New Blog Location

My blog has moved to the "Going Out of Business By Design" Facebook page of the same name. Catch it there "on the Wall. Thanks! Tom

Go Buildingless?

Among your highest operating expenses is building occupancy cost--rent, utilities, insurance, maintenance, landscaping, furniture, taxes, property taxes--phew! Just imagine if you did not have that! How? Don't have a building. With today's tech you can stay connected visually and otherwise with coworkers. Maybe just a warehouse for some shipping and receiving will do. If you have customers in ocassionally for product presentations you can always rent on demand a show space in a nice part of town. Imagine the impact. Bigger bottom line, employees do not have to buy gas, clothes, makeup for work, and greener footprint. You wake up and you are at work!

Of course, this will not do if you have a retail business. Another downside is that people do not always like working where they live. But today's tech has eliminated distance. You could take advantage. Paperless and wireless are already business goals so lets add buildingless to that. In all three cases you will probably not achieve a zero sum but certainly a lesser one.

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Business DWI

In my opinion a big destroyer of businesses and business careers is ego. When too much ego is present in a decision or plan it is going to come apart at at some point. When owners have too much ego in their decision making I call this Deciding While Intoxicated. DWI. You are too juiced with yourself. Sometimes you cannot see this but others do. You are putting your self image above the well being of the business and do not see clearly. This results in decisons made by 'feelings' rather than facts. My wife the counselor frequently reminds me that 'feelings are not facts'. If you are a business owner you need the facts. If you go by those you will definitely feel better in the morning. Egosim, ego maniacs, ego centrics and all the rest usually come to ruin. A smart CEO keeps various voices around, other than "yes men", to stay grounded and out of the ego zone.

When I began doing well with my IBM sales career I became a bit cocky. I was taken by my fancy suits, custom shirts and expensive cars. As I extolled my accomplishments to my mother she always had the same unexpected response, which I hear to this day: "Tommy, pride goeth before a fall." Mom did not know a lick about business but she knew what got people into trouble. Heck, I really wasn't trying to be that prideful. Guys just want to impress their moms! Dads just tell you what you're doing wrong.

Do we doubt for one minute that the Wall Street collapse was brought on by serial DWI-ing executives ensconced in Taj Mahal offices being paid millions whether they did the job or not. You can bet that their main concern was to look better than their competitors. All involved just built a House of Ego that nearly brought down the nation.

I have found it a much better path to take a more humble approach. If you have been a business owner long enough you know that the Businessauress Rex Change Monster is always waiting outside your office to spew flames on your business. Things can change in a hurry and that should keep you humble. People like a strong confident leader but not a phoney one. If you are worried you should tell your people you are. If business is bad you should share the numbers. Employees have a lot of stake too and they try harder if you level with them. Sometimes owners just do not want to state bad news. Silly. It is the equivalent of pulling the score off the board if the home team is behind.

Anyway, if you are going around like a rooster just ask yourself what your mother would have to say about that and then you will know what to do. Some days you are the statue and some days you are the pidgeon. You will have plenty of both. On days you are the pidgeon let that remind you that you can actually leap, like superman, tall buildings in a single flight. On days that you are the statue, let that remind you that things can get messy at a moments notice.

Treat Everyone Differently

If there is one tenent that I feel has made a lot of difference in my business success it is my concept that you should treat all employees differently. This would seem to fly in the face of time honored dictums that say you should treat everyone the same. Treating everyone the same really does not work that well first of all. It assumes everyone is the same. Not true. Each person is distinctly different from the other. God made us all originals. We surely know you would treat a grandmother differently than a teenager, a man different that a woman, a child differently than a parent and so on. So in business.

I think the 'treat everyone the same' concept originates from lazy business leaders. It is a lot more work to treat everyone individually. But you can do that effectively in a small business of say under 50 employees. It would not work well in a large business and probably turn it into some kind of chaos. Treating everyone differently can be a unique strength of a small business owner' s management style and you should adopt it.

I like to think of a small business as an organization that has unique abilitities to solve employees' problems, or at least mitigate them, for their well being and thus the better well being of the business itself. For example, when we were a younger, child bearing company I allowed mothers to leave work at the drop of a hat if their child was sick at school, or they had to take them to the doctor or simply had to be at a school play. This time was given gratis becuase children are such a valuable part of a parent's life you are a complete fool to stand in the doorway of anything important in this area. By supporting it, you have gained a much more motivated employee and new respect. Would you not rather have that than be seen as some rule enforcer?

Detractors will say this is not fair to non-mothers but it is just a matter of time before they have sutff come up that needs wiggle room. They may have a grueling commute and if it was me, I would give them a later starting time so they could miss that nightmare. This, in turn, would not have much meaning to someone who only lived a mile from the office but then one day they need something and so it goes....Become a sort of Employee Godfather and everyone benefits in my opionion. If you treat everyone differently then, in a sense, you are treating them the same! Everyone gets exceptional treatment.

Winning Ugly

In very tough times like these it may come down to winning ugly. You may have to resort to some unpleasant strategies to recover your bottom line. Yes, they are 'ugly' in that you nor the one on the receiving end will like how it looks but this is about survival. Here are some things you can do to win ugly.

• Renegotiate leases and loans. Ask your landlord and lenders to refinance your balances to a lower and longer amortization. If they won't, do it for them and tell them this is what you can do. This is not a case of trying to get out of something you owe. You are just seeking to relieve tight cash flow from these tight times. It is likely that they will live with it but it will ruin your chances of getting anything else from them in the future.
• Deduct ten or twenty per cent from vendor invoices you have in hand. Again, if they continue to want your business they will probably go with it but they may not ship you any more stuff.
• Reduce employee pay by ten percent. This has almost become standard right now. Maybe force everyone to take two or three days of unpaid time off each month. Have a later start time and an earlier end to the day with reduced pay accordingly.
• Turn lights off, AC up, and remove every other bulb from light fixtures. Re issue company cell phones with ones that only have local service and thats it. Be cheap.
• Reduce insurance coverage to bare bones that guard against major catastrophe only.
• Take more of your pay out of the company in the form of a loan to you. This has to be paid back but it gets you out of paying payroll taxes on it. Pay it back slowly with an auto deduct from your regular paycheck over a couple of years. You can only do this a few times.
• Barter. Pay your bills with paid for, useful inventory. That is how all business was conducted way back when. The indians woluld trade a cowboy blankets for rifles. You may want to exchange free landscaping service in lieu of rent. Bartering conserves cash. There are even barter groups you can join such as Trade Bank.

You do what you have to do.

Dark Times Strategy (con't)

Buying or merging with another company is a possible solution to revenue and profit problems. When two companies get together they benefit from new economies of scale. That means that the new entity can shed expenses that were being duplicated at the other company such as rent, the phone system, utilities, insurance, probably some employees and the like. The two combined companies now create more profit than the two did standing separately. This is expressed in the Acquisition Formula of 1+1=3. Rather, one plus one must equal three for an acquisition to make sense and provide each company with more benefit than they had standing separately. Put another way, you wrap a ketchup and mustard soaked bun around a hot dog which , in turn, creates a much tastier product than the bun or dog alone. You get the idea.

The new cash flow coming from this can be split by the two companies or it can be used to finance the purchase of one company by the other. Usually some owner financing is involved, especially these days. Maybe there is a bank loan for half the purchase price and then the owner takes back a note for the rest over 5-10 years. Selling prices vary some but here is the formula that will be pretty close. Take the recasted company, that is, how it will look once it is absorbed, and multiply its new annual profitability, usually with all owner's take out of this too, by 3.5. It comes out close to about half of your annual revenue.

Two owners rarely get along so plans should be made for one to turn things over to the other after a six month transition period. The most likely companies to merge with would be one in your own field but an acquisition also is a means for one company to enter a new field that it previously did not have the expertise to do but now does with its new purchase. In an acqusition it is good to keep in mind the definition of a good deal. A good deal is one that is good for both parties.

Dark Times Strategy (con't)

Nervous System Health

Taking care of yourself needs to be in your list of priorities. Tough times can be tough on the body and mind. If you are not sleeping or are incurring depression/anxiety, your nervous system is taking a big hit. If mind, body and business are ailing--not an uncommon trio right now --you must do things to neutralize this toxic cocktail. Get anti-depressant medication or sleeping helps from you doctor. Forget anything you have heard about taking these medications. Most are not true and these meds can be worth their weight in gold. There are various ones in each category and your doctor , with your input, will arrive at the right one. Your regular doctor can now prescribe most medicine that only a psychiatrist could before. These nervous system medicines will not solve your problems but they give you your fight back so that you can deal. If you are already taking medication, keep doing so but add in twenty minutes of cardio exercise daily. All this gives your nervous system needed help which in turn gets you a clearer head and renewed energy to fight another day. The health of your business may depend on your own health.

War Zone Strategies

Much of what is going on in the economy and your business probably feels negative. Dropping profits, pay cuts, lost customers, tight cash and all the rest can easily make it look like there is little light out there. The truth is that there is always something that can be done. There is. You have to find it and put energy into strategies that will improve your situation. Just deciding to head in that direction gives needed positive boost. Here are a few tactics to use. You will find more of them in my book Going Out Of Business By Design: Why 70% of Small Businesses Fail.

• Allocate your time smartly. Owners may hunker down too low. They may feel the best thing is to take the sales floor or call on customers as a salesperson or do some of the repair work if they have technical background. That is the equivalent of the pilot leaving the cockpit. It gives the allusion you are doing something to solve things. Most likely it will amount to only a blip. Your work is the big "A" tasks such as motivating your staff better, being more creative, staging promotions, advertising smartly, establishing cash conservation plans, getting a bank loan, adjusting pricing, liquidating cash robbing inventory, hiring needed expertise, looking for a merger/acquisition opportunity, and holding regular meetings with your employees. These actions are the ones that move the moutains.
• Hire a constultant. When you are in tax trouble you call a CPA. When in legal trouble you call a lawyer. When your car is broke you get a mechanic. There are all sorts of specialists in this economy and these are all examples of hiring a consultant. There are many in the business world too. I am one with certification from the Institute of Independent Business. You can go to this site and search for a consultant that may help or ask local banks or chambers of commerce to recommend one. The only way a consultant should be hired is on a month to month basis at no more than $2,000 a month. The $2000 does need to be in advance to free the relationship of any hindsight quarterbacking by the business owner. You will get your money's worth if you provide good information. Do not sign a long term contract either.
• Add a new product. The best way to find additional revenue is to start selling additional products. Find something similar to your company's skills that would appeal to your customer base. Conduct training on it and then get out there!
• Adjust pricing. It is possible you are overdue for a price increase. You should raise your prices 5% yearly to keep up with inflation. If you have not raised prices in, say three years, you have a 15% cost burden to overcome just to break even. The government does this with Social Security and the like and calls it cost of living adjustments because most costs in our lives go up yearly. Same for your business. Most vendors are probably raising prices to you similarly. These are not large to any one customer but are a significant source of needed revenue for your top line.
• Eliminate free things. The "Baker's Dozen" term came from the baker giving 13 instead of 12 of what you ordered because this generated goodwill -- a good thing. In this economy though, most people are not thinking about such and are just trying to figure out the survival strategy. Nobody is expecting you to give them free goods and services. So don't. You can't afford it. Look at things you have been doing free and add something, anything, to your invoice. Late charges, mileage charges, expedite charges, "we had to deliver it up three flights of stairs" charges, after hours charges and so on. Ever looked at your bank statement, credit card statement or tire bill? There are no free lunches here.
• Reach out. Business owners are fiercely independent types that do not like to let anyone know their bad news. Yet, all owners get plenty of it. It is how the bad stuff is handled that makes all the difference. By letting people in, and that means all employees, friends, professionals and family, you tap into a great deal of help. If you fell into a dark cave nobody is going to know you need help but if you cry out you may well save your life. Same here. You cannot solve everything by yourself even though you would like too (died in pride?). Ask around. Share your pain. Seek suggestions. Hold company meetings with financial statements in hand. Take people to lunch to talk. Hell, have the waiter bring a bottle of wine while he's at it!
• Demand what you need. Nobody knows better than you what is needed for your company to be well so demand it piece by piece from those who can get you there. Demand admin find needed cuts. Demand salespeople make more calls. Demand your vendor reduce a price. Demand your service people be quicker and watch parts usage closer. Demand a better sense of urgency from everyone including yourself.
• Invoke Law of the Pinball. This principle applies to all owners and salespersons. Hopefully you are old enough to remember a pinball game. They were replaced by video of course. The pinball gets set in motion and the object is to keep it in play as long as possible by using all manner of concentration, body english, quick judgement and good instincts. If you did this it guaranteed the ball would run into more things that lit up, rang bells, and otherwise said you hit something for a big score. Same for you. Put another way, stay in motion and don't stop until you score--and don't stop then either.

Dark Times Strategy

There are numerous small business owners hunkered down . Probably scared. Probably in the red. These are indeed, scary times. Surely, when the history is written, this recession will have a captial 'G" and a capital 'R'. It may be of some comfort to business owners down on self esteem to know they did not cause it but they are surely the victims of it. Nearly every retail business talks in terms of sales revenues being down 40%. B2B businesses are doing better but talk in terms of 15 to 20% sales drops.

Adjusting to that is hard enough but businesses are doing it by reducing pay up to 10%, layoffs, or reduced schedules or all three. You have to do what you need to do to get a break even. I don't think there is enough adjustment to work with a 40% decline in revenues. That is just too steep and owners of those businesses are in true misery. True misery. I wish customers would do what they can to improve their purchases. I wish CEO's of large corporations would scour their cities and look for opportunities to purchase a lot from a little company. Money they are spending anyway. Could mean the difference between life or death for a small business.

Owners of small business need to take heart. There is always something that can be done. In my book Going Out of Business By Design, I devote a lot of space to managing trouble. I will condense some here.

The first thing to do is get the right attitude which is Eye of The Tiger. This is the determination a tiger has just before he jumps prey. You know by the look on his face he is going to get it. Other examples--Tiger Woods behind in a golf tournament, soldiers in Afganistan searching a building, John Sullenberg landing the plane in the Hudson River with no engines, Harry Truman dropping the bomb to end WWII, George Bush seeking the bad guys for bombing our country--all had Eye of the Tiger. Rocky movies play it as their theme. Eye of the Tiger says 'don't mess with me now because you have the fight of your life on your hands'. Eye of the Tiger says there is always, always something that can be done because there is. Eye of the Tiger is a leadership attitude that inspires others. Eye of the Tiger says I will fight to the end. I will not quit. I will get the help I need and get you the help you need.

There is the story of an army captain who was charged with heading off an advancing enemy platoon. The major told him to cross the bridge and turn those guys back. He failed. The major heard a junior officer pipe up who said he could get it done, send him. So he did. This junior Eye of the Tiger captain led his men across the bridge. Once all were across it the captain blew up the bridge. Failure was not an option . His crew then prevailed. As troubled business owners let us not look for convenient bridges to run back across. Let us say to ourselves that we will spend all day every day on the other side of the bridge and be so determined until we have done what we need to do.

Once you have Eye of the Tiger attitude rally your platoon. Maybe you are good at this and maybe not. To get a band of brothers and sisters to help fight your battle the first thing you must do is drop all ego and pride and let everybody in. I repeat. Let everybody in. Business owners are proud and when it comes crunch time may find it hard to seek the help they need. This forces them to fight undermanned. Don't let that happen. Let people in. Be humble. Ask everyone one for help. Give them the numbers. Ask for their suggestions. Seek out experts or call on higher powered people. You won't be able to do it by yourself.

Eye Of the Tiger Attitude gives you a shot at a postitive attitude and the ability to produce positive motivation for the troops. Your band of brothers and sisters will then be the thing that sustains you personally if you so let it be.

(Dark Times Strategies will continue a few blogs later)

Countdown to Publishing Date

The countdown has begun to a six week time frame after which I will have copies of my book Going Out of Business By Design. It is really exciting even though I am an unkown in a big jungle of publications by famous authors. I do have a New York Publisher though! Book stores really love to stock the famous guys since the name recognition helps sell the books. I have never written nor sold a book but my publisher, Morgan James of NY, is great about coaching new writers along. They feel Going Out of Business By Design has great merit and are publishing it. They have come up with a cover we agree upon and are editing the content and laying out the pages. These are genuine people and the kind you want to work with.
They tell me to get out and give talks and seminars based upon the book. Do this even from city to city and to build book sales. I am presently honing a talks that would be meaningful to business owners--a tough crowd if there ever was one.

I feel I have a lot to offer in Going Out of Business By Design. If nothing else, a person with 29 years of experience in something would easily qualify in a court as an expert witness. I can verify with certainty that I have witnessed, hopeully expertly, the factors of success and failure in business ownership. I am eager to get talks going as well as good discsussions with my audience.

My plan is to contact all the local buisness groups and get on their adgenda for a breakfast or luncheon talk followed by discusion followed by book sales!

How The Book Got Its Name

In the early days of my business a competitor was selling our same brand of copier but always much lower in price than we did. After paying for the copier and the sales commission there was nothing left and I could not understand this company's pricing stategy. I asked the manufacturer's representative if he was selling machines to this company cheaper than to my company. And how could this company do this?
He replied that we both got the same price and that this company could not keep that up for long. He told me that they were 'going out of business by design.' So that phrase stuck with me.