Sunday, April 25, 2010

Common Problems in Small Business

It is not by muscle, speed, or physical dexterity that great things are achieved, but by reflection, force of character, and judgment.
~Marcus Tullius Cicero

Every once in a while you need to sit back and reflect on life to see if there are any trends or experiences that you or others can learn from. The Jim Moran Institute recently celebrated its 15th anniversary, and I was reflecting on the common problems that entrepreneurial clients (over 3,000) have had over the years. By far, the number one problem that entrepreneurs have dealt with is the selection of accountants.

Too often, entrepreneurs continue to use the same accountant, not realizing that the services offered can vary so tremendously from one accountant to another. In addition, so many entrepreneurs feel intimated by accountants, and they are just not comfortable asking cogent questions. However, you must have an accountant on hand to spot trends and advise you on ways to improve your profits.
Having an accountant that only does your taxes at the end of the year is just not adequate. Entrepreneurs must hire an accountant that will look at their financial statements each month and give them advice on how to perform better.

The second common problem is that entrepreneurs do not have a coach or mentor. Empirical studies have repeatedly shown that entrepreneurs who have mentors are so much more successful in terms of their business’ performance than entrepreneurs who do not have coaches.

So many entrepreneurs do not ask for help from a mentor or coach because they think that to do so would be a sign of weakness. However, in reality, asking for help is a sign of strength and courage. There is no way any entrepreneur could ever know everything about their business, and having a coach or mentor can help them navigate the rough waters without slipping out of the boat.

The third area where almost every business struggles is staffing, both in terms of hiring the wrong employees and holding back when it comes to letting questionable staff go. In order to have a great organization, you must have great people working for you – people with character, people skills and motivation. Where these qualities are concerned, you just cannot make exceptions as they are not skills you can teach.

In terms of letting people go, it is always tough. I like to say that the day you have to let someone go is both the worst day and the best day of your life. Having a bad employee is like cancer in that it just keeps growing if left unchecked, and letting these problem employees go frees you and your organization up so much. If you have a bad employee, the sooner you let them go, the better, both for your organization as well as for your ability to manage it.

Now go out and make sure that you have addressed your accounting issues, have a mentor and have a great staff.

You can do this!

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Monday, April 19, 2010

A Driving Process for Success: The Governor’s Sterling Award

When we are motivated by goals that have deep meaning, by dreams that need completion, by pure love that needs expressing, then we truly live life.
~Greg Anderson

Two years ago, I was lucky enough to be invited by Fringe Benefits Management Company’s President and Florida Sterling Council Board Member Lorraine Strickland to attend the ceremony for the Governor’s Sterling Award in Orlando. Prior to that time, I had heard about the Sterling Award, but I did not know exactly what it did or how it operated. What I remember most about the ceremony was the absolute glee that was apparent on the faces of the staff of the winning companies. That more than made up for having to wear a tux, which is not my favorite thing to do, at all.

The Governor’s Sterling Award is presented to both governmental agencies and private businesses, and for each winner, it seemed as if the entire staff was on the stage to receive the award. I have never seen a happier group than the recipients of this very prestigious honor.

The Sterling Award is to the state of Florida what the Malcolm Baldridge National Quality Award is to the entire nation. Both programs seek to improve the overall performance and bottom line of each organization (whether for profit or not-for-profit) through process improvement.

The Sterling process evaluates each applicant’s effectiveness in seven areas: leadership, strategic planning, customer focus, measurement and analysis, employee focus, process management, and of course, results. Clearly, this award understands how important processes and process improvement are to making organizations successful. They have a very well-thought-out but demanding path for achieving this award, and outside examiners are brought in to evaluate each firm.

To me, whether an organization wins or not, merely going through this very effective application process is the real value as it brings about some very significant changes. I sit on the boards of two organizations that are going up for the Sterling Award, and I have seen first-hand how simply starting the application process has triggered changes in both staff motivation and process improvement.
Leading up to the Sterling Award ceremony, they hold their annual conference, which helps to educate and train staff on how they can achieve this prestigious award. But more importantly, it demonstrates how to become a more efficient and effective organization. Their 2010 conference will be held June 2-4 in Orlando, and they will cover topics such as “How to Avoid the Four Human Ailments: Pitfalls that Hold Us Back” and “Leadership…Let’s Keep it Real.” It is an extremely informative conference, and I will be attending.

I was so impressed with the entire process that I, along with several others, finally nagged John Pieno, the executive director of the Florida Sterling Council, into developing a Sterling process for small businesses. Called the Small Business Blueprint, this is a series of workshops that brings the guts of the Sterling Award to small firms, and many small business owners have shared with me how valuable this training has been for them.

Whether you are a large business, small business, government entity or a non-profit, Sterling has something for your organization. You can get so much more information about this organization at their web site,

You can do this!

Sunday, April 11, 2010

Make sure there is demand for your new product or service

Nobody ever lost money taking a profit.
~Bernard Baruch

Marketing 101 demands that before you introduce a new product or start a business selling a new product, you need to make sure that there is a solid demand for the product. While this sounds so elementary, we continually work with entrepreneurs and inventors that have just forgotten about this basic tenet of good marketing.

We were called in recently to assist an inventor that had developed a new type of dog toy. The toy was fun for dogs but very expensive to produce. They gave me one to try, and I can personally attest that my dogs (3) loved the toy.

This toy was the brainchild of an inventor who really needed a product like this for his dogs. This idea came to fruition after the inventor invested over $100,000 in initial production and development expenses. His teams called JMI because they wanted help with some partner issues. However, as it frequently turns out when people call us for help, the issue they cited was not the critical issue at all.

After much discussion, we were able to ferret out the real problem. Their partner issues paled in comparison to the fact that they were uncertain if the product even had a viable market. They spent all of this money without knowing if there was any real demand for the product. Of course, they asked their friends and relatives what they thought about the product, and of course, they got rave reviews. What they did not do was ask potential customers if they would be willing to buy the product and for what price.

In order to cover the cost of getting these dog toys produced, they would have to charge a very high price, and because they assumed there would be a landslide of demand, they thought they could do that. We very kindly told them that they first needed to find out if there was a real demand for the product. Furthermore, even if the demand was there, we thought that it was way overpriced.
We suggested that they try to sell their current inventory on the Web as well as at various dog events. They could set up a small table and try to sell the blankets at these events before they invested too much more money.

While ensuring that there is a demand for your product seems like such a simple concept, this inventor just got caught up. He fell in love with his first idea, not his best idea. Additionally, he saw this as a way to achieve financial success, and he failed to think carefully through all of the ramifications of ensuring that there was a demand for his product.

Now go out and make sure that there is a viable demand for your new product or business. You can do this through the use of surveys, selling your product to a small market, or asking your existing customers what they think about a new product or service.

You can do this!

Sunday, April 4, 2010

Why Partnerships are to be Avoided!

Concentration is my motto -- first honesty, then industry, then concentration.

~Andrew Carnegie

One of the hardest problems that we have to deal with is when a partnership turns sour. It really is not a pleasant thing to see as it takes so much time and effort to extricate the partners. Normally, this separation takes 12 to 16 months, and because many lawyers and experts are involved, it is also very expensive.

The number one cause of failed partnerships is that they are formed for the wrong reason. Typically, these alliances are formed when one partner feels that he or she is missing some critical element for running a business. Generally, I find this missing element is either marketing or finance. For example, we had one partnership where the originating partner was a great marketer, but she needed someone to take care of everything else.

Another predominant reason why partnerships fail is theft. I really do not know why this happens so frequently, but my guess would be that one partner feels as if there is an imbalance in the partnership. This perceived imbalance could be, for example, disproportionate hours worked or different competency levels. Or perhaps it happens simply because no one is watching them, and they think they can get away with it.

Whatever the motive, theft destroys partnerships. Trust between partners is critical to keeping the business running, and once that trust is breached, the partnership implodes.

We were helping a business in the healthcare industry. This business was thriving, but the founding owner felt that he did not have the necessary financial skills. He was great at running and marketing the business, but he lacked both the skills and knowledge to effectively manage the entire operation.

As a result, he went into business with a partner that he thought had the skills to handle the finances. Additionally, he thought this new partner would be able to bring in the funds needed to finance a necessary expansion.
After six months, the new partner would never allow the originating partner to see the financials or manage any of the money. Then, while I was meeting one morning with the partners, it came out that none of the credit cards that the new partner was using to finance the business were being pulled down as the firm was very, very profitable.

Something was wrong, and I must have had a very strange look on my face because the originating partner says that moment was his turning point. He realized then and there that theft was probably going on.

It has been so painful for the originating partner to prosecute the partner that he thought would save his business. From hindsight however, he realized that if he had done some due diligence, he would have discovered that his former partner had a history of problems.

After having gone through this mess, the originating partner now realizes that he has the skills and the confidence to run his business that he never had before. While this was clearly a painful experience, there were also some very tangible benefits, and the business is now moving towards a sound financial future.

You are wise to avoid partnerships, but if you must have one, make sure there is a very clear partnership agreement that protects both parties should a problem ever arise.

You can do this!

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