Choose a Domain Name and Hosting Company for your Online Business

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The second thing to do after planning your online business is to choose a domain name. After that, you need to decide who is going to host your website. Choosing a domain name for your website is critical for the success of your online business. Karol K. writing in Winning WP concurs: “Choosing a domain name is something every website owner needs to ensure they get right — ideally before they do anything else, and ESPECIALLY if the website will be serving a commercial purpose.”

Also important is to get a reliable company to host your website. “It’s crucial to select a hosting provider carefully since your business will depend on it” advised Syed Balkhi in the Huffington Post.

But let us first discuss how to choose a domain name for your business.

How to choose a domain name

It is mostly great fun to search for a domain name. I do it as follow:

  1. I go to a domain name search facility e.g. GoDaddy.com;
  2. Then I type my first choice domain name to see if it is available;
  3. If the name is already taken, then I try my second choice, and so on;
  4. Once I’ve it the ‘jackpot’ (a domain name that is available), I’ll quickly register and pay for it.

However, there are more structured ways to choose a domain name. Brainstorming is a good way to generate a list of potential domain names. Still, many of us battle to get a name to start with.

If you battle get a domain name to start with, have a look at your mission and vision statements that you’d designed in the planning stage of your online business. For example, if your vision statement is: “We want everybody to wear our garments”; then www.garmentsforall.com may be an appropriate domain name. Or if your business’s name is “The Coffee Shop” the www.thecoffeshop.com is an easy choice.

However, since most of the generic .com domain names are already taken, you need to be more creative. Then it may be a good idea is to choose an unusual, but catchy domain name like www.zop.com.

There are several things to consider when you want to choose a domain name for your business:

  1. The size of your domain name. A short domain name is better because users can remember it easier. They are unlikely to misspell your domain name while searching for your business online. The domain name for this website is “ebizplan” which I think is easy to remember and relatively easy to spell.
  2. Consider a domain name that resembles your business. Ideally, customers will be able to guess a domain name from the firm’s name. If this isn’t possible, then find a functional name; a unique name (Yahoo!); or one that expresses an emotion or attitude associated with the brand, person, or mission 1.
  3. Choose a unique name. If you choose a domain name that is too similar than existing domains, you’ll start your business on the back foot. First do a Google search of the domain name you’ve got in mind. You’ll quickly see how many domains have similar names and also if they do similar business than you planned to do.
  4. Choose “.com” first. Dot com (.com) websites are by far the most popular domain extension on the web. “If your number one name choice isn’t available, then try your second choice before accepting other top level domains. Remember that some browsers accept address-only entries in their address bar. If you type just the domain name (and who knows how many of your users will just do that?) they will return, by default, to the ‘.com’ site”, suggest Ogi Djuraskovic and FirstSiteGuide team.

Deciding which company will host your website is the next step after you’ve acquired your domain name.

Choosing a hosting company for your website

Your website needs to reside on a hosting computer somewhere.  Because when you buy website hosting you basically rent server space on a server where your web files will be placed. So whenever somebody will look up for your website by entering your domain, he or she will get directed to your website.

Therefore, it’s crucial to choose a reliable web hosting company to ensure that your website remains safe and accessible all year round. Also, a web hosting company makes it possible for your website to be accessed by everyone on the web.

Syed Balkhi writing for Huffington Post gives the following advice when choosing a web hosting company:

  • Understand the different hosting options available – there are various web hosting options available such as Shared, VPS (Virtual Private Server), Dedicated and Managed Web hosting;
  • Excellent customer support is a must – the internet never sleeps. So, look for a provider that offers excellent customer support;
  • Choose a host with an excellent uptime track record – the hosting provider you choose should take every precaution to ensure maximum uptime;
  • Cost should not be your only consideration – as the saying goes, “you get what you pay for.” As a business, you cannot afford to experience extended downtime;
  • Ability to scale – as your business grows, your website will tend to generate more traffic. For that reason will the ability to scale be increasingly important.
  • Good reputation is essential – once you have narrowed the list of important features you require, the next step is to find a host with a top-notch reputation.

Now that you’ve a registered domain, and hired a capable web hosting company, you may start thinking of choosing your eCommerce package.

Concluding

Congratulations! You are now one of at least 330 million registered domains owners on the internet. I’m afraid so say, the easy part is over. From now on it will be guts before glory.

The third step to take when starting an online business is to choose your eCommerce package…

Further reading:

  1. 7 Steps to Start an Online Business
  2. Planning Your Online Business

Note

1 Thomas, L. 2011. The McGraw-Hill 36-hour course: online marketing, McGraw-Hill Education.

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Pixabay.com

 

Planning Your Online Business

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Planning your online business is the first step you need to do in order to start making an income online. The internet and digital technology have revolutionized about everything we do and also the way that we conduct our business.

However, the planning of your online business needs to take place in a world that is changing faster than we can learn. Indeed, concurs Barry Ritholtz in Bloomberg:   “Creative destruction caused by technology is so rampant that it is practically a cliche. It is easy to ignore not only the speed at which disruption caused by technology is affecting society, but the acceleration in the pace of change. This acceleration and its effect on markets, companies and labor are astonishing.”

The offline retail sector took the brunt of the digital revolution. Hordes of retailers went out of business because they failed to adapt their business models to fit in the new online channel. They couldn’t better the value that online retailers offered to their clients. Online retailers had a cost advantage that enabled them to lower prices with the same if not better margins than offline retailers. Furthermore, they offered a wider selection of products; and increasingly better service because of personalization and interactive communication.

Although the pace of change around us seems to increase exponentially, you’ll still need to do the planning of your online business in a structured way.

Planning your online business in a structured way

Most of us want to be in business to win, to outperform our competitors, and most importantly to make money. However, before your register a domain and creating a website, you need to know where you want to be with your business and how you’re going to get there.

In other words, you need to have a vision, mission and goals.

A Vision for your online business

You have to be able to communicate a vision of what your online business is all about and where it wants to be in the future. A vision needs to describe the aspirations of your business.

Jeff Boss writing in Entrepreneur.com list the following eight ways a Vision Statement adds value to your business:

  1. A Vision statement offers guidance. It articulates what the company aspires to be at some point in the future.
  2. Vision statements set decision-making boundaries. Every decision that employees make should be governed by the company’s overall vision.
  3. Vision statements serve as behavioural boundaries. They may include the values that companies holds dear which, in turn, outline ethical – and subsequently, unethical – behaviour.
  4. A Vision statement instils emotion. It reminds us why we chose our place of work and give us reason to perpetually pursue the purpose for which the company stands.
  5. Vision statements spur growth. A compelling vision acts as a call to action for individual and organizational growth.
  6. Vision statements keep curiosity spurning. It is one way to keep the mental hamster wheels spinning because achieving a vision isn’t necessary the intent, but learning along the way is.
  7. The Vision statements allow difficult conversations. You can easily refer to the vision and ask, “How does your behaviour support our vision?”
  8. Vision statements enable leadership. It reminds current and aspiring leaders to fulfil their leadership responsibilities by adhering to the strategies set in place to pursue that vision.

Here’s the Vision Statement of eBay (Smart Insights):

eBay pioneers communities built on commerce, sustained by trust, and inspired by opportunity. eBay brings together millions of people every day on a local, national and international basis through an array of websites that focus on commerce, payments and communications.

And now for your online business’s Mission Statement…

Your online business’s Mission Statement

The mission statement communicates the overriding purpose of your online business. It’s also about how your business is going to get there.

Your online business’s mission sets the stage for the entire life of the business, and it should convey the following 1:

  • It should clarify the reasons why that business exists;
  • Which are the target markets for your business?
  • What types of needs will your online business be addressing?
  • With whom and where will you do business?
  • Which are the products or services that will be provided to the markets?
  • What technologies are you going to utilize to do your business? and,
  • Which innovative and differentiated approach will you pursue in relation to the potential competitors?

The vision and mission statement of Amazon.com is the following: “Our vision is to be earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online” (The Balance).

The vision/mission statement of Amazon.com communicates exactly what their business is about.

Business Goals – realizing your vision and achieving your mission

The mission statement sets a clear direction for organizational activities and establishes a focus that facilitates joint efforts toward predetermined long-term goals. However before you can pursue the long-term goals and objectives of your online business, you need to develop strategies to determine the course of action to take and the allocation of resources necessary for carrying out these actions 3.

Therefore, whether a firm is an incumbent or new entrant, it must formulate and execute an online strategy if it is going to have a sustainable competitive advantage. This entails answering four important questions 2:

  1. Where is the firm now?-that is, how well is it doing? What is the basis of its performance? What are its strengths and weaknesses? Are there any threats and opportunities that it faces?
  2. Where does the firm go next? Given the firm’s performance, its positioning relative to its rivals and competitive and macro environments, it may want to pursue different goals.
  3. How does the firm get there? Pursuing new goals usually means finding different ways to achieve them.
  4. How does the firm implement the decisions to get there?

The business plan – putting your planning together

After you have analysed your market research, set your goals and identified what you need to start your online business, you may write it all up in a business plan. A business plan is a formal statement of business goals, reasons they are attainable, and plans for reaching them.

The structure of a business plan typically looks like this:

  • Executive Summary.
  • Business Description.
  • Market Analysis.
  • Organization Management.
  • Sales Strategies.
  • Funding Requirements.
  • Financial Projections.

Visit eBizplan’s Business Plans page for more info and a quote…

Conclusion

If planning your online business is not done, or not done properly, you’ll be left with a bad website. According to Digital Impact (UK), over 70 percent of people claim they wouldn’t buy from or use a poorly designed website. A bad website isn’t just not helping, it’s a dead weight tied around your business, alienating your users and holding your business back.

And a poorly designed website is in most cases the result of an online business without a business model and business strategy.

Next read: Choose a Domain Name and Hosting Company for your Online Business 

Notes

1 Gandellini, G. and Venanzi, D. 2013. Strategy for action–II: Strategy formulation, development, and control, Springer Science & Business Media.

2 Afuah, A. and Tucci, C.L. 2001. Internet business models and strategies, New York: McGraw-Hill.

3 Andersen, T.J. 2013. Short introduction to strategic management, Cambridge University Press.

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7 Steps to Start an Online Business

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Having your own online business is a dream that many of the readers of this blog may have. There are however important steps to start an online business that needed to be followed.

Starting an online business, although it operates in a different channel, is not that different from starting a Brick and Mortar business. In both cases you need no do certain things in order to get your business up and running.

The 7 steps to start an online business

Starting a business may be for most people a chaotic and emotional episode. However, if you have a guide to do the right at the right time, the process may be smoother that you think. So, here are the steps:

Step 1: Planning

A Business Plan is a detailed action plan or road map outlining every conceivable aspect of the proposed venture. The plan describes what, how, when, where and why with regard to the new venture. It is thus a structured guideline for achieving your business goals.

Therefore, if you want to start an online shop, you should at least ask the following questions:

  • What kind of products do I want to sell?
  • Are there any competitors that will be selling the same products as me?
  • What should my website look like?

Read more: Planning Your Online Business 

By this time you should already have an idea what your business is about. Also about a name for your business…

Step 2: Register a domain name and choose a hosting company

If you already have the name of your shop, it is time to start setting it up. The first thing to do is to register for a domain name. However, good luck! According to Tek Eye (2017), there were 330 million domains registered for over 1.8 billion websites last year… So I think all the obvious domain names is already taken.

In spite of all the best domain names already been taken, you should try to get a name that can best represent your products or services. Registering a domain name should not cost you more than $10 (R120) for a .com extension. Visit SA Domains to see if a domain name is available.

After getting the domain name, you need to find a good hosting company. Look for a hosting company that has good servers and that will be able to run your online store e.g. Texo Webhosting.

Read more: Choose a Domain Name and Hosting Company for your Online Business 

Step 3: Choose your E-commerce package

You can build your online store through hosted solutions or self-hosted solutions

Hosted solutions:

Many hosted solutions provide a good experience to users with you doing very little on your end. However, when you use a hosted solution, you should be prepared to lose a lot of opportunity for customization.

The following three are among the top solutions:

It’s easy for anyone to set up an e-commerce site with Shopify. Some of the features you will enjoy by setting up a store with them include a custom mobile template, unlimited server bandwidth, SSL security, and a personal app store. You can try it for free for 14 days or choose a package that will suit you. Pricing starts from $14 to $179 (R180 – R2300) per month depending on the features and functionalities you are looking for.

Yahoo! Merchant Solution. The layout of Y!MS is fairly straightforward and can be easily customized. Y!MS ecommerce plans start from $19.98 to $224.96 (R260 – R2925) per month depending on the package and features you need.

BigCommerce is similar to Shopify but has limited features. The website has a clean interface, making it easy for users to sign up. You can easily add users, products, features and take payments online in just a few minutes. BigCommerce pricing ranges from R325 to R3900 a month depending on the features your need.

Self-Hosted Solutions:

If you do not want a hosted solution, you can make your own e-commerce scripts or use other open source or commercial shopping cart scripts.

Zen Cart is a popular open source script that will work in most web hosts. The script is free to download. The only downside of using the script is that your website will feature a “Powered by Zen Cart” message at the bottom.

Magento is another good script you can use for your e-commerce website. The script is written in PHP and is frequently updated. As is the case with Zen Cart, you will feel more comfortable using Magento if you are well-versed with HTML and CSS.

If you are comfortable using WordPress, you can easily set up an ecommerce store using various free and paid plugins. Examples of popular plugins that will enable your WordPress site and have ecommerce capabilities include WooCommerce, WP e-Commerce, Cart66, and others.

Step 4: Taking Payments Online

Credit cards provide customers with an easy way to make payments at your store. Apart from credit cards, customers may also wish to pay through other methods such as PayPal. You will want to accept payments through the methods that your customers trust and use. To accept credit cards online, you will need a merchant account.

Step 5: Add Content and Products

After you have set up your domain name, hosting and shopping script, you are ready to start selling online. You now need to add your content and products. From this point onwards, you will also need to do some maintenance and tune your website design to match the needs of your customers.

Indeed, “The quality and relevance of the content of a retailers’ webpages can mean the difference between a sale and a bounce” writes Douw G Steyn recently in Bricks2Clicks.

The next important step is to get the product that your customer has paid for, to its destination.

Step 6: Shipping and Fulfillment

Like a physical retail store, you need to maximize the visitors at your store. However, you cannot simply hand over products over the counter. Also, shoppers expect a seamless shopping experience — no matter where they are, what device they are using, or how they choose to shop. Order Fulfillment – taking the right product, putting it in the right box, shipping it, and gaining the customer’s approval – is a demanding task (Bricks2Clicks).

Step 7: Marketing your online shop

One of the biggest challenges you may face as an e-commerce store owner is generating traffic that converts on your store. There are a number of digital marketing channels that retailers can use in the online channel:

  1. SEM (Search Engine Marketing) consists of SEO (Search Engine Optimization) and Paid Advertising (e.g. PPC – Pay Per Click advertising).
  2. Content Marketing includes Blogging, e-Mail marketing, e-Books and video marketing.
  3. Social Media Marketing is marketing on social media websites such as Facebook, Twitter and Pinterest.

So these are the seven steps to start an online business…

Concluding

Just as with Brick and Mortar shops, there’s no easy way to just star and make money. If you follow these steps to start an online business, you may soon identify your strengths and weaknesses as well as opportunities and threats that exist in the marketplace.

Good luck with you new venture!

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Pixabay

 

You can create a Website in less than 20 minutes – then what?

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It’s very easy to create a website. Why not? Almost every business and professional person of note has a website. Surely, if you create a website your business will flourish, and with billions of web users to target – wow, the money is there to be made.

A recent blog page by wix.com “7 Tips for Creating a Stunning Website for Free” achieved 3.7 million likes. Indeed, the people want websites.

So you can start to create a website. It’s very easy…

How to create a website

There are many posts that instruct you on how to create a website. The most mentioned steps are as follow:

  1. Search the internet to find a credible website host (e.g. Texo.co.za);
  2. Choose a website hosting plan;
  3. Pick a domain name;
  4. Fill in your details;
  5. Finish your registration; and
  6. Create a password.

A website host provides server hardware and network infrastructure so that your website can operate optimally. Texo, for example, also hosts WordPress, a free and open-source content management system.

In fact, WordPress powered 26% of the internet in 2016 (Manage WP).

Types of websites that you can create with WordPress

With WordPress, you can create about any type of website that you want. The Theme Country listed the 12 most popular WordPress websites:

  1. Blog or Personal Website – creating a blog or personal website is one of the most common reasons for using WordPress.
  2. News and Magazine Website – WordPress makes it easy to set up a news and magazine website.
  3. Business Website – you can choose from thousands of business themes for your WordPress site and then tweak the layout to better represent your business.
  4. eCommerce Website – there are several high-quality WordPress plugins and themes that incorporate eCommerce features.
  5. Online Job Board – create a community job board using WordPress. By using a forum theme for WordPress, you can easily organize job categories and create a space for people to post or find jobs.
  6. Business Directory – you can also use WordPress to create a business directory.
  7. Online Communities – create your own online community dedicated to a topic that you love. Share information with other people and use the subscriber option to build an email list.
  8. Portfolio Websites – showcase your talents with a portfolio website. There are hundreds of premium and free WordPress themes for setting up your own online portfolio.
  9. Knowledgebase / Wiki Websites – start building a large knowledgebase or wiki-style website using WordPress. One of the great features of WordPress is the ability to use categories and tags to categorize your content.
  10. Niche Affiliate Websites – affiliate marketing can be a useful way to earn extra money, especially if you go about it in the right way.
  11. Photography Websites -as with portfolio themes for WordPress, you will have a large variety of photography themes to choose from. These also focus on the images used on your website, instead of the content.
  12. School or College Websites – WordPress could be a useful option for creating a school or college website. You can easily design a professional website for the school or college while adding resources that faculty and students will find useful.

So, you’ve created a website, and chosen your website type – what now?

Because it’s relatively easy and cheap to create a website, many people only think about what to do with their site after it’s been activated. Some people spend lots of money promoting their new websites with AdWords and Facebook with little or no success.

As it should be with any other business, you need a business plan for your website. You can read more here: Every Business Needs A Business Plan. After you’ve established what business you’re going to do with your website, you need to find out where your business will come from.

If you want to make money from your website, you to make the following happen:

  • Get people to visit your website;
  • Give the visitors what they was looking for on your website;
  • Get them to subscribe, buy or contribute to your site;
  • Let their online experience be so great that they bookmark your site and tell their friends about it.

You therefore need to know:

  • Who are your audience? (your target audience).
  • What do they want from your website (their needs – problem solving, entertainment, etc.)
  • Where and how can you communicate with your target audience (your digital marketing strategy – e.g. on Facebook or Google’s AdWords?)
  • Who else is after your target audience? (Who are my competitors?)

I think you’ll now start to realise that it takes a lot of planning, money and knowledge to get your website to work for you.

Concluding

So, next time you click on a link like: “How to make a million dollars with your website in 20 minutes”, you’ve helped the owner of the website to achieve her goal – getting traffic to her site. It’s good for her business (ad income), although not many users will return or register with her site. Then again, there’s billions or other users looking to make money online…

If it’s too good to be true, it is probably just that. To make honest money online takes a lot of time and resilience.

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PixaBay.com

Video: Raiken Profit

Living Your Dream – Your Own Business at Last!

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Everybody has a dream, a dream to own your own business perhaps? Like Sipho*. Sipho is a South African that grew up with his granny in a corrugated iron shack in Alexandria. Their shack was right next to the affluent city of Sandton. Now let’s learn more about Sipho’s childhood…

Sipho had a difficult childhood. He lost both his parents when he was only ten years old. For that reason his granny took care of him. Many nights Sipho had gone to bed hungry, because his granny’s social grant was too little…

The school that Sipho attended was not far from their shack. However, it was overcrowded and underfunded. He had to attend classes with about 50 learners in rooms fitted for only 30 pupils.  Also, there were not enough textbooks and the teachers were many times not there to teach them.

In spite of Sipho’s dire situation, he was not blind to the wealth and extravagant lifestyles of his neighbours on the other side of the fence. He was dreaming to live and prosper on the other side of the fence…

Sipho is dreaming of having his own business

We’ve heard many times that small and medium enterprises (SMEs) are the most important sector in most economies. In fact, SMEs are the principle providers of jobs in developed economies. Yet, in developing economies, like South Africa’s, the informal business sector contributes significantly to the GDP. According to South African Market Insights, the size of the informal economy is estimated between 7% and 13%.

Even more, South Africa’s informal sector is supporting 27% of all working people and it provides goods and services to millions of people on a daily basis, according to Natalie Greve in FIN24. In fact, Stats SA has found that almost 70% of people who start an informal business do so because they are unemployed and have no alternative source of income.

Image eBizplan

Getting into the formal business sector

Sipho will probably not enjoy the glitter and riches of the Sandton community by selling loose cigarettes, sweets and small packets of corn chips on busy street corners. He needs to enter the formal business sector which will give him access to venture capital and, if he is lucky, government support.

For Sipho, however, it won’t be easy to enter the formal business sector. Although there may be lots of opportunities in the sector, the costs of starting a business are high. And then there are things like rates and taxes, government’s ‘red tape’; labour issues, political uncertainty and fierce competition.

Sipho will need the all the help he can get, and lots of good fortune to start his own business and cross the fence to Sandton…

Concluding

There are many people like Sipho in South Africa. They are poor, hungry and desperate. Maybe the answer for them is to join the digital economy. Government and private sector can facilitate access by means of free Wi-Fi at internet cafes near the homes. It is a place where they can get information about ‘starting a business’ and also to join a group on the social networks.

Read also: Home-based business – Important Startup Strategies

Main image: Pixnio

 

Making Difficult Decisions are Necessary to Keep a Business on Track

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Managers making difficult decisions are mostly taken for granted. Someone has to make a decision, and that’s a manager’s job, say most of us. “When you consider why some leaders are successful and some are not, the difference between a successful and unsuccessful leader is often directly linked to the choices and decisions they make”, says Peter Barron Stark, President of Peter Barron Stark Companies.

However, decision making becomes difficult when uncertainty is high, as it is now in the digital era. Indeed, technical and market uncertainty make decision-making difficult and, because information is often complex, understanding a problem is a challenge and often impossible before the problem is solved 1.

Making difficult decisions in times of uncertainty

Uncertainty is the difference between the amount of knowledge necessary to perform a task and the amount of knowledge already available within the company 2. Therefore, uncertainty refers to a lack of information regarding potential outcomes. So, it seems that knowledge is a critical element that is needed to make sound decisions.

Not so, says Malcolm Gladwell, (Blink: The Power of Thinking Without Thinking):  “The key to good decision making is not knowledge. It is understanding. We are swimming in the former. We are desperately lacking in the latter.” Decisions that seem to be the most difficult are those that require a deeper level of thought.

Kescia D. Gray suggests in the Corporate Wellness Magazine the following five steps that will help you to make better decisions in times of uncertainty:

Step 1: Identify your goal. Identify the purpose of your decision by asking yourself what exactly is the problem that needs to be solved? And why does this problem need to be solved?

Step 2: Gather information for weighing your options. It will help you to better understand what needs to be done in solving the problem, and will also help to generate ideas for a possible solution.

Step 3: Consider the consequences. In this step, you will be asking yourself what is likely to be the results of your decision.   How will it affect you now?  And how will it affect your future?

Step 4: Make your decision. Now that you have identified your goal, gathered all necessary information, and weighed the consequences, it is time to make a choice and actually execute your final decision.

Step 5: Evaluate your decision. Once you have made your final decision and put it into action, it is necessary to evaluate the decision and the steps you have taken to ensure that it works.

Concluding

All right, according to Psychology Today, in the real world, most of our choices only need to be good enough, not perfect. Nevertheless, to understand the decision that you must make, you need recent, reliable and relevant information. Also, try not to make the decision on your own. By involving your team, the decision that you make may be accepted and understood more. As result of this, making difficult decisions may become easier.

Read also: The Humanity of Decision-Making: A Business Perspective…

Notes

1 Sweere, R.A. 2009. Improve Understanding and Decision-making in Standardization and Technology Licensing Projects by Applying Soft Systems Methodology and Scenario Thinking to Wicked Problems, Dissertation: Master of Science in Innovation Management, Technology University of Eindhoven.

2Liu, R. and Hart, S. 2011. Does experience matter? — A study of knowledge processes and uncertainty reduction in solution innovation, Industrial Marketing Management, 40:691-698.

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The Humanity of Decision-Making: A Business Perspective…

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Even with Big Data, Artificial Intelligence and Decision Support Systems, humans mostly need to make the final decisions regarding which business strategies they will pursue. As result of this, we can’t escape the humanity of decision-making in business environments.

Nevertheless, because decisions are made by humans, they are influenced by human-like behaviour such as emotions (think about the primary emotions 1: love, joy, surprise, anger, sadness and fear). Since emotions affect our decision-making, without emotion decision-making becomes ineffective says Erik Larson in Forbes.

Indeed, every decision that we make has an outcome. The outcome can be good, bad or nothing…

The humanity of decision-making – success

We all strive to be successful in our businesses. Therefore, if we make the right decisions the financial rewards are great! Even better are accolades that go with decisions that had worked out well – promotion, invites to join the top management strategy workshops, overseas visits… Is that true? Hardly…

Mark Suster made the following remark in ‘Both Sides’: “Have you ever noticed how many leaders are afraid of offering promotions to individual superstars because they’re worried about the impact on the rest of her teammates?” So, if you made a decision to earn or save your company millions of dollars, don’t hold your breath to be rewarded or recognized – you may die suffocating

But what happens when your decision went wrong and is costing your company money?

The humanity of decision-making – failure

Decision-making is about things that will happen in the future. Because nobody can accurately predicts what will happen in the future, many decisions that we make go wrong. Also, there may be dire consequences for decision makers when the decisions they made go south. Somebody needs to be blamed…

One of the reasons that contribute to a series of decision failures is the perceived invincibility of the decision-makers. Praise from others and routinized “success patterns” contribute to managers’ beliefs that their decisions are unlikely to fail. As a result, they make decisions and then move on to the next initiative without considering the outcomes of the earlier decisions 2. A disaster waiting to happen…

And what if no decisions are taken? That’s even worse.

The humanity of not making decisions

“Inability to make decisions is one of the principal reasons executives fail. Deficiency in decision-making ranks much higher than lack of specific knowledge or technical know-how as an indicator of leadership failure.” John C Maxwell quoted in BrainyQuote.com.

So if you not able or if you’re afraid to make decisions in your business, you’re in anyway screwed. Good luck for you and your business should you stick around…

Concluding

Decision-making is done by everyone in an organisation. The higher the position of the decision-maker, the bigger the consequences of his/her decisions. That’s way people sometimes behave differently when confronted with making a decision. This piece is an introduction on a series of post about decision-making to follow.

Further reading:    The Reasons Why Start-up Businesses Fail

Notes

1 Shaver, P., Schwartz, J., Kirson, D. and O’Connor, C. 2001. Emotional Knowledge: Further Exploration of a Prototype Approach, In G. Parrott (Eds.), Emotions in Social Psychology: Essential Readings, 26-56. Philadelphia, PA: Psychology Press.

2 Shimizu, K. and Hitt, M.A. 2004. Strategic flexibility: Organizational preparedness to reverse ineffective strategic decisions, The Academy of Management Executive, 18(4):44-59.

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Home-based business – Important Startup Strategies

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There are millions of entrepreneurs that do their business from their homes. In fact, according to IncFile.com, home-based business was done by at least 38 million Americans during 2017.

Although the idea of doing business from your home sounds informal and casual, entrepreneurs should do the following suggests Casey Kelly-Barton in the HostGator Blog.

Important strategies to consider when starting your home-based business

  1. Interview yourself. Not only will you be your own boss, you’ll be your own employee, so hire with care.
  2. Study the logistics of self-employment. Do you have space to work and to store any inventory, equipment, and raw materials?
  3. Make a simple and clear business plan. What do you plan to sell? Who will buy it? How will you reach them? How often will they buy from you, and how much will they spend?
  4. Put your legal and financial ducks in a row. Decide on your business type and get your city or county business permit in place. Then open a business banking account.
  5. Set up your website. Look for a web hosting service that offers mobile-optimized site templates and fast page-load times.
  6. Set up a professional email address. Not all web hosts offer email hosting. Streamline things for yourselves by choosing a web host (like HostGator) that offers free emails with your website.
  7. Listen to your prospective customers. The most successful home-based businesses go out of their way to meet the needs of their customers, and it’s especially important to listen well as you plan your first product or service.
  8. Develop your value proposition. What can you offer your audience that will provide value for them and require a not-ridiculous amount of risk (in terms of effort and expense) from you?
  9. Ramp up your marketing. Once you have a product to offer and a customer base, you can market to prospects like the customers you already have.
  10. Develop new products or services. Expand or iterate on your product line based on customer feedback.
  11. Review regularly. Ask yourself a few questions about your business in general.

Concluding

And if still wondering what home-based business to do, here are some guidelines 1:

  • Turn what you most enjoy into a home-based venture, such as a favorite hobby or interest.
  • Utilize existing skills from your salaried job.
  • Solve a problem that people are willing to pay someone else to do for them.
  • Use technology and resources you already have around the house, from your van to your computer.

Read also:  Every business needs a business plan

Note:

1 BizMove Management Training Institute, How to Start a Small Home Business A Step By Step Guide to Starting a Successful Home Based Business, http://www.bizmove.com/books/how-to-start-a-small-home-business.htm

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Borrowing Money from a Bank to Start your Business

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Borrowing money from a bank to start your business is not an obvious option for prospective business owners. Unless you are well known, with a track record of starting and running successful businesses, no formal sources of capital are likely to invest in you in the early stages of your business 1.  Banks usually require an operating history to reduce their risk.

“Banks love collateral. They swoon over profits. And they get positively dizzy over long-term performance records. Because of this, it’s difficult to get a loan from a bank to start a new business, which doesn’t have any collateral, profits or long-term success to back up your loan application” according to Master R Stell writing in NFIB.

What do you need to know when borrowing money from a bank to start your business

Banks demand a lot of info from prospective business owners before they will consider approving a loan.

  1. Collateral – your business has to have hard assets it can pledge to back up a business loan. Banks look very carefully at these assets to make sure they reduce the risk.
  2. Business plan – must show the banks how and where you’re going to make your money.
  3. All your personal financial detail – details on assets and liabilities such as your home, vehicles, investment accounts, credit card accounts, auto loans and mortgages.
  4. Insurance – banks may insist that applicants take out insurance against the deaths of one or more of the founders. And the fine print can direct the payout on death to go to the bank first, to pay off the loan.

Concluding

Although there may be a lot of “red tape” evident when prospective business owners apply with a bank for start-up money, banks are at least making an effort to get involved. For example, some banks specialize in lending to small or new businesses. To decide whether a bank loan is right for your business, research both traditional loans and alternative funding sources. It’s also important to know your business inside and out.

Read also:

  1. Getting Money for Your Business – Other Individual Investors
  2. Start your Business: Borrow Money from Friends and Relatives
  3. Using Personal Savings to Start Your Business

Note:

1  Vinturella, J.B. and Erickson, S.M., 2003. Raising entrepreneurial capital, Academic Press.

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Getting Money for Your Business – Other Individual Investors

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Prospective business owners may approach other individual investors to get money for starting their businesses. A large number of private individuals invest in others’ entrepreneurial ventures. They are primarily people with moderate to significant business experience but may also be affluent professionals, such as lawyers and physicians 1.

These other individual investors are collectively known as venture capitalists. A venture capitalist is a person who invests in a business venture, providing capital for start-up or expansion (Susan Ward, The Balance). Venture capitalists are sometimes flooded with business ideas and business opportunities from entrepreneurs that need investment in their ventures.

Let’s have a closer look at venture capitalists.

Other individual investors – venture capitalists

The majority of venture capital (VC) comes from professionally-managed public or private firms who seek a high rate of return. Therefore they (typically) invest in promising start-up or young businesses that have a high potential for growth but are also high risk (The Balance).

Venture Capitalists usually are heavily involved with the businesses that they have funded. Although money is important to VCs, they must also protect their investments. Therefore they engage in activities that help give each company its best chance to succeed 2. However, the over involvement of VCs may result in entrepreneurs losing their autonomy…

What make a ‘good’ venture capitalist?

As VCs usually chooses the most promising business ventures to finance, so should prospective business owners identify the best of them. Quora.com listed the following characteristics that good venture capitalists have:

  1. Being a great net-worker. Having the right people to talk to during the diligence process and making the right introductions (to potential employees, customers and acquirers) is a major way that VCs can add value.
  2. Being a great listener/being able to read people. These are the key characteristics to becoming a great VC. The ability to truly understand where an entrepreneur is coming from helps in evaluating entrepreneurs.
  3. Ability to predict the future. Everyone has access to the same basic market research data but taking that data and interpreting it and turning it into actionable investment ideas is a good skill to have.
  4. Sales/persuasion ability. Being able to convince entrepreneurs to work with your firm versus another. Also, convincing a key employee to join a portfolio company and convincing a potential customer to work with a portfolio company. These are all examples when sales and persuasion skills come into play.
  5. Negotiation skills. To help negotiate a top-dollar acquisition for a start-up in your portfolio and being able to negotiate the lowest possible price when it comes to making an investment.
  6. Experience – there is definitely a learning curve and many lessons that can be gained with time.
  7. Luck – venture is an extremely hits based business. One great investment can make a whole fund successful. It is impossible to know if making an investment was luck or skill but there is definitely an element of both.

Concluding

Other individual investors will fund your business only if the potential rewards outnumber the risks by far. They want a return on their investment and, if they are shareholders, they will involve heavily with your business. Failure to receive funding from a venture capitalist, however, does not indicate that the business plan is not a good one. More often, the venture is simply not a good fit for the investor.

Read also:

  1. Start your Business: Borrow Money from Friends and Relatives;
  2. Using Personal Savings to Start Your Business

Notes:

1 Longenecker, J.G., Moore, C.W., Petty, W. and Palich, L.E. 2005. Small business management: An entrepreneurial emphasis, South-Western College Publishing, A Division of International Thomson Publishing Inc.

2 Kressel, H., 2007. Competing for the future: How digital innovations are changing the world, Cambridge University Press.

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