There are many ways to define success in the business world but most small business owners tend to look at financial statements and key financial ratios to determine how well they are doing. While it is important to understand your financial statements, and to use them as a management tool, there are equally important pieces of information that you may want to measure to determine overall success.
In the early 1990s, Harvard University professor Robert Kaplan developed the Balanced Scorecard as a means of measuring key success factors that cover not only the financial aspects of the business but it also measures success in three other components of a business: The customer component, the internal business processes component and the learning and growth component. Professor Kaplan proposed that each of these components should be measured, just as you might measure your financial status, by using metrics you have identified as the key drivers in your business. After all, when you get an annual physical exam, the doctor doesn’t just listen to your heart beat, he/she looks at the whole body to determine overall health. Why should your business be any different?
You can’t generate a profit over the long haul if you do not have a good product or if you frustrate and drive off customers and employees. While the financial analysis of your business may give you clues of something else happening, the financial statements won’t tell you why customers are being driven away.
However, if your business can identify key drivers that measure customer satisfaction, you can begin gathering metrics that will tell you whether you have loyal, repeat customers. For example, you may want to track the gains and losses of customers, complaints, market share relative to competitors and repeat business. You may have difficulty implementing a means of measuring your success in this area if you do not maintain a customer tracking system so your first step might be implementing such a system.
Satisfied customers are the result of producing reliable and consistent products and services. For this reason, you also want to measure your internal processes to determine if there is any way to improve on your cycle time for key processes, to reduce delivery mistakes, to reduce recalls, or to improve safety during production.
Finally, your company’s infrastructure needs to undergird the strategies and goals that you quantify in the financial, customer and internal components mentioned above. This means that you need to develop a strategy and a means of measuring the levels of knowledge achieved through training and education. You might also want to measure the increased capacity that you might gain from improvements to technology and to the work environment.
If you want to do a little reading about some of these concepts, you may want to pick up ‘Keeping Score’ by Mark Graham Brown. Needless to say, the overall health of your business is dependent on a number of factors. The guiding principle behind the Balance Scorecard approach is ‘what gets measured gets done’. Research suggests that those companies that measure their performance out-perform those that do not, so you may want to give some serious thought to developing metrics for your business that will help you meet your business goals.
Tuesday, March 16, 2010
Thursday, February 18, 2010
Asking for a Loan? Common Mistakes Made by Businesses
Many business owners have given up asking their lender for money these days. Perhaps they have already been told ‘no’ more than once and they cannot get a grasp on how to move forward as a business without being able to access capital. I would like to suggest that there are some very positive steps that any business can take that will not only improve the business’s financial position, but will help any business move to a more bankable position:
1.) Assuming that your business has profits, quit taking all of the profits out of your business! You cannot grow a business without profits. Your banker knows that and so should you.
2.) If you are not profitable, find out why. If you don’t know how to analyze your financial information get help! Contact your accountant or your business adviser if you have one on retainer. You can also access services through your local Small Business Development Center. Profit Mastery is a business finance educational program that you can access through the Small Business Development Center and it provides down-to-earth financial management tools that any business owner can use.
3.) Analyze your customer base and begin developing a customer relationship management system. You have ‘gold’ in your customer information and ‘mining’ that gold can add to your bottom line. Since 80% of your business likely comes from 20% of your customers, find out everything that you can about those customers and then develop a strategy to find more of them!
4.) Make sure your financial information is accurate, that you review it regularly and that you know which items could be a red flag for your lender. For example, if you find out that your Balance Sheet reflects negative retained earnings you should know that your lender will not be pleased. For that reason, you may want to go back to point number 1) and stop taking all the profits out of your business!
5.) Build a strategy for success. This takes planning and if you need to have someone help you through the planning process contact the Small Business Development Center. Building a strategy takes a lot of thought. I recently came across the following quote which sums up, very succinctly, why the typical business owner may have difficulty developing a strategy for their business:
“There is no labor from which most people shrink as they do from that of sustained and consecutive thought; it is the hardest work in the world.” Wallace D. Wattles
If you find it challenging to stay focused on the planning process, find an adviser to help you through the planning process. Again, this could be your accountant, a business consultant or the Small Business Development Center.
I have another list, in my office, which is specific to documentation requirements for developing a loan package. I use that list whenever I work with clients to help them develop a loan proposal. But presenting a loan proposal to your lender, before you lay the foundation for success, is like putting the cart before the horse.
If you need assistance contact your local Small Business Development Center for confidential, no-cost services: 360-442-2946 or http://lowercolumbia.edu/smallbus
Article written by Susan Hoosier, Certified Business Adviser and Certified Economic Development Professional, with the Washington Small Business Development Center in Longview, WA 360-442-2946. Susan has owned and operated three businesses and managed a revolving loan fund for a Midwestern Regional Development Commission.
1.) Assuming that your business has profits, quit taking all of the profits out of your business! You cannot grow a business without profits. Your banker knows that and so should you.
2.) If you are not profitable, find out why. If you don’t know how to analyze your financial information get help! Contact your accountant or your business adviser if you have one on retainer. You can also access services through your local Small Business Development Center. Profit Mastery is a business finance educational program that you can access through the Small Business Development Center and it provides down-to-earth financial management tools that any business owner can use.
3.) Analyze your customer base and begin developing a customer relationship management system. You have ‘gold’ in your customer information and ‘mining’ that gold can add to your bottom line. Since 80% of your business likely comes from 20% of your customers, find out everything that you can about those customers and then develop a strategy to find more of them!
4.) Make sure your financial information is accurate, that you review it regularly and that you know which items could be a red flag for your lender. For example, if you find out that your Balance Sheet reflects negative retained earnings you should know that your lender will not be pleased. For that reason, you may want to go back to point number 1) and stop taking all the profits out of your business!
5.) Build a strategy for success. This takes planning and if you need to have someone help you through the planning process contact the Small Business Development Center. Building a strategy takes a lot of thought. I recently came across the following quote which sums up, very succinctly, why the typical business owner may have difficulty developing a strategy for their business:
“There is no labor from which most people shrink as they do from that of sustained and consecutive thought; it is the hardest work in the world.” Wallace D. Wattles
If you find it challenging to stay focused on the planning process, find an adviser to help you through the planning process. Again, this could be your accountant, a business consultant or the Small Business Development Center.
I have another list, in my office, which is specific to documentation requirements for developing a loan package. I use that list whenever I work with clients to help them develop a loan proposal. But presenting a loan proposal to your lender, before you lay the foundation for success, is like putting the cart before the horse.
If you need assistance contact your local Small Business Development Center for confidential, no-cost services: 360-442-2946 or http://lowercolumbia.edu/smallbus
Article written by Susan Hoosier, Certified Business Adviser and Certified Economic Development Professional, with the Washington Small Business Development Center in Longview, WA 360-442-2946. Susan has owned and operated three businesses and managed a revolving loan fund for a Midwestern Regional Development Commission.
Tuesday, January 12, 2010
Revisiting Your Credit Strategy
Monitoring and understanding your cash flow is probably one of the most critical aspects of business management. Cash flow has always been important to businesses, but many business owners have recently been reminded of this in a very unpleasant fashion; i.e. the cancellation or reduction of a vital credit line.
Business owners typically concentrate their efforts on year-end tax planning and strategizing for increased sales in the coming year. It is rare, in the planning process, to see businesses pay equal attention to planning for cash flow by reviewing the business’ credit strategy (the way that bills are paid and the way in which you receive payments for goods and services that are sold).
Following are some tips on things to consider when you review your credit strategy:
If you need assistance in developing a credit strategy or assistance in analyzing your cash flow, contact your local Small Business Development Center for confidential, no-cost services: 360-442-2946 or http://lowercolumbia.edu/smallbus
Article written by Susan Hoosier, Certified Business Advisor and Certified Economic Development Professional, with the Washington Small Business Development Center in Longview, WA 360-442-2946. Susan has owned and operated three businesses and managed a revolving loan fund for a Midwestern Regional Development Commission.
Business owners typically concentrate their efforts on year-end tax planning and strategizing for increased sales in the coming year. It is rare, in the planning process, to see businesses pay equal attention to planning for cash flow by reviewing the business’ credit strategy (the way that bills are paid and the way in which you receive payments for goods and services that are sold).
Following are some tips on things to consider when you review your credit strategy:
- Think twice about paying early on your business debts since you may use up cash reserves that may be critical for survival.
- You may need to consider asking your customers for more financial information to determine whether they have the capacity to pay for goods and services purchased on account.
- You may need to reconsider the length of time that you are allowing your customers to pay on their accounts or you may need to consider asking for a larger deposit or a greater percentage of the total cost of a project to reduce the risk of bad debts.
- Consider taking credit cards, if you are not doing so already, since the banks’ merchant fees may be a small price to pay for not worrying about collecting from some of your customers. It may be more important for you to have the cash in the bank!
- Use the maximum time allowable to pay your suppliers on account unless you will lose the benefit of a discount.
- The economy is still tight, funding is tough to find, so do not assume that your existing strategy will continue to work for you. Instead, be proactive about addressing any policies that might increase your risk for bad debts.
- Clean up your financial statements, strengthen your equity position in your business, and continually monitor your cash flow position.
If you need assistance in developing a credit strategy or assistance in analyzing your cash flow, contact your local Small Business Development Center for confidential, no-cost services: 360-442-2946 or http://lowercolumbia.edu/smallbus
Article written by Susan Hoosier, Certified Business Advisor and Certified Economic Development Professional, with the Washington Small Business Development Center in Longview, WA 360-442-2946. Susan has owned and operated three businesses and managed a revolving loan fund for a Midwestern Regional Development Commission.
Friday, December 18, 2009
Preparing for a Disaster
In Southwest Washington, we are approaching the time of the year when flooding may be a common occurrence in some areas. We have already experienced several flood warnings in some areas. The Cowlitz-Wahkiakum Council of Governments is currently working on a plan that will provide local businesses with tools that will help businesses plan for potential disaster. You will be hearing more about that program in the months ahead.
Meantime, it would be advisable to plan for possible flooding, particularly if your business is located in a vulnerable area. Even if it isn’t, flooding in your community could significantly impact your viability as a business. According to the Washington State Office of Emergency Management 40% of small businesses that close, due to a disaster event, never re-open. Coupled with current economic conditions, this number could escalate dramatically if a natural disaster were to occur in the near future. In addition, the Office of Emergency Management also notes that ‘85% of the critical infrastructure in the U.S. is owned by private industry’.
You can mitigate your chances of survival, as a business, by using many of the tools that are already available to you through the Office of Emergency Management. The business portal for disaster preparedness can be accessed at the following website: http://www.emd.wa.gov/preparedness/prep_business.shtml
You can download many documents, including sample disaster announcements, from FEMA’s website at: http://www.ready.gov/business/publications/index.html . In addition, many of the templates can be filled out on-line. Other resources that are available to you include your local County Department of Emergency Management and the Small Business Development Center.
At this time of the year, flooding is probably the disaster scenario that comes quickly to mind. However, disasters can occur at any time and can include earthquakes, fires, information technology disruptions and any number of other disasters that may have huge implications for your business. Don’t wait until disaster strikes. Instead, reduce your risks by planning for survival. If you need assistance staying on task in this area, utilize the services of your local Small Business Development Center to help you strategically plan for your business in this area. Services are available at no cost to business owners and sometimes it helps if you have someone helping you take the necessary steps to reduce risks for your business. Call 360-442-2946 if you would like to access services.
Meantime, it would be advisable to plan for possible flooding, particularly if your business is located in a vulnerable area. Even if it isn’t, flooding in your community could significantly impact your viability as a business. According to the Washington State Office of Emergency Management 40% of small businesses that close, due to a disaster event, never re-open. Coupled with current economic conditions, this number could escalate dramatically if a natural disaster were to occur in the near future. In addition, the Office of Emergency Management also notes that ‘85% of the critical infrastructure in the U.S. is owned by private industry’.
You can mitigate your chances of survival, as a business, by using many of the tools that are already available to you through the Office of Emergency Management. The business portal for disaster preparedness can be accessed at the following website: http://www.emd.wa.gov/preparedness/prep_business.shtml
You can download many documents, including sample disaster announcements, from FEMA’s website at: http://www.ready.gov/business/publications/index.html . In addition, many of the templates can be filled out on-line. Other resources that are available to you include your local County Department of Emergency Management and the Small Business Development Center.
At this time of the year, flooding is probably the disaster scenario that comes quickly to mind. However, disasters can occur at any time and can include earthquakes, fires, information technology disruptions and any number of other disasters that may have huge implications for your business. Don’t wait until disaster strikes. Instead, reduce your risks by planning for survival. If you need assistance staying on task in this area, utilize the services of your local Small Business Development Center to help you strategically plan for your business in this area. Services are available at no cost to business owners and sometimes it helps if you have someone helping you take the necessary steps to reduce risks for your business. Call 360-442-2946 if you would like to access services.
Thursday, November 5, 2009
ARE YOU LOOKING FOR WORK OR THINKING ABOUT STARTING A BUSINESS?
In the business community, business owners are continually looking for well qualified people. Since so many people have recently lost their jobs, it seems like there should be a way that the unemployed can identify which businesses are hiring so that the business owner and the unemployed worker can find one another. In this article, my goal is to provide resources for the unemployed. I realize that this is not the primary reason that a Small Business Development Center exists. I also realize that there are well qualified people working with the unemployed to provide as many resources as possible. However, Small Business Development Centers are in a unique position. As Business Advisors, we may be aware of opportunities that exist that the general public may not understand.
Since Stimulus dollars are being used to support many public projects, one might want to find out who is doing business in the public arena. For example, businesses that want to do business with the federal or state government must be registered in specific databases. Following is a list of those databases:
Federal Level: www.ccr.gov
Washington State: www.ga.wa.gov/EAS/smlwrk-roster.htm
http://www.ga.wa.gov/WEBS/index.html
County Level: Do a search for the Small Works Roster in the County of interest
Any business that describes itself as an 8(a) certified company, a HUBZone certified company, SDB certified company, or woman-owned company, may get priority on some contacts. Keep in mind that businesses on these databases do not need to be construction-related businesses. Government contracting officers will also use these lists to identify sources for materials and services. Many businesses wrongfully assume that there is no reason to pursue the above-mentioned certifications because they may not be in the construction business. Government databases are not created simply for the construction trades. Business owners who may be reading this article and would like to know more about doing business with the government, can access no-cost advising services through the Small Business Development Center by contacting the SBDC at 360-442-2946. Any business in Cowlitz or Wahkiakum County could, potentially by HUBZone certified!
While there is no guarantee that a business that is listed on the government databases is hiring, they may be hiring in the future if they are successful in marketing to the government. As a job searcher, you may have better success finding businesses that are in the hiring mode by searching for businesses who are attempting to do business with the government.
If you have been active in a trade association, at any point in your career, search the career listings on the trade association website. In addition, check out the state website for Washington State higher education jobs at: http://careers.wa.gov/HigherEducationJobs.htm
Finally, do not forget that local businesses may have job listings on the Lower Columbia College job listing site at: http://collegecentral.com/lowercolumbiacollege/
Networking has always been one of the best ways to tap into job opportunities. In addition, if you have not been on the job market recently, hone your interviewing skills and develop a strong resume by using the services of your local WorkSource Office (711 Vine Street, Kelso, WA). You may also want to ask your WorkSource Advisor about the Self Employment Assistance Program if you have been considering business ownership.
If you are thinking about starting your own business, plan to attend the free start-up business class that is offered the last Thursday of every month on the Lower Columbia College campus. November’s class will be held one week prior, due to the Thanksgiving Holiday. Call the SBDC for more details.
Article written by Susan Hoosier, Certified Business Advisor and Certified Economic Development Professional, with the Washington Small Business Development Center in Longview, WA. Susan has owned and operated three businesses and managed a revolving loan fund for a Midwestern Regional Development Commission.
Since Stimulus dollars are being used to support many public projects, one might want to find out who is doing business in the public arena. For example, businesses that want to do business with the federal or state government must be registered in specific databases. Following is a list of those databases:
Federal Level: www.ccr.gov
Washington State: www.ga.wa.gov/EAS/smlwrk-roster.htm
http://www.ga.wa.gov/WEBS/index.html
County Level: Do a search for the Small Works Roster in the County of interest
Any business that describes itself as an 8(a) certified company, a HUBZone certified company, SDB certified company, or woman-owned company, may get priority on some contacts. Keep in mind that businesses on these databases do not need to be construction-related businesses. Government contracting officers will also use these lists to identify sources for materials and services. Many businesses wrongfully assume that there is no reason to pursue the above-mentioned certifications because they may not be in the construction business. Government databases are not created simply for the construction trades. Business owners who may be reading this article and would like to know more about doing business with the government, can access no-cost advising services through the Small Business Development Center by contacting the SBDC at 360-442-2946. Any business in Cowlitz or Wahkiakum County could, potentially by HUBZone certified!
While there is no guarantee that a business that is listed on the government databases is hiring, they may be hiring in the future if they are successful in marketing to the government. As a job searcher, you may have better success finding businesses that are in the hiring mode by searching for businesses who are attempting to do business with the government.
If you have been active in a trade association, at any point in your career, search the career listings on the trade association website. In addition, check out the state website for Washington State higher education jobs at: http://careers.wa.gov/HigherEducationJobs.htm
Finally, do not forget that local businesses may have job listings on the Lower Columbia College job listing site at: http://collegecentral.com/lowercolumbiacollege/
Networking has always been one of the best ways to tap into job opportunities. In addition, if you have not been on the job market recently, hone your interviewing skills and develop a strong resume by using the services of your local WorkSource Office (711 Vine Street, Kelso, WA). You may also want to ask your WorkSource Advisor about the Self Employment Assistance Program if you have been considering business ownership.
If you are thinking about starting your own business, plan to attend the free start-up business class that is offered the last Thursday of every month on the Lower Columbia College campus. November’s class will be held one week prior, due to the Thanksgiving Holiday. Call the SBDC for more details.
Article written by Susan Hoosier, Certified Business Advisor and Certified Economic Development Professional, with the Washington Small Business Development Center in Longview, WA. Susan has owned and operated three businesses and managed a revolving loan fund for a Midwestern Regional Development Commission.
Thursday, October 15, 2009
Grants for Businesses
Calls have increased lately for people who want to know more about grants for starting a business or funding a business expansion. I find it increasingly difficult to convince people that their chances of accessing grant dollars are extremely slim (to none) as more and more information is provided to the public about Stimulus Funds. Everyone seems to think that Stimulus Funds will automatically provide 'free' funding for business start-ups and expansions.
At the risk of sounding like a broken record, I would like to clarify a few points:
1) Business development grants are typically given to economic development agencies who are charged with dispensing funds through a revolving loan fund program. Although the economic development agency receives the funds in the form of a grant (and may be called a 'business development grant), the funds are disbursed in the form of a loan with typical loan payback requirements to the business applicant. There are usually job creation goals and other parameters associated with the loan. It is always wise to check on the eligibility components of a revolving loan fund before assuming that your business might qualify. Keep in mind that these funds are a loan to the business, not a grant!
2) Other types of business grants might be in the form of a municipal program where a specific municipality has applied for funds that are made available to local retail establishments to improve store-fronts or encourage other building improvements. It is typically a requirement that the business prove that they are economically viable.
3) Energy grants might be available to some businesses for specific energy-related programs. Again, the business may need to prove that they are economically viable.
4) The government may provide grant opportunities to businesses that are providing a valuable product or service that is vital to the public good. For example, if a business produces a product that will be beneficial to the war effort, the government may provide some grant funds to assist with additional research and development. When the government provides grant funding, in most cases the business needs to understand that -
5) In the past, the government has provided grants for child care facilities. However, grants of this nature are few and far between now that more child care facilities have been established nationwide.
Suffice it to say, anytime that the government makes a grant, it comes with eligibility requirements and, if one wants to take the time to read a Request for Proposal (RFP) one will find those eligibility requirements are clearly stated.
No matter what you read on the internet no one can guarantee that you will get a grant! There are countless 'entrepreneurial' folks who will be happy to sell you a book and sign you up for technical assistance and the cost may be as little as $39.95 up to $2,000+. Believe me, I have had clients who have purchased books and paid $2,000 for what they thought was a guaranteed grant only to find out that they were sold a bill of goods.
All government grant opportunities are posted publicly and can be accessed at no charge on official government websites. Let me emphasize here that it is the official government website that you want to research. Be wary of websites that want personal information and that have an appearance of being an official governmental website.
On the Federal level, the official site is: For the State of Washington the official site is:
There are also many technical assistance providers who will promise that they can get you a government contract. Government contracts, contrary to popular belief, are not awarded in that fashion. If you want to know more about contracting with the government, see your local Small Business Development Center for no-cost advising services.
If you are seeking funding for your business, contact your local SBDC. Business advising services are available at no charge to business owners and eligible start-up operations. The Washington State SBDC website is located at:
At the risk of sounding like a broken record, I would like to clarify a few points:
1) Business development grants are typically given to economic development agencies who are charged with dispensing funds through a revolving loan fund program. Although the economic development agency receives the funds in the form of a grant (and may be called a 'business development grant), the funds are disbursed in the form of a loan with typical loan payback requirements to the business applicant. There are usually job creation goals and other parameters associated with the loan. It is always wise to check on the eligibility components of a revolving loan fund before assuming that your business might qualify. Keep in mind that these funds are a loan to the business, not a grant!
2) Other types of business grants might be in the form of a municipal program where a specific municipality has applied for funds that are made available to local retail establishments to improve store-fronts or encourage other building improvements. It is typically a requirement that the business prove that they are economically viable.
3) Energy grants might be available to some businesses for specific energy-related programs. Again, the business may need to prove that they are economically viable.
4) The government may provide grant opportunities to businesses that are providing a valuable product or service that is vital to the public good. For example, if a business produces a product that will be beneficial to the war effort, the government may provide some grant funds to assist with additional research and development. When the government provides grant funding, in most cases the business needs to understand that -
- The business may be required to match the funds. For example, if the business wants to request a $100,000 grant, the business will need to put $100,000 into the total project costs.
- The business must show that they are financially stable and will be required to provide internal financial information to prove that they are a viable business.
- The grant may have a component that requires that the business partner collaborate with an institution of higher learning to complete the research and development.
- Lastly, there are numerous reports and parameters that need to be met, depending on the grant requirements.
5) In the past, the government has provided grants for child care facilities. However, grants of this nature are few and far between now that more child care facilities have been established nationwide.
Suffice it to say, anytime that the government makes a grant, it comes with eligibility requirements and, if one wants to take the time to read a Request for Proposal (RFP) one will find those eligibility requirements are clearly stated.
No matter what you read on the internet no one can guarantee that you will get a grant! There are countless 'entrepreneurial' folks who will be happy to sell you a book and sign you up for technical assistance and the cost may be as little as $39.95 up to $2,000+. Believe me, I have had clients who have purchased books and paid $2,000 for what they thought was a guaranteed grant only to find out that they were sold a bill of goods.
All government grant opportunities are posted publicly and can be accessed at no charge on official government websites. Let me emphasize here that it is the official government website that you want to research. Be wary of websites that want personal information and that have an appearance of being an official governmental website.
On the Federal level, the official site is: For the State of Washington the official site is:
http://access.wa.gov/business/grants.aspx
There are also many technical assistance providers who will promise that they can get you a government contract. Government contracts, contrary to popular belief, are not awarded in that fashion. If you want to know more about contracting with the government, see your local Small Business Development Center for no-cost advising services.
If you are seeking funding for your business, contact your local SBDC. Business advising services are available at no charge to business owners and eligible start-up operations. The Washington State SBDC website is located at:
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