Jay’s newest article in the September Issue of FSB is called, Get Tough – You Need a Thick Skin to Make it in Business.  In the article he writes,

“Entrepreneurs tend to start out young and naïve, but sooner or later we all toughen up to survive.”

He gives examples of having to “get tough” in different areas of business including human resources and relationships with vendors and customers.  I think all of us, whether entrepreneur, business owner, or business executive, have had to toughen up.  Whether it’s a failed business plan or just poor execution, many of us have grown harder after our own disappointments in business.

Shortly after finishing my post-graduate degree, I remember feeling so optimistic and ready to go any direction.  After going through a few disappointments of my own, I am way less trusting and way more likely to challenge all assumptions in business.

I liked this article because it sparks a conversation between business owners, entrepreneurs, and execs.  How have you personally been toughened up by your own experiences in business? Please add your comments below.

Posted by Corey Curwick on August 16, 2009

I guess I’m not the only business owner that found this article to be valuable as CNN, Yahoo Bizz, and Business Week all did an online write-up about it.

While we continue to endure the growing pains of breaking into a new economy.
And while industries continue to lose momentum or simply disappear altogether, business owners in these waning industries must evolve or die.

One of the ten questions that Goltz asks business owners is:
Are you in an industry that’s going bad, making it hard to profit? Or is it some aspect of your execution that’s to blame, be it pricing, service, or location?

The reason many businesses are able to survive past the fatal ‘five year’ mark is because the nature of an industry can make it easy for them to survive. However when a change in the external business or economic environment puts pressure on an industry, threatening its survival, only the fittest of companies will survive.

Flawed means something that can be changed. Is it possible to identify and correct a flaw in your business model that will help your business to thrive again? In an dying industry, business owners must find a way to stay in business.

I think the impulse for many business owners is simply to quit. Goltz also addresses this in his article. He presents some poignant questions that all doubting business owners should use as a starting point if they feel frustrated to the point of being defeated. Although the inclination is to fight, there is a point when the business owner should actually walk away.

Any personal stories you could share on this topic are appreciated. Please comment.

Posted by Corey Curwick on April 12, 2009

I like his explanation of how dips in revenue, even as small as 10%, can have dramatic effects on profits, particularly when fixed costs remain inflexible.

I also like something he said which is, “You should always be looking for savings and efficiencies-not just when times are tough, but even when you are growing.”

And, because so many businesses are trying to keep up with growth, business owners just can’t stay on top of watching costs, or haggling with vendors, or investing in innovation and cost-efficient technologies.

One thing I would add to this list is the importance of seeking out the help of your employees and empowering each one of them to become a leader within your enterprise.  Seth Godin, one of my favorite writers on business and marketing, just released a new book on the importance of encouraging leadership in your enterprise.  This was an inspiring read for a business owner who’s also fighting through this recession.

What are some of the most creative ways that businesses have survived recessions in the past?

Posted by Tbird on February 12, 2009

This quote from Warren Buffet inspires me and other investors out there to keep a strong current flowing in the frantic and fearful financial market.  Now really is the time to invest in assets that, only a year ago, were priced through the roof.  For real estate investing, now is surely a time when well-positioned investors can profit handsomely from being greedy.  And, what about the bargain price of oil?

And what other assets deserve to be snatched up by greedy investors in this fearful marketplace?

Article Sources:
http://www.thedigeratilife.com/blog/index.php/2008/10/19/how-to-run-a-small-business-in-time-of-crisis/
http://money.blogdig.net/archives/articles/September2008/29/10_Things_Small_Businesses_Can_Do_During_a_Financial_Crisis.html

What are the differences? This is another topic all in itself. I did find a great guide in the July issue of Inc. Magazine on how to assemble and manage your Board of Advisors.  Inc. Magazine has these nifty, monthly guides that highlight topics related to policies, procedures, and practices. This guide is simply called, the Inc. Guidebook.

Check it out for a very simple checklist on how to assemble and manage a Board of Advisors. It also offers alternatives to a Board of Advisors including:

• A Board of Professional Advisors
• The ad hoc board
• The task-specific board

More important, is something I mentioned in my post from yesterday about the broker replacing the banker on the present day Board of Advisors.  By broker I mean an individual that has access to both traditional and niche money sources and also has the flexibility to creatively structure deals that are outside the box.

The author of the guide in Inc. Magazine continually refers to the banker as one of the essential team members so I wanted to reference this guide again today and pose the question. Is the banker being replaced by the ‘money’ broker in today’s credit market? Would anyone else like to comment on this or answer this question?

Although the credit crunch is putting many of us in a temporary holding pattern, there are tons of sources of private money out there.  These private money lenders are capitalizing, literally, on the opportunity that our credit crisis has presented to them.

But what is private money? A lot of people will immediately say that private money is just another word for ‘hard money’ but this isn’t entirely true. I guess it depends on what you consider to be ‘hard’ money.  As I see it, hard money is money that rents for anywhere between 18+ percent with additional points on top of that.  Private money, on the other hand, can rent for anywhere between 9-18 percent plus points.

But with so many private money lenders popping out of the woodwork to take advantage of this opportunity, how do you find the legitimate sources?  And with so many private money sources, terms, criteria etc. to weed your way through, how do you find the right lender and loan product for your unique needs?

That’s why it’s essential to have a broker you trust involved in helping you find private money for your business. Particularly when seeking hard money, a broker that has your interests in mind is crucial to your success.  As a business owner or investor, searching for private money without a trusted broker is like approaching the bench and pleading your case to a Judge without an attorney. Nine times out of ten that Judge is going to find you ‘guilty’ which is analogous to getting declined by a lender or being stuck with unfavorable terms.

Equal to your attorney and CPA, a qualified and experienced broker is a key component of your advisory team for your business and other ventures.  These days, the financial broker will replace the banker on your team of advisors.

How do you know when it’s time to sell your business? How do I determine my own exit strategy from my business?

For a lot of small businesses this begins to become a consideration soon after the business begins to get off the ground. Norm Brodsky, a contributor to Inc. Magazine hits on this topic in his column, ‘Ask Norm‘ in the July issue.  Brodsky, a successful entrepreneur, has been at the helm of six companies.  Norm’s advice in this column is helpful during a time when many small cap companies are hurting and troubled about their next steps.

I really enjoyed reading some of the answers he gave to the tough questions posed to him by a variety of business owners in varying stages of their businesses. One business owner complained of a situation where he was locked into a business that barely broke even, yet he was still able to pay the bills and steadily grow the business. There are a lot of these guys out there right now. Imagine the number of Boomers with marginally successful, yet growing, small businesses. How many of these business owners are anxious to come up with an exit strategy from these businesses?

Another business owner described his business as growing quickly and profitably, yet he was still concerned about when to sell.  I think that all business owners who are looking on the horizon for an exit, should take the time to read the answers that Brodsky published to this business owner’s question. Brodsky asks the business owner to ask himself the following questions:

1. What kind of life do you want 5 to 10 years from now?
2. What would you like to get out of a potential sale in terms of:
   1. Money you would get
   2. How your customers and employees would be treated
3. What do you want to do next? (this goes along with question #1)

By asking themselves these specific questions, I think most business owners can better plan for the future of their businesses and their own exits.

Do you, like me, feel that most of your meetings are a complete waste of time? Unfortunately, a large percentage a business’s time-consuming meetings are grossly ineffective and sometimes a complete waste of time!

When I was flipping through Utah Business Magazine this month, I found an article called, ‘Lean Mean Meetings’ where a successful Utah business owner shares his tips for how to make the most out of your business meetings. These were great tips so I wanted to share a few of them in this post:

1. Distribute a detailed agenda prior to the meeting. More importantly, specify time frames for each item on the agenda so decisions can be made quickly.
2. Bring customer perspectives to the meeting via customer feedback or customer stories. This will prevent members of a business team from losing sight of the reason they are in business.
3. Learn from each other at every meeting by having members share things learned, or share other information obtained at conferences or lectures they’ve recently attended..
4. Foster conversation about overall strategy so everyone is tuned into the vision. Vision has to be communicated abundantly in any organization.
5. Make time to recognize employee accomplishments. These moments have “one of the greatest emotional impacts on the meeting.”

 I really like #3 and #5.  Continually learning from other team members is grossly overlooked in most businesses. Employee recognition in front of other team members is also overlooked and should be a common practice to guarantee employee satisfaction.  If you dread meetings because you feel they can be a waste of time, I recommend checking out this entire article found at www.utahbusiness.com .

The five mistakes she cites seem like common sense to the experienced investor but for the beginner, these are good tips.

•        1. Don’t panic
•        2. Don’t be in a hurry to sell
•        3. Don’t be afraid to buy
•        4. Don’t listen to media hype
•        5. Don’t become emotionally invested in a potential investment

If you are a beginning investor, go to the link where I found the article and read in detail about each of the above five points. http://finance.boston.com/boston?ChannelID=3191&GUID=6700990&Page=MediaViewer

If you are an experienced investor however, I’d love to hear from you!  I myself am by no means an experienced investor but I don’t consider myself to be a beginner either. My two cents on this subject is related to some other common traps that investors fall into during similar crisis. 

One trap is related to investments that serve as solutions to current problems or as quick fixes. One example of this is all of the newly formed investment groups that are raising funds either through a PPM or another vehicle to purchase REOs or pre-foreclosures. These groups will pitch to potential investors that they are taking advantage of the opportunity that has arisen from all of the foreclosed homes on the market.  Do your due diligence on the members of these groups and verify their track records. How long have they been doing this? If they are a newly formed investment group, run!!

Another example is for the loan seekers who just can’t get credit during the current crunch and need a loan desperately.  Be wary of all of the ‘hard money’ lenders that are offering private money from outside investors.  A lot of these entities have just popped up overnight to take advantage of the credit crunch and they too have no track record. If you do need to go after private money, make sure the company has been in business for awhile and also, compare your options. Just because you are desperate doesn’t mean you need to be taken for a ride.

If any other experienced investors would like to add their own two cents on common traps that investors should avoid during the current crisis, I would love to hear from you!!