The Entrepreneur's Mentor

The Art of the Deal

Some entrepreneurs love making deals. To them, doing business is boring- it is doing deals that is exciting. The high is in buying and selling. I know one entrepreneur that used to walk into my office and basically say "You buy me or I'll buy you. It doesn't matter. Let's do a deal." To him it was a big, fun game, and he was pretty good at it. Not everyone is.

Transactions are full of pitfalls. While some entrepreneurs feel they have a sixth sense about reading people and sensing when a deal is right for them, they still need a team of experts around them to make sure all goes well. Taking the time to build such a team is hard for some who are "can do" folk and who believe in the Nike philosophy of "just do it." They view lawyers and accountants as obstacles rather than a support team.

Rather than the professionals being the obstacle, the entrepreneur's thought process is the real barrier. There is risk everywhere and it takes experts to steer around it or eliminate it. Great business sense does not make up for a lack of legal or accounting or tax or human resource or ERISA knowledge. Thousands or even millions of dollars can be involved in some key pre-purchase decisions. A transaction that "feels" right and looks superficially like a home run can turn into a disaster of huge proportion if all key areas are not explored. Proper due diligence can make or break a deal.

I bought one company without sufficient due diligence and with the wrong supprt team. What looked like a cheap deal on paper turned into a million dollar fiasco with far-reaching consequences. Those of us that can see opportunity everywhere need to re-orient ourselves. Instead of opportunity we should be thinking about our capabilities. We need not just our eyes on the deal but the eyes of those paid to protect us. These folks needn't be viewed as obstacles. Think instead of navigators, who will help us find a safe course through difficult waters.

Satisfy your deal urge. It is a great high. Just do it smartly- with the right guidance. Your team, your posse is worth every penny you pay them if you choose them well.

Health Care Costs as an Obstacle

The biggest example of health care costs impacting business has been General Motors. But smaller businesses are feeling the crunch just as much, if not more.  In some businesses, health care is the highest expense after salaries. To maintain these employer provided benefits, companies have had to forego vital expenditures like marketing, increased inventory levels, and improved technology. And they still have a hard time keeping up with the cost of health insurance. Ultimately, they have to start laying people off or refusing to pay for coverage any longer.  This is all very negative and can lead to progressive disintegration of businesses.

It is clear that the cost of health insurance has been tough for business to handle. But have we really thought about it as a deterrent to startups? In order to attract employees, companies must offer health coverage. But the cost of coverage makes employees too expensive. Catch 22!

If entrepreneurs have good ideas but can't support the people needed to help execute them, they are stymied. They want to maintain their independence and not take their ideas to big companies. They want to control their own destiny. But they can't get a company off the ground. Sure, there are independent contractors and freelancers out there. But will they bring the passion to the assignment that is needed? Will they align with the entrepreneur's vision and values? Will they willingly become a real part of a team?

There are enough obstacles in starting a business. This one is too much. If we are to encourage entrepreneurs to work their magic to help get the economy back on its feet, we have to come up with a solution to the health care situation.