I recently spoke with one of my readers about his small business, when she all of a sudden declared she felt like a business failure. I was somewhat surprised by her statement as I thought she had established a nice little business, was making enough money and had a good work/life balance. She explained that someone had started in her line of business and his business had grown faster and she felt she could not compete with this business, she still worked form home while this competitor had already opened the third shop in the the state. She almost declared herself a failure. I asked her what her intention had been for her business when she started.

She began to explain, that she wanted to work from home since she wanted to be home for her child and still have an income and not lose touch with the work she loved. It was always clear to her that she could only spend about 10 - 20 hours of work per week, but that would give her the income and the professional life she needed, while getting her work/life balance right.

As she was telling me about her business, she began to lighten up - as she realized she had done exactly what she set out to do - far from a failure she was a success. She had made the same mistake we all make from time to time, she had compared herself to a business that clearly had different goals. Sometimes our ego gets the better of us or in cases like this the worst of us, which is why I believe it important to write your goals down on a piece of paper and look at it each week, to help you to focus and realign your actions with your goals.

Any business is only a failure when it is literately failing, like running out of money failing, if that is not the case you are a successful business. Looking at the competition is all about seeing what is happening in the market and learning from the comparison how to achieve your vision and goals, not to limit yourself to what your competition is doing.

The vision for your business should go beyond comparing yourself to your competition, comparing yourself will often limit your vision. — ST.

Today I got an invitation from someone to link up with him via LinkedIn, the social network for professionals. So I signed in and accepted the invitation. Scanning through my LinkedIn homepage, I noticed that a “colleague” from WinWeb had signed up. Once I clicked on the link I was shocked to read that someone else was claiming to be CEO of my company, WinWeb International Limited.

As you can imagine I was a little perplexed, but then you realize that these social networks all have certain limitations, and this is one of them. Anyone can claim to be someone else and there is little you can do about it. It could also be a simple mistake, but who knows?

So be careful when you meet someone online for business, they may not be who you think they are. ST.

Good question! When you read many small business publications and online resources, most people talk about growing your business. Sometimes it sound like it is important to grow your business, along the lines of if your business does not grow, it is going backward.

To tell you the truth most people talk about growing their business to attract funding - VC money, loans - believing that this money will help them to grow and this way solve their business problems. Surprise, surprise - that never works and never will, it amuses me no end when I hear some people ranting about VCs, when they not even have a business.

If you achieve your business objectives, whatever they are, why would you want to grow your business? There is no problem in remaining small and as you are, don’t let anyone tell you otherwise. Work on your work-life balance and enjoy your success.

As Michael Bloomberg - a U.S. entrepreneur and Mayor of New York - once said:

Is your company small you have to do everything yourself? Wait until you’re so big that you can’t. That’s worse.

Could not have said it better myself - there is your answer. ST.

Disclaimer: As with any of my readers questions, I do not have all the answers and here on my blog I can only give you some ideas, since I know very little about your small business. If any of you can add anything here do so for the benefit of my reader, who asked the question and everybody else, leave a comment below - I’d be most grateful.

As many of you know by know I’m a sucker for bootstrapping for small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer- or Personal business, like professional, contractors, freelancer, self-employed, sole-trader and virtual assistants, and outsourcing is a big part of my bootstrapping philosophy, so here a re a few pointers:

1. To outsource, or not to outsource …. . I would always outsource non-critical and non-core business functions, in other words, whatever it is that makes your small business different and unique you do yourself, because that is what earns your money. Anything else could and probably should be outsourced (see: outsourcing options for small business).
2. Do It Online. This will allow you to stay in close touch with your supplier, and get real time up-dates and feed-back - there are other benefits too.
3. Don’t abdicate. Outsourcing does not mean to forget these tasks, you just delegate them to someone outside of your company, you are still responsible.
4. Know who you are dealing with. Not all partners are the same, one virtual assistant is not like the next, the same is true for accountants, bookkeepers and other service providers.
5. Don’t become a favor. If your future partner says things like: ” I’m not sure if I have time, let me see.” or you new service provider makes you feel, as if they are doing you a favor, don’t deal with them, you need partners and not people you feel guilty calling.
6. Nobody answers the phone - put the phone down and do not call back. Anybody in this kind of service business should understand what service is all about, not answering the phone shows they don’t - they will leave you high and dry sooner or later.
7. Get references, if you can. Anybody who has been in business for 12 month or more should be able to give you at least one or two references. Don’t shun new service providers, check their CV, remember you may get a good deal and it is good to be one of the first customers.
8. Get a back-up. Negotiate a back-up deal if you can, so if your primary provider falls ill, you have a back-up, or divide the work between two or more service providers to begin with.
9. Pay on time. You want good service, pay on time. You want professional work, pay a decent retainer or hourly rate. If you don’t, you’ll be last on the work and service agenda, that means you business suffers. If you can’t afford the service don’t hire them.
10. Get at least three quotes and compare them. Just to make sure you don’t get taken to the proverbial cleaners, and to compare service levels. Don’t be afraid to ask for an explanation, if you don’t understand something.

Outsourcing is good for your fix-cost structure, should make you more professional, and help you to concentrate on your core-business. If it becomes a distraction, deal with it immediately, if need be change supplier. ST.

If you want your small business to be successful you need to have the ability to get things done - are you one of those people who get stuff done?

But is that really all that counts? No, of cause not, getting the right stuff done is what counts. So every time you are working on something you need to ask yourself

“Is this effort I’m putting into this project getting me anywhere or not?”

If the answer is “NOT” then you need to stop it right away. This can be one of the hardest things to do, especially if you have invested a lot into it the project already. But it is essential for your business success to make this hard decision.

You may decide to try again and again, but as Benjamin Franklin used to say:

“The definition of insanity is doing the same thing over and over again and expecting different results.”

ST.

The typical scenario is you work hard all week, have no live and at the end of it all little money to show for it. This is often a sure sign of loss of management control in a small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer-, Professional-, Personal businesses.

The small business health-check questions for this episode are:

• Do I know what is going on in my business in all areas or have I abdicated some responsibility to staff? You can pick and choose what you do work-wise everyday, you can not pick and choose what you should know about and make decisions about - this is your business, not your staffs business - act like it.
• Am I running my business or is it running “itself”? No business is running itself, other than into the ground!
• Do you know how your cash-flow is doing? Done this one before, yet it always comes back to this, check it out.
• Do you have an overview of your small business fixed costs and sales, are you happy with the situation? I guess you could always do better, but if you do not know the details you can not improve your situation.
• Is your vision in line with your small business targets? You need a vision for your business, that will allow you to develop your small business strategy and plan, so you know where you are going - don’t just drift along.
• Have you asked your staff lately? Have a power-meeting with your staff once a week, to see how they are feeling about your small business, last week or the next few weeks. It will motivate them and give you a new insight in how others see your small business.

The central message here is to be involved in ALL areas of your business ALL of the time - in a management capacity. When I hire people I always hire people who do something better than I, but you have to stay involved.

You can see other reasons for small business and personal business, like contractors, freelancer, self-employed, sole-trader and virtual assistants failures in my Health Check Category, if you can add to this list please do so, I would welcome your comments.

The first post in this mini series is related to this issue of cash-flow and so will be many that follow. Cash-flow is the central and most critical management objective for every small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer-, Professional-, Personal business.

T o perform this small business health-check, ask your self the following questions:

• Do I have a written plan and cash-flow forecast for my business? As I said before, without it it is like driving with your eyes shut.
• Am I efficient in achieving those aims? We often allow non-core issues and irrelevant stuff to “steal” our time, or we are so overwhelmed by work that we do not have the time to stand back and look at our small business - take the time and make those decisions.
• Do you have a feel how my small business works financially? If not, you must be feeling uncomfortable most of the time, again take the time and feel better about your small business.
• When did I plan and monitor my cash-flow last? You need to do this at least once a week or if something happens that is not in the plan. Check your cash-flow each time before you make a bigger purchase or hire staff which is not in the plan, you will quiet easily see if you can afford to do it or not.
• How much reserves does my business have? The best peace of mind is when your small business has substantial reserves, do you have any or are you at least planning to get a 2-3 month reserve buffer?
• Have I re-negociated my terms with my suppliers? What if your suppliers gave you 60 or even 90 days payment terms - put that in your cash-flow and smile, it’s instant reserve. You need to pay your suppliers on time, only then will they trust you enough to give you the extra long payment terms.
• Am I chasing my clients for payment adequately? Do you know the average number of days you clients need to pay you? Give incentives - 2 % off if you pay within 7 days - try and keep your average well below 30 days. If you have not enough time to do credit control outsource it.
• Do I need my overdraft? If you get better payment terms fro your suppliers and do a better job at credit control, you may not need your overdraft anymore, which will save you a lot of money. Don’t cancel your overdraft, but make sure you only pay for it when and if you use it - shop around. On those terms you should get an overdraft, even if you do not need it, so if something unexpected happens you got the cash-flow reserve.

The importance of your cash-flow situation can not be overestimated, as long as you can pay your bills you are in business - as the saying goes: Cash Is King!

You can see other reasons for small business and personal business, like contractors, freelancer, self-employed, sole-trader and virtual assistants failures in my Health Check Category, if you can add to this list please do so, I would welcome your comments.

I have decided to write a little mini series on why small business and personal businesses, like contractors, freelancer, self-employed, sole-trader and virtual assistants, fail and how to find out if your small business is in danger, too.

In this first part, I would like to talk about fixed costs in small business. To perform a basic small business fixed cost health check, ask yourself the following questions:

• Do I know where all the money is going every month? You should know where all your money is going at all times - if you don not know, it is important that you find out.
• How comfortable am I with the current level of costs? Are you able to generate reserves in your small business, or is your business just making ends meet.
• Are large parts of the costs for non-core business tasks and do I get value for my money? No matter how well your business is doing, you should never waste money - so if you can outsource do it, it will make you small business more focused and far more resilient and efficient.
• Do I have a cash-flow forecast for my business? Having no cash-flow plan is like driving with your eyes closed - cash-flow planning is easy, and you will have a better feeling about your small business.
• Are there any spending issues with business partners or colleagues? Are other people spending your money (?) and you can not control them - deal with it, sort it or get rid of them even if they are partners in the business, find a way or get help.
• Am I in control of my spending or have I abdicated this function to someone else? Even if you have staff - outsourced of employed - doing your bookkeeping and organize the payments for you, you need to make the decisions of when your suppliers get paid, so you can control your cash-flow.

There are many more questions you could ask yourself, here I just wanted to get you going. If you have any more issues or are uncomfortable with any of your costs and answers to the above questions, then you should get some professional advice.

Running out of money is the reason most small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer-, Professional-, Personal businesses, fail - not controlling your fixed costs is one of the main reasons for this.

You can see other reasons for small business and personal business, like contractors, freelancer, self-employed, sole-trader and virtual assistants failures in my Health Check Category, if you can add to this list please do so, I would welcome your comments.

I get many questions about bookkeeping and accounting for small business and start-ups, here are a couple of things you should consider before making your decision:

What do you want to achieve? Do you want to:

1. Do you just want to collect your receipts and other documents and than hand it over to someone else?
2. Are you happy to fill in a simple online forms and have the double entry done by an bookkeeper or accountant?
3. Or do you want to do the accounting yourself and have the accountant prepare your tax-returns for you?

Each of these options is OK, as long as you do not relinquish all your responsibility to the other party when you outsource. You need to keep your books up-to-date, so you know where you small business is going and so you can make good and informed decisions.

If you are considering option 2. then their are products on the market that can help you, one of them is our AccountsOffice- Lite Edition ( currently still called CashBook), for a full tri-ledger accounting system you can use our AccountsOffice Standard Edition, both of the single user versions are free BTW.

For small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer-, Professional-, Personal business, the only way to go is online - I’m sure you think I would say that - but consider this.

You will need to get information fast - to make an urgent decision - how is anyone going to give you advice without up-to-date numbers on your business. There are other benefits to consider, but this one to me is the most crucial. Remember most small businesses fail because of bad financial decisions being taken, often based on false or out of date data.

What if your accountant or bookkeeper wants you to use an offline accounting system - do your business a favor find a new accountant, fast. Accountants are sometimes slow to change, they are also very often very busy people, but you should not worry about that, you need to worry about your business.

I wrote in the past about many accountants wanting to live in the past - that they are not interested in helping you plan your future. Michael Gerber in his book “The E-Myth Revisited” calls these type of business people “technicians” - I agree most of them are and very few have an entrepreneurial outlook in live.

So remember - no planning or no online accounting/bookkeeping for your small business - leave NOW! You owe it to your business.

I did not want to publish another small business checklist this week, but for obvious reasons I decided otherwise - I also altered the usual title to fit the occasion - here goes ……

Your small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer-, Professional-, Personal businesses - and Skype - will not survive without customers, and you need to get across to them how much you value them - you need to have a clear and consistent internal and external communication strategy. Here are some pointers:

1. Deal with the problem - customers who know that their problems are taken care of are likely to be more satisfied with the service and will be happy customers for the future.
2. Be sympathetic - some customers could suffer a great deal of inconvenience and stress, as a result of the problems, you need to address these issues head on.
3. Appoint an incident communicator - for constant and timely updates on the progress of resolving the issues.
4. Keep to deadline - if you set deadlines by which the problems will be solved, make sure you keep to them, otherwise you will loose trust and goodwill.
5. Build Trust - if the problem takes longer to resolve, propose smaller steps to resolve the issue any lost trust by your customers will return step by step.
6. Don’t create a vacuum - by not communicating with your customers. Otherwise you will learn they can talk your problem up and up, creating another problem.
7. Train staff - make sure you have trained staff to handle your customers complaints and problems.
8. Build understanding - by openly discussing your problems with your clients so they know what to expect.
9. People - avoid putting the wrong people on the helpline.
10. Resources - make sure your customer care department has adequate resources.

Have a look at my earlier post on “How not to do it!” - I’m stunned that a company like Skype can get it so wrong, IMO. Your business is build on trust and relationships, especially in these community driven times - neglect these simple rules at your own peril.

For more of my checklists see the Small Business Checklists category and as always please add to my list with your comments, tell us what works for you.