Value Your Time
Many business owners go home at the end of the
day feeling worn out and with little in their bank accounts to show
for it. According to CCH Business Owner's Toolkit, allowing this
scenario to continue too long could be dangerous because owner burnout
is among the leading causes of failure when a business is in its
plateau stage.
An entrepreneur's salary is a crucial part of the business, says
Edward Kohl, president of BCM Consulting, based in Newark, Del.
Kohl, who has worked with many one-person companies, says salaries
need to be treated like any other valid expense. "If you are
not paying yourself, you are not paying your cost," says Kohl.
"So you are below breaking even."
"This is a very specific stage in the life cycle of a
business," says Lori Pedelty, President and Founder of Capstone
Consulting in Chicago. "If you're not showing enough respect
for your time and the services you're delivering, you're giving
an image of how you're being treated by the market," she says.
"And then you can be perceived as a kind of bottom feeder."
Pedelty suggests figuring out a price for your service that both
suggests value to your customers and covers the costs of your business. "I just see too many people giving away too much," she
says.
Need Cash Fast?
Cash flow is important because it determines how
flexible a business can be in delivering its service. Mitch Schlimer,
host of the syndicated radio show "Let's Talk Business"
and chairman of a New York-based support service called the Let's
Talk Business Network, says many budding entrepreneurs don't take
control of their cash flow and fail to pursue debts aggressively
enough. "That can create a quick downward spiral, especially
when you're small," says Schlimer. He describes financial reports
as a kind of blood test for a business's bottom line. "It's
analogous to being a pilot who is unable to read the instruments.
You get into a fog, and you can't even land the plane."
Some business owners will turn to credit cards to cover immediate
costs, but Pedelty says the high cost of plastic can make a deadly
mistake for a company in the breaking-even phase. She instead urges
businesses to get customers to pay now for products or services
to be delivered later. "If cash is so important, perhaps you
should get some up front," she says.
One of Pedelty's clients was a software business that lacked the
tens of thousands of dollars it needed to build up the proprietary
products it was offering. So it negotiated with its potential customers
about getting cash up front. "They said, 'This is what we need
from you,'" she says. "You need to have confidence, and
to show respect for the value that you bring to the table."
Work 'With' Your Customers
People in business for themselves have every reason
to take control of the direction of their business, starting with
clientele. Tapping into the resources that reside in their customer
base is a rare opportunity for underdog businesses to take advantage
of their small size, says BCM's Kohl. "One of the best resources
available to you that's not available to 'the big guy,' is that
you can talk to your customers."
"New business owners are often under the mistaken impression
that marketing is about getting new customers," says Terri
Lonier, president of Working Solo Inc., a New Paltz, N.Y., consulting
firm that specializes in small entrepreneurial businesses. By capitalizing
on the already-existing relationship with customers, a business
can move in a different direction — up. An objective look at
your present client base will often reveal that most of the profit
comes from only a small percentage of the clients on the list, says
Lonier. Most business owners never really sit down and analyze who
their customers are, says Lonier. "The challenge is to find
out who the profitable 20 percent are, and then scale back on the
other clients," she says. "Create a profile of who your
best customers are, and start eliminating those customers who don't
fit that profile."
Businesses should seek clients who will bring repeat business, who
will refer your business to other potential clients and who let
you handle things cleanly and without headaches, says Lonier. "You
have to think about tweaking your business so that it's set up to
encourage repeat business."
Advertise Wisely
Owners of successful businesses also assess exactly
what their market is before spending money on advertising, says
Russ Allred, president of Bakersfield, Calif., consultant firm Allred
& Associates Inc. He tells of a former client who wasted $1,000
advertising his neighborhood restaurant in a newspaper that circulated
all over Kern County. "People aren't going to drive past Denny's
and Marie Callendar's just to get to your neighborhood restaurant!"
he says. "Rather than focus resources on people who are unlikely
to come into your restaurant, spend money on those people most likely
to. Little businesses can't use the strategies of big businesses
because they don't have the money."
Another Allred client, who ran a carpet cleaning business, was more
successful in analyzing his market. The man had been forced to discount
his service because his competition tirelessly handed out coupons.
Allred did a little research, and figured that people generally
clean their carpets once every two years. So he suggested that the
carpet cleaner keep a database of his customers and send them postcards
reminding them 18 to 20 months later of his service. By intercepting
the business before they received coupons from the competition,
he did not need to give deep discounts, and started making more
money.
Give Yourself Room
Though The Industrial Printers' Herlands still
puts a lot of energy into the business, he decided to devote sparse
resources to hiring employees for basic duties like making pickups
and deliveries, bookkeeping, and calling in overdue accounts. "Instead
of making all the sales, Boom! I'm going to put together a sales
force," he says. After freeing up his time, Herlands began
to focus on making his business more efficient and also had the
flexibility of joining potential clients on the golf course, thus
bringing in more business and adding to the value he brought to
his own company.
"Will that bring in more profits overnight?" asks Herlands
rhetorically. "No. But over the course of 10 weeks? Yes, it
will."
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Study finds Female-Led firms excel
By Anita Bruzzese
Gannett News Service
Wednesday, December 3, 2003
Move over, boys. The girls are running the show, and they're doing it better.
According to a Babson College study, not only are woman-owned family businesses growing in this tough economy, they are more productive than their male counterparts.
"We think that the organizational and leadership style of women may be fueling more productivity," says Nan Langowitz, faculty director for Women Leadership and associate professor of Management at Babson College. "Women tend to be more collaborative, and have more 'people style' firms."
The study, sponsored by Babson College and MassMutual Financial Group, found woman-owned family businesses are showing some financial muscle at a time when many other businesses are floundering.
Specifically, these companies led by women have average family revenues of $26.9 million in 2002, with some reporting annual sales as high as $1 billion.
Interestingly, many of these woman-owned enterprises are relatively new: most are only in the second generation of operation.
"They are active in the same kind of industries as male-owned firms, but what we're seeing is an increasing confidence in women to be leaders in a family businesses," Langowitz says.
The study also found:
• Woman-owned businesses have increased by 37 percent in the last five years.
• Woman leaders direct their companies to be more philanthropic, focusing on education and community organizations.
• Although these companies tend to be smaller in size than male-led counterparts, they generate sales with fewer employees. In fact, woman-owned family businesses tend to be nearly twice as productive. Langowitz explains that some of this may be because of the "inherited" bureaucracy many males are forced to deal with because the businesses owned by men tend to be older. It was reported that the median number of employees for female-owned family businesses was 26, while it was 50 for the male-owned family businesses.
• Woman-owned family businesses tend to focus more carefully on CEO succession planning.
• These businesses have greater family loyalty, agreement with goals and pride in the company. Specifically, they have a 40 percent lower rate of family member attrition.
• Woman-owned family businesses are twice as likely to employ female family members full time and are three times as likely to employ more than one female family member full time. "What this also shows it that these women are in a place to be great role models for other women in that company," Langowitz says.
• Female leaders tend to be more fiscally conservative. They may carry less debt partly because women have a tougher time gaining access to capital, as compared with men.
"Either way, the relatively low debt load gives female business owners strong ability to weather adversity, but may limit their opportunity to fuel potentially higher growth through increasing funding," the study found. Still, these women remain optimistic, with a two-to-one ratio of respondents saying they anticipate a positive future for their companies, despite a sluggish economy.
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Report Shows Strength of Female-Led Small Businesses
February 22, 2005
In total, 44 per cent of Female-Led firms recorded sales growth in the third quarter of 2004, seven per cent more than businesses overall taking part in the survey.
A major quarterly report of nearly 12,000 small to medium sized businesses reveals the strength of female led firms.
The Small Business Research Trust (SBRT) Quarterly Report is being re-launched later month with a new author, the University of Liverpool Management School (ULMS), a new sponsor, HSBC Bank, and a new partner in the business pressure group the Forum of Private Business (FPB).
One of the key fingings of the report is that it shows that Female-Led businesses are successful and they are optimistic of future growth.
In total, 44 per cent of Female-Led firms recorded sales growth in the third quarter of 2004, seven per cent more than businesses overall taking part in the survey. Meanwhile, 45.7 per cent of female-led businesses expected growth in the final quarter of 2004.
Employment is another a strong area, with 27.7 per cent of female-led firms reporting growth in the third quarter of 2004, ten per cent more than businesses overall in the survey. Furthermore, 20 per cent of Female-Led firms expected to take on more staff in quarter four of 2004 - again more four per cent than the businesses overall in the survey.
Sectorally, the survey sheds light on the industries female owner managers are drawn to. The three main sectors being wholesale and retail 34 per cent, real estate 21 per cent and education/health 15 per cent.
The report shows female-led firms are predominantly, 40 per cent, in the micro businesses size category, employing between one and four people, with a further 26 per cent in the five to nine employee category. However, in the employment category of 10 to 19 employees, the number of women leading firms falls to 16 per cent, and falls even further, to just 14 per cent, in the 20 to 49 employees category .
FPB Chief Executive Nick Goulding said the report is strong evidence that the Government is right to adopt measures to encourage female entrepreneurs to set up in business.
"It is vital we see more women going into business and driving the UK economy,' he said. "If women started up businesses at the same rate as men, 150,000 extra new firms would be created every year. A glittering prize is within grasp for the UK if we can harness the entrepreneurial potential of women. The Government has set itself an ambitious target to increase the number of female owned businesses to 20 per cent of the UK business stock by 2006. That target needs the support of the political, business and media worlds if it is to be achieved from its current level of 15 per cent of the UK business stock."
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Study Finds Women Fare Best in Female-Led Companies ~ Women Executives Earn 15-20% More in Female-Led Firms
07-14-05
Women executives have relatively better compensation and representation among top management in firms with more female Board members. A comprehensive study of the gender pay gap and the role of women leaders on the careers of other executive women has found that women leaders are instrumental to the success of top executive women in quantifiable and significant ways.
The study, by Haverford College Economics Professor Linda Bell, reveals several important facts:
* Women executives working in Female-Led firms earn between 15-20% more in total compensation than women working in other firms.
* Overall, top women executives are paid between 8-25% less than male executives.
* Women executives do better -- in relative compensation and numbers -- in firms with a female CEO or Chair, especially if the female CEO is a member of the Board.
* Women executives have relatively better compensation and representation among top management in firms with more female Board members.
"My research shows very strong empirical evidence that women leaders are associated with positive outcomes for women executives in substantive and important ways," said Professor Bell. "It seems a logical conclusion to infer that women leaders help the women below them. If equity for high-skilled and performing women is a policy goal, then the one obvious instrument is affirmative action at the very top of the corporate hierarchy."
Professor Bell's study merges the Standard & Poor's ExecuComp data for the years 1992-2003 with an independent data set from the Institutional Investor Research Center (IIRC) on Corporate Directors. Firms in the ExecuComp data constitute more than 80% of the total market capitalization of U.S. public companies. The data contains information on compensation and the individual components of compensation of the top five executives of all firms in the S&P 500, S&P Midcap 400, and S&P Smallcap 600. There are 25,529 unique executive observations and 2,194 unique firm observations over the 12-year period.
Professor Bell's research extends the work on the gender pay gap in top executive jobs in several ways. First, she studied the executive gender gap through 2003, thereby extending analysis to a period of greater participation of women executives generally and specifically at higher ranks. Second, because of the large sample size of firms and the tripled representation of women at high levels in later years, Professor Bell was able to test empirically the impact of women leaders on the careers of other executive women.
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