Friday, February 27, 2009

The Worst Business Decisions Ever Made

3 Adults. 4 Kids under the age of 7. And a brand new minivan for a whole week!

Those are the critical elements of one of the worst business decisions I have ever seen a company make. We arrived in Dulles airport early Tuesday morning excited for a week-long vacation visiting family, museums, historical sites, and beaches along the east coast. It was an ambitious trip with almost 1,500 miles of driving.

The clerk at the rental car company (we will keep them anonymous) handed me the keys to a brand new minivan, we loaded the car seats, luggage, and humans into the van, and we began our adventure.

With just 5 miles on the odometer, we could smell and sense the newness and freshness of this beautifully manufactured piece of machinery. All we needed was a week to change that! As we drove and drove and drove for the next 7 days, we ate several meals in it while we were driving and it became our only place of permanence since we slept in a different place every night. We moved in.

We were tired after our week of vacationing as we packed our suitcases to prepare for the flight home. So much of our “stuff” had been moved into the van that we left an entire suitcase empty so we could fill it up when we returned the van. For each item I handed my wife out of the van, she chose whether it should go into the suitcase or a large trash bag.

In an effort to spare you all of the gory details of what I found in that van, I think I can sufficiently summarize it by explaining that the car rental location did not have a trash can large enough for our bag of trash when we were done. With almost 1,500 miles on its odometer and a year’s, or I mean a week’s, worth of wear and tear, the van was returned.

As we rode the shuttle bus to the airport terminal, my mind reflected on the beating that van took during the week. Considering that and the significantly discounted rental rate we paid, I concluded that giving us a brand new van was one of the worst business decisions I have ever seen a company make.

Thursday, February 26, 2009

Entrepreneurs Epitomize Realistic Optimism

What is a realistic optimist? An entrepreneur. Here’s why:

Even though the business was facing insolvency, the entrepreneur graciously accepted an award for his company’s “outstanding” growth and achievement. You see, just 12 months earlier the company was growing at record pace and people loved to work there. With a drastically different economic outlook, triple-digit material price increases, stiffer competition, and a few other challenges his company was now hanging on by a thread.

I’ll spare the details of how he got himself into this situation to make my point – entrepreneurs live a life of dramatic ups-and-downs, yet they remain realistic optimists. They can face the most dire of circumstances and still keep a positive outlook on their enterprise. They are grounded in reality because they have to face it and deal with it every day. This is not always easy to do. The entrepreneur mentioned earlier felt bad about receiving such recognition while his company was struggling so severely. But he showed up, put a smile on his face, accepted the award, and recommitted to turning his company around and becoming more successful than ever.

We often paint entrepreneurs in the light of amazing and even brilliant people. Some probably are both of these things, but being amazing and brilliant are not required. There are lots of amazing and brilliant people who make horrible entrepreneurs. However, being a realistic optimist is imperative to an entrepreneur’s success. This career path is not for the faint of heart. It is a difficult and often lonely road, one that can only be survived with realistic optimism.

Friday, February 20, 2009

Lessons Learned from Blogging

After trying my hand at blogging for a little while now, here are a few of the things I have learned along the way.

FIRST LESSON: You have to start somewhere.  I had no idea what I was doing, but I knew I had something to say.  So I just started blogging.  It wasn't easy, and I often felt inadequate, but I did it anyway.  Just by going through the process of preparing blogs I feel like my thoughts are more organized and I have been able to capture some of the solutions we deliver our clients in bite-sized "gems."
 
SECOND LESSON:
Just because you write a blog does not mean anyone will read it.  For some reason I thought that people would start finding my blog and be so overwhelming enlightened by its content that they would come back every day.  Not only has that not happened, but I have also realized that there are very few places on the web that I visit regularly.  I only go back regularly for excellent content.  No pressure, but I now, very humbly, admit that I cannot produce that kind of content every day.  But I know my content helps some and adds value to many of my professional and personal relationships, so I keep doing it.  I hope I'm getting better.

THIRD LESSON: It is okay to market your blog in appropriate mediums. I let people know about my blog posts through Twitter and Facebook, although that is not my only activity on those platforms.  I spend most of my time connecting with people and building relationships - which creates an environment that is very approving of mild self-promotion.

FOURTH LESSON: Comments are good, not bad.  You should allow people to comment on your blog posts and be open to their input and suggestions.  It may be scary to put yourself out on the internet in the form of a blog post so anyone can comment on your writings.  For the most part commentors are kind and they usually have some good insight to add to your thoughts.  Be humble, and you will learn a lot from their comments.

This post was inspired by the following video of Seth Godin and Tom Peters.  The topic is blogging.  It is short and powerful - I recommend you watch it: WHY SHOULD I BLOG?

Thursday, February 19, 2009

We Have a Business Plan, Now What?

You have gone through the painstaking effort of creating a formidable business plan for your enterprise. Now, what do you do with it? The answer – use it at least monthly to run your business!

After investing thought and time into the business plan, the biggest question mark that still remains centers around the assumptions we have made concerning sales, margins, and cash flow. It is imperative to validate or invalidate our assumptions with our actual performance.

If we assumed our sales would grow by 5% each month, are we actually hitting that number? Are we higher or lower than it? Why? Is our sales cycle taking longer or shorter to complete? Are we hitting our conversion assumptions? The result of actually tracking our sales performance relative to our assumptions will generate two results: first, we will be able to hold our organizations accountable, and, second, we will more clearly understand our sales process and empower ourselves to make better assumptions in the future.

There are many valuable results that we will realize if we use our business plan at least once per month to help us run and grow our business.

Tuesday, February 10, 2009

You're an Entrepreneur if...

Have you ever woken up with a sick feeling in your stomach that all your customers were going to fire you? Or perhaps you weren’t sure how you were going to cover payroll that day? This feeling is common to all entrepreneurs, and it is a good measure to determine if you are one. In fact, most entrepreneurs experience this at least once per week.

Thursday, February 5, 2009

Leadership After the Layoff--A Financial Plan is Key

You had to do it. You had more staff than work, and your cash flow was not going to be able to support everyone you had hired for much longer.  You gear yourself up and let some of your closest friends and colleagues go.  Then you realize your most difficult job still lies ahead - retaining your remaining staff and their morale!

After reading Leadership After Layoffs I thought about the many companies that have laid off or will need to lay off employees.  There has been and will be a lot of material written on how to communicate with the remaining employees after the layoff.  But far too little is written on the need to formulate a financial plan to survive the layoff and return to prosperity.

Does the CEO really see how the layoffs will solve the company's cash flow and profitability issues?  Can he/she confidently explain to the remaining staff why these cuts were just deep enough but not so deep that the company's hallmark way of taking care of its customers will not be in jeopardy?

With a sound and reasonable financial model that accounts for the "before" and "after" effects of the layoff, a business owner, entrepreneur, or CEO will be able to communicate with honesty, transparency, and confidence.  A leader should have the financial model/plan in hand when he/she meets with the remaining employees.  The leader should be able to say something like this: "If we can realize at least $50,000 per month in sales for the next 12 months, we will not have to make any more changes in staffing."

Such communicating will begin to rebuild the trust of the remaining workforce who just saw their friends and colleagues escorted from the building.  If the leader fails to communicate specifics and refers to the future performance of the company in vague terms, the employees will continue to lose their trust in the company.  Productivity and morale will drop and the company's chances for survival become much less realistic.

It is my experience that when a company has a sound financial plan for rebuilding the company after a layoff, the productivity and morale of the remaining staff actually increase.  This improves the firm's chances for success and helps its comeback as a leaner, meaner, and more nimble firm that adds even more value to its current and future customers.