There’s so much media attention focused on business owner’s challenges in today’s economic environment I felt it might be a good time to search the World Wide Web for articles on business owners who have done well to see what advice they shared on achieving success. I hope these “sound bites” help to balance the ledger. There’s always someone who just never quits and provides great inspiration to the rest of us. I hope you enjoy their observations.
“If you can get your business to a million, you can get it to a billion.”
Heather Reisman: Indigo Books and Music Inc. 244 stores, 7,000 employees, $1 billion in revenue.
“When I asked Robert Lantos, who ran Alliance and was an investor in Galaxy, if he wanted to see the business plan, he said “No, you’re the business plan”. That put a lot of pressure on me because I had to deliver.”
Ellis Jacob: Galaxy Cinemas (Now Cineplex Entertainment.) 130 theatres, 10,000 employees, $1 billion.
“Almost all of the people I’ve hired, they start at the bottom. You have to learn how things are done on the floor if you want to manage people. I only know one job where you start at the top: when you dig a hole. And guess where you end up? In a hole.”
Frank Hasenfratz: Linamar Corporation. 39 manufacturing facilities, 16,200 employees, $2.8 billion.
“The words, “That’s good enough” don’t exist in business. You cannot rest on your laurels. The auto business suffered badly by making a product that was inferior. They learned their lesson. Quality first, as Ford would say. And I think that true in everything we do.”
Ron Joyce: Tim Horton’s. 4042 stores, $2.9 billion revenue.
“I can remember my grandfather saying “Don’t sell the skin of the bear before you kill it.” Meaning, don’t spend more money than you have. Money is the thermometer of an enterprise. You don’t take actions that don’t make you money.”
Cora Mussely Tsouflidou: Chef Cora, 4000 employees, over 120 franchises
“My dad always said, hire people better than you, and keep them. You don’t want to have turnover.”
J.R.Shaw: Shaw Communications, 14,000 people, $4.7 in revenue.
“I didn’t have a goal, except one: to conquer the world. Before I launched in 1972, I did a marketing study that was a catastrophe. Nobody believed in the Lise Watier beauty line-and that gave me the adrenalin to prove them wrong.”
Lise Watier: Lise Waiter Cosmetics, 2009 locations, 162 employees, $55 million revenues.
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Over the years, it’s been interesting to observe unique and innovative ways that businesses create value for their clients or customers. One of my favorite questions in interviewing prospective clients is “what is the one thing you do better than your competitors”? In short, what is your right to exist?
Often, business owners can clearly articulate their ability to identify and curate assortments or services to a specific target customer. Some deliver the lowest price or have a product whose uniqueness alone creates unusual demand. Others can’t clearly identify how they create value for their customers or clients, and when questioned further, claim to be average to good at most things that matter. Those are the ones that are in real trouble; if not today, then certainly tomorrow.
I define value as benefits received for burdens endured, and there are many ways to create value for customers or clients. Businesses that compete on price, service, assortment, or convenience can all be successful by understanding what their customer values, then organizing themselves to deliver that unique value. In the retail arena, Costco and Family Dollar deliver value based on price, Apple and Uniqlo on fashion, Walgreens of CVS on convenience, and Lexus or Ritz Carlton on service. These retailers focus on the ONE thing that separates them from their competition, and find ways to continually improve their value proposition to extend their competitive advantage in the marketplace.
But sometimes, businesses organize themselves to fail by trying to be all things to all people. I once listened to a business owner opine that his strategy was not segment the market, since everyone was a potential customer. Others I remember chased the latest fashion trying to emulate their competitors without knowing really knowing why. These businesses were invariably a day late and a dollar short when it came to building the founder’s net worth.
Growing a business profitably isn’t easy. It’s even harder if you don’t have a right to exist. Think about that one thing your business can do better than any of your competitors; then focus relentlessly on what competencies your organization needs to grow, partner with or acquire to enhance your competitiveness. If you take good care of your customers or clients, they’ll take good care of the rest.
As always, we welcome your comments and feedback to our point of view.
It’s a cliché to say that most small businesses don’t survive for more than five years, but it’s true. Wild exceptions like Steve Jobs and Bill Gates aside, most entrepreneurs who start a business simply fade away once they’ve launched their venture. During my career as a consultant to companies large and small, I’ve witnessed first-hand the different capabilities successful leaders possess in larger companies that some small business owners just don’t seem to get. Many habits and skills entrepreneurs develop early on can limit their ability to grow their business over time. I’ve highlighted a few of my observations below, and while I’m certain the list isn’t complete or in any prioritized order, it may serve as food for thought for small business owners looking to become an exception to recent statistics.
- Lack of bi-focal Vision. Most small business owners begin with single issue myopia; a deep passion that drives almost everything they do. Most often, it’s that single minded focus that creates early success. Over time, however, failing to recognize and capitalize on market and consumer changes erodes the early advantages of laser like focus. Most large companies possess the ability to manage the short and long term business horizon simultaneously.
- They want to control EVERYTHING. After growing revenues become clear evidence of early success, many small business owners find it difficult to let go as their businesses become more complex. Many spend too much time trying to learn and internalize specialized skills like accounting, real estate, marketing and technology that slows their speed to market. While larger companies have separate divisions for these competencies, they didn’t begin with any of them. Those leaders recognized the need for specialization and often times began by outsourcing, then insourcing, each competency over time as their business grew.
- Talk to everyone, listen to no one. One small business owner I knew spent an inordinate amount of time with an “advisory group” to try and learn things “he didn’t know”. The time spent obtaining this “free” advice resulted in a considerable waste of valuable time. Better to have found two or three experts he trusted enough to really listen to, even when he didn’t always agree with the advice given. Larger companies face the opposite dilemma; CEO’s find it harder to really get to the truth because most subordinates tell them what they want to hear. Perhaps return on time is more valuable than return on capital in the early innings of a business.
- Employee loyalty. In the early days, that small band of employees at the start of a business often makes the difference between success and failure. They become family; exactly the sort of people needed when there’s no assurance of long term success and security. Over time, loyalty to these first generation employees can become a liability as complexity grows. CEO’s, while not lacking sympathy with their people, simply understand that their future success depends on every team member’s strengths. Allegiance shifts towards a growing employee base, customers, investors and business fundamentals and away from friends as good companies grow.
Please let me know your thoughts on why most small businesses don’t scale!
The JOBS (Jumpstart our Business Startups) Act was signed into law on April 5 by President Obama and aimed at increasing the ability of small businesses to access capital and create jobs. In this and subsequent posts, I will monitor the opinions of legal experts, consultants, financial advisors and compliance guidelines from the Securities and Exchange Commission (SEC) to help determine how small business owners may be able to take advantage this new legislation and report back periodically on what I learn. My hope is that many small business owners can gain access to much needed capital to expand their businesses and create jobs to improve our economy.
Since the legislation was signed into law I’ve read numerous legal opinions from attorneys at Morrison & Forester and Seyforth Shaw along with several other posts from my peer group of consultants and financial advisors. Here’s what they all seem to say in common at this point:
- It will now be easier for small businesses to raise capital. The Act defines small businesses as “Emerging Growth Companies” (EGC} with less than 1 billion in revenue, which applies to most small business owners I work with. The law provides temporary relief from the SEC from certain regulatory reporting requirements, making it easier, less expensive and more feasible to go public.
- The Act makes it easier to sell stock to private investors in addition to venture capital groups. The Act removes an SEC regulatory ban stating that businesses cannot use advertisements to attract investors to a non-public offering, which has made it difficult in the past to keep communications about a private offering under wraps.
- Small businesses will have a new way of raising money through “crowdsourcing”. The Act allows business owners to sell equity to anyone with the cash and interest through web based “crowdfunding” portals which provide platforms to connect businesses with individual and group investors. Previously, crowdsourcing was limited primarily to artists or small business owners accepting small donations in exchange for bags and CD’s. Also, the new law states that you don’t have to be a really rich person (an accredited investor) to invest in a small business, which in itself creates a new set of risks and rewards to companies interested in obtaining this type of funding.
The SEC has 270 days from April 5 to come up with a new regulatory framework allowing businesses to sell company equity on crowdsourcing platforms. That means you have until about Thanksgiving to get ready to compete for new crowdfunding sources of capital.
I expect that small business owners with solid customer value propositions, well-articulated business plans and clear evidence that new capital can be put to work effectively will be the early benefactors of the Act. Audited financials, explanation of the risks associated with equity investment and a plan that anticipates future capital rounds will be also be pre-requisites to success for those businesses hoping to cash into cash in on this new equity source. Now is the time to begin thinking about how your business can benefit from the JOBS Act.
If you would like to share your perspectives on how to better prepare for the JOBS Act, please post your comments or contact me directly. Let’s figure out how to take advantage of this enticing opportunity to grow new businesses by helping them gain access to the capital they need!
Sometimes I like to think back on some of the really interesting comments I’ve received from some of my best clients. Often these comments are shared during our project “post mortem discussion” in discussing what really worked and didn’t. I’ve kept a list of some of the most interesting feedback I’ve received over the years, and thought you might find it interesting and somewhat entertaining. As consultants, we’re not infallible with advice we give others; fortunately our clients see us as human, too!
1. “You know that great candidate you introduced me to last week? Well, he was an idiot”.
2. “We had our management team meeting yesterday and we’ve concluded that we’re kind of screwed”.
3. “It finally hit me that revenue and cash are not the same thing. I really didn’t understand we were in the banking business. Customers provide “revenue”, Vendors provide “terms”. Employees want to be paid in cash”.
4. “My partner had a major life event. He’ll be leaving us but is happy to continue to contribute as a member of the board. By the way, I’m sure we’ll be OK”.
5. “Learned from tech guy you recommended that that “virtual” means that it can virtually disappear whenever it wants. Why are we doing this “cloud” thing again”?
6. “I finally followed through with your idea of “executive leadership” yesterday. At the last management meeting, our marketing person told me we were getting crushed in the market because we just weren’t “competitive”. I told her that we’re investing in our future, not our present”.
7. “We have 3 months of cash left in the bank. Adjusted for inflation. But, not adjusted for the fact that we have no idea if any of the deals we sold this quarter is ever going to pay us in a form that can be used to pay bills and payroll. Our landlord is clueless and doesn’t understand the importance of the work we’re doing”.
8. “Back in college, when you “audit” a course, it meant you just tried it out and see if you liked it. Why does “auditing financials” have to be so intense”?
10. “We’ve found new office space. To be consistent with the 3 year pro-forma we discussed at our last briefing, we’ll be signing a 10 year lease that matches the space needs based on those projected numbers. It’s nice when things just work out, isn’t it”?
11. “I woke up this morning with this really big idea. It’ll make the idea you suggested last week pale in comparison. The good news is that my friend says we can execute this one more quickly and easily than yours. This is going to BIG”!
Have a great day!
For small and mid-sized businesses cash is their lifeblood. Northstar Consulting, in its capacity as a Certified Advisor with the Organization for Entrepreneurial Development, is pleased to offer OED’s Grant Availability Analysis to small and mid-size businesses in the metro Atlanta area.
The Organization for Entrepreneurial Development is a 501(c)(3) non-profit organization founded to serve small and medium sized, entrepreneurial businesses in the United States OED’s efforts are geared to helping businesses and their owners thrive (not just survive) by making available to them the resources necessary to establish, grow, maintain and exit from their businesses. OED has simplified the process of searching for and finding grants and funding by offering a Grant Availability Analysis to small and midsize businesses.
Since cash is the lifeblood of business, OED has established grant and funding programs for entrepreneurs to help them get their share of the money that is available… and there is money out there. Business owners just need to know where to find it and how to get it.
If you, or a business owner you know, needs cash or funding to achieve unmet business goals, please use or forward this email or call me directly to take advantage of our Local Business Assistance Program. It is pro bono and it works, so… why wait?
Gene G. Wright
Northstar Consulting is officially certified with the Organization for Entrepreneurail Development
I can’t help but wonder what some business owners will ask themselves about what they did to change the trajectory of their businesses 10 years from now when they think back to a time when interest rates were the lowest in fifty years, the prime rate was zero, great employees were readily available, the internet made the size of a business irrelevant to customers. I hope they aren’t the ones that answer the question by saying ““I spent my time whining, waiting, worrying and wishing for things to get better.”
It’s time to stop thinking about how crazy the times are and start thinking about what crazy times demand. For most of us, 2011 represented two very different years; the first half being more robust than the second half. From where I sit, 2012 feels solid and quite balanced. But it’s not “Deja vu all over again” as the famous philosopher Yogi Berra once said. This time around our clients are working outside banks to source operating capital, finding new strategic partners or forming alliances that help enhance their competitiveness and getting closer to their customers than ever before in very different ways.
The goal is time around isn’t just to grow sales and market share; it’s about growing business profitably. I have some thoughts to share along those lines.
First, small businesses need to” get out of the banking business” as my friend Lara O’Conner Hodgson proclaims. Most businesses don’t even realize they are in the banking business, but they are, financing inventories for their vendors and receivables for their customers. They take the same risks as banks (in fact backed by their same personal guarantees), only they don’t receive interest from their loans to their suppliers and customers!
However, when more cash is needed to fund new growth opportunities, buy new equipment or hire people in advance of product shipments, where does it come from? Not from a bank line of credit if you’ve been in business less than three years or don’t have a need for a loan because you have excess cash on hand. But being in business for less than three years isn’t a prerequisite for achieving phenomenal revenue and profit growth.
In order to achieve success in working “outside the banks” to acquire capital, owners must first optimize their own working capital to provide more cash internally. Next, they need to insure that their business design (customer selection, differentiation and scope) not only produce profits, but protect the profits they earn from their competitors.
I am fortunate to be working with a few clients who are currently exploring ways to finance exponential growth because they were successful in creating excellent business design that their customers love! These companies refused to pull a manhole cover over their heads and wait for better times. They were able to grow profitably in a tough economy because they had a structured, disciplined approach to do so.
There has never been a worse time for business as usual. Let’s get to it!
“A man who carries a cat by the tail learns something he can learn in no other way.”
Many business owners suffer from the ‘going it alone syndrome.’ They have a business with all the demands of larger firms, but without the skills or staff to perform the day-to-day management, financial and planning functions. They try and do too much which sometimes results in even less getting accomplished over the long run. It is easy to become mired in small details and push aside or delay the decisions that really matter.
The sheer number of choices that owners must make each day-what products to buy, what information merits attention, what tasks to prioritize-can be overwhelming. The burden of isolation can often lead to inaction and being unable to process the next step or decision.
So, what to do? The first step is to simply understand what you’re up against. Start by slowing down a little bit and trying to understand better what you’re up against. Speed is the enemy of reflection. Next, get some help. A reliable support system is crucial to an owner’s success and you should begin cultivating a group of trusted advisors who can provide a safe outlet for you to express concerns and reliably provide honest unvarnished feedback. In many cases, learning to accept feedback is a challenge within itself; especially if you believe “no one knows better than you.”
Often known but rarely discussed, owners are plagued by feelings of isolation and many feel it hinders their performance. Take a minute each day to reflect on how complex and even scary your job responsibilities can be. The more accepting a business owner is of this reality, the easier it is to seek and accept support in dealing with it.
Unfortunately, the ‘going it alone syndrome’ can be fatal to a business, if not corrected. And even if not fatal, then surely it will limit the business’ success, such that the business is just surviving… not thriving.
Gene G. Wright
Northstar Consulting and The Business Owner Movement are pleased to announce The Business Owner’s Challenge, a series of business owner meetings/workshops beginning in January 2012. Our panel of business experts will provide counsel and feedback on a PRO BONO basis to business owners in the metro Atlanta area during a two hour “hands on” workshop in response to your greatest business opportunities and challenges submitted in advance of January 9, 2012.
Each week, if selected, you and your business will be our featured guest of our panel of business experts for a two hour workshop to provide insight, advice to help your business achieve its potential! We’re excited to be able to assist businesses gain access to some of the leading consultants, attorneys, accountants, IT and marketing professionals in the metro Atlanta area!
Please visit www.thebusinessownermovement.com and complete the on line questionnaire to register your interest for this unique opportunity. The Business Owner’s Challenge workshops are scheduled to begin on Monday January 16, 2012 from 11:00am-1:00pm at Atlantic Station, 201 17th Street Suite 300 Atlanta GA. 30363.
We look forward to your participation and hope to help make 2012 the most successful year ever for you and your business
Best wishes for a successful and prosperous 2012!!
“In chaos theory, the butterfly effect is the sensitive dependence on initial conditions; where a small change at one place in a nonlinear system can result in large differences to a later state. The name of the effect, coined by Edward Lorenz, is derived from the theoretical example of a hurricane’s formation being contingent on whether or not a distant butterfly had flapped its wings several weeks before”. —-Wikipedia.
Many small and mid-market businesses did not survive the turbulence caused by multiple “butterfly effects” during the decade of 2000 that began on September 11, 2001 in New York. Wars in Afghanistan and Iraq (along with spending on social programs and bank bailouts) resulted in record federal deficits by 2010. Earthquakes 2004 in the Indian Ocean led to disasters in Indonesia and the Philippines. The collapse of the US housing market in 2007 led to an unprecedented global financial crisis. Hurricanes devastated New Orleans and the Gulf Coast in 2008. The impact of China and India as emerging global powers had a direct impact on US unemployment during the entire decade. Rising commodity prices led by oil and gas pretty much finished the job
on consumer spending the collapse of the housing market had begun. Rising unemployment, soaring health costs and a continually shrinking middle class added to the difficulties of the US business owner, and the cumulative effects of these events had dramatic impacts on business large and small.
The business gladiators who survived the decade endured multiple “butterfly effects” from these and other hardships. Banks denied access to credit, consumers stopped spending, and businesses reduced buying from other businesses. They cut expenses including people to the bone. They halted
marketing and business development initiatives in their tracks. They learned how to get by with less because there was no other alternative. Somehow they made it through the decade and now are wondering “what could possibly happen next”? They’ve become reluctant to hire new people even though there’s a flickering flame of demand, they want to hoard what little cash they still have because they are afraid of “what happens after what happens next”.
My question to these gladiators is does your preference for safety create its own risk? What will the decade of 2010 bring? More
chaos and uncertainty is a given, but it’s always darkest before dawn. There are nascent signs of recovery ahead. Unemployment has begun to reverse its trend, large companies have record levels of cash reserves, and reports indicate a good start to the 2011 holiday season relative to consumer spending. The housing oversupply over the next few years will return to some form of equilibrium. The playing field is currently absent of competitors that did not survive the past decade.
Technology advances in cloud computing and smart phones will create new opportunities for those who can monetize the business opportunities they present. Outsourcing non core competencies will keep costs down while bringing much needed people resources on a “just in time” basis. No business ever expenses its way to profit over the long term. Today’s gladiators have an excellent grasp on costs; they’ve developed that core competency to survive. But will they miss the next big opportunity?
Now is the time to rethink how to grow their businesses profitably. They owe it to their families, employees and investors who stayed with them. Its time to take some risks.