The Entrepreneur's Mentor

Look Outside

Almost everyone needs help these days. Don't be too stubborn to admit it. We all have egos, and many of us have done well in the past without help. It is a whole different ball game now. We haven't seen times like these before in our lifetime.

We need to do everything we can and use every idea we can find to stay afloat. That means listening to everyone within your business and many from outside.

Employees on the front line are the closest to the customer. Have we asked them what the customers are saying and how their behaviors have changed? Have we asked them for their thoughts? If not, why not? Don't fool yourself into thinking that as the boss you always know what is going on better than everyone else. Your employees have as much at stakes as you do, at least relatively speaking- they want to hang on to their jobs and their way of life. Ask them, use their thoughts.

Your competitors and colleagues may be in the same boat. Why not get together with them and discuss group strategies for survival? Find ways to pool purchasing to get better pricing, to share advertising cost, etc. If you don't want to give away competitive information, get together with business owners in related or even different fields. Many businesses face the same issues you do. Use ideas from outside your company.

Look for groups online that are discussing key issues.

And I know that consultants look like expense to many of you. But the right ones can be an investment in your future. They may be able to help you effect savings or increase revenue well beyond the cost of their fees. Good consultants have experience that you may not have. They have competencies that do not exist within your organization. If you are fighting for your life, you want as many as possible on your side.

The upshot of this post is that entrepreneurs should not go into a shell and try to solve their problems on their own. Reach out to as many as possible. Tap as many brains as you can reach for the idea or ideas that can mean continued existence, and even more, success. Asking for help does not lessen your authority- it expands it. It shows wisdom, it shows humility and it shows a willingness to learn from others. These are all positive traits in leaders.

How you think and act now will affect your future. Take a step back and think about all of the resources at your fingertips, both internal and external. Think strategically about how to employ them and how to take what you learn and put it to use in your business.

The world is a big place. There are a lot of creative, thoughtful, smart people out there willing to share. Use them.

Outside Directors: The Good, The Bad and The Ugly

Many entrepreneurs make the decision at some point to bring in some outside directors to add experience, wisdom, contacts, opportunities or just a different way of thinking. This can be a very good idea as long as there is a clear concept of how they will interface with the entrepreneur.

Is the Board an advisory board or a governing board? It may be wise to keep outsiders on an advisory board where they can give advice but the business is not bound by them. If they are placed on the governing board, they can force changes in operating policy, or in some cases, in management. This can be risky.

Should outsiders be paid? Most small business people cannot afford to pay them, so they serve voluntarily. They may get a few nice meals a year out of their service, but that is it.

Others offer shares in the company to their outside directors. This is especially so in cases where the plan is to go public or cash out within a few years.

Either of the above considerations can be offered without putting the outsiders on the governing board. But if you decide to go that way, beware. Board members have a fiduciary duty to the company, not to you. And if they have "skin in the game", they are going to be less forgiving of entrepreneurial missteps.

I have been through situations with both legal clients and consulting clients where the outside board members banded together with one or two management people on the board to overthrow a founder CEO. In each instance it was deserved due to managerial incompetence, but the entrepreneur had nobody to blame but himself. He put himself in that position. The people he brought in to help him have ended up having to remove him in order to save the company.

These situations are difficult and delicate. No one walks away happy. The Board must act to save the company from the founder and then initiate a plan to bring things back to an even keel.

So, in summary, outside directors can be good for the entrepreneur and the company. But they can also be bad for the entrepreneur, and ultimately things may get real ugly.

Knowledge and power do not have to come as a package. When they do, the law of unintended consequences may come into play.

You pay your money and you take your chances with any option. No outside directors can mean your thinking is totally in the box and non-global. Outside directors can cure those shortcomings, but introduce others.

It is your company. You decide. But consider the options and the consequences of each one before moving ahead.

It's What They Want, Not What We Want Them To have

This is a short one.

Make sure you are prepared to give your customers or clients what they want rather than what you want them to have. Retail stores often push customers to higher margin items. Many businesses sell expensive warranties that the customer doesn't need but that are pure profit for the business.

Customers are not dumb (well, most of them are not). They know what they want or what they need. They know when you are not hearing them say it. They want to trust you. You build trust by fulfilling their needs in a cost effective or value added way.

This means not trying to be the solution for everyone's problem.

Know where your product or service fits. Recognize the symptoms of someone in need of it. Don't push it on the wrong people or at the wrong time.

Be professional and be disciplined. Be credible. Help people buy what is right for them and you may win a customer/client for life.

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.

Accountability

There has been a a horrific story in the Philadelphia newspapers this week about a young girl in the Philadelphia DHS "system" who died from neglect. A grand jury has ended up indicting her separated parents, some caseworkers and some sub-contractors who were to provide services to the child and family.

An investigation came to the conclusion that nobody was doing their job and nobody was overseeing those who weren't doing their jobs. The entire culture was called "toxic."

While the results here are extreme and the responsibilities breached very serious, the conduct in and of itself is not uncommon. Even if an organization has explicit stated values and behaviors, they are meaningless if they are not enforced. The proper behaviors need to be acknowledged and even rewarded, and the wrong ones discouraged or punished.

Entrepreneurs need to be aware of their own behaviors and the type of role model they are. And they need to be aware of the behaviors of their employees. An organization needs to be accountable from top to bottom.

Accepting excuses does no one any good except the person making them. It lets that person off the hook. It allows lesser performance to prevail. It cuts into results. As a common practice, it will bring the organization down.

I have been guilty of accepting too many excuses from employees, ranging from salespeople to production managers, when results were not as expected. In the end, I had to accept responsibility for our results because I did nurture a culture of accountability.

The importance of accountability cannot be underestimated. It cannot be under-communicated.

It comes down to survival - maybe not of a human being as in the case of DHS - but of the organization's culture and of the organization itself.