Celebrate Your Accomplishments

In the rush of meeting orders and collecting enough cash for payroll, many entrepreneurs don’t take enough time to celebrate accomplishments. It can be big things or little things, milestones and anniversaries. Celebrating on-going accomplishments is a way of building a positive, growth-oriented, and hopefully ‘fun’ culture within your business.
One of my favorite stories about celebrating milestones in business comes from one of our alumni, Charles Hagood co-founder of The Access Group. I recounted their celebratory tradition in the opening of the case study that I wrote about their business:
“The duck quacked. It was a long standing tradition at The Access Group (TAG) to enthusiastically make a stuffed duck they kept in their office quack whenever they landed a new project. In fact, that duck had been quacking much more often in recent months. The recession that started in late 2000 and the aftermath of 9/11 had taken a toll on manufacturing companies, which has been TAG’s main client base. But their fiscal year 2003-2004 had seen improvement in both the top and bottom line, and their forecast for 2004-2005 was for TAG to have its best year ever. Charles Hagood and Mike Brown were once again able to think about strategies to grow their business.”
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That’s right. Middle-aged engineers march up and down the hallway quacking a rather homely looking stuffed duck whenever they land new business. What a wonderful way to build a culture that celebrates success.
We had a tradition of celebration in our business that also involved, coincidentally, ducks.
When we first went into business together my partners, both physicians, found a particular piece of art work I hung in my office to be, well, funny. It was a rather nice scene of ducks flying out of a marsh–a painting like you might find in hundreds of offices around the country.
It looked a lot like this picture:
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My partners had decorated most of our office space with trendy and modern pieces of art. My picture to them was way too “corporate” for our entrepreneurial venture. But, I liked it and it stayed.
On our first anniversary in business together, my brother (one of my two partners) gave me a present to mark our first year in business. It was–you guessed it–a duck. It was a beautiful carved mallard to be precise. On the second anniversary of going into business he gave me the female mate to my mallard. Each successive year he gave me another duck; each unique.
Over the years these ducks became a wonderful focus of conversation for those who visited my office. The ducks symbolized our staying power in the volatile industry of health care during the 1980s and 1990s. Each year our staff would check in to see this year’s duck for the collection.
Finally, on the ninth and final anniversary of our business he gave me a magnificent carved loon to commemorate the successful sale of our business. I was moving to the land of loons–Minnesota–to begin my current teaching career, so it was a fitting end to our tradition.
The ducks are on prominent display in my office here at Belmont. They allow me to tell stories about tradition, celebration and longevity in business to my students.
Milestones and anniversaries are important, so be sure to celebrate.
What brought this topic to mind today? Well, it is our 27th wedding anniversary! So from Dr. C to Mrs. C — Happy Anniversary!!!

LLC or S-Corp

I often get asked whether a new business should form as an LLC (Limited Liability Corporation) or an S-Corp. My non-lawyer answer has usually been that, generally speaking, an S-Corp is a bit simpler and cheaper to set up, so unless an attorney has specific reasons to go with an LLC go with the simpler and cheaper option.
There is a lot more case law on S-corps so their rules have been ironed out more clearly over time (one of my personal business goals was to never have my name or our company name in a famous case in the tax laws). However, for most businesses the differences are not that significant so if you get set up one way or the other by your attorney don’t worry about it too much. Establishing good cash flow is much more important!
If you like to explore the intricacies of the legal pros and cons of each approach to organizing your business, nolo.com has a very comprehensive overview. Reading such things makes my hair hurt, however.
Some states are moving to make forming and maintaining an LLC simpler. For example, Tennessee just enacted such legislation.
It is not a life or death decision, but is one that can be intimidating for first time business owners. You will get conflicting advice. The best course of action is to talk over your long-term business plans with your attorney and your accountant making sure that the organizational form you pick fits your vision for what the company will become. For example, a business that will likely try go public in three years may need a different approach to legal formation than a business that never plans to have more than the original two shareholders.
Also talk through costs with the attorney. There are fees to set up the legal entity charged by your lawyer, fees that the state charges to file your legal entity (different for LLC vs. S-Corp in many states), and on-going yearly fees due to the state (varies by state).

China may be Cooling as International Entrepreneurship Hotbed

A couple of reports may signal a softening of international entrepreneurial activity in China.
First, Red Herring reports that venture capital investments in China fell in Q1 of 2005.
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“Venture capital investment in China dropped 24 percent in the first quarter, and some observers are blaming enforcement of a new government policy….The drop may have been caused by a regulatory initiative known as Document 11, which was circulated in late January. The rule makes it difficult for Chinese entrepreneurs to establish the elaborate structures that facilitate listing on international stock markets.”
Second, the Treasury Department in looking into possible Chinese manipulation of monetary policies to effect trade. Any retaliatory efforts by the US could make outsourcing to China a more difficult and expensive process.
Add these developments to the pervasive reports of Chinese businesses thumbing their noses at intellectual property rights and we may see a rocky road ahead for our economic relations with this government. At a minimum, it all drastically increases the risk for American small businesses doing any business with Chinese companies in the next year.

Is EU Getting on Right Track to Foster Entrepreneurial Development?

The National Dialogue on Entrepreneurship reports that the European Union plans to move decidedly in the direction of a planned economy. They will be funneling billions of Euros into information technology and renewable energy. Such governmental picking of economic winners is quite likely going to lead to little long term benefit, as such initiative have rarely succeeded over the long-term.
But as part of this announcement, the EU said it will be focusing its efforts on reducing regulation of small and medium enterprises. On the face of it, this is a policy that could help spur more entrepreneurial development across Europe.
However, as Europe has a long history of governmental and cultural barriers to entrepreneurship, they will have their work cut out for them. Bureaucracies and cultures take a long time to change. Additionally, there is no word on tax cuts or tax simplification, both of which are also key to encouraging more entrepreneurs.
The other key ingredient for entrepreneurial growth is education. While entrepreneurial education has increased across Europe, they are also leading efforts to create certification exams for entrepreneurs through governmental oversight.
Europe has a long history of making business start-up a difficult and even daunting process. While they are taking some small steps in the right direction, it is unlikely that they will lead to enough change to make a difference. Socialism has deep roots throughout Europe both culturally and institutionally. Most new EU policies and initiatives (remember the World Tax) are moving toward even more tax burden on wealth creation and more centralization of economic planning.

An Age of “Micro Marketing”

Entrepreneur.com offers some interesting insights into trends related to American consumers. As I have written about related to the entertainment industry, mass marketing based on broad demographic categories is no longer the dominant strategy for reaching American consumers.
We are a country of “micro markets.” This plays right into the hands of entrepreneurs as micro marketing is what we do best. We love finding niches and giving them what they need. There are many factors that have helped to create today’s entrepreneurial economy, and this shift in American consumers is clearly among the most important forces at work.

Real Estate Related Overhead is Your Enemy

Overhead is the enemy of entrepreneurial start-ups. Every dollar that is spent on overhead is a dollar that does not make it to the bottom line. Precious operating profits get eaten up by overhead preventing them from becoming net profits. Bootstrapping space is one of the most common and effective means to keep overhead costs down for start-up ventures. Start in your kitchen, your garage, your basement; anywhere that does not require you to pay rent.
Anita at Small Business Trends points out the power of virtual space for start-ups in this post. Entrepreneurs can literally start businesses with the founders all over the country if they plan communication correctly.

Bankruptcy Law Bad for Entrepreneurs?

Fortune Small Business has a column arguing that the new federal bankruptcy law will be bad for entrepreneurs. Why? They may be afraid to take certain risks.
(R)eader Johnathan A. wrote to say that he thinks the new bankruptcy law “will take away from the adventurous nature of small-business owners.” He’s already reevaluating his business plans: “As a small business owner, I will be less likely to take as many risks as I currently do. Expansion was a recent topic in my [business], but now I’m a little scared! If we blow it, I could lose my business, home, and personal savings.”
If a risky decision has a significant chance of bankruptcy, then it is not a prudent risk. So, if the new legislation keeps Johnathan A. from being “adventurous” that means that he will not take risks that may have an impact on other small business owners who are his creditors. Somebody has to pay for his aggressive decision making. Why not Johnathan A. himself?