10 (plus 1) Ways to Winning a Business

Many people fantasize at one time or another
about going into business and being their
own boss. Now a growing number of Americans
are turning that fantasy into a reality. In
an economic climate that encourages and nur-
tures entrepreneurship, hundreds of thousands
of corporate executives, MBAs, retirees and
individuals interested in a career change are
striking off on their own. And as owners of
small businesses, they are creating a dynamic
force that is revolutionizing business as we
have known it in this country.

The total number of non-farm businesses
(including self-employed individuals and part
-time entrepreneurs) reached 20 million in
1990 – up 54 percent since 1980. And the U.S.
Small Business Administration reports that
small businesses account for 58 percent of the
private U.S. workforce and 40 percent of the
gross national product. Moreover, a National
Science Foundation analysis reveals that small
business has been a more prolific source of
innovation per research and development dollar
than large business.

This new age of the entrepreneur is also
an age of opportunity. For example, a substan-
tial number of today’s small business operators
are women. By 1987, they controlled 30 percent
of the nation’s 13.7 million small firms and
generated more than $65 billion annually in
gross receipts. During the 1980s, women-owned
companies increased at twice the rate of male-
operated start-ups.

But success is far from automatic. Start-
ing a small business is risky, and the odds of
succeeding are daunting. According to the SBA,
only 50 percent of small businesses survive their
first year of operation. By the tenth year, be-
tween 80 and 90 percent have failed.

These figures aren’t intended to scare you,
but rather prepare you for the sometimes rocky
path that lies ahead. Underestimating the diffi-
culties inherent in running a business is one of
the biggest obstacles entrepreneurs face.

However, chances of surviving and prosper-
ing are greatly increased if you are patient,
willing to work hard, and take all the necessary
steps. The following 11 subjects, gathered from
a variety of experts, are the most important
ones for new business owners to consider. Not
heeding them is often the reason entrepreneurs
spend so much time climbing out of the holes
they’ve dug rather than scaling the ladder of

1- Know Yourself

Not everyone is cut out to be an entrepreneur.
It takes a special talent. Some owners of
small businesses have it and some don’t. Be-
fore investing time, energy, money and a piece
of your heart, it’s important to do some ser-
ious self-analysis. Answer such questions as:
Am I prepared to work hard and make sacrifices?
Am I self-disciplined? Do I have management
ability? Am I experienced enough in this field?
What do I want out of life? Are my goals re-
alistic and attainable?

Studies have shown that successful entre-
preneurs share certain characteristics including
an overpowering need to achieve. Entrepreneurs
tend to be more creative and innovative than the
average person. They are self-confident and not
easily defeated. They also thrive in a challeng-
ing environment and have a tremendous need to be
in control. They are risk takers. They welcome
responsibility, and are willing and able to make
decisions. In addition, they are able to learn
from their mistakes.

Successful entrepreneurs possess an opti-
mistic and cooperative outlook, and usually get
along well with people. They have well develop-
ed oral and written communication skills, and
overall technical knowledge of the goods or ser-
vices they produce.

Moreover, successful entrepreneurs are pa-
tient and able to wait out the sometimes slow
beginnings of a business. They devote count-
less hours to their endeavor, often at the ex-
pense of family and friends. Entrepreneurs,
in short, are often termed “workaholics.” They
will continue to work despite headaches or other
ailments which might keep others away from the

According to Rod Beck, chief of administra-
tion for California’s Office of the Small Busi-
ness Advocate, entrepreneurs share another common
trait as well. “In addition to desiring indepen-
dence at all costs,” he claims, “they have ob-
served what other business owners are doing, and
feel convinced they can do it better.”

Take a good look. Do those traits describe
you? “Know yourself and be willing to work 60
hours a week. Starting a business is one of
life’s biggest commitments,” advises Roy Nordman,
director of the Emerging Business Services Prac-
tice for the San Francisco office of Coopers &

Small business owner Nancy Wansick of Wansick
Graphics echoes those sentiments: “My business
has become my whole life. Day becomes night and
work has become play.”

One thing is obvious: you have to love your
work. And if you choose a business that meshes
with your personality, those extra hours spent
won’t be as difficult. The key is to identify
what you enjoy doing the most, and then find a
business opportunity that makes use of skills
and interests.

2- Plan Your Business

After deciding to start or expand your business,
it’s critical to take the necessary time to formu-
late a realistic path for yourself. In an increas-
ing competitive world where businesses face an up-
hill battle, planning helps minimize the risks

A Harvard University study showed that the
amount of time spent in planning a business is
directly related to its success.

Owners spending six months or less ended up with
an 80 percent failure rate. Those who took a year
or more to plan ended up with an 80 percent suc-
cess rate.

Many new entrepreneurs don’t realize the
business plan is perhaps the most crucial document
to develop during the planning stage because it
tells a complete story about their business. A
well-prepared and comprehensive business plan (up-
dated every six months) serves several purposes.

* It forces you to take an objective, critical
and unemotional look at your business project
the way an outsider would. It assists you in
setting goals, and determining how workable and
desirable your venture is.
* It is an important sales tool for raising cap-
ital from outside investors. These people are
primarily interested in the future profitability
and value of an enterprise. They need to be con-
vinced that they will earn a substantial return
on their investment within a few years.
* It is a starting point for a more detailed
operational plan, and becomes an important man-
agement tool for monitoring the growth and per-
formance of the firm and charting future di-
* It is a virtual must when applying for a loan.
To the lender, the plan reveals your evaluation
of your venture’s feasibility and reflects your
management abilities.

Business plans are not all the same. They
vary depending on the type and size of the en-
terprise. However, all plans should be organized
into distinct sections as shown on page 6 under
“Business Plan Checklist.” If you need assist-
ance in preparing your business plan, the Ser-
vice Corps of Retired Executives (SCORE) is an
organization of skilled professionals who will
counsel you free of charge. Or you may decide
to hire a consultant. However, even if you
turn to outside help, you should be completely
familiar with every detail of your plan, because
at some point you will have to meet with pro-
spective lenders. Your knowledge and under-
standing of the plan will influence their de-

In summary, the importance of a business
plan is not just the written document itself,
but rather the process and thinking involved
in developing it. Many owners will argue that
the marketplace changes too fast for a business
plan to be useful, or that they are too busy
running the venture to prepare one. While many
owners are reluctant to invest the necessary
effort to put down the details in writing, the
time is well spent if the business grows and
prospers as a result.

One final word of advice from Marty Rabkin,
the principal of VTR Associates, a Berkeley-
based firm that consults with new business start-
ups: “After preparing your plan, have at least
two other individuals review it. They should
understand lending and investments and be able
to give you constructive suggestions. That way,
if your plan needs work, you can revise it before
submitting it to lenders.”


“The most hazardous period for a new business
is the first two years due to insufficient work-
ing capital,” says Bernard Schnitzer, a counselor

One of the major causes of small business
failure is inadequate start-up financing. Before
you open for business, it is critical to deter-
mine how much cash you will need. Many over-eager
entrepreneurs start operations without adequate
capital to sustain them and their business until
profits begin to roll in – which is typically
three to six months. They have only enough money
for a few months’ rent, some equipment and mini-
mum inventory. Many experts advise having at
least a 12-month financial cushion to handle all
business and personal expenses. This will allow
you to remain self-sufficient and minimize the
risks should your endeavor prove unprofitable.

Prior to starting out, carefully review your
total financial needs. The checklist entitled
“How Much Money Do You Need?” should assist you
in this evaluation process. Don’t forget to add
in the additional funds that will be necessary for
personal and living expenses. Some examples in-
clude mortgage or rent payments, medical and in-
surance costs, entertainment, food, clothing,
utilities and transportation.

Equally important is the preparation of a
cash budget. This analysis forces the entrepreneur
to think ahead by estimating the firm’s income and
expenses. It will also warn you about possible
deficits that could require additional funding.
By carefully projecting your financial needs, you
can avoid some of the crises that would otherwise
arise from a shortage of funds in the future.

While new business owners will not have
actuals for various budget categories, they can
approximate operating expenses with a little in-
vestigation. For example, talking to other busi-
ness owners can help pinpoint tax, utility and
trash removal charges, while a real estate agent
can project rental costs. In addition, most pro-
fessions, industries, and trades have organiza-
tions that can provide averages for both income
and expenses.

Once you have estimated your present and
future financial needs, you may realize you need
to seek outside financing. There are a number of
sources available to the small business owner
besides partners, family and friends. For the
vast majority of businesses, loan financing
comes from the private sector through banks,
savings and loans and other financial services

The government is a secondary source of
assistance, primarily through the U.S. Small
Business Administration’s Loan Guarantee Pro-
gram. Other financing alternatives include local
government programs, and venture capitalists –
wealthy individuals and firms which make their
money as investors. Some entrepreneurs borrow
against their life insurance policies.

Before filling out a loan request – no
matter who the prospective lender is find out
what documentation is required. Finally, bor-
row carefully. As one small business owner ad-
vises, “Having financing is critical during the
growth phases. But be careful not to overextend


Experts agree that a comprehensive and under-
standable bookkeeping system is one of the most
basic requirements of a successful business.
While very few entrepreneurs enjoy the number-
crunching aspects of running an operation, a
simple system can be maintained with a minimum
amount of time and effort. And the results are
well worth the expenditure. For good records
will provide the critical information you need
to determine how your business is functioning.
They will also assist you in making better
short-and long-term decisions.

One small business owner realized that
vision, optimism and a willingness to work hard
were key to the success of her venture, but
also discovered that attention to the balance
sheets was equally vital. “It took me a while
to learn it,” she explains, “but you really
have to run a business by the numbers.” And
you can’t run a business by the numbers without
an adequate accounting system to use as a man-
agement tool.

To begin with, your books should include
accurate and thorough statements of sales and
operating results, fixed and variable costs,
profit and loss, inventory levels, and credit
and collection totals. Also needed are tax
returns and reports to regulatory agencies,
and comparisons of current data with prior
years’ operating results as well as budgeted

In addition, you should track daily cash
receipts and credit sales, expenses and inven-
tory received, and employee expenses including
pay and deductions.

A good record-keeping system should be
easy to understand, reliable, accurate, con-
sistent and designed to provide information
on a timely basis.

There are two methods of accounting: cash
and accrual. Using the cash method, income is
reported the same year it is received, and ex-
penses deducted the same year they are paid.
With accrual accounting, income is reported the
same year it is earned, even if it hasn’t been
received. In most cases, the method you choose
for accounting will also be used for tax pur-

Due to its simplicity, cash basis account-
ing is generally used by sole proprietorships
and partnerships unless inventory is involved,
in which case the IRS mandates use of the accrual
method. Most corporations use the accrual method.

To determine which system is preferable, or
required, for your business, it is best to con-
sult with a financial advisor or public account-

Once you have done so, a number of options
exist to ensure that your accounting gets done
accurately. These options include:

* Your own ledger books – if you’re motivated
and can spend the necessary time to keep your
finances current.
* An accounting system book, available at sta-
tionery stores, in which everything is set up
by ledgers. All you have to do is enter the
* Accounting software, which is becoming more
and more popular because of the way it can in-
crease both the speed and accuracy of the ac-
counting process.
* Bookkeeping services, which provide a wide
range of services to help with accounting needs.
* A part-time bookkeeper who can maintain the
company’s journals and ledgers by recording
all financial transactions.
* An accountant, who can set up an easy-to-
follow bookkeeping system specifically designed
for your business, and help prepare financial
statements and tax returns.

5- Practice good management

According to the U.S. Small Business Admini-
stration, poor management is the greatest
single cause of business failure. Management
of a business encompasses a number of activi-
ties: organizing, planning, controlling, di-
recting and communicating. Most business fail-
ures aren’t the result of bad economic times;
rather, they stem from improper management.
The cardinal rule of small business management
is to know exactly where you stand at all times.

Some of the more common mistakes managers
make include:
* Hiring the wrong people;
* Inadequate employee training;
* Trying to do too much;
* Misuse of time;
* Absentee ownership.

In a large company, a bad month in one di-
vision can be offset by other divisions. In a
small firm, in contrast, there’s nothing else on
which to fall back, so a bad week can be fatal.
Managing a small company means staying on top of
key aspects of the operation so you can react in-
stantly and decisively when problems arise.

However, bad management isn’t limited to poor
economic periods. It can happen even when the cli-
mate is positive. Some management consultants who
work with small businesses confirm that overex-
panding, hiring weak personnel and being overcon-
fident are frequent management mistakes that occur
when times are good.

Along with those is the inability to handle
growth. “If the business is successful, it takes
on a life of its own,” says one owner. You become
a “situation manager” rather than just a people
or business manager. Suddenly, you are trying to
balance opportunities, investments and energy.

Whether times are good or bad, the success-
ful manager is the one who remains calm and con-
fident and who turns adversity into opportunity.
In addition to seizing short-term opportunities,
the ability to plan for the long term is also
crucial. This involves being aware of subtle
shifts such as increased competition, a change in
area demographics, products which no longer meet
customer needs and inadequate technology. This
continual analyzation and planning process allows
the owner to reevaluate what the firm is doing,
what prospects can be developed, and what actions
need to be taken to strengthen the company posi-
tion over time.

In addition, a successful manager must also
be a good leader. Many experts claim leadership
is a form of behavior which includes persuading,
inducing, guiding and motivating. They believe a
well-rounded leader is a master of certain skills
which can create a climate that encourages pro-
ductivity and directs and controls employees’

Very often, leadership style reflects an in-
dividual’s personality. However, what works well
with one group or individual may not work as well
with the next. As a result, good leadership re-
quires a flexible approach that is based on the
people involved and the situation at hand.

Advises one small business owner, “Surround
yourself with competent people, then train them
and learn to delegate.” And when you do delegate,
keep the following tips in mind:

* Don’t constantly check up on employees while
they’re working.
* Believe what they say.
* Avoid having to know every single detail at all
* Be sure you know enough to stay on top of things.

“Delegation is an issue of trust,” says
another owner. “But it cuts both ways. You can’t
get someone to trust you unless you trust them,

A final note of advice: not all owners are
necessarily good managers. If you feel you lack
the necessary managerial or leadership skills,
the wisest move you can make is to bring someone
on board who can better fulfill this function in
the interests of the business overall.


Marketing is the complex process of creating cus-
tomers for your products or services. Finding and
keeping customers is a way of thinking – of do-
ing business – that is close to the heart of every
successful entrepreneur. It involves knowing and
reaching out to customers, listening very care-
fully to their needs and preferences – and com-
plaints – and acting to service them better and
better every time.

A sound marketing plan is key to the suc-
cess of your venture. It helps you manage the
process of creating customers, including the
action steps needed to make the plan work. Before
developing a plan, however, you must do your home-
work. Effective marketing, planning and promotion
begin with gathering factual information about
the marketplace. Visit your local library, talk
to customers, study the advertising of other busi-
nesses in your community (including that of your
competition), and consult with related industry

Answers to the following series of questions
comprise critical components of your marketing plan.

1. Marketing Overview
* What business are you in?
* What do you sell?
* What are your target markets?
* What are your marketing goals for next year?
(include sales and profit goals)
* What obstacles might keep you from achieving
these goals?
* What is your marketing budget?

2. Products and Services
* What are the benefits of your products/ser-
* How do you differ from the competition – what
makes you special?
* What product/service provides the biggest con-
tribution and the biggest drain to your overhead
and profits?

3. Customers and Prospects
* Who are your current customers? (include age,
gender, income level and geographic locale)
* What are their buying habits?
* How do your customers learn about your pro-
ducts/services? (newspaper advertising, direct
mail, word of mouth, Yellow Pages)
* Why do your customers buy your products/ser-
* What qualities do your customers value most?
(selection, convenience, service, reliability,
availability, affordability)
* What qualities do your customers like least?
Can they be adjusted to serve your customers
* Who are your best customers?
* Are there prospective customers who need your
product or service, but whom you aren’t cur-
rently reaching?
* What is your market share? Is it expanding,
shrinking or stable?
* Is your market growing, shrinking or stable?
Is it changing in other ways?

4. Competitive Analysis
* Who are your competitors?
* What do your competitors do better than you?
* What do you do better than your competitors?
* How do you rank relative to the competition?

5. Price, Location and Sales Practices
* How do you establish prices?
* How do your prices compare to those of your
* What are the advantages and disadvantages of
your location? (traffic flow, complementary busi-
nesses, convenient parking)
* What are your sales practices? (including
follow-up after the sale and sales training)
* How do your sales practices compare to those of
your competitors?

6. Strengths and Weaknesses
* What are the internal and external strengths of
your business? (skilled personnel, outstanding
technology, expanding market)
* What are the internal and external weaknesses
of your business? (lack of sales support ma-
terials, aggressive competition)

The final component in your marketing plan
should be your overall promotional objectives:
to communicate your message, create an awareness
of your product or service, motivate customers to
buy and increase sales. Defining objectives makes
it easier to design a successful promotional cam-
paign, choose the methods that will be most ef-
fective, and keep that campaign on the right track.

7. Advertising and Promotion
* What is your overall advertising and promotion
* What marketing tools can you implement within
this budget?
* What are your advertising and promotional ob-
jectives? (penetrate specialized markets, sell
more to present customers, change your firm’s
* What do you currently do to promote your busi-
* What previously used promotional methods have
been most effective?
* How does the competition promote itself?
* How will you evaluate the effectiveness of
your advertising and promotional efforts?

8. Long-Term Strategic Marketing
* What marketing problems have you discovered
so far?
* How do you plan to solve these problems?
* Are the goals stated under “Marketing Over-
view” still valid? If not, what are your new
* How do you plan to achieve these goals?
The essential element underlying effective mar-
keting efforts is targeting. That is, making
sure your message reaches the people you want
to attract to your business’ products or ser-
vices. Today’s marketplace is too fragmented
and diffused to reach everyone without the ex-
penditure of vast amounts of money, which small
businesses certainly cannot afford – nor do
they need – to spend.

A long-time entrepreneur affirms the im-
portance of targeting: “Before, we always tried
to get everybody and their brother to buy from
us. Needless to say, that approach didn’t work.
Then we developed a marketing plan that zeroed
in on a specific geographic area, and it brought
in all the business we hoped for.”

7 Hire the Right People

Employees are one of the most valuable as-
sets your business can have. Their cooperation,
enthusiasm and well-being can make the difference
between a mediocre or an outstanding business.
Untrained unmotivated employees can cause a busi-
ness to fail just as surely as strong competition
or economic downturns. It’s absolutely imperative
that you carefully plan the staffing needs of your

Two of the most critical points to be con-
sidered in terms of employees are productivity
and trust. Productivity equates to how much is
produced for every dollar you spend on labor.
Too many owners think about what they pay in
wages, rather than how much useful work their
dollars will buy.

The second key point is trust. One basic
reason otherwise successful businesses remain
small is that their owners can’t bring them-
selves to trust other people enough to give them
authority and power. Three secrets to trust are
believing in yourself, taking the necessary time
to recruit and hire diligently, and making re-
sponsibility a part of every job – even the most
menial. If you do these three things, your em-
ployees will continually grow in their abilities,
and learn to handle major responsibilities more

The hiring process should not be haphazard.
Before you begin, carefully analyze your busi-
ness needs and write down the specific duties
for each new employee you think is required.
Also determine what you are willing to pay in
salary and benefits. Going through this process
enables you to clarify and prioritize the skills,
experience and qualities you are seeking.

Be careful not to “over specify” the posi-
tion. By imposing too many specifications, you
might limit the type and number of resumes you
receive. Whenever possible, remove any qualifi-
cations that are not absolutely necessary to per-
form the job, and ask yourself where you would
compromise if you had to. All too often entrepre-
neurs hire people who have skills identical to
their own, rather than those with complementary
skills. This type of repetition can be particu-
larly detrimental to small operations. Also
be sure to determine if you actually need to
hire any new fulltime employees. There may be
more effective and efficient ways to get the
job done, such as buying a computer software
program to help with accounting functions, or
contracting out for phone answering or janitor-
ial needs. Use of freelancers and/or indepen-
dent contractors is another possibility, as is
hiring short-term temporary workers.

If you haven’t already formulated a person-
nel policy, now is the time. You need to consid-
er the number of hours to be worked each week,
the number of days per week, holiday work and
the time and method for overtime pay; fringe
benefits; vacation and sick leave; time off for
personal needs; training; retirement; a griev-
ance procedure; performance review and promo-
tion; and termination.

There are a number of sources to which you
can turn for job candidates: classified adver-
tising in newspapers and magazines, private em-
ployment agencies, temporary agencies (for
short-notice or seasonal needs), state employ-
ment agencies, labor unions, schools, community
organizations, former employees or friends and

Once you’ve narrowed the field of candi-
dates, it’s time to set up interviews, which
are critical to the selection process. Ineffec-
tive or inexperienced interviewers are usually
marked by four main failures: not spending
enough time analyzing the job they are trying
to fill; failing to ask the right questions to
determine a candidate’s strengths and weaknes-
ses; talking too much during the interview;
and overly trusting their gut reaction rather
than evaluating candidates objectively against
the criteria they’ve established for the job.

Keep in mind that any person’s potential
for success in a given job is a function of
three factors. The first is their ability (the
“able to” factor). The second is their job
knowledge (the “how to” factor), resulting
from a candidate’s education, training and ex-
perience. Don’t be reluctant to ask candidates
what they have done, and how well they did it.
Ask about their successes and the problems
they’ve faced. Ask for references and call
them. Verify education and training as well.

The third factor is their motivation (the
“want to” component). Motivation is based on
what an employee gets from performing the job.
And while salary is important to performance,
it’s not everything. The best employees are
those who enjoy what they do. Your task in hir-
ing is to find people who want and like to do
the job for which you are hiring them.

When interviewing, it is also important
to know the laws related to job discrimination.
According to one expert, there are two simple
rules that determine whether or not to ask a

(1) Is it job related? If it isn’t, don’t ask.
(2) Is the question presented only to a speci-
fic type of candidate? If it is, don’t ask.

Once you have selected your new employee,
the next step is to create a good working rela-
tionship. Open-mindedness, patience, communica-
tion skills and willingness to listen play a
vital role in the development of such relation-
ships. Another tried-and-true standby is posi-
tive reinforcement of desired behavior, from a
simple “thank you” or praise for a job well
done, to asking for employees’ advice or opinion,
or giving them a choice of work assignments or
time off with pay.

One key to motivating and retaining good
employees is to be a good manager yourself. The
people at the top of an organization set the
tone. Be sensitive to your employees’ needs.
Learn where you can be flexible in order to ac-
commodate employees and enhance their job satis-
faction. Create an environment where every per-
son feels an important member of the group.

Although you are careful to hire the right
people for the job, and are working hard to form
rewarding relationships with your employees, you
can still be subject to problems. That is the
nature of business. Often the ones you experience
mirror those of society in general.

One problem currently facing employers is
drug and alcohol abuse, which is costing American
business about $100 billion a year in lost pro-
duction. While many large companies have set up
in-house programs to help employees with sub-
stance abuse, such programs are too expensive for
the small business owner. You can begin by writ-
ing out a policy statement concerning drug and
alcohol use at work. The policy should state
plainly that drug and alcohol use on the job is
forbidden, and that violation of this policy is
grounds for disciplinary action, including dis-

To aid troubled employees directly, you may
want to investigate outside employee assistance
programs (EAPs), which offer workers a place they
can go for help for personal problems, including
alcohol and drug abuse. These programs provide
confidential counseling and can refer employees
to specialists, if needed. The cost is usually
several dollars a month per employee. If no such
provider is available in the area, you may want
to join with other local companies to create an
EAP together. In some cases, outside employee
assistance programs encourage more people to
seek help and minimize the role the company plays
in resolving employees’ personal problems.

Once you have found a suitable EAP, make it
an attractive alternative. Stress that you are
implementing the program to keep people on the
job, not as an excuse to fire them.

The success of your business depends on a
large extent on your employees. And similar to
a good marriage or friendship, the relationship
between you and your employees should be a two-
way street. Communication, trust and commitment
are critical. If you want those relationships
to last a long time, you must be willing to
work hard to make them grow.


Choosing the location for your business is
as crucial as deciding what product or service
you will provide. Stories abound of entrepreneurs
who selected or purchased a site without thorough
investigation only to later discover the neighbor-
hood was deteriorating, road or traffic patterns
were being changed, the previous owner did not
have clear title to the land, the site was pol-
luted or a competitor was moving in next door –
conditions which would adversely impact their
business. It’s extremely important not to rush
the selection process and, if necessary, to use
the services of a specialist in this area to as-
sist you.

Your choice of a location will depend on
your type of business, as well as who and where
your customers are. For example, retail stores
and restaurants (where location, location and
location have been called the three most criti-
cal factors for success) have to be situated
very near to their customers. Other considera-
tions include the volume of pedestrian and vehi-
cular traffic, parking availability, public
transportation, the compatibility of neighbor-
ing businesses and the building itself.

Many business areas, from neighborhood
trip centers (ventures clustered on the same
street) to shopping malls, have anchor stores.
These are large retailers such as department
stores and supermarkets which attract a large,
loyal customer base through reputation and
heavy advertising. Smaller establishments often
do well being located near these high-volume

Service businesses operating out of store-
fronts that depend on foot or drive-by traffic,
such as dry cleaners and shoe repair shops,
should be situated where customers are going to
pass them on a regular basis. Other service op-
erations that are more personal in nature such
as beauty parlors, health clubs or automobile
repair shops can cultivate a base of steady
clients who are willing to go out of their way.
Also, whenever services are performed at the
client’s home or place of work, such as exter-
mination and carpet cleaning, the company site
is relatively unimportant.

If establishing a manufacturing, wholesal-
ing or industrial supply business, make sure
the site allows room for future expansion. Also
consider taking an option for additional space.
Choose a location that is relatively convenient
for your employees, and accessible by car or
public transportation. Many plants in out-of-the-
way locations have difficulty retaining employees.

If your operation has heavy electrical power
requirements, verify that these services are
available since the linework needed to provide
additional electrical service can be costly. Also
be sure to check the availability of freight,
express and parcel delivery services so you won’t
have to pick up and deliver materials. If your
facility is above or below the ground floor, in-
vestigate the condition and load capacity of the
freight elevator. This is especially important if
the total weight of all your equipment and ma-
terials is excessive.

In addition to these industry-specific con-
siderations, certain basic items must be taken
into account when selecting any new location. If
you are renting, try to talk with former tenants
and ask why they moved. Meet with other shop-
keepers and learn as much as you can about the
area and its customers. Be careful if you see
numerous unoccupied buildings for rent or sale,
as this could signal that the area is undergoing
an economic downturn.

Also pay close attention to the zoning,
building and fire codes of the locations in
which you are interested. Make certain there
are no present violations, or likely future
conflicts with your business operations. The
same concern also applies to electrical and
plumbing codes.

Have both your lawyer and insurance agent
review any lease before signing it. Key points

* How the rent is determined.
* Whether it is high or low compared to other
rents in the area.
* Whether utilities and equipment are adequate.
* Who is responsible for repairs.
* Estimated cost of any renovations.
* Who owns any improvements made by the tenant.
* The amount of insurance held by the landlord
and the degree of coverage required of the tenant.
* Lease renewal and termination provisions.
* The tenant’s right to sublet.
* Options for expansion and purchase.
* Property use restrictions (zoning).

A final question is whether to rent or buy the
facility you are considering. Base your decision
on these factors:

* Are your requirements going to change rapidly
over the next few years? If so, renting is prob-
ably preferable.
* Is capital in short supply? Can you use your
available money better if it’s not tied up in
a building? What return can you expect from your
funds if they were to be invested elsewhere?
* Will the building be easy to resell?
* What kind of tax incentives and other kinds of
assistance are available from the state or local

Before embarking on a search for the perfect
location, outline your present and future needs
and then find a site that best meets them. If you
require assistance, a business real estate broker
can often be helpful. In addition, your local
chamber of commerce will be able to answer any
questions you may have about the community.


Quality may well be the biggest competitive
weapon of the 20th century and beyond. At today’s
prices, people don’t want cars that aren’t per-
fect, toothpaste tubes that leak, houses made with
inferior materials, stores with rude employees, or
airlines and restaurants that provide poor service.
And while most customers don’t bother to complain,
they simply take their business to other companies
which offer the service they expect or products of
better quality.

Owners and managers of small, medium and large
businesses alike need to understand that quality is
more than a buzz word. It has become an impera-
tive. The benefits to companies which embrace it
are numerous and far reaching – from fewer product
defects to less wasted management time, lower costs
and higher customer retention rates.

The dictionary defines quality as “superior-
ity of kind; degree or grade of excellence.” As
the owner of a business, your first concern should
be building quality into your employees, or assist-
ing them to continually strive to improve. Only
after the “humanware” is securely in place should
other aspects of the business be considered.

Normally, top level managers are concerned
with the lofty concept of improvement, while
lower level employees spend their entire day
following instructions. In this hierarchical en-
vironment, a valuable resource is wasted. For
many “worker bees” harbor a wealth of knowledge,
information and insight about the processes for
which they are responsible, the customers with
whom they deal, and product/service enhancements
that could make a difference.

Tied to the whole issue of quality is custo-
mer service. This means understanding what pro-
duct and service attributes your customers value,
why they value them, and how your company measures
up against those attributes. It’s no longer safe
to assume that just because your customer com-
plaints are low, the majority of your deliveries
are on time, and your price is competitive that
your customers perceive you as a quality- and
customer service-focused organization.

One way to help your employees focus on cus-
tomers and their needs is to have them view each
other as internal customers. This means realizing
that for whatever jobs they perform, other em-
ployees are impacted and impact them – from the
chef in the kitchen to the person in the adjoin-
ing office, the stock boy, or the next person
down an assembly line. Focusing on your inter-
nal customers is key to any successful quality/
customer service program, as is the mindset of
never being satisfied even when you think things
are perfect.

The bottom line in customer service is that
it’s only as good as the customer says it is.
When employees start focusing on how to better
meet the needs of their customers, they become
more sensitive to the processes they perform and
how to improve and/or change them to achieve the
results the customer desires.

Building quality into a company also in-
volves changing processes within the organization
itself. It entails managers ceding some power and
responsibility to fellow workers who can do the
most about improving the business operations. It
means giving employees the authority to satisfy
customers’ needs. Finally, it includes eliminat-
ing unnecessary steps in the approval processes
that impede production, delivery or the process-
ing itself. Basically, quality means pushing
the decision making down into the ranks to the
people who can make the biggest difference.

This entire scenario understandably creates
risk and uncertainty for the manager who has not
been trained or mentored to encourage such em-
ployee behavior. The CEO as coach/trainer must
ensure that managers and employees do not become
paralyzed by a desire for perfection and cer-
tainty of accountability. Training people at all
levels of the business is key to the success of
this approach.

This approach to operating your business can
improve morale and productivity by making workers’
jobs more meaningful, reduce costly supervision
and inspections, and provide more time for stra-
tegic planning. In addition, a reduction of un-
necessary processing stages and layers of approval
diminishes cycle time, lessens the possibility of
errors, and allows you to deliver products or ser-
vice at a faster rate to the marketplace.

It makes far more sense to build in quality
during development and production, rather than
after completion when making changes is costly
and frequently delays meeting customer needs in
a timely fashion. Partnering also helps eliminate
the adversarial relationships that frequently de-
velop in a business. Weaving quality and customer
service into every fiber of the company can be the
key to improved competitiveness and growth, and
will provide that long-term edge in distinguish-
ing your company or brand from the competition.


Turning to outside specialists to help avoid or
solve problems is standard operating procedure
for large companies. Yet with the exception of
accountants and attorneys, many small business
owners avoid using consultants, and thereby
deny themselves valuable and timely advice.

The problem many entrepreneurs face is how
to afford professional help at the point when
their need is greatest: usually when their finan-
cial resources are most limited. But advice need
not be expensive. In addition to professional
consultants, sources of assistance include cham-
bers of commerce, trade associations, specialty
newsletters and magazines, and business librar-
ies, to name a few. Moreover, chambers of com-
merce and many financial institutions publish
how-to books for a small fee or just for the

Most important, consultants say, is knowing
what kind of help you need, and then getting it
early enough.

“It’s a shame more small businesses don’t
tap into the resources of a professional to help
them realize their full potential,” notes Howard
Cohen, economist and chartered accountant in
Tiburon, California.

Urges Dale Morseman, owner of Industrial
Graphic Arts in Concord, California, “Gather ad-
vice from all available sources, particularly
business and trade associations. When you have
questions or problems outside your area of ex-
pertise, seek professional help.”

Experts also recommend the appointment of
an active outside board of directors or advisors
with whom you meet regularly. A board can pro-
vide objectivity, install business performance
accountability, and establish a valuable method
of monitoring progress. Boards are most valu-
able when they contain directors carefully select-
ed for expertise and skills that complement the
given business.

The resources don’t end there. Free counsel-
ing and workshops are also available through
Small Business Development Centers, the U.S.
Small Business Administration and SCORE, its vol-
unteer arm. SCORE is staffed by experts in a wide
variety of fields who have had successful careers
of their own. SCORE counselors appreciate what
small business means, and want to share their ex-
periences and knowledge with any entrepreneur who
needs help. The organization also publishes a
number of practical guides and handbooks.

(See “Consultants and Your Business” in
Volume IV of Small Business Success for more
detailed information on finding the right con-
sultants for your company.)


Among the many subjects small business owners
must tackle, perhaps none is more daunting than
technology – a word that encompasses a full
spectrum of equipment that can radically alter
a company’s efficiency and productivity.

On the one hand, technology is seen by the
uninitiated as a complex array of options that
are difficult enough to understand, much less
to master. Those at the other end of the spec-
trum imbue technology with the magical ability
to revitalize a company, cut costs, and resolve
problems ranging from personnel to product qual-
ity. Most people fall within these two extremes,
having embraced technology to some extent, but
still not tapping its full potential.

Just as each business is different, so is
the degree to which automation makes sense. Cer-
tainly the needs of a home-based or several-
person venture are not the same as those of a
larger firm which relies heavily on the input-
ting of massive amounts of data, or which re-
quires extensive inventory tracking. Yet no
matter what an enterprise’s size or scope, the
technological tools available on the market to-
day (ranging from phone systems to fax machines,
computer hardware and software, paging systems
and cellular phones) can help it run immeasur-
ably more smoothly. These tools also help to
maximize what is perhaps today’s most valuable
commodity – time.

One key point should be kept in mind when
deciding to what extent to automate your busi-
ness. There is no single answer that is “right”
for everyone. Before any investment is made,
it’s crucial to identify your endeavor’s speci-
fic needs and tailor the solution accordingly.
Too much time and money rest on the outcome to
undertake this process lightly, or without
enough research. And, while problems will like-
ly arise at some point in the process – be it
technical difficulties or internal resistance to
change – the long-term benefits far outweigh any
short-term obstacles. For utilizing technology
to increase the capabilities of your business is
key to enhancing your competitive position in
today’s marketplace.

According to Lynn Brady, vice president,
chief financial officer Finance & Information
Systems at Pacific Bell Directory: “Many small
firms that do not learn to implement the best
technology, particularly in the areas of com-
puters and telecommunications, will see larger
companies gain competitive advantages that will
allow them to lower costs, adjust prices, and
take a larger share of the product or service
market. Even a two or three percent cost advan-
tage is sufficient to guarantee market erosion.”

(To better understand the full array of
technological tools currently available on the
market that can enhance the efficiency and com-
petitiveness of your business, see Volume IV of
Small Business Success. Free copies of this
and any previous editions of the magazine can
be obtained by phoning (800) 848-8000.

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SMB Reviews
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SMBReviews is committed to providing small and mid-sized business owners with the information and resources they need to select the best service or product for their company.

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