Getting Ready to Start a Business?

Everyone at one time or another had the thought – I can do that so why don’t I start a business? Or that idea is so new that everyone will want to buy it.  Unfortunately, those ideas and a heart and a prayer is not all it takes to start a business. Many entrepreneurs leave out the pre homework to starting one. 

The pre homework is the initial thinking that gets an entrepreneur started in the right direction.  First a budding entrepreneur should be able to define his or hers product or service. The definition should include the why of going into business, what problem is solved along with unique features and characteristics. The entrepreneur does not want to get too “hip” by using too many words like best, advanced but rather in the description it should be clearly stated why the product is the best or more advanced so the potential users know why to buy it. So the initial thought should answer the following questions:

·         What do you want to be known for?

·         What sets you apart from your competition?

·         How did you determine the need for the product/service?

After developing those answers, spend some time on thinking how does the product/service solve a problem or fill a current need in the marketplace. This line of thinking is not about the physical make-up of the product but rather the psychological side of the product. Here the questions to be answered are:

·         How do the features of the product solve the need?

·         What is the purpose or the item?

·         Does it really do what it is supposed to do?

Next the conversation on competition must happen. An entrepreneur just can’t copy the competition and expect to make a success. The entrepreneur must improve upon the competitor’s product in significant ways to garner sales.  Just changing the color will not cut it in the marketplace. This area is where the entrepreneur can create the niche to get started and not compete with well-established larger competitors. Money can be made in niche markets and allow the startup business to gain financial health.

Finally proving the product works must happen. This proof shows the new idea will fit into the current marketplace and be accepted by consumers. If the product has a strong solution, it will probably have low resistance to entry into the marketplace.  If it requires consumers to have to change their buying patterns, there may be increased resistance.

If you have any questions on this article, call Richard Proffer at the University of Missouri Extension SBTDC of Cape Girardeau County at 573-243-3581 or email me at profferrd@missouri.edu.  

How to Set Your Business Apart from Your Competition

As I spend time with friends, I often hear them say, “There is no unique place to go shop these days. They all have the same stuff.”  To which I reply, “why do you shop where you do?’  This leads to sometimes an interesting dinner conversation. But it always reminds me many business owners may not know how to set themselves apart from the competition with little or no cost.

Creating an image of your business being different than the competition is part of establishing a competitive advantage for the business.  As a business owner, the competition for your business should be well researched so the idea of what you will do differently will be clearly thought out and easy to implement. Two ways to establish the business’s competitive advantage is pricing and the market.  With pricing, you can lower the price by finding a way to be more efficient thus lowering costs. With the market, you find a niche and exploit it to attract more customers.

In creating a competitive advantage for the market, some strategies are to really push superior customer service, increase product quality or benefits to the customer, create an atmosphere where customers are welcomed or offer additional add-on services not currently offered by your competitors. The idea behind higher quality is to prove the product to be of such high quality that the niche customers will pay more for it.  I know I am glad to pay for something of quality that will last longer than one month. With customer service, the first impression needs to be positive as customers make quick decisions on if they will come back or not within minutes of entering the business. Also finding new uses of a product and showing it off is another way to benefit the customer. In the store, show how piece of fabric could be used as a fast and easy table runner for

an upcoming house party. By focusing on a niche audience, you focus on the needs or desires of a narrow audience who find it hard to shop.  I used to work in a local big and tall men’s clothing store.  The store was definitely a niche since we started at extra-large and went up to eight x large.  The people who came to us typically had few retail choices and with our focus taking care of them, they kept coming back. We had chairs for them to sit on, we kept it cool even on winter days. They did not have to struggle to get a shirt or pant, the sales staff did it for them and so on. 

On pricing, the business is typically working on a lower price point to attract new customers.  This method is fine if your way to doing things is more sustainable because the serious competitor will also work to match your price. Some ways to do this is to increase your production efficiencies.  Here you learn to be more energy efficient, buy product more lower prices or work out credit terms with the suppliers. As a business owner, you might upgrade your technology to better track inventory, record sales for bookkeeping purposes or to develop an online presence. Innovation is also a way to reduce price and it does not necessarily always mean technology.  You could be innovative on how you promote a sale through Facebook or other social media outlets, by better tracking your customer’s purchases to remind them when a similar product has come in or being more personal to customers by creating an anniversary/birthday program. As the business owner, staying on top of overhead is a daily task.  This is an area where a business owner can lose his shirt quickly. Staying aware of employee turnover, salaries, benefits, operational costs and physical structure costs like rent, can help see areas to trim. 

Creating a competitive advantage is important to the success of a business. The business can stand out and attract customers or be like its competitors and be open waiting on the doors to open. Any questions on this article, feel free to contact Richard Proffer at the University of Missouri Cape Girardeau County Extension at 573-243-3581 or email him at profferrd@missouri.edu. 

River Heritage Announce Fourth Annual Farm to Table Dinner

The movement of local foods continues to grow in American and here in the Midwest it is becoming of a very important way to illustrate the importance of local foods to our economy and our food system.

In a continuing effort to increase people’s awareness of this effort in a fun and “foody” way, the River Heritage Association (RHA) has announced the date of its fourth annual Farm to Table Dinner. President Jeff Grunwald announced the date has been set for Saturday, October 12 at the River Ridge Winery in Scott City, MO.

The event will start at 4:30pm with wine tasting from the host winery and light appetizers. The meal, served buffet style, will begin at 5:30pm. Lori Brotherton, event chairperson and association secretary, said “ We are very pleased to have Chef James Cain, of Cape Girardeau’s long time barbeque restaurant Port Cape Girardeau Restaurant and Lounge.” She went on to say, “the menu will feature food prepared from ingredients found within 150 miles of Cape Girardeau and will feature appetizers, cold and hot selections and two desserts.” The meal is served buffet style.

Chef Cain is a native of Southeast Missouri and finished his culinary training at the Illinois Institute of Art – Chicago in 2008. His family has owned the historic restaurant for over thirty years.

Just in case nature does not cooperate, the group has planned for the dinner to be held under a pavilion at the winery. The structure will house over 70 people so there is room for all.

A limited number of tickets are available for this annual sell out event at the price of $65 person. For tickets, please contact the River Heritage Association at info@riverheritageregion.com or any association member. The listing of members can be found at www.riverheritageregion.com.

How would you like to serve on the University of Missouri Cape Girardeau County Extension Council?

Good afternoon,

I want to invite you to consider being a part of the University of Missouri Cape Girardeau County Extension Council.  You may be aware of the many services and activities your local MU Extension office provides to the residents of Cape Girardeau County like community economic planning, agricultural services, livestock advice, 4H programming and grandparent and family programming to help strengthen the family unit along with nutrition programming in the local schools.

As a member of this council, you have input on the programming the local specialists, like me, do in the county. You actually get to help decide what happens in the county from programming, events or help plan new activities never done in the county before. Your ideas are listened to and encouraged.  This year, the council decided to be the host of the Triad County Picnic (an event between the counties of Perry, Cape and Bollinger), hosted an educational wine tasting event at Apple Creek Winery and brought the state specialist on wine and grapes to talk and faced some hard decisions regarding budget.

The council meets an average of 9 months out of the year with two meetings being our annual meeting and our picnic. All meetings are held here at the Extension Center in Jackson, MO.  They start at 7pm and are usually done by 9pm with a few exceptions depending on the agenda that evening. So time wise, the commitment is not significant but the input you provide is significant to us.

If you have benefited in some way from our work here in Extension, I encourage you to consider nominating yourself for one of the eight open positions on the council. It is a competitive decision as there are usually more people running than we have positions. That alone shows you that residents consider this council to be pretty important to the community. So if you decide to run for the council, it is suggested you do some kind of campaigning like posting on  Facebook or Tweeting or at least encouraging your family and friends to vote for you.  If you have any concerns, please talk to Erin Larimore at 573-0243-3581. She is our

Nominations Committee Extension Resource person.

If you decide to put your name in the hat, please reply to this email and I will give it to our Nominations Committee.  They will contact you with the information they will need to place your name on the ballot in January.

So give it some thought and if you have any questions, just let me know.  I will be glad to discuss them with you. 

Richard D. Proffer

MBA, EDFP

Community Economic Development Field Specialist

Southeast Missouri Region

University of Missouri Cape Girardeau County Extension

684 W Jackson Trail

Jackson, MO 63755

Phone # 573.243.3581

Mobile # 417.300.3185

Making Your Ad More Creative

We sometimes see an ad that really catches our eye or ear.  We think “why can’t I come up with something like that?” You can if you follow some time honored points in advertising creative strategy. 

The five points for better creative advertising are: know your audience, tell about the product, make a promise, tell why you should buy it and describe the character of your business. If you follow these points, your creativeness will definitely produce a fresh appeal to your customers so they will want to come in and shop.

The first point is knowing your audience.  Many small business owners say everyone is their customer.  That is simply not true.  While they have may have a wide array of people coming into their shop, the customers they really want to reach repeatedly are the ones who buy most frequently from them. As a business owner, you need to be able to describe your customers in terms of demographics, shopping habits, lifestyle, etc. This will help you in thinking of words, scenes, etc. that will appeal to them in your ads where you show targeted products in use.

Then comes the product(s) you want to push in the ad.  Since you know what your best customers like, you have the task of putting your product into their life in your ad.  If they can see it in a setting they can relate to very comfortably, then there is an increased chance they will come in and look at it or call you about the service you offer.  The key here is putting your product or service into their life.

The third item for stronger creativeness is making a promise to your readers or listeners.  This promise is part of your competitive advantage – it is something you do better than your competitors do.  Maybe it is price, service, guarantees, etc.  You want to make sure to tell your potential customers in your ad what that is.  This is one of the most important parts of your creative advertising because it tells people what you do best.

Fourthly, after you have told the customers your promise, you then back it up with a statement or example of how the product/service delivers on the promise.  For example, if your promise is to have the lowest prices in town, then you would state you will not be undersold.  If your promise is to have the most unique inventory then tell where you got your inventory from to show that it

did not come from around the corner.

The final part of strong creative advertising is describing the character of your business. This is where you get to tell potential customers what to expect when they come to see you. You could say you are the place like no other, or come in to see the wonderful world charms, trinkets and babbles. You are setting your visitors up for the experience they will receive when they walk in.  This is very important because everyone can remember when they walked into a business establishment only to be disappointed. 

Working on these five tips for better creative advertising will certainly help you drive traffic but remember that is the purpose of advertising to bring in the people.  You must sell them once they are there.

If you have questions about this article, feel free to contact Richard Proffer with MU Extension at 573-243-3581 or email him at profferrd@missouri.edu.

Community Economic Development – What Exactly Is It?

In my new role in University of Missouri Extension, I have switched from small business development to community economic development. During the conversations with area residents, I am often asked, “what is community economic development and isn’t it just another word for economic development?”

The simple answer is no it is not just another word for economic development. The longer answer is similar to economic development but work in many other parts of the community. 

According to the Community Economic Development Handbook by Mihailo Temali, the definition of community economic development (CED) is “actions taken by an organization representing urban neighborhoods or rural communities in order to 1) improve the economic situations of local residents and local businesses and 2) enhance the community’s quality of life as a whole.” So CED concerns itself with people-based strategies and place-based strategies working together to improve the overall health of a community. 

Some common strategies in CED work centers around a town’s commercial district, creating microbusinesses, improving the workforce and creating job opportunities. With MU Extension, we work closely with the community and let them decide what areas they need to focus on regardless if it is on the most common accepted ones.  The local community knows what it needs to address and I serve as a facilitator or guide to developing a plan and working on the needs. 

CED accomplishes this by starting with the community and building up to local government (bottom up process) instead of starting with community government (top down process).  Extension has learned, if a community is to be changed, it has to have the support of the residents served. Without that support, the project could easily die without a chance.  In some of the communities Extension has worked with, we learned no community input and then the follow up and follow through is not successful because the community was not involved at the beginning. 

Extension has programming designed to help communities plan for their economic future. The first one is Building Local Prosperity (BLP). Here the state team works with the local leadership team (LLT), consisting of local community residents and government, to lead three monthly meetings with the result of a plan designed to address the identified issues and bring resolution.

A second one is Strategic Doing where the community spends one day dealing with a very specific topic and works to develop a plan. This method is fast paced and intense as it is designed to end the day with the beginning of an action plan the group can implement and start making changes to the community. 

Our third offering is a two part one – half day on fundamentals of economic development and the other half showing residents how their community had changed over the years. This is especially good for a community considering doing something in CED work,  as it challenges the resident’s perceptions of their community.  In the towns where we have done this, the attendees always come out with their perceptions of their community changed.  In one meeting, the group questioned me in depth on the reported role of agriculture in their community. But once, we came back and presented more information, they found their perceptions to be different than reality. This change then opened the door for new ideas to improve the community. 

If you or your community would like to learn more about these or other programs the CED department can bring to the community feel free to contact Richard Proffer at 573243-3581 or email him at profferrd@missouri.edu.   

Small Business Succession Planning Means Success in Small Towns

Many small rural towns in Missouri has a large population of aging Baby Boomers. They are retiring at the rate of 10,000 day or over 4 million annually according to the Washington Post. But what are they doing with their business assets when they retire?

This high rate of potential small business closings has sparked a lively conversation in rural America about business succession planning. By doing succession planning, the current retiring owner can sell the business and it remain open and serving the community. This activity is a big win for the current owner, future owner and the community. So why don’t more retiring business owners do succession planning?

Research from University of Minnesota Extension indicates there are three barriers to rural succession planning. The first one is a lack of a discussion on the importance of succession planning. The second one deals with barriers to the actual process related to finances, time and confidentiality. The final one having other available resources to assist in the planning and actual transfer of the ownership.

With the Small Business Administration saying small businesses create over 64% of all new jobs in the United States, they are the real lifeblood in any community but of particular importance to small rural Missouri communities. Besides jobs in small towns, they also provide a broader support base for a town by being active in civic functions, social events. The concept that the place where these businesses exist is also the home for the business owners creates a very strong tie. That tie helps make the local small community stronger which creates the case for the business to stay in business when retirement happens. It can be said that the smaller the town the bigger the impact the business has on the town.

Before a community can work on the first barrier, they need to realize that there are actually two transfers happening simultaneously when a business is sold. The first one is “transfer of ownership” which is the sides of legal, taxes, and finances and is pretty cut and dried. The second is the “transfer of leadership” and deals with knowledge, management capacity and the social capital to the new owner. The first one is very important to the retiring owner while the second one is very important to the community. To address this lack of conversation, an effort to educate the current business owners on succession planning needs to be conducted.

 The second obstacle is often times in the workings of the current owner and a lack of knowledge on succession planning. It can range from overestimating the business’s worth to not telling others their business is for sale to inadequate records. Surprisingly, though, sometimes the selling owner wants to stay involved in the business after it has been sold which can hamper the new owner’s ability to operate. Sometimes it is the owner taking the easier approach and just closing the business. Again, education appears to be the best solution to remedy this situation.

The final obstacle is the actual sale.  Many rural communities do not have access to business brokers to help make the sale smoother between the seller and the buyer. Finding financing to buy the business is another big factor. An interesting finding in the research by Minnesota Extension indicates that older business owners do not want to sell to older citizens. At a time when the baby boomers are retiring and have more available capital to use, they are seeing the door closed to them by their own kind. A lack of community resources is another reason for a difficulty sale. If a community has no local bank, accountant, attorney or a pro-business local government, then the potential owner has no-where to turn for advice.

Research suggests that if rural businesses can be kept open instead of closing that business retention is created but even more, business expansion happens. Minnesota Extension found that new owners reported hiring more people, growing their customer base and increased sales. That is another success story that would not have happened if the business just closed.

So Missouri small towns are at a point where retiring baby boomers want to do something locally but may not have the resources. The same is true for existing business owners who want to sell their business but do not know how. The answer appears to be the meeting of the minds and having conversations about succession planning.

Any questions on this article please call, Richard Proffer at the local MU Extension office at 573-243-3581 or email him at profferrd@missouri.edu.

10 Do’s for Website Promotion

The internet has become a household tool that everyone knows how to use it seems. Even first graders know how to wiz around on the web faster than I do sometimes. But while it is now a common place part of our lives, as a small business owner, do we effectively use it to benefit our own business?

Just because you have a website does not mean people (your potential customers) will see it. Yes, it can make your small business look as capable as a large business but the people still have to see it. The need to promote your website is just as important the budget you developed to get it built.  So once the gate is built, you have to develop ways to keep it open for your target audience to find it and either go shopping on it or learn more about your small business.  You have got to promote the website to make this happen.

To make your website promotion effective, a small business owner needs to decide why do you want to be on the web anyway? Some reasons come to mind immediately – to communicate to staff or customers. Another one is to share your knowledge about a topic so you appear to be a source of information for people seeking that information. Thirdly, it is a way to show your business’s personality so people know what to expect when they go in. Or it is one method customer’s can shop your store. Hopefully, you know your reasons for wanting to be on the web and use them as a guide in developing your website.

Understand for a website to be effective, you need to constantly adopt and adapt it to what is happening in the marketplace. Understanding what is working is essential to a successful website promotion.  If it works, keep it on the site and tie it your other promotional activities. If it is not,

then adapt it by trying new ideas.  You should always be aware of the new techniques or ideas that exist in your industry and be willing to give them a try.

A book called “Streetwise Low Cost Web Site Promotion” suggests the following 10 Commandments of website Promotion.

1)     You need to make a commitment to planning and doing website   promotion so you can stay on top of your competitors.

2)     Know your visitors so you can make sure your website delivers their   wants and needs and drive traffic to your business or create online sales.

3)     Be open to learning new things to help you promote your website.

4)     Don’t be afraid to look at competitor’s websites and borrow their   techniques if you see a need for them.

5)     Be like Gumby, the ‘80’s TV character, always willing to go with the   times (when it makes sense).

6)     Make changes to your website based on feedback from your visitors and      users.

7)      Use the analytics from your search engines to help make decisions.

8)      Your decisions on website promotion will be based on their ROI 

       not personal favorites.

9)      Take at least 1 hour per day to work on website promotion.

10)   Do not spam.

If you have questions about this article feel free to contact Richard Proffer, business development specialist for the University of Missouri Extension at 573-243-3581 or email him at profferrd@missouri.edu.

How to Protect Your Valuable Business Ideas

Every business has ideas it has developed to do things more efficiently. Or the business owner has come up with a way to produce his product in a manner his competitors cannot copy. Better yet, the owner has devised a variation on an existing product that makes it more durable in the marketplace. A business customer list is also an example. These ideas or innovations are important to a business’s success and allows them to gain competitive advantage over their competitors. 

But how can an idea be protected? They first must be tangible and able to be seen, read, touched or in some other physical form.  If a business owner has no way to protect these new ideas then the chances are they will never see the light of day. The rest of society will not benefit from these new opportunities. There are four legal ways to protect your idea: patent, copy right, trade secret and trademark. 

The first one – patent – is the most common way. Here the inventor files a disclosure on the invention with the U.S. Patent & Trademark Office (http://www.uspto.gov/) to review. This office is responsible for making sure the idea is able to patented.  There are three types of patents: utility, design and plant.  

With an utility patent, you obtain protection on how a product is used and works. 

The design patent then only pertains to the way the product looks.

Finally the plant patent is aimed to protect new species of plants that are bred.  There are some types of plant creation that is not covered so make sure you check into the possibility if you invent some new types of plants.

The second type of protection is a copyright. These protection devices are also managed by the Federal Government at the Library of Congress (http://www.copyright.gov/). This method protects an author’s rights to original creative works. An interesting website on copyright is www.templetons.com where they have an article on the top ten myths of the topic.

Next, we have trade secrets which are handled entirely differently.  They are not protected through Federal registration but through the legal system on all levels – federal, state and local laws. Some factors that determine if your idea is really a trade secret is:

1)      How many people  know it outside the business (hopefully none is the   answer)

2)      How many people, within the business, know the secret (hopefully few)

3)      How is it be safeguarded

4)      How important would it be to competitors

5)      How much did it cost to create this idea

If a business wants to protect information, it should keep in mind the above five questions as those efforts will help a court realize you are serious about this idea. As you can see from the questions above, a trade secret deals with the operations of the business and not information dealing with payroll for example.

The final way to protect your idea is through a trademark. These protection techniques are registered at the state level (usually at your secretary of state office of the U.S. Patent & Trademark Office (http://www.uspto.gov/). Here you are dealing with a recognizable sign, design, or expression that clearly identifies the product or service of a particular company.  An easy example is the Coca-Cola trademark for Coke. Trademarks have their roots as far back as the Roman Empire where blacksmiths would mark their swords. 

So even if you are a small business but have creative ideas, you can gain protection for your ideas. 

Funding for Your Business

“Yes Virginia, there is Funding for your Business…”

Just as the headline refers to the 1890’s news story in The (New York) Sun, there is funding in the capital world for many business if they cannot get it from traditional local or institutional banks. 

A business should always try to go local first in seeking funding either from community banks or the larger regional/institutional banks.   But not every business can fit the criteria of local banks and when turned down, they must go elsewhere.  But where is elsewhere is the question University of Missouri Extension Business Development counselors often get when these entrepreneurs come to our offices. 

After learning about the business, its past financial performance and where the owner wants to go with the new funding, the matching up process for the business against several new opportunities on the lending market can get started. 

One set of new lenders is the nonprofit sector.  While nonprofits have always been around, more and more are starting to lend money to qualified business owners or startups.  The lendee must meet criteria set by the nonprofit but if met, the terms are usually more flexible than a traditional bank loan.  In most cases, the lendee must show refusals letters from banks as proof of need.

Another set is the online environment.  Companies like OnDeck, Lending Club, Street Shares, Source 1 Capital and many others are now competing for local loans as many banking communities continue to have tight lending requirements. Here the entrepreneur goes to the website, completes the profile and the people behind the scenes go to work on matching the request up to potential lenders.  These lenders may be national banks outside of the local market area, financial investors, venture capital firms or other people or organizations willing to lend money to the entrepreneurial marketplace.

A second part of the online lending world are the peer to peer networks.  Here the entrepreneur tells the business’s story, the need for capital and the planned uses for it.  As people read the application, they decide on to invest or not in the opportunity.  Examples of this type of lending are Kabbage, Kiva, Prosper, and Zopa. 

A way gaining popularity amongst early retirees is using their tax-deferred retirement savings to start a business. This method is complicated due to the tax liability and the many maneuvers to avoid tax penalties for early withdrawal.  Guidant iFinance is an example of this type of lending.

One now so new way but more and more people are looking to is credit cards.  The National Small Business Association reported that about 33 percent of small businesses has used credit card financing in the last 12 months to help meet capital needs. Overusing this method can lead to cash flow chokes later on in the life of the business so entrepreneurs really need to plan out their usage of this option.

One final way is membership stores like Sam’s Club or Costco’s are turning to lending to their membership businesses as a way to help grow market share and retain customers.  It is important to know that only businesses can apply for these loans not a consumer.  These loans are traditionally under $25,000 and membership is required for application.  Not all club stores participate in this program so the entrepreneur will need to ask and not assume they do. 

Any questions on this article please call, 573-243-3581 and ask for Richard Proffer or email him at profferrd@missouri.edu. 

RIver Heritage Announces Fourth Annual Farm to Table Dinner

The movement of local foods continues to grow in American and here in the Midwest it is becoming of a very important way to illustrate the importance of local foods to our economy and our food system.

In a continuing effort to increase people’s awareness of this effort in a fun and “foody” way, the River Heritage Association (RHA) has announced the date of its fourth annual Farm to Table Dinner. President Jeff Grunwald announced the date has been set for Saturday, October 12 at the River Ridge Winery in Scott City, MO.

The event will start at 4:30pm with wine tasting from the host winery and light appetizers. The meal, served buffet style, will begin at 5:30pm. Lori Brotherton, event chairperson and association secretary, said “ We are very pleased to have Chef James Cain, of Cape Girardeau’s long time barbeque restaurant Port Cape Girardeau Restaurant and Lounge.” She went on to say, “the menu will feature food prepared from ingredients found within 150 miles of Cape Girardeau and will feature appetizers, cold and hot selections and two desserts.” The meal is served buffet style.

Page 2 Farm to Table Dinner

Chef Cain is a native of Southeast Missouri and finished his culinary training at the Illinois Institute of Art – Chicago in 2008. His family has owned the historic restaurant for over thirty years.

Just in case nature does not cooperate, the group has planned for the dinner to be held under a pavilion at the winery. The structure will house over 70 people so there is room for all.

A limited number of tickets are available for this annual sell out event at the price of $65 person. For tickets, please contact the River Heritage Association at info@riverheritageregion.com or any association member. The listing of members can be found at www.riverheritageregion.com.

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Interviews can be arranged by calling Richard Proffer at 573-243-3581 for more details.

Is Your Business Ready for Growth

Most business people want to grow their business but a question often comes up is am I ready to grow or can I afford to grow?  Those are big questions for small business owners because of the time, commitment and financial resources it takes to successfully grow a business.

The first step towards growth is to take inventory on your business. Richard Proffer, business development specialist for University of Missouri Extension, says, “I am not talking about physical inventory where you count your product but a more mental and financial inventory to see if you have lined up the right resources to grow.”

For this inventory, the business owner will need to invest time in analyzing the current situation and work on redefining the business’s goals. This analysis will allow the owner to make smarter decisions, be more accurate in the financial projections and move faster into growth when it happens.

Many business owners face the Red Queen paradox where they feel the constant strain of working and working and not getting anywhere but where they started.  This feeling is typical of entrepreneurs who have not done a good job of planning their business’s future. “Simply doing more of the same thing is usually not the answer for growing the business,” per Proffer.

The first step in planning for a business’s growth is taking that inventory and defining where the owner wants to be in the future with the business. Then the owner plans out what needs to happen with the business either in sales, employees, financials or marketing to reach the desired goal. The third step is to start putting into action processes to reach the goal in the stated time. Finally, goals need to be set so progress can be measured and the owner knows the right path has been chosen for success or where to make corrections to the plan. 

Any questions on this article please call, Richard Proffer at the local MU Extension office at 573-243-3581 or email him at profferrd@missouri.edu.  

Balance Sheet -- Does it Matter to a Business

The one of three forms a business owner often does not understand is a balance sheet. This form is one of the best methods for an owner to see how the financial health of the business is and possibly start to see where to improve the business.

The balance sheet is divided into three parts – assets, liabilities and equity.  An asset is something a business owns or has value like cash, equipment, inventory and investments. When completing a balance sheet, do not forget to include items you may not have complete ownership to like the building, a leased car etc. There are two types of assets – current and non-current. A current asset can be turned into cash quickly (usually within one year) like cash, accounts receivable and inventory.  A business owner would not normally expect to keep owed amounts or inventory past this one year time frame anyway. A non-current asset is the opposite – it is not expected to be turned into cash quickly and include items like fixed assets (land, facilities, equipment and cars.  These assets tend to be used in creating sales for the business.

The second part is the liabilities. This is where the business reports what it owes to other people or businesses.  Another name for these items is accounts payable.  Again this section is divided into current and non-current liabilities with the same time requirement as assets. Current paid off within a year and non-current longer than a year is how a business owner should look at the items.

The final section is equity and shows how much the business is worth to the owner(s). It should be the difference between assets minus liabilities. This section can be either positive or negative depending on what is happening within the business. If there is a decision to expand operations, then this section may be in the red due to increased expenses. If there was a significant in sales, the owner may decide to keep money in the business for future use and it would be in the black.

The one thing a balance sheet does not show is how profitable a business is. This is reported on the income statement (a form we will talk about in another column). As a business owner, the balance sheet provides a snapshot of the health of the business at that moment and is an aid in deciding on future plans for the business. 

Any questions on this article please call, Richard Proffer at the local MU Extension office at 573-243-3581 or email him at profferrd@missouri.edu.

Opportunity to Serve

Opportunity of Service

                If you are concerned about the quality of life in your county and live in one of the following counties: Scott, Stoddard, Mississippi, New Madrid, Dunklin and Pemiscot an opportunity to help your community/county is currently open. The Bootheel Regional Planning Commission is currently seeking active citizens who have an interest in either broadband and bringing it to their community or who have an interest in improving the quality of the workforce. Both groups are part of the national economic development plan written by the SET 7 group. The two committees are:

1)      Broadband – will work to educate the communities in the  Bootheel on the importance of having broadband presence in their community and how they can help make it happen; the committee’s next meeting is 8/23 at the Delta Center in Portageville, MO from 9-11a

2)      Workforce Development – will work to create a higher skilled workforce in the region through cooperation of many partners; the committees first meeting will be 8/19 at Three Rivers College in Sikeston, MO from 2-4p

To sign up for one of these committees, please contact Hannah Barnett at the Bootheel Regional Planning Commission at 573-614-5178 or email her at hbarnett@bootheelrpc.com.

For questions about the committees, please contact Richard Proffer at 573-243-3581 or profferrd@missouri.edu.

 

How to Protect Your Valuable Business Ideas

Every business has ideas it has developed to do things more efficiently. Or the business owner has come up with a way to produce his product in a manner his competitors cannot copy. Better yet, the owner has devised a variation on an existing product that makes it more durable in the marketplace. A business customer list is also an example. These ideas or innovations are important to a business’s success and allows them to gain competitive advantage over their competitors. 

But how can an idea be protected? They first must be tangible and able to be seen, read, touched or in some other physical form.  If a business owner has no way to protect these new ideas then the chances are they will never see the light of day. The rest of society will not benefit from these new opportunities. There are four legal ways to protect your idea: patent, copy right, trade secret and trademark. 

The first one – patent – is the most common way. Here the inventor files a disclosure on the invention with the U.S. Patent & Trademark Office (http://www.uspto.gov/) to review. This office is responsible for making sure the idea is able to patented.  There are three types of patents: utility, design and plant.  

With an utility patent, you obtain protection on how a product is used and works. 

The design patent then only pertains to the way the product looks.

Finally the plant patent is aimed to protect new species of plants that are bred.  There are some types of plant creation that is not covered so make sure you check into the possibility if you invent some new types of plants.

The second type of protection is a copyright. These protection devices are also managed by the Federal Government at the Library of Congress 

(http://www.copyright.gov/). This method protects an author’s rights to original creative works. An interesting website on copyright is www.templetons.com where they have an article on the top ten myths of the topic.

Next, we have trade secrets which are handled entirely differently.  They are not protected through Federal registration but through the legal system on all levels – federal, state and local laws. Some factors that determine if your idea is really a trade secret is:

1)      How many people  know it outside the business (hopefully none is the answer)

2)      How many people, within the business, know the secret (hopefully few)

3)      How is it be safeguarded

4)      How important would it be to competitors

5)      How much did it cost to create this idea

If a business wants to protect information, it should keep in mind the above five questions as those efforts will help a court realize you are serious about this idea. As you can see from the questions above, a trade secret deals with the operations of the business and not information dealing with payroll for example.

The final way to protect your idea is through a trademark. These protection techniques are registered at the state level (usually at your secretary of state office of the U.S. Patent & Trademark Office (http://www.uspto.gov/). Here you are dealing with a recognizable sign, design, or expression that clearly identifies the product or service of a particular company.  An easy example is the Coca-Cola trademark for Coke. Trademarks have their roots as far back as the Roman Empire where blacksmiths would mark their swords. 

So even if you are a small business but have creative ideas, you can gain protection for your ideas. 

Small Business Succession Planning Means Success in Small Towns

Many small rural towns in Missouri has a large population of aging Baby Boomers. They are retiring at the rate of 10,000 day or over 4 million annually according to the Washington Post. But what are they doing with their business assets when they retire?

This high rate of potential small business closings has sparked a lively conversation in rural America about business succession planning. By doing succession planning, the current retiring owner can sell the business and it remain open and serving the community. This activity is a big win for the current owner, future owner and the community. So why don’t more retiring business owners do succession planning?

Research from University of Minnesota Extension indicates there are three barriers to rural succession planning. The first one is a lack of a discussion on the importance of succession planning. The second one deals with barriers to the actual process related to finances, time and confidentiality. The final one having other available resources to assist in the planning and actual transfer of the ownership.

With the Small Business Administration saying small businesses create over 64% of all new jobs in the United States, they are the real lifeblood in any community but of particular importance to small rural Missouri communities. Besides jobs in small towns, they also provide a broader support base for a town by being active in civic functions, social events. The concept that the place where these businesses exist is also the home for the business owners creates a very strong tie. That tie helps make the local small community stronger which creates the case for the business to stay in business when retirement happens. It can be said that the smaller the town the bigger the impact the business has on the town.

Before a community can work on the first barrier, they need to realize that there are actually two transfers happening simultaneously when a business is sold. The first one is “transfer of ownership” which is the sides of legal, taxes, and finances and is pretty cut and dried. The second is the “transfer of leadership” and deals with knowledge, management capacity and the social capital to the new owner. The first one is very important to the retiring owner while the second one is very important to the community. To address this lack of conversation, an effort to educate the current business owners on succession planning needs to be conducted.

The second obstacle is often times in the workings of the current owner and a lack of knowledge on succession planning. It can range from overestimating the business’s worth to not telling others their business is for sale to inadequate records. Surprisingly, though, sometimes the selling owner wants to stay involved in the business after it has been sold which can hamper the new owner’s ability to operate. Sometimes it is the owner taking the easier approach and just closing the business. Again, education appears to be the best solution to remedy this situation.

The final obstacle is the actual sale.  Many rural communities do not have access to business brokers to help make the sale smoother between the seller and the buyer. Finding financing to buy the business is another big factor. An interesting finding in the research by Minnesota Extension indicates that older business owners do not want to sell to older citizens. At a time when the baby boomers are retiring and have more available capital to use, they are seeing the door closed to them by their own kind. A lack of community resources is another reason for a difficulty sale. If a community has no local bank, accountant, attorney or a pro-business local government, then the potential owner has no-where to turn for advice.

Research suggests that if rural businesses can be kept open instead of closing that business retention is created but even more, business expansion happens. Minnesota Extension found that new owners reported hiring more people, growing their customer base and increased sales. That is another success story that would not have happened if the business just closed.

So Missouri small towns are at a point where retiring baby boomers want to do something locally but may not have the resources. The same is true for existing business owners who want to sell their business but do not know how. The answer appears to be the meeting of the minds and having conversations about succession planning.

If you or your community would like to have a conversation about succession planning, feel to contact Richard Proffer at 573-243-3581 or email him at profferrd@missouri.edu.