Strategic Planning Archives | Page 18 of 18

You Don’t have to Be in the Music Industry to Learn from its Current Changes

I came across a good article discussing the 10 Truths about the Modern Music Business. The remarkable fact about this article was that you don’t have to be in the music industry to appreciate the observations in the article. As I read the article, I substituted “business person” for “artist,” and “customer” for “fan.” In most cases, there was a direct relationship among industries.

Now, I am not saying that every point can relate to other industries, exactly, but let me give you an example. I told a client that when I Go-ogled his industry in the southern California area, his company did not materialize. In fact, I had to insert a very refined search term, and his city, just to find his company’s site. Ironically, his competitors appeared all over my results. His response, “Well, that is not the way my business works. Companies don’t Google to find my type of business.” I asked him, “Then why are you losing market share? Why are you struggling to bring in new business, where the same competitors seem to be growing?”

This article has some good points that businesses can take home like, the use of technology to stay in front of the field, and the need to communicate directly to your target prospect, and not rely on Yellow Pages, or some other platform to do it for you. New thinking is taking hold in the world of Strategic Planning. Will you be a leader and embrace them, or be left behind with only excuses?

Music App Swims in an (Apparent) Blue Ocean Strategy Looking for a Long Tail

You remember the music industry, don’t you? You know, the enterprise sunk by pirates on dry land? But, light shines brightest in the darkness. An article came across my computer that shows the ingenuity of these creative enterprises. The article is New iPone apps are changing how music is marketed and made. This is a good example of a strategist using the Blue Ocean Strategy to create a long tail. (See Chris Anderson’s video on the Long Tail and the music industry).

In the IPhone article, the creator of the BandApp has designed an app that helps bands to launch their own virtual record companies. The app “works as a record store, marketing department and cameraphone-wielding stalker combined.” The app seems to take out the middlemen between the band and the fans. This of course is creating a blue ocean strategic plan for both the bands and the app owner because the traditional record company cannot compete on this level. The record company can advertise more, create more tours, but ultimately there will be forced to confront this app (or some derivative of it) head on. There will be no avoiding it. The app is creating a blue ocean where there is no direct competition.

Likewise, the owners of BandApp also are looking for the long tail. “Equally, rather than trying to sign five bands in hope of selling a million records each like a record company, he can, without risk, “sign” 100,000 bands, even if they’re only likely to sell 50 records each.” What that means is instead of focusing on the big-selling bands in the top tier, they are focusing on all the rest of the bands regardless of popularity. On an X-Y axis, with the Y axis representing dollars, and x axis representing band ranking, the graph would look like a big mountain with an infinitely long tail. That tail gets smaller as it stretches to the right. This is the money-making arm of BandApp.

During times of economic gloom, strategist who find their blue ocean will more likely survive now, and maybe prosper when the economy improves. The long tail combines the strategy with the new viral markets.

When it comes to your personal finances, are you a Stage 1 or a Stage 4 White Water rafter?

This economic meltdown has many people second-guessing the financial decisions made in the last 8 years.Where do you stand, and what can you do about it?

A couple of years ago we shot the Snake River rapids in the Grand Tetons. Like many rapids, the river offered its “flat” moments (stage 1), and churning moments (stage 4). One time we prepared ourselves for a level 4, and were hit by something unexpected, hail. In the middle of summer we turned a corner and were pelted by hail stones in the face during a storm.

I think many of us can relate to this in the current economic times. But, the extent of damage depended on whether you operate your business (and personal finances) in a stage 1 or stage 4 rapids

I found there are two main types of business and investment personalities: One type are those who lived during the depression, or learned by it. They are very conservative in what they do, and try not to be too speculative in whatever they do. The other type is the sprinter. Many of these sprinters profited handsomely in the past 8 years riding the leverage train of real estate.In their business and personal finances, they also seem to leverage heavily.

When I work with clients personal finance strategies, I keep these two polar positions in mind. If a client is younger, then they can obviously take more risks with their personal finances. However, when a client approaches middle age, I caution them that the downside is more severe if they do not meet their personal finance objectives. So, both in personal and business opportunities I recommend the following:

Always have a well thought-out strategy. What do you want to accomplish with your personal finances?
Don’t fool yourself with the possible outcomes. Look at worst case scenarios. Personal finances can be very emotional, and if you don’t drop the emotion in your thinking, it can hurt your final strategy.
Plan for both your intended outcome and your worst case scenarios. Just the other day, my 14 year old lost his English notebook with homework and school work. He thought he left it in the classroom, but wasn’t sure. I told him to not just think about what he would do if he found it, but what he would do if he didn’t. This took some of the stress off him since he had rationally thought about how he could replace the work while he was calmer. If he would think about this at the time he found out that the notebook was not in the classroom, then he would have beem more immotional and could have created a flawed strategy. Luckily, his notebook was there teh next day, and he received credit for all the work.
You may want to reduce your risk, just in case the worst case scenario occurs. Remember, water can both save you, and kill you depending on how much your drink. Don’t throw yourself completely into a personal financial position, whether it be real estate, stocks, or percious metals without thinking about the consequences of over investing in one product. Your personal finances can live or die depending on the magnitude of your decision.
Execute the plan and view it objectively. Too many business persons in this position extend their risk because they are looking for the “next big deal.” I find this rose-colored glasses approach a major cause of business failures.
If you are hurt by the resent economic melt-down, adjust your strategy towards a stage 1, but don’t circle the wagons. Keep a sharp lookout for business opportunities that may pay handsomely when the economy recovers. You may want to invest in social networking or search-engine optomization services in order to get your business a higher profile at a smaller price tag.

Always get professional help.

How to Hire Bookkeeping Services in Los Angeles

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Bookkeeping: The mere mention of the word can give business owners a headache. But it doesn’t have to be painful. In fact, if you follow these ten tips for hiring business bookkeeping services , you can reduce errors, increase productivity, and improve profitability.

1. Don’t Do It All Yourself!: Most small business owners hate the idea of handing over the bookkeeping reigns to someone else. They feel like they’re losing control. Does this sound like you? The truth is that having small business bookkeeping services in fast-moving Los Angeles actually frees you up to focus on your core business and serve your customers better.
2. Communicate: Communication is key when you hire a small business bookkeeping services in Los Angeles. Make sure you keep the firm up-to-date on all financial transactions—especially such things as new property purchases and employee bonuses that are often overlooked.
3. Save Receipts: This may sound like a no-brainer, but it’s easy to forget to keep receipts or even misplace them in the day-to-day hubbub of a busy office. It’s important to have the backup documentation for your deductions so tax time can be easier and more beneficial.
4. Track Expenses: As a small business owner, you may pay for expenses out-of-pocket. While this is not ideal, the real problem is forgetting to track these expenses and submitting them to the company to be reimbursed. A small business bookkeeping services in Los Angeles specializes in keeping you on track so you can reduce your tax liability.
5. Reconcile Properly: It’s a fundamental aspect of bookkeeping. The books and bank statements must be reconciled each and every month. This can be a time consuming process for a business owner, so again this is another task that can be managed by a small business bookkeeping services in Los Angeles.
6. Backup!: A paper trail is imperative. Documentation or verification should always be available. You don’t have to have all of it on-hand. Just sign-up with an automatic data back-up service to ensure everything on your system is backed-up on a daily basis.
7. Properly Classify Employees: Do you know who is an employee, who is a contractor, a consultant, a freelancer? It can get confusing. Make sure you hire a small business bookkeeping services in Los Angeles to help you classify each and every employee so you can get the biggest benefit at tax time, not to mention avoiding penalties for misclassification.
8. Know Your Petty Cash: How much money is in petty cash at any given time? Setup a system and make sure a petty cash slip is filled out whenever money is removed for any purpose. Something as simple as petty cash can really mess up a company’s bookkeeping.
9. Categorize Expenses: Are you using the right categories for expenses? Again, this can get confusing. Your small business bookkeeping services in Los Angeles can help you follow generally accepted accounting practices.
10. Deduct Appropriate Sales Tax: Many retail businesses make mistakes when deducting sales tax. This can actually be a huge problem if you have many total sales because it results in a higher total sales amount without lowering the taxes due. Of course, this can be easily corrected and regularly monitored by a small business bookkeeping services in Los Angeles so you can avoid any tax burden as a result of sales tax.

These may seem like second nature to some business owners, but keeping focused can keep your books clean.

Do You Know Your Company’s Risks? Are You Managing Them?

Leaders of small to medium-sized businesses usually have two things on their mind: What are my sales? And, do I have enough cash to make payroll? Don’t settle on a reactionary position in dealing with the risks that can have long-lasting effects.

Many businesses suffer, and fail because their leaders do not see the inherent risks that can negate the years of hard work it took to build the business.Here are some tips to managing the risks:

Look at your company from the 20,000 foot level: The first step to managing risks is to identify, on a broad level, your company environment. What is the established company culture that increases your risks? Why is the culture like this? What is the company philosophy? If you need a blueprint, use the COSO ERM (Enterprise Risk Management) framework as a guide.
Take your business apart: Look at your company by business unit or profit center. Use techniques like questionnaires, interviews, or my favorite, scenarios.
Access the Risks: Access the risks visually. I have found that flowcharts show the snags in operations that lead to inefficiency, misappropriation, and possible fraud.
Develop a plan and assign responsibilities: An ERM plan should tie into the company’s strategic plan. All cylinders should be firing sending the machine in the same direction.
Be proactive in your thinking: Don’t react to crises, but implement controls that can prevent, or at least detect a breach of company policies and procedures.
Communicate the plan: All department heads and executives should own the responsibility of implementing the plan and controls.
Use metrics to monitor: We create executive dashboards that monitor certain benchmarks, critical success factors, and accounting ratios that indicate the plan is in operation. This is essential, because an unmonitored plan is a dead plan.
Be flexible and alter the plan: Nothing is in stone. Businesses are not stagnant, so change the aspects of the plan that are not working.

Selling a Small Business?

So you want to sell your small business that you built from scratch! That’s great, but are you going to sleep at night? Here are a few tips you should consider when selling a small business:

Know what your small business is worth. Compare your small business to the industry, and the regional market share you possess. If you are the value of your small business, you will have a hard time selling it for what it is worth.
Make a liquidation plan of your small business. There are “asset sales” and “stock sales” of a small busines corporation. Find out the difference and consult a financial advisor about which would be better.
Value your small business by its individual assets, first. This valuation will help you understand your tax picture. You should know this before you sign the contract to sell, or maybe before you accept an offer.
Don’t warrant anything. Your small business financial statements are probably not audited, so don’t act like they are. If they are audited, let the CPA attest to its validity. Be careful of what assurances you make about your small business.
Have you considered the option of consulting to your small business after you sell it? This could build a comfort level in the buyer and intice them to make the deal.
Consult your financial advisor before making any decisions to sell your small business. It could be the difference between crafting a great deal, or life-long regret.

Some Tips on Moving from Employee to Small Business Owner

This economy has spurred many to open their own small business because their income decreased, their employer closed down, or they were laid off. Whatever the reason, here are some tips:

The first question I ask a married person starting their small business is, “What does your spouse do for a living?” The first 1 or 2 years of a new small business can be tough, and that second income can be the difference between you closing your doors, or seeing year 3. If your spouse can shoulder the major financial burden for a year, try reducing her salary tax withholdings. Your small business income will probably be lower than the previous year, creating a smaller tax liability.
Do you know what kind of legal structure you want? Sole proprietor, C Corporation, S Corporation, LLC? If you have a partner who is the money person, and have unequal distributions, an LLC may be your best structure for a new small business.
If you are a professional, what restrictions are there imposed by the licensing board on your choice of entity?
How is your overall personal debt? If it is high, you may want to pay it off before making the leap into a new small business. You will need cash for your small business. Cash is king.
How are you going to issue payroll? QuickBooks has a good payroll function for a small business, but complicated payroll issues can take a lot of your time.
In regards to payroll taxes, do not use the government as a bank. This is so common in small business. I have seen small businesses and medium-sized businesses pay the net payroll, but not the taxes withheld. Be very careful, because criminal penalties can arise if you spend the money.
Insurance? Don’t forget. You don’t want your small business to be the source of legal liability on your personal assets. It could mean the difference between you paying a deductible of $5,000 or losing your house. Make sure to consult an attorney on this point before starting your small business.
How are you planning to market your small business? This is a constant effort. Start by looking at other professional organizations that compliment your business. For example, I only go to CPA functions for continuing education. I prefer to meet at lawyer’s functions, contractors, entertainers, and other persons that I can introduce myself for additional business.
If you are hiring employees, check the workers comp rates. In manual labor small businesses, this seems to be a large chunk of the budget.
A few other tips are to budget your expenditures, create a web page, and match your costs to your job.

There are many things to consider.

Strategic Planning–Avoiding Sharks with a Blue Ocean Strategy

When I hear, “Think outside the box,” I cringe. I believe that this command frustrates analytical people; they do not know what to do, or how to do it because there are no rules or assumptions.Instead, I like to tell people to use the right side of their brain – the creative side.A strategic planning approach, The Blue Ocean Strategy, facilitates this type of thinking.

Blue Ocean Strategy (BOS) is a corporate strategy and business book written by Professors W. Chan Kim and Ren© Mauborgne, of INSEAD. The strategy attempts to create an uncontested market space, and thereby make competition irrelevant. Dim & Maubourgne initially called this “Value Innovation,” in 5 articles for the Harvard Business Review published before their 2005 book. BOS is the result of a decade-long study of 150 strategic moves spanning more than 30 industries over 100 years (1880-2000).

There is no easy way to quickly describe BOS, except by example. Cirque du Soleil is a good example of a company that meets the BOS criteria (focus, divergence, and compelling tagline).For example, compare this circus to Ringling Bros. using the following factors: star performers, animal shows, 3-ring arenas, aisle concessions, theme, unique venue, and artistic dances. Cirque du Soleil concluded that the public really did not want star performers, animal shows, 3-ring arenas, and aisle concessions.In addition, star performers and animal shows were very expensive.They decided to do away with the three, but added theme, unique venue and artistic dances. This created a unique market because they were discarding what the public did not value, and added new aspects that the public would value.Instead of being in a “bloody” red ocean competing on price or quality, they could be competitive by offering a new experience for the audience.

If you are in the artistic world, maybe I can stretch this example to Paul Simon.In 1986, he could have composed music using the same style such as folk (Simon & Garfunkel), or a pop (Kodachrome).However, he used his artistic ability to expand his use of world music. In 1986 he released Grammy award-winning Graceland, which featured the groundbreaking use of African rhythms and performers. In 1990, he followed with the album The Rhythm of the Saints, which featured Brazilian musical themes. These albums helped to popularize world music as a genre.It essentially created a blue ocean for him without competition in a new genre.

Now this is not to say that every blue ocean does not turn red, because once the idea is manifested, there is a window of uncontested opportunity.So, what a business must do is continually develop blue oceans and keep ahead of the competition.

This alone will not confirm success. To stop at a strategic plan level will only bring frustration, because the process will not be complete. In order to be successful, you must properly impliment, monitor, and alter a strategy.

How do you include social networking in your business strategy?

I remember when I was a little boy, how I used to marvel at the futuristic gadgets that Walter Cronkite would display in the Sunday night program, The 21st Century.The program was designed around scientific advances that could re-shape our lives in the next century.The 21st Century seemed so far away to a little boy in the 1960s.But here we are.

In the 1996, my interest was piqued with Bill Gate’s books, The Road Ahead. In this book, Bill Gates predicted that we were nearing a society where financial transactions, product research, file transfers, and such could be transacted though the internet on a device the size of a checkbook.

How ironic, within the next decade, Steven Jobs would spearhead the invention of the Iphone.Users now bring up all sorts of applications including social networks like Facebook, Twitter, etc. These social networks are becoming the foundation of the new business communication.

But, how do these social networks impact business? So many businesses just stick their toe in the SN waters. Can business really take advantage them?

The answer is a guarded “yes”.

The advantages of such networks are communication and visibility. Implemented correctly, vehicles like FaceBook, LinkedIn, Twitter, blogging, and others can enhance your company’s visibility, and draw the world to your web site.With increased visibility comes opportunity.
There is a downside to these opportunities, however. Employees can post criticism on blogs that may hurt the firm’s reputation.In addition, the opportunities with any of these networks can be a bottomless pit sapping into employees time with no immediate response.

Like any tool, the internet can be the piece of your strategy that increases your market share, if used correctly. If used incorrectly, it could be a wasteful tool.

So, here are a few basic tips when your business ventures into social media:

Concentrate on building relationships, not just numbers. It’s nice to see the numbers grow, but if many are not viable business contacts, then so what?
Don’t spam people with your services. Give them something to take home with them every time you connect.
Build partnerships among those who have similar business interests, or work in a similar industry.
Don’t just copy what others are doing in your industry. Set yourself apart by using your core competancies to create your own uncompetative ocean (i.e., Blue Ocean).
Be consistent, be creative, but be real in your daily social networking business strategy.
Write about relevant topics that concern your market place.

These six points will give you a start in developing a real social networking strategy for your business. A very important point not listed, though is that you start today.

Strategic planning tips when buying a company

So you found the perfect company to buy! That’s great, but are you going to sleep at night? Here are a few strategic planning tips you should consider when buying a company:

Do your due diligence. Investigate the trends of Accounts Receivables, Cash, Accounts Payables, Officer Loans, Sales, and Cost of Goods Sold over five years. The trends will tell you a lot about the past, present, and possibly the future of a company. If these trends look bad, ask the hard questions, and demand support for their responses.
Create a Strategic Plan. Most new owners do not know what this means. The main point is to visualize where your company is in relation to its industry and where you want it to be. The strategic plan will include your internal strengths and weakness. Be honest and don’t look at the business through rose-colored glasses. An honest strategic plan before you buy the business can alert you of business aspects that you overlooked.
Plan for technology. Technology can help you monitor your strategic plan. Along with your budgeting plan, strategic plans have benchmarks that a company wants to meet. Use technology as a “thermometer” of your business health. A few troubling metrics can signal a bigger problem down the road. Also, how will social networking and search engine optomization help you in achieving your goals?
Cash is king. Always capitalize your company adequately and properly. Sometimes the best capitalized companies are those who squander their resources, while the poorest companies may have the best ideas but no capital to get there. Again, your strategic plan along with your maketing and budget plans should give you an honest idea of what it will cost to finance your company. Many feel that once you arrived at that number, multiply it by three because your sales will usually lag behind your estimates for a lot longer than you think.
Consult experts: There are many forms of strategic planning. If you have a good grasp of you industry, you can solicit the help of a strategist and business plan professional to help you organize the plan. Never venture out in a new direction without professional help. A couple of hours of consulting with a CPA or an attorney can save the business down the line.