Published May 2004

Help your business succeed with ‘3C’s’

By Jamie Curtismith
Guest Columnist

Do you need money? What a silly question. What small-business owner doesn’t need money?

Women are starting their businesses at twice the rate of men. Unfortunately, small-business failure rates still exceed 80 percent. I hate doing the math on this, but the sad reality is too many businesses go out of business, and many of those businesses are owned by women.

There are many reasons why businesses fail, just as there are many reasons why marriages fail. I have explored several aspects of small-business failures (I am still happily married, so I haven’t explored marriage failures) and have determined that the majority of failures are based around what I call the “3C’s”: clarity, communication and cash flow (maybe there is a correlation to marriage here).

n Clarity: Most entrepreneurs launch their businesses thinking they can provide everything to everyone. They run around developing all kinds of products and services to offer and try to market them to anyone who will listen. We waste time, energy, effort and, most of all, we waste money. We do not have the luxury to “offer the highest-quality products and services at the lowest possible prices.” That strategy is for Wal-Mart, and you can see how successful small businesses compete against them. We must get absolutely clear about what we are doing, how we are doing it, who we are doing it to and most of all, why we are doing it.

Here is a test: If you cannot say what you do (your product or service), who you do it to (target market) and where you do it (niche/operations) in less than 10 words, then you lack clarity. Finding a target market in a well-defined niche is the key to small-business success.

n Communication: Clear communication is a huge challenge and the most difficult to recognize, until it is too late. We are constantly miscommunicating to our customers, our employees and our business associates. Our business suffers when we cannot clearly articulate our message. This is especially true in marketing. Our business name should clearly identify what we do. Our business cards, letterhead, logos, tag lines, advertising campaigns — everything that represents our business — should support our product/service and attract our target market.

n Cash flow: There are many “money issues” in our business. How much do I need to start the business? Where do I get the money? How much can I expect to make? How much should I charge? All of these questions can be answered with a little business planning.

I offer several courses on dealing with finances in a small business. Sadly, these are the least-attended courses. We are in such denial about our relationship with money that if it weren’t so tragic, it would be comical.

Here’s a rule: If you can’t manage the money you have in your personal life then there is no way you are going to be able to manage money in your business. Don’t rely on your bookkeeper and accountant to do this for you. They do not own your business — you do.

Pay particular attention to the money that is spent. Every purchase must be justified, and it should be tied to the bottom line. Ask yourself, “If I purchase this, can I expect a sale from it?”

We need to be as frugal as we can be. It is not wise for startups to sign a long-term lease, purchase new equipment or launch a massive marketing campaign. Many things that entrepreneurs spend money on are not imperative to the operation of the business. All of these activities tie up cash that could otherwise be used to run the business. You must have adequate “working capital” on hand. Don’t know what I’m talking about? Then don’t be afraid to ask for help.

I will be offering several entrepreneurial financial courses at Everett Community College this spring, including:

n “Money Matters Part I: Being Money Smart” — May 11. The course will cover the basics of money to build knowledge, security and confidence. Learn about budgets, track income and expenses, develop a chart of accounts, build a balance sheet, discuss profit-and-loss statements, and understand cash flow.

n “Money Matters Part II: What are Your Financial Statements Trying to Tell You?” — Mary 13. The seminar will distinguish between managerial, financial and taxation systems and how this financial information can be applied to the decision-making process. Learn about the importance of the balance sheet, discuss profit-and-loss statements, and understand cash flow. The emphasis will be on practical, meaningful ways to understand and use what would otherwise be a confusing array of information.

n “How Much Do I Charge for This? — May 19. Learn how to price your product using several techniques. Participants will identify how much it costs, who will buy it and how much profit to expect.

n “Finding Funds to Finance Your Business: How to Get Money, From Myth to Reality” — May 26. Learn the “inside scoop” of borrowing and of evaluating your equity sources. Understand the role of bankers, venture capitalists, angel investors and the many financial programs available on the market.

All classes will be held from 4 to 6 p.m. Cost per class is $39. For more information or to register, call 425-267-0150.

Jamie Curtismith is owner of Curtismith Consulting, specializing in entrepreneurial development. She also is a small-business management instructor at Everett Community College. She can be reached at 425-252-4165 or by e-mail to curtismith@comcast.net.

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