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Small Business Startup – 10 Steps For Practicing Good Business Fundamentals

The “Business of Business” has ten fundamentals that if perfected will help improve your chances for success. Athletes have coaches, fans, press, and opponents to quickly remind them when they slip in their sport’s fundamentals. Business owners have customers, employees, shareholders/investors, and competitors to remind them when they ignore their industry’s fundamentals.

The game of business is pretty simple in its most basic form. A 24 hour, credit card only, drive up gas station versus a 24 hour full service, additional services for truckers, restaurant, convenience and tourist store, franchised gas station. The core business for both is the selling of gas to customers. The additional services, benefits to employees, customer niches, variety of items in inventory, types of investors, etc. all add layers of complexity.

Complexity is neither good or bad it is just more difficult to manage. Watch the news and you will hear about businesses restructuring to get back to their core business because they have lost their identity in the marketplace.

A client of mine, called me in to help him sell his business. When I asked why? He explained that he was dissatisfied and unhappy coming to work. As we talked further, we discovered that only part of the business was the source of the unhappiness – sod. The core business was trees, shrubs, and indoor-outdoor plants. He got into sod when a customer asked if he could get some for his yard. While the sod stood in the parking lot for the customer to pick up, other customers asked if they could buy some sod too. Each year for the next 5 years the amount of semi loads of sod increased till sod became a major part of his business. What started out as a goodwill gesture for a customer became a dirty, unsatisfying, unhappy part of his business. He wanted out! Luckily, our conversation allowed us to clarify what needed to be sold. We spun off the sod business to an employee wanting to work in the sod business. My client got back to his core business and a happier state of mind.

The list below contains some of the general business fundementals. It’s a good starting point for you to brainstorm with and identify specific fundementals for your business.

1. Understand what your core business is in its most simple form. Knowing the costs and margins of the core allow you to determine the costs and benefits for the add ons to the core. Complexity costs more and should reward more.

2. Understand the layers of complexity you are adding to the core and who is benefiting from these.

3. Pick 5 to 7 areas of your business that are critical to your success and track them. The old adage “that which is measured and tracked improves” is true. Create benchmarks and a culture that continually strives to improve. The summary report is often called a business dashboard.

4. Establish “Win-Win” relationships with your customers. Any customer who wants to bleed you dry, refer to your competition. This is easy to say and hard to do.

5. Pay attention to details within the process of delivering your solution to the customer. Attention to detail is usually what we tip on, your profit margin is your tip. This is not about being perfect, it is about having a great relationship with your customers.

6. Keep your prospecting funnel full. Be Proactive not Reactive. Always keep your eyes peeled for your next customer. Determine how much time and resources are needed each week to keep your business busy. It’s a very bad feeling when you don’t know what prospecting activity fills the funnel but you have to cut back on your prospecting activities.

7. Each week take a half day to Work On Your Business versus Working In Your Business. Working On your business includes thinking about, what are the trends within my industry, how does my pricing compare to my competitions, what kind of technology innovations are available, is my business structured properly, what is going on in my community, am I missing opportunities, is the business on goal for my 5 Year Plan, etc.

8. Know the financial health of your business. Depending on your business cycle you should have daily, weekly, or monthly report. One of my clients uses her payroll periods for updates. Labor is her critical resource and knowing after each pay period where her projects are is important to knowing the health of her business. Pick 5 to 7 financial items to track your success. Benchmark these with your goals and budgets. Develop similar items for your supervisors.

9. When hiring, choose someone who will help your business grow. If possible, hire someone who is better at a task than you. Compensation should include an element of performance pay either individually or as a company. Raises based upon ongoing employment can create two problems. The first is you will have a tendency to underpay at the beginning and overpay towards the end of employment. Leaving only the middle half to third of employment where compensation matches performance. A pay for time served strategy will not allow you to recruit and hire the best. Think less time-line and more share the business benefit as it happens. If an employee works extra to expand a customer’s business with you, know what she would want as a thank-you. Performance based compensation requires you to know your margins, which is not a bad thing.

10. Work on your management and leadership skills. Remember, the hat you wear most as owner is that of manager/leader. These areas include time, prioritization, decision-making, people skills, vision for business, presentation of self and business, and community involvement. There are many books out there in these areas. Find a mentor (does not have to be in your industry) who is willing to talk with you about the above.

You Need Insurance Regardless of Your Business

While it might be comforting to think that insurance is something that only the big companies need to worry about. Insurance is something that all businesses need to worry about. Indeed, the smaller you are as a business, the more vulnerable you are to a wide array of risks that can only ultimately be dealt with by adequate business insurance protection.

When you run your own business, you take on obligations and responsibilities above and beyond that of the average citizen. In fact, it can be seen as somewhat of a double-edged sword. On the one hand, you probably go into business hoping to make a profit doing something you love while providing a benefit to others. On the other hand, all those others are affected by what you do — good or bad. It’s the latter that can get business owners into trouble if they don’t seriously think about serious business insurance protection.

Let’s take small business liability insurance as an example. Without this form of insurance protection, a business owner is putting themselves in unneeded and unnecessary financial risk.

Small business liability insurance is that which essentially protects a business from the threat of a lawsuit. It differs from other kids of protection many individuals might already be familiar with because it covers assets from the risk of being attacked by a claim of misconduct carried out by you or your business. If somebody decides to sue your business, not only could you be on the hook for the damages awarded, but the legal fees involved can often be staggering, even if the lawsuit is frivolous. Things like small business liability insurance, as part of a comprehensive business insurance package, are meant to deal with just such instances.

If you don’t think that your business is at risk like this, you might want to reconsider. No business is too small or irrelevant to be untouched by the risk of a lawsuit. In fact, the smaller you are, the less you’ll be able to count on your own resources to address the crisis of a legal proceeding, or the damages awarded as a result.

Perhaps for no sector of business is this reality more apparent than with small offices providing services of various sorts. While the amount of resources at your disposal is tight, the extent to which you may have an impact on the public is very considerable. And the extent to which that same public can come back and bite you can be similarly considerable, too. This goes for real estate professionals, management consultants, tax preparers, lawyers, doctors, and so on. No one is immune from the threat covered by business insurance that includes things like small business liability.

No matter how competently you think you run your business, how much emphasis you place on customer satisfaction, how well thought of you are in the business community, or the lengths to which you strive for excellence and achievement in your profession, you can be hit by a lawsuit. And, very often, you won’t even have seen it coming. Even some service provided as a sub-contractor for someone else can be seen as having done harm to someone. If that someone decides to sue, there are costs that have to be covered. Good business insurance will cover it. More specifically, good small business liability insurance will cover it.

Let’s take the management consultant industry as an example of where business insurance that includes small business liability is necessary.

The duties and responsibilities associated with the job of being a management consultant are considerable. In such a capacity, you use your expertise in the field of management to advise people professionally on a whole range of matters related to the proper running of a business. This can includes things as simple as staffing to something more sophisticated like public relations. Good management consultants provide a professional service noted for the extent to which comprehensive solutions are offered to meet challenging business environments.

This is precisely why management consultants need to be covered by good business insurance that includes small business liability insurance.

The extent to which their advice and solutions impact people can be almost limitless. In fact, if you tried to figure out who might sue you for advice you gave a client, you might never be able to do it. There will always exist people who simply perceive themselves to have been hurt by something you did. And they’ll sue you for it.

Alternatively, even the best management consultants make mistakes. Sometimes they could have legal ramifications. Other times, they could have professional ramifications. Indeed, things like errors and omissions insurance or professional liability insurance exist because professionals make mistakes. Not only do they make mistakes, but they make mistakes that violate the professional principles involved in their industry. It happens. It’s why even management consultants need good business insurance and liability protection.

Of course, whether you’re a management consultant, real estate agent, tax lawyer, or healthcare specialist, the specifics might be different, but the insurance risks are much the same. As small business owners with offices that need to be protected from the threat of financial loss, business insurance and small business liability insurance is simply a smart solution to that end. They literally help protect the small guy and gal from the swamp out there that could digest everything they’ve worked for. And that swamp could include the unwanted lawsuit.

Top 5 Mistakes People Make When Getting Business Insurance

This might come as a surprise to some, but getting the right insurance for your business might be one of the most important decisions you’ll make as a business owner. The consequences of inadequate coverage, or no coverage, could be devastating. There is a whole world of things that can happen to you and your business. Not protecting yourself and your business with the right insurance could cost you in so many ways.

That’s why engaging in a process of obtaining business insurance right for you and your company is so important. Do you know what general commercial liability insurance is? Well, if you don’t, then it’s just another reason why doing it right is so important. Not doing it right might cost you when you need help the most — during crisis. It’s why people get insurance. It’s why smart business people get smart business insurance.

Doing it right essentially means avoiding some common mistakes made when trying to get the best insurance policy for your business. Knowing what some of these mistakes are, and avoiding them in the future, will help you in your quest to simply make the right business decision when it comes to insurance.

Top 5 Mistakes When Getting Business Insurance:

1. Discounting the importance of business insurance

Business people of all types, whether it be CEO’s of large business conglomerates, or even someone just working out of their home office, have their own set of reasons for getting insurance specifically for their business. But not all business people necessarily think this way. Some think it might be too costly. Some think it might not be necessary . Some may even think that they’re covered by other insurance policies that they have for their property or for themselves.

Not having the insurance specifically tailored for your business often comes as a result of simply not thinking that it’s necessary. But it is. Take general commercial liability insurance, for example. This kind of insurance protects businesses from the costs of lawsuits resulting from basic damages done to people or property that have even the slightest contact with what you do. Not having this coverage when someone decides to throw a lawsuit at you, even if frivolous, could cost you in terms of money and reputation.

2. Not knowing the basic issues

It’s nice to think that insurance is just insurance, but it isn’t. Would you get car insurance for you house? Would you get life insurance for your healthcare? Of course you wouldn’t.

Yes, some of the issues involved in business insurance are similar to other forms of insurance. A good policy will, for example, protect your assets in case they get stolen. It will also protect you if bad weather destroys your business property. These are straightforward insurance issues for your business. But don’t be fooled into believing that they’re the only insurance issues for your business.

For example, take general commercial liability insurance. Some business owners might not even know what liability insurance actually is. It’s the insurance that protects you from the financial costs resulting from a lawsuit from somebody who claims they or their property has been hurt or injured as a result of the way your business conducted itself. General commercial liability insurance is the kind of insurance those companies engaging in commercial activities get to protect themselves because people hurt themselves on their premises or one of their products did damage to someone’s property. Being knowledgeable about these kinds of things will most certainly help you get the right insurance.

3. Not getting insurance early enough

There are two things that can happen to you if you don’t get insurance for your business early enough. The obvious one is that you’ll need it before you get it, and you’ll be stuck with paying for the damages from a storm or a lawsuit yourself. The other thing that can happen is that you will not have a budget for your start-up for the proper insurance, so you’ll get stuck with inadequate coverage. That’s the last thing you want to happen. Therefore, to avoid it, thinking about insurance as early as possible, even at the business plan stage, will help you create the budget you need to get you adequately covered for all future circumstances.

4. Getting the wrong kind of insurance provider

Perhaps the most tempting option for someone seeking business insurance is to get it through insurance companies they’re already doing business with. So, for example, you like how your house is covered, and who’s covering it, so you’ll seek to extend that coverage to your business, too.

The reason this is inadvisable, or should at least be looked at very carefully, is that your property insurance provider might simply not have the kind of experience with the kind of insurance you need for your business.

For example, if general commercial liability is what your particular business is in need of, even if a provider carries that kind of insurance, they may simply not have enough developed expertise to know what’s right for your particular needs. Ideally, only those companies and agents who have dealt with your kind of business before can help your kind of business get you adequately covered for your particular situation.

5. Getting the wrong kind of coverage

Following from the risk of getting the wrong insurance provider, a mistake to avoid is getting the wrong kind of coverage. Ultimately, you’re the person in charge of making the right business decisions for your company. You’re the best person suited to look out for your own interests. No one else is. That’s why it’s incumbent upon you to make sure you’ve got the right coverage for you and your situation.

As much of the above already suggests, delegating these decisions is important. Yet, in the end, it’s you who has to decide if you have the right kind of coverage for your business. After going through the entire process, collecting all the information, and talking to the right people, it’s you who makes the decision. Make sure it’s the right one for your business and where you want to take it.