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Category Archive: Entrepreneurship

1st Chat Post on KaizenBiz.com

This is such an exciting time for #kaizenblog. We’ve changed our name and added a website. We’re now KaizenBiz and you can find us at www.kaizenbiz.com.

Our guest, Deb Carducci of Villa Lusso has our inaugural framing post, “Color, Environment and Your Workspace”  Please read the post on our new site and join us for our conversation on Friday, February 24th at 5pm GMT/12pm ET/9am PT.



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Business, Design and Love

Eve Blossom and Lulan Artisans

 This post is by guest blogger, Eve Blossom who leads Lulan Artisans  and author of Material Change is our guest on this week’s Twitter chat, #kaizenblog. She is passionate about creating a collaborative business model that sets the stage for the artisans to have economic and social sustainability. Please join us to explore “Love, Design and Business” this Friday at 12pm ET/5pm GMT/9am PT on the Twitter chat, #kaizenblog.

Business: What Moves You, Grabs You, Won’t Let You Go

I started my career in Architecture and in 1995 was fortunate enough to live and work in Hanoi, renovating old French villas. During my first few months in Hanoi, I witnessed first-hand a transaction where a young girl was sold by her father to a European man for sex.  She was 6 years old. I tried to intervene. I was threatened at knifepoint.  I was unsuccessful in changing the outcome for that little girl.

 That night, I had a striking realization.  I began to see Human Trafficking as a marketplace— where unfortunately the commodity is a person. I could see clearly that Human Trafficking is an economic market that needs to be addressed at an economic level. Click here to read more »

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SOPA, Innovation and Potential Global Impact

SOPA, Innovation and Potential Global ImpactAcross many social networks and many blogs, you may have noticed a lot of discussion of SOPA. There is a clear explanation on CNNMoney but, in a nutshell,  SOPA (Stop Online Piracy Act) is a bill going through the US Congress that is supposed to eliminate copy infringement and penalize offenders. There are plenty of people out there with rogue web sites who steal innovative and creative products. These rogue websites are located outside of the US but they This threatens not only the competitive edge of the companies who has intellectual property and products stolen. According to a letter to the editor of the New York Times, the US Chamber of Commerce, it “threatens 19 million jobs.”

No one is advocating for online piracy

What is at stake is that the bill is poorly written in its current form. Fortunately this week, support has eroded and perhaps the sponsors of the bill will take the opportunity to improve the language so it actually targets these rogue websites. Artists, musicians, film makers, entrepreneurs and other content creators should have their copyrighted material protected. No question. It just comes back to how the bill is written and can it do what is intended?

Could innovation be stifled?

There have been discussions about how to regulate the Internet. As you know, there is everything on the ‘Net. But one of the things that makes the Internet so attractive is its openness. Now we have so many ways to communicate, collaborate and share with one another new ideas for business. We’re redefining how we interact on a personal and professional level. And this is changing how business is conducted. Not only are companies and partnerships formed but what is truly intriguing is the capacity to the varied ways people can connect to create and produce intellectual property.

Since there are provisions in the bill to shut down sites that are alleged to have violated a copyright. This means that sites would be blocked by ISP’s, be removed from search engines and be denied the ability to collect payment from online payment services (ex. Paypal). It is unclear how a site could defend itself from false accusations. So if a site aggregates information or users interact with one another, there could be an allegation of an infringement or intellectual property or the ability to enable an IP infringement. Result: the site just disappears.

What could happen globally?

It seems to me that a number of small and mid-sized businesses will not only cease to exist. Cloud computing, social media sites and many other advantages that the Internet provides an avenue for these smaller companies to compete, attract and serve their non-US customers with lower costs and easy access.

Non-US businesses may find that there are just too many obstacles to doing business in the US. SOPA could have a chilling effect as there may be fears that it is a form of censorship and potential legal issues.

Want to add your thoughts on how SOPA could positively or negatively affect how business is created and conducted?

Join us on the Twitter chat, #kaizenblog, on Friday, January 20th at 5pm GMT/12pm ET/9am PT. We want to hear what you have to say.

Certainly it’s clear that I have some grave concerns about SOPA in its current form so my bias is negative. The US House and Senate have to create a bill that will be cognizant of what is really going on online, what laws currently provide adequate protections, the types of products and companies that are created and how this could adversely affect how business is conducted. Still online piracy is a problem.

What would you suggest?

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Collaborative Consumption – What Is This, Where Is It Going?

This post is by guest blogger, Nick Allen of  Spring Ventures, a multi-stage/multi-strategy venture fund that invests in novel information technology and cleantech companies. He has a great deal of experience in clean tech and on Wall Street. He is passionate about the potential for capital in in private and public markets to revolutionize broad sectors of the economy like transportation, energy and the built environment. He is our guest host on this week’s Twitter chat, #kaizenblog. Please join us to explore Collaborative Consumption this Friday at 12pm ET/5pm GMT/9am PT on the Twitter chat, #kaizenblog.

Join us as I guest host on the Twitter chat, #Kaizenblog Friday at 9am PT where we will discuss the very cleanweb concept of collaborative consumption – the massive rise in sharing/trading/renting of goods and services enabled by information technology and peer-to-peer market places. While an unfamiliar term to many, collaborative consumption is part of a widespread cultural shift in how we interact with others, our stuff and our surroundings.

More and more our idea of an ownership society is giving way to one where we value experiences and access over ownership.  No longer do we need to own the vacation home, the car, the CD, or the DVD. We want the experience they provide without the hassle, cost and inefficiencies of ownership. Yesterday’s vertical business practices and centralized distribution systems no longer serve the needs of a culture that is highly open and highly networked. Collaborative consumption flies in the face of traditional consumer culture and replaces it with the efficient and social use of products, services and resources. The result is a sustainable, improved and lower cost experience.

 A few questions to ponder ahead of Friday’s tweet chat…

 What are some examples of collaborative consumption?

 Buildings: There are 260, 80 and 2.4 billion square feet of residential, commercial and storage space respectively in the US. That’s over 1,100 square feet for every man, woman and child in the US. Using this incredible asset base more effectively and efficiently is a key theme of collaborative consumption. Companies like Airbnb and Homeaway are displacing the need for costly and energy intensive hotels by facilitating home share and rental between individuals.

Transportation:  Cars sit idle 95% of the time. The average person spends 35 hours of year in traffic at a cost of $115 billion per year in wasted time and fuel. Peer-to-peer car sharing networks like Zip Car give the benefits of ownership without the hassle.

Goods:  The average power drill is used for a combine total of 20 minutes. Craigslist and EBay were the first to connect buyers and sellers and give life to products otherwise destined for landfill. The greenest of products are the ones that never need to be manufactured in the first place. This idea has been extended more broadly through companies like Rentcycle,  FreeCycle  and ThredUp.

 Finance:  Banks and credit card companies have long controlled the purse strings. Social and peer-to-peer networks are opening up lower cost ways for consumers to get loans and investors to put capital to work by cutting out the costly middleman. Solar Mosaic allows anyone to invest in solar, Angel List is connecting startups with much needed early stage capital, and Lending Club and Prosper are getting consumers better terms then they ever could from their credit card companies.

 How big can this concept be?

As I mentioned above, collaborative consumption spreads across every industry. It’s not just a business practice but also a secular cultural shift that is impacting broad segments of society. And it’s not just happening in the US, but abroad as well. I’m not kidding when I say this is a mutli-trillion dollar movement.

 A NY Times article from early October talked about how barter networks were surging in Greece as economic crisis gripped the nation. This is collaborative consumption replacing a major currency!

 What are the cornerstones of the movement?

 Trust:  Companies and brands have spent enormous amounts of time and money building trust with their customers. We want to know that the products we use will perform as expected and will be safe. The level of trust for collaborative consumption to work is even higher. It’s more personal in nature and challenges our ideas around privacy and ownership. My hope is that we see new services arise that increase trust between parties and further accelerate peer-to-peer.

 Critical Mass:  Convenience drives the modern world. Zipcar works because it’s local and there when I need it. The swapping of goods is very local as well and needs a balance of supply and demand.

 What happens next?

Mobile is going to make collaborative consumption more and more on demand. The ability to use things when we want and how we want is only going to increase. Trust networks built by social media and our online presence is going to further meld with our physical lives allowing greater use, flexibility and efficiency.

 Where can I find more information?

The Mesh, Lisa Gansky

What’s Mine is Yours, Rachel Botsman

http://www.collaborativeconsumption.com/

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Creating Social Businesses – Business of Now or Future

Twitter, cloud computing, virtual collaboration, telecommuting…what makes a social organization? It’s safe to skip that everyone is friendly or simply civil to one another. So that’s not it. According to Dan Schwabel, a social organization “applies social media and mass collaboration as strategic to new challenges and opportunities to rally communities of people and engage them to deliver business value.”

Tools, technology or something more?

With variable adoption of social media and technology that supports collaboration, creating a social business may be an anomaly rather than an emerging practice.   I was talking with someone at a networking event who works with businesses around the world who declared that nothing has changed and large corporations don’t consider the digital lifestyle to be significant.

So which is it?

In the Hay Group Leadership 2030 research, it is noted that “digital tools offer cheap, easy and fast communication, co-operation, organization and production, and workplaces are no longer tied to to bricks and mortar locations.” This seems to point to organizations having all the necessary ingredients to create a social business. But having the tools ready and waiting isn’t enough. As Anthony Bradley and Mark McDonald pointed out in their HBR post, All Organizations Are Social, But Few Are Social Organizations, the way the business is organized (hierarchies, business processes, management styles) illuminates how connections are fostered.  In a previous #kaizenblog chat (Collaboration in a Multi-Cultural Environment), Ritu Raj defined “Collaboration… includes working together, brain storming, creating a common vision, bringing people on the same page or coordinating with each other to fulfill an objective; a mission where tasks are interdependent, or…that they are all cooperating.”

What if we left out the large corporations?

A client of mine often talks about his business as primarily a social construct that sells stuff.  This is a very different business mindset. If the person I spoke with at that networking event is right about large corporations simply ignoring social media and other collaborative technology, this is an opening for smaller, more agile companies to take advantage of. I keep thinking of Stephen Denny’s book, Killing Giants in which he talks about strategies that smaller competitors can use to bypass or beat larger companies to gain new customers and market share. Couple this with employees desiring greater work-life integration, meaning and purpose in their work, a social organization could be a model that promotes a different way of responding to business challenges and opportunities.

Try this scenario-the business owner/management notices that revenues are trending downwards and are wondering what is creating this situation. By collaborating with the very people who are in the field doing business development, customer service, customers and the in-house widget maker/service provider, information could be shared in real-time via documents (Google docs, document-sharing cloud apps) and conversation (in-person, virtual meetings via Skype, intranet chat networks, social media) to pinpoint the disruption, identify possible solutions, create a plan, take action and follow up with scheduled reviews.

Maybe nobody will be left out?

With the recent economic upheaval, the environment has changed quite a bit. It is much easier to build a strong regional, national or global presence with social media and other technologies. You don’t even need to be in the same building anymore to get your work done. On top of that, most of us are knowledge workers in one form or another. An interesting observation was made by Taleo Research, “To attract the best knowledge workers and keep them engaged, companies must constantly and aggressively evolve how they engage them with mobile, social networks and other digital tools. In this atmosphere of individual empowerment, companies that embody ‘old school’ top-down corporate structures and communication methods will grow increasingly irrelevant to the knowledge workers they value most.”

Research is pointing the way…is this what’s happening?

When you’re already involved in social media and using the digital tools, it is easy to say that everyone is doing it. This may not be true in all sectors. However, the ways business was conducted in the past are changing. I hear a lot of experienced business owners and leaders trying to determine the “right” path for their organization. It is possible that whoever is leading your organization (this may be you) may find that he/she will find the “right” path by collaborating with all levels of his/her organization rather than in high level meetings.

How are social organizations making their presence known currently?

What would an organizational chart look like if the business is a social organization?

How does creating a social business affect leadership styles?

What types of business models could be created from a social organization?

How would you describe the relationship between healthy revenues/profit & a social business model?

What tools/technologies do you see gaining prominence as social organizations become the norm?

 

*Consider yourself invited to discuss this topic of “Creating Social Businesses – Business of Now Or Future” on the Twitter chat, #kaizenblog on Friday, November 11th at 12pm ET/5pm GMT/9am PT so I hope you can join us. If not, please add your thoughts below.

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Is a Real Smile Too Much?

Real smiles and customer serviceWhile I was doing my graduate degree, I worked at a jewelry counter. During the sales training, they explained that many customers could appear rough around the edges and not well dressed. They emphasized that the most unlikely people could be the big spenders. The organization training me was based in the the middle of the country so they spoke about farmers and factory workers. The community I lived and worked in included old time New England types, immigrants from India, Central America, Russia and transplants from other US states.  Unfortunately, the trainers didn’t explain how we were to make a connection with these particular customers so we were left to our devices.

Smiling seemed a natural way to start building rapport. It was fun to hear the back story and look for an everyday watch or that perfect set of earrings with my customers. Creating these mini-relationships seemed logical to me and it certainly was a positive strategy as I was a top commission earner in the department.

We’re all in customer service

No matter if you’re selling jewelry, consultancy services or smartphone apps, we are all customer service representatives. Tom Asacker has written extensively about how everyone in an organization communicates the brand. This exhibits the authenticity of an organization.  We have so many potential moments to connect with another person when we speak with prospects, colleagues and other professionals. Some, if not all of these moments could have you smiling at another human being. Jeff Toister has a great post of what happens when you leave the smile out, even over the phone. We are all points of reference for people outside of our organizations.

So all I need to do is smile, right?

Partly, yes. Are you seeking to engage with the other person and why? Answering this question reverts you back to your organization’s executive summary. Yes, seriously. It’s about the organization’s values. Are you smiling at this person because they are a revenue source or something else? Is it inauthentic on your part to want to make the sale?

Authentic customer service is more than a smile

The current messages about authenticity state that people are seeking “real” people to do business with. We’re told how to write content, biographic profiles and frame sales pitches so they build relationships. There is nothing inherently wrong with these messages. But we might be creating something that doesn’t exist in business. Perhaps we’re faking authenticity the way we fake our smiles. The face moves but we’re left feeling like something is off base. (Want to see if you can spot fake or genuine smiles? Take this test on this BBC site.)

Tom Asacker writes, “engagement is the first step in an evolving process that ultimately leads to belief, adoption and support of the organizations’ brands.” Feelings prompt purchases. This is true whether you’re selling business to business (B2B) or to consumers. The way you make me feel is what prompts me to want to do business with you. And…how you make me feel, particularly during a conflict, prompts me to want to continue doing business with you.

Conflict is the greatest test of authentic customer service

At some point, you will have a clash with someone over your product, service, ideas or price. Smiling may not be literally the most appropriate response to a situation but bear with me for a moment. Your value system includes how you want to be treated by others. This is the human element that is a potential chaotic agent. When someone approaches us with a complaint, it is natural to feel defensive and attacked. This complaining person has attacked our value system. Chaos is introduced when we forget how we want to treat others.

A real smile may be worth a lot of money…or not

The current emphasis on being authentic may be a trend and not significant in the long term. On the other hand, there is a lot of energy in conversations about making work meaningful and more human-centered. As we interact with customers, prospects and other professionals, we are the snapshot of our organization. A real smile could be an invitation and gift embedded in your authentic customer service.

Beyond the  current vogue definition of “authenticity”, how would you honestly describe it?

How do you train customer service representatives to naturally exhibit organizational authenticity?

What are our choices really saying when we fail to treat our clients/customers as if they matter?

If businesses are ultimately about making money, could authenticity be irrelevant?Why or why not?

*Consider yourself invited to join us as we talk about customer service & authentic connection “Is a Smile Too Much?”” on the Twitter chat, #kaizenblog on Friday, October 14th at 12pm ET/5pm BST/9am PT so I hope you can join us. If not, please add your thoughts below.





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Living Business Plan: Letting Go, Quitting and 2012

*Join us for this topic on the Twitter chat, #kaizenblog. We’ll start the discussion on Friday, October 28, 2011 at 5pm BST/12pm ET/9am PT or add your comment below.

Recently, I had the pleasure of presenting a business planning workshop to small business owners. While talking about  living business plans , I urged the participants to identify what needs to be eliminated. We don’t talk enough about how to let go of the parts of our businesses that are half-alive. And quitting? Forget about it!

For the sake of this conversation, I’m going to use the word, quitting. It’s a word with so many negative nuances. WLet Go, Quit and Decision Pointithout critical thinking, we accept these nuances without knowing if they are true to our experience.

What’s not working as well as you would like?

When you set your business goals for 2011, you had certain things you wanted to achieve by December 31, 2011. There were positive results to celebrate. But what produces lackluster results?

  • Holding onto a product or a service that very few purchase
  • The marketing plan didn’t produce the expected results
  • People just didn’t want what we offered
  • You fell in love with your product or service and didn’t allow for adaptation or iterations of your product or service

Could you let go of something you loved developing?

Some of what we offer to our customers means more to us than simply a revenue source. Maybe all is good for awhile and then you’re doing your quarterly review. You notice  it’s not moving the way you expected. After a couple more quarterly reviews, you’re seeing a downward trend.

By letting go, it all gets done. The world is won by those who let it go.

But when you try and try. The world is beyond the winning. -Lao Tzu

When letting go becomes quitting…

There’s an interesting behavior among entrepreneurial business owners. When someone decides to close their business and return to working for someone else, entrepreneurial colleagues often respond with suggestions to keep the business on the side or urge him/her simply to not quit. Failure still seems to be taboo, for all those who claim that this gives you some kind of street cred.

Imagine quitting isn’t failure.

Of science and the human heart

There is no limit.

There is no failure here, sweetheart

Just when you quit

“Miracle Drug”, U2

That’s the premise of the Freakonomics podcast, “The Upside of Quitting”. They state that there is a fallacy of weighing sunk costs. This concept is that we’ve sunk too much of our time, money, and/or energy and we can’t leave without getting something back for our efforts. One of the people interviewed for this podcast is Justin Humphries, a former baseball player, who now assists baseball players outside of Major League Baseball decide when it’s time to quit playing. Many baseball players who are at the end of their career struggle with accepting that they aren’t good enough or too old. Part of this seems to stem from lacking a broader sense of identity. Instead of seeing how they might transfer their skills to another part of baseball or find another career entirely, many players keep playing baseball.

Knowing when to ” shut it down”.

Stephen Dubner captured underlying belief for these baseball players, “Wow, that’s particularly poignant in my view… because baseball’s one of those rare sports that because it doesn’t have a clock, no game is ever out of reach…You could be behind a thousand runs in the bottom of the ninth and theoretically you can still come back and win. So that’s part of the ethic of baseball is never, never, never, never quit. Quitting is  not an option.”

The dissonance between “science and the human heart”

Entrepreneurs and business owners are often like these baseball players. With the recent severe recession and snail-like recovery, many startups and businesses are at a decision point. There are glimmers that things are just beginning to ease up and it’s exhausting trying to keep things afloat. And yet, quitting may not be seen as one choice.

As entrepreneurs and business owners, we derive much of our identity and a sense of competency from our business. We see the financial reports spelling out the science of our business. But, in our hearts, the challenges evoke emotions of grief, helplessness and powerlessness. We’ve put too much in to close the doors. We’re given so many messages that shames us out of quitting. And yet, quitting may turn out to be the best decision we could ever make for ourselves and our businesses. As it is urged by the “The Upside of Quitting”, imagine “there is no failure here.”

Setting goals for 2012

No one would ever say that letting go or quitting are easy or even pleasant experiences. Nonetheless, it is essential to identify any deadweight or mediocre performers. These could be things (or, ouch, people) you are fond of or just have out of habit and these are compromising your business vision. There is an intersection between deciding to let go or quit and your business goals. Aligning your metrics and your heart is an essential task when setting business goals.

What messages do we hear when we’re at the decision point to let go/quit/continue?

How are these messages helpful or  harmful?

How do you let go of a product/service in your business that’s not performing well?

How can “science and the human heart” become resonant with choice to quit?

As you plan your business goals for 2012, how could letting go or quitting assist planning?

 

*Join us for this topic on the Twitter chat, #kaizenblog. We’ll start the discussion on Friday, October 28, 2011 at 5pm BST/12pm ET/9am PT or add your comment below.





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Steve Jobs: Visionary or Product Innovator?

Please meet my latest guest blogger, Joe Ruiz  of Strategic Marketing Solutions. It’s been my pleasure to get to know Joe through the Twitter chat, #UsGuysChat. He brings such warmth to that chat and recently joined the #kaizenblog community. His background includes, being an Epsilon alumnus and former Vice President of Strategic Services at Brann Worldwide. Throughout Joe’s 27 years in marketing, he has worked heavily in the pharmaceutical, healthcare and financial services industries.

Many things have been said about Steve Jobs the past few weeks.  He has been compared to Edison, Disney, Einstein and countless others for his creativity and innovation.  There is little doubt our lives are different today because of his insight, intuition and marketing acumen.

“Life Changing”

Recently my wife started using an iphone.  Prior to this she had no interest in anything other than a basic cell phone.  Lately she has discovered the world of apps and photos (to name a couple of obvious phone features).  She is constantly exclaiming “This is life changing!” She is not engaging in hyperbole, she means it!  For her, this is a new discovery of an expanding universe; a new world beyond itunes and ipod.

All of us have felt the impact of Steve Job’s innovative touch in some form or fashion.

As I was reviewing tributes for this post, I found many common descriptive characteristics.  Steve was a leader, salesman, artist, and an evangelist.  He was passionate and persistent.  He had an ability of turning imagination into reality. Steve had a completely different way of looking at the world.  He approached technology from the users’ perspective rather than the programmers’.  When responding to an interviewer’s question “Why would you rather spend time tutoring a 9-year-old boy on how to use a Mac than with two famous artists?” he replied, “Older people sit down (in front of a computer) and ask ‘What is it?’ but the boy asks ‘What can I do with it?’”.

Steve created more than products; he created great experiences, platforms, and even entire industries.  His disruptive innovations changed the way we buy and consume music and listen to talks (podcasts), to name a couple of the more significant innovations.

Although Jobs was a brilliant strategist, Apple’s culture is by most standards difficult.  Steve was demanding and difficult, over-berating colleagues publicly.  According to Guy Kawasaki, there was secrecy between Apple divisions.  Jobs had a reputation for being controlling and very detail-oriented.  When Steve was dismissed, the company floundered and it was only his return that set the company back on course.

Here is a summary of some of the lessons learned:

  • Keep it simple and clean.
  • Sweat the small stuff.
  • Think ahead of your customers.
  • Create engaging and creative interfaces with the technology.
  • Design for lifestyle and application, not efficiency or functionality.

Finally, a quote from a 1985 interview best illustrates Steve’s ability to look ahead and see what few others could:

“The most compelling reason for most people to buy a computer for the home will be to link it to a nationwide communications network. We’re just in the beginning stages of what will be a truly remarkable breakthrough for most people – as remarkable as the telephone.” Playboy, Feb 1, 1985

Questions for discussion:

Q1 – Is there a difference between a Visionary and a product innovator? If so what is it?

Q2 – What can we learn from visionaries?

Q3 – Are visionaries truly unique or is there element of “right time, right place” at work?

Q4 – How would you compare Jobs to Gates or Zuckerberg?

Q5 – Do you think Apple’s innovation will be sustainable in the future? Why?

*Consider yourself invited to discuss this topic of “Steve Jobs: Visionary or Product Innovator” on the Twitter chat, #kaizenblog on Friday, October 14th at 12pm ET/5pm BST/9am PT so I hope you can join us. If not, please add your thoughts below.

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Living Business Plan: Financials For Non-Money Small Business Owner

SME Finanical ReportsNot a money person? You’re not alone. Many small business owners are not money people. And there is nothing wrong with being a great idea person or adept at business development. However, thinking that just paying attention to your “cash in, cash out” is the only information you need means you are missing a great deal more information.

In previous posts about living business plans here , here and here, I’ve written about the importance of having a living document and designing it so you use it on a quarterly basis. It’s great to have well written goals that keep you in action and being clear about what you want to accomplish is crucial. But, at the end of the day, how do you know if what you’re doing is working? How do you know if you’re making money? It’s all in the financial reports.

The 3 most important reports

1. The Balance Sheet is like a snapshot of your small to mid-sized business (SME) for a given moment in time. It details the company’s assets, liabilities and net worth.

Now, before you let your eyes glaze over and shut off your brain, let’s take a closer look. It is highly recommended that you read more about   these definitions at AllBusiness.com (highly recommended site) as this post is using just the basic definitions for brevity.

Asset: an economic resource that is expected to provide benefits to a business. A few examples of this include real estate, cash, inventory, machinery or a patent. There are also sub-categories that may be important to understand if you are planning to speak with investors or a banker. In your living business plan, it is important to know what your business owns that carries a tangible or intangible value.

Liability: a debt or financial obligation. A few examples  of this are money owed to vendors, estimated tax payments or loan payments. For those of you who offer a money-back guarantee or warranty, this may also be a liability.

Net Worth: total assets less your total liabilities. This is also sometimes referred to as retained earnings. Imagine it like a simple math problem Assets – Liabilities = Net Worth

If you aren’t using accounting software or have an accountant creating this document for you, you can find a good template here to get you started. Seeing it all lined up in categories and numbers can help you see the overall picture of what your small business is doing right now.

2. The Profit and Loss Statement is another sort of picture of the health of your SME. Simply put, it lists how much revenue (money coming in) is being generated and your expenses (money going out) during a set period of time. This can be done monthly, quarterly, biannually or yearly. Other terms that mean the same thing are income statement or operating statement. This report cuts to the chase. Are you making a profit or posting loss after loss? If you find your business is consistently losing money, it may be time to revisit other parts of your business plan or consider an exit strategy (closing the business, selling it or hiring someone with better skills to run it).

3. The Cash Flow Statement reports revenue and income as well as expenses derived from selling services or products, investing in long term measures for the growth of the company and borrowing and/or selling common stock. This report really highlights the solvency of your business by showing how easily financial obligations can be met.

You can be a “money person” some of the time

You may not become totally enamoured with all kinds of financial reports but you can discover how useful they are as tools. There are moments that you will discover good or bad news. I remember one time in the early days of my business when I was sure things were going south. I was pleasantly surprised to discover that the cash flow was healthy and trending upward. There is plenty to lose sleep over. Knowing what is going on financially will help you sleep better and make proactive decisions.

*Want to learn more about living business plans? Join me for a 2-hour interactive Business Planning Workshop on Monday, October 17, 2011 from 6:00pm to 8:00pm at the Lowell Small Business Assistance Center, 88 Middle Street, Room 202, Lowell

Participants will:

  • Revisit their vision, core values, and core purpose to make sure they are on track
  • Learn simple methods to analyze and measure how their business is progressing so you can make course corrections before it’s too late
  • Fine tune their current goals and map out steps so they stay focused on what their customers really want and stop wasting time

During the workshop, there will be written exercises using information from case studies and the participants’ own businesses. At the end of the workshop, participants will leave with a written version of their living business plan. To learn more about the Lowell Small Business Assistance Center, you visit their website or call (978) 322-8400.

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Emerging Open Innovation or Something Else?

Innovation never seems to become a dead topic. However, lately it seemed to be less favored by business leaders. And yet, it is becoming clearer that our understanding of innovation is changing. Just yesterday, a client was emphatically telling me that he’ll know his product will be innovative when people buy it. So, maybe innovation is defined by our customers?

Is it who defines it or the process that creates innovation?

In a post from the Ivey Business Journal, Henry Chesbrough posits that how innovation will be managed is evolving as new technologies allow us to connect with one another. Think about where you work. How many innovation sites have been opened over the last few years? In the Greater Boston area, it seems like one is opening all the time.

Chesbrough’s point is that it’s the process that creates innovation but there will be several changes coming in the future.

1. Innovation will be more collaborative. Collaboration will come in many forms. Between technology advances that make it easier to collaborate virtually to including customers in the iterative process of a new product, there will be ideas and opinions exchanged making fora richer experience.

2. Business models have to be adapted. Chesbrough predicts that simply having great ideas is not going to be a sustainable model for a company. He writes, “[t]hrough devices like the business-model canvas of Alex Osterwalder, organizations are learning techniques to visualize both their current business model as well as possible alternative models.”  The effects of the global recession include a re-balancing of where economic growth will come from which will also influence how business models are designed.

3. Service economies and innovation. In his last prediction, Chesbrough notes that the majority of established economies are more geared to services than products. This means that how services are created and provided to the customer must be innovated. Some companies (e.g. Lego) are already moving in this direction. Another thing that Chesbrough notes is that service companies need people but also other options to serve their customers in the best way. He suggests that creating a platform that others can use is a viable way forward in managing innovation.

What do you think?

The way we produce actually may come from how we innovate the process of innovation. This could change the business landscape quite a lot! In the next Twitter chat, #kaizenblog, the focus will be on Chesbrough’s predictions. Some of the discussion questions will include:

  • How do you define innovation?
  • Assuming innovation is always about new things (e.g. the iPad), are we emphasizing innovation to the detriment of satisfying customer needs?
  • How will partnering with customers make innovation more possible? What is the possible downside to this collaboration?
  • What could one of these future business models look like?
  • What could it mean for a business to service/support their competitors’ products?
  • What changes will emerging economies introduce?

There are many more questions to pursue with this topic. I hope you’ll enjoy the lively and thought-provoking conversation on the Twitter chat, #kaizenblog on Friday, July 22nd at 12pm ET/5pm BST/9am PT.

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