estate brokerages, real estate advertising companies,” he said. “For legal help, we have partnered with a national law firm and with a national collection agency.”

The value to those partners, he said, “is the prospect of teaming up with a company that has intimate knowledge of tens of thousands of landlords.”

Through trial and error over the last year, he said, he and his partner have also gained other insights about running their business, like agreeing on a division of labor and farming out accounting and other tasks outside their expertise.

Mr. Takle plans a marketing campaign in the spring, and expects to increase his business from managing “several hundred” properties to 1,000 by the end of June. Then, he said, he hopes to be able to leverage his company’s size to cut deals with other companies, like steeper discounts from Roto-Rooter for providing plumbing services.

Already, he says, previously reluctant investors are beginning to show interest, putting him on track to raise at least $500,000 in 2008. But Ms. Portman of Nolo sounded a note of caution. “He’s not the first one to do this sort of thing,” she said. “There’s lots of software out there.” And none except her company offers a lease that is complies with state laws in all 50 states — meaning, she says, that Mr. Takle’s effort to create a leasing product in all the areas he is aiming at may be an insurmountable task.

“He says he’s consulted with national firms, but you aren’t going to find a law firm that has a presence in 35 states,” she said.

Ms. Portman also questioned RentingYourHome.com’s assertion that it can eliminate “landlord headaches.” The biggest headaches are tenants who have sterling credit but a history of making trouble, she said, and the only way to identify them is to pick up the phone and call their former landlords, she said. “I think he overpromises,” she said.

Mr. Takle conceded that he will not be able to update the leases he offers on a day-by-day basis, as Nolo probably can, but said the law firm he is working with, its partners, state and local Realtors associations and Web sites that offer legal forms like uslegalforms.com can provide him with sufficient material to offer state law-compliant leases anywhere in the country.

As for resolving all headaches, he said, “she makes a good point.” But he said he believed his company had streamlined the most onerous tasks and provided sound advice to landlords on the ones they have to do themselves.

Even so, he said, his year of experimentation has taught him is that the best-laid plans can go awry if the money runs out.

“Let’s just say I’m encouraged by stories of other entrepreneurs who tear their hair out,” he said. “It’s part of what being an entrepreneur is. Sure, it’s fun, it’s exhilarating. But when you see money going in one direction, out, and not in the other direction, in, it can be tough.”

Home-Office Life and Its Discontents (NYT)

Home-Office Life and Its Discontents

By RALPH GARDNER Jr.

BEFORE they were married in September, Nicci Young and Richard Wiese first had to split up. The problem was not romantic, but spatial: Ms. Young Wiese, who organizes community development safaris to Africa, and Mr. Wiese, a writer and explorer, found that their Upper East Side one-bedroom was not big enough for the two of them after both decided to work from home.

“He kept talking to me about his work, which is very interesting, but it was really taking time out of my workday,” Ms. Young Wiese said. “And when I was alone there was a sense of loneliness and procrastination.”

Mr. Wiese, who is writing a how-to book about exploration for teenagers, acknowledged the problem. “Nicci tends to be a lot more intense,” he said. “Especially with lighter work, I can be watching a ballgame. If I saw a funny e-mail coming through I’d want to share it. I’d get these glances from her, like, ‘I’m working!’”

Ms. Young Wiese is one of many of the millions of Americans now working outside traditional workplaces who have found themselves surprised by how difficult home-office life can be. It requires strict self-discipline and an ability to tune out spouses, children and pets. For the more sociable or emotionally needy, it can feel like house arrest, especially if the phone hasn’t rung in a while.

Ms. Young Wiese’s solution was to rent space in a communal office, an increasingly popular option for those who can afford it. (According to Sara Horowitz, the executive director of the Freelancers Union, a nonprofit organization that advocates for the self-employed, the use of communal work spaces has been on the rise among members for about three years, “and in the last year it’s started accelerating.”) Those who can’t afford a separate space, or who find home too convenient or rewarding a workplace base to give up — learn to live with the challenges, coming up with smaller-scale solutions over time.

One of the hardest adjustments for those working from home is deciding when to take a break, and when to quit for the day. With the computer always beckoning and the commute measured in the time it takes to cross the living room, there’s always a reason to go back to work — or an excuse to avoid it. “It’s sort of a guilty feeling — I should be working,” said Kathy McHugh, a headhunter for high-tech companies who has worked out of her Manhattan apartment on and off for several years. “My office is two feet away.”

Children can be a distraction, as Barbara Magnoni, an international development consultant, discovered when she and Magali Montes, a business associate, tried to hold meetings in Ms. Magnoni’s apartment after picking up their children from school. “We’d meet at home with our kids running around and they would think it was a play date when it actually wasn’t,” Ms. Magnoni said.

Sid Holt, a media senior vice president whose office is in a barn a few steps from his house in northern Westchester County, described the difficulty of pacing himself. “There are no cigarette breaks,” he said. “You’re either working too hard or not hard enough.”

Mr. Holt said he finds it helpful to schedule his time in a way that mimics the nine-to-five life of his years spent working in a New York office. He tries to keep to a routine that includes breakfast at a local coffee shop — reminiscent of his ritual of picking up coffee and a bagel at Grand Central Terminal on the way to his former job — and a 10 a.m. conference call with three other employees of go2Media, a Boston-based mobile Web service for which he oversees editorial content.

The conference call and frequent e-mail exchanges with other employees contribute to a sense of accomplishment that would be harder to achieve if he were working entirely on his own, he said. And they also help him to feel that he has earned the reward that once greeted him on his return from Manhattan, and that he still uses to punctuate the day. “I say to myself, there’s a martini waiting for me down at the house and I’m leaving now.”

For home-office workers who aren’t in regular touch with colleagues or clients, a frequent complaint — even among those who say they are distracted by other members of their households — is of isolation. David Behl, a photographer whose studio is connected to his TriBeCa loft, said he enjoys working at home when the jobs are pouring in and the studio is filled with clients and assistants. But at other times, he added, he misses the studio he used to share with two other photographers. “You don’t see anybody,” he said. “You don’t go out for lunch. It’s easier to get depressed because there’s no one to complain to.”

Ms. McHugh said that business lunches can be a lifeline after a couple of weeks working from home, and that she often finds herself glomming onto her daughter when she gets home from high school in the afternoon. “I’m happy to see somebody who’s out in the world,” she said.

These issues have been observed at I.B.M., where a “mobile workforce” strategy has led to 30 percent of employees working full time from home (as well as a savings on office space that the company estimates at $100 million a year). “We found if you’re working from home and do not have an interaction with someone from work, or a client, or a physical meeting, after three days you start to feel isolated,” said Dan Pelino, who manages I.B.M.’s mobile workforce program. Soon after the company introduced the program in 2001, he added, “people have said to me, ‘I.B.M. stands for ‘I’m By Myself.’”

The company has tried to mitigate this problem with “mobility centers,” communal spaces that it maintains wherever it has offices, offering desks, phone and Internet lines, and office equipment for the periodic use of home-based workers.

It has also promoted “I.B.M. clubs,” meant to encourage employee bonding. Club members have taken day trips together to a zoo, traded cookie recipes and “gone to a race track and learned how to be a Nascar driver,” Mr. Pelino reported.

For those who can’t depend on corporate beneficence, it is now possible to rent a desk or office in communal work spaces all over the country. The Regus Group, a Dallas-based company that rents temporary office space around the world and has 17 locations in Manhattan alone, has been doubling its American business every two years, according to Guillermo Rotman, the company’s chief executive for the Americas. In addition to cubicles and individual offices in various configurations, its spaces all have business lounges with sofas, armchairs, Internet ports, coffee machines and companionship for those seeking it. (The company also sells $300-a-year passes to its business lounges, which number 950 around the world and cater to itinerant laptoppers.)

One Regus client in New York, David Robertson, said he had been looking forward to working at home from his lower Manhattan apartment when he took a job in 2006 with a start-up company that licenses images from college sports events, but that he lasted less than three months.

“There seemed to be a lot of distractions,” he said, “whether it was my children, or the refrigerator, or some home improvement project that was just sitting there staring at me.”

His company pays slightly less than $1,000 a month for the cubicle he selected over an office with a closing door because it presented more opportunities to socialize. He now wears a suit and tie to work when he wants to, and enjoys the reassuring cadences of the nine-to-five world, as well as the camaraderie of his new office mates.

“It’s not like they’re best friends,” he said of his fellow business lounge denizens and the Regus staff members who are there to support them. “But they’re adults you can have a conversation with.”

Ms. Young Wiese, who pays $650 a month for a desk in a communal office in a private house near her apartment, said she, too, is happy to be surrounded by office mates who are friendly, if less gregarious than Mr. Wiese. They share job leads with one another, they go out to lunch. (She added that she prefers these relationships to those in a traditional office. “You have this collegial atmosphere, but it’s not fraught with any work issues or roles or responsibilities,” she said.)

Several of them are women who, like her, have abandoned their home offices to their work-at-home husbands. Abby Vaughn, an advertising representative for Canadian newspapers, actually took over her husband’s space at the communal office when he was dismissed by the office manager after two weeks because his telephone manner was too loud. He is once again selling market research from home, while Ms. Vaughn goes off to the rented cubicle.

“He’s worked from his apartment for two years,” his wife explained. “He wasn’t used to being around people.”

Bracing Small Business in a Turbulent Economy (NYT)

Bracing Small Business in a Turbulent Economy

By ELIZABETH OLSON

THE Bush administration and others have praised small business as the engine of American job creation, but small-company owners are being squeezed by the shaky economy and rising health costs.

Their chief advocate, the Small Business Administration, has been criticized as ineffective by Democrats in Congress, by women who own businesses and by other advocacy groups. Its budget has also fallen by a third since 2000. But the agency is trying to revitalize itself under the leadership of Steven C. Preston, who took over in July 2006.

Mr. Preston, former executive vice president of ServiceMaster, outlined steps the agency is taking to aid small businesses. Here are excerpts from the interview:

Q. If the economy is headed for a serious downturn, or worse, how will this affect small business?

A. The indicators still show a fundamentally strong economy, but small businesses are seeing higher fuel costs, higher health care costs and potentially a slower growth. So the cost factors as well as some of these other issues are affecting them.

Q. What is the S.B.A. going to do to help small businesses grow?

A. We already guarantee about $75 billion worth of capital supporting small business. We and our resource partners train or counsel about one and a half million small businesses every year. We support small businesses in the process of getting about $80 billion worth of revenue from the federal procurement programs.

What happens in a situation like we’re seeing right now is that these types of services become even more critical because we help lenders make loans to small businesses that they wouldn’t make loans to otherwise.

Q. Have you loosened any guidelines to make loans easier?

A. No, but what happens is that banks will use our loan guarantees if it is a business that maybe needs longer payback periods, or maybe an unconventional structure or may not quite meet their credit standards. So in a situation where banks are pulling back on credit somewhat, having our guarantee becomes more important in reaching those businesses.

Q. Can you do anything to push them to be more lenient?

A. We have a nationwide effort going on right now to spend time with banks to make sure that they are looking at using all of our products where they are relevant. I personally am getting involved in outreach to major banks to make sure they are helping get capital to small business.

Q. The economic stimulus would double the amount small business can deduct for expenses. Why is this a good idea?

A. It encourages small businesses to make investments now, and provides them with the financial incentive to do so. And those investments fuel the economy. Secondly, they are making those investments to expand their business, or to leverage their employees through capital investments, or they’re upgrading their equipment.

Q. Is S.B.A. proposing anything for the upcoming government budget to shore up small businesses?

A. The uncertainty about whether the tax cuts, which are set to expire in 2010, will be extended, is hurting small business right now in terms of investment and understanding what their ability to deploy cash is going to be. If those taxes go up, they’re going to have less money to hire, less money to expand and less money to invest in their business.

Another very important thing is putting in place policies that reduce health care costs for small business. The president has been a strong advocate of small-business health plans, which allow small businesses to band together and buy health care through buying groups. It’s a simple way they can leverage size. In addition, he has proposed giving small businesses the same tax benefits that large businesses have in buying health care.

And we need to open foreign markets for small business. Right now, for example, small businesses represent 35 percent of our exports to Colombia. We want to open those markets so small business can expand their revenue base and increase our competitiveness.

Q. Why are these free trade agreements important?

A. One reason is that they provide better intellectual property protection so if you’ve got a technology product or a knowledge-based product, you’ve got to make sure they’re protected when they go overseas. And these agreements simplify the administrative process and make it faster to get goods over the border.

Q. What more can the agency do to counter criticism that it’s not doing enough to help small businesses, particularly those that are female-owned, to win government contracts?

A. Our contracts to women-owned small businesses reached $11.6 billion in 2006, a record level. It was also the largest growth in history, by $1.5 billion. The federal government hasn’t reached its 5 percent goal for purchase of its good and services from women-owned businesses, but we’re hitting records every year.

We are holding more outreach events and events to match businesses with buyers. We also have goals for all district offices to hold those events, and those have been ratcheted up this year. We are also providing technology tools so agencies can find the right small-business vendor to meet their particular need, and putting more S.B.A. people on site with federal contractors. We retrained the entire field network to help small businesses in the contracting arena.

So we are doing more than we ever have before — some of it’s people, some of it’s technology and some of it is extended outreach.

Small-Business Books That Break the Mold (NYT)

Small-Business Books That Break the Mold

By PAUL B. BROWN

Books aimed at the small business and entrepreneur audience far too often fall into two categories.

There is the “how I made $27 trillion in business, and you can too,” genre or the ones that say you only need to take care of customers (or cash flow or sales or something else) and you will be the envy of Warren Buffet and Bill Gates.

The following four do not fit into either mold, and if, for no other reason, are worthy of consideration.

Let’s start with the best, and work our way through the list.

“A Whack on the Side of the Head” (Business Plus), a book about increasing creativity, has just been reissued to celebrate its 25th anniversary and it easy to understand its lasting appeal.

The author, Roger von Oech, a consultant, has taken an abstract subject — how to think differently — and made it concrete by asking a series of questions, all of which involve breaking what he calls the “mental locks” that bind our thinking.

“Most of us have certain attitudes that lock our thinking into the status quo and keep us thinking ‘more of the same,’ ” he writes. “These attitudes are necessary for most of what we do, but they get in the way when we are trying to be creative.”

He suggests breaking the locks by acknowledging that they are there and forcing yourself to pry them open.

We are typically taught, for example, that there is one right answer to a problem. But, he says, keep searching even after you find it. After all, as Linus Pauling, winner of the 1954 Nobel Prize in chemistry and the 1962 Nobel Peace Prize, put it, “The best way to get a good idea is to get a lot of ideas.”

Perhaps one of the most appealing things about “How to Get Rich” (Ebury Press, 2006), is that the author, Felix Dennis — the publisher of Maxim, The Week and Stuff magazines, spends a lot of time discussing the mistakes he made. He didn’t understand that people who buy computer gaming magazines wanted a free game with each copy, as one of his rivals was offering. And he laments not diversifying into television and exploiting the internet.

That candor gives him credibility when he offers several warnings to entrepreneurs:

¶ Never be overoptimistic when it comes to day-to-day finances. “If cash flow is good, then no matter how badly run or poorly managed a company is, there is always a decent chance of turning it around,” he says. “But if a business’s cash flow is weak or failing, then the chances are it must shut down or be sold in the not-too distant future.”

¶ Never act big. You, and your company, should live below your means.

¶ Never skimp on hiring talent.

There are only four traditional business ideas in “The One Minute Entrepreneur” (Doubleday, 2008), the latest in the “One Minute” series by Ken Blanchard, this time assisted by Don Hutson and Ethan Willis. Here they are:

1. Revenue needs to exceed expenses

2.Collect your bills. Don’t let your customers use you to increase their cash flow.

3. Take care of your customers. “You work for them.”

4. Take care of your people.

But the appeal of the fable is not in the business advice, it is the relentlessly upbeat, encouraging message that if you work hard enough, and concentrate on the right things, you will be successful.

Like all fairy tales that have a happy ending, it would be nice to believe the message is true.

The premise underlying “Life Entrepreneurs” (Jossey Bass, 2008), by the consultants Christopher Gergen and Gregg Vanourek, is simple. The same principles that can make you a success in starting your own business — recognizing opportunities, taking risks and innovation — can lead to a more fulfilling life as well.

They argue that you can obtain the life you want by following exactly the approach you did in starting your business: You develop a plan, in this case for what a good life would look like, and you figure out how to obtain it.

That sounds simple in the abstract. But then, again, so does starting a successful business. Hard work is required in both cases.

An earlier version of this article misidentified Linus Pauling as Linus Paul.

Restaurants Produce Green Profits (Entrepreneur.com)

Restaurants Produce Green Profits

Any business can benefit from these strategies that appeal to consumers who want to support green operations

By Bill Roth | June 16, 2008

URL: http://www.entrepreneur.com/management/greencolumnistbillroth/article194882.html

Here’s why I am writing a two-part series about restaurants and "Going Green": According to the National Restaurant Association, almost a million restaurants in the United States generate more than $500 billion annually, employ 13 million people and provide 70 billion meals a year. The Green Economic Revolution has begun to take hold with restaurateurs, and they have lessons your business can learn.

One key element of "Going Green" is logistics. According to a study done by Martin Heller and Gregory Keoleian with the Center for Sustainable Systems, University of Michigan, the average American foodstuff travels an estimated 1,500 miles before being consumed. This is not sustainable at today’s fuel prices. And transportation accounts for approximately one-fourth of our country’s greenhouse gas emissions.

Typical of how "Going Green" tangentially creates other benefits, restaurants gain competitive advantage by offering fresher, better tasting food sourced from local growers. This also contributes to the local economy’s prosperity and increases support for local restaurants.

Like your business, running a successful restaurant also requires cost control and aligning with the increasing consumer focus upon "Going Green." So what would such a green restaurant that does it all--has compelling taste, strong cost management with competitive advantages and aligned with consumer desires for healthy food--look like?

One example is a new franchise that has exploded onto the restaurant scene with the motto, “Saving the earth one pizza at a time.” The restaurant is called Pizza Fusion, and it is the first franchise I have seen engineered to build and run a national green restaurant chain.

Pizza Fusion has a holistic vision. More than 75 percent of its food is organic, and the rest is natural. It offers a gluten-free pizza for wheat-intolerant consumers.

“We have had customers drive a hundred miles to buy our gluten-free pizzas,” vice president Eric Haley says. How many of your customers drive a hundred miles just to buy your specialty product at your location?

Pizza Fusion has a line of vegan dishes, including breadsticks with no butter, brownies and pizza with soy cheese and no milk-based ingredients. It also has casein-free pizza to provide fun food to the autistic community (casein is the predominant phosphoprotein that accounts for nearly 80 percent of proteins in milk and cheese, and many autistic children suffer from what is called a “leaky stomach” due to their intolerance to casein).

Pizza Fusion also has strong cost controls on its energy, waste and water. It uses Energy Star Certified appliances, rated most energy efficient, and uses only compact fluorescent light bulbs that use one-third less energy than conventional bulbs. Overall, a Pizza Fusion store uses 30 percent less energy than a typical pizza restaurant.

The stores also reduce their waste stream and associated costs through a supply procurement system based upon a 60-day decomposing goal that is enabled by food containers made from 100 percent corn starch and utensils that are made from 100 percent potatoes. They install low-flow faucet aerators that cut water waste by 40 percent. They use low-flow, dual-flush toilets and waterless urinals. They even give customers 25 cents off their meals for every pizza box returned for recycling. And deliveries are made by company-owned hybrid cars, which lower fuel costs and bring more cost savings. Cha-ching--straight to their bottom line!

So the question is: does "Going Green" sell?

“What we are seeing is that customers are voting with their dollars in support of businesses that are offering green solutions,” Haley says.

The business results of this consumer trend for Pizza Fusion mean 70 franchises sold in about a year covering approximately a dozen states with 10 store openings and another 15 anticipated by year’s end.

So, do you want to make money in this Green Economic Revolution and create sustainable competitive advantage? The steps outlined by Pizza Fusion are compelling:

1. Make sustainability the core element in your product design, cost management and branding to increase your margins and gain competitive distinction.
2. Identify and supply those green specialty products that mean something special to customers searching to buy green.
3. Invest in technologies that reduce costs and emissions to gain sustainable cost control and reduce exposure to higher fossil fuel and water prices.
4. Doing green (vs. going green) creates binding customer loyalties generating sustainable revenues.

Try these four green elements in your business. You may be surprised to find your customers and work associates have been waiting on you to capitalize on their enthusiasm, creativity and loyalty. And if you are looking for a business opportunity, start investigating franchises like Pizza Fusion that are designing strategies targeting the emerging $4 trillion Green Economy.

And don't miss part two of this series that will outline a grassroots path for "Going Green."

Bill Roth is president of NCCT, a San Francisco-based consulting firm facilitating innovations in sustainability marketing and green business strategies. In addition to participating in the launch of the first hydrogen-fueled Prius, he has held executive leadership positions as senior vice president of marketing and sales with PG&E Energy Services, as COO of Texaco Ovonics Hydrogen Solutions and president of Cleantech America, a developer of solar power plants. Roth’s latest book, On Empty (Out of Time) details an emerging multi-trillion dollar green economy that is revolutionizing how the world does business, and how you can make money from it.

Use Your Leadership Style to Make Your Best Business Plan Yet (Entrepreneur.com)

Use Your Leadership Style to Make Your Best Business Plan Yet

Find out what kind of a thinker--and business owner--you are by asking these strategic questions.

By Tim Berry | July 24, 2008

URL: http://www.entrepreneur.com/startingabusiness/businessplans/businessplancoachtimberry/article195854.html

Funny, isn't it, how just getting started is often the hardest part? I think that's true of business planning. Avoid the inertia. Get started, get going and don't wait.

How do you get started? It's important to realize there are many different ways, and the best choice for you depends on the way you like to work.

In Start with the Review Schedule, my March 2008 column, I suggest that you start by setting the review schedule. That's still one of my favorite starting points, because it sends a clear message about what the planning is about and how it'll help your business.

However, maybe you're a concept person, a strategic thinker. That's great. Stick with that, and start your planning with what I call the heart of the plan, the core strategy. Take a step back from your business and ask yourself four key strategic questions:

1. What am I really selling?
   Ask yourself why people buy your product, what they're getting from your business that they can't get elsewhere, and what wants and needs drive their decision to buy your product.
2. How do I want my customers to think of my business?
   Ideally, what words or phrases would they use to describe your business to a friend? Are you reasonably differentiated? What's the key message customers should be getting?
3. What am I really good at? What do I (my company) do better than anybody else? Am I correctly focused on that core competence?
4. What do my customers want that I'm not giving them?

But perhaps you're more comfortable with numbers than concepts. That's not a problem; no apologies necessary. In that case, consider these three tips:

1. Do a sales forecast. Break your sales into components, such as specific products, groups of products, channels or buyers. Project it if possible into units, price per unit and cost per unit (not always possible, but a good idea when you can do it). You'll discover that as you project your estimated sales, you're thinking about some of the core strategy questions above, which will be implicit in your numbers. And once you have a sales forecast, you can start tracking results, which leads to your planning process.
   
2. If you're a startup company, estimate startup costs. That includes expenses that occur before your first day of business, such as legal expenses, fixing up a location, developing prototypes; and the assets you'll need to start, such as equipment, starting inventory, and--oh, yes--cash in the bank.
   
3. Estimate your expense budget. If you like, call it a burn rate. What do you think you'll be spending for rent, payroll, utilities, marketing expenses and everything else? As with the sales forecast, this gives you something to track, so you can start planning.

Alternatively, perhaps you like to-do lists better than numbers or concepts. In that case, start your plan with milestones: dates, deadlines, business activities, how much they're going to cost, how much they're going to produce. These are concrete specifics.

The key here is to get started and get going. People are different, so start anywhere you like; it won't matter. You'll fill in the rest when it's needed. This way you'll be able to see results quickly, and that will help you stay motivated as you do your planning.

Tim Berry is the "Business Plans" coach at Entrepreneur.com and is president of Palo Alto Software Inc., which produces the industry's leading business planning software, Business Plan Pro, as well as other popular planning applications for businesses.

For Real Planning, Start With the Review Schedule (Entrepreneur.com)

For Real Planning, Start With the Review Schedule

Stop letting all your management plans slip through your fingers with efficient meetings that track progress.

By Tim Berry | March 13, 2008

URL: http://www.entrepreneur.com/startingabusiness/businessplans/businessplancoachtimberry/article191304.html

My favorite suggestion for your business plan this month is that you go--right now--into your plan and set up its review schedule.

That's right--I hope it surprises you. Why worry about the subtleties of an executive summary, language or a market analysis if you don't have the most important element for actually using and working a plan?

Planning isn't complete unless you've planned for review. People in management should know that initiating any plan is only one part of managing that plan. Much like steering a car, you also need to make necessary course corrections every now and then without losing track of the long-term goals. Without plan reviewing, your business is like a car with a locked steering wheel.

To establish consistent review meetings, schedule a particular day for it, like the third Friday of every month. Make sure the main people involved are invited to those review meetings.

When you set the schedule in advance, it is harder for key team members to come up with reasons not to be there. Sure, occasionally there is some command performance that can't be helped, necessary business travel, people sick, or whatever; but having the dates ahead of time makes the plan review more likely to happen.

And if you're running your business alone, or there's just two or three of you, it's still a good idea to set the review schedule. People need reminders. It'll also help you to remember review key points, your main assumptions, and where you want to go with your plan. We all forget sometimes, so we need a reminder to take a step back, and look at the larger picture.

Here are some tips for making your plan review as useful as possible:

• Start your review meetings by discussing key assumptions. This is why it's so important to list those assumptions so they're fresh in your mind.

• Keeping changes in strategy and changes in assumptions related to one another.

• Keep review meetings as short as possible. One of the biggest threats to an effective planning process is spending too much time in meetings discussing the same things.

• Emphasize metrics. How do actual metrics compare to plan metrics? Discuss variances, the differences between the planned and the actual numbers. The obvious metrics are the financial results, but don't let those be the only metrics.

• Be aware of the "crystal ball and chain" phenomenon. Don't let planning become a no-win game in which people commit to future metrics that come back to bite them. Make sure planning is collaborative, so that it's always understood that change can happen and when managed, is good. Planning helps us manage change; it doesn't keep track of how bad we are at predicting the future.

Even though it may feel unnatural, the plan-as-you-go technique I described in last month's column will soon become second nature. Sometimes people don't want to record their plans for their peers. Setting the review schedule in advance sends the message that this plan will be tracked, reviewed and managed, which makes it that much more important to every employee involved.

Tim Berry is the "Business Plans" coach at Entrepreneur.com and is president of Palo Alto Software Inc., which produces the industry's leading business planning software, Business Plan Pro, as well as other popular planning applications for businesses.

High Gas Prices Hurting Small Businesses (NYT)

High Gas Prices Hurting Small Businesses

By MICKEY MEECE

It has been a bruiser of a summer for small businesses that must be on the road every day.

Gasoline prices may have moderated a bit lately, but business owners are still smarting from the run-up in prices this year.

John Nicholson, owner of Company Flowers & Gifts Too in Arlington, Va., was on Capitol Hill this week to tell members of Congress how his business has had to absorb higher costs. “Higher gas for our van alone runs more than $12 per delivery,” he said, though he added that so far he has kept delivery charges at $9.50. “We don’t want to discourage our customers from sending flowers.”

Still, he added, “After awhile I guess we’ll have to raises prices.”

Plumbers, contractors, data couriers, florists, limousine companies and other small and midsize businesses that rely on driving to make money are adapting to a volatile landscape in different ways — whether through higher prices or creative, long-term fixes. Energy prices are still high enough, and the economy still slow enough, that the changes made in the last few months by those small and midsize businesses may well stick.

“As the economic outcome remains uncertain, small business owners are searching for innovative ways to reduce expenses and increase sales,” said Bruce D. Phillips, senior fellow at the National Federation of Independent Business Research Foundation.

In fact, the business owners say they are glad to make adjustments before the next problem arises. “You can only see into the future so much,” said David Rosenthal of Rosenthal Plumbing in Santa Cruz, Calif.

Every six months or so Mr. Rosenthal tries crystal-gazing when it comes to fuel prices. If he’s wrong about how much it will rise — as he was this time with his recently published pricing list — then his company has to offset the difference. “I don’t want to inflate prices to where it’s uncomfortable to our client base,” he said.

So Rosenthal Plumbing adopted global positioning system technology this summer to track its fleet of service trucks so it can deploy them more efficiently and increase the number of jobs technicians can handle in a day. It will soon install mobile navigation devices in each truck so that his employees can find the fastest routes to save on fuel costs.

The high gas prices this year cemented a decision by Sam’s Limousine and Transportation in Houston to head in a new direction. It decided to sell its last two limousines, which seat eight. Replacing them are other vehicles to transport passengers, including party buses, sport utility vehicles and Town Cars. The party buses seat 16 to 20 passengers and have, according to the company’s Web site, “soft, black leather couch seating, a mirrored stargazer ceiling, opera lighting, laser lighting, strobe lighting, DVD screens and a custom stereo and sound system.”

Ron Jones, vice president of the company, said it has recently seen “an increase in larger groups pitching in and going out together,” which makes the $130-an-hour rate affordable for a night out.

“This is something that’s been going on for a year now,” Mr. Jones said. “We have completely changed how we do business” to accommodate those groups by buying four buses this year.

What small business owners say they fear is that they will lose customers because of higher costs, putting even more pressure on their bottom line. In a recent survey by American Express, the percentage of business owners reporting that they have lost sales, like an inability to deliver an order, has doubled to 35 percent from 17 percent last fall.

The semiannual telephone survey of a representative sample of 621 owners this spring found that small business owners are being squeezed by higher energy and gasoline costs. A third said they had raised prices, up from 26 percent last fall.

RDS Delivery Service in New York, for instance, has raised prices this year. If not for diversification, it would be suffering the typical summer slowdown, plus the ill effects of rising fuel costs, which have hurt its small business customers.

Larry Zogby, its president, said the family-owned company added document storage and retrieval as well as critical parts and retrieval services to its courier businesses.

It also now allows customers to store goods in its warehouses and will pack orders and deliver them upon request. The idea is to build a “longer and deeper relationship” with customers, he said, and of course, not be completely reliant on its main business — messenger and courier services in the New York region.

This summer, he said, he has seen more than a few smaller customers go out of business. One owner told him, “If you’re flat, your ahead of the game.”

The National Federation of Independent Business Research Foundation, which surveys more than 3,500 owners via mail every four years about problems of greatest concern, reported in June that energy costs, excluding electricity, were the second most pressing concern after the cost of health insurance. Energy jumped two spots from the earlier survey.

The primary energy cost for 38 percent of the companies responding to the survey was operating vehicles. Most small businesses cannot afford to switch to more energy efficient vehicle, the authors pointed out.

“For four years, the economy provided a good, stable foundation for small business owners to do business,” said Mr. Phillips, author of the report with Holly Wade, a policy analyst. “But as it started to take a negative turn over the last several months, they felt the effects of rising costs of doing business as reflected by these results.”

Family-Owned Businesses (KQED)

Family-Owned Businesses (click here for show)

Many of the most successful global corporations started out as family businesses -- but from sibling rivalries to succession dispute issues, these companies face numerous challenges. We examine the trials, tribulations and joys of the family business.

Guests:

• Amelia Ceja, president of Ceja Vineyard, a Napa winery founded by the area's first generation of Mexican-American producers


• Kent Rhodes, visiting professor of leadership and ethics at Pepperdine University and an associate and consultant with the Family Business Consulting Group


• Lou Lucaccini, adjunct professor and research associate at the School of Business and Management's Family Business Center at the University of San Francisco


• Mary Everett, owner of the Everett and Jones Barbeque Restaurant, a family-run business with seven restaurants locally


• Maryles Casto, founder and CEO of Casto Travel, the largest privately-owned travel management company in Northern California and the largest travel agency in the Bay Area


• Steve Radford, senior vice president for Radford Surveys + Consulting