Networking is all about relationships. Networking with like minded-entrepreneurs (whether face to face or online) begins with understanding the VCP Process.
Any successful relationship, whether a personal or a business relationship, is unique to every pair of individuals, and it evolves over time. It starts out tentative, fragile, full of unfulfilled possibilities and expectations. It grows stronger with experience and familiarity. It matures into trust and commitment.
The VCP Process describes the process of creation, growth and strengthening of business, professional and personal relationships -- it is useful for assessing the status of a relationship and where it fits in the process of getting referrals. It can be used to nurture the growth of an effective and rewarding relationship with a prospective friend, client, co-worker, vendor, colleague or family member. When fully realized, such a relationship is mutually rewarding and thus self-perpetuating.
Visibility:
The first phase of growing a relationship is visibility. You and another individual become aware of each other. In business terms, a potential source of referrals or a potential customer becomes aware of the nature of your business -- perhaps because of your public relations and advertising efforts or perhaps through someone you both know.
This person may observe you in the act of conducting business or relating with the people around you. The two of you begin to communicate and establish links -- perhaps a question or two over the phone about product availability. You may become personally acquainted and work on a first-name basis, but you know little about each other. A combination of many such relationships forms a casual-contact network, a sort of de facto association based on one or more shared interests.
Credibility:
Credibility is the quality of being reliable, worthy of confidence. Once you and your new acquaintance begin to form expectations of each other -- and the expectations are fulfilled -- your relationship can enter the credibility stage. If each person is confident of gaining satisfaction from the relationship, then it will continue to strengthen.
To determine how credible you are, people often turn to third parties. They ask someone they know who has known you longer, perhaps done business with you. Will she vouch for you? Are you honest? Are your products and services effective? Are you someone who can be counted on in a crunch?
Profitability:
The mature relationship, whether business or personal, can be defined in terms of its "profitability." Is it mutually rewarding? Do both partners gain satisfaction from it? Does it maintain itself by providing benefits to both? If it doesn't profit both partners to keep it going, it probably will not endure.
Are you really profiting from the relationship, or are you stunting its growth? Perhaps if you gave this vendor all your business, you could work out terms that would benefit both of you. Profitability is not found by bargain hunting. It must be cultivated and, like farming, it takes patience.
Visibility and credibility are important in the relationship-building stages of the referral marketing process. But when you have established an effective referral-generation system, you will have entered the profitability stage of your relationships with many people -- the people who send you referrals and the customers you recruit as a result.
Sunday, November 7, 2010
Thursday, October 28, 2010
Financial Management
It's great to hear about your entrepreneurial spirit in starting a construction company. I would just caution you to really make sure that you have the work experience and the team in place to successfully move forward with this venture. Sometimes entrepreneurs jump into a venture, and after getting their hands dirty, realize they don't have all the tools in place to be successful.
As you point out, finance and accounting are crucial elements in all businesses. As basic as it may seem, a lot of entrepreneurs jump into a venture without thinking about how they will make money (i.e. be profitable) and to account for that money.
Once you have completed the majority of your business plan, then start to work on building a financial model. As I stated before, you will want to highlight all of the specific drivers of revenue growth in your model so that you will be able to measure your progress in reaching your milestones for each growth initiative.
Let's move to the expense side of running a business. As a side note, this happens to be an area that entrepreneurs usually underestimate and is the common cause for a cash crunch later on down the line.
Your first step is to list as many expenses that you can think of on a plain sheet of paper. Think long and hard on this and do some research because there may be expenses that are not coming to your mind at first. Also, speak with other entrepreneurs in the construction industry as they will likely fill in any gaps you might be missing on your list.
Once your expense list is complete, incorporate it in the financial model. Keep in mind that as you grow, your expenses will also likely increase so you will want to model operating expenses such as employee headcount, office space, administrative fees and anything else that goes into your business.
In addition, it is often helpful to incorporate some scenario analysis in your model (i.e. worst-case, base-case, expected scenario). For instance, if you were estimating the fuel costs for the company's construction vehicles on a yearly basis, a scenario analysis would entail modeling gas prices at current levels, higher levels and lower levels. It doesn't have to be exact as no one can predict the future but you should be thinking about different scenarios to better prepare yourself for the future.
As you point out, finance and accounting are crucial elements in all businesses. As basic as it may seem, a lot of entrepreneurs jump into a venture without thinking about how they will make money (i.e. be profitable) and to account for that money.
Once you have completed the majority of your business plan, then start to work on building a financial model. As I stated before, you will want to highlight all of the specific drivers of revenue growth in your model so that you will be able to measure your progress in reaching your milestones for each growth initiative.
Let's move to the expense side of running a business. As a side note, this happens to be an area that entrepreneurs usually underestimate and is the common cause for a cash crunch later on down the line.
Your first step is to list as many expenses that you can think of on a plain sheet of paper. Think long and hard on this and do some research because there may be expenses that are not coming to your mind at first. Also, speak with other entrepreneurs in the construction industry as they will likely fill in any gaps you might be missing on your list.
Once your expense list is complete, incorporate it in the financial model. Keep in mind that as you grow, your expenses will also likely increase so you will want to model operating expenses such as employee headcount, office space, administrative fees and anything else that goes into your business.
In addition, it is often helpful to incorporate some scenario analysis in your model (i.e. worst-case, base-case, expected scenario). For instance, if you were estimating the fuel costs for the company's construction vehicles on a yearly basis, a scenario analysis would entail modeling gas prices at current levels, higher levels and lower levels. It doesn't have to be exact as no one can predict the future but you should be thinking about different scenarios to better prepare yourself for the future.
Tuesday, October 26, 2010
Your Executive Team
Building your team demands matching jobs to people's strengths. That means giving people responsibilities according to skill level, not based on how close a friend they are, or how closely related they are to you, or whether you just like their sunny personality. That includes you as well--don't give yourself an impressive title and job unless you're right for the job. The fact is, many smart entrepreneurs hire their own boss when they realize their skills lie elsewhere in the company.
Chief Executive Officer (CEO).The fact of the matter is, the CEO is the boss of everyone and is responsible for everything. They determine the company's strategy. They hire and build the senior team. The CEO's skills must include strategic thinking, the ability to rise above the daily details and decide where the industry
and business are headed. They must then be able to decide the company's best route for navigating the future market conditions. They have to be able to make good bets.
Chief Operating Officer (COO)The company's COO insures the business can deliver day after day. He figures out just what needs to be measured so he can tell if things are going well. Then his team creates the systems to track the measurements and takes action when the company isn't delivering.
President. Some say a president oversees staff functions--human resources, finance and strategy--while the COO oversees daily operations. Others proclaim that the president is a synonym for COO, especially in smaller companies. Yet sometimes, the president fills gaps left by the COO and CEO. Or sometimes, the title goes to someone you want at the strategy table but who doesn't have an obvious C-level title. In any case, you should think long and hard about whether you need someone to fill this title, or if your company is fully covered with a CEO and COO.
Chief Financial Officer (CFO) Plain and simple, your CFO handles the money. They create budgets and financing strategies. They figure out if it's better for your business to lease or buy. Then they build the control systems that monitor your company's financial health. The CFO is the "bad guy" who won't let you buy that really cool videoconferencing equipment and makes you pay down a commercial loan instead. While you mope about it in your office, the CFO will be busy figuring out which customers, business
lines and products are profitable, so next year you can afford the really cool videoconferencing equipment.
Chief Marketing Officer (CMO) The CMO will know (or learn) your industry inside out and helps you position your product, differentiate it from your competitors' products, enlist distributors, and make sure customers learn to crave your product.
If your business's success depends mainly on marketing, you need a CMO. That might be you--but only if you have time to keep up with competitors, oversee the marketing implementation, and still do the rest of your job--and do it well. Otherwise, you need to look for the person with the sunny disposition, Blackberry in hand, keeping up on what's hot and what's not.
Chief Technology Officer (CTO)
CTO should keep up with technology trends, integrate those trends into the company's strategy, and make sure the company keeps current when it's necessary. They should not be buying new toys and leading-edge technology just because it's the latest, greatest thing out there.
You need a CTO if technology impacts your business
or industry strategically. (If you're in tech yourself, or your industry relies heavily on technology, that means you.)
Chief Executive Officer (CEO).The fact of the matter is, the CEO is the boss of everyone and is responsible for everything. They determine the company's strategy. They hire and build the senior team. The CEO's skills must include strategic thinking, the ability to rise above the daily details and decide where the industry
and business are headed. They must then be able to decide the company's best route for navigating the future market conditions. They have to be able to make good bets.
Chief Operating Officer (COO)The company's COO insures the business can deliver day after day. He figures out just what needs to be measured so he can tell if things are going well. Then his team creates the systems to track the measurements and takes action when the company isn't delivering.
President. Some say a president oversees staff functions--human resources, finance and strategy--while the COO oversees daily operations. Others proclaim that the president is a synonym for COO, especially in smaller companies. Yet sometimes, the president fills gaps left by the COO and CEO. Or sometimes, the title goes to someone you want at the strategy table but who doesn't have an obvious C-level title. In any case, you should think long and hard about whether you need someone to fill this title, or if your company is fully covered with a CEO and COO.
Chief Financial Officer (CFO) Plain and simple, your CFO handles the money. They create budgets and financing strategies. They figure out if it's better for your business to lease or buy. Then they build the control systems that monitor your company's financial health. The CFO is the "bad guy" who won't let you buy that really cool videoconferencing equipment and makes you pay down a commercial loan instead. While you mope about it in your office, the CFO will be busy figuring out which customers, business
lines and products are profitable, so next year you can afford the really cool videoconferencing equipment.
Chief Marketing Officer (CMO) The CMO will know (or learn) your industry inside out and helps you position your product, differentiate it from your competitors' products, enlist distributors, and make sure customers learn to crave your product.
If your business's success depends mainly on marketing, you need a CMO. That might be you--but only if you have time to keep up with competitors, oversee the marketing implementation, and still do the rest of your job--and do it well. Otherwise, you need to look for the person with the sunny disposition, Blackberry in hand, keeping up on what's hot and what's not.
Chief Technology Officer (CTO)
CTO should keep up with technology trends, integrate those trends into the company's strategy, and make sure the company keeps current when it's necessary. They should not be buying new toys and leading-edge technology just because it's the latest, greatest thing out there.
You need a CTO if technology impacts your business
or industry strategically. (If you're in tech yourself, or your industry relies heavily on technology, that means you.)
Monday, October 25, 2010
Small Business Financing
Many Entrepreneurs and Business Owners have used the Guidant 401(k) plan. By rolling your existing retirement funds into Guidant’s 401(k) plan you can invest in a small business or franchise inside your retirement plan... without tax penalties!
Guidant’s 401(k) plan, is an alternative to small business financing that allows you to invest in something you can truly control while significantly affecting its value. Lower the overhead of your new business and enjoy higher retirement-account returns along with other outstanding benefits:
* Utilize funds from retirement accounts like IRAs, 401(k)s, 403(b)s, Keoghs, SEPs, etc., without incurring early distribution taxes or penalties
* Launch your small business or franchise with minimal (if any) debt while securing significant tax benefits
* Use up to 100% of your retirement funds, or use a portion as a down payment on an SBA, unsecured or home equity loan
* Combine your retirement funds with the retirement funds of a business partner or spouse
* Save thousands in interest fees and protect your personal credit
* Invest profits tax-deferred back into your business or pension plan
* Lower business overhead while aggressively growing your retirement account
* Position yourself for faster success!
The Guidant 401(k) plan for small business investing and financial expertise saves you time, expense and worry. To learn how you can finance a small business or franchise while enjoying significant tax and credit advantages.
Guidant’s 401(k) plan, is an alternative to small business financing that allows you to invest in something you can truly control while significantly affecting its value. Lower the overhead of your new business and enjoy higher retirement-account returns along with other outstanding benefits:
* Utilize funds from retirement accounts like IRAs, 401(k)s, 403(b)s, Keoghs, SEPs, etc., without incurring early distribution taxes or penalties
* Launch your small business or franchise with minimal (if any) debt while securing significant tax benefits
* Use up to 100% of your retirement funds, or use a portion as a down payment on an SBA, unsecured or home equity loan
* Combine your retirement funds with the retirement funds of a business partner or spouse
* Save thousands in interest fees and protect your personal credit
* Invest profits tax-deferred back into your business or pension plan
* Lower business overhead while aggressively growing your retirement account
* Position yourself for faster success!
The Guidant 401(k) plan for small business investing and financial expertise saves you time, expense and worry. To learn how you can finance a small business or franchise while enjoying significant tax and credit advantages.
Sunday, October 24, 2010
Subscribe to:
Comments (Atom)