Zen and the Art of Business

In case you hadn't noticed the Chinese know a thing or two about business and have been pretty successful at it for a few thousand years. The communist revolution put the brakes on entrepreneurship for a while, but you can't keep a good thing down and the leaders of China know it. Entrepreneurship is the new religion in China again capitalism is not a dirty word any more.

I thought you might like to look at a few Chinese proverbs and how they are applicable to business. You could do a lot worse that incorporating some of this Chinese Zen philosophy in how you lead your own business, so read on.......

1. “In every crisis, there is opportunity.”

Most entrepreneurial ventures arise from a solving a problem. If you are faced with a problem, craft a solution and sell that solution to others. As an interesting side note, it’s a common misconception that the word crisis and opportunity mean the same thing in the ancient Chinese language. This misconception initially gained momentum when John F. Kennedy incorrectly cited it in a speech in 1959. (source: smallbusiness411.org)

2. “Sow a thought, reap an action; sow an action, reap a habit; sow a habit, reap a character; sow a character, reap a destiny.”

Entrepreneurship starts with an idea and ends with a destiny. You craft your destiny with your actions, habits and character. You make your destiny, it doesn’t make you.

3. “The best time to plant a tree was 20 years ago. The second best time is now.”

Aside from 20 years ago, there is no better time to start a business than today.

4. “If you want one year of prosperity, grow grain. If you want ten years of prosperity, grow trees. If you want one hundred years of prosperity, grow people.”

The goal of every entrepreneur should be to start a business and find capable people to run the business so that they don’t have to.

5. “A bad workman blames his tools.”

A bad entrepreneur places blame on someone or something else when things go bad. First and foremost, you should hold yourself accountable for a negative outcome of your business.

6. “A closed mind is like a closed book; just a block of wood.”

As an entrepreneur you always have to be open to new opportunities. If you aren’t actively looking for new ways to make your business more innovative, you won’t be very successful as an entrepreneur.

7. “A fall into a ditch makes you wiser.”

When bad things happen, a good entrepreneur learns from them.

8. “A fly before his own eye is bigger than an elephant in the next field.”

When you focus only on the opportunities that are right in front of you, you might miss the larger ones that take effort to find.

9. “A jade stone is useless before it is processed; a man is good-for-nothing until he is educated.”

A strong education is often the foundation of a strong business. The more you know about entrepreneurship, the more equipped you will be to face its various challenges.

10. “A journey of a thousand miles begins with a single step.”

Every entrepreneur in the history of the world started their business with a single action.

11. “A person who says it cannot be done should not interrupt the man doing it.”

As an entrepreneur, you will undoubtedly encounter people who will doubt you. Don’t let those people get in your way. Instead, use their doubt as motivation.

12. “A single conversation with a wise man is better than ten years of study.”

You can learn a lot from talking to experienced entrepreneurs. They have been through the process and can teach you more than most any book.

13. “All cats love fish but fear to wet their paws.”

All people love to make money but few people pursue entrepreneurship because it’s full of challenges and uncomfortable risks.

14. “Cheap things are not good, good things are not cheap.”

As a small business owner, always focus on providing quality.

15. “Customers are jade; merchandise is grass.”

What good is a business without customers? You should value your customers more than any other aspect of your business.

16. “Defeat isn’t bitter if you don’t swallow it.”

You will encounter setbacks, but don’t let those setbacks defeat you.

17. “Defer not till to-morrow what may be done to-day.”

One of the most challenging things for an entrepreneur is simply getting things done. According to numerous entrepreneurs I have spoken with, procrastination is one of the largest causes of failure in new businesses.

18. “Don’t count your chickens before they are hatched.”

Though a good entrepreneur isn’t afraid to take risks, never rely too heavily on projections of profitability, success in a certain market, etc. A good entrepreneur always considers, and has a plan for, the worst-case scenario.

19. “Don’t stand by the water and long for fish; go home and weave a net. “

Instead of complaining about how you aren’t making much money, find new ways to earn it.

20. “Easy to run downhill, much puffing to run up.”

It’s easy to run a business when the going is good, but the true test of an entrepreneur is how he or she behaves when faced with challenges. As the current economic climate makes overwhelmingly clear, every market has its ups and downs.

21. “Failing to plan is planning to fail.”

This one is so clear, it requires no explanation.

22. “Falling hurts least those who fly low.”

The less amount of money you spend, the less it will hurt if your business fails. It’s common for entrepreneurs to bootstrap the initial costs of their business. Bootstrapping means doing whatever you can to spend as little as possible.

23. “If a thing’s worth doing, it’s worth doing well.”

If you’re going to put effort into starting a business, then make sure you put 100% effort into every aspect of your business.

24. “If you get up one more time than you fall you will make it through. “

When you get knocked down, get back up. If you don’t get back up, your business will fail.

25. “If you pay peanuts, you get monkeys.”

When you get to the point of hiring employees; the more you pay, the higher quality effort you will receive.

26. “It’s as difficult to be rich without bragging as it is to be poor without complaining.”

As an entrepreneur, it’s important to remain humble, especially when you’re rich. Humility is difficult to maintain when things are going well.

27. “Learning is a treasure that will follow its owner everywhere.”

Learn from your business and it’s something you will never lose.

28. “Make happy those who are near, and those who are far will come. “

If you make your customers happy, they will talk and those they talk to may become new customers.

29. “Patience is a virtue.”

Having patience with your business is essential to your success. Very few businesses are profitable in their first year.

30. “Rich not gaudy.”

When you become rich, don’t become gaudy, or tastelessly flashy.

31. “Teachers open the door. You enter by yourself.”

Being taught something will only get you so far. You must independently apply that learning to become successful.

32. “The diamond cannot be polished without friction, nor the man perfected without trials.”

You will encounter trials and tribulations as a business owner, but these trials and tribulations will mold you into a better entrepreneur.

33. “The emperor is rich, but he cannot buy one extra year.”

Your business and the money it generates are not the most important things in your life.

34. “The loftiest towers rise from the ground. “

Even the most successful businesses in the world started with the conception and implementation of an idea.

35. “The palest ink is better than the best memory.”

When you conceive an idea on how to improve your business, write it down!

36. “There are two perfectly good men, one dead, and the other unborn.”

No one is perfect. Always be open to learning from other people.

37. “To open a shop is easy, to keep it open is an art.”

Starting a business is simple in comparison to keeping it.

38. “We all like lamb; each has a different way of cooking it.”

Entrepreneurship is like an art: there is not always a right and wrong way of pursuing your business goals. Let your personal taste and style as an entrepreneur be your strength.

39. “Who is not satisfied with himself will grow; who is not sure of his own correctness will learn many things.”

Remember you don’t know everything. Actively seek out advice and information, and you will learn.

40. “A smile will gain you ten more years of life.”

What’s the point in owning a business if you’re not having fun with it? If your business doesn’t make you smile, then it’s the wrong business for you.

Confessions of a Micro-Manager

I know that modern management books and HR people at seminars tell you that you should hand duties to your staff and let them get on with it. Great in theory, but I hear from a lot of business owners that it doesn’t work. “People never listen”, they say, or “They only do a half-arsed job and take twice as long as me”. So what is going wrong?

A common scenario is that the owner is handing over control of some relatively important jobs and not following up like they should, often because it was a job that they didn’t like anyway and were glad to get rid of it. It may not be a core production job (most owners like to keep those) but an equally important support job that is equally as critical to the success of the business. Maybe invoicing, for example. What often happens is the owner ABDICATES the job to another person rather than DELEGATING it. There is a big difference and it is around the process used and the control retained by the “delegator”.

Like many things in business, delegation is a process and involves several steps. Miss one or two and the process breaks down, the job doesn’t get done properly and the boss gets (more) stressed. So step one is to delegate properly, don’t abdicate.

Until you feel VERY confident that a staff member is competent, check and re-check what they are doing until the process is as smooth as a machine running in a bath of oil. Then check some more. Have the staff member report back to you on a regular basis on what is happening, the roadblocks they are facing and the progress they are making towards activity and performance goals. That might be a DAILY reporting process for some tasks. Like President Ronald Regan said during the cold war, “Trust, but verify”.

Keep control of the cash. There are some areas of small business that I am loathe to encourage an owner to delegate. One is the control over the bank account. By delegating (read abdicating) control over the accounts payable function in particular, a business owner can lay themselves open to less than ethical employees taking advantage of the situation and starting to steal money. I remember being in a network group a few years ago and one of our members was a panelbeater. He employed an office lady to look after the accounts as it was an area that he didn’t like and had little interest in learning about. The office lady was actually the wife of a good friend of his. Not long after employing her, the panelbeater’s wife developed cancer and grew steadily worse. They had 2 young children who needed attention and this started to take an increasing amount of his attention, which was not unexpected in view of the situation. Unknown to the panelbeater was the fact that his office lady had a gambling problem and she started to siphon money out of the business to feed her habit. Remember, this was a family friend who on the face of it was saying she would look after the accounts so the panelbeater could tend to his gravely ill wife. The stealing was eventually uncovered after the business started to perform poorly and an audit was conducted, but tens of thousands of dollars had gone.

The moral of this tragic and true story. Trust no one! I am not saying that you need to retain all the day-to-day accounting function yourself, but don’t pass over control of this area until you have some strict policies and reporting functions in place. If you don’t understand about money matters, learn about the critical issues and find a good accountant to help you put good control measures in place.

It’s okay to micro-manage a bit. Wear your control freak label with pride.

Visit our website for more information here: Coaching in Business

Ten Things to Think About Before Going Global

Like any sound business plan, the first step is doing your research and taking a breath to think clearly. Here are ten factors to consider before taking the plunge and going international:

Point 1. PLAN at least a two-year lead time for world market penetration. It takes time and patience to build a successful export business, especially in Asia where relationships take longer to develop.

Point 2. DECIDE how much you can afford to invest in your international expansion efforts. Pick a figure based on a share of domestic profits and stay with that consistently.

Point 3. CHOOSE the appropriate model for entering the market. This may be a simple export model of manufacture in NZ and ship to an importer overseas, or maybe something else. Joint venture or a licensing arrangement may be more effective. Offshore manufacture in a third country may be required. Don’t assume it is a 1-size-fits-all strategy decision.

Point 4. FOCUS on a narrow product or service offering. The same principal that is necessary to dominate a market niche in New Zealand is even more essential overseas. Don’t try to be all things to lots of people. Stick to one small segment and do it well. What is your USP?

Point 5. RESEARCH to identify your prime target markets. You want to find out where in the world your product will be in greatest demand. Try to look for an unsatisfied need or even better, a problem that needs fixing.

Point 6. ADAPT your product for export. This may be basic labeling requirements or more significant design changes. What regulatory and legislative requirements are there? Know this before you make an expensive mistake.

Point 7. FIND a good lawyer, a banker with international experience, a good accountant and wily transport specialist. Good advice is expensive, but bad advice is MORE expensive. I can help you put an export plan together that has the benefit of 25 years of export experience behind it. I don't have every answer, but if you make half the mistakes I made and learn from my experience, you can't go too far wrong!

Contact me via my website here: Mentoring and Coaching

Point 8. INSIST on clear terms, conditions and other financing options, in advance. Never sell on open account to a brand new customer, EVER.

Point 9. PROVIDE an awesome customer experience. Ensure this extends to well after the sale is made and keep the lines of communication open all the time, even if that means some very late nights on the phone.

Point 10. MAKE contact with your customer at the heart level as well as the head. Learn to embrace the culture of your customers and aim to incorporate a bit of it into your own life. Learn to enjoy these new experiences.

Icon Business Solutions website is here: Coaching in Business

Andy Burrows

Business Advisor - Email me here

Cash Flow: The Lifeblood of Your Business

The latest MYOB Business Monitor Survey for April showed that the leading concern for most of the 1000 owners they surveyed was around cashflow issues. With current estimates indicating that approximately 90 per cent of business failures are the result of poor cashflow, the level of concern is hardly a surprise. Don’t let your business be one of them.

Maintaining smooth cash flow requires juggling nearly every facet of a business, from staying on top of accounts receivable, to extending lines of credit, to managing inventory. The essence of successful cash flow management is regulating the money flowing in and out of your business, to reduce the amount of fixed capital that you need to support the given level of your business.

A lot of business owners we talk to often suggest that the way they want to increase cash flow is to increase sales. Strange as it may seem, this can kill a business faster than by doing nothing. The reason is that the business may be “cash negative” (consuming more cash than it generates) and so the extra sales generated need to be financed by additional borrowing or capital injection by the owners. This can drive the business into a worse position than it already was. It is essential that a Net Variable Cash Flow analysis is done on the business FIRST before additional sales are chased.

I can do this for you at no cost so either email me to make an appointment or contact me through the website here: Cashflow solutions

So, what can be done to turn a negative Net Variable Cash Flow situation into positive territory? Try these ideas to start:-

1. Organize your billing schedule

The faster your receivables turn over, the more capital you'll be able to spend on growing your business. Make sure you send bills out promptly each month and put in a system to flag any overdue accounts for immediate follow-up. Put in a documented credit management system and stick to it.

2. Stretch out your payables

Take the maximum amount of time allotted (often 60 or 90 days) to pay your suppliers. Think of these terms as an interest-free line of credit from your supplier. It gives you sufficient time to collect receivables without spending money on short term credit lines. Perhaps use the interest free period afforded by credit card companies and use your credit card for purchases. Just make sure you pay it all off on the due date!

3. Take advantage of early payment incentives

If your suppliers offer you a discount for paying early, take them up on it. Think of it this way: a 2% on a 30-day invoice is equal to a 24% annual return if the money was invested. If your suppliers don't offer this kind of incentive, ask for it; they may be willing to offer the discount in return for speeding up their receivables.

4. Balance your client base

Is there any opportunity to change some of your clients into a regular paying regime (retainer for a set number of ongoing services), rather than a project-by-project basis only? This may reduce profitability a little, but will help to smooth out cash flow. Institute a deposit system for larger projects where the client pays something up front and regular progress payments.

5. Check your pricing

When was the last time you raised your prices? Many small businesses hesitate to increase their rates because they're afraid they'll lose customers. However, customers actually expect their suppliers to institute small, regular price hikes. Also, check out your competition on a consistent basis. If they're charging higher prices, you should too.

6. Reduce your inventory

Liquidate older inventory by having a sale and turn that stock into cash. Once you have done that be careful of bulk offers by sales reps that can result in becoming over-stocked again. It is tempting to take advantage of a seemingly great offer by a persuasive sale rep, but how fast can you sell all that extra stock and what extra margin will you make?

Once some of the strategies listed above have been implemented and the business is stable and has a positive Net Variable Cash Flow, you can go out there and chase those extra sales, safe in the knowledge that the bank balance will be going up, not down.

You can find out more here: Coaching in business

Andy Burrows

Senior Advisor - Icon Business Solutions

Email: andyburrows@iconbusinesssolutions.com

Web: www.iconbusinessolutions.co.nz

Icon works with the owners of independent businesses to help them make more MONEY, build better TEAMS and allow the owner to spend MORE TIME where they want to.

Up Your Quality Game for a Big Jump in Business Profits

Research shows that most SME’s lose between 5%-15% of sales revenue as a result of the lack of attention to quality¹. Lose this much revenue and a significant portion of net profit is lost as a result, holding companies back from growth and providing a decent ROI to its owner. In addition, buyers in domestic and international markets are demanding that their suppliers operate quality management systems as a means of ensuing strong commitment to quality, productivity, cost competitiveness, and customer satisfaction.

So what can an owner do about this? Traditionally organisations throughout the world are using tools such as the ISO 9000 series of standards to help them achieve high standards of quality. However the ISO9000 standard is a big beast and requires a company to commit considerable management and financial resources to implement it. After all the ISO 9000 standards were originally developed for large manufacturing companies supplying products and services to the defence, aerospace and nuclear industries.

A more workable option needed to be developed that better suited the small business situation in NZ where the owner is often driving such initiatives. A good example of such a model has been put together by Telarc Limited, a New Zealand management systems certification body. They have developed the Q-Base Code quality management system for SME’s in the early 1990s. If improving your quality game, eliminating mistakes and satisfying customer requirements for a quality guarantee is needed in your company, then this Q-Base code should be looked at.

There are seven clauses in the Q-Base Code. To become registered you need to meet the requirements of each clause. You will need to write down what you do in a way that works for you. Briefly, here’s what you need to do:

• Assign a staff member to the job of Quality Coordinator

• Have a way of controlling critical documents and records

• Have a way of understanding your customers’ needs

• Have a system for purchasing

• Train staff for the work that they do

• Have plans for inspecting work, both in progress and when finished

• Have a method for continual improvement.

Even this Q-Base code will take some time and effort to implement, but the great thing about improving quality control processes is that any savings in production costs and reduced mistakes goes STRAIGHT TO THE BOTTOM LINE. To achieve the same increase in profits by focusing on growing revenue is likely to take much longer and take far more resources. Aim on working smarter, not harder.

Find out more here: Small business coaching

¹Sirma Karapeeva, Ministry of Economic Development