Category Archives: Business Development Strategy

How to Invest in your Business Wisely for Fast Grow and Profits

Are you an entrepreneur? Do you want to learn how to invest in your business for maximum profit? Then read on. One of the most crucial factor an entrepreneur or manager must keep an eye on; is the business expenditure. Big corporation with millions of dollars in budget can afford to spend money on even the most absurd things; they can afford to gamble with a few million dollars on research but not you. You are probably a startup company; or a small business owner with limited capital and you have little room for waste. So you have to make sure that every investment in your business is justified; both in the short and long run.

“Waste of resources is a mortal sin at IKEA.” – Ingvar Kamprad

Effective capital direction is essential to success in business. Now we must all invest in our business at one time or the other; but I want you to know that all business investments are not equal. Some business elements are more important than others; but unfortunately, these important elements are often the most ignored. Most entrepreneurs invest in stocking inventory; while ignoring other little things that matters. Now what are the little things that matters? How should an entrepreneur invest in a business?

   The Two Most Important Elements You Must Invest in your Business

1.            Profits

“Everything we earn we need as a reserve.” – Ingvar Kamprad

I believe this point is quite clear. An entrepreneur that is concerned about growing a business must first demonstrate commitment to growth by re-investing the business profits. Once a business kicks off and profit begins to pour in, you may be tempted to take out cash or look into other industry. At this point, effective capital direction and concentration is highly needed.

“Watch the costs and the profits will take care of themselves.” – Andrew Carnegie

To build a successful business, you must resist the temptation to divest your capital or profit; you must resist the urge to spend your money on frivolous activities. You must invest your re-invest your profits in your business; you must seek ways to increase efficiency and sales. You must concentrate your resources on the core tasks that matters.

“Concentrate your energy, your thoughts and your capital.” – Andrew Carnegie

2.            Time

“The best thing to invest in your business is your time. To schedule, plan and use time effectively, know your turf and know your objectives. Assess the obstacles and opportunities, then devise your strategies.” – The Mafia Manager

Warren Buffett ran Berkshire till his 80’s; so did Ingvar Kamprad. J. Paul Getty, Steve Jobs and Mary Kay Ash ran their companies until death. What does this portray? It simply means that an entrepreneur must run his/her business; an entrepreneur must be at the helm of affairs. You may have a team of competent managers but nothing beats being part of the core team running your business.

“I have run engineering since day one at Oracle, and I still run engineering. I hold meetings every week with the database team, the middle ware team, the applications team. I run engineering and I will do that until the board throws me out of there.” – Larry Ellison

After many years of building a business, I have come to observe that nobody can run your business better than you. You can have the best managers in the world but you can never find someone who is passionate about growing your business as you. I am saying this from experience. Your competent managers and professionals will work hard for your business, but their effort will have to be proportional to their compensation. But an entrepreneur that started a business from the scratch will be willing to work for free just to see his business succeed.

“Time is your most important resource. You can do so much in ten minutes. Ten minutes; once gone is gone for good.” – Ingvar Kamprad

Capital alone is not enough; you need to invest time to grow your business. Just think of Warren Buffett and Steve Jobs; they worked hard for their various companies, yet they were among the lowest paid CEOs in the world. Invest time in running your business; it pays in the long run.

“It’s my job for Oracle, the number two software company in the world; to become the number one software company in the world. My job is to build better than the competition, sell those products in the marketplace and eventually supplant Microsoft and move from being number two to number one.” – Larry Ellison

Now that I have listed the two important things you must invest in your business, I will now proceed to highlight specifically how to invest in your business. Now what must you invest in to grow a business successfully? You can find your answer below.

9 Ways to Invest in your Business Wisely

a.            Invest in yourself

“To succeed in business, to reach the top, an individual must know all that is possible to know about that business.” – J. Paul Getty

You are the entrepreneur and this means you are the chief decision maker in your business. The success or failure of your business largely depends on you; so it’s important that you invest in yourself first. Even before starting a business, you must invest in yourself. You must invest in developing leadership and business skills. You must learn how to sell, negotiate and work with people. More important than all, you must know everything about running a business; from accounting, sales and marketing to product development, etc.

“The ability to sell is the number one skill in business. If you cannot sell, don’t bother thinking about becoming a business owner.” – Rich Dad

b.            Invest in marketing your business

The sustainability of a business is highly dependent on the management’s ability to generate profit; and profit is a product of sales, while sales is a product of effective marketing. As part of your marketing effort, you must strive to promote your business on the web.

c.             Invest in your employees

“When people are placed in positions slightly above what they expect, they are apt to excel.” – Richard Branson

Most entrepreneurs don’t invest in their employees; and they don’t see the need to. But if you aim to build a successful business, you must invest in your employees; you must invest in increasing their knowledge base. Another way you can invest in your employees is to train them regularly.

“Outstanding leaders go out of their way to boost the self esteem of their personnel. If people believe in themselves, it’s amazing what they can accomplish.” – Sam Walton

You should also provide them with tools, software and materials that will make their task easier and increase productivity. You must strive to keep your employees happy. You can achieve that by paying them well and encouraging them with incentives. In fact, just maintain a good relationship with them and you will bring out the best in them.

“If you pick the right people and give them the opportunity to spread their wings and put compensation as a carrier behind it, you almost don’t have to manage them.” – Jack Welch

d.            Invest in building a brand for your business

“If you are not a brand, you are a commodity.” – Robert Kiyosaki

Most people believe that branding is for big corporations with millions of dollars in advertising budget but it is not so. The game of branding is now an all-comers affair. Both big and small businesses can now build their brand without breaking the bank. You don’t have to wait till you have a million dollars in revenue; you don’t have to wait until your business gets big before building a brand. Start small and work on your brand from the beginning; this will enable your brand grow alongside your business.

e.            Invest in your company’s communication system

“Team, it turned out that Michael Dell wasn’t perfect at predicting the future. Based on today’s stock market close, Apple is worth more than Dell. Stocks go up and down and things may be different tomorrow but I thought it was worth a moment of reflection today.” – Steve Jobs

One of the most important, yet often ignored systems of business is communication. In fact, communication is so important that no business can survive or grow without it. So you must invest in your business communication system. You must ensure that there is a smooth flow of information between the management, employees, customers, suppliers and investors.

f.             Invest in making your customers happy

“The customer is our business.” – Peter Drucker

The primary reason a business exists is because of the customer. Without the customer, there is no business; so you must invest, not just in finding new customers but also in keeping your existing customers happy. Also, you must bear in mind that it is cheaper to retain a customer than to find a new one and business thrives on recurring sales from loyal customers. So keep your customers happy. You can do this by initiating a loyalty program, giving them incentives and maintaining a close relationship with them.

“Courteous treatment will make a customer a walking advertisement.” – James Cash Penny

g.            Invest in building business relationships

“The ability to deal with people is as purchasable as a commodity as sugar or coffee and I will pay more for that ability than for any other thing under the sun.” – John D. Rockefeller

No entrepreneur ever built a successful business alone; successful businesses are built by a network of people. That’s why my mentor Robert Kiyosaki said that:

“The richest people in the world build networks; everyone else is trained to look for work.” – Robert Kiyosaki

To become a successful business owner, you must build a network of people and businesses around yourself. A good way to invest in building relationships is to form strategic partnerships with other businesses. You must also maintain a close touch with other entrepreneurs, professionals, advisors, VCs, angels, etc. Before rushing to build a network of business people, you must make honesty your watchword. You must be a person of integrity.

“It takes 20 years to build a reputation and only five Minutes to ruin it. If you think about that, you will do things differently.” – Warren Buffett

“Business is not just doing deals; business is having great products, doing great engineering and providing tremendous service to customers. Finally, business is a cobweb of human relationship.” – Henry Ross Perot

h.            Invest in information

“The most meaningful way to differentiate your company from your competitors, the best way to put distance between you and the crowd is to do an outstanding job with information. How you gather, manage and use information will determine whether you win or lose.” – Bill Gates

Information in the hands of a smart entrepreneur can become a competitive advantage. Having the right information and acting on it is the sole reason why some companies dominate certain industry. So you must invest in acquiring information. Information can be industry news and happenings, trend analysis, research work, inside information, etc.

One of the most important information an entrepreneur must acquire is information about the competitor. You must invest in obtaining information about your competitor and you must be prepared to act on such information. You may think you don’t need this but you do.

“Therefore I say: know the enemy and know yourself; in a hundred battles, you will never be defeated.” – Sun Tzu

i.              Invest in legal protection

A lot of entrepreneurs rush into business without first covering their backs; they launch their products while failing to protect it. This is one of the most dangerous mistakes small business owners make. Therefore, it is advisable that you seek legal protection for your business. You might think it’s too expensive but more expensive and painful is the loss of a business due to poor legal structure. A good way to start protecting your business legally is by choosing the right legal business entity. Patents, trademarks, copyrights are also good legal shields for protecting your business assets.

In conclusion, these are the few things you must invest in today. Even if you have limited operating capital, investing in the highlighted elements will produce positive results on your business both in the short and long run.

10 Causes Of Small Business Failure You Must Watch Out For

If you visit a construction site or a chemical plant, you might see some warning signs. These signs are called “red flags” and they alert you of impending danger. Just as there are red flags in life, so are they also in business. In business, red flags are there to save us but most of the time we ignore it.

                “Failure is an opportunity to begin again more intelligently.” – Henry Ford

In the process of starting a business, there are signs of business failure you must watch out for. I am going to reveal this signs to you. Whenever you see these danger signs in your business, you must act fast.

10 Cause of Small Business Failures You Must Watch Out For

1.            High Debt Ratio

The first cause of business failures you must watch out for is high debt ratio. If your business is being owed much, maybe by giving too much credit to customers, then your business is at risk. Also, if your business is heavily indebted, then it’s at risk of folding up. An antidote to this is for you as an entrepreneur to always carry out an acid test ratio and keep a keen eye on the debt to equity ratio.

                “There is one paradoxical characteristic every entrepreneur must possess to succeed. An entrepreneur must be able to persuade his debtors to pay their debts promptly and at the same, must tactically delay payments to his creditors.” – Ajaero Tony Martins

2.            High level of mismanagement

The second cause of business failures is high level of mismanagement. If your key staff lacks professionalism, then your business is in trouble. Since your staff are in charge of running the day to day affairs of your business, their professionalism should not be compromised for anything.

                “There will be times when you will have to be abrasive, even brutal to members of your staff. Don’t worry that your people will say bad things about you because of this. They already have. But in general, try to be pleasant and accommodating. Try to please the greatest number who work for you that you can; antagonize the fewest. Blow smoke.” – The Mafia Manager

3.            Unexpected resignation of staff

The third to watch out for is the unexpected resignation of staff from sensitive position. This can really pose a threat to your business so you must be prepared for it. In business, poaching is really a factor to deal with. Big companies are always poaching good employees away from other companies by enticing them with improved salaries and incentives.

                “The competition to hire the best will increase in the years ahead. Companies that give extra flexibility to their employees will have the edge in this area.” – Bill Gates

4.              Inadequate Inventory

Another factor that leads to small business failures is inadequate stock or inventory. I don’t need to emphasize much on this because the point is clear. If you have inadequate stock either for production or for your customers, your business is bound for failure. Also; if you stock too much inventory, you are still bound to fail because you are tying down working capital.

                “Inventories can be managed but people must be led.” – Henry Ross Perot

5.            Selling products below cost price

The fifth cause of business failures is the sales of goods and services below cost price. Sometimes in business, cash crunch, fierce competition or economic factor make businesses sell their goods below cost price and this can ruin your business.

6.            Dwindling working capital

Dwindling working capital also cause of business failures and you must watch out for. Depreciating working capital may be as a result of unnecessary expenditure, too much inventory and weak cash flow management on the part of the entrepreneur.

7.            Consistent negative cash flow

The seventh factor that could lead to business failure is consistent negative cash flow. Cash flow is to business what blood is to humans. No business can survive without strong cash flow management. A solution to negative cash flow is to hire a professional accountant to keep a keen eye on the cash flow.

                “The most important word in the world of money is cash flow. The second most important word is leverage.” – Rich Dad

8.            Declining Profit

Declining Profit, if not handled properly can cause business failure. If there is a down turn in profit margins due to competition or deflation, your business could be negatively affected. A solution to declining profit is to increase your sales volume so you can make more profit on turnover or better still; diversify.

9.            Loss of market share

Loss of market share is the ninth cause of most business failures. If you observe you are losing your market share due to either competition, new technology, innovation or trend, then this is a sign that your business is on the verge of been liquidated.

                “Your greatest and most powerful business survival strategy is going to be the speed at which you handle the speed of change. That speed of change is trend.” – Ajaero Tony Martins

The only prevention to loss of market share is to keep your ears to the ground for any new industrial trend, technology or innovation. You must also keep an eye on your competitor and be quick to act and adapt to any positive or negative industrial change or once again; you can diversify.

10.          Inability to secure operational capital

Lastly, your inability to secure funds from financial institutions could lead to business failure. I really don’t know what to say on this one because raising capital is one of the most difficult tasks in business. But it is often said that “where there is a will, there is a way.” If financial institutions refuse to assist you financially, you have to turn to other sources of funds.

In conclusion, the overall cause of business failure is lack of control on the part of the entrepreneur. Never leave total control of your business to your employees even if they are professionals. Remember, professionals are only there to advise you on what to do. The final decision lies in your hand as the entrepreneur and business owner.

                “Before making an important decision, get as much as you can of the best information available and review it carefully, analyze it and draw up worst case scenarios. Add up the plus or minus factors, discuss it with your team and do what your guts tell you to do.” – The Mafia Manager

How to Reduce Operating Costs, Run Lean and Still Grow your Business Fast

“Cash flow is the life blood of business.” – Robert Kiyosaki

One of the most tedious; yet most important tasks in business is cash flow management. Constant in flow of cash is very vital to business survival but will be meaningless without proper utilization and channeling. Poor cash flow management is a major reason why most businesses fail; even with a winning product and business team.

“The most important word in the world of money is cash flow. The second most important word is leverage.” – Rich Dad

Every now and then, you will hear of businesses taking drastic measures such as downsizing; just to cut down costs. Now reducing the operating cost of your business is a very simple task; yet, it’s extremely difficult because it takes discipline to achieve.

So in this article, I will be sharing with you some inside tips on how to reduce your operating costs, run your business on a lean budget and still grow fast. If you are an entrepreneur starting out with low capital or you are seeking ways to preserve investors’ money and make the best use of it; then this article is for you. But before I go into the details, I want to point out the fact that reducing costs or running a business on a lean budget will never be possible without the three factors below:

  1. Discipline
  2. Thorough understanding of the business
  3. Your team’s commitment towards your plan

Having said that, below are practical ways you can reduce your business expenses and operate on a lean budget.

                How to reduce your business expenses and operate on a lean budget

1.            Avoid Marketing/Advertising whose results can’t be measured

Marketing and advertising are some of the leaks through which money flows out of a business. Now don’t get me wrong, both of them are important to generate sales but they should be done tactically. You are a start-up company and you don’t have the million dollar marketing budget of the big corporations, so what do you do?

Well, you simply apply marketing tactics that puts you directly in the face of your targeted market; note the keyword “targeted market.” Therefore, avoid marketing/advertising methods whose results can’t be quantified or measured. Effective marketing must reflect in the books; it must yield the corresponding desired results (increase in sales, lead generations, increased traffic/visitors/customers) and must be quantifiable (percentage change, ratio).

Avoid advertising agencies, Pr firms and social media ad companies except you have millions of dollars to toy around with. Avoid advertising techniques you don’t understand or have not mastered; stick to what you know. And best of all, try to make the most of free publicity; such as press releases, getting on TV and radio shows and contributing content to news sources. Most importantly, if you are going to use a paid advertising medium, make sure you first educate yourself about the intricacies of the medium; it will save you a lot of cash in the long run.

2.            Avoid Expensive Office Spaces or Leases

“I could have an office all to myself but since my collaborators don’t have one, then I too am contented to have a desk in a shared room.” – Ingvar Kamprad

One of the expenses that take a large chunk of capital/resources is office space and most entrepreneurs waste investors money by situating their businesses in glorified high rise buildings; just to satisfy their ego. If you are a start-up company or you are running on a lean budget, then you don’t need an expensive office spaces. You can go for shared office spaces or better still, work from home and make use of a virtual office address. After all, Amazon, Ford Motors and Apple were started from the garage; you shouldn’t be an exception. Start small.

3.            Avoid Technology or Software that doesn’t improve Efficiency

“The tone is in the fingers……..not the instrument.” – Jason Fried

I have a friend who has a dream to become a black belter in martial arts. This friend of mine is so committed to his dream that he has invested heavily in buying several kits, books and video tutorials on sparring techniques. He knows all the fighting styles and terminologies off hand; yet, never will you see this friend of mine sweating out in the Dojan (training ground). He would rather watch videos and read books than train. Is this friend ever going to become a black belter? The answer is no.

The same applies to business and unfortunately, most entrepreneurs are just like this friend of mine. They live with the illusion that a new technology, business software or tool will make them better entrepreneurs and push their profits to the sky. But improved technology or the latest software/tool will be useless if you are not prepared to put in the required efforts. An expensive golf club did not make Tiger Woods a star; a super computer did not make Bill Gates the richest man in the world, their skills did. So don’t waste your resources pursuing technology, if it’s not going to add to the bottom line of your business. Rather, work on improving your business skills and boosting the morale of your employees.

4.            Don’t Overstaff or hire incompetent people emotionally

“If you own a butcher shop, don’t hire vegetarians.” – Rich Dad

Most entrepreneurs tend to over staff their company; based on the illusion that more numbers of employees will lead to increased productivity. Others tend to hire incompetent people emotionally. Don’t do any of the above. Having a large staff doesn’t signify success; neither does it increase your company’s output. Remember, it’s easier to increase your number of employees but difficult to shrink. Small businesses hope and strive to be big while big businesses wish they were smaller in size because being small gives room for flexibility. So don’t overstretch your workforce; hire slow and fire fast still remains a golden rule in business.

5.            Avoid Office equipment that doesn’t add to the bottom line

I have seen entrepreneurs keep a computer on their desk that they don’t even know how to use. I recall a time when I wanted to put a television set in my office; I had the urge to go for a 21 inch plasma but I sat back and asked myself: why do I need a television in my office? Why do I need a 21 inch wall plasma? Well, I figured out that I needed a television set to stay current with happenings but my desire to buy a 21 inch plasma was simply that of ego. A normal 14 inch will serve the same purpose, so I shoved the idea of buying a plasma TV and went for a normal 14 inch television. Buy necessities, not wants. If an equipment won’t add to your bottom line; don’t buy it.

6.            Avoid hosting your business meetings in high brow buildings

Well, having a business meeting in an environment that’s conducive is important but you must avoid expensive places. I sometimes meet with my business team in fast food joints or restaurants; other times, we meet in my office or the hall of my church or even a public recreation centre provided it is quiet. These places are conducive and almost free; we only get to pay for a meal, that’s only if we need it. I think you can adopt this strategy too to save cost.

7.            Watch the decisions you take; it may cost you a fortune

“I have made tough decisions, always with an eye on the bottom line. Perhaps it’s time America was run like a business.” – Donald Trump

For every decision you take in life or business, there will always be consequences resulting from such decision; either positive or negative, so be careful of the decisions you take. I have seen businesses suffer massive setback and loss just because the entrepreneur or manager took a decision that backfired. So weigh every decision you are about to take while keeping an eye on the possible outcome; it will save you from monumental losses.

8.            Concentrate on your core; outsource the rest

What is your core business operation? One of the mistakes small businesses and start-ups make is trying to do everything effectively. Business, just like the human body, is made up of systems and all systems must work effectively for a business to be successful. To be successful, a business must handle human resource, payroll, sales, marketing, product development, production management, customer relationship, accounting and so on.

Now instead of taking up all these tasks and increase your overhead; you can choose to concentrate on your core task and outsource the rest. Some business tasks you can outsource include employee recruitment, human resource management, product manufacturing and packaging, payroll, etc.

9.            Avoid luxury and unnecessary expenses

“Simple routine have a greater impact. It is not just to cut costs that we avoid luxury hotels. We do not need fancy cars, posh titles, tailor made uniforms or other status symbols.” – Ingvar Kamprad

Avoiding luxury is a good way to cut down on your business expenses. By avoiding things such as private or chartered jets, five star hotels, corporate cars, frivolous parties, being chauffeured in limousines, etc; you can save a tremendous amount of cash for your business.

10.          Avoid taking on too much inventory

If you are running on a limited budget; then you should avoid tying down cash as inventory. Rather, try to produce on demand or work out a systematic time-based production.

Now these are ten common ways you can reduce your operating cost, run lean and still build a successful business. In addition to the above, below are an extra eleven unconventional ways to run a profitable business on a lean budget.

                11 Unconventional ways to run your business on a lean budget

a.            Work for free first; then put yourself on a decent salary

Working “in” and “on” your business for free is a good way to make some extra cash available for your business but unfortunately, most entrepreneurs wouldn’t want to hear of it. Everyone wants to get paid for doing a task and that’s why most people shy away from starting a business.

Most start-up entrepreneurs sometimes set aside ridiculous salary for themselves even when their businesses is yet to turned out a dime in profit; but things don’t work that way. Building a business requires commitment and sacrifices especially in the start-up phase; so therefore, you should be prepared to work for free.

Now if you must know; every successful entrepreneur today has at one time or the other worked on their business without receiving a dime. I have also worked for free and I still work for free today in some of my new businesses. It’s not absurd to work without getting paid; rather, it’s something you should get used to as an entrepreneur. When your business begins to turn in some revenues or even profit; then you can place yourself on a decent salary. Remember, your aim for building a business is not to earn a steady paycheck. I want to believe you are in it for the bigger picture; which is building a multi-million dollar asset.

b.            Don’t expand vertically; grow horizontally

Most managers and entrepreneurs love the idea of growing vertically because it makes the business look big from the outside; and they do this by creating more job positions and employing more people. While this may look good from the outside and earn you some prestige; remember that growing vertically will increase your overhead and make your business more cumbersome.

Rather than growing vertically, I will advice small businesses grow horizontally through strategic partnerships and alliances. Do you want to expand into another industry or you want to grow in terms of scale? Instead of increasing your overhead by taking new employees, all in the name of growth; it is better you forge a partnership with an existing business that handles such task or serve such industry. This will help you save some cash and even reduce your growth risk.

c.             Encourage your customers/clients to pay before service

This tactic is simple, yet most entrepreneurs ignore it. You can offer your clients/customers incentives and value added services to entice them to make advance payment for goods and services. This will help your business with cash inflows.

d.            Avoid expensive business meals

I believe the message here is clear; avoid meals that cost an arm. Good food doesn’t have to be expensive.

e.            Spend on budget and stick to it

I am a stickler for forecasting and budgeting; both in business and in my personal life. I don’t wake up and spend money just for the sake of spending; I spend on a budget. Everything I buy, every cash note that leaves my pocket today has been budgeted for months back. Even if I am going to spend some free cash, it has been budgeted for as miscellaneous; I have never had free cash at hand that’s unaccounted for and I don’t intend to. I tend to look at my cash needs at present and use it as leverage to forecast my future needs; this singe act has helped my business avoid a cash crisis. You should do the same; operate on a budget and stick to it.

f.             Balance your acts with family and friends

“People say I am cheap, and I don’t mind if they do.” – Ingvar Kamprad

The issue of family and friends is something I handle cautiously. Family is family and business is business; I don’t mix both and this is a principle I live by. Now family and friends are a very important part of your life; so also is business. To be a true success, you have to balance your act between these three elements.

Family and friends are close to you; meaning, you can’t hide your success from them. Secondly, you tend to be soft towards them because of their close relationship with you. Well, it’s ok to be soft with them but when it comes to financial matters; you’ve got to be tough with them.

Most people see entrepreneurs as money bags; they see your company growing fast, with you working round the clock to ensure a smooth business operation and then they will think you are made. What they don’t understand is that there’s a big difference between revenue and profit. They won’t understand that a business can generate revenue without profits. This is when you need to tighten up on your finances. Now I am not asking you not to give your family money; all I am asking is that you do it with cautiousness. I have had friends complaining that I am too strict when it comes to spending; well, why shouldn’t I be. After all, I worked hard for my money while they slept; so I can’t afford to waste resources on unprofitable things. I think I have ranted enough for you to get my point. Open your mouth and wallet cautiously…………………enough said.

g.            Be a tough negotiator

You are running a business on a limited budget; this means you don’t have the resources for trial and error, and there’s no room for wastage. You can’t also afford to leave money on the table, so you have to be a mean and tough negotiator. Now I am not asking you to be a penny pincher; I am asking you to be a tough negotiator and get the best out of every deal you make.

“If you want to buy something; it’s obviously in your best interest to convince the seller that what he’s got isn’t worth very much.” – Donald Trump

h.            Cut down you energy consumption

Another way to cut down your expenses is to cut down on your power consumption; this will directly reduce your bills. You can do this by using energy saving appliances and switching off appliances that are not in use. Now for those who generate their own power supply like me, you can further cut down your energy cost by switching between alternative power supplies and generator.

i.              Establish a credit line with your suppliers

Now by establishing a credit line with your suppliers, while encouraging your customer to make advance payments for goods and services; you will be creating a pool of extra cash that can be diverted to very short term tasks.

j.             Avoid litigations; it cost money

This is as simple as ABC; avoid litigation, it’s a huge waste of time and resources. The only people that get rich from litigations with certainty are attorneys or lawyers. Engage in litigation only when your business survival depends on it or you have a substantial case to prove with a success to failure ratio of 80:20.

k.            Keep your eyes open; to avoid larceny and waste

“Waste of resources is a mortal sin at IKEA.” – Ingvar Kamprad

One thing I have observed in business is that employees don’t attach value to business materials and equipment; because they aren’t the ones that bought them.  They tend to discard business items that can still be used or managed. Secondly, employees tend to take lousy decisions most of the time; if you allow them. After all, they have nothing to lose should their decision backfire; they will simply blame somebody else. Thirdly, employees will steal from you; consciously or unconsciously. Things employees steal from business premises include pens, notepads, toiletries, etc; and if they are left unchecked, they will even your steal time by engaging in unproductive activities during work hours. To run lean and still be successful, you have to successfully guard against the three things listed above.

As a final note, I think the above 21 steps is more than enough to help you grow your business on a lean budget. Remember, it takes discipline and action to achieve success in any endeavor. I rest my pen.

The ABC of Business Branding: Product, Corporate Strategies

1.            Introduction to Business Branding

Introduction and Steps to Global Marketing and Branding

How to Build a Strong Brand by Conducting Critical Market Research

How important is Business Branding to Your Marketing Strategy?

Five Reasons Why You Need to Build a Strong Brand image for your Small Business

2.            Small Business Branding Strategies

4 Tips on How to Effectively Conduct Small Business Branding

6 Online Small Business Branding Strategies That Work

3 Small Business Branding Strategies for Entrepreneurs

3 Business Branding Tips for Small to Medium Businesses

3.            Corporate Branding Strategies

The importance of Corporate Branding for Entrepreneurs and CEOs

4 Corporate Branding Options you can choose for your Business

The Advantages of Using Videos for Effective Corporate Branding

4.            Product Branding Strategies

Product Branding Propaganda – An Overview

Business Strategy 101: Effective Product Branding for Small Businesses

Five Product Branding Strategies and Tips for Your Small Business

Six Advantages and Disadvantages of Incorporating a Business

Should I incorporate my business or not? This is one of the questions I get so often when I talk to my proteges about the fundamentals of incorporating a business. So in this article, I will be sharing with you the advantages and disadvantages of incorporating your business.

Incorporating a business is one of the key questions to ask when starting a business but before I go into the pros and cons of getting incorporated, I want to draw a line between unincorporated businesses and incorporated businesses. Unincorporated businesses cover sole proprietorships, or businesses which have exactly one owner, partnerships or businesses which have two or more co-owners. In the unincorporated setup, the owners of the business are the business themselves; while they get a share of business profits, they also expose themselves to a large degree of responsibility for all the liabilities and debts that strike down a business. Therefore, creditors can take over personal assets in case of business debt and can also take over business assets in case of personal debt as well. There is simply no room to be financially careless.

An incorporated business however, grants the business a legal standing distinct from its owners. Ownership of incorporated businesses is through holding stocks (certificates of ownership). These stocks are the owners’ involvement in the business, and through it they can get a share of the profit proportional to the amount of stocks they have. Because of the separation of owners and business in the eyes of the law, whatever arises as a liability in one camp leaves the other camp untouched. Creditors therefore cannot chase personal property in cases of bankruptcy in an incorporated business. Likewise, creditors cannot chase business assets in case the owners themselves get bankrupt. Separation of owners and business also allows the easy transfer of business ownership through stock distribution. Incorporation also allows the business to continue existing even if the owners retire or die, and allows more opportunities for government financing.

However, deciding not to incorporate a business has some modest advantages in itself. There are fewer legal requirements to attend to; the start-up fees are lower; the recurring costs (costs which a business owner has to pay again and again) are lower and the entrepreneur’s business losses can be deducted from money they earn outside the business. An unincorporated business, however, runs a string of disadvantages, like personal liability for business liability, higher tax rates (business income counts as personal income, so the tax rates followed are for personal income, and personal income tax rates are higher than those for business income), fewer chances for income sharing with other members of the family, and less flexibility in ending fiscal years due to the December 31st ending requirement.

Incorporation poses some drawbacks as well. Some of these include soaring start-up fees because of the legal costs that incorporation entails; more legal requirements to contend with; more record-keeping responsibilities in place, and the inability to deduct entrepreneur’s business losses from money they earn outside the business. These, however, are minor compared to the benefits that incorporation gives. However, the large start-up fees can be quite a burden, so it is important to have some spare money first before considering incorporation, if finances are tough.

For more information about incorporating a business, you can talk to a business lawyer. Nevertheless, this is a guide for you to find out whether you will just be a plain sole proprietorship or partnership or you will ultimately incorporate your business.

Hiring Employees: How to Balance Payroll for your Small Business

If you run a small business, then you know it can take a lot of manpower to get the day-to-day activities finished; while still managing finances, marketing efforts, bookkeeping and hiring. In fact, many small business owners cite hiring and employee management as one of the toughest aspects of their job. There is a science to managing labor for your business. Here are a few tips for expanding your staff effectively:

1.            Think about the number of people you already employ

The burden of taking on another employee greatly depends on how many people you already have. If you have three employees, adding another one would be increasing your labor by 33%. Decide if the addition of a new employee is worth the time it takes to train and teach them effectively.

2.            Plan ahead

Plan how much a more increased payroll will cost you overall. How much will it cost you each month? Each year? You should also look at how this will affect your business in terms of meeting the needs of the customer. Will another person or people allow you to perform more efficiently? What kind of work do you have coming in? Does it require more manpower? Thinking about these questions ahead of time is important, and it can prevent future lay-offs that no one enjoys.

3.            Hire ahead

The worst thing that you can do for your company is to try to stretch your labor too thin and then provide customer service that is not up to par. Conversely, the very best thing you can do for your company is deliver exceptional customer service every time. If you are sure that an extra employee or two would significantly increase the level of customer service of your business, that’s probably a good sign to proceed with the hiring.

 4.           Outsource your business process

You may or may not be the best at the numbers that go along with your business. It can be helpful for you to outsource your accounting. An accounting firm will be able to interpret your numbers and compare it to the industry average. Bookkeeping services are readily available; all it takes is quick phone call to identify your options. Many people forget that accountants are there to help you, and really, they care about your business just as much as you do.

5.            Think about your hiring criteria

You want to hire someone who will not only mesh with you, but also the company’s personality and culture. Think about how this new employee will affect your company in the long run. No one enjoys working with someone they don’t get along with, so besides being a qualified individual, make sure they are a good match for your business.

These points should help you hire effectively and efficiently. We know that this part of business can be tough, but right now, there are more qualified individuals out there than ever before. So instead of seeing hiring as an unfavorable task, see it as an exciting venture into a new and improved business.

How to turn your Self Employment Job into a Business

Are you a self employed entrepreneur? Do you want to become a business owner? Then this article is for you because it contains in-depth details on how to turn your self employment job into a business.

Have you read the book cash flow quadrant? If you haven’t, then I will recommend you get it as soon as possible. In that book, Robert Kiyosaki identified the four quadrants of money that every human being is categorized into. They are: Employees, Self employed, Business owners and Investors.

Every year, thousands of businesses are started. Unfortunately, most of those businesses are self employed type of business or sole proprietorship. Today, the media is filled with news of work from home jobs, home based businesses, seminars on specialized skill development and do-it-yourself investment ideas. The sad news is that these sorts of businesses are simply self employed jobs in disguise; where your earning potential is proportional to your work input.

Now before I proceed, let me draw the line between a self employed business and an established business. Simply put, a self employed job or business cannot survive without your interference; it means you must be actively involved in your business for it to function. Examples of self employed businesses are home based businesses, salesmanship, specialized skilled service such as dentist, barbing and so on. On the other hand, an established business is run through an organized system and such system can run without your active participation.

One of the most important phases of business growth is the transition from a one-man business to a well-structured business. Unfortunately, most small businesses never make such transition. I am writing this article today to guide you in the transition process of becoming a business owner.

Most successful entrepreneurs and drop out billionaires of today started out as self employed entrepreneurs. Examples are Henry Ford, Steve Jobs, Robert Kiyosaki, Debbi Fields, Ray Kroc, Aliko Dangote, Cosmos Maduka, Richard Branson and so on. In fact, I started out as a self employed entrepreneur but later transited into a business owner. Sincerely speaking, I don’t think I have fully completed the process. Though some of my businesses run without me, I am still very much involved with the development of my other businesses. The reason is because once I complete the process in a particular business, I start another business. So I believe I will fully exit the process when I retire. Well, that’s for me, let’s focus on you.

                How to turn your Self Employment Job into a Business

The ultimate goal of the transition process from a self employed entrepreneur to a business owner is to get the business off your neck. The moment your business is off your neck; the moment your business begins to run without the need for your direct effort, you have completed the transition process. Now how do you begin the transition process? How do you get your business off your neck? Before I go into the details of the transition process, I want you to bear in mind that there is no set time frame for the completion of the transition process. The transition process can be completed in as short as three months or may take more than ten years to complete. It all depends on your pace, your plan and the growth rate of your business. Now how do you turn your self employment job into a business?

1.            Envision the possibility

The reason I suggest you first envision the possibility is because if you can’t envision your business working without you, it will never become a reality. You must see beyond your present reality; you must see yourself as a business owner.

2.            Change your mindset

Your mindset is going to be an obstacle to the transition process so it’s better you deal with it early. The problem that keeps entrepreneurs in the position of being self employed is their mindset. Self employed entrepreneurs such as artists, plumbers, hair stylist and so on can’t let go of their business because they believe nobody else can do it better. They are perfectionists who prefer to do things themselves; and if they train an apprentice, their mindset will never allow them to co-exist with such trainee. And when the trainee gets kicked out; the person becomes a competitor to the trainer. So if you are going to successfully complete the transition process, you must change your mindset.

3.            Draw a plan

Every successful process begins with a plan. Without a plan, you will only be running in circles. What skills are needed in your business? What are the criteria for bringing in employees? How will the transition be financed? These are the questions your plan must address. Most importantly, your plan must be strategic in nature and executable.

4.            Incorporate your business

An important step in turning your self employment job to a business is to get incorporated. Incorporation increases your sense of responsibility, both to your business and the government; and it spurs the need for a business team.

5.            Assemble a business team

Assembling a business team is very important to the process of becoming a business owner. In previous articles I have written, I emphasizes the fact that building a business requires a synergy of both entrepreneurial and professional skills; this is where the need of a business team arises. In fact, this is where the real business challenge lies; this is where most of your transition time will be spent. Once you can overcome this challenge and get yourself a business team; your business is set for a change in structure and growth.

6.            Delegate, Delegate, Delegate

The coming of a business team will definitely free you of some major tasks but you still need to get more tasks of your neck through delegation. Assess your team or employees, select competent individuals who have proven themselves trustworthy and delegate vital tasks to them.

7.            Stand aside and become a watch dog

After engaging in the art of delegation for a certain period of time; it’s time to stand aside and monitor your team and employees. This is where you correct and implement your succession plan. If anything goes wrong in this phase of the transition, you can step in and make amends. But if nothing goes wrong in this phase; then it’s going to be jubilation on your part because you have just completed the transition process from being a self employed entrepreneur to a business owner.

What Are Working Capital Loans and How can it help your Business

Working capital loans are a kind of loan that is intended to bankroll daily operations of a business or a company. Business owners and executive officers of a large company know the indicators to monitor just in case they are in need of a working capital loan from a bank or other alternative credit financing firms. Normally, a business needs this type of loan if they are having fiscal crisis within the company or they need additional funding to expand their operations. Under these instances and many more, a working capital loan is really necessary to the survival of both a small business startup and established business.

A business may need additional finances for varied factors. This could probably be used to purchase new equipment in order to increase production, to develop the present inventory by adding new products, to open new store locations and production centers, to finance expensive promotional campaigns or to refinance debts. Furthermore, with the global economic recession almost affecting every player in the society, a working capital loan could be a life saver for emergency situations.

Working capital loans could be secured or non-secured. Secured loans refer to the type of loan guaranteed by collateral such as a property, equipment or inventory of products. These loans should be entirely paid on the agreed period or else the bank will sequester the assets under the collateral agreement. On the other hand, the non-secured loans are not backed up by any form of collateral but they need to be paid with higher interest rates. Usually banks would approve non-secured loans only to their longtime clients or to a company with less risk. If your business is just new in the industry, it is considered as a high-risk company and will be denied for non-secured loans.

A working capital loan is among the two basic choices for a company to meet their financial needs. The other one refers to the corporate cash advance. These main options have their advantages and disadvantages but the rate of success in using any option depends on how the company will manage the additional funding. Among the primary advantages is the fact that a working capital loan is an excellent source of quick funding to help a small business to sustain their operations until they are profitable enough. This loan could be used to refinance cash flow for near-bankruptcy stages of your business.

A major disadvantage of getting funds from this type of loan is the fact that the funding is only intended for short-term solutions. These loans will not suffice long-term business goals or business projects that will need higher investments. Aside from this, you need to regularly pay the loan; while ensuring timely payments to avoid being enlisted as a high-risk or a delinquent client.

The internet is a rich source for banks and credit unions that are offering working capital loans. This will provide you the chance to compare interest rates, client reviews and to study the fine print. You just need to devote your time and make your decision to choose which lender could provide you with the emergency funds for your business operations.

Working Capital Management: How to keep your Cash Flow Strong

Strategic working capital management is integral to a company’s survival and it is a concept that many companies fail to grasp correctly. There is a long-standing distinction between assets (whatever puts money into your pocket) and liabilities (whatever removes money from your pocket). The conventional thinking about them is that both of them are predominantly long-term, so they are often projected in long-term periods of three or five years.

However, a business cannot survive unless it can manage some the hurdles associated with building a business. The focus of handling working capital properly is on short-term assets and short-term liabilities that affect daily operations. Short-term assets include working capital, investments, debtors, cash equivalents, inventories, and receivables while short-term liabilities include debts, creditors, and payables. (A handy determinant of a company’s ability to fulfil short-term financial obligations is found by dividing total short-term assets with short-term liabilities. The greater the quotient, the better off the company is; with respect to its ability to finance short-term operations).

The importance of working capital management can be illustrated with this example: A mango shake company requires $300 to buy mangoes, sugar, and other ingredients to keep a well-stocked inventory. In a week, the company packs the mango juice and sells them; in another week, the company receives payment. The $300 is the company’s working capital; which gets converted into the ingredients. Whatever the company owns to process the ingredients (like blending machines, packing machines, etc) are fixed assets, but working capital may be needed to run them (electricity and maintenance).

Effectively managing working capital entails getting the $300 regularly so that they can buy more mangoes and other ingredients to turn to mango juice. If the company can’t sell its mango shake, then it will have no source of working capital to make new batches of mango shake. It may need to borrow money to resume daily operations. Based on this, it is a must to ensure that customers pay on time and that the company pay its suppliers just at the right intervals; not too quickly or slowly.

We have already seen the importance of short-term cash; the question now is how to optimize it for business needs. Forecasting cash flow is one way to do so. Businesses should be alert to everything that can alter its cash flow. Some of these are unforeseen events, loss of customers, business rivals’ actions, and market trends. Going along with forecasting should be a well-placed risk management system, used to weather the effects of drastic cash flow changes to keep all damage to a minimum. Working capital can also be tackled on a company-wide inter-departmental manner. Information sources, banking, production, billing, and treasury should be properly coordinated to ensure that the short-term assets of a business are recycled smoothly and the short-term liabilities are dealt with properly.

Working capital management is also encouraged by cooperating with other parties which serve as your main source of working capital and one of such parties are the customers. Determine what they need so that your production is synchronized with their consumption. Handle disputes well to leave them satisfied. Finally, do all you can to gain their trust; so that they can help fill your working capital needs.