Tag: business problem

Great Problems To Have

Entrepreneurship

I know that a lot of you are struggling to get your business off the ground: get your first sales, get a little growth in revenue, perhaps hire your first employee.  It is always a struggle to get things going, but sometimes you will have a situation where you will get more business than you can possibly handle.  I have written about our experience with this kind of problem, where our business growth was somewhat out of control because of being listed on Yahoo, but I have also run across another business that had the same situation.  It was a one man shop that brokered logistics services.  The owner ran across some government business, wound up selling millions of dollars, and had a very hard time dealing with it all.  Last year the company grossed between 10 and 15 million dollars with probably half of that gross profit before salaries and such.

The company has only been in business 7 years, since 2003.  The owner is an exceptional sales person but in 2000 – 2001 was basically broke and penniless.  He sold used cars to try to earn enough to support his family.  He also waited tables.  This all happened because the great MLM business we were all doing had collapsed.  Where I went back to work, he had to start again from scratch.

Today the owner of this logistics company has 7 acres of property on a river in Florida, a boat, jet skis, a golf cart to get around his property, a 2006 corvette, a brand new Cadillac Escalade, and two other cars.  He also owns several investment properties.  All of what he has is fully paid for, no debt.  Plus he has enough in secure investments to provide him with income for the rest of his life.  In fact, he bought the Escalade with his American Express.

The business now has 5 total employees: all of the labor, trucking, and other work is brokered out to other companies.  It is still a lot of work and the business has challenges.  After several years, the business may be losing the government work that made them so incredibly busy.  Since they started getting the government logistics work, they had not sold any additional work because they were so incredibly busy.  Now they must devise a strategy and build a sales team and sell again, but motivation to rebuild is definitely an issue.

If you find yourself in this kind of situation, there are people who can help.  I know that you may be an entrepreneur and a sales person, but not a business manager.  You may have a hard time trusting people because you’ve been burned.  I understand.  There are people who can help and I can definitely put you in touch with the right people to help you with your problems.  People who are trustworthy and who will really help, and will help you feel comfortable that you are really going to be helped and not leached upon.

Business consulting is not cheap but will pay dividends.  It will help you get control of your business, your personnel issues, and your business problems.  You will sleep better at night and have the time to think for 5 minutes.  The right business consultant can help you get your business growing again.  And consultants are like temps, they take no benefits and go away once the project is complete.  No need to fire them.

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What Is A Project?

Management

You may think of a project as customizing your kitchen or planting a garden, but in business it is a couple things: It is a solution to a problem and it is an investment with a return.

A solution to a problem

Why are you doing this project?  I’m sure you’re not working on the project just because you had nothing else to do.  It is usually because there was a problem that you needed a solution to, and your project is your solution.  Now the project might be a major IT project, or it could be just a minor change in business process, but it is always meant to solve some sort of problem.

An investment with a return

We talked a couple of weeks ago about valuing and investing in stock. Similarly, a project is typically an investment in time and or capital with an expected return.  For instance, we had a project to change much of our transportation paperwork to fit on fewer pages and print two-sided.  The investment was mainly IT time and the return was less spending and waste of paper.

You could have all kinds of different projects that fit this criteria: product development, marketing, sales training, ERP implementations, process improvements, and reorganizations all fit.  You invest in a change, a project, and either save money or make more money.  The return you should expect may vary by the amount of risk built into the project.  You might expect a big, risky project to have a 40% return for example, where a risk-free project may return 10% or less.  Remember, though, that if the money is worth more to your shareholders, you really should pay it out in dividends rather than invest in low-return projects.

Exceptions to the rules

Let’s say you have a project you need to do but it doesn’t have any return. Then why do you want to do it? Perhaps you have a major customer that changes their requirements to do business with them.  So you do a project to solve the requirements problem with the customer, but nothing changes really.  You’re still doing the same business.  Well, the return is actually the business not lost.  The alternative would be to lose the customer and the revenue that goes along with them.  So there is a return after all.

Summary

So you typically do a project to solve a business problem.  And it’s an investment with a return.  You should make a judgement if the return is worth doing the project.  You may even have a list of projects to do that you can prioritize by the expected return, perhaps weighted by the risk.  Most businesses do always have projects meant to improve the business in some way.  And, hey, you’re either growing or shrinking so best to keep growing.

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