Every week as SmallBizLady, I conduct interviews with experts on my Twitter talk show #SmallBizChat. The show takes place every Wednesday on Twitter from 8-9 pm ET. This is excerpted from my recent interview with @AlfredEdmondJr. Alfred Edmond, Jr. is SVP/Editor-at-large of BLACK ENTERPRISE. He is a content leader, brand representative and expert resource for all media platforms under the BLACK ENTERPRISE brand, including the magazine, television shows, web site, social media and live networking events. He also hosts The Urban Business Roundtable on WVON-AM in Chicago and Money Matters, a syndicated radio feature of American Urban Radio Networks. Read more from him at his blog.
SmallBizLady: What are the top three things a business must do to be positioned for growth?
Alfred Edmond, Jr.: First, assess the operational and financial resources of the current business. Can you draw from those resources without hurting existing operations? Do you have the human capital/skill sets to support expansion? If not, can you finance the additional resources necessary for expansion? How?
Second, assess your financial resources. What is current cash flow? How much cash do you have in reserve? Third, assess outside resources. Will your banker support expansion efforts? Your investors? Can you draw from your credit line? Finally, what is your end game? What does a “win” look like? Do flow charts of the operational structure of the expanded business. Who will report to whom? How will labor be divided? How will processes change? What key factors will you track to stay on course, adjust goals or abandon expansion efforts?
SmallBizLady: When should an entrepreneur consider hiring advisors or coaches?
Alfred Edmond, Jr.: Business expansion may justify hiring an advisor, coach or consultant, with expertise and experience specific to expansion target. That expertise should be industry specific, and could include knowledge of new territory or product segment, such as high-end luxury. Other expertise areas: new manufacturing processes/sourcing for product expansion, such as cuff links for a neckwear company. Before hiring an advisor or coach, be clear on timetable, objectives and how performance will be measured. Also be clear on compensation structure. Payments based on previous agreed upon milestones? Flat fee? Hourly rate?
SmallBizLady: How important is a strong brand in positioning a business to take it to the next level?
Alfred Edmond, Jr.: If you do not have a strong brand in the eyes of consumers, next-level business growth is next to impossible. You are building from a base of current customers who you will be counting on to communicate your brand promise to others. Current customers can’t communicate your brand promise if they are not sure of it themselves; sign of a weak brand.
SmallBizLady: How often should you evaluate your pricing?
Alfred Edmond, Jr.: On a monthly basis, and sometimes even weekly, you should evaluate your pricing. At minimum, evaluate your pricing against that of the competition, and against your costs per unit of goods/services. What is the perception of value of your offerings in the eyes of your customer? Can your brand promise command a higher price? Also, explore establishing a premium line of goods/services at a higher price than you charge for your basic offerings. Consider a no-frills line at a lower price than your basic offerings.
SmallBizLady: What should a business owner do if they want to target an entirely new market for business?
Alfred Edmond, Jr.: Consider who is already serving that market. What can you offer that is better or different? Consider the costs of entering that market. For example, what will real expenses be to open a new location in a different neighborhood? Consider the potential of the new market. How much additional revenue will expansion generate? How will expansion impact existing business? Is this new revenue sustainable? Does it justify the costs of expansion? What is the exit strategy, timetable, if potential is not realized? Before you go into a new market, have specific goals and a deadline to abort effort if they aren’t met. Have a plan for getting out as well as getting in.
SmallBizLady: Sometimes people expand prematurely and crash instead. How do you know if your business is ready to grow?
Alfred Edmond, Jr.: Is growth being dictated by personal desire or market demand? If the potential growth is being driven by market demand, it may be an opportunity for your business. You may be ready to grow if you are having difficulty handling customer demand with existing resources and personnel. You may be ready to grow if your profits are consistent, but your revenue has remained flat. Growth may be necessary to keep up with expanded offerings/service offered by your competition.
SmallBizLady: You can’t grow as a solopreneur, how many employees should you have in place to start scaling a business?
Alfred Edmond, Jr.: The number of employees you bring on should be measured against the additional business likely to be brought in on a monthly basis. To avoid overextending yourself in pursuit of growth, explore flexible alternatives to permanently increasing your overhead. Hire freelancers, independent consultants, temporary help, subcontracting to others on an as-needed basis, before adding to permanent staff. Also consider: What positions do you need to fill in order to capture new business? Is it sales? Customer service? Marketing? Start hiring there.
SmallBizLady: How to do you hire good employees?
Alfred Edmond, Jr.: First, be clear on the skill sets you need and what level compensation they command, depending on experience of the candidate. If you can’t compete on salary alone, consider other benefits, including health care, flexible hours, sales commissions and other incentives. Screen for aptitude, but hire for attitude. Consider the impact of every potential hire on the culture of your company. Chemistry matters. The most skilled person can’t help your business if they are difficult to work with, are unprofessional or lack personal integrity. Look for people with proven ability for the positions you need to fill, but also willingness to wear multiple hats to get business done. Look for people with the skill to do the current job, but the potential/skills set to grow with your company.
SmallBizLady: What adjustments does the owner of the company have to make in the face of expansion, especially as a solopreneur?
Alfred Edmond, Jr.: CEOs have to give themselves a gut check in the face of expansion. They’ll need to be able to relinquish absolute control to grow the business.
Once you hire the right people, can you trust them to get the job done their way? No one wants to be micromanaged. The more the company grows, the more the CEO must delegate technical, day-to-day operational duties and focus on providing strategic direction. Art of staying engaged enough to keep things on course, but distant enough to stay out of the way of team hired to get things done.
SmallBizLady: What else must a business owner consider when taking the company to the next stage?
Alfred Edmond, Jr.: At every stage of the business, the owner must have an exit strategy. This will constantly change as the business evolves. Is the goal to sell the business at some point? Pass it on to a family member? Go public? How does business growth impact those options?
SmallBizLady: What is the biggest mistake entrepreneurs make when taking their business to the next level.
Alfred Edmond, Jr.: Biggest mistake made by entrepreneurs is expanding just for the sake of doing it. Before getting bigger, get better. Ways to get better: 1) Investing in technology to boost productivity, 2) Find new markets, uses for existing products, 3) Investing in more training for existing staff. Also, train each person to do multiple jobs. Maximize the productivity and efficiency of your current operation before expanding, or you’ll end up with an even bigger, more inefficient business.
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Melinda F. Emerson, known to many as SmallBizLady is America’s #1 small business expert. As CEO of Quintessence Multimedia, Melinda educates entrepreneurs and Fortune 500 companies on subjects including small business start-up, business development and social media marketing to fulfill her mission to end small business failure. She writes a weekly column on social media for The New York Times. Forbes Magazine named her #1 woman for entrepreneurs to follow on Twitter. She hosts #SmallBizChat Wednesdays on Twitter 8-9pm ET for emerging entrepreneurs. She also publishes a resource blog http://www.succeedasyourownboss.com. Melinda is also the bestselling author of Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works and the ebook: How To Become A Social Media Ninja; 101 Ways to Dominate Your Competition Online.