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More “Words of Wisdom” for Entrepreneurs
With much thanks to a Great Brit, Susi Ibelati at Bussroot for providing Yoda with great inspirational words for entrepreneurs the world over, from a world famous writer…
“Here's to the crazy ones. The misfits. The rebels. The trouble-makers. The round heads in the square holes. The ones who see things differently. They're not fond of rules, and they have no respect for the status-quo. You can quote them, disagree with them, glorify, or vilify them. But the only thing you can't do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do. "
Jack Kerouac
Put these words up on the wall in a prominent place. And read it every time someone tells “it can’t be done!”
Master Yoda knows these things. His job it is. May success be with you!
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Without Objectives, There Can Be No Real Strategies and without Real Strategies There Can Be No Long-Term Success!
Business Master QuickTip: Planning
I’m rarely contacted by a prospective client unless they are in trouble, real or perceived. Most often, their lament is that their growth has slowed or even stopped. And my first question usually is “what’s the basis for your growth – that is, why do you want/need to grow?’’ Now if that sounds like a strange question, think about it. Growth for growth’s sake is meaningless. You should grow for a reason or reasons – gain economies of scale to generate more profitability; or gain the capital to expand our product set, or increase our customer base to create a basis for selling a broader product set into that base, to name a few. Or something as simple as attracting a more experienced management team or even, as a business owner I can take more cash out of the business. There are no meaningless objectives. They are the targets the business aims to meet over time. And it is upon these objectives that the strategies for the business are based. They are what gives the business direction.
A few months back in one of my postings, I attempted to show startup businesses the value of having a business plan. Yet, once beyond the startup phase, few businesses or business owners have a set of objectives upon which they operate and upon which they build strategies, let alone an ongoing business plan. In fact, few, if any small business owners who’ve been in business for longer than a couple of years, do much planning or objective setting beyond, maybe, putting together an annual budget or forecast. And without specific objectives and strategies, the business, in good times, will wander. And in bad, will flounder.
So when the challenges of an economy like the one we’ve been in for the last two years occur, the business, in the absence of any firm targets or strategies to get there, begins operating in a “strategy du jour” mode, continually trying to come up with something that works for them, but has no real basis, except trying something new. In the process they waste precious resources and slow “growth” (the only vague objective they might have) even more. As with the old saying, “if you don’t know where you’re going, most any road will take you there.”
As the business owner, what do you do?
Well, do what I do when I first walk into a new client situation and before we go very far into the engagement. I ask them to take a step back and ask themselves the following questions:
• Where do I, specifically, want the business to be over the next 3 years, and why?
• Where do I, specifically, want to be personally, professionally and financially over the next 3 years and why?
I tell them to ask the first question of their key people, as well, especially those in a management role. Get a consensus. On the second question, which, of course, is closely tied to the first, I tell them to ask their significant other or even close friends to help them. Get a consensus here as well.
Just by addressing these simple questions and coming up with some basic, straightforward objectives, the business (and the business owner) now has a foundation and rationale for the strategies it creates and decisions it makes to implement those strategies. It could help better rationalize when, where and how to grow the business as well as potentially exit it. As external factors, like the economy or markets change, adjustments can be made, accordingly, that still keep the business heading in the right direction…for the right reasons.
If this all sounds so mundane and fundamental, it is. But, as Yoda has said many times in these postings, success in most any endeavor - business, sports or life, for that matter, is based on getting the fundamentals right. And they’re never very exciting, but they ALWAYS work!
Master Yoda knows these things. His job it is. May success be with you!
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“Be Careful What You Wish For…Success Always Comes at a Price!”
Business Master QuickTip: Business Growth
Ask any small business owner and they will almost always tell you the same thing. If they could just grow their business bigger and faster, everything would be terrific. Not so fast, there my young business warriors! Growth and success are not the same. And further, all success comes at a price.
First, let’s address the growth issue.
You always want to grow the business. But, growth for growth’s sake is sometimes detrimental to the business. I would guess 75% of all of the inquiries I get from prospective clients come from companies whose “growth is stalled.” Yet when I ask them where they think they should be and why, and further, why they’re not there, they simply have no answers.
You should rationalize why and how you want to grow. Playing the game just to achieve “the scoreboard” (kind of like professional athletes’ salaries) can create all sorts of problems for you. First, you want to grow in a measured way so you can effectively manage the growth (and have the capital to support that growth). And, second, you want to do it, profitably. Two fairly, self-evident points. Yet, many entrepreneurs find themselves either growing too fast and not having the infrastructure or the cash flow to support that growth, or they are growing with reduced profitability or both.
Growth requires a plan. I spent a previous blog post (December 15, 2009) talking about the importance of a plan, throughout the life of a business. The plan helps you rationalize growth. New products, new customers, new markets, etc. It forces you to determine the strategies and tactics you will use to achieve that growth, including what infrastructure changes you will need to achieve and support that growth and how you will fund it (remember my rule of thumb from previous blog posts – about 35% - 40% annual growth is about all you can expect out of cash flow, unless you have a very unique business model – they’re out there, but few and far between). And, of course, it should be flexible enough for you to modify it along the way.
And now comes the even harder part. Let’s say your growth plan works and you achieve the success you were after. It will come at a price!
The business will no longer be so easy to manage. You might have doubled staff, expanded your facility requirements and your payroll may have doubled or even tripled. The challenges of the early stage will seem like “child’s play” compared to the growth stage. You will lament about how easy it used to be when it was only you and your three earliest employees. And this is another crossroads for small business owners. Success means that some professional management needs to be added to their organization - folks who have “been there,” to assist you with further managing and growing the business. And your biggest test – to maintain and expand the culture that you have built so that the new employees embrace and thrive within it and this continues to translate to existing and new customers.
For the small business owner, growth and success are always challenges to reach. And, they come at price. But the price is, most often, well worth it. The price encompasses growth of a different nature – personal and professional, stretching and challenging the entrepreneur to new heights, bringing satisfaction and value way beyond just the balance sheet! It is the building and growing of a team to drive the business. You are no longer alone!
Master Yoda knows these things. His job it is. May success be with you!
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“Hiring the Right People…and Holding them Accountable Is Critical to Growing Your Business!”
Business MasterQuicktip - Employees
One of the most difficult transitions an entrepreneur faces is going from “the garage” to a real business, from “getting by” to generating real and sustaining revenue. And the most difficult part of that transition is hiring and managing employees who will help deliver that revenue and make future growth possible. The challenges of this major step often make the challenges of getting the business off the ground seem like a “walk in the park.”
Now, I’m assuming that you’ve already been through the outsource versus in-house decision, so we’ll proceed on the premise that you’ve decided to hire rather than contract. But once you decide you will be hiring, then you face series of critical questions – what positions to hire for, how to hire, who to hire and how to manage them? – that can often determine how well, or if you can grow your business.
Hire to replace you. Initially, hire for positions that will take a majority of either the labor-intensive work or required functions for which you are not strong (e.g. marketing, where your strength might be development) from your shoulders.
Define the position. As best you can, define what you want from the position, including type of background or experience you’d like to have, responsibilities the job entails and proposed compensation you’re willing to pay. Use your advisors and close colleagues to help you create this. As to where to find the folks you’re looking for, before you go to a resume mill (e.g., Monster, Careerbuilder, Ladders, etc.), use your network. They know you best and will often recommend people to you who they think are a good match. If that fails (and even if it doesn’t) post the job on the various sites. You can’t have enough good candidates to screen.
Hire the right people. When interviewing, look for folks that fit within the culture you’ve developed or are developing. Tony Hsieh of the famed Zappos had a good rule of thumb for their early (and even later) hires – “people we’d like to hang out with.” Obviously, they have to have the skill sets required for the job, but hiring people who you would like to work with can’t hurt. (As for interviewing skills that few of us have, I’d recommend you take a look at Carol Quinn’s website – www.hireauthority.com where she has a short course that you can secure to help you find the best potential performers for a job.)
Put people in a position where they can succeed. To do that they need to have the right background and skills for the job. Then, they need to be properly trained for the position. If you know exactly how the job should be performed (since you were probably the one who was doing it) don’t just show them, train them, through repetition and feedback. Specifically define the responsibilities of their job and expectations for their performance. Then give them the authority to carry out those responsibilities – i.e., give them the ability to make fundamental decisions. And critical to this last point, allow them to make mistakes…we all do… without the threat of firing. Having them learn from those mistakes (so long as they don’t keep making the same ones over and over – then you have problem) is a way, both, for, them to grow personally and professionally, and for the position to continually be better defined and expanded, as necessary.
Hold them accountable. Whoever you hire, hold them accountable for the responsibilities and expectations you’ve defined. Since they are in control (they have the authority to carry out those responsibilities), encourage their “ownership” of their job. Once they establish ownership, accountability is a “no-brainer.” And accountability is the key to not only getting the job done, but getting it done well.
Hiring the right folks for the right positions, then having them take ownership of those positions and holding them accountable for the responsibilities and expectations associated can become the foundation for success and future growth of a small business.
Master Yoda knows these things. His job it is. May success be with you!
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“Do You Lead with Price…Leaving Money on the Table and Losing Potential Customers in the Process?”
Business Master Quicktip: Pricing
I can’t begin to count the number of small business owners that I have spoken to and advised, whose nearly first comment, as they describe their business, is how low-priced their product or service is. Now being the low-priced provider is one thing, but making price your leading advantage is again another… and not a good one! How you price and how you use price are critically important to a small business, especially when you are competing against much larger competitors.
Knowing the cost of delivering your product or service (not just cost of goods sold, but also what it costs to sell and support it) is absolutely critical to establishing a price at which you can make money. Most often a small company can price itself under most or all of its larger competitors, carrying less overhead, having a lower cost base, etc., but it needs to be sure it understands its cost vs. its price and is generating margins it can live and grow with. And that needs to be reviewed periodically. I had a client that was so proud that they had not raised their prices in more than ten years. When I asked them if they had given out any raises during that time or if the cost of materials and services to deliver their product had increased they looked at me like “a deer in the headlights.” Oops… never thought of that! No good having the lowest price if you aren’t making money at it.
Too many small companies make the mistake of figuring that leading with price will win the day, often lowering an already low price to ensure success. Shaving margins, leaving money on the table and maybe, ultimately, still not winning the business. Like the old saying, “if your only tool is a hammer, every problem is a nail.” They focus so completely on price, and a lower price at that, that it raises questions in the minds of the prospective customer if they are getting lower price because your product or service is of less quality or depth.
Price is only one of the key elements necessary for successfully selling a product or service. Obviously, a given is that no matter how low-priced your product is, if it doesn’t meet market and potential customer requirements, and isn’t of high quality, you won’t sell very much. But beyond the obvious, is how you deliver and support that product or service. This is often where the small business can really show and provide its difference. The care with which you and your employees develop and deliver your product or service and the extent to which you support and service it, are as critical, if not more so, than pricing. Plus, the small company can and will be more customer-attentive, providing service levels that the larger company competitors often cannot compete with. Tie this to your price. You’re not just lower priced, but more cost-effective for your customer. In short, they get more, for less!
Don’t lead with price. Let price speak for itself. After you’ve convinced them that your product or service is a high quality one that more than meets their requirements, show them (especially through current customer references) that the service and support level that they will get with it will surpass their wildest expectations. Then your price makes a difference!
Master Yoda knows these things. His job it is. May success be with you!
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