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Edmonton Business Consultant | Entrepreneur Business Plan Myths – Part 2

What’s your, what’s Your Business First? Uh, [inaudible] yeah. Alright. Transparent partnerships to reach light transcripts. Partnership please. I filled, Yup. Good. Edmonton business consultant that’s the succinct, the seed. Yeah. Uh, Gen galleries or custom jewelry in Sherwood Park. You dream it will make it, you treasure it. We’ll fix it. Hmm. Um, okay. Those are good. I think everyone gets that, that and people don’t know how important that is and [inaudible] in terms of building a team and guiding what you do every single day because you’re going to have decisions, you’re like, what the heck do I do? What does the mission say? I should do a lot? I’ll probably tell you the answer. Um, other than that you end up making decisions on, you know, frustration or greed probably. Um, when you’re not as clear, right. Go back to that mission. Having like a location in your mission about electrical so that I’m ready.

I think it needs to be more sensitive. I think people, you know, think that it’s quality, electrical, price, trust and expertise. Quality is wonderful. Yeah. So like you could say quality ratings would be a little more descriptive on that. Okay. Yeah. Um, but I, I can’t specifically preclude the, the location because mine has a location up in Canadian business. Beauty. Austin has it. Yeah. Well, it also has to do like, I really don’t know us tax at all. Like I don’t know the first thing to do. Edmonton business consultant, break your business down into Oregon and beyond that one, break your business down into no more than pre-revenue groups. I. E. A contractor may have one group for fixed fee projects and another group for hourly service work. A Jim may have one group for monthly membership costs and another group for personal training type business owners are often too precise in establishing categories.

This thing increases the cost and time to track performance. However, rarely results in better choices as the, even if the categories are tracked accurately. Most businesses don’t have enough data points, but the information to be reliable. So the example I like to use the restaurant example, pretend you’re a restaurant. You want to figure out exactly how much money you make on onion rings. So you’re going to spend the time figuring out how much grease you dump into the French red container versus the onion ring container. And then even if you drive yourself absolutely nuts trying to project that, the, the, what you have to tell that business owner then is you don’t actually have enough data points for that to help you predict the future. If you’re a and W and you’re selling millions of orders of buddying rings, you’ll have enough data points to do that with that level of specifics.

But for the average small owner, that same restaurant owner doesn’t need to know how much I’m making Andres. They need to know how much they’re making. Every time someone walks through the door, every time walked someone walks to the door, on average, they order this. My food costs are that. My gross margin is this. That is a very powerful number and one that will likely help you project the future. But if you try to project on every item on the menu, you will be wrong. Not you might be wrong, you will be wrong. Uh, you just, you won’t have enough data points to do it accurately. Edmonton business consultant, figure out the average revenue per average revenue project per transaction for each revenue group. Identify the direct costs of each revenue group. Drag costs, the costs that vary on how many units produced and how many customer serve materials, direct job labor subcontracts they do not include costs that remained relatively constant regardless of volume, I. E. Rent, administrative or fixed staff.

If you have a year of history, count the number of transactions in the prior year by the revenue group to get the average revenue Frederick per transaction. Divide the gross revenue for the revenue group in the prior year by the number of transactions. So if you know how many invoices you sent out last year, you know how much your total revenue is divided by the number of invoices you sent out, you’ve got your number. It’s not overly complex. We can make it really simple like that. And you start to get really good forecasting if you know those averages. Same thing with the average direct costs. If you know what your direct costs are divided by the number of invoices you sent to the last year, I’m assuming those invoices are all on the same project you guys did. Progress billing, you might have to see by the number of jobs, not invoices. Um, if you’re starting from scratch, figure out the revenue per track, per transaction by working backwards.

Start with the average transaction cost and then add the desired profit per transaction and you get the proposed average revenue per transaction. Then compare to industry average and estimated desired pricing structure. So if you’re, if you don’t have any history to go lie, look at what it’s gonna cost you to produce it. You know, you’re going to add a profit margin in and then compare that to what your competitors are charging and you’re going to start to see if that’s, if you’re completed at the lunch or if that’s going to work. Okay? You didn’t give you guys some time to look at that. We’re going to come around because this is a little bit of a meaty topic and yeah, stick your hands up and myself. Y’All away. As an Edmonton business consultant, we’ll come around and try to, uh, flush it out. If you’re struggling with it at all, you’re free to leave. I’m not, I’m not holding you here.

Um, so the next thing is your differentiation strategy. Okay. There’s a couple of common differentiation factors and most people in the mistakes that they’re is, they’re trying to be everything to everyone. I have the common differentiation strategies written here and they’ll probably hold true for almost every business here. And I encourage people that you want to pick no more than three could be just one. You just might want to be the fastest. That might be it. Edmonton business consultant, you want to pick no more than three. But think about your differentiation strategies are going to end up someday on a piece of marketing material. And what do you think will happen if you have 15 different differentiation items on a piece of marketing material? No one’s going to read it. People are, they just don’t have the attention span to get through to that. It’s too hard.

So number one, focus on niche customers. So imagine if you’re a general contractor and you only build offices for dentists that’s focused on niche customer unique features and qualities of service that could be an x or long warranty. Everyone else in the business has a one year warranty and you have a three year warranty. That’s a unique feature, quality of service location. You’re doing something specific in a specific area for a lot of you trades guys here. Um, some of you are trying to be, you know, Evanston’s flooring guy and when you should maybe focus on being the southeast flooring guy. Cause sometimes the market in Edmonton is actually a little too big. Edmonton business consultant, just start, we might move to the greater African area later, but a lot of times you need to go even smaller, uh, facilities, equipment and software. You might have a piece of equipment that your competitors don’t have or that you might have online booking software that allows you to, you know, acquire more customers.

That might be one of them as well. Branding and marketing, branding and marketing, branding and marketing, branding and marketing, branding and marketing. It probably needs to be one of your three. It needs to be one of your three. And I’ll tell you why is because every other one that you can put pick out of here, all of your competitors can probably steal them from you eventually, but they can’t steal your branding and marketing. Everyone knows that. One I love to point out is you guys know the uh, uh, men and kills the window Washer guys. There is like zero barriers to entry to this business unit, a little squeegee, squeegee, and a ladder, but they have killed it with their branding and marketing and you can’t copy that. You could copy the pricing, you could copy the equipment that they have. A, you can buy the same squeegees it doesn’t matter, but you can’t copy that branding and marketing.

They own it and you won’t be able to rip it off with a significant significant amount of effort, painted methods and terms. So famous in terms, maybe you offer financing your competitors don’t. Maybe you can offer fixed fees and your competitors don’t. Um, that’s a big one. Numbers, certification experience. But in a longevity of staff, maybe you’re a master electrician versus journeyman electrician. Okay. Edmonton business consultant, discussing organizational longevity, that one is different. Make sure you make the distinguishing the difference between organizational longevity and number certifications of staff. Because when a lot of people start businesses, they’re experts, they’re, you know, 10 year vets, they have all the experience, but what they really, what they don’t realize is they have zero organizational longevity. You’re just the new kid on the block in terms of your company. So you’ve got to make sure those are, those are two different things.

Convenience and customer experience. You know, you’re the contractor that does a one year followup in person. If you are a general contractor, if there’s a general contractor in this room, do your one year followup in person and it makes no sense when you, when you just plunk it on as a cost. But I guarantee you there’s other projects that we’ll flush out of there. And the guys who do it absolutely kill on that because that’s how they get the referrals and that’s how they did the deck last year. And they’re going to do the base of rental this year. They do their one year inspection, not over the phone. They do it in person and they clean up on it. So, uh, that’s a unique customer experience. So you need to pick no more than three of those. Okay. The key is no more than three of those.

You can’t be everything to everyone. You’re not going to forget about the harass. You’re just going to say these are the three that I want to be better than my competitors. We don’t get rewarded in business for being good. We get rewarded in being business for being better than our competitors. Okay. Um, because being good isn’t enough. If you’re good and another guy’s better, I don’t buy from him. You have to be better. Edmonton business consultant, don’t try to be, you know, just a little bit of everything. Just be better at that one thing. Cause there’s some, uh, some of your customers out there, they won’t care about anything else other than the payment terms and your cause, your payment terms of the best in them. But you don’t care about anything else on the warranties because your warranty is the best they went with you.

That’s how you have to think about it. Okay. Um, so then section four is a little bit of, yeah, section four is what we can work on over lunch here. So you want to identify the geographical area and three main characteristics, your ideal and likely buyer. Consider their age, gender, income, marital status, family status, interests, one to three sentences concerning the market trends for your industry. I generally recommend one trend that makes it easier to do business in your industry and one cha trend that’s a challenge in your industry. Uh, I know those electricians here. So, Edmonton business consultant, one trend that makes it easier as people are looking for more energy efficient products and they want to upgrade things that are, you know, a little bit less efficient. And one thing that makes it challenging, there’s a lot of industrial electricians coming back. And trying to do residential work.

So one, one trend to vote in any sort of business that you’re in. If you have, if you’re overly pessimistic or overly optimistic, you’re probably missing the boat on there. You want to have one of both. And then the three main risks of your business. Most businesses will have very predefined risks. It’s either going to be profitability and their cashflow. This one’s hard, but it’s going be the business acumen of the owner. If you can admit that you’re on the, you’re on the road to recovery. Uh, the business acumen of the owner a and trust me, I’ve been doing this for 21 years. I’m starting to get a little bit good at it after 21 years, um, acquiring new customers, losing customers, and our pricing pressures, legal and regulatory risks, obsolescence. So whatever you’re selling is going to be obsolete. People are going to want something different. Supply chain. I’ve had clients who installed, they build log homes and they get all the log home packages from one supplier. That is a huge supply chain risk. But that supplier, you know, jacks up their phrase. So they have a fire at their plant there. You’re literally out of business. Um, and then human resources, um, human resources that the massage therapist, this clients, they have huge human resource problems because they’re all hippies and they’re impossible. It’s like hurting cats.

Uh, but yeah, so some business like that have intrinsic human resource challenges. You’ll seasonal businesses, landscaping, that sort of thing. They have difficulties with human resources and almost every business will have a human resource limitations at some point. So, Edmonton business consultant, that’s what we have here guys. Well, I think that’s enough to send you guys in to lunch break and, uh, yeah. Great. Any questions you have on the business plan? Another thing, we got pizza for you guys sitting right there.