How not to fail.

This is near the anniversary of my biggest business failure. I learned some very expensive and some very painful lessons. Here’s the short story.

As a formerly successful entrepreneur I figured I could start a new enterprise that would be even more successful than my first company. I had ten years of success and so going after another goal…well it’s seemed doable.

There were two big mistakes that I made that, for coaching purposes, I will  share with you. 1. I was so sure of my success in the venture that I didn’t want to take on any partners. 2. I was so sure that my idea would work I ignored what was going on around me and in the technology world in general.

My simple idea was to have a way for anyone anywhere who wanted to hear/sample a cd before they bought it simply call an 800 number and through the magic of Telephony technology (Press one for two for etc.) they could find and play samples of the selected cd. Note that this idea was prior to the internet…but just only 6 months before the internet. The IR technology that existed at the time just had to be tweaked so to speak and then sold to companies that were selling music and any audio cd. Finding the technical people to accomplish this was not too hard. I choose to finance the company with my own funds.

This choice sounds natural enough but here is a lesson. If you have an idea that is valuable and other people think so then other people will want to invest. If you don’t give other people the opportunity to invest that is your choice but if don’t find other people to invest then maybe your idea is not worth investing in (gambling on). Lots of people surveyed at the time thought they would use the service. Some record chains were just beginning to let people hear music before they purchased in the store so why not over the phone?

Here’s the thing about technology that my blinders would let me see at the time. Technology moves much faster than one can imagine. By not keeping one eye on the developments of the tech of the time I got behind in developing a web version of the same service. So the unique selling proposition I had was obsolete before it was sell-able to the market. Do I regret losing tons of money? Of course I regret it. No reason for you to do that same mistake.

If your business needs to keep up with or ahead of technology then you must be prepared to either have very deep pockets or very wealthy friends/backers. This is so obvious in today’s world that it hardly needs saying. But the point is knowing how your particular business niche is moving forward via your competition or the industry at large is very important. Having the latest technology may not be necessary but knowing how technology will impact your specific business in both the short term and long term is now part of your job (yet another hat to wear).

Learn from your mistakes (miss-steps) and be prepared to change course quickly when necessary.

Keep on keeping on…

Going the Distance

Going the Distance

Most of us in the USA have heard this phrase, “to boldly go where no man…etc.” in reference to just about any adventure. Starting a business is not like going into the unknown and yet “unknowns happen.”

I’ve started several businesses over the years and I can assure you that there are always challenges you don’t expect. Aside from natural disasters, the most challenges new businesses have either are with cash flow or personnel issues and sometimes both at once.  In former blogs we have gone over how to approach some of the issues and no matter how much you plan still you will be surprised.

So how to handle ‘surprises’ that are not wanted or expected can be a useful skill. If your business is maintaining good or even Okay cash flow then the issues one needs to handle will be the ones created by those that work for you or with you or those whom outside your business you depend on in one way or another. Sometimes, more than you might want to recognize the “issue” you are troubled by may be a problem not created by someone else but by you.

Take a breath and take this in, we often create our own challenges and sometimes others help us do that or maybe simply throw fuel on the fire for whatever reason. It can be hard to see our part in a situation when the heat is turned up and time is an issue. But this is what we need to do. Stay calm. Stay centered. Stay ready to be flexible while working out a resolution that is fair to all. Of course, sometimes an employee will break the rules and or not learn from their mistakes. It is difficult to let some go once you have gone to all the trouble to vet them in the first place. But this should be the last resort in most cases of incompetency. Sometimes things just don’t work out, and relationships are one of the hardest things to ‘work out’.

In business there can be a middle ground where everyone is OK and ‘wins’ in one way or another. This should be the goal. Giving people a way to “save face” as my Japanese friends use to advise, is a good strategy.  But sometimes confrontations will need to be resolved by letting someone go. If at all possible always let someone go with some from of Grace. What is Grace? Well how would you like to be told you are not going to make the team? Be gracious and yet firm. Have specific reasons and give constructive feedback. No matter how upset the other person may be you can afford to be gracious even if you are terribly disappointed.

Keep on keeping.

The Challenge of Ownership

The Challenge of Ownership

Besides the challenges of having enough cash to start and run a business the next big deal is to get the business running well enough that the owner can afford good assistants or partners, and or workers so that the owner can begin to ‘have a life’ beyond the business. Building solid working relationships with employees is key to growth and keeping one’s sanity.

So how do you find and keep good help?

Some small businesses are a family business and whoever is available and ready to work may be your next employee even if they are not the ideal candidate. Most owners will be challenged to find a good assistant or sales person. Here are some tips. You want to find someone slightly over qualified who is truly interested in what the business is and wants to do whatever it is you want them to do. Easy said, I know. But the idea here is whoever you hire they likely will leave when they find a better job somewhere else unless…and this is really important, they have an opportunity to learn and earn more with your firm.

There needs to be a way for a person to both learn to excel at a job and have the chance to grow into having more responsibility and of course, earning more as well. If not you might have an assembly line of first time workers coming through and you will be spending way too much time training each one and managing them and no time to grow the business.

Where to find good people? Depends on what kind of help you need and how much you are will to pay or can afford to pay. But pay is not always the prime issue. If the business has potential for growth and is challenging in a good way, then you will have a better chance at finding ‘good’ help.

Good help can come in all shapes and ages and from every possible background. But it’s the individuals that have a more outgoing personality that often make the best employees if they also want to work.

Can you pick out who wants to work…not out of necessity but out of that’s just how they were made? There are tests to find these kinds of people but often small businesses don’t have the resources to go down that road. Meeting someone and shaking their hand, looking them in the eye and talking with them for 10 minutes should be all the interview you need. Let you gut be your guide. If it feels right to hire them then do so and get on with your business.

Some people are quick learners some not, but if they want to learn it will show in their actions and questions. If they push for more to do that’s a good sign. If they do tasks well and on time then tell them so and invite them to do more.

More on this later…keep on keeping on

A Job Well Done

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When was the last time you experienced ‘a job well done’?

What service or product was it? What was it about that service or product that made you think, “Wow, what a great …”

Can you pin point what it was that was so great? Maybe everything was great.

Friends and I went to a local restaurant, The Five Mile House, outside of Nevada City and had great service, great ambiance, a great meal, and great entertainment at a reasonable price. Each one of us was impressed and will return again…the highest rating a business can get indeed. Not only that, here I am telling everyone what a great time we had. It was so good I had to personally thank the Chef and owner before we left for the evening.

Now, take your business, whatever it is, and think like a customer. Would you give your business a “great” rating? Why or why not? Of course, we like to think everyone would be impressed with our business and its offerings but are you getting those kind of ‘thank you’ comments from clients?

If not, why not?

Surely, there are always improvements to be made, but once you have the right formula for success in your particular business then the business should be flowing and growing. If not then look close at what is going on. Ask your clients for their feedback and take it seriously.

Even with impeccable service and/or products businesses do fail. So looking at the bigger picture is paramount for all owners. Timing, market placement, a unique selling proposition, and clever marketing are also very important aspects of the business. Also, as we have gone into previously, cash flow is king.

The Five Mile House owner had to endure the past 5 year of bust to get to what looks like a profitable place in the crowded food service industry here in the Gold Country. But endure he has and now his hard work is paying off. The growth may be slow but slow steady will when the day in most cases.

Keep on keeping on…

One Small Business Conundrum

One Small Business Conundrum


Those who know say a business has to grow if it is to survive. There may be some exceptions but I want to focus on the proposition of growth as a way to go.

I was fortunate to have been invited into a new business as a person “Friday”. I did whatever was needed from sweeping the floors to answering phones to stocking to testing electronics. Being a card carrying English major I was happy to have the second job. My main work at the time was in Public Relations. The new electronic business was started by a very bright Stanford graduate who knew his way around Silicon Valley just as it was becoming Silicon Valley. Anyway, the team assembled worked well together and sooner than I had expected I was helping in sales and then managing sales. The business was growing mostly in spite of itself just because we were in the right place at the right time with the right services—electronic recycling and distribution.

Three of the that companies’ main players (myself and two others) decided we could go start our own company because the owner was getting more insane each week. And so we did leave and managed to catch some of the same good timing of the markets.

Like most business cycles we had to weather the ups and downs of the electronic industry boom and bust juggernaut. But mostly we grew the company because: 1. We recognized that we needed help, 2. We didn’t want to continue to work 80 plus hour weeks. 3. We could share the wealth and work less, that is, we had a budget that would support hiring support staff.

That was many years ago and I have had the opportunity to start other businesses…smaller businesses mostly and learn that good ideas do not always equal success. Timing and teamwork are more important than ever.

As a small business you need to have a vision of where you want the business to go but perhaps even more important you must know 1. That there is a market for what you want to offer, 2. That you know who will buy and how much they will pay for your offer. 3. And that you must know you will not get there alone…you will need help and you will need to budget for that help.

To grow the service or product you offer must have a future…there must be evolution inherent in your plan to survive. Evolution is the natural order of life. Chaos happens but eventually order comes out on top. So consider the long view when considering your business plan.

Take a look around, notice who has survived the longest in your niche. Notice what they have done well. Some lessons can be learned without spending money. Ultimately you will spend money to make money, so do so wisely by getting help before you need it.

Keep on keeping on…

Motivation vs Motivation

Why do

you do

what you do?

Motivation is understood to be the ultimate motive(s) behind your actions.  When I think about what motivates me I start with a list that might look like this:  enjoyment, fulfillment, make others happy, make money, be healthy, be a good neighbor, be a good citizen etc. All very OK, but maybe not quite as deep as one can go. You will need to go deeper if you intend to find your true motivations.

Why should you do this search?  To find your deepest motivations will help you achieve clarity and to sustain your desire for success when the odds seem to be against you. That said, when you do feel that the odds are against you it would be advisable to get a second opinion. One of the companies I started failed spectacularly because I was not in touch with my real motivation and I did not seek outside help and would not accept other people’s ideas. I wanted to do it my way, I knew I was right, I knew the time was right, I knew the service was right because I did have focus groups telling me so, and I knew if I pushed just a bit harder I would ‘win’.

I lost. My ego was so invested in my way of doing the business that I couldn’t see the forest for the trees. The business opportunity window slammed down hard and because of my nearsightedness I almost lost my family and I did lose my life savings. I know now that I’m not alone in having that kind of experience but when one is in that situation and you feel like you are alone that is a big clue that you need to stop and get help. I didn’t and I paid a huge price on many levels. Yes, I learned a lot and I am here to help others not make that kind of mistake.

I have won on other ventures and I would say that the main difference is in having the right staff and or partners to both share the vision and share the burdens and the wins.

“But, Michael, I’m just a one person show, how can get to that next level?”

If there were a simple blueprint for success in business there would be a zillion books already written with all those helpful suggestions or rules or laws printed inside. To be fair there are a lot of great books that have good advice and/or info in them. Regarding the motivation inquiry I can endorse one of my all-time favorites: “The Seven Habits of Highly Effective People.” By Stephen R. Covey. This is a classic business/life book that will never go out of worth.

Reading thoughtful books should be part of your daily regime. Even if it’s just a few minutes before you nod off each evening. Do not short change yourself, be proactive and find out what is/are your true and deepest motivations.

And keep on keeping on…

Money and You

Cash flow is king

It’s said that money is the blood of a business. But it takes blood, sweat, and tears to start up, run and succeed. If you are the one who started the business then you are the one ultimately responsible for making sure that cash is flowing. Of course, we mean flowing in and out and in again. That whatever you call your business it must become a money making machine. That means you have planned how when you will get to a positive cash flow. However, what often happens is most entrepreneurs woefully underestimate the amount of funds needed to get to the profit side of the equation.

Whether you say you are ‘shoe stringing’ it or getting backing from a bank you will wind up short because you just can’t plan for everything…as in, you don’t know what you don’t know. So now you wind up not paying yourself, maybe you have to tell your investors you need more cash or worse tell your life partner you’re out of money. I’ve done all three over the years and pushing the limits of your relationships with your partner and family is by far the toughest situation which I hope you wont have to go through.

Spending money to make money is for most businesses the way it works. Some exceptions exist in the service business world but even then if you are to build your service business you will need to spend money for infrastructure and help at some point. So you must plan to make enough capital to include set backs and growth.

Here’s the deal, planning to make money works out better than hoping to make money. Does this mean business plans are a must? Not in every case however, having a business plan will help keep you focused in those rough times that will happen. Plans do and should change when they need to. Being flexible is important; knowing when and how much flexibility is called for however, is more of an art.

I recommend you plan to earn 2 to 3 times more than your overhead. Do you know what your true overhead costs are and will be in the near future? What kind of business you are in will make a huge difference in what your net should be. But as a rule, you need to be aggressive and reasonable at the same time.  Remember this, it’s not how much money you make, it’s how much money you keep.

Keep on Keeping on…

The Trouble with Money

The Trouble with money

What are you worth?

What will people pay?

The Trouble with money

My Dad said, “Money doesn’t grow on trees.” Most parents have ways of saying no to the requests of children by giving them one a liner that may in some way make sense but are more a like Zen koan to the inquisitive young mind.

Of course money doesn’t grow on trees, so far, but the Fed makes it like as if it does. But you and I have to earn it in some way. So either you work for someone else or you work for yourself.

The trouble with money is that we as a society have become more than attached to it. But I’m not going to preach on that subject today but rather take it at face value…we need money to live in this world. On a higher level money is a symbol of energy being exchanged for something else: a service or product. Money is only valuable because we as a society have declared it so.

So if you are not producing enough income/money then perhaps what you are offering is not considered valuable or valuable enough by others, OR you have not figured out how to price your product or services, AND/OR you are not selling to the correct market OR you are being screwed by a system that is taking advantage of you.

What are you worth?

Could be all those options are true to some extent but let’s take the higher road. You have talent or a great idea, or a new or better product to offer the world and you need to figure out what its worth. So go ask people what they would pay and see what you learn. This is basic but essential market research. Most people starting out in business skip this for one reason or another and find out too late that there was never a “there there”.

Your time is worth more than anyone can afford if you consider this life is short and the time you have to make money is short. So take time to be realistic about how you will spend your precious time doing something that will produce income and hopefully even make a difference.

What will people pay?

Unless you have a truly unique product or service you may already have a good idea what the buying public is paying by researching your competitors.  Maybe you can do it cheaper than the next person but that tends to be problematic if you are a small business person. It’s a much better plan to find the right niche or clientele who can afford and will pay for your time or product. But it is generally true that everyone loves a bargain so there is a balance you need to consider. Perception is often considered reality. What we perceive to be “true” is what we think is true. Of course, this is not the actual truth we are talking about but rather what we feel is true in the moment. Advertising has trained us to perceive value and benefits in such a way to completely side step what is in fact true. But the point here is you must help your potential customers perceive your value and convince them that the benefits are both real and worth their hard earned money. This is a universal business ‘truth’ which you cannot ignore.

Researching the value of something will help you know if or how you will succeed in your specific business. Take this point seriously and your chances of success will rise accordingly.

Keep on keeping on…