[N]ow there’s news Richard Branson is accepting “micropitches” via Twitter for new
startup ideas.
It’s all part of a new startup conference dubbed PerfectBusiness that the
billionaire entrepreneur is helping to get going, and it’s pretty simple. All
you have to do is Tweet your business idea to @PerfectBusiness and add the
hashtag #micropitch… which means your business idea has to be compressed down
to just 111 characters to fit into the available space of a Tweet. Winners will
get two tickets to the conference, airfare to L.A. included, and business
coaching to turn the Tweet into a meaningful, complete company plan. There’s
even the chance Branson and team will choose your idea and get some VC funding
on board.
(Thanks to Belmont alum Tyler Seymour, co-founder of Just Kidding Productions, for passing this along).
This week’s question for Forbes magazine’s America’s Most Promising Companies initiative once again comes from Brett Nelson, Entrepreneurs Editor at Forbes:
Like it or not, leading the troops means keeping them happy and motivated. How do you do that while cutting their salaries and benefits to stay alive?
We know that there are two reference points that employees use to determine if their pay and benefits are fair. First there is the internal equity of the compensation — how it compares to people around them at work. If everyone is feeling the pain, they may not like it, but it tends to not effect motivation as much as if the cut-backs are selective. If the employees see that everyone — hourly workers, managers, and owners — are taking their share of the cut, the impact on morale and performance can often be minimized.
The other reference is people with similar jobs in other companies. Is their pay equitable when looking at other people in the community or in other companies in their industry? Since times are tough all over, there may be a sense that they are just happy to have a job.
Remember that both of these references — internal and external to where they work — will be used by employees to determine relative fairness of their current compensation.
Small businesses have always had other means of non-salary rewards and compensation that are not always used in larger businesses. More than ever, these can be used to help increase the morale and motivation.
Small businesses have more flexibility in how they structure compensation. To leverage this entrepreneurs should listen to what the employee really wants. There may be opportunity to meet their needs in ways that do not cost money.
An example comes to mind from my days as an entrepreneur in the healthcare industry. There was a manager I wanted to hire to run a new program we were
starting, as he was one of the best in our industry. He worked for a
large, national company. I knew I could not match his salary, but I did
not give up.
I got to know him and found out what he was really looking for in
his career and in a job. He wanted to have more control over his
department. That was easy as we were small and our structure was quite
decentralized. He could run the new program like it was his own
business.
He wanted to have some real ownership in the business he worked in.
We could do that, too, as we set up separate corporations for each new
program we started and we had already planned to offer a small
ownership stake for the right manager. Equity or equity-like incentives
can be a way to defer compensation until you can afford it, and create
an incentive that gets everyone pursuing the same goals.
There was one more thing he wanted, however, and it was clear it was
a deal breaker for him. His current employer had very strict rules on
vacations and holidays. He was a Viet Nam veteran and had wanted to go
to Washington, DC each Veterans Day to remember his fallen comrades.
His current employer’s rules did not make it possible to guarantee
that, and he had missed the last two Veterans Day observances. So, in
my offer I promised him that he would be guaranteed Veterans Day and
one work day on either side of it off each and every year (they were
counted as vacation days). That was all it took to convince him that we
were the best place for him to work. He came to work for us taking a
significant cut in base salary from what he had been making before.
My column in this week’s Tennessean is on the need for boundaries between the entrepreneur and his or her employees:
There is a risk in going into
business with friends — if the business relationship sours, the
friendship almost certainly will end.
But what if you find yourself becoming friends with employees you hire in your business?
This
is the question that one of our student entrepreneurs asked while we
were chatting in my office the other day. He had observed other young
entrepreneurs becoming buddies with their employees and wasn’t so sure
that was a good practice.
In
a small business, becoming friends with employees is a natural
occurrence. A small group of people working closely toward common goals
often develops friendships with each other. You all suffer together
through the trials and travails of start-up and early growth, which can
create strong bonds.
We
know that facing common adversity is powerful for building teams. Such
camaraderie can be a critical element in building a strong culture in
the business and in creating loyalty among your staff.
But, it is important for the entrepreneur to keep certain boundaries as such friendships develop.
No
matter how strong the team becomes, the entrepreneur is the one person
who is ultimately responsible for the outcomes of the business — the
one who personally has everything on the line.
Hard
decisions will have to be made at crucial points in the growth of the
business. And no matter how hard it may be, the entrepreneur must make
the best decision for the future of the business even if it may not be
in the best personal interest of all the individual employees.
Be the ‘shock absorber’
As the business owner, there are certain things you should never share with your employees.
If
they have become your friends, you may feel that you can share your
deepest fears about the business with them. This is a mistake.
First
and foremost you are their leader. It is your job to communicate
confidence and commitment to the vision, even when times are tough.
You
need to be what I call their “emotional shock absorber.” Your
confidence and commitment will be what keeps them on task and doing
what needs to get done to survive rocky times.
If
you share your fears and doubts, as you might with a good friend, you
run a real risk of creating a climate of hopelessness and defeat in
your company.
At
the end of our discussion my advice to the student entrepreneur was
that it was OK to become friendly with employees, but to maintain
certain limits. It is fine to socialize, but remember that you are the
owner and the boss 24 hours a day, seven days a week.
It
is not unlike the parent/child relationship as the child moves into
early adulthood. While parent and child find their relationship can
evolve more and more into one of friendship, there remains a certain
boundary based on their familial relationship.
Friendships with your employees need to also have these boundaries.
This week’s question for Forbes magazine’s America’s Most Promising Companies initiative comes from Brett Nelson, Entrepreneurs Editor at Forbes:
Small companies must get creative to survive the recession—even going so far as to branch into new lines of business (assuming they have the cash to do it). But mission creep comes with serious risk. What are some tangible do’s and don’ts about expanding your product line?
Why should a small company change their product line? For only one compelling reason — the market is taking them there.
Entrepreneurs typically rely heavily on their
business plans when the time comes to launch their new venture. It is a
plan that they may have agonized over for weeks, months or years. They
have done their research, creating a carefully thought-out business
that justifies their financial forecasts. But then a funny thing
happens. They assumed in their business plan that the market wanted
“A.” But if they listen carefully to the customer, they often find out
that the customer really wants “B.”
I call this learning to “dance with the market.” And you should be ready to let your customers lead in this dance.
The need to listen to the market never really ends. Markets are dynamic, so you need to be ready to follow where they lead, particularly during times of rapid change and turmoil in the market as we are experiencing with the recession.
What should you be cautious about when it comes to adjusting your mission?
Don’t move so far off of what you are known for that you lose your customer base. There may be opportunity beyond the boundaries defined by your mission, but these opportunities may end up redefining your business so much that you confuse the market.
Any type of word of mouth promotion demands action — it rarely just happens.
The same holds true when using social media as a vehicle for word of mouth.
The USA Today has a great example of how a night club is actively using Facebook to get the word out:
Bartender Beau Dieda does more than mix and serve drinks every night at
popular nightspot Baja Sharkeez: He is also instructed to sign up
friends and fans for his company’s Facebook
page, as well as his own. Before he leaves the restaurant, he sends
bulletins to his collective fan base inviting them back in for
specials, discounts or events.
Just setting your business up in a social media site is not enough. It does not work like a more passive media like web pages or craigslist. You need to find ways to continuously reach out when using Facebook and Twitter.
In my column for the Tennessean yesterday, I gave an overview of a new bootstrapping group here in Nashville. It is a good learning model to try in any city to help bring entrepreneurs together to talk about their challenges and successes with bootstrapping:
Bootstrapping — the
collection of tools and tactics that entrepreneurs use when they have
limited resources — has become a crucial skill in today’s tough
economic climate, with its tight credit and shrinking pools of venture
capital.
Now there is a group in Nashville that hopes to help entrepreneurs become better at bootstrapping — Better Bootstrap.
Its
goal is to provide bootstrapping entrepreneurs, or the 99.962 percent
of business owners who never see venture capital, with practical tools
and encouragement to help build more viable businesses.
Meetings have three main features.
First,
a successful entrepreneur visits the group to offer on-the-ground
examples of what it takes to get a business cranking when resources are
limited. One founder spoke of polishing the tops of his shoes before
important presentations, while carefully concealing the duct tape that
covered the holes underneath. (His firm now has thousands of prominent
clients.)
A second
feature of each meeting is a brief of a business fundamental that will
help entrepreneurs realistically tie their day-to-day activities in
marketing, operations or finance to a long-term strategic goal.
Finally,
entrepreneurs practice marketing their enterprises by perfecting and
presenting 15-second “elevator pitches.” (The elevator pitch must fit
into the time it takes to travel between floors.)
It
is the first exposure some business owners have to the idea that a
sharp, compelling message about “not what you do, but what you can do
for me” creates the biggest impact possible with a limited budget.
Management
consultant David Ledgerwood, chief executive of ALOC Group, says, “The
real-life stories at Better Bootstrap really help me realize how
similar entrepreneurial experiences are. …
“I
get validation for what I’m already doing at times and get to see the
end-game success of people who are trying (to do) exactly what I’m
trying. Plus, there is real value in fellowship with others who are
facing the same questions I grapple with in my businesses.”
Bootstrappers
and soon-to-be bootstrappers from any industry are welcome. However,
the group is limited to actual bootstrappers of a business anticipated
to grow beyond a single-person operation.
Consultants,
vendors and professionals who hope to network with and market to
entrepreneurs can, in fact, expect to be “booted” out.
Otherwise,
the group is free, requesting only that participants buy something from
the restaurant where they meet to ensure that they will be welcome
again.
The next
meeting is 5:30 p.m. Tuesday at Logan’s Roadhouse, 2400 Elliston Place.
Jane Ferrell and Joyce McDaniel of community and government relations
and PAC consultation firm Ferrell McDaniel will speak.
First, as a loyal Packer fan let me thank you for the great memories — the Monday night miracle after the death of your father, the Super Bowl games, the last minute come from behind victories like the one my brother and I watched together in Houston.
But, now that you have decided to retire from football — at least that is what you are telling us today — let me offer you a little unsolicited advice. Learn to define who you are beyond just what you have done for a living.
It was a lesson my wife helped me learn after we sold our business. She put me in time out — no deals for at least six months — which forced me to really stop and ponder who I was beyond what I did for a living. It helped me remember that I was more than just an entrepreneur.
We should not let ourselves understand who we are only by what we do for a living. Don’t simply define who you are as a person by your career as an NFL quarterback. Don’t get me wrong — that must be a really cool job! However, do not let yourself define who you are too narrowly.
It seems to me as an outside observer that you may be a bit lost. I worry that you may have fallen into the trap where nothing else in his life has any real meaning without that career to define yourself.
I have warned entrepreneurs that they should not define who they are only by the noun of what they do for a living. Although they may start and grow businesses, defining themselves as only an entrepreneur seems to crowd out so many other important parts of their lives.
We have seen evidence of the danger of defining who you are by what you do in your work from others who have also failed their attempts at retirement. Lee Iacocca could not stay retired as a corporate executive. Dan Rather could not stay away from the teleprompter after he retired from the evening news. And just like you, Magic Johnson and Michael Jordan could not stay retired as athletes. For all of them, it appeared that they may have let what they did for their work define who they were as people.
Careers can do this to us. If we are not careful, they can consume all that we are. And what gets lost as a result? Our families, our friendships, and even our souls.
If we are to become all that we were put on this Earth to do, we have to temper the temptation to become consumed by our work. We need to resist becoming the noun of what we do for a living.
So Brett, work hard at being a good husband. Work hard at being a good parent. Work hard at worshiping God if you are so inclined. Work hard at being a good friend to those who know the real you — not just the guy who wears #4. Work hard at being a good citizen in your community. Remember that none of these alone can fulfill our humanness.
One of the risks of using nouns to describe what we do in our work is that it can reinforce the tendency we all have to get carried away with our work. I loved starting a growing businesses (most of the time, at least). I love teaching and writing. It is indeed a blessing to love what one does for a living and joy the hard work that goes along with it. But, I need to be more than just an entrepreneur or a teacher. With every virtue there is a vice looming in the background. Although hard work is a good thing, it can be taken to excess and become a vice if it keeps us from all the other things we should be doing with our lives.
American society does not make this any easier. I am reminded of the lyric from a jazz record from the 1980s that said, “Everything in moderation, and moderation is the first to go.” We have become a culture of excess.
This is particularly true for the entrepreneurs out there who read this blog. We seem to create folk heroes out of entrepreneurs who expend Herculean efforts to achieve success in their businesses. And while this is good to a point, if entrepreneurial success comes at the expense of our marriage, our families, our faith, and our friendships, it is a hollow victory. If all we have at the end of our lives is our wealth, if that is all we leave behind, that is not a life well lived. As the old saying goes, “you never see a hearse with a luggage rack.”
I hope you find fulfillment in the rest of your life on the Earth. After all, the actuaries tell us that as someone about to turn forty, you have lived less than half of your expected life. And whatever it is you decide to do next, always keep room in your life for all the things that really matter.
To all of you small business owners out there — be alert for yet another scam that is making the rounds. This one involves fake checks. Read about here in an article by Kathy Kristof at MoneyWatch.com. And please pass this along to other business owners.
Thanks to all of you who e-mailed me about my post yesterday on focus versus diversification. Several folks asked me when diversification does make sense for smaller businesses.
If the core business you have going is stable and mature, it can be a time to consider spreading your wings into new deals. It is not always a wise thing to do, but this is the point when shifting your attention to something new makes the most sense.
If you do branch out into new deals, the best approach is to think incremental. Choose deals that build off of what you know and what you are already doing.
However, remember that your ability to spot a good deal and even to execute the start-up has very little to do with your ability to manage an increasingly complex set of operations. That is what too many people fail to realize.
Starting yet another deal is like getting a new puppy when you already have a dog. (I am sitting on the back porch this morning with our two dogs AND our daughter and son-in-law’s two dogs, one of which is a lab puppy — so I guess we know where this metaphor is coming from).
Your old dog has kind of gotten on cruise control in the family. He is just kind of there — a great pal, but not much fun and excitement any more.
The thought of a new puppy is exciting. After all, it will good for your older dog to get a playmate. And what fun a new puppy is to have around the house. We do like to rationalize, now don’t we?
So you buy that new puppy. Now you have to deal with all of the challenges of a puppy in the house that you kind of glossed over or shoved into the back of your mind when considering this decision — the messes, the chewed up shoes and furniture, the middle of night trips into the yard.
On top of that, now your older dog is getting kind of put out. He needs more attention than he did when he had the house to himself. He starts to act up — maybe forgets his house breaking manners or starts to misbehave in other ways just like that new puppy. So now you are dealing with the demands of the puppy and the renewed demands your older dog has now created for you!
I have to be honest with you at this point. We have gotten that second dog several times in our lives. And I have
started that next deal several times. But, every time it has ended up being
more work and more stress than I had planned for.
I don’t tell you all of this to say never start a second or third or fourth deal while still operating your first deal.
I say this to make sure that you remember that just because you can start another business does not always mean you should.
How
do I balance a need for strategic focus versus diversification and expansion of
my products/services?
This question gets at the heart of a classic entrepreneurial challenge.
On one hand, it is essential to adjust the business to meet the changing needs of the market. This may take the form of expanding or altering the positioning of the business to meet these changes in the market. This may require expanding or even fundamentally changing what we offer to our customer base. It may also lead us to change how we define who are customers need to be going forward. Certainly, entrepreneurs should never allow themselves to become paralyzed within their original business model if the market is telling them that they need to evolve their concept to fit the reality of a dynamic market.
On the other hand, I see many entrepreneurs who suffer from what I call Entrepreneurial A.D.D. For these entrepreneurs I find myself saying one word over and over: Focus!
So why do entrepreneurs lose their focus? It has to do with opportunity. While opportunity in the market is what launches entrepreneurs into business, it can just as quickly become their undoing.
What happens is this — once the entrepreneur enters the market they start to observe many other opportunities that exist in the marketplace. Entrepreneurs, especially less experienced ones, start to see new business opportunities everywhere. They feel compelled to pursue those opportunities even if it is not wise to do so. They feel a desire, even a compulsion, to start additional new businesses even while their first one is still in the start-up phase.
Sometimes the opportunity relates to expanding into new markets. The entrepreneur sees opportunities to move into additional markets that are not part of their current business operations. The problem arises when the business and/or the entrepreneur are not yet prepared for this expansion.
For example, a former student of mine had started a franchised business that provides in-home care for the elderly. During his first year in business, and even before his business had positive cash flow, he was approached about buying a distressed franchise operation of the same business in a nearby town. When he asked my opinion, I urged him keep his attention focused on the first business he had started – he did not need two businesses that were operating at a loss!
But, he could not resist what he perceived as an opportunity worth a risk and bought the second franchise. About a year later he called and admitted that it was a huge mistake. He managed to get both businesses on the road to profitability, but was working 80-100 hour weeks and going much further into debt than he had ever intended.
Even more disruptive is when entrepreneurs pursue opportunities in entirely new businesses before their initial start-up venture is profitable. I recently met with one entrepreneur who had five distinct businesses operating. But, not a single one of them had reached profitability. Luckily, we were able to develop a plan to shut down most of them so he could focus his efforts on his initial start-up business and build it to the point of positive cash flow.
The best way to avoid pursuing too many opportunities too quickly is to write down a clear mission statement and always remember one word: focus. If truth be told I believe that mission statements are most important as a tool to keep the entrepreneur on track than as a means to communicate to our team and to the outside world about what we offer.
Given a choice between strategic focus and diversification for small and medium ventures, I will choose to push for more focus almost every time.
