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Alternatives to Hiring Full…

December 22nd, 2011 No Comments

Jamie S. Walters, Founder & President of IvySea and author of “Big Vision, Small Business”

One big question facing many business owners is when to hire full-time staff members and when to consider other options, such as part-time employees, independent contractors or partnering with other small businesses. Unfortunately, there’s no hard-and-fast rule. The answer depends very much on the business itself, the particular needs and an awareness of regulatory requirements. The ability to be creative and flexible is another advantage of a smaller, independent enterprise. There are several examples of how this flexibility might present itself.

Several years ago, we at Ivy Sea had a year during which several full-time staff members for a certain job category came and went. An intern on our staff suggested that a graduate student would be more compatible with an organization that was very oriented toward learning and continuous improvement, which is how she saw our firm. In her view, people wanting the more settled routine and established outside-of-work socializing more typical of larger corporations wouldn’t mesh well with our independent, mastery-focused group. Students, on the other hand, were geared toward learning, and would find the firm’s dynamic pace and culture exciting.

We took her suggestion to heart. In addition, we expanded our definition of “student” to include candidates who had valuable skills but might be looking, for example, to re-enter the job market after graduate school or parenting, or who were making a career shift and wanted to put their skills to use in a new way. We created an advanced internship we call an Ivy Sea Residency. The positions are full- or part-time, finite-term opportunities that can be extended for additional three- or six-month intervals based on discussions of mutual benefit. The positions are compensated fairly, with the high level of learning opportunity taken into account as part of the compensation package. Residents, in return, contribute their skills and get an opportunity to re-enter the market, as well as add new marketable skills to their résumés and work samples to their professional portfolios. Based on feedback from participants, the program has been a success, and helped us stem the turnover that had previously occurred in that job category.

We’ve now developed relationships with what we call our “extended family” – a small circle of like-minded professionals with compatible vision, aligned values and a commitment to rising above the norm in their work. In addition, we maintain contact with a network of other self-employed professionals and small businesses with complementary areas of expertise with whom we partner and exchange referrals. This allows us an experience and expertise pool that is both deep and broad, without having to expand the organization to a degree that would negatively affect our ability to work according to our big-vision priorities and the Golden Rules for right relationship.

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Growing Pains

December 22nd, 2011 No Comments

When an organization has not been fully successful in developing the internal systems it needs at a given stage of growth, it begins to experience “growing pains.” Growing pains are symptoms that an organization needs to make a transition. This article examines in detail the most common organizational growing pains. It also discusses the degree to which different sizes and types of business experience growing pains based on data collected over the past twenty years.

The Ten Most Common Organizational Growing Pains

As organizations enlarge, they often experience a variety of growing pains that signal that something has gone wrong in the process of organizational development. The ten most common organizational growing pains are listed here:

1. People feel that “there are not enough hours in the day.”
2. People spend too much time “putting out fires.”
3. People are not aware of what other people are doing.
4. People lack understanding about where the firm is headed.
5. There are too few good managers.
6. People feel that “I have to do it myself if I want to get it done correctly.”
7. Most people feel that meetings are a waste of time.
8. When plans are made, there is very little follow-up, so things just don’t get done.
9. Some people feel insecure about their place in the firm.
10. The firm continues to grow in sales but not in profits.

Each of these growing pains is described below.

People Feel That “There Are Not Enough Hours in the Day.”One of the most common organizational growing pains is the complaint that there is never enough time. Employees feel that they could work twenty-four hours per day, seven days a week, and still not have sufficient time to get everything done. They begin to complain about “overload” and excessive stress. Both individuals and departments feel that they are always trying to catch up but never succeeding. The more work they do, the more there seems to be, resulting in a never-ending cycle. People feel as if they are on a treadmill.

The effects of these feelings can be far reaching. First, employees’ belief that they are being needlessly overworked may bring on morale problems. Complaints may increase. Second, employees may begin to experience physical illnesses brought on by excessive stress. These psychological and physical problems may lead to increased absenteeism, which can decrease the company’s productivity. Finally, employees may simply decide that they can no longer operate under these conditions and may leave the organization. This will result in significant turnover costs and replacement costs related to recruiting, selecting, and training new people.

When many employees have the feeling that there is not enough time in the day, usually no one is suffering more from this feeling than the company’s founding entrepreneur. The entrepreneur, feeling ultimately responsible for the firm’s success, may work sixteen hours a day, seven days a week in an effort to keep the company operating effectively and help it grow. As the organization grows, the entrepreneur begins to notice that he or she can no longer exercise complete control over its functioning. This realization can result in a great deal of personal stress.

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Growth Strategy

December 21st, 2011 No Comments

Potential investors who read your business plan will want to know how you plan to grow your business once it is off the ground. This entails more than just demonstrating how your revenue will grow. The growth strategy section of your business plan is about proving to others that you have a plan for bringing your product to new customers and new markets, and perhaps even introducing new products.

The obvious objective in outlining your growth strategy is to show how these moves will increase sales. This can happen in a number of ways:

Multiple locations: If your business requires a retail presence, outline where you might seek to open additional shops and what your geographic strategy will be. Don’t assume you can go national just because your product is regionally successful.

New client bases: Once you’ve reached your original core customers, who else might be interested in your products? If you’re a business-to-consumer company, think about offering business-to-business services, and vice-versa. Office supply stores, for example, have been very successful at catering to the needs of individuals as well as small-business owners.

New products: New products are an obvious way to grow sales, but their issuance often is poorly executed. Discuss your plan for introducing new products or services in the short, medium and long term. These can be variations of your core product or completely new offerings that expand your overall base.

Franchising: Restaurants often turn to franchising, and it is a feasible option for many other industries as well. Franchising works best when your product is consistent and customers have certain expectations about your brand.

Online strategy: How will you use the Internet to grow your sales? Will you sell your product on your own corporate Web site, partner with an existing Internet retailer or maybe advertise online to build local brand awareness? Using the Web is not mandatory for selling your product, but your growth strategy should include an online element.

Marketing: Look back at the marketing section of your business plan. If you’ve already addressed facets of your business growth strategy in that section, you can use it to detail your expansion, and then refer to your marketing section as an implementation tool.

Decreasing costs: Growth has bottom-line advantages, too. The more business you do, the more you can take advantage of learning curves and economies of scale. Learning curves allow you to become more efficient as you gain experience. Economies of scale refer to a reduction in average cost over time because of factors such as buying power and managerial specialization.

Acquisitions: A final option to address is growth through acquisition. This would come into play after your startup is more established and ready to expand into other markets. At this stage, you may want to address which companies, or types of companies, would make ideal acquisition targets. Look for companies that are a good fit for your product and distribution methods, but that also present new opportunities for growth. Any duplication from an acquisition should be balanced out with growth areas.

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Are You Entrepreneur Material?

December 20th, 2011 No Comments

Despite the difficult economy — and in many ways because of it — entrepreneurship in America is alive and well. Take a look around you, on Main Street and on the Web. Even when unemployment is high and consumer confidence is low, there are new businesses opening as fast as others are closing. Many of them are being launched by people who lost their jobs and either didn’t want to, or could not, find another.

If you’re thinking of taking the entrepreneurial plunge, it’s important to know to what it takes to be successful before you make what could be the biggest financial and emotional commitment of your life. Here are five ways to know if entrepreneurship may be right for you.

Are You Running Away from a Problem or Running Toward a Vision?

Some people feel they have no choice but to start a business when all they really want is to find a good job. A few of these so-called “forced entrepreneurs” may come up with the next big thing, but many don’t have the heart to be in a business for the long run. So do some soul-searching and figure out if you’re running toward a defining vision of your future as a business owner, or away from a problem. And if all you really want is a great job, you can learn how to find one much more easily than you can find success as an entrepreneur.

Do You Have Support?

Hillary Clinton was right. It takes a village — not just to raise a child, but to start a business. Before you start a business, you need to have a strong support network in place. It starts with your family. If your spouse/partner and children aren’t fully behind your idea, you have more work to do. If you can’t “make the sale” to them, how are you going to convince customers to buy from you, partners to do business with you, a supply chain to give you credit, and a bank to give you financing? Entrepreneurship starts at home.

Do You Have Deep Reserves?

Convention wisdom says you should have 6-12 months of living expenses in the bank to live on until your business becomes cash flow positive. That is not nearly enough. I advocate having five years of capital saved. That sounds like a lot…and it is. But most business failures happen because the owner runs out of cash, just at the time when in another few months they may have seen daylight. So have as much of a bankroll as you can to allow for unforeseen contingencies.

Do You Have Good Entrepreneur Role Models?

When you were a kid playing in Little League, what major leaguer’s batting stance did you imitate? Children always look for cues for modeling their behavior. Smart adults do, too. Look around your circle of family and friends for successful entrepreneurs and figure out what makes them tick. Do you have the same stuff? If not, can you get it? If you don’t know anyone personally who you can study, hit the library bookshelf and study up on people like Ray Kroc (founder of McDonald’s), Donald Trump, Walt Disney, Oprah Winfrey, Bill Gates, Mary Kay, Howard Schultz (founder of Starbuck’s) and Michael Dell. Read their memoirs and biographies about them and understand the commonalities of all the greats.

Do You Have the Key Skills of Entrepreneurship?

There are hundreds of things you need to know how to do to be a successful entrepreneur, but the most important ones are these:

High Risk Tolerance: You have to be able to stare into the abyss of entrepreneurial uncertainty and not falter.

Excellent Salesmanship: You absolutely have to have at least a little Steve Ballmer in you to be successful as an entrepreneur. You may have the greatest invention in the world, but if you can’t communicate its importance to a variety of constituencies (customers, employees, suppliers, lenders), you’re not going to succeed.

An Independent Temperament: Entrepreneurs consistently go against the tide. They start companies when others are retrenching; they don’t care about being rejected time and time again; and they trust their gut.

Great Negotiating Ability: If you negotiate well for everything from a store lease to contracting services to website design, you’ll realize that every dollar saved keeps your business in business through the peaks and valleys of cash flow.

Emotional Intelligence: This is a term coined by behaviorist and author Daniel Goleman. “EI,” as it’s often referred to, is a set of skills that allows you to understand and influence the behavior of yourself and others. Being able to listen, reason with and persuade is different from being a good negotiator but just as important.

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Effective Networking for Busy

December 20th, 2011 No Comments

With all the demands on our time made by our business, professional and personal lives, it is tempting to assign a lower priority to networking as an activity designed to meet new people. After all, we have so many commitments at the office and at home — to colleagues, family and friends – that it is difficult to set aside extra time to bring even more people into our lives.

This thinking would be wrong, however, on two levels. For one, we are constantly being introduced to new people anyway, every day, with no disruption to our schedules.

Secondly, by not consistently widening our circles of acquaintances and contacts, we may be severely curtailing our chances for advancement and success. It is estimated that the average person knows about 250 people. And each of those people knows, in turn, another 250 or so people. This means that for each new person you meet, you gain access to a potential pool of 62,500 people separated from you by just two degrees!

Imagine the odds, then, that out of so many people, you would NOT find one person who would be a source of information about a better job, additional clients or customers, a speaking engagement or writing assignment, an investment opportunity, where to shop for better value, and much more. In all likelihood, you would find many more than one.

Do these numbers sound staggering? At the end of this article, I will prove the multiplier effect to you!

Networking, therefore, is one of the most profitable activities in which one can engage. Fortunately, like any endeavor, one can get more proficient at it with practice. Moreover, it takes very little time or effort to get it right.

It takes only a moment’s conscious decision to become a networker, with no interference to one’s daily routine. All it requires is a slight shift in attitude, and adopting one simple trifurcated rule:

Greet each new acquaintance with an openness to learn more about that person, a willingness to help, and an offer to stay in touch.

This approach is equally applicable to every form of networking, whether in business or social contexts, and whether the encounter takes place in person or, as frequently happens today, online.

It pays to network in person, not only to meet new people, but also to keep your vital communications skills sharp. Practice making friendly conversation; even if no relationship develops with that person, he or she will likely remember you as a “nice guy/lady” if asked about you at some point in the future.

If you feel you are too busy to go to networking events, attend only those vital to your professional or business standing. Make the best of chance and casual meetings that occur during the course of your normal workday.

Also, take more business cards than you give out. That way, you are more in control of the tempo of developing relationships.

If you’d like to network from the comfort of your home or office, or during down time on weekends, join an online business networking community. Many of them have sub-networks focused on topics of particular interest to you. In addition, you can look at others’ profiles and prioritize accordingly.

The power of online networking is in the viral effect so unique to the Internet. I belong to an online networking community that has tens of thousands of members.

As members invite friends to join, this network’s rate of exponential growth is now up to an average of more than 2,750 new members a week. As an individual member, over eight months, I have linked directly and mutually to 208 online “friends.” Amazingly, this translates into 8,138 “friends of friends!” These are all people I can access with a few clicks of a mouse, and without disturbing my first circle of friends at all. It is mind-boggling to imagine the number of “friends of friends of friends” I have – and this figure grows every hour, with no more effort on my part.

It is worth noting that all this is free – and for just a small upgrade fee, I can search the entire network for individuals who work in a specific industry or company, live in a city I plan to visit, are experts in a field in which I am seeking advice, etc. And there is a very good chance they would respond to me, since we are members of the same community of networkers.

Lack of time is no longer an excuse for failing to “reach out and find someone” who can possibly be on your side in the business of life.

Buzzy Gordon is the publisher of WealthQuoteoftheDay.com, where this article first appeared.

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