Bad weather decisions

We in Oklahoma got clobbered this Christmas eve with snow. We are not used to having 8"-12" of snow ever, let alone on Christmas. The weather threw everyone's plans into disarray and many were caught in snow drifts trying to get home.

I say this not to minimize the difficulty we all had, but to make the point that as a business owner you need to inform your (prospective) customers about what is going on.

If you were forced to close early, the least you should do is to put a sign in the door, then change the answering machine for the store phone - "Due to the weather we are closed until Friday". You should also take a couple minutes to do the same for your website main page. Both of these could be done from your own home, without requiring you to drive into the store. (You do have your phone answering machine codes and website logins at hand, don't you?)

My wife and I braved the roads on Christmas day to go see a movie. When we arrived at the theater, it was closed. We had actually called the theater beforehand, and it listed the movie times and made no mention it was closed. If my wife and I had been the only ones caught, you might have argued we were just crazy to go. But during our time there at the theater, at least 10 other cars pulled in the lot, each driving up to the door trying to go to the movies. It is not outside the realm of possibility that someone might try to go see a movie on Christmas.

Don't compound the bad weather by not considering your customers!

You'll know when to Start your business

In a great article on 7 Things I learned from a Tech Incubator, the author and founder of a startup remarks, "Lesson 7: You’ll know when to start your startup when not starting it is no longer an option."

This sounds a bit strange, but he notes this was one of the best pieces of advice he received.

If you can do the things you want within the context of an existing business - why go through the heartache of running your own? But when you find that not doing it is no option, that is when you start.

By example, someone who is a musician is driven to play music. Not playing is not an option. That is a big difference than me plunking around occasionally in the front room on a guitar and a musician (talent notwithstanding!).

Now there are different motivations for why you feel you must start your business.

• Vivik Wadhu from Duke University says, "...the greatest motivation is that you are tired of working for other people."
• Maybe there is some technical problem you are consumed with, and there is no way you won't give up on it.

Whatever your motivation, if it is just "well, I will see what happens," you are liable not to be willing to put in the extra effort needed to make it happen.

Talking Around Email

In their latest posting on the 37 Signals blog, Matt remarks,
"But we kept thinking that just one more email would clear up the confusion. It was a reminder of how easy it is to waste time talking around a problem when just getting real with it can get you to consensus in a fraction of the time."

How many times do we use sending an email as a means of contacting someone? Wait until 5:05pm and watch all the email come in...with messages like "Tried to call and could not reach you - will call tomorrow" or "where are we on the McGillicuty project?"

Remember: an email is not "talking to someone". Pick up the phone or better yet, go solve the problem rather than sending another email. Another email won't clear up the confusion.

PS: sorry about the lack of posts the last week or two - I got a wicked cold last week and basically missed the entire week. Back to work today! Thank goodness for antibiotics that still work.

Good business ideas

"Is this a good business idea?"

It is a question we are often asked after discussing a business with a prospect.

The answer is often difficult, not because we want to avoid disappointing the prospect, but that we don't know whether it would work or not.

If a town does not have a certain type of business, does that mean there is not a big enough market for that business (and so it would not stay in business) or does it mean no one has tried it?

I would hazard there are people right now running successful businesses, who if they had brought me that very business idea, I would have recommended against it.

So if you are looking for me to peer into the future, I cannot.

What I can say is that the questions I ask, the issues I recommend you research and the items you have to discover on your own, will be ones whose answer will make your business more successful, and you more capable.

Many people try to learn a foreign language or a musical instrument; most fail. But if you ask me whether it is a good idea to try to do so - I can only give you insight into what it would be like, not what it will be for you.

If over the holiday(s), you get inspired or come up with an idea for a business, come on by and let's discuss it. You might discover that it is a good idea and one you want to pursue or that on investigation, it is not one you want to pursue.

Either way, have a nice Thanksgiving!

Retailing Management, Spring 2010

I will be teaching at Oklahoma State University this Spring semester, Marketing 3613 Retailing Management. We will be discussing many different topics relevant to small business management and ownership. If you are a student at OSU, I recommend signing up. And if you are interested in auditing the class (taking it for no credit), let me know!

Car Wash

I was in Oklahoma City last week for a meeting, and in the underground parking garage I noticed two stalls had been converted to car wash stations. If you wanted you could pay to have them wash your car while you had it sitting in the garage and you were in the building.

Their stations looked to have a hose hooked into the fire sprinkler water system (the floors already have drainage.)

I have seen car washes and oil change at airport parking (Fine in Tulsa does this), but I had never seen it in a nondescript parking garage in downtown.

Shows there is always a way for a creative business idea to get started.

Getting Your Work Done

In the book, The Five Disfunctions of a Team, p148, the conversation turns on a VP who is always helping out however he can to the group, but in the process is not getting his responsibilities done.

The result is the president of the company saying, "I want all of you challenging each other about what you are doing, how you are spending your time and whether you are making enough progress."

As an entrepreneur, I know you have a bias for action: "get it done!" is your mantra. But it is important to be sure you are doing what you need to do, not what needs to be done.

This can be hard for someone who comes up from the ranks; a baker often finds it easier to bake than to manage the bakery.

Still, start your week or day or even hour(!) by asking yourself what is the most important thing to do, not the most urgent. Be sure your employees also recognize the difference. This will make you more productive and also allow you to release some of those duties you dread, but feel you have to do (or no one else will).

Keeping up with Trouble

Two weeks ago, my wife broke her arm falling on a slick floor. Since then she has had to be operated on to get the bone set, have a cast put on, and is handling all the other difficulties involved with a broken arm on her dominant hand.

Thankfully she is healing and I have been able to accommodate the changes in my schedule without too much trouble.

Most small business owners do not have that luxury of rearranging their schedule. Someone in the family gets sick, or has an accident or other issues - all of these cause the owner to be pulled away from the business. Yet, being away from it can cause other problems to creep up.

You can't avoid the possibility of someone being sick; what you can do is have a plan for your being out. Are there certain duties you do regularly that you could train another person to do (in your absence)? For example, scheduling employees, or ordering food items. Do the employees know what they need to be doing while you are out? Who makes decisions when you are unavailable?

Now is also the time to have your key tracking financial numbers worked out - so if you are distracted or not able to read through all your normal work activities, you can still keep up with the business. Whether table turn for a restaurant, sales/employee hours or whatever ratio is relevant to your business, now is the time to work that out.

Having processes in order will not avoid all the difficulties, but it will mean that when you are out, there is a lessor chance of major problems arising.

Starting the day off right

Every weekday morning, about 7:50am, in office buildings throughout Japan, managers and their teams get together for a brief overview of the day. When I lived in Japan, this meeting was announced by a bell, and ended about 10 minutes later with everyone saying they will work hard together that day.

The meeting gives the team a chance to fill everyone in on who is going where, doing what, and what is important to be handled for the day.

The meeting participants speak one at a time round-robin, starting with the most junior employee and working up to the manager.

I liked this type of a meeting, and recommend it to small businesses. Once you have more than one or two employees, it is amazing how disconnected the owner gets from what his employees are doing each day. Many times I have spoken to exasperated owners remarking they can't understand why their employees are not doing what they are supposed to!

A daily quick recap meeting allows the entire team to know what's going on:

• When the phone rings for Sam and he is gone - everyone knows where he is - and why he is out of the office,
  
• By getting a sense of what his team is doing for the day, the manager understands where to better place staff or arrange schedules,
• Each team member is able to show that his or her work is important,
• There is a sense in which saying what you will get done out loud, motivates you to get it done.

Try adding a short - very short - daily recap meeting and see if it helps overall communication in your company. You may be surprised at what your employees are doing each day!

Hiring the right person

To continue with a theme from my last posting, finding the right employees for your organization will be critical as you grow.

Know who you want and need - but also be knowledgeable about what the market will demand and adjust accordingly.

Here is an example. A technology incubator in a mid sized southern city is looking for a CEO to head the incubator. Their press release says the

"candidate should have 10 or more years of professional management and leadership experience, preferably in the incubation industry, strong fund raising skills and financial management expertise, a successful entrepreneurial experience and demonstrated success in program development and implementation, marketing and administration."

The first thing that should strike you is "wow, this would be a pretty heavy hitter - successful entrepreneur, 10 years management, strong fund raising with demonstrated success". Second, think of how many organizations are looking for this type of person - pretty in demand person. Third, what would it take to get this person to come on board?

Then you get to their next sentence,

"A new CEO will get a mid-five figure salary, benefits, and incentives for fund raising"

Huh? Mid-five figures is what, $50,000? A successful manager, 10 years experience in any sort of technology company - entrepreneurial, take charge person, looking for a new challenge. Your probably making $100k, plus bonuses right now.

Why would you take this job?

Anyone in the incubation industry with 10 years of management experience is going to be making more than that already.

I am sure they are limited in what they can pay, but why ask for all the above if that is all they can offer? They'd be better off saying:

"Ready for a second career working with entrepreneurs? We are looking for a middle aged manager with a technology business background who wants to work with new businesses. We can't pay what you'd made at ABC, co. before they laid you off, but it is a fun environment. Come talk to us!"

At least that might get you someone close to what you are looking for.

If you are a small business, maybe you cannot afford to pay for the talent you need. But you have to give in on something to make it worthwhile to get the right person. You have to be creative: you are not IBM!

Stages of Group Development

As you run begin to develop a team of employees around you it is useful to know some basic information about groups and group formation.

Bruce Tuckman developed a 4-stage model for group development back in 1965, and it has been a major component of the study of group dynamics since.

He labels the stages:

1. Forming: the group comes together and gets to initially know one another and form as a group
2. Storming: a chaotic vying for leadership and trialing of group processes
3. Norming: agreement is reached on how the group will operate
4. Performing: the group practices its craft and becomes effective in meeting the objectives

The first consequence of this is to note that even if you are 'the boss' there will still be a vying for leadership and contention about the group processes. We have all been in situations where the group seems to operate in ways opposite to management expectations!

The second consequence is that how you generate the culture of your organization is going to have a large effect on the way it operates. Culture is the norms, values and methods of interaction between the group. As the employees come together, they will take on the character of the organization.

Once settled in, a culture can be very difficult to change. In fact, short of removing all the employees,I would argue it cannot change - and that businesses that seem to 'run down' or fail after a number of years are suffering from some form of cultural sickness.

By being aware of the process of group formation, you can try to influence the way the group comes together. And of course, since you will likely be the person hiring new employees, it is important to consider how they are going to fit into the group, and how the group will react to those changes. Don't be surprised if the addition of a new employee causes the entire organization to reach in unexpected ways.

Incubator Syndrome

I was reading a blog entry on incubators, and the author advised prospective clients to watch out for incubator syndrome: "in which the entrepreneur allows their initiative and judgment to be replaced by those of the consultants in the center." I had never heard this term used, but a quick Google search showed others have referred to the same.

If you are starting a business, and the incubator manager says he has started multiple businesses, and met with many companies, and here is what you need to do, you might well decide to follow me, rather than your vision.

And that would be bad.

But is it a 'syndrome'? I am no more easily able to manipulate your initiative than any other person you might depend on for advice.

It is true that I have to be careful to acknowledge that what advice I provide is just that - advice. My confidence of how you need to sell or market your product, while based in experience, is not the 'truth'.

What is more important than worrying about whether you will fall susceptible to the incubator manager's beguiling, is whether you really are making good decisions based on the advice you receive, and what your action will be. If you refuse to listen to advice and want to go it your own way, then why come into the incubator in the first place? Get clear in your mind what you want to do to be successful and then pursue that.

Most incubator managers are there to help you, not manipulate you into their vision of your company.

Of course, when I heard the use of the word 'syndrome' - i was reminded of the SNL skit "The Pepsi Syndrome"! I assure you, incubators are not like the nuclear power plants of the skit.

Fighting Adversity with Indifference

Chris Guillebeau in his latest post discusses what happens when he misses a goal he's set for himself:

1. Acknowledge disappointment: don't hide it away.
2. Revert to backups if possible: accept a secondary or partial goal.
3. Compare to other goals at the end of the year (and reevaluate for next year): if you did not achieve the goal, maybe others got in the way, or were more important.

Let's apply his response to our situation. As entrepreneurs, we are confronted with (the possibility) of failure every day. A sale could fall through, a product has a tough bug or problem with it, an employee - or yourself - can fail to get something done that needed to be done.

1. Acknowledge disappointment: let others know it happened - the telling gets it outside of ourselves
2. Revert to backups if possible: accept a secondary or partial goal - you did have an alternate or backup to whatever the goal was, didn't you?
3. Compare to other goals at the end of the year (and reevaluate for next year): if many things went right, and a couple went wrong, take it as a win and move on. Or decide on whether the goal is a valid one or not.

Try to follow the maxim: "Fight Adversity with Indifference". Act as though the setback has been expected, and that you have a response to it. It is not that you don't care about the missed goal - but that you are focused on the consequence, not the event itself.

An advantage of following the maxim also is that when you are setting the goal, you set the expectation as to what you will do if it is not handled. "We are going to sell product X to Company Z in 3 months" - well, what are you going to do if that does not happen?

Too often an entrepreneur says "well, we were supposed to get the sale last month, but didn't so now we don't know how to recover from it".

Instead, set goals in a matrix of what the different outcomes may be, and the resulting responses to them. It will keep you ready for when things do go wrong, and responsive when an alternative presents itself.

Evaluating your Staff

It is time for our bi-yearly performance reviews here at the tech center. Most people dread the entire process of performance reviews, and some entrepreneurs have been motivated to start their own business after receiving a review that seemed to ignore all they did the last year!

Once you start your own business and have your own staff, it is easy to decide that your company is not going to do the same tired performance review. But all to0 soon, it seems as though the HR blanket falls over the company and you are filling in forms that say "Performs duties as necessary" with a five point bubble scale.

It is understandable to want to avoid the above, and you are so busy doing other things - how are you going to review your employees? Nevertheless, this does not absolve your responsibility to evaluate the employees you have working for you!

One way I like to get my hands around an issue is to create a framework across two parameters and use that to categorize. You could consider your employees according to there Usefulness/Critical skills for the organization, and whether they are likeable/good to have around. (You may have other more important criteria).

Setting these two parameters into a quadrant layout gives us the following:This gives us four categories of employees. Then work out what you want to do for each category:

• An employee you want to keep, but is not doing a critical or very important role, you need to get them into something more useful (whether by training, promoting).
• The difficult employee performing a critical task needs to be handled carefully until you have the chance to brings someone else into that role or at the very least, be a backup. Then you can try to change whatever it is that makes them difficult.
• The want to keep/critical employee may not need any more than just taking care of them and being sure that what they need to do their job is gotten them.
• The difficult/non-critical employee needs to be moved out; you don't have the time to deal with that type of employee.

Generally, you want to move employees up and to the right, that is, someone you want to keep and someone doing something important. Those in the 'want to keep' and 'less critical' roles can serve as your 'bench' for future moves into important spots. Those in the difficult and critical you might have to keep because of skills or particular need, but you are always looking for someone who can better do the work.

Again, each of these are merely types, not particular people. By using a typology though, you can look over your 5, 10 or even 20 employees and quickly sort them into categories, then come up with reasonable responses for each.

If you have an employee you can't categorize, put him or her on your list to watch a bit more closely.

The reason I like this typology is that most employees already think of the other employees as 'nice or not' and 'good worker or not' - so it gives you a rough method to start thinking proactively about your employees and where they are going in their careers at your company. Which is something you as the owner should have at hand anyway!

Rally!

Labor Day represents the end of Summer for most of us. Even though the local schools have been going since mid-August, and Fall seems a way off, Labor Day weekend ends Summer.

But in ending Summer, it also kicks off the next few months until the holidays start up again with Thanksgiving. Now is a great time to rally the team, get them re focused on business priorities and even enthused about what is coming.

Take a bit of time over the next few weeks to reconnect with each employee or report one-on-one. Does she know what is the most important thing that has to be done? Does he know what goals you have set for the next quarter?

Likewise, take a bit of time and be sure you know what your goals are for the next quarter - and what is the most important thing you need to get done.

Put away the beach clothes and let's get back to work!

New CBD Informational video

We've created a new video describing the Center for Business Development and what we offer. '

If you have a chance to view it, please give some feedback. The intent is to help in a small way to give prospective tenants to see what we can offer without necessitating them coming into the building.

Managing and Leading

In the August 17th Business Week, the back page article by Henry Mintzberg argues we are 'overled and undermanaged'. [As an aside, the article in the magazine was called "We're Overled and Undermanaged" but online the same article is called "The Best Leadership is Good Management" hmmm!]

He writes that it became fashionable a few years ago to say that Leaders "do the right thing" while managers "do things right" - and that crucially we've been told that Leaders need to be detached from what is going on day-to-day in managing. This detachment resulted in much of our financial crisis, i.e., the heads of banks and investments did not know what was going on, being so caught up in 'leading', and the problems rolled into a giant mess.

It is true that you as the head of a group or business have to have some detachment from the immediate issues at hand. Being too caught up in day to day is sometimes characterized as 'fire fighting' where you are solving immediate problems all day and no time devoted to larger issues.

This detachment (or lack thereof) is not a characteristic of Leadership, rather the defining characteristic of Leadership is to be able to detach from the particular when necessary to understand what is happening over the entire organization. Leading is not standing in front of a PowerPoint with the 5 goals for the year (strategy) or even setting the tactics of a marketing campaign. If anything, leading is creating an environment wherein the organization and its members - employees - can be successful. And a necessary condition of success is good management.

This reminds me that for many years, the most influential movie on managers about leading was the WWII movie, 12 O'clock High, released in 1949. Gregory Peck's character was not detached from the management of his bomber squadron, just the opposite: he flew with them. You might take the opportunity to watch it if you've never seen it!

Finally, I might comment that the back page of Business Week is where Jack Welch's article is placed (on vacation the week of this piece). Jack is often considered one of the best leaders of this generation who oversaw huge and drastic firings of employees, especially at the outset of his being head of GE. How might we view his leadership (or management) in light of the above?

'Flush' with ideas

Last month there was an interesting article about Toto, the Japanese bathroom and kitchen ceramics company in the Economist. Toto is trying to get their fancy lavatories into houses in America - with heated seats, music and 'hiding odor' features!

At the end of the article, it is remarked on Toto's 800 engineers working on new toilets, but that even still "they will have a hard time getting around the biggest obstacle to the use of its fancier lavatories in the West: the lack of electrical sockets in bathrooms."

Toto's President, Kunio Harimoto says that it took Japan 20 years to get this change added to homes, but that they are ready to wait until it develops in America.

What struck me about the article was how often the business ideas (or plans) I am presented depend on 'getting electrical sockets in bathrooms' - that is, some large structural change that a single new startup will be hard pressed to enable.

A startup by its nature has a limited life; it either catches a segment or customer base quickly or it starves. Structural changes take time. If your business idea depends on a major change happening, you will need even more capital and more time - which increases risk. The entrepreneur who started Segway already had made millions before Segway, and it still has not happened yet.

Coping with Millennials

gen y,millennial,young workers,entrepreneurs

By now you are probably familiar with the term "Millennials" or "Gen Y" - these are young people from about 8-30 years old. If you are not, here are some links:

• Millennials: Wikipedia
• Amazon.com Books on topic "Gen Y"

As I read about this upcoming generation, I am reminded of a comment made by a boss I once had. He said that the new employee Sam, "wanted to start at the top and work his way up".

Part of me is rather unsympathetic to this new generation and thier expectations. But as a business owner, we have to come to grips with them. I could of course hire only people over the age of 30 (inverting the old 60's adage to 'never trust anyone over 30'), and I could sell my products only to older people.

For those who don't want to pursue the above course w e should ask ourselves: what do I need/want from that group of people and how can I get it?

From the employee side, I need to hire the best people I can find. And many of the younger generation have valuable skills that can be useful. First, remember that even within the generation there are outliers - there are young people who won't quit at the first chance to go tubing in Chile. Second, don't forget Joel Spolsky's adage to hire "smart people who get things done". Even if the person in front of you has very different expectations, if you two can negotiate a win-win situation, it could be very productive.

Yet, these different expectations of the younger generation should cause you to ask questions like "is it more important that their body is here from 8-5, or that the work gets done" or "why should my best employees stay working here". I believe that in trying to answer these types of questions, you will be able to better handle all the employees and customers you can gain.

From the customer side, it is much more difficult. Depending on your product or service, you may have a hard time reaching them. If you sell expensive watches, what will be the effect of young people no longer using watches (they use their cell phone to tell the time!) My brother, who is a creative designer, wears interesting watches that are more jewelry or statement than they are watches, since his computer, phone, ipod all tell him the actual time.

You might want to hire 'one of them' to help you market to 'them'. But what happens when she says you need to change the way you are selling your products or marketing or even the products you stock - then what?

Return from Summer Conference

I was at our Summer CareerTech conference this week in Oklahoma City. This brings all the CareerTech system professional staff together for three days of sessions, meetings and networking. Our plenary speaker made an interesting point about education: "The primary aim of education is not to enable students to do well in school but to do well in life outside of school". By this he was remarking on our education systems unfortunate tendency to be more interested in obedience and order than in learning and development.

In considering this comment about education, what came to my mind is we often have processes or procedures or even 'ways of doing things' in our businesses that are more due to internal aspects than have to do with customers - that is - our reason for being.

As always, Seth Godin has a good statement on this, "The only reason to answer the phone when a customer calls is to make the customer happy." We often set procedures such as 'you must answer all customer calls', then not provide any resources or ability for the person answering to actually solve the problem. We lose sight of the reason we have a business is the customer.

You might remember, and it seems to have gone out of our collective consciousness, that there used to be a place in the department store called "Complaints Department" - a window where customers brought their unsatisfactory purchases. One also used to see this as part of a joke in comic strips.

Anyway, the point being is that the Complaints window never actually was able to solve the problem - so it was more a place to vent than anything else.

If we have policies in our organizations that inhibit our being able to sell products and make money, then we are just like schools turning out students good at school but not at life.

In both cases, the results don't justify the outlay. Take the opportunity here at the end of summer to review your procedures - are there places you are teaching your employees to be good students and not good salespeople?

Making your first customers count

In a new start up, you are likely to have only a few customers. They are going to be the people who tell their friends about this new business they [shopped/bought/consulted]. How you treat and interact with them will make a significant difference in the growth of your company.

The thing is, they are going to want features, additional items or changes to your product or services - requests you may be loathe to fill. Since they are your first customers, you might feel you have to satisfy all those requests. But what if those requests conflict with your vision of where your company is going and what your customers will look like.

So you find yourself in a quandary: either make the changes the first customers request, or risk losing their business (sticking to your view of what should be the business) and losing those first customers.

How to respond?

Make the customer feel they are part part of your business. We all want to be the person who knows of the little known shop or great new restaurant. You can inculcate this behavior by creating a great experience to your early customers (even if you say no to their requests). Even if you can't add their new feature request, or change your product mix immediately in your shop, try to get them to participate in the process.

Grocery stores used to do this on occasion. They would have a form to request a special order or special product. If it was available, they could add it to the grocery shelf. I remember our local grocery store used to do that, and then all the special order products would be stuck in the same area. It was very interesting to see what people had requested. But each in a small way created a connection to that customer. Even if they were unable to get it, the participation of the customer itself had value.

Making the first customers count (meaning 'do something for you') can create the relationship you need to get your business rolling.

National Learning Systems (NLS) graduates from Meridian Center for Business Development

National Learning Systems, a resident tenant of ours, is graduating at the end of July. Here is our press release

STILLWATER, Okla. The Meridian Technology Center for Business Development is pleased to announce that National Learning Systems (NLS), a resident of the business incubator, has graduated and will move into another location in Stillwater in July.

National Learning Systems partners with schools and the Oklahoma State Department of Education to provide high-quality, research-based educational courseware supported with sustained professional staff development proven to increase student achievement. Since their move into the incubator in September 2006, NLS has grown to 8 employees.

Charlcie Cumming, Director and owner of NLS, remarked "Being a resident of the Center for Business Development has been important for our growth at NLS. We have been able to obtain assistance in hiring new employees and have benefited from being able to host training sessions in their conference areas. We've enjoyed the benefits of the business incubator and appreciate all the support and encouragement provided by their staff."

Ron Duggins, Director of the Center, said "NLS has been a great client and we appreciate all their dedication and hard work which has made them successful. By being able to have the facilities to develop companies such as NLS, North-central Oklahoma and Stillwater are able to keep businesses in the area, creating jobs and further opportunities for our community and region."

I am really pleased when we get to graduate a company from our incubator. Yet when I tell people a company graduated from our incubator, they often ask me what I mean by that. Do I just kick them out after a set period of time?

When a company becomes a resident in a business incubator, there is supposed to be more going on than just renting space; we incubate a new company by adding value to their development.

Each client has different needs. NLS already had a pretty experienced management team, so they had little need in developing a business plan or figuring out their business concept. Instead, for example, we were able to help NLS hire additional staff by making sure they had a good job description, were doing a good search, and by being available to their staff to discuss candidates.

But NLS is now at the point they don't need us, though they will continue to have our support: NLS can and should contact me if there is some assistance I can provide. That means it is time to graduate from the program.

Roughly, I've found it takes about two to three years for a company to know if it is going to stand on its own or not. I use roughly since every company is different and circumstances vary. But if the first year is spent getting a product out the door, the second year starting to sell the product, the third year making some profit...and the company is not moving along that progression at all, then we have to consider the viaibility of the company.

In a way graduation is less about the clients' needs, than ours. As a company becomes more successful, the cost of our incubator services becomes a smaller and smaller part of their budget. They don't need our help to stay in business, but it is nice to have someone there to help whenever you need it. I am sure many clients would love to stay in an incubator permanently. But how would we work with new clients if the old ones never moved out?

Graduation is really about the client no longer needing the services I provide, and I taking those services and offering them to the next prospect. Just like graduating college, it is about the company moving from adolescence to adulthood. And while that transition may be disruptive to both the client and us, it is important for growth.

Congradulations NLS on your graduation!

Keep close to your competition

Have you ever noticed that where there is one gas station, there are often two or three? Instead of spacing out each station a couple miles apart, you will come into an area, find three stations on one intersection, and then no others for miles around.

Being (physically) close to your competition seems to be wrong: wouldn't you want to be as far away from competition as possible?

For many types of businesses, it is better for prospective customers to know where they can find a wide variety of something, than for them to locate each individual business. For example, consider the diamond district in New York City. In a few blocks are many businesses all selling diamonds. Or car dealerships that tend to cluster together.

By being close to the competition, you make it easier for customers to find you, and also allows you to distinguish yourself from the competition...and keep your eyes on how they are doing. If a customer is dissatisfied with your competition it is much more likely he would visit you next door than if you were ten miles away. It also creates loyalty for your business over those 'other people' who go to the competition.

As you consider where to locate your business, take a good look at being close to your competition.

When Dairymen get Innovative

incubator,entrepreneur,rubes,Leigh Rubin

A couple weeks ago, there was a great cartoon by Leigh Rubin in my local paper -

Now I only know a little about dairies; the cows have to be milked twice a day every day. The dairyman sells his milk to a distributor/co-op, at a price largely set outside of his control.

I like this cartoon because the dairyman is dealing with his circumstances in at least three innovative ways:

1. He is getting out of having to milk this cow, since it looks as though the customer would get the milk themselves - saving him time.
2. He is selling direct to the customer.
3. He is selling the benefit of the milk bath, rather than selling the milk itself.

Each of these can also be applied to you as an entrepreneur:

1. Can you turn something you have to do, into something valuable to someone else that they would do themselves?
2. Can you avoid the middleman and sell direct to customers?
3. Can you sell your product to a different market altogether, using benefits ancillary to your primary market?

My guess is that dairymen have had to be very innovative to stay in business, so how about you?

Take care of those close to you

incubator,entrepreneur,marketing

Just in the last week or so, I have had two stories told me which touch on the importance of marketing and taking care of customers close to you.

1. My barber has his shop in a strip center off a relatively busy street. Recently a new chinese takeout restaurant has moved into the center. He said since the restaurant is but a few doors down he and the other barbers might drift down there for a quick bite. Twice they have mischarged him and other barbers - or tried to charge for a dinner meal rather than a lunch (and he had some other stories about the cost of soda, etc).

2. My collegue had his glasses broken by his child over the weekend. When he called his optometrist about a replacement set, he was told they would not just refill the current prescription since he is due for a checkup, and by the way, they cannot take any appointments until July 16th (it being July 6th).

There is a lot wrong with both of these stories, but I want to focus on the importance of taking care of those customers close to you.

In the case of the chinese takeout, let's think about their market. Being new, they want to increase the number of customers. And two doors down from them is a hair salon, with 6 people cutting hair. Now wouldn't it first be a good idea to keep the barbers happy about your business? Not only do they spend their days talking to people (and the new restaurant might well come up in conversation), but also they are probably busiest around lunch and dinner time - times when someone might think "hmm, maybe I will pick up chinese for tonight." Instead, the restaurant seems to be making a habit of annoying the workers at the hair salon.

In the case of the optometrist, I understand he wants his customers to keep their glasses up to date with regular checkups. And maybe my collegue is due - but he needs glasses (today). He can drive down to Oklahoma City and get some glasses in an hour at a mall store. So his cost is 3 hours (one hour down, one hour glasses and one hour back), and the cost of basic frames and glasses. Instead of helping out a customer in need, the optometrist has decided to drive away his customer to another location or business - precisely when he could have bound his loyalty even higher!

In both cases, the customer close to the business (whether physically or as an existing customer) is being treated worse than if they were a stranger, and they are precisely the customers who would most be willing to recommend (or not) the place of business.

Seth Godin makes an analogous point, when he describes how to handle special requests, "the problem with treating all customers the same is that customers aren't the same."

Take the time and opportunity to strengthen your customers who are already closest to you - don't drive them away from you.

Big Time

I have a friend who play bass in a Country & Western band Jeremy Johnson and the Lonesome Few that tours throughout Oklahoma and Texas. They often open for bands traveling through the area, and so he is able to meet other musicians from well known bands.

He remarked that the one thing he hated was when a famous musician would 'big time' him. Being 'big timed' is when you are talking to someone who constantly looks over your shoulder to see if someone more important or something more interesting is going on. Essentially it is a brush-off.

This struck me as a vivid example of a bad behavior we see in business as well. You might be at a trade show, or even working at your retail shop - a customer or employee comes in and while you are talking with them, your glance travels over their shoulder to whatever else is going on. It may even be unintentional, but they notice.

When I used to do quite a few trade shows, one of the skills you needed to learn was how to quickly qualify a lead (someone entering the booth), and disengage with that person and go on to another. Otherwise, you'd spend all your time with the first person and you'd miss ten others.

Interestingly, if you made a conscious effort to concentrate on the person at hand, then said thank you and moved on to the next person, it was faster and better than if you sort of paid attention to the first person while looking over at the second. People understand you are busy - what people want is to be treated respectfully.

As an entrepreneur, you are besieged by issues, people, and items to consider. If you cannot learn to quickly qualify the importance of a given issue or person's problem, you won't be able to get anything done, and/or you will be considered rude. It is easy to pay only partial attention to the issue at hand, but that is a mistake.

Next time you have three things going on, and someone - employee, customer, incubator manager - comes up to you asking about something, ask yourself, "am I big timing this person?"

If you can give the person your undivided attention, you may just hear something that may become a new feature, or another sale or resolve a customer issue.

Facebook and social media

I hate to say it, but I am skeptical of Facebook as a marketing tool for small businesses or entrepreneurs. I have read the articles proclaiming how this business is doing great because of it's Facebook page and web 2.0 social media marketing. I have seen and tasted the Kool-aid. But I am not sure - too push the analogy a bit too hard - of the nutrition of the drink.

Blogs - yes, especially if you have readers. :)

LinkedIn - yes, especially if you have a good network of people, and don't succumb to allowing Larry the annoying guy from marketing into your network so he can spam your friends.

I can even see how a tool like Twitter can keep people in communication with one another during the work day. I especially can understand its usefulness for people like developers of software to help find solutions to problems "Hey I need a foo to do bar - can anyone help?"

But pure social media sites should be left to your family, church members and the softball team. It is useful, but not for business. You would not want your boss to be a 'friend' on your Facebook page.

I suppose if I put on my Seth Godin hat (would that be a purple hat?) - I might argue against myself and say "Brad, you are building up your brand - who and what you stand for - and that brand is what will be valuable as you sell or run your business." If I am authentic, then that is what generates a group around me and the value of that group.

Here is the rub: authenticity has consequences both good and bad. If my authentic self is completely into tatoos, and my body is adorned with them, then that might keep me from a job. The world does not necessarily value authenticity. Are you sure you want to blur the public and private?

When I lived in Japan, I was often struck by the difference between my Japanese aquaitence's inner and outer personas. Outside, they were salary men, bland, faceless, group members. Inside, they each had great passions for a variety of interests. They found it strange that Americans often wear our inner passions outside (we strive to look different) yet internally, we are all the same.

My argument against social media is much the same: are we ready to put our inner selfs on display, and accept the consequences thereof? Blogs, LinkedIn and Twitter all allow us to use our outer personas in public, but leave our inner selves hidden. Social media is predicated on the opposite.

Segway

Segway,Entrepreneur,Incubator

My wife and I were in Branson, MO last weekend for a family reunion. While there we passed a business that sold rides on Segway (Segways?). For $20 you received a 5 minute tutorial, and 20 minutes of riding around a small course along the side of a hill. The Segway were limited to 5mph so you really could not get yourself in trouble.

I have always wanted to ride a Segway, so we went in and tried it.Even though I am a lousy roller skater and skier, I turned out to have a great time riding around.

At the end of the 20 minutes I went up to return the Segway. I was then informed that since I had completed the beginner level, I could now return (or continue) and this time, ride the non-speed limited Segway (they will go up to 13mph), and for 25 minutes.

I did not realize this (and I can't remember even seeing it listed on the forms when we paid to ride).

I wonder: is this a good system (to wait to offer the second faster level riding)? On the one hand, I would think most people who come into the shop have never ridden a Segway, so you would want to do everything you could to make it simple to get them to try riding. Once they ride, they will probably want to ride again, and then you bring out the faster speed and longer ride time for the same price.

On the other hand, if I had known that I could ride for 20 minutes and if I liked it, ride on a faster one for 25 minutes more, I might have been more disposed to buy both sessions right off.

Or maybe you allow a beginner 10 minutes for $10: my wife never really liked riding the Segway, and would have quit after 10 minutes but wanted to ride out her time she'd paid for. After 10 minutes, I had gotten the hand of it and really wanted the faster Segway.

This seems like a situation where the owner could try various pricing systems - 90% of his customers are there on vacation and probably would only come once or twice anyway. So for a month or two he could try various pricing and times to see what made the most money.

What do you think?

Business Startup: act like you are on tour

incubator,entrepreneur,on tour,tony levin

When I was in college, I played bass in a rock band. My interest in bass has led me to follow for many years the blog of bassist Tony Levin.

Recently he posted about his latest tour in Europe. Remarking on packing for the tour, he says, "the main effort on small band tours like this is to keep your bags (2 at most) each under 50 pounds, to avoid airline overweight charges. We've all gotten pretty good at it, so there are a lot of 49 pound suitcases, and of course, they have no limit on weight of carryon bags, so maybe the compressor and a box of cd's will go into that --- I'll regret it on the long airport walks, but after 4 or 5 flights we'll have saved a lot of extra charges.

Being on tour teaches you to be careful and avoid those $50 bag charges.

Likewise as a startup, every dollar is precious - and if you are not careful - you too will be socked with the equivalent of overweight charges  - whether overnight shipping costs, fancy desks, or whatever.

Try to consider your business as if it is on tour: what are the essentials?

Note also that musicians don't fail to bring key equipment - compressors, pedals, whatever - that they must have to do their work. Even if that makes their bag heavy. They spend on the necessary, not on the desirable. There may be key tools or software you need for your business - get and use them.

Plus if you consider your startup as a band on tour, it might even have benefits for the team and comraderie.

Make Something People Want

incubator,entrepreneur,paul graham,inc. magazine

In this month's Inc Magazine (June 2009), there is an article on Paul Graham, the founder of Y Combinator "The Soul of a New Startup Machine" [p. 60 - no hyperlink yet on Inc website].

Y Combinator gives startups a very small bit of capital to prospective software startups, then pushes them to release a product quickly - see if it catches on, then build from there. The Y Combinator mantra is "make something people want" - they even give you a tshirt that says that when you come on board. And if you sell your startup, you get another that says "I made something people want".

The claim to make something people want caught my eye as I during my reading of Paul Hawken's book, "Growing a Business", he remarks, "the American consumer is inherently dissatisfied".

Contrast this with the common marketing view that consumers don't know what they want. The example often used is a Sony Walkman - no one was sitting around saying they wanted a cassette player with headphones [What's a Walkman?]

The lesson from these three views is that people know what they don't like - or know that they have a point of pain about a product, service or situation. If we can create something that alleviates or meliorates that point of pain, people will be interested in our solution. Of course, you have to have the right price for the solution and the right type of answer, but at the most basic, you have to solve a problem people want solved.

Furthermore, you have to solve it in a way that they 'get it'? It has to be, if not elegant, than something the prospective user can understand, e.g., the way the iPod took mp3 players to another level, even though there had been others previous to it.

Too often prospective startups come in to discuss their business idea with me and it is all about their needs, their intentions, their desires. But when pressed as to what problem they are solving for the prospective customers - they almost always say either "Huh?" or "I will be cheaper than the rest". Neither is a good answer.

Whether software or service, product or restaurant - ask yourself: "am I making something people want?" and "is it something they can understand?"

Customers: good and bad

incubator,entrepreneur,customers

During our Entrepreneur breakfast yesterday (May 21st), our speaker told a story about being kicked out of the local IHOP.

It seems he and his wife and a second couple were having brunch in the local IHOP. He has known the owner for many years, and they are regular customers. During the course of their meal, he was telling a story that ended with a slightly off color statement. And being rather gruff, his voice carried. From the table next to them, a women with her family loudly complained at him for his crude comments.

Now this woman's children had been very loud and unruly during the entire meal - so much so that the couples had almost told her to quiet the kids down.

Of course, the result was the two tables arguing back and forth. The owner came up to them and said it would be best if they left.

Let's put ourselves in the position of the owner. He has an argument going on in his restaurant, and has to decide what to do. On the one side is a longstanding customer, on the other, a family with children. If he kicks out the regular, he could lose them. If he kicks out the family, it could be a marketing nightmare - it is an IHOP family restaurant.

What would you do?

I believe he did the right thing. He knew that his friend and regular would undoubtably return, and he could always seat them away from families in the future. The family, however noisy, might just tell their friends about this rude table being removed from the restaurant, etc.

Let's open the net a bit wider: you have a product and you can only deliver it to one of two customers right now - an existing customer or a new customer. Who do you get the product to first? (Or two technical support calls, or two client projects.)

How you as a business owner will balance competing claims for your attention will be critical - not only for the result - but for how your employees will also react in the same situation.

Kinds of Entrepreneurs

incubator,entrepreneur,startup

As we get closer to summer, young people are looking for summer jobs - or their parents are urging them to look for summer jobs! Given the current economy, it is not surprising that newspapers and magazines are running articles on teenagers who started their own business.

Do you ever notice the list of tips or advice for the group described in the article are pretty much the same as one would give any startup. For example, in the USA Today article on teen entrepreneurs, they provide the following list of advice: "don't let shortcomings thwart you" "price wisely" "don't over invest in supplies". These could be given to any startup. There is nothing distinctly teenager about those items. Just as like articles for women entrepreneurs give advice that could cover men entrepreneurs as well. This is not surprising if you consider that business remains the same regardless of who runs it.

What grabbed my eye in the article is a couple of the comments from the teen entrepreneurs. The young man notes he is learning more than he would at a typical summer job, "this is just the foundation for learning how to be a businessman," he says. "I couldn't learn this just working at a restaurant."

The young woman had to convince her parents to let her start her business. When Archer first brought up the idea of selling hair pomade, her parents didn't take her seriously. "It took a lot of convincing" to get the business going, she says."My mom was like, 'Maybe you can start the business when you are 20 or when you get out of college.' "

The consequence I draw from these two comments is that it is not the youth or teenager who needs to be convinced of the importance of getting out there and starting his or her own business - but the parents or adults in his or her life.

The young woman's mother would rather her work at a fast food restaurant all summer long to make - say $2000. Her daughter learns to make fries. Instead, her daughter wants to open a business. Let's say she does open the business and it fails (in her case, it is succeeding). Then the parents would have to cover her lost income. But the daughter would have learned a lot more than making fries. But the mother would rather her daughter wait to start a business when she is out of college?

And the young man realizes that he is better off not doing the restaurant job (and so does the daughter). But why not the parents? The risk is low, the learning high, and at the worst, the daughter learns something about herself. Strange.

I am reminded of a Buckminster Fuller quote, "we are all born geniuses". I take this as meaning as we get older, we get less pliable, less open to taking advantage of our genius. Why not try to be open to the possibility? [And of course - take the useful advice on how to start a business!]

Getting in your Customer's Business

incubator,business,entrepreneur

There was a very good article in BusinessWeek this issue: how Sysco, the restaurant supply company, is helping their clients (restaurants) to become better businesses. The effect: better more profitable restaurants will be able to order more product from Sysco.

What I really like about the article is that it brings up something that even a small business in the B2B market can do - help its customers to be better businesses.

The word partner is often overused - if you are my partner, then help me pay these bills of ours.

You are selling your clients a product or service, but you can increase the value  of what you are offering by helping them to solve an additional problem. Don't empathize with their pain, relieve it!

A good business owner knows if his customers are doing well, and the customer views him as the reason they are doing well, that is going to mean a strong relationship.

Rather than cutting the cost of their products, Sysco realizes that if they can get their customer's restaurants to make more money, the restaurant owners will be less worried about a few cents of price difference in the product and more willing to go back to Sysco for more products. And as long as the cost of the programs they are offering are more than offset by the additional sales they generate it is a win for both (which is really what a partnership is all about).

As often is the case, my point is just trolling in the wake of something Seth Godin said last week in his blog, "When all of your competitors are busy increasing value by cutting prices, you can actually increase market share by increasing value and raising benefits."

Finally, remember that the additional value you provide has to be meaningful - a free 20 cent pen is not going to make the value increase on a $1000 sale. We stopped getting toasters for opening a bank account years ago.

Avoid being an Entrepreneur

incubator,entrepreneur,37 Signals

In a recent post on their site, Matt from 37 Signals argues that you don't have to be an entrepreneur to be sucessful. There are many very sucessful people out there who are " succeeding without MBAs, business plans, and all those other credentials you’re supposed to have before starting a business."

We have somehow created the myth of Entrepreneurs - MBA from a top school, writes a killer business plan and Venture Capitalists flock in... It almost sounds like something from The Fountainhead.

Thankfully most of the (small e) entrepreneurs I deal with are not so characterized. They don't have big MBAs or venture capital, and in fact, concentrating at all on those ideals must set up a false demand in the prospective business owner. Instead of finding a niche or market they understand, they try and develop something towards this mythical Entrepreneur.

We must break ourselves from this mythical Entrepreneur.

----

Matt also remarkes that "It’s time to get over the idea that risk and reward are so intertwined in business." This is a incisive point. Many of the financiers we are now bailing out had much reward for their actions - though little significant risk. Likewise, starting up a small software shop in college or just out of college has very little risk (Paul Graham has written persuasively on this as well), so any reward is positive.

What I don't have an answer to is how, as a 40ish mid-career person, I can balance the reward and risk where I am now as a business owner. And many of the people who have been laid off right now are exactly in this position. Revised 5/12: What I meant to say was: I am neither a recent college grad, nor a wealthy ex-financial - I am a mid-career person with a mortgage, car payments, etc. For me and my family, the risks of starting my own business can be very high. And if I were a recently laid-off mid-career worker, the risks are even higher. How then do I manage to untangle the risk and rewards of opening my own business?

How do we go forward?

Status updates for projects

incubator,product management,project management,entrepreneur

If you are trying to discover how far along a person is with a particular project or job, instead of asking "what percentage complete are you?" (or "how far along are you?") ask the following:

How long have you spent on the project?

How much longer do you need?

By asking percentages, you are likely to get answers like 50% or 80% or 30%, which often have no relationship to where the project really is.

By asking times, while it is still a swag, it is a more realistic swag.

When someone says "two hours", resist the temptation to say "what did you do the other 6 hours?" or you are likely to get told "eight hours" next time! Instead, go to the second question. Track how long tasks take and you'll do a better job as you go on estimating who can get things done right and how long it will take.

I always think I can do projects much faster than those who work for me or in the group I am in. As an entrepreneur I often have to remember that no one is going to do the job the way I will do it. But I can be more systematic about assigning work and time it takes to get the job done right.

Dale Carnegie

Incubator,entrepreneur,Dale Carnegie

I regularly read or at least skim the latest titles for business books hoping to pick up some hints or ideas to pass on to our clients.

We have all heard of Dale Carnegie books, and if you are like me, you probably scoffed at reading them. On practically a lark, I picked up a copy of Dale Carnegie's How to Win Friends and Influence People. I certainly did not expect it to provide me anything I did not already know. Surprisingly, it was very good. The stories were somewhat corny, and the writing breathless, but the content was relevant, lacking in jargon and avoided all references to the latest - or any -business theory.

Instead it gave practical advice that we each can use every day: How to handle people, Six ways to make people like you, Win people to your way of thinking, and How to lead.

And if you say "why should I care what you think, Rickelman?" - then how about Joel on Software's Joel Spolsky?

I hate recommending a lot of books for entrepreneurs since they usually are too busy to read. But this is one they should skim.

Heartened, I recently completed How to Stop Worrying and Start Living which contained more useful advice.

So: easy read, good info, no jargon. A great recipe for any book, let alone books that will help you persuade others to your view and help you better intereact with them.

NBIA wrapup

incubator,NBIA,Kansas City

We are back from the NBIA conference on business incubation. A great set of presentations and panels - and a nice way to meet with other incubator managers from all over the US and world.

Some reflections:

1. "All progress starts with telling the truth" - I heard this aphorism during one of the sessions. As someone trying to assist startups, it does no good to avoid telling the truth about the situation with a client business. In trying to soften the blow perhaps I am weakening the chance of improvement. Likewise, if our client companies don't tell us what is really going on, how are we to help them?
2. "Are our services good enough that someone would pay for them, even if we did not have space?" or another way "is my presentation/class good enough that someone would pay for it?" I'd like to think so - we have six associate or virtual tenants who take services but no space. Every product or service has a price (it might be $0!) - I often caution new businesses to not underprice themselves. But you can overprice yourself as well. I have been trying to find the right time and pricing to run another Kauffman FastTrac program. It has been difficult, since the value is really found in taking the class - and if you are on the outside considering, it is hard to realize that.
3. Consulting assistance for existing business. Even if you are a well established small business, your local incubator can be a great place to look for some consulting assistance. For example, we at the CBD have expertise in Marketing and International, areas that you can contract for.

Of course, I did get to Arthur Bryants, which made it all worthwhile!

There are very dedicated incubator managers all over and I encourage you to take advantage of their programs, or at the very least, evaluate their programs to see if they can help you!

NBIA!

Incubator,National,Business,Association

We'll be at the NBIA Conference next week - April 19-22 - in Kansas City. I am looking forward to the sessions on Advisory Boards (we are looking to get ours restarted) and on Best Practices (I always get a couple good ideas on how to better serve our clients and community).

Plus where else can you get Arthur Bryant's BBQ? The best! For steak, I like the Golden Ox.

While I am at it -

1. Did you know that Kansas City has the only WWI memorial museum in the USA? It recently was renovated and is incredible.

2. Shoes! Bob Jones shoes is all that remains of Kansas City's tradition in shoes ("lady, those red shoes are 30% off!")

3. Mens Wear: Michaels, at 1830 Main a couple blocks from Bob Jones, is a great old fashioned Men's clothing store. They have a good selection of big and tall; classis clothing.

If you are an incubator manager - see you at NBIA. If you are thinking of a place to visit for a short vacation and you like to eat: Kansas City!

Web 2.0

incubator,entrepreneur,web 2.0

There was an interesting presentation this morning at our local Chamber of Commerce on Web 2.0 (and marketing). The presenter gave us a pretty good history lesson on where it came from and how it is different than web 1.0.

On the way out of the building, a local businessman I knew said, "Brad, is this something I need to devote time to?" A good question. As an entrepreneur, you have quite a few items pulling on you every day...is there room to fit social media or Twitter or Facebook or...?

The two cardinal virtues of web 2.0 are "authenticity" and "community". Authentic, as meaning you are who you say you are (and not trying to sell something to others by pretending to be otherwise), and community as contributing towards the goals or purposes of a group.

If you are wanting to 'get yourself some of those twitter things' so you can sell more sugar water - then your lack of authenticity will keep you from really being able to do just that. And you will also find your community to consist of others trying to sell their own sugar water.

I joined an entrepreneurship group on LinkedIn, and one of the first posts I read was someone asking if there were any real entrepreneurs in the group (and not just people trying to sell their own product or services)! That is not going to help you.

But going back to the businessman I spoke to earlier - he could use a social media group for his employees (to make it easier to communicate what's going on), or he could start a group for his clients to talk to one another about whatever his product is...these could be ways to develop a useful web 2.0 presence. If he builds a place where people can communicate on issues related to the business- great! Or better yet, maybe he could gather his thoughts on running his business into a blog.

Note that this is not something that will take place overnight - one post and look at me I'm on Facebook'. It is going to take time. But that is just to say that the 'social' side of web 2.0 is just like the social side of being with people. We all have been in the situation where we meet someone who immediately tries to sell us something; if not, think of dating (or bad dating!) experiences.

So in response to the businessman, I might say, "what are you doing now to create a relationship with your clients based on authenticity and community?" Whatever he is doing now - can he do the same on the web? If so - spend time doing that. If he has a newsletter, convert it to a blog. If he sends out coupons, make them email coupons. If he has group client meetings, make them podcasts. That will make his time spent more useful.

If he is not doing any of those things already, then signing up for accounts on Facebook or Twitter won't do any good for him.

Baseball: building your (business) team

baseball,entrepreneurship,incubator,team,management

It's the beginning of baseball season! The long winter is over.

As I follow baseball, I often compare managing the team to managing a company. Not only in selecting the right team members, but also deciding what type of employees you want on the team and choosing which role to place them in. A sports writer I follow, Joe Posnanski, made an interesting claim about managing a baseball team:

You can go a million different ways. But, in my view, you HAVE TO CHOOSE. That’s getting at the core of what I believe about baseball now. I think you need a plan that is much more involved than just grabbing a bunch of good players with varying skills and just hoping that it all works out for the best.

This gets to my difficulty with the book Good to Great. As you know Collins argues to 'get the right people on the bus, then in the right seat on the bus, then point the bus (in the direction to go).'

But, contra Posnanski, I might argue, before you put anyone on the bus, you have to choose how you are going to go about your business. If you don't know - then any collection of, as he puts it, "good players with varying skills and just hoping it all works out".

Now, your way of going about your business can't be just willy-nilly, just like you can't select only baseball players who are tall, or wear size 13 shoes. Your business has to reflect your values and philosophy on how you do things.

I used to work for a small software company whose owner prided himself on being out front on new techologies in the industry - if we weren't at the bleeding edge, we weren't in it at all. That philosophy should have colored every employee he brought on. Without it, no amount of good people on the bus would get it pointed in the right direction.

If you are an entrepreneur, you are the face of your company. If you don't know what your philosophy or way of doing things is, you won't be able to decide on which way to go. In the end, choose how you are going to do things and go, rather than dawdling on different ways you are going to build your team. That is what creates loyalty to your team. Not everyone likes the Yankees (boo!), but at least I know what they stand for. What do the Pirates stand for?

BTW - Go Twins!

Starting a business after being laid off

incubator,entrepreneur,laid off

Unfortunately, but all too common given our current economy, I have recently been consulting with a number of people who have been laid off from their jobs, and are now considering opening thier own business. Their stories are crushing.

Yet, I must caution - even in the face of real need and difficulty - not to jump from one bad situation into another. Need cannot in and of itself be the business.

In one case, an engineer was considering cashing in his 401K to open a franchise. He had been provided three franchise opportunities by a 'consultant' brought in by the outplacement service his previous employer gave him as a severance account. The franchise he wanted was clearly a terrible fit for him, yet he plaintively argued he had to do something to feed his family.

Stories on the internet or in entrepreneurial magazines about people who have successfully made the transition from laid-off to entrepreneur seem always to circle on people such as a marketing executive who did culinary arts cooking previously, now opened a successful bakery. Or the engineer who had tinkered with some software at home, now writing Itunes applications.

There are opportunities out there that can be taken, and within a short time. But no amount of immediate need can overcome the need to know your market, have a product that solves a problem, and priced accordingly.

Use the library (free) or come by your local business development office or incubator (usually free) and get yourself a plan of action first. Then make a firm decision.

This also will allow you to avoid having the weight of your previous layoff overhang your new business. If every time you go into an account with your new business, you predicate your pitch with "I was laid off from ABC, and now am selling X" - people will be sympathetic, but not buyers.

By being organized and ready, rather than just needy, you send a great message to new customers and will allow you to move into the ranks of new business owners.

Sorry I've been quiet

Sorry I have been quiet during the month of March - it has been a bit hectic. Back to entries today!

Interview with an Entrepreneur: John Avellanet

incubator,entrepreneur,avellanet,cerulean,fda compliance

I recently had the opportunity to interview a good friend and entrepreneur, John Avellanet of Cerulean Associates. Cerulean is a specialty consulting shop focused on FDA quality systems and regulatory compliance.

Brad: John, now that you have been in business for a few years – what has been the most unexpected aspect of running your own business?[JA] The marketing never stops – clients do.

2. Did you or have you taken advantage of business services offered by community or governmental groups: whether SBA, local business incubator, chamber of commerce, university? If not, why not? If you did – was it helpful?[JA] The SBA I did not approach because I didn’t want a loan; I did plow through their very, very helpful website and resources. The local business incubator recommended that I contact them once I had at least 3 employees (or temps) working for me. The chamber of commerce I tried to use, but this is really just a networking group and lobby group for the local community; if you’re not selling to local businesses, carefully evaluate any impetus to join. That said, the chamber does have the SCORE folks (retired executives who donate their time) and depending on your type of business SCORE may be very helpful so don’t overlook it. As for local colleges, I ended up guest lecturing at the local business university on entrepreneurship.

3. Did you put together a business plan when you started? [JA] Yes and like everyone says, it’s a good exercise, forcing you to conduct market analyses, etc., but realistically, unless you plan on keeping it a living document, revising, etc., every six months to a year, it sits in a drawer collecting dust. I would suggest you put together one, but then do a simple 3-4 page annual summary every year, and make those addendums, to help you craft your business. You’ll be surprised at how much your target changes after 2-3 years from what you first conceived.

4. Did your expectations regarding competition and market size when you started your business match up to what you’ve experienced? [JA] Yes and no. There is definitely more competition out there than I had originally surveyed – things crop up over time, so in hindsight, that’s something anyone looking to start out should expect. Depending on the business model – and the economy – competition will go up and down. Despite the tough economy right now, I expect the market size to continue to expand – not because of some imagined miracle cloud of new customers that will “poof” appear, but because we continue to be globally connected and this increases the number of folks looking for my services. That said, given the economy, several of my competitors (particularly the larger ones) have already gone out of business or filed for bankruptcy (see the part above, when a couple of years ago I didn’t want to start by taking out a loan), so that’s created more elbow room for me and continues to increase the number of folks wanting to work with me.

5. Have you considered co-working or professional office space to house your business? [JA] Yes, but until I need to (as in, have to hire at least a couple of full-time folks), I don’t anticipate it. Currently, I operate out of a home office and love it (especially since I spent 8 years commuting 1 hour 15 minutes each way to and from work – now my commute is approximately 7 seconds).

6. How do you locate and develop your pipeline of new clients? [JA] This is the million dollar question. I’ve tried cold-calling; it really doesn’t work for the small business person – it’s just a numbers game and to get a greater chance of success requires more calls, so when do you actually have time to work? Plus, frankly, I’m not a big fan of telemarketing. I’ve had the best luck through those things I do best: writing, speaking, and giving great service (so the latter translates into referrals). Every business is different, though, and entrepreneurs and owners should focus on what they do best and like to do in order to generate clients. Several colleagues of mine really dislike writing and speaking, but love networking – that’s how they get almost all their business.

7. What’s been the toll or effect on your family life with you running your own business? [JA] Well, this is another reason why I like working from home. I read somewhere that the average entrepreneur works at least – that’s “at least” – 60 hours a week. I don’t doubt it; I suspect that number is probably low. So, if I were out of the house 60-80 hours a week, I’d never see my family. Now, I can take a break here and there, go meet the kids at the bus, and so on. And I’ve got a lot more energy without the commute….

8. Do you have a personal network or peer group of individuals you meet with regularly to discuss business ownership, what’s happening and generally to bounce ideas? [JA] Yes – both virtually and in person. I like to talk over ideas with friends who run their own businesses (all different from mine) locally; I find they are a source of interesting ideas and challenges – after all, if they do a promotion that succeeds, how can I adopt that and make it succeed for me…those are the types of discussions I love. From a virtual aspect, I use the phone and email a lot to keep in touch with old colleagues whom I trust implicitly to give me perspective and wake me up from getting too carried away with some idea or other. I think advice from both those sets of folks has helped me survive so far.

Hey, wait a minute - thatlast question was supposed to be answered "Oh yes, Brad Rickelman is the greatest!" [JA] You said I was supposed to answer truthfully - and I did intimate that I talk with 'old collegues'.

"Startup in Thirteen Sentences" and "Three things you need if you want more customers"

incubator,entrepreneur,startup

Two great short articles this week - both with simple and straightforward messages for those wanting to start a business.

Seth Godin's Three things you need if you want more customers - here I will give them to you -

1. A group of possible customers you can identify and reach.
2. A group with a problem they want to solve using your solution.
3. A group with the desire and ability to spend money to solve that problem.

and Paul Graham's Startups in 13 Sentences.

Paul says if he had to pick only one: "Understand your users."

Both Seth and Paul are striking on the same stake: if you don't identify/understand/know your market, you are done before you start.

But Brad - if people only understood my great solution, they would love it! Maybe. How do you know what people you are trying to get to understand your solution?

If you can come in to the CBD with answers to 1,2,3 - now we can take advantage of the services and offerings available to entrepreneurs. Too often people come in with everything else - then try to find a customer base.

alla garibaldina

incubator,entrepreneur

The italian phrase alla garibaldina refers to 'an enterprise begun with carefree audacity, little preparation and a lot of risks' Paul Hofmann

Is your startup alla garibaldina?

While Garabaldi succeeded in bringing Italy together into a country, your enterprise is more likely to fail. We love the myth of the entrepreneur - striking out on his or her own and making it big. And I certainly don't want to downplay the importance of passion for what you want. When you investigate our mythic entrepreneur, we often find that they did have preparation in their previous experiences - skills gained or learned - that carried them through. What seems to be effortless, is instead the result of endless work.

Every entrepreneur who comes through my door tells me of his passion for whatever idea he has. Yet almost none return for a second visit. This could well be a critique of my advice - and maybe they go off and do succeed. But we could use less myth and more realism.

Your pain is not the Customer's pain

retail,incubator,entrepreneur

I recently have been trying to sell a Belstaff shoulder bag. I bought it when in UK, in pounds. The dollar was weak at the time and so now as I try to sell it, due to my arbitrage, I won't recover what I paid.

In pricing my bag at what I'd paid, rather than what the market was buying, I was confusing my pain with the customer's pain - just because I had overspent, does not mean I can have the customer also overspend. He might be sympathetic to my plight, but won't cover my mistake.

When you sell your product or service, remember you are trying to hit the intersection between the customer need/pain and your desired return. A Rolex does not cost $5000 to make and distribute - but it is bought and sold at that price because it crosses the customer's desire for a swiss watch and the profits they want to get from it.

If you are a retail store, don't be afraid to move out slow selling items - take your hit and move on. Then do a better job next time at choosing products to sell to your market. When Circuit City said it would close its stores, people went there looking for bargains - not finding them, they left (with the stores even slower than before they announced closing).

BTW - I still have the bag!

The Business of Incubators

incubator

Allow me to do a bit of navel gazing...

There have been a couple articles the last few weeks about business incubators having difficulties. Here is a link to a Business incubator program suspended (the Adirondack Regional Business Incubator in New York). These articles usually contain some statistics about the return value of incubator programs, how many businesses were created, and other reasons why they should not shut down the programs.

While I have no specific information about that particular incubator, the article notes that they did not have enough sustainable financing to continue. What I find interesting is that for entities that are created to help businesses become successful, we in the incubation industry seem to have a hard time doing the same for ourselves.

It seems to be relatively straightforward to get grants and other sources to open a facility, get the mayor with the big scissors to cut a ribbon,..., but once open how do theyexpect to keep going? If it costs $400,000/year to run an incubator, but revenue from a full facility will bring in $100,000/year - where will the rest come from? Usually the rest comes from local funding agencies (Chamber, Economic Development Agencies, Grants) - but when there is a down turn in the economy, or change in a funding agency, the money disappears and the facility shuts down.

The problem is caused by something I occasionally see in a client business: the person paying for the product is not the end user. The incubator's operational expenses are largely covered by some other agency. The success of the programs are in local businesses - but they don't pay the incubator beyond the rent.

When we give reports to the agency, we say '50 jobs were created with incubator businesses, bringing in $x to the local community.' But those $x don't pay the salary or expenses of the incubator - the funding agency does.

At least in those incubators that take equity in their clients there is a clearer connection between the success of the program and success of our clients.

If a local community wants to setup an incubator, they had better be clear about where their dollars are going. Does the local community realize that they will be carrying a facility and staff indefinately on their budget? That is not in and of itself a bad thing - local communities fund police, fire, and other departments. But if there is some implied "well, the facility will become self-sustaining" I think that sets the community up for heartbreak.

That is why I was heartened to read Benton Harbor area not ready to sustain incubator - a community that realizes it is not ready for one yet (and maybe not ever). Instead they already offer a good set of services, and with some iintegration they can gain most of the benefits of an incubator.

Local businesses and entrepreneurs need and can take advantage of the services we offer. But we need to be fair to our stakeholders.