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A Little Business Advice

When I first started EMA, a friend of mine had a similar business. Since the business was heavily field service oriented, his advice was, “don’t hire anyone.” The thought was that employees added cost, complication and headaches. This gentleman was making a very good living as a one man show, seemed to enjoy it, and there was validity to his viewpoint.

I gave that some consideration. It was true, especially back then, that I had the skills to simply work on my own, and since overhead would essentially just be me, it wouldn’t take that many customers to provide a very nice income. I had managed employees before, and acutely aware of the problems that could accompany them.

I think that’s something that every entrepreneur should think about and consider. On the one hand, being a one man show, has its drawbacks. If you have any success at building a customer base, taking time off from the business can be difficult, the number of customers you can have is probably limited, and you can’t grow beyond what you can do yourself.

There’s also the problem of getting older. What’s attractive to you at 30 might not be acceptable to you at 50. And trust me, getting older, is the only alternative to dying. So put it into your plans.

The upside, is that it’s simple. I have a good friend that writes programs for industrial machines. He told me  when he founded his business, he had two goals:  make more money, and  simplify his life.

He works from his home, and his business has been very successful. In fact, he was having to turn down business simply because he didn’t have the time to do it. . I suggested to him that he consider hiring another programmer, and reminded him that he was leaving money on the table by not accepting the other jobs. He reminded me that while that might help the first goal, it was out of line with the second.

I think, at least from a clarity of purpose standpoint, he has it right. That’s not how I would do it, but for his purposes, it’s the proper course of action.

This particular friend is comfortable working completely alone; but you might not be. Again, it’s just something you should think about. What’s right for one person is not necessarily right for another.

Once you do decide to hire another person, it changes everything.

I didn’t handle it all that well at first. I thought I knew how to manage people because I’d been reasonably successful at it before. But that seemed to change when the pressures of my own business hit.

I’d be gone all week calling on clients, leaving a couple of technicians and a clerk there to get repairs done. On several occasions I’d return to find the technicians stuck on the same problem they had when I left. I was well aware that meant no billings while overhead continued to pile up and I was operating very close to the edge financially. To make matters worse, on several occasions the clerk had made mistakes in our accounting system that required hours of my time to correct.

The stress of that, plus my own inexperience caused me to fly off the handle with employees, rather than attempt to resolve the problems. In a couple of the cases, I should have terminated an incompetent employee much earlier, and in others, I should have spent more time coaching and helping them to be successful.

Yelling at people is not leadership; it’s bullying. It’s also unprofessional and unacceptable and I’m not proud at all of it. Pragmatically, it makes things worse not better.

Here’s what I’ve discovered.. the hiring process is important.. in fact, if you plan to have employees, nothing you do is more important.

Jim Collins, in his landmark book, Good to Great uses the analogy of a bus. He says that who is on the bus determines where the bus is going, not necessarily where you wish it were going. Spend time determining who should be on your bus.

Since we were a technical business primarily, I spent a lot of time attempting to test for technical prowess. That was my primary hiring criteria, and I would ignore almost anything else if they proved to me they could handle the job technically.

Even if I were hiring clerical types, I applied the same criteria. For instance, if the person had prior experience and could demonstrate competence with our accounting program, I’d hire them despite any other factors. Those were costly mistakes.

What I learned, the hard way, is that intelligence and attitude are the two most important criteria. I remember a  presentation by Ross Perot years ago, long before he got into politics. He was asked how one could go about training employees to be more friendly to customers. Perot, in his classic style, shot back, “why don’t you just try hiring friendly people to start with?”

He was exactly right.

Collins has another piece of advice regarding employees: had you known when you hired this employee, what you know about them now, would you have hired them? If the answer is “no,” then you made a hiring mistake.

But, here’s a caveat, you have no right to terminate anyone to whom you haven’t been giving feedback about their failings. Everyone deserves a chance to correct their performance.

In a strange and convoluted way, many of us do not want to be unkind to an employee. Hence we will not say anything negative about their work. Instead, we wait until we are so frustrated by the lack of performance, that we just terminate them with little warning. It goes without saying, that is hardly kind, and in fact, is incredibly unfair.

Terminations should never be a surprise. If it ever is, then you aren’t doing your job.

Here are a few things to consider if you’re starting a business..

 1.  Play the “what if I’m successful” game.

I do this even now when considering whether to chase a particular piece of business. As unemotionally as you can, visualize what day to day life is going to be like. You may discover that you are not going to enjoy it at all.

We bought a log cabin in North Georgia some years ago, and near there was a little cozy restaurant where we enjoyed eating breakfast. I got to know the owner, and one day she asked me if I would consider buying her business.

I was taken back a bit at first, but here was her story. She and her husband enjoyed visiting the North Georgia mountains from Atlanta, and in particular this restaurant. They both thought it would be a great break from the stress of city life to move up there and operate this little café.

She failed to realize was what running it would entail.  It meant getting up at 4:30 in the morning to begin getting the restaurant ready for breakfast at 7. It meant no off days, and since this small business didn’t generate enough income to hire employees, it meant doing everything yourself.

Hardly the idyllic life they’d imagined. I am convinced part of the reason so many small businesses fail every year is founder disappointment. I faced this in a very real way myself a few years into EMA.

Visualize, in as unvarnished terms as possible, what the business and your day to day life will be like

2. Be realistic about money.

Out of cash is out of business. Think your cash requirements through carefully. All of us have heard inspiring stories of businesses that started with nothing, and exploded into success. Remember, people also get hit by lightening, but it’s not common.

If you are living paycheck to paycheck now, and couldn’t get your car repaired if it broke, this might not be the best time to start a business. No matter how well you plan, you will not think of everything, and those unanticipated expenses can sink you.

Another factor: invoicing and getting paid are two different things. To me that was one of the most frustrating realities I faced. I would work hard to land a customer, work hard to do excellent work, send them an invoice, and 90 days later it was still unpaid. Meanwhile, my expenses marched on.

That drove me to do a couple of things,  One was place a lot of emphasis on collections, and second, stop doing business with people who were collection problems.

Take all of this into account when envisioning your cash requirements.. the best case scenario, rarely happens. Plan for the worst case.

3. Be able to explain what your business does in a few sentences.

I was asked once to talk to an engineering services business about some marketing issues they were having. I asked them, because I truly didn’t know, to tell me what their business did. Two people talked for about 30 minutes, and at the end of it, I still had no idea what they were selling.

I told them, “I’ve discovered your problem. “ Keep in mind, these were very smart and talented people, but they were trying to be so many different things that they lacked focus. IF prospects don’t know what you do, even if they think you’re smart, they will not be doing business with you.

Be as simple as you can when envisioning and describing what your business will do. It will help you focus.

4. Who is your market?

Politicians and entertainers are often cautioned to avoid “believing your own press.”
One of the first questions I like to ask is “who will buy from you?” There are two ways to approach this.

Steve Jobs built devices to sell that none of us even knew we wanted. Think about that for a moment: He was a visionary that was able to convince large numbers of people to buy in to a technological future, that looked very different than anything that had happened before. You could perhaps argue whether android phones are better than the Iphone, but you cannot argue that Jobs was wildly successful at changing the world.

There have been entrepreneurs all through history that were able to do that.. sell a completely new idea to masses of people. Henry Ford comes to mind, as does Alexander Graham Bell, and others.

The other, and more traditional way, is to determine what demographic is already buying the service or product you wish to offer, or at least, is already buying a similar product.

I have spent almost all of my business career working small niche markets. You can overplay this.. IF the market you’re thinking about is extremely small, and the service or product is fairly low priced, a business dealing exclusively with that might not be viable.

As an example, there is a market for left handed guitars. People that are left handed often need a guitar that is designed to be played left handed. These “leftie” guitars vary from inexpensive to very high priced, and almost all manufacturers make left handed guitars. But, if you were opening a guitar store, exclusively for left handed players, and asked me for advice, I’d warn against it. Guitar stores serve a niche already, and narrowing that niche even further is going to make success difficult. Would it be impossible? No, probably not. But is success likely? .. not in my opinion.

Here’s a few things to note about niche marketing

-The first thing to do is identify the niche. What will the typical person or business that buys the service or product look like? This is an essential step. There’s a country song about “looking for love in all the wrong places.” There could easily be a business song about looking for business in all the wrong places. Selling to people that don’t need or cannot buy your product or service is a waste of time. Spend time on this- it’s essential. The better you can identify who a prospect is, the more success you will have.

-Who else is playing in this field? Competition can be looked at in two ways. . one way is if other people are making money serving this market, then you can as well. On the other hand, if it’s so competitive that pricing has been pushed down into an area where it’s hard to be profitable, you might reconsider. We talk about mature vs expanding markets. A mature market is one in which the ONLY way to get business, is to take it from a competitor. An expanding market, is one that is growing, and new customers are entering, so you can grow without taking business from anyone else. People have been very successful in both instances, but it does change the way you market your product or service.

-Once you identify the niche and the demographic that will buy your product and service, give some thought to what complimentary products and services you can offer to the same group. Don’t go so far as to lose focus, but if you’re selling cigars, then maybe you should sell lighters as well. What you don’t want is your customer having to visit your competitor to get an ancillary product or service they need.

5. Prepare yourself for the long haul.

For most of us, business success is a marathon not a sprint. There are exceptions, but they are rare. Business is a lot more than creativity and inspiration- it is hard work. The common theme you will hear from successful entrepreneurs is that it’s grueling, especially in the beginning. Just be sure you understand that.

Thomas Jefferson is often quoted as saying “the harder I work, the luckier I seem to get.” I’ve also heard this credited to Gary Player, Samuel Goldwyn, and others. But regardless of who said it first.. it’s been true for me and others.

Want to start a business? Great..  be creative, innovative, do your research..  BUT..  prepare to work hard.

Eddie Mayfield