Getting to success as an entrepreneur requires determination, conviction, and an unyielding passion in the pursuit of a dream that is so compelling there is no defeat in their lexicon.  It also requires understanding what the requisite cost of entrepreneurship is; that is to say, the out-of- pocket expenses that are required to see your dream take shape and establish a road map for success. These include:

• Market opportunity assessment
• Preliminary financial analysis
• Financial risk analysis
• Startup strategy
• Technology commercialization plan development (if applicable)
• Intellectual property protection (Patent)
• Business plan development
• Funding option analysis and strategy
• Investor presentation
• Business coaching/mentoring.

Most of the fledging entrepreneurs I deal with have not considered these preliminary action steps and are quite often unprepared for the out-of-pocket costs (or investment) associated with these actions.  These costs are not to be associated with funding your enterprise. These are the preliminary costs associated with forming your concept and developing the business plan to attain it.  In the best of all worlds, a new entrepreneur would undertake several preliminary actions such as conduct a market opportunity assessment, a financial analysis, identify financial risks and establish a startup strategy as a precursor to developing the all important and necessary business plan.

If the fledging entrepreneur does have the time and expertise to complete these actions on their own, there is little cost other than the cost of a decent to good business plan template, and their sweat-equity to develop a business plan.  In this case, to be successful, the entrepreneur should have one or more mentors, possibly even an advisor, to provide external guidance, review and support the development of the requisite planning documents.

However, in most cases the fledging entrepreneur does not have the requisite experience nor the time required to appropriately address the preliminary actions and business planning to ensure a successful venture.  At this juncture the alternative is to work with a management consultant with expertise in new venture and startup business planning, strategy and execution on a fee-basis to develop a business plan and execute strategies to attain the desired business objective; which is typically achieving first and second stage funding.  In fact, choosing the right management consultant is as important as properly budgeting for the cost of entrepreneurship and planning for success.   And this should and must be a reasonably accepted cost and investment factor just as angel or venture capital financing is.

So the question at this point is, “what is a reasonable fee for a business plan?” Business planning fees are typically, although not entirely, determined on the basis of the time and expertise, professional services rendered, the nature and value of the advice and deliverables provided, and the value of the intellectual property conferred to the client. Fees can range from a very low level such as $3,500 upwards to and exceeding $15,000, with most in the range of $5,000 to $10,000.  A professionally developed business plan warrants such consideration since the intended audience is the investor who expects a high quality, comprehensive, distinctly written and very well prepared business planning document, coupled with a financial forecast and an investor presentation; at the minimum.

There is ‘no cheap’ in a quality written business plan or with quality business planning services. The management consultant providing these services does so having accumulated several years of expertise and education in business, management, finance, new venture development, capital formation, business and strategic planning and entrepreneurship. A fixed-fee priced business plan will quite often be heavily discounted relative to the actual value or cost associated with developing a high quality product if it were priced on an hourly basis. For instance a good business plan priced out at say $5,000 is likely ‘five’ times that in value when considering the time it takes to build the business plan and the hourly rate, at which a management consultant charges for services; which in my experience ranges between $100 and $150 per hour but can be much more.

There is never, nor can there be, a full guarantee, that a professional written business plan will 100 percent of the time attain necessary funding. However, there is a significantly higher probability that funding will be obtained with a professionally developed business plan vs. one that is not.  The cost of business planning must always be factored into the total cost of entrepreneurship when considering a new venture. It is one of the critical and strategic costs of establishing a new venture.

About the Author

Mr. Sandy Graham, MBA, MS/BA Economics, has over 20 years’ experience with new ventures, Stage I and II growth companies, Fortune 1000 organizations and Fortune 50 companies. His management consulting competencies include business and strategic plan development, market analysis, business opportunity assessment, profitability analysis, financial forecasts, feasibility studies, investor presentations, startup strategy and business coaching/mentoring.

The word sequence means “an arrangement of two or more things in a successive order or an ordered set of related ideas such as an action or event that follows one after another”. In mathematics, a sequence means an “ordered infinite set of mathematical entities in one-to-one correspondence with the natural numbers, such as {1, 3, 5, 7, 9}, or it can be infinite, such as {1, ¹/₂, ¹/₃, ¹/₄, … ¹/_n }. In cards, it is a “a set of three or more consecutive cards, usually of the same suit”.  The word ‘predetermined’ means “to determine beforehand”.  So from these definitions, we can see that a “sequence of predetermined steps”  is actually an arrangement of related ideas or a sequence of steps that follow one after another in a series that has been determined beforehand.  “Action” is defined a “something done or performed that may be characterized by physical or mental activity”. So in the clause “a sequence of predetermined actions”, when combined with “…to complete future organizational objectives..”, we have the essence of what business planning is: a sequence of predetermined steps or actions to meet an organization’s objective, such as business development goals.

In my experience there are two levels of business planning. The business plan followed by the strategic plan, or what I like to refer to as ‘the strategic growth plan’. My definition of a business plan is the ‘development of the business road map for success, where a strategic plan (or strategic growth plan)  is defined as ‘establishing and executing a systematic plan of action to attain business (growth) goals’.  I am combining business and strategic plans under the broad term ‘business planning’ from the point of view of developing the appropriate series of actions to meet critical business objectives. There are corporate distinctions that allow for separate business planning, strategic planning, strategy, and business development. However, when looking to determine what is necessary to attain a future goal or objective, planning is a required activity to arrive at and attain critical business development goals.

Concerning business plans, there are two versions that are important to business success. The initial business plan all new ventures and startups thru Stage Two small business growth companies  must have in place to define the road map for success and to obtain necessary funding.  The next version of a business plan is one that an established organization develops from an existing business plan to ensure the company is on the right road to success. This is not just an update to the initial or original business plan, but is one that strategically addresses critical business issues, refines and fine-tunes the target market with industry updates and new market data; including company performance in the market, updates executive management information, and  includes a 3 to five year financial performance examination.  I call this the advanced business plan.

In developing the advanced business plan, the process begins with an assessment of an organization’s current business situation that typically comes about through a series of questions, such as:  What are you most passionate about from a business, market perspective? What drives your economic business engine? What can you be, or what are you, the best in the world at; that is what do you do better than anyone else? Do you have the right executive management team in place to attain your vision, and grow your company?  Are you competitively organized to optimize corporate core competencies to grow market share? What is your biggest obstacle to growth? Are you encountering a clouded vision and direction for growth? Do you have a defined vision for attaining growth? Have you planned how to attain strategic business objectives? Do you have positive cash flow? Do you have a business plan in place, and are funding needs achieved?  If developing a new technology, has a commercialization plan been development?  The answers to these questions must be integrated into the advanced business plan that should include additional financials on sales forecast.

The essentials of a business plan include the core areas of a strategic plan, however it is a streamlined version in that it should be succinct, limited; in my opinion to no more than twenty pages, and used to layout the specific road map for attaining success, as well as attracting necessary funding. The advanced business plan should be the basis for developing a corporate strategic plan focused on growing business; call this the strategic growth plan. It is an internal document for business planning purposes, and not necessarily for funding purposes, although it can be revised accordingly to fit a funding need.

A strategic plan provides the comprehensive strategy for attaining business growth, and provides the actionable steps to accomplish business initiatives, objectives, mission and course of action to follow in attaining business development goals. It is the master plan that provides the ‘how’, ‘why’ and ‘when’ to accomplish objectives and by ‘who’. The tenets of a strategic plan will typically emerge from the advanced business plan and focus on long-term, strategic growth objectives.  Jack P. Friedman defines strategic planning as “a management process involving determination of the long-term objectives of the organization and adoption of specific action plans for attaining these objectives.” 

According to Friedman, there are five interrelated elements of strategic planning: 1) analysis of the market environment; 2) establishing objectives; 3) performing a situational or SWOT analysis; 4) selecting alternative strategies; and 5) implementation and monitoring the strategic plan. The strategic plan is developed from the viewpoint of the corporation and business entity where the focus is on the accomplishment of strategic business objectives, and will address four critical questions: Who are we? What do we do? Where do we want to go? How do we get there?

In conclusion, the process of business planning must be goal oriented and focused. Keep in mind, business success begins with a vision that becomes a goal achieved by a strategic plan; given that goals are the cornerstones of achievement. In achieving business development goals,  addressing a set of critical business situation questions as a precursor to first developing an advanced business plan will lay out the foundation for the necessary strategic plan that, when executed, will be the management guide, tool and process to reach business development goals.

The first criterion is Envision, and as a transitive verb means “to picture in the mind; imagine, to conceive or see something within one’s mind; to imagine.” This requires visualizing where you want to go or what you want to achieve.  The second criterion, Plan, is a verb defined as “a scheme, program, or method worked out beforehand for the accomplishment of an objective….”  A plan is this context will be the course of action,  such as a business plan and/or a strategic growth plan; where a business plan  provides the business road map for success, and a strategic growth plan establishes the systematic plan of action to attain business growth goals and objectives. As a systematic business development tool, a strategic plan provides the comprehensive strategy for attaining business growth, and the action plan for attaining business initiatives, objectives, mission and course of action to follow in attaining your vision. It is the master plan that provides the ‘how’, ‘why’ and ‘when’ you will accomplish your objectives and by ‘who’.

Execute is the third criterion to be accomplished, and is also a transitive verb meaning “to carry out fully, put completely into effect, to make or produce (as a work of art) especially by carrying out a design”.  The fourth criterion is Attain and as a transitive verb means “ to reach an end, such as achieve or attain a goal”. That is to attain an end result in business, envisioning the goal, planning how to attain it, then executing the plan produces the winning result.

Practicing client-focused business development by meeting the envision, plan, execute, plan criterion is the basis for strategic business growth. A company that is fully optimizing its core business competencies,  structured to maximize competitive advantages and has a strategic business growth framework grounded on identifying, understanding and meeting client needs; running smoothly on all cylinders if it were, is positioned to for Business Growth Optimization, and attain business development objectives.

Business Growth Optimization cannot be contrived, contrite or minimized in anyway. It requires an unrelenting passion and desire to accomplish strategic business goals and objectives that are focused directly on growth.  I contend achieving Business Growth Optimization requires an eight-step process:

1. Become an authentic leader.
2. Take Action; make the decision to proceed then move forward.
3. Assess the current business situation.
4. Envision the strategic objective.
5. Develop the plan of action.
6. Execute plan.
7. Attain the objective.
8. Achieve Business Growth Optimization.

Step One requires a little explanation, and it comes from my book, “See the Green$: Achieving Your Entrepreneurial Dream”.   Authentic Leadership is an internal strength to forge ahead in the face of obstacles, based on a strong moral compass; focused on a vision, living a balanced life, with personal integrity. The authentic leader drives Steps Two thru Eight by ensuring he or she has the right executives in place that will successfully initiate Step Two and reach Step Seven, providing the forward vision, motivation and conviction for attaining and maintaining Full Business Growth Optimization.  Step Two requires the conviction, determination and commitment to take action. Often this is the most difficult place to start for any sized business enterprise firmly engaged in day-to-day business operations. But to succeed at full business optimization and achieve strategic business development objectives, it is critical. Step Three involves conducting a full assessment of the present business situation. This step produces the “is” in understanding what the current business climate, conditions, and processes are that define present business operations. It also looks at what the organization core competencies are to leverage in gaining market share. Step Four involves envisioning the desired objective; the desired result and outcome.  Step Five involves developing the plan of action to achieve or attain the desired result; it provides the “what, how, when and where” to attain the objective.   Step Six is the execution of the plan.  Step Seven is the actual end result; the attainment of the objective. Step eight is the point at which the business enterprise transcends mediocrity and becomes growth oriented and bound.

My experience suggests that Business Growth Optimization occurs at the point where a company is fully maximizing its core competencies to increase market share and achieve business growth objectives as a result of ‘continuous wins’ which keeps them on their increasing returns growth curve, as opposed to reaching a point of diminishing returns and eventual stagnation, and possible collapse.  When I say Business Growth Optimization, I am not referring to search engine optimization, mathematical optimization or any biological process; although invariably it does relate to the process of innovation, adaptation and to a point, assimilation typical to the fields of natural science.

In my experience, attaining Business Growth Optimization involves an archetype similar to what I define as consisting of  a SOLE Framework, achieved through the establishment of a Hedge Hog Model and implemented or executed through what I have called the Cultural Competitiveness Organization structure. That is:

The SOLE Framework where SOLE spells out the framework:

• Solve client business issues and meet strategic objectives,
• Optimize growth by meeting customer needs,
• Leverage business core competencies, and
• Establish a competitive baseline to achieve success.

The Hedge Hog Model was made famous by Jim Collins in his masterful book “Good To Great” and refers to what a business entity can be the best in the world at; what a business entity is most passionate about; what it sees as its primary purpose; and what drives the business entity’s economic engine. These are developed within a three-circle format where the intersection of the three form the Hedge Hog Model.

The Cultural Competitiveness Organization is based on organizational shared values, direction, mission and belief that the primary focus of an organization is to first meet customer needs, followed by employee empowerment to meet those needs, community involvement, using common business sense approaches towards conservation, and then attention to stockholders interests to establish a strategic competitive advantage in a market segment.

I view these three strategic pieces or legs of the business growth optimization archetype as a highly integrated and efficient process, or system, which allows for back-in-forth lines of communication on the progress of  growth and in meeting strategic business development objectives.  This archetype provides for a combined compass, barometer and gyroscope necessary to maintain focus on market opportunity horizons that are linked to and captured through an envision, plan,  execute, attain business development campaign.

Know Your Customer – Your customer is the primary focus of your business enterprise. Identifying who your customer actually is, followed by knowing your customer needs, is essential in meeting growth objectives. Staying connected with your customers via email,  web site, face-to-face conversations, and special customer appreciation programs, such as offering a monthly customer discount, strengthens your customer base and lets you know who your customer is. Think of it this way; a customer-centric organization gains a competitive advantage over competition, which typically results in a bigger share of the market.

Know Your Market Opportunity – Next to knowing your customer, knowing your market opportunity is next in importance. Simple questions such as —“What is your strategic market opportunity? How well do you know strategic market opportunity?” And where is your strategic market opportunity?” are your common how, where and what questions that a business enterprise must address. For instance, how do you see your market? , where is your market”, and what is your market?  Business growth is extricably linked to market opportunity, and how well you capture it. In my experience business growth is a function of envisioning your strategic market opportunity, planning how to acquire it, executing your plan, and then working your plan to attain it.

Cultivate and Maximize Your Brand –  Brand recognition has become critically vital to small business growth as much as knowing your market, customer development, product and service credibility, growth strategy, pricing, cash flow, and having the right executive team in place. Your brand is the ‘face’ of your small business enterprise and how well recognized it is well directly impact your business growth. Cultivating and maximizing brand recognition is crucial to your business success.  The new marketing media approaches include social networking venues such as Twitter, Facebook, LinkedIn, MySpace, YouTube, etc, which need to be exploited.  Global companies have realized the enormous marketing opportunity these venues provide and have established social networking as a primary business function.  The small business enterprise can likewise take advantage of this expanded, nearly free, marketing approach to reach customers and increase brand recognition.  Cultivating and maximizing your brand distinguishes you from competition and allows your customers to link your business with your brand.

Develop Your Growth Strategy -   Developing a growth strategy is a best-management process which involves determining long-term growth objectives and developing a specific action plan for attaining these objectives.  The process involves an assessment of your market environment from the perspective of having the relevant market experience after startup;   performing a  SWOT analysis; selecting a set of alternative growth strategies based on changing market conditions, and  then implementing your strategy.  The strategic growth plan is developed from the viewpoint of your business corporate entity, where the focus is on the accomplishment of your strategic business objectives based on four critical questions: Who are we? What do we do? Where do we want to go? How do we get there?  The answers to these questions will give you the information necessary to create your strategic objectives for your growth strategy.

Get The Right People On The Bus – This is one of my favorite discussion points, concerning leadership and relates to the strength, character and capability of your executive team.  Here we use ‘bus’ to refer to the small  business enterprise or organization and comes from Jim Collins’ book, ‘Good To Great” , where he quotes  Ken Kesey’s reference  to a bus as being the company, organization or firm.  Collins found”……if we get the right people on the bus [in the company], the right people in the right seats [in the right executive roles], and the wrong people off the bus, then we’ll figure out how to take it somewhere great [to attain the founder’s vision]…”  As a small business owner, it is incumbent upon you to ensure you have the right executive team in place that will take your vision of where you want your company to go, and achieve it. Business growth at all levels is largely achieved with the right people on the corporate ‘bus’, driving it to success.

Listen To The Experts– Consider hiring a Business Advisor, Coach — According to The National Federation of Independent Business [NFIB] Education Foundation, over the lifetime of a business, 30 percent will lose money, 30 percent will break even, and just fewer than 40 percent will be profitable.  If you are a small business, it is important to realize that the Small Business Administration [SBA] reports that 50 percent of all small business fail after their first year, 33 percent fail after two years, and nearly 60 percent fail after four years.  A Business Coach and Advisor will work with you to help avoid becoming an SBA or NFIB statistic, help you to maintain focus on driving your business forward, work with you to develop and refine your objectives, help you to develop critical business growth strategies; and provide an honest assessment of where your business is in its life cycle. In fact, business coaches work with executives, primarily CEOs, for small to global companies on a plethora of business issues focused on helping the executive to successfully navigate troubled business waters, resolve business hurdles and move the company forward towards optimal growth.

Follow Your SOLE - It has been my experience that the business executive responsible for business growth almost always follows and prescribes to a framework that embodies the envision, plan, execute and plan strategy in achieving business growth.  Often this resembles what I have developed for my clients as the SOLE Framework. The SOLE Framework provides the context for accomplishing business growth optimization where you: Solve a critical market problem or need; Optimize growth by meeting customer needs in solving a problem , Leverage your principle business core competency, and  Establish a competitive baseline to achieve business growth.

Be A Hedge Hog – The Hedge Hog Concept was developed by Isaiah Berlin in his “The Hedge Hog and the Fox” Study which divided management, leadership  and professional  positions into two clusters: hedge hogs and foxes, based on Greek mythology, where the fox knows many things, however the hedge hog knows one big thing. The fox is a sleek, cunning, fleetly, crafty and beautiful animal. On the other hand, the hedge hog is a dowdier creature, more like a cross between a porcupine and a small armadillo who when faced with danger rolls up into a very prickly ball and spends his days looking for food. However, Berlin points out that this otherwise simple creature is certainly not stupid, or simpletons; they have a piercing insight that allows them to see through complexity and discern underlying patterns of behavior. The hedge hog sees what is essential, critical, and important, and ignores everything else. To be a Hedge Hog, the small business executive must see only what is essential and focus on it, exploiting the essential in a positive, productive manner and concentrate on three key dimensions: what you can be the best in the world at; what you are most passionate about; and what drives your economic engine.

Establish a Competitive Culture – A competitive culture concerns how your organization is structured for market competitiveness.  In fact, corporate culture is a competitive advantage for a small business focused on growth by following a rather simplistic approach, based on organizational shared values, direction, mission and belief that the primary focus of a small business is to first meet customer needs, followed by employee empowerment to meet those needs, then community involvement, using common business sense approaches towards conservation, and then attention to investor interests.  This hierarchical organization places the most important focus on meeting customer needs, followed by empowering employees to meet those needs creating a company structure that is positioned to be highly competitive.

Optimize Business Growth – What is Business Growth Optimization? I think a good way to initially answer this question, is to draw an analogy to a perfectly timed automobile engine running on all cylinders, smoothly, fully optimizing its capability to produce maximum power.  Similarly, a business growth company that is fully optimizing its core business competencies is structured to maximize competitive advantages and has a strategic business growth framework; running smoothly on all cylinders if it were, is attaining Business Growth Optimization.  In my experience, attaining Business Growth Optimization is a three-tier process involving the SOLE Framework, achieved through the establishment of the Hedge Hog Model and implementation of the Cultural Competitiveness Organization structure focused on continuous increasing returns to produced growth.

Ask me how I increased corporate sales by $14M by using business planning & development, corporate strategy and customer/client management.

I know how and why CRM software came about. It was the compliment to ERP systems that were back-in oriented concerning business operations. CRM provided the face, the front-in so to speak, giving credence to tracking customer calls, requests, orders, issues, etc. This morphed into using CRM applications to build sales proposals and track sales. And yes, call centers jumped on the CRM bandwagon since it provided a structured, scripted process to handle mainly irate callers complaining about lousy service or products or both.

I realize I am going to be stepping on a whole host of toes here. In fact, I had stints at IBM Global Services where I was involved in Siebel and CRM business solutions all based on using software applications to track and manage customer activity.  But like the old Wendy’s commercial of many years ago when the little old lady shouted, “Where’s the beef”? In reality it is “Where is the real customer relationship?  The use of software applications are a necessary and fundamental business tool to assist in managing customer activity, but in my view they should not be the end to the means.  It is a tool and should be used as such. Never should a software application replace human interaction between a business and a customer.

Yes, I have been on the receiving end of some highly questionable call center help desk reps that had difficulty speaking English where their focus was on reading a script, filling out an on line form, and following the prompts and pull down menus all provided by some CRM application where there was no intent to provide real customer support;  much less establish a sense that they were truly interested in solving your problem, thereby creating a positive experience that could be transferred into possible additional sales.

Client management in my mind should actually be a focus and a goal of establishing partnerships between business and its customers. This takes human interaction. When a business takes the strategic action to know its customer, identify their need or needs, and then provide a product or service to meet that need, it moves forward into a customer-centric posture. The essence of client management is not, in my opinion, simply employing CRM software to track and manage customers and sales, but rather it is to provide a customer-centric, relation-based strategy where CRM software is employed as a tool, not to displace human interaction, but to augment it in building long-term business to consumer relationships or better yet, partnerships.  That is client management should be about establishing, nurturing and managing strategic client partnerships as a business strategy for growth, increasing sales and profitability.

About the Author:

Gerald S. “Sandy” Graham, MBA, MS Economics, is a Business Strategist, Client Executive and Author of See the Green$: Achieving Your Entrepreneurial Dream by LOGOS Press at  http://logos-press.com/books/see-the-greens.php. Learn more about Sandy Graham at www.sequoyahassociates.com and http://www.linkedin.com/in/sgrahammba

The Cost of Government Regulation

I see three ways government regulation impacts business, primary small business: regulatory compliance, weakening the competitive market position against international competition, and increased uncertainty.

Regulatory Compliance. Researchers at Lafayette University in a report entitled “The Impact of Regulatory Costs on Small Firms” estimated that in 2008 Federal Regulation costs small business with less than 20 employees $10,585 per employee annually, where it costs larger firms with more than 499 employees $7,755 per employee annually; that is a $2,830 differentiator heavily impacting small business.  If you consider for a moment a small business with twenty employees, this amounts to nearly $212,000 of additional business costs on an annual basis along with the opportunity cost of an equal amount in lost infrastructure investment and new jobs. What is also interesting is that when you look at the distribution of regulatory compliance by firm size for small business with less than 20 employees, compliance with economic regulations cost $4,120, followed very slightly by environmental regulations at $4,101. Combined these account for nearly 78% of regulatory compliance for small business, contributing to the majority of this cost factor. This major cost factor alone erodes small business growth.

Weaker Competitive Market Position Against International Competition.  The Lafayette University report found that the one of the most significant impacts of government regulations on small business was a weakening international competitive position as a result of increased cost of business resulting from government regulations. U.S. goods cost more than those produced on foreign soil, adding to the trade imbalance as well as providing market advantages to foreign companies, which further erodes small business growth.

Increased Uncertainty. Small business Chief Executive Officers, or in some cases, Chief Everything Officer, (in both cases CEO,) are faced with rising uncertainty about the prospects of  investing and hiring as a result of government regulation and deep concern for ‘what’s coming next’.  Until Monday, January 31, 2011, Obamacare was seriously thwarting growth, and in particularly the individual mandate and 1099 provisions. Now that this law was struck down as unconstitutional by Federal Judge Roger Vinson, the law is null and void, and headed to the U.S. Supreme Court. The conundrum faced by small business to large firms across the country is the uncertainty of the U.S. Supreme Court decision. A free market advocate would hopefully speculate the Court will uphold Judge Vinson’s decision, however we cannot hold our collective breath because we simply do not really know what the outcome will be, hence increased uncertainty, further eroding in particular small business growth.

A Business Strategy Solution

The definition of business strategy is a long term plan of action designed to achieve a set of goals and objectives.  For instance, a goal can be to reduce the impact of government regulation on your business, where the objective is to accomplish this within thirty days.  Most often business strategy involves an actionable plan to achieve a set of goals, with objectives, rather than one goal and one objective.  But there are exceptions to that of course.  Business strategy should focus on improving performance, saving money, and making money.  For example, business strategy is an excellent tool to accomplish the following:

• Establish alternative revenue streams.
• Develop and execute a strategic growth plan.
• Asses and acquire new market opportunities.
• Identify, solve and eliminate business hurdles.
• Develop and execute a business capture strategy.
• Link all financial decisions to strategic business objectives.
• Establish a plan for acquiring the right executive management team.
• Transition from a traditional fixed/variable cost model to a variable cost mode.

In tackling the excessive and escalating burdens of government regulation, how can we use business strategy to mitigate the cost impacts of government regulation, and to actually construct a road map for growth. First of all , we need to see what government regulation is in terms of a cost factor.  Since government regulation does not vary with production or output, it is typically a fixed cost; although it does vary and is becoming more burdensome. Ok, so government regulation is a burdensome fixed cost, how can we mitigate its impact, develop a plan to manage it, and actually grow a business inspite of it. Our business strategy is clear: develop a long term plan of action to mitigate and effectively manage the impact of government regulation on business operations and costs, and meet growth objectives within  a specific time frame, say thirty days. In this example we have three goals:

1. Goal: Mitigate-reduce, impacts of government regulation.
2. Goal: Effectively manage government regulation by limiting its impact on business operations  as a cost factor
3. Goal: Develop a growth plan.

For any business strategy to be effective, it must involve a solution or resolution to a problem, obstacle, crisis or dilemma. In our example, we are seeking to resolve a big problem…how to handle government regulation in a cost effective way that allows for business growth. Our solution, implement a variable cost model to shift the burden of fixed cost to others, and focus on increasing returns for growth. In 2010, Variable Cost Models emerged as the new paradigm for small business growth companies. This variable cost model reduces the need for the small business to make large capital investments to enter new markets and its variable cost structure protects operating cash flow.

There are multiple reasons why a variable cost model makes good business strategy for mitigating and managing government regulation. Fixed costs can be significantly reduced primarily by 1) partnering with other small business in sharing physical space, and 2) employing business infrastructure service companies, such as UPS for logistics, contract manufacturers for production and contract support services such as ADP for financial services. Fixed costs can also be reduced further using, on a limited basis, a group of related technologies such as cloud computing, and server and network virtualization which provide a combination of shared benefits and costs. However, according to Chris Drake, CEO and founder of FireHost, Inc., a secure Web hosting company, cloud computing is not well suited for mission-critical sites and SaaS applications, and you cannot achieve compliance mandates of HIPAA, PCI, SOX, etc. when storing data in and serving applications from “the cloud.”

The use of the variable cost model as a business strategy is to shift as much of the fixed cost burden to a shared basis with other enterprising small business companies, significantly reducing individual company fixed costs to a marginal level, providing for more manageable oversight of the cost of government regulation, and creating a lower break-even point. A small business then can focus on increasing returns which occur where an increase in quantity produced is greater than the increase in inputs to produce output, and as production increases, variable cost decrease yielding the optimal business growth position.

In this example,  we have used business strategy to mitigate the cost of government regulation by first understanding its aspects, then establishing a solution to reduce its impact with  the focus on growth, and how to achieve it. The application of business strategy to solve a problem and/ or to meet a need must be a fundamental tool that small business employs on a consistent basis.   Remember, business strategy is a long term plan of action designed to achieve a set of goals or objectives.

About the Author:

Gerald S. “Sandy” Graham, MBA, MS Economics, is a Business Strategist and Author of See the Green$: Achieving Your Entrepreneurial Dream by LOGOS Press;  http://logos-press.com/books/see-the-greens.php. His web site is at www.sequoyahassociates.com.

http://sequoyahassociates.com/

• First to market opportunity
• Directly meets customer needs
• Highly competitive market advantage
• IPO candidate or acquisition Target
• Strong founders/management team
• High profitability and a greater than average ROI potential
• Definitive financial statements and sales forecast
• Barriers to entry
• Exit Strategy

When you meet with a potential investor, it is critical that you demonstrate the following:

• Genuine passion for the venture
• A commitment to success
• A strategic business plan
• Drive, ambition and authentic leadership to create something special
• A clear understanding of your business opportunity
• A clear understanding of the barriers to entry, business hurdles
• Strong management team capability

These criteria are met with a business plan that includes the following sections:

• Executive Summary
• The Opportunity: Business Opportunity, Market Need/Problem Solution and Products and Services
• Industry and Market Analysis: The Industry, Market Analysis, Product Solution and Target Market
• Competition and Sustainable Advantage: Market Differentiation, Sustainable Advantage, Competitive Analysis and  Location and Site Analysis
• The Business Model: Executive Team, Keys To Success, Risks Analysis, Business Hurdles/Barriers to Entry, Strategic Business Objectives and Exit Strategy
• Marketing and Sales Strategy: Marketing Plan and Go-To-Market Strategy
• Funding Requirements: Source and Use of Funds, and How Loan is to Repaid
• Financial Forecast: Financial Assumptions, Financial Statements (Estimated Income Statement, Estimated Cash  Flow, Estimated Balance Sheet), Financial Ratios, and Break-Even Analysis
• Appendix

A business plan  includes the core areas of a strategic plan however; it is a streamlined version in that it should be succinct, limited; in my opinion to no more than twenty pages, and used to attract various levels of funding, i.e., venture capital, angel funding, alternative funding, etc.  As an entrepreneur, once you have acquired your necessary funding, the business plan should be the basis for developing your corporate strategic plan focused on growing your business.

In golf we see that preparation, goal development, strategy planning, more preparation, visualizing goals, and executing strategy to attain goals produce winning results. In business we can follow a similar strategy by envisioning our entrepreneurial objective, developing a plan to achieve that objective, executing the plan, and then if we stay on target, attain that objective. In developing a ‘game plan’ for entrepreneurial success, a business model for success must be in place.  What constitutes the right business model for the fledging entrepreneur is arguably a professional preference.

The business model I use is founded on business approaches which have been shown to attain amazing success in producing winning business results. I call it ‘Business Growth Optimization’, I define as the pursuit of attaining maximum business growth by leveraging strategic core competencies, competitive strengths, and meeting customer needs involving the (1) SOLE Framework, achieved through the establishment of a (2) Hedge Hog Model and creation of the (3) Cultural Competitiveness Organization.

The SOLE Framework provides the context for establishing full business growth optimization and involves the following: Solve business issues and meet strategic objectives, Optimize growth by meeting customer needs, Leverage the principle business core competency, and establish a competitive baseline to achieve success.

The Hedge Hog Model comes from Jim Collins book, Good to Great, and focuses on what you can be the best in the world at; what you are most passionate about; and what drives your economic engine.  Picture each of these as three intersecting circles, where the  intersection of the circles form your Hedge Hog Model that provides your single, most strategic competitive market advantage to build your venture or business around.

The Cultural-Competitiveness Organization is based on the concept and practice of shared values, direction, mission and belief that the primary focus of an organization is to first meet customer needs, followed by employee empowerment to meet those needs, community involvement, using common business sense approaches towards conservation; or in today’s parlance ‘business sustainability’, and then attention to stockholders interests. The Native American practice of ‘story-telling’ that focuses on communicating culture, shared values and beliefs from one generation to the next is a strategic business practice successful companies employ. And is an integral part of the Cultural-Competitiveness Organization in addressing the ‘why’ employees are empowered to meet customer needs.

The entrepreneur or small business owner who follows a winning game plan, or business strategy, for success is like the PGA Pro who envisions the best approach to the green, determines the strategic direction to get there, and focuses all his efforts on attaining the goal of getting to the green at par or below, and attaining a winning score.  For winning is the objective.

About the Author:

Gerald S. “Sandy” Graham, MBA, MS Economics, is a Business Growth Strategist and Author of See the Green$: Achieving Your Entrepreneurial Dream by LOGOS Press; the source for this Blog Article.  See the Green$ uses a golf analogy to convey the key elements and ideas entrepreneurs and small business owners can use for growing their business from new venture to emerging small business growth company.  If you are interested in learning more about how to achieve success as an entrepreneur or small business owner/executive, please go to http://logos-press.com/books/see-the-greens.php. Enjoy the Ride!

When I decided to write on entrepreneurship, I started looking for the ideal premise since there are lots of book titles on this subject in your local Barnes and Noble book store. In fact, they have a separate section dedicated to the subject. As a golf enthusiastic and fan of the sport, I often thought of the extricable link [pardon the pun] between golf and business, in particular how one is successful in entrepreneurship.  The parallels are noticeably very strong, and in fact if you consider how opportunity is envisioned by both, then the question “can you see the field of strategic opportunity” is a logical question for both, since it will directly determine your level of success.  So, as an introduction to my upcoming book entitled: “See the Green$: Achieving Your Entrepreneurial Dream”, I would like to repeat my very first Blog Article here.  I hope you will enjoy it and please, if it resonates at all, I would like to get your comments.

See the Field of Strategic Opportunity – Can you “see the field of strategic opportunity”? Have your clearly defined your plan to achieve your entrepreneurial dreams? Have you mapped out the strategic direction to attain your plan? Have you envisioned your market and know how to position your business to acquire it? Do you still have that “entrepreneurial flame” that caused you to spend nearly every wakening minute working “on” your business or have you succumbed to the daily chores of working “in” your business?  Too often, new entrepreneurs and small business owners get caught up in the “day-to-day” running of their business, and find themselves unable to focus on their passion and keep the “entrepreneurial flame” going in the attainment of business initiatives,  envisioning the market, reaching the optimal strategic direction, and seeing the field of opportunity.

The Golf Analogy

A new venture entrepreneur or small business owner who can “see the field of strategic opportunity “is much like the PGA Professional who “sees the field” when he stands in the tee-box and looks down the fairway to the flag stick. He envisions the best approach to the green, determines the strategic direction to get there, and focuses all his efforts on attaining the goal of getting to the green and setting up a short birdie putt.  The result is success, and if continuously repeated, will lead to a very strong finish.  The great Bobby Jones was said to be the best at this. The present day version is Tiger Woods. In business, I believe we can achieve the same ‘vision’ as Tiger and Bobby if you can “see the field of opportunity”.  How you “see the field of strategic opportunity “will largely determine your level of success. It is here you have the decision to make to either work “on” your business, or work “in” your business. Positioned to work “on” your business keeps your entrepreneurial flame burning, fueled by the passion that first inspired you to leave corporate or blue-collar America and take that entrepreneurial leap-of-faith. Conversely, if the field of opportunity is clouded, foggy and difficult to see, then you likely will succumb to the notion that it is better to work “in” your business to keep it going. There is certainly nothing wrong with that, except it means status quo and not growth.

The Consequence of Not Seeing the Field

Now I am not a biology wiz, but I do know this; in the natural world, if an organism stops growing, assimilating and adapting to its environment, and  asically reaches a point of accepting a natural status quo, decay sets in and the result is not good. The same goes for a new venture or small business nterprise. The ability to “see the field of strategic opportunity “is critical to your ability to be successful; where growth, assimilation and adaptation come ab out through preparation, planning and execution which are extricably linked to how well you” see the field” of opportunity, followed by how you achieve it.

The Importance of Preparation and Planning

To “see the field of strategic opportunity”, in my opinion, involves spending the requisite time to properly prepare and plan how you are going to attain your entrepreneurial goals, envision your market, and determine the strategic direction to achieve them.  In business, any business be it biotech, telecommunications, software, medical, manufacturing, or even golf, preparation involves and includes sound strategic planning, market analysis, rofitabilityassessment, and finally looking at your financing status, options and position.

Both entrepreneurial development and small business have stakeholders.  The nature of entrepreneurship has a limited number of direct stakeholders being investors, vendors, employees and customers, with considerable and multiple indirect stakeholders, which includes the local community, on a much larger scale than a small business. The small business owner’s direct stakeholders include lenders, vendors, employees and customers on a local level, similarly to the entrepreneur, however their indirect stakeholders are typically on a more limited scale than the intrepid entrepreneur.

I think at this junction, we should examine what is entrepreneurship?  From my new book: “See the Green$: Achieving Your Entrepreneurial Dream’, the concept of entrepreneurship has been described in many ways. The Merriam Webster Dictionary defines an entrepreneur as one who organizes, manages and assumes the risk of a business or enterprise. Often we use business and enterprise interchangeable to refer to the same thing. The word ‘entrepreneur’ comes from the French word ‘entreprendre’, which means “to undertake”.   In a business context it means to undertake a business venture. 

The concept and practices of entrepreneurship as a formal activity emerged in early 18^th Century France. According to John S. Lamancusa, Pennsylvania State University, entrepreneurship has its origin with Richard Cantillon (1680–1734), a French economist in his Essays la nature du commerce en général, who is credited with giving the concept of entrepreneurship a central role in economics.  Adam Smith spoke of the “enterpriser” in his 1776 Wealth of Nations as an individual who undertook the formation of an organization for commercial purposes, and saw entrepreneurs reacting to economic change and becoming the economic agents who transformed demand into supply.  French economist Jean Baptiste Say,  in his 1803 Traité d’ éeconomie politique, described an entrepreneur as one who possessed certain arts and skills of creating new economic enterprises, who had exceptional insight into society’s needs and was able to fulfill them.   

In 1848, British economist John Stuart Mill elaborated on the necessity of entrepreneurship in private enterprise.  Carl Menger (1840-1921) in his 1871 Principles of Economics, referred to the entrepreneur as a change agent who transforms resources into useful goods and services, creating the circumstances that lead to industrial growth, an astute individual who could envision this transformation and create the means to implement it.  According to Lamancusa, “the term entrepreneur subsequently became common as a description of business founders, and the ‘fourth factor’ of endeavor was entrenched in economic literature as encompassing the ultimate ownership of a commercial enterprise.”  

Mark Casson writes that Joseph A. Schumpeter (1883-1950) in his “Theory of Entrepreneurship, took a different approach, emphasizing the role of innovation, and saw the entrepreneur as someone who carries out “new combinations by such things as introducing new products or processes, identifying new export markets or sources of supply, or creating new types of organization”.  Schumpeter saw entrepreneurship as founded in the intellect of man, fueled by passion, dedication, and belief in a goal. It is a driving force that is ignited by the desire to solve, improve, and/or innovate.  In fact, Schumpeter’s definition of entrepreneurship has become the modern era definition. So, if you believe the individual that  seeks “new combinations by such things as introducing new products or processes, identifying new export markets or sources of supply, or creating new types of organization” is an opportunists, then absolutely. Isn’t that the definition of opportunity, and in business, it is looked at as market opportunity.  Also consider that Schumpeter’s definition of entrepreneurship is based on the definition by Say who considered society’s needs.

Referring back to the question of sustainable entrepreneurship in the context of having social concerns and benefits, in my view, ‘sustainable’ entrepreneurship is the process of supporting a level of entrepreneurial development as to create a paradigm shift in economic activity such that national GDP, job growth at all levels, capital investment, innovation, technology advancement, and quality of life is unmatched, unsurpassed and unequalled directing benefiting the local community, county, region, state and nation.  We can and should incorporate the concept of true entrepreneurial development into the free market lexicon and allow the consummate entrepreneur, who seeks wealth creation within a tremendous risk-reward environment, through sustained invention and innovation, to achieve success.   Entrepreneurship is by nature, sustainable. So, in my view, the emphasis should be on entrepreneurial development and allow its’ sustainable nature to occur naturally.