March 2023 - Page 5 of 13 - BOLLYWOOD SURKHIYAN

5 Reasons for Writing Business Correspondence

What is an effective business organization? The answer to this is quite broad and diverse. But there is one aspect of business operations that is often neglected. This is business writing.

Effective business communication is important in the daily operation of a company. Moreover, it can dictate whether the company earns or loses money. In addition, it affects the business organization at different levels from the individual up to the corporate leaders.

1. To convey information

The essential role of business writing in an organization is to share information. Whether it is the latest sales statistics or sale projection, a business plan, a marketing proposal, proper communication of data is essential. The success of a business organization depends on the quality of information that passes through its people.

2. To justify an action

Another reason why people communicate is to justify or explain an action. One example to this is writing an incident report. The person explains what happened so that the company can understand an event better. Justifications and explanations require that the author put as much detail as possible to communicate his thought clearly.

3. To influence action

Business writing is often a way to influence other people. A good example of this is presenting a business proposal, a marketing plan or a project proposal. By detailing pertinent information, the author seeks to affect the decision. Influencing others is a hallmark of effective business communication.

4. To deliver good or bad news

The workplace is a dynamic place. It offers employees both good and bad news on a daily basis. Through proper business communication, the bad news is properly written to soften the blow. Likewise, good news is highlighted just to give emphasis. This can range from getting a pay raise to sharing the company’s achievements. On the other hand, this can offer grim realities like suspensions, or even layoffs.

5. To direct action

Lastly, effective business writing aims to direct the reader to the right actions. Many company documents like SOP manuals, employee handbooks, technical instruction manuals and the like offer explicit information. In order for a corporate correspondence to direct the action of the employee, it must be clear and concise. Unfortunately, many failures in communication result due to unclear and conflicting statements.

Having these 5 reasons of corporate correspondence in mind, an author can effectively write business communication. Furthermore, the proper writing style stems from a clear and effective business writing purpose.

Earned Revenue – The Most Important Source of Income For Nonprofits

Especially in the current economy, if you manage a nonprofit, I highly encourage you to diversify your revenue sources. If you plan to stay solvent, you don’t want to over-rely on any one source of income. Having multiple streams of revenue will increase the likelihood that your business will sustain over the long term.

A common misconception about nonprofits is that they can’t and shouldn’t make a profit. This is totally untrue. A nonprofit is a business and it should make a profit. It is unfortunate that the majority of people who start nonprofits don’t fully understand how to develop a nonprofit business model that generates sufficient revenue to make a profit. It’s fairly simple, you create a product and you sell it.

Let’s look at some real life examples so you have a better idea of what I’m talking about. The Quicksilver Track Club is an elite track and field training program that works with at risk youth. Their mission is to train kids, build their athletic ability so they can get college scholarships. As you can see if you visit the website, the registration fee is $235 per year. The program is not free. Yes, they’re serving economically disadvantaged kids, but it costs money to deliver this service. Far too many people who start nonprofits want to give their services away for free and you just can’t operate a business without revenue. And without a clear understanding of this basic concept, you cannot build a successful nonprofit.

Another earned revenue option is the sale of tangible products. The American Cancer Society has mastered the art of selling products. On their website you can purchase jewelry, shirts, jackets, watches, and a myriad of other wares. They have a crystal beads bracelet that sells for $18.99. If they sell 1,000 of these in one month, they’ve generated $19,000.00. Their tote product sells for $12.99. Again, selling 1,000 of these will generate $13,000.00. At the time I wrote this article they reported on their website that they raised $58 million dollars through their various fundraisers and sale of products.

Making A Way Housing, Inc. earns the majority of its revenues through the rental of real estate. The organization’s core activity is providing affordable housing for homeless persons and those undergoing treatment for alcohol and substance abuse. The residents pay rent that is subsidized by grants. Rental fees are not market rate, but they’re not free either. They have 70 two-bedroom units. Each unit is occupied by two residents who may pay between $100-350 per month. At these occupancy rates, they can generate between $14,000 and $49,000 per month.

I like to use the illustration of the pie chart. A pie has multiple slices. For the nonprofit, each slice represents a revenue source. I propose that the most important and the largest slice of any nonprofit’s revenue pie should be earned revenue. The wise person is the one who develops their nonprofit business model with earned revenue as the cornerstone.

21 Secrets to Franchise Business Success

1) Evaluate your tolerance for risk

Opening a new business is a scary prospect. There’s a lot of personal, professional and financial risk to consider. It’s natural when contemplating such a profound step in your career to look at ways to manage your risk and increase your chance of success.

The Small Business Administration conducted a survey that found 62% of non-franchised businesses failed within 6 years. A separate study by the United States Chamber of Commerce found that 97% of franchises were still open after 5 years.

The research conducted by these independent third party organizations clearly demonstrates that choosing a franchise business carries significantly less risk than starting a business on your own.

2) Work with what you’ve got

Making a list of your strengths is easy. But when launching a business, it’s also important to make an honest assessment of your weaknesses.

Before you get to work selecting a franchise, take the time to develop a list that honestly depicts your strengths and weaknesses as a potential business owner. Then use this profile as a tool to help with the decision making process.

Ask franchise owners questions about the duties they perform, and compare the job requirements to your profile. If the business has the potential to be a good fit, the skill sets required to run the business will either be skills you already have or skills you can learn quickly. If this is not the case, it’s best to keep looking.

If a certain aspect of a franchise has a steep learning curve but the business is otherwise a great fit, you may want to consider hiring someone experienced with that position. If this is the choice you make, be sure to include their salary and benefits in the financial business plan.

3) Remember to run the business

Many potential franchisees make the mistake of thinking they’re limited to buying a franchise in their current field. In fact, this might be the worst way to go.

Some franchises will not allow someone skilled in a particular industry to buy a franchise in that industry. For example, a mechanic may not be allowed to purchase an auto repair franchise. Skilled technicians sometimes find the transition from hands-on work to management work difficult to make, and are tempted back onto the floor to do the job they’re familiar with.

The problem with this is that you grow the business by running the business, and what a franchisor wants to see on the bottom line is growth. A business owner needs to be out networking, marketing and interacting with customers. If there’s too much work on the floor of an auto repair franchise, then the owner – even if he’s a highly skilled mechanic – needs to hire more mechanics.

Basic business skills are transferable to any franchise. If your current position involves universal roles like sales, marketing or accounting then your franchise options are practically unlimited.

4) No business is recession-proof

There’s no such thing as a business that can’t be impacted by a faltering economy.

There are, however, certain industries that are considered recession “resistant.” These are generally products and services people can’t do without no matter how much they’re cutting the budget.

The good news is there are hundreds of great franchise opportunities in recession resistant industries. The following are just a few examples:

Top recession resistant industries: Food · Automotive · Healthcare · Medical·Clothing · Education

Recession resistant franchise industries: Fast food restaurants· Automotive maintenance, parts and repair · Weight loss and fitness · Resale shops and discount (dollar) stores · Education (tutoring) and child care

5) Objectively evaluate professional advice from personal sources

Friends and family have your best interests at heart, and their advice comes from a place of love and concern for your well-being. No one would suggest making the personal, professional and financial commitment to launching a business without consulting your loved ones.

But friends and family are not subject matter experts and their advice can – intentionally or not – discourage a new business venture. The people who love you worry about what could happen if you fail, and their instinct will be to protect you from the risk.

When it comes to the final decision whether or not to proceed with purchasing a franchise, of course you will carefully weigh all the advice you’ve received. The key is to rely most heavily on the advice offered by industry professionals.

6) There’s no such thing as a free lunch

There are countless “free” franchise brokers and consultants out there claiming to offer unbiased information on franchise opportunities. They will work with you to assess your needs, and use your professional profile to help make recommendations on franchise opportunities that may suit you.

The problem with these services is that they get paid by the franchises for selling franchises. That means they are naturally only going to show you options they’ll get paid for. And in the case of high profile franchises that may offer them 2 to 4 times the average commission, there’s a real risk they may steer clients to those businesses whether they’re a good match or not.

These broker services may have access to detailed data on several hundred franchises and they can be a great source of information. Just be cautious about their recommendations, and get a second opinion before investing your money.

7) Tune out the hype

Never before was the adage “if it sounds too good to be true, it probably is” more applicable. You’re going to hear a lot of hype – good and bad – while assessing potential franchise opportunities.

Between marketing blitzes and human nature, it’s easy for success stories to spread like wildfire. Think about the guy who lost weight eating Subway – that story is so pervasive it’s become almost impossible to separate the allegory from the restaurant in the public’s perception. The hype surrounding that marketing campaign will have an impact on potential Subway franchisees for the foreseeable future.

It’s also natural for people to look for something to blame when things go wrong. Because of this there are also going to be negative, emotionally charged franchise stories in circulation. However, keep in mind the nuanced details that created such situations are never discussed; only the attention-grabbing outcomes.

No one is suggesting you completely ignore these stories, because hidden beneath the hype there are likely valuable lessons to learn. Learn from them what you can while keeping in mind what they are: unique situations with complex back stories that probably have no bearing on your success whether or not you choose the same franchise.

8) Look beyond the big brands

Sometimes it’s easy to forget there are thousands of franchise opportunities out there, because the big name brands get all the attention. When you’re in the early stages of your search, it’s a good idea to bypass the overblown marketing of the huge franchises and make an effort to learn about the “no-name” franchises in your industry of interest.

There are quite a few advantages to lesser known franchise brands. For instance, they are often cutting edge concepts that can get a lot of marketing attention. Lesser known franchises haven’t yet saturated your local market. And they’re usually less expensive to start up, which means less financial risk.

Of course, you may be looking for the security and benefits that come with a big name franchise. Criteria such as national marketing campaigns, standardized employee training, management support and strong purchasing power may be at the top of the checklist for what you’re looking for in a franchise, and there’s nothing wrong with that. But if you’re not interested in being another instantly recognizable box in another strip mall, then a ‘no-name’ franchise might be for you.

9) Look beyond the price tag

Just because a franchise is more expensive does not mean it will be more successful.

It’s important to evaluate every aspect of a franchise – financial projections, monthly franchise fees, franchiser support levels, issue response time, customer base and marketing, to name a few. The price tag is a factor to consider, but should not be the sole criterion for evaluating the quality of the business opportunity.

Once you narrow down your preference to a particular industry, conduct due diligence on 2 to 3 franchises in that industry. Gathering adequate information on several comparable franchises will allow you to make an informed decision.

10) Comparison shop

Once you decide a franchise is right for you, keep looking.

If you decide to purchase a franchise of Coffee House A, then it’s time to start looking for reasons not to buy it. Build a list of questions, and then go talk to owners of Coffee House B and Coffee House C.

Be blunt – ask the competing franchise owners why they feel their business is better than Coffee House A. Ask them what made them choose B over A and C. Ask them if they would recommend you buy the same franchise, and don’t stop digging until you’re clear on the why (or why not) of their response.

Build a spreadsheet comparing the details of the franchises. Include data such as the benefits offered, financial commitment required, estimated monthly expenses, commercial lease requirements and franchise fees.

If your franchise preference stands up to the scrutiny, then you’re on the right track.

11) Contact current and former franchisees

The best way to find out if a franchise is right for you is to go behind the scenes and ask a lot of questions.

Before making a buying decision, prepare a list of questions. Contact at least five current franchisees and make an appointment to discuss your interest in the business. Whatever else you discuss, be sure to ask the questions you prepared.

Try to arrange an all day job shadow session with at least two current franchisees. This will allow you to observe the daily operations of your potential future business without committing to personal financial risk.

Contact several separated franchisees to learn about their experience. Understanding their reasons for getting into – and out of – the franchise can impact your decision.

12) Do your due diligence

All franchises are not created equal, and it’s your job to sort them out. The information is out there – all you have to do is go get it.

Conducting due diligence on a franchise opportunity should include:

· Check with the Better Business Bureau for complaints

· Check with the State Attorney General for complaints

· Speak with the franchisor

· Request a Franchise Disclosure Document (FDD)

· Attend a discovery day with the franchisor

· Make at least 10 calls to current and separated franchisees

· Make appointments to meet franchisees and visit the operation

· Job shadow a franchise owner (or owners) for at least a day (longer, if you can)

· Repeat as necessary

The purpose of due diligence is to reduce your risk. All the steps are necessary, but the most important step is interviewing and job shadowing a current franchise owner.

Some franchise owners will allow potential franchisees to spend weeks at their business learning the ropes. They may be willing to share detailed financial data, and can confirm or refute claims made by the parent company. A franchise owner can answer questions the franchisor may be legally bound from discussing. You may be able to make assessments about your own management style or potential business location by observing theirs. Visiting operating franchises in the course of due diligence may be the single best method for evaluating your potential success with a franchise opportunity.

13) When the time is right, hire a legal and financial team

Getting expert advice on the legal and financial aspects of a potential franchise purchase is essential. Some buyers skip this step to save money, but this is not the place to cut corners. The relatively small fees a lawyer and accountant charge pale in comparison to the enormous financial loss you’ll incur if the business fails.

Bringing in the legal and financial experts too soon in the purchase process can also be a mistake. Their professional opinions are necessary and valuable, but their advice can be expensive and potentially counterproductive in the early stages of your search. It’s crucial to remember when seeking their input that they should not choose the franchise for you.

Bringing in an accountant too soon can mean paying for them to run Profit & Loss data on every franchise that catches your eye. This onslaught of numbers can cloud your judgment, particularly if they’re taken outside the context of in-depth, due diligence research on each business.

Bring in an attorney too soon can mean paying them to review the Franchise Disclosure Document (FDD) for every franchise that strikes your fancy. Studying detailed franchise information at such an early stage with a legal advisor who doesn’t understand your personality, lifestyle and professional preferences can be detrimental to your search. You could end up inadvertently being talked out of the perfect business.

Waiting to bring in legal and financial advisors until your franchise choices have been narrowed down dramatically is not just cost effective. It’s the logical way to use the team’s expert advice to your best advantage.

14) Feel the fear and do it anyway

The best way to manage your fear of buying a new business is to manage your risk. The best way to manage your risk is to learn everything you can, then proceed according to what you’ve learned.

Start the process with no intent to purchase. That removes the chance of getting so excited about business ownership that you take an irrevocable leap with the first prospect you research.

Above all, ask yourself “can I picture myself doing this all day?” If the answer is “no,” then be grateful for what you’ve learned and move on to researching a different industry.

The research and due diligence processes get easier with practice. It may take a few attempts to find the perfect franchise, but your efforts are not wasted. By actively engaging in the search, you’ve made yourself familiar with the process. And there’s no fear in the familiar.

15) Go it alone

Business partnerships are appealing on the surface because the idea of splitting costs, liability and workload is tempting. But it’s nearly impossible for any two individuals to work together as much as necessary to launch a new business without problems developing.

If it is a financial necessity to form a partnership in order to purchase your franchise, it’s crucial to define the roles each partner will play well in advance. If at all possible, try to structure the partnership so you own 51% and have the power to make binding decisions for the business.

Entering a partnership is not to be taken lightly, and should not be done without consulting your attorney.

16) Lease, lease, lease

Most franchises provide detailed specifications on the type of commercial real estate required to launch the business, and many will assist with the search for an appropriate property.

Leasing a commercial property is nearly always preferable to purchasing one. The capital required to purchase a property is better reserved to fund operating costs for the first few years. It’s also preferable to sign short lease terms with options to extend rather than committing to a long lease term.

Because many commercial leases include taxes and assessment fees buried in the fine print that can cause financial problems for your business, it is very important to have your attorney review any commercial lease before you sign it.

17) Don’t forget you’ve got to eat

One of the most common mistakes people make when working up a financial business plan is forgetting to pay themselves. This simple oversight is at the root of a lot of failed businesses.

In a perfect world we would all have enough in savings to go a year without a paycheck, and everything a new business makes could go right back into making it stronger.

The reality is we’ve all got bills to pay. It’s important to be honest and thorough when estimating the salary the business will need to pay you. Cutting yourself short will create enormous problems, especially if your fledgling business can’t afford to give you a raise yet.

This is one area where decisions you make for the business directly impact your personal life. The franchise isn’t going to do you much good if your heat’s turned off and the bank is foreclosing. Taking extra care with this critical detail could someday save more than just your business.

18) Consider alternate financing options

In the current economic climate, strict lending standards are making it harder than ever to get a commercial loan issued. When loan approval is a problem, it is worth considering your 401(k) or IRA as a resource for purchasing your business.

These self-directed retirement structures do permit individuals to actively invest their retirement funds into a business without taking a taxable distribution or incurring early withdrawal penalties. A successful use of this financing method offers the chance for a greater potential return on your money than the original investments.

Using your retirement funds to purchase a business is not to be taken lightly. But if done right, having your own business could be the best retirement plan of all.

19) Lead by example

If you’re not working hard for your business, neither will your employees.

At the end of the day, the only one who cares if your business succeeds is you. This is not the time to kick back and count the money. In fact, that attitude is the quickest way to ensure that soon there won’t be any left to count.

Even the most diligent business owners may forget that employees can’t see through the office door. They have no idea you’re calling customers, ordering supplies, writing a marketing plan, reviewing applications and trying to find a way to cover next week’s payroll. For all they know, you’re taking a nap.

When an employee sees a manager coming in late, leaving early and taking long lunch breaks they think the worst. They don’t understand that you came in late because you attended a 7 am referral group meeting. They have no idea that your lunch ran long because you were signing a deal with a big new client. It doesn’t occur to them that you left early so you could attend a Chamber of Commerce networking function.

Communication with your employees can help them see you’re working as hard as they are. Share your growth projections and help individuals set goals to meet them. Bring key employees to client meetings. Send high performing employees to networking functions in your place. By giving your employees a role in growing the business, they’ll take pride in supporting your success.

20) If you don’t love it, don’t buy it

Confucius said “Find a job you love and you’ll never work a day in your life.”

If you wake up in the morning and dread going to work, your franchise will not be successful. It’s as simple as that.

The beauty of franchising is the endless variety of options – there’s literally something for everyone. You just need to devote the time and effort to figuring out which one will make you hop out of bed every morning, happy to be doing what you love.

21) Use every resource at your disposal

Investing your personal, professional and financial future in a franchise opportunity is a big decision. Use every source of information you can find, and compare the data to make sure you’re getting the whole story.

How Small and Medium-Sized Businesses Can Plan For ERP Implementation

Introduction: Proper Planning to Reduce Risks of ERP Failure

In the first article, we discussed how a well-structured system assessment scorecard can help Small and Medium-sized Enterprises (SMEs) mitigate enterprise resource planning (ERP)[1] implementation failure risks at the system acquisition stage.

In this article, we outline certain steps SMEs can take to mitigate ERP implementation failure risks in the subsequent phase of implementation: the planning phase.

Briefly defined, the planning phase is the stage during which the organization prepares to “ERP-ize” its business. An ERP project requires much more than the mere installation of an IT software system. It requires organizational restructuring.

Generally, SMEs have to restructure their operations to satisfy the business flow parameters defined by the ERP software. These days, most ERP software packages are pre-customized to sectors according to certain industry best-practices.

The extent of organizational restructuring that is required depends on the structure of existing business processes, and on the technical and functional requirements imposed by the ERP software.

As with any complex restructuring project, ERP implementation is accompanied by certain risks of project failure. For example, failure can result from a runaway implementation that causes the project to become uneconomical. It can also result from organizational rejection of the restructured environment where such rejection impedes the achievement of the projected efficiencies.

In the following sections, we elaborate on these particular risks of implementation failure and how effective implementation planning can mitigate these risks.

Failure Risk 1: Run-Away Implementation

If an SME is planning to implement ERP, its primary reason for doing so is probably to achieve cost efficiencies. According to 2009 research by the Aberdeen Group, the need to reduce operating and administrative costs continues to be the main driver of ERP acquisition in the SME segment [2].

Since financial reasons drive the decision to implement ERP, it is critical that the implementation be completed within budget. A failure to deliver an economical implementation will mean project failure.

Since this section deals with ERP-related finance, it is important to briefly discuss some of the underlying principles.

The cost side of an ERP budget is based on a total cost of ERP ownership (TCO) calculation. TCO is the sum of the present values of system, maintenance and service costs. System and maintenance costs are fixed and largely determinable in advance.

In contrast, service costs are usually highly variable and difficult to project with accuracy. Further, service costs are proportionately significant. In 2007, service costs accounted for 45% of TCO for SMEs. Put another way, for every $100 an SME spent on ERP software, it spent an additional $81 on service [3]. As you will have probably guessed, service costs mainly reflect implementation costs.

Poor scheduling, improper resource allocation, project delays and scope creep (i.e. unplanned increases to the project’s scope) are the usual culprits for runaway implementation costs. The first three are generally well understood. Scope creep deserves a bit more attention.

During implementation, there is a holy-grail temptation to “ERP-ize” certain business processes that were not included in the original project plan. The rationale supporting a scope increase is that incremental efficiencies will be gained by “ERP-izing” the additional tasks. Implementation seems like the perfect time to widen the scope: the project is underway, consultants are on site and the teams are dedicated.

These temptations must be resisted. Implementation is seldom the right time to widen the scope (except for dealing with unforeseen items that must be addressed).

The reason the temptation must be resisted is because the argument favouring unplanned scope changes only accounts for the benefits side of the financial equation. Incremental costs must also be considered. These costs include direct service costs as well as the opportunity costs of delay. With respect to the latter, every unplanned day that the SME is unable to operate under the new system is a day of lost efficiencies.

It is fair to assume that an ERP project scope is designed to maximize the net ERP benefits (net benefits = cost efficiencies – costs). This means that all components of the project that yield a positive net benefit are accepted. It also means that all components that yield a negative net benefit (where the incremental costs exceed the incremental efficiencies) are rejected. Unplanned scope increases are typically components that would yield negative net benefits, i.e. they would be unprofitable. Since they diminish the return on ERP investment, these components should be rejected.

The following graph (omitted) depicts the relationship between a project’s gross costs, gross efficiencies and net benefits (net benefits = gross efficiencies – gross costs). As seen by the Net Benefits line, the ideal project plan is at Point A. At this point, all profitable components are accepted and all unprofitable components are rejected. Any project plan that lies to the left of Point A would mean that the plan could be profitably expanded. Any project plan to the right of Point A would mean that unprofitable components are being accepted. Scope increases are generally components that lie to the right of Point A.

The above profitability analysis explains why incremental scope changes are both unnecessary and unbeneficial to the project. As time passes, these incremental changes will either be ignored or implemented as part of a profitable optimization plan.

In summary, a well-structured plan can mitigate the financial risks associated with overly broad scope definition and scope creep. Such a plan will help keep the ERP project within budget and on time.

However, even if financial risks are mitigated, other types of failure risk still threaten the project’s success. One such risk is that certain key people will reject the new ERP system and/or the restructured business processes.

Failure Risk 2: Improperly Managed Change

Restructuring is a necessary evil. It causes the SME to undergo significant and disruptive changes. For example, the SME’s organizational and reporting structures will likely change as departments are shifted. Its operations will likely change as business processes are re-engineered. Daily tasks will likely change as manual tasks are automated. All of these changes mean that employees, management and executives will have to unlearn old habits and learn new ways of doing business.

Some people will embrace the challenges and opportunities presented by the change. These people will help move the project forward. However, there will be those who fear the uncertainties associated with change. These people may resist the project and may risk undermining its success.

Change resistors are powerful forces. Even relatively innocuous-seeming resistance can thwart success. Consider, for example, the case of a sales person at a manufacturer who decides not to input an order into the new ERP system. Instead, the employee calls the order into production – the way he had always performed the task under the old system. Although the order is now in the process queue, it was not registered in the ERP planning system.

This one omission can have severe and far-reaching consequences. Automated production planning, shop floor scheduling and material movements planning become inaccurate and unreliable. These inaccuracies will prevent sales people from providing accurate lead time quotations. As a result, sales relationships will become strained and customers will be lost. The unplanned production backlog will also cause an increase in inventory-related costs. Further, real-time performance reporting will become less accurate since the reports fail to include certain transactions. Unreliable reports will negatively impact management’s ability to make important and timely decisions.

In summary, a failure to buy-in to the new system and processes can cause the organization to fail to reap the efficiency and informational benefits of ERP. The result: an uneconomical ERP investment.

The above is but one example of a change resistor. Generally, an organization faces different groups that resist change for different reasons. Common examples of resisting forces include:

· A union that objects because its members’ job functions would change as a result of process re-engineering and automation.

· Employees who object because they have performed the same manual assembly tasks for 20 years and are afraid of or don’t want to learn new processes.

· Managers who object to donating their “A-players” to the implementation team. The loss of key performers would almost certainly have a negative impact on departmental performance.

· Executives who object to short-term business interruptions caused by the restructuring project, notwithstanding the long-term benefits. This moral hazard is caused by an incentive system that rewards the executives for short-term performance. Interruptions may cause the SME to miss compensation targets.

Fortunately, many of the various human capital forces that can sabotage an ERP-driven restructuring can be mitigated at the planning stage.

Good Planning Lessens Failure Risks

A good implementation plan accomplishes two goals:

1. It presents a clearly marked and easy-to-follow roadmap to implement the process changes and ERP system; and

2. It prepares the organization and all potentially affected stakeholders to adapt to the changed environment.

A plan that achieves these twin goals will significantly help the implementation project’s prospects for success.

Although each plan should be customized to meet the SME’s particular needs, there are certain fundamental principles that can frame the design of every project plan. These principles relate to project championship, project plan design and team formation.

Project Championship

Top management is ultimately responsible for allocating time, resources and money to the project. Its collective attitude towards the project filters down and impacts organizational commitment to the project. Consequently, top management support can make the project while its absence of support can break the project.

Given the importance of executive commitment, the project requires a top-level manager to convert the non-believing managers. This person must be both fully committed to the project and capable of influencing others’ commitment. In his capacity as project champion, this person will be responsible for ensuring that the project remains a top priority and is allocated the resources that are required. In other words, the project champion acts as an advocate who drives change, encourages perseverance and manages resistance. Ultimately, it is this person who legitimizes the project and the accompanying organizational change.

Project Plan

The project plan is a formal document that is instrumental in preventing runaway implementations and change resistance.

If done properly, the project plan helps prevent runaway implementations by memorializing the project deliverables on a timeline and allocating a specific budget to each deliverable. Each deliverable should be broken down into manageable and measurable tasks. A well conceived roadmap prevents scope creep, cost overruns and project delays.

The details of the project plan should be (to the extent necessary) transparent throughout the entire organization. Communicating the project plan will diffuse a portion of the organizational anxiety by eliminating ambiguity about the project and the future state of the organization.

In terms of its components, the main project plan should, at a minimum, include the following:

Project Charter:

This is an articulation of the project’s mission and vision. It clearly and unambiguously states the business rationale for the project.

Scope Statement

This defines the parameters of the project. The scope is broken down into measurable success factors and strategic business accomplishments that drive the intended results.

Target Dates and Costs

This sets out individual milestones. Identifiable, manageable and measurable goals are established. Target completion dates are set. Each individual milestone is valued. This step articulates the breakdown of the project into discrete sub-projects.

Project Structure and Staff Requirements

This sets out the project’s reporting structure, and how that reporting structure fits into the larger organizational structure.

The main project plan should be supported by whatever subsidiary plans are necessary. Common examples of subsidiary plans include: IT infrastructure and procurement plan, risk plan, cost and schedule plan, scope management plan, resource management plan, and communications plan. For present purposes, these last three subsidiary plans deserve a bit more attention.

Scope Management Plan

This is a contingency plan that defines the process for identifying, classifying and integrating scope changes into the project.

Resource Management Plan

This sets out individual assignments, project roles, responsibilities and reporting relationships. It also sets out the criteria for back-filling positions and modifying project teams. Further, this plan details human capital development and training plans. Finally, where necessary, it sets out the reward system used to incentivise project performance.

Communications Plan

A communications strategy is critical to manage change resistance. This plan codifies the procedures and responsibilities relating to the periodic dissemination of project-related information to the project teams and throughout the organization. Examples of common channels include email newsletters, press releases and team meetings.

A good project plan is only effective if the project teams are capable of executing the recommendations. For this reason, team formation and training are critical parts of the planning phase.

Team Formation

Successful execution requires an enabling structure. Like many well-structured organizations, an ERP project structure should contain a steering committee that has executive-level strategic responsibilities; a core team that has managerial-level delegation authority; and functional teams that are responsible for implementing the changes.

To facilitate communication and decision-making, each hierarchy level should have a member who is represented on the level below. For example, the ERP project manager should sit on both the steering committee and the core team, and certain key users should sit on both the core team and a given functional team.

The Steering Committee

The project steering committee should be comprised of the chief executive officer, the CIO, executive level business managers, and the ERP project manager. The committee has strategic-level responsibility for reviewing and approving the project plan, making changes to the plan and evaluating project progress.

The Core Team

The core team is responsible for managing the implementation project. It should be comprised of the ERP project manager, functional leads, the outside consultants and certain key end-users.

Functional leads should be top-performers who are reassigned to the implementation project on a full-time basis. They should be experts in their respective departments, should understand other departments’ business processes and should be knowledgeable about industry best practices. In many cases, functional leads will have to be backfilled in their day-to-day jobs.

During the planning phase, the core team is trained on the fundamentals of ERP theory and on the particulars of the ERP software. The purpose of the training is to ensure that the core team is capable of managing the development of the new business processes.

Functional Teams

These teams are responsible for implementing the business process changes in their respective functional departments. Each functional team is comprised of a core team key end-user, select end-users that cover all of the functional unit’s business processes, and a functional consultant with an understanding of the ERP software.

Organizing committed and capable teams is critical to the project’s success. The project teams will be responsible for managing the implementation and helping the organization adapt to the new business environment.

Conclusion

ERP implementation is a complex project that involves significant operational restructuring. The restructuring is accompanied by certain risks of project failure, including runaway implementation and resistance to change.

Fortunately, an SME can mitigate many of the ERP failure risks by properly planning for the project. At a minimum, proper planning requires a project champion to secure executive buy-in, the preparation and communication of a project plan that breaks the project down into manageable sub-projects, and the assembly of strong teams capable of executing the project.

[1] Briefly, an ERP system is intended to electronically integrate an organization’s functional areas, administrative areas, processes and systems.

[2] Jutras, C. (2009). ERP in the Midmarket 2009: Managing the Complexities of a Distributed Environment. Boston: Aberdeen Group.

[3] Jutras, C. (2007). The Total Cost of ERP Ownership in Mid-Sized Companies. Boston: Aberdeen Group.

Pricing Strategies for Your Services

What’s the best way to price a product or service? What are the things that you have to take into consideration? Most business owners who are not very sure what to do will simply use their competitor’s pricing and either price below it or above it. The question to ask then is, how would you know that their pricing strategy is right?

Let’s look at the factors you need to take into consideration when pricing. First, you need to determine your pricing objectives. It basically defines what we want to achieve. There are 3 pricing objectives to consider.

1. Revenue-Oriented Pricing

It is setting a price that will maximize revenue from the target market. For example, if your daycare centre is offering something which other daycare centres are not able to offer such as a particular curriculum, then you can consider this objective.

2. Operations-Oriented Pricing

It seeks to balance supply and demand. It introduces cheaper prices during the lull periods (or when demand is low) and raises prices during peak periods (when demand is higher). For example, during the holiday season, when parents do not send their kids in, you can offer short courses / electives.

3. Target Market Pricing

It uses different prices for different target markets. For example, you can offer parents who put more than one child at your daycare centre a discount from parents who only place just one child at your centre.

Next, you need to think about the pricing strategy you are intending to adopt. Pricing strategy defines how you are going to achieve your objective. There are 3 different strategies in which you can adopt.

a. Market skimming

Do you think that your daycare centre or its services generates added value? Do you think your customers will be able to afford it? Are you the only or selected daycare centre that is offering it? If you answer is yes, then you can consider market skimming. It basically involves charging the highest possible price. You will need to decide if whatever you are offering is something which the customer values. For example, you are offering a particular curriculum which other daycare centres are not offering and you think that this value added curriculum is something which your customer will be willing to pay for. Or your centre is the only centre in town that closes at 8pm and it is something which you think your customer values and is willing to pay for. To charge a higher price will also mean that you need to communicate that to your potential customer through effective promotional means.

b. Market penetration

If there are a number of daycare centres and all of you are offering basically the same curriculum or services, then you should consider penetration pricing. It basically means keeping the price low in order to gain a greater market share.

c. Price adaptation

The last and most complicated strategy is price adaptation. It is offering different prices to different target market. For example, parents who places 2 or more children at your daycare centre is offered a discounts. But what happens when one of the sibling becomes of school going age. It might be difficult to revert back to the higher price.

Pricing strategies is something which plague many business owners. Whilst pricing lower might mean higher chances of increasing recruitment, the low prices might mean that you need to cut back on some luxuries such as quality meals or curriculum, which could impact the image of your daycare centre. Therefore, it is important to think very carefully before setting a price because in most instances, it’ll be difficult to reverse that decision.

Increase Business Revenue With an Innovation Strategy

Innovation provides many ways to increase revenue in your business. A properly managed innovation strategy can increase sales of products or services. An increase in sales can result from new products or services, as well as the introduction of new features for existing products or services.

Increased business revenue can result from:

New customers that are attracted to your innovative products or new product features. These new customers may also purchase other products and services from your company.
Existing customers who purchase your new products in addition to the products they previously purchased. This situation builds stronger customer relationships while expanding product sales.
Existing customers who begin purchasing more frequently due to the new product innovations. Your new product features may cause existing customers to consume more products, or buy more of your products as “replacements” for products previously purchased from a competitor.

Promote your business as an “innovator” and show the market how your products offer unique benefits. Look for new product features that have the potential to become the “must have” features in your market. Tell people why these new product features are so valuable – give examples. Establishing yourself as an innovator in your market builds your customer loyalty and produces valuable word-of-mouth advertising.

Let’s consider an example. In a particular market, certain individuals have not purchased a particular type of electronic device due to perceived problems or confusion with operating the device. However, when a version of the device with an innovative user interface is developed by a new company, these individuals purchase the product from the new company due to the ease of use. This new device with the new user interface performs the same basic function as other devices in the market, but the “must have” feature is the easy-to-use interface. In this example, the innovative product brings new customers into the market and increased revenue for that company.

When developing an Innovation Plan, be sure to consider opportunities to increase business revenue with both existing customers and new customers. Also, consider how innovative products (and product features) can attract new customers who have not previously purchased products in your market. Implementing new product features that satisfy unmet needs in the market is a great way to increase sales.

Market Research Strategies For Small Businesses

Have you ever done any market research? If not, you may be missing some valuable marketing ideas and information that you could capture by doing some research. Market research is a vital part of the process that most small businesses or start-ups neglect to do. However, it could be the single most important thing a new business does prior to formulating their business plan, location or marketing strategy.

Marketing research is the process of gathering data and opinions from consumers, employees, or a specific subgroup within the public, to improve decision making and reducing the risk associated with those decisions. Individuals/businesses can use information gained from marketing research to assess awareness, attitudes, perceptions, or opinions on products, services, advertising, brands, and/or companies. The two types of research are qualitative (words) and quantitative (numbers).

Qualitative research is an in-depth analysis of relatively few respondents, which provides a holistic insight and understanding of the issue at hand. For example, if a company is interested in testing company logos, qualitative methods would provide rich data.

– Focus Groups are an “informal” gathering of 6-10 people from your “target group” to have an in-depth conversation of opinions on your product, brand, advertising, and other areas of your product and/or service.

– Face-to-face interviews typically involve a one-on-one conversation with your consumers or decision-makers. These methods can be more expensive than a traditional survey, but will provide a more comprehensive evaluation.

Quantitative research seeks to summarize data and typically applies some form of statistical analysis. Using this method, for example, a company could measure their customer’s level of satisfaction and then, in turn, make internal changes to increase that satisfaction.

– Researchers should use surveys or questionnaires when trying to measure an audience’s opinions more accurately.

*Telephone surveys are often the most expensive, but are the most effective at getting respondents to complete the survey.

*Mail surveys can be relatively inexpensive, but the response rate on a mail survey is typically 3-10% and takes more time to conduct. These cannot be used when results are needed quickly.

*Online surveys are relatively new, but growing fast in popularity. With online surveys, you can ask survey questions, but also get feedback on things such as logos (using picture files) or commercials (using streaming video).

*Intercept interviews are a tool a company uses when they do not have a list of their customer base, such as a restaurant or a sports team, but would still like to measure their customer’s satisfaction.

For the small business owner it might be helpful to hire a marketing company or market research firm to help with these types of in-depth research however it’s not to say that you couldn’t ask your current clients or contacts as well on your own. Just remember you do not have to do all of this yourself, it’s always good to consult with experts in areas that you are not familiar or experienced with so it’s the best use of your time and it gets done right.

Now what do you do with all that great qualitative and quantitative information when you receive it? It is imperative that you work it into your marketing materials, Web site, correspondence, sales presentations, advertising and many other areas of your marketing plan. When you find out what your target market wants or likes, it is important NOT to ignore those results.

Smart Diversification Strategies Skyrocket Your Business

Diversify to Manage Risk Effectively

Many factors determine a booming business. Diversification is a strategy commonly adopted by businesses to boost sales and profits from new products and/or markets. Depending on the stage that your business is in, diversification can offer many benefits, such as buffering your company from major fluctuations in the industry. As an example, if your business is only involved in the production and export of corn; an outbreak of plague that affects corn crops would adversely impact your company.

However a diversified company with several unrelated businesses or revenue streams would be better positioned to manage the crisis because its funds and resources are not completely tied up in any one sector.

In addition, diversifying also enables your company to explore new markets and opportunities.

Explore New Opportunities

There are numerous types of diversification undertaken by businesses. Concentric diversification occurs when a firm leverages its existing knowledge and ventures into an industry similar to the one it is already in. Horizontal diversification, on the other hand happens when a business incorporates products or services that are unrelated to its current products to its mix, aimed at attracting current customers. For example, a shampoo manufacturer engaging in horizontal diversification might introduce anti-frizz hair serums to boost sales.

As a real-life case study, Australian owned company Wesfarmers undertook horizontal diversification by establishing Kleenheat Gas in the 1950s. Its earlier operations included wool and wheat merchandising and oil distribution to remote areas. The Kleenheat Gas venture tapped into another aspect of the energy industry and proved successful.

Diversify Wisely

Diversification strategies that are meticulously planned and executed have the potential to deliver great results. Some businesses may opt to diversify (overseas or locally) for several reasons, including a pessimistic outlook on the stability of the established market and improving the adaptability of their company to financially uncertain and difficult times. It may be that your company is “forced” to diversify in response to difficult economic conditions or it could be due to new opportunities that present.

Business diversification varies widely – firms may venture into an industry entirely unrelated to their current specialisation or develop a new product line similar to their existing products. No matter the type of diversification, it is important for companies to consider several factors:

Financial Planning

Expanding globally or starting a new product line from scratch is costly – does your company have the financial ability to do so? A good tip is to look through your accounts and assess how you can improve your business productivity prior to diversifying.

Market Research

Thorough market research and analysis is vital to the success of any business venture. The process often reveals important information, such as the profitability and feasibility of your proposed product or service in the target market and the strengths and weaknesses of your competitors.

Competition

Who are your biggest competitors in your target market? Sound market research offers insight into your strongest rivals and enables you to tailor your product or service so that your business has a competitive edge.

On the flip side, undertaking diversification without proper planning can lead to great volatility and little benefit overall. It’s easy to spread your capital too thinly when diversifying without proper financial planning and market research.

Acclaimed investor Warren Buffett said, “Wide diversification is only required when investors do not understand what they are doing”. Over diversification may prove to be inefficient, increase a company’s investment cost and lead to below average returns. Certainly, diversifying is not something to be entered into lightly without proper due diligence. However, if the planning and research is sound and the scope for business growth is there, it may well lead to exciting new opportunities.

Legitimate Online Home Based Business Opportunity

Are you looking for a legitimate online home based business opportunity? This has become of great interest for many people since there is a lot of money to make online that has become apparent in recent years. This has caused many people to try different tactics to make money online but unfortunately, scams have risen out of this in an attempt to make money off those that are trying to find a true legitimate home business opportunity.

The only way to have a successful home business is to begin with a solid foundation and make sure you have the tools you need to run the business. For starters, you need to have a business plan or at least a guide to what your new company is going to be about. For instance, do you plan to sell an actual product or is the business more service oriented? For example, starting a consultant agency is definitely going to be a service or advice that people are buying as opposed to something tangible they can hold.

The next step in preparing for your home based online business is to have the office space or some part of the home designated for your business. You’ll need to have a computer, Internet connection, and a phone. You will also need to set up a website that explains your business. Do not take this step lightly since your website is what gives visitors a first impression so you want to make it good. If you do not know how to set up a website, this may be your first expense as a new business.

You will also need to have your website optimized so that the search engines, namely Google begin to index your site in the search results. You can do this by using keywords that are the most searched as they relate to your business and then build quality articles around these keywords. All of this might sound small, but if you can’t get traffic to your site, you will not have many new customers.

It’s important to use other free marketing strategies for your new online home based business opportunity that you’ve undertaken. One of the hottest ways to do this is via social media marketing. This includes the social media websites such as Facebook, Twitter, and Pinterest. You can use these to get more people to your website and interested in your product or service. Building a new home business takes time and there are true legitimate opportunities available, you simply have to take the time to do your research to find one that best suits your interests.

Christopher Benoit

http://www.WorkWithChrisBenoit.com

Rules to Setting Business Goals and Objectives: Why and How to be SMART

We all know that nothing runs without a plan, and a plan cannot run without having its objectives set.

That applies to any kind of plan, whether we’re talking business or personal finances, university degrees or NGO programs, website promotion or weight loss.

Setting objectives and milestones is of crucial importance for any planning activity and is the core of its success, or failure.

Knowing how to set objectives is not exactly rocket science in terms of complexity, but any strategist should know the basic rules of how to formulate and propose objectives. We will see in this article why objectives play such a major role within a company’s planning and strategic activities, how they influence all business processes, and we will review some guidelines of setting objectives.

The Importance of Setting Objectives

One might wonder why we need to establish objectives in the first place, why not let the company or a specific activity just run smoothly into the future and see where it gets. That would be the case only if we really do not care whether the activity in discussion will be successful or not: but then, to use a popular saying, “if something deserves to be performed, then it deserves to be performed well”. In other words, if we don’t care for the results, we should not proceed with the action at all.

Setting objectives before taking any action is the only right thing to do, for several reasons:

– it gives a target to aim to, therefore all actions and efforts will be focused on attaining the objective instead of being inefficiently used;

– gives participants a sense of direction, a glimpse of where they’re going to;

– motivates the leaders and their teams, since it is quite the custom of establishing some sort of reward once the team successfully completed a project;

– offers the support in evaluating the success of an action or project.

The 5 Rules of Setting Objectives: Be SMART!

I am sure most managers and leaders know what SMART stands for, well, at least when it comes of establishing objectives. However, I have seen some of them who cannot fully explain the five characteristics of a good-established objective – things are somehow blurry and confused in their minds. Since they can’t explain in details what SMART objectives really are, it is highly doubtful that they will always be able to formulate such objectives.

It is still unclear from where the confusion comes: perhaps there are too many sources of information, each of them with a slightly different approach upon what a SMART objective really is; or perhaps most people only briefly “heard” about it and they never get to reach the substance behind the packaging.

Either way, let us try to uncover the meaning of the SMART acronym and see how we can formulate efficient objectives.

SMART illustrates the 5 characteristics of an efficient objective; it stands for Specific – Measurable – Attainable – Relevant – Timely.

1. Be SPECIFIC!

When it comes of business planning, “specific” illustrates a situation that is easily identified and understood. It is usually linked to some mathematical determinant that imprints a specific character to a given action: most common determinants are numbers, ratios and fractions, percentages, frequencies. In this case, being “specific” means being “precise”.

Example: when you tell your team “I need this report in several copies”, you did not provide the team with a specific instruction. It is unclear what the determinant “several” means: for some it can be three, for some can be a hundred. A much better instruction would sound like “I need this report in 5 copies” – your team will know exactly what you expect and will have less chances to fail in delivering the desired result.

2. Be MEASURABLE!

When we say that an objective, a goal, must be measurable, we mean there is a stringent need to have the possibility to measure, to track the action(s) associated with the given objective.

We must set up a distinct system or establish clear procedures of how the actions will be monitored, measured and recorded. If an objective and the actions pertaining to it cannot be quantified, it is most likely that the objective is wrongly formulated and we should reconsider it.

Example: “our business must grow” is an obscure, non-measurable objective. What exactly should we measure in order to find out if the objective was met? But if we change it to “our business must grow in sales volume with 20%”, we’ve got one measurable objective: the measure being the percentage sales rise from present moment to the given moment in the future. We can calculate this very easy, based on the recorded sales figures.

3. Be ATTAINABLE!

Some use the term “achievable” instead of “attainable”, which you will see it is merely a synonym and we should not get stuck in analyzing which one is correct. Both are.

It is understood that each leader will want his company / unit to give outstanding performances; this is the spirit of competition and such thinking is much needed. However, when setting objectives, one should deeply analyze first the factors determining the success or failure of these objectives. Think of your team, of your capacities, of motivation: are they sufficient in order for the objectives to be met? Do you have the means and capabilities to achieve them?

Think it through and be honest and realistic to yourself: are you really capable of attaining the goals you’ve set or are you most likely headed to disappointment? Always set objectives that have a fair chance to be met: of course, they don’t need to be “easily” attained, you’re entitled to set difficult ones as long as they’re realistic and not futile.

Example: you own a newborn movers company and you set the objective of “becoming no. 1 movers within the state”. The problem is you only have 3 trucks available, while all your competitors have 10 and up. Your goal is not attainable; try instead a more realistic one, such as “reaching the Top 5 fastest growing movers company in the state”.

4. Be RELEVANT!

This notion is a little more difficult to be perceived in its full meaning; therefore we will start explaining it by using an example in the first place.

Imagine yourself going to the IT department and telling them they need to increase the profit to revenue ratio by 5%. They will probably look at you in astonishment and mumble something undistinguished about managers and the way they mess up with people’s minds.

Can you tell what is wrong with the objective above? Of course! The IT department has no idea what you were talking about and there’s nothing they can do about it – their job is to develop and maintain your computerized infrastructure, not to understand your economic speech. What you can do it setting an objective that the IT department can have an impact upon, and which will eventually lead to the increase you wanted in the first place. What about asking them to reduce expenditures for hardware and software by 10% monthly and be more cautious with the consumables within their department by not exceeding the allocated budget? They will surely understand what they need to do because the objective is relevant for their group.

Therefore, the quality of an objective to be “relevant” refers to setting appropriate objectives for a given individual or team: you need to think if they can truly do something about it or is it irrelevant for the job they perform.

5. Be TIMELY!

No much to discuss about this aspect, since it is probably the easiest to be understood and applied.

Any usable and performable objective must have a clear timeframe of when it should start and/or when it should end. Without having a timeframe specified, it is practically impossible to say if the objective is met or not.

For example, if you just say “we need to raise profit by 500000 units”, you will never be able to tell if the objective was achieved or not, one can always say “well, we’ll do it next year”. Instead, if you say “we need to raise profit by 500000 units within 6 months from now”, anyone can see in 6 months if the goal was attained or not. Without a clear, distinct timeframe, no objective is any good.