The Entrepreneur's Mentor

Did You Hear the One About Two Friends Who Start a Business Together?

How many times have you heard about friends going into business together and having it be the end of the friendship? It doesn't have to end that way, even though it often does.

It can work if:

• You share a vision.
• You agree on a strategy.
• You agree on a financial plan.
• You have complementary skills and competencies.
• You each value what the other brings to the table.
  • If one brings money and one brings expertise or contacts, there should be a clear statement of the value of the non-monetary contributions so resentment doesn't build over time.
  • There should be an understanding of each person's willingness to sign personal guarantees or put in additional money.
  • There should be a clear understanding of how much risk each is willing to take.
• You can separate business and friendship.
• You have job descriptions.
• You take all of the precautions you would take in going into business with someone you do not know well.
  • shareholder agreement
  • employment contracts
  • issuing shares
  • clear policies and procedures
  • clear understanding of the limits of individual authority,
• You have clear and distinct areas of responsibility.
• You keep lines of communication open and have continuous communication.

As you can imagine, the above represents a lot of preliminary work, probably a lot more than most people even think to do. Business is a serious venture. While it might be fun to work with a friend, this fun is still serious business.

Think about it as business first, fun second. It can work. It can be fun. But do all you can to maximize the possibilities.

A Strong Economy Can Hide Bad Habits

When everybody has money to spend, it is relatively easy to get them to buy goods and services. Companies stop looking at process and instead focus on their results.  Good results can make everything okay. When the phone is ringing off the hook, marketing seems less important. When salespeople are busy taking orders, they are forgiven for not taking the time to prospect.

Then one day the economy starts to tank. The phone rings less often, unsolicited orders slow and we don't know what to do. We have gotten away from following a sales and marketing process and we have nothing in the pipeline. Ouch!!

Entrepreneurs need to have a focus on process, on doing the right things in the right sequence at the right time to locate prospects and turn them into customers. There needs to be discipline. Time management is critical. Sales management needs to be focused.

Who really benefits from your product or service? Who really needs it? To whose business do you add value? For which customers can you be a strategic component of their success?

The collapse of the home building industry this year has been a disaster for many types of businesses that have put too many eggs in that one basket. With home sales going through the roof a couple of years ago, the lumber yards, paint companies and all of the subcontractors had all of the work they could handle. They did not think about developing a differentiated customer base. Now where are they?

The time to develop good habits is when business is good. Exercise discipline and selectivity. Have criteria in place for prospects and customers. Which ones are recession proof? Which ones will thrive more in a down economy? What fat can we cut from our processes and budget when times are good to give us a little wiggle room when time is bad?

If we have good habits in place when times are good, they will serve us even better when times are not so good.

Culture Change is Like Weight Loss

How often have you heard, "You didn't put all of that weight on in one month, so you can't expect it to come off in one month?"  Your weight changes over time, often subtle, imperceptible changes that you do not notice until one day you look in the mirror and realize you look different. Or you put on a favorite outfit and it doesn't fit as comfortably.  Then you pick up on what has been happening over time.  It takes effort and time and good habits to get back to where you were before. That process isn't easy.

Likewise, within your business, changes occur without you realizing it. If you are not scrupulous in creating and enforcing the culture you want, you will get something different. You will not notice from day to day. And then one day you will take a hard look and you will not like what you see.

By not enforcing and reinforcing the right values and behaviors, you create a void that will be filled by "who knows what."  You will discover habits you dislike immensely, behaviors that are not productive and attitudes that might even be dangerous to the future of your business.

Once you discover this mess, you want to change it overnight.  Well, that just doesn't happen. Change takes time. Change takes effort. Change takes perseverance.

Let's say you have always had a culture of mutual respect and equality. Then you hire a real "hunter", a top- notch sales animal, who brings in lots of business. But he is a bit of a boor and a gloater because of his success. He disrespects others that don't do as well. He treats staff poorly because he has no respect for what they do.

You let it go for now, hoping that exposure to your warmth and humanity will change him over time. And you are basking in his sales success, and don't want to tinker with a winning formula. Over time, and it doesn't take much, others start acting more like him. Why? Because, if he can, so can they. Obviously, what you say the culture is does not matter any more. Behavior speaks louder than words.

Before you know it, everything has changed and you almost don't recognize your own business. And this is all because you let one person break the rules without adverse consequences, thus negating the rules totally.

Now you have to start from scratch and rebuild what you had. This means holding your big gun accountable, and even going so far as firing him if he does not comply. The statement needs to be loud and clear that no one person is bigger than or more important than the culture you are building for all of them.

Like weight loss...It is easier not to gain in the first place.  But if you do, be prepared for a process to shed the fat or the bad habits.

Track Your Time

Entrepreneurs have to wear many hats, particularly early on in the process of building a company. It is as much by necessity as it is the desire to be involved in every aspect of the company's activities.

There is the creative innovator's hat; the sales hat; the marketing hat; the operations hat; the production hat; the finance hat; and the "do whatever it takes" hat. A lot of roles to be filled, a lot of duties to perform. It is only human nature to gravitate towards what you like to do the most. It is part of the entitlement of being the boss.

But, therein lies a big danger. If the entrepreneur does only what he or she likes to do the most, the company will suffer in a number of areas. SO, it is important that all of those hats get worn.

The owner entrepreneur should have a sense of how many hours a month need to be spent on each activity. Finance may be a weekly activity- paying bills, writing payroll checks, balancing the checkbook. Sales and marketing should make up a larger percentage of time spent.

Entrepreneurs ought to keep track of what they spend their time on so they can take a hard look and see what areas are getting properly attended to and which areas are not. You cannot rely on memory alone.

All bases have to be covered for a business to succeed.

How Should Entrepreneurs Network?

Every entrepreneur should have a strategic plan.

Every strategic plan should have a marketing plan as a component.

Every marketing plan should take into account the variety of ways that a company can become know and can get its message out to the right audience.

Most entrepreneurs do not have a huge marketing budget. Many do not allocate any money towards it. The fact of the matter is that marketing is critical. And since advertising, public relations and sponsorships all cost money that an entrepreneur may not have, it is important to use other methods that are less costly.

Networking is one of those methods. While networking in membership organizations may have a cost attached to it, and may be worth the cost, the entrepreneur has to think in terms of the value of the time spent as much as the dollars spent.

Think of time as investment capital, and invest it well.  Look for and get a return. If you don't, reinvest elsewhere.

Chambers of commerce and Rotary are common membership organizations for businesspeople. Join and work them hard and maybe you will get business, maybe not.

There are entrepreneurial groups in every city and there are good networking possibilities. You can meet venture funds; you can meet angel investors; you can meet mentors and professional advisors; and you can commiserate with other entrepreneurs.

There are now so many social networking opportunities that you could spend full time on them-  Facebook,  MySpace, Linkedin, Plaxo, Squidoo, Twitter, Meetup, etc. etc.

All may be a source of contacts and business. But watch your time investment.  Get a return.

Networking should be expected of every employee. Salespeople should network where they can find business; technical people where they can mingle with other technical people and increase their knowledge. There are CEO organizations for leaders.

Budget your networking time and make sure you get a return. Some time can be pro bono- an investment in your community, a service out of the goodness of your heart or to build your brand as being community-oriented.

Network away - but do it wisely and not haphazardly.