I recently saw a question on Linkedin that got me thinking of business growth. (Have you achieved any notable business growth in the recent few years?) In this economy, business growth is on everyone’s mind. Although the economy remains uncertain, growth opportunities exist as evidenced by our own clients and their success. As 2011 draws to a close, its time to think about how you’ll grow your business in 2012.
1. Where are you currently experiencing growth? It’s easy to develop blinders to your business growth if you’re only focused on revenue. Growth doesn’t always come in the most obvious ways. Other areas of business growth to track include profit, referrals, website visits, sales appointments, etc.
2. How can you capitalize on the growth areas in your business? Albert Enstein defined insanity as “doing the same thing over and over again and expecting different results.” Focusing on the bright spots of growth in your business – and making the most of them – puts an end to the craziness.
3. How can you target growth industries? Five industries are targeted for growth in 2012 and beyond. These include:
testing/eductational support including tech schools
internet/technology especially start-ups with big ideas and capital
ecofriendly products and services
residential and commercial construction especially specialty contractors like drywall specialists, glass contractors and architects
health care industry including acupuncturists, massage therapists, yoga instructors, physical therapy, and those providing elder care
What can you do to promote your products or services to these industries and grow along with them?
Growing your business in any economy has its challenges but during times of economic uncertainty, it requires the best from everyone on the team. Although you feel like a team of “one”, you may discover that you have more brain power and skill at your disposal by learning to enlist, engage, and involve vendors or suppliers to help grow your business.
When my dad launched his diesel repair business in 1972, business was simple. It was easy to be skilled in his craft and knowledgeable (not skilled) in a variety of areas needed to run the business, such as planning, finances, and marketing. That is certainly not today’s business environment. Information is coming at us at an accelerated rate. Keeping up with new developments in one’s own field of expertise is a challenge. Staying relevant in industries not core to your business, yet vital to your success, is near impossible. Reaching out for assistance is the first step to growing your business.
1. Seek experts (vendors/suppliers) for your business. Steve Jobs made growing a business look simple. How did he do it? He surrounded himself with expertise so he could focus on his true talents.
You’re the master at your craft…your core business, therefore you want to look for specialists in the areas of human resources, legal, bookkeeping & accounting, sales & marketing, graphic/web design, IT support, and business coaching. (I saved the best for last.)
Ask your trusted colleagues and valued friends for referrals, explore online, or draw on the search capabilities of Linkedin.
2. Interview several vendors/suppliers. One size doesn’t fit everyone when it comes to finding the right support so you’ll want to interview three to four specialists for each vendor position to ensure the right fit. Take your time with the interview process. Educate them on the way you do business. Ask about their standards of excellence, rate of dependability, and commitment to ongoing learning. You want a team of experts that works proactively on your behalf to pull your business forward.
3. Engage your team of experts quarterly. Once you’ve identified your team of experts, actively engage them in growing your business by meeting with them quarterly. Ideally, it’s best to meet with your entire team simultaneously in person or by phone. This ensures everyone is playing from the same game plan and is a major time saver for you, the busy entrepreneur.
4. Replace as needed. A business is only as strong as its weakest link. Even the most thorough interview process doesn’t always reveal chinks in the armor. ‘Replace early and replace often’ is our motto. Although that sounds harsh, your business can’t afford to be held back by vendors/suppliers that are slow to respond or reactive to your business needs.
As a small business entrepreneur, you need talented vendors/suppliers on your team. And, you need them before a problem arises! Building your team of experts now saves you a tremendous amount of time, money, and brain cells.
What other ways do you engage your vendors in growing your business?
There comes a time in the life cycle of your business when you need to consider the type of entity you want it to be.
If you’re a reader of this blog, then you’re already focused on business strategy, and legal planning should be a part of your arsenal. As an attorney that primarily works with entrepreneurs in southern California, a frequent question I’m asked is how to formalize a business and what the best entity route to take is. There is a virtual alphabet soup of options out there, and the IRS self-help info available is not what I’d call an enjoyable read. Here is a handy “cheat sheet” to introduce your entity choices and important considerations, to help you maximize your time with your tax professional, business consultant, and lawyer. This should not be the substitute for legal advice, but a way to help you start the conversation and organize the research material you gather.
Why does choice of entity matter?
Your business is unique, and your entity should be, too. What’s right for your artisan jam business may not be right for a tech startup. It affects how much you’ll pay in taxes, what happens when one of your vendors or customers sues you, how you grow your business in terms of raising money, bringing in partners and employees, and how much paperwork you’ll have to do.
Sole Proprietorship is a common form for small businesses that do not have a lot of startup capital. The setup paperwork and licensing involved is primarily at the city or county level. You are taxed as an individual, and all debts, profits and liabilities are yours personally. This is a popular choice in California to avoid paying the corporate tax. However, it leaves you unprotected in case of a lawsuit, and makes it difficult to raise money as you grow.
“C Corp” is shorthand you may have heard for a “C Corporation.” Incorporating your business will create a separate entity. It is taxed and treated separately, and there are stringent filing requirements with the secretary of state. You’ll have to register for a tax ID with the IRS and state in order to pay yourself. You’ll have to maintain corporate paperwork, file updated statements and pay fees regularly. The benefits are limiting your liability in case of a lawsuit, you can issue stock or offer stock options to employees, and you’ll appear more attractive to investors and talent.
Variations on the theme: S Corp
You may have heard about the “S Corp.” S Corporation is not a separate entity, it is an election you can make with the IRS to have your corporation taxed differently. You enjoy the legal protection benefits, but your profits and losses “flow through” to your personal return. There are restrictions on who may own a majority share in an S corporation, such as U.S. residency. S Corps are still subject to the yearly franchise tax in California as well.
A Limited Liability Company is a hybrid between a corporation and a partnership, and is very customizable. It allows members to have the limited liability of a corporation without the paperwork compliance load, and the tax benefits and hands-on management control of partnership. Generally it requires more than one member.
If you want to run your business with one or more people (or companies), a general partnership is another option. California requires filing with the secretary of state, and apportionment of taxes amongst partners. All partners can be directly involved in managing business affairs, but also can be held personally liable.
A Limited Partnership is a variation on the partnership structure to allow partners to enjoy tax benefits and limited liability. The catch is, only one General Partner is permitted to manage the day to day affairs of the business, and does not have limited liability. The Limited Partners only maintain a passive investment role. This may be more appropriate if you are seeking to partner with other corporations.
But wait! There’s more!
As you can see, there are many choices too complex to fully analyze in one post. I haven’t even dipped a toe into the fascinating waters of professional entities, and business entities you can form in other states. Hopefully this will give you some food for thought and discussion topics with your business advisors. —Nicholle Mineiro, http://lawbydesign.wordpress.com
Synnovatia is a strategic coaching firm that is detailed and knowledgeable about business. i have a small business that grew from $150K to $750K because of the goal setting and resources that Synnovatia provided. It saves me years of learning on my own.