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.

Two professors, Julian Lang and William Bygrave, from Babson College in the US have found that the business performance of businesses started, with or without business plan, was unaffected.

This finding is not entirely surprising, since I believed for a long time, that getting too hung up about business plans can be a great waste of time, especially if you are not in a position to evaluate all variables that make up small business success.

I still believe cash-flow forecasting, SWOT analysis and a simple business goal sheet are helpful as far as business focus is concerned. A full business plan however, in my opinion is often a waste of time.

Some people plan and plan, but never start a business, why is that? If you are looking for problems you will find them. ST.

It’s a fact, that so many people will tell you that starting a small business is a bad idea, should not really influence your decision making at all. An here I include the so called business gurus - just ignore them.

Can you imagine what happened when

• Alexander Graham Bell announced he wanted a phone in every house - Western Union called it an “electric toy” and “totally out of the question”;
• Henry Ford said he wanted one car in every family - most felt the horse was here to stay.

The same happened to me still in 1995, when most people thought the internet was going to disappear faster than it had arrived - I remember the abuse very well. So why do people get so negative about other peoples business ideas:

• Lack of Vision is probably the biggest reason;
• Envy is another big reason - driven by the inability to take a risk themselves and the fact that they can’t bear to see others succeed;
• Genuine concern for your well being - they thing your are taking too big a risk, you are naive, and so on.

Take advise on certain techniques on how to run your business, but do not take advise on if you should start a business or not. As these examples above show, you never know how big a business will get.

People make it big in business, while I think it not necessary to make it big, it may never the less happen and it could be your turn next. ST.

Choosing an accountant/CPA is probably one of the most important decisions to get right, because you are unlikely to have an accountant’s grasp of

• taxation
• company law
• dealing with the tax authorities
• wide range of knowledge about small business.

You need to make sure you find an accountant/CPA who concentrates on 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 before you make any appointments.

Another aspect is size, make sure you are not “one among millions” sort of speak, smaller accountants practices are often more in tune with your small business needs, because they are a small business too.

Here are some questions I would be asking when starting out with a new business venture:

• Should I start my business as a sole-trader, partnership or limited liability company?
• Can you help me to find and raise finance? (Read about bootstrapping first!)
• Will you help me with setting up my cash-flow forecast?
• When do I need to register for VAT (UK), GST (Australia) or when do I need to charge sales tax (US)?
• Am I ready to start trading, or should I wait?
• Do I need to choose my financial year and trading year end date?
• Are you going to do my bookkeeping and accounting work?
• Will you work online with me, so we both can be up-to-date with my business progress?
• Will you deal with my employment issues, pensions, annuities and insurances for me?
• Will you help me to understand more and more of these issues myself, and will you be available for advice if and when I need it?

There are many more issues to consider and they depend on your business, that is where your accountant will help you too. If you find the accountant is dealing with other businesses like yours you are in good hands, they can give you better and more realistic planning guidelines about your business venture.

The most important question is the one you need to ask yourself, “do I trust this person and can I work with him/her long term?” If you feel intimidated, or misunderstood, get up and walk. An accountant should be your advisor, he/she should never be your boss, what I mean is you need to make the final decisions, not your accountant. No matter what advice you get anywhere, you are always responsible.

Most of all your accountant should be a trusted advisor, trust me you will need his/her advice on a regular basis! 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.

How long is a string? Let me give you some pointers here, but please remember you can always do more on the cost-cutting front in any 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.

1. Keep your staffing level low. As much as it may hurt, work longer hours yourself, until extra staff is economically viable.
2. Outsource all non-core business activities. This will reduce your fix-cost structure, make your small business more flexible and you can react faster to an economic down-turn.
3. Buy second hand. Do you really need the brand new van? Or computer, or……
4. Work from home, this will not only cut your cost, but may improve your work-life balance at the same time.
5. Let your staff work from home. No office cost, hire a room if you need to on an hourly basis.
6. Use online technology, so you don’t waste time and get distracted.
7. Focus on your core business and sales. Every distraction costs time and money, sales generates money.
8. Bootstrapping. Think before you spend a penny, could I borrow, hire or do it online, get creative.
9. Analyze your fixed cost every month. You will find things you don’t need - trust me you will.
10. Compare and get new quotes. Even if you need the service or product from your supplier, check others all the time, insurance, telephone, utilities, etc.
11. Get better payment terms. Ask to pay in 60 or 90 days, or get an early payment discount.
12. Check your bank charges - you’ll be surprised. Or have it done on a results basis, doesn’t cost you time and gets you money back.
13. Do credit control - get your money in lower your bank overdraft cost and charges.

This is only a short list of what you can do, but it’s a start. Remember even $100/£50 per month is $1200/£600 a year more in your pocket. 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.

I have discussed before that it is important 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, to do a minimum of business planning, but does it stop there?

Not really, you need to keep up to date with your bookkeeping, to complete the business planning process. You may ask why, if you have done the planning, why not get your bookkeeping done once a year for your tax return?

The answer to this question is the business planning process never ends. Remember I have been talking about going back to your plan at least once a month. In order to fine-tune your small business planning you need to actual information how your business performed in the last month. The only way to do that is to do your bookkeeping or accounting.

By doing that you will be able to compare your predicted numbers in your cash-flow with the actual number your business has generated. This in turn will help you to update or modify your cash-flow plan for the future. More important than that, you will learn new things about your business:

• You may have higher (good) or lower (bad) sales, than you expected?
• Your cost in your business may be higher (bad) or lower (better) than you expected?
• Your cash-flow may be better or worse do to the above two points?
• You may need to outsource some business processes to lower your fixed cost structure, to make your business more recession proof or just more profitable?
• You may need to ramp up your sales and marketing activities for your small business products or services?
• You may also have to adjust your SWOT analysis and your business goals?

You will be surprised how creative you can be, once you know about and understand a problem in your business plan. It may not even be a problem at that time, you may just need to adjust the way you do things, and you may have avoided a small or big problem in the future.

In my opinion strict cost control and bootstrapping are not like nice to have features, they are essential for your small business survival. Often the difference between failure and success is just a little planning and checking the “plan” - doing a reality check. There is no excuse not to do it, all the tools are available for free, for anyone.

If you feel the initial process of business planning is too much for you, than get your accountant or bookkeeper to help you to set your cash-flow fore-casting, SWOT analysis with you, doing it online will give you strategic advantages, like you can work with your accountant or bookkeeper in real time in different places, this lowers your cost, no time wasted and is good for the environment.

I would like to make one more point here, the aim of all this planning is not to get it spot on - no, the aim is to understand what is happening in your business, that is why you should be doing it.

Among other things, it will give you a measure of certainty, security and confidence, if you understand what is happening in your business. So, how confident are you about the future of your business? Why not take the weekend and have a planning session, it is like playing monopoly, only this game will secure your future. ST.

Here in the UK we had the “Pre Budget Report” yesterday. The government set out it’s plans to get small business owners to pay more tax, they increased capital gains tax by 90%. At the same time they announced the economy outlook to be weaker as expected.

The result was immediate, looking thru my log files today, I stopped at the search term listings and saw many references to “recession” in it. Next up one client asked me about “How to run his small business in a recession?” I asked him a few questions to get him to think about what to do in times of a recession:

• What are the problems in a recession? You may get fewer orders, customers pay later, some customers go out of business - was his answer.
• What can you do to combat those problems? Keep your fixed cost down, make sure you have reserves, keep up with your credit control, here I had to help him with most answers.

I’ve been talking about “bootstrapping” or “cost-cutting” for a long while now, with business planning as an additional tool, to combat any surprises. Going the easy route is not always the best way to run a business. For example, having to fire people because the economy is in recession is no fun for anyone and quite easy to prevent in most cases.

So even when the times are good, make sure you do bootstrap so you will survive the bad times. I think my client got the message - good on him. ST.

For me small business planning centers around some very basic questions and I always aim to answer those first:

• How much is my business going to cost to set-up?
• What are the monthly running costs of my start-up?
• Is anyone willing to buy what I have to sell?
• What other problems or challenges does my business face?
• What are my best selling points or strength?

You may thing that these are all very basic questions and you would be right - but can you really answer them for your small business? I think I would find it difficult at times too. So I have devised this very basic business planning system I would like to share with you:

• Cash-flow Planning
• SWOT - Strength, Weakness, Opportunities and Threats Analysis
• Mission & Goals Statement

Let us have a look at each one of these components individually - first up cash-flow planning - without money it is difficult to run a business. You may see that as a problem, I view that as an opportunity in as much that it forces you to sell your service or product, before you do anything else.

You could of cause do a market study and analysis, spend “lots” of money in the process and have very little extra useful information at the end of the process. While if someone buys your service or product you know it sells - without spending a penny. Enter your sales into a cash-flow and you can easily work out how much cost your small business can take. I’m passionate about “bootstrapping your small business” from day one.

This in turn will help you to focus on saving money wherever you can, since you will only make very little money in the beginning. You will understand that payment terms you offer to your clients or payment terms you receive from your suppliers can greatly help with your cash-flow, I have written about cash-flow planning before.

Secondly I like to do a SWOT analysis so I can focus myself and others in my business to stay “on message” and understand the vision for the business better. Even if you have no staff to begin with, it will help you to make the right decisions and stay focused.

Strength and Weaknesses are “internal” factors where you need to be honest with yourself and write down what you do well and what you do badly - writing it down is almost therapeutic - enabling you base future decisions on these facts, building on your strength, while avoiding your weak spots.

Opportunities and Threats are all about “external” factors and deal with issues like your unique differentiators for your products and services in the market place, as well as your competitors, red-tape, funding issues, etc. Again just writing them down will move you forward.

Last but not least I find it helpful to have a “Mission Statement” for my business, what do I want to achieve, so my customers, partners and others understand what my business is all about.

The “Goals Statement” is more personal, I write down why I run my small business or why I want to start a business.

As with all plans it is of the utmost importance to revisit your business plan as often as once a month or at times when you do not know which decision to take - go to your goals list, it will help you to focus on the way forward.

Doing basic business planning like that will help you to run and grow your business, and it can be fun too. Remember it is cheaper to test your plans on paper then for real with your own money.

I wish you and your small business or 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 “Happy Planning and Success”! ST.

Related Items:

• How to Plan Cash-Flow Category.
• How to Bootstrap Category.

I often refer to “bootstrapping“, when I talk about small business, you may very well be asking “What the hell is bootstrapping?” To put is simply, bootstrapping is the art of running a small business with no or very little money and/or funding.

So if you are thinking about starting, growing or running your small business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer-, Professional-, Personal businesses, but are worried about if you can be successful, worried about failing, worried about giving up your job, etc. than bootstrapping is for you.

Especially if your aim is to build a personal business, like contractors, freelancer, self-employed, sole-trader and virtual assistants, working from home, creating an income and keeping it small and manageable, then bootstrapping is definitely for you. There are more than 18 million small and home businesses in the US alone, self-employed working is gathering pace in all areas of business. If you look around you you will most probably know many people working from home, or doing contract work, freelancers and so on.

One very unpleasant outcome of a small business venture is the failure thereof. Bootstrapping will mitigate any fallout from a business failure. Remember that business success often comes with experience and experience comes form making mistakes - bootstrapping will allow you to make mistakes and recover from them.

Here are a few bootstrapping facts to consider if you wonder if bootstrapping is for your:

• Bootstrapping is a fast and the best way to build a solid small business, because you are starting with sales as your priority task - that creates cash-flow and keeps your small business alive.
• Bootstrappers don’t waste their money - they make money. They understand that cash is king and should not be wasted on old style advertising and marketing - there are better and almost cost-free ways to promote your small business.
• Bootstrappers don’t waste time with long business plans they start their small business immediately. Cash-flow, SWOT, list of goals and they are in business.
• Bootstrapping is the lowest risk strategy to start a business, you can start your business with a Small Business Infrastructure for about $20 / £10 per month, get ready in peace find customers in your spare time and build your business on the side.
• Bootstarppers don’t follow the herd, they use unconventional thinking to move forward and succeed.
• Bootstrappers focus on their business goals, outsource and build networks to grow their small business.

It is never too late to start with bootstrapping even if you have been running your small business for years. So have a look at it and build a stronger, more secure small business for yourself.

When are you going to start bootstrapping? ST.

Related Items:

• How to bootstrap category.

Funding issues are really only a problem if you do not use “bootstrapping techniques” - so I’m not that comfortable talking about this issue, since I believe everyone should start their small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer-, Professional-, Personal business on a shoestring.

Anyway here are the small business health check questions you need to ask yourself:

• What do I need the money for? Can’t you find a customer how will buy the product or service, before you even have it? It can be done you know!
• Do I have enough securities for a bank loan or overdraft? I always like the analogy of a bank will give you an umbrella (money) and when it rains (problems) they need the umbrella themselves - what than is the umbrella good for!
• Should I be looking for an external investor? You could find external investors who will tell you how to run your business, but know even less about your small business than you do?
• Do I have the detailed business plan needed to find investors? You will need a detailed business plan - which frankly may not be worth the paper it’s written on - which will be used against you when things don’t work out.
• Do I have the time to wait until a decision is made? You could be looking a 12 - 18 month before you have funding, do you have that time? Why not deal with customers today and get started on a shoestring.
• What if they say NO? This is my favorite one - are you happy to give up on your business idea if everyone things is bad or worse (?)…. if you are don’t start a business, because you are not ready and whatever you do do not borrow any money from anyone.

If you read this and think this is all b*** s*** - and you may be right, of course - let me know why you think you need to borrow money? Maybe we could come up with an idea that would allow you to start your small business, without having to borrow money and loosing some of the control in your small business.

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.