Customers and other strangers

If you operated Momma Mia's Meatballs, which feature do you think would give you the best advantage in the competition for customers?

• The best location?
• The best meatball recipe?
• The best prices?

Would any of the above matter if you didn't have any customers?  Or if you ill-served the ones who patronized you? Probably not. At least not for long. 

I was thinking about this following a hike this weekend in a local state park.  We were hungry after finishing our jaunt and were looking forward to a burger and beer at a historic tavern near the entrance to the park.

It was closed.

On a beautiful Saturday afternoon. 

In June. 

It wasn't closed because of an illness or malfunction.  Its posted hours noted that it didn't open until 4 pm on Saturdays. We took our appetites and our business elsewhere, as did others.

The little deli up the road, which didn't offer anything other than pre-packaged fare, was busy with others like us. Hungry customers. With money. 

As Peter Drucker, the father of modern business management once wrote:  "The purpose of business is to create and keep a customer."  You cannot do this successfully if you are not focused on satisfying their needs.

Mother's little helper

Some mother's day musings:

Jeffrey Gitomer is one of my favorite business personalities.  His books, blogs, videos and seminars on sales and selling contain the kind of practical, no-nonsense nuggets that can only come from someone who not only has a true passion for his craft, but has truly mastered it. Such as:

"Your Mother taught you everything you needed to know about connecting to people before you were 10 years old: make friends, play nice, tell the truth, take a bath and do your homework!"

On the other hand, Dan Ariely's observations are a not exactly motherly, unless your mom is a cognitive scientist and behavioral economist.  His belief is that you can't always trust your intuition, or your eyes. But his delivery is every bit as pithy, and his conclusions are as trenchant, as Gitomer's.

Enjoy your week, all you moms and mom's helpers.  Be clean, be helpful and be mindful of your irrational behavior.

The stuff of dreams?

My cousin is married to a musician of some note in certain musical circles. A blues and R&B bassist, "Choppy" performs with several bands and we try and catch him at his local shows whenever we can.  This past weekend, he and friends played a gig in Hudson.

One of their pieces was a raucous, bluesy cover of the country standard "16 Tons" that segued into the Eurythmics' techno-pop hit "Sweet Dreams (Are Made of This)," that they stripped down and rocked out.  They synthesized two seemingly discordant musical styles and schools into a jam that brought the house down.  Smartly, the bartenders chose this moment to pass around the tip hat.  Naturally, this got me thinking about finances.  Small business finances, specifically.

I have met with several business owners lately who have not taken advantage of opportunities that would accelerate their growth.   They each had reasons:  uncomfortable funding the investment from their equity, uneasy about diminishing their cash flow, unwilling to take on debt.  It made me wonder, have even entrepreneurs become too risk-averse when it comes to employing all options for financing growth?



In the aftermath of the financial crisis that began in 2007, debt has become a figurative four-letter word (it already was a literal one.)  There's no argument that we had a debt binge in this country (globally, actually) and that our economic challenges are attributable in large part to postponing working through the necessary deleveraging process.

As marketer Seth Godin once noted:  The guy who invented ships also invented shipwrecks.  Thankfully, the perils of sailing did not scuttle seafaring.  Has the pain of the debt bubble created a mindset that is too limiting where debt financing is concerned? 

Access to debt financing can be a powerful force for small business growth.  It has ever been thus.  It is called leverage for a reason:  small amounts can have a powerful effect.  If you've kept good books, are profitable with a history of good cash flows (and have good credit score), banks and community lending institutions will and want to lend to you. 

Capital is the essential lubricant of commerce and for small businesses it is practically the elixir of life. Yet some now view debt as if it were unicorn blood, extracting a terrible toll for its employ. Smoothing out the cyclicity of cash flows rather than being hamstrung by them is smart financial management.  And the right debt can often be cheaper and provide more operating flexibility than equity capital.

Tennessee Ernie Ford may have lamented debt "to the company store" as an unholy burden, but for smart business owners, it is the stuff of which sweet dreams can be made.

Chances are...

The 1974 film Blazing Saddles is considered one of the great American comedies.  A satire not only of movie westerns, but also of American popular culture, many of the movie's scenes have become classic.

One of those highlights was the late Madeline Kahn's performance of "I'm Tired" a comic lament to over-abundant but largely unfulfilling opportunities:  "I'm tired of being admired..."  We should all have such problems.

The song came to mind this week during discussions with business leaders about coping with the endless series of decisions they must make to keep their organizations moving forward.  Being fatigued was a common complaint.

Indeed.  We've all had those days where we have felt so bombarded by incoming requests that by day's end we feel paralyzed or simply unable to process even a simple request like: "Honey, what do you want for dinner?" without risking a domestic violence charge.

Grappling and growing

My oldest son was not an athletic child.  Growing up in Manhattan, he was an urban street kid and possessed a dexterous rather than physical prowess.  This manifested itself in highly individualist forms: yo-yoing, card tricks and magic.  Brains over brawn stuff.

When we moved to "the country," these unique skills gained him instant visibility with his new peers and helped him to forge new connections.  They didn't alter the reality, however, that his new friends were much more interested in sports than sleight-of-hand.  He had a decision to make.

So he chose to wrestle.  Not an easy sport to jump into, given that many of his teammates (and competitors) had been in programs (who knew?) since grade school. He spent his first year getting beaten pretty badly, which for him was a singular and disorienting experience; he had no prior experience on which to mitigate the helplessness he felt.  It was not just the losing, he said, but more so being unable to figure out how to stop losing. He couldn't just think his way out of it and was frustrated about not being able to apply what he was learning in actual competition.

Fast forward a year:  he has as many wins as losses; placed 2nd in a 12-team tournament over the holiday, and last week pinned a more experienced opponent in less than a minute on what his coach called, "a beautifully executed move."

The path you choose

The word entrepreneur is not of modern vintage.  It is about about three centuries or so old, and not of English origin.  According to Wikipedia:

"Entrepreneur is a loanword from French and was first defined by the Irish-French economist Richard Cantillon as the person who pays a certain price for a product to resell it at an uncertain price, thereby making decisions about obtaining and using the resources while consequently admitting the risk of enterprise. The term first appeared in the French Dictionary "Dictionnaire Universel de Commerce" of Jacques des Bruslons published in 1723."

In the original definition -- a reseller or middleman -- the word entrepreneur hardly conjures up the glamor and symbolism that are associated with it today: a world of Valleys, Alleys, start-ups, venture capital, IPOs and potential riches.

Despite the pop culture mythology attached to modern entrepreneurs, life for most business owners is more mundane than commonly portrayed. They are a practical lot, more concerned with making payroll than the size of their bankroll.

And even though Americans like to think we are the masters of commercial risk-taking, we aren't even the most entrepreneurial society.  Be that as it may, both the uncertainly and the "risk of the enterprise" surely remain the same as it ever was.

For many, the difference between success and failure comes down to how well they "make decisions about obtaining and using resources." In other words, the path they choose to get what's in their head (vision) into operation (execution) in their business in a way that allows them sufficient sustained profitability to endure.

An enemy of one?

About two thousand years ago, a Chinese general named Sun-Tzu wrote a 13-chapter tract about the martial arts and warfare, entitled "The Art of War."

While I am sure that he was, as many leaders tend to be, very self confident and at least a touch self-centered, I am equally sure he didn't envision his treatise becoming a best-seller for business leaders a couple of millennia hence.

The Art of War is widely quoted and cited on a range of business topics, from general management to sales to human resources, and has become synonymous with the melding of strategic and tactical thinking.  One of the most famous lines speaks directly to that: "Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat."

But Sun-Tzu also believed that engaging in war was a fool's choice, "Anyone who excels in defeating his enemies triumphs before his enemy's threat become real."   He also said: “If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but know not the enemy, for every victory gained you will also suffer a defeat.  If you know not the enemy or yourself, you will succumb in every battle.”

In other words, get to know yourself and the battle is won.

Last week I listed five steps to achieve greater focus for yourself and your organization which I have learned from working with successful business owners and CEOs.   In more depth, they are:

Crossroads

In last week's post, I wrote:  "In the weeks ahead, I'll outline ...  an "Owner's Manual" for 21st century small business leaders."

That wasn't entirely accurate.  What's follows over the next few weeks is not a manual, in the truest sense of the word:

Manual [ˈmænjʊəl] adj 
[via Old French from Latin manuālis, from manus hand]

1. of or relating to a hand or hands

2. operated or done by hand manual controls

3. physical, as opposed to mental or mechanical manual labour

4. by human labor rather than automatic or computer-aided means

5. of, relating to, or resembling a manual

n

1. a book, esp of instructions or information a car manual

2. (Music, other) Music one of the keyboards played by hand on an organ

3. (Military) Military the prescribed drill with small arms

Collins English Dictionary – Complete and Unabridged © HarperCollins

The problem with manuals is that they are so, well, hands-on, in a more or less literal sense, AND they are very basic (find key, put it in ignition, turn on car...) Manuals tell, rather than teach.

What I have found from working with business owners, CEOs and organizational leaders for over 30 years is that the best seek not a how-to, but a map, a compass, a guide to help them navigate.  They are constantly trolling for new experience and expertise and they want guidance on better managing themselves and their businesses.

The half of it

There are probably not many who don't know the old adage about the half-filled glass: that the optimist sees the glass as half-full, while the pessimist views it as half-empty.

That aphorism has been extended in many ways: An economist would say that, adjusted for inflation, the glass is 10% less full than two years ago; a banker would say that the glass has 50% of its net worth in liquid assets; politicians would say that it would be fuller if you vote for their programs, and a private equity investor would say that they could get rid of the excess glass, then fill it back with a bit of leverage.

And finally, some would over think it altogether.

In the days leading up to the Thanksgiving break, there was much to-and-fro about the state of the world:  the results of the election, the fiscal cliff, a world without Twinkies, Black Friday, Small Business Saturday, etc., etc., ad nauseum.

While those of us who prefer not to live in caves or with our heads in the sand have more than a passing interest in the news of the day, fixating on macro issues is mostly a distraction, and finding the truth is as elusive as ever.

Uncorked

It's November. Halloween has passed, we've turned the clocks back and daylight hours are fading fast.

In other words, it's that time when a business owner's thoughts turn to planning.  Our TAB members are working on securing this year's successes and focused on defining their priorities for 2013.  Happily, most of our businesses have seen gains this year, as is the case with many owners who are part of a knowledge-sharing group.

While each business plans in a way that is unique to it, I have found that the ones that are most successful in achieving their goals share some common approaches:  they focus on fewer, but very specific goals; they set hard targets and timelines; and they lead their organizations to the achievement of the goals without doing the work themselves.

When leading planning discussions, I like to start with three baseline questions:

• What are your three priorities for 2013?
• What resources do you need to achieve them?
• What do you need to stop doing to make them happen?

Out of the bowl*

Congratulations.

Your business is finally back on a growth track, after several years of struggle.  Sales are not only improving, they are accelerating.  Some hiccups month-to-month, but the trend line is steepening and extending.

Your increased profits have allowed you to finally move ahead and expand the range of products and services you offer.  Your customers are reacting happily, buying more often and spending more per transaction.  It's a virtuous circle.

Employees are happy.  They are getting profit sharing bonuses and those bonuses are increasing as the business performs.  You've installed the systems and processes to give them the autonomy to do their jobs without being micromanaged.  You trust their judgment -- you have to, because you're now so large that you couldn't do their jobs even if you wanted to.  In fact, there's several people you didn't hire yourself; your managers did.

Heading north?

"True north" was a wildly popular term in the late 20th century. So popular that dozens of companies, organizations and products incorporated the term into their name.  Paradoxically, it became so widely embraced and adopted that its usage in recent years has gone south. 

True North is, literally, a physical place.  It refers to the earth's geographic North Pole.  It is unmovable, immutable, constant, consistent.  It is, not literally, the polar opposite of Magnetic North, which varies in time and place, and by your perspective.

So, navigationally, literally and figuratively, it is best to know True North, or you may be traveling off course.

Metaphorically, it is also necessary to find and understand your True North if you wish to end up where you want to go metaphysically.