When you can’t find a job, self-employment becomes an option. The big question is what kind of a business should you start? There are lots of choices so you need to really do your homework. One of the big factors is to find something that you truly have a passion for rather than chasing money.

Having your own business gives you an opportunity to do what you have always dreamed about.  I have made this journey and it isn’t easy. The first step is to take time and really think about what you would like to do and where you would like to do it. Taking time to do research possibilities and doing the necessary due diligence is critical.

 There are lots of books and internet resources to guide you. One of the first steps is to carefully evaluate and assess your skills and abilities. This will reveal the possible business options that you could follow. When performing this step you should document all your thought processes. Think about what might be possibilities. This is essential because it gives you a good road map of potential opportunities. Let yourself go and explore all the things that enter your mind without limitations. Noodle, take notes, and create a road map.

 The above analysis should include some of the self assessment steps mentioned in my most recent blog post. Take your transferable skills inventory and link them to potential self-employment opportunities.

 After you start to get some ideas about what businesses are possible, list them down on paper. This is when you really need to dig in and do your homework. Some things to consider include:

• Am I qualified to do this work?
• What is the cost to start this business?
• What resources do I have to commit to the business?
• What is the competition?
• How successful is the competition?
• Will I need help to run the business and can I get the help I need?
• Can I run the business from my home?
• Who can I talk to about starting this business?
• Do I need a business coach or advisor?

These questions represent only the surface of things you need to know about your new potential enterprise.

 Before you actually launch your new business, take time to develop a good business plan together with appropriate projections and an estimate of cash flows. Just doing a spread sheet isn’t good enough. The business plan should contain a detail written statement of your vision and business mission. You’ll need to set objectives and craft a strategy to achieve them. In line with all of these plans include the type of structure for your business. Should you incorporate, create a LLC, a partnership, or operate as a sole proprietor? What business systems will you need including accounting systems? Don’t try to do all this stuff yourself. Spend the time and money to get a trusted advisor to assist you. This can save you a lot time in the long run.

 One of the big questions to answer is can I pull this off and do I have enough money, time, and the skills to do it? This is where an advisor to help guide you through the process can really payoff. Objective advice here can save you invaluable time and money.

 Lots of people have done it and done it successfully. This blog post won’t answer all your questions, but will give you things to think about. There are many possibilities and you need to explore to find what can work best for you.

Your unemployed, so now what do you do? Keep looking for scare jobs or do you launch your own business? Continuing to look for a job that either doesn’t exist or that is being pursued by untold numbers of applicants feels like a hopeless situation. This is the new reality and a dilemma facing millions of people.

I have been in this situation. It feels awful and tears at your self-esteem. Why me and what did I do to deserve this fate? I’m fortunate that I’m a CPA and licensed to practice accounting and consulting. Still, it didn’t remove the hurt and the feeling of frustration.

I moved on but can still relate to people who are faced with the challenge of “what do I do and how do I do it.” From my vantage point, as an observer and an advisor, I don’t see the employment situation improving. The world is different and likely will never return to the good old days.

The good old days are gone so what are unemployed people to do? Well, they can keep looking for the same old job in the same old way or they can start doing things differently. Businesses have downsized and in other instances relocated. The reality is that the old job the way you knew it no longer exists.

If nothing is available regionally, you may be forced to relocate to areas that do have employment. Another option is to accept less. This is a problem since there are a lot of overqualified unemployed people looking for work. The bad news is overqualified people have been out of work for a long time. How do you respond to the question about “what have you been doing for the last year?”

I have some thoughts about possible steps that unemployed folks might explore. The first step is to brainstorm all the possible options. Some people will opt for more training. Others will decide to get training in areas where there may be a shortage of qualified help. Many people are considering a 2nd or a 3rd career. Ask yourself what do you know and what are you passionate about? You might be surprised to find out that answers to these questions could open up lots of new opportunities. Start thinking outside the lines and then begin drawing some new ones.

People struggle to deal with paradigms and get locked into old ways of thinking. The world is different and it’s going to stay that way. This means developing new strategies and going in different directions. While these steps might lead to different job opportunities, it might also lead to becoming an entrepreneur. Becoming your own boss isn’t such a bad thing. You’re the only one who can fire you.

This is how businesses get started. When you find yourself locked into a tough situation, sometimes the only way out is to take bold new steps and embrace the reality of change. Take a look at the possibilities. Set goals and create a plan. Figure out what you can do and might want to do. This planning process should include a budget so you can stretch your finances over as long a period as possible.

Creating a budget is essential when starting a business. Any business you launch is going to take time to generate adequate cash flow and profitability. Starting a business is a scary process. It also can be a lot of fun. Take time and really think through your business model. While it might seem like an impossible endeavor, realize that millions of people have done it, and so can you. It might be the most important thing you ever do in your life.

I have been both unemployed and underemployed. It is a pretty scary situation that has you asking “what do I do now?” While I can’t fix the situation, I have some ideas based on my own experience that might help.

The unemployment report indicates that the rate in the United States at around 10%, the highest in 26 years, will likely inch higher before leveling off and then starting to decline. When tossing in the underemployed and those who just stopped looking, we’re probably up to 18 %. Then consider that almost 26 % of working Americans have nonstandard jobs. This includes part-time, independent contractors, temps, on-call workers, and others. It’s a bleak picture.

This scenario isn’t limited to the uneducated and untrained, it’s across the board. My sense is that things aren’t going to get better any time soon. In fact, it may get worse. For people in this situation, and others who could land up in this basket, it means you better begin developing some options and a survival plan.

Just sending out more resumes isn’t going to get you where you want to be or need to be. The first step is to carefully assess your situation, your skills, and financial requirements. Establish a clear and honest evaluation of who you are, what you can do, and what you want to do. Most people don’t face up to current reality. This assessment is like a SWOT analysis (Strengths, Weaknesses, Opportunities, and Strengths). Establishing a baseline creates the basis for going forward.

One option is to accept less. Another is to become self-employed. You might have to combine both of these options. Getting more training is another option. As you go through this process of establishing your future direction, it is essential to be honest and realistic.

This situation might mean adopting a second or third career. Ask yourself what can I do? What are you passionate about? As you go through this process, set goals with timelines. Also, set up your financial plan and understand what you need and consider the possibilities of achieving it. The process of setting goals gives you a better chance of success. Your performance will be higher with goals.

Just the thought of becoming self-employed is daunting. It raises multiple questions like how do I get started and what will I need to be successful. Probably the most challenging question will be what will be my business? Only you can answer that question. Since I have been through it and successfully launched my CPA and consulting practice, I can offer advice and assistance.

My first piece of advice is to figure out what you really want to do and think about how that fits into the economic landscape. When you make the paradigm shift from working for someone else to working for yourself you are on your way. It’s a scary leap of faith, but once it’s made you’ll find yourself in a better place.

The road is long and takes a lot of hard work. At least you are controlling your own destiny. Having been through the process, I can tell you that your frame of mind and reference will improve because you have input on what happens. It’s you Inc. so jump in and get started.

Ask and Listen

A key tool in assessing a business is diagnostic interviewing. This is a process of asking questions and then carefully listening to the answers. W. Edwards Deming, the man who helped the Japanese recover from World War II, always said, “Ask the people who are closest to the action to find out what was really happening.” This advice has never failed me.

Diagnostic interviewing provides indications and clues as to problems. It is a technique I have used to conduct assessments in countless organizations. Getting business owners and management to open the lines of communication can be difficult, but it’s worth the effort. Employees might be reluctant to open up and provide the “unvarnished truth.” It is essential for management to make it clear that they want the truth and the facts. Tell me like it is.

The real key to success is listening and hearing what people are telling you. Frequently, what people say with body language is more revealing than the words that are spoken.

Other Thoughts

A business assessment involves more than just looking at financial data. Take time to step back and thoroughly evaluate the business. Find out what hurts and locate the source of the pain.

Assessments should encompass the entire state of the business from every aspect and all points of view. Get an effective understanding of what is happening in the industry and in the business. Get the big picture as fast as possible.

Analysis

Analysis is performed in order to prioritize problems. Examine problems and then break them into their component parts. Conclusions then can be developed to fit the problem. This is when symptoms are distinguished from problems.

Analysis depends on the specific problems under consideration. Here is my three phase approach:

1. Sort out the facts,

2. Applying analytical techniques, and

3. Use judgment to draw conclusions from the analytical process.

Sorting out the facts is a process of categorizing all the information collected during the assessment. The facts should be sorted based on the assessment parameters. There will be a lot of data to match up including the information gathered from the interviews. Take time with this process and avoid jumping to premature conclusions.

Once the facts are sorted, then start applying analytical techniques. There is both qualitative and quantitative analysis. Qualitative techniques are used to analyze factors which can’t be measured in numerical terms. Examples of qualitative techniques include the development of matrices, asking fundamental questions, and searching for patterns. Additional examples include comparison of events for the purpose of identifying both differences and similarities. Qualitative techniques also include development of flowcharts and fish bone diagrams. Applying analytical techniques is very important so think carefully about the potential range of possibilities.

Self-Assessment Toolkit

I developed a Self-Assessment Toolkit for use in my consulting work. You don’t need to use it but the checklists and questionnaires it offers provides a good roadmap. Another component of the toolkit is a team survey to gain feedback regarding employee opinions about the organization.

The 10 Step Process

To get things on a profitable footing I created the 10 Step Process to Building Business Value:

1. Identify and locate the pain.

2. Establish the parameters on what needs to be done.

3. Evaluate your market, products, and services – are they right for your business?

4. Right size the business.

5. Financing the business.

6. Maximize asset utilization and returns.

7. Improve employee productivity.

8. Conduct product and customer analysis.

9. Improve business processes.

10. Measure and monitor performance.

These 10 steps represent the essential components of what every business needs to do to maximize profitability and build the value of their organization. These steps represent a long-term no nonsense approach to value based management that produces results.

This methodology works because I have used it to produce results in a number of businesses. When businesses apply the tools and employ them consistently over a period of time, the benefits are record growth in sales and profitability.

These concepts are not silver bullet fixes. They represent a common sense application of tried and true methodologies that can make the difference between survival and failure.

What is a mission or vision statement? In brief terms, a mission statement is a description of how an organization defines success and where it is headed going down the road. In order to be successful, a mission statement needs to be more than just words or phrases. An effective mission statement needs to be a living document that provides the necessary focus for all levels of the organization.Despite the importance of defining a mission, there have been a lot of failures to create any change in organizational performance or in what people are doing to accomplish results. One of the big problems is that mission statements fail to effectively communicate to employees on where the company is headed. Mission statements also fall short on linking strategic direction with specific goals and objectives at all levels of the organization.

It is critical for organizations to define their future business direction so employees clearly understand where they are going and how they will get there. From this platform, organizations need to develop a definition of success and a process for setting goals and objectives. Together with these steps, it is critical for the entire organization to have clarity on its sources of strength and competitive advantage.

Once organizations get these step right, they need to move forward to clarify “the what, where, and how” of competitive success. This message then needs to be effectively communicated to employees and other people who have a stake in its success. A process of setting goals and objectives at all levels of the organization needs to be complete so everyone is on the same page in order to achieve a successful execution of the mission.

In many instances I think the objective setting process can be simplified. It doesn’t need to be complicated, but there needs to be buy in at all levels and everyone needs to know their role and how they fit into the plan. Defining an effective set of objectives might sound easy, but it is a tough job and is critical to achieving success.

The key to a successful mission or vision statement boils down to the following three steps:
1. Where is our business going?
2. What are our objectives?
3. How will we accomplish our objectives?
After these three questions have been answered, the key to success is to effectively convert the answers into performance objectives for employees at all levels of the organization. Organizations that commit to this process with focus and determination will be the winners.

In the current economic environment there are lots of business owners struggling to deal with issues and problems and no idea on where and how to get help. Likewise there are CPAs who are asked by their clients for assistance in areas where they lack the knowledge and experience to provide support. It is a perception that help has to be geographically accessible. The reality in many situations is that there are virtual means of accessing the necessary experience and assistance.Many services, including training, can be provided virtually using the telephone, e-mail, and conferencing tools. I selected the areas of my expertise that could be delivered virtually. It is possible to review strategy and operational situations by using my questionnaires and experience in effective ways. Another situation faced by many companies is that they lack the financial expertise to provide the financial and controllership skills required to survive the current difficult economic environment. Virtual tools are available to share financial information and in many instances an experienced financial manager can provide the needed suggestions that can make the difference between success and failure.

Internal controls represent an area where CPAs need some assistance so they can avoid reinventing the wheel. In many instances I can provide instant answers to questions and provide suggested solutions that could otherwise take hours to solve. Based on working with the COSO internal control framework and assessing audit risk, I can provide direction and advice to practitioners and even help them review their work papers to minimize their risk.

My dealings with family-owned businesses have provided me with firsthand experience in working with succession and planning issues including estate and trust planning tools. It is like having someone working in your CPA practice where you can discuss and review a problem for potential solutions.

Some other areas where virtual assistance is available are cost management, operations and supply chain management. Why struggle with these areas when help is a phone call away. I can also provide assistance with strategic planning and share checklist and questionnaires that will allow you to facilitate development of strategic thinking with your clients. If you are a business looking for assistance, I can provide virtual support and training in these and other specialized areas.

You may not have given thought to using virtual support or training, but it available and utilized all the time. It is a cost effective way to receive the assistance you need. Give me a call to discuss ways that I might be of assistance.

Why not virtual consulting and business support? Since I have always performed consulting services at client’s sites, this represents an interesting question. In the current economic environment when every dollar counts it occurred to me that I could provide companies with excellent support and advice they might not be able to access in their geographic region. I teach on-line courses for Villanova University in conjunction with Bisk Education where I facilitate live discussion session with students every week. If I could teach on line then why not consult on line?After pondering the topic and the question, the answer seems pretty straight forward. Clients could really benefit from such an approach. In one of my recent live discussion sessions we had an extensive dialogue on the transformation of communication. Virtual communication is what has evolved in today’s world. Since we communicate virtually, then consulting and business advisory support represents a logical approach.

Telephone and e-mail are logical tools that most clients understand. The part which is a mystery to them is realizing that we can conduct an on-line dialog over the internet utilizing voice in addition to sharing of presentations and other analytical tools. It isn’t quite the same as face to face communication, but it works pretty well and is a lot cheaper and more time effective. It is an approach that works well enough to help a large number of clients. Virtual consulting can save time and reduce costs so traveling to client sites is limited only to the bare essentials.

In addition to reducing costs and improving efficiency, this approach saves a lot of wear and tear and allows me to reach out to a greater audience and expand my market reach. I can now help more people access my knowledge and expertise. I think this is a good way to work especially in a tough economic environment.

Deciding on what product and or service attributes will provide the best chance to win a competitive edge strikes to the very heart of how to develop an effective strategy. There are a number of approaches that can be used to craft a winning strategy. In this post we will identify some of the more common techniques that can be deployed.One approach many companies use, especially during difficult economic conditions, is a low-cost and low price approach. An alternative approach is one of differentiation and selection of a specific market niche. Differentiation can represent a more profitable option.

During a turbulent economy you will see a number of companies making moves in response to the rapidly changing industry conditions and other factors that develop in the external environment. This is one of the reasons adopting and maintaining a strategic focus is so essential when times are tough and competition heats up. Many of your strategic choices will go beyond just pure survival; they will be to secure a competitive advantage.

Another element of strategy relates to geographic market coverage and the extent of penetration in the market. Companies who got stretched with excessive capacity will have to consider adopting this approach to secure markets and customers to consume this capacity. One approach that some businesses have followed is deciding to pursue vertical integration to enable more sales to existing customers.

There are a number of different financial value propositions that are used by companies as a component of their strategy. Additional choices include the application of human resources, research and development, technology, and a variety of marketing promotions. Linked to these options will be manufacturing and operational approaches that fit with these choices.

A unique approach to strategy as we proceed into the 21st century is collaborative partnerships and strategic alliances. This seems to be a growing trend since it is difficult to be all things to all people making this a choice of necessity.

Strategic choices require developing skills, expertise, and competitive capabilities that set the business apart from rivals. The goal is to insulate your business as much as possible from the effects of competition. From this step you need to perform an analysis of the strategic variables and match them with your capabilities as well as your competitors. Strategic and competitive analysis is a critical component of crafting a winning and sustainable strategy.

You need to carefully think about your point of view relative to the future and assess how it stacks up against your competitors. Are you a risk-taker or just a rule maker? Another question that begs answering is what percentage of your effort is focused on catching up to competitors versus building business advantages that will take your business successfully into the future. It is critical to evaluate your agenda and determine whether you are setting it or if it is being driven by the competition.

While times are tough and success doesn’t come easily, it is imperative to think into the future and set the course for where you plan to be in five to ten years.

My recent post Strategies for Recession implies that everyone understands strategy. The truth is that strategy isn’t well understood and means many things to different people. One of my students in a recent session indicated she had worked on strategy development project for a large unnamed company and the executives didn’t have a clue as to what strategy is and how to utilize it. Hopefully, we’ll shed some light on strategy and how it is crafted.I think competitive strategy is about being different and deliberately making choices relative to activities that will provide a unique value proposition to customers. One contradiction is that operational effectiveness is strategy. This is what every organization should be doing to remain competitive. Strategy is about making tough choices needed to maintain a competitive advantage. These are choices to change the rules so they work in your favor.

Having the right goals is a critical component of having a sound strategy. Setting goals and objectives represent components of effective strategies. Strategy needs to have continuity and isn’t something that can be constantly reinvented. It boils down to the basic value proposition you are trying to deliver to customers.

A good strategy includes simple consistency between all the functional activities and the overall strategy. The strategic fit drives competitive advantage and sustainability and occurs when the activities are reinforcing thus achieving optimization of effort. Competitive strategy grows out of the entire system of activities.

Thompson and Strickland in their book Crafting and Implementing Strategy define five primary tasks:
1. Formulating a strategic vision of the company’s future business composition and the direction where the entity is headed.
2. Setting objectives.
3. Crafting a strategy to achieve the desired outcomes.
4. Implementing and executing the selected strategy efficiently and effectively.
5. Evaluating organizational performance and making appropriate corrective adjustment wherever necessary.

These five primary tasks become a continuous loop whereby you are observing, orienting, deciding, and acting on necessary adjustments as needed. In the current economic environment, organizations need to be agile and quick in making these decisions.

I will provide additional insight on strategy and how to apply it effectively in the future. In the meantime some strategic terminology might be helpful. Here are some definitions that will help to remove some of the mystery.

Strategic Vision is a view of the organization’s future direction and business makeup. The organization’s mission is defining it’s the business purpose and what the business is trying to accomplish on behalf of its customers. Strategic objectives represent the targets management establishes for strengthening the organization’s overall business position and competitive vitality. So strategy represents the actions and approaches that are implemented to satisfy customers and the strategic plan is a statement outlining the mission, performance targets and strategy.

This should provide some clarity and eliminate confusion related to strategy. Hopefully this will help you navigate turbulent waters and craft your strategies for survival.

Don’t Panic
Take a lesson from the pilot of US Airways flight 1549 who was forced to land his Airbus in the Hudson River with all the 155 people on board surviving. I think this is a critical lesson when trying to survive in a recession. This is the time to keep your wits about you and keep a level head.

Develop a Plan and a Budget
In uncertain economic times there is no way of knowing what’s going to happen or how bad things might get. In these situations I tell clients to develop a worst case scenario budget. This budget should be a rolling forecast so you are continually projecting your best estimate of what you think will happen and develop. Be conservative on your estimate of sales and revenue and hold the line on expenses. It is critical to monitor and measure your financial performance in all categories, especially cash flow.

Cost Reduction
Evaluate all opportunities to tighten your level of expenses. I developed a Recession Survival Toolkit that contains extensive information and tips on cost reduction to managing cash flow and obtaining credit. While most businesses are laser focused on controlling payroll, they do this through layoffs. There are multiple ways of containing payroll other than terminating employees. These steps include salary cuts, reduced hours, and vacations without pay to list a few ideas.

Strategic Planning and Thinking
A recession is the time to establishing a strategic plan. I urge clients to create a clear vision of the future realizing there is a lot of uncertainty. It is imperative to be agile and ready to move in different directions with your response to changing conditions. You need to have a number of options so you are not locked in to a narrow strategy. In fact I like clients to have a reasonable range of options because it allows you more flexibility.

Selling and Marketing
I think a number of people fail to think proactively about sales and marketing opportunities during a recession. Managing risk is as much about identifying opportunities as it about looking for things that might produce a negative impact on the company. Companies need to be aggressive with their sales effort because the psychology of recession is taking buyers out of the market. When there are fewer customers it is critical to aggressively pursue maintaining or increasing market share. However, this should not be achieved at the expense of giving up your profit margins. This is when I apply profit focused accounting to match costs with selling price to maximize profit margins. I see too many executives cutting price just to gain volume in contrast to employing all the necessary tools to maintain profitability.

Cash is King
In a recession, cash is king. It is critical to maintain lines of credit and have them available just in case. The key is to maximize your cash conversion efficiency. This concept is focused on turning accounts receivable into cash as quickly as possible and at the same time reducing your investment in inventory. The other component is stretching accounts payable as much as practical without losing discounts or damaging your credit worthiness.

Using BBV^TM
Building Business Value is our approach to building value using proven management methods that preserve shareholder value. A recession is exactly the time to stay with proven management techniques and methodologies. One of my suggestions in this regard is to make sure you have the right people on the bus and in the right seats. Good execution of management fundamentals should be the objective. My final thought is to utilize my change management concepts to make sure you don’t get lock into doing things just because of your pre-recession comfort zone.

When all else fails, do as Debbie Reslock suggested in yesterday’s Denver Post. “Bid in the dark and shoot the moon because through it all, I still have faith. With out looking at the cards, I’m betting on all of us.” I am betting on Debbie’s hand, I think she’s got a winner.