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Cost management for entrepreneurs

As an entrepreneur or small business owner in the first few years, its money that makes your business world go around. Its cash flow, budgeting, funding and being seen by others as a successful business person that is financially sound. As your business grows so does your reputation and a wise, highly successful businessman once said to me that you have one shot at a good reputation.

If you are getting an app/product/service to market then you are managing a project (if you want a heads up on what a project is click here), then cost management is a key driver within your project. The other two key drivers are time management and quality management. One of these three key drivers are the primary driver of your project, ie one of the three is more important than the other two.

So what exactly is cost management? The Project Management Institute (PMI) defines cost management as planning how you’ll spend the money, estimating, getting the financing, finding funding, managing and controlling the costs and of course budgeting too. There are four processes to project cost management.

Before we get in to the four processes of project cost management, let’s first have a look at some frustrating issues that can occur if cost management isn’t utilised, and the benefits of project cost management when it is.

If you are experiencing any of these frustrating issues then project cost management is really going to help you:

  • Contractors or services providers, such as app developer for example, are costing way more money than you initially thought
  • Your burning up too much money with getting your app/product/service to market and you don’t understand where the money is going
  • You may have to scale back what you were originally want to do as you can’t afford it
  • You can’t say right now how much money you have spent on your app/product/service and how much money you still need to get it to market
  • Your investor or loan provider is riding your back wanting to know when there is a return on investment (ROI) or loan repayment
  • You think you were too optimistic when setting your budget for your app/product/service and now you’re not sure you can even get to market
  • Your under pressure and you don’t know what to do

So bearing in the mind the above, the benefit of using cost management as part of project management is numerous. Some of these benefits include:

  • Investors and suppliers seeing you as a mature business owner that has a healthy attitude to managing costs. This will support them in having confidence with investing in your business or extending lines of credit to get your project going
  • If you are providing a service clients will feel confident that your cost management is sustaining your business and won’t lose you as a supplier. This is particularly relevant if you are trades person or run a business where you do high value renovations/construction/land scaping etc
  • Have a realistic view of what your project costs are and when you are consuming costs. Then this will support you with understanding your business cash flow
  • You have a good degree of certainty with what your costs are to execute your project and get your app/product/service to market
  • You know how much you’re spending and on what
  • You are still able to afford to get your app/product/service to market as you originally planned, if not better
  • You have a good degree certainty with how much you have spent to date and able to answer questions off the top of your head
  • Your investor or lender is comfortable with how you are managing your costs and you can produce the facts and figures when asked

As mentioned before, there are four processes for project cost management that when done properly and in sequence will support you realising the benefits above. They are:

  1. Plan Cost Management. This is the process of how you will manage your costs and have a cost management plan. Here you will figure out what documentation and tools you need to manage the costs of your project, incoming and outgoing. The documentation you create and the tools you identify will support you with planning, managing, spend and controlling money.
  2. Estimate Costs. This is where you will figure out how much your project will cost. When you do this you will need to identify how much your staff will cost (including your own salary to draw from the business), expenses, costs of suppliers, costs of contractors, costs of any premises that you will need, cost of council permits if needed etc. You will also need to figure out the costs of activities (from your project schedule).This is step one in creating your cost baseline.
  3. Determine Budget. So once you have your estimate and costs of activities this will help you to understand the total cost of your project, which you will hopefully have enough money for. If you do then this is your budget, if you don’t you will need to eliminate some activities or scale the costs back to what you can afford. When you layer these costs in to your project schedule you will then have a budget profile where you will know when you are spending on what. This is step two in creating your cost baseline.
  4. Control Costs. Here you will use your cost management plan and use the documents and tools you created earlier. Together with your cost baseline you will be able to track your actual costs against your baseline costs, see the variance in what your spending to what you planned, and take any corrective action to rein in costs. This information will help you give the facts and figures to investors or loan providers when needed.

By following the above it gives you the understanding to manage your project costs, give you control on costs flowing in and out, plus show to investors and suppliers that you have a mature and healthy approach to managing costs.

EmineoHub supports you at getting your best work out to the world. If you would like a FREE 20 minute chat with Sarah to realise your business goals please click here.

 

Project Management for Entrepreneurs

 

At some stage in your life, whether personal or professional, you would have done a project. Launched an app/product/service? Or how about renovating your house or organizing your wedding? Well, that’s a project and at some stage you would have been a project manager!

So as a business owner why do you need some sort of formal project management in your business? It supports you meeting a business objective and helps make life easier. Project management can help you take a clear and structured approach in meeting that business objective. Your team can understand what it is you are trying to achieve and manage their workload accordingly. It can help your business continually improve, increase team performance and is crucial if you wish to scale your business up in hitting a big growth business objective.

What exactly is project management?

The Project Management Institute (PMI) states ‘A project is temporary in that it has a defined beginning and end in time, and therefore defined scope and resources. And a project is unique in that it is not a routine operation, but a specific set of operations designed to accomplish a singular goal’. That singular goal is your business objective.

Effective project management means being very clear on what you are going to do and when, how much it will cost you and what the look/feel/theme of your product is in regards to quality.

Being very clear on what you want to do means having a scope of work document. This is basically the ‘make stuff happen’ document. It discusses the required work necessary to complete the project and achieve your business objective. Creating a scope of work document with the contribution of team members means that everyone can agree to the requirements of your project. It also discusses the timelines to make it happen, how much it will cost, and the quality of your app/product/service. It also discusses who will work on your project. It can be given to others so they can understand what you are doing and how you are meeting your business objective.

If you need to get to market quickly to take advantage of consumer behavior, or a particular time of the year, then project management will help you with time management. By mapping out a timeline it will support you communicating to others either internally or externally to your business when you expect people to deliver. Knowing project timelines will help reduce headaches with suppliers or service providers by asking them upfront if they can deliver when you need it by.

We all know money is crucial to running a business. Understanding your costs when getting to market can be make or break for reaching a business objective. Project management can certainly help you understand what you are going to spend and when. Contrast this against your business cash flow it can really help with decision making. If you can see any financial dips coming your way you can either juggle your timeline map or take other action such as negotiating supplier payments or sourcing additional funding.

How do you want your product to look and feel? What is the experience you want your customer to have? Whatever that is then the product quality specifications need to be factored in to your project. If you want a high spec product that the market raves about then you may need to take your time developing the product. Or it could be costly to develop the product and project management can enable you to manage costs effectively.

Ask yourself how can project management benefit you and your business? How will it help you meet your business objectives? Will it help you be really clear on what it is you need to do, or will it be of benefit to help you manage timelines or manage costs? And if you wish to scale up your business imagine how project management in your business could drive that forward.

EmineoHub supports you at getting your best work out to the world. If you would like a FREE 20 minute chat with Sarah to realise your business goals please click here.

Project Renegade

In the last few months, I have been speaking to people that have a great business idea that they would love to pursue. They have a vision and enthusiasm; have done their business plan and customer research and ready to get cracking on their idea. Then they hit a wall. Typically the comments I hear are ‘I don’t know where to start’ or ‘I’m not really sure how much time and money I can commit as I am still working full time’. I ask them if they have considered using a project management approach and surprisingly I usually hear a ‘no’, and ‘how does project management fit into my business?’

Using project management within your business can enable you in getting an app/product/service to market smarter and faster.  Before we get started, it’s really important to understand what a project is. The Project Management Institute (PMI) defines a project as ‘A temporary endeavour undertaken to create a unique, product, service or result. It has a specific beginning and end and the end is reached when the objectives of the project are achieved, or it is decided to cancel the project’. The benefits of undertaking a project within your business are numerous and can include:

  • Turning your business idea into a reality
  • Having a clear and structured approach to realise a business objective
  • Launching your app/product/service to take advantage of your market at specific time of the year to take advantage of consumer demand

To undertake a project there are seven crucial steps you must take to get your app/product/service to market smarter and faster. The seven steps below will really help you take a holistic and mature approach to launching your app/product/service

  1. Understand your project boundaries. Being really clear about what your app/product/service specifications are is super important as it means you won’t deviate from the core specifications.  This clear understanding of what work you need to do will assist you with budgeting, and figure out how long it will take to get the market, as you will know what is and isn’t included. You can of course always change the specifications in the future by reducing or adding to your project boundaries.  If you are adding to your specifications perhaps you can consider this as a new version for a future release (and a future project).
  1. Break the work down into chunks. Some of you may have heard the terms work breakdown structure (WBS), well this basically means breaking down the work you need to do into manageable chunks of work. You can start this by understanding each specification or need to develop your app/product/service, for example, this can be research the app, source an app developer, design the app, test the app etc. Understand the deliverables of each chunk of work, for example with researching the app deliverable one could be understand market demand for the app and deliverable two could be complete research and development (R&D). Design the app deliverable one could be create a storyboard, deliverable two would be design is 50% etc. With sourcing, an app developer deliverable one would be select an app developer and deliverable two sign a contract with the app developer. Test the app deliverable one could be app ready for testing and deliverable two is ready for release once any bugs identified in app testing are rectified.
  1. Identify resourcing needs. Write up a list of whom and what you need to make the chunks of work identified above happen. Take in consideration who is available to you at the moment and where there are gaps in resourcing needs as you will need to mitigate these needs.

Ask yourself these questions…Are you working on this project yourself? If you are, then what are your time constraints? Consider your commitments to maintaining existing business cash flow, family time and recreational time.Do you have staff? What commitments do your staff have with their existing workload and do they have enough time to work on this project without getting stressed out? Will you need to hire a service provider such as an app developer or a graphic designer to make up any lack of skills or knowledge within your business? Once you have asked yourself these questions you can then apply the time available to you, your staff and service providers in the next step.

  1. Understand timeframes. Now that you have done the first three steps above you can take the clearly defined app/product/service specifications, the defined chunks of work with deliverables and the resources available and come up with a timeframe to make your project happen.

Look at each chunk of work and break it down into activities to meet the deliverables you created earlier. Understand which activities are being done step by step in order to meet your deliverables. To understand how long each activity will take you will need to take into consideration how long you would like each activity to take. You will then need to consider the resources available to you (including yourself), the service providers needed and determine whether they are enough hours available to meet the timeframes. If there is enough time for you and your staff this makes things much easier for you. If not, you will either need to look at making the timeframes longer, or hiring additional people. With hiring service providers you can articulate to them when they need to deliver when you negotiate their service.

  1. Understand costs. Getting your costs right is crucial. Failure to get your costs right may mean reducing the specifications in your app/product/service and ultimately reduce its quality or desirability.

To understand your costs take your timeline above and apply the costs of you and your staffs time to each activity. If Sally costs you $50p/h and you assign her to an activity that takes 10 hours then that activity costs $500. Your time is really valuable too so work out how much you cost to your project especially if it means you aren’t doing any chargeable work to anyone else. This is also the time to get quotes from service providers so you can determine a cost and apply to your timeline.

Once you have done this you will have a good idea of how much your project is costing you per week/month. It will also give you a heads up of when you can expect to pay your service providers or suppliers and how much, which will support you understanding business cash flow.

  1. Understand what can go wrong. Even the best laid and well thought out plans can go wrong. Employees leave, people get sick or suppliers go out of business. To avoid your project going off track and delaying your business objectives take a good look at what can go wrong and analyse the likelihood of it. If there is a fair chance of it happening then forewarned is forearmed and you can monitor the chances of it happening, and ultimately avoid it happening if possible. Understand the consequences of anything going wrong as well, just because something is likely to happen doesn’t mean it has to be a big impact on your project. Or something else is unlikely to happen and if it does then what does that mean. Perhaps this means the app you were wanting to get out for Christmas may have to wait until five months later.
  1. Wrap it up in to a brief. Summarise what you have created in the six steps above in to one document. The benefit of putting it all in to a brief is so you have an easy to access plan that you can refer to through-out your project so you can monitor your performance and see any deviations. You can also use this project brief to share with your staff or any suppliers so they can understand what it is you wish to achieve as it supports them buying in to your vision.

Following the steps above will enable you to understand what you do, by when and by how much it will cost you to meet your business objective. It will help you focus and get your business to market smarter and faster.

EmineoHub supports you at getting your best work out to the world. If you would like a FREE 20 minute chat with Sarah to to realise your business goals please click here.

Project Management 101

Project management is undertaken by many different types of organisations around the world. There are also numerous types of projects undertaken that range from an entrepreneur launching an application/product/service, to global companies investing in a new asset such as a mine or oil refinery.

No matter the organisation or type of project, the characteristics of a project are usually always the same. The way a project is undertaken though can vary drastically to award-winning within an industry, to abysmal failures, that result in cost and schedule overruns or an end product that is of poor quality.

So what is a project then? The Project Management Institute (PMI) states ‘a project is a temporary endeavour to create a unique product, service or result. The end of the project is reached when the objectives of the project have been achieved, or when the project is terminated because its objectives will not or cannot be met, or when the need for the project no longer exists’.

It is important to note that temporary doesn’t mean a short duration of time, a project can last for years! An example of a recent project taking many years is the new World Trade Centre in New York. However, as an entrepreneur or small business, you may be keen to get your product or service to market much more quickly than that.

Some examples of projects taken by entrepreneurs or small business are:

  • Developing and launching of an app or software
  • Opening a café/bar/restaurant
  • Opening a store or boutique whether its online or has a physical presence
  • A child care centre
  • Implementing new software or tools within a business to maximise productivity
  • Taking a business idea and turning in to reality
There are five key processes in a project (and the brackets are what PMI calls the processes), these are:
  1. Starting (Initiating)
  2. Organising (Planning)
  3. Doing (Executing)
  4. Managing (Monitoring and controlling)
  5. Finishing (Closing)
Then the following six aspects of a project fit into the five key processes above. These are:
  1. Scope of work (what you need to do within your project to get your product or service to market)
  2. Quality of your product or service
  3. How long your project will take
  4. How much your project will cost
  5. Who will be involved in your project
  6. Managing any risks to your project so you can ideally avoid them
It’s also important to note that a project can be quite dynamic and subject to change as you elaborate on your product or service. The typical drivers of a project are related to quality, cost and time. The drivers of your project may change too as you progress through your project and where cost was perhaps the primary driver, it could now be time as you wish to get your app/product/service to market as quickly as possible.
EmineoHub supports you at getting your best work out to the world. If you would like a FREE 20 minute chat with Sarah to realise your business goals please click here.

How to get an investor with project management

You have a brilliant idea for an app/product/service and you have done your market research. The feedback is positive and you have done what you have needed to do to get you to the point where you are ready to pitch to an investor.

When an investor is considering an entrepreneur or small business owner as a person they want to know that you have the ability to follow through, to deliver the goods and walk the talk. If they are evaluating a few potential investment opportunities and one of the deciding factors is how you will follow through, then applying project management with getting your app/product/service to market may be just what makes you shine brighter than the others. If you want a heads up on what project management is then click here.

Project management may be just what you need to have a competitive advantage over someone else. A project plan demonstrates how well you have thought out your strategy to get to market. A solid project plan helps investors make smart decisions and analyse any weaknesses. If you are going to a large organisation to get funding it will help show that you are a serious entrepreneur/small business owner that has taken a considered approach before pitching. A project plan also outlines the timelines of when you are getting to market so an investor can have an idea on when to expert the return on investment (ROI) to commence. They will also want to know the quality of the app/product/service and whether its up to their standard.

You are demonstrating to them that you have considered the numbers, your business has the potential to be scalable through project management, displaying your background and experience, that you are credible and results driven. If your app/product/service is a risky investment it will help them identify at which point you should both bail and avoid a smash.

Everybody knows an investor want to know numbers. What’s your business revenue, what flows in and out of your business financially, and how you spend money. Giving an investor a project plan with a cost management plan included on how you plan to spend the money will help them assess whether you are realistic with your estimates and budgets and whether they will ever see their money again. That you aren’t a risk to them. It will help them see how mature and responsible you are with someone else’s money. A cost management plan will also give them something to analyse to see if there are any pitfalls coming up that they can help you mitigate. If an investor is issuing the money in installments it will also give them an idea on when to have funds available.

Showing an investor that you are using project management techniques will help them understand that if you wish to scale up in the future, you have a scalable framework to support this. The wins, failures, problems and headaches in this project can be considered so you can improve the outcomes of your future projects. If you are going to be doing versions on your app/product/service this will certainly help you to continually improve.

An investor will also want to know your background and experience. By putting together a project plan you will be able to demonstrate this and you have a realistic understanding and approach to getting your app/product/service to market. This will give an investor confidence to invest in you or not. If not, you can take their comments and feedback and incorporate it in to your project plan ready for your next investment pitch to someone else.

An investor will also want to know that you are credible, the people working with you are credible and that you have considered the costs of hiring credible people or suppliers. This will be reflected in the quality of the information in the project plan.

Your project plan will also discuss the project schedule and when you will be getting the app/product/service to market. The schedule will have deliverables and performance milestones so you can show the investor that you are results driven and that you thought out how you plan to achieve. This will also give the investor an opportunity to analyse what you are doing and when so they can see if there are any pitfalls you may need to mitigate.

All good investors want to do their due diligence when investing. A well thought out and structured project plan can give an investor something to think about, ask the right questions, show your professionalism and if you have competition with attracting an investor, be the extra tick in the box to get the funding.

EmineoHub supports you at getting your best work out to the world. If you would like a FREE 20 minute chat with Sarah to realise your business goals please click here.

 

Time Management for Entrepreneurs

Time is precious and it’s a valuable commodity to an entrepreneur or business owner. I’m pretty sure we have all wished for more hours in the day during the last week! And once the time is gone we never get it back.

If you are getting an app/product/service to market then you are running a project. When it comes to time management on a project, it is one of three primary drivers of a project. The other two drivers being cost management or quality management. Deadlines, constraints and performance are typically the key time issues on any project.

If time management is a primary project driver of your project it could be because of a deadline, constraint or performance. Some of the reasons for these are:

Deadlines

  • You committed to someone in delivering your app/product/service to market by a certain date
  • You need sales volume to repay a loan that funded the development of your app/product/service so it needs to be out to market by a particular date
  • Being innovative, competitive and relevant with you app/product/service to market before others beat you to it
  • Getting your app/product/service to market to take advantage of a particular time of the year
  • Someone is going to give you one hell of a hard time if you don’t deliver on time, and it usually has a contract involved

Constraints

  • If you are a solo entrepreneur or small business owner with few staff, then the constraints on your time or your staffs time can dictate the amount of time reasonably available to execute your project
  • The people you need to hire to get your app/product/service to market are only available at a particular time and you need to cater to their availability

Performance

  • Your team may not be too sure about what they need to do on your project and you will need to allow time for them to learn
  • If a project is new in your business or unfamiliar to people in your team, a project schedule outlining the tasks of the project, and what they are responsible for assists with individual and team performance
  • Realistic expectations of what needs to be done and when reduces individual and team stress

So why is time management on your project important? It can help you and your team with the following:

  • Achieving overall and incremental results on what needs to be done to get your app/product/service by its deadline. What are your project deliverables and when do you need to get to market?
  • Clarify to you what tasks need to be taken in order, ie step by step task management
  • Understand when to hire the resources you need to get your project done on time. At what point do you need to start hiring or engaging the right resources to meet your project deadline?
  • Understanding your time frames and communicating these time frames to people either internally or externally to your project
  • Identify any issues that may get you off track in meeting your deadlines
  • Estimate the performance of you, your team and others to meet your deadline so you can identify where things are slowing your project down and why
  • Estimate your project cashflow and when you need to pay to supplier
  • If you have obtained funding or have an investor, it can give them an understanding on ROI, based on what you plan to deliver and when. Together you can take corrective action to get to market on time if necessary

EmineoHub supports you at getting your best work out to the world. If you would like a FREE 20 minute chat with Sarah to realise your business goals please click here.

Create a quality product that people love

If you are an entrepreneur/small business owner getting an app/product/service to market then you are managing a project. Are you wanting to ensure that was you deliver is the best quality possible?

Quality management is one of those icky topics in project management as it is hard to quantify. It’s hard to quantify because quality means different things to different people along with the value people put on quality. In some cases the desired level of quality is a given, ie a bridge needs to meet the civil engineering standards of the country in where the bridge is located. In the fashion industry the desired level of quality isn’t consistent as it doesn’t have to meet any given standard. Just do a Facebook search to see the clothes people ordered online that didn’t meet up to the pictures from and the quality of the goods that the seller was happy too sell. Some epic fails there!

If you are getting an app/product/service to market and you are managing it as a project (if you want a heads up on what a project is click here), then quality management can be a key driver within your project. The other two key drivers are time management and cost management. One of these three key drivers are the primary driver of your project, ie one of the three is more important than the other two.

There are two ways quality management can be applied (or combined), the first is the desired level of quality in how a project is run and the second is that the quality of the app/product/service. The former is used on projects with significant investment and big companies executing the project have a quality framework in place to ensure they execute projects in a consistent manner, and build their reputation for delivering quality projects. The latter means the cost of your project could be high as you do product research and development (R&D), or your project timeline is lengthy as you do your product R&D.

For the purpose of this blog post we will focus on the quality of the actual app/product/service. Project quality management may layer in more work that as a solo entrepreneur or small business owner you don’t need.

So how do you determine what the quality is of your product? Hopefully you will have done market research to see if your app/product/service is viable in the marketplace and whether people want what you offer. From there hopefully you will have an idea of what it is people want to pay which will help you determine the quality of your product so you meet customers expectations, sustain your reputation as a quality business and still make a profit.

Based on your market research you will need to weigh up the following with getting your app/product/service to market:

  • Do I need to get out there before anyone else does or do I need to take advantage of a particular time of the year? If this is the case, then time is a key driver for your project and you may wish to get your app/product/service to market quickly with enough capability to get people talking. From there you can then improve the quality with new versions or service offerings (and you want people coming back for more!).
  • Is there a health and safety aspect of what you are offering that needs attention? If this is the case, either cost or time could be the key driver of your project as you ensure that your product is safe and quality is not compromised.
  • What are other people doing in a similar space to me? What can I do to make sure I am seen as a better quality offering than my competitors? Again this could be cost or time driven as you shine up your offering so you are automatically the ‘go-to’ product or person.

The quality of your app/product/service always needs to be a consideration as you get yourself to market. Quality will need to be taken in into consideration when you do your project management plan, when you develop your project timelines and your project costs The desired quality of your app/product/service also needs to be communicated clearly to your suppliers, contractors and staff so they are clear on your vision and why the quality of your app/product/service is important to you.

EmineoHub supports you at getting your best work out to the world. If you would like a FREE 20 minute chat with Sarah to realise your business goals please click here.