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Just a few thoughts about starting a business. (Or, you can go directly to the quiz.) Hi, I'm Hattie Bryant. And I'm Bruce Camber. Since 1994 we have
started three television productions: You can start the business of your dreams, too. This weekly show
and all the people and companies Every one does not have to start a business, but we all can, and should do meaningful work. All the insights from every show are being worked into one of eight steps -- from an initial idea for a business to an IPO. This section is to examine your motivation and your commitment to take your idea and to struggle up over those first four steps to start a business. If you really want to start a business, you can; you can succeed; and you don't have to do it alone. Discovering your special gift is a challenge. It is everybody's challenge. We are all asked as children, "What do you want to be when you grow up?" If you are not sure, we can not tell you, but perhaps these other people's stories can. We invite you to read What is Your Personal Magic?, the first chapter of Hattie's book, Beating the Odds. There are now over 25 million small business owners in the USA alone. These are measured by the number of business tax returns reported to the IRS. Hattie began her first in 1979 and Bruce in 1970. Our vision is to plant a seed so all business owners help each other to succeed. That has been one of the abiding purposes of these television series. We will search the world for the most gracious, informed, and creative people who might inspire us all and in the process to expand our knowledge about how to successfully start, run and grow our business. This is our hope. This is our dream. Just a "little" quiz (that can make a huge difference). Before you jump in and start a business, take the suggestion of Jack Maxwell of Tulsa, Oklahoma. He was profiled in Small business Today. Sue and Jack Maxwell started Maxwell Healthcare, a national placement service for occupational and physical therapists. They have built the business to $21 million in sales -- they are, and will continue to be, extraordinary examples to all of us. For 23 years, Jack and Sue have helped people make career decisions and here Jack shares an important exercise with you. This is your little test (quiz) to check your priorities in life. Take a blank piece of paper and rank these five words, Leave some space between each word. Now, write a short description of what each word means to you. For example, Hattie says, "Money means reward for contribution. The more I contribute the more I should make. If I am making an important contribution to the lives of people, I ought to be compensated by the system. I've heard it said to be successful in business, Find a need and fill it. If I can fill the needs of customers, there should be money waiting for me at the end. The amount is not as important as lifestyle. I grew up without much because my father was a minister. I sewed my own clothes, did lots of baby-sitting so I would have spending money, and earned a scholarship for college. Since I don't have children, I'm not too concerned about the total amount of money I make. I simply believe I will be rewarded for hard work." Each word is important. This exercise is to challenge you to be realistic about your
answers to the question, Many people put money as #1. If you did, you have some work to do. If money is number one or two on your list, you should
think twice before starting a business. If security is number one or two on your list, you really need to think long and hard about starting a business. The ability to take a risk is the difference between a business owner and an employee. You don't have to take a wild, crazy or silly risk. You can spend plenty of time researching your idea and raising money to kick it off; however, when you start a business, you are taking a risk. Neal Patterson, owner of Cerner Corporation, a Kansas City, Missouri healthcare software development company, says, "You put everything at risk when you leave a job to start a business. As a CPA with a big six firm, I had a nice lifestyle and work life. But, I saw an opportunity. I did not jump into this blindly; I did my homework, but it was still a risk." You can find more about Neal's success story the study guide. He is a leader in his industry and community and his compnay produces nine figures of annual income (more than one hundred million dollars). If challenge or advancement are number one or two on your list, you should start a business! Very few "jobs" offer the level of challenge and the opportunity for advancement you can experience as a business owner. Jack Maxwell also offers his list of "must have" qualities for the small business owner:
Want to keep reading? Good. If you're still with us, let's get to work!. How and where do you start?You can start a business from scratch, buy (or possibly inherit) an existing business, or buy a franchise. Now, be very thoughtful. When you decide on a particular path, you will need these "must have" qualities. If you want to start a business from scratch, you need to answer "yes" to following questions:
Before you buy an existing business, you should definitely answer "yes" to the following questions :
If you are thinking about buying a franchise, you should definitely answer "yes" to the following questions:
Hattie comments: "I started in business by buying a franchise. It was good for me then and it is the most surefire way for you to be successful. As I learned and grew in my business, I decided there were many things I wanted to do which were "outside the boundaries" of my franchise, so, I evolved out of my relationship with the franchiser. I then found myself in the "start from scratch" category. Had I not had the knowledge gained from owning a franchise, I think my new venture would have been even more difficult. Remember Jack Maxwell? He did the same thing. We were both in our late 20s when we wanted to go into business and we both had no experience or knowledge. We both bought a franchise, of different companies, then we both ventured out on our own. Bruce comments: "My very first job out of college was with a political activist group made up of business owners. The core group of twelve became my first business mentors. Three had very large manufacturing businesses, one had a huge retail operation, one was a large distributor, and the others were partners in professional practices (three lawyers, two advertising agency executives, and two CPAs). Within a year I had asked so many questions, and we had done so many new start-up projects, I was ready to be on my own. With mentors you can learn a lot quickly." No decision has to be forever. Simply start where you are most
comfortable. What industry or type of business do you want to own? Only you can answer that question. However, we can tell you what we have learned from our own experiences -- and please take this advice very seriously -- Know yourself and match your strengths to a business concept. Hattie says, "I believe in magic -- some people might call it a gift, but I like the word, magic, because I think that, if you have read this far, that you have some special magic inside of you. When you match your magic to a type of business, or, a style of doing business, the results look like miracles to an outsider." "In one of my classes, I had a seminary student who loved ice cream; he opened a small shop selling his own magic recipes. Today, every time someone buys the "Lemon Slush" at places like Disneyland and Six Flags over Texas, the former seminary student makes a small percentage of the sale. He needs wheelbarrows to haul his money to the bank." Heliodoro Valadez can't read English, but he knows how to make great Mexican food. He has respect for the recipes of the past and as a cook took pride in making the plate look beautiful for the customer. Now he makes tortillas and sells them -- over $5 million a year -- to restaurants and grocery stores in in Texas. He has magic; you can see it in his eyes. Its almost indescribable. He talks about flour, tortillas, his machines, and the people who work for him in romantic terms with profound love. See for yourself in our very first show. Rita Wain used to make bridges and false teeth in a dental lab. Now she makes the molds which are injected with liquid plastic to become your telephone, automobile ash tray or a hundred other plastic items you use everyday. She is fascinated with making the intricate. She loves designing, being the test site for hardware and software used in her industry, and constantly working toward perfection in finished products. She's a perfectionist. She applies her magic to moldmaking and keeps winning contracts -- all in a very traditional man's world. See Rita in action. The successful small business owners who make money, build loyalties, and contribute to their communities have tapped into something deep inside of themselves. They aren't just doing to be doing. They aren't just doing to make money. They are making magic. If you don't know what your magic is, it's time for you to find out. You really need to stop to read the first chapter of Hattie's book here on the web site -- Beating the Odds. Also, try some of these ideas:
Keep this in mind also, most business ideas spring out of the work you are doing now or from a hobby. If you love your work and find it fascinating, follow that path to your own business. If not, look at your hobbies. Bruce comments, "I know some of you have a problem with the word, magic. Perhaps you could also think of it as a deep-seated definition of your being -- your unique map that defines who you are . . . your genetic and eidetic code. And as a result of that unique self, your answers to the four most basic questions about life are unique as well. These questions are: Who am I? Where did I come from? Where am I going? What is the meaning and value of life? For a business, the same questions apply: "Who are we? Why did we start this business? What is our mission and what are goals for the future? And, what is the unique value of our products and services?" "These are the questions of the philosopher, Immanuel Kant, and I believe it is important to link these questions to a series of deeper questions about your company or business concept. Spend a little time on the WorldWideWeb with a search of key words that you use to define yourself and your business and work on defining your uniqueness. This is a key to your success." Now, when you know what type of business you want and you have decided if you're going to start from scratch, buy an existing business or buy a franchise, what's next? What's next?There are hundreds of details. The library is waiting, the WorldWideWeb is waiting, and there are a lot of people who have already have a businesses who will gladly talk with you. Start networking today. Structure your questions and answers in a journal, chart your progress, but most importantly, get started and stay focused. Jim Coane gave us some sound advice. When we did this episode of the show, Jim was President of Telebase; he later sold that business! Telebase was one of the earliest "libraries of the future." His company supplied the huge databases of information to AOL (America On-Line), Prodigy, CompuServe and others. He came to Telebase to grow it, which he did and now lives to tell about it. Jim says, to grow a business you need money, people and systems. On Money...According to research done by VISA business Card Primer, relatively little money is used to form most businesses. The Small business Administration says most businesses are started with less than $10,000. This is good to know, however, if you want to grow it does take cash. Jim Coane was looking for 4 million dollars. The banks turned him down. This is no surprise -- new research says that we small business owners are only getting $7 out of every $100 loaned by banks. This will change. Though employing 54% of all America's workforce, there was a time when banks have had little confidence in us. They still have a healthy skepticism. Next, Jim went to venture capitalists. The downside of this strategy is you have to give up equity -- a large part of ownership -- but Jim was willing. No success. He was turned down by several. If you try venture capital, please start with the WorldWideWeb. Go to DataMerge; it is a good place to start, but you should be prepared to spend no less than $15,000 and as much as $100,000 to find the right people and get your deal consummated. Although some people say $500,000, we believe you should be looking for at least $5,000,000 before you consider venture capital because anything less is not worth the effort of the venture capital firms and its not worth percentage of dilution of your equity. (Consider Angel capital first.) Finally, Jim came up with a creative solution which may be an option for you. He borrowed from his customers. The companies who are dependent on his service wanted him to succeed. IBM did this with a young programmer named Bill Gates. Another typical way small business owners raise money is from their family. Jim's family didn't have any money for him to borrow so that wasn't an option for him. When Hattie bought her franchise the loans came from her family. She made monthly payments just as if they were bankers, with 18% interest because that was what the money market was paying in 1979. Although they weren't holding their breath, her two "bankers" were thrilled when her business thrived and she was able to make every payment on time. If you can hold on to profits you can gradually self-fund your growth, often called bootstrapping your company. This is the advice of Neal Patterson of Cerner Corporation. Why? You don't have to give up ownership or carry the burden of interest. Yvonne LeFleur has owned her boutique in New Orleans for 25 years and holds this philosophy dear. She says, "In retail every dollar invested in inventory creates more profit. If I buy a Mercedes, I can certainly drive it but it doesn't make me the profit that $75,000 would earn if it were invested in inventory." You can franchise your idea. If you have a thriving laundry, you can add locations by using the franchise fees. To make this work, your present business must be running like a Porsche engine. People will not buy into your idea if it has any major flaws. You must also be able to duplicate the system perfectly and it can not be dependent on your personality. Tony Robbins, the motivational speaker, is being sued now by a group of people who bought his franchise. Let's face it. There's only one Tony, whether you like him or not. And, you can go to the stock market. An IPO, initial public offering, is a complicated, expensive process yet it is a good fit for some ideas. You need an investment banker, attorneys, and accountants; and then once you succeed, you will have to report quarterly to your stockholders and daily to the one's who think they "really" own the business. Once you sell shares, you are no longer the only owner. There is an ego rush and huge net worth gain potential to this strategy. Along with the personal satisfaction of being the principle owner of a publicly traded company, you inherit legal responsibilities which will blow your hair back. Take a look at the businesses listed within Step 7. So, there's more than one way to raise funds. You may need to try them all. On people...Jim Coane knew he needed a CFO (Chief Financial Officer) to achieve his goals. I asked him how he found the right person. He said, "I used every method. I used executive search, my own network of friends, and the friends of my employees." You notice, he did not use the newspaper. To hire an executive, the fees you will pay to a search firm are probably worth it. They will take time to discover exactly what is going to be best for you, then they do a full court press to find the right person. One of the world's largest executive search firms is based in Fort Worth, Texas and Hattie knows the son of the founder, Paul R. Ray, Jr. He may have brainwashed her to have confidence in the search firm concept, however, we keep hearing from the fast-growing company CEOs that they use them effectively. Your own network of colleagues is probably the most cost-effective and risk-free method to find the right people. The people you worked with in the past are a great resource. Because you know their work habits, values, and talents it is comforting to bring them into your organization. Hire the friends of your employees. If you have a great employee, chances are they they have friends you would like to hire. Like attracts like. When you need to fill a job, ask your employees to tell their friends to apply. Good people run in good families. If you have an outstanding employee, hire their siblings. Become the company people want to work for -- you can have people lined up waiting for an opening. Ekkwill Waterlife Resources raises over 1,000 types of tropical fish. The business is labor intensive and not your clean, neat, air-conditioned office either. Employees wade in mud puddles, have their hands in tanks of fish all day, and haul heavy equipment. One of the owners, Mike Hennessey, says they have a good benefits package, they treat people fairly, and try to have fun. They have no problems finding people who want to work for them. Once you have hired a person, you must teach them.Any small business owner who has grown their company is a teacher. No one wants a boss, everyone wants a teacher. Jim Coane is teaching people the value of reading. He buys the latest business books, passes them out, then everyone discusses how the ideas in the book can be applied to their company. He also has regular pizza luncheons with all of his non-management people. They discuss anything and everything. Teaching is a constant process: start with orientation; bring in outside trainers; send employees to seminars; fund tuition for college courses; and, be a mentor. Curt Rutsky and Stu Ganslaw own Coating Sciences, Inc. They will pay for any seminar or college course any employee wants to take. Before they started their business, both Curt and Stu worked for big companies which provided on-going training. That experience was so positive they certainly wanted to give it to their employees. The difference is, in a small company you won't have as much "in-house" training as would a large company. However, there are many opportunities for learning available through local Chambers of Commerce, universities, junior colleges, and nationwide companies which provide seminars "on tour." Challenge employees to think. One of our favorite people is Marty Edelston. He is the CEO of Boardroom, Inc. which he founded 23 years ago. Located in Greenwich, Connecticut, it produces newsletters, periodicals, and books, and today is one of the most productive and effective companies in the nation. Marty is proud to tell anyone that his staff of 80 employees produces $110 million in sales which amounts to almost $1.5 million in sales per person. Among the Fortune 500 the average sales per person is $325,675. How does Marty make his magic? He asks every employee to give him two ideas in writing per week. The ideas are about how an employee can be more efficient at her own job, or, how her department can be more efficient. One of the first ideas he implemented came from a mail room employee who suggested that Boardroom's books always weigh under four pounds. By simply trimming 1/8th of an inch off the cover size of their books, Boardroom saves over $50,000 per year in shipping costs. Reward employees constantly. My friend, Michael LeBoeuf, wrote a book called, The Greatest Management Principle. You should buy the book and read it, although I'll tell you right now what the greatest management principle is: what gets rewarded gets done. Hattie comments: "When I was growing up, every Saturday my Mom would say, "As soon as we have the house cleaned up, we'll go shopping." Well, my sister and I would dive in and it seemed as if, in no time at all, we were on our way to the shopping center. Not only was the work without complaint, by rewarding us for a job completed, my Mom created in both of us a very positive attitude about cleaning." If you can possibly tie compensation to contribution, your employees will increase their productivity. When there doesn't seem to be a "reward-for-effort" system in place, employees will take their paycheck for granted and find ways to do as little as possible. Why do more if no one notices, or, if no one cares? Each year, Marty Edelston gives away over $100,000, in cash, to employees for their ideas. Marty calls his idea generating process, "I-Power." He rewards ideas with dollar bills, candy, pats on the back and handwritten notes. Everyone who makes a suggestion gets a quick response--within seven days at the most. Once a week the ideas are evaluated, rewarded, categorized and acted on if possible. Good ideas are rapidly implemented. In 1994 over 3,000 ideas were acted upon out of the 7,000 ideas presented. "I-Power" is based upon the ideas of Peter Drucker and W. Edwards Deming. Deming, the father of Total Quality Management, coined the phrase, "continuous improvement." Marty has discovered "I-Power" is the process which literally forces continuous improvement to take place every day at Boardroom. Marty says, "Tapping into the skills and knowledge of workers who, day in and day out, handle the actual work in offices and factories is the most powerful -- and under-utilized -- engine of growth, ideas, strength and opportunity available to every American company." Delegate. It's the only way for you to grow. Everyone who owns a business that is growing will tell you, "I have good people and I let them do their job." Letting go is hard and some never really do. The reason owners don't delegate is lack of trust. It's not usually overt. If you didn't trust someone on the surface, they wouldn't really be working anywhere near their capacity and they probably shouldn't be working for you. Examine your relation and your feelings about every employee. If somewhere deep down inside, you don't believe in the other person's capabilities to do the difficult, then it is you who needs to do the difficult. There are many sites on the web about terminating employees. But, then, it may be you who needs to see something different within the person. In either direction, you have special work to do. Tom Velez has three degrees in mathematics including a Ph.D. On top of that, he has a law degree. And, he is a virtuoso with the violin. Yet, he really believes that many of the people who work for him are smarter than he is. That's hard for me to grasp, but look what it does for the psyche of his employees. They "feel" his approval which is extraordinarily motivating. Also, Tom is able to run the business with very loose reins on people because he trusts them to do their very best. After over 15 years in business, Tom is convinced people are not motivated by money as much as they are by freedom and challenge. "You have to let people solve problems on their own. This builds their confidence and the excellent employee will simply keep improving. These high quality people will then build your company for you." If you have to terminate an employee, do it sooner than later. Laying people off or firing them (be sure you have cause) is no fun. In fact, in all our years of working with business owners, we find that letting a non-productive employee go is the thing about which business owners procrastinate most. "If I ignore them, they'll quit on their own." "If I refuse to give them a raise, they'll get mad and leave." "I'll just pile on so much work, they'll throw up their hands in despair." The most fair thing to do is take action. As soon as you know a person is not a fit for you, sit down with them and say: "I want you to achieve your goals in life. It's clear to me we are not the right place for you. I need to let you go so that you can find a place where you can succeed." On Systems...Jim Coane observes, "Many entrepreneurs try to keep all of the numbers in their head." They run the business with a "cash register" mentality. This is OK when you're under $2 million in sales, however, as you grow, this technique will become a problem. Heliodoro Valadez has his assistant, his daughter, prepare a simple monthly report of expenses and sales. He says, "I look most carefully at cost of materials and cost of labor. I know what my ratios have to be for me to make profits." Know what your overhead really is. Many entrepreneurs are optimists. They assume things are going well and perhaps don't want to know the truth. What some might consider "tight cash control" is probably the system you should have as you grow. This advice is from business owner and author, Lawrence Tuller:
Reports other than those oriented to cash control are also valuable.
One of Hattie's early teachers said, "If you can't measure it, you can't manage it." If you want to grow a business, you must discipline yourself to face the truth. Of course, you don't do these reports yourself because you have smart people working for you. Starting a business is one thing and growing it is another. To grow a business you need money, people and systems. Why take Jim Coane's advice? Because, he's already done it. Good luck! Do you find yourself in a rut? Find a mentor; or if you have ever
had one, call that person. Whatever you do, keep surfing the web and come back
and visit with us often. If we are ever in your
area on location, give us a call and let's arrange a time to visit.. -
Hattie Bryant and Bruce
Camber |
| We invite your questions or comments. |