Are You Cut Out to Be an Entrepreneur?

Do you have what it takes to succeed in business? Many do who seem to lack strong entrepreneurial skills. Here’s what they do have in common.

Do you have what it takes to succeed in business? Some people think it takes special skills to be a successful entrepreneur. I think it’s a myth. If you question your own entrepreneurial credentials, take a look at some of the people I’ve worked with—from solopreneurs to 50 or more employees:

  • Two art majors started making hand-printed greeting cards for friends. Now they own a print shop with a bunch of employees. They’ve printed my books.
  • A woman was making pear condiments in her kitchen. Soon she was selling pallets of her specialty foods to Costco from her warehouse. I have a photo of her driving her forklift.
  • A woman in IT had gluten intolerance, started baking things for herself. She now has a bakery, several retail outlets including a new one in the San Francisco Ferry Building, sells online, and has 30+ employees. She still doesn’t understand her P&L.
  • A Japanese immigrant worked as a busser in a restaurant, and saved his money. The restaurant went bust, he bought it for a pittance. Twenty years later, he has one of the best restaurants in the Bay Area, and has had a Michelin star.
  • A woman took over her husband’s bookstore when he died of a heart attack. She didn’t really enjoy the business, but she trained somebody else to run it for her, and she actually hired two more people.
  • A Hispanic guy got hurt on his construction job, and went on disability. While he was waiting for some job retraining, he started doing gardening for neighbors. He was chastised by the state for accepting money while on state aid. He now has three trucks and two gardening crews working for him.
  • A woman got fired from her sewing job, took a couple of favorite customers and did sewing for them. She now has a sewing workroom with ten employees. She recently bought out her former boss.
  • A banker took his early-retirement buyout and started a yoga studio, and he just loves doing that.
  • My wife BJ, the least entrepreneurial person I know, left her job when she got passed over for a promotion. She scanned the want ads for a new job for about six months, until she had so many HR consulting clients she had no time for that. Ten years later she keeps her schedule full without any marketing, just by referrals.

None of these people would have scored high on anybody’s entrepreneur test beforehand. But they’ve all done well. It may be true that not everyone is cut out to be an entrepreneur, but I challenge you to point ’em out ahead of time.

Are you one of these “accidental entrepreneurs?” Your issue is, once you are up and going, how can you make the best of it? Not just to survive in business, but to thrive, and get where you want to go.

What It Takes to Succeed

For these folks to succeed as entrepreneurs and take their business where they wanted it to go, they had to master a handful of basic lessons. Here’s what they have told me. My guess is, these apply to you as well:

Find your natural gift and build your business around it. Not only what business you are in, but what you do in the business. These folks learned to succeed by doing what they were best at—design, product selection and merchandising, working with customers, spotting and negotiating deals, whatever—and handing off all the rest.

Insist on making a profit. Know what things cost, and how profitable each sale is. Don’t spend money unconsciously. If you’re not good at the numbers, hire a strong numbers person and have them give you the financial data you need in a way you can understand and take needed action. If they don’t do this, replace ‘em!

Pay yourself first, and well. If the cash is just not there, tune your business model until it is. Or is this just a hobby for you?

Listen to the market. Let it tell you what to sell, and what to ruthlessly pare back. Let your customers tell you what they want to buy from you, then give it to them.

Learn to sell by being who you are. Let your passion show through. Be there with your prospects and customers. Looked at this way, selling is not a fearful activity.

Don’t be the Lone Ranger. Get past your “only I can do this job” mindset. Bring in top quality people. The better people these owners had on their team, the bigger and more profitable they became, and the easier their job was. And the longer their vacations!

Let go those who don’t measure up. Don’t be held back by the limitations of your people—whether employees, subcontractors, or professional advisors such as accountants.

Stop being a control freak.  When you have good people, trust them to do the job you’ve hired them for. Trust but verify. Watch over things, but don’t jump in and do them yourself.

Get the secret knowledge out of your head. Learn to turn everything into systems, checklists, procedures manuals—even the things that you’re sure only you can do correctly—so that others can do them.

Set a plan, even when the uncertainties are daunting. Stick with it, review it regularly, and revise it as needed. A plan should be just a page or two, and should be dog-eared, coffee stained, and covered with notes.

Save money as you go along. Build up a cushion for tough times and a fund for expansion. Those that did this all along stayed in business throughout this tough downturn.

Take care of yourself. If you burn yourself out, you can’t provide the services you are passionate about. The notion of the 24-7 always-on entrepreneur is a dangerous myth.

Build your business around your life, not your life around your business. You’re in business to get to do what you want. Otherwise you might as well have a j-o-b.

Know when to let go and get out–whether you sell, pass it on, or just lock the door–and head on to the next thing.

You don’t have to be a rocket scientist to master these lessons. But having some help makes it easier.

This is where I come in. I’ve helped these folks grow to the size they want, put a lot more money in their pocket, take long vacations, then come back and find things ran well in their absence.  So give me a call.

 

How to market on a tight budget

Where do you get the biggest bang for your buck? Or for your hour? I hereby give you permission to stop doing what doesn’t work.

My answer to a LinkedIn question from Leanne Smith

Short on money? Substitute time. For most  of us small-biz types, marketing is time intensive. So you’d better have a time budget plus a money budget.

Where do you get the biggest bang for your buck? or for your hour? List all the things you do for marketing down one column. Ads, press releases, networking lunches, social media, taking a prospect for coffee, etc. Whatever you spend money or time on related to marketing.
In other columns, list for each of these things:
— How much money you spend on this in a year
— How much time you spend on this in a year (Multiply by what an hour of your time is worth.)
— What results you’ve gotten: contacts, prospects, customers, nibbles, “laters”, etc.
— How much revenue this has brought in over the past year

Now you rate all these things you do, and compare them. What’s paying off? What isn’t? How could you improve the payback from any of these?

I hereby give you permission to STOP DOING THE THINGS THAT DON’T WORK! Networking groups? Yellow page ads? Online directories? Feh.

Do more of what works, and tweak it so it works better.

If your marketing pays off, brings in customers, and boosts your revenue and profit, then you won’t be on such a tight budget.

But beware! Marketing is like a yacht. If you’re around boats, you’ve probably heard people say, “A yacht is a hole in the water that you throw money into!” Marketing is the same way. There’s no end of ways you can spend money on marketing, and most of them don’t pay off.

How to Say No to a Prospect

“Sharisax is Out There” has a series of posts on this topic, and my “guest post” is the fourth in this series. After you read mine, check out the other articles.

Selecting the best clients is critical to growing your business, so how can you bring yourself to say no to a prospect?

First of all, you must know what kind of clients or work you want . . . don’t want . . . and why. Define your core expertise, and who your services are best for. Create a brief mission statement out of this. Then re-read it when you are talking with a marginally qualified prospect.

The main reasons you should say no are, in my experience:

1. Unprofitable

2. Off target for you

3. You don’t like them

If you think a prospective client isn’t right for you, you might ask, what would it take to make them right? For example, raising the price. Or being able to hand the work off to a subordinate. You propose that to them. They’ll probably say no, but if they say yes, you can have a good client.

If you’re turning down work because you’re too busy, then:

— Take the most interesting and challenging and lucrative work

— Raise your prices

— Hire a qualified associate, and bill them out at 3 times what you pay them

You’ve got to deal with your own resistance to saying no. For example:

– “In these tough times, I need every client I can get (even the unprofitable ones).”

These clients suck up the time and energy—and profit potential—you should devote to profitable clients. Your profitable, desirable clients end up subsidizing your unprofitable, aggravating ones.

– “Maybe they’ll grow into a bigger client.”

Occasionally true, but make sure you price high enough so that it’s profitable now.

– “They really need me, but don’t have the money.”

To keep your own business healthy and profitable, yet still help out the cash-flow-challenged, set a percentage (5 to 10% of your work time) for pro bono or el cheapo work you will do, and stick to it. Oh, and if you notice that this “poor” prospect is driving a new BMW, then bill them full rate.

– “Wow, this may be an interesting new thing I could get into!”

“After all, we can really do anything!” Not true. Stick with your core expertise. Go back and reread your mission statement.

It’s important to qualify—and disqualify—any prospective client early in the interaction. You don’t want to spend several hours with somebody then discover that you won’t be working with them.

Finally: All the above applies to firing an existing client as well.

The 3 Barriers to Small Business Growth

Your business is growing and profitable, then BOOM, you hit a speed bump. Or you get stuck in a swamp. What happened? You ran into one of the growth barriers that are dang near universal.

Your business is growing and profitable, then BOOM, you hit a speed bump. Or you get stuck in a swamp. What happened? The bigger you grow, the tougher it can be to grow yet larger. I call this the “paradox of small business growth.”

As your company grows, you’re likely to run into three barriers at different stages of growth. Seems to me these are dang near universal!

Barrier #1. You’re a solopreneur, yet you want to grow beyond what you can handle working by yourself. But you get stuck in “the business is moi” trap.

Your growth challenge: Learn how to find good employees, then trust and manage them well.

Barrier #2. It’s you and the crew, but further growth is limited because everybody reports to you, and it’s running you ragged.

Your growth challenge: Learn how to be the CEO and entrust day-to-day operations to your skilled managers.

Barrier #3. You’re a successful, strategic CEO of your growing company, and now it’s time to move on to the next thing—sell, retire, start something else. But you’re so tied to the business, you can’t bear to turn it over to others.

Your growth challenge: Learn to let go.

I’ve been working with owners at all three levels for a lot of years. Here’s what they have in common: They have a management style that has worked very well to get them where they are. But to get to the next level—and they definitely want to get there—they must change what works. “It works, but break it anyway!” And this is very painful.

Many can’t make the leap. They decide to stay the same, and come up with very convincing explanations why further growth is not desirable for them. Alas.

There are straightforward ways to tackle these barriers. Once you see them laid out, you say, “Oh yeah, I could do that. I just need some guidance.”

This fall I’m going to offer a program that addresses each barrier. (You can only be at one barrier at a time.)  I’ll elaborate on each of these barriers in later posts.

In the meantime, I’d love some examples from the Peanut Gallery. If you read one of these and moan, “Ohh, that’s me right there you’re talking about!” let me know your story. Where do you want to go; what’s in your way?

We learn best from each other. You learn to transcend your barriers by seeing how others have done so (or even by watching them be stuck).

How entrepreneurs get started

If you don’t have a workable product, then you cannot demonstrate that everybody wants it. Without this evidence, nobody will invest in you.

From a question on LinkedIn by Robert Saric: “Do you agree — first build the product everyone wants, then raise enough money to build the business?”

I agree, Robert. If you don’t have a workable product, then you cannot demonstrate that everybody wants it. Without this evidence, nobody will invest in you.

Creativity and innovation are hard; building a business around these is much easier (though still difficult). Creativity and innovation are rare, business skills are much more common, investment capital is plentiful. But investors want strong evidence that you can give them a 5x return.

Thus most businesses are initially self-funded, or rely on “3F funding”: family, friends, and fools. You go into hock to build your prototype and see if you can generate some market buzz. Then you go after angel or VC backers. You get some seed capital, do more marketing, produce more results, then go after 2nd round financing.

You build stepwise in this manner. You hire only those who are essential to get your product to the next level.

Pre-dot-bomb and pre-“great recession” rules were much different, but this is 2010, and investors hold their cash with an iron fist.

*   *   *   *

If you’re in this situation, and don’t see where the capital is going to come from, let me know. I’ll be glad to talk you through it.

Lessons From a Gawdawful Year

“What if I was this cost-conscious in the good times?” “I saw how arrogant I had been.” “I let myself get discouraged.” “I only kept half an eye on the books.” “We lost sight of our goals.” “We should have laid people off sooner.”

Some people have told me that ’09 was not their best ever year! But what doesn’t kill you makes you stronger. What lessons have you learned from this tough year? Here’s what people in my Success in 2010 plan workshop sessions have been saying:

“We’ve had to cut costs to the bone. We’ve managed to save 10%. It struck me, what if I had been that ruthless in good times and not just bad? I’d have 10% more bottom line. Money to put in my pocket, to create a cushion for future tough time or to create a growth fund.”

“2009 was humbling. I saw how arrogant I’d been. We assumed that growth would just keep going. But when the phone stopped ringing, we had to relearn Marketing 101. For example, setting targets for number of new clients, and tactics how to bring them in. We should have been doing this all along.”

“I let myself get discouraged by telling and retelling the same old story of woe about how bad 2009 was. This was killing the business. During the plan workshop, I wrote it all out in excruciating detail, took one last look and then tore it up in little pieces. Now the slate is clean for 2010.”

“We kept people on way too long. We should have laid people off sooner. I was afraid that we’d never get the good people back. I’ve learned we cannot guarantee jobs. We must retain labor flexibility. From now on, our scheduling must go along with revenue—not just shop people but admin as well.”

“We saw our employees perform better in tough times. They’re more friendly, supportive and team-oriented. Is this fear of unemployment? I think they just saw the trouble the company was in and it focused their thinking. As a result, people are doing better client work than ever.”

“I watch the books like a hawk now. During good times, I only kept half an eye on the books. I’ve got to track how we’re doing—even day-to-day. I can’t wait till the end of the month to see what we did a month ago.”

“We hunkered down and lost sight of our goals. We’ve had to get in touch all over again with our long-term vision. It’s the source of our direction and inspiration. Without this we’re just wandering around.”

“Tough times force us to make better decisions. In fat times, we get lazy; let bad decisions slip in; spend too much on marketing and keeping poor employees, etc.”

“We laid off 40% of our people and kept the best 60%. Now that business is picking up, I’m giving more hours to our remaining people—even overtime—rather than rehiring. I see that paying overtime for existing people is cheaper than paying health insurance, workers comp, etc for extra people we hire.”

“We got a lot less picky about our customers. We’re going after smaller clients we would have said no to before. And without these, we’d be dead now.”

“A key employee left unexpectedly. This threw us for a loop. The lesson? Cross-train. Don’t be put into a position so that the company is held hostage to whether one employee stays or leaves”

What lessons have you learned? Add ‘em below.

Getting Past Procrastination

Do you ever procrastinate? Stop kicking yourself! Here are some ways we help each other counter this.

Inspired by a short article in BNET, “Why We’re Wired for Procrastination

Do you ever procrastinate? Stop kicking yourself! The linked BNET article says it’s not a moral failing; it’s just the way the brain is wired. Here are the first three “brain quirks” and the resulting “procrastination effects.” (There’s more detail in this Psychology Today article.)

  • Quirk 1: The brain is built to firstly minimize danger, before maximizing rewards.
    Procrastination Effect:
    We avoid tasks that threaten the self, and we discount future rewards in favor of immediate gratification.
  • Quirk 2: Too much uncertainty feels dangerous. It feels like possible pain so we avoid it.
    Procrastination Effect:
    Uncertainty — not knowing what to do next — is scary. Delaying a task becomes a way of coping with or avoiding that fear.
  • Quirk 3: Our conscious processing capacity is small, which makes us terrible at a lot of things, including predicting what might make us happy.
    Procrastination Effect
    : It’s difficult for us to set realistic goals — or stick to them.

Well, okay, procrastination is not a moral failing, but we still have to run a business, and get things done.

My clients are small business owners, and I see this behavior everyday in them (yes, and in myself). This springs up whenever they need to get out of their comfort zone and dive into the new, e.g.:

— Making marketing calls
— Expanding into a new niche
— Hiring a top level manager
— Investing in growth
— Preparing their business to sell
— And the #1 Procrastination Generator: Writing a book! Hey, many of us get frozen up trying to write a blog post!

So how do you counter procrastination? I was excited to note that the way I work with owners helps limit their procrastination due to these “brain quirks.” Here’s how: I put together groups of 10 owners. Each ongoing group meets half a day a month. The purpose is to tackle the challenges to growth you face, using the group as your problem-solving panel and sounding board. But these growth challenges are the very ones that generate the most procrastination, because you are forced outside your comfort zones. Thus a big part of what we do is have members set commitments, then report back to the group the following month.

Being held accountable by a group of peers you respect is a powerful force. As one woman said, “There’s no way I’ll go to the group and not have my commitments done! I’ll stay up till 2:00 am the night before if I have to.”

The 9th Circle in “Procrastination Hell” is reserved for people who write books. And business owners who write books are in the center of that circle. Running your business is a full-time job, and writing a book is a full-time job. The business pays you now; the book might pay you something way off in the future. The business gives you instant feedback on how you’re doing. The book? Will anyone ever read the dang thing? Writing a book–even a business how-to book–is complete self-exposure.

Thus writing a book scares the bejebbers out of people. (I’m saying this as a guy who’s published four books, and many workbooks.) I tell people a book takes two years to complete: 10% of the time writing; 90% agonizing over it.

An example: A consultant I’m working with has been writing a book about his field for the last couple of years. The early parts went really well, but the  closer he got to the end, the slower it got. He’s down to writing the lead ins for each chapter, and progress was zero. Every time he set aside time, something would come up. Paid client work! Can’t miss that. The wife needed his help. The dog had a problem. Etc.

We talk by phone 10 minutes a week, setting goals, then reporting how it went. Every time there was no progress, we problem-solved how to do better the next time.

Finally one week, he made a bit of progress. Elation! Congrats!

Then the next week, he reported that he had completed all the rest of the chapter summaries. “Once I got started, and generated some momentum, I just kept rolling,” he said.

Lessons:

1. Having a coach really helps. When I write my books, I hire a coach to keep me on track.

2. When you are stuck, find a way to get unstuck that will allow you to make a bit of progress.

3. Once the logjam is loosened, and you build some momentum, keep going. Stay on a roll as long as you can.

4. Strike while the iron is hot! When you feel a bit of inspiration, go for it RIGHT THEN. If you wait even 1/2 hour, it’s gone.

In my e-book “Recapture Your Time,” I have a section on getting creative things done while you’re running a business. Overcoming resistance. Carving out time for development. Finding your best creativity work style.

And I’m also doing an e-book on “Cash Flow From Your Creativity.” When will it be done? Depends on how well I practice what I’m preaching here. If you’re interested, bug me, then I’ll be more likely to get it done sooner.

mvh

When Do Companies Stop Being Creative?

9 creativity killers for small business owners. Failure of creativity follows shifts in the attitudes of the owner and other key people

(From my response on joyofhumancapital.com.)

A. As I look around at the small business owners I’ve worked with (including myself) here’s what I see:

1. Creativity comes in all kinds and sizes of business, and so does failure of creativity.

2. Failure of creativity follows shifts in the attitudes of the owner and other key people

CREATIVITY KILLERS FOR SMALL BUSINESS OWNERS

• Owners get dragged out of creativity by the demands of running the business day to day. This has a lot to do with your own management style. “ I can’t find good people that I can trust.” “I got into this business to do what I love; now I spend all my time as a damn manager.” Thus you are continually pulled back down into lower-level tasks, and can’t focus on creativity, vision, strategy.

• Lack of support. Nobody is pushing you to take the creative leap, nor problem solving how to overcome the hurdles. No-one following behind, handling the details, executing the vision.

• Lack of systems; seat-of-pants management. Thus your “franticness quotient” increases exponentially with growth.

• Ill-fitting systems. E.g., accounting or project management or sales tracking systems that don’t give needed performance information to the owner.

• Constraining systems. Too much “by the book” or “bean counter mentality.” Of course the owner has put these into place, but then starts believing in them.

• Failure of vision. A creative owner gets beaten down, burned out. You have one good idea, but stick with it long after the window of opportunity has slammed shut. Or you fear taking the needed next step. “Tried that, got beaten down, it didn’t work, now I’m gun shy.”

• You get out of touch. You drift into an eddy out of the current of new ideas and technologies. This can be related to age, but there are many creative codgers out there.

• You get too comfortable. The balance between work and life tips toward Maui.

• Physical/mental impairment. Alas, this eventually catches up with us. If you’re smart, you’ll go out at the top, handing the creative reins over to the young whippersnapper you’ve groomed—and whose ideas you probably hate.

What’s the answer? First, see if you spot yourself in the above list, and own up to it. Then you can tackle the problem.
— My book can help you tackle this challenge: How to Grow Your Business without Driving Yourself Crazy.
— If you were a member of one of our business owner groups, this would be a perfect challenge to bring up to your group of peers. This is valuable because it’s often hard for us to see and acknowledge our part in this process.

— Call or email me. I’d be glad to talk with you a bit about this at no charge.

Has Your Company Stopped Being Creative?

I see small companies launch in a burst of creativity, then slowly lose their creative edge over time. Why?

This post was catalyzed by “At what size do companies stop being creative?” on www.joyofhumancapital.com

I see small companies launch in a burst of creativity, then slowly lose their creative edge over time. How about you? Tell me about you and your company’s creativity.

My clients are small business owners – from a handful to a hundred employees. Run by the owner, who is often the founder as well. As I look around at the people I’ve worked with (including myself) here’s what I see.

First, two observations:

1. Creativity comes in many flavors. Not just the “creative industry” like ad agencies. Also creative business concepts, product dev, designs; creative marketing campaigns, merchandizing, or product selection; creative distribution or service packaging or customer service; creative team building or organization structure; creative pricing or financing.

2. Creativity comes in all sizes, and so does failure of creativity.

CREATIVITY KILLERS FOR SMALL BUSINESS OWNERS

• Lack of support. Nobody is pushing her/him to take the creative leap, or problem solving how to overcome the hurdles . . . No-one following behind, handling the details, executing the vision.

• They get dragged out of creativity by the demands of running the business day to day. This has a lot to do with their own management style. “ I can’t find good people that I can trust.” “I got into this business to do what I love; now I spend all my time as a damn manager.”

• Lack of help. Owner continually pulled back down into lower-level tasks, can’t focus on creativity, vision, strategy.

• Lack of systems, relying on seat-of-pants management. Thus their franticness quotient increases exponentially with growth.

• Ill-fitting systems. E.g., accounting systems that don’t give needed performance information to the owner.

• Constraining systems. Too much “by the book” or “bean counter mentality.” Of course the owner has put these into place, but then starts believing in them.

• Failure of vision. Creative owner gets beaten down, burned out . . .  Has one good idea, and sticks with it long after the window of opportunity has slammed shut . . .  Fear of taking the needed next step. “Tried that, got beaten down, it didn’t work, now I’m gun shy.”

• Gets out of touch. Drifts into an eddy out of the current of new ideas and technologies. This can be related to age, but there are many creative codgers out there.

• Gets too comfortable. The balance between work and life tips toward Maui.

• Physical/mental impairment. Alas, this eventually catches up with us. If you’re smart, you’ll go out at the top, handing the creative reins over to the young whippersnapper you’ve groomed.

Can you add to this list? And how did you overcome this hurdle?