The first year of operations is a critical time for any small business, with decisions made about market focus, finding financing and hiring a team that will have a significant impact on the business’s success or failure in the future.
SCORE’s fall 2019 “Megaphone of Main Street” data report focuses on the challenges facing startups, which are companies in operation for less than one year.
This latest installment of the Megaphone of Main Street is the fourth in a data report series that presents a snapshot of the current American small business landscape. This particular report delves into the world of startup entrepreneurship, sourcing both qualitative and quantitative data directly from a diverse group of roughly 1,000 startup small business owners across the nation. Continue reading →
Most business owners focus on increasing profit margins as the primary means of improving the value of their business. Profitability is absolutely important, but it is not the only factor to consider.
In fact, there are three components which can increase – or decrease, the value of a business: risk, profitability and growth.
Take for example a recent client. We determined the valuation of the business to be about $1 million.
We then illustrated that if they were able to incrementally decrease risk, improve profitability and accelerate growth, they would be able to realize as much as $300,000, or 30% of additional value.
Decrease risk (discount rate) 2 pts: +$80,000
Increase profitability 10%: +$100,000
Increase annual growth 2 pts per year: +$120,000
Now, will this client be able to realize the full $300,000 in incremental value? It really depends on the timeframe and level of effort that they want to put into improvements. It is a good idea to identify the range of opportunities and then prioritize activities.
Kitsap SCORE and local Chambers of Commerce are working to develop a series of roundtable discussions for people who want to solve problems, find opportunities, and grow their businesses. Please share your answers to four simple questions and help us pick the best time to meet and choose topics for conversations.
by Susan Shoemaker, Principal-Project Manager, Peninsula Web Design
The single most common challenge for creating a website is writing good content. Why is this an issue? We encounter this speed bump with almost every website project.
The written content of your website impacts the performance of your website. This is how both the search engines and users find you, and determine if you have what they want. For your website to produce results for your business it first has to be found, and then it must connect with the user, in order for that person to be inspired to reach out to you.
This simple strategic planning technique can help you identify what your business is doing well, what it needs to improve, where it needs to grow, and what could be its undoing.
Choosing the right direction for the future of your company can be a daunting task. Should you add services? Is your team staying competitive? How can you improve cash flow?
All of these questions and more can be answered by performing a regular SWOT analysis.
What is a SWOT Analysis?
SWOT stands for strengths, weaknesses, opportunities and threats. Taking a deep look into your business by examining these four elements will provide you with an overview of the health of your company. Your strengths and opportunities offer avenues for your company to flourish, while your weaknesses and threats can inspire improvement and help you recognize emerging competition.
It’s likely that you completed a SWOT analysis in the beginning stages of your business plan to help determine where you stood in the market and identify target customers. Now that your business is established, it’s imperative to conduct regular SWOT analyses to help improve your operations and systems and stave off problems.
How to Get Started with a SWOT Analysis
The most vital step in conducting your SWOT analysis is determining what your strengths, weaknesses, opportunities and threats are, but sometimes they can be hard to narrow down. Continue reading →
The odds are that there are a lot of other businesses in your market providing similar products or services. So what is compelling about your firm that sets you apart from your competition and entices potential customers to buy from you?
Many business owners will answer with the “soft” differentiators, such as reputation, good service and high quality. These are all great characteristics (and absolutely necessary!), but do they really set you apart? I’ll bet that if you ask your competition what sets them apart, you will get similar answers.
The fact is that highly differentiated firms are generally more profitable than their counterparts. Their overall market may be smaller than a less differentiated firm, but they have more of it (the proverbial big fish in little pond). And, they most likely charge more and spend less on advertising and marketing. Continue reading →
Cash is the fuel that makes a business run. It is needed to pay salaries including your own, fund marketing programs to acquire and retain new customers, invest in equipment and facilities, pay rent, supplies and many more day-to-day activities. Most financial experts recommend three to six months of operating expenses, but using this for every business in every situation is misleading.
To determine how much cash you need, you must look at the following key areas.
How Much Cash Have You Been Using?
If you’re an established business owner, look at your monthly cash flow report (or go to the next paragraph if you’re a start-up). This report will provide an historical and seasonal perspective. Note the cash received from sales and the cash spent. The net of these two is often referred to as the “net burn rate.” For example, if you have $50,000 in sales and $30,000 in expenses, then your net burn is +$20,000
Your “gross burn rate” only takes cash expenditures into account; in our example, that’s $30,000 and is the more conservative amount, since it does not assume any sales are made. Historical spending patterns are a good starting point in considering future spending plans. Continue reading →