One of the best and most cost effective resources for small business owners is the Small Business Development Center Network. I was introduced to the SBDC by clients who had worked with SBDC staff to craft their first strategic plan. The clients invited me to a follow up session they were having with their SBDC consultants to review how their actual progress over the past year compared to their original plan, and to make revisions for the future accordingly.
As a result of this experience I felt it was important to include the SBDC as a resource in The Complete Idiot’s Guide to Low-Cost Startups. In order to provide a more in-depth look at this organization, I recently interviewed Sharon Macaluso, the Area Director for the Dekalb County SBDC in Georgia.
GMR: I understand that the SBDC is a “joint program” of SBA and the State University Systems of individual states across the country. Your website uses the term Network in its description of the Georgia SBDC. How do you explain exactly what the SBDC is?
SM: The Small Business Development Center Network is a nationwide program. One-third of the funding comes from the SBA (US Small Business Administration) with the remaining two-thirds provided by State Universities on a state by state basis. There are centers in all 50 states. Each state creates a separate structure with its own mission and goals.
In the early days (the 1990s) SBDC consultants would meet with anyone who had an idea for a startup. Today the Georgia SBDC network has developed a protocol that focuses its one-on-one activities with existing small businesses throughout the state. We also put a great deal of effort into a wide range of classes that are open to anyone who wants to participate. This is reflected in the Georgia network’s mission statement….
“To enhance the economic well-being of Georgians by providing a wide range of educational services for small business owners and aspiring entrepreneurs.”
GMR: What can a prospective client expect from a relationship with the SBDC?
SM: We provide hopeful entrepreneurs, solo-preneurs and micro businesses with a series of seminars that we hold at our offices throughout the year. Anyone can attend these professionally taught seminars. We charge a low fee (typically in the $59 range) to cover our costs.
The efforts of our consultants are focused on emerging and existing companies with revenues in the $500,000 to $15,000,000 range. We work with the owners to develop a solid business plan as a first step. But with our goal of “increasing Georgia commerce and creating jobs” we realized that we had to go beyond the planning stage to actual hands on assistance with implementation of the business plan strategies.
Too many companies will invest sizeable sums in hiring outside consultants to help them write a plan. Then the consultant moves on to his or her next client, leaving the owners on their own to implement the plan. Often strategic planning remains just a vision that no one makes the time to execute. This is where the SBDC has really invested our energies over the last 5 years. We go back to the company two weeks after the planning session and see what they have managed to implement on their own. Then we stay the course with them to make sure they turn the plan ideas into real tactics that get the company to the next level.
GMR: The SBDC’s January 2010 Newsletter states that SBDC clients actually experienced 15% sales growth in 2009 when other Georgia businesses (and those across the country) saw revenue declines. To what do you attribute this remarkable success?
SM: Each of the consultants in Georgia has a specialty area that we are required to maintain and for which we are continually expanding our skill set. For example, my area of expertise is in Marketing, which complements my graduate studies (Sharon received a Masters in Marketing from Kennesaw State University). Although we work for a specific office within a certain region of the state, our consultants call upon each other as a resource to come in and work with a client in certain strategic area if they feel our expertise can help them achieve specific goals in the business plan.
GMR: How do you publicize the SBDC?
SM: About 80% of our one-on-one consulting clients come to us through referral sources. These include referrals from other clients, local Business Associations, Chambers of Commerce around the state, Congressional offices and of course through our Website.
GMR: What criteria do you use to determine if a prospective business is eligible for your services?
SM: In order to qualify for one-on-one consulting, prospects must have a well established company with 15-20 employees. This typically translates into $3,000,000 in gross revenue each year. If the business meets these criteria we may suggest that they attend our Entrepreneur Success Series (ESS). This program uses the Fast Trac Program created by the Marion Kauffman Foundation. It was created for companies that have $200,000 to $14,000,000 in revenue. The participants must have employees and complete an application to be accepted into this program. The Georgia SBDC has the exclusive rights to present this program in our state. This program, underwritten by Georgia Power, helps owners to work “On” not “In” their business. Once a participant completes this series we decide if they have the commitment required to benefit from one-on-one coaching.
GMR: Do you only serve people in your geographic area? Do you cross refer to other SBDC locations depending on the prospects location?
SM: A prospect may choose which location in the Georgia network of SBDCs they would like to work with. Sometimes the choice is made purely on a geographical convenience basis. Other times the prospect may have a particular area they might want to focus on. For example, I have clients outside my Dekalb County area that choose to work with me because they need to focus on their marketing strategy.
GMR: Is the Dekalb office (and each SBDC site) specifically affiliated with one or more GA universities?
SM: Yes. For example, our Dekalb office is directly aligned with the University of Georgia in Athens, GA while Kennesaw State University has an SBDC office to which it dedicates its resources.
GMR: The SBDC website has a specific area dedicated to Commercialization. Is this an academic term for what laypeople would call –business consulting services? I see that in encompasses business plans, marketing, and capitalization – can you break this down for me in simple terms?
SM: This is a new focus for the Georgia SBDC – the emphasis here is on business expansion. The goal is to help existing businesses get their new ideas and products to market. One way we help these clients is by facilitating equity forums (think a kinder, gentler “Shark Tank”) where they have the opportunity to seek prospective capital sources.
Another example would be helping a company that is on the verge of expanding its customer base to larger players in their market. An example would be a newly patented product company experiencing rapid growth might be a target client for our new Commercialization division.
GMR: You’ve been with the SBDC since 1994. What is it about your work that has held your interest all these years?
SM: My motivation comes from the fact that I am constantly learning new concepts and tools for helping clients. My work is varied, full of experiences with many different kinds of businesses. It is never boring.
GMR: Is there anything else you would like to add?
SM: The Dekalb SBDC is the organizer of an Annual Professional Women’s Luncheon and Trade show which is being held at Villa Christina in Atlanta on June 4th 2010. This event is designed to give women entrepreneurs an opportunity to showcase and sell their products and services, network, and learn from experts on topics of interest to today’s professional woman.
Do you have an experience with an SBDC in your area? I welcome comments and stories from those small business owners who have.
It Takes a Village to Launch a Writer
For me, writing is a new business venture. Everything I’ve read about being a successful author today stresses the fact that your real work begins when you finish writing your book. This is counterintuitive to the age old image of writers as quiet, thoughtful, introverted people whose gifts are confined to expressing their ideas in the written word. Today’s successful writers have to be so much more; having a talent for writing is just one of many qualities necessary to sell books and ideas in 21st century.
In order to truly do justice to this wonderful opportunity I’ve had to write The Complete Idiot’s Guide to Low-Cost Startups, ![clip_image001[4]](http://lowcoststartups.files.wordpress.com/2010/05/clip_image0014.jpg "clip_image001[4]")
I had to admit to myself that I cannot do it alone. Last month, I proved to myself how important it is to get out of one’s cozy self-made cocoon in order to make things happen in your business. I decided to attend a meeting of the Atlanta Bloggers Group when I read that the group’s organizer, Chad Rothschild, had put together a terrific program that included skyping in Seth Godin, prolific author and one of today’s Internet gurus.
‘Working’ a room full of strangers can be awfully intimidating. I looked around and saw two women sitting at a table who were sipping cocktails and ordering food (something about people who know how to enjoy themselves was very appealing) so I invited myself to join them. That was how I met Nan Ross, graphic designer by day, Social Media Consultant the rest of the time. Looking back, this totally random meeting seems to have been the catalyst I needed to spring into action. Instead of talking about promoting my book, I began to do the things I’d been talking about. I followed up with Nan who has since become my Social Media Strategist. My daughter, Mlle. Butterfly has agreed to work as my virtual assistant. This week marked two momentous occasions. First, I met and engaged a publicist, Mimi Schroeder of Max Communications. Secondly, I had my radio debut on The Nan Ross Show last night. It’s been quite an exciting time.
Quote for Today
“The…man took millions of dollars in ore from the mine, because he knew enough to seek expert counsel before giving up”.
~ Napoleon Hill, Think and Grow Rich
I share all this because it proves one of my essential tenets about achieving success as an entrepreneur, whether you are selling services or products. One of THE most important aspects of building a viable business is knowing when to call in the experts. Now I know I will reach more people and make a bigger difference to others’ successes. There is still so much to do, but it all seems so much more in reach than it did a few weeks ago when, as the typical small business owner, I was trying to do everything myself. And like Velma in the video below, I have learned that I simply cannot do it alone.
Have a great weekend everyone.
Where Have All the Heroes Gone?
Today’s post is Part 2 and the conclusion of a previous article published on March 22nd.
Last month, as we were driving from Los Angeles to New Orleans, my daughter (Mlle. Butterfly) and I were in a 1989 Toyota Celica. We had done all the right preparatory measures before starting a long road trip in an old car – oil change, new tires, fluid checks, etc. But the potential for car trouble is ever present in a car this old, and by the end of our second 500 mile day, we saw two warning symbols light up as we pulled into our hotel in Van Horn, Texas at 9:30pm.
We called my daughter’s mechanic in LA in the morning since the lights were back on the dash; he thought we might have an alternator problem. But the car started so we headed for Austin. Two hours into our drive the radio stopped working and the car started to decelerate even though Mlle. Butterfly’s foot was on the gas pedal. Looking to the right and the left of the Interstate, there was nothing in view for miles (which you can clearly see in this desert-like part of the country).
One of the best ideas I had before leaving home turned out to be grabbing my GPS to bring on the trip; it located all auto shops on demand, with a special icon just for Auto Services. After a few seconds of searching I see we have hit the jackpot – a few miles away in Johnson City, Texas is the Commercial Alternator and Starters Company. We manage to make our way to the shop.
Upon arrival we are looking at a garage that is piled high with alternators. There are alternators in the storage area, piled outside the building and all over the floor and work benches in the work area. We realize that we are not in an auto repair place – this company refurbishes car and equipment alternators and starters for commercial customers. There are no other cars on in the driveway, no parking lot full of cars awaiting repair.
We are in the birthplace of Lyndon Baines Johnson, the 39th President of the United States. I poke my head into the dark inner sanctum of the workroom and say ‘hello’ several times in a loud voice. Finally a man emerges and I explain our predicament. He is visibly agitated – he’s already had a long day. He tells us he has no help, he is working alone today. “Can’t get good help”, he explains. Moreover, he already has 70 orders that he needs to research parts for. But he comes over to our car and I ask him just to take to see if he thinks we can make it to Austin which is another 50 miles from here. Ever so begrudgingly, he opens the hood.
We learn that our mechanic’s name is Kenneth, and that he was born and raised Johnson City. He quickly confirms that our problem lies inside our alternator. He shows Mlle. Butterfly the label indicating that her alternator is the original from the Toyota factory, and predicts he will find worn out alternator brushes at the root of our engine trouble. Within minutes he has taken the alternator apart and is showing us the difference between the worn down “brushes” and those of the new part he has pulled from his extensive inventory. He takes Mlle. over to the work area and lets her watch him rebuild the alternator, test it for power generating ability on his specialized equipment and place it back in the engine.
How lucky were we to find one 
of the remaining alternator rebuilders in the country, easily the most knowledgeable in Texas if not the Southwest, who not only knew how to repair our car, was willing to do the hard work to get it done in an hour? And one who had the part we needed on hand for a 20 year old car?
What has become of these unsung heroes who were once the bedrock of our economy? Why are there fewer people with auto repair skills when this is still a viable way to make a living?
According to an article summarizing the 2009 ‘How’s your Business?’ Survey Results, (an annual survey compiled by the Auto Service Association):
“…(with) an aging workforce that is either retiring or nearing retirement, there are more efforts to attract and retain technicians in this industry.” ~Robbie Addision, AutoInc. online edition
Manual labor may be passé in the eyes of younger generations, but automobile travel is far from an outdated concept. Addison goes on to state that “Customers are pushing businesses to delve further into the new dimension of electronic communication. Today’s customers want to communicate with speed, simplicity and (most of all) convenience.” We can read between the lines and see what a terrific opportunity there is for Generation Y to partner with Baby Boomer repair shop owners to create a true win/win – the elders would exchange hands-on technical knowledge about their craft with a younger apprentices who grew up in the electronic age and bring an intuitive understanding of all 21st century media.
There is further proof of strong business potential in these numbers – It is estimated that 70 percent (176 million) of out-of-warranty vehicles are repaired at independent shops. This is a good customer base for a small business.
Quote for today:
“A journey is best measured in friends, rather than miles.”
~ Tim Cahill
Within an hour of stopping in on Kenneth, we were back on the road and headed to Austin, driving past dozens of family owned ranches like the one in Kenneth’s family. He works on the ranch on the weekends and helps take care of his elderly parents. He’s been keeping this schedule for the last eight years, since his father had a stroke and was no longer able to keep up the ranch himself. Kenneth told us that hard work was the story of his whole life. Which is not entirely true – his “whole” life includes being an expert at his trade, owning and operating a successful small business, and daily acts of kindness to friends and strangers alike. And for me and Mlle. Butterfly, Kenneth will always be the hero in the story of our 2010 road trip across Texas.
It is a well known truth that Manufacturing has become the dinosaur industry of our land. Men like my husband, a Mechanical Engineer who loves to work with his hands and can spend hours on end fixing things around the house, have a tremendous sense of the decline of U.S. manufacturing. He told me this Decline is a frequent topic of conversation among his colleagues. They lament that America is no longer a country that makes things.
These sentiments are not restricted to the engineering world. They show up in Pop Culture as well. Last Thursday’s episode of 30 Rock, (the Tina Fey send up of her experiences as a head writer for a live television comedy show) includes a great example.
Alec Baldwin’s character, Jack Donaghy is an executive of GE whose biggest claim to fame (he claims) is thinking up the rotating platform of the microwave oven. In last week’s show, Jack learns that GE has been purchased by a cable television conglomerate. His first reaction to the news is that his career is over; he will no longer have the potential to ‘make things’. He says “Kabletown doesn’t make anything. ….
Today’s Quote:
American businessmen were born to make things.”
Jack Donaghy, TV Executive of NBC’s 30 Rock
But what about the art/skill/talent for repairing “things” – keeping them going, or as we like to say in CPA world “extending the useful life”. Is this not a corollary to the Decline of American Manufacturing – that the potential for a respectable livelihood earned with highly skilled labor is rapidly fading. Is it now true that using skilled labor as a basis for a low-cost small business startup is no longer a viable business concept?
Planned obsolescence is one of the few concepts I remember (and actually understood) from the Intro to Economics I took at college. As America became a nation of insatiable consumers, it became acceptable to manufacture goods that simply wouldn’t last very long –reliability became less important than cheaper prices. This was especially true for what was the Number One iconic industry in the U.S. – the manufacture of automobiles. Over time we began to take it for granted that a car was meant to last only as long as it “looked good”, or was “in style”. Locally owned auto repair shops, with talented mechanics who kept our cars running for ten years or more slowly gave way to Convenience Stores.
Younger generations may not realize this but those of us who have been driving for 20 years or more appreciate the fact that we deal with much less car trouble than we did with our first cars, primarily because cars have become more disposable than they once were. Our passion for consumerism has prompted Americans to buy cars more frequently. It’s not uncommon to hear someone in the market for a new car explain that “they prefer to drive a car that is still under warranty”.
So the decline of manufacturing has been accompanied by the decline of skilled repairmen. Which made what happened on Day 3 of my recent road trip from LA to New Orleans the minor miracle of a lifetime. And it includes answers, both pro and con, to the questions raised above - How are opportunities for low-cost startups affected by this trend? My road trip story, which continues here later this week, will provide some good discussion points for this question.
I am so pleased to announce that The Complete Idiot’s Guide to Low-Cost Startups is now on sale at major book sellers across the country. You can order it from Amazon.com by clicking on the icon to the right. Or if you are someone who still prefers the “touch and buy” experience of the pre-Amazon.com days, you can venture to any major bookstore and pick up a copy today.
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It was an incredible experience for me to walk into a Borders Bookstore last Friday, go to the Business Section and see my very own book on the shelf.
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It’s been a long time since I was in a situation that gave me butterflies, but that is exactly what I was feeling as I walked through the doors of Borders in search of my book. It was just one more reminder that Intention is the first step to making your dream your reality. There were many more steps along the way (and a great deal of writing and editing) but the idea and commitment to make something happen are the keys to unlocking the doors of new possibilities, just like launching a low-cost startup. Here you can see me with my dream come true in my very own hands.
I know it has been a while since I posted to this blog, and so much has happened in the past two weeks. It’s hard to believe that there were more important things going on for me than the release of my first book, but that is the long and the short of it.
Last week I was literally on the road, making a road trip from Los Angeles to New Orleans. No, I was not on a book signing tour (although I am working on my book marketing strategy), but traveling in my capacity as a Mother – I accompanied my older daughter as she moved across the country. Driving through the Southwest on Interstate 10, we saw the vast and open terrain of Southern California, New Mexico, Arizona and West Texas. I had never been in this part of the country before, and I found the views from the car fascinating. It was a lesson in geography, economics and sociology all rolled into a four day road trip. There is so much open land in this section of the country, so much possibility.
As we were leaving California and crossing into Arizona, we saw some large windmill fields, a sign of burgeoning new technology and the hope of green energy for the future.
This sight and the suburban sprawl and city centers of El Paso and Houston were the trip’s exceptional symbols of the 21st century “new economy”. For the most part these particular highway scenes looked very much the same as they might have 50 years ago. Small towns dominated the landscape; large big box stores like Wal-Mart and Home Depot were few and far between. Mostly we drove through rural areas with their own home-grown businesses – local restaurants, discount stores, and, especially in Texas, lots of ranches and farms. It was a reminder to me that the concept of making a living as an entrepreneur is not limited to large metropolitan areas. It is an opportunity open to everyone, anywhere. In fact, this is even truer in the vast rural sections of the country, where there are no major employers for hundreds of miles.
Today’s Quote:
When you’re traveling, you are what you are right there and then. People don’t have your past to hold against you. No yesterdays on the road. ~William Least Heat Moon, Blue Highways
We had the chance to chat with a couple of small business owners during our four days on the road. Most of the people we met had been born and raised in the small towns we stopped in. These encounters made a huge impact on me and my daughter, and have given me a lot to think about, not only in relationship to starting a business but in the context of human connection in general.
Next week I will share some personal stories about the business people we met on our journey across the Southwest.
For many, many years hopeful but nervous entrepreneurs perceived excessive working hours as one major downside of running their own business – the long hours it takes to get a business up and running. This perception goes hand and hand with beliefs that
· The boss never really gets to go on vacation
· The boss takes his/her work everywhere
· The boss has to be thinking about his business 24/7
· The boss is the one person who can’t call in sick, take a snow day, or go home early.
For all generations before this decade, the upside of having to report to a manager and be told what to do and when to do it was being able to leave work at the end of the day, confident that you had earned your pay for hours worked. Most employees were not required to worry about their jobs once they left for home.
In the new age of constant connectivity this is no longer a truism. In fact, it has become much harder for many employees to disconnect from work during off hours. This is primarily due to two critical drivers in today’s economy:
1) High unemployment and the corresponding lack of jobs make everyone skittish about holding onto the jobs they have. There are at least six people looking for work for every available job opening today (US Bureau of Labor Statistics). Employees in periods of high unemployment are extremely vulnerable. Many of those who are still gainfully employed are threatened with possible layoffs in the near future. Even government employees, who used to be able to bank on virtually ‘lifetime’ employment, are at high risk from the impact on government budgets by the revenue declines of the Great Recession.
2) In today’s world of digital connectivity, we are all expected to be plugged in, if not every minute of every day, at least once a day to answer emails, reply to blog comments for those of us writing online, check voice mail, text messages, our Facebook wall, LinkedIn updates, etc. You get the picture.
These two facts have made it more demanding to be an employee than to be your own boss, a situation true today that was never before the case, except for extremely highly placed executives. In his recent Generation B column (New York Times Sunday Styles Section, January 14, 2010) Michael Winerip wrote a telling article about the changes he and his adult family members have made in their annual family vacation habits. His piece articulates the crux of this situation extremely well so I will not try to paraphrase his article but encourage you to take a few minutes to read it.
But I will use this excerpt from Winerip’s article as Today’s Quote:
“As we talked, it was clear that while we all felt lucky to still have jobs, there wasn’t one of us whose business hadn’t been seriously wounded by this not-so Great Recession.
And yet, even as business has slowed, we have been speeded up…” ~ Michael Winerip, Generation B
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In essence, here is the new formula for work in America:
Great Recession = Layoffs
Layoffs = Increase demand for Productivity from Remaining Employees =
More time spent working and less time off for the same or less salary
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Which brings us back to the initial point of this post. The path to entrepreneurship has equalized by the increasing hurdles to life as a salaries employee. Once upon a time the additional working hours to build your own company was a significant change in lifestyle from remaining under the protective wing of corporate America. This is no longer the case – in fact you could argue that as an independent business person, you have more control over your time than a corporate employee, who no longer has the luxury of working a 9-5 job or a 40 hour work week.
How would you describe the changes in your own working life since the beginning of the 21st century?
Bringing Your ‘A-Game’ to Your Startup Launch
I have spent the last several days on vacation in south Florida, visiting my folks on the occasion of my father’s 83rd birthday. I brought my laptop, which I rarely travel with, because I was sure I would find the time to write a daily post for my Low Cost Startups blog. Now sitting in the West Palm Beach airport, way early for my flight (we were sure the airport would be mobbed with people returning North after President’s week) I have the first opportunity to actually turn my thoughts to business and the task of creating something cohesive and interesting to share with readers.
I realized upon arrival in sunny Delray Beach (yes the sun came out and gave us the mild, breezy, temperate weather that people flock here for) that the best gift I could give my Dad for his birthday was to focus on the primary reason for my trip, spending time with my parents, rather than my usual habit of squeezing in “productive” work hours. As a result I stayed relaxed and made my focus having a great weekend celebrating my Dad’s birthday. I am happy to report that a good time was had by all.
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I couldn’t help noticing how many parallels I could draw between being an Olympic champion and launching a successful startup.
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We spent some evenings watching the Winter Olympic events. Even though I was taking a break from writing blog posts, I couldn’t help noticing how many parallels I could draw between being an Olympic champion and launching a successful startup. Like most non-Olympians, I have always been fascinated by the amazing dedication that Olympic athletes exhibit at the games. They are so serious about everything, their complete confidence in their ability to win the gold, their mental preparation, their incredible levels of physical fitness. We watch them in awe, admiring their determination, discipline, just about everything about them. We get glimpses of a competitor as he waits for his turn, eyes closed and ignoring the cameras fixed on his every move, as he is obviously going through a visualization exercise, imagining the slope, the ice rink or the bobsled course, seeing himself going through each move perfectly until he crosses the finish line to win the gold medal.
We see these champions at their very best, and expect nothing less than a tremendous performance. This is why we tune in to the Olympics, to share these ‘mountain top’ moments in the athletes’ careers. Whether they go home with a medal, or crash and burn before they reach the finish line, we witness these individuals giving their all to achieve their goal.
Win or lose, their intention is to bring on their ‘A-Game’ every time they compete. In order to have the chance to show their ‘A-Game’, they work day in and day out, for countless hours, doing everything they can to prepare them for the big moment. And we expect nothing less of them. As I watched some of the video clips of athletes preparing for the Games back home, I was struck with the obvious – just how much hard work and perseverance it takes to get to the Olympics. And it’s not just a few months of training anymore. In order to be competitive today an athlete must dedicate most of his or her years leading up to the Olympics doing everything possible to prepare to win.
Quote for Today:
You have to learn the rules of the game. And then you have to play better than anyone else.
Albert Einstein
Applying this analogy to a small business startup is very empowering. It becomes clear that planning and preparation are THE critical factors. None of these big wins happen overnight. And several of the winning athletes we’ve seen in the last 10 days had near catastrophic setbacks along their road to Winter Olympics XXI. Yet they still were driven to be the best in their sport, and go back to develop their ‘A- Game’ all over again.
The takeaway here is that just like an Olympian going after the gold medal, a hopeful entrepreneur must be willing to put in the time and effort to prepare for launching a new startup. You can’t expect to bring your ‘A- Game’ to the business world without the same planning, hard work and conditioning we have been witnessing in the Vancouver Games this last week.
Do You Have What it Takes to Launch a Startup?
My good friend and social media guru, Mr. Midas, has been helping me with the technical aspects of my blog. Last week he insisted that I open a Twitter account. As one who is still coming to terms with the various components of Facebook and WordPress, I protested that I wasn’t ready for Twitter yet. Mr. Midas insisted. In fact he literally opened a Twitter account for me at our very next social media ‘counseling’ session.
Now, needless to say, in addition to coming to grips with posting to my own blog and on my Facebook page, I am struggling with Twitter. But this morning something happened that forces me to admit – Mr. Midas – you were right!
One of my morning tweets was forwarding (in Twitter talk this is called ‘retweeting’) the link to an article in yesterday’s Harvard Business Review that is a perfect one to share with all those interested in low cost startups and what it takes to transition to an entrepreneurial existence. Professor Daniel Isenberg (Professor of Management Practice) of Babson College posted a 10 point questionnaire for all those considering making the leap to owning their own business. It covers a lot of important points to consider if you want to know if you have what it takes to be self-employed. The comments are worth reading too. And Professor Isenberg does a nice job of responding to his comments.
Another recent article with ideas worth sharing is from New York Times Small Business Conversations. It is an interview with George Cloutier, a consultant whose recent book has a terrific title ~ Profits Aren’t Everything, They Are the Only Thing (Harper Business, 2009). I was in total agreement with Mr. Cloutier until I got about half way through the article. Once he starts on the subject of micromanagement, our philosophies totally diverge. But the first part is dead-on for differentiating who makes money as an entrepreneur from who does not.
I’ve missed more than 9000 shots in my career. I’ve lost almost 300 games. 26 times, I’ve been trusted to take the game winning shot and missed.
I’ve failed over and over and over again in my life. And that is why I succeed. ~ Michael Jordan
Although Mr. Cloutier focuses his services on existing businesses that need help being more profitable, he has several words of wisdom for the budding entrepreneur as well. Here are the two beliefs that resonate the loudest with me.
1) Many people whose businesses have declined are too quick to blame the recession. Often the reason your sales dry up are because you need to do more marketing.
2) The common thread for many companies in trouble is that they fail to focus on the basic financial information, such as a regular Profit and Loss Statement. Also, business owners don’t pay attention to their cash flow.
For hopeful entrepreneurs it is important to understand what lies ahead in the distant future as well as the near term. That’s why Cloutier’s advice is as important as Professor Isenberg’s test in deciding if you have what it takes to survive a startup.
What do you think?
Budgeting – A Real Life Example
I have been getting a lot of support in this phase of my blog launch from Angela Ferraro-Fanning, a graphic designer who runs her own business in Wisconsin. I came across Angela’s website last summer when I was researching the Marketing Chapter of my book. I found an article on Angela’s Blog about creating a social marketing plan. I was impressed by the design of her site, with its appealing background patterns and colors. More importantly, Angela struck me as someone on her game, both from the way she presented herself and her willingness to share her knowledge freely on her site. The clincher was how friendly she looked in her photo.
So I sent her an email introducing myself and explaining the book project I was working on, and asked if she would have time for a 30 minute phone interview to talk about her business. We had a lovely conversation about how Angela started her business, marketing strategies she used to grow her client base (which were low-cost AND effective), and what her business was like now that she was significantly past the startup phase. One of her low-cost marketing techniques is included as a ‘Success Story’ in Chapter 24 of my book.
Quote for Today:
The beginning is the most important part of any work … for that is the time at which the character is being formed and the desired impression more readily taken. ~ Plato (The Republic)
I re-connected with Angela just a few weeks ago when I realized I was spending more time contemplating my blog than actually putting one together. Her company, 13thirtyone Design, helped create the look of this blog. Angela understood that I wanted something simple, low-cost and really soon. I love the result; I got exactly what I wanted without investing a ton of time or money into the project. I could focus on what I really wanted to do which was to start posting content.
After 
writing yesterday’s post on Budgeting, I wanted to follow up with a real life example of a successful business that had begun as a low-cost startup. Once again I called on Angela, with a hunch that her design and business savvy were extensions of a practical approach to all aspects of running her business, including management of costs and containing overhead. Fortunately for me, my hunch paid off. Here’s the 411 on how Angela managed her budget during her startup period.
Q: What motivated you to start your own graphic design business, 13thirtyone Design?
A: I was working for a larger marketing design firm as an employee. I enjoyed the work and my clients, but I was getting burned out from my long work day which included a 45 minute commute each way. I also believe that the foundation for good design work is a close and direct working relationship with clients, which is more easily achieved in a one person design firm.
Q: How did you manage to make the leap from full-time employment to self-employed entrepreneur?
A: After I left my full-time design job, I took a simple, part-time job locally to give me an income stream I could count on. I worked 5 hours a day, from Noon to 5pm, five days a week for several months. This gave me enough time to build my business and a small cushion that provided a financial safety net.
Q: Can you tell me what equipment and supplies you had to purchase in the beginning?
A: I was really lucky because most of my design work requires creative talent as the main ingredient, so there weren’t a lot of startup costs. The most expensive item I bought was my computer. I shopped carefully on the Apple.com site to find a refurbished MAC which I still use today. It cost about $1,500. (Check out available refurbished MACs at Apple Store)
Q: Did you buy your software at the same time?
A: I already had some software and basically purchased upgrades of packages over several months’ time. That way I could use the cash flow from my business rather than coming up with all the money in the beginning.
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There are always reasons, within the control of a business owner, for the ultimate success of a company.
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I was excited about how neatly Angela’s story of a choosing a refurbished MAC dovetailed with yesterday’s list of The 5 Best Tips for Keeping Startup Costs Low. But I was not surprised. There are always reasons, within the control of a business owner, for the ultimate success of a company. Ultimately the only reason a business fails is because expenses exceed revenue. By starting out with a written, bare bones budget, you can ensure a much greater likelihood for moving past startup and creating a successful company.
"B" is for Budget
Budgeting for your business is very much like managing a household budget. You set limits on your spending based on various factors, like how much is in your savings account or how much you can afford to spend based on your monthly income. The same is true for your startup.
When I was working with my editor at Alpha Books, Paul, we worked through guidelines that would frame the content and approach of The Complete Idiot’s Guide to Low-Cost Startups. From the moment we began discussing the concept of low-cost, Paul insisted that we keep our startup budgets to $1,000. I remember my first reaction was – how on earth was I going to come up with enough startup ideas to fill a book if all someone could spend upfront was $1,000 or less. But the more I thought about different ideas, the more creative I became with a small budget. Keeping costs low brings the American dream of starting a small business to reality for many more people than say coming up with the typical $100,000+ it takes to buy most franchises.
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Today’s quote, which we all have heard since childhood, takes on a new meaning when you consider that your basic business formula is
Revenue – Expenses = Earnings
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The appeal of keeping the startup costs to $1,000 is obvious; the risks associated with failure become much more tangible-you can get your thoughts around it, picture it, and deal with it. What if you bought a new 45 inch HD Television and it stopped working right after the warranty ran out? (This never happens, now does it?)
If you have a job that requires you to manage a budget, your spending limits are established for you. You may have some leeway to determine how to spend your budget, but your hands are mostly tied when it comes to how much you spend. This all changes when you go out on your own. Now you are the investor and the boss in charge of monitoring expenses.
Quote for Today:
A penny saved is a penny earned. ~ Benjamin Franklin
Here is a list of the 5 best tips to keeping your startup costs as low as possible:
1) Use stuff you already own
2) If you absolutely have to buy something, like a piece of equipment, shop for used items. There are plenty of fire sales going on right now with bankruptcy filings at an all time high
3) Write it down before you spend your first dollar– if a budget isn’t in writing it doesn’t exist
4) Make yourself accountable – compare what you are planning to spend to actual prices BEFORE you commit to buy it
5) If you HAVE to acquire some piece of technology, whether hardware or software, DON’T go chasing the latest thing on the market. We all know that:
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New + Improved = For Sale at Top Dollar
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I’m not advising you to purchase used computer equipment. Just don’t use starting your own business as the excuse for buying the latest version of whatever. I actually have many stories I could tell you about new entrepreneurs who did buy some cool new, expensive device with their seed money. But here’s a short one that makes the point.
Several years ago I was working on a business plan with a long-time client and his new partner. They had a great idea for a new software concept that would serve a particular industry. During the weeks we were working on the plan, each partner put in several thousand dollars to launch their idea. At the very next meeting the new partner brought his newly purchased IBM tablet laptop, which he had considered essential to getting the software project off the ground. Cost? Around $4,000. Essential to a successful project?
How long would you guess this partnership lasted? What tips can you share that kept your startup costs to a minimum before you started your business?
