New Adventures

Sunrise on 30A over Gulf of Mexico
Sunrise over the Gulf of Mexico. Jeff Cornwall

Well, my retirement has looked nothing like I imagined.

During the first six months, I filled my time with as many projects as possible. I went from working full-time for the University to working full-time on various interesting projects. I enjoyed everything I was doing, but it looked nothing like retirement.

Then, in early 2023, I was diagnosed with non-Hodgkin’s lymphoma. Chemotherapy was not on my bucket list for retirement, but it is what dominated much of last year.  The good news is that my treatment was successful, and I was told I was cancer-free after my last round of chemo.  I am so grateful for all the prayers and support we received from friends and family.

Our New Adventure

Toward the end of treatment, I was sitting on our back porch feeling miserable. I wondered why we needed our big house. As Ann always said, we lived in only a small part of it. When Ann got home from pickleball that day, I asked her if she was really serious about downsizing. She assured me that she was.

So, we sold our house, got rid of eighty percent of the “stuff” we owned, and moved into a small apartment a few miles from our house. We then began the process of exploring what our next adventure would be. We knew we were ready for a warmer climate and ready to live in a community with people at our stage in life. We have always enjoyed Hilton Head, but it can get almost as cold there in the winter as it does in Nashville. So, we settled on Florida.

Specifically, we decided to move to the panhandle of Florida, along the area known as 30A.  It offers a nice climate and is easy to get to from Nashville, where our kids and grandkids all live. We bought a lot and have begun the process of building our new home in Latitude Margaritaville Watersound.

Entrepreneurial Voices

Since I retired from the University, I have been working on my new book, Entrepreneurial Voices. My progress was slowed a bit during treatment, but I have been plugging away at it for the past eighteen months.

I’ve been talking about writing this book for decades.  It is inspired by the book Working by Studs Terkel, in which he interviews more than a hundred and fifty people from all walks of life about their work.  Most of his book contains direct quotes as people talk about “what they do all day and how they feel about what they do.”  My wife and I have always believed it would be compelling to develop the same type of book about entrepreneurs and small business owners.  When I retired, Ann said, “You now have the time to write this book!”

So, I spent much of the first year identifying dozens of interesting business owners and conducting long-form interviews about their journeys as entrepreneurs. Like Terkel, I wanted to capture not only what they have done as an entrepreneur but also the affective side of owning a business. The book presents the lessons and challenges of entrepreneurship from the business owners’ own voices.  The world is full of books in which authors give their views about entrepreneurship, including several written by me. This book offers lessons and insights from the words of entrepreneurs.

Entrepreneurial Voices will be published sometime in 2024.

My next several blog posts will offer my reflections on the lessons from various stories in the book. Although the chapters in the book are in their voices, my upcoming posts will offer my reflections on these interviews. Conducting, transcribing, and editing these interviews not only inspired me but also taught me many important lessons about not only the process of entrepreneurship but on being an entrepreneur.

 

 

 

It’s the Cashflow, Stupid

Profits are an illusion created by accountants.

You can’t grow your way out of a flawed business model.

Cash is King, Queen, Master of the Universe, and Emperor for Life.

These are mantras I’ve been telling entrepreneurs for years.  Nothing matters more to the life of a business than its cashflow, which is why a good cash forecast is so important to a growing venture.  Derek Baker at Cashboard offers his five reasons cash forecasts are inaccurate.  Great post, via CJ Cornell’s newsletter.

The Power of the Value Proposition

I have written before about the challenges new businesses face as they try to get established in the market and build revenues.  In one post, I compared new businesses to annoying little gnats flying around in the face of the market.

At the heart of early success for a new business is identifying a compelling value proposition that you can offer to the market.

Your marketing mix, that is the combination of your product positioning, promotional plans, and pricing strategies, all need to reinforce the value proposition you are offering to your customers.

Andrew Gregson explains how pricing reinforces the value proposition in a post at StartupNation.

The most popular pricing strategy for startups and small businesses is to follow the lemmings and charge what everyone else charges or to calculate the costs and target a certain margin. Both are disasters. Following the pack leads to average profits at best. Marking up from costs leaves money on the table.

Even though getting pricing right is tough, it is critical to put in the time to ensure your pricing reinforces your value proposition.

 

The Beast Comes Roaring Back

The beast is back.  Inflation is roaring, and showing no signs of letting up.  Small business owners concerned about inflation has increased from 74% in Q4 of 2021 to 85% in a recent update of the Metlife/Chamber of Commerce small business index.

Vulnerability of Small Businesses

The problem for smaller businesses is that they are less able to adjust to inflationary pressures.  Small businesses are the weak player when it comes to market power.  Time is your enemy right now, as inflation is raging at levels we have not seen in decades.

If you have big suppliers or customers, they can tie your hands.  Your costs go up, but you are unable to pass along these costs with higher prices quickly enough to keep up with the inflationary squeeze.

An additional worry is that we have a weak economy with inflation — this is called stagflation.  In this scenario, customers begin to sit on their hands.  When you raise prices they either buy less from you or even decide not to buy at all.  Consumers go out to eat less often and when they do, they buy less expensive meals.  They travel less and choose cheaper options.  They postpone buying new goods.  They also postpone maintenance on our big investments, such as houses, cars, and appliances.

Employee costs were already on the rise due to recent labor shortages, but now will likely accelerate as a result to their own challenges with inflation in their everyday lives.

What to do?

When inflation heats up even a little, be aggressive with frequent small price increases rather than waiting and trying to catch up at
some point with one big jump. Don’t let yourself get behind, as small businesses can almost never play catch-up if the delay price increases.

This can be tough to implement for some businesses, particularly if you publicly list your prices.  For example, it can get very costly to print up new menus each month for a restaurant owner who wants to follow this strategy.

But be vigilant.  Customers are less likely to pay attention to price increases if they are small, so it is essential to find creative ways to communicate your pricing to allow you to implement this strategy during inflationary times.  For example, a restaurant may use menu inserts that can inexpensively be replaced.  This was actually very commonly used in restaurants during the 1970s and 1980s when we had high inflation.

In addition, prudent management of finances can help a business survive inflation:

  • Find ways to cut expenses without impacting the core value offered to customers.
  • Keep overhead low.
  • Build cash reserves to buffer short term price increases that precede your ability to get higher prices from your customers.  I know this sounds contrary to the investment advice we are now hearing about holding cash during inflation.  Don’t think of this cash as investment — it is your lever to hold back the rising tide of inflation.  Think of it as an internal line of credit to hold off the impacts of inflation.
  • Watch your margins carefully. Worry about growing profits, not sales.
  • Don’t lock into long-term contracts that have narrow margins with large customers.
  • Pay down variable interest loans ASAP, especially now that interest rates are temporarily relatively low. As soon as inflation heats up, interest rates will continue to rise.  And given the stubbornness that the Fed is now showing with interest rates, we may soon see huge spikes in rates over just a few quarters as inflation takes hold.