Human Resource Blues

What do you think is the most commonly found difficulty in owning and running your own business? Some may say access to capital, access to markets or managing a work-life balance. Ask a handful of business owners and you’ll find that managing employees is their toughest challenge.

From hiring, firing and counseling through the dramas humans attach themselves to, maintaining a happy, productive and cost effective workforce in any business is challenging. To make the challenge more interesting, the workforce is seeing dynamic differences in the generations represented within most companies. These differences have frustrated both ends of the spectrum.

Yet, one of the most commonly seen problems with employees is the tie between salary and production. Business owners have seen trends in employees arriving at work with an entitlement mentality. Often times, employees assume their work is solely for the benefit of the business owner. In reality, most business owners earn less per year than the bulk of their employees.

Employees go further in their entitlement mentality, buy expecting yearly pay raises and bonuses. However, the amount of work being produced by the employee seldom increases. In order for a small business to prosper, the business needs to prosper financially in order to pay an increased salary.

Michael Alter with Inc.com recently wrote about employee compensation. He noted, “most employers don’t have a problem giving raises to their employees if the employees are doing their part to ensure business growth and profitability.” Michael went further by stating: “However, in many companies that’s a big ‘if.’ When profitability plateaus, employees generally interpret flatline compensation as a sign of disrespect instead of making the connection between compensation and job performance.”

One way business owners can escape from the employee entitlement mentality is by creating a performance incentive program. Rather than paying employees their salary and bonuses automatically with the assumption they he/she would earn at least a cost of living raise every year, turn the table onto them. If an employee wants a raise or bonus, develop an incentive program with clearly defined goals the employee has to reach in order to receive more money.

In establishing goals for the employee, make sure they are realistic, fair and have value for the company. Communicate with the employee throughout the year about where they are, what they have achieved and what may be going wrong. Have conversations with the employee at least once a quarter or more.

As a business owner, also utilize noncash rewards for good work being produced. In between the pay checks, if an employee or a team rises above the your expectations, take the time to thank them. You can get creative in ways to encourage their work. From buying lunch to putting a thank you card on their desk, small personal incentives often go much further in motivating than cold cash.

Finally, remember employees typically seek work that is rewarding to them rather than seeking large sums of money for their time. Creating an environment where they feel appreciated and motivated to deliver the productivity the company needs is a win-win situation.

Law of Attraction

“You are what you believe in” and other well know clichés have gained the attention of business leaders as the Law of Attraction has seen a rise in awareness. Marketing professionals have subconsciously worked with laws of attraction as they implement concepts and strategies to build profits for companies. Business leaders are now seeing a correlation between their attitudes and the health of the company.

The Law of Attraction is a relatively simple concept. It simply implies that you attract toward you what you think about. Your dominate thoughts will manifest and move you. For example, have you driven down the road and fixated on an object in front of you. While your subconscious knew to avoid the object, did you find yourself driving directly for that targeted object?

As a business leader, do you have a target focus? Do you know who you need to attract to your business to achieve great sales, profits or exposure? While running a business of any size, if the leader of that organization does not have focus, direction or a purpose, then the business is not going to attract what it needs to succeed.

Are you a business owner who has been in business for a few years, not seeing great success with the business but enough to get by? Have you developed a negative attitude about the business, or are you skeptical of trying anything new since you have “done that already?” Do you realize that others involved with your business, whether employees, customers, contractors and so forth, take on your same attitude about the business whether you are verbalizing it or not? Being a business leader is a tremendous responsibility and the Law of Attraction applies to your leadership style.

Whether you believe in the Law of Attraction or not, as a leader in the business, you set the tone for all others to subscribe to. If you have a negative outlook, know that no one else who comes in contact with your business is going to have a higher opinion of the business than you. If think the world of your business and believe in it through the up and down cycles, then others around you will too.

In utilizing the law of attraction in your business’ marketing, the Small Business Trends Radio show suggests that you differentiate yourself from the rest. Think and believe of your business as sensational and dare to be different if you can. Being the same as everyone else does not draw the attention of new customers.

Secondly, becoming an expert within a niche in your industry will begin to attract the right types of customers for your business. This may not work for everyone, so analyzing your business within the market is needed. However; creating a niche for the business will attract new customers.

Lastly, capture your customers through entertainment. Speak to them emotionally, as people become less defensive when they have invested their emotions to the situation. Again, dare to be different if you can.

While psychologists and philosophers argue about the validity of the Law of Attraction, there are things you can do to lead your company in positive ways to attract the types of customers that will support your business venture. Ask yourself what you value, where your attitude lies with the company and what you can do different in marketing your company that will have impact on your business. Running a business is hard work, but it can be fun work. What are you going to do for yourself?

Lies of a Business Owner

Entrepreneurs come in all shapes and sizes. Their businesses are as different as their DNA at times. Some businesses take off and grow quickly, while others move along at a steady pace. While entrepreneurs are different and unique, they face similar challenges and problems commonly found in business. Entrepreneurs will often rely on the same “I’ll tackle that myself” mentality; however, seeking outside assistance is also an option.

According to Guy Kawasaki, the top ten lies entrepreneurs express to others include:

            1. “Our projections are conservative”
            2. “The market is forecasted to be $50 billion by 2010”
            3. “Amazon will sign our deal next week”
            4. “Key employees are set to join us as soon as we get funded.”
            5. “We have no competition”
            6. “We need you to sign a nondisclosure agreement”
            7. “Our larger competitors are too big to be a threat”
            8. “If I could get ‘one of them’ grants for my business, then I will be set”
            9. “Our patents make our business defensible”
            10. “All we have to do is get 1% of the market”

If you are an entrepreneur and have said any of these statements, you are not being completely honest with yourself or with others about your business. Before opening a business, do the necessary research to see if your business idea will be able to be supported by the market you are seeking. Ask potential customers what they think about your product or service. If you need a prototype to demonstrate to others, then you need to have one created.

Being an entrepreneur is hard work. If it were easy, more people would open businesses rather than work for someone else. Since running a business requires a lot of hard work and takes a  desire to overcome the risks involved with business ownership, why not take the time to start the business right? Understand how you intend to finance the start of the business (knowing there are NO grants available to start businesses), how to acquire the skills you may lack in running your business and how to get the market to buy from your business.

Entrepreneurs do not need to know everything. Assistance for entrepreneurs comes in many different ways; entrepreneurs need to seek information from industry experts as much as possible. While seeking information and assistance, entrepreneurs also need to be aware of what information is coming from what source. If you seek information from your best friend, his/her advice may not be accurate or right for them to express towards you. If a friend said you have no chance to break into the market you are seeking, how are they to judge that for you unless they are an industry expert?

When seeking the help of professionals, entrepreneurs need to “interview” those companies and representatives that you would be hiring. You are hiring them, so seek the assistance you need from them. Don’t let those firms tell you what you should want or need. 

Information is a critical component to being a business owner. The more information and training you obtain for your business, industry, market and skills the more equipped you will be as the leader. Commit to yourself that you will no longer make excuses for your business; rather you will seek what is needed to make your business a success.

Arm Yourself with Knowledge

The internet has provided access to entrepreneurial experts from across the globe. Information on opening, expanding or harvesting your business is readily available. However, entrepreneurs need to be willing to take the time to access the information and learn from what is available.

This may seem like an easy task, yet many business owners do not take advantage of the information available to help their businesses survive, thrive and grow. Knowledge is a competitive advantage, and the business owner who learns about the market place, how to capture that market place and maintain market share will win.

Market research and competitive intelligence is an ongoing research task for any business. The information is critical in maintaining an edge in the market, especially in this time of more aggressive business and global competition. Market research is an ongoing task, because markets are changing very rapidly and the pace of business has increased dramatically in the past few years. The danger for many entrepreneurs comes from feeling overwhelmed and overloaded by the amount of information one can obtain.

To help the entrepreneur with their market research, there are a few key questions to ask. Before you start, ask what decision will be made and how the information will be used. When engaging in internet research, give yourself a time limit for searching the internet. There may be times where you waste more time than you gain by searching for answers on the internet.

Once you begin to engage in research, look at the source being viewed. Who wrote the article, what is their authority or affiliation? How accurate or relevant is the information, what is the intent of the information and how reliable is the information?

While engaging in market research, 50% of the information should be sought from people. Interview or call your competition’s suppliers, any associations for your industry, merchant associations, customers or local reporters. Get a feel for what is happening in your industry, what changes are taking place and what are some of the needs in the industry. Be persistent in contacting and talking with industry informants.

The next 50% of the research can be done on the internet or the library. Begin by using a variety of search engines for the same topic. Some search engines to try are www.google.com, www.yahoo.com, www.ask.com, www.search.msn.com, www.clusty.com and www.vivisimo.com. You can search blogs, local clubs, chambers of commerce, economic development organizations and more. Additionally, a lot of information can be found on GIS Maps. Fort Smith has an excellent GIS department, and they can be found at www.gis.fsark.com. Lastly, if you are in search of regulatory information, you can go to www.Thomas.loc.gov, www.usa.gov or http://asbdc.ualr.edu/.

Other search options include: your competitor’s website, news sites, sites your competitors link to, blogs, patent applications, podcasts, Wikipedia or advanced search engine requests. While the amount of information is overwhelming, entrepreneurs need to equip themselves with information that will help the business win customers. In this information age, anyone can access the information they need for business. The challenge is being disciplined enough to seek out the information that is needed.

NO FREE GRANT FUNDS

Opening a business and being one’s own boss is as much a part of the American dream as owning a home. In fact, being self employed or an entrepreneur is gaining a great amount of attention in this country’s economy. Citizens of this country are blessed with the freedom to start a business and enter an endless number of markets.

However, opening and running a business is not as easy as many make it seem. If you have flipped channels in the middle of the night, a funny looking man with question marks on his clothes lure others into the idea that there are numerous funds available for people to start their own businesses or that you can earn thousands working from home. This gentleman along with other copy cats are selling you untruths in order to sell their own books or services.

Business service providers, like the Innovation and Entrepreneurship Center or the Small Business Development Centers, wish there were easier ways to finance a business like the infomercials suggest. However, the reality is there are no free grant funds for people to start or grow their businesses. There are a small number of technology grants available to companies willing to engage in research and development for departments of the Federal government. These grant funds are highly competitive and come with many strings attached to the funding.

Moving forward on a business, the entrepreneur needs to be prepared to address the financial needs for the business. He/she needs to be able to sustain their personal finances first before moving toward opening the business. Rarely is a business profitable as quickly as the entrepreneur may think. Planning to sustain personal finances is the first step in starting the business.

In the planning process of opening the business, the entrepreneur should prepare conservative financial statements. These financial statements should identify how much capital is needed to start the business. If the company requires more funds than the entrepreneur has, then he needs to seek outside financing to help open the doors. Usually, a business will seek out a business loan to help pay for the materials, inventory or equipment needed to operate the business.

The first place an entrepreneur should look for additional capital in starting their business is through what is commonly called “friends, family and fools (fff).” This form of capital is the easiest to find and obtain. After seeking support from friends or family, bank loans are then sought out for the business. If your business is entering a fast growth industry and your capital requirements are great, then venture or angel funding may be necessary.

Regardless of the type of capital source the business seeks, the entrepreneur needs to prepare a business plan, sound financial statements, and form a solid management team for the business. In addition to preparing the business for capital, the business owner must prepare their own financial worthiness. A good credit score or a cleaned-up credit report will be needed for the business.

Before jumping into a business idea, the first step towards understanding business capital comes with learning as much as possible about the options, opportunities and the requirements of money and one’s business. Utilizing resources like the Small Business Development Center or the Innovation and Entrepreneurship Center are good places to start.

African American Business Owners

According to the US Census Bureau, there are 1 million Black owned businesses in the United States. Black businesses account for over $100 billion in annual sales, and African Americans have over $800 billion in expendable income each year. Minority business enterprises (MBEs) are a rapidly growing and increasingly important segment of the U.S. and global economy.

From 1997-2002, the total number of U.S. companies increased by 2 million. According to the Minority Business Development Agency (MBDA), over 50% of this increase was accounted for by minority-owned firms. MBDA notes that minority-owned businesses are diverse, and participate in a wide variety of industries like financial services, health care, construction, transportation, and other services.

However, despite the impressive growth in the number of U.S. minority firms, MBEs must increase their size, scale, and the economic viability of their firms if they are to compete effectively in the global economy. In this day of the global economy, minority businesses must be assertive and innovative competitors who will not fear or retreat from globalization.

In the MBDA report, “Minority Business Enterprises Mastering the Supply Chain: A Perspective,” research suggests that businesses who understand the supply chain concept will be more equipped to bring their businesses to the next economic level. The report, available at www.mbda.gov, demonstrates how minority businesses are able to grow their companies by coping with the challenges of local, national and international competition.

If minority businesses learn about and master the three levels of supply chain management, new opportunities await their businesses. Supply chain management is defined as the “planning and management of all activities involved in sourcing, procurement, conversion and logistics management activities. It also includes the coordination and collaboration with channel partners, which can be supplies, intermediaries, third-party service providers, and customers.”

The three levels of supply chain discipline according to the MBDA include:

• Managing the fundamentals of supply chain, which includes identifying the risks that exist within the supply chain. Once the risk is identified, the business owner may take steps to mitigate those risks.
• Selling the value of a shorter and more reliable supply chain. By reviewing the supply chain, the business owner can see where efficiencies are needed and where partnerships may be formed to decrease costs yet increase turn-around deliverables.
• Transcending today’s supply chain. By acquiring the skills to get ahead of today’s supply chain trends, moving toward higher value positions and markets and staying ahead of the competition, the business owner will see greater results.

The three levels of supply chain discipline lead to business owners to a path of continues study and learning. Staying abreast of the market and trends happening within the market and with technology will lead to business decisions that are relevant. Minority businesses have great opportunities with their businesses, and taking charge of the business is the first step to success.

E-Myth Revisited

Several business owners and entrepreneurs in the Fort Smith region have been reading the book The E-Myth Revisited. Watching several entrepreneurs transform their approach to their businesses has been priceless to the IEC. The great thing about Michael Gerber’s book is that almost any business owner can read through its wisdom and apply at least one idea to help their business.

One such idea is considering one’s business as a reflection of oneself. Gerber notes “If your thinking is sloppy, your business will be sloppy.” This idea drills down to every aspect of one’s business. If you don’t have a plan, then your business won’t have a direction. If you don’t research your market or talk with customers, your business will reflect limitations because of that. If you don’t keep up with your market or industry by continuously learning, your business will get left behind. If you are greedy, your employees will reflect your values of greed. If you are unorganized, no one else in your business is going to be more organized than you.

If you don’t understand what it takes to run a business, your business will reflect that. However, there is hope, and you can change. The key is the business owner needs to be willing to change and make needed improvements to the business. Whether it is cleaning an office and getting organized or documenting and instilling policies or procedures for the organization, business owners need to be willing to take a sober and unbiased look at their businesses. If your business has cash-flow problems, will a line of credit or bank loan fix the problem or is there something else that needs to be reviewed? While complaining about business problems is easy, one needs to stop pointing the finger at others and take responsibility for what you see in your own business.

FYI – if you are interested in excellent buisness information, visit http://www.e-myth.com/blog/. This is an excellent blog to help you with your business.