Wednesday, January 25, 2012

Startups Need Defined Goals. And Deadlines.

Startups Need Defined Goals.  And Deadlines.
Lucille Wesnofske, Director
Small Business Development Center at
Farmingdale State College
Doug Boyce, Director,
Small Business Development Center at Binghamton University

Sitting on the fence is not living on the edge.  For start-up businesses, the clock begins to tick as the idea begins to form.  One of the most difficult processes for any start-up businessperson is turning an imaginary concept into an action plan.  “How do I get from A to B?” is the common question.  And, by the time a would-be entrepreneur has made the decision to go for it; the dream may have become obsolete either through technological advances or even new local competition.  If the decision is to proceed, there are goals that must be defined.

In the United States, about 675,000 new businesses are created each year.  Unfortunately, more than 80% of start-up businesses do not make it to the fifth year.  The primary reason is lack of planning.  Dreams evolve into goals with the development of a business plan.  This concept of business plan can not be overly stressed.  It is a road map, a timeline and a deadline.  It is a feasibility study in which dreams are broken down to nuts and bolts.  It is a working document which requires periodic review and revision as the business progresses.  Too many entrepreneurs fail to develop and follow specific short and long term realistic goals – the business plan. 

Most successful entrepreneurs are self-motivated, energetic, creative, visionary, profit–oriented, above average in communication skills and controlling.  Although these characteristics have a positive impact during the conception and birth phases of development, several can become negatives if not recognized for what they are.  Entrepreneurs have a tendency to need to be in control and many have difficulty in delegating.  They go into business and quickly lose focus as they become all things rather than concentrating on core competencies. It is important that a full self assessment of skills be done to help recognize what areas are weak and will need outside help.  i.e.  The entrepreneur may be strong in marketing and weak in finance.   Staffing needs should be identified.

Competition is always underestimated.  A startup businessperson may not realize how difficult it is to convince customers to change vendors or how deeply entrenched competitors are in the marketplace.  An analysis of the market will help determine if there is sufficient unfulfilled need.  A product or service must have a “unique selling proposition” that differentiates it from the competition.  The startup businessperson must answer the question “Why should I do business with you rather than your competitors?” 

Other considerations in setting realistic goals should be: prior experience in the type of business being started; family requirements and expected support; the economic outlook for the industry as a whole, and the personal sacrifices the startup businessperson is willing to make.

Finally, of all other things considered, cash flow is the most vital component of any startup.  Few new businesses are properly capitalized and most do not realize a profit through the first or even second years.  Capital sources can vary from personal equity, to friends and family, to lending institutions.  Lack of oversight or sloppy control of expenses can choke any startup business and prior to raising outside capital, an accurate assessment of capital needs is required.  Planning cash flow needs and sources should warrant a separate section of any startup businessperson’s plan.

Wesnofske is Director of the Small Business Development Center at
Farmingdale State College and can be reached at or 631-420-2765

Boyce is Director of the Small Business Development Center at Binghamton University and can be reached at or 607 777-4024

Control, Don't Cut Costs

 Control, Don’t Cut Costs
By Gregory Bavaro

In these times of economic woe, controlling costs is essential to the survival of your business.  When sales are down and expenses are up, we as entrepreneurs are forced to take a closer look at how we can run our businesses more efficiently.  This simple analysis can do so much more than get you through this recession; it can create a windfall of profits when the economy rebounds.

Many “old school” business owners, all too often, focus on cutting costs.  This can be detrimental to your business, and it is important to know and understand the difference between cutting costs and controlling them.  When costs are cut, quality and service are sacrificed and your customers suffer.  As a result, you lose customers.  Loss of customers equals loss of sales forcing you to cut more costs and creating a vicious downward spiral ending in another store available for rent.  However, if costs are simply controlled, you are able to maintain the same service and quality your customers know and expect while spending less to do so.

Easier said than done, right?  Wrong!  It’s simple.  Open up your checkbook or general ledger, whether you use Quickbooks or a composition notebook; take a look at your expenses.  Start with your biggest numbers.  If you are in a service business it will probably be your payroll, utilities, and rent.  What can you do about these?  You’re already short-handed, and neither the local utilities nor your landlord want to negotiate. 

First, stop letting your business run you for a moment and take a look around.  Is your business really short-handed or is it just you?  Look at your staff.  Are all of your hourly employees really necessary at all times they are present or can their shifts be staggered so they only overlap during peak hours?  What about your salaried personnel?  Are they managing their time properly or are they robbing you blind?  (I could virtually guarantee that time is the most pilfered asset in your business.)  Take a look at their computers (hint: check their internet history).  I’m sure there are plenty of more productive tasks they could have been performing instead of all that online shopping and personal emailing.  In addition, this might not be the right time to dole out raises.  You’d be surprised at how well you staff will handle a pay freeze when tens of thousands of jobs a month are being cut nationwide.
Concerning utilities, rates may not be negotiable, but you’d be surprised how helpful the local gas or electric company can be when you express interest in an onsite consultation on preserving energy.  They will send an expert out to your location and inform you as to how your energy costs can be drastically reduced.  In addition to the money you will save, your customers will be thrilled to hear you’ve “gone green” to help save the environment! (Make sure you capitalize on that one too!)  With regard to your rent, contrary to popular belief, most landlords are reasonable businesspeople.  They would much rather renegotiate a lease to retain a reliable tenant and continue receiving rent than sit with a vacant space.

If you’re a seller of products as opposed to services, take a look at your suppliers.  If you can buy from other suppliers, through co-ops or direct from manufacturers, do it!  There is no doubt that keeping your suppliers honest will save you more than any volume discount.  It doesn’t matter how many “rebates” and “discounts” you’re receiving, that is just your suppliers’ way of saying, “thanks for paying too much for the products you’ve been buying.”  It is important that the products you are purchasing are less expensive, not cheaper.  Also, eliminate items that aren’t selling. 

Simplify your operation and trim the fat, too.  In every business there are some luxuries you just don’t need and now is the time to find them.  If it doesn’t generate income or improve your service, you don’t need it.  Assess the services you pay for.  Can any of them be performed by your employees?  Some people enjoy cleaning, landscaping, and even doing repairs.  If there is someone in your organization who can help out with some of these tasks, not only can it save your business money, but it can also make employees feel more secure in their position.  If an employee can pick up a couple of extra hours performing a task they enjoy, it can break up the monotony and boost morale. 

The list goes on and on, and controlling costs becomes addictive.  Stay in discount hotels while traveling and compare airfares and car rentals.  Join business associations to receive group discounts on insurance.  Sublet any unused space you may have.  Cater meetings in-house instead of in fancy restaurants.  Shop shipping rates, webhosting, etc.

Controlling just your top three or four expenses can keep you out of the red and in the black right now.  As your competition falls by the wayside and your business grows, you will soon be rolling in the green. 

What You Should Know About Buying a Food Franchise

What You Should Know About Buying a Food Franchise

If you have the capital, there is no better time to buy a franchise than right now. While many potential franchisees dream of owning their own restaurant franchise, there are a few things to note prior to venturing down the path of franchising.

My experience says yes, especially for those wanting to buy into the major brands. Some lesser known concepts may be willing to overlook this, specifically if you have extensive experience in corporate America on the management side. But major brands, especially the ones seeking multi-unit candidates, are looking for some type of restaurant managerial experience.

The food business is a management business. Having management experience is important, especially in dealing with unskilled labor (vast majority). If you have mastered management at some point in your career, you have an edge in opening your concept. Your hands-on education will also be valuable in your selection of the right manager to operate your location and future locations.

These days many major brands only want multi-unit operators. This means you, and your management staff, will be responsible for potentially hundreds of employees (based on owning 3-5 units). You must have the ability to improvise when someone calls in sick or quits. These are headaches business owners face daily. Understanding how restaurants operate will ease the execution of your team, which will become much smoother as you become a more established franchisee and restaurateur.

Multi-unit operators strike franchisors as their top option when looking for franchisee candidates. For franchisees, taking the multi-unit road is also the most financially sound. When you become a single-unit franchisee, it will take longer to reach financial freedom (if that is what you are looking for).

This brings me back to my first point – the need for restaurant experience. With restaurant experience, and a good manager in your first location, you will be set up for continued success, as that manager can become a part of your multi-unit development team. That manager can then manage two locations as you focus on finding your new real estate, extended financing options, and marketing your business.

Multi-unit goals will impress franchisors and will set you up, if done right, for better success and a better exit strategy.

Financing is more difficult to come by than it was a year ago, but for the major brands, banks are still somewhat friendly. If you are joining a lesser established restaurant concept, you should be prepared for a longer fight for financing. Banks will look at your plans similar to how franchisors will. Banks want to see restaurant experience. They want to see long-term goals. They want to make sure you are set up for success so that you will eventually have the best chance of returning their loan.

If you have it, it will help you to understand location and lease negotiations. Experience is the key word in venturing into restaurant franchising. The more you have, the easier business operations and growth will be. In my days at Dunkin’ Donuts, we found that the best candidates for new development were the ones who understood at least the basics of real estate and construction. We also found that the best candidates were the ones who had good partners. It was always attractive to us, the franchisor, to see two sides of a team: one that understood real estate and construction, and one that understood operations.

If you have limited real estate experience, franchisors, in most situations, will hold your hand throughout the real estate process, but you will have to rely on your own skills to make the best real estate decisions. And the good thing about today’s economy is that landlords are hurting too. They are coming down to reality and are bending over backwards to have major brands fill their spaces. Think about that when you start your brand search.

Every good beginning has a great end. Your plan should include an exit strategy. Sure, you will want to build your 3-5 units to the top, but then what? Think about the end sale. Think about setting your franchise empire up for the end.

Keep in mind it is much easier to sell a franchise that has brand awareness and name recognition. You will have a much bigger pool of applicants when selling an established concept. However, if you choose to go with a relatively new brand, remember, if you use your experience and your success and continue to connect with your consumers through strong local store marketing, you can be influential in taking your younger brand to an established brand. This will be big as you eventually look to mature your concept portfolio by becoming a multi-unit/multi-concept franchisee.

Wednesday, January 11, 2012

Tips For Successful Cold Calling

Being successful in sales as in most things, requires two key ingredients- a good attitude and positive energy. We have all heard the expression attitude is everything. That saying could not be more true then when engaging a prospect in a sales process. No one likes working with people who have a negative attitude. Attitude is contagious; if you are upbeat and positive this will help create positive, upbeat relationships with your prospects.

 It is, however,  difficult  to be positive and upbeat day after day when you are in sales. After all sales is rejection and hearing ”NO” all day can wear on even the broadest shoulders.

If you are a telephone sales warrior, there are ways to help keep your energy and attitude upbeat and positive throughout  the day. Kensington Company & Affiliates offers these three tips to help keep your head in the game:

Make your difficult calls first:   If you have challenging or difficult calls that you need to make, make them early in the day. I think of those calls much like the dreaded visit to the dentist. If you have a dentist appointment in the afternoon, you spend most of the morning feeling anxious and unfocused. Make those challenging calls early in the day when you’re full of positive energy and then you can quickly put them behind you and move on with your day. . 

Break up your cold calling:  The law of numbers says you are going to hear more “No’s” then ““Yes’s” when calling. And that’s only when you actually get someone on the other end of line vs. the endless voicemails you leave all day.…. Break up the cold calling,  and reach out to prospects that you know are tracking in your process so you can get some engaging conversations into the mix. You will have rejuvenated energy after speaking with a live voice that is appreciative of the information that you are passing along.

Motion creates emotion: Stand up, get out of your chair, pace the floor,  do what ever you need to do to get your blood flowing. No one wants to speak to someone who has no pulse, no energy and no passion. If you are half dead on the phone, you are creating a situation for the prospect on the other end of the line to reciprocate that low energy. Be upbeat, it is contagious and your prospect will instantly feel that energy.

You have the power to change your attitude and energy. They are easy simple steps that can be embraced and brought into your sales process that will help keep momentum moving.