Business Blog

Managing Your Time

2008-04-30T08:49:00.000-07:00

Most of the smartphones today have powerful built-in tools to aid us in managing our time. Powerful software packages are available for computers as well. Nevertheless, efficient time management still remains one of the most difficult aspects of human activity. Moreover, efficient time management is necessary not only for business people and managers, but for everyone. Simply, time is something that you cannot buy, alter, slow down or otherwise affect (well someone may argue that if you own a jet, you can seriously save time but again there are only 24 hours per day strictly for everybody). So, the only way to use time efficiently is to adopt some simple but important methods. In this post I will provide you with 9 important rules for managing your time efficiently. In the end of this post, I am reviewing a method called the Eisenhower Method. I will expand this topic in several upcoming posts.

Managing time is difficult because efficient time management depends on many personal traits, which are not sometimes obviously connected to time management. For example, usually those people who tend to regret on past failures are very bad at managing time. So the rule #1 for efficient time management is to stop regretting past failures and start learning from your mistakes.

When doing something, have you ever had a feeling that you were losing time? Sometimes we do have to do routine things and when doing such things, this feeling of "losing time" becomes even worse. So, rule #2 is to seek something positive in whatever you are doing and thus kill the feeling of "losing your time". Of course, if you are doing a totally useless thing, then no matter how you try to kill this feeling of "losing your time", it won't help for you will be really losing your time.

In the opening of this post I have mentioned that smartphones do have built-in time management functionality. Most of the smartphones (for example Symbian or Windows Mobile based smartphones) are very easy and comfortable to use with your desktop computer and synchronising data with the desktop software (for example Microsoft Outlook) is extremely easy. So our rule #3 is to get such a device or in the worst case get a plain old paper notebook and a pen or pencil.

Rule #4 is to keep reminders all the time. This is when smartphones or other electronic PIM devices come in handy and this is one of the things where paper notebooks have an explicit disadvantage. You can attach an alert to an entry in your electronic calendar and the device will beep or otherwise remind you about the calendar entry. With the paper notebook, you must regularly check the entries. Another form of reminder is to keep small sticky notes at your home or in your office.

When I first started using computers, it was a DOS era and the Norton Commander was the killer application of that time. Of course multi tasking in DOS was out of question. You were only able to run a single application at a time. If you look at a monitor of an average computer user today, you see gazillion of open windows: Internet browser, word processing, e-mail client, music player, graphic editor and so on. Multi-tasking is concentration's number one enemy. However, achieving efficient time management requires that you stick to rule #5 and concentrate on one thing at a time.

Imagine a large corporation. Companies as large as General Motors have tens of thousands of employees. If I remember correctly, GM has over 330,000 employees. GM has more vice presidents than there are regular employees in most of the small companies in the USA. It would take a whole day of GM's CEO to just say "Hello" to all company's top managers (I am not even saying middle managers). How then executives of such large companies manage to be successful in managing the companies? They delegate responsibilities. When an owner of a very small company feels and understands and more importantly is ready to delegate responsibility to others, it's the point when the company starts real growth. So, stick to rule #6 and delegate responsibilities whenever possible.

Sometimes we get lost in routine tasks and lose focus of the "big picture" and the long-term goals. In the end, the long-term goals matter. Those goals are the reason we do or at least must be doing everything. The short-term tasks are supposed to support achieving long-term goals. Yet, many people forget the long-term goals. In order to be successful at time management, stick to rule #7 and from time to time revise your long-term goals. Beginning of a month is a good point to do so. Also, whenever there are considerable changes in the environment or significant events occur, it makes sense to revise and if necessary update the long-term goals.

Try to make realistic to-do (also called a task list) lists. All of us want to accomplish as many things as possible during a day. But keep in mind that there are only 24 hours per day, not an hour more. If you make unrealistic to-do lists, in the end you will get frustrated because every day you will have many unaccomplished things carried from the previous day. At the same time you should not fall in another extreme and make very easy to-do lists. Always keep in mind that when it comes to time management, Pareto's principle works in all its beauty: 80% of tasks can be completed in 20% of the disposable time and the remaining 20% of tasks will eat up 80% of the time. However, we can make the Pareto's law to work for us to increase productivity. Did you know that 80% of the productivity can be achieved by doing 20% of the tasks? If you want to do so, keep in mind the rule #8: make realistic and achievable to do lists and the rule #9: try to find and do those 20% of tasks that will help you achieve the 80% of productivity.

Finally, I would like to talk about a very powerful method for efficiently managing your time called the Eisenhower Method. It is believed that the US president Dwight D. Eisenhower was using this method. I'm not sure if he was the inventor but it if this method worked for Mr. Eisenhower, then it must work for you and me as well.

What is important is seldom urgent and what is urgent is seldom important - President Eisenhower would say. More formally, we can categorize tasks on two scales according to their importance and urgency. If we make a matrix as shown on an exhibit below, we get 4 quadrants.

Thus, according to this system, each task can belong to one of the 4 quadrants and thus a task can be: A. urgent and important (top-left quadrant), B. urgent but unimportant (top-right quadrant), C. not urgent but important (bottom-left quadrant) and D. not urgent and not important (bottom-right) quadrant. After you classify your tasks, the matrix shows how you must approach the tasks. As you can see from the exhibit, you must get done urgent and important tasks right away, make note and when time comes do the important but not urgent tasks, you can easily delegate urgent but not important tasks to others and finally you must try to minimize spending your time on unimportant and not urgent tasks. Yes, the tasks from the bottom-right quadrant eat up that 80% of your time. Examples? Here you are: chatting, gossiping on the phone, watching absolutely useless TV programs, clueless and useless Internet surfing, taking 2-hour showers (like our Juliet) and so on.

Time management is a topic that can easily fill a book or two and of course it is impossible to speak about all of the aspects in a single blog posts. However, I hope I have given you a good starting point. I will expand the topic in the upcoming posts and provide you with external references as well.

Slogans and Mottos

2008-03-03T05:21:00.000-08:00

In one of the previous posts I have talked about missions statements. We have defined a mission statement as a brief but at the same time broad declaration describing the overall purpose of the organization. I have also reviewed missions statements of some of the well known companies. As it was noted, missions statements can be several paragraphs long.

It is not always practical to advertise a mission statement. That's why, companies have slogans and mottos - a short distinctive phrase used to identify a company or organization or its goals. In effect, a slogan can be viewed as a short version of a mission statement.

It is very interesting to know that the word slogan comes from Gaelic sluagh-ghairm (pronounced slua-gherum), which means war cry. A good slogan is as important in business as it used to be in the past in warfare. Usually slogans are brief and rhetoric, sometimes even vulgar.

It must also be noted that while companies have one mission statement, they can have more than one slogan. Also, slogans are subject to more frequent change than mission statements.

Well, after this brief theoretic excursion, let's get down to reviewing slogans of some of well known companies. Mostly, these are Fortune 500 companies.

Exxon Mobil

"Taking on the world's toughest energy challenges"
"We're drivers too"
"Understanding Energy"

Chevron - "Human Energy"

Gillette

"The best a man can get."

"Look Sharp! Feel Sharp! Be Sharp! How are ya fixed for blades?" - this is a slogan from forties of the past century. Good slogans live long. Don't you agree?

General Electric

GE's slogan is "Progress is our most important product." The well known "We bring good things to life!" was abandoned in 2002. That slogan was introduced in 1979.

General Motors - "Fuel efficiency with a choice."

American Airlines - "Something special in the air."

AVIS Rental Cars - "We're Number Two, We Try harder"

This slogan was invented in 1962 and in my opinion is very interesting. Why? Because it is not only a catchy phrase, but also entails a company strategy as well. You see, sometimes being the second (i.e. not a market leader, but a follower) is a good strategy and AVIS clearly underlines that. It is interesting that the company's current website displays only the second part of the slogan, i.e. - "We Try harder".

BMW - "Sheer Driving Pleasure"

This is my favorite car maker and I'm a proud owner of their car. It is interesting that the company has another slogan "The ultimate driving machine", which was invented back in 1975. Personally, I like the "The ultimate driving machine" more.

Canon - "Image is everything."

In this slogan we have a pretty nice play of words. Yes, image is everything.

Carlsberg Beer - "Probably the best beer in the world"

Citibank - "The Citi never sleeps"

Again, in this slogan you can see the play of words. This is a really cool slogan coined in seventies of the past century.

IBM has a cool single-word slogan - "Think". However, that slogan has had a serious impact on the company and the whole computing industry as well. That slogan deserves a separate, dedicated post and I will be writing about it in the upcoming post.

Sometimes, companies devise slogan for each individual product or product line. For example, we can recall a well known slogan of Hershey's Kit Kat - "Have a break. Have a Kit-Kat". Probably, that slogan was coined far before many of our readers were born. More precisely, that was in 1957.

L'Oréal - "Because I'm worth it"

This is a very nice slogan coined by McCann-Erickson in late sixties of the past century. The slogan implies that the price of the product may not be the cheapest but she is worth it. Not a surprise this slogan has been working so well for decades.

McDonald's belongs to those few companies that frequently change slogans.

The current slogan "I'm lovin' it", which was adopted in 2003, had been preceded by such slogans as "We Love to See You Smile" (from 2000), "Did Somebody Say McDonald's" (from 1997), "Have You Had your Break Today?" (from 1995), "What You Want is What You Get" (from 1992) and many others.

Also, McDonald's has some localized slogans. For example, "There's a little McDonald's in Everyone is for the Canadian market and "Things that make you go 'mmm'" has been used in Australia and Great Britain.

Coca-Cola

However, a recordsman in changing slogans is Coca-Cola. I have counted over hundred slogans since 1886 till 2007. Well, the latest slogan is "Give a Little Love and it All Comes Back to You".

This is all for now. More slogans will come in the upcoming posts. I will also bring slogans of some less known companies. Belive me, sometimes even tiny companies and one-man companies have cooler slogans.

B2B vs. B2C - The Nature of Your Business

2008-02-20T23:30:00.000-08:00

The terms B2B and B2C were coined to differentiate e-commerce companies that sold primarily to consumers from those whose market are other businesses. Some people involved in business can't even see differences between B2B and B2C marketing. After all, selling is selling and marketing is marketing. No matter if you sell your products or services to a national corporation or to John down the street, you ultimately sell to humans.

While certain marketing techniques work equally well both in B2B and in B2C contexts, it is politically incorrect to assume that there are no differences between B2B and B2C marketing. Differences are deep and complex and if you ignore them, your business will be doomed for failure.

But let's make things simple. In order to analyze those differences, let's look at some facts, which are easy to observe and easy to check against the reality.

Businesses and Consumers Buy Different Products and Services

Sometimes both businesses and consumers buy the same products and services. However, often, the products and services bought by businesses and consumers are different. This can be easily explained. Consumers are usually the end-users, while businesses acquire many products and services for their business processes. You buy milk and so does B en & Jerry's Homemade. But you are the one who consumes that milk, while Ben and Jerry's Homemade use the milk to produce ice-cream. On the other hand, there are not many business that buy tooth-paste, while you can hardly ever find a person who doesn't buy it. Likewise, I seriously doubt you have bought or will ever buy many of the products purchased by such companies as General Motors, General Electric, Apple, Coca-Cola and other large, medium and small businesses. Please note that the size of the business does not always determine the nature of the products bought by businesses. There are many really small companies that purchase products that many of us have not even heard of.

Quantities Purchased by Businesses and Consumers Are Different

Even when both businesses and consumers buy the same products, they do so in different quantities. Getting back to the example above, both you and Ben & Jerry's Homemade buy milk. However, while you may buy a couple of liter's per week, Ben and Jerry's Homemade's weekly purchases probably measure in tons. You can observe many other examples. You may have several computers in your household, however even a very small company may have more computers.

However, because businesses usually consume products in larger quantities, don't be fooled to think that you can sell more by targeting to businesses. While Ben and Jerry's purchases more milk than any one person can do, there are not MANY ice-cream producers (or other milk-consuming businesses), however, there are many, too many people who consume milk.

Deal With Few or Deal With Many

Usually B2C companies have many customers, while companies whose primary market are other businesses have few customers. There are exceptions to everything, though. Microsoft, has a lot of business customers and while most (if not all) buyers of Bugatti Veiron are end-consumers, I doubt there to be many of them. However, a general idea is that when you are a B2B company, you deal with few customers and if you are a B2C company, you cater to a lot of consumers.

Dollar Value of a Purchase

Even when businesses and consumers buy the same products, usually the dollar amount of the transaction will be different. You may buy a PC for $1,000 but when Google buys 1,000 of such computers, it makes the deal a million dollar one.

Please note that in this post, I will be reviewing some fundamental differences between B2B and B2C natures of businesses. Only after giving a careful thought to the facts below can we see what makes B2B and B2C marketing different. So, let's start.

Nature of Purchase Decision Making

As a rule purchasing decisions made by businesses are more rational buying decisions than those made by end-consumers. At the same time, purchasing decisions made by consumers are emotional based on status, desire, price, etc. However, this is not always true. Sometimes businesses make wrong purchasing decisions and consumers do pretty well on that end. In our complex world, with many alternative products, it has become very difficult to make right purchasing decisions. However, at the same time, the advent of the Internet made it easy to do quick research prior to purchasing a certain product. A quick example. From the last 20 books that I've bought on Amazon only one turned out to be under my expectations.

Influencers and Real Decision Makers

The person sitting in front of you might not be the one who has made the purchase decision. Usually, purchasing decision made by businesses are affected by multiple influencers. This is also true with some of the purchasing decisions made by end-consumers. For example, you don't buy a house spontaneously or choose a college without consulting with friends, relatives, etc. When it comes to less expensive things, most of the decisions made by end-consumers are automatic and spontaneous. Of course, businesses also automate purchasing decisions, but again, most of the purchasing decisions are influenced by more people than the purchasing decisions made by end-consumers.

Sales Cycle Are Different

Usually sales cycle are longer with businesses than with end consumers. Are you already running Windows Vista on your PC? Pretty safe to assume. However, there are many businesses that still use Win 95 and are pretty happy with that. So, you see the morale here. A business may not care at all if their vehicle is 10 year old. As long as it does the job fine, they won't replace it. However, we, end-consumers, would like to drive the latest models of cars. The same goes for other things like mobile-phones, computers, etc.

Relationship Driven vs. Product Driven

Businesses that sell to other businesses try to maximize the value of a relationship and use it as a means to maximize profits. Businesses that sell to end-consumers try to maximize the value of a transaction. For example, if a company sells expensive, specialized software to other companies, it may take a couple of rounds of negotiations until the deal is finalized. This is rarely observed with B2C businesses. Again, there are plenty of exceptions here. For example, when buying a house or an expensive car, it may take some negotiation but with most of the products purchased by end-users, the transaction goes without any negotiation at all. With B2B transactions, most of the transactions are pre-negotiated.

These are the fundamental differences between B2B and B2C companies. As you see, while there are many commonalities, the differences are deep too. Therefore, we can now safely assume that B2B and B2C marketing require different approaches and techniques. More about this will be coming in one of the next posts.

Real-world Examples of Mission Statements

2008-01-24T00:28:00.000-08:00

In this post I will analyze and compare mission statements of real companies. I will mostly review mission statements of some of the Fortune 500 companies. Here we go.

The Walt Disney Company

The mission of The Walt Disney Company is to be one of the world's leading
producers and providers of entertainment and information. Using our portfolio of
brands to differentiate our content, services and consumer products, we seek to
develop the most creative, innovative and profitable entertainment experiences
and related products in the world.

As you can see, this mission statement emphasizes geographic locations (...the world's leading producers…), products (...entertainment experiences and related products...) and quality (...the most creative, innovative and profitable...).

Nike, Inc.

To Bring Inspiration and innovation to every athlete in the world.

Nike's mission statement is brief but very specific. Global markets are addressed and the customers - every athlete.

Microsoft

At Microsoft, we work to help people and businesses throughout the world realize
their full potential. This is our mission. Everything we do reflects this
mission and the values that make it possible.

Microsoft is one of my favorite companies. Could not really omit their mission statement. Again, we see that the mission statement emphasizes geographic location (…throughout the world…). The mission statement also clearly shows the customers - people and businesses. However, because in the Microsoft's products are targeted to anyone and everyone, there are no specific details. The mission statement also says that the company's every effort reflects their mission and their values.

NWA

Workforce diversity gives us access to a world of different ideas and
perspectives. Northwest Airlines is committed to maintaining a corporate culture
where men and women of all ages, races, physical abilities, preferences and
backgrounds are treated with dignity and respect. At Northwest Airlines we
recognize that when diversity is valued and respected the results are improved
service, customer satisfaction and a positive community image. We believe our
employees make a world of difference and work to maintain an environment where
diversity and inclusion is a critical component of our success. Our Diversity
Vision To build a high performing environment where individual differences and
contributions of employees, customers and business partners are respected and
valued, the result of which is a business organization where fairness, trust and
integrity govern relationships and the way we do business.

NWA's mission statement is one of the most verbose mission statements. The primary focus is made on corporate culture, the company's employees and the diversity.

The McGraw-Hill Companies

We are dedicated to creating a workplace that respects and values people from
diverse backgrounds and enables all employees to do their best work. It is an
inclusive environment where the unique combination of talents, experiences, and
perspectives of each employee makes our business success possible. Respecting
the individual means ensuring that the workplace is free of discrimination and
harassment. Our commitment to equal employment and diversity is a global one as
we serve customers and employ people around the world. We see it as a business
imperative that is essential to thriving in a competitive global marketplace.

Again, this mission statement's major focus is on the company's employees.

Mattel Inc.

Mattel makes a difference in the global community by effectively serving
children in need . Partnering with charitable organizations dedicated to
directly serving children, Mattel creates joy through the Mattel Children's
Foundation, product donations, grant making and the work of employee volunteers.
We also enrich the lives of Mattel employees by identifying diverse volunteer
opportunities and supporting their personal contributions through the matching
gifts program.

Mattel's mission statement addresses the geographic location (…global community…), customers (...children…) and higher motives (…charitable organizations…). At the same time, the mission statement is addressed to the company's employees.

Sometimes along with a mission statement, companies have short slogans and mottos. Mattel Inc. has a really cool motto: The World's Mattel. Again, Matte's motto emphasizes the geographic aspects.

Kelly Services

To serve our customers, employees, shareholders and society by providing a broad
range of staffing services and products.

Here the accent is made on the products and services offered by the company. The mission statement also addresses customers, employees, shareholders and the society in general. The company's motto is: Steffing the World.

JPMorgan Chase

The Corporate Governance & Nominating Committee exercises general oversight
with respect to the governance of the Board of Directors.

This mission statement sounds very formal but hey it's JPMorgan Chase not a toy company. The mission statement addresses company stakeholders. However, their motto, Strengthening communities, addresses customers. However, in my opinion, the motto is quite vague.

IBM

Operating a safe and secure government.

This mission statement is one of the most interesting in my opinion. Yes, it's IBM's mission statement. Did you think anything else?

The Hershey Company

Undisputed Marketplace Leadership

This mission statement emphasizes market leadership. No other information is given. It could be a mission statement of any company. In my opinion, this is one of the worst mission statements. However, I am planning to dedicate a separate post to discuss what it takes to craft a good mission statement, mission statement do's and don’ts.

Fedex Corporation

FedEx will produce superior financial returns for shareowners by providing high
value-added supply chain, transportation, business and related information
services through focused operating companies. Customer requirements will be met
in the highest quality manner appropriate to each market segment served. FedEx
will strive to develop mutually rewarding relationships with its employees,
partners and suppliers. Safety will be the first consideration in all
operations. Corporate activities will be conducted to the highest ethical and
professional standards.

I like Fedex's mission statement very much. It addresses company stakeholders, products (...high value-added supply chain, transportation, business and related information services…), the means to achieve the goals (...through focused operating companies…). The mission statement also emphasizes the company's customers (Customer requirements will be met…) and employees and partners (... develop mutually rewarding relationships with its employees, partners and suppliers…). Corporate ethics and professionalism are also addressed (...the highest ethical and professional standards). In my opinion, Fedex's mission statement is one of the best you can read.

Chevron

At the heart of The Chevron Way is our Vision to be the global energy company
most admired for its people, partnership and performance.

This mission statement emphasizes geographic location and markets (global…), their employees (...admired for its people…) and partners. Their motto is: Human energy.

Barnes & Nobles, Inc

Our mission is to operate the best specialty retail business in America,
regardless of the product we sell. Because the product we sell is books, our
aspirations must be consistent with the promise and the ideals of the volumes
which line our shelves. To say that our mission exists independent of the
product we sell is to demean the importance and the distinction of being
booksellers. As booksellers we are determined to be the very best in our
business, regardless of the size, pedigree or inclinations of our competitors.
We will continue to bring our industry nuances of style and approaches to
bookselling which are consistent with our evolving aspirations. Above all, we
expect to be a credit to the communities we serve, a valuable resource to our
customers, and a place where our dedicated booksellers can grow and prosper.
Toward this end we will not only listen to our customers and booksellers but
embrace the idea that the Company is at their service.

The beginning of the mission statement is very interesting. B&N sells books, yet they say to be best regardless of the product. In my opinion, this mission statement is needlessly verbose and it could rephrased to make it shorter. The mission statement emphasizes mainly the quality of the company, its position on the market. Customers (... a valuable resource to our customers…), partners and suppliers (...a place where our dedicated booksellers...) are also addressed. The motto is made of a single word: Booksellers.

The last mission statement that I will review is not from a business sector. Imagine, even the U.S. Department of State has a mission statement.

U.S. Department of State

Create a more secure, democratic, and prosperous world for the benefit of the
American people and the international community.

I will revew more mission statements in the upcoming posts. Stay tuned and check this blog frequently.

What is a Mission Statement?

2008-01-15T08:51:00.000-08:00

A mission statement is a brief but at the same time broad declaration describing the overall purpose of the organization. The mission statement defines the organization's reason for existence in one or more paragraphs. The mission statement is a declaration of what an organization aspires to be.

A mission statement usually embodies the organization's philosophies, goals, ambitions and values. A mission statement can be focused on the organization's employees, customers and other stakeholders, as well as geographic locations, technology, etc.

A mission statement outlines what the organization is now and/or what it wants to become in the future. In respect of the future, for managers, the mission statement becomes a good benchmark against to which to evaluate performance. Very often, mission statements, identify critical business processes as well.

From the qualitative point of view, a good mission statement must be visionary, broad, realistic, motivational, easy to understand and as short as possible. Most of the mission statements that I've read are limited to a couple of paragraphs. However, there are some organizations whose mission statements can span on a whole page or two.

Is it mandatory to write a mission statement for your organization? There is no unequivocal answer to this question. However, most of the experts agree that it is a good idea to have a formal, written mission statement. Empirical data further strengthens this point of view. Over 60% of the Fortune 500 companies have written mission statements.

However, there is no use of a formal mission statement if it is just written and then thrown away on the shelf with a half inch dust on it. As mentioned above, a mission statement can serve as a good benchmark for managers. At the same time, a good mission statement distinguish your organization from others of your type.

In the next posts we will review, analyze and compare mission statements of several Fortune 500 companies. Further, we will delve into what it takes to write a good mission statement.

Business Blog Is Back

2008-01-14T07:31:00.000-08:00

After quite a long pause, I am glad to announce that the Business Blog is back. There have been some objective reasons to this break. However, I'd been getting quite many e-mails from our readers all of them asking whether the blog would continue or not.

I would like to thank our readers for their patience and support. Stay tuned and don't forget to subscribe to our RSS feed. Some reaaallly cool posts are coming up.

Managing Your Own Business - Part I

2007-10-06T10:57:00.000-07:00

In the previous post I described some of the mistakes that you can make when starting your own business. I mentioned that usually, the founder of the business appoints himself/herself as a manager or the boss of the company. This is a critical moment for a new company, which may determine whether your company becomes successful or becomes doomed for failure.

There is a prevailing opinion among people that management is required in medium and large organizations only. Unfortunately, this is an extremely false assumption, which goes contrary to empirical facts. The size of an organization has nothing to do with the need for management. Management is required if your company has hundreds of thousands of employees and management is required if your organization consists of only you and your companion. Whenever we have two or more persons engaged in a process of achieving some goals, we have an organization and thus we there is a need for management. However, it must be noted that there is a dramatic difference between techniques for managing a large corporation and for managing a company that employees 4 or 5 people.

Management is important because good management will allow you to achieve your company goals in the most efficient way. A business organization is like a living entity. Businesses have inputs (resources, for example money, labour, natural resources, etc). Business process those inputs and finally businesses have outputs, or the results of the processing. The need for management stems from a simple fact that the resources that your business can consume are scarce. If you had unlimited money and other resources, you would not care much about management. However, because the resources that you can use are limited, you must use them in the best possible way.

Hence, we have come to the first function of management and this function is planning. Planning deals with setting goals (company objectives) and then devising a plan how best to achieve those goals.

Even the best plans in the world are useless if they never get implemented in life. Implementing plans is another management function called organizing. Basically, organizing is a process of allocating the resources for carrying out the plans. Keep in mind that your resources are scarce. You will almost always be dealing with limited resources and thus the importance of good organization must never be underestimated.

When managing your organization, you deal with people working with you. You must be able to influence those people to engage in the work processes to achieve organizational goals. Your employees will expect you to share your vision with them, help them in difficult situations, direct them towards achieving the organizational goals. In other words, you will be doing the third function of management called leading.

Think about your business like an aircraft going from destination A to destination B. If the aircraft deviates from the course, the autopilot can adjust it. In business you are both the pilot and the autopilot and the only way to adjust deviations from the "course" is to have good controlling in place. Controlling is an important function of management. It helps you regulate organizational activities and check that the actual performance conforms to your company goals. If there is a discrepancy between the actual performance and your company goals, good controlling can diagnose problems early and let you take necessary measures.

Unfortunately, the above four functions are not enough for managing your business successfully. Usually, you as a manager, will need a specific knowledge of the industry in which your company is going to operate.

Another problem associated with being a boss in a startup is the fact that you will have to deal with everything from hiring new employees to marketing and sales.

You may be thinking that throughout this blog you read mostly about difficulties associated with running own business. However, this is very close to reality. Running your own business is not an easy endeavour. You must be ready to face many difficulties and usually they do arise in front of business owners. However, if you build a successful company, you will be getting such a satisfaction that is difficult to compare to anything. So, don't be scared. Stay tuned and check out upcoming posts.

Mistakes That You Can Make When Starting Your Own Business

2007-09-30T12:18:00.000-07:00

In this post I will speak about typical mistakes that you, as a future business owner can make. These mistakes are very common among new business founders. If you take these points into consideration, you will increase your chances of success.

The first mistake is starting your own business without having adequate experience in the relevant field. It is imperative that you gain experience in the field where your business will operate. If you plan to start a software development business, it is important that you work in the industry a year or two. Even if you won't become a professional programmer, having experience in software engineering will help you. The same is true for other industries as well. Under experience I imply not only technical expertise, but knowing key players in the industry, having contacts with key people and so on, well you get the idea.

The second mistake that a business founder can make is to appoint himself/herself as a CEO of the company. Usually new businesses are started by people who are professionals in certain fields. For example, a programmer after working 5 years for a software developer company quits his/her job to start own business. Experience shows that such new businesses have slim chances of surviving and becoming successful. Why is it so? Simply, because being a boss requires additional skills along with the domain knowledge and expertise. Unfortunately, most of the newly founded small businesses does not have enough financial resources to hire professional managers and thus the founders are becoming de facto managers. This point is so important that I'm obliged to bring a an example.

Let's take Google. It is a software giant, a multi-billionaire company, dominant player in the industry. The company was started in a campus room. One of the factors why Googles has become so successful is that its two young founders, Sergey Brin and Larry Page hired a professional manager as soon as the company could afford it. The same can be said about Apple. I won't take much of your time by bringing additional examples, there are quite many, both today and in the past.

The third mistake that you can make is to start your own business in order to avoid hard work. Some people are so bored with their jobs that in order to avoid it start new businesses. Such endeavours are usually doomed for failure. If you think that running your own business will save you form working hard, pardon, but you are deeply mistaken. George Eastman, the founder of Kodak would spend nights experimenting prior to founding the company. Successful entrepreneurs work almost 24 hours a day.

The fourth mistake is starting your own business when you are not ready to sacrifice. Spending less time with your family, cutting down on personal expenses, taking risks, being overstressed are a number of things that you may face. If you are not ready to cope with those things, you'd better not start your own business at all.

The fifth mistake is being very optimistic about future. Being too optimistic I would say is dangerous when you run your own business.

The sixths mistake is starting a business without a sound and well thought out business plan. Equally terrible mistake is having a business plan which is put on the shelf covered with an inch thick dust. Business plans are to be followed, reviewed, reworked but not put on the shelves.

Of course, there are many other pitfalls and difficulties, however I've tried to direct your attention to the most important mistakes. Hopefully, these introductory topics are giving you a good idea whether to start your own business or not.

Business Nature as a Factor of Growth Potential

2007-09-29T12:24:00.000-07:00

Have you noticed that some businesses grow extremely fast while other businesses don't grow at all? Yet another businesses grow slowly but steadily.

For example, let's take Google. The company is celebrating its 9th birthday this year. Google has demonstrated phenomenal growth, hence their owners are one of the quickest guys to become billionaires.

Now let's look at pharmaceutic companies. Almost none of the well established pharmaceutic companies experiences rapid growth, yet almost all pharmaceutic companies grow slowly but steadily.

Finally, let's look at a local grocery store. It has a limited growth potential. Even if it is a profitable business from year to year, still it has a very limited growth potential.

You may object that Google is a big corporation and the local grocery store is a home-based business run by a family. Well, you are right if you compare today's Google to the grocery store. But please notice that 9 years ago Google was a small company as well.

We can conclude that a company size does not have much to do with its growth potential. However, the nature of the business does. This is such an important point, let me repeat it. The nature of the business is one of the factors that determines the growth potential.

Generally, businesses introducing innovative or revolutionary products and services have the fastest growth potential. However, at the same time such companies have the greatest risks. Companies offering well established products and services are usually associated with low risks but at the same time low growth potential.

There are many factors that affect growth potential. Generally, the industry or the segment where the company operates determines the growth potential. As a rule, when a particular industry experiences fast growth, so do the companies involved in that industry.

There are several other factors that determine growth potential, however the nature of the business and the industry are one of the most important factors. We will get back to the topic of growth in the upcoming posts as well.

By the way, the next post will be very interesting. In the next post I will speak about pitfalls that expect you and the most common mistakes that business owners make. So stay tuned, and don't forget to subscribe to the RSS feed.

The Good of Running Your Own Business

2007-09-28T14:32:00.000-07:00

In the previous post I have tried to highlight some (but unfortunately not all) of the difficulties associated with running your own business. It's time to move to the bright side of running your own business.

First, if your business becomes successful and financially healthy, it may generate considerably more income to you than what you would get by working for someone else.

Second, even if you had a high salary job, you would still be limited in your annual income. This is not true when you run your own business. If your business grows, so does your fortune. Theoretically, many businesses don't have much growth limits. For example, if you have $500,000 per year, your income will be half a million no matter what you do. However, if your business makes half a million in net profits and you expand it and start making quarter a million more, then you earn $750,000 per year.

Third, you are your own boss. Unfortunately, many people, especially young and inexperienced business owners see this advantage as the most attractive. Unfortunately this is not true in reality. You should never abuse this privilege.

Fourth, if you establish your business with long term objectives (i.e. not a business with quick exit strategy) then every minute spent by you working you work on yourself. Thus you make yourself richer, not your employer.

Fifth, you have more control of your life. As long as your business is doing fine, you don't risk losing your job whereas a slight reorganization in an employer might have left you jobless.

Sixth and the most important thing about running your own business is that if you do right things and do things right, your own business will give you a perfect chance for self-realization because only in your own business will you have full creative freedom.

Finally, I would like to mention that neither this list nor the list from the previous post, is or can be complete. Rather, I've tried to highlight the most important (at least from my experience) negative and positive aspects of running your own business.

Running Your Own Business vs. Working For Someone Else

2007-09-27T14:51:00.000-07:00

Running your own business is such a tempting thing that sometimes I think at some point in life everybody must try it. I'm 28 and I've been running my own business for over 8 years. I started working when I was 18 and the very first two years was the time that I worked for someone else.

Starting your own business when you are a teenager and your experience is almost zero is a tough thing. The same is true when you are 55, experienced but lacking the energy that you would have at 18.

If I had a possibility to go ten years back in my life, I would follow the same track and would start and run my own business. The reward outweighs all difficulties, pressure and risks. We'll talk more about this below.

There is a prevailing misunderstanding among people that running your own business is always the best thing. Unfortunately, in life, nothing has only positive sides and running a business is no exception. Let me quickly mention a couple of disadvantages of running your own business.

First, your personal income depends on the success of your business. With an employer you have a guaranteed income. As long as you are not fired from your job, you get your monthly salary.

Second, you must take care of your superannuation. When you work for a company, your employer is taking care of your superannuation. The same is true for a paid leave or a sick leave. For example, according to contracts with my employees, they are entitled to a 4 week paid leave.

Third, at 6 PM you leave your work, right? Even if you have a lot of work and have to stay longer at the office, at some point you will leave your work. Unfortunately, this is not the case with your own business. When you are running your own business, it's always with you, at 3:00 PM, at 4:00AM or when you are dreaming about Ferrari 430.

Fourth, as a business owner you are under a heavy pressure. If you grow your business, at some point you will have to hire employees. Those people's and their families' well being is heavily dependent on the success of your business. If your business runs into difficulties, you will have problems paying salaries and this will put serious pressure on you. In a worse case the pressure may drive you to a nervous breakdown.

Fifth, in many cases you will have to compete against companies that have more financial power than you do. Your financial power limits your abilities to spend enough on marketing, research and development, operations and thus puts you in a less competitive position.

Sixths, mistakes for a small business owner might be fatal whereas a large corporation may easily survive a row of such mistakes.

There are many other difficulties and disadvantages associated with running your own business. However, I've tried to highlight the most important and critical difficulties. Hopefully, you are not scared. In the next post I will speak about positive aspects of running your own business.

Welcome

2007-09-27T08:48:00.000-07:00

Welcome to our Business Blog, a new member of the Blogvasion Family of blogs. As you may have already understood, main focus of this blog will be business. I will cover such topics as entrepreneurship, business planning, management, marketing, finances, negotiating, game theory and strategic thinking. Both theoretic and practical issues will be addressed. Most of the blog posts will be based on real-world experience. Here we won't talk about Mr X. or ABC Corp., rather all of the examples and case studies will be based on real people and real companies.

Target audience for this blog are people who would like to start their own small business, existing entrepreneurs, managers as well as students of business schools. In order not to make the blog too dry, from time to time we will include interesting business news and funny stuff. It is my plan to publish a new article in every two days. So, stay tuned and don't forget to subscribe to this blogs' RSS feed.