management Archives - Resourceful Business

5 Reasons to Start Your Small Business Right Now

31 January 2015June 20, 2022Ann MillsLeave a comment

Starting your own business is the iconic American dream. If you have a passion, perhaps it’s time to pursue it in a more serious way and see if you can make a living doing it. The figures are daunting. Approximately 8 out of 10 start-ups fail within the first 18 months, and new entrepreneurs will invariably make mistakes, many of which will be costly. Often there is financial pain along with the uncertainty of how long to keep going if the concept isn’t working. At times, you will feel like you jumped off a cliff, but nevertheless, there are so many reasons to try.

Here are 5 reasons to start your small business right now:

1. Be Your Own Boss

Work Life Balance is the enviable state of successfully managing a career and life. A highly-regarded online medical resource, WebMD, even has a section on how to improve your work life balance, and the pursuit of it is one of the key drivers behind the exponential rise in the freelancing industry. Starting your own business will certainly throw your work life balance off for a while as you build, fund and grow a new venture. Ultimately, the rewards include the ability to manage your own time and be your own boss. You can decide how large to grow your business and who to hire. You can even work from home until such time as you choose to expand your company.

2. Pursuing a Creative Passion is Good for Your Health

Having a creative outlet is important to your mental well-being. For many people, it takes the form of a hobby that is enjoyed around a structured work week. But why not try to build your hobby into a business. In Six Tips for Turning Your Hobby Into Your Job, Jacquelyn Smith encourages people to figure out if there is an income stream in their hobby and pursue it. Do you like to crochet? Help others learn how to enjoy your hobby by teaching at a local community college or develop a series of classes from home. Doing so can be good for your health. A study in the Journal for Aging and Health found that creative people had lower levels of stress and healthier brains.

(Effective Loan Rate of SBA Loan Portion from Spedco.com)

3. Interest Rates are at Historic Lows

Whether it’s seed capital or money for day-to-day operations, many aspiring entrepreneurs need funding. One of the primary reasons for small business failure is lack of cash flow, and small businesses are perceived as risky, so they pay much higher interest rates on loans than large corporations. If you are looking to start a new business, the interest rate environment matters. In the United States, the Small Business Association (SBA) has a loan program that will guarantee up to $5 million dollars or 75% of the loan repayment called the 7(a) Loan Program. Typically, interest rates on SBA loans are benchmarked off prime rates and the Federal Funds rate. The Federal Funds rate is at historic lows.

4. Age Discrimination in the Workplace

As workers age, many find it nearly impossible to re-enter the workforce after any lapse in employment, particularly after the age of 50. Age discrimination is well-documented. Not surprisingly, many older Americans apply their skill set to starting their own business. With a lifetime of experience and a wealth of knowledge, olderpreneurs are on the rise. And because older business owners typically have more money than their younger peers, they borrow less and their ventures have a higher rate of survival.

5. Individual Health Insurance under the Affordable Care Act

The landmark healthcare legislation, the Affordable Care Act, made individual healthcare plans available to many Americans who previously did not qualify. One of the main reasons employees hesitated to leave a traditional workplace environment was the ensuing loss of health coverage, but solopreneurs can now purchase individual health plans on the Federal open marketplace. Small businesses can even set-up a defined contribution plan for employees and provide allowances to reimburse employees for their individual health insurance costs, and it is typically cheaper than a group healthcare option.

So, if starting a new business has been on your to-do list, there is no time like the present. From the practicalities of finding funding and getting health coverage to the benefits of achieving employment flexibility and work life balance, it’s a great time to consider pursuing your passion. If you choose to take the leap, contact Resourceful Business and we will create a digital marketing strategy to make your new business soar!

Mexican Train Dominoes Offer Lessons for Small Business

29 August 2014May 4, 2017Ann MillsLeave a comment

On a recent vacation, my family taught me how to play Mexican Train Dominoes. The game is a variation of dominoes which allows players to add to their own line of dominoes, their private train, or alternatively, add to a line of dominoes open to all, the public train. Players try to get rid of all of their dominoes before their opponents and keep remaining dominoes to low numbers. After several rounds, the winner has the lowest number of points based on the totals of any remaining dominoes from each hand.

As I was new to the game, it took me several rounds to develop my own strategy. After settling on one that seemed to work, it occurred to me that my strategy had similarities to some of the key decision-making inherent in a small business. In addition to being a fun family game, Mexican Train Dominoes offer lessons for the small business.

Lesson One: Focus On What You Control

As I mentioned, in Mexican Train Dominoes, each player has a private train, which consists of a line of dominoes open only to that particular player. None of the other players can put down dominoes on someone’s private train. There is also a public train where all the players can put down a matching domino if they have one. As I organized whatever dominoes I had been dealt, I found myself segregating out the dominoes in my hand which worked on my private train from ones which worked on the public train. I could control the orderly play of my private train dominoes, but I had no control of what the public train opportunities were as the dominoes would change as players put down various combinations.

In fact when running a small business, one of the most important components of any strategy is focusing on what you control. For example, you can’t control whether a competitor opens up a shop next door. However, you can control the decision to expand your own product line once the competitor opens up. You can’t control the consumer trend towards iPads and mobile devices. You can ensure that your website is responsive and mobile-friendly.

Lesson Two: Identify and Minimize the Risks You Can’t Control

After I was dealt my starting dominoes at the beginning of the game, I would find myself separating out the dominoes that I could match up and use in my private train into one pile. I would organize them into a line so as to match as many as possible, and I would move them around until I had one orderly line which I could use for my private train.

My second pile would have the dominoes that I could not use in my private train, but rather would have to dispose of in the public train. Since I had no control over the public train, I would always strive to play any dominoes in my public train pile first. In effect, I was minimizing the risk I could not control, the playability of the public train.

Similarly, for a small business owner, it is important to identify and minimize risks to the business that are outside of his or her control. One example might be a business that is a strictly brick and mortar storefront. A particularly precarious winter or nearby road construction can make access to the store difficult and imperil sales. However, in understanding the risk of being a brick and mortar business, the owner could develop an online e-commerce website for popular products or offer deliveries within a certain radius.

Lesson Three: Leverage Your Assets

One of the rules in Mexican Train dominoes relates to the double domino, a domino which has the same number on each side of the line. If a player has a double domino, (s)he plays it perpendicular to the line of dominoes, and it must be followed by a regular domino with the matching number on one side.
Double dominoes can be critical to a winning strategy. First, they allow a player to put down two dominoes. In playing a double domino, a player can quickly decrease the point value of the dominoes left in his or her hand. Strategically, the opportunity to play a double domino should not be missed, and if possible, it should be played early.

Similar to playing a double domino, a savvy business owner will leverage the assets of the company to gain a competitive edge. The assets might be personal contacts or an alumni network. Social media is an excellent way to leverage and broaden the audience for marketing campaigns or promotional offers. A small business can also leverage a customer relationship in one business line into another area and grow the overall business with the client.

Clearly, Mexican Train dominoes is not just amusing child’s play. There is some luck of course, but also plenty of strategy. The next time you have an opportunity to enjoy dominoes, remember the small business lessons implicit in the tactical side of this clever game. And if you could use some assistance identifying and focusing on strategic areas for your business, minimizing risks outside your control or just leveraging what you have, contact us. We will help you develop a winning strategy!

Small Business Strategy: The Importance of Stakeholders

24 March 2014May 4, 2017Ann MillsLeave a comment

Every business, regardless of size, has a management structure. Even sole proprietors subcontract out work and may find themselves managing the subcontractors. Whether a person is an owner, manager or employee, (s)he plays a role in the success or failure of the enterprise. Sometimes, making employees or managers stakeholders in the business can have dramatic effects that benefit the company. Let me give an example to illustrate a key small business strategy and the importance of stakeholders.

Two retail stores operate down the street from each other. Both are small businesses with an owner, manager and several employees. Business is hectic, and the owner of Business A assigns the manager the task of putting out the work schedule each week and allocating hours amongst the part-time staff. Over the course of several weeks, the manager receives complaints from the staff that they are not getting enough hours. So, she tweaks the schedule and adds a few more hours here and there. Some of the shifts now overlap, but everyone seems happier. The owner notices that the payroll seems to have gone up and wonders why.

In contrast, the owner of Business B, down the street, also assigns the manager the task of putting out the weekly work schedule. For the increased responsibility, the owner also gives the manager a small allocation of the net profit each month should the business beat certain net profit targets. As the weeks go by, the staff complain that they are not getting enough hours in their shifts. The manager could allocate everyone a few more hours. However, the manager knows that if she allocates unnecessary hours to keep the employees happy, the net profit target at the end of the month might be jeopardized due to the extra payroll expense. The manager chooses to keep the schedule intact and instead explains to the staff that the business does not require more shifts.

The difference is striking. In Business B, the owner made the manager a “stakeholder” in the business and, in effect, changed her decision-making process.

What is a Stakeholder?

A stakeholder is defined as “a person with an interest or concern in something, especially a business.” By having a financial interest in the success of an entity, stakeholders will intuitively begin to consider the profitability of decisions, even if subconsciously. It is why profit sharing, end-of-year bonuses and stock awards in lieu of cash are often used in the for-profit environment. On a smaller scale, I have seen small businesses distribute a little bit of each month’s profit to their key managers should the business achieve key targets. The managers embrace the business and work to make it better every single day. They start to think about the business’ reputation and how to get clients to become repeat customers.

When The Resourceful Business is asked to advise clients on their current strategy, one of the first things we evaluate is who in the company has the role of stakeholder. It can drive the day-to-day decisions being made in the business.

How Being a Stakeholder Will Change Behavior

In Business A, the owner would eventually sit down with the manager and explain that the work schedule should not be compromised to benefit the staff. Rather, the manager should create a work schedule to benefit the business, although a strong incentive to do so is not really in place. As the staff complain, the manager could still be motivated to add a few extra hours here or there, perhaps just not as many as before.

In Business B, the owner has incentivized the manager to create an efficient work schedule by making the manager a stakeholder. I outline this contrast as a reminder that it is very important for a small business to constantly evaluate who has the role of stakeholder. It may seem counter-intuitive to widen the base of stakeholders in a small, growing business. However, if a business exceeds expectations at the end of a given month, even a small distribution of profits to key staff members is incredibly motivating. Cost-cutting suggestions will start to trickle in and some fabulous new ideas will too.

A small business can thrive by considering how it designates and incentivizes its stakeholders. Need a strategic perspective on the structure of your business? Contact us.