The Entrepreneur's Mentor

Predictability

There is nothing more meaningful to a business person than predictability. Imagine if we could always accurately predict our sales and our expenses. Suppose we could always predict the behavior of our employees, customers and vendors. Business would be a whole lot easier, wouldn't it?

There are factors far outside of our control that make it especially hard to predict those things even somewhat within our control. For instance:

• What will happen next with the economy?
  • the price of raw materials?
  • the value of the dollar relative to other currencies?
  • the value of gold?
  • the availability of credit?
• How will the economic problems impact the international political scene?
  • Remember why WW II started?
• We have an election in a week- how will the results affect business?

In business, we try to plan. We try to play "what if?" How can we do so with all of these variables? All of us need to be thinking about possible scenarios for the near future. What do we have to do to survive this present so we can have a more positive future?

Some multi-nationals spend millions on planning for alternative futures. They work out what they will do under certain conditions and how they will react to certain happenings. Small business people do not have that luxury. But they can still look at a few scenarios and plot a survival course under each.

Many businesses are going to fold in the months ahead, and as a result, many families will face bankruptcy. Giving serious thought to avoiding that is the most important step to take right now. For many we are not talking about reduced income- we are talking about survival.

Thinking these issues through is so important. Do it now!!

Why Would I Need a Consultant?

Entrepreneurs as a group rank high in confidence. They are true believers in what they are doing and they see the path to success. And some can achieve this success without help from anyone outside their organization.

Some are extraordinarily talented or smart or focused. Others have hired well and have within their organization all of the competencies the organization requires to be successful under existing circumstances.

On the other hand, circumstances can change, and existing competencies cannot address the new circumstances. If such is the case, the wily entrepreneur must become better educated quickly, must hire new people with new areas of expertise or must look outside for consultants. To do nothing invites disaster.

My guess is that if a poll was taken among entrepreneurs, consultants would rank right there with bankers and politicians. They are a fact of life, and I might have to deal with them, but I don't have to like them. It has been said that consultants "borrow your watch to tell you what time it is."

I can't argue with that view as a broad indictment. There are many consultants that do not add value, that make recommendations and then disappear, and that leave a business more in disarray than in an improved state. Those folks just don't get it!! They don't get what entrepreneurs are going through emotionally, they don't have the emotional intelligence to get invested in what they are doing in a client's business. They remain detached from what is really going on.

I understand why many entrepreneurs shy away from hiring consultants, even when they need one badly.

So, what should an entrepreneur do? Do your homework. Search for a consultant that has experience in the area that requires work in your business. If you are not sure what is wrong, invite several different consultants in to talk. You can tell by their questions to you if they are "peeling the onion", digging deep to see the root cause of your problems.

Once you narrow it down to two or three, get written proposals and see how accountable they hold themselves for results. See if they stick around to implement their recommendations. See if they have clear cut objectives. See if you connect with them, and if they connect with you. Then choose.

Your job is to provide the information and they access the consultant needs and more importantly, to hold the consultant accountable for providing what has been promised. Even this year, I had an experience with an internet consultant that was frustrating and expensive. The terms of the contract were clear in my mind (and I am a lawyer), but in the end I got much less than what I thought I had paid for. I hired a consultant because i had no time to think about, much less handle my internet marketing, and I thought I bought a full-service solution to the problem. Boy, was I wrong.

So, be careful, but do not fail to act. Do not refuse to seek help for fear of choosing wrong. Act and choose wisely. And you will derive the benefit you desire.

Swimming Naked

Warren Buffet is one of the most admired people in America, and perhaps the world. His success in business is virtually unparalleled. There have been a number of great quotes attributed to him of late, but there is one that stands out in my mind.  He said,

    "It is only when the tide goes out that you can tell who is swimming naked."

It is so true. In good times, anyone can be successful. When times get hard, those that don't have the right discipline, the right values, the right processes, will be unprotected. They will have difficulty surviving.

You want to be one of the survivors. If it is not too late, get those good habits in place. Tighten up your process, make your operation as efficient as possible and prepare for a long siege not a short battle.

There are lots of analogies that could apply here. Remember that a business is a living organism, like a body. If a patient comes into the hospital with a severe injury or disease in a body part, surgeons will want to save the body, the whole being, by cutting out the sickness. If an amputation is required to save the whole, it is the right thing to do.

The same applies in business. It is admirable to want to save everyone's job or to keep everyone's hours where they were in good times. But will that save the business? Does it do any good to avoid a layoff but have to shut the business down? Of course not. There are tough, emotional decisions to be made. The logic is clearer when you look at someone else's situation.

If it comes down to feeding your family or saving all of the positions within your company, what would you do? Your duty is to your family first. Remember, your business is a means to achieve the ends you desire for your family.

Make the tough decisions. Handle them as fairly as possible. But do what you know needs to be done. The longer you linger over them, the more you are jeopardizing your whole business and your family. And the longer you are swimming naked.

The Entrepreneur's Alternate Universe

The bailout, credit crunch, rescue....whatever you want to call it may affect you, and if it does, it will not feel good.

If your bank is hurting, it may start calling in a lot of loans - yours may be one of them. It won't be because you are failing. It may be because the bank is failing.

All of that small print in the loan documents that you didn't pay attention to may come back to bite you. If your bank feels "insecure" in your loan, it may call it. And then you get to enter the wonderful world of "workout', a place you don't deserve to be.

Remember when you signed the loan documents at the bank, it was in a nice, bright, airy conference room? When you go into workout, the meetings take place in a windowless, hot, uncomfortable space. This is not an accident. It is a signal that your relationship has gone straight downhill.

The bank tells you how long you have to pay back the loan and what will happen if you don't. They are clearly no longer your "friend", your "partner" or your "ally". They are now clearly adversarial.

The trick here is to not just roll over. You must be proactive. Just because one bank feels the need to call your loan, doesn't mean others won't want your business. And if not a bank, then a more non-traditional lender. But you must move on it. If you are in totally unfamiliar territory, get an advisor who knows the finance world.

If your business is hurting because of the economy and there is no relief in sight, your task may not be an easy one. All of those cash reserves you meant to build up over the years, would come in handy now. Without them, you are on borrowed time as well as borrowed cash. The clock is ticking and you need to make finding a solution the number one priority.

Cut unnecessary expenses. Begin thinking about layoffs or cutbacks on hours. Look at office equipment leases and truck leases and see if there are outs.

The bank is going to want to see some action steps on your part as you move toward your deadlines. Remember, you probably have a personal guarantee on the loan. You may even have your house as collateral. Do not kid yourself. The bank will take it. It is easier than selling your inventory or equipment.

This is a horror story, right? It no doubt is and you probably could not imagine it happening to you. But it can. Keep in touch with your banker and know where they are financially. If they are tightening up, they may want to get rid of all loans of a certain size or type, and you may be within that group, regardless of your financial condition.

It is a good time to develop relationships with a few other banks. See if there are signs of interest and keep them on the hook. Keep your financials current so you have something to show them if you do have to make a switch. Have ready whatever they would need to make a decision quickly, in case one is required.

This is not what entrepreneurs dream about, nor is it what they want to think about when they are awake. But it can happen, and your readiness to cope with it can be the difference between saving your business or not.