Best Practices for Your Business

Today's small business owner is confronted with new business problems and opportunities on a regular basis. Running a company requires the ability to look outside the business for solutions, ideas, and best practices. However, borrowing ideas and best practices can be wrought with danger. Learn what big business already knows about benchmarking best practices and how to effectively borrow or steal ideas, tactics, and strategies.

What is a Best Practice?
A best practice is the process of finding and using ideas and strategies from outside your company and industry to improve performance in any given area.

Big business has used best practice benchmarking over decades and realized billions in savings and revenues in all areas of business operations and sales. Small business can reap even greater rewards from best practices.

Benefits of Best Practices for Small Business
Reduce Costs:
Small companies often do not have the deep financial pockets of big business to "re-invent the wheel". By learning what other companies have successfully done, a small business can save money without testing new ideas.

Avoid Mistakes:
Solving business problems on your own can result in costly errors. Learning what others have done can keep your business in business.

Find New Ideas: 
Adopting the "Not-Invented-Here" attitude can spell disaster for small business. Learn to borrow the best from beyond your company.

Improve Performance:
When your business looks for best practices outside your business, a wonderful thing happens. You raise the bar of performance and set new standards of excellence to propel your company forward. How to Bake a Best Practice Cake?
 The methodology for best practice study is critical. This is where most small businesses fail. It is like baking a cake. You need the exact ingredients and recipe to create the same result. This also applies to business.
 For example, you learn of another retailer running in-store seminars to drive traffic and sales. Instead of rushing out to try the new idea, you'll need the recipe. What results did the retailer achieve? And how did they achieve it?
 After careful, probing you discover the in-store seminars have increased traffic and sales by 6% and 12%, respectively. Also, you find the key ingredient is to make attendance confirmation calls to all the seminar attendees the day before or else attendance drops to zero. After finding all the steps to success than you are ready to effectively implement the idea in your company

Steps for Best Practices

• Identify one business process or service to improve. (Product delivery)
• Look for one metric to measure. (Late Shipment %)
• Find competitors and companies within your industry and outside your industry.
• Collect information on the successful, best practices of other companies.
• Modify the best practice for your situation. 
• Implement the process then measure the results.

Remember to survey companies of all sizes. And the time to complete a best practice study doesn't have to take months. A few weeks of literature research and telephone interviews are often enough for small business.

Do you have examples of best practices that you have used in your business and can share with others? Please share below...

Do Your Homework When Starting Your Business

Avoiding Legal Problems
Arm yourself with basic knowledge of business law so you're alert to your company's obligations and rights.

Practice prevention. Have your attorney review contracts and agreements before they're signed.

Get your attorney's opinions on documents you have drafted - such as employee policies - before you put them in place. You want to make sure they meet the requirements of the law.

Familiarize yourself with trademark and patent laws so you don't violate them. Learn how to apply for a trademark or copyright should you need to do so.

Understand the law as it pertains to your organizational structure. Your legal obligations as a C corporation, for example, will differ from those as a sole proprietor.

Policies for Employers to Implement
A policy, which states the company is an equal opportunity employer and strongly enforces a nondiscrimination policy.

A strong sexual harassment policy detailing what isn't accepted at your place of business.

A policy about phone and/or e-mail communications.

Expectations of employees.

Include how your company plans to monitor or take action on all of the stated policies.

Obtaining a Lease
Be prepared to negotiate. The landlord's printed lease will most likely favor the landlord.

Match the lease to your business's needs. If location is important, you'll want a longer lease - or a shorter one with options to renew.

Understand who pays what - such as utilities, repairs, insurance and even taxes. You may want to pay slightly higher rent for eliminating these items.

Be aware that your negotiating power is stronger in a market where lots of commercial space is available.

Remember that a lease is a legal document. Have your attorney review it before you sign.

Advertising Legally
Don't engage in false, misleading or deceptive advertising. Make sure your claims are accurate.

Obtain written permission to use photographs, endorsements, or quoted matter. Remember that some material is protected by copyright.

Don't use words and phrases like "free" and "easy credit" unless they're true. Easy credit, for example, means you offer credit to poor risks without charging them more for it.

Remember that consumers can sue you for deceptive advertising, and federal, state, and local governments can take action against you.

Consumer Credit Basics
Know the laws. If you must grant credit directly to consumers, familiarize yourself with both federal and state consumer credit statutes.

Tell the truth. The Truth in Lending Act requires you to disclose exact credit terms, such as the monthly finance charge and annual interest rate.

Follow correct procedures for handling billing mistakes. If you don't, you may have to give the customer a $50 credit even if your billing was right.

Don't discriminate on the basis of race, color, religion, national origin, age, sex or marital status when granting credit.

Developing an Employee Handbook
Some company policies have to be in writing - such as policies on sexual harassment and discipline - so employees know what's expected of them. These can form the basis of an employee manual.

Draft your employee handbook yourself or assign someone else in the company to do it. Then have it reviewed and fine-tuned by your lawyer.

Include a disclaimer stating clearly that the manual is in no way a legal contract.

Make sure every employee receives a copy of the handbook and signs a statement saying they've read it. Review it every six months or so and update it as needed.

Protecting Yourself from Employee Lawsuits
Obey the laws regarding employees. Don't discriminate in hiring, for example, or permit sexual harassment.

Hire carefully. Look for people with a strong work ethic and avoid hiring those who feel life owes them something.

Adopt strong employment policies. Communicate them clearly to employees and enforce them.

Keep good records on employee mistakes, even when they're not firing offenses. Document your own actions and the reasons behind your employment decisions.

Consider buying employment-practices liability insurance (EPLI).

When Military Duty Calls
Employees have the right to use their vacation time or personal days during their service; they may also opt for unpaid leave.

You aren't obligated to pay employees who are absent on account of military duties, unless your company policy says you will.

If your company does have a paying policy for military service time, you can't require employees to use their vacation or paid leave time.

You must extend the same benefits to employees who are absent for military service as you do to employees who are on nonmilitary leaves of absence.

You may temporarily fill vacancies left by military employees absent for service. However, upon their return, military employees are entitled to the same positions they left.

Brought to you by SCORE, "Counselors to America's Small Business."

The Basics of a Good Business Plan

A good business plan has two goals: It should describe the fundamentals of your business idea and provide financial data to show that you will make good money. Beyond that, the content of your business plan depends on whether it's for potential investors or a financial projection just for yourself.

How Will You Use Your Business Plan?
Depending on whether you're trying to attract investors or are creating a blueprint for your own use, a business plan can take somewhat different forms.

Attracting Investors
If you will use your business plan to borrow money or interest investors, you should carefully design your plan so that it sells your vision to skeptical people. Normally this means your business plan should include:

• persuasive introduction and request for funds
• statement of the purpose of your business
• detailed description of how the business will work (including what your product or service will be, whether you'll have employees, who will supply your goods, and where you will be located)
• an analysis of your market (who your customers are)
• an evaluation of your main competitors
• a description of your marketing strategy (how your business will reach plenty of customers and fend off your competitors)
• a résumé setting forth your business accomplishments, and
• detailed financial information, including your best estimates of start-up costs, revenues and expenses, and your ability to make a profit.

Together, all the parts of your plan should reveal the beauty of your business idea. You want to show potential lenders, investors, or people you want to work with that you've hit upon a product or service that customers really want. In addition, you should prove that you are exactly the right person to make your fine idea a roaring success.

Get Help If You Need It
Because your business plan will be submitted to people you don't know well, the writing should be polished and the format clean and professional. Your numbers must also be accurate and clearly presented. However, not all business people are great writers or mathematicians. Consider paying a freelance writer with small business savvy to help you polish your plan. Similarly, if you are challenged by numbers, find a bookkeeper or accountant to provide needed help.

Funding the Venture Yourself
If you're not looking for outside money, your financial projections will be the most important part of your business plan. These projections will tell you the cost of your products or services, the amount of sales revenue and profit you can anticipate, and, perhaps most importantly, how much you'll have to invest or borrow to get your business off the ground.

Because you won't use your plan to ask for money, you can create an informal business plan that omits some of the elements listed above. For example, you don't need to worry so much about making a sales pitch or a slick presentation, and you may decide to skip the résumé of your own business accomplishments, but think twice before leaving out too much. Any new business will need to introduce itself to people -- for example, suppliers, contractors, employees, and key customers -- and showing them part or all of your business plan can be a great way to do it.

Financial Projections
Forecasting the finances of your business may seem intimidating or difficult, but in reality it's not so bad. Good planning consists of making educated guesses as to how much money you'll take in and how much you'll need to spend -- and then using these estimates to calculate whether your business will be profitable. Here are the financial projections you should make:

• A break-even analysis. Here you'll use income and expense estimates to determine whether, in theory at least, your business will bring in enough money to meet its costs.
• A profit-and-loss forecast. Next, you'll refine the sales and expense estimates that you used for your break-even analysis into a formal, month-by-month projection of your business's profit for the first year of operations.
• A cash flow projection. Even if your profit-and-loss forecast tells you that your business will have higher revenues than expenses -- in other words, that it will be profitable -- those numbers won't tell you if you'll have enough cash on hand from month to month to pay your rent or buy more inventory. A cash-flow projection shows how much money you'll have -- or how much you'll be short -- each month. This lets you know if you'll need a credit line or other arrangement to cover periodic shortfalls.
• A start-up cost estimate. This is simply the total of all the expenses you'll incur before your business opens. If you need to pay off these costs during the first year or two of business, they should be included in your month-to-month cash-flow projection.

Again, no matter who your audience is, you should be as thorough as possible when calculating your break-even analysis and profit-and-loss forecast. The last thing you want is to experience the very real misery of starting a business that never had a chance to make a solid profit.