Wednesday, October 26, 2011

Bad Ideas or Bad Entrepreneurs

There is a lot of chatter about how small businesses and entrepreneurs are the backbone of the economy, and many have commented on how both are the best chance we have at regaining economic strength as a country and throughout the world. Most universities now offer, through their business schools, areas of emphasis in entrepreneurship. The up-and-coming generation is bombarded with the message of working for yourself, thanks to books like the 4-hour work week and so many others.

When you sort through the hype and get down to what's really going on, it seems like all of this focus is not creating any more commercially viable businesses than before. A lot of research suggests that start-up failure rates have not improved. So are there no more good ideas that can be turned into successful businesses, or do we generally lack enough qualified entrepreneurs, or "A" performers, to create successful ventures?

In my opinion, the world generally does suffer from a lack of good ideas. In fact, more of the people around you than you might think have good ideas rattling around in their heads that would solve problems for customers in such a valuable way that the customers would be willing to pay for the solutions. What the world lacks are "A" entrepreneurs and "A" teams that can really make the most of good ideas, turning them into successful businesses.

Where is my proof? Just look at all of the incubators, mentor-driven startup groups, and other similar initiatives that have become so popular in the last few years. If each of these organizations were honest, they would tell you that all of the startups they have sponsored are founded on great ideas, but most of them lack the entrepreneurial leadership required to make them successful. These entrepreneurs can only be mentored and "incubated" for so long. If they fail to take and implement the advice they get, and if they lack the battle-tested experience needed to run a non-theoretical business (meaning it's no longer a business plan worked on in a class or a bunch of concepts read in a text), the great ideas they are trying to commercialize will never materialize.

So the need is clear--we need "A" entrepreneurs and teams. The solution is not as clear. As universities, angel groups, incubators, and start-up generators struggle, they'll find the best results if they focus on creating "A" entrepreneurs with the right blend of experience, education, humility, desire, work ethic, and so much more.

Wednesday, October 19, 2011

Government Cannot Solve Unemployment

In my new position as President & CFO at Aribex, I attended the Mountain West Capital Network's Utah 100 awards ceremony. The Governor of Utah, Gary Herbert, addressed the unemployment "problem", stating about 100,000 workers in the state are unemployed. Then he issued a challenge for all 83,000 businesses in Utah to hire just one more worker over the next couple of years, almost eradicating unemployment entirely.

"Did he really just say that," I thought to myself. That is ridiculous, on so many levels. But here are the two main reasons why government will never solve unemployment:

First, it's impossible to make unemployment go away. There will always be a percentage of the population that is unemployable due to issues of their own fault--they can't pass a drug test, they can't show up on time, they have a significant criminal record, and so on. A call to employers to hire these folks is unreasonable and wasteful. People's poor choices cannot be solved by government, and asking the employers to try and solve them is a faulty political move--one that entrepreneurs, business owners, and CEOs can see right through!

Second, government should not be focused on asking employers to hire more people. Employers should be responsible for that. Much of government struggles to manage its own budgets, now its trying to make budgetary recommendations to business? Unacceptable. Instead of this nonsensical request, why doesn't the government ask, and then help, businesses be more profitable. Profitable businesses hire people. Businesses that are dumb enough to hire an employee or two because the governor told them to are going to go out of business, making the unemployment problem worse, not better.

So, how can government help businesses be more profitable? That's a question many others have attempted to answer, and I'm sure you have your own opinions of this as well. Perhaps I'll cover that in a future post.

KEY TAKE-AWAY
Government needs to stop trying to solve unemployment and start trying to make businesses more profitable. Then unemployment will solve itself, at least as much as is reasonably possible.

Wednesday, October 12, 2011

Is it time for a Finance Executive?

Controller. VP of Finance. Director of Accounting. Accountant. Chief Financial Officer, or CFO. No matter what title you give the position, someone in every company wears the executive hat of finance and accounting. This person "deals" with the taxes and tries to keep up with financial reporting, performance improvement, planning, budgeting, treasury/cash management, payroll, AR, AP, collections, contracts, and so many other duties. Most small businesses let this part of the business slack, viewing these functions as necessary evils of doing business, ignoring them as if they might go away.

Just like you know how to make your product or deliver your service better than anyone else, there are others who do all of the things I mentioned above, and more, for a living. They are experts in these things, and they've dedicated their entire career to these things. Even if you know your way around accounting and finance, your most valuable contribution to your business is likely developing new products, innovating service models, and building key relationships to help your business grow.

At some point every business reaches a point where leaving all of the things mentioned above to yourself or other non-executives is no longer acceptable, meaning it will do more damage to your business than the money you think you might save paying a finance executive to help you run your business, maximize your cash flow, and become more profitable.

In a recent article for which I was interviewed by Entrepreneur Magazine, How to Know When to Hire a CFO, I detail the three main criteria every business owner, entrepreneur, and CEO can use to measure when its time to pull the trigger on making all that admin, accounting, and finance stuff a strategic competitive advantage, not a necessary evil of doing business by hiring an executive that manages and leads all of that stuff as his or her profession.

Wednesday, October 5, 2011

How I can Guess Your Company Values

Do you have company values? How did you decide what they are? Are they an idealistic view of who you want to become, or do they represent who you are today?

If I want to understand what a person values, I look at where they spend their time and money. Most people are protective of both and mindful of how they use both, and they are very quantifiable. The same is true with a business. If you want to understand what your company values are today, just make an honest accounting of where your company consumes its and its employees' time as well as how it spends its money.

If you don't like what you learn about what you value, then you can certainly change. But it will take discipline. Your employees, customers, and other stakeholders have become accustomed to doing business with you based on your values.

Key Take-Away:
You can make a conscience decision to allow your values to define you. But beware that most companies write their values based on who they want to be, not who they actually are. Those companies are letting their values determine who they are. With discipline, focus, training, and systems, you can define your values and, eventually, become them.

One you establish values and act in alignment with them, here are 7 Ways to Get More Value from Your Values, a recent article I wrote for American Express OPEN Forum.your small business as successful as it can be.