Monthly Archive for March, 2009

Knowledge and creativity: small business owners need both

Knowledge and creativity are the dynamic duo of entrepreneurship. Armed with these two, small business owners deal with challenges and carve out new opportunities.

Sometimes we address challenges by using what we’ve learned, and then move on to the next one. That’s the beauty of knowledge; it’s always loaded up, ready to fire. It’s also useful because we can share it by teaching others, which allows us to delegate, thereby leveraging ourselves.

But entrepreneurship based solely on knowledge is mono-faceted and most small business challenges require multi-faceted approaches, which only occurs when knowledge is blended with creativity. Knowledge is critical to success in any endeavor, but in the world of entrepreneurs, creativity must flourish.

The French novelist, Marcel Ayme, once said, “…from time-to-time, I find myself terribly limited by the words in the dictionary.”

As a man of words, the dictionary held his knowledge, his tools and his inventory. But sometimes, as he lamented, it also held back his creativity. I think Ayme was also telling us about his spirit. What else would cause him to imagine and yearn for something beyond what he knew to exist?

Entrepreneurs have Ayme’s kind of spirit. As founders of business opportunities that haven’t previously existed, our spirit drives us into uncharted territory. But we’re more fortunate than Ayme: We aren’t limited by a “dictionary”, only by our creativity.

If you’re feeling “terribly limited” by your entrepreneurial dictionary, perhaps you’ve been focusing too much on knowledge and not enough on creativity.

Entrepreneurs use knowledge to identify and employ the “words” that are available to them. But rather than lamenting the ones they don’t have, they use creativity to make the new ones they need. It’s a beautiful thing.

Small business owners and the 26th U.S. President

Here’s an inspiring quote from the 26th president of the United States. It’s most often shown as a paragraph, but I think the impact of his thoughts get lost in that form, so I present it to you here in a more tabulated way. Take a look and see if you recognize anyone.

“It is not the critic who counts;
not the man who points out how the strong man stumbles,
or where the doer of deeds could have done them better.
The credit belongs to the man who is actually in the arena,
whose face is marred by dust and sweat and blood;
who strives valiantly; who errs, who comes short again and again,
because there is no effort without error and shortcoming;
but who does actually strive to do the deeds;
who knows great enthusiasms, the great devotions;
who spends himself in a worthy cause;
who at the best knows in the end the triumph of high achievement,
and who at the worst, if he fails, at least fails while daring greatly,
so that his place shall never be with those cold and timid souls
who neither know victory nor defeat.”

Of course, this is the wisdom of President Theodore Roosevelt, from over a century ago. I think he’s talking about you, small business owner.

Every day you enter the marketplace arena getting dirty and bloody while striving valiantly. You know that failure is the harness-mate of success so, when you err, you do so with great daring, understanding that you’ve learned something that might not have been revealed if success came too early or too easily.

Because you’ve experienced failure without submitting to defeat, it’s merely one aspect of your life, not something that defines you. And it’s not hyperbole for me to say that that single fact makes you the best hope for the future of the global marketplace and, therefore, the world.

I am so proud of all that you do and all that you stand for, small business owner. Teddy would be too.

Recently on my small business radio program, The Small Business Advocate Show, I talked about this Roosevelt passage and what it means to me. I think you’ll enjoy my expanded thoughts on the heroes of the global marketplace. Take a few minutes to listen, and be sure to leave your thoughts.

Rethinking your small business sales strategy

Here’s a question that has been asked – and answered – a million times: Is selling a science or an art?

The correct answer, in my multi-decades of experience, is it’s both. Clearly, there are classic selling skills and fundamentals that can be taught, learned and repeated time and again that apply in virtually every selling situation. But there are also certain people who have a talent for artfully applying these fundamentals.

But how does a small business reconcile all of this with the fact that there are so many tasks that are required to make a sale, from beginning to end, in addition to actually closing the deal? Here’s a short list of those tasks that would apply to many selling situations:

1. Find the prospect
2. Qualify the prospect
3. Make initial contact
4. Determine needs and discover wants
5. Offer and perform a demonstration
6. Prepare and deliver a proposal
7. Close the sale
8. Delivery preparation
9. Successful delivery
10. User training
11. Customer care
12. Additional sales

So which of these steps are science and which are art? In your small business, how many of these tasks do you have your highly trained closers doing? In many businesses, the answer is: All of them. But is that the best use of their art and science? And if not, is this multi-tasking structure for your sales staff ultimately diminishing the performance of your company?

Recently, I talked with sales organizational expert, Justin Roff-Marsh, president of Ballistix, about an alternative way for a business to organize its sales strategy. I think you will be intrigued by his ideas, so take a few minutes to listen and let me know what you think.

The evolution of small business dreams

The British playwright, William Archer (1856-1924), once remarked to a friend about how a “perfect plot” had played out to him and “evolved” in a dream one night. He saw “the whole thing, from beginning to end,” and when he awoke, put pen to paper.

Small business owners know about this kind of dream. It begins with what I call the founding dream, which is the first time an unconscious entrepreneurial inclination pops upon our consciousness radar screen.

At first a founding dream may be barely perceptible. And when one is remembered for the first time upon waking, the awareness is often more troubling than remarkable: What does this mean? What do I do with this?

But if the mind and the spirit are receptive, a founding dream “evolves” into more than a blip on the radar. Subsequent dreams become less impressionistic and more real. Animated dreams come next. Your nocturnal entrepreneurial visions play out with an actual cast of characters - sometimes in Technicolor.

Now you’re well aware of, and more comfortable with, your small business dreams and you start to do a little day dreaming. Day dreaming is the first step in the due diligence process - the research. You start asking lots of questions: What if….? How do I…? Where does this…? Who can…? When should…?

Ultimately, as the answers to these questions are revealed and accumulate, you begin to make your entrepreneurial dream become reality; you actually start living the dream of owning your own business. At this point the start-up dreams will stop. Since you’re now living your dream, why dream about it, right?!

Your founding dream now has a name, address, phone number and a tax ID number. It has “evolved” into the “perfect plot” for your small business.

Don’t be stupid - eliminate barriers to customers of your small business

A while back, I needed to reach an acquaintance who worked in a local branch of one of the national banks. When I looked for the local number in the phone book, all I found was a toll-free number that connected me to a computer answering system. That’s right – a local business didn’t publish a local number in the phone book, and here’s the stupid part: The answering system didn’t offer an option to connect to any branch or person. I’m not making this up.

Don’t be stupid! Lesson 1
Don’t create barriers to customers and prospects. If you have any, take them down. NOW! I know you think you don’t, but in the name of efficiency and the advent of new technology, you might.

Undaunted, I called a local board member of that bank who gave me the local number (yes, they had one). When I called, I was told that my acquaintance, a loan officer, had recently been laid off.

“Why was he laid off?” I asked. Since the bank was losing money and, for the sake of the stock price the CEO needed to impress the stock analysts with his guidance on the next quarterly conference call. So an edict came down that almost 2,000 employees across the company would have to hit the bricks. Never mind how valuable they were, or what such cuts would ultimately do to the bank’s long-term ability to compete, “We’ve got to cut costs and the quickest way is to cut payroll.”

Don’t be stupid! Lesson 2
Quarterly goals are important for planning. For a publicly traded company, quarterly guidance to stock analysts is a counter-intuitive and dangerous practice for long-term success. Small businesses have to remember that customers don’t buy based on quarterly schedules, so don’t let your quarterly pressure on sales people cost you lost business and, worse, lost relationships.

I learned later that even though my acquaintance was the top loan producer, he was the last one hired, so he was the first to go. Now he’s no longer a payroll drain on this bank, but he is now kicking the backside of his former employer as a high-producer with a competitor.

Don’t be stupid! Lesson 3
In the 21st century, seniority doesn’t trump productivity.

Today, this bank is one of those that had to be bailed out by the government. The bank CEO, who allowed blind devotion to stock price undermine the tried-and-true management practices of building a strong team and taking care of customers, is now himself no longer a drag on that bank’s payroll.

How much business did this bank lose because of that phone answering strategy? What would have happened if this bank CEO had simply installed an answering system that made sure anyone who wanted to call a local branch could not only find that number easily, but quickly connect to a local person? The answer might be that the CEO would still have his job, and so would my friend and several hundred other former employees. Who knows? By simply adopting a customer-friendly phone system, this bank might have actually needed to hire more employees to handle all of the new business.

Don’t be stupid! Lesson 4
If you need more sales revenue, make sure your organization, including people, systems and policies, aren’t getting in the way of the prospects and customers who want to do business with you.

Recently, on my small business radio program, The Small Business Advocate Show, I talked about the potential dangers of quarterly policies with sales management expert and Brain Trust member, Skip Miller (m3learning.com), author of The Ultimate Sales Tool Kit. Take a few minutes to listen to what this smart guy has to say. And be sure to leave your smart thoughts.

The truth about taxing those wealthy small business owners

In case you haven’t been paying attention, in his address to Congress last week, President Obama promised to raise the marginal income tax rate on the top 2% of taxpayers to help pay for his new agenda and to give the other 98% of taxpayers a tax cut. Now, most folks probably think that this elite group of Americans can handle a tax increase. After all, we’re talking about people like Bill Gates and Alex Rodriguez, right? But in his speech, the president goes on to further define the people on his hit list. Specifically, if you have annual taxable income of more than $250,000, you’re wealthy enough to pay more.

Lately there seems to be some confusion about whether this attempt at redistribution of wealth will impact small business owners. So let me provide some clarity with a small business story that plays out across America every year.

This particular small business will put $100,000 on the bottom line of its Profit and Loss statement. Most big businesses blow more than that every year in wasted soap in the men’s rooms. But for a small business to accomplish these numbers, someone had to work extremely hard and very smart, and at some point along the way, risked everything.

The owner of this small business pays herself $75,000 in annual salary. Not too bad by national average income standards, but still less than she made when she worked for a big company and, when the work, worry and risk-taking is considered, not enough. Oh, by the way, this business that our intrepid entrepreneur started from scratch now provides livelihood, benefits and prosperity for the families of its ten employees. Meanwhile, the spouse of this employer has a job elsewhere that pays him $95,000 annually.

It’s important to note that this small business, like millions of others, is structured legally as a Subchapter S Corporation. That means that any profits produced are distributed to the owner as taxable income to be included with her personal tax reporting. Since this couple files a joint tax return, they have annual gross income of $270,000. Allowing for reasonable personal deductions, their taxable income is over $250,000. It should also be noted that a goodly portion of the hundred grand of business income does not exist as cash - it’s tied up in inventory, accounts receivable, etc. - but still taxable.

According to President Obama, this couple, like Warren Buffet and Oprah, is among America’s wealthy and should pay more taxes. But here’s a critical piece of information that I doubt our President understands: Ask small business owners – as I have – what they would do if they paid lower taxes and every one will tell you that they would re-invest that precious capital in their business. That means buying more capital goods and employing more people. In 2009, it might mean surviving.

So, with all due respect, Mr. President, if you want to get our economy going again, not only would you not raise taxes on even one member of the sector that creates over half of the U.S. economy, signs the front of over 70 million paychecks each Friday, and creates most of our new jobs, but you will find out what they need to help them grow their businesses and do that – all of it. Even if it means you have to cut back a little on your ill-conceived Robin Hood act and even if it means you have to let GM, Chrysler and AIG get a little less bail-out money.

And trust me, sir, this strategy will be time and money well spent for our country - and the world. And here’s a political bonus you probably haven’t considered: it will do more to help you get re-elected in 2012 than anything else you could do.

Recently, on my small business radio program, The Small Business Advocate Show, I talked about the difference between the Obama world view and the world view that I believe is good for small business. Take a few minutes to listen to my thoughts on taxes and other issues. And be sure to leave your thoughts.




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