Tag Archives: Entrepreneurialism

Street Smarts for Small Businesses

steps to success

The smart person learns from his or her mistakes, a wise person learns from other peoples mistakes

I believe the best way to learn how to be great at something is to seek the advice from those that have successfully gone before you, not to imitate them, but to follow the principles that have made them successful. This is why mentors and also books can provide invaluable help and resources on our journey to achieving our vision and goals. One such book I recently came across is Street Smarts: An All-Purpose Tool Kit for Entrepreneurs by Norm Brodsky and Bo Burlingham.

The reason I found the book so useful was because it is based on practice not theory. Brodsky himself is a veteran entrepreneur, has been a mentor to a number of successful entrepreneurs, and in addition to co-authoring Street Smarts is a columnist and senior contributing editor for Inc.com.

There are so many gems in this book it was difficult to select just a few so the best advice I can give you is to get the book! But until then here are three things that really resonated with me:

My three favourite principles

1.       Spend your time going after high margin customers let the low margin customers come to you and then negotiate the price up.

This typically means focusing on customers that spend more, but probably buy less. i.e. the customer that buys from you whether your product is on sale or not. These customers are probably more valuable to your business than the serial bargain hunter who only buys during the sale. It is better to spend your time building relationships with the former and letting the latter come to you.

Why? Well, as Brodsky and Burlingham explain, gross profit (the net sales minus the cost of goods and services sold) is the most important figure for a small business; all expenses are paid out of gross profit. To illustrate, if your product costs you £20 to make and you sell it for £35 you are obviously making a decent profit margin, if you sell the same product at £21 even if you sell more, the picture isn’t so rosie. The lower price will undoubtedly attract more customers but this may not actually be of benefit to your business, because not only are you making significantly less profit on each sale (which may not be enough to cover expenses), but you are also having to service significantly more customers which may erode the minimal profit you received from the sale. Yet many small businesses make the mistake of going after lots of low margin sales, these sales look good initially but could actually be costing your business. Better to have few high margin customers than many low margin customers. This is why I’m not a fan of competing on price, as it erodes value for your business and your market. I personally will always compete on value.

2.       There is ONE opportunity you should be thinking about at the beginning of any business

Emotion causes you to want to jump on every new opportunity that arises, but as Brodsky and Burlingham state “the numbers (as discussed above) will help you balance your emotion”.

Most entrepreneurs are ideas people so they tend to struggle with focusing on one idea at a time, perhaps you can relate :) however, When you have limited time and limited money as is the case for most small businesses, focus is a must.

Focus and discipline are more important than chasing opportunities when building a business– a plan helps you do this. As Brodsky and Burlingham state; “eventually your business will grow so strong that it won’t need you, and then you can chase opportunities to your hearts content”.

3.       First mover advantage is overrated

You often hear that to be successful you need a unique product or service or you should choose a business with as little competition as possible. Brodsky advices the opposite, because there is nothing more expensive than educating a market. This one’s definitely food for thought :)

These three principles barely scrape the surface of what the book has to offer, so if you’ve recently started a business or are planning to do so in the near future then I can’t recommend this book highly enough.

If you do decide to read it, please come back and let me know what you think and what your favourite principles are.

Speak soon,
Katrina

PS:here’s Norm Brodsky’s Twitter handle @NormBrodsky if you wish to follow him.

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Is the UK Becoming a Free Agent Nation?

Business Show 2013,
Me presenting to current and future free agents and micro business owners at the Business Show, London Olympia

I am fascinated and excited about the increase in business start-ups and general trend towards entrepreneurialism within the UK.

As reported by Enterprise Nation, in 2013 alone 500,000 new businesses were formed and with 4.9 million businesses trading in the UK, 12% of the working population are their own boss.

What I find even more interesting is that the image that many of us have, regarding what a small business looks like is probably quite different to the reality; many are sole traders, working from home, running their business on a part-time basis and most plan to grow through the use of subcontractors as opposed to permanent employees and costly overheads such as office space. You can find more details in Enterprise Nation’s Quarterly Small Business survey results.

What we are actually seeing is a phenomenal rise in micro businesses  and what  Daniel Pink termed a ‘Free Agent Nation’ in his book entitled Free Agent Nation: The Future of Working for Yourself.  A free agent’s encompass the self-employed, independent contractors, temporary workers and micro businesses. Although written in 2001 and based on America, the book has some really interesting points that I think mirror the UK’s own rapidly growing free agent nation.

In my endeavour to understand the trend a little more I read Daniel Pink’s book a couple of weeks ago, I found it quite insightful and wanted to share 3 key takeaway’s with you:

1.       The ‘organisation man’ is no longer the ideal

Yes being a high-level executive in a fortune 500 is still a well-respected and highly sought after career path but people don’t view it as the utopia they once did. An ‘organisation man’ is defined as someone who lets his individuality and personal life be dominated by the organisation he serves, this is often the reality for many in high-paid, high-level corporate employees. An increase number of the population is realising that they would rather have freedom, autonomy, financial freedom and quality of life and becoming a free agent is often the answer.

2.       Money is no longer the measure of success

As Dan Pink puts it; “As prosperity widens and as the expectation of comfort becomes the default assumption … money matters less in determining individual satisfaction and personal notions of success …a wealth of psychological studies have concluded that satisfaction is not for sale.

Free agents care about money and indeed many of them make a lot of money, but what motivates them to go down the free agent route is rarely about money. Increasingly many feel that in order to reach true self-actualisation and be free, it is necessary to transcend the confines of an organisation and step out on their own.

3.       The nature of loyalty has changed

In an economy where many senior executives lose their  jobs with increased regularity and  employee churn much higher now than in days past, the difference in perceived risk between a full-time job and self-employment is not as vast as it’s once was. In fact many free agents perceive self-employment as the safer bet. As job security has eroded so has loyalty.

As Dan Pink states; Investing all your human capital in a single company makes as little sense as investing all your financial capital in shares of IBM…diversify or die.

Free agents hedge their bets and tend to work for many companies as opposed to one. The job for life no longer exists and in addition, staying with one company for too long is seen as more of a negative than a positive as it raises questions as to how well a professional can adapt to a new environment.

For these reasons vertical loyalty (loyalty to one company or one leader) has weakened and horizontal loyalty (loyalty to colleagues past and present, teams and groups) has strengthened.

If you haven’t already read Free Agent Nation: The Future of Working for Yourself I recommend it as it paints a very interesting picture of the changing world of work. If you’re a free agent or planning to become one I’d be really interested in hearing your views so feel free to leave your comments below.

Speak soon,
Katrina

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Entrepreneurs work for others too

So I’ve always had great ambitions of setting up my own marketing consultancy, it was never an if, but, or maybe but quite simply a when.  I’ve had a business plan of my dream business sitting on my bookshelf since before I left university

However, of late my thinking has changed and I’m no longer so sure that self-employment will be the end goal for me, I don’t feel that I’m any less ambitious, driven or entrepreneurial than I used to be, but something’s changed….can’t put my finger on what or when it changed, but it’s definitely changed…

perhaps it’s that I quite like the definite divide between work-life and home-life that seems easier to maintain when you work for someone else’s business rather than your own

perhaps it’s that my notion of success has changed; I used to think that the only way I would truly feel successful would be to work for myself – I no longer feel that way in fact the things that I associate with my success have less and less to do with ‘employment’ with each passing year

perhaps it’s that I’d rather spend my spare time in more philanthropic endeavours than building my own business

perhaps it’s that I’ve realised that there’s more than one route to financial freedom

perhaps it’s that I’ve realised that you can be an entrepreneur, a change maker within a company

and perhaps it’s that I actually quite like working for someone else dare I say it

Entrepreneurs and thought leaders are as much needed in established businesses as they are in start-ups and one-man bands. The nature of business has changed and now I realise that the burning desire I have to effect change, be a thought-leader and expert in my chosen field can be realised within an established organisation. The future of work belongs to entrepreneurs and thought leaders whether you work for yourself or others.

It seems that everyone wants to be an entrepreneur and run their own business these days, which is cool, I haven’t ruled it out myself, but my point is that business success doesn’t necessarily culminate in self-employment and that’s cool too.

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