Capsule 1: Positivity

Capsule 1: Positivity

Nothing tastes sweeter than victory.

 

The sheer joy that comes from triumph totally obscures the pain and effort involved in its achievement. But success does not just fall into your lap, IT COMES FROM DEVELOPING A WINNING ATTITUDE.

 

To achieve the unimaginable, to break boundaries, to evolve into the super you, you need loads of positivity - the believe that you can.

 

Barack Obama's presidential campaign was made alive by this desire to win against all odds. His campaign slogan infused his team with a lot of positivity and made them drive themselves harder to do the eithertofore unimaginable. All through the campaign in 2008, the words: "Yes We CAN!" drove the Obama campaign team and spurred it on to great success.

 

Notable American tech expert and enterpreneur Steve Jobs also had a can-do spirit. His remarkable success was due to the firm conviction he had in himself and in his ideas. He did not feel that he was inadequate nd incapable of meeting challenges, instead he  faced challenges with a lot of positivity.

 

A positive person totally believes in himself and does not for a second feel that a set target/task is impossible- difficult yes, but never impossible.

 

Think for example of David in the Bible. Up against the most feared warrior of his time- a gaint warrior, several times bigger, several times more experienced, several times more dangerous- David did not doubt the possiblity of overcoming the fierce Philistine. In your daily endeavours, you need that kind of attitude. a good mantra to adopt should be: IT IS POSSIBLE, I CAN DO IT!

 

A word of caution though.

 

The positivity here encouraged is not a thoughtless recklessness based on emotions but an intelligent force based on hard evidence and competence.

 

Remember to always say to yourself: IT IS POSSIBLE, I CAN DO IT!

BUSINESS PLANS

In this second part of a four-part paper on business plans, I look at what you should include under each plan element discussed in Part (1), what guidelines you should follow in writing your business plan and where you can get help and advice in writing a business plan and in developing financial projections

Writing a Sound Business Plan – A Dummy’s Guide

As we have seen in the previous paper, a sound business plan is an essential part of a business man’s armoury. As you write your business plan, remember to bear the reader in mind. The business plan is not a theoretical composition filled with technicalities and bogus high sounding terms. It is your description of what your business is now and what you want it to be in the very near future.  Think of it as an opportunity to tell others how sound your business is and how much better it can get.

So, always write in your own style. There is no place for being too technical. Just say what you want to say in the language of your business and industry.

While writing, avoid exaggerating.  The truth may not be as flowery as some cooked-up scenario, but the truth trumps fallacies always. Also do not make unrealistic claims about your business’ future prospects. Base your projections on hard evidence! Write only what you can back up and prove.

Avoid verbosity. There is no need to embellish or elaborate to an excess. Just say what is necessary.

Make reference to other key staff in your organisation and the role they would play in the organisation’s future success.  Also remember to acknowledge outside professional help.

Do not include confidential information. You do not know into whose hands your business plan may find its way.

You are not allowed to be grammatically wrong. Typographical errors are largely unpardonable

Okay. Now you know what to avoid.

What should be included in the plan elements?

1.   Cover Page

Should include

a.       The title

b.      Date of preparation

c.       A statement showing that the document is confidential

d.      Contact information

          i.   Company name

          ii.   Address

          iii.  Phone numbers

          iv.  E-mail addresses

          v.   Principal contact person

2.   Table of Contents

Should be structured in such a way that “readers can quickly find the part that interests them”¹

3.   Mission Statement (should be limited to one paragraph)

Here you tell the reader exactly what your business is. Should specifically state

a.       The purpose of the business

b.      The target market

c.       The factors that make your business and its products different from your competitors

4.   Executive Summary

Under this plan element, tell your reader

a.       the structure and background of your business

b.      the company’s management and key staff

c.       the relative position of your company in the industry

d.      future growth prospects

e.      what is required to make those prospects reality

f.        if you are requesting for funds, state

i.                     the amount required

ii.                   how the funds would be employed

iii.                  how the funds would be repaid

NOTE: WRITE THE EXECUTIVE SUMMARY LAST!

5.   Marketing Plan

Should include

a.   A description of the product or service to be offered and how these satisfy what consumer needs

b.   A comparison of the unique benefits your products and services offer over those of other closely competing products

c.   A documentation of forms of intellectual property protection you may enjoy – patents, trademarks etc.

d.   Identify your market. Who are your customers? Where are they located? What is there size?

e.   List your major competitors along with their size, strength , weaknesses and other relevant information

f.    Describe environmental, legal or governmental factors that could affect the future of your business.

g.    Document your pricing strategy

h.    Identify your product distribution channels

i.     State your sales, service and warranty policies

j.    Document your promotion and advertising plans and how they compare with competition.

6.       Operational Plan

Should describe in detail

a.     Who will direct the affairs of the company

     i.  Who make up the management team?

     ii.  How are your staff organised?

b.      How will they direct the affairs of the company

     i.   How will new personnel be recruited

     ii.  How will they be trained

     iii. Discuss the company’s management and operational policies

7.       Management Control Systems

Describe systems in place to monitor,

           i.   Company’s investment in  inventory

           ii.  Product or job profitability

           iii. Sales management and effectiveness

           iv. Admin and other overhead costs

           v.  Cash flow management

8.       Financial Statements and Projections

Start by discussing

     a.      the present financial position of the company then,

     b.      the funds required for further expansion

     c.      how the funds will be spent

     d.      your plan for repayment

     e.      show how the additional funds requested would increase your profitability

The above narrative presented should be supported with historical financial statements for the last three years if available. The financial statements should be audited and certified by a firm of chartered accountants

                                You should here present:

i.    Projected Statement of Cash flows

ii.   Income Statement

iii.  Projected Statement of Financial Position

iv.  Income Statement and Statement of Other Comprehensive Income

v.   Debt Repayment Schedule

(A firm of Chartered Accountants would be glad to help you with this. You may also contact me using feyitimianthony@yahoo.com )

9.       Long Range Strategic Plan

Here describe

a.   Where you want your business  to be in the next few years and how you plan to get there

b.   Include an explanation of your strength and weaknesses and opportunities open to you in your line of business

c.   Explain your strategy for minimising your weaknesses and exploiting your strengths and opportunities

On a final note

After you have a rough business plan draft, let your accountant review and edit the document. This is VERY important.

If you need further assistance and professional advice on this matter, feel free to write to feyitimianthony@yahoo.com

Or call +2348184251501

You may also check the following online resources for helping you write sound business proposals

i.     www.bizplans.com

ii.    www.bplans.com

iii.   www.masterplans.com

iv.   www.sba.gov/starting_business/planning/basic.html

v.    www.myownbusiness.org

The next part would show a sample business plan to serve as a model for you in developing your business plan. It will be entitled “Summing Up the Plan Elements – A Sample Business Plan”

References

1.    Martin, Davis E. Managing a Small Business Made Easy. Entrepreneur Press, 2005.

2.    Harroch, Richard D. Small Business Kit for Dummies. IDG Books, 1998.

3.    David, Kintler et al. Independent Consulting – A Comprehensive Guide to Building Your Own Consulting Business. F+W Publications, 1998.

NEGOTIATION AND YOUR BUSINESS: DON’T “GIVE AWAY THE STORE”!

What is negotiation?

Negotiation is a process “by which two or more parties attempt to resolve their opposing interests.”¹ It is a conflict resolution tool.

Again, negotiations may be viewed as “discussions aimed at reaching an agreement”²; “the action or process of conferring with another so as to arrive at the settlement of some matter”³

All negotiation situations have basic features common to them all.
Lewiki et al 2009⁴ identifies six (6) characteristics of negotiation situations, namely

a.     There are two or more parties.

  Negotiation is a process between individuals, within groups, and between groups

b.    There is a conflict of needs and desires between the two or more parties.

c.     Parties involved in a negotiation situation negotiate by choice.

d.    Parties expect a give-and-take process. Although there is a lot of strenuous arguments for what they each want, ultimately both sides will adjust their demands to reach a final agreement

e.    People or groups who negotiate, prefer to negotiate rather than to fight openly, permanently break off contact or got to a higher authority to serve as an arbiter.

f.    Successful negotiations deals with the management of tangibles as opposed to intangibles. Tangibles basically refer to the key terms of the contract – for example- whereas intangibles are the underlying emotional and psychological motivations that may directly or indirectly affect the parties during a negotiation.

BEFORE ever you negotiate these factors must be present. If they are not then what you are involved in is not a negotiation where the two parties win – a win-win situation – but a bargaining, a competitive win-lose situation, that would leave one party feeling like Alexander the Great and the other like Darius at the Battle of Guagamela in 331 BC.

When should you not negotiate?

J.C. Levinson et al in their book Guerrilla Negotiating: Unconventional Weapons and Tactics to Get What You Want⁵ list situations you should NOT negotiate.

You should not negotiate when:

1.   You could lose everything.

In such a case, choose other options rather than negotiating

2.  You are already running at capacity. There is no need to negotiate then just raise prices.

3.   The demands are immoral or unethical.

The other party may ask you to do something illegal, immoral or otherwise unethical – say giving kick-backs to government officials or accepting a bribe.  “If you tell lies to get business, if you involve in shady business practices…or in other unethical business practices… in the long run, the effects are damaging.”⁶

4.  You don’t care.

If you have no stakes whatsoever in the outcome and have nothing to gain, then do not negotiate. As an example, a company you buy raw materials from has a by-product X from its plant. It intends to sell X at a really low price, since it is occupying space in the store and would expire after three months. It has already been in the store for a month now. The company asks you if you’d be interested in buying at 1/10^th of the normal costs in the market. You do not need X and you currently have no installed capacity to process or even to store it. You have no means of trading in X within three months. 

5.   You are pressed for time.

A lack of time may pressure you into making mistakes. In fact in most cases when you don’t have time, you’d settle for less than you would under normal circumstances. As an example you might be offered a very good contract with attractive financials but then be told that the offer expires in 48 hours. Corporations use these tactic – exploding offers – in a negotiation to “prevent the other party from continuing to search for a potentially superior offer”⁷

6.   They act in bad faith

If they start acting in bad faith, it is time to stop negotiating. If you can’t trust their negotiating you may not be able to trust their agreement. In this case stick to your guns, do not negotiate. You may even discredit them

7.   When waiting would improve your position.

Let’s say you deal in a good which is slowly becoming the fad. A customer wants a large quantity of the good at a price you deem too low based on your estimated projections. Drag the negotiations. Wait it out. Or maybe you’ll have a new technology soon or another opportunity may present itself. If the odds are good that you will gain ground by waiting, wait.

8.   You are not ready

If you’re not ready just say “no”. There’s a reason athletes prepare for competitions even though their daily life is usually dedicated to the sport of their choice. If you do not prepare you start the negotiations from a weakened position and will ultimately lose out.

References

1.   Roy J. Lewicki, Bruce Barry, David M. Saunders. Negotiation (International Ed.). Mc Graw Hill, 2010.

2.   Hornby A.S. Oxford Advanced Learner’s Dictionary. Oxford University Press, 1995

3.   Editors of Merriam-Webster. Webster’s New Encyclopedic Dictionary. Merriam-Webster Inc., 2002

4.   Roy J. Lewicki, Bruce Barry, David M. Saunders. Negotiation (International Ed.). Mc Graw Hill, 2010.

5.   Levinson J.C., Smith M.S.A., Wilson O.R. Guerrilla Negotiating: Unconventional Weapons and Tactics to Get What You Want. John Wiley & Sons Inc., 1999

6.   Feyitimi A.O., Why Having A “Must-Win” Mentality May Actually Be Damaging To Your Business. www.feyitalksbiz.blogspot.com, 2012

7.   Roy J. Lewicki, Bruce Barry, David M. Saunders. Negotiation (International Ed.). Mc Graw Hill, 2010.

How can you ensure successful negotiations? What are some negotiating tactics you should be aware of and how can you successfully overcome them? What should you do if the other party starts ‘fighting dirty’? I will consider these questions in the next part of the Negotiation series, a paper entitled: “Negotiating: Untangling the Chinese Puzzle.”

WHY HAVING A “MUST-WIN” MENTALITY MAY ACTUALLY BE DAMAGING TO YOUR BUSINESS

So it is that good warriors take their stand on ground where they cannot lose – Sun Tzu

"We live in a greedy little world". With those words Shaina Twain aptly captures the dominant spirit of our world today in her very popular song "KaChing".

Our society is obsessed with winning – a cut throat competitive spirit. From an early age, the desire to come first is actively encouraged and bred. Coming second is unthinkable.

An example of the damaging effects of the “must-win” attitude as evident in our society today is the use of performance enhancing drugs in sports. Why do athletes most of them very respected like Marion Jones for example cave in to the pressure to use performance-enhancing illegal designer drugs?  One reason is that successful athletes can win instant fame and a huge fortune. Steroids seem to offer a shortcut to this gold mine. A prominent sports coach summed up a dominant attitude of many when he said: “Winning isn’t everything—it’s the only thing.”

Dr. Nora D. Volkow, director of the National Institute on Drug Abuse, told a U.S. congressional hearing some seven years ago:  “We are now facing a very damaging message that is becoming pervasive in our society—that bigger is better, and being the best is more important than how you get there.”

Bob Goldman, a physician specializing in sports medicine, conducted a survey in which he asked young athletes if they would take a banned performance-enhancing drug under the following conditions: They would not be caught, they would win every competition for the next five years and, afterward, they would die from the side effects of the drug. More than half the youths responded with a yes.

Every business is set up primarily to make profits hence many businessmen do not see it as their jobs to question the morality or otherwise of the sources of such profits. In fact this overriding desire to make as much profit as possible, has led many business execs to carry out outrageous malpractices, the effects of which has led to pain, loss of jobs and even death to others. As an example, The British newspaper The Guardian recently announced in 1984: “The international drugs industry, including leading British firms, was accused by Oxfam of systematically exploiting the Third World poor for commercial profit.” The newspaper went on: “Its most damning indictment concerns the willingness of the major drug companies to sell highly dangerous and potentially toxic preparations to the Third World—frequently with claims about safety and efficacy which they have been forced to withdraw in the West.”

Or take the example of former Enron CEO Jeffery Skilling who was so driven by the urge to win at all costs that he mortgaged his company’s fiscal health for a winning stock position, which act led to the massive losses to the life-savings of more than a thousand employees.

What do I think about the win at all costs attitude? I think that it is sick, unhealthy and not good for your business – in the long run. Remember the steroid example above? Steroids make you bigger faster better as an athlete but over time it gradually cripples the body’s internal organs and may cause organ failure or even death. Think of doing anything unethical and immoral in business as steroids that would ultimately lead to the death of your business.

Please note though that winning - succeeding in business – is not wrong in itself. In fact it is a necessary desire if your business is to survive in this harsh economic climate. A desire to succeed helps you strategise and look for the best ways to produce, market and position your products and services. It is a necessary requirement for any business person.

From the foregoing, it is necessary that you have a winning attitude, a strong desire to surmount obstacles and be the best at what you do. A drive to grow your business and make it a market leader, a desire to control the niche you’ve carved for yourself in the corporate environment. But, and this is a big but, how you win matters a lot.

Be Sun-Tzu’s ideal warrior, the invincible one, by fighting on ground where you cannot lose. This involves adopting strategies that makes it impossible for you to fail. Fraudulent practices in business is a reckless strategy, it is ground on which you will most certainly lose!

If you tell lies to get business, if you involve in shady business practices, evade taxes, pad your statement of financial position, carry out professional espionage or involve yourself in other unethical business practices, if you proclaim you have something that you do not, you may enjoy some benefits short term – a sharp rise in profits, increase in sales – but in the long run, the effects are damaging.

First and foremost, the trust you’ve built over time becomes eroded, your business name sounds odious to clients who at one time regarded you as the best. Finally it may lead to the loss of revenue to you, and final collapse of your business.

Ask Enron COO Jeffrey Skilling .

References

1.       Ofili, Okechukwu. How Stupidity Saved My Life, Ofili Ikechukwu, 2010.

2.       Awake! December 22 2005, What You Should Know About Steroids, Watch Tower Bible and Tracts Society, 2005

3.       Sun Tzu, The Art of War (Translated by Thomas Cleary), Shambhala Publications Inc., 2005

Business Plans

BUSINESS PLANS

In this first part of a four-part paper on business plans, I look at what a business plan really is and why it is such a necessary tool for businesses. As always my focus is on the small businesses and on individuals hoping to start up their own businesses.

DO YOU REALLY NEED A BUSINESS PLAN?

Leadership is a matter of intelligence, trustworthiness, humaneness, courage, and sternness –Sun Tzu

I once consulted for a small Nigerian company operating a foundry and producing foundry works and goods. Aluminium/iron/copper furniture, heavy machine parts, small tools, farm implements, stuffs like that for a number of small and medium businesses and for quasi-government corporations.

The Managing Director needed to get a government grant, and he also wanted to shortly take a loan from a reputable Nigerian bank to provide additional financing for his business. To do all of this, he needed a business plan which would include in money terms his opinion of what his business is worth and what it can be worth if given additional funds. Naturally he consulted a professional accountant – me.

As I walked him through a question and answer session, I discovered that his company had a net worth of NGN 20,000,000 and an average annual revenue of NGN 5,000,000 and he did not know!

He was also really surprised to note that his business earned so much revenue in a year, with nothing to show for it. In fact as at the time he came to me for professional advice, he was still operating from the leased plot of land he started from some twenty years ago, without any visible improvements.

He had NO business pan, did not think it was necessary to even keep books of accounts and his business though very profitable was going to fail. In fact he told me he was planning to sell off the business if his efforts at ‘reviving’ it failed!

Is a good business plan really that important?

Edwards Deming, noted industrialist, author, and a leader in the reconstruction of post-World War II Japan, states quite succinctly: “You don’t have to do this – survival is not compulsory”.

Every business – even a one-person consultancy business- should create a business plan and create it in writing. This serves as a solid blue print for success, gives the business a sense of direction, and serves as a bench mark against which to measure its progress.

Banks will refuse to consider loaning you any money if you have no sound business plan. The banker must be reasonably convinced that your business can repay the sum borrowed plus all incidental costs of borrowing, and still be profitable.

What does a young man who wants to win a girl’s heart do? Why, he buys her chocolates and roses and showers her with care and love – in short he tries to prove to her that he is capable of taking care of her and that he is a good investment. Think of a business plan as a tool to woo potential investors. They must be convinced they are making the right choice backing your ideas with their money!

So then what do you need a business plan for?

The book Managing a Small Business Made Easy¹ identified three key reasons why you need a business plan:

1.       It is your guide to developing an idea into a successful business operation

2.       It is the “step further” that transforms your initiative into reality. Developing a business plan for your new, start-up business or for an already existing business requires some understanding of the techniques involved in running that business and the initiative to get it done.

3.       It is a useful tool for getting additional financing for your business. Note that lending institutions do not loan large sums of money based on great ideas. In addition they do not loan money if the loan request is not backed by a sound business plan that embodies the great idea and other essential ingredients for your business to succeed.

But then what is a business plan?

The MD of the foundry operation I mentioned at the onset of this paper, discussed with me the background of the company, his role, and the role of other key personnel, his company’s products, what gives his company and his products and services a competitive edge in the market place.

He explained to me how he sells and distributes his products and his ideas for new products and services in the future. He also defined for me the overall market and who his competitors were and what they produced. The amount of funds he would require for future expansion, how the funds would be spent, a plan for repaying borrowed sums, and the time period over which repayment would take place.

We also considered how the additional funds will affect the profitability of his business.

With these information, I made detailed financial projections and added them with the foregoing and voila! We have a business plan!

A true business plan simply presents the italicised information in a detailed, well written and tastefully organized document.

Almost all books written on managing a business include a description of a business plan. Managing a Small Business Made Easy dedicated a chapter to developing a business plan as does the Small Business Kit for Dummies² and the Independent Consulting – A Comprehensive Guide to Building Your Own Consulting Business³. The Harvard Entrepreneurs Club Guide to Starting Your Own Business⁴ also devotes a full chapter 36 pages long to the subject

What plan elements should be in your business plan? Nine plan elements can be identified from the many books on developing a business plan.

1.       Cover page

2.       Table of contents

3.       Mission statement

4.       Executive summary

5.       Marketing plan

6.       Operational plan

7.       Management controls system

8.       Financial statements and projections

9.       Long-term strategic plans

What should you include under each plan element, what guidelines should you follow in writing your business plan? Where can you get help and advice in writing a business plan and in developing financial projections? I will consider these questions in the next part of the business plan series titled “Writing a Sound Business Plan – A Dummy’s Guide”

References

1.       Martin, Davis E. Managing a Small Business Made Easy. Entrepreneur Press, 2005.

2.        Harroch, Richard D. Small Business Kit for Dummies. IDG Books, 1998.

3.       David, Kintler et al. Independent Consulting – A Comprehensive Guide to Building Your Own Consulting Business. F+W Publications, 1998.

4.       Sharma, Poonam. The Harvard Entrepreneurs Club Guide to Starting Your Own Business. John Wiley & Sons, Inc., 1999.