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.

Innovation Environment

It doesn't stop. The flow of new ideas, leading to new businesses and new products, is not deterred by a weak economy. To the contrary, it may be spurred by our economic distress. We have to be more clever and more inventive to achieve with fewer. resources.

Entrepreneurs have had to re-think all of their processes in order to eliminate as much cost as possible. They have had to seek out new sources of revenue. Even many who have never thought of themselves as innovative have discovered previously unknown competencies, driven to the surface by necessity.

Suppose that President Obama banned the sale of gasoline in our country effective in one year. Don't you think necessity would propel innovators to come up with new solutions quickly?

Innovation is, of course, part creativity and part intelligence. But it is also the application of critical thinking to common problems to come up with uncommon solutions.

There are different ways to be innovative. We can all think out of the box. It is important for entrepreneurs to remember that. Instead of giving up when an obstacle seems too difficult to overcome, look at it as a Rubik's cube. Move some parts around; turn it over and look at it from a different angle; keep thinking and re-thinking and possible solutions become visible. We can innovate with totally new ideas or by taking an old one and adding or subtracting a key element or two.

Necessity can be the mother of invention. This old adage can be the key to your business surviving and thriving.

Six Month Review

For some, the key landmark at this time of year is the summer solstice, which just passed; or the first day of summer. To others, it is the end of the 2nd quarter of the business cycle. Either way, the year is just about one half over. What can we learn from the first half?

What did we do right? What could we do better? And what are the critical success factors for the next six months? We are still in the depths of a bad economy, so we cannot expect external factors to be of assistance. Consumer confidence has not picked up, so we can't count on euphoria.

We can only count on ourselves. We have to do the right things. We have to examine what it is that keeps our existing customers or clients coming back and make sure we keep doing those things. If we are not doing enough, we have to do more. It is not just price. Service and quality are critical. Reliability is necessary. Flexibility counts. What else?

We have to remember that our employees are the ones that are responsible for our customer relations. Happy, engaged employees contribute hugely to customer loyalty. Even in the age of layoffs and benefit cutbacks, we can work hard to keep our employees as happy as possible under the circumstances. We can work to inspire them, to earn points for credibility, transparency, honesty and integrity. How we treat our employees is part of our brand- don't forget that.

We can cut cost and lay off employees, but it is rarely enough. We have to keep business coming in the door. We have to pay our suppliers. We have to ask for everyone's contributions- effort, ideas, teamwork and sacrifice.

Entrepreneurs need to ask of themselves what they are asking of their employees. If there is a general wage freeze or cut, the owner should be doing the same to his own wages. If he is asking additional hours from others, he should be putting them in himself.

If something is taken away from employees, they ought to be given an incentive of some sort to get it back. Employees ought to be able to earn back what they gave up if certain benchmarks are hit. This builds teamwork, morale, employee engagement and employee loyalty and gives the employer credibility if he ever has to ask something of the employees again.

Use the midpoint of the year to measure your accomplishments and your opportunities for improvement. Then do something with the information.

Don't Go It Alone!

All too often as entrepreneurs, we believe that is shows more strength of character to dig deep and we should go it alone to accomplish our mission, provide our service or deliver our products.  Now, I believe independence is important and at times essential but is that the best use of our own resources. 

 For example, my background has prepared me as a Registered Nurse and I have some knowledge of health and disease,  but I would be rather foolish to believe that I could diagnose a life threatening illness without qualified, professional support.  Certainly I could have researched and studied, but in the meantime the disease could have move mored quickly than my ability to learn and then it may be too late. 

Fortunately, I have found that even as an entrepreneur, one of my greatest assets is my associates, partners, coaches and advisers. My past experience with teams and organizations has served me to become more interdependent in a healthy, resourceful manner.  With deadlines and challenges confronting we entrepreneurs often times hourly, being able to pick up the phone and receive support, ideas or an empathetic ear because a life line for survival. 

This week alone I was challenged with an unexpected project that had an immediate deadline. Rather than become overwhelmed I picked up the phone (yes, voice-to-voice actually is better when deadlines are looming) and a valued resource was on the other end. I shared my dilemma and guess what they had already done a great deal of work in the past on the very same issue.  They provided me with a draft which saved me hours and days of additional work and help me secure a new client.

What about you?  Do you have a cache of resources to call on during crunch time or do you wait for something of consequence to show up and shoot off panic emails and phone calls, hoping that someone will respond?

Expanding our resources helps us to improve our business and social networks while improving our net worth. Business like life requires balance. Understanding the core success factors for relationship and resource building ultimately will help you to give and get better results. 

For we entrepreneurs, it is important to be able to be independent, self-reliant and self-sufficient. But there is absolutely no good reason for failing to build your resources. There can and will come a time when you need it. Find a few great (not just good ones) trusted advisers and colleagues that you can depend on with you business and sometimes with you life.

I can guarantee you it's much more fun than going it alone!

Laura Novakowski, RN, MBA
President Positive Power Strategies, Inc.