November 1, 2010
Since I posted the article last week about whether entrepreneurs can be trained, I’ve had a request to post what I think is essential to get a new enterprise off the ground. Early on I posted the 8 Pillars of a Profitable Business. It is relevant, but not the necessary the steps to starting an entrepreneurial enterprise. So here we go; 6 steps to lead you to success.
1. Get a job!! Go to work and get experience. If you want to be successful go to work in the industry. You will gain valuable insight and experience. Spend a year or two or three learning everything you can on someone else’s money. Learn what is being done right and wrong. What would you do differently to set you apart from the competition? Why? Do you still want to be in this industry? Do you still want to go into business? Consider this a paid internship or being paid to gain inside information.
2. Develop Your Team! While you are learning figure out what skills you will need. If you don’t have them, who does? Talk to people whose skills can complement yours. Ask yourself what it will take to be successful in your startup. You can cultivate these relationships initially without revealing your plans. As you get closer to “go” day, share your ideas and see if they will join you.
3. Create a Team of Advisors!! You don’t have experience yet so know where you can turn for advice. Who will your mentors be? Select from different areas like sales, accounting, legal or marketing. These folks become your official or unofficial Board of Advisors. You can also tap SCORE, retired business owners that will help you.
4. Business Plan!! Shouldn’t this be first, you ask? Nope. After going through steps 1-3, you have the knowledge, expert advisors and team to refine your ideas and create a solid plan. Your business plan will clarify how you will make your business successful. You can anticipate pitfalls, your market and the processes you will need. When it is completed, it will help you get the investment needed to launch.
5. Find Your Investors!! Time to raise capital. Overestimate what you think you need because if you don’t hit your projections, you will most certainly need more money. And, if you don’t hit your projections, it will be harder to raise more money. Try banks (if you have collateral), the Small Business Association, angel investors, family (be careful) or reach into your own pocket. Limit what you put in because it is likely you will need to forego an income for the first 6 months or a year before drawing from the business.
6. Launchtime!! Now you are ready to go. You have the foundation for a successful business. The rest is up to you, your team and your advisors. But, mostly success rests on your shoulders. Religiously track sales, revenue and expenses to be sure your business is tracking your business plan. Stay focused on where you have to be this week and this month. Don’t worry about long term, yet. Just focus on immediate goals and results. Nothing else matters.
There you have it, 6 Easy (??) Steps to Starting Your Own Business.
Happy Entrepreneuring!!
Filed under News, Start Up by on Nov 1st, 2010. Comment. 
November 4, 2010
Continuing on with the weekly Thursday series on Hiring the Best People, I will cover the offer this week. Other posts in this series are listed in the archives.
“Hard work never killed anyone, but why take a chance” Edgar Bergen
Once you have completed the interview process and have selected your primary candidate, you need to prepare your offer. In the interview, the candidate’s current and/or past compensation was disclosed so you have an idea of what you need to offer to hire. Depending on the position, the offer will include some or all of these items:
- Base – Whether exempt or non-exempt, the base should be about what they had been earning at their previous position if they are not currently employed and your position is comparable. If they are working, a rule of thumb would be 10-12% higher.
- Commission – If this is a sales position you most likely have a commission structure based on sales volume or revenue targets. Is it paid weekly, monthly or quarterly? Are there charge backs or clawbacks for non-paying customers? You will need to spell this all out.
- Bonus – If the position is bonus eligible, how is the bonus paid? Quarterly? Annually? Is it paid in cash or is it partially deferred? What targets need to be met to collect?
- Title – The title of the position should be comparable to others in your business that has similar experience and skills.
- Benefits – Be prepared to discuss benefits with your candidate, especially if it wasn’t covered during the interview process. The main benefits most people are interested in are paid time off, health plans and 401ks.
Once you have put it all together, it is time to make a verbal offer. Throughout the interview process, you should have uncovered what kind of package a candidate expects. When you deliver the verbal offer, you should have an overall expectation that over 95% of offers will be accepted either on first pass or with a little negotiating.
When you make the verbal offer you need to be very positive. Start out the conversation something like this, “I have some great news for you. We have selected you to fill X position. I have an attractive offer for you to join us.” Your candidate will normally respond positively at this point. If they don’t, say, “You don’t seem very excited by this.” You will uncover any hesitation they have about the position. You can uncover their hidden agenda before you make the offer.
“I always arrive late to the office but make up for it by always leaving early.” Charles Lamb
Lay out all the details of the offer. Once you are done, simply ask, “You and I need to discuss a start date. What would work for you?” What I have done here is assume that the candidate is accepting the offer. At this point, they will either ask a question, want to negotiate or come up with a start date that works for them.
Negotiations can be tricky. Some things you will not want to negotiate. For example, commissions and bonus structure need to be uniform among your staff. It would be 
highly unethical to pay someone a higher commission as a new person than your current staff.
Base salaries can be negotiated. If the candidate balks at the base, let the candidate know it is a very good offer and compares favorably in the market. Ask what they were expecting for an offer. If the number they provide is doable, you can just let them know you can pay it. Or, you can continue to negotiate. You may want the salary lower for any number of reasons, so you make a counter offer. This give and take can go on several times until a compromise is reached. However, if they are unreasonable, just thank them for their time, wish them luck in their job search and go to your second place candidate.
Once all negotiations are complete and you have settled on a start date, put it all in writing. This will protect both parties.
Happy Hiring!!
Filed under Hiring and Managing People by on Nov 4th, 2010. 2 Comments.
November 8, 2010
“You suck!! But, you suck less today than you did yesterday!” Some managers would consider this positive reinforcement. In fact many companies treat their employees in this manner. This thought process by management focuses on the weak skills of an employee rather than developing the strong skills.
It has been my experience that no staff member gets up in the morning, goes to work and decides to do a lousy job. They might end up doing a lousy job on any given day or in completing any individual assignment. They might not want to come into work on a particular day and they might not necessarily like their job. But they don’t think they are going to do a bad job.
Management tends to spotlight the negative side of job performance, preferring to manage by looking at numbers and pinpointing staff weaknesses. This provides the basis of the annual review process. The manager points out and acknowledges a few things the employee did well, but then turns to the negative. There really is no reason to point out the negative. The employee already knows where they have not met expectations and where they need to improve. They may just not know how to accomplish it.
When an employee’s performance is not good, the manager should look in the mirror and at the tools they provide to the employee to get the job done. If an employee is struggling, lack of training and coaching should be the first areas to analyze. Do they have proper support and access to the tools they need? Are you as a manager supportive of their efforts to get the job done? Or, are you so focused on the negative and your own insecurities, you forget to support your staff.
Don’t get me wrong. Everyone needs to be held accountable to goals. If goals are not met, your company can suffer. However, a pat on the back, and better yet, a mentor or manager who can demonstrate success in the job is a terrific alternative.
A few years back, I was asked to manage an office where I was told there were people who would most likely have to be replaced. I determined I would be the judge of 
that. What I found was that the people who”needed to be replaced” had not had great training or leadership. I worked with them every day to help them learn the skills they needed to be successful. I showed them how to do the work and how to be successful at it. By showing them how it could and should be done, they mimicked me. By so doing they learned and became successful and role models as well.
Had I taken the “normal” route I would have let them go and replaced them. Instead, I gained a sense of satisfaction of proving that my method of management works.
Happy Entrepreneuring!!
Filed under News by on Nov 8th, 2010. 1 Comment.
November 15, 2010
I have to admit I have a case of writer’s block today. My brain is frozen, the nerve endings drifted off to another world and my fingers are crossed and fused together. The canvas is blank before me. It’s a tough environment for a creative business person!
But, I needed to write and post something to get the “You Suck” picture off the top of my blog. Every time I logged on, I thought the comment was directed at me!!
Interestingly enough that post has generated the highest readership of any article I have published. I wonder what that means.
To get some ideas today, I logged on to one of my favorite small business sites, CNN.Money.com. There are several sites I frequent to check the pulse of small business and it is one of the better ones. I can always find controversy, stimulating questions, answers and comments. The business world has a lack of consensus around ideology and methodology. Maybe that’s why business stays interesting for me.
“The secret to winning is constant, consistent management.” ~ Tom Landry
But, this is not about me. It is about you and your small business. One of the topics being discussed is the need for a business coach. The question is posed by someone who is in “business”. He is working full time in his “former” trade and “waiting” for his “business to take off.”
First, I have an issue with anyone thinking they have a business if they are waiting for something to happen. Good, gosh, golly almighty, YOU GOT TO MAKE IT HAPPEN!! A coach can’t get you to do something! Coaches can show you how to do something, tell you what you need to do and help you plan. But, they won’t do it for you!!
OK, I’ll get off my soapbox now and answer the question! Do you need a business coach? There are times when you probably do, but you shouldn’t rely on them. They can bring fresh ideas to your business, help you get out of a rut or look at a business problem from a unique perspective.
Before you think of retaining a business coach, you need to define what issue you want them to help solve. Are you a start up and stuck with your marketing plan? Are you going to expand? If so, where? Do you need to raise capital? Do you have new competition? Are your sales flat? Do you have people issues? These are only general categories. You will need to dig deep to define the issue with specifics. All of these and many more are valid reasons to retain a business coach or consultant.
Depending on the size of your company and the complexity of the issue, your questions might be answered using the expertise of your Board of Advisors or your Board of Directors. Or, maybe your accountant or attorney has the answers and you are already paying them. If they don’t have the expertise, then go outside.
If you are a larger company, look to one of the larger consulting firms. They have the expertise and resources for larger projects. Their coaches or consultants generally don’t have real world business experience, but they do have a track record of success. Of course, they won’t tell you about any of the failures they have had. They are pricey, too.
“Make sure that team members know they are working with you, not for you.” ~ John Wooden
Smaller businesses or entrepreneurial start ups should look to a small firm or individual coach depending on the issue that needs resolution. Look for someone who’s been there, done that and has seen both success and failure. They can guide you in the correct direction.
Keep in mind that just as you don’t have all the right answers, a coach may not either. But, they have the methodology and are not emotionally involved with the decision making process. A solid business coach can help you uncover potential solutions, define pros and cons and help you select the best option for your company. A superb business coach will save you many hours of frustration, wrong decisions and opportunities lost. And, yep, they can save you a whole heck of a lot of money!
There, I think this turned out to be quite a good post despite all my limitations!
Happy Entrepreneuring!!
Filed under News by on Nov 15th, 2010. Comment.
November 22, 2010
I picked this book up to read while I was on vacation a few weeks ago. Published in 2006, it is an interesting look at the internet, internet marketing and sales from a few years back. Some parts of it are outdated.
Anderson chose an interesting subtitle for his book, “Why the Future of Business is Selling Less of More.” When the subtitle caught my eye, my first reaction was this guy has to be kidding. As a firm believer of maximizing profits, my mantra has been to seek the most profit from the fewest! After reading his book, he is very serious, but I am only convinced this will work for few businesses.
Business has long believed in the 80/20 rule. 80% of your business comes from 20% of your customers. In my experience, that is true. Also, if you are in retail or service, much of your business may come from a finite geographic area (i.e. restaurants, service industries, etc.) However, the popularity of the internet is turning this upside down, maybe!
Look at some of the biggest internet age companies like Amazon, Netflix, and Apple ITunes. What do they all have in common? An almost unlimited selection of products to sell to you. And, most of their products are virtual files to download, this means virtually no or very low cost to store product as it is all digital files stored on a server.
So, while a bricks and mortar store may carry 10,000 or so titles, Amazon can carry 100,000 titles for far less. Apple’s ITunes works the same way. They can carry a huge selection of digital songs for download. Many more than the traditional record stores and soon to be extinct CDs. It costs them next to nothing to store digital files so they only really pay royalties when they sell the song. Amazon and Apple are putting brick and mortar stores out of business. Traditional stores cannot compete.
Netflix has done the same with Blockbuster. They offer a larger selection and can send it to you via streaming video… instant gratification.
Long Tail Economics is based upon a business having an unlimited product to sell. It is still true that the most popular song will still be an ITunes best seller. But, it is also true that a long forgotten song will also have a sale once in a while. Thousands of these once in a while sales among long forgotten songs turn into almost pure profit for Apple. Creating bulk sales from items that create no inventory space helps them reap huge profits.
You Tube (it was Google Video when the book was written) has done the same thing with advertising. They take a lot of advertisers who pay for “click-thrus” and turn that into a mind boggling profit machine. The advertiser pays very little, but since the volume is so large, this makes “small” advertisers profitable. They would not be profitable in the traditional sense.
My blog reflects how this works. Without this blog, my message is limited to my network unless I promote. This blog expands my reach. In addition to readers from the US and Canada, I have readers from 29 other countries. Will I ever to business with them? Probably not, but there is one out there that is the diamond for me. I am not sure what they are looking for, but my reach is global now. To a certain extent I had this back in the late 90’s when people could download software from my website at literally no cost to me.
E-commerce is still a relatively small portion of our overall economy, but it is growing. It will continue to grow as we all find it easier to be connected to using it for our own needs. Anderson’s book puts it into perspective and shows us where we are headed.
This is a good read for anyone who wants to understand the marketplace as it exists. I recommend it as a quick read, but not the definitive look about where we are headed.
Happy reading!!
Filed under News by on Nov 22nd, 2010. Comment.
November 29, 2010
Now is a great time to start a business! With interest rates so low, money is cheap. There are plenty of skilled people available for hire or for contracting at attractive compensation packages. Suppliers are more likely to want to do business with you since their business has slowed down. Sure, your potential customers are probably spending less, but that’s OK. It always takes a bit of time to get up and running with a startup. Let’s look at a few of the reasons.
- Great Idea – You have come up with a solution to solve a problem. It is going to change the world. It will make everyone’s life easier, more efficient, and more comfortable. Alexander Graham Bell had that vision with the telephone and founded what eventually would be known as Ma Bell. Your idea might not be this far reaching or lead to a company as large. But, if it is an idea that can help change the way people do or look at something, you might have an opportunity. Al Gore did not exploit his invention of the internet (tongue in cheek), but many other companies owe their success to the internet. They found a means to move their product.
In the 90’s, my company, Swift River Communications used its’ website and the internet to facilitate getting software and software upgrades to my customers. I also used “cloud” technology to facilitate programming and customer interaction.
A great idea does not have to solve a new issue. A while back, my wife came up with the idea of a template for brownies that would allow anyone to cut “perfect” brownie squares in the pan. She made a prototype and it worked quite nicely. We never pursued it. Today, there is a similar product that sells on TV for “only $19.95! But, wait, you get more!” We lost an opportunity!!
- Out of Work – This is a great motivator even if it isn’t ideal. What skills do you have that you can sell in the marketplace? Are there companies that could pay you to work with them on a contract or project basis? Is there a business you could start part time while you are looking for a new position?
Maybe it is time to look at a franchise. Many have a low investment and will finance your costs for you. Be prepared to market and sell your services.
- Do Something You Love – Turn your hobby into a business even if it is part time. It doesn’t need to start big. If you have a love for something, you will spend time working with it and turn it into more. The key is you want your fledgling business to turn into a large enough enterprise to be able to support you! If it won’t generate enough money, keep it as a hobby!
- Create Wealth – A smart business owner can not only generate a living salary, but can also create wealth either for themselves, other shareholders or family. It is accepted that small businesses create wealth for their owners. It should also be noted that many businesses do not make it to the 5 year mark and cease to exist. Alternatively, you may decide to grow you business to the point where you either go public or sell out to a larger company.
- Do Something Better than Anyone Else – How many people have worked for a company and asked, “Why are they doing this? There are so many better ways to do this!” If you have worked in your industry for a number of years with a few different companies, you may have a better way of doing things. Go ahead and research your ideas to assess if they are really better. If they are, are there others that agree with you. If you have a better way, how easy would it be for someone already in the business to move to your business model, if you are successful? Will you be able to compete with them if they do? If you can answer yes, it may be time to start your own business!
There are many more reasons to start your own business. What is yours?
Happy Entrepreneuring!!
Filed under News, Start Up by on Nov 29th, 2010. Comment.
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