Discover essential strategies and insights into succession planning to ensure a smooth transition and ongoing financial success for your small business.
Adobe Stock: Prostock-studio
By Dan Coconate
Special to Financial Independence Hub
As small business owners approach early retirement, ensuring the continued financial success of their business becomes a top priority. The journey of building a business is filled with hard work, passion, and dedication.
To ensure that successors are prepared to carry on the legacy and achieve ongoing financial success, delve into these essential strategies.
Succession Planning
Succession planning is a critical part of preparing for retirement. Identifying potential leaders within the team early on and providing them with opportunities to grow is key. This includes offering challenging projects, exposing them to various aspects of the business, and involving them in key decision-making processes. An effective succession plan ensures a smooth transition and continuity when the time comes for new leadership to take the reins.
Financial Literacy Training
Financial literacy is indispensable for any leader aiming to drive business success. Investing in comprehensive financial training programs that cover budgeting, financial analysis, risk management, and strategic financial planning is crucial. Developing a strong grasp of financial principles equips future leaders to make informed decisions that positively impact the business’s bottom line.
Executive Coaching
Executive coaching plays a significant role in developing leadership skills and ensuring alignment with business goals. There are several benefits to offering personalized executive coaching sessions, whether led by you or a third party. It’s an easy way to help potential leaders enhance their decision-making abilities, improve their emotional intelligence, and refine their leadership style. Continue Reading…
When you get an idea for a new business, it’s easy to want to launch it right away. It might seem like a “now or never” situation, and your eagerness makes it nearly impossible to think about waiting a year or two to get things running.
However, it’s not uncommon for small business start-ups to cost thousands of dollars. Applying for small business loans can take time, and if you’re worried about launching quickly, you might be tempted to bankroll your business and use your own money to finance it.
Unfortunately, that’s a risky move. While it might seem like an investment, it could be a bad idea for a small business looking to grow.
If you’ve got a great idea for a small business and you’re anxious to launch it, you already know the importance of funding. However, it’s just as important to recognize some of the risks of financing it on your own. Let’s talk about what that might look like, and some issues that often arise when you’re putting in your own money to get things off the ground.
Mixing Business and Personal Funds
One of the biggest problems that can arise when you finance your small business yourself is drawing a line between your personal funds and what you’re spending on the business. It might not seem like a big deal for the two to commingle, especially if you’re starting out as the only employee. Some of the most common ways of commingling funds include:
Using one bank account for business and personal needs
Moving money back and forth between accounts
Depositing personal money to pay for business expenses
Withdrawing from your business account to pay for personal expenses
Not only can commingling funds get confusing, but it could put both your business and your lifestyle at risk. First, if your business is listed as an LLC, you could end up being held personally responsible for any business debts or lawsuits. You’ll also risk your personal assets being exposed.
One of the easiest ways to keep yourself from commingling funds is to dedicate a separate bank account to your business. Even if you end up putting some of your personal money in there for funding, you’ll be less likely to tap into it for personal reasons, and it will be easier to keep things organized and easy to understand, especially when tax season rolls around.
Ignoring the Fine Print
Financing your small business yourself doesn’t always mean reaching into your own pocket. It could simply mean you’re taking other routes to fund your idea, rather than relying on a bank or small business loan.
One popular option nowadays is crowdfunding. In the United States, over $17 billion is generated each year through crowdfunding sites. If you need money quickly, setting up a crowdfunding campaign is a great way to get it while encouraging people to get excited about your new business. It can be a solid marketing tool if you invest some time into it.
However, don’t ignore the fine print when it comes to these campaigns.
There are several different sites and platforms that allow you to ask for money. Each of them has a different set of rules and regulations. Some might require a small percentage of whatever you make. Others will charge a fee. Even if you understand that part, make sure you know what you’re liable for if you reach your funding goal. Many platforms require you to offer incentives to people willing to donate or pledge. It’s important to follow through on those incentives. Not only could you end up getting reported and lose some of your funding, but it’s a bad look for your business if you don’t give the people helping you out what they deserve.
If you decide to go with a crowdfunding site, make sure you understand the rules and are willing to stand by them, whether you make your goal or not.
Not Building your Skills
When you’re starting a business, you have to wear many hats. You might have a great idea, but you’re going to have to learn how to market yourself, deal with accounting, work with technology, and even how to hire the right people. In addition to the hard skills you’ll need, there are plenty of soft skills small business owners should have, including:
Leadership
Strong communication
Organization
Emotional intelligence
Not only are these skills important for running your business, but they’re necessary if you’re trying to work with angel investors or you want to secure venture capital. Refining your soft skills can make it easier to communicate with potential investors. By communicating clearly and effectively and showcasing your leadership skills, they’ll be more likely to trust your business plan and your projections. Continue Reading…
Justifying working with social media influencers in a big business is much easier. They have the resources, reach, and reputation to make the process seamless. But should your Small Business partner with a social media influencer?
Let’s examine three pros and cons of working with a social media influencer as a small business. Then, we’ll guide you in deciding if this type of partnership is worth pursuing.
Pros and Cons of working with a Social Media Influencer
Working with a social media influencer can positively impact your business’s bottom line, but first, you must weigh the pros and cons of this kind of partnership equally. Let’s start with three substantial disadvantages:
1.) Working with an influencer is hard to justify with a small budget
You must consider whether you can actually afford to bring on an influencer and that you’re committed to measuring the return on investment to ensure it’s worth it.
2.) It’s risky
Any marketing strategy is risky, but working with an influencer can be particularly risky because you can’t control people. Even if an influencer checks off all the boxes on your “ultimate influencer” list, they may not do what you thought they would do for your brand.
From taking your product and running to not producing the agreed-to content to being completely ghosted, many things can go wrong when working with a social media influencer.
If you aren’t comfortable with the risks, this may not be for you.
3.) It takes a lot of time and effort to find the right influencers
One of the most complex parts of working with influencers is finding the right ones to partner with. Working with the wrong influencers can damage your reputation. If they do something against your brand’s values, your audience won’t be pleased you’re associated with them.
Finding the right influencers to work with takes a lot of time and effort. But you must put in that time and effort to ensure you’re partnering with people with shared values, morals, and ethics.
Even with these cons, the advantages of working with a social media influencer can be significant for a small business. Here are three of them:
1.) Capitalize on the trust influencers have with their audience
The great thing about successful influencers is that they know their audience. They built massive trust with them through content they can resonate with. You can capitalize on influencers’ trust with their audience when you choose the right ones to work with. Continue Reading…
A few years ago, I came up with “The Seven Biggest Mistakes that Entrepreneurs Make and How to Avoid Them” for a breakfast seminar presentation. The presentation was well received and has since been used many times, eventually expanding into several chapters of my latest book for entrepreneurs, “Don’t Do It the Hard Way.”
This is a short version of my list of the seven biggest mistakes followed by my recommendations to avoid them by seeking balance.
#1 Too Entrepreneurial
Certain characteristics of entrepreneurs are necessary for them to be successful. But if over-indulged they can lead to big mistakes. These include the tendency to be too opportunistic and not sufficiently selective and focused; to be too optimistic and miss or ignore the warning signs; to be too impatient and expect too much too soon.
Entrepreneurs usually have great confidence in their instincts, but the mistake is to neglect or ignore market feedback and analysis of the facts. Being action-oriented, the tendency is to “just do it.”
Entrepreneurs are expected to be decisive and demonstrate leadership, but both can be overdone: deciding too quickly and providing too much direction so that input, initiative and creativity are stifled. All these mistakes can arise from being “too entrepreneurial”.
#2 Lack of Strategic Leadership
Another tendency of many entrepreneurs is to get lost in the daily details and completely forget their original strategic plan. Operating decisions demand continuous attention and there is seldom time dedicated to stepping back and looking at the business from a strategic perspective. The common observation is that the owner is too busy working in his business to effectively work on his business.
Defaulting to continuous short-term decision-making can result in the business not having consistent strategic direction and straying far from the original plan. Lack of strategic direction may be the single Biggest Mistake that Entrepreneurs Make.
#3 “That was Easy, Let’s Do It Again!”
Another common mistake that can have devastating consequences on the business is the over-confident entrepreneur who concludes, “That was easy, let’s do it again!” So he or she jumps into new markets, new product lines, or even a new business or investment opportunity without doing the homework first.
It’s important to remember: Making money doesn’t make you smart. Look at every opportunity with the same detached analysis as the first time you started a business. Many successful entrepreneurs have made the mistake of jumping into a new venture: merger, acquisition, restaurant franchise or real estate investment – and blown away the equity value they generated in their original business. Another big mistake to avoid.
#4 Focused on Profit
Being focused on profit doesn’t seem like a mistake. After all, isn’t that the whole purpose of running a business? No, actually. The primary financial objective of any business is “to enhance long-term shareholder value.” Continue Reading…
By Don Ludlow, Vice President, Small Business, Strategy & Partnerships and Business Financial Services, RBC
(Sponsor content)
While the COVID-19 pandemic brought significant challenges and uncertainty to small businesses across Canada, it also became a catalyst for many new business practices.
In many ways, it also accelerated the need for small business owners to adapt to other trends and consumer expectations that were steadily on the rise over the last several years.
To help us better understand these trends, RBC recently conducted research to gauge the types of experiences and expectations Canadians have when interacting with small businesses in the coming year as we continue to navigate the ongoing pandemic and journey toward economic recovery.
The survey revealed three important trends that will continue to impact small businesses in the year ahead:
First, we’ll see a growing demand for digital payment and engagement options, whether customers are connecting with small businesses in person or online.
While eCommerce and digital solutions were already on the rise pre-pandemic, they became pandemic necessities as businesses adapted to health and safety measures.
Now, more Canadians are expecting this to be the new way of doing business, with two-thirds (64%) of Canadians saying that partnering with digital platforms to make products and services more accessible will be important post-pandemic, especially among millennials (72%).
Meanwhile, four in five Canadians polled say that they would like to continue to shop online at small businesses, even after the economy is fully reopened, and 72% say that increased social media presence helped them become more aware of what small and local businesses had to offer.
Small businesses that focus on prioritizing employee wellness and overall customer health & safety will be greatly valued by Canadians.
The majority of Canadian respondents in our poll said providing more wellness and mental health benefits and resources to employees will be important going forward (87%).
They also expect heightened hygiene standards to continue post-pandemic (99%) and would like businesses to continue offering flexible curbside pickup and delivery services (78%).
As a result, offering employee benefits, resources and safety protocols that meet these expectations will be critical differentiators for small businesses looking to attract and retain talent and customers.
We’ll continue to see a rise in socially and locally conscious consumers – especially among millennials and Gen Z.
Supporting small, local, and diversity-focused businesses is here to stay post-pandemic. According to our research, the majority of Canadians (77%) polled plan to spend more at small, local retail stores, restaurants and businesses to support their recovery than they did before the pandemic.
Many respondents also said they are actively seeking out and supporting 2SLGBTQ+* (52%) and BIPOC **(61%)-owned businesses, products and services. These numbers are greater among Millennials and Gen Z, indicating the next generation of consumers will increasingly purchase through a diversity-focused lens.
Being aware of these trends, and adapting business strategies and operational practices to address evolving consumer expectations will be important to the success of small business owners in the next year.
In light of these insights, we have three tips for entrepreneurs to consider as part of their 2022 playbook for success.Continue Reading…
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