Posts Tagged ‘Business Owners’
Business Model Innovation
What is business model innovation (BMI)?
BMI is about finding new ways to add value to a business in the face of rapidly changing circumstances – economic, social, environmental, technological and political, global, national and local. People have been devising innovative ways to do business for centuries. The explosion in the breadth, scope and power of communications and other technologies over the past decade, however, and in particular the emergence of the commercial Internet, has opened new business model possibilities which were previously unimaginable. This is so regardless of the nature of the core business.
BMI requires of business owners and managers not just a thorough understanding of the key players in their particular industry, but also a sophisticated appreciation of the likely impacts of emerging global, national and local trends and events. It is no longer enough to simply be aware of what the competition is doing. This is an outdated, reactive approach which completely misses the point that the global business environment is changing in ways, and at a pace, never before seen. It is businesses which properly understand this point which will be able to position themselves to take advantage of the most profitable opportunities these trends and events open up, and to avoid their most adverse consequences.
Why BMI is important
BMI is crucial not just for the sake of maintaining current profitability, but also because the valuation of an operating business is significantly affected by the level of future maintainable earnings. Because of this, any business owner with a future sale in mind must recognise that maintaining business model relevance in the face of rapidly changing circumstances is as crucial to future sale value as it is to current profitability.
BMI – the current view
In a recent edition of Fast Thinking magazine, the leader of Strategy and Change Consulting with IBM Global Business Services, Matt English, observed as follows:
… IBM’s Global CEO Study 2006, which surveyed over 750 CEOs worldwide, concluded that business model innovation is the key differentiator in an increasingly competitive and globalised market place. …
The study had examined three types of innovation which CEOs had identified as being crucial in driving growth in their organisations – products and services innovation, operational innovation and business model innovation. The study demonstrated that organisations with an emphasis on business model innovation generated a higher performance in profit margin. English went on:
… By understanding revenue, enterprise and industry model innovation, an organisation is able to make strategic changes to its business model to increase flexibility, reduce cost and open up new markets.
The message is clear that the business model is a key area for innovation in the way organisations shape their businesses and deploy their capabilities. The business model presents strong opportunity for growth, but also provides some challenges regarding collaboration, governance and people processes and technology. …
Langdon Morris, a Senior Practice Scholar at the Ackoff Center for the Advancement of Systems Approaches at the University of Pennsylvania, had this observation in his 2003 paper Business Model Warfare:
… As we examine industry after industry, we see that wherever there is an exemplar, a company that stands head and shoulders above the others, that company is almost always a business model innovator that is applying creativity in dimensions other than technology to become a market leader. … .
.. what’s happening continuously in the marketplace is competition between business models themselves. … What this means is the winners at business model warfare have generally applied innovation to create competitive advantages, building stronger relationships with customers by developing business models that fit closely with customer needs and preferences.
By: Greg J O'Connor
About the Author:
Business Partnerships: Negatives and Positives
An individual diving into business ownership is a risk. An individual has to deal with all of the decision making regarding hiring and finances. Furthermore, individual business owners also have to attempt to overcome their weaknesses and present them as strengths.
Due to the difficult decision making needed and the incredible amount of skill involved in owning your own business a lot of people like to involve themselves in partnerships but just like any other relationship, business partnerships have negatives and positives.
1. One positive of a partnership is an increased amount of contacts.
2. Another positive is that one persons strengths can make up for another ones weaknesses.
3. An additional positive is that having financing coming from multiple sources is a great asset to any business.
4. Partnerships also allows for more ideas to develop. Two heads are better than one when it comes to creating ideas and problem solving.
Below are some negatives involved with business partnerships.
1. The profits have to be split. With a partner you are automatically giving up a percentage of income to someone else.
2. Another negative can be disagreements. Disagreements about different aspects of how a business should be run can lead to turmoil between partners.
If you are considering starting a business with a partner, review this article to make sure it is the right thing to do.
By: Andre Bias
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Business Plan Guide – 7 Mistakes to Avoid When Writing a Business Plan
1. Don’t Put it Off.
Yes, writing a business plan can be a monumental chore. It’s easy to procrastinate while you focus on the more exciting processes of your business. Many new business owners will wait until the day before their scheduled meeting with the bank — and then frantically try to write a plan overnight. You can imagine the results.
Don’t wait until you have more time. There will never be more time. You need to clear your calendar for a week and make your business plan a top priority. Or if that isn’t feasible, schedule a certain period of time each day to work specifically on planning. No doubt you have heard the old saying: “If you fail to plan, you are planning to fail”.
2. Don’t Confuse Profit With Cash Flow.
Unless you have an accounting background, you are very likely to define the success of your business in terms of profits. A simple definition of Profit would be Sales minus Expenses equals Profit. But in the business world, profits do not equate to cash. Your profit formula does not take into account the amount of cash you have tied up in production costs for products that have not yet sold, or the customers who still owe you money for sales that have already been made. Your business can look quite “profitable” while your bank account is over-drawn.
Make sure your business plan includes a table that addresses cash flow. Ideally, you should detail the monthly cash flow for the first two years of the business and annually thereafter.
3. Don’t Fall in Love With Your Idea.
Too many business plans blabber on for pages about the “newness” and “uniqueness” of the idea. But the truth is, investors want to invest in people, not ideas. It is only the people who can execute the systems necessary to bring the idea to life.
Instead of waxing poetically about your business idea, focus your energy, and your reader’s eyes, on the ways you plan to implement this great business idea.
4. Don’t Succumb to Fear and Dread.
If you have never written a business plan, the process may loom like Mount Everest. But, like most new challenges, writing a business plan isn’t as hard as you have imagined it to be. You aren’t writing a doctoral thesis or the next great novel. If you have invested in a business plan guide, use it. You can easily find helpful resources such as books, software programs and templates. Remember, you eat an elephant one bite at a time, so start chewing.
5. Don’t Over Sell.
Skip the vague and meaningless business phrases such as “best ever”, “highest quality” and “unsurpassed customer service”. You will lose your reader’s interest and respect if you engage in hyperbole that isn’t supported by measurable facts. Remember that the objective of a plan is its results, which require tracking and follow up. Focus your goals on specific dates, management responsibilities, budgets, and measurable milestones. Think fewer words and more numbers.
6. Don’t Engage in One-Size-Fits-All
Business plans can have many different purposes and they should be written to reflect the specific purpose at hand. You may be using your plan to start a business, or just run a business better. Your purpose may be simply to sell an idea for a new business to one particular business partner. Your plan may be intended to secure a small business loan, or it may be needed to secure millions of dollars of venture capital. Each of these purposes would require different information, presented in different ways to meet the needs of different readers. Keep a picture of your intended reader firmly in your mind and your business plan will stay focused as well.
7. Take Off the Rose Colored Glasses
Optimism is a wonderful resource. Without it, a business owner would find it difficult to summon the energy necessary to launch a new venture. However, this is not the time to engage in unbridled projections. If your company’s growth chart is based on an “industry average” of 15% annual growth, you should certainly be prepared to prove that assumption. When in doubt, be less optimistic.
By using a good business plan guide, and avoiding these common mistakes, you can prepare a plan that almost guarantees your business success. Good luck!
By: Barb Dearing
About the Author:
Barb Dearing is a writer specializing in topics that relate to new business owners. She recommends a free 9-Step Business Plan Guide that can be found at: http://www.business-plan-guide.com
The 5 Critical Success Factors in Business
Here, we’ll explore what they are – and how you can put them to work for you in your own business. These principles form the basis for most success in business achieved by entrepreneurs, business owners, business managers, and professionals. Without following them at least to some extent, you’ll find business to be a struggle – and much less rewarding than it could be.
As you read this, see how well your own thinking and actions in business stack up to these five core principles:
1) Profits are essential for your business to succeed – they are what pays you.
You don’t have to look far to find examples of businesses imploding due to lack of profits. (The current banking and financial crisis immediately comes to mind… Or, remember the dot-com bubble?… the spend, spend, spend your way to market share type of thinking.) And, those are just some larger, more visible examples… small businesses are at even more risk.
Ultimately, profits are the essential key ingredient for business survival – and your focus on them is key. The very existence of your business depends on a steady-stream of profits… to pay your bills… your salary… your employees… your vendors and suppliers… and to secure your financial future.
Profits make the difference between the success or failure of your enterprise. They’re the essence of being in business and are the fruits of your labor. Without profits (or deep pockets), you can’t last long.
2) Most businesses miss profit opportunities on almost every transaction or customer/client relationship – and are limiting their incomes without even knowing it.
Here again, you won’t have to look far for examples. Just think of all the leads that don’t get proper follow-up, the customers/clients that receive only occasional communications (if any), the up-sells, cross-sells and add-on sales that could have been part of a given transaction, the unrealized intangible opportunities that exist in your customer/client or vendor/supplier relationships – and you can begin to see a sad pattern.
It’s a pattern of profit opportunities gone by… wasted utilization of assets… or under-realized profit potential in your transactions. In many cases, business owners, managers and professionals are completely unaware of their lost profit opportunities.
Make your expenditure of time, energy, capital, and resources produce more for you – and capture the money that most businesses miss. Think about your sales, marketing, and advertising process as a total package – and create, test, and put in place processes that take advantage of strengths in your business.
3) Stability and security comes from creating a “Web of Profits” in your business.
Do you have a number of different sources within your business to support you? Or, are you relying on only a few? Or, even worse, relying on only ONE primary source of profit?
The majority of businesses rely on fewer than five profit sources – and think in terms of “profit centers.” In other words, a collection of different channels of profit from individual sales of products or services (retail), bulk sales (wholesale), joint ventures, ownership interests, licensing and/or other arrangements, and so on.
But, when you create a “Web of Profits” in your business – that is, an interconnected approach that integrates a variety of profit sources and activities together into a single unit of functionality – you stand a better chance of leveraging your business in new ways.
4) The focus on Increasing Profits is more beneficial than the focus on Cost-Cutting.
In times of recession or economic crisis, sometimes cost-cutting is the only logical and sane option. If you’re bleeding… you stop the bleeding before anything else. But, when it comes to cost-cutting, the effect is temporary and fleeting. Once you’ve drastically reduced your expenses, any additional cost-cutting might hurt your business’s effectiveness and viability.
Crisis management aside, it’s much better to focus on getting more business, to create new profit sources, run better promotions, do better advertising and marketing, and generally operate your business in a more customer/client oriented way.
That’s what eases the pressure from high-costs… and provides you with what you need from your business. The thinking that goes into a profit-oriented focus and mindset can often provide innovative and inspirational breakthroughs in results.
5) Strategically plan for Profits – and take the specific action steps needed to implement your plan.
Being laser-focused on profits – rather than your strategic planning being primarily focused on revenue – takes you to the next level in your business plan. You’ll be able to see alternative profit possibilities – and the action steps needed – so you can build them directly into your plan.
By their very nature, business plans focus on the bottom-line – and usually they just focus on the obvious sources – not necessarily on the alternative profit possibilities. And it’s these alternative profits that most businesses miss… profits that could even eclipse what’s being produced by your current business activities.
Often, the biggest difference between those who are able to implement new profit sources and those who aren’t – is simply the willingness to identify what potential alternative profit sources exist… to prioritize the order in which you want to implement them… and to know exactly which action steps to take. Then, of course, to simply get started – and systematically put them into practice in your business, one-by-one.
Copyright © 2008, Guerrilla Profits International
By: Stuart Burkow
About the Author:
Stuart Burkow is co-author of the new book, Guerrilla Profits: “10 Powerful Strategies to Increase Cashflow, Boost Earnings & Get More Business” — along with Jay Conrad Levinson, the famed “father” of Guerrilla Marketing. You can get the new Guerrilla Profits book at the $14.78 “Amazon.com” price (reg. $18.95) — PLUS: You’ll also get a Free “Profits Launch Kit” with 5 Free Bonuses worth $161… At: http://www.guerrillaprofits.com/NewBook.html
New Business, New Credit Card
Many new business owners are unsure as to why they might need a business credit card. Surely it’s just as easy to put any funds into a personal account and run the business from there? Unfortunately, this couldn’t be further from the truth. Separating personal and business finances should be a priority for all new business owners. Not only will it minimise the amount of paperwork necessary during accounting periods, but it will also look far more professional to the Inland Revenue Service when it comes to submitting accounts. Business credit cards also offer spending reports, allowing you to identify spending habits – an advantage which most personal credit cards do not offer. Having separate accounts makes finances easier to manage and also makes it far simpler when it comes to things like declaring expenses – something that the majority of employees have to do at some point. In addition, you can request further credit cards for employees; a facility that is not possible with a personal credit card. These cards can have spending limits attached to them and transactions can be tracked online to ensure that all employee spending is necessary and within the set limits. In addition, the business owner can see exactly what has been spent, even if an employee forgets to submit the appropriate receipts.
A business credit card also allows a new business to qualify for particular deals and discounts that are designed with companies in mind. These can include perks such as reward schemes on certain products and services or offers on Airmiles or travel insurance. These benefits can be particularly advantageous to small and medium-sized businesses if the card is selected with the perks in mind. For example, a business whose employees travel a lot might choose a card where travel insurance is discounted.
The security offered to a new business through a business credit card is also a very important factor. These cards offer protection against fraud, theft and there are even capabilities that offer protection against employee misuse. Card security can give the new business owner far more peace of mind and prevent unnecessary expenditure in the event of the ever-present threat of Internet fraud or ID theft.
The most vital aspect of a business credit card for a new business is the credit itself. Credit can be used for a variety of reasons, not least of which is managing the company’s finances during times of restricted cash flow. As the credit does not touch the business’s cash account, supplies can still be bought and services paid for whilst you’re waiting for customer balances to be settled. Of course, the APR and monthly repayments have to be considered, but there are plenty of introductory offers out there to suit even the most lowly of beginnings and these are often matched by cheap rates once the introductory offers have expired. Using credit also helps to build up a company’s credit rating and opens the door for further business credit and greater sets of benefits and perks.
It may appear easier to simply trust your company finances to your personal credit card, but the advantages of a business credit card specifically designed for your business needs are obvious. Business credit cards are designed specifically to deal with the stresses and strains demanded by a company. A personal credit card is not. Finding the right business credit card for you is a process of elimination, comparing and contrasting the deals on offer in the marketplace. With over 500 business credit cards available, comparison websites are an extremely useful resource to help you make the right decision and provide your company with a practical, useful and valuable asset.
By: Hannah Callen
About the Author:
Hannah Callen, a write for Money Now, has published many articles on business finance and likes to provide first hand knowledge of business credit cards. Read more about a business credit card here.