Small Business

 


Small Business Introduction


Small business is the engine of the economy

Your small business is an important contributor to the economic growth of your country. Each small business might seem insignificant, but collectively, small businesses in North America employ a significant portion of the workforce. Your small business require the same basic principles to create value as a big business. However, it's important for each small business owner to understand that the failure rate is a whopping 90%! Although starting a business comes with risks, understaning and applying certain core values, business prnciples consistently, systematically, with the right attitudes, product, and people, increases the likelihood of success significantly.

This site presents simple, basic business principles to help each small business to function effectively. Michel A. Bell spent 32 exciting, fruitful years with former Alcan Inc., now Rio Tinto Alcan, (Alcan) in mostly executive capacities in head offices, large and small subsidiaries, on boards of directors of publicly traded and private affiliates, in different countries, cultures and continents. But there were a few constants: Alcan's principles, objectives, and polices applied always. What applied in Canada applied equally in Thailand. These business principles, business objectives, and business polices were valid for billion dollar businesses and million dollar businesses. Though I will devote this page to small businesses, the business principles, objectives, and policies I will discuss are valid for all businesses.

Developing and growing a small business can and should be fun. However, you need to be in the right business, for the right reasons, with the right expectations. You must be realistic. If you plan to start a small business today, probably it will produce "unnecessary" goods or services. How many stores in a typical shopping plaza sell "necessary" stuff? How many businesses produce "needed" goods or services? Your small business will compete with other businesses for access to highly indebted folks' credit facilities to spend on non essential items. Think about this as you journey.

Small Business & Economic Cycles


Small business hurt badly when the economy shrinks

The economy cycles from boom to recession and then boom. We don't know the timing, but we know the economy will continue to cycle between feasts (growth) and famines (recessions or contractions). That's why an important consideration of every small business owner is to be patient and never chaste the current fad. We see an excellent example of coping with feast-to-famine cycles in Genesis 41.

Many business owners don't accept that famine follows feast, and the reverse. Often, they overextend their businesses in good times, and in the slump, they contract, collapse, or linger for years on the verge of collapsing. They don't realize they must find a sustainable operating level, with minimum debt (ideally, no debt) at which to operate during boom and famine periods. To do this, they must overlook some opportunities. in boom periods. Most of all, they must avoid bad growth--opportunistic growth outside their vision, mission, and capabilities; especially those temptations requiring debt. Why do you think we have so many lay-offs in famine periods? Corporations chased unsustainable growth with borrowed funds, and then wham!, reality sets in, and they must contract. Sadly, too many of the CEO's of these corporations survive...some with huge bonuses, to boot.

Several business owners, particularly small business owners, don't see the need for flexible cost and revenue structures to cope with extended famine periods. Nor do they see a need to conserve funds and other resources always--in boom and famine. Many executives and owners who are children of Messiah Jesus don't see the need to let Jesus guide them to His chosen opportunities and away from their pet projects, which look good for awhile, but have no substance.

If you are in business today, ask God to show you how to navigate through your challenging circumstances. Don't be deceived and think there is no hope. With God, everything is possible (Mark 9:23). Dedicate your business to Jesus; let Him be the chair of the board. Be open to His direction. You might need to go ten paces back to advance twenty, or you might need to stay ten paces back. Are you prepared to do as He says? As you seek God's direction, ponder these words from Lamentations 3:24-25 (NIV): I say to myself, "The LORD is my portion; therefore I will wait for him." The LORD is good to those whose hope is in him, to the one who seeks him; it is good to wait quietly for the salvation of the LORD.


Core Values & Business Partner


This is a business truism: if you and a business partner are not on the same page, the relationship will be a disaster. Unequal yoking the Bible mentions is profound for businesses, too, especially for a small business. Imagine learning these matters after you start the business: You believe in paying taxes, paying creditors on time, being open with customers, but your business partner doesn’t share these views. Watch out; draw up a set of core values you and your business partner will commit to before you agree to join the business.

Even if both business partner is a Christian, still, draw up a statement of core principles to commit to. As well, agree a dispute resolution procedure ahead. You don’t need a values’ statements or dispute resolution procedure when things go well. You need them for three reasons. First, each business partner can think through his or her obligations in sensitive areas ahead of his commitment. Second, when disputes arise, each partner can refer to the agreement as a reminder of the original intent. And third, your business partner can channel disagreements through a previously agreed dispute resolution procedure.

These procedures do not prescribe solutions, but the process to follow to get to solutions. I found pre-agreed core values and dispute resolution procedures invaluable during my career, especially working in different countries and cultures.


Why Do You Want To Be In Business?


Why do you want to be in this business? Why not just offer your services for a fixed or commission-based fee? Some folks want to be in business because someone tells them about a "good business." Alternatively, they might see an enticing advertisement. Still, they might have a vision, or dream from childhood. These are seeds. Ask the Lord to guide you. Is this His goal where He wants you to join Him? Pray, seek His direction; seek to find where He is working so you can join Him. Beware of your pet project, your vision, your plans; they will fail. God's path will not flop.
Listen to and try to understand your spouse. If he or she is uncomfortable, ensure you listen to, understand, and pray about each concern. Telling your spouse to "trust you" or "he or she doesn’t understand" suggests you are not prepared to discuss the matter openly.

Be willing to hear from God. He might not want you to go into "this business." When you act, listen for His voice. If you walk closely with the Lord, you will know when you take a “wrong turn” (Isaiah 30:21).

Starting a business, buying 100% or a share in a business, could be one of your most important commitments. It is God's money and you are His steward; ensure He is leading the decision process, and activities that follow.

Wrong Reasons To Start A Business


These are four wrong reasons to go into business:


  1. “My friend says this business is doing well.” “Well” is subjective; we have objective measurements to show how businesses should perform.
  2. “I want to make "money”; governments “make” money; they print it. Businesses make products or provide services that earn money.
  3. “I want to help my friend.” Sure, help your friend but do you have to commit God’s money in a business to deliver this help?
  4. “God has gifted me with the talent to do this.” Certainly he has; but does he want you to use it now in this business? Never let your talent drive the decision. God might want you to go where you feel uncomfortable, so that you will rely on him.

Does God Want You To Start This Business?


This is one right reason to go in business: God tells you “this business” is where He is working and wants you to join Him. If God shows the way, He will give you everything you need. There is a pattern in Scripture where God calls a person to do an activity and always, He gives him what he needs. In Exodus 3:10 and 12, we see a clear goal from God to Moses. However, God's plan was not clear. Moses had to rely on God constantly. That's the picture you must record in your mind and play back regularly: you must lean on Jesus continually to see His plan. Look at the lives of Abraham, Moses, Nehemiah, Apostle Paul, George Mueller, Mother Teresa, and others who listened to God and trusted Him to do as He promised.

Do not worry about time. You have more than you need: 24 hours daily. You will be able to do everything He wants you to do in each 24-hour day. Did you get that? When God calls you, He gives you everything you need to do His will. So, you shouldn’t use "deflection speech," and victim attitude statements to excuse your poor planning and execution. As you go, eliminate these three meaningless, deflection speech phrases from your vocabulary:

  1. “I don’t have time”
  2. “I am too busy”
  3. “I can't do that”

Pastor and bible teacher Chuck Swindoll reminds us that “God doesn’t “change flat tires.” We must do our part, so do homework to learn business basics about strategy, leadership, goals, markets, finances, time, productivity, continuous improvement, and accountability. You don’t need to become an expert, merely understand enough to guide the business and ask right questions. Periodically, we upload pdf files covering business basics.

What's the Business' Purpose and Strategy


Though obvious, often we decide to start a business, home-based or otherwise, but we don’t think through what the business will do, or what skills it will need. Sometimes we see a TV ad with folks telling us how to earn thousands and do no work. That's the first sign we shouldn't be involved. I tell my students that only governments make money-they print it! We should strive to earn it. Ignore those TV ads telling you to sit, do nothing, and earn millions. To be sure, if it sounds too good to be true, it isn't true.

There are several matters each potential business partner should consider carefully during the business evaluation procedure. Here are a few questions each partner should answer before moving ahead:

  • Will the business produce goods and, or services that do not exist?
  • What will be the business' competitive advantage: What will the business do better than its competitors?
  • Will the business need special equipment or talents?
  • Are they available? Who will provide needed skills? You? If not you, where will the business get essential skills?
  • Is technology an issue?
  • Will the business need to keep up to date with special technology?
  • Will the business require special funding now or in the near term?
  • Does each potential business partner understand the business’ issues?

Be clear on whay you will be in business--undersatnd the mission. Along the way, you should do a SWOT analysis: examine strengths, weaknesses, opportunities, and threats to the business and other analyses to understand "where you are." This will lead to developing the business strategy--identifying core capabilities, customers, markets and how to get to them. Most businesses do not have coherent strategies; instead, they have lists they call goals, without supporting plans.

Your strategy must show how you will build on your strengths, remove weaknesses, seize opportunities, or overcome threats. This is crucial. Calling something a strategy, such as a pricing strategy, does not make it a strategy. Southwest Airlines exemplifies a corporation with a coherent strategy in an awful industry where almost all its competitors are perennial losers. Business owners should pause and ensure they understand their strategies before rushing ahead chasing dreams that will later become nightmares.


The Business Plan


Settle mission, business strategy and goals and then develop or update the business plan to reach them. The plan is your road map to do your strategy to reach the business' goal. Without an effective plan built on a coherent strategy, you will get lost.

The business plan should be an active document that helps you clarify your thoughts to see how you might seize opportunities, respond to threats, and handle the business' strengths and weaknesses. If you write it for someone, such as your banker, and then file it, you will miss the full benefits. The business plan should include the mission (often their is a vision, too) business strategy, ownership structure, economic and other assumptions, corporate goals, products, services, market analyses, financial analyses such as cash flows, balance sheet, and specific funding needs. Do not get lost in the numbers. They should merely reflect the score or result of doing the strategy and plan. I repeat, the numbers are the result of business activities; they do not drive performance.

If you are working without a business plan, write one. It should be simple and non-financial focused. As you develop the business plan, test major assumptions. Before you sign off on the plan, ask the Lord to guide you with this three-step review and evaluation: First, consider again why you will be in this business. Second, how realistic are the business’ strengths and weaknesses, potential opportunities you identified? Third, have you identified realistically, threats from competition, the economy, and the marketplace? Essentially, you want to test the business strategy.

After finishing the business plan, you will have decided the organization type, structure, funding needs, and essential key resources. Still, you must work out several operational details, such as operating budgets and information systems, which we will discuss later.

Last but not least, the key to the businesses success will be people. This is even more important in a small business where there is less specialization. Put the right people in the right slots and empower them to serve each other and your customers.



Michel A. Bell's Business-Related Publications


General

  1. Four Keys to Success in a Mission Focussed Business
  2. Will Loblaw's Takeover of Shoppers Drug Mart Create Value For Loblaw's Shareholders?
  3. Meaningful Control Elements Key To Effective Budgets And Control
  4. Doing God's Vision, Mission, Goals In Business

Job Creation & Government Ineffectiveness

  1. Creating Jobs Is A Political Target; Creating Products Is A Business Target
  2. Business Create Wealth and Jobs: Remove Corporate Taxes to Stimulate Growth and Job Creation
  3. Baseline Budgeting: The Perfect Tax and Spend Formula

Financing

  1. God Holistic Funding & The Credit Crunch

Important Lessons

  1. Lessons from the Great Recession

Globalization & Outsourcing

  1. Globalization; We Don't Get It!
  2. ABC News Buy America Program is Naive and Off Base