Tag Archives: recession

Ride the wave of love for startups — and existing small companies

If you’re an entrepreneur — or are thinking about becoming one — take advantage of the prevailing national pride in small business. America has always had a love affair with the Mom and Pop Main Street shop, but now, more than ever, the country is depending on entrepreneurs of every ilk to play a large role in our economic growth.

During the dark days of this recession, small business owners everywhere watched the big banks and car companies in the news and joked, “Where’s my bailout?” If it’s lonely at the top, it’s especially desolate at the top of a small business, where entrepreneurs have struggled alone with all kinds of tough decisions, from whether to lay off valued employees to if it might be time to file for bankruptcy. Plenty of small companies have folded, but many more are still standing.

These business owners, and the new entrepreneurs joining their ranks, are poised to become the national heroes of the American economy. For one thing, they provide half the jobs in the country and create up to 80% of all new jobs. Lawmakers and business reporters are now pulling out all the classic metaphors, like small business being “the backbone of the economy” and “the engine driving our economic recovery.”

If you own a small business and survived 2009, or if you started a business last year, you deserve some high praise. No doubt it required sharp business acumen, not to mention bravery, to pull that off. The people around you, in your company, your community and even your country, appreciate what you’ve done to help keep your employees working and your vendors in business. People with income can spend, which creates more income, and more spending, and eventually, the economy will be thriving again.

This is what I’d like to see. I’d like to be sitting on a plane sometime soon and have the airline attendant stand up and grab her microphone to say, “Ladies and gentleman, we have some small business owners on board with us today. Let’s give them all a round of applause to thank them for their part in stimulating the American economy.”

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How a tough year for your business in 2009 might mean a fantastic 2010

I can’t believe I’m saying this, but 2009 was actually a great year at Tribe. And I’m thinking it might have been at your company too.

Of course, we did lose our largest client, due to the slump in the housing market. We had to lay off a few talented, hardworking people that we’d hire again in a heartbeat. We cut back on some perks, like having a fresh flower in everyone’s office each Monday and providing free takeout for lunch five days a week. We froze salaries for most of the year. We gave a somewhat smaller holiday bonus than usual.

On the other hand, we’ll enter 2010 ready to compete on a much higher level than ever before. We’ve used this slow year to reinvent, and to move into some new territory. We’ve expanded our internal communications practice area to incorporate social media and engagement tools. We’ve created some interesting initiatives in new media, for both consumer audiences and employee ones. We’ve developed expertise in some key research areas, like the widely varying perspectives of Gen Y, Gen X and Boomer employees in the workplace, and recession spending by affluent couples. We’ve dabbled in creating our own content and products, like our “Start Your Own Company” card deck and iPhone application.

Other small business owners I’ve talked with seem to have done their own share of reinventing. This year has been about accepting that the recession is real, having time to reflect on what works and what doesn’t about our companies, and exploring some new areas we might not have had time to spend time on before.

Everyone’s talking about how companies are stronger for trimming expenses and figuring out bow to do more with less. Thinking small is a good exercise.

But an even better way to think is how we could get bigger. Ways we could expand to serve other types of clients than we have in the past. How we could fill some new need that’s not being met. What we could do next that would make us wake up excited about getting in to the office.

Nature moves in cycles, and business does too. New moon to full moon. High tide to low. Winter to spring. 2009 has been a good year for sending our roots deeper and in new directions. Soon, hopefully beginning in 2010, certainly in the next few years, our economic downturn will swing back in the other direction. The economy will grow, our clients will grow, our companies will grow. The quiet reinvention so many small businesses have done in 2009 will position us well to reap all the benefits of the next boom time.

Jobless at 58 sounds like an entrepreneur to me

Yesterday the New York Times ran a headline that read, “At 58, a Life Story in Need of a Rewrite.” The article was about Michael Blattman, who’s been out of work since January of 2008. Blattman is a 58-year-old MBA with a strong resume in financial services who once earned $225,000 a year.

After a year and a half of an unfruitful job search, it seems obvious that this guy should start his own gig. It’s unlikely that the financial sector will be in a hiring frenzy anytime soon. Blattman has applied for 600 jobs, according to the Times, and has scored exactly three interviews, only one of which was in person. It doesn’t look good for him being gainfully employed at a hefty salary anytime soon.

startercards.0626When I hear about people like Blatmann, first I want to shake them and then I want to find their address and send them a deck of our Start Your Own Company cards. He clearly has experience and expertise to share, having worked with the Federal Reserve and the Sallie Mae student loan program, as well as teaching business classes at the University of Maryland.

Why is he not starting his own company, or at least hanging out his shingle as a consultant? The cost of going into business for yourself needn’t be much of a hurdle, in an age when you can incorporate online with LegalZoom for $139 and launch a website with a free template. Perhaps there’s a growing need for guidance in applying for student loans, or maybe he could consult with schools on some aspect of providing financial assistance. Or it could be that his real passion is wine or carpentry or backpacking or piano and this is his chance to start a company doing what he loves.

He’s clearly got time on his hands that might be put to better use. He mentioned to the Times reporter that he had “zero” planned for the coming week, and he admits to driving two towns over for groceries, just to kill an hour or so. Blattman is divorced, but has given up on computer dating sites for now, because women apparently don’t show much interest in 58-year-old guys who are unemployed. It seems his life could use some positive momentum.

Blattman comes across as intelligent, likable, capable. He has years of contacts and a strong reputation in his industry. Why not use the thick skin he’s no doubt developed over his 18-month job search to sell the services of his own company, rather than trying to get hired by someone else?

He may have excellent reasons for continuing to job hunt rather than creating his own income. But I wonder if he just doesn’t realize that starting a company doesn’t have to be that hard. When I run into someone stuck in that spot, I want to get up on my soapbox and shout about how Starter Cards take you through the process, one manageable step at a time.

This is the era of unintentional entrepreneurs. People who never considered themselves the entrepreneurial type are creating their own work when they can’t find suitable jobs. But unintentional or not, every entrepreneur has to summon the guts to take that first leap.

Like anything else, launching a business can be broken down into a series of smaller tasks. If you know a Blattman out there,  send him or her to the Starter Cards website  for that Start Your Own Company deck. And if you’re Michael Blattman, give me your address and I’ll mail you a deck as my gift.

4 important reasons to start a company when you can’t find a job

woman blank biz cardIn this recession, many companies are being launched by people who never meant to be entrepreneurs. These people haven’t long harbored the dream of being their own boss; They just haven’t been able to find a job and are thus taking matters into their own hands. The New York Times published an excellent piece yesterday  titled “On to Plan B: Starting a Business,” by Mickey Meece that touched on several of what I consider to be important themes in today’s entrepreneurial landscape.

1. It’s not crazy to launch a business during a recession. Contrary to the general assumption that  starting a company during an economic downturn is particularly risky, it appears to be no more risky than at any other time, according to a 2009 report from Ernst & Young. In fact, the survival rate is about the same for companies started in good times or bad. The Kauffman Foundation offers some reassuring statistics supporting the idea that companies fare no better or worse when launched in a recession or bear market.

2. Technology and social media make it easier than it’s ever been to start your own company. Just imagine how much harder it would be to start a company a decade or two ago — without the Internet, without email, without cell phones. You can research competitive companies and potential customers online. You can find legal services online, so you can incorporate without even leaving your desk. Creating a website no longer requires the services of a programmer, since there are numerous website templates and tools out there, from inexpensive to free. You can even use social media to market your products and services. A tremendous amount of business resources are available now that just didn’t exist before.

3. Starting your own business can give you some measure of control over your future. The current job market can be tough on egos. While the jobless rate is almost in the double digits, many companies are sidestepping much of the etiquette that once was common practice. You send out resumes, email decision makers and place phone calls, and it might seem as if you’ve just launched them all into a black hole somewhere, judging from the response you get. You may score an interview, but then never hear back from that company again, even to tell you that you didn’t make the cut. Launching a business at least gives you some concrete actions you can take that will result in visible progress. Week after week, you can see that your efforts are beginning to materialize into a company you created out of thin air.

4. Even if you get another corporate gig, it’s still good to have that Plan B. Let’s say you launch your company and then you get that big job offer you’ve been waiting for all this time. If your business is something you can continue to do on the side, it might be helpful to  have that additional income. That side business is also just as useful for your mental health. When you have a bad day at work, or your job future seems  uncertain, it can be enormously reassuring to know you’ve got something else to fall back on.

Starting a company as a Plan B

Plan B guyThis economy is a great time to have a Plan B. Are you in the midst of a job search? Might not be a bad idea to start a company on the side, in case the right job doesn’t show up right away. Have a job? Also a good idea to have a small business you mess around with after hours, because even the most solid-seeming jobs can go away with no warning. 

I’m not saying you need to go out and launch a time-demanding, capital-intensive startup. I’m talking about creating some other stream of income, even it’s very modest. Maybe it’s selling vintage clothes on ebay, or marketing your handmade greeting cards on etsy.com, or taking orders for your one-of-a-kind birthday cakes. It could be starting a worm farm in the backyard and shipping live worms to bird lovers and reptile owners. It might be hiring yourself out as a D.J. for parties, or giving tennis lessons or painting dog portraits. You could build websites or custom backyard swing sets. You could sell your special barbecue sauce or cater barbecues. Almost anything could be a Plan B.

Creating additional income is only one reason this is a good idea. The larger reason is the benefit to your mental health. When you wake up in the middle of the night, worried that you’re marked for the next round of layoffs at work, it can help to know you have something else to fall back on, even if it couldn’t possibly support you in its present form. If you get to the third interview for a job and then they hire somebody else, you’ll feel slightly less desolate knowing you’ve got something else going on.

Your Plan B could also surprise you. Maybe your iPhone app becomes a big seller and you find it bringing in much more money than your day job. Maybe your hand-stitched handbags become one of Oprah’s favorite things and you’ve got retailers beating down your door for orders. Stranger things have happened. 

Your Plan B might give  you a running start when you need it. Let’s say you do suddenly find yourself unemployed. Or let’s say you’re enjoying your Plan B sideline so much, you’re thinking you’d be much happier doing it full time. Having spent several months or years making gradual progress on this side company, you could probably ramp it up much more quickly than if you were starting from scratch. You also will have had the opportunity to iron out a few wrinkles and get a feel for what’s it like to run that business.

Here are a few suggestions for putting your Plan B in place, just in case.

1. Choose something that’s a passion of yours. One of the best things about a Plan B is that it isn’t burdened with the entire responsibility for your financial support, so you can afford to try something just because you love it, and not because of how much money it makes.

2. Pick a business you can handle after hours. You don’t want to jeopardize the job you have, or to take too many business hours away from a job search. 

3. Treat it like a real business. Do what you can to make this sideline profitable. Keep good financial records. Pay attention to operating costs vs. income. 

4. Be professional. Your clients and customers will want the same level of professionalism they would expect from any small business. Even though you’re not doing it full time, you’ll still want to show up on time, do what you say you will and deliver a good value.

Small Business Strategies: Inspire employee loyalty now, before the economy gets better

3 happy employeesWhen you sell talent, your inventory goes down in the elevator every night. If your business depends on your employees coming up with great ideas, maintaining strong client relationships or possessing the sort of odd knowledge that not just anyone would have a handle on, then now’s the time to cement those bonds between your people and your company. 

Sure, you get calls and emails every day from people looking for jobs. But they might not be the right people. And even if they were, you’d have to train them, give them time to settle into your company culture, help your clients feel comfortable with new names and faces. It’s much better business to keep the team you have. I realize that at the moment they’re all unbelievably grateful for their jobs. However, when the economy turns around, which it eventually will, you don’t want to lose them because some other offer comes their way. Here are a few things you can do to reduce your chances of the grass is greener scenario:

1. What’s good for the employees is good for the company. Whether you’re talking faster computers or better coffee or good music or letting people bring their dogs to work, whatever you can do to help your employees enjoy their time at the office will repay you in morale, productivity and loyalty. 

2. Let everybody be the boss of something. Teamwork is great, but we all like a chance to be in charge. Give people their own projects to run, and then back off and let them do it. Your number two person can probably run a sizable piece of business without your interference. Your admin can make reasonable decisions on what restaurant to choose when ordering lunch to be delivered for a client meeting. Even the intern can handle something without being second guessed by you. What the heck, let him order whichever brand of copier paper he thinks best. 

3. Give them the flexibility to deal with what’s going on in their lives. The people in your employ are human beings, which means that although they may be professional and dedicated workers, they also have kids who break their arms, aging parents who begin to lose their minds, dogs that need surgery and water heaters that burst. Assume that all your employees will need time out of the office to deal with this kind of stuff, and let them know it’s okay. They’ll make up in gratitude what you lose in a few hours of their productivity. 

4. Help them with their career goals. Every employee wants to know they have a future with the company, and it means a great deal if they know the boss has given some thought to his or her career path. Talk with your people about what they see themselves doing down the road and how they think they could contribute to the company’s growth. One caveat here: I always stress with employees, particularly the young, entitled ones, that my company is not a school with an obligation to provide them with an education in whatever area they wish. The onus is on them to figure out what they can contribute  that happens to be something the company actually needs. 

5. Offer ways to help them stay healthy. This could be as large as offering to spring for gym memberships or as small as keeping fresh fruit in the break room, but anything you can do to help your people improve their wellness is a good investment in your relationship. Encourage the ladies in accounting to form a walking group at lunch, or sponsor the marathoners in the group who are running to raise money for leukemia, but make wellness a priority in your culture.

Small Business Strategies: Dealing with tough economic times

guy leaping cliffsThey say desperate times call for desperate measures, but there’s no reason to panic. My recommendation to business owners worried about the economy is to adjust to current conditions as needed, but without losing sight of the long term. This recession won’t last forever. The first goal is to make sure your company is still standing when the tide turns, and the second is to be prepared for rapid growth when it does. Here are a few lessons I’ve learned over the years, in most cases the hard way.

1. Don’t postpone layoffs. If you know you’re going to have to lose people, do it sooner rather than later. The only difference is that if you do it earlier, you stop the leak in your payroll expenses that much more quickly and you can probably afford to offer better severance packages. If you’ve lost a big client due to the recession, cut your staff immediately. That makes it much easier for them to connect losing their jobs with the company losing that business, and not because they weren’t performing.

2. This is a good time to prune dead wood. Ask yourself if there’s anyone on your staff you would not hire today, knowing their work habits, abilities, attitude and suitability for where your company is now. If there is, you might want to gently release them. If you’re afraid they couldn’t find work elsewhere, maybe you ought to give them a little more credit. You’d be surprised how often business owners offer a huge severance out of guilt, only to find their former employee gainfully employed almost immediately. Yes, even in this economy. 

 3: When business is slow, do something. Anything. In my experience, it doesn’t really matter what you do to stir up new business, as long as you’re putting some energy into it. Pick up the phone to call a few prospects or brainstorm some new way to market your company or just take someone to lunch. Somehow the sheer force of that activity shifts something somewhere out there and suddenly the phone starts to ring with business. Often not with the people you’ve been calling or wining and dining but from someone completely out of the blue.

4: Say no to clients who aren’t right for you. One of the hardest things for business owners to do is to turn down a paying customer. Especially when times are tough. But it’s crucial to building the business you want. Decide what sort of clients are a good fit for your company and then be ruthless about turning away the ones who aren’t. Refer them to some other company who would love to have them and it becomes a win for everyone. 

 5: If no one ever balks at your prices, you’re not charging enough. Unless you’re trying to be the next Sam Walton, the low price leader is not a prize you want. Set your fees reasonably for the value you provide and then expect some people to tell you they’re too high. The ballpark number I use is that one out of 10 prospects will think we’re too expensive. We’d rather work with the other nine.

6: Use the lean times to do less visible work. Slow times are the perfect time to add a new expertise to your service offerings, to research a new part of the industry, to learn something you don’t have time for when you’re busy — like social media, for instance. Take a cue from nature. In the winter, when the sun doesn’t shine and the wind blows cold, the roots are down there underground doing their thing. Then when spring arrives, the plants are ready to burst out with vibrant green leaves and beautiful flowers. That abundant growth could be just around the corner.