So how big is your dream? Will this be a solo career……considering a partnership……needing to hire staff…..or looking for investors? In our Business 201….Building My Organization….we’ll work to answer these questions and more!
Today we are moving past corporate structure….as in whether my company is a Sole Proprietor, LLC, S or C Corp, to answer questions related to products and services, pricing, staffing, time management and investors. And even though we may focus on the Sole Proprietor as our base example…..the concepts will remain viable for most of the business models.
So, question #1, Who is my ideal client? When I consider my product or service….who really needs me? Will it be another small business, a solo like my self, members of the general public or some special sub-set? Who is it, that simply cannot wait for me to get started…..that will live lacking if they don’t have me in their life……or may themselves go out of business if I don’t help them fix a problem? Now, that you’ve answered that question, think about this; who else is doing what I do? How do I begin to differentiate myself from the competition? What makes my business, my skill set a disruptor in the market? And speaking of talent, skills and abilities…what do I have? What is it about my experience that will cause potential clients to consider working with my organization? Who have I worked with? Did I do an excellent job? Would they be willing to recommend me? And am I willing to take the great risk of guarantees and outcomes? These are just some of the thoughts and questions to consider when designing a product or service and how I set myself and my organization apart from others in the market.
Next, exactly how do I price goods or services to these potential clients? Will I work on an hourly basis, retainer or charge by the project? I am so glad you asked. The least desirable, in my opinion is charging by the hour. Unfortunately, it is the place that many clients or potential ones want to land. Here are some of the concerns I have with this. If you charge by the hour…..exactly how different is that from working for your current employer. I mean you do some work for eight hours and get paid. This doesn’t feel like a business to me. You’ve simply exchanged where you are working. And on top of that, you have to produce billing…..supporting documentation……and wait to collect your money. Not much fun here. In stead, consider working on a retainer basis. Now you have moved to payment based on knowledge or outcomes, instead of producing work by the hour. But, if you are in a service related business, this will not be possible for most work. If you are repairing something, you have both time and material involved. But if you’re in the “Knowledge Economy”, they are paying you for what you know or solutions provided. In short, you are available to answer questions or help them work through a problem. This allows you to set a fee and be paid…let’s say… on the first of the month via electronic wire or credit card. Some months you may work 10 hours and others 100…the amount can be the same BUT no billing is required. And finally, there are those projects. This is where some major dollars may be waiting for you to collect. Project work is usually three months to a year in length and offer you the chance to ask for a major portion of the total in advance. Let’s say the project is scheduled for nine months and you quoted $80,000.00 to do the work (not bad). You might build into the contact a payment of one third to half as the retainer and the balance over the remaining months in equal payments. How nice would it be to receive $20,000.00 to $40,000.00 on the front end before the work even starts? To answer the question…it’s GREAT and successful consultants and coaches are doing this every day!
But……In order to do this as a solo or small business owner, you must be fit for the battle. The best way to insure you are, is through proper time management. This type of work requires focus, attention to detail, planning and great execution. And that can only happen when YOU are in control of the clock. We all have 24 hours in a day and 168 hours in a week. Again the successful people out there know exactly how to “rule over” their time. Leaders in small, medium and large organization understand the word MARGIN. You must become a master at building margin into your schedule. If you are a solo, then you are the only person working with your client. And they expect you….only you…..and the you that’s at the top of your game every time. That will not happen if you don’t take time for self-care. There are hours for work, hours for eating, hours for resting…..hours for family…..and hours for recreation and play……yep play! Your brain and body were never designed to work 16 hours a day, eat junk food, take no time for exercise, sleep 4 hours or less, then get up and do it all over again. It’s a recipe or disaster! Now, you may do ok for a few weeks, but at some point it will catch up with you. And when it does everyone suffers…..including your career.
Now let’s say that dream is a little bigger than you…and help is needed to get started. Maybe you’re considering a partnership…..that’s great! And just like fences make for good neighbors, a well spelled out contract between or among the partners can make for a happy ending. Being able to sit down and spell out expectations, financial arrangements, percentage of ownership, duties, responsibilities and a succession plan with a good attorney are keys to success. I heard it said years ago…….Prior Planning Prevents Poor Performance…. and no place is that better said than in a business relationship.
And since we’re talking about organizations with different levels of people and responsibilities, have you considered staffing? Yes……. how, when and why do you bring on additional people for the business. But when you do….time and responsibility increases for someone. Those questions may include……who will be keeping up with hours worked? Payroll and payroll taxes? Workers Compensation claims? Benefits and time-off requests? Who will write and keep the employee manual up to date? Will we use a staffing company for new hires? Is the payroll done internally or will we outsource to a PEO? And we haven’t even begun discussing job descriptions yet. This is a lot to consider, even when the total operation may be less than 10 people. However, all these items and more are part of the equation, when you have employees.
You may be saying now……but Mike….I just need some capital….a little money up front to get started. Surely that can’t be hard to obtain. Well…………..if you’re looking for investors or just a loan, having a quality, well thought out business plan is a must! Whether you goto the Small Business Administration, your local bank or seek out private equity, having a well written plan can make all the difference in the world for receiving the money you need. Why is that? Again, I’m glad you asked! People and lending institutions have a hard time letting go of those dollars. It’s not a gift or simply money they are willing to give away. Nope! They want to see and know about the ROI (Return On Investment). And the best way for them to have a clear understanding of what to expect for that investment, is a well spelled out plan. One that includes what you will be doing….how you will be doing it…..who is involved and to what degree….projections…..and of course a budget. Yep, they want to know how you are going to spend those dollars.
So whether you’re going solo to consult or coach, provide products and services, retail, warehousing or manufacturing…these are but a few of the many things you need to consider as you begin the next Great American Dream! But understand this…..no matter how many things must be done…..how many road blocks you may hit……people who say no…..or regulations that must be followed…….if you have a dream and the heart to see it birthed into reality…..it’s the best, most fulfilling adventure you will ever have. For all the failures, setbacks, no’s and waits I have experienced in starting a business, I wouldn’t trade any of them for just keeping the dream in my pocket.
Now…………go out there and turn your dream into reality!!!!!!!!!!!
Want to know more about how I can help you……….http://www.mikesizemorellc.com