Now that your business is running, here are the basics of what you need to know.

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» Plan Your Business Future

While poor management is cited most frequently as the reason businesses fail, inadequate or ill-timed financing is a close second. Whether you're starting a business or expanding one, sufficient ready capital is essential. But it is not enough to simply have sufficient financing; knowledge and planning are required to manage it well. These qualities ensure that entrepreneurs avoid common mistakes like securing the wrong type of financing, miscalculating the amount required, or underestimating the cost of borrowing money.

Before inquiring about financing, ask yourself the following:

1. Do you need more capital or can you manage existing cash flow more effectively?
2. How do you define your need? Do you need money to expand or as a cushion against risk?
3. How urgent is your need? You can obtain the best terms when you anticipate your needs rather than looking for money under pressure.
4. How great are your risks? All businesses carry risks, and the degree of risk will affect cost and available financing alternatives.
5. In what state of development is the business? Needs are most critical during transitional stages.
6. For what purposes will the capital be used? Any lender will require that capital be requested for very specific needs.
7. What is the state of your industry? Depressed, stable, or growth conditions require different approaches to money needs and sources. Businesses that prosper while others are in decline will often receive better funding terms.
8. Is your business seasonal or cyclical? Seasonal needs for financing generally are short term. Loans advanced for cyclical industries such as construction are designed to support a business through depressed periods.
9. How strong is your management team? Management is the most important element assessed by money sources.

Perhaps most importantly, how does your need for financing mesh with your business plan? If you don't have a business plan, make writing one your first priority. All capital sources will want to see your for the start-up and growth of your business.

Not All Money Is The Same
There are two types of financing: equity and debt financing. When looking for money, you must consider your company's debt-to-equity ratio - the relation between dollars you've borrowed and dollars you've invested in your business. The more money owners have invested in their business, the easier it is to attract financing.

If your firm has a high ratio of equity to debt, you should probably seek debt financing. However, if your company has a high proportion of debt to equity, experts advise that you should increase your ownership capital (equity investment) for additional funds. That way you won't be over-leveraged to the point of jeopardizing your company's survival.

Equity Financing
Most small or growth-stage businesses use limited equity financing. As with debt financing, additional equity often comes from non-professional investors such as friends, relatives, employees, customers, or industry colleagues. However, the most common source of professional equity funding comes from venture capitalists. These are institutional risk takers and may be groups of wealthy individuals, government-assisted sources, or major financial institutions. Most specialize in one or a few closely related industries. The high-tech industry of California's Silicon Valley is a well-known example of capitalist investing.

Venture capitalists are often seen as deep-pocketed financial gurus looking for start-ups in which to invest their money, but they most often prefer three-to-five-year old companies with the potential to become major regional or national concerns and return higher-than-average profits to their shareholders. Venture capitalists may scrutinize thousands of potential investments annually, but only invest in a handful. The possibility of a public stock offering is critical to venture capitalists. Quality management, a competitive or innovative advantage, and industry growth are also major concerns.

Different venture capitalists have different approaches to management of the business in which they invest. They generally prefer to influence a business passively, but will react when a business does not perform as expected and may insist on changes in management or strategy. Relinquishing some of the decision-making and some of the potential for profits are the main disadvantages of equity financing.

You may contact these investors directly, although they typically make their investments through referrals. The SBA also licenses Small Business Investment Companies (SBICs) and Minority Enterprise Small Business Investment companies (MSBIs), which offer equity financing. Apple Computer, Federal Express and Nike Shoes received financing from SBICs at critical stages of their growth.

Debt Financing
There are many sources for debt financing: banks, savings and loans, commercial finance companies, and the U.S. Small Business Administration (SBA) are the most common. State and local governments have developed many programs in recent years to encourage the growth of small businesses in recognition of their positive effects on the economy. Family members, friends, and former associates are all potential sources, especially when capital requirements are smaller.

Traditionally, banks have been the major source of small business funding. Their principal role has been as a short-term lender offering demand loans, seasonal lines of credit, and single-purpose loans for machinery and equipment. Banks generally have been reluctant to offer long-term loans to small firms. The SBA guaranteed lending program encourages banks and non-bank lenders to make long-term loans to small firms by reducing their risk and leveraging the funds they have available. The SBA's programs have been an integral part of the success stories of thousands of firms nationally.

In addition to equity considerations, lenders commonly require the borrower's personal guarantees in case of default. This ensures that the borrower has a sufficient personal interest at stake to give paramount attention to the business. For most borrowers this is a burden, but also a necessity.

For more information on financial topics go to www.sba.gov/financing/index.html

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Forecasting for Growth
To be effective as a leader, you must develop skills in strategic thinking. Strategic thinking is a process whereby you learn how to make your business vision a reality by developing your abilities in team work, problem solving, and critical thinking. It is also a tool to help you confront change, plan for and make transitions, and envision new possibilities and opportunities.

Strategic thinking is like making a movie. Every movie has a context (or story) which it uses to get you to experience a certain outcome (an emotion, in this case) at the end of the movie. Strategic thinking is much the same in that it requires you to envision what you want your ideal outcome to be for your business and then works backwards by focusing on the story of HOW you will be able to reach your vision.

As you develop a strategic vision for your business, there are five different criteria that you should focus on. These five criteria will help you define your ideal outcome. In addition, they will help you set up and develop the steps necessary to make your business vision a reality.

The following is a list of the five criteria of the strategic thinking process:

Organization:
The organization of your business involves the people you will have working for you, the organizational structure of your business, and the resources necessary to make it all work. What will your organization look like? What type of structure will support your vision? How will you combine people, resources, and structure together to achieve your ideal outcome?

Observation:
When you are looking down at the world from an airplane, you can see much more than when you are on the ground. Strategic thinking is much the same in that it allows you to see things from "higher up." By increasing your powers of observation, you will begin to become more aware of what motivates people, how to solve problems more effectively, and how to distinguish between alternatives.

Views:
Views are simply different ways of thinking about something. In strategic thinking, there are four viewpoints to take into consideration when forming your business strategy: the environmental view; the marketplace view; the project view; and the measurement view. Views can be used as tools to help you think about outcomes, identify critical elements and adjust your actions to achieve your ideal position.

Driving Forces:
What are the driving forces that will make your ideal outcome a reality? What is your company's vision and mission? Driving forces usually lay the foundation for what you want people to focus on in your business (i.e., what you will use to motivate others to perform). Examples of driving forces might include: individual and organizational incentives; empowerment and alignment; qualitative factors such as a defined vision, values, and goals; productive factors like a mission or function; quantitative factors such as results or experience; and others such as commitment, coherent action, effectiveness, productivity, and value.

Ideal Position:
After working through the first four phases of the strategic thinking process, you should be able to define your ideal position. Your ideal position outline should include: the conditions you have found to be necessary if your business is to be productive; the niche in the marketplace that your business will fill; any opportunities that may exist either currently or in the future for your business; the core competencies or skills required in your business; and the strategies and tactics you will use to pull it all together.

By working through these five areas, you will begin to get a clearer picture of exactly how your business vision can be accomplished. As your vision becomes more focused, your ideas will appear stronger and more credible. Not only will it be easier to convince others that your idea is a good one, but it will also be easier to maintain your own conviction and motivation when you reach any pitfalls or obstacles in the road.

Overall, you can apply strategic thinking skills to any area of your life. But by making a concerted effort to apply them specifically to your business venture, you will have a much better chance of bringing your vision to life. And isn't that what you want?

Sharpening Skills
Do you find it difficult to move from task to task or are you very flexible when it comes to retaining and evaluating a lot of different information? Or perhaps the idea of having to manage others really turns you off? On the other hand, maybe you're the type who has never been bothered by the idea of delegating and loves the challenge of long-range planning.

Are You A Good Decision Maker?
Decisions, decisions, decisions. It seems like every time we turn around, we have to make more decisions. The question is, "Are you a good decision maker?" If you aren't (or don't think you are), there is no need to worry. Decision-making is a skill that can be learned by anyone. Although some people may find this particular skill easier than others, everyone applies a similar process.

Important Structures of Successful Meetings
If you have employees your successful communication with them is imperative to your business’ healthy operation, and timely, structured meetings that touch the right points and involve the proper personnel are a large part of this communication. Successful meetings use structure. Procedures and structure help groups perform significantly better in meetings. Meeting structures are the solid foundation upon which effective meetings are built. Here is a list of some of the important structures that make a successful meeting.

1. A regular time for the meeting is established, or meetings are scheduled for a period of time. For example, meetings for a given month, quarter, or year are scheduled at one time.
2. The meeting leader is prepared.
3. Desired outcomes are written.
4. Important inputs to the meeting are prepared and brought to the meeting.
5. Meeting recorder(s) is selected.
6. The meeting format is developed.
7. The meeting agenda is prepared and available ahead of time, and is reviewed and modified as needed before the meeting begins.
8. Planned participation is used within the first 15 minutes.
9. Meeting minutes are recorded.
10. The meeting is critiqued for continuous improvement.

You Can’t Do It All – Learning To Delegate
There is not a single management skill more critical to your personal and professional success as an entrepreneur than learning to delegate. There is much more to delegating than meets the eye. It does not mean to simply hand out assignments. It is a science and an exercise in understanding one's self.

Strategic Planning for a Growing Business
To many people, strategic planning is something meant only for big businesses, but it is equally applicable to small businesses. Strategic planning is matching the strengths of your business to available opportunities. To do this effectively, you need to collect, screen and analyze information about the business environment. You also need to have a clear understanding of your business - its strengths and weaknesses -- and develop a clear mission, goals and objectives. Acquiring this understanding often involves more work than expected. You must realistically assess the business you are convinced you know well.

In addition, strategic planning has become more important to business managers because technology and competition have made the business environment less stable and less predictable. If you are to survive and prosper, you should take the time to identify the niches in which you are most likely to succeed and to identify the resource demands that must be met. Learn more about this topic.

For more information on management topics go to www.sba.gov/managing/index.html

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To succeed, entrepreneurs must attract and retain a growing base of satisfied customers. Marketing programs, though widely varied, are all aimed at convincing people to try out or keep using particular products or services. Business owners should carefully plan their marketing strategies and performance to keep their market presence strong.

General Definition
In plain and simple terms, marketing activities and strategies result in making products available that satisfy customers while making profits for the companies that offer those products. That's it in a nutshell!

Stated another way:
A focus on what the customer wants is essential to successful marketing efforts. This customer-orientation must also be balanced with the company's objective of maintaining a profitable volume of sales in order for the company to continue to do business. Marketing is a creative, ever-changing orchestration of all the activities needed to accomplish both of these objectives.

Marketing Strategy
A marketing strategy identifies customer groups which a particular business can better serve than its target competitors, and tailors product offerings, prices, distribution, promotional efforts, and services toward those market segments. Ideally, the strategy should address unmet customer needs that offer adequate potential profitability. A good strategy helps a business focus on the target markets it can serve best.

How Are The Customer And Business Objectives Met?
The American Marketing Association's definition of marketing is:
"The process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives."

You see in the above definition that the process of marketing begins with discovering what product customers want to buy. Providing the features and quality customers want is a critical first step in marketing. You'll be facing an uphill battle if you provide something you want to produce and then try to convince someone to buy it.

The marketing process then continues with setting a price letting potential customers know about your product, and making it available to them.

What Activities Are Included In Marketing?
Marketing activities are numerous and varied because they basically include everything needed to get a product off the drawing board and into the hands of the customer. One look at our Marketing Mall Directory shows that the broad field of marketing includes activities such as designing the product so it will be desirable to customers (using tools such as marketing research and pricing; promoting the product so people will know about it (using tools such as public relations, advertising, marketing communications; and exchanging it with the customer (through sales and distribution.)

It is important to note that the field of marketing includes sales, but it also includes many functions besides sales. Many people mistakenly think that marketing and sales are the same-they are not.

Market Research
Successful marketing requires timely and relevant market information. An inexpensive research program, based on questionnaires given to current or prospective customers, can often uncover dissatisfaction or possible new products or services.

Market research will also identify trends that affect sales and profitability. Population shifts, legal developments, and the local economic situation should be monitored to quickly identify problems and opportunities. It is also important to keep up with competitors' market strategies.

How Does Marketing Fit Into The Company?
Another way to describe marketing activities is to consider the big picture of how they fit in with the other business functions. Through marketing efforts, decisions are made and strategies are implemented concerning:

Products are created through production efforts. Capital and operating funds are managed and tracked in the accounting-finance area. The focus of the human resources area is employees and the policies concerning them.

Oftentimes, a marketing approach relies upon the coordination of several business areas to be successful. For example,

As a result, marketing usually crosses more departmental boundaries than other business functions do out of necessity. So, marketing requires the orchestration of everyone who plays a part in the common goal of pleasing the customer. For a small business owner who has no employees, this means that she needs to mentally tear down the walls between varied business functions and think holistically when it comes to marketing strategies.

Target Marketing
Owners of small businesses usually have limited resources to spend on marketing. Concentrating their efforts on one or a few key market segments - target marketing - gets the most return from small investments. There are two methods used to segment a market:

Geographical Segmentation:
Specializing in serving the needs of customers in a particular geographical area. For example, a neighborhood convenience store may send advertisements only to people living within one-half mile of the store.

Customer Segmentation:
Identifying those people most likely to buy the product or service and targeting those groups.

Managing the Market Mix
Every marketing program contains four key components:

1. Products and Services
2. Promotion
3. Pricing
4. Distribution

The following are combined into an overall marketing program.

Products and Services:
Product strategies may include concentrating on a narrow product line, developing a highly specialized product or service, or providing a product-service package containing unusually high-quality service.

Promotion:
Promotion strategies include advertising and direct customer interaction. Good salesmanship is essential for small businesses because of their limited ability to spend on advertising. Good telphone book advertising is also important. Direct mail is an effective, low-cost medium available to small business.

Pricing:
The right price is crucial for maximizing total revenue. Generally, higher prices mean lower volume and vice-versa; however, small businesses can often command higher prices because of their personalized service.

Distribution:
The manufacturer and wholesaler must decide how to distribute their products. Working through established distributors or manufacturers' agents generally is easiest for small manufacturers. Small retailers should consider cost and traffic flow in site selection, especially since advertising and rent can be reciprocal: A low-cost, low-traffic location means spending more on advertising to build traffic.

The nature of the product or service is also important in siting decisions. If purchases are based largely on impulse, then high traffic and visibility are critical. On the other hand, location is less a concern for products or services that customers are willing to go out of their way to find. The recent availability of highly segmented mailing lists, purchased from list brokers, magazines, or other companies, has enabled certain small businesses to operate from any location yet serve national or international markets.

Marketing Performance
After implementing a marketing program, entrepreneurs must evaluate its performance. Every program should have performance standards to compare with actual results. Researching industry norms and past performance will help to develop appropriate standards. Entrepreneurs should audit their company's performance at least quarterly.

The key questions are:
Is the company doing all it can to be customer-oriented?
Do employees ensure the customers are satisfied and leave wanting to come back?
Is it easy for the customer to find what he or she wants at a competitive price?

In Summary
These are the fundamentals of a true marketing mindset:

For more information on marketing topics go to: www.sba.gov/managing/marketing/market.html

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Today, the use of computers, the internet, electronic information, and digital communication is almost essential to many businesses in sustaining competition in their industries. The advantages of efficient technologies reduce business costs through increased time efficiency, communication efficiency, and greater access to resources. Using the web as a source for sales, marketing and business communication adds not only convenience to business management, but may also reduce the costs of performing these actions in traditional ways.

Depending on the type of business you are, and your goods/services, you may or may not want to use the internet as a sales and marketing tool. If your business would profit from using the web to reach consumers that are otherwise restricted from accessing what your business offers (either through time or distance constraints) you would want to consider starting a website for your business. If your business is based solely on local customers who need personal contact with your business (an auto-mechanic shop, for instance), you may want to focus on a more localized marketing and sales strategy.

Through the web, you can expand your market to the national level. However, keep in mind that there are many uses for the internet, and though internet sales or marketing may not suit your business there are many other uses through communication, financial services, and virtually every other aspect of managing a business.

For more information on Technology topics try one of these sites:

www.business.gov/phases/growing/use_technology/ecommerce_faq.html
www.sba.gov/managing/technology/understandinter.html

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Local Trade Organizations
In order to keep up on current trends, fluctuations in market supply and demand, new technologies, and business opportunities in your industry, it is helpful to belong to an organization that can take the pressure of doing all of this yourself. Joining a trade or business association helps you make connections that you otherwise might not be aware of- for improving your business, contacting new customers, or contacting new suppliers.

Many industries have either localized or nationalized organizations devoted to specific industries, from the Collier Building Industry Association to the National Association of Professional Pet Sitters. The list of nationalized trade and business organizations numbers in the thousands. Starting with a local or state organization, or running an internet search, is your best bet in finding one to help you. See also business and trade associations' contact details by clicking on the links below:

» Local business and trade associations
» State business and trade associations

Government Business Opportunities
The U.S. government is the world's largest buyer of products and services. Purchases by military and civilian installations amount to nearly $200 billion a year, and include everything from complex space vehicles to janitorial services to cancer research. The government buys just about every category of commodity and service available.

By law, federal agencies are required to establish contracting goals, such that 23% of all government buys are intended to go to small businesses. In addition, contract goals are established for women-owned businesses, small disadvantaged businesses, firms located in HUBZones and service disabled veteran-owned businesses. These government-wide goals, which are not always achieved, are 5%, 5%, 3% and 3%, respectively. They are important, however, because federal agencies have a statutory obligation to reach-out and consider small businesses for procurement opportunities. It is up to you to market and match your business products and services to the buying needs of federal agencies.

Selling to the federal government is, in some ways, similar to selling to the private sector. While federal procurement procedures may have a different set of rules and regulations, many of the same marketing techniques and strategies you already employ may work here. Use your common business sense. Some tips: Get to know the agency and understand the context in which your product or service could be used.

Obtain available information on past awards, quantities, costs and awarders. Become known to potential purchasers. Before going forward, take a moment to think about your company's products and services. Take a close look at your company and consider what the government will look for when considering your company for a contract award. Financial status, staff capabilities and track record are all of interest to the government.

How the SBA Can Help
The SBA's mission is to stimulate and foster economic development by helping new businesses get started and established firms grow. While small businesses often face considerable hurdles when trying to win federal contracts, the SBA can help overcome these barriers. The SBA works closely with other federal agencies and the nation's leading federal contractors to ensure that small businesses obtain a fair share of government contracts and subcontracts.

For more info and links to business opportunities with the U.S. Government go to: www.sba.gov/businessop/index.html

For SBA and other government website links please click here

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As your business grows make sure you keep it going in the right direction. To do this you first need a direction. As you meet the goals set in your business plan, change your plan to set new goals. This way you have direction and purpose so your business can set its sights on something more concrete than “growth”.

Set milestones to pass, and as you pass them make new ones. Keep momentum and progress up, otherwise your business may stagnate and lose its way, which leads to low profits, increasing debt, possibly even failure. A successful business is a one that can set goals and achieve them. Your business plan becomes a “living document”- it changes with your business and is a description of your business’ profile and goals.

By reviewing and revising your business plan often (perhaps monthly or quarterly) you keep your business, and yourself, aware of its status, progress, and future. Share changes, progress, plans and goals with your company - employees and investors - to help set a collective sense of direction, understanding and cooperation.

Use your resources, find help when you need it, think ahead, be creative, and you will succeed.

…and good luck!

The Greater Naples Chamber of Commerce