Series: Rules for Entrepreneurs « Grow Smart Business

Small Business Success Index

Index Score^*		Grade
SBSI INDEX	75	C
Capital Access	69	D+
Marketing & Innovation	70	C-
Workforce	78	C+
Customer Service	91	A-
Computer Technology	75	C
Compliance	89	B+
*Index score is calculated on a 1-100 scale.

The Small Business Success Index takes the pulse of small businesses. Commissioned by Network Solutions, LLC and the University of Maryland's Robert H. Smith School of Business, the Index is an ongoing measurement of the competitive health of U.S. small businesses.

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Rules for Entrepreneurs #1: Make Sure Your Business Card Doesn’t Get Thrown Out

June 2nd, 2009 :: Steven Fisher

This entry is part 1 of 5 in the series Rules for Entrepreneurs

This article was originally posted on Solutions Are Power, but the series is now residing on Grow Smart Business.

Last year when I wrote for my blog, Venture Files (now owned by Technosailor), I wrote a post about business cards called “Business Card FAIL“. It was a very popular topic and seemed to strike a cord with many people. As time has gone on and I have seen a ton more people out freelancing or starting their own business in the last few months, I thought it would be good to do an update.

Now, I am a sucker for great design and great branding. To me it sets you apart from the tiny businesses that don’t invest in a good branding package from the beginning. Granted, there are many companies that are totally word of mouth and don’t really need it in their particular business so a basic card will do just fine.

However, there are many professions where people will judge you, knowingly or unknowingly, by your presentation and your business card, along with your attire and attitude will convey this to potential clients. Some great business card designs and other inspirational designs, many of which don’t meet the test in the original Business Card FAIL post, are useful in the right situation.

So I have to take back adjust much of what I wrote in the “Business Card FAIL” post and approach this from a different angle.

So here is some updated advice to ensure your business card doesn’t get thrown out:

1.) Tell me what you do. Quickly.

I like this from the original post:

“Business cards are supposed to have the usual information – name, address, e-mail, title, phone, company name. To make some real impact, you should use the space on the front of the card to have a single statement below your company name that is your main marketing message. For example “Next Generation in Sales Software” let’s me know you are innovative, provide sales software and are a tech company. Simple.

You can also use the back of the card for this too but don’t jam it full of sentences or a big paragraph. 2-3 sentences at most and it should build on the marketing message you have on the front. You can also use the back for the marketing message itself to change it up a bit.”

I have a friend that uses the traditional back of his business card. He hands it to them with the back facing up. Very smart and very memorable.

2.) Don’t jam your web site onto your business card

Ever been on a date and the person tries to tell you their whole life story in between breadsticks and dessert? Same thing. This is in the same vein as number one but I had to say it again.

3.) You can be cool, but be relevant to your audience

In my original post I really bashed cards that went outside the box and I really should take that back. Nothing bores me more than getting a Times New Roman 12 point font business card and although they are probably very competent and very nice, they don’t stick in my mind when I might need them or want to recommend them.

What I really didn’t get into last time was the most important – Know your audience. People will expect a certain thing from you and if you push the envelope just a little bit it will work beautifully. If you go to far they will think you are trying to hard and throw your card out.

4.) If you use funky materials, have a purpose

I love great looking cards and there are some really creative ways to use a business card. My original post really judged a bad business card if I couldn’t write on it. Now some business cards are just really out there, but I have seen cards that fit the business and the approach really well. My dad, who has been in business for 32 years runs an engineering firm and their cards use the same materials (mylar) they use to create the master drawings for blueprints. Very cool and unique.

5.) Your LaserJet does not count as a professional printer

For those of us that remember dot-matrix printers and doing our term papers with them it really couldn’t compare to the LaserJet that your parents had at the office that was all sorts of sexy. If you were able to get them to print it out for you at work (if you didn’t wait until the night before) it looked awesome and might give you a couple of extra points for a good grade. Same thing here. Now everyone has color a LaserJet and thinks they are a print shop. Not so fast dude.

This is where professional printers are worth their weight in gold and will make your beautiful design look fantastic on the right card stock. Think about it. You spent a lot of money on a logo and an design and you print it yourself? I don’t think so.

6.) Make sure it works on a card scanner

If you get alot of business cards these days, you probably use a business card scanner or your assistant does. For many people, if it can’t scan they will toss it instead of typing everything in manually. This is the risk you will run using the more funky and edgy types of cards. Hence, you are warned.

7.) And for goodness sake, get a domain name and a PROPER email address

I like this too from the original post:

“Nothing says “amateur” than using a Yahoo/Hotmail/AOL/Gmail e-mail address as your main address. I mean come on, a domain name and hosted e-mail account is not expensive these days. The biggest perpetrators are usually those trying to be “consultants” but have a day job and this is their side thing or they are just starting out and haven’t talked to one person about marketing.”

With all the new laid off workers going freelance and doing the consulting thing, this an excellent way to show that you are in it to win and build a business. I do make an exception if it is your personal business card and your are using it to find a job. Still there, I would recommend that you get your own domain and put your CV up there and market yourself in the same way.

We want to hear about your bad business card experiences

Since there are so many bad business cards out there I couldn’t capture the sum of things that you my reader have probably seen. Please use the comments as your place to be funny, trash bad business cards and most of all call people out on their bad business card protocol.

Tags: business cards, entrepreneurship, Steve Fisher
Posted in Rules for Entrepreneurs Series | Comments

Rules for Entrepreneurs #2: Pay Yourself First

June 9th, 2009 :: Steven Fisher

This entry is part 2 of 5 in the series Rules for Entrepreneurs

This article was originally posted on Solutions Are Power, but the series is now residing on Grow Smart Business.

I originally wrote this on VentureFiles which is now part of the Technosailor Galaxy of Blogs but as Aaron Brazell, Editor and fearless leader of Technosailor.com said, this post is more relevant than ever when you are trying to keep your business running and growing (even in this economy). I originally wrote the post about a year ago so below is the original post and after that is an update that tries to do a little reflection on doing this during the current state of the economy.

Original Post:

Over the last 9 years and two startups I have learned many things and screwed up royally in some cases. This series is about providing you best practices of lessons learned and avoiding the mistakes I have already made.

In the past, I have had good years and bad years. When you have employees, they expect to be paid and when you mess with payroll (and payroll taxes, but that is a post for another time) you create such a negative culture that nothing will get done.

With that said, when you are starting your business regardless if it is a service or product company, you will have startup costs and probably forgo paying yourself for 6-12 months to keep growing the business. That is fine and to be expected. What you should not do (and what I did) is keep adding staff and sacrifice your own salary in the name of growth. If you keep going like that and have a bad quarter you will have nothing saved for a rainy day and if the business fails you will probably be in immense debt and get nothing out of the business.

Granted, the balance between growth and cash flow is a tenuous one but it is one thing you should never defer to someone else in beginning. Plus, there is a difference between creating a lifestyle business and an enterprise. A lifestyle business is really making enough money for yourself and having some contractors or 1-2 people that gives you a good salary but is more about freedom. An enterprise is a business that scales and gets big over time but you will be working intense amounts in the beginning but will need to hire those smarter than you with the intention that you are looking for an exit and will have time for freedom when you cash out.

So when you are growing the business you should work the first 6-12 months paying off the initial capital expenses and getting about 6 months of cash flow for yourself before you hire anyone else. Once you have that done, start paying yourself something, even if it is small and will ramp up over six months, pay yourself first. This will get you in the habit of being committed to making the business pay for itself and you so you are not worrying about living month to month and lets you find some resources to help you deliver while you continue to sell and grow the business.

Once you are looking at hiring someone use these two rules as a starting basis:

- Have six months of payroll for that person in the bank on top of your salary

- Have 90 days of projects or sales committed for that person to deliver so they not only have something to do but are earning their keep.

You may have to be conservative at first in your growth but in the end you will scale better and create a business that is focused on delivery and customer service without putting you and your employees on a cash flow roller coaster.

Update, One Year Later:

When I read that post I reflect on the mistakes of past and having had a business through the dot com bust and subsequent recession. Granted, it was not as deep or as long as this one, but the word that comes to mind is, balance. And while it holds true that you need to pay yourself first before you keep growing, the original post was written with the tone of growth and not reduction which may be more likely these days.

When you are growing you are tempted to throw caution to the wind and sacrifice your pay in order to hire that extra person that keeps the idea factory turning out wonderful widgets. When times are good and the sales are going upward, your risk threshold increases. When times are tight, you might feel like you are holding on with your fingertips to a 5,000 overhang below you and no way to see up over the ledge. In these cases, it is natural for people have a tendency to pull WAY back into their shells and not hire when they know they need to or lay people off in order to stay cash positive. In this case, you might sacrifice your entire salary to keep people on board. While this might sound noble, I have done this and it usually ends badly.

This is where the word “balance” comes in.

You can only go so far to reduce staff and pile tasks up on people that are probably already overworked, but cutting down too much can keep you from potentially delivering to clients in the end making things worse. Look to reduce costs in other ways, like office services you may not critically need, or ask if people would volunteer (including you) to take a 5% pay cut so we can keep everyone and deliver at the level of quality clients have come to expect so we can keep our clients happy and ride out this recession together.

Tags: Business Tips, Entrepreneurs, entrepreneurship, Rules for Entrepreneurs Series, small business, steven fisher
Posted in Entrepreneurs, Rules for Entrepreneurs Series, Small Business | Comments

Rules for Entrepreneurs #3: Avoid Founderitis at All Costs

June 9th, 2009 :: Steven Fisher

This entry is part 3 of 5 in the series Rules for Entrepreneurs

This article was originally posted on Solutions Are Power, but the series is now residing on Grow Smart Business.

leadershipbutton In this next rule in our series “Rules for Entrepreneurs”, Rule #3 deals with the affliction of “Founderitis”. Don’t know what it is? Sound like a weird dermal disease?

Wikipedia defines Founderitis as “the unhealthy condition that afflicts many companies whose founders maintain a stranglehold on organizational leadership. While many companies owe their success — and in fact their very existence — to their founders, those same individuals can create chaos that ultimately leads to the organization’s collapse. The challenge to founding CEOs and boards of directors is to take steps to change conflict and chaos into opportunities for growth.”

Founders, because they are not detail-oriented and are driven by their exclusive devotion to mission, often disdain management tasks. At some point, staff members begin to complain to the CEO or perhaps even directly to the board, calling for more systems to be established. Founders, comments Linnell, may “see all such challenges as malicious or wrongheaded or an abysmal waste of time in the face of the real (mission) work of the organization. This can lead to all-out battles between the champions of mission and the champions of systems.

While this may not be a disease that makes you sick, you sure can feel stressed and nauseous working for someone with this “affliction”. Unfortunately, I was someone who used to have this problem in a bad way. Over time I have learned that hiring people smarter than you and getting the hell out of their way is usually the best way to build a company. More on that topic in a future “Rules for Entrepreneurs”.

Symptoms of a Larger Disease that can Kill Your Company

Founder’s syndrome manifests in numerous ways. The Center for Association Leadership has an excellent list of the symptoms. The leader who suffers from founderitis exhibits these types of behaviors:

Gives short shrift to planning activities, staff meetings, and administrative policies;
Is reluctant to relinquish strategies and procedures that worked in the past, although circumstances may dictate new approaches;
Neglects to institute new systems, even though the board has formally requested them;
Seeks and accepts little input from others in making decisions;
Sees all challenges as hostile and drives away staff and board members perceived as disloyal; and
Refuses to delegate authority.

Treat the Personality not the Problem

Managing through a fit of founderitis requires a tricky mixture of growth opportunities, board involvement, and a firm delivery method. In the mean time, here are a few things you MUST do to beginning shed the affliction of Founderitis from infecting your company:

Respect the need for planning activities, staff meetings, and administrative policies;
Realize that as the company grows circumstances may dictate new approaches;
Institute new systems with approval of your board;
Seeks and accepts input from others in making decisions;
Delegate, Delegate, Delegate
Accept the fact that you can’t do everything themselves and you need to bring on people whose strengths complement your own.
Separation of your identity and goals from your role as a founder.
Accept that the organization’s success no longer depends solely on your creativity and decisions but instead requires the input of partners who are equally or perhaps more skilled than you.
Dance around the room to let things loose
Shift responsibilities to worthy successors and trust them to fail and succeed.

Don’t worry if you can’t over come this there is a simple solution. Get your board to hire a professional CEO and take a long vacation.

Do you have Founderitis and not even know it?

Do you see yourself in these words? Have an errie feeling that you might be like this or working in an environment where you engender Founderitis?

First, read this article again and see how many symptoms you may have already. If you notice some, ask those around you if you fit this profile. Tell them it is ok to tell you if you do and be very honest. If you are a classic case of Founderitis then go back one section in this post and follow the instructions on beginning to let go. This is not something that will happen over night. It took you all your life to build up these habits and it can take just that long to work them out of your system.

Photo Source: iStockPhoto

Tags: Business Tips, entrepreneur, founderitis, steven fisher
Posted in Entrepreneurs, Rules for Entrepreneurs Series, Small Business | Comments

Rules for Entrepreneurs #4 – 5 Ways to Avoid Small Business Death by $100 Expenses

June 10th, 2009 :: Steven Fisher

This entry is part 4 of 5 in the series Rules for Entrepreneurs

This article was originally posted on Solutions Are Power, but the series is now residing on Grow Smart Business.

broken-piggy-bank-small When I started my first business as an adult and left the warm blanket of a steady paycheck I also left the fuzzy fun of expense reports. Those detailed reports on excel spreadsheets full of stapled pages of photocopied receipts that we got paid back on eventually (usually in 2-4 weeks) and were part of the work experience when you traveled or did anything company/client related.

Back then they were a tedious chore because I really wished I had a corporate credit card but that was only available to the executives. However, I never noticed how those expenses added up because they weren’t mine and they were usually billed back to the client.

Then I launched my first business.

Eyes Wide Shut

I started my own business and my eyes were wide open – shut to the realities of how quickly things add up. I thought I was being conservative and budget conscious but I was still doing lots of business lunches, buying lunch for the team a few times a week, paying for drinks on Friday because I thought I was the “cool boss”. We sponsored various events at small levels because we were more concerned with seeing our logo out there than actually demanding that there be some type of measurable return. Very soon the $50 here, $50 there, $100 for this sponsorship, $250 for that sponsorship and lots of $75 for happy hour rounds started to really add up and we were spending $2000-4000 a month for non-sensical things but it didn’t stop until the party was over and we burned out.

Burn Rate? More like “Burn Out Rate”

You might have heard of the term “burn rate” during investment conversations and discovered that it is the amount spent on a monthly basis that you burn through and includes fixed and estimated variable expenses. The purpose of knowing this number for investors is to understand how much money you would burn based on the level of growth as you scale up to reach certain revenue/customer milestones. This concept can be applied to any business regardless of whether you get outside investment because it will be readily apparent in a cash flow statement when you would run out of money based on current operations if you are spending more than you earn. When I started the business, I had a fair amount of savings stocked away and as I ramped up and felt that I need to quickly scale to “run with the bulls” so I felt I was spending money to make money. Really I was just spending money. Clients would sign with me regardless if I took them to a coffee house or a fancy steak house.

These little expenses felt like paper cuts that all together were causing the company to bleed out and be on the verge of death. Things had to change.

5 Ways to Avoid the $100 Business Expense “Paper Cut Bleed Out”

Paper cuts are unexpected and happen in the worst places. The shallow ones sting and bleed a little bit. The deep ones bleed a lot more than you think. If you had 100 or 1000 of them happen at once, you could actually bleed out and die. I apologize for the morbid description but there is no better analogy than a paper cut.

We realized that since we were like most companies that did not have investors, our high burn rate was leading us down the path of burning out. We decided at that moment that we must first get our expenses under control then evaluate or correlate expenses to things that helped our business grow. We came up with five simple ways to make things work:

1.) Know your burn rate

2.) Question the expense before you spend it

3.) Budget for recurring expense amounts each month and keep it in check

4.) Find cheaper alternatives to off site meetings – If you meet a client off site, coffee is much cheaper than a meal and really cheaper than rounds of cocktails

5.) Get your employees to think creatively and reward them with saving the company money – if they can save $500 for you, give them $50 extra

How Have You Prevented Burn Rate “Burn Out”?

These five ways seem like no-brainers but you would be surprised how hard it is to actually admit you have a problem and understand the depth of it in order to make the change.

Tags: burn rate, entrepreneur, spending, steven fisher
Posted in Entrepreneurs, Rules for Entrepreneurs Series, Small Business | Comments

Rules for Entrepreneurs #5 – Compliment and Give Credit to People

June 11th, 2009 :: Steven Fisher

This entry is part 5 of 5 in the series Rules for Entrepreneurs

For the last year I have been working on a project that is non-profit and I believe pretty groundbreaking in terms of its business model and offering. During this time I have learned even more about my strengths, weaknesses and learned to improve in many ways, take new risks and work to be a better leader. Building a business, whether profit or non-profit, requires people that believe in the vision and what is being delivered to the world.

Although you might have the crazy hair-brained idea to start something and have a partner or two that join you on this journey, it quickly becomes not about you. This is a fact that I had to learn the hard way in the past and have said things that were the result of my own pride and ego ending up hurting those around me and impact the project. This is why I present to you “Rule #5 – Compliment and Give Credit to People“. It has three parts to it:

Part 1 – Everyone has different agendas

We are a tribal species by nature and we find ourselves or place ourselves in various groups and based on the goals we unconsciously or some times bluntly craft an agenda or goal that we would like to achieve. Most people are very non-opportunistic people but in the group there are some that are just out for themselves and what something or someone will give to them without regard for reciprocity. While that is the more extreme and Machiavellian, there are more subtle agendas like adding skills for a resume for the next job or participating to be a part of the accolades that could possibly come.

But in many cases and what I experienced in this project was the best agenda and the one you hope everyone has and that is to create something so great and amazing that it changes the world even in some small way. These are the people that make you get up every day and promise to work your butt off because you refuse to let them down and I am humbled to be around some of the very best of these kinds of people.

Part 2 – If people stop believing, they will stop working

In order to execute and deliver, you need people and if you take them for granted, they will be out the door never to return. Whereas for-profit companies can hire someone and pay them some sort of salary, many non-profits, including this project, relies on unpaid volunteers. These people can be the saviors of the project and be the critical support to see the project to completion.

However, if you give them pause as to your commitment and passion to the project or show them your frustration, you will lose your most truest of believers in your project or startup. Secondary lesson? Believe in them and the project and don’t show them anything different even when you are at your most anxious and worried when things could all fall apart. They most likely won’t but if you show doubt, then they will doubt and then they will leave.

Part 3- Recognition can be more powerful than any money in the world

People take pride in their work and it might be a surprise to many that a great deal of people are not motivated by money. Sure we would all love to have more money in our checking account to pay debts, give a little more to charity or increase our standard of living but it is not a top priority as much of the media might have you believe. I know many people who are paid very well do a job they don’t really like and the only time they hear from their boss is when they screwed up or how they should have done it differently with no recommendation included in the reprimand. Those very same people take tremendous pride in their volunteer work or other project where they are recognized for their contribution. This pride in their work as well as to the credit give to them by those in charge motivates them to continue working hard and see a project to completion.

So in closing, spread the accolades and praise people as much as possible because they will know they are being recognized for the hard work they put in and be your biggest evangelists for your startup/project. No amount of money could motivate that because people recognize geniune passion in someone and it is usually contagious.

Tags: Rules for Entrepreneurs
Posted in Rules for Entrepreneurs Series | Comments

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