What is operations management?
By Samantha Garner | March 17, 2012
When we talk about operations management in a small business, we’re talking about a lot of moving parts. So what is operations management? It refers to all the activities, processes and controls a small business uses to produce its products and services. The components of operations management include:
- New product or service development
- Inventory management
- Purchasing
- Manufacturing
- Distribution
- Logistics
Whether your small business is in retail sales, manufacturing or a service company – or anything in between – you need an operations management plan. Of course, the operations plan for a hair salon won’t be quite the same as that of a small manufacturing business, but a plan is vital. How will you source your suppliers? How will your inventory get to your location? Who will control purchasing? Is it the same person who will control distribution? The list goes on! The components of operations management are interlinked, so a well-crafted operations management plan will ensure you are prepared.
Sounds complicated, but there’s a silver lining – entrepreneurs and small start-ups can design and implement new and innovative operations processes without having to overcome outdated ways of doing things. Older, larger businesses are always looking for ways to cut costs and improve operations. Small firms are fast and flexible, and can quickly gain the upper hand over the competition if they can deliver more efficiently too.
Have more questions about operations management? See what questions have already been answered in our Ask an Expert – Operations Management section. If you don’t see your question there – ask! We love talking operations management with fellow entrepreneurs.
Topics: GoForth Institute Small Business Training, Small Business Tips and Advice | No Comments »
Small business blog posts we liked this week
By Samantha Garner | March 10, 2012
We found some great posts on other business blogs around the web this week. Here are some of our favourites – let us know what you think!
- Hey, Small-Business Owner: Do You Shop Local? at Entrepreneur.
- How to Win a Tech Start-up Competition at Inc.com.
- Taking Stock of Your Personal Inventory: Do You Have What It Takes To Be an Entrepreneur? at Small Business BC.
- As Facebook IPO Nears, Universities Take Aim at Student Startups at Huffington Post.
- Small Businesses Lag on Sustainability: What To Do About It at Small Business Trends
Topics: Entrepreneurial Inspiration, Entrepreneurship News, Small Business Tips and Advice | No Comments »
Should you buy, rent or lease your business’ location?
By Samantha Garner | March 3, 2012
So, you’re ready to hang your shingle and open your business. You’ve looked at a lot of properties and have a pretty good idea about what’s available and how much it costs. The question remains – will you buy, rent or lease?
It’s not an easy decision (as with many decisions when starting a small business). But here are some things to consider when faced with the option of buying, renting or leasing your small business’ location.
Renting or Leasing
You may consider renting or leasing your space in the early stages of business when cash is too tight to buy. Compared to buying, credit ratings aren’t as important when it comes to leasing or renting. You also won’t have to suffer any major financial losses if you don’t own property when the market’s not so hot.
Other benefits of leasing or renting are greatly reduced moving expenses (no selling the property!) and a tax-deductible monthly rent as a business expense.
If you decide to lease or rent your small business space, we recommend having a lawyer review the lease agreement with you. Go over renting costs, the duration of the agreement, restrictions on the use of the property, subletting options, possible penalties and anything else you have questions about. And don’t be afraid to ask questions! It’s better that you fully understand what you’re signing on for. You should also find out if there are any restrictions around renovations you can undertake, or the kinds of signage and advertising you can put up.
However, there are some downsides to renting or leasing. Rental rates fluctuate. You could be paying more one year than you bargained – and budgeted – for. Also, your rent money goes into someone else’s pocket rather than invested in your own assets. And depending on the terms of your leasing agreement, you may have little control over some parts of your location choice, including staying where you are at the end of the lease.
Buying
When you buy a location for your small business, the money that you spend each month goes toward your own mortgage payments, which means more assets for your business instead of your landlord. The interest payments that you make on your location’s mortgage are tax-deductible. Since you own the space, you can make any renovations to it that you want. There are no rent increases. Ultimately, you have more control over the location.
However, with the control of owning your small business location, you also have more responsibilities. You’ll need more initial capital. There’s the risk of poor market conditions, which could put you at a loss when you sell. There are additional legal costs and requirements, additional operating costs and maintenance requirements – yes, you have to shovel your own sidewalk.
So. How do you choose between renting, leasing or buying your small business’ location? There’s really no one perfect or one-size-fits-all solution. Consider your specific priorities when it comes to your location, especially the length of time you plan to be there and how much control you want over your space.
Topics: Small Business Tips and Advice | No Comments »
What’s your out? Why an exit strategy is important
By Samantha Garner | February 25, 2012
One day, maybe a very long time ago, you had a great idea that also happened to be a great business. You made a few sacrifices at the beginning and worked many an 18-hour day, but now your small business is ticking along smoothly. You might even have time and breathing room enough to sleep eight hours a night! Finally – your small business dream is now a reality.
So – how will you get out of it?
Why developing an exit strategy for your business is important
Aside from figuring out your business’ pricing strategy, location and HR policies, one of your most important responsibilities is the planning of an exit strategy. We know it seems kind of odd – you plan to spend years growing and nurturing your small business. Why would you ever stop? But an exit strategy ensures you’re prepared when the end comes. And it will come – every business has a lifecycle. Family businesses in particular need a well-planned exit/succession strategy.
On that note, a family-run business that plans to transfer ownership to a next-of-kin will likely operate much differently than a business that has its eye on a ritzy IPO in five years. Your exit strategy will inform how you run your business.
Tips for planning an exit strategy
You must have a clear understanding of how you’re going to get out of the business, whether it’s a few months off or many years away. You should take as much time and effort planning the exit of your business as you did in starting it. This won’t be a fast and simple process – planning your exit strategy may take weeks, months or years. Leave no situation unexamined.
Consider who may be interested in purchasing or taking over your company. If there isn’t anyone within your company that may be able to continue with it, consider family members, people within your network, or others looking to purchase a new business opportunity. You’ll want to get as much out of the exit as possible, considering everything you’ve put into your business. You may need to gradually downsize before finally withdrawing yourself completely.
The situation surrounding an exit will be quite different for different types of companies. Whatever you decide, make sure that your strategy is well thought out, planned and implemented properly. It wouldn’t hurt to consult people in your network who may have exited their own businesses – pick their brains to see if they can give you some useful advice.
Did you create an exit strategy for your business? Have you exited a business in the past? Let us know in the comments!
Topics: Small Business Tips and Advice | No Comments »
Four big marketing mistakes in small business
By Samantha Garner | February 18, 2012
Marketing isn’t a one-size-fits-all thing for any small business. In fact, we bet you’ve tried or mulled over several different marketing techniques and strategies to help you grow your business. How many of them worked? Have you wondered what you could be doing differently?
In our experience, there are some marketing mistakes that are quite common among entrepreneurs. Don’t feel badly if your latest idea is on this list! Entrepreneurship is ever-evolving.
Not knowing your market
Although you may think you want to market your product or service to everyone, we all have different needs and experiences. Instead, narrow down one to four specific customer groups that will be most profitable and accessible to target. Consider these major elements when dividing up your segments:
- Demographics: Age, income, gender, education, family status, income level, occupation, social class, ethnicity.
- Geographics: Cultural, climate, regional and national differences, population density, population growth rate.
- Psychographics: Lifestyle, personalities, attitudes, opinions, behaviours, values.
- Behaviours: Buying patterns, usage rate, price sensitivity, brand loyalty, benefits wanted.
Porsche and Ferrari clearly target those in high social classes that have high incomes as well as lots of money to spend. Lifestyles of this target market are very luxurious and probably value products that demonstrate status. On the other hand, who does Wal-Mart target? This segment is very different – probably middle-aged parents who are cost-conscious or not concerned with status symbols.
Take some time to draw out what your typical customer would look like and where their lifestyle, age and social class fit in to their buying patterns. All this research will really show in your marketing. Your customers will feel that they are understood and their needs catered to.
Not making a marketing plan
A sound, clear marketing plan is necessary for small business success. How well have your family vacations worked without a map, or a daily set of goals and outcomes? Small business is no different. Your marketing plan can evolve, but setting your strategy down is a vital step that mustn’t be overlooked. Who do you want to market to? How? When? Why? Are your marketing ideas cohesive with your company’s values? Is a blog really a good marketing tool for your business, or is Facebook better? You may have all the great marketing ideas in the world, but putting them into a plan will help you find holes and better ideas you may not have previously thought of.
Once you have developed a clear plan for the branding and marketing of your company, it’s important to implement it correctly. Be sure that your marketing plan is clear and understood by all of your staff so that it’s properly used through all activities. Monitor and track your plan to identify strengths, weaknesses and opportunities for improvement. Have your plan written out and refer back to it frequently.
Being seduced by the latest marketing trend
Social media is here to stay, and it seems like a new outlet is making headlines all the time. But what’s the signal to noise ratio? We mentioned Facebook earlier, and many small businesses are also turning to Twitter for marketing. There’s also LinkedIn, YouTube, Vimeo, Google+ – we could go on. I’s enough to make your head spin. And that doesn’t even cover marketing trends outside the social space.
We have all been dazzled by a new marketing idea, one that seems perfect and guaranteed to increase sales; especially if it appears that everyone else is doing it. But what if the new marketing trend is actually terrible for your business? Let’s look at Facebook again. It’s great for engaging customers, sharing news and having conversations. But what if your business is very “niche” or provides a service that doesn’t often get repeat business (like a paving company)? You may never have enough people on your Facebook page to talk to, or you may have nothing to talk about on a regular basis. Here, Facebook may not be the best marketing idea for you. Instead, offering educational tools for free on your website, such as white papers, may be a better marketing tactic.
We love new ideas as much as the next person, but it’s important to keep your wits about you in the midst of all the hype. Otherwise, your marketing focus can be stretched too thin, making it seem to customers that you have no focus at all.
Not getting marketing help once it’s necessary
You don’t have to tell us twice – your small business is your baby. Entrepreneurs are nothing if not tenacious, and that applies to our marketing as well. You probably created the marketing plan, researched all the social media outlets and maybe even had a hand in designing your business’ logo. And all your work has paid off. Your sales are increasing in leaps and bounds and your to-do list is as long as your arm. Great! That’s the sign of a successful small business.
Except, when was the last time you looked at what your customers were asking you on Twitter? Or updated the menu on your website? Maybe it’s time to release your grip on your marketing and delegate to someone who can really concentrate on it. Now, this person doesn’t need to do marketing full-time, but he or she should be able to focus on moving your marketing plan forward seamlessly, aligning with your business’ goals, vision and culture. We know that delegating can sometimes be very difficult for entrepreneurs, but it’s a sign of business growth. And anyway, all babies become teenagers eventually, right?
Do you have experience with these four marketing mistakes? Do you know of one we didn’t include here? Let us know!
Topics: GoForth Institute Small Business Training, Small Business Tips and Advice | 2 Comments »