Are Mistakes Good?
"Experience is a dear teacher, but only a fool will learn from no other." Benjamin Franklin Business owners learn a lot from their experiences. As a friend says, "Experience is what you get when you don't get what you want." In many companies, you can trace the history of their employee issues through their handbooks. The dress code says that Fridays are casual days. Then it goes on to say that casual dress does not include ripped jeans, low-cut blouses, flip-flops, shorts, sleeveless t-shirts...more
Turning Plans into Realities
We've discussed some simple steps to getting started on your annual business plan. (see previous post: The Seven Questions of Simple Planning). Once you have the questions answered, you can begin moving towards the actions that transform your plans into realities. The first two of the Seven Questions ask what your revenue goal is, and what needs to happen for it to be reached.Let's say the target is a 10% increase, and the "need to happen" is expanding to a new geographic territory. For most business...more
The Seven Questions of Simple Planning
The Creation In the beginning was the plan And it sprang from the assumptions And the assumptions were without form So the plan was void of substance And darkness fell upon the face of the workers And the workers spake unto their supervisors, saying “This is a crock of shit, and it stinks!” So the supervisors went to their managers, and told them “This is a pail of dung, and none can abide the odor.” So the managers went to the division heads, and said “This...more
Three Circles of Family Business
What is a "Family Business?" A large percentage of small companies have some family involved. For most, it is simple a case of providing employment to family members. If the founder of the company is also the principle revenue generator, it may be a spouse (most often the wife) who keeps the books and runs the office. Employment of children who can't (or won't) find another job is common, and more so in the current economy. In most instances it is just a matter of income transfer with some value...more
Never, never, never, never give up.
I kind of see everything as connected. Last week we hosted Larry Linne, author of "Make the Noise Go Away," a book about the roles of first-in-commands and second-in-commands. I will be writing about a couple of things Larry said in his presentation in the next few weeks. One Larry's key points was about the tendency of a first-in-command to give up. Not giving up on the business, or on working hard, but giving up on change. We get so much push back from those we employ. "Not another change!...more
Can Startup America revive US small business?
A couple of weeks ago in my opinion blog "Awake at 3 o'clock" I pointed out that politicians pronouncing small business owners as the saviors of the economy is a misplaced strategy. ("SMB isn't the cure for the economy") Most SMB owners are ageing Boomers, disinclined to take big risks as they seek greater retirement security. Now the government is rolling out a new program "Startup America" to foster the development of innovative entrepreneurs. The program will support early-stage companies by...more
Leadership vs. Management
What is the difference between a leader and a manager? We talk a lot about managing employees, but no amount of management will direct employees who don't know what they are supposed to be doing. Simon Sinek on TED.com talks about the golden circles of leadership. What we do is easy. How we do it is more difficult. Why we do it is the most important thing we can verbalize as leaders, and the one that is neglected most often. In the Star Trek television shows and films, Mr. Spock is indisputably...more
Performance Reviews- Best Practices
Performance reviews are a pain. In my nearly 40 years in business they have always generated the same complaints. Managers hate to do them. As a consequence, they are frequently over due. They provide the employee with little information on how to improve. They are written to match decisions that were already made, like a promotion, a big raise, or a small one. I was auditing one of our business owner peer groups (The Alternative Board®) when one of the members presented his issue. His family...more
Profits and Savings aren't the Same Thing
How much profit will you make this year? If you are like many business owners, the answer is "We'll see." They consider profit to be the amount left over after all of the business expenses are paid. That's an accounting definition, not a business definition. The accounting equation is R-E=P. While valid from an arithmetic perspective, that approach causes may businesses to look at profit as an incidental effect of cost control. Intuitively, calculating profits as a remainder seems to make sense...more
The Third Factor- A Third Eye?
For several years my writing and speaking has focused on two factors that are indispensable for entrepreneurs; creativity and tenacity. Creativity is the drive that not only makes entrepreneurs see opportunities, but also makes them consider every problem or challenge as solvable. It is the part of the business that entrepreneurs enjoy so much. That's why so many of them are poor managers. Tenacity is the refusal to accept failure. Any successful entrepreneur has been told at some time that it...more
Black Swans and Small Business Plans
The term "Black Swan" has become immensely popular on Wall Street and in the media to designate a rare occurrence. Google "Black Swan Japan earthquake" (which is popular enough that Google will fill in the last 11 or 12 letters for you) and you'll find hundreds of articles comparing that seismic event and the rare bird. The term "Black Swan" comes from Nassim N. Taleb's bestseller of the same name. Like most ideas popularized in the media, they got it wrong. Taleb's point is that Black Swan events...more
Service Needs to be a Defensible Territory
The UN air strikes against Gaddafi's forces raise an obvious question. Why Libya? Although we believe Qaddafi is a really bad guy, there are plenty of other players in North Africa and the Middle East that have to rank somewhere near him on the Bad Guy Scale. Why could the United Nations get support (or at least abstentions from China, Russia and Brazil,) against Libya, when other despots are also killing their own protesters and defying international opinion?I think the answer has a lot to...more
Lifestyle vs. Legacy - Part 1
There are three types of business owners. The first, which encompasses the vast majority of small businesses, is the one who simply wants to make a living from running his or her business. They dream of the day that they can take vacations without worrying about the impact on their companies. Sometimes the biggest goal is to go home at five, or just to sleep through the night without worrying about the next day (thus the name of this blog).But if you are tenacious, if you execute on your plans and...more
It IS all about you.
Why did you want to own a business? If you believe the textbook definition of an entrepreneur, it was to leverage capital and other resources to create wealth. That probably applies to about 5% of us.Or, you might have started it to provide gainful employment in your community. That applies to even fewer business owners.The reason, at least for most of us, is that you wanted to be more successful, provide a better living for your family, and have greater control over your future. In other words...more
Hunters and Farmers
Several times monthly, I interview entrepreneurs who are considering membership in The Alternative Board® as a means to improve their business. Part of the process is asking each one what his or her core skills are - the things that made them successful.Many, and perhaps a majority, start the answer by lowering their voice a bit. "Well first of all," they say, "you have to understand that I think I'm a little bit ADD."No kidding? You started a company because the job you had wasn't moving...more
Jerry West on dealing with tough times
Sorry I've been away. Actually, I wrote this to post last week and forgot to publish it.Lately I've been telling business owners a story from an interview I did with Jerry West during his tenure as GM for the Los Angeles Lakers.Jerry said that he had been through good times and bad times. The good times were great; championship rings, parades, media. The bad times were tough. His wife hated to go shopping because strangers stopped her in the supermarket aisles to tell her what an idiot her husband...more
Serendipity and Strategy
This is kind of an unusual posting. It is more philosophical than most, and more personal. This blog tends to practical comment and advice. While I stray a bit with this, it has a business objective.I have a coach. She is an accomplished professional in her field, whereas I'm more of a practical businessman who happens to coach business owners. She reads coaching books, and studies coaching as a discipline. She speaks, writes, and belongs to coaching organizations.She told me a few weeks ago that...more
The Rhythm of the Sales Process
With so many of our clients trying to boost sales in a tough environment, we've been having lots of discussions about sales incentives. It's surprising to me how many business owners create incentives that don't fit their business, simply because a concept like "straight commission" or "straight salary" appeals to them.I've worked on sales incentives for years, and find that if they don't fit your business they are inevitably doomed to failure. By "fitting" the business I mean that the rhythm of...more
Another Swimming Metaphor
"Only when the tide goes out, do you discover who has been swimming naked." This classic bromide by Warren Buffett has come to mind several times in the last few weeks. As the economy hits dead low tide (coming back according to Bernanke, stuck there according to Buffett) we are seeing some sales departments finally, finally just run out of momentum.These are folks who were making a living by answering the phone. They are in relatively small companies that serve really big customers, so the phone...more
"Only Dead Fish Go with the Flow."
That quote, by Minnesota Congresswoman Michele Bachmann, is one of the best I've heard in a while. While she wasn't commenting on entrepreneurs at the time, she hit the nail on the head regarding small business success.There are times when you have to go with the flow. Small businesses don't have the resources to battle upstream all the time. Like Salmon, you jump an obstacle, then rest. You push for a sales goal, then rest. You make an uncomfortable termination or focus on a critical hire, then...more
