Tag Archives: small business owner

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.”

Can you cut your payroll and still keep employees happy?

Most small businesses have already done some belt tightening this year. We’ve trimmed dead wood, become a more lean machine, and every other metaphor you can apply to spending less money. Still, when we see our final projections of where our year-end financials will end up, we might  wonder if we should cut a little more.

Sylvia Ann Hewlett, founder of the Center for Work-Life Policy, wrote in the New York Times this weekend about a creative approach to cutting costs by trading employees money for time. She cites the example of KMPG, the giant accounting firm, and their solution to cutting payroll costs without losing star talent. They presented 11,000 employees with a Chinese menu of choices: work a four-day week and take a 20% pay reduction; take a short sabbatical while earning 30 percent of their base salary; both of those options; or neither of those options, retaining their regular salary for their standard work week. Over 80% of them chose one of the flex options.

Hewlett points out that because KPMG positioned these options as “a strategic response to the downturn, rather than a ‘benefit’ for working mothers, it has gone some distance to legitimizing flex time. Taking this option has become an honored choice — a way to save jobs. As a result, overloaded men as well as overloaded women have felt free to vary their schedules.”

I’ve seen one small company try a flawed version of this plan with disastrous results. Faced with the need to reduce payroll and loathe to eliminate jobs, the business owner asked everyone in the company to take a 15 percent pay cut, assuring them that she was taking the same reduction in salary. She hoped they would see this as a good way to help all their coworkers keep their jobs.

It didn’t work that way. Morale plummeted and some of her best talent jumped ship. Months later, when she was able to reinstate full salaries, she didn’t score any points with her staff because the damage was already done.

The crucial elements of cutting payroll while retaining employees are 1) giving them something back, i.e. time, in exchange for giving up some of their salary, and 2) giving them the choice of making that trade or not. Asking employees to help suck up your losses by getting paid less for the same work week is only going to hurt the company in the long run.

The thing about being an entrepreneur is that you have the potential to make a lot of money in good years. You also have the potential to lose money in the bad ones. We all willingly take that risk, but it’s not fair to expect our employees to share in the down side. On the other hand, in 2010 or 2011, when we see year-end projections that show us closing the year with gobs of money, we’ll benefit nicely from the upside of that risk-reward ratio.

Small Business Wisdom: How To Ruin Years Of Effort With One Dumb Mistake

directionsThis is how you can make years of progress toward a goal and then ruin your chances with one stupid mistake. We completely blew a meeting yesterday with a prospective client. The client’s assistant had sent us typed directions for several possible routes to their office, but no one at Tribe had stopped to read them very carefully. An hour or so before the meeting, we briefly discussed as a group which set of directions we should take and decided on one. Then my business partner and I set out for the meeting, an ample 45 minutes ahead of time.

The route we chose was the wrong one. Instead of the 20 or 3o minutes the trip should have taken, we drove around our elbow and through four counties (I’m serious), all the while following our typed directions. At five minutes before our meeting was scheduled, we were still whipping along some distant suburban highway and trying to come to terms with the fact that we were going to be late. We had GPS, we had our iPhone Map application and we had the office on the phone. All three assured us we were heading in the right direction, but we had a long way to go.

We apologized profusely and the prospective client was very gracious about it. But it’s a tough first impression to overcome. We were also rattled in the meeting and I’m sure we were not anywhere near the top of our game. The client turned out to be someone we enjoyed immensely. She was smart and energetic and funny and we would probably love working with her, but I’d be very surprised if we ever landed any of her business. And that’s completely our fault.

Our dumb mistake has much larger repercussions than one meeting. The drive back to our office (taking another of the listed routes on the assistant’s sheet) took less than 20 minutes. The crew back at Tribe understood that we’d shot ourselves in the foot with that meeting, but I don’t think they truly realized that we’d blown much more than one hour of a prospect’s time.

The effort it took to land that meeting began years ago. That prospective client works for a large Atlanta company which has been on our hit list since 2004 . For five years, my business partner has been reaching out to them with mailings and promotional pieces and emails and phone calls.

Over a year ago, in August of 2008, I finally connected on LinkedIn with Jo Ann, the then-marketing director of the company. Six months ago, Jo Ann left the company to start her own business and emailed to see if I’d like to get together for lunch or a glass of wine. Three weeks later, we finally met for lunch. She asked some advice on running her own company; In return, she kindly offered to set up an introduction with Leigh, the marketing director who took her place at her old company. Several weeks later, the introduction was made. It took my business partner a month after that to get Leigh to agree to a meeting. The meeting we had with her yesterday.

So there was a long road to that meeting yesterday, and I don’t mean the one we were following through four different counties. What we blew wasn’t one meeting. It was the years of effort to create a long series of very tiny movements toward that meeting.

Moral of the story: There’s so much a small business can’t control about whether a client hires us or not. Let’s control the ones we can. For instance, check out your directions ahead of time.

 

Sustainable Startup: Worthwhile Wine From South Africa

Tom_Miranda_Zumas_smallTom Lynch’s new company really began on a father-daughter trip. He and his 13-year-old Miranda were planning a trip to South Africa, and decided they should spend a week of their time there doing something to help. They ended up in Nzinga, a remote village of mud huts, where Miranda read books to the children and helped out in the school while her dad was put to work planting potatoes and working in the communal garden.

On the trip home, Miranda told her father they couldn’t just leave and do nothing else. She wanted to keep working to help this village. Tom agreed to help her launch a non-profit, which Miranda named Isopho, a Zulu word for “gift” and the children’s nickname for Miranda. While they were sitting there waiting for the plane, Tom searched for available URLs and registered Isopho.org then and there.

Eventually, Tom began to feel a disconnect between his work with Isopho on nights and weekends and his daytime job as a VP of Strategy & Planning for a large digital agency. Doing more of the same each day at work felt insufficient, in light of the challenges he’d accepted in Nzinga. When the company began to consider layoffs, he suggested a mutually beneficial exit agreement for himself so that he could spend more time on Isopho.

He also began thinking about starting a company that might be a better complement to Isopho. On one trip to South Africa, he stayed an extra few weeks to visit an extensive list of wineries he had culled from an even larger list.  His first requirement was that the vineyard consistently win awards for great wine. And the second was that it contribute to sustainability in some major ways. Despite its unfortunate history, the South African wine industry is now one of the most progressive in the world.

The result is Tom’s new company, Worthwhile Wines, which will import 261 sustainable wines from 21 different South African Vineyards. Although the history of winemaking in South Africa is oppressive at best, the vineyards Tom selected are doing things like putting a third of the land in the names of the Black workers, providing school and decent housing for the families working there, developing ways to use fewer pesticides, using organic grapes and employing Blacks in management roles.

Most of us would choose a sustainable product over a similar one that’s not sustainable. But few of us want to go to much trouble to figure that out. Choosing a bottle imported by WorthWhile Wines will be a quick and easy way for consumers to know they’re a) getting a good wine, that B) is from a vineyard that ‘s doing good.

Worthwhile Wines will also be a way Tom Lynch can a) run a good business that b) does some good in the world.

The Weird Resumes That Lead To Successful Entrepreneurs

ML hurdles026

Marilou (in white) hurdles toward her future startup

The path to entrepreneurship often covers exactly the right ground, in ways we could never predict. Interests and experience that seem to be unrelated eventually turn out to be precisely the preparation a specific new venture requires.

Marilou McFarlane, for example, has recently launched Vivo Girls Sports, an online community for athletic girls aged 13-22. If she had known when she was a kid that this was the company she’d start at age 48, she could not have plotted a more useful resume of stepping stones to this moment.

Sure, Marilou played sports as a girl. Soccer and track and tennis and more. She also grew up around college sports, since her father, Jim Heavner, announced many of the Tarheel games for WCHL,  the radio station he started in Chapel Hill. (Being the daughter of an entrepreneur also helps pave the way for starting your own gig later.) After college, she worked for Turner, back when Ted still owned it all, so that gave her some good experience in media, as well as a chance to work for another entrepreneur who thinks big. Later, in San Francisco, she was a media rep for KCBS for many years, before she started her own company, McFarlane Marketing. She had two daughters, both athletic, and was involved in season after season of their sports. For two years, she served as president of their soccer league, a full-time volunteer position she handled while continuing to build her marketing company. She also started an offshoot of  her marketing company that targeted colleges specifically. And now her oldest daughter, Kelly, will be playing for the Tarheels in Chapel Hill starting next year — on their very impressive women’s soccer team.

Marilou knows sports and she knows marketing. She understands teenagers and college students. She has a deep affinity for the issues that girls in those age brackets are facing. She’s savvy to the incredible buying power of this group and its appeal to marketers. And she’s not afraid to start something  new.

Starting a company is not just a way to make a living. Sometimes it’s how we reconcile and integrate everything we are.

The Romance Of A Startup

King PlowThere’s nothing like the excitement of starting your own business. Most entrepreneurs have a certain nostalgia about the early days when their companies were only a few steps beyond those initial notes on a legal pad — or a cocktail napkin.

When I launched my first ad agency, we really did start with a cocktail napkin. My business partner and I were teaching classes one evening a week at an ad school, and afterwards we’d meet up the street for a glass of wine. We would plot and plan and scribble thoughts on paper napkins, as we discussed our vision for the agency we would eventually call Match. Before we decided on a name, we practiced at the same bar with their cloth napkin rolls, wrapped around knifes and forks. We’d pick up that napkin roll and hold it to our ear saying, “Hello, thanks for calling Albert & Baskin.” No, that sounds like an ice cream store. “Hello, thanks for calling Magnet.” Okay, maybe. Until we finally tried, “Hello, thanks for calling Match,” and decided that was the one.

Our first office was two rooms in a renovated plow factory. We would spend the days pitching business and going to see clients, and then about 5 or 6 the phones would simmer down and we’d start doing the creative work for whatever deadlines we were trying to meet. I’ll never forget how it felt to be there working late, with the glow of lamplight on the dusty red brick walls and the rumble of trains moving past our open windows, almost close enough to reach out and touch. We’d have good music on the stereo and our dogs at our feet and after awhile we’d start to have some good ideas. It was heady stuff.

At first, we couldn’t afford much furniture and most of what we had was hand-me-down. Our desk was a borrowed dining room table we shared, facing each other across our laptops. We splurged on a pair of new swiveling desk chairs at the Office Depot, but hadn’t yet sprung for any rugs, so the chairs would slowly roll away on the warped old hardwood floors if you didn’t keep a good grip with your feet. One late night I was sitting cross-legged in my chair, writing on a pad of paper in my lap. I heard my partner B.A. talking to me, but she sounded far away. When I looked up, I realized I had rolled downhill all the way across the room. After that, we got some rugs, and they also helped with the noise of the trains which was so loud it was beginning to make our teeth rattle around in our heads.

Eventually, our little startup was employing ten or 12 people and working with an impressive list of clients. We grew out of our two rooms and knocked down walls to expand into three connected studio spaces. We bought furniture and returned the desks and tables and other pieces we’d begged and borrowed in the beginning. We put in a sophisticated phone system. We started a 401(k) plan. In short, we became a real business. Our startup worked.

But I wouldn’t trade anything for those early days. There’s nothing like the feeling of making something out of thin air. One day, Match was a stack of cocktail napkins covered in Sharpie. Then suddenly, there was a company that didn’t exist before, doing good work for clients, supporting a number of people in doing work they love, and giving other would-be entrepreneurs the confidence that they could do it too.

Several years later, a woman I’d worked with a decade before asked me to lunch to discuss the company she was about to launch. Over our Caesar salads she said, “I told my business partner, how hard could it be? If Elizabeth and B.A. can do it, anyone can!”

After a baby, is starting a company a better idea than going back to work?

babyMaggie would really rather be at home with her new baby, but went back to her job after a standard maternity leave because she and her husband decided they couldn’t afford for her not to work. Several months into it, she’s figured out that after paying for childcare and other expenses associated with the job, she nets about $300 a month. So, in her words, she’s working “to pay for a couple of tanks of gas and some groceries.”

Is there not a better way to make $300? Maggie is the sister of a friend of mine, and I’ve only met her once or twice, but I can’t quit thinking about her situation. I remember what it was like to have a new baby and be torn away by work. And I loved my work at the time, although I understand Maggie is not crazy about her job. I do know she comes from an entrepreneurial family, so the idea of starting her own business is probably not foreign to her.

What sort of business could she start that would mean limited time away from her baby? We’re not talking about the kind of all-consuming startup that requires 80 hours a week or depends on venture capital to get off the ground. To quit her job, Maggie would only need to create $3,600 a year in net profit. That’s not so hard to do. Let’s look at some hypothetical possibilities, making some huge assumptions about what sorts of skills and talents she might have to offer — and the kinds of things she’d actually enjoy doing.

A good solution would be something she could bill by the hour, for only a handful of hours a week. Let’s say she’s a talented tennis player and could give tennis lessons, or fluent in French and could tutor high school students, or a math whiz and could serve as an SAT coach for kids trying to raise their scores. If she charged $50 an hour, or even $35, she could work a very short week and clear her $300 net, even if she had to pay a babysitter. Although, she also might schedule some of those hours during the weekends when her husband could be with the baby.

Let’s say she’s been keeping the company books on Quickbooks at her current job. So many small businesses use that accounting software, many of which might not be large enough to have a full-time bookkeeper but would like to outsource the accounts payable, accounts receivable and basic financial reports. She could handle the books for one or two small companies by going in just a morning or so a week and come home with that $300 or more.

What about starting a company that would provide something needed by other mothers with young kids? I remember several years ago a  woman in New York had the brilliant idea of an exercise class in Central Park that incorporated baby strollers (and babies) into the fitness routine. Maybe Maggie was a lifeguard and swim instructor in her youth and could start a group swimming class for mothers and babies using her mom’s backyard pool.

One trick to making this plan work would be choosing a business that offers the chance of recurring income from the same clients month after month. In other words, she signs up one student for tennis lessons and sees them once a week for months on end. Or connects with a small business who could use a freelance bookkeeper and continues to do their books until they’re large enough to need someone full time. Otherwise, she’ll need to spend a large amount of her time marketing her services so she can create new clients over and over.

Selling your hours adds up more quickly than selling a thing. Particularly a thing that requires hard costs for materials or equipment.  This is not always true, but I think would be for the types of things I can imagine someone like Maggie selling, like homemade greeting cards (she’s very crafty) or hand sewn baby bonnets or fresh-baked birthday cakes. She would have to sell a whole bunch of any of those to make her $300 each month. If you have a skill or talent that allows you to charge a significant hourly rate, that can be an easier path to doing without a paycheck.

Starting a company as a mompreneur doesn’t have to be complicated. If you don’t need to rent office space or hire employees or buy expensive equipment, the startup doesn’t have to cost much either. This is not meant to be a pushy plug for our products, but the Start Your Own Company application for the iPhone is just .99 and could walk Maggie through the basic steps of launching a business. Or she could try the more comprehensive Start Your Own Company printed deck from Starter Cards, which also includes information on the Launch and Follow-Through phases as well as the Launch phase. Either one could be a simple first step to creating a life-sized business that works for this stage of her life.