Author Archives: alvi

Small Business Management

Running a small, start-up business has it share of ups and downs. When I launched my company nearly nine years ago, running my own small business has been both rewarding and challenging. It has enabled me to establish greater balance in my life as I have reduced the administrative burden that corporate America places on each of its employees and replaced it with more time spent on developing content for my clients.

Given the choice, running my own small business is the best option for me at this stage of my life. I can work out of my house, see my kid on a regular basis, focus my work effort on content, rather than administration, and yes golf a tad. That being said, I am asked continually by others “what is it like to be in business for yourself?” as they contemplate the leap from corporate to sole proprietorship.

While it is not for everyone, here are some of the points of consideration that one should mull over before making the jump to starting your own small business:

One Stop Shop: One of the benefits of being a small business owner is the autonomy of “calling the shots”. You are the boss and clearly can steer your company as you see fit. Many think they relish this set-up but in reality, when it comes to being the self-motivator that is required to be successful – the “guy” to go to – lots fall short. Before you read any further, ask yourself if you are cut out to be the “go to guy”. If not, you can save yourself a lot of time and frustration. Simply stay in the corporate world.

Develop A Business Plan: So, why is business planning so crucial? In a word, it provides “clarity”. Investing time to develop a plan provides precise clarification of the company vision. In addition, it provides a mechanism to gauge the results of the business and provides the foundation for future growth plans. In the long haul, it enhances the company valuation through fiscal responsibility, which provides the story of opportunity to any future investor or employee. Business planning is one-part strategy and one-part tactics – but where the sausage actually gets made is in the execution. Execution comes in the hard work necessary to carry out a plan and the accountability for your activities by tracking them.

Understand Tax Burdens: Regardless of the political rhetoric surrounding the tax code and its impact on small business, the fact of the matter is that these entities are levied with a myriad of taxes. I am shocked by how many budding entrepreneurs fail to understand the taxes that small businesses pay. My company has essentially one of the easiest business operating models that a small business can have. I invoice a few clients per month; receive a few checks a month; pay a few bills a month; and have very little inventory and/or depreciation of capital assets. Despite that, my tax return was 84 pages last year. Filing as an S-Corp, my outlay on taxes is between 25% and 39% of federal taxes; North Carolina state income taxes ranging from 6.0% to 7.5%, social security and medicare (twice as a matter of fact for employer and employee) of 15.3%, so nearly 50% of all income goes to taxes and fees.

Replicate Yourself: Given the fact that you are a one stop shop, a small business owner needs to replicate themselves wherever possible. Tools such as social media and the acceptance of telecommuting through online collaboration have enabled small business owners to be in many places at one time. In order to be successful, small business owners need to tap these tools to maximize their exposure to potential clients as well as reaching customers outside of their immediate trade area. Prior to these tools being readily available, my business was limited to the state of Illinois (where my company was originally based). Since I have utilized these tools to replicate myself, I have had clients in thirteen different states.

Navigate Third-Party Challenges: A small business owner wears many hats and relies on third-party entities for key alliances. When Go Daddy had their website and email server outage in September, roughly 5.3 million small business websites and emails were knocked out. Small business owners rely on these support companies and at times, are held captive when issues arise. While my company does not conduct a lot of commerce via my website, many small operators lost online revenue due to the outage.

Be Wary Of Scams: Lastly, where there is a small business owner, there is a criminal waiting to prey on the unsuspecting operator. In fact, this past week, I received a letter from a group claiming to represent the State of Illinois. Having been in business nearly nine years, I am keenly aware of all of the annual expenditures that my company pays. As an Illinois corporation (operating in North Carolina), I received a letter stating that I needed to send in a $125 fee for my “Annual Minutes Records Form”. I didn’t recall ever doing this, and when I contacted my CPA, he shared the following press release with me:

The Small Business Myth of Job Creation

I have been a small business owner for my entire business career. Most of those small businesses have been real estate ventures of come type such as real estate brokerages, property management and owning different types of real estate. But I have also owned and been involved in insurance, restaurants, bars, garment factories, hotels, building and general contracting, convenience stores, food marts and gas stations. I was a partner in my first small business, a diner, at age 18. Even while I worked as an employee in someone else’s small business, I owned and operated several of my own at the same time.

I have only worked for one large corporation, and I hated every minute of the time spent there. I was employed for less than a month before I quit. I felt as if I were in prison. My boss was someone who had been in his position for many years, and he was counting the days so he could begin his impending retirement. Some of my co-workers were spending more time thinking up ways of not doing their jobs than actually performing their jobs. I was a nameless and powerless spoke in a wheel. When I realized that I had more authority and responsibility in my after-school jobs than in that behemoth of a business, I knew that I wanted to be my own boss at all costs even if it meant never playing with the big boys in the corner offices. So when you hear someone say a “mom and pop” operation, I am that business owner.

Some of the businesses I had were out-and-out financial disasters. Others became very lucrative. Most, though, just allowed me to make a decent living. I never started one in my garage that ended up being an Apple Computer. All of my businesses were just small operations. A few times when I felt the business was becoming too big, I either sold it or cut back. I wanted to know everything about the operation. Even if I did not possess the skills to do every job myself, I wanted to be able to at least understand what was needed to succeed in performing that particular job in my shop.

Why does someone like me decide to toil as an owner-operator and chief bottle washer than pursue a career with IBM? There are several reasons for taking the plunge into a life of entrepreneurship. When I was growing up most of my family, including my parents, were owners or employees of small businesses. My father went from owning a bar to being a bartender for someone then owning another bar again sometimes within weeks. That is why today I understand that failure is not defeat if one learns and tries again. We were a working class first generation and immigrant family looking to earn a decent living. For someone without skills or fluent in English or familiar with American customs, owning your own small business is the only way to grab for the brass ring. Small business ownership is in my genes. Even though I went to college and could have gone a different path, my personality and characteristics nudged me toward entrepreneurship.

Small business ownership is not for someone who doesn’t want to sweep the floors or carry out the trash. It is not for someone that wants to go home after their shift and leave business worries on their doorstep. It is not for someone that wants a guaranteed two week uninterrupted vacation each year or a pension or health insurance. It is not for someone who doesn’t possess a little of the dreamer in his soul. To be a successful small business owner, you need to be a romantic pragmatist, with a strong ego who can get out of bed in the morning day after day, week after week and year after year. You need to be self-motivated and confident that whatever happens, you can handle the day’s problems.

During this crazy political season, the four candidates for president and vice-president are extolling the virtue of small business people as job creators and the backbone of the United States’ middle class. They poetically tell the electorate that this policy or that policy is what is needed. It would be nice if one of them had ever owned a small business. The only person that states he had a job in a small business is Congressman Ryan. In high school, college and for a short time after graduating while waiting to be employed by the federal government, young Paul toiled at McDonalds, as a waiter and a trainer.

Mitt Romney at least made a fortune in the private sector. I guess you could call his boutique firm, Bain Capital, a small business. But I bet he never swept the floor trying to save the money on a cleaning person. He may have built that fortune but it wasn’t with the proceeds of his house being mortgaged to the hilt to allow him to pursue that dream. He had contacts and referrals from his father and mother. Governor Romney went to Harvard Business School and Law School. He worked hard and diligently for everything he accomplished. But Mitt is certainly not one of the guys from the neighborhood who made good. I doubt he can understand what it is like to be sweating out collecting what is owed to you so you can pay your employees that week.

President Obama apparently didn’t even have a job while in high school or college. Harvard and Yale is where he learned about private enterprise. He never experienced being a stock clerk at the corner hardware store or the kid that delivered the pies from the neighborhood pizzeria. His knowledge of small business comes from being a customer. He never invested his savings into opening a dry cleaner or even a law office. While his running mate, Joe Biden, might speak as if he knows how it is to work the factory line, he has been in politics his entire adult life. His greatest financial risk is if the Republicans shut down the government and he misses his paycheck.

The myth, we hear from our candidates, is that as small business people we are going to add jobs to the economy, that we are the job creators. It has and continues to be my firm belief that hiring additional employees is the last thing any smart small business person wants to do. I would much rather work harder and keep that person’s salary. I would much rather spend money on technology to be more efficient. A robot or computer program never walked out or didn’t come into work. Small businesses are not Fortune 500 companies. A small business owner has no bruised ego with not having thousands of employees under him. It might sound good to say I own a company that has 10 employees but I would rather have 5 employees and have more money in my pocket. That is the only way I will ever have a raise.

That is not to say that I don’t hire additional employees. I am not going to lose business over staffing issues. Additional employees have to have a benefit directly to me… not the macro economy of the U.S. It is true that small businesses hire the bulk of American workers. It is also true that small businesses jettison the most workers because most small businesses fail. The great thing about the United States is that failing is no barrier to trying again. Small business people get up, analyze why they failed and open a new business.

Another myth is that small businesses will expand by hiring more employees. That may be true for a very few business startups like Microsoft, but for the vast majority growth is measured in increases of one or two employees not hundreds. If I open a 24 hour a day 365 day convenience store no matter how successful it is, I will only employ so many workers. Even if I buy another store a mile away and staff it; have I increased the number of people working? The answer is probably not. Because if I hadn’t open that convenience store someone else would have. Sometimes, especially for small businesses, it really is a zero sum equation.

Our politicians need to stop making scape goats and heroes and concentrate on facts. The first fact is, Mr. President, I did build that business by my own ingenuity and hard work. However, Mr. Romney, I needed to count on the government to provide security, infrastructure and the rule of law to be successful. When I opened my first business more than 40 years ago, I never worried what I would pay in taxes if successful, I only worried about success. The tax rate never stopped me from going into business. Going into business is what I do just like an actor acts and a clergyman prays. What I so need of my government is consistency in laws, and tax rates and regulation. For my planning purposes I want to know what I can expect, today, tomorrow and next year.

I don’t mind being regulated. I’ve been a New York City property owner and building manager, I have lived with the stupidity of rent regulation. I’ve succeeded and prospered in spite of it. What I want to see is smart regulation. Any regulation or law that requires thousands of pages to explain its meaning becomes meaningless. Simplicity is the key to enforcement. It is not productive for the economy to have lobbyists, congressional staffers and attorneys writing arcane laws and regulations. That only ends up employing people in those nonproductive occupations. At the end of the day, it adds no new products to the American economy.

I think most Americans and the majority of small business owners agree with my sentiments. I would like my elected officials to reflect the American electorate. Perhaps we need fewer graduates of Harvard, fewer lawyers and career politicians running for office. Harry Truman was a farmer, a citizen soldier and a failed small business man before turning to elected offices. A little practical world experience would make for a better president.

Small Business Project Management: Six Pros and Cons

Growth hungry small businesses today in the UK and indeed throughout the world face the challenge of balancing two competing objectives. Firstly, businesses must maintain and standardise current business processes in order to give your business the chance to get really good at what it does through experience curve effects. Greater business efficiency normally translates into a better customer experience and higher profits. Secondly, businesses must transform business operations in order to survive and compete in the future. How well we are able to achieve the right balance for our business will ultimately determine if we survive and go on to thrive or go the way of so many small businesses into market irrelevancy and insolvency.

You may well be thinking right now what has this got to do with project management? To understand that we first need to understand the fundamental differences between projects and day to day business operations. Whilst many of the skills required to manage your “business as usual” activities are the same as those needed to manage projects, there are some crucial differences. Amongst the most significant differences are that project work tends to be at least cross functional and often cross organisational and every project will be unique in some way rather than following the predictable pattern of business as usual. These characteristics of projects introduce opportunities and risks over and above those encountered in business as usual. In short, projects are riskier than day to day business, and therefore need a different management approach.

Projects are the means by which we introduce change in organisations. All businesses that are making any attempt to adapt to face future challenges have projects. Common examples of projects in small businesses may include setting up a company website, establishing the office in a new location, or implementing a new product but it can be any temporary activity or set of activities that have a specific output associated with it. Businesses increase their productive capacity one project at a time. Indeed, for ambitious small companies looking to grow and expand, the need to initiate the right projects and achieve the desired results is even more vital l than it is for huge national and multi-national businesses

Despite the obvious need for a project management (PM) approach, most small businesses don’t bother. This constitutes a huge missed opportunity as effective project management impacts the bottom line. For example, research by the CBP shows that project management improvement initiatives improve project performance by up to 50% for the first project and can continue for each new project if the business offers ongoing project management tools and support. We could emphasise this point further by citing the Standish Group, who in their CHAOS Report conservatively estimates that 20% of money spent on projects is wasted because companies don’t have a consistent approach to project management.

Let’s take a look at six reasons I often hear from small business owners that choose not to bother with project management and then critically address the misconceptions behind these reasons.

1. Project management practices take more time

Having a process to follow may add time to the duration of an activity. Doing something properly will almost always take a little bit more time than adopting a slapdash approach. However, if you where building a house, would you rather have a quality end result that took a little longer, or would you prefer to have it done quickly but with lots of problems? Given that poorly executed projects can be completely de-rail a small business if they go badly, doing it well is essential, and PM processes help ensure things are done well.

2. Project management eats into the cash that I need to grow my business

A common misconception is that it is hugely expensive to implement PM process. The reality is that there are many free or low-cost sources of advice, techniques, tools, templates and project management services readily available and accessible through the Internet. If done correctly, any small business can implement PM processes, techniques and tools with very little cost. The likelihood is that small business owners are already using software and other tools that can be used for project management. For example, certain email software, spreadsheets, and other common software applications offer good templates for project management, especially if used in collaboration with some of the low cost project management services available for small businesses

3. Project management requires skills that I don’t have and cannot afford to hire

Although it does require specialised skills and experience to be an accomplished project manager, these are skills that can be learned over time. To move further up the learning curve faster, it is possible to take a PM course in as little as four or five days. Most small business owners tend to possess the knowledge needed for project management, and courses such as the Prince 2 Practitioner course would build on these skills while introducing the specific theories, tools, and processes essential for project management. Whilst business owners might not emerge from a course as a project expert, they would certainly learn valuable skills to apply to their small business.

4. I don’t need the hassle or paperwork of project management.

Every entrepreneur that starts their own business will, at some point, need to do a risk assessment, a marketing campaign or apply for finance. Being knowledgeable in project management and applying associated tools such as stakeholder analysis, communication planning and risk management will not only assist in many of these tasks, but will provide your small business with a competitive edge over competitors who do not approach.

5. Project management will slow me down and I need to stay agile.

Modern PM methodologies all acknowledge the importance of a tailored approach to project management. If your project requires speed, the right methodology can enable you to move quickly. Just as important, however, it will provide you with techniques to understand whether some proposed projects are worth pursuing at all. Rushing into situations without thoroughly understanding your environment is hazardous to the health of any project and potentially to the health of the business as a whole

6. I am an expert in my industry, I don’t need project management.

Most small businesses are started by a person who already has some expertise in their industry. This is unquestionably an advantage; however, project management should still be used to convert plans into reality. The main reasons for project failure tends to be poor planning, lack of capital, and lack of management. Project management, while not a cast-iron guarantee of success, will assist the small business in mitigating some of the common risks that so often cause project failure amongst small businesses.