Please, Pray for Noah

For anyone who follows my blog or Twitter, you know I've been asking for prayers for little Noah for some time. Noah has brain cancer and has recently had additional growth of the tumor. He will be having his third surgery on January 3rd. He's had a rough time over the Christmas holiday having spent time in Children's Hospital in Birmingham and generally feeling lousy. Even with all he's been through in his almost four years, he has an awesome disposition and a smile to melt your heart. He's a great patient, and very courageous in the face of needles and scanners. He's endured more than should be expected of a little boy. 


With his surgery coming in a few days, please take a minute and send some prayers to Noah and his family. Visit his website and leave an encouraging comment or a get well wish. If you are so moved, make a donation to help offset the huge medical expense associated with his treatment. But if you do nothing else, send a prayer. 




www.PrayForNoah.com

Research Tricks

Whether we're talking about developing a business plan for your great idea, or a marketing plan to promote your business, we always start with research. I teach this in workshops, classes, and in one-on-one coaching and consulting. You always begin with research. 


That entrepreneurs don't do this properly was brought to light several years ago when a coaching client responded to my inquiry about her experience in the niche restaurant business that she had eaten in plenty of restaurants and didn't need any more experience than that. Just last year a coaching client told me that he didn't need to do any research because he was starting a sporting goods store because we didn't have any in town. I really tried to polite, but just couldn't help busting out in laughter.


But here's the question, how do you do your research? For big companies that can afford to subscribe to services, databases, and hire their own research staff it's not a big worry. But how does a small company go about gathering all the appropriate information?  I have some thoughts, but I'd like to here yours.

It's not the critic who counts

This is one of my favorite quotes of all times:

“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 and comes short again and again; because there is not effort without error and shortcomings; but who does actually strive to do the deed; who knows the great enthusiasm, the great devotion, 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 he fails while daring greatly. So that his place shall never be with those cold and timid souls who know neither victory nor defeat.”  

Theodore Roosevelt

I've used the quote used with leadership groups, volunteer organizations and recent graduates entering the world as a kick in the pants to get in the game, get involved. Finding your place in the world has a lot to do with finding your niche, finding that path that God has laid out for you and staying focused. It's also about getting involved, even if it's a little uncomfortable at times. Whether that means your job, a volunteer or civic group or your church (inside the building or out).


I find this quote to be very compelling. I don't think I need to recap it, it speaks for itself. What are you doing in the arena?


P.S. I was reminded of this quote by Jack Weinzierl in a Twitter post. He wrote an interesting blog post about the quote on his site JackWeinzierl.com, check it out. Thanks Jack! 

Marketing Plan Template

I teamed up with local marketing wiz, Felica Sparks of Ad4! Group to write a book on marketing for small business. Marketing Plan Template: Writing Marketing Plans for Small Business. The Kindle version is now available at Amazon. Click on the link below to get your copy now.

  

2011 Top States for Doing Business

Area Development magazine has issued its rank of states based on their survey of top location consultants. The consultants were asked to name their top-5 state choices in 12 site selection categories. The final ranking is:

1. Texas
2. Georgia
3. Alabama
4. South Carolina
5. Indiana
6. Louisiana
7. North Carolina
8. Tennessee
9. Mississippi
10. California

Pray for Noah

Since my bout with cancer, I am much more aware of cancer all around me. While surfing the web one evening I found this site: Pray For Noah. Noah is almost 4 years old and is a sweet boy. He is battling with brain cancer and has already suffered more than most adults could stand in a lifetime.

  

Check out Noah's site, get a bracelet, or make a donation. But please leave a comment of support and include Noah in your prayers. 

Anyone who likes Curious George is a friend of mine.

Know what you don't want to sell

Most companies know what they want to sell. They create elaborate marketing strategies to promote their business and products or services. They spend enormous amounts of money to advertise.

  

I'm not saying that any of that is right or wrong. It really depends on the situation.  But here's the real question: Do you know what you do NOT want to sell? Most companies have products and services that are offered, or are in the catalog, or listed on the website that they don't really want to sell. It may be for financial reasons. It may be for personnel reasons. It may be manufacturing efficiency related or even product component availability.

  

If you don't want to make the product or you don't make any money offering the service, why do it?

Do you need to offer the product or service due to competitive forces? Maybe you'd be better off not offering the product and referring customers to other manufacturers or service providers. I know, this sounds like the rantings of a crazy man, but maybe not. Carefully consider dropping those products and services from your offering. It may be a "we've always done it that way" kind of thing. If you rarely sell it and don't make any money off the product or service, perhaps you can just quit doing it. Can you buy it from your competitor and just get out of the market all together? Consider a manufacturing agreement with your competitor to buy the product from them and offer it for resell on those rare occasions when you actually need the product. 

  

If a manufacturing agreement won't work in your situation, think of other options to buy or otherwise acquire the product or service. Maybe you'll find that your customer can use a different product just as well. Maybe, if you sit down and discuss the situation with the customer and find out what their real needs are, you'll come up with a different solution that better suits their needs and your bottom line. 

Don't Be a Drop-out

We’re talking about some of the key questions entrepreneurs should ask before deciding to start a business.  We’ve already discussed figuring out how much cash do you have to invest in your new business and how much cash you need to survive while you’re starting your business whether getting a different job or a part-time job might not accomplish you goals.  In this post I’ll discuss whether going back to school would help you accomplish your goals rather than start a new business?

Would increasing your education provide you the income you desire?

Chris, why are you trying to talk us out of starting a business?  One of my main goals in my professional life is to keep people from throwing away their life’s savings on a harebrained idea.  You’re worked, by definition, all your life saving up that money so you can retire in a comfortable lifestyle.  Don’t throw it away without knowing what your options are and looking at all those options for meeting your goals.  For many people, starting a business will never help them reach their goals.  I’ll say it again, unless you have a burning desire to start a business that just won’t go away, look at other options.

One option to consider is going back to school to upgrade your education so you can get a better job or qualify for a higher salary at your current job.  How much does it cost to go back to college?  What does it cost to go back to college?  What sort of salary increase might you expect from an advanced degree?  Compare that equation to the amount of money you’re going to have to invest in a new business and the expected profit over the same time frame.

Going back to school is a whole lot less risky than starting a business.  Maybe getting an advanced degree will help you accomplish your goals.

Maybe You Should Just Get a Job

We’re talking about some of the key questions entrepreneurs should ask before deciding to start a business.  We’ve already discussed figuring out how much cash do you have to invest in your new business and how much cash you need to survive while you’re starting your business.  In this post I’ll discuss whether you’d be better off financially getting a different job than starting a business?

For many people, their dreams could be accomplished without having to start a business.  Could you accomplish the same goals by getting a different job or trying for a promotion at your current place of employment?  Would spending an extra couple of hours a week at work give you the advantage you need to get the promotion?  That might be a better strategy and one that probably has significantly less risk.

  

This question really goes back to the question in a previous post, ‘why do you want to start a business?’  Well, why do you?  If the answer is to create more family income, there may be an easier way to do it than starting a business.  What about a part-time job on Saturday mornings?  What about teaching a class in the evenings for a local community college?  Do you have any special skills that will allow you to generate other cash for your family?

  

Unless you have a burning desire to start your own business, then try to figure out other options for generating income.  For many people, starting a new business means taking a pay cut, not getting an increase.

ShoestringVenture.com

Thanks to the guys at Shoestring Venture blog for featuring my first book,Business Start-up 101: From Great Idea to Profit...Quick!  Click on the logo below to go to their feature.

   

   

You can buy the book on Amazon by clicking on the link below.  It's available in paperback and Kindle format and comes with handy downloadable templates to help you get started right away.

   

Shoestring Venture

I'm pleased to report that they guys at Shoestring Venture blog will be featuring my first book, Business Start-up 101: From Great Idea to Profit...Quick! on October 27th at 1:00 PM Central Time.  Here's the link:  http://shoestringventure.com/2011/10/27/creating-startup-success/  The link will not be active until Thursday.  Feel free to visit their site by clicking on the Shoestring Venture logo below.

   

  

I appreciate the publicity and encourage you to buy my book if you haven't already done so.  You can buy it through my book website atwww.BusinessStartup101.com, use the link below or go directly to Amazon.  It's available in soft cover for $19.95 or Kindle for $9.95.  The book comes with free downloadable templates for MSWord and Excel.

I am a cancer survivor!

As many of my friends know, I've been dealing with prostate cancer for the past several months.  I don't typically discuss my personal life in the blog, but felt like I needed to make an exception this time.  

  

I heard a voice in the back of my head telling me that I had prostate cancer, that I would be okay, but that I needed to go to the doctor. So I scheduled the physical that I'd be postponing for ages.  When the blood work came back, the PSA test result was 21.  That's a huge number.  So, we re-ran the test.  Let's make sure it's not a mistake, because that's a big number for someone so young, and without any issues.  The second test resulted in a 24.  Doc sends me to a urologist to check into the elevated PSA.

  

After some uncomfortable exams and an eventual biopsy, it was determined that I had prostate cancer.  I'm no expert in the medical terminology, so bear with me.  The prostate gland was almost completely covered with cancer.  The Gleason Index was a 9.  That's a ranking of the aggressiveness of the cancer growth.  A 1 is very slow and a 10 is very fast.  A second opinion at Vanderbilt Medical Center confirmed the results and the suggested procedure.  Hormone therapy bolstered by daily hormone supplements with surgery in 60 days after the hormones have had time to work.

   

I had surgery on October 11th.  The doctor said it went much better than he expected.  Due to the aggressiveness and amount of cancer growth within the prostate, he expected it to be pretty ugly when he got in there.  However, when the biopsy pathology came back, it was negative.  The edges and lymph nodes were clean.  He said I got the best possible results back.  I am cancer free!  The percentages suggest that 85% of patients will not be clean, at least not for long.

  

I have a big advantage.  I'm a Christian.  I believe that the original 'voice in my head' was God taking care of me.  I believe that this experience was a learning experience for me.  A way for me to grow closer to God and be a better disciple.  I'm not a scripture quoter.  Heck, I'm not even that good of a Christian.  But I do believe that God sent his son Jesus to die on the cross for my sins.  I'm trying to make the most of this situation and grow as a person and a Christian.  Let me know if I can help you.

  

So here's the deal:  Men, I'm 50 years old.  You should get a physical yearly.  I didn't fit any clinical profile.  Men my age don't have the kind of cancer I did with the aggressiveness of a Gleason 9.  I was way past the 1% range of occurrences.  About 75% of men will have prostate cancer in one form or another.  If you find it early, it can be treated.  Nearly 1.6 million people will be diagnosed with cancer in one form or another in 2011.  And approximately 571,000 will lose their battle with cancer this year.  Get yourself checked.

  

If you want to help fight cancer contact your local American Cancer Society office or visit www.cancer.org.  As an odd aside (I don't really believe in coincidences), my wife is a board member in the Huntsville ACS organization. 

Got Your Code?

QR Codes are the latest craze in the marketing world.  QR, or quick response, is a 2-dimensional bar code that can pass on a website link, launch a video or any number of things from any smart phone device.  Point your smart phone at the code and it reads the code and opens the video, webpage or whatever.

   

I launched a new book on October 16th called Business Plan Template.  It's available on my blog and from Amazon.  This QR code will take you to Amazon to the Business Plan Template page.  While you're there, why don't you buy the book?

Business Plan Template

The follow-up book to my #1 Best Selling Business Start-up 101: From Great Idea to Profit...Quick! is now out on my book site www.BusinessStartup101.com and Amazon.  The book is Business Plan Template and is a how-to guide for writing a business plan for any business.

  

   

The book is available in Kindle e-book format and will be available as a paperback on Amazon within the next week.  Please check it out and give me your feedback.  I love to chat with entrepreneurs.

    

Click on this link to buy the book.

Survival Cash

We’re talking about some of the key questions entrepreneurs should ask before deciding to start a business.  In the last post, I discussed figuring out how much cash do you have to invest in your new business?  In this post, I want to discuss how much cash you need to survive while you’re starting your business.

  

It many cases, it can take a year, two years or more to get your business stabilized and paying you a regular and adequate salary.  Can you survive for a year, two years or more without a salary?  Maybe you have a spouse that can fully support the financial needs of the family while you start the business.  If so, you’re very lucky.  If not, how much money do you need to have in reserve to live on for one year?  You should plan to have a reserve fund available that will support your personal financial needs for at least one year.  After you work on your financial projections, you might decide to lengthen that period based on what you expect for your business. 

    

Prepare a family budget, determine your cash needs and figure out how you’ll survive for the next year or two if you don’t bring home a salary.  Remember, entrepreneurship is not for sissies!

Blue Point Site Selection in NEWSDAY

Thanks to Jamie Herzlich, small business writer for Long Island's Newsday daily newspaper, for the mention in her article Small Business: Finding the Right Space in yesterday's edition of the paper. Jamie writes articles about and for small business owners.  Click the link to read her article.

Show Me the Money

Over the next several posts, I’ll discuss some of the key questions entrepreneurs should ask before deciding to start a business.  The first one is how much cash do you have to invest in your new business?

You do realize that you need some of your own cash, right?  This is a great time to take a personal financial inventory.  How much do you have in your checking and savings accounts?  How much do you have in your investment account?  What about home equity and retirement savings?  Where is your money, can you get your hands on it and in what time frame?  Make a list of these sources of funds for your reference.

Does your spouse consent to your investing your savings into a new venture?  This would be a good time to discuss it.

Do you have the ability to personally borrow funds to invest in your business? Maybe you have a family member that wants to support your new business.  What about assets you can use as collateral for borrowing?  Maybe your car is paid off and you can use it for collateral at the bank.  What about home equity or credit cards?  Be careful with the use of these borrowed funds, but in a pinch, they might be the source you need to get launched.

So before you get started too far along in this new venture, figure out how much cash you can invest into your own business.  Make a list of possible sources of personal funds.  Whether it’s from your own cash in checking accounts or cash borrowed from a home equity loan, make a list of all these sources and figure out what you have available.  It’s not time yet to decide how much you will invest, but how much you can invest.

If you need a worksheet template for your financial figuring, go to my book website,www.BusinessStartup101.com.  Look in the templates page and download the sources of cash worksheet to use as a guide.  And if you haven't yet bought my book, Business Start-up 101: From Great Idea to Profit...Quick! then now would be a great time to do so.  It's available from my book website or directly from Amazon.

We don’t need no stinkin’ Emergency Plan

Being prepared is always smart, especially in an emergency.  Back in April of this year, we had bad storms pass through the state.  Tornado’s ravaged the area from Birmingham all the way to the Tennessee State line.  We’ve had storms pass through before, but not like this.  The storms spread destruction and death across the state.  And while the destruction was really bad for many people, local businesses without damage still had financial problems.

  

How did a business without any damage have financial problems?    They had problems on several fronts.  First, these businesses were without power for about a week.  That means they were out of business for a week.  I’m guessing that much of their overhead didn’t stop during that time.  Rent was still due, salaried employees still had to be paid.  Insurance and equipment leases still had to be paid, regardless of whether the doors were open for business.  So not only did they have to continue paying for much of their overhead, they also didn’t get any income from sales.  What sort of damage to your businesses financial condition would no sales for a week have?  What if you sold a product that had to be cooled or even frozen?  What if your product had to be warmed?  Now in addition to the losses from continuing overhead and no sales revenue, you have ruined inventory.

   

What is your business has some sort of emergency like a fire, explosion, flood or tornado?  What would you do with your employees and customers?  How would you keep them safe in a weather event?  What would you do in the case of a robbery?

      

Now I’m no disaster preparedness expert so I’m not about to tell you what to do with your business.  But I can give you a few points to think about.  If you don’t know how to respond to these points, a little internet research or discussion with your insurance agent/broker or workers comp insurance carrier will serve you well.  Here’s a very small list of subjects to get you thinking.  Don’t stop here, consider all the possible emergency or disaster conditions that could affect your business and create a policy or plan for your employees so they will know how to deal with these situations.  And don’t let the disaster situation be the first time they see the plan.  What does your insurance policy require for you to comply with your coverage?  Don’t wait for a disaster situation to ask the question.

   

• Disaster/Emergency/Robbery Plan or Procedures
• Employee Training on the Plan
• Emergency Contacts List
• Insurance Policy Requirements
• Business Interruption Insurance 
• Computer Program and Data Backup (Offsite)
• Important Document Copies (Offsite)

Got Your Backup On?

Everybody hears the commercials on talk radio, TV and in magazines on Carbonite and other online computer data backup services.  “Backup your computer or you’ll be sorry!”  That’s the message that they’re pushing.  If you don’t backup your computer data, it’s just a matter of ‘when’ not ‘if’ your computer will crash and all your precious data will be gone…and then what will you do?

   

I learned this lesson the hard way many years ago.  I had a computer crash and lost everything on it.  Luckily, I had my data ‘backedup’ in the form of floppy disks.  Guess what?  When I went to restore my data on a new computer, it wasn’t compatible or couldn’t be retrieved off the 3.5” floppy disks.  Turns out I didn’t have ANYTHING backed up.  These are lessons learned the hard way.  I had to rebuild my data base from bits and pieces of data contained in reports and notes in files.  I was doing commercial and industrial real estate appraisals at the time.  I had databases of information on property sales, with all kinds of specific data recorded.  I had flood map data, employment statistics, all kinds of demographics and economic development statistics on the communities where I practiced.  I had hundreds of scripts written on different communities, construction types, sales situations, definitions and what have you.  I had been building this database over a ten year period and in an instant, it was gone.

   

After this incident, I was religious about backing up my data…for a while.

   

Last week, my computer died.  Just like in the Carbonite ads, it’s not a matter of ‘if’, but ‘when’.  This time I really did get lucky in that my mother board went out and my data was still safe on my hard drive.  However, I also have a subscription to Carbonite, so I didn’t lose any data.  I bought a new computer, restored my data and I’m back in business.  No problem.  Who says you can’t teach an old dog a new trick?

    

So, how do you back up your data?  DO you backup your data?  If you have anything important on your computer, give your backup process a little attention today, before you regret it tomorrow.

Business Start-up and Your Personal Credit

Starting a business may actually hurt your personal financial position.  If you’re going to borrow money personally for a new vehicle or a home, being self-employed will create a problem if your business is new.  Retail bankers are not business bankers and may not have the skills to evaluate or understand your business.  And, it’s not their job to review your business to determine if you have the capability to repay a loan.  They will want to see two years of profitable operation in the form of financial statements and tax returns.  If you are unable to produce those, you will not be viewed favorably.  In fact, if you have yet to produce two years of profitable operations, your business will likely hurt your chances to get any kind of loan.

  

If you plan to purchase a new home for example, the mortgage company will look at the income and credit of you and your spouse.  Your combined incomes will be used to qualify you for the loan.  If your spouse earns enough income to qualify for both of you, then all the better unless your business has filed tax returns showing a loss.  If so, that loss will be deducted from your spouse’s annual income.

  

Plan major purchases, college education expenses and the like against your plans to start a business.  In some cases, you’ll be better off waiting to start your business until after the major financial expense event.

What does my FICO score have to do with anything?

In a word, EVERYTHING.

  

The personal credit score is the first and most often cited reason that individuals are unable to borrow money to finance their business dreams.  They never get a chance to describe their idea, show their financials or impress with their strategies.  The banker looks at the personal credit score (called a FICO Score) and says, “No thanks.”

  

If you will need to borrow money from a financial institution to finance your start-up, you will need a minimum credit score of 680, and probably much higher.  Make an appointment with a commercial loan officer at your bank and discuss the process.  Find out about the bank’s credit score requirements  and make sure you have a high enough credit score to qualify.  While you’re there you can get a general idea of the bank’s underwriting guidelines and business information requirements and you can find out if they lend to start-ups.  Many banks and credit unions don’t lend money to start-ups at all.  Your company may need a couple of years seasoning before they will consider a financing request.  Of course, you probably won’t need the money by then. 

  

Don’t wait until you need the money to start the process.  Make friends with the banker and learn about the banks requirements.  Start building your personal financial position and improving your FICO score.  If you have bad credit, see a personal credit counselor.  There are many free services to help you understand personal credit and how to manage it better.

The 5 Deadly Sins of Entrepreneurism

The dream of business ownership is like an addiction running through the veins of entrepreneurs.  We crave the start-up and break out into cold sweats at the very thought of a new business opportunity.  When done properly, a start-up is a wonderful thing, blooming with profits and gushing cash flow.  When mismanaged, the beauty tarnishes and becomes a kudzu in our flower bed.

  

So what causes us to lose our way and take what we thought was such a wonderful idea and turn it into such a mess?  For many unenlightened entrepreneurs, they take their eye off the contest and start coveting the prize.  Instead of focusing their serious intention on building an enterprise, they lose focus and just create a job.  Or worse yet, they fall prey to the 5 deadly sins of entrepreneurism:  fame, fortune, leisure, travel and possessions.  Let’s look at these in more detail.

  

1.  Fame

   

You dream of walking into any room in town and being instantly recognized.  People whisper behind your back, ‘say, isn’t that the guy who started that successful business that’s taking the market by storm?’  The mayor takes your call and congressmen call you for your opinion.  That the sort of fame you got in mind?  Well, the reality is that you’re at work so much that your dog doesn’t even remember you anymore and growls when you enter the front door.  

  

2.  Fortune

  

You’re treating everyone in town to dinner at the best places, throwing lavish parties and watching your bank accounts skyrocket.  You’re thinking about opening one of those Swiss bank accounts to shelter your income.  HA!  Most likely, you’re taking a pay cut.  You made pretty good money as a mid-level manager at your former company.  Maybe you were an engineer or salesman and you did pretty good with salary and investments and retirement funds.  But now, you’re employees are making way more than you and your wife is concerned about making the mortgage next month if something doesn’t change.

  

3.  Leisure

  

Do you see yourself in a James Bond movie, relaxing by the pool with bikini-clad supermodels?  Maybe you’re doing something simple like coaching a youth sports team or doing a mission trip to Africa for a few months.  The reality of starting a new business that you’ll be stuck in the office way more nights and weekends than you ever dreamed possible in your worst nightmare.  In fact, in July, you slept in the office more than you slept at home.

  

4.  Travel

   

See the world from your luxury yacht.  You and Robin Leach are sipping champagne and eating caviar in all the best destinations.  Is that your dream?  How about a dream crushing 90-minute commute twice a day in your 2004 Honda?  Will that do?

  

5.  Possessions

   

Possessions tend to be all over the map, depending on the individual.  While some prefer expensive suits and Rolex watches, others want a Bentley or Rolls Royce.   What you’re more likely to get is accounts receivables, inventory and bad debt.

   

There is nothing wrong with wanting nice stuff.  That’s one of the reasons we started these crazy businesses in the first place.  I put myself into that mix with the rest of you.  The problem is, many hopeful entrepreneurs take their eye off the start-up and start focusing on the prize, before the enterprise is even established.  For these people, the prize becomes a poison and bitter reality instead of the comfort.  They dive into the prize before they have earned it.  Instead of keeping their attention focused on creating an efficient enterprise that will generate profits and cash flow without your constant supervision; they spend the new credit line on a ‘much deserved’ vacation or leathers and a hog Harley. 

   

Don’t let the prize get in the way of creating a business enterprise.  Get the work done first and then enjoy the fruits for many years to come.

What are your business start-up goals?

Why do you want to start a business?  Many people want to start a business for all the wrong reasons.  See the previous posts on that topic.  Let’s change the topic slightly.  What do you hope to accomplish in starting a business.  In other words, what are your business start-up goals?

  

Are you starting a business just so you can get money for stuff?  Extra income for:  cars, boats, houses, travel, hobbies?  What about college education for your kids, medical expenses or retirement?  These are all good goals, but will your new business actually allow you to get there?  And what about time frames?  Over what period of time do you expect to reach these goals?  Does starting a business REALLY help you achieve your goals?

  

Spend some time thinking about your goals.  Why do you want to start a business?  What do you hope to get out of it?  Many would-be entrepreneurs thought that by starting a business they wouldn’t have to work for the ‘man’ any longer.  What they found was they traded one ‘man’ for another.  The new boss is probably much harder to work for and requires significantly longer hours and a much higher quality of work than the old ‘man’ required.

  

Think about your motivation for wanting to start a business.  Discuss your thoughts with your spouse and family.  Make sure that everyone is on the same page and that page isn’t a fairy tale.  Talk with a business coach or mentor to get a reality check on your plans and goals.  If you do the proper planning up front, the end result may be exactly what you wanted.  But a lack of planning may put you worse off than when you started.

Rocket City Sitters - WBCNA Start-Up of the Year

Rocket City Sitters win again!  

At the Huntsville/Madison County Chamber of Commerce Small Business Awards ceremony on September 1st, Rocket City Sitters won the Women's Business Center of North Alabama Start-up of the Year award.

Last summer my friends at Rocket City Sitters won the Madison Chamber of Commerce Start-up of the Year.  I blogged about it here.  RCS was started by Adrienne Stephens, Nick Weseman and Erica Weseman.  They are a fine example of the kind of small business that drives the American economy. 

RCS provides short-terms childcare in the Huntsville-Madison county area.  They hire only trustworthy sitters who are certified to provide quality care for your kids.  They also work with organizations such as churches and businesses and events like a wedding or reunion.  No more need to stay home on a Friday night because you can't find a sitter.  Contact Rocket City Sitters today to schedule a sitter by phone at 256-272-1727.

‘Intellectual Disarmament?’

Jim Albaugh, President and CEO of Boeing Commercial Airplanes, warned the National Aeronautics Association on July 13th in an address that the nation risked intellectual disarmament in the aerospace industry if participating companies couldn’t continue to attract engineering talent.  He noted that with the end of programs like the space shuttle and slashed budgets, engineering talent would continue to diminish.  To make matters worse, much of the current engineering talent is approaching retirement age in the next couple of years.  “I fear we are in danger of falling into a downward, self-perpetuating spiral.  Without enough capable scientists, engineers and technologists, our nation won’t be able to maintain its position as the world’s aerospace and technology leader,” Albaugh told the group.”

  

He went on to say that watching the final shuttle landing on July 8th was “one of the most devastating days of my professional career, thinking that for the first time since 1962, we no longer have access to space…just another country hitchhiking a ride to low Earth orbit” on a Russian spacecraft.  It’s actually gotten much worse since Albaugh’s speech; the Russian space program is on hold until further notice following the failure of the Progress M-12M on August 24th.  The unmanned resupply freighter failed to reach orbital velocity and crashed to the ground shortly after launch.

  

So here we are in the fall of 2011 and not only does the United States have no manned space program, neither does anyone else.  It’s been 50 years since we could say that.  While that is tragic in and of itself, it speaks to the problem that aerospace industry has in attracting new talent.  Informal discussions with current and former NASA employees uncover a large number who have never seen a program come to fruition.  That is, these employees have worked on one program after another which was cancelled and never built.  Can you imagine spending your entire career working on programs that were cancelled?  Can you imagine never seeing one of your projects completed?  What a demoralizing prospect.  

  

This sort of start and stop has become second nature at NASA.  It has become a hot potato being tossed from project to project as the political whims of Washington D.C. politicians change every other year.  Is it any wonder that the best and brightest scientists and engineers choose other careers?  Not since the von Braun days of Apollo have we had a national excitement about our space program.  In those days, the best and brightest were drawn by edge of the envelope work to space centers at Marshall, Johnson and Kennedy, knowing that the fate of human lives and national prestige were on the line.  That’s the sort of environment that draws the best talent.

  

I fear, like Jim Albaugh, that we will be unable to attract excellent talent to the aerospace industry in the future.  But, I also fear that the world-class talent that is there now will leave for other industries, other opportunities, other jobs.  And in these days, any job is a good job.  And once they are gone, I’m afraid we’ll never be able to replace them.   

Days Beyond Terms

Business Days Beyond Terms reported by Experian Business Information Services for the second quarter of 2011 show some interesting results.  Like the bankruptcy rates discussed in the last post, the most interesting being that the largest companies had the worst payment rates.

While the publicly released data doesn't give the actual numbers for company size, the full report does disclose figures for industry groups.  For company size, Days Beyond Terms is represented by categories of colors from tan (least bad) to dark red (worst).  I'll represent them with numbers from least bad (1) to worst (5).  For the period ending June 2011, the figures are as follows:

Company Size DBT

1 - 4 1

5 - 9 1

10 - 19 2

20 - 49 3

50 - 99 3

100 - 249 2

250 - 499 2

500 - 999 3

1,000+ 4

Frankly, I'm at a loss to explain this.  Like the discussion about bankruptcy rates, I'm not surprised that the larger companies are having difficulties, but what's different about them versus the small companies?  Anyone have an explanation for this?

Now let's look at industries.  I'll just summarize the top worst offending industries.  These may surprise some of you.

Industry Avg. DBT % $ Delinquent % $ 91+

Construction 12.1 22.8 17.4

Business Services   9.2 12.7   9.0

Finance   8.9 11.2   7.8

Agriculture   8.8 10.5   8.0

Communications   8.1 19.3  11.7

Business Failure Rates

Business bankruptcies reported by Experian Business Information Services for the second quarter of 2011 show some interesting results.  The most interesting being that the largest companies had the biggest failure rate.

While the publicly released data doesn't give the actual number of bankruptcies, they are represented by categories of colors from tan (least bad) to dark red (worst).  I'll represent them with numbers from least bad (1) to worst (5).  For the period ending June 2011, the breakdown in bankruptcies by business size, in terms of number of employees, is as follows:

Company Size Bankruptcies

1 - 4 4

5 - 9 4

10 - 19 4

20 - 49 3

50 - 99 3

100 - 249 4

250 - 499 4

500 - 999 4

1,000+ 5

It's not surprising that the smallest companies had a high bankruptcy rate.  But it does seem surprising to me that the largest companies had the highest rate.  Anyone have an explanation for this?

I think it shows that the medium sized companies are not doing as well as the huge companies. That Microsoft and Google and Apple's of the world have cash reserves larger some some countries is well documented.  Those are gigantic companies.  But what about the medium sized companies with 1,000 - 5,000 employees?  I think this is where the problem is occurring.  These companies don't have cash reserves in the billions and also don't have good access to credit.  Thanks to TARP and a general overreaction in the financial sector to poor decisions made in the past, banks just aren't lending much money these days.  Those that want to lend are either restrained because their ratios are out of whack or have so tightened up their underwriting standards that it's difficult for all but the best companies to qualify.

Here in Alabama, we're right in the middle of the pack as far as averages are concerned.  What is it that makes a state like Florida good and Texas bad?  That's a question for another day.

Why do you want to start a business?

Starting a new business is a scary and risky proposition.  Starting a new business can be extremely time consuming and may require participation from your family or your absence from family events.  Starting a business may require you to use your life’s savings or borrow money from the bank for which you’ll be personally responsible.  So why do you want to do this?

  

For some people, it’s just a no brainer.  They HAVE to start their own business.  They’ve been working for ‘the man’ for too long or are just tired of seeing a business run into the ground.  For others, they have an idea that just needs to get out.  If not them, who?

  

For still others, they want to start a business out of necessity.  That is, they don’t have a job and have no good prospects for finding one anytime soon.  They see starting a business as a necessary evil.

  

If you plan to make your fortune in a few months and start living the good life, think again.  Most new business owners make little or no income for the first few years in business.  In fact, many times, your employees will make more than you until your business is well established and financially stable.  You need to clearly understand your motivation for starting a business and then decide if starting a business will help you achieve your goals.  

Selling into a non-market

Do you understand who your customers are and what they want?  I think many small businesses don’t really understand this.  They think more about their product and how to sell something that they want to produce, rather than what the market wants to buy.  

  

Hugh MacLeod, author/blogger/artist one of my favorite entrepreneurs (gapingvoid.com) calls these businesses the Middle Seat Guys.  He likens businesses that sell stuff that their customers don’t want to airlines who sell middle seats.  Hardly any airline passenger wants the middle seat.  In fact, with rare exception, if you were given a choice between the aisle, middle or window seat, the middle seat will go unclaimed every time.  Hugh wonders why the airlines still offer a middle seat when they know their customers don’t want them. 

   

The ideal situation for a small business person is to find a niche within their market segment to operate.  Look at the market and the competition and figure out what the customer wants.  What are the trends in the market that aren’t being addressed?  The way we do business in almost every market is changing.  What areas of business do your competition or market leaders fail to adequately serve?

  

Yeah, this is hard.  But if you can find a niche where there is actual demand and there aren’t 100 other companies in the market already trying to serve, then maybe you’ve found a place for your company.

The Financial Reality of Starting a Small Business

Chris joins Jim Blasingame on The Small Business Advocate radio show on July 5th.  they discuss the financial aspects of starting a small business and it's affects on the entrepreneurs personal financial situation.

Radio Show Link

Jim Blasingame & The Small Business Advocate show

Entrepreneurship is a Family Affair

Chris joins Jim Blasingame on The Small Business Advocate radio show on July 5th.  they discuss how starting a small business affects the entrepreneurs family.

Radio Show Link

Jim Blasingame & The Small Business Advocate show

The Big Idea

So you’ve got a great idea for a business, now what?  The question you’re really asking is how do you turn a great idea into money?  It’s the question inside the question that entrepreneurs are afraid to ask out loud.  I wonder why that is?  Isn’t that what creating a business is all about, making a profit to support you and your family in a lifestyle you can grow accustomed?  As far as I’m concerned, it is.  I’m not sure why many people now consider profit a bad word.  We need profit to grow businesses, hire employees and make charitable contributions.  Without profit, we’d have none of that.  The answer can be summed up in one word: entrepreneurship.  In other words, turn your great idea into a business.

Merriam-Webster defines entrepreneurship as:

           “one who organizes, manages, and assumes the risks of a business or enterprise.”

The concept that a person can take an idea and turn it into a profitable business and achieve financial security is the embodiment of the American Dream.  For years, individuals have been developing ideas into businesses.  Some have taken really harebrained ideas and become overnight successes.  Can you think of any harebrained business ideas that turned into financial windfalls?  I'll talk about a couple of well-known ideas that worked out in a future post.

There are all kinds of statistics from government and private sources about how many businesses survive and how many fail.  Generally speaking, roughly 80 - 90% of new businesses fail.  And there’s a good reason.  Depending on which publication you read or which organization you believe, there are literally dozens of reasons start-ups fail.  I generally categorize business failures into three groups:

1. The idea behind the business was a silly non-star aligned harebrained idea
2. The real idea behind the business wasn’t sufficiently studied and planned
3. The individual starting the business screwed up.

In fact, operator error is the root cause of almost every business failure.  The owner didn’t understand the market, the capital requirements, the complexities of partnerships or the seriousness of cash flow.  Oh, the cash flow, that vital nourishment of all small businesses.  Perhaps the market turned sour and the owner didn’t have enough capital to sustain though the bad times.  Could we add a fourth category or fifth or tenth?  Sure.  But I generally categorize anything not a 1 or a 2 as operator error.  You can make the case (it’s semantics really) that the economy turning isn’t something that the owner can do anything about.  I could argue that the owner should have foreseen lean times and had a reserve.  Does it really matter?  I think you get the point.

If we look back to the definition of entrepreneurship, it suggests that someone is organizing and managing a business.  That someone is you.  It’s the organizing and managing that tends to get in the way of most people being successful.  That’s the part that makes starting a business such a risky proposition.  However, the statistic that you don’t usually hear is that for people who get some business education and coaching, the statistic turns upside-down.  Entrepreneurs who get business and financial education and who work with a mentor or coach tend to succeed at an 80% rate.  Now that’s more like it. 

The Fog of Fear

Unfortunately, I see this all too often in coaching and consulting clients.  Either they’re hoping to start a new business or they’re in crisis.  The former is way easier to fix than the later.  But either way, the fear has them in a head lock and they can no longer think rationally.  In fact, they can no longer see the situation clearly, which is why I call it the ‘fog of fear’. 
 
Fear is an ugly thing.  It makes us do things we would never do in a more rational time.  It causes us to make poor decisions, or more often, fail to make important decisions about our business.   Failing to act in the business world doesn’t mean that nothing happens.  It just means that you have failed to take an active part in managing your business.  You’ve chosen instead, to let your business run itself.  What I call Management by Abdication, is the worst kind of management.  Serious operational and financial problems don’t just go away…they usually get worse when left to fend for themselves.
 
Why does this happen?  Why do normally logical and engaged managers and owners get lost in the fog?
For new entrepreneurs or those still ‘hoping’ to get started, it may be an inability to pull the trigger.  They don’t have enough information or don’t understand how to tilt the odds in their favor by using standard financial and analytical tools.  Three simple tools; the income statement, cash flow report and break-even analysis, what I call the Three Tools of Financial ViabilityTM, can help hopeful entrepreneurs evaluate their business model for viability.  In other words, will real people pay real money in sufficient quantity to allow you to meet your goals?  Without some way to determine if your business model has a good likelihood of being successful, many people just can’t seem to pull the trigger.  And frankly, without any kind of success likelihood, why would you ever take the risk?
   
But the fog I’m really talking about is the fog that grips existing entrepreneurs when their business is in crisis.  Owners or managers frequently get consumed by the fear of the unknown consequences.  Maybe they haven’t run across this particular problem before and aren’t sure how to proceed.  Eventually, as the problem grows in magnitude, the fear turns into a fog that can’t be navigated.  Owners just sit, paralyzed into inaction with fear.  This is when they lose their business.  Taking no action, or inappropriate action, the business suffers further and a downward spiral sucks them into the abyss of failure.
  
If you find yourself in this situation, get some outside help.  Use your advisors or mentor to help you see the most appropriate response to the situation.  If you need to hire a financial professional, do it.  The alternative may be loss of your business.  Usually these problems are nearly as bad as you’ve made them out to be.  A little professional advice or strategy will probably help you get back on track to profitability.   

Jim Blasingame: The Small Business Advocate

Jim Blasingame, author and host of the award-winning radio show The Small Business Advocate Show, was in Huntsville to speak to the Women's Business Center of North Alabama today.  The lunch-time keynote was inspiring and informative.  Jim spoke to a full house crowd about the changing nature of business and the relationship that companies have with their customers.  

One of the sponsors of the lunch was Fred Holland and WTKI.  Jim's radio show is carried locally by WTKI, and the radio station bought copies of the book for all in attendance at the event today.  Jim's 2006 book, Three Minutes to Success, is packed with small business lessons that entrepreneurs can read in three minutes.  Short lessons for busy people.  The book can be found on-line and in bookstores.

Jim was kind enough to pose for a photograph for my blog.