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 Barry Moltz, @BarryMoltz. Barry is a small business expert, consultant and author with over 20 years of small business experience. He is known for getting businesses “unstuck” and has become a nationally recognized small business speaker. Barry has worked with Wells Fargo, Capital One and GE, among others. You can catch him live and in-person in Philadelphia at this year’s Reinvention Weekend presented by Small Biz Lady.
SmallBizLady: What is the biggest problem that small businesses face?
Barry Moltz: Oftentimes, small businesses will lack a cohesive approach to an effective and systematic sales and marketing plan. As we already know, these are the two most vital aspects of a small business. Without marketing, you aren’t making sales. Period.
Also, many small businesses are busy but they aren’t productive. There is a very big difference. Being productive implies explicitly completing tasks. Busy is similar, but it’s very possible to be busy without actually accomplishing anything (think checking emails). Know the difference between the two.
Small businesses also have trouble understanding their own financial statements. I know this seems like a given, but this is a huge mistake! A small business owner must constantly know what the finances of a business are on any given day. Ironically, while some small business owners lose track of something as important as the business finances, many also waste tons of time over-managing other aspects of the enterprise.
SmallBizLady: How do I build my brand?
Barry Moltz: The very first step is going to be to identify your (potential) customers’ pain points that you are attempting to solve. Part of this is also figuring out what target group of people can afford to pay for a solution to their pain points. Think of it like this: people buy painkillers over vitamins.
Also, you need to know your brand’s promise. What will customers say about your brand/business after they work with you?
This is also where social media comes in. Every single social share should reinforce your brand. If they don’t, they’re wasted potential.
SmallBizLady: How do I do marketing when I am so busy with other work?
Barry Moltz: It can be a challenge to balance your marketing efforts when you’re in charge of a million other things as a business owner. The good news is that there are tools to make it less challenging.
To do this, you definitely need to begin taking advantage of technology to automate your marketing process. There are tons of applications that allow you to schedule your share content far in advance so that you can set them once and forget about them – or tweak them over time as you see fit.
Remember, when you embark on digital marketing strategies, don’t sell. Educate your potential clients in your email blasts and social media posts. Work your way into the “maybe” pile as one of several companies the prospect will consider buying from. Lay the groundwork with your digital marketing and be there when prospects are ready to buy.
SmallBizLady: How much money do I need to spend on a website?
Barry Moltz: This number may vary but I’d say that anywhere between $500 and $3000 is a good place to start. Use Wordpress and find a theme (template) that you’d like to have on your website. Be sure you when you build a website that you are able to update the content yourself. And don’t forget to make it mobile-friendly! This is so important in today’s world!
SmallBizLady: How can I be productive and not just busy?
Barry Moltz: I think the first and easiest step to doing this is to think about your workday the night before. Sometime after work and before you go to bed, decide on two critical tasks you want to accomplish the next day. Set your sights on them before you do anything else. This means don’t open emails, don’t go on social media and don’t take any meetings before they are done. When you do this, even if the rest of your day is totally packed, it was a productive day because you finished these important things in the morning.
During your workday, turn off all your notifications and limit how often you check your email and social media. These are distractions and they do nothing but hinder productivity.
Lastly, I recommend that you do not take your phone to bed with you. Set aside time to go off the work grid and prepare mentally for tomorrow. It’s healthy and it also prevents you from losing focus on tomorrow’s tasks by being so bogged down by work stresses tonight.
SmallBizLady: What are the most important financial figures I need to understand?
Barry Moltz: I think you should always know how much cash is in your business account. This is good to know for your day-to-day when paying for daily expenses and payroll. This information is also vital to being able to know whether you’ve lost or made gains at the end of the month. Along with these you should know how much you, the business proprietor, is taking home in compensation each week/month.
You need to know what your gross profit margin is as well as which of your customers are the most profitable.
SmallBizLady: When should I fire my accountant?
Barry Moltz: Great question! The fact is every business needs an accountant. This person plays a critical role in the success and maintenance of your business. That being said, it can be difficult to sever ties with one when you realize how important they are to your enterprise. There are some red flags to look out for though, and if your accountant has shown signs of any of them, it’s time to let him/her go:
- If your accountant doesn’t get you monthly financial statements to review
- If your accountant doesn’t help you understand how your business makes money
- If your accountant ever belittles you or makes you feel less intelligent
- If you don’t see your accountant as a legitimate business advisor
If any of these things ring true, get rid of them ASAP and find someone trustworthy who will keep a close eye on your business’s finances while also helping you grow.
SmallBizLady: When is the right time to hire your first employee?
Barry Moltz: You should hire your first employee when you realize that doing so will have a significant impact on your small business. Once you get to a point where you simply cannot run it alone anymore, it’s time to hire your first employee. Bottom line: If your business will truly benefit from the spreading out of responsibilities to someone other than yourself, it’s time.
Remember, hire your freelancers first and your permanent employees later. Freelancers will give you the freedom and flexibility to take some responsibility off your own shoulders without worrying about that comes along with permanent employees (uniforms, codes of conduct, benefits). You can’t do everything yourself in your small business – that’s a job, not a company!
Also, remember you need to be able to afford new employees and don’t forget about yourself – you need to be paid, too!
SmallBizLady: Is it a good idea to hire close friends and family such as a spouse or sibling?
Barry Moltz: I don’t think this situation is especially problematic as long as you set certain conditions.
For one thing, never leave the role of your friend or relative in a gray area. Be sure that everyone understands what is expected of him or her. This is also true for you. Make your expectations and demands clear from the very beginning. Make the positions clear – don’t leave a job title open to interpretation.
These same rules apply to compensation. Don’t assume you may pay them less because you have a personal relationship with them. Be clear about what you are willing to pay for the work being done, and make sure they are willing to work for that amount.
Last, and most importantly, do not let business ruin any of your close relationships. You hear horror stories all the time about siblings and marriages being broken apart by the stress of a working-personal relationship. Don’t let this happen to you. No one wins in that scenario.
SmallBizLady: When should I leave my day job?
Barry Moltz: There are several indicators that you are ready to leave your day job. Once you have paying customers, this may be the time to quit your day job. If you’ve built your business or brand to the point of generating revenue, the business is officially launched and it’s probably time to put your all into it.
If you have saved enough money to live off only your savings for six months, you may be ready. This will also allow you to focus 100 percent of your energy on your new business. At the same time, even if the above two instances don’t exactly apply to you, it may time to leave your day job if you find that you can only achieve your professional goals by working for yourself alone.
As a golden rule, once you realize you can no longer work your side business without it interfering with your day job, you must leave. It’s not fair to your customers or your employer if you’re only giving half your potential in either venture. Besides, if your side business is taking that much of your energy from your day job, it’s better to leave before you’re “let go” for poor performance.
SmallBizLady: How do I find money to fund my business?
Barry Moltz: Most small businesses begin with personal savings. I’d have to say this is by far the best way. If you don’t have enough in your own savings, talk to your family and friends about investing in your dream. This can work out really well for you as long as you set realistic expectations for them and what they will get for their investment.
Another option is crowdfunding. This is a relatively new method of raising capital but its reach is as far as the Internet goes. Anonymous donors, friends, family and angel investors can find you this way. If you’re seeking funding that ten thousand dollars or less this is a good option for you.
I advise against taking a loan.
SmallBizLady: Is bootstrapping really the best way to go about starting a business?
Barry Moltz: I think the answer to this question will definitely depend on which business expert you ask. My opinion is yes, definitely.
While crowdfunding and capital loans can be helpful, they also come with a bunch of strings attached. For example, when you use a crowdfunding website, if you fall short of your goal, you won’t get any of the money you’ve raised at all. You normally need to offer your donors something in exchange for their help, also.
Bank loans. We all know what comes with these: high interest rates and catastrophic consequences if you fail to pay. It’s just not worth it, in my opinion, especially if there are other ways. Never take out a second mortgage to fund your startup – it could end up costing you the roof over your head. Literally!
Bootstrapping allows you to set your own pace in terms of saving and once you begin building, you owe no one but yourself (or some close friends and family.) Self-funding gives you freedom to build without tethering you to a for-profit financial institution and you don’t need to leverage your future to do it.
If you found this interview helpful, join us on Wednesdays 8-9 pm ET; follow @SmallBizChat on Twitter. Here’s how to participate in #SmallBizChat: http://bit.ly/1hZeIlz
For more tips on how start or grow your small business subscribe to Melinda Emerson’s blog http://www.succeedasyourownboss.com.