Monthly Archive for February, 2016

Are you asking the Outsourcing Power Question?

Biutou Doumbia lives in a tiny village in Mali, in western Africa. She and her family live in poverty, very close to the line between survival and, well, you know.

Oh, one more thing: Biutou is a small business owner. She makes and sells peanut butter.

In Mali, as reported in a Wall Street Journal article, peanut butter is made the same way African women have made other staples for millennia: by grinding the seeds on a rock with a wooden pestle. You might say Biutou’s operation is vertically integrated: She grows the peanuts, then manufactures, sells and distributes her product.

Over two centuries ago, in The Wealth of Nations, Adam Smith explained how markets are made by the division of labor. And free markets created capitalism, which Ayn Rand called, “the only system geared to the life of a rational being.”

Biutou doesn’t know Smith or Rand from a warthog – she’s illiterate. But she is one of Rand’s rational beings. And as such, she recognized the division-of-labor efficiencies offered by a diesel-powered grinder/blender when it became available. Now for 25¢ and a 10-minute wait, the sack of peanuts Biutou carries to the central grinding location turn into better peanut butter than she could make pounding all day with a pestle.

So Biutou now practices outsourcing, a division of labor process which is the employment of contractors to create efficiencies. Outsourcing is a valid business strategy, as is its opposite – you guessed it – insourcing, the process of removing vendor layers, usually to get closer to customers.

These two strategies are as different as chocolate and vanilla; but, like ice cream, choosing one doesn’t mean the other is wrong, just different. When Biutou practiced insourcing she didn’t have a choice. You have many choices; but are you choosing wisely?

One of the things every 21st century small business must do is focus on core competencies: what you do that makes your business valuable to customers. Everything else, theoretically, can be performed by a specialist in your non-core activity.

Take a look at your own operation to see if – like Biutou – you can find efficiencies and recover time through outsourcing. Ask yourself and your staff Blasingame’s Outsourcing Power Question: Must this task be done in-house? The answer will come from these three questions:

• How much control do we lose, and can we live with it?
• What impact will our decision have on customers?
• How much of not using outsourcing is about ego?

Remember, any decision to employ outsourcing – or not – should be driven by the desire to seek efficiencies and improve customer service.

Write this on a rock … Blasingame’s Outsourcing Power Question: Must this task be done in-house?

Small business owners have the right stuff

One of my favorite books is The Words Lincoln Lived By, by our good friend and Brain Trust member, Gene Griessman. That’s where I found this Lincoln quote about tenacity:

“I expect to maintain this contest until successful, or till I die, or am conquered, or my term expires, or Congress or the country forsakes me.”

Sound familiar? If you are a small business owner, I bet it sounds very familiar. It might even give you a little chill when you read those 140-year-old words. you know, hearing the essence of your being translated into the spoken word in a way in which you may never have actually spoken it out loud.

As an Army officer I was taught to be responsible for everything my unit did or failed to do. In small buisness, and you’ve heard me say this before, “You turn the lights on, you turn the lights off. Whatever it takes.”

Tenacity. I sure do like that word, and I admire tenacious people. Are you tenacious? The tenacious have the courage of their convictions. Courage, period. Passion. A strong spirit. Maybe even an indomitable spirit.

If you are a small business owner you know how far down inside of you that you have to reach to rise above all of the challenges, train wrecks and surprises that are thrown at you. Sometimes deeper than you knew you could. Testing your mettle. I don’t care what anybody says, astronauts are heroes, but they don’t own the franchise on “the right stuff.” Small business owners have it, too.

I am so proud of you.

The politics of the Supreme Court

By now, you know that one of the great Supreme Court justices in the history of our country passed away unexpectedly. Even those who disagreed with almost every decision Antonin Scalia ever cast had immense regard for him and his work. Indeed, Scalia and his liberal alter ego on the court, Justice Ginsberg, had been best friends for decades, even before they were on the nation’s highest court.

In our online poll this week, we asked you to weigh in on the debate about the process for replacing him. Here were the responses and my comments:

20% - The president should nominate a replacement and the Senate confirm this year.
23% - They should start the process to see if a replacement can be confirmed this year.
16% - The president should not nominate a replacement in his last year in office.
41% - Even if a replacement is nominated, the Senate should not confirm this year.

Only one-in-five of respondents to our first option think the president and Senate should just get along together and do their business this year. But there are circumstances that complicate this logical and Constitutional scenario, like ideological balance of the bench and the impending election to replace the sitting president. Kumbayah will not be part of this scenario

I kinda like the second group, representing almost one-fourth of our sample, because they’re saying, regardless of the politics, both parties should just give it their best shot in the process of doing their job. Everyone knows the president is going to nominate and the Senate is likely going to reject. So quit jawboning and get to work.

The third group is the smallest, with 16%, who think the president should just stand down on this issue, since he’s out the door in less than a year. But even though he likely knows he’s not going to get a nominee confirmed, he will at least be able to use the rejection to help his party. It’s politics, and any president of either party would do it.

The largest group, at 41%, is the most troubled by the imbalance of the Supreme Court. They’re counting on a party change in the White House next year, and maintaining the majority party in the Senate. For now this group, and the Senate, are in the catbird seat.

Just when you thought the political season couldn’t get any weirder or more complicated, with a socialist and a billionaire running for president, the arch-conservative Justice on a tightly divided Court dies, leaving his replacement up to a president who is his polar opposite politically. As I’ve written before, we continue to live the Chinese Curse: May you live in interesting times.

To take this week’s poll on the US economy and your small business sales in Q1, click here.

4 Power Questions That Will Cultivate Your Leadership Tree

Most agree that there are many traits of a true leader, including: highly competent, professional, visionary, trustworthy, instill confidence, good communicator and, of course, courageous.

But great leaders have three other qualities that further set them apart.

  1. In the 21st century marketplace, the prime devotion of leaders is to their people because they know it’s through engaged, high-functioning teams that their “bottom line” goals are achieved. If you can deliver on this trait, you’ll be more likely to accomplish your professional and personal goals.
  2. The most successful and beloved leaders I’ve known had another trait that’s sometimes overlooked: They mentored their people to become leaders. Great NFL coaches like Vince Lombardi, Bill Walsh, Tom Landry and Bill Parcels became legendary through the subsequent performance of the coaches they mentored. It’s called the Coaching Tree. Whose names will be on your Leadership Tree.
  3. This quality has two parts that are as inextricable as the sides of a coin: 1) They’re devoted to asking questions; and 2) they listen.

Number 3 is so important that I want to offer four cardinal questions that will help you become a legendary leader and build your own Leadership Tree. The first two are from my friend and Brain Trust member, Chester Elton, co-author of “What Motivates Me.” The last two are mine.

How’re you doing?
Chester says this isn’t a drive-by question. It’s a look ’em in the eye, “I’ve got time to listen” question. The setting has to be where the leader can be “in the moment” with the other person. And answers are not pre-supposed – might be about their job, their aspirations, or their personal life. Great leaders care about all of that.

How can I help?

Chester says this question creates a safe environment. A mentor once told me, “If you’re in trouble in your job, don’t go down by yourself. Get me involved early and let me help you get out of trouble.”

What do you think?
I call this the Leader’s Power Question and it produces two kinds of fruit: 1) few things cultivate the illusive engagement factor more than when the boss asks the opinion of an employee; 2) valuable information almost always spouts.

What did we learn?
I call this the Leader’s Magic Question, and it may be the four most important words in management. Surely redemption is the most human behavior a leader can demonstrate. And the most powerful mentoring moment happens after a team member makes a mistake taking initiative and the leader says, “Okay, now we know what happened,” then redeems him with: “What did we learn?” Powerful!

Write this on a rock … Become a legendary leader with your own Leadership Tree.

Blasingame’s Law of Sales Pipelines

Here’s a sales maxim: Selling is a numbers game. Even though there are a thousand things that could prevent a sale from being completed, it’s still your job as a small business owner to close enough sales to keep your doors open. Enter Blasingame’s Law of Sales Pipelines.

Click on image to watch with Flash. Don’t have Flash? Click here to watch.

6 steps that can make a banker your champion

At some point in your career as a business owner, you’ll need a business loan; probably from a bank, but perhaps from a non-traditional source, like a crowdfunding lending platform. Allow me to help maximize your chances of getting the loan by introducing you to the fundamental underwriting elements any lender will use when considering your loan proposal. Meet the “Six Cs Of Credit.”

1. Character – What’s the character of the borrower? To a community bank, character still means a lot. For larger banks, digital credit scoring dominates the approval process and this “C” is less compelling as an analog factor. Regardless, the appraisal of your character will always impact the loan approval process. Guard it well.

2. Capacity – What’s the ability (read: cash flow) of the company to repay the loan? A banker once told me if he could see only one loan proposal document he would ask for the projection of cash flows, because that’s where he could see if there would be enough cash to repay the loan. Remember, profit is an accounting concept. Bank payments are made with cash, not concepts.

3. Capital - Is the loan amount justified by the financial strength of the borrower? For example, sales volume, profitability, CASH FLOW, retained earnings, the underlying value of the asset being purchased, etc. If you’re unsure about your capital appraisal, take your banker to lunch and talk about it.

4. Collateral - This is the bank’s fall-back position. Collateral is whatever a banker can get you to pledge as their Plan B in case you default. But remember: Once you give a banker collateral, getting a partial released prior to payoff is like getting a she-bear to hand over her cub.

5. Coverage - Bankers are prepared to take certain risks, and the interest rate and terms are based on the level of risk with which they feel comfortable. When possible, banks look for opportunities to shed or minimize that risk, like various kinds of insurance products. Be prepared.

6. Conditions - Bankers ask themselves, “Does it work? Do we like this deal?” You can improve your chances by explaining how you’ll use the money, how it will help you grow your business, create more jobs, strengthen your market position, make more money, etc. Practice your pitch on someone before you go “live” with your banker(s). If a banker doesn’t understand your deal and how you’re going to make it work, you won’t get the loan.

The title of the shortest book in the world is “Loan Officer Courage.” Help a bank become your champion by showing you understand and support their underwriting process.

Write this on a rock … Improve your loan chances by understanding the Six Cs of Credit.




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