Tuesday, June 25, 2013

3 Unsexy Business Secrets that Work Every Time

It’s probably pretty obvious by now that I believe in planning. 

That wasn't always the case.  

It’s based on my twenty years of small business experience.  Especially the part of that experience we euphemistically refer to as “learning.”   The same “learning” that’s haunted my dreams and affected the very trajectory of my life (but let’s save that for another post, shall we?)    

Now that I'm older and wiser I believe the best shortcut in business is some sort of executable plan. *

Toward that end let me reveal my unsexy secrets.

1.  Define the business model.  Know what business you're growing.    

When I talk about business models what I'm really asking is, “Who does the business serve and how does the business make money?”  Of course those two questions create even more questions begging for answers.     
Think about these questions:
·         Who benefits from the activity of the business?
·         What problem do you think you're solving for them?
·         How do you find that customer with the problem?  How do you find more of that customer?
·         How do you communicate how remarkable you are with the customer?
·         How do you actually generate revenue?
·         How much does that revenue cost? (COGS/Overhead)
·         And what’s the margin?

2.  Create the Plan.  How are you going to communicate the model?

The answers you gave to the above questions matched to your creativity will support you as you develop the plan. 

Your plan works best if it’s a written plan.  It also needs some sort of time management, implementation tool. 

Even if you create a fairly simple document it will pay you back by motivating you, helping you identify top priorities while eliminating time wasters or wasteful processes.  And of course don't forget the financials.   

3.  Work the Plan.  What will you do tomorrow?  The day after?

This is where the implementation timetable is useful. 

I hate to use the “d” word but to implement the plan we have to show a little restraint; a little discipline.   As Austin Kleon writes in his book “Steal like an Artist,” "Be Boring; it’s the only way to get work done." 

So there you have it.   I'm the first to admit that some of this you've heard a million times.  It's like that magical (yet unsexy) combination of diet and exercise resulting in a healthy life. 

Most of us have to hear it a million times before we'll actually do it.                

*I've said it before in several other posts but it bears repeating; I believe planning has the most impact in existing and expanding businesses not necessarily at startup.  

Monday, June 17, 2013

How I Lost 10 Pounds WITHOUT counting calories

Complicated best describes my lifelong relationship to sugar. 

As a kid, against my mother’s strict order not to take candy to church, I defiantly filled my tiny kid-purse to the brim with jelly beans one Easter Sunday.  As she sat in the pew, clapping her hands in praise,  my spirit was lifted higher and higher too as I consumed mouthfuls of the super sweet candy.

As a teenager I may have complained about cafeteria meatloaf but I still remember my love of the cinnamon rolls studded with dark raisins and the tart cherry goodie sweetened with brown sugar. 

And as an adult woman with the full responsibility of marriage and twins I continued my relationship with the sweet stuff always finding time for circus peanuts, spicy gum drops and buttery caramel corn. 

Needless to say this lifelong sugar journey has a dark, shadow side.  The dentist loves me.  Often times my stomach hates me.  And I forever need to lose ten pounds. 

The strategy I usually employ to reduce my body weight has me counting something. Calories.  Points.  Carbs.  Fat Grams.  
A tremendous amount of counting.  Usually this lasts for about a month or so and I take off the extra pounds.  

Of course you know the rest of this story; in another month or two following all of this obsessive counting I've put back on most of the ten pounds and I start again. 

A New Approach

So about six months ago I had a conversation with my sister that focused on the newly padded Penny (in other words I had my ten pounds back) and I mentioned to her it was time to start counting.   

She’s younger (but obviously wiser than I) and suggested that maybe it was time for a new strategy. 

Her suggestion was to forgot the incessant counting and simply reduce my sugar intake.  A kind of non-diet diet. 

 Six months later I’m not only twelve pounds lighter I seem to have made peace with my sugar obsession.  

New strategy.  New outcome. 

So I ask you, what do you want and how will you get it?  If you've used the same strategy more than once or your implementation process has been used repeatedly and you're not winning then perhaps it’s time to make some changes. 

If you think the strategy may be flawed then change it.  If it’s around implementation take a look at a few key pieces:
·        Are you clear as to who in your organization is responsible for executing key strategic components? 
·         Is the plan too big? Is the plan “fluffy?”  Is the timeline realistic?
·         Is everyone on the same page?  Are you communicating?  Is there consensus?
·         Is the strategic implementation on “project status?”  Said another way is everyone involved accountable and fired up to deliver their part of the plan.      

Be bold and make a change.  Find a strategy or implement one that works for your business. 

Find the courage to win.           

Monday, June 10, 2013

Do it Yourself versus Done for You: PART TWO

Do the advantages outweigh the disadvantages??

With this PART TWO post let’s pick-up where we left off by looking at some of the advantages and disadvantages associated with copacking. 

·         Have you started to research how expensive it is to set up a food/bakery manufacturing facility?  The investment of capital is staggering.  Using a copacker will significantly reduce startup.  
·         Because you will be under contract with the copacker you will be able to better predict COGS.  With a copacker your COGS will be a fixed cost allowing you to more accurately predict margins.
·         It also helps in getting a product to market.  You will not need to put your attention on sitting up a facility, sourcing ingredients, cost accounting, etc.  If you choose the right copacker their company will already have processing lines, packaging and labeling in place.  You are simply placing an order with the copacker for your product. 
·         Oftentimes (if you pick the right copacker) the copacker will have more experience than you do creating your product because they have more practice and familiarity with creating your type of product commercially. 
·         The copacker will have the necessary regulatory certifications and insurance.  In some states however you will need to hold a health department manufacturing license.

·         The copacker may be able to get better pricing for purchasing supplies and ingredients and should have the proper facilities for receiving and storing ingredients. 

·         The big disadvantage to using a copacker for control-oriented entrepreneurs is loss of product control. With a copacker you don’t have the headache of getting production finished or dealing with employees.  But at the same time you no longer control the product and its manufacturing.  It can take a while to get used to that.  Many copackers will invite you to view the first product run.  After than not so much.
·         In some cases the same copacker you’re using could be creating a similar product for your competition.  Where there’s nothing inherently wrong with this, it’s just a little close for comfort. 
·         How much does the copacker value your business?  Sometimes it can seem (especially when your order is small to the copacker) that your production is totally at the mercy of the copacker.  You’ll have to plan accordingly so you always have product. 
·         Your product will need to conform to the copacker’s equipment.  If you're currently using vintage jelly jars to pack your tangerine marmalade you may have to rethink your packaging.
·         Some entrepreneurs can never get passed the confidentiality issue no matter how many non-disclosure forms are signed.  In some cases you may need to share customer information, volume and suggested retail with your copacker.   Confidentiality can be protected to some degree but it is never completely assured.    

I trust this information will at the very least get you started.  In the spirit of full disclosure this discussion on copacking is incomplete.  I divided it into two parts when ten parts is probably what it deserved.   

I have so much info on copacking (what to look for, what can go horribly wrong, secrets to successful copacking relationships, not to mention how it impacts your margins) that I'm considering writing a little eBook on the topic. 

Would that be helpful??   


Sunday, June 2, 2013

Do it Yourself (DIY) versus Done for You (DFU): PART ONE

Let’s say late last year you were in the process of cleaning out your parents’ attic as they prepared to list the family home for sale.    Enduring the sweltering heat and inch-thick dust you not only discover your grandmothers’ cookbook, but between the worn pages on a scrap of paper was her blue ribbon recipe for cinnamon sugar snickerdoodles.  

You became nostalgic while fingering the fragile paper covered with her distinctive handwriting.  Sitting on your knees you fondly remember the 4th of July picnics and school lunch boxes featuring those buttery cookies.  

By the time you left the attic however you're no longer lost in the past.  Instead you're planning a future bringing these fabulous cookies to market. 

But first you need to decide who will make the cookies.  Will you go into the baking business and open a bakery?  Or is it time to start a relationship with a copacker. 

Just in case you're uncertain with the role the copacker plays let me define the term and its responsibilities. 

A contract packer (shortened to copacker) is an existing company that manufactures and packages food for their clients.  The copacker works (usually) under contract with the hiring company (you) to manufacture food as though the products were manufactured directly by the hiring company.

Now getting back to the above question; do it yourself or hire it out to a copacker, the short answer is; it depends.  There are advantages and disadvantages to either decision but know it is a big, complicated serious decision to make.  But then what else is new??

As you’re weighing the pros and cons it makes a difference if you're a startup or an existing company looking to expand.

STARTUP - If you're a startup company the first question you ask yourself is why you’ve decided to go into business. 

Hopefully it has something to do with a profitable solution to a problem – in this case you think the world needs another cinnamon cookie.  But there may also be an emotional component that figures into your decision.  For instance on a soul level do you take pleasure in the idea of making the cookie dough, hand scooping it onto parchment-lined sheets in preparation for the fiery ovens?  Honestly would you be interested in the business if time in the kitchen was not part of the promise? 

If taking the bakery kitchen out of the model doesn’t feel good then you're a prime candidate for doing your own manufacturing.

On the other hand does your dream center on sales?  If your vision focuses more on the distribution side as opposed to the manufacturing side you may want to forget the apron and start looking for a copacker.  

EXISTING BUSINESS -If you're an existing business involved in creating strategies for expansion you've probably already fulfilled your need to be elbow-deep in dough.   In other words you no longer need to make the cookies (or the widgets) to feel productive.  If this is the case it may be time to seek outside manufacturing (a copacker.) 

With startup or expanding  you have different issues; different considerations.  This first post was to represent the “softer side” of the issue.  The next post will be a touch more gritty.   

So stay tuned.  In a few days I'll finish this conversation with a pros and cons list that will help. 

In the meantime read E-Myth Revisited by Michael E. Gerber if you’re in startup.  The Goal by Eliyahu M. Goldratt and Jeff Cox for existing businesses especially if you’re considering staying with your own manufacturing.