Small Business and the Unemployed

For several years I have been presenting seminars at Career Place in Barrington, Illinois, working with numerous unemployed. Many of these people had developed a one-page handout that contained highlights of their qualifications and experience. Often, a list of targeted companies was also on the one-pager.

The problem is that most of the companies targeted on these handouts were Fortune 500 and other large companies. Unfortunately, many of the large companies have not been doing a lot of hiring lately. I counseled these people to look at small businesses, because when you consider companies with $500 million annually in revenue and less, there are several thousand in the greater Chicagoland area. I am sure that this is true in many other metropolitan areas as well.

For the unemployed there are two questions to ask: why seek out small business and how to do so?

Why the unemployed should seek out small business.

Most entrepreneurs that start businesses have great experience…in something other than business. The entrepreneur focuses on doing whatever is necessary to get the business going. In particular they are focused on their customers, how to find them and how to get the customers to buy.

During startup, entrepreneurs are usually less interested in business practices than in their fundamental expertise. And for them, this is the correct attitude to start with. However, if the entrepreneur’s idea gets traction and the business starts to grow, there are a host of business pitfalls that need to be avoided. In the past, I have written articles on the importance of tracking cash flow, in particular incoming cash as a basic and often ignored process. In other cases, entrepreneurs have never done a “break even” analysis that would show them whether or not they are profitable.

Many unemployed have the skills necessary to help these small businesses grow and thrive. On the other hand, often small business owners don’t even know what they need. There have been times when I was discussing different aspects of business with entrepreneurs only to have them discover that I had information and skills they needed; they just didn’t know that they needed them!

In other cases, small businesses are seeking the proper people to help them, but the positions they are trying to fill don’t show up on Monster or in ads. This brings us to the second question.

How to find and reach out to small businesses.

Since many small businesses do not know what help they actually need, or have limited resources to find people, it is up to the unemployed (or employed looking for a change) to find the small business and reach out to them.

There are many resources on the Internet and in libraries that can aid the research. A good example is the Business Affiliations Database from Lexis Nexis, available in many libraries. You are able to search for companies by many different variables. First, to find the kind of company that you would like to work for determine the SIC or NAIC codes (industry classifications) using an online database, easily found in a search for NAIC or SIC. Once you find the classification of the company’s industry, you can use that as part of you search. In addition, you can search by company revenues and geographic area.
Now you have a list of companies to approach, but what to do next? Corporate Affiliations will list, for most companies, the owners and officers.

My suggestion is to write a letter to a person at the company explaining that you are interested in possibly working in their industry and are conducting research. Who should you choose to write to? That will take a bit of creativity, but here is an example: supposing that you are an experienced marketing person, and you notice that the company does not have a marketing director listed. Your best bet is to contact the person that would most likely have a marketing director reporting to them, perhaps the CEO or COO. Then write your letter.

Several days after your letter has been sent, follow up with a phone call requesting a short meeting (15 to 20 minutes) where you could ask questions and conduct your research. If you find a gate-keeper, try to enlist their help; explain the research that you are doing and ask for their help in setting up an appointment. Be sure never to say you are looking for a job.

Once you have an appointment scheduled, be prepared not only to ask good questions, based on industry research that you will do before the appointment, but also be ready to talk about what you do and how it is applied. Often, you will be surprised at the interest the person you are meeting will have in what you do. Even more so, you will frequently be directed to other people to contact, both within the company as well as at other companies.

Small businesses need a variety of experienced business professionals in order to thrive. Use the information in this article to take the initiative and find a niche for yourself in small business.

Competitive Advantage: Are You Focused on What is Important?

Competitive advantage is what all businesses are seeking: it allows your business to charge higher prices for your products and services or to get more customers. Everyone is seeking competitive advantage in their market.

Gaining and maintaining competitive advantage requires that your business be focused on the proper things; that is simple, but not always easy. There are really only two areas of business focus in order to establish competitive advantage: first, you must be competitive in your industry and secondly your business must differentiate itself from the competition. Sounds like a contradiction to me! Let’s take a closer look at each.

In order to be competitive in your industry your business must do “industry basics” well. For example, if you are Starbucks, you can have the nicest storefront possible, with great music and a cool ambiance. But, if your coffee is not at the right temperature, or tastes bad, you will not be able to compete in your market. For a coffee shop, temperature and taste are basics and the company must focus on them in the right way.

In what might seem to be contradictory, it is also true that you should not exceed your industry basics in the name of competition. That practice can be costly and self-defeating. Take the example of a distribution company that competes in a market where 5 day delivery of goods is the standard and customers do not expect more. If a company were to spend time and money on next day delivery, they would be wasting money creating differentiation that their customers don’t want. Doing so puts the focus in the wrong place and could actually hurt the business.

In many cases, businesses do not always focus on the right places to understand industry basics. For example, a business’ financial results, in comparison with the industry median for that result is often a good place to see where your business stands in your industry.

A software development company might look at their software production cost (Cost of Sales); they may not be competing on price, but if their production costs are significantly higher than others in the market, they will have a hard time competing. Proper focus here will keep them competitive in their industry.

Differentiation, on the other hand, is not about industry basics. It is about how your business can do something differently to distinguish itself in the industry. Of course, what you do differently must also be something that your market wants!

Let’s look at distribution again. Supposing that the company that tried to differentiate with quick delivery took some time to talk to their customers that are retail operations. Perhaps they might discover that their customers spend time breaking down the goods they receive from the distribution company into smaller lots for reshipping. The distribution company might be able to save their customers time and effort by packaging their goods in such a way that the customers would have minimal repackaging to do.

At times, it might be possible to turn an industry standard on it’s’ head in order to gain competitive advantage. Prior to Starbucks, most of the coffee industry was centered on fast food coffee chains such as donut shops. Fast was the operating word. Starbucks created a product that included not just upgraded coffee, but an entire experience.

The company wanted people to stay longer, not leave quickly. Starbucks achieved tremendous success with that strategy; only recently have they made moves that have harmed them (but that’s the topic of another Blog).

The name of the game in competitive advantage is to stay focused on the right things for your industry!

Customer Service Personified

This past week, I took my wife for lunch at the Union League Club in Chicago. While I was there, I saw my good friend Joseph. Actually, he saw me first, as Joseph is a member of the wait staff at the club. By the time I had my soup from the buffet Joseph had placed my favorite soft drink at a table in the corner that he knew I preferred. As I approached, he caught my eye, flashed his signature smile and held out his hand to greet me, saying as he always does, “It’s good to see you!” My wife shares my opinion that Joseph personifies customer service.

Now, the award winning Union League Club in Chicago has many outstanding employees who give great service all the time so that it is easy to say that the club administration is doing all the right things to encourage their employees. Many of their employees have been on staff for years, indicating that they enjoy working at the club, and it shows! All the same, there is something special about Joseph; you can’t just teach somebody to be the way he is, although others could learn from his example. After thinking it over for a while, I concluded that there are four qualities that Joseph personifies: pride of ownership, personal warmth, attention to detail and enthusiasm.

Pride of ownership: It does not matter in which of the clubs restaurants you see Joseph; he always acts as if he owns the place. I mean this in a good sense, that he wants people to enjoy his restaurant and he will do everything possible to see that you do.

Personal Warmth: I believe that there are few people who can go to one of the club’s restaurants more than a couple of times that don’t know Joseph and consider him a friend. He consciously works at getting to know you and what you like. His efforts include more than just food and drink; in his unobtrusive way, Joseph gets to know about you as a person and remembers what he learns.

Attention to Detail: Joseph is always moving, seeing what is going on and who needs something. He is able to anticipate what you need next almost before you know it. As I mentioned above, my favorite soft drink will appear on the table before I get there with my food. Grab a dessert and he will be there with a fork before you sit down.

Enthusiasm: It is obvious that Joseph loves what he does. His underlying enthusiasm for his work shines through as he surveys the room and does whatever needs to be done. At the same time, Joseph has a great sense of timing, knowing how to take care of something without becoming the focus.

Recently, I took my granddaughters to the club for lunch for the first time. They were in Chicago, and I felt were ready for the experience. I was sorry that Joseph was not there that day, as I had prepared them in advance to watch him as an example of how to approach life with a great attitude and the spirit of great customer service that anyone in business should possess.

Strategy and the Advisory Board

It is surprising to me how often small businesses do not have an advisory board; that is a group of people that serve as a sounding board to the business owner on the health of their business. As I have said here in the past, entrepreneurs are experts in what they do, but often lack an understanding about running a business, especially if this is their first business. The advisory board is one way to help fill in the gaps in the entrepreneur’s knowledge and expertise and give the entrepreneur a better chance of success.

So, let’s pretend that you are getting ready for you first advisory board meeting and you want advice on your strategy for the next year. What are some of the things that you may want to discuss with them? Here is a checklist to help you prepare.

First of all, when you are preparing for an Advisory Board meeting, you will be thinking in several areas as well as at different levels. The first question is, “Are you going to bring a plan for 6 months, 12 months or another time period? Since we are a good way into 2011 it may just be for the rest of this year. For whatever time period that you choose, you will present your plan. That plan becomes the subject at future meetings, where you will report on plan execution actuals versus the plan.

 So, there are a number of things to think about:

What are your business objectives for the time period? These may be expressed in financial terms (i.e. increase top line revenues by $X) or business terms (increase active clients by X, or increase sales to current clients by X %). These objectives need to be specific so that they can be tracked.

Once you have your overall objectives, you need to analyze your objectives in terms of the affect on your business according to area:

  • Financials – what is the overall affect? Will you need additional working capital? What is the affect on the important factors such as Cost of Goods, Inventory, Labor, etc? Given what you must do to make the change, will it be worth the final result?
  • Labor: What will be the demand on your labor force, increased productivity? New Hires?
  • Sales: How many new clients will you need? How much increase form current clients?
  • What specific actions must you take to implement the new plans?
  • What specific actions will other people need to take, in leadership roles to implement the plan. What must you do to support them? This step involves detailed project planning, not just a check list for each group.

 

Based on these questions, you can begin to formulate a plan for the coming period. What you can expect from your advisory board, and insist that they give you, is an honest appraisal of your strategy before it begins, and then critical thinking on the results that are achieved during the execution of your strategy.

Information Underload

It is true that we are bombarded daily with what seems to be an almost infinite amount of information careening towards us at the speed of light. All sorts of communication swarm around us like bees buzzing around the honeycomb. Many are concerned that it is simply not possible to master all the information that we need to do business, even just to live well in our modern world. We are told that we have reached the point of absolute information overload.

Despite the realities of the information explosion, I once again experienced the reality that many people are even more afflicted by information underload and that the condition can be corrected by active listening, clarification and reflection.

Now, there are a number of definitions of information underload that can be found on the Internet, but in this case, I am defining information underload as the inability of a person to listen carefully to what another person is trying to communicate directly to them, and thereby missing the point and potentially important information.

This problem does not have as much to do with the modern marvels of communication as with the age old human condition. All of us, me included, have a tendency to listen with “half an ear” to what a person might be saying to us. Even before the other person finishes we are quickly drawing conclusions about what that person means to say to us, and how we are going to respond.

In a business setting, our response is often couched as a defense, as if we perceive that the other person is attacking us and we must defend ourselves. I once again experienced this yesterday while listening to a group of experienced business people listen to and offer advice to an entrepreneur. The entrepreneur had an answer (read defense) for every comment as if each of them were an implied criticism.

This is perfectly understandable, given that this entrepreneur, like most others in his position, is passionate about his new business. The downside is, however, that he also missed some really good information that was proffered by the gathered business people.

There is a simple process that you can follow to help alleviate the information underload that can occur in such a situation. Recall now, I said simple, not easy! To employ this process will take conscious effort, discipline, and perhaps some reminders from individuals that you trust. Here is the process:

  • Active Listening: concentrate on understanding what is being said, without forming a quick conclusion. Listen in such a way that you will be able to repeat back to the other person what they are saying to you.
  • Clarify your understanding: when the other person is finished, repeat back to them what you understand. Ask additional questions to be sure that you understand.
  • Take note of the information, once understood, for later reflection.
  • Thank that person for the information and resist the urge to explain your self further.

 Taking notes in this type of situation is very important, as it will give you the chance to return to the information later for further consideration. When you do, you can keep what you like and discard the rest. You never know in advance when, on second look, some of the information may turn out to be very valuable!

When All Else Fails

Many entrepreneurs come to the point where they must make a decision as to whether or not to continue with a particular enterprise. Things just don’t seem to be working; the breakthrough always seems to stay just around the bend. The entrepreneur’s business and personal finances may be in a shambles but the great idea that the entrepreneur has been passionately pursuing still seems to be a star in the heavens worth pursuing. The question will arise in the entrepreneurs mind, “Should I just give up?”

For those that are in this position, there are a several questions that you may want to ask yourself, the first being, “if I stop working on this idea for right now, am I really giving up?” one person can’t really answer this question for anyone else, but there are things to consider when you feel that you are behind the eight-ball.

First of all, what have you learned? To be an entrepreneur with a dream often means learning many lessons, some of them quite hard. If you begin to peel away the layers of your situation and analyze them, you will very likely find many things that could have bene done differently. These are lessons learned at a high price, but they are lessons that many other entrepreneurs have also learned. I once heard a successful entrepreneur who has hailed as an overnight success say when speaking to a group” Sure, I was an overnight success; it only took me 27 years to get there.

Second, once you have peeled away the layers of your experience, you will be left with the core of your idea. Do you still have a passion for that idea? Your passion could still be a wonderful idea, but perhaps you will be able to see a better way of pursuing your passion. Quite often, that first pursuit (or second or third, sometimes it takes time!) is not quite aiming in the right direction, or at the right market or the right approach.

Perhaps you have not found the proper situation, or partner or timing for your idea. I am reminded of the story of Colonel Sanders of Kentucky Fried Chicken. In 1956, Harlan Sanders had perfected his recipe, but he was 66 years old and broke. He had an idea; to get restaurants to use his recipe for a small fee. Four years later, 400 franchisees were using his recipe and Kentucky Fried Chicken was on its way.

The key to being a real entrepreneur, in my mind, is not whether you continue working on a particular situation, but whether or not you are able to take something away from a situation that is not tenable, and create something new and more passionate to pursue with all your energy. Sometimes, that means stepping back, doing what you have to do to keep your life organized, and then re-launching. The true spirit of an entrepreneur has a long term dream, and the commitment to that dream sees them through.

Business Starts with an Idea (2)

Entrepreneurship is alive and well in the Midwest, based on what I experienced at midVentures LAUNCH in Chicago last week. The event hosted more than 150 startups and 1,500 attendees in several days activities designed to showcase a host of energetic entrepreneurs both budding and successful. Amid the flurry of activity, contests, panels and speakers, a number of entrepreneurs struck my eye. Here they are!

There are not many consumer experiences that are more complex to decipher than acquiring a mortgage, at least in my experience. A myriad of choices, rates that never seem to be what they appear to be, fees that come out of nowhere all add up to an experience that can be frustrating. You often wonder, could I have done better?

Mark Pickett of MORExchange (www.morexchange.com) is trying to improve that experience with an online site that attempts to demystify the mortgage buying experience. In particular, I appreciated the manner in which the online application lists out all of the various fees that could be tacked on to the original mortgage.  Simplifying the mortgage application could be a winner in many people’s eyes.

 Have you ever stood outside a restaurant with a big hunk of plastic in your hand, waiting for the gadget to vibrate and the lights to flash, signaling that your table is ready? Me, too! But, as much as carrying that device is a pain for me, think about the restaurant; the expense of buying, maintaining and replacing those devices is significant and operating them can be a pain. While they are a step up from the paper list, there must be a better way.

 Joe Spovieri thinks he has found a way, and I was impressed by what I saw: readyping (http://www.readyping.com/). The solution: an online application that will alert a customer that their table is ready via their own cellphone or other device. The restaurant can access the service via any computer and not worry that the customer is going to wander off with a large plastic device.

 Now, if the previous paragraph did not tip you off that I am foodie, this one will. Don’t feel like cooking? Imagine a place where restaurants, catering services and personal chefs are waiting to take your recipes and turn out the goodies just for you. Such a paradise actually exists and it is called cookitfor.us (www. cookitfor.us).

Conrad Fuhrman and his partners have conceived a site that allows people, “cravers” in their lingo, to input their favorite recipe, and then have “makers” bid on producing the culinary delights. In our busy world, we already have many ways of getting food that is ready to eat, but cookitfor.us provides a way to customize that experience to your own recipe book.

As you can see, I am constantly amazed at the creativity of entrepreneurs, even just in our corner of the world in the Midwest. Here’s to all of the entrepreneurs that help keep our imaginations soaring!