The Evils of Profitability (Ha, Ha!)

September 26th, 2009

Capitalism is a wonderful, self regulating system. Adam Smith’s “invisible hand” allows freedom of choice for all members of a capitalist system.

The flip side of capitalism is Socialism: a government controlled system that takes most (or all) decision making from the individual and places it into the hands of “all knowing” bureaucrats. Marxism takes Socialism one step further by having those bureaucrats also make all the personal decisions of the individuals.

Question: Why is one of these systems wildly successful and has helped build the greatest wealth in the entire world in unprecedented short periods of time while the other system has proven over and over again to be a failure?

Answer: One six letter word – profit.

In the capitalist system, bad ideas, mediocre performance, gross inefficiencies are continually purged from the system without interference from individual decision making simply through lack of profit. It is a self regulated, cleansing mechanism that separates the weak from the strong.

In the socialist system, no such self purging process exists. Emotions and decisions of fallible individuals rule. If an operation is mismanaged (look at your school systems for example), is a bad idea in the first place (look at cash for clunkers), is not profitable (see the US Post Office or Amtrak), what happens? The “rulers” simply dump more money into the losing proposition. Where do they get the money? From YOU through taxation, or by “printing” it (printing money is actually just a hidden tax, as inflation, which leaves the consumer with less buying power, is always the result.)

In order for a society to advance, they must produce more consumable goods and services (such as food, clothing, housing, etc.) with less effort. This is called “productivity.” The more efficient a society is at producing these goods and services, the better off they are (more food, better housing, warmer clothing, better health care and ultimately more “unnecessary” goods such as more time off to spend with the family, golf clubs, boats, cool cars, recreational items, etc.). Since in a socialist system people have no incentive to work harder or more productively, matters rarely improve for the society in general. And, because there is no mechanism in a socialistic system to purge the weak programs from the strong, the general solution to a failing system, as said earlier, is to tax those that have, or print new money in order to make up the difference.

Allowing a Company such as GM to fail would be GOOD for the economy. Most of the jobs would not go away, they would be replaced by other successful companies, reorganized, improved and the work performed by those workers would become productive. Bailing them out simply throws more money at a bad situation and never solves the problem.

That is why socialist systems have been nothing but unmitigated disasters robbing humans of their God given right to freedom of choice.

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Posted in Financial, Politics | No Comments »

Our Need for REAL Leadership

July 13th, 2009

This is the third (and I will tell you not the last) letter I have sent to the Mayor of Milwaukee suggesting we need Leadership in our communities, not a bunch of political gobbledegook. I have yet to hear back from him. This is not a local problem, however, as I believe we are suffering from a VERY SERIOUS lack of leadership at all levels of government.

Mayor Barrett:

This is the third letter I’ve sent you in the past four months regarding the “state” of leadership in our community. You did not respond to the first two.

My conclusion in the first two letters was that our local, State and National leadership is in a “sorry state of affairs.”

Without strong leadership, starting locally, our community is doomed to mediocrity. So many “No Job Initiatives” have been supported by our so called leaders that it is laughable when they come out “for businesses and for creating more jobs.”

The programs that are being supported by the “leaders” include higher and higher taxes and fees (which are simply just hidden taxes), more red tape and an anti-business attitude. These attitudes seem prevalent these days at all levels of government.

So, what are we to do? As much as some of our “leaders” try to convince us that government can create jobs, it does NOT: businesses do! To quote Maine’s Democratic Governor Baldacci, “without employers, you don’t have employees.” And, he adds, “The best social services program is a job.” You yourself said (just last week), “I am committed to keeping and creating jobs in Milwaukee.”

Well, how is that going to happen if businesses are forced to close their doors because they can’t compete with surrounding communities and our business leaders continue to “hang up” their hats in frustration over the economic hands that are being dealt to them by our local and State leaders? Effective leadership in today’s environment can only be a reality if they are committed to LOWERING TAXES, REDUCING regulations and SUPPORTING businesses both large and, particularly, SMALL.

Let’s stop chasing businesses out of our community! Let’s encourage business people to STAY HERE, not flee to more business and people friendly environments. Let’s do it by OPPOSING No Jobs Initiatives such as the Sick Leave mandate! Please DO NOT appeal Judge Cooper’s Sick Leave decision! Lead Milwaukeeans to oppose this mandate! I understand that as a local leader, you are faced with the “9 to 5” crowd, but in my countless discussions with business leaders in our community, those politicians that do not begin LEADING their constituents in pragmatic directions will be facing the “24/7” crowd: a group which I can assure you IS PRAGMATIC, and DO control the keys to job creation. This crowd truly believes that “the best social services program is a job” and they WILL create those jobs if given a fighting chance.

Now is the time for you to take a stand and fight the Sick Leave mandate. You told me when we spoke at MMAC’s Madison Day in Milwaukee at the Harley Museum that you opposed this mandate: stand up for your constituents and LEAD them away from a program that will further and severely erode the business climate in Milwaukee.

Very truly yours,

Posted in Politics | 1 Comment »

Appended to Web Two-Oh (2.0) and “Viral Marketing”

June 6th, 2009

See the last paragraph I just added to my Post entitled Web Two-Oh (2.0) and “Viral Marketing.”

Posted in General Posts, Marketing | 4 Comments »

Mayor, Please Answer My Question

May 4th, 2009

April 30, 2009

Mayor Barrett:

Earlier this week I posed a question to you which, based upon your answer, you did not seem to understand my intention. I would like to re-phrase it now:

What will YOU do to encourage and support Milwaukee area businesses, their creation and their growth in this climate of unprecedented economic stress?

The basis for my question lies in basic economic fact. Any regional economy will only improve if the productivity of workers improves. “Improved productivity” means that for all the hours worked by all of the constituents in a given geographic region (business and government jobs combined) more goods and services are produced than before for the equivalent amount of effort. Additionally, increased taxes result in lower business activity resulting in fewer jobs, lower tax receipts and a dimmer future for everyone. This is fact, not theory. And anyone denying it is either uneducated or naïve, and certainly wrong. But a lousy business climate is determined by more than just the level of taxes. Business “red tape,” laws that work against the business community and lack of support by the governmental units in charge all contribute to the climate. And Wisconsin (and particularly Milwaukee) leads the way in creating a lousy business climate!

In the current socialist/Marxist environment seemingly sweeping the country, businesses and constituents are flocking to better environs wherever they can find them. [And in the case of Milwaukee, that means somewhere else!!] People want better jobs, more pay for their hard work and better services from the governing bodies to which they pay taxes and MORE FREEDOM, which comes only when they have more dollars left over at the end of the month to do with as THEY choose, not some unknown bureaucrat. For the past several years and at an accelerating pace recently, the Milwaukee region seems to be doing everything it can to adopt “no-jobs initiatives” on businesses and drive them out of our community.

What can/will you do to stop this nonsense? I keep asking the question, but I keep getting non-answers like yours: political boilerplate. What will you do to LEAD this community to encourage business creation and growth?

And, more spending IS NOT the answer!

Please answer my simple question. We need leadership from our leaders, the kind of leadership that tells their constituents when “enough is enough!!” We need to produce more before we spend more! And we can only produce more productively if our hard earned money is not re-directed by bureaucrats rather than by the very businesses that create the jobs in our community! If allowed, those businesses WILL invest in better education (that will lead to improved productivity), they WILL invest in improved facilities and business infrastructure (that will lead to improved productivity) and they WILL create more jobs (that will lead to improved productivity). This WILL lead to greater freedom to choose whatever constituents desire rather than what faceless, nameless bureaucrats want! When I wrote to you last month, I told you that as a businessperson I had to change my expenditure budget for 2009 from purchasing thousands of dollars of goods from other local businesses and from hiring additional help to making my payment of grossly increased property taxes: you didn’t respond! My increased property taxes did NOTHING to improve the business environment around Milwaukee. And, do you understand the ripple effect that tax increase had on the local economy (not just my tax increase, but the combined effect of all the businesses in the area facing the same dilemma)? Decreased business activity, fewer jobs, decreased Milwaukee area asset values – that was the net effect!! It is time that Milwaukee area leaders LEAD, not couch their decisions in political speak that can be interpreted anyway that the people listening want! LEAD!!

No, Mayor Barrett, your answer to my question was a foul ball. And that is not just my opinion. Nearly every person that I spoke with who heard your response Monday agreed that you did not answer the question and most thought that perhaps you didn’t even understand it. Please clarify. Please LEAD, before that car you referenced in your speech does drive off the proverbial cliff!

Posted in Politics | 1 Comment »

Web Two-Oh (2.0) and “Viral Marketing”

April 11th, 2009

Unlike “viruses” in the world of health, “Viral Marketing” is a GOOD thing when it comes to businesses! What, exactly, does “Viral Marketing” mean?

When an interesting article or event is strategically placed on the Internet, occasionally it can go “viral” in a very short time (I like to think of it as a “viral firestorm): that means that someone, somewhere notices the posting and sends it to a friend or acquaintance who then passes it to his/her friend(s) or acquaintance(s) who then pass it on to others who subsequently pass it on, etc., etc. until within hours, thousands of individuals have seen the posting. This is a good thing as long as the posting reflects your message, Company, product, etc. positively. Many businesses are striving to do “viral marketing.”

What are the tools that can be used to set off a “viral firestorm” of events? The following list (which, by the way, is not comprehensive and is being added to daily) lists many of the technologies that can be used. 

  • Informational Web sites (think SEO – Search Engine Optimization)
  • Shopping Web sites
    • Promotions
    • Incentives
    • Other
    • e-tailors
    • Sites for Retailers
  • Social networking sites
    • LinkedIn
    • MySpace (40% of users between the ages of 35-54, more than half are 35 or greater)
    • Ryze
    • Facebook
    • YouTube
    • Twitter
  • Blogs
  • E-mail (push) promotions
    • For products
    • For after purchase add-ons
  • Communities
    • Discover which communities exist in your area of influence
    • Ning (create your own)
    • Google’s Open Social platform
  • Wikis
  • RSS Feeds
  • Advertising
    • Google
    • Yahoo
    • Any of the above
  • Mobile

Suggestions:

  • Do not build with the idea that “they will come.”
  • You cannot build it and wait – must be pro-active
  • Focus on branding
  • Map content to your goals
  • Think “POST:”
    • People
    • Objectives
    • Strategy
    • Technology
  • Strive to become a “thought leader” in your area of specialization.

 

If you are further interested in this topic, there are an endless number of books, reference manuals, blogs, etc. that you can help you learn more. Just Google “Web 2.0″ and you will be able to read for the rest of your life. Start with the Wikipedia entry on Web 2.0 (it is one of the first entries you will find when you Google “Web 2.0″) . One of the finest books I have read on the topic is The New Rules of Marketing & PR by David Meerman Scott (see his blog at www.WebInkNow.com for an interesting example of the use of Web 2.0 strategy from one of the best). Another good read is Web 2.0: A Strategy Guide by Amy Shuen. Yet another interesting read is Profiting From Social Networking by Patrice-Anne Rutledge. A word of caution: the more you read on this topic, the more you will find that the reference to technology referred to as “Web 2.0″ is controversial. Some argue that there is no such thing as a Web 2.0, others defend it vehemently and even suggest Web 2.0 is “old hat” and we have already gone past it to Web 3.0!! Don’t waste your time in this debate. The reference to web tools by throwing them into a category that we are calling “Web 2.0″ is pretty irrelevant to the whole technology. The important thing to do is understand these various tools, select the ones that can help you the most and GET AT IT. Time is wasting and you are being left in the dust.

Posted in General Posts, Marketing | 1 Comment »

Money Management

February 25th, 2009

Managing finances effectively in a Company is crucial to its long term survival.

What are some of the topics that need to be addressed in a good corporate financial model? We will not cover all these in today’s Blog, but be aware they need to be addressed because they are all important.

1.      Accounting. Of course, tracking revenues, expenses, salaries and wages, inventories, investments, ownership, and many other financial subtleties can only be done effectively with a good accounting system. And, there are several inexpensive, easy to use computer packages that you can purchase. Eventually if your Company grows large you will need to replace the “off the shelf” accounting package with a more sophisticated one, but for the small, start-up Company, most inexpensive systems work perfectly well. YOU may be the impediment to a good accounting system if you are not diligent and understand basically what you are doing.

2.      Investment Capital. Debt and equity which will help define ownership will need to be understood.

3.      Corporate Structure. Will you be a Corporation? Sub-S, an LLC, a Partnership? Answers to these questions help determine your taxation structure and liability exposure.

4.      Performance Metrics. What are they? Are you making money? Is your production efficient? Remember, if you cannot measure it, you cannot manage it!

5.      Cost Control. You’d better be diligent in cost control or you will be wasting your financial resources.

6.      Product Pricing. If you don’t know your costs for each product and or service, you may be losing money on every sale. On the other hand, if you don’t properly price your products, you may not be able to sell them either.

7.      Profitability. I have always believed that profit is your most important element in your Profit and Loss Report. While conventionally, profit is the last item on the bottom of the P&L, I believe it should actually be recognized somewhere in the middle just like any other expense item. Because, without profit, your company cannot/will not grow, it will have difficulty getting loans, other investors and operating on a day to day business.

The investment ladder is a list of places from where you might obtain the necessary cash needed to run your business. Let’s start on the bottom “rung” and work our way up. By the way, this list is fluid and not complete. For every business, only a few of these rungs might ever be used.

1.      Your own money. If you are starting a new business, it is easiest to get going if you have some of your own funds to tap. No questions, no commitments, no responsibilities (except to yourself of course).

2.      Bank Money (debt). Maybe you can borrow from the bank. Usually to do this, you need to guarantee the loan with some other asset (maybe your house if you have one, maybe an old 401k, maybe a ??? – you work it out with the Bank).

3.      Your friends or family. It is always nice to have a “rich Uncle,” but short of that, maybe your relatives have plenty of faith in your idea and will be willing to loan you money or receive ownership in your new venture in the faith that they will eventually be paid back in spades when you hit it big.

4.      The Government. There are many grants that may be found with a little “google-ing.” Often these grants may be from a local government (an economic development operation in your City, County or State) or a Bank loan guarantee from an organization such as the SBA (Small Business Administration). Often these grants or guarantees come with strings attached. But, the government may be a good place to find financial help.

5.      Angel Investors (also known as “AdVenture Capital”). If you can find it, funds from and Angel will usually be in the form of debt or equity. An “Angel” is usually a high net worth person (or group of people) who enjoy helping small businesses grow and who are hoping, at the same time, to make a great return on their investment if the company succeeds. If you can find an Angel Investor, they usually bring more to the table than just money. Often they bring connections and REAL business advice and experience.

6.      Broker Dealers. They may charge a fee and probably will provide money in the form of debt, equity or both.   

7.      Profitability. Growing rapidly can be very expensive. One way to finance your Company may be right in your back pocket: grow slow, make more profit and use it to finance future growth. I know to some this may sound like heresy, but think about it, by funding growth through profitability, you avoid debt and you avoid giving part of your Company away to outsiders.

8.      Merger/selling out/buying another company. Merging with a competitor or company with a complimentary line of products can sometimes provide cash because maybe they had excess cash reserves or the combination of your company with theirs can provide operating synergies or other financing opportunities. Sometimes you merge and come out “on top” and sometimes the other Company comes out on top. It just depends on which Company is better run. Also, remember that sometimes owning a small slice of a bigger fish is better than owning a large slice of a tiny fish.  

9.      Venture Capital. Venture capitalists can be great business partners. They generally are outstanding business managers. They come to the table with large capital resources, but they do come at a high price.

10.  Mezzanine Financing. Sometimes when moving from one form of financing to another (say going from an Angel investor to a Venture Capitalist), a business will obtain “mezzanine” financing. This may be provided by a number of various sources including other Angels, Venture Capitalists, Banks or others.

11.  Going Public (otherwise known as an “IPO” for Initial Public Offering). This comes in the form of equity and can be an expensive way of obtaining extremely large amounts of cash. Often the initial owners of the Company end up giving up much control when they “go public.” And, management’s business decisions become heavily scrutinized by financial analysts and investors to a much larger degree than any other form of financing: you may not enjoy that “encroachment” on your “privacy.”

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Posted in Financial | 9 Comments »

Your Business Plan

February 21st, 2009

Most business consultants will tell you to, “Write a comprehensive business plan if you want your business to succeed.” And, of course, they are right. You do not plan a long driving trip without a good map and a route to get to your destination: you cannot start, manage and effectively grow a Company without a good map and route to your destination.

On the other hand, sometimes too much effort and time is spent on perfecting the business plan way too early in the process of getting your business up and running: time that could be better spent in actually getting the business “up and running!” And, just as on a long trip, occasionally you need to take detours because road or weather conditions change. So it is in the world of running a business: detours are often needed and conditions change so that what seemed like a good idea yesterday, may not be achievable today. And, those changed conditions may be due to circumstances totally out of your control. It may be time to change your route.

Usually, the original business plan that is written for a business changes dramatically as events unfold as the company is founded, customers found, products (or services) refined and economic conditions change. As these “discoveries” are made, if much time was spent on perfecting the original business plan, then more time will need to be spent changing the plan and it no longer becomes a road map, but rather a document that traces your route after the fact.

Don’t misunderstand: I believe strongly in a well thought out, researched business plan. As a company grows, employs more people and customers, a business Plan is a necessity. But, I also like, especially in the early stages of development of a business idea, a shortened version which I call the “Business Plan at a Glance.”

A Plan at a Glance is a short (maximum several) page bulleted description/summary of your business plan idea. It can, and probably should, become the skeleton of your more extensive plan later, but as your real Business Plan is evolving, the Plan at a Glance helps you stay focused, conserves time and acts as a straight forward reminder of your business. It can also be used as a daily reminder to you of what your business is REALLY all about (sometimes you need to nudge yourself back to reality) and as a short communication device for others.

Following are elements you need to address in your Plan at a Glance:

1.      Your Mission. This needs to be simple, succinct and really, in only a few words, explain to the reader why your business exists.

2.      Ownership/Management Structure. Who makes the decisions? Who hires/fires? Who runs your operations? Who is responsible for sales, marketing, accounting, finance, etc.? In start-up companies these tasks are often done by the same person, so early on, this section may be quite simple, but placing responsibility for these activities will avoid Keystone Cop routines when crises arise and will also assure that needed activities at least have a “home base” as growth gets hectic.

3.      Purpose Statement. Why are you in business? Make this general enough to include your product and service offerings, but not so general as to not describe exactly what you are doing by owning a company. What is your real purpose for being in business?

4.      Markets served. To which groups of customers will you sell your products and services?

5.      Services and Products. This one or two sentence statement tells the reader what products and services you provide (that sounds simple, huh?). But list them all, widgets, repair service for your widgets, training, etc., etc.

6.       Marketing Tactics. Describe how you think you will get the word out that your company exists and offers products and services that others may want to buy? Will you advertise, do free seminars, use “word of mouth,” shout it from the tree tops, blog it, attend trade shows, post it on Facebook, try eBay, etc., etc.? Include any ideas you might have regarding “branding” your products (more on branding in a future article).

7.       Sales Tactics. How do you expect to actually sell your product? What I mean is what steps will you take to get someone to pry out their wallet, open it and give you some of their actual cash? This should be the foundation for your sales process later on which will be a formal workflow description of how sales people are to approach the buying public and get from “introduction” to close to payment.

8.       Core Values. In Built To Last, the authors, Jim Collins and Jerry Porras tell us that every successful company that they studied had a written statement that described their “core values.” Your core values tell your current and future employees what kind of person you expect them to be. Honest? Serious? Formal? Professional? Casual? Does your Company value employees? Customers? What is your level of integrity and ethics? Are you profit driven, expect to provide the highest quality? Etc., etc. These may seem like obvious traits, but as you hire new people, if you don’t tell them what kind of employees your Company has/wants/needs, how could you expect them to know? And, maybe they don’t fit your “mold.” Better to find out early on than later after damage has been done.

9.    Financial needs. Where will you get the money to start and run your business? From your personal savings? Relatives and friends? Will you borrow it? Get a grant from the government or some other “help” organization? As your financial needs change as your company changes, you may need to tap into other reserves such as Angel or Venture Capital financing or maybe ever “going public.” These are all topics for future discussion: if you ever get to those points, you will need more than a Plan at a Glance for your Business Plan. You also need some way of tracking your revenues, expenses, salaries and wages, investments, etc. How will you do that? With an accountant? A simple accounting system that you manage? Don’t forget you need a checking account, and a business form (are you going to be a Corporation, a Limited Liability Company, a Partnership)? And don’t forget about Uncle Sam: he will want to know all about the financial aspects of your business so that he can get his “fair share” of the spoils later as well.

10.  Adjectives you would like others to use to describe your Company. I like to do this exercise because it helps describe the core values you enumerated above. Examples include, Outstanding Attitude, Superb Quality, Excellent Value, Understanding, Visionary, Tenacious, Flexible, Professional.

11.  Corporate Objectives. Describe your objectives such as Profitability, Growth, Corporate responsibility, help the needy, save the planet, etc. 

12.  Needs and Plans. What are your near term plans for each aspect of your business? Jot down only a few bullet points for what needs to get accomplished in Money Management, Marketing, Sales, Operations, HR and Legal. Do you need to hire more people? Now? Later? Do you need to develop new products?  A better sales process? Do you need more money (which company doesn’t, huh)? Does your accounting system need improvement? Do you need to control your costs better? Do you need to improve your quality? This can become your “To Do” list of things that need to get done sooner rather than later.

13.  Now you can list a set of action items that need to be completed also, sooner rather than later, and assign responsibility. Then, review your Plan at a Glance everyday and determine whether these action items are actually getting accomplished. If they aren’t, someone’s priorities are misplaced.

14.  Expectations. This is the fun part. If you can accomplish everything you listed above, what do you expect will happen? What do you hope will happen? Will you increase salaries and benefits for your employees and yourself? Pay off your debts? Will you receive more prestige? Become a spokesperson in your community? Become known worldwide? Have more fun?!!

That’s it, the Plan at a Glance. Still a lot of work, but at least a foundation for your Business Plan which is easily shared with others, can be used as a quick reminder for what you should be doing and when. Carry this plan with you at all times and keep it “ever green,” changing it as needed to keep it up to date with both business conditions and your ideas for making your business more successful.

 

 

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Posted in Entrepreneurism, General Posts | 1 Comment »

My complaint about high property taxes

January 31st, 2009

The following e-mail I sent to my Alderman appeared in several other Blogs as follows:

Biz Times Milwaukee

Then I got the “Quote of the Week” in the January 29, 2009 Biz Times Bubbler:  Scroll to the bottom to see the quote.

AND, I got picked up in Charlie Sykes, local Radio Talk Show Host’s Blog:

Alderman Puente:

I am still in shock over the receipt of my recent Commercial Property Real Estate Tax bill. It grew by an average of 38.9% over last year!! This is outrageous and does nothing more than convince me that doing business in the City of Milwaukee is a crazy venture! The lowest increase of the various components on this tax bill was 31.0% (the State of Wisconsin believe it or not) to the highest, 49.3% for the Public Schools. In addition, my water “fee” increased 50% (to over $1,000) this year after an astronomical increase the year before of nearly 200%!! I don’t even use much water in my building except to flush a few toilets and make coffee!! This is insane!

 

This problem is exacerbated by the fact that my commercial property value (which I maintain diligently, so it is not deteriorating as are many other buildings in the Milwaukee area) has DECREASED in value over the last several years, not increased as has my assessment. This particular round of tax increases has reduced my property’s economic value by $62,000!! And furthermore, after paying all these taxes, I’m not even eligible to visit the Zoo, Museum or play golf on county courses without paying non-resident fees simply because I don’t live directly in the City (or County) proper!!

 

To make matters worse, the services I have received from the City have done nothing but decline over the past years. If you ever drive north on 107th Street, you will find that south of Brown Deer Road you are riding on a beautiful boulevard. If you continue north past County Line Road, you will find another beautifully repaved and nice section of road for two miles to Mequon Road. The one mile segment between Brown Deer Road and County Line Road (where my building is located) is awful: a pothole laden, patchwork quilt that shakes the inside of your car as if you were driving down an unpaved rural road. The road is narrow and the shoulders treacherous. And, this section serves many companies that use large semis to pick up and deliver their goods, so the traffic is always busy. The ditch in front of my building NEVER empties and has become a cesspool of garbage which can never be cleaned up because there is always standing water in it and it is deep and treacherous. I’ve been told that it is a “down steam” problem and that some other “authority” is responsible. Only no other “authority” will admit to their responsibility and clean it up. This problem has existed for many years.

 

Between this and many other unbelievable anti-job decisions being implemented by City “leaders,” the asset values of Milwaukeebased businesses and properties are declining precipitously. As mentioned earlier, I have lost significant value in my commercial property and business potential due in large part to this anti-job atmosphere, not just the economy. I was born and grew up in Milwaukee, went to school here, have been a long time business owner, employer, taxpayer, run the only non-subsidized business incubator in the region, volunteer in various non-profit organizations and am a strong advocate of entrepreneurism and other activities to encourage business growth and create jobs. At the rate that this City is declining, I’m not sure how much longer I can “hang in there” dreaming that someday we will find the “holy grail” and everything will be just great. Anything I do to help create jobs, start new businesses or encourage existing businesses to grow and come to Milwaukee seems futile.

 

Please, provide some guidance about what I can do.

Posted in Politics | 5 Comments »

Sales Management 101

January 31st, 2009

There are six basic Building Blocks for successful business growth: Sales, Operations, Money Management, Marketing, Legal, and Human Relations. None of these Building Blocks is more important than any other. Without them all functioning well, the business is doomed to failure: healthier processes lead to healthier businesses.

This article will take a quick look at the “Sales” Building Block. As with all the other building blocks, a coherent process will help ensure adequate sales at all levels of business growth.

To begin, any sales process can be diagrammed to show each critical step. Let’s start with a “Leads” box. Where/how will you find prospective clients? Who are they? Are they people or businesses? What kind of people? What kind of businesses? Where are they?

Next, the Qualification box. Once you identify a prospective buyer, you must determine of they are qualified to purchase your product: “Do they need it? Might they want it? Can they afford/pay it?” are basic questions the “Qualification Box” tries to answer.

Once a lead is identified and qualified, the next step is to present your “Sales Story” (or “Pitch”). First, determine the prospects needs. Do they even need or want your product? If not, you must convince them of why they should want it and why they should part with their hard-earned cash to buy it. A well-honed “pitch” is a necessary step in your sales process. It may include a brochure, a well-designed web site, an elaborate proposal, or just a sales person presenting the features and benefits of your product. The sales story must be defined by you, the business owner, and you must ensure that any sales person you have representing your product, does so the way YOU want it represented!

Once you have convinced any prospects that they absolutely HAVE TO HAVE YOUR PRODUCT, you move to the next box in the sales process: the dreaded “Close.” Closing the deal requires you to finally get the prospect to say “Yes, here’s my money.” This may require a Purchase Order from their Company, an “OK” from a spouse, or just finally getting them to open their wallets and pay you for the product. Sometimes closing the deal can be the most difficult step in the process: just because someone tells you they think your product is awesome, don’t think your job is done!!

A robust Sales Process can and should be represented by a very extensive flow diagram. The larger your sales function, the more critical it is that your process is “bullet proof.”  If it isn’t, you can be assured that sooner or later you will encounter serious problems.

We have only scratched the surface on the necessary functions of a good Sales Process. There are software tools available to help in designing and managing a good process. CRM stands for Customer Relationship Management system and is a software program that can, if well-implemented, help you in managing your sales function: lead tracking, sales presentation, managing the qualification process, following up with after sales support, revenue forecasting, etc.

Much more time is needed to fully explore the Sales Function – and we will in future articles.

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Starting a new business: do you really want to?

January 29th, 2009

Did you ever dream of running your own business? Have you ever taken any steps toward doing so? If so, you are among millions of Americans who “dream the dream.” But, will you ever actually “live the dream?”

If so, you will be one of tens of thousands who have.  While some have failed miserably, many of those people have reaped great rewards. We don’t want that great dream to turn into a nightmare.

What can you do to move forward with your dream and increase the odds of success?

We don’t have enough space in this blog article to discuss all the things that successful entrepreneurs do to assure they are successful, but we can start by you answering a few simple questions and then follow up with future blog articles that continue the discussion:

  1. What is your business idea? This may seem elemental, but many people who start businesses cannot coherently answer that question. Will you manufacture a product? Provide a service? What is it that you will do to convince someone to take money out of their pocket and hand it over to you?
  2. Do others think your idea has “legs?” That is, maybe you think your idea is great, but are others willing to spend their hard-earned cash on your idea? Ask around: ask your spouse, family, friends and neighbors. You might be surprised.
  3. How much do you need to spend to deliver your product or service? There are many types of costs (which we can discuss in some future column), but basically, answering this question along with the previous one will help you determine whether your business will ever be able to survive on its own (that is, without you investing more and more resources to survive).
  4. What kind of supplies or help do you need to deliver your product or service? Are they readily available? Can you afford to buy some of it before you sell your first products?
  5. How will you make prospective purchasers aware of your product or service?
  6. Are you willing to work 60 or more hours a week to get your business launched?

As I said, these are REALLY basic questions, but until you can comfortably answer them, you shouldn’t even think of starting a business. In future articles we will discuss the Six Building Blocks of Business Growth including the forms of businesses, the financing that you might need, intellectual property (i.e., the need to protect your invention or idea from others stealing it), marketing, sales and many other business concepts.

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