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Monthly Archive for April, 2010

Introducing your small business to Motivation 3.0

We’re only 10% into the 21st century, so there is a pretty good chance that a lot of what you know was learned in the last century.  Having said that, here’s the bad news: Most of what you learned about the marketplace in the last millennium is now obsolete.  And that includes how to motivate and manage people, especially the young folk.

Having come of age in the marketplace in the last third of the 20th century, it seems to me that managing and motivating people wasn’t much different in that era than it was for my mentors. Indeed, senior managers in those days were pretty much doing in the 1970s, 80s and 90s what they had learned and practiced for decades. But somehow, seemingly coincidental with the advent of the new millennia, best practices for leveraging human power effectively and successfully in business began to change as two new generations came online.

One of the most noticeable changes was how different these new generations were from earlier ones with regard to motivation.  Clearly, the motivational books are having to be rewritten for the 21st century, and not surprisingly, one of my long-time Brain Trust members, Dan Pink has done just that.

Recently, on my radio program, The Small Business Advocate Show, I talked with Dan about why the old “carrot and stick” approach is not as effective in the 21st century and what managers should know about what he calls ”Motivation 3.0.” Dan is the author of several provocative, bestselling books about the changing world of work, including his latest, Drive, in which he reveals his ground-breaking ideas on modern motivation best practices.

I hope you’ll take a few minutes to listen to what Dan has to say in this recent visit with me. And be sure to leave your own thoughts. Listen Live! Download, Too!

Tim Berry’s Top 10 reasons small business start-ups fail

In 1998, the SBA reported that 50% of small businesses fail in the first five years. That wasn’t good news but, sadly, it got worse. By 2008, the mortality of small businesses actually increased by 20% when it was reported that 50% of small businesses were now failing in the first FOUR years.

There are as many reasons why a business fails as there are business failures, but over the years it has become clear that all of those micro-reasons can be conveyed up into a smaller number of macro-reasons, including being under-capitalized, bad management, bad idea, failure to plan, etc.

Recently, on my small business radio program, The Small Business Advocate Show, I talked with someone who knows a lot about why some small business fail and why some succeed. Tim Berry is the founder of Palo Alto Software, the publisher of Business Plan Pro, the #1-rated software for developing a business plan and the author of two great books on business planning, The Plan as You go Business Plan and the business planning bible, Hurdle: The Book of Business Planning.  Tim is also one of the founding members of my Brain Trust.

Take a few minutes to listen to our conversation on why businesses fail so you can avoid making these mistakes and land in the survive and succeed category. And, as always, leave your own story and/or comments. Listen Live! Download, Too!

The small business ownership transfer challenge

One of the primary reasons most small businesses aren’t prospects for venture capital is because of incompatible thinking regarding the exit strategy. VCs expect to get their money back within a few years (less than 10 but closer to five) while a business founder typically thinks of running the business until he or she gets tired of it and/or retires.

Regardless of exit strategy goals, all business owners must think about how they’re going to exit the business they founded: selling to a new owner, going public, handing the reins to family members, or as in way too many cases, simply going out of business. But sadly, as much of a certainty as it is that a founder will exit the business, most fail to plan for this inevitability.  And the result of this failure to plan an exit often results in an expensive and painful scenario for the owner, and in the case of health problems or death, the family.

But all of this inefficiency, pain and brain damage can be prevented with a strong resistance to floating down that river called denial, plus some forethought and planning.  If you’re having trouble making this happen, your problem can be fixed by talking to professionals who know how to hold your hand and get you on the right ownership transition track, regardless of which exit scenario is most likely to be in your future.

Once you’ve come to grips with your ultimate departure from the business, you can start to accept that the way your business is operated and structured when you show up each day - let’s say, in the middle of your ownership tenure - will be different from the way it will look on the day you convey the business to the next holder of the keys, whether an arms-length sale or a family transaction.

Recently, on my small business radio program, The Small Business Advocate Show, I talked about the process of planning for the orderly and successful transfer of ownership of a small business with a member of my Brain Trust, Dr. David Gage. David is a leader in the field of business mediation, a founder of BMC Associates and author of Partnership Charter: How to Start Out Right with Your New Business Partnership (or Fix the One You’re In).

Take a few minutes to listen to this conversation and be sure to leave your own thoughts, including any business transfer stories you might have. Listen Live! Download, Too!

We’re in an “M” shaped economic recovery

When discussing the current condition of the U.S. economy, we hear experts talking about recovery shapes. For example, there is the “V” shaped recovery, which is where the economy bounces back quickly after a recession. The 1990-91 recession is a good example of a V-shaped recovery, as was the one in 2000-01.

You may have heard economists prophesy that we will experience a “U” shaped recovery. This is where economic recovery consists of anemic growth for an extended period before expansion. If we have had a U-shaped recovery in the U.S. it was probably the one that followed the 1974-75 recession, a period associated with the Arab oil embargo, the Jimmy Carter malaise, and a scourge called “stagflation,” a toxic confluence of slow growth and high inflation.

Then there is the dreaded “W” recovery, also referred to as the “double-dip.” Unless you’re in the ice cream business, a double-dip is not good. This economic scenario isn’t really a recovery at all, because not long after the initial recession is technically over, economic growth proves unsustainable and takes another dive producing back-to-back recessions. We experienced one of these in 1981 and 1983. It wasn’t pretty.

Traveling around the country talking with small business owners, the abiding topic of conversation is the economy and prospects for recovery on the way to economic expansion. Here is the question small business owners have asked me most often this year:

 ”If the recession is over, why doesn’t it feel more like things are getting better?”

The answer is this economy still has many financial toxins and structural challenges yet to be absorbed and cleansed by the marketplace ecosystem. During this healing process - which will take place over years, not quarters - we have to operate our businesses like we’re running a marathon, instead of a sprint. So, the Blasingame classification of the period following the Great Recession is an “M” recovery. ”M” stands for “marathon.”

Physical conditioning is required to complete a marathon race, but knowing when and how to expend energy comes from mental preparation. As you unlock the front door of your small business each morning, pace yourself and your organization for this marathon which, like the footrace, you cannot finish successfully if you run out of gas. Pacing means prudent application of capital, physical assets and human resources, plus minding your own psychological and physical well-being.

Remember, “M” stands for marathon - the shape of this recovery.

Recently, on my radio program, The Small Business Advocate Show, I talked about this “pacing” attitude as we run this economic recovery race successfully.  I hope you’ll take a few minutes to listen, and be sure to leave your own thoughts. Listen Live! Download, Too!