THE AMERICAN DREAM IS SUCCESS
IN A BUSINESS OF YOUR OWN
by Joel D. Johnson
Like ice cream and apple pie, the American dream of owning our own business and our own home is the foundation of the American way of life. Dreams that have enriched us all. Owning our own time and controlling our own financial destiny are the magic ingredients of American freedom.
New ideas that create new businesses, new jobs, and increase our standard of living are being introduced every day. Much of this increase in business activity can be attributed to the Internet, the driving force behind information technology at lightning speeds. Information technology will play a vital roll in the success of your business. It is imperative that you understand the importance of information gathering, technologies for gathering and sharing facts, and how they will affect the future. Not being computer literate will almost guarantee your failure. In fact it is almost impossible to do business with major corporation without electronic data interchange or a similar technology. Without information sharing, it will be difficult for a small business to complete.
Product distribution, in every category, is destined for the most dramatic revolution in the history of business. It no longer takes six weeks to receive orders. It is now same day, next day delivery, making it much easier to create a “Just-in-time” inventory plan that will reduce the number of days inventory is required; thereby, increasing inventory turn rates and net profits from operations.
It is now possible to allow your vendors to stock your products and deliver them direct to your customer, bypassing the need to ship to your location and therefore eliminating duplicate handling and freight requirements. This one method of distribution is upending and is replacing the necessity of brick and martyr locations. Amazon has already dug into the future of major retailers world wide by using this innovative method of sales, marketing and distribution. Look into your crystal ball for even more dramatic changes that will affect and change the whole world of commerce.
When was the last time you actually went into the lobby of your bank to do business? Electronic banking is now the norm. I predict a whole new world of finance that will see banks moving into local business offices, rather than having large store fronts designed to impress. Banking customers aren’t impressed. They seek convenience and quality service, which is why online banking is the norm. It is also the norm for banking officers to get out and about as they seek new customers and increase their loan portfolios. Why? Because not as many potential customers are walking into the bank as they once did. All enterprise is customer driven and that includes banks and other financial institutions. It is the recognition of this fact that will grow successful banking operations. Nothing happens until something is sold, including loans. Access to capital is a two way street.
In America, of all businesses that fail, eighty-percent fail within the first two years. Ninety-percent of all businesses that fail, fail within the first five years. Why? Because people fail to plan and many are not prepared for the normal challenges that face all business owners. Many entrepreneurs who are undereducated in business, go into business thinking that nothing bad will happen. They believe that by creating sales they will have sufficient working capital to succeed. But, they soon find out bad things can and do happen and when you get down to the real reason these things happen it can be traced by to their own poor choices. Research has shown that most business that fail, fail due to the lack of knowledge, lack of capital, lack of research, poor choices in location, etc. Most of these failures could have been avoided had they made the choice to plan. When you fail to plan, you are actually planning to fail. With proper planning most all of these things could have been avoided.
Of course, there are many opinions of why some entrepreneurs succeed, while others fail, but research has also found that those who succeed generally come to the table with all their homework done. They know their business, set realistic goals, make good plans, start with sufficient financing, and most importantly, they work their plan. I won’t fool you! Planning is hard work, and that’s probably the reason many new entrepreneur fail to do it. However, if you want to succeed badly enough, you must work hard at planning and even harder at following your plans.
Someone once said, people can be divided into three separate groups; those that make things happen, those that watch things happen, and those that wonder what happened.
Making the right plans: Who, what, where, when, why, how, and how much, along with determination and perseverance are the most important ingredients for success. You might think you don’t need a written plan, that you already have everything planned out in your head. You’ve probably heard from one of y0ur friends that you really don’t need a written plan. ‘Things change to quick, making the plan obsolete. They say. Besides, how can you possibly know how much business you are actually going to do? There is no way to know that! They say. How is it possible to predict cashflow among all these unknowns?’ Good questions! If you can’t answer who, what, where, when, why, how, and how much, then how will you know if you have a chance to succeed? Why are you doing this stupid thing of starting a business, when there are so many unknowns? Completing a business plan forces you to think. Putting your plan in a workable format helps you visualize all possibilities. Planning helps you find the gaps that need filling before you begin. Planning every detail helps to eliminate possible failure, which as noted above, should be an awakening point.
Lenders know that plans are subject to change, but the one thing that is important to the lender is that you have done your homework. That you know your business and that you have thought things through. Your business plan demonstrates that. While the main thing they are concerned with is cashflow, collateral, and your ability to repay the loan, presenting your plan moves you to the top of the list for consideration and that alone should be reason enough to plan.
Wishing you the best!