There are brilliant people that study for years to provide brilliant advice based on solid, empirical evidence. Then, there are others that just talk well.
Financing, Outsourcing And 7 Other Tips from an Expertby Shira Levine, touts the advice of two business women, Amy Abrams, and Adelaide Lancaster who are releasing a book in September based on 100 interviews of entrepreneurs.
The article sets forth the following advice:
You’re never finished with your homework
Really ask yourself what you want out of your business
Focus on what is meaningful to you vs. what you are passionate about
Figure out your business goals
Determine what to outsource
Find access to capital
Specialization is key
Now, I have not read the book. And based on these seven points, I probably won’t buy it. The reason is because these points don’t present a case that is no more than common sense. Business people do not need motivational speakers or cheerleaders. Instead, they need experience, knowledgeable and trained people to give them real advice of what, how, and when to do things.
To prove my point, if you were to buy this book, may I suggest that you spend an extra $50 and buy the following:
Good to Great by Jim Collins
Blue Ocean Strategy by W. Chan Kim and Renee’ Maugorgne
Predictable Success by Les McKeown
If you do not have the time or budget to read those, at least buy a smaller guide, Achieving Strategic Alignment by Barry MacKechanie.
Most of these books are critically acclaimed with sound business advice based on years of research by highly educated and experienced strategists. In these books, you will find recurring themes.
Compare what they say to Abrams/Adelaide book if you choose to buy it. Small business owners cannot hire the seasoned professional, but can learn from them through their writings. Business acumen has a price, but the inability to develop it has a much bigger price.
My college-aged son played “Satin Doll” with his jazz band in a local upscale restaurant last week. I turned to my wife and told her I played that song in a big band music group back in 1969. The 1953 Duke Ellington song is still timeless. But the same old tune doesn’t work for business startups.
The Digital Music News reported that nearly $15 million dollars was thrown at music startups in July bringing the year-to-date total to $143 million, Spotfly representing almost 1/4th of the total.
So far this year, about a half a dozen startup record companies have approached me to design a strategy and business plan for their new music venture. They always have the same plan: 360 deals, sign up and write for other bands, run on a shoestring budget.
I always reply, “So, what are you going to do different than the other companies, because their business models are broken.”
I always get a blank look because they only seek to do what others have done unsuccessfully before them. This of course allows me to do my Blue Ocean Strategy speach. I also thrown in my bad strategy caution.
A large componet that I stress to startups is that you must focus on your consumer. What is the consumer asking for? What are your competators giving the consumer that they don’t want? Are you able to create a strategy where you can extracate those things the consumer is not asking for and present a product or a service to the consumer that they are not getting from your competators?
Business consultants seem to produce the same framework for startups. To think like those who have come before you will not turn your startup into a resounding success. I am not saying that you should launch a startup based on some hairbrained scheme that you have not researched. No, instead, you should make informed decisions and take calculated risks with your startup.
In addition, don’t paint only a rosy picture of your startup, but present scenarios that show breakeven, normal, and pie-in-the-sky financial projections.
Have you heard? We’re still in a major recession. Well, not according to our government.
However, according to Paul Resnikoff’s article, What is the Economy Doing to Creativity , our current economic disaster may quiet musicians because of their prolonged economic struggle.
I think Paul is on the wrong side of history. Artistic and business creators could not have a better feeding ground than our current economic condition:
Slave Music:Prior to 1865, slaves obviously were in a hopeless situation. Yet, while coping in their economic, social, and political dungeons, they created some of the timeless music. Starting with their African spirituals, they created Gospel music which is still popular 150 years later.
Jazz:Moving to the early 1900s, struggling musicians were blending art in New Orleans. Folk, blues, marching band, spiritual, and ragtime were just some of the music that fused into jazz. The micro-economic environment of jazz musicians percolated creativity from some of the most legendary composers of the last 100 years.
Rhythm and Blues: Toward the end of the Great Depression and during World War II, music creativity morphed again into R&B. Though many were just coming off of food lines and battlegrounds, creativity shined through the smoke. R& B moved into rockabilly and rock and roll.
1960-70s Counter Culture Music:This was the era where I learned to be a musician. In spite of the Cold and Vietnam wars, the musicians came out in droves spreading their music and lyrics into the halls of our government. Dylan claimed that he did not create the movement, but just reflected it.
The stars shine the brightest in the darkest part of the night. If artists were to stop creating, it would not be because of lack of finances, but because they lack the desire to create.
This can be translated into business, also. Small business owners become more creative when their backs are against the wall. They question assumptions, rehash markets, and listen more to their customers.
Today is the time to stroke your creativity. Small businesses and musicians, like never before, can reach thousands of people with little investment via the Internet. A small business that sings the same song has a much bigger chance of failure than one who creatively changes (or leads) the industry.
So, how do you it? I have written a number of articles, here, that sets out different strategies on achieving business success in this environment. But, one thing I cannot teach is creativity. That must come from your passion, or the passion of a person that you partner with.
Amazing, just amazing. No more than amazing, it was magic. That was my first reaction to the 80/20 rule when I reached into my pocket and saw that 20 % of the coins equaled 80% or more of the value. So, I read the book The 80/20 Principle, The Secret to Success by Achieving More with Less by Richard Koch.
That was a few years ago. Since then I have applied the concept of the book (and the 1906 Italian economist Vilfredo Pareto who created the principle) in many business situations. Here’s a few conclusions:
80% of your income is earned from 20% of your customers: This is a danger signal to businesses. If your income is lopsided like this, you must change the way you are marketing. For example: If you are a brick and mortaur business, you may want to hire an SEO/social networking consultant to broaden your reach on the Internet. Conversely, if you are a local business with a lot of internet, non-recurring customers, you may want to canvas the local neighborhoods. Look at your marketing plan using the 80/20 Principle.
20% of your Products bring in 80% of your Income: So, why keep the other 80% of your products if they don’t sell? This is why cost accounting is so important. You must know what your gross profit margins are per product and why they are that way. Oh, sure, you may have a 75% gross profit margin on Product A, but if you only sell 3 a month, you have to ask about the effort it takes to market it. Cut the stale products using the 80/20 principle.
20% of your Employees are Producing 80% of your Company Value: Now, before you start handing out pink slips, look at your employees with multiple dimensions. Are they underperforming because they are lazy? Unmotivated? Poorly trained? Or, maybe they have a specialty that you have not looked at which could set them apart. People are not simple and must be observed from multiple points of veiws. Test these views and make adjustments using the 80/20 prinicple.
As an owner or C-level management, are you spending 80% of your time performing tasks that others can peform, and 20% of your time bring in business? Delegate to someone’s highest level of competance. Don’t try to be a one person shop but build a company network of talented individuals that interact for a common, and ultimately great goal. Manage your time using the 80/20 Principle.
The secret to analyzing hidden business pitfalls is to not be bogged down in the minutia. As a business owner, you should manage your business and depend on others to build the wealth through their labor.Use the 80/20 Principle as a looking glass to focus on the right things in your business.
My grandfather left quite a legacy. He came from Italy as a boy to start a new life. He acted in and scripted silent movies, fought in WWI, tightrope walked between two eight story buildings (without a net) over a busy Chicago street, helped build navy ships as an electrician during WWII, and founded a successful restaurant with his wife and nine kids.
His success in the variety of endevours is grounded in one quality: creativity. Creativity is a right-brain function, natural to some and alien to others. Should all brain-storming teams have a business strategist who has this trait?
Coyne and Coyne’s article, Seven Steps to Better Brainstorming, tries to quantify this concept with a set of rules that can build business strategists within a group. Their article states that brain-storming sessions should proceed in seven steps:
Know your organization’s decision-making criteria
Ask the right questions
Choose the right people
Divide and conquer
On your mark, get set, and go!
Wrap it up
Follow up quickly
At first, I thought that maybe step 3 would meet the need for a creative strategist. But, to my disappointment, they only categorized the “right” person as one who knows answers to questions that are asked about the operations.
Still, any strategy that quantifies brainstorming raises an eyebrow. You cannot quantify creativity, and thus create a business strategist. However, the article intriged me because it referred to another article, Sparking creativity in teams: An executive guide. Ahh, I said, here is a place where the authors are referencing the important creative person, maybe thebusiness strategist. Then I read the first sentence:
“Although creativity is often considered a trait of the privileged few, any individual or team can become more creative—better able to generate the breakthroughs that stimulate growth and performance.”
This opening sentence conjured up a new term in my head, Debabbitting. Debabbitting is any company process that aims to enhance creativity by forcing people into uncomfortable situations. But, in a business strategy session, people are most comfortable with what they know, and their usual approach to problems. In the classic Sinclair Lewis’s book Babbitt, George F. Babbitt, a mid-level company man, grew very uncomfortable when he tried to change his mundane outlook and style of life.
Now, don’t get me wrong, everyone has their special gifts. Most people are creative in certain circumstances. But, not anyone is creative in all circumstances. Take for example, a friend of mine who is a mechanical engineer. His forte is finding solutions to problems. He regularly uses creativity to find solutions to fix the problems. Yet, if you were to ask him to brainstorm outside of his element, he would struggle.
Les McKeown, author of Predictable Success, hit this point in his presentation at an Association for Strategic Planning–Los Angeles event. He spoke of his forth coming book, The Strategist–Leading Your Team to Predictable Success. At the meeting, Les described the different personalities in a business: The Operationalist (“O”), The Visionary (“V”), and the Processor (“P”). “O” is the person who solves problems, “P” does not solve problems, but will write a manual about it, and “V” is our creative person who doesn’t solve problems, and many times creates them. Though all of these roles are necessary, they conflict with each other. Therefore, Les introduced the “S”, the Synergist. The Synergist is the glue that brings all of the others together to arrive at solutions. I have find Les’s book more plausible then trying to conjeur people’s creativity. In fact, I would venture to rename the “S” as the Strategist, (the Business Strategist) because that person must strategize on how to bring all of the players together.
At first glance, you may argue that the business strategist is Les’s “visionary.” However, when you work in complimenting (and conflicting teams), you are creating a business strategist’s network, not individual. I believe Les said the roles are not cut and dry, but it seems to me that once you identify the gifts and each person’s own brand of creativity, the brainstorming session can evolve naturally.
So, how do you resist the temptation to Debabbit? First of all, you have to know your players, and their abilities. And second, you must use each person in such a way in which the process maximizes each person’s strengths. And finally, you must lead from the front by example to show the team how it can (and will) work towards a common goal.
When I was five years old my cousin Bill and I created a strategic plan to build a flying carpet. We wanted something that hovered over the ground about three feet (so not to be too dangerous). We also needed a steering wheel and a motor.
We had our passionate vision (I still get goosebumps), and all we needed were the materials to build it. Bill’s father was a carpenter and worked on cars. He had a garage full of parts that we chose from. So, we set out to collect the parts, or the tactics of our overall “strategy.”
We started with a piece of plywood. That was our “carpet.” Using manual saws, we cut a square out of another piece of plywood and mounted it on the larger piece with a 2×4. That was our steering wheel. Lastly, the motor. My cousin found a used automobile oil pump, it looked like a motor. We strapped it on.
We were finished and sat on it waiting for it to lift off the ground powered only by our imagination.
Richard Rumelt’s article, The Perils of Bad Strategy reminded me of that experience, and also so many prospects who call me to prepare a business or strategic plan.
Before, you consider a business plan, or a strategic plan, let’s look at some his points that are common to bad strategic plans.
Failure to face the problem: “A strategy is a way through a difficulty, an approach to overcoming an obstacle, a response to a challenge. If the challenge is not defined, it is difficult or impossible to assess the quality of the strategy. And, if you cannot assess that, you cannot reject a bad strategy or improve a good one.”
A common idea for a potential business plan which comes across my door, is the creation of a record company by some musician that wants to publish, record, and write for other bands, or artists. The problem that they never address is that the current record company business model is broken. So I ask them what are they planning to do that is different? They usually don’t hire me when I ask that question, and I never hear of them again.
Mistaking goals for strategy: “A leader may justly ask for ‘one last push,’ but the leader’s job is more than that. The job of the leader—the strategist—is also to create the conditions that will make the push effective, to have a strategy worthy of the effort called upon.”
This is why motivational speakers (or life coaches) are not strategists. They work up passions to get people to give it that one last push, but don’t have the business skills to set the condition, or roadmap for them to do so. What good would it have been if my cousin pushed me down a sand dune on the wooden carpet if he did not lay out the strategic plan of how he was going to get it to fly?
Bad strategic objectives: “Another sign of bad strategy is fuzzy strategic objectives. One form this problem can take is a scrambled mess of things to accomplish—a dog’s dinner of goals. A long list of things to do, often mislabeled as strategies or objectives, is not a strategy. It is just a list of things to do.”
When you are driving cross country, the mileage markers (Los Angeles 200 miles) are metrics that measure how far you have gone, and how far you have to go to reach your destination. A list of business metrics for the sake of metrics will not help you if they are not in line with your strategic plan.
Fluff: “A final hallmark of mediocrity and bad strategy is superficial abstraction—a flurry of fluff—designed to mask the absence of thought. Fluff is a restatement of the obvious, combined with a generous sprinkling of buzzwords that masquerade as expertise.”
If you don’t understand this, try moving to Los Angeles and prepare a business plan/strategic plan for an entertaiment company. This city if full of this vibe. I see part of my job is to cut into this and get to the core issues of the business. I have to ask the hard questions and ground whatever assumptions the client is making.
The most important ingredient in a strategic plan is honesty. Entrepeneurs have to be honest with themselves and their potential investors. If they are not, the carpet won’t fly.
There is a fine line between guts and stupidity. Stupidity is much more entertaining.
Thanh Viet Jeremy Cao of Rancho Santa Margarita, Calif. pleaded guilty of filing 22 false claims against a number of harmless people. Among these harmless victims were: SEC attorneys, U.S. District Court Judges, U.S. District Court Magistrate Judges, the U.S. Attorney for the Southern District of California, Assistant U.S. Attorneys, U.S. Secret Service special agents and special agents of the IRS. Each lien alleged that the lien victims were “debtors” of Cao for hundreds of millions of dollars.
Why didn’t he just file some against professional assassins? He would have gotten more attention.
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It started with Chumlee. I walked through the living room to my computer and stopped to watch Rick and Chumlee on Pawn Stars discuss the historical significance of something like a musket rifle. This intrigued me, but what really got me interested in their antiques was “value.” No, I don’t mean some 1920 decorative egg, I mean something that won’t break down within two years like my microwave.
Eight years ago, we purchased moderately expensive sconces. We didn’t realized that they would only last about five years. They developed an electrical short, and succumbed to the outside elements.
Inspired by the Pawn Star’s antiques, I bought four 1929 sconces at an estate sale that I will recondition. I believe these will be a better value than going to a lamp store to pay $200 per sconce. These antiques have lasted over 80 years, and are pretty cool to look at. I believe they will be a good value.
Then I came across a Strategy+Business Magazine article, Power of the Post-Recession Consumer by Gerzema and D’ Antonio. The article stated that we are part of a post recession trend of people looking for more than purchases that show status. [People are into]” a lifestyle more focused on community, connection, quality, and creativity.” In other words, when a consumer is deciding what to purchase, that consumer is considering which vendor using these four pillars. These exact points have been the foundation for some of my prior postings:
Of course, if this is the current reality, what are you the business owner, doing to capitalize on the trend? Are you changing your strategy to meet the consumer movement, or are you just doing business as usual? Businesses, small, medium, and large are moving at “warp speed.”
Our kids hate us…when we don’t give them money. Oh sure, we pay of their schooling, sports, and other school-related activities, but we are determined to require them to work for their recreation money. All three of my boys have worked for me from time to time.
So, when I came across Barbara Haislip’s article, How to Raise en Entrepreneur, it rang true with lessons with business strategy and tactics:
Encourage your kid to start a home spun business: For those of us that are fed up working for some else, why not think about starting a new business? Go through the steps and take a calculated risk. You may never be happy if you don’t try. Develop your business strategy, and then the tactics that you will need to achieve your goals. See https://www.ricknorriscpa.com/blog/business-finances/buiness-plans-and-strategy-living-on-a-hope-and-a-dream/
Don’t let kids get too comfortable: As a business person, if you are not growing, you are dying. Without a business strategy, you are going nowhere real fast. Likewise, without business tactics, you may know where you want to go, but may be “doing donuts” instead of getting there.
Help kid’s recognize the world is full of buisness opportunities: In your business, think creatively about your industry. Opportunities show themselves at some of the mots unusual places. The most basic business strategy has a SWOT analysis. Opportunities is the “O.”
Teach your kids in their sports to be a leader and team player: As an business leader, you must learn how to lead and encourage without intimidation. Good to Great by Jim Collins shows us that a screaming ego maniac CEO may create a successful company, but it does not usually survives the CEO’s departure because underlings are abused into acting. In your business strategy, you must share the vision. In your business tactics, you must adjust your course and measure your success in acheiving you objectives.
My message is obvious, your business strategy and tactics tools are things you may have learned since you were a kid. Tap into them and allow your creativity to
At the time you are reading this article, the IRS is still shaking the kitty litter from their feet. Earlier this month, Jan Van Dusen made them cough up a fur ball. The IRS painted her as a wacky cat lady trying to cheat the government out of its hard-earned taxes. As a Fix Our Feral’s volunteer, whose mission was to trap stray cats, Ms. Van Dusen would trap feral cats, neuter them, and care for them until they can be adopted by owners or released…70 cats to be exact. Ms. Dusen then deducted all expenses relating to the cats as a charitable tax deduction under section 170.
A few months ago, I wrote about this type of charitable tax deduction in Serving as a Vounteer? You Don’t Have To Wait for Heaven to Collect Your Reward. In order to take the deduction, you must have support for some unreimbured expense that you used to support a charitable organization. In addition, you need a letter from the organization acknowledging your expenditure as a gift.
This doesn’t mean that you can go out and plant 200 trees and get a charitable tax deduction unless some organization acknowledges that this is a gift to the organization and in furtherance of their charitable purpose.
In the previous article, I spoke of how my wife and me use our horses for such a purpose. We use them over 90% of the time to patrol for the National and State Park Services. Not only do the Services provide a letter to us, but they train us in CPR, first aid, and we log in with a radio when we patrol. We are in effect, the eyes and ears of the rangers. The program is very precise and requires 12 hours of horse training per year. We deduct 90% of our horse expenses as a charitable tax deduction because we use our horses almost exclusively as the mounted volunteer patrol.
The time to think about your charitable tax deduction is today. Don’t wait until April 14th. If you volunteer for an organization, determine what they need to further their charitable purpose and deduct whatever expenses you require to further it. Your burden is to substantiate it with receipts and a letter acknowledging it as a gift. Alway use a tax professional when making these kinds of decisions.
IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the U.S. Department of the Treasury and Internal Revenue Service, we inform you that any tax advice contained in this e-mail (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (a) avoiding penalties under the Internal Revenue Code or state tax authority, or (b) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
When I was five years old my cousin Bill and I created a strategic plan to build a flying carpet. We wanted something that hovered over the ground about three feet (so not to be too dangerous). We also needed a steering wheel and a motor.
There is a fine line between guts and stupidity. Stupidity is much more entertaining.
