Author Archives: Admin

Recession Makes Business-Plan Revisions Imperative

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J. Roy Miller, State Director, NM SBDC Network

J. Roy Miller, State Director, NM SBDC Network

It’s a safe assumption that most of the companies doing business today didn’t include recession-survival tactics in their plans for 2008-2009. This means that the assumptions underlying their business plans are probably outdated, even for companies launched just a few months ago.

That’s how quickly things can change in a global economy buffeted by unstable financial markets, tightened credit and faltering consumer confidence. And that’s why forward-thinking companies maintain their advantage by having and progressively updating a written business plan.

For some businesses, the dramatic scenery change of a deepening recession means that the sales assumptions in their original business plans are now overstated and unrealistic. Other businesses — the lucky ones that stand to profit in a slow economy — have business plans that understate their possibilities for expansion and revenue growth. Either approach — over-reaching or under-reaching, based on an invalid business plan — could endanger the unwary business owner.

To increase the chances of surviving this financial winter, companies should revisit the long-term and short-term portions of their business plans and adjust in light of changing circumstances. Those in charge should consider the following:

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Realistic Expectations Are Central to Obtaining Capital

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Paul F. Goblet, Investment Advisor, NM Small Business Investment Corporation

Paul F. Goblet, Investment Advisor, NM Small Business Investment Corporation

Finding the money to run a business is a concern that begins at conception and doesn’t stop until the business fails or is sold to someone else. Satisfying a healthy business’s appetite for capital requires knowing which kinds of investors to approach at each stage of a company’s growth and what size of investment to expect at each stage.

Each funding source has its own guidelines for when to help — and how much to give — a company that’s hungry for capital. But the first thing all investors want to know is what stage a company has reached and what chance it has to grow and make money.

Few businesses follow a predictable path and timeline from one stage of life to the next. Some linger for a long time as startups, while others dash directly from startup to exit. Knowing the life cycle of a typical business can help an entrepreneur know where to find capital to reach the next stage.

Life cycle of a business

The seed or startup stage starts with an idea or a prototype for a product or service. At this stage, entrepreneurs either tap friends, family members or other personal contacts for funds, or they seek angel investors, grants, micro loans or venture capital.

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The Seven Deadly Sins of Marketing and Sales

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Pat McNamara, Marketing Consultant

Pat McNamara, Marketing Consultant

Failure to listen to potential customers or clients has sabotaged many a great idea or product, especially among entrepreneurs who lack empathy and act as if they know all the answers. Such a self-centered approach to doing business is bad enough when the economy is booming, but it’s fatal during a recession, when thinking about the other guy is essential.

Self-centered assumptions lead some entrepreneurs to commit one or all of these seven deadly sins of marketing and sales:

It’s all about me. “I may not be much, but I’m all I think about.” That slogan on a young man’s T-shirt caught my eye on a recent business trip, as did a similar pronouncement on the T-shirt of a woman in my hotel lobby: “It’s all about me.” Extreme self-consciousness underlies stage fright and is a barrier to successful sales. When a speaker or salesperson genuinely wants an audience or individual to understand a concept or make the right purchase, self-consciousness vanishes.

We are so much alike. In truth, we are all very different — in the things we value, how we think and make decisions, the speed with which we walk and talk. Some of us value relationships and strive for collaboration. Others focus on results. Some people make instant decisions, while others ponder for weeks. Appreciating diversity is critical to tailoring a sales pitch.

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Hard Times Are No Time to Stop Marketing

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Julianna Barbee, Director, New Mexico Small Business Development Center at Northern New Mexico College

Julianna Barbee, Director, New Mexico Small Business Development Center at Northern New Mexico College

Marketing is essential to the growth and success of any business, yet it seems to be the first part of the operating budget that managers slash when revenues dwindle and the economy gets unpredictable. Understanding and appreciating the role of marketing can prevent business owners from making the mistake of viewing this type of outreach as a dispensable luxury.

Whether you conduct business in a small, rural area or the global market, some principles are universal:

Marketing is all about the customer. To meet your customers’ needs you have to know those needs and know how your products or services will help them. Figure out ways to communicate with customers and persuade them to choose your services or products through creative marketing.

Standing out amid the information-overload din. On any given day, people are exposed to thousands of marketing messages through advertisements on TV, radio, billboards, newspapers, magazines and the Internet. To win the competition for your customers’ overtaxed eyes, ears and wallets, your message has to stand out amid all these appeals, and that requires creativity, a marketing budget and careful consideration of your target market and the best media channels to reach it.

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Recession-Proofing Your Business Requires Back-to-Basics Strategy

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Julianna Barbee, Director, New Mexico Small Business Development Center at Northern New Mexico College

Julianna Barbee, Director, New Mexico Small Business Development Center at Northern New Mexico College

With the crisis in America’s financial markets now metastasizing around the globe, many entrepreneurs are making a return to business basics part of their strategy for survival. Among these essentials are a determination to succeed, a positive attitude, flexibility and willingness to act quickly and decisively.

Here’s a more specific look at some core principles and how they can be applied to your business:

Productivity. Never stop thinking of how to increase productivity. Increasing return on equity means increasing the financial results and outputs relative to costs and inputs. Look for ways to increase sales, revenues and profits at lower costs.

Customer satisfaction. Be clear about how your customers define satisfaction, and know what they really want, whether it’s speedy service, quality service or access to those in charge. Every business has both external and internal customers, and satisfying these people is indispensable to success. If your customers are happy, they will buy from you again or use your services again, and they’ll tell their friends about you.

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Wanted: Business Leaders Who Inspire Others to Lead

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Julianna Barbee, Director, NM Small Business Development Center at NNMC

Julianna Barbee, Director, NM Small Business Development Center at NNMC

Few things are as effective as a global economic crisis for identifying the qualities of leadership most likely to inspire optimism and involvement. Whether it’s in the world of politics or business, the most effective leaders exude both confidence and pragmatism and are inclusive and decisive.

Leadership in business means creating an environment in which people’s strengths are reinforced and their weaknesses offset, which is why the most effective leaders surround themselves with other leaders, not just experts in their chosen field.

Studies show that when something negative happens within the workplace, blaming the individual or individuals involved can often hinder our ability to see the larger context in which it happened.  Recognizing the fallibilities and possibilities of being human allows business leaders to unlock the energies of every team member and increase collective excellence and performance. A united team can focus on all areas at once rather than succumbing to the natural tendency to pay attention to one problem or opportunity at a time and get lost in the details.

Whether you are a business owner or an employee of a large or small organization, these leadership traits can help you and your business become more efficient and more productive.

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Staying Cool When the Market’s Blowing Hot and Cold

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Gena Wilimitis, PR Coordinator, Securities Division, New Mexico Regulation and Licensing Department

Gena Wilimitis, PR Coordinator, Securities Division, New Mexico Regulation and Licensing Department

The Securities Division of the New Mexico Regulation and Licensing Department is cautioning investors to avoid making impulsive and uninformed decisions about their long-term financial holdings in response to the unprecedented volatility on Wall Street.

“Investors should resist the temptation to make hasty decisions about their investments or finances,” division director Bruce Kohl said. “And now is the time to be especially wary of unsolicited financial advice offering new investment opportunities. We know from past experience that con artists follow the headlines to exploit the worries of everyday investors. In times of confusion and uncertainty, there are always those who will try to prey on the investing public.”

Turmoil in the home-mortgage market creates opportunities for crooks to peddle phony real-estate investments that promise enormous returns, Kohl said, and soaring energy costs have inspired scams disguised as oil and gas partnerships and alternative-energy projects. The Internet has given a global grasp to con artists who disguise themselves as online “friends” eager for your partnership in money-making ventures.
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Selling Your Product Means Selling Yourself

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Leslie Hoffman, Director of Lending, ACCION New Mexico

Leslie Hoffman, Director of Lending, ACCION New Mexico

Remember your favorite first date? Think about what made it special for you.  Maybe it was the way your date listened and took an active interest in you and the things you care about. It could have been the extra care your date put into looking just right for the occasion or the bouquet of flowers that greeted you at the door.

Making a good and lasting first impression in business is a lot like a memorable first date. In a competitive marketplace where consumers, companies and government institutions have multiple choices about where and how to spend money, it’s vital for small-business owners to remember that selling yourself can help you sell your product or service.

A common mistake of business owners is failure to make a positive and lasting first impression, but it’s a mistake that’s simple to correct by following a few simple steps.

Be prepared. Begin building a lasting first impression even before your meeting starts. Know everything you can about your product or service. This might include having a portfolio of work or product samples or other promotional or marketing materials. Be prepared to answer commonly asked questions. Remember the adage: Failure to prepare is preparation for failure.

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Money Is Tight, but It’s There for the Lending

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F. Leroy Pacheco

F. Leroy Pacheco, CEO, The Loan Fund

The credit crunch is a new nightmare for some borrowers, but entrepreneurs and start-ups of modest means were only too familiar with being turned down for traditional financing even before the economy went sour.

Private alternative lenders such as The Loan Fund have helped such borrowers build self-sufficient businesses for years. Since the Wall Street meltdown, we’ve been getting more referrals from loan officers at local banks who know we have more flexibility than they do and can make a loan or authorize a line of credit of up to $1 million.

Bankers aren’t bad people; our board of directors includes several of them. They want to help business owners, but their hands are often tied by federal regulations and mandates from above — and those restrictions have only increased recently. One banker told me applicants must now have a minimum credit score of 650 and three years of profitable financial reports before the bank even considers making a loan.

Because we’re a private group that balances social benefits and fiscal responsibility, The Loan Fund has more flexibility when it comes to helping our clients get (and keep) going. One such client, Carley Preusch of Silver City, was turned down by four banks that considered her profit margin “too low.” We loaned her $125,000 in July to expand her assisted-living center.
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Keeping Loyal Customers During a Downturn

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J. Roy Miller, State Director, NMSBDC

J. Roy Miller, State Director, NMSBDC

Every business knows it costs more to acquire new customers than to retain existing ones. Yet many businesses spend lots of money on elaborate advertising campaigns while their profitable, longtime customers walk out the door to do business elsewhere. In this climate of economic uncertainty, it’s more important than ever for business owners to hold on to the customers who helped them build their business in the first place.

Don’t give them a reason to stray. Make customer service a priority by setting the example for your employees, who learn by seeing and doing what you do. Make suggestions and invite workers to come up with their own suggestions for how customers could be better served. Good customer service starts with the boss.

Reward loyalty. Every customer wants to know that his or her business is appreciated, especially when money doesn’t go as far as it did even a year ago. Customers often go elsewhere simply because they feel ignored. Let your customers know you appreciate their business by saying thanks through words, letters and small rewards.

Act on complaints. For every customer who complains, another 26 have similar problems they haven’t resolved, according to the U.S. Office of Consumer Affairs. Think of complaints as market research you didn’t have to pay for, and then respond by fixing the problem.

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