Communication

Recently I had an interesting conversation with my friend Trish Ellis about employees. This was news to me but she told me there is a new term for coming of age employees, called “Millennials”. These are my kid’s generation, born some where between the late  1980’s and 2000 and they are creating a real problem for employers: They don’t take orders well.

 

When I first started working, at age 10 on our family cranberry marsh, the employee handbook was titled “Because I said so”. When I was told to dig ditches, I did not ask “Why?” I dug ditches. If they were not deep enough or straight enough, I dug them again and usually at no pay and with a sore behind as a reminder to do the job right. Today’s employees are not as easily motivated to excel in the workforce.

 

Trish’s consulting company, Ellis & French LLC, coach employers and employees how to work together. The “Millennials” are coming into the job market in enormous numbers, some 80,000,000+, with a completely new approach to work ethics’ from the one I knew. They want to be asked to do a job, and asked nicely. I am simplifying a complex issue here; however it is creating enormous conflicts for both employers and employees today. So much so that companies like Trish’s are springing up to transition both parties through the process.

 

For new companies that don’t have employees, this topic is relevant as you will employ others some day. For those of you who already employ, you know what I am talking about.

 

Relating to Employees

 

With very few exceptions we have all been employees at one time or another. Only a few of us have been employers however. So it is likely that when you become an employer, you will access some of the strategies and tactics you saw while working for someone else. We have all had bad bosses who made the work experience tough on us. Some of them may actually have been good leaders but they made life hard because they held us accountable. Finding the right balance with employees is very hard and never stops. Because of the stresses and duties required in running a company is so all consuming, we will often forget or fail to take time to be human with employees. Or we go the other direction and become too familiar with employees. Like I said it is a balance act and there is no right or wrong way to do it. You have to find the balance that works for your personality.

 

But this whole millennial thing has got me thinking: Maybe this is not such a bad thing. What if I had been “asked” to do dig those ditches straight and deep? Might the approach have made a difference? I really can’t say.  But what I do know is that change, no matter how much I resist it and deny it, brings about good things. Working to have good and open flow of communication with staff is a worthy investment in your company. In fact it may actually be one of the best investments you make.

 

Leadership

 

Businesses owners who have good employee relations also are good leaders. While leadership is varied in approach the results are the same: If the leadership did their job well, were accountable and responsible, they expected their employees to do the same. And the staff saw the leadership taking responsibility and accountability, which created respect of these tenets in those businesses. It really does all start at the top. What also happens when this approach is adopted is a staff of highly competent people show up for work every day. Those who can’t fit into the mold will quit or fail to be hired.

 

Be a leader in your company:

 

• Do what you say you are going to do. “Do as I say, not as I do” cripples business
• Be accountable. If you can’t follow through, own it. People respect leaders who accept responsibility
• Ask questions. Since the staff is often on the front lines of business, they know where things are going well or not so well

 

Remember, it all begins and ends with you. If you having challenges with employees, then you need to look at how that happened, starting with your own role. Some times the problems seem overwhelming. That is usually the best time to ask for help. Good leaders do that, ask for ideas and solutions, and then implement them. Doing so will actually improve communication with your staff as people are looking to help your business succeed. Engaging them gives a sense of ownership in their role.

 

Good leaders also know what is going on in their company, at every level. They do this be staying involved, in touch, and communicating with their people.  The worst problem a business owner can have is staff that hides the truth, whether it is a broken tool or unhappy customers. You want your people to bring all the news to you, not just the good.

 

Communication

 

It’s my experience that most problems between people are caused by a gap in communication, especially staff. Since we are seeing a new generation of employees coming on the job market, communication is going to become even more important between you and your staff. Effective communication is a key component of good leadership.

 

One of the biggest epiphanies I’ve had in recent years is that people say things for a reason. Maybe you already knew that but it was a big surprise to me. So I started asking the question,”Why do you ask that?” Now when I ask that question, I often get an answer I did not expect.

 

Now, here is a second epiphany: not everyone thinks like I do. My life experiences cause me to think and speak in a certain way. Someone who lives in the next town, another country or is not of my generation has vastly different experiences than mine and so they communicate differently.

 

My sister, Cestjon, is an attorney in Seattle and works with people across the globe. She is highly regarded in her field, actually one of the best in the world, and as a result is sought out by people from many cultures. She taught me a couple of key ways to improve communication:

 

• Ask questions. One I like is, “You said that for a reason. Why?”
• Listen to the answer. Repeat, listen to the answer
• Give clear instructions
• Don’t assume
• Take time to respond. “Let me think about that and get back to you” has kept many doors open even when communication broke down

 

There are plenty of books and resources available for improving communication and I have found the time I spent invested here has improved all aspects of life, not just business. Working with companies like my friend Trish’s may be a solution for your company as well.  Spend a little time honing and improving your communication skills, it will pay dividends down the road.

 

Resources to help Small Business Owners:

Niclolet Area Technical College Entrepreneur Classes, www.nicoletcollege.edu/business/startabus/

SCORE, Small Business Mentoring and Training, www.score.org

Small Business Administration, www.sba.gov

Vilas County Economic Development Corporation, www.vilascountyedc.org

Oneida County Economic Development Corporation, www.ocedc.org

 

Brent McFarland has worked as a Financial Advisor, Registered Investment Advisor and served as Business Development Director at the Lac du Flambeau Indian Tribe. In addition to being the 2010 Apple Peeling Champion of Bayfield Apple Festival, he is an Adjunct Instructor at Nicolet Area Technical College in the Business Development Program. He can be reached at bmfarland@gmail.com or 715-604-2275

Starting a new Business?

Starting a new business is a risky venture and owning a business is often all consuming in time and energy. Small business owners have to be all departments in their business from human resources, accounting, public relations, to cleaning crew. If someone calls in sick, you’re the replacement guy. So why do we want to be our own boss if it’s so much work?

The answer is different for everyone but the common reason is freedom. For some of us we seek freedom from fear, whether its’ losing a job, being replaced or not making enough money. We also seek freedom to make our own decisions. Being a small business owner does give us these things but it also comes with an entirely new set of worries and responsibilities we didn’t have as an employee. Today I want to address how to prepare business owners for this and avoid some pitfalls at the same time.

Before we get into the details let me share some information with you which I found very interesting. Here in the Northwood’s we feel the effects of the economic slump at every turn. It has hurt the local businesses and impacted jobs across this area. We see older people going back to work to supplement incomes, younger people find it hard to get jobs, and professional jobs are very hard to find. So what does it take to turn our economy around? The answer is: small businesses.

Creating Jobs

According to the Kauffman Foundation Senior Fellow Tim Kane, who has done extensive research on job creation, his recent work showed was that startups aren’t just an important contributor to job growth: they’re the only thing. His studies showed that without startups, there was no net job growth in the U.S. economy. In fact from 1977 to 2005, large companies (50 or more employees) were net job destroyers, losing 1 million net jobs per year. In contrast, new businesses in their first year added an average of 3 million jobs annually.  So small startup companies are not only significant to the owners, they are vital to our community economic growth and survival.

A Solid Foundation

If you’re going to start a new business, or even if you own one now, you will need a Business Plan. For many of us this sound like a lot of work and terribly time consuming. Well, it is. But it is essential for you to do this if you want to succeed. Lucky for you there are many resources to make this easier than ever.  There are many on-line services, for free, that will help you with this first step. The Small Business Administration has great resources, as does a group called SCORE. I personally like the SCORE organization because they offer free advice from retired business executives and owners. Locally, Nicolet Area Technical College offers classes on topics from marketing to business plans writing, with guest speakers in banking, accounting and insurance. The Vilas County and Oneida Count Economic Development Corporations also have great resources.

Making a Plan

A Business Plan is the blue print for how your business will be structured and run. Writing this document makes you an expert on your business: You will know and understand the financial aspects, marketing, feasibility and long range plan for you business. And when you go to a bank for funding, they will require you have this document. No two are the same but they usually have the same components and can range from a dozen pages to over a hundred.  You will also discover who your competition is, what their strengths and weakness are, and where you business fills a niche in your market. A well done plan also has an exit strategy, identifying at what points you should get out and how to do so without losing what you have put in. This is as important as what to do when you become successful, maybe even more important.

The Process

The process of writing a business plan starts with identifying what your business will do, who it will serve and why there is a need. You will also build a Feasibility Study to determine if you idea is relevant, a Strategic Plan for your business growth, Marketing Plan for how to promote your product/services, Mission Statement for what you stand for, and Value Statement outlining your company’s core values.

In this process you will research where your business is to be located, what the typical rent and lease arrangements are, what your fixed costs will be and how much you will need to make each month to cover those costs. You will also explore what the legal structure of your company will be, whether it is a Limited Liability Corporation, C-Corp., S-Corp. and why. At the end you will have a solid understanding of the taxes you’ll need to pay from payroll, social security, corporate, personal and real estate. It will also tell you if you can afford or will need to provide employee benefits, what kind and how much they will cost.

You will do projections on your revenue for the next 3 years, which may require research on similar companies to get an accurate idea of reality. One hurdle new owners face is over estimating the success of their idea. Be conservative. And then be even more conservative. You will determine your breakeven revenue and then estimate growth. This is the area where people get in trouble, they get excited about potential and assume it will be reality. Remember, success is never as good as you think it will be and failure is always worse than you fear.

Lastly, you will know what sort of debt you will need to carry, where you are going to find it, and how much it will cost. According to the SBA 82% of all startup businesses that fail do not have enough startup capital. So becoming intimately familiar with how much money will be required is a key result of doing this planning.

Success

Having a clear understanding of these areas at the outset will improve your chances of success 3 fold. Remember, half of all startup businesses fail in the first 5 years. You owe it to your self to make sure you have the greatest chance for success and that all of your blood, sweat and tears will land on fertile ground. Once your up and running, it will be 10 times harder to find time to write this document than it is right now. And things change, as will your business plan. It becomes a vital part of your business and will evolve as your business grows. Incorporating a rolling 5 year plan will help you monitor your bench marks, looking down the road and monitoring to where you want your business to be in 1, 2 3 and 5 years from now.

If you have any doubts about the importance of this type of planning, do some research yourself. Go visit a successful business in your community and ask them about what sort of business tools they use, find helpful, or wish they had.  Even if you don’t have doubts, those are good questions for you to have answers to before you start a business.

Here are some of the resources I find helpful:

SCORE, Small Business Mentoring and Training, www.score.org

Small Business Administration, www.sba.gov

Vilas County Economic Development Corporation, www.vilascountyedc.org

Oneida County Economic Development Corporation, www.ocedc.org

Brent McFarland has worked as a Financial Advisor, Registered Investment Advisor, owned a Real Estate Investment company as well as numerous businesses, and served as Business Development Director at the Lac du Flambeau Tribe and is the 2010 Apple Peeling Champion of Bayfield Apple Festival. He is currently an Adjunct Instructor at Nicolet Area Technical College. He can be reached at bmfarland@gmail.com or 715-604-2275

Do EDC’s really work?

Do Economic Development Corporations really work?

This is an obvious but serious question I’ve been pondering. There is a lot of energy, money and human capital invested in these programs, but do they work? If economic recovery is driven by businesses employing under 50 employees, the stats I read confirm this, why don’t EDC’s target those ventures? 20 small businesses employing 2-10 people is cheaper and easier to get up and running than a 60 employee manufacturing concern, employ more people and generates greater revenue in the community.

There is less, if any, competition to bring those businesses into a community and it directly serves the population. Two simple programs address this market: First a Starting Your Own Business education class and second a revolving loan fund of $5K to $50K. Graduates of the classes are eligible for the loan fund. What do you think?

From Idea to Reality

Small Business Corner: From Idea to Reality
By Brent McFarland
April 24th, 2011

I have this college buddy who had a great idea to import mushrooms from Poland. Edible ones, for cooking, not the other kind. I thought we had plenty around here but he had an idea. So he starts this business in his basement, builds shelves to stock the mushrooms from Poland and Russia, bags them and sells to grocery stores. He has a nice little business. Then he gets a great offer from Russia to buy a special batch, very cheap but a large order. This is a big deal for him, it will change his life with the profit he makes. So he borrows money to buy them. The shipment arrives at O’Hare and customs will not release it. “WHAT! Why not?”

It turns out they are radioactive, they came from Chernobyl area in Russia that had just had a nuclear reactor melt down. All his money, the money he borrowed is gone. He had no back up plan and his business came close to being ruined. He had a good idea, great opportunity, but no plan to recover from the unexpected. There is a happy ending here which I’ll tell you at the end of this story.

Okay, so you have this idea. It might make a million or maybe just enough so you can fish more often. How do you make it reality?

I’ve spoken to thousands of people who ‘have this idea’ and they want to build a business around it. A lot of them were in fact great ideas and could have changed the lives of their creators. If only they had the tools and knowledge to make it reality. There are a great many resources for people to gather both the tools and knowledge to build a business. Sometimes there are too many options. Some times there is simply not enough time in a day to learn what is required and still work a full time job. So people just jump in and try to make a go of it. Poor planning, lack of capital and no strategy kill 9 out of 10 businesses. Building a solid foundation from the start is critical to success.

First Steps

Put your idea on paper, write out everything that comes to mind. Don’t worry about spelling or sounding stupid, this is just for you. Get it on paper and then go back over it. You will make changes to it, whittle some of it away and build up other parts of it. You going to change and fine tune your business almost every day. Putting it on paper is the first step to making it reality. It has gone from a nebulous thought in your head to a solid, real thing once it is on paper.

Once you have the concept on paper, your going to tell a story about this great idea. Starting with once upon a time and ending with “happily ever after”. Begin with what the idea is and move to how it will work. Then look at who will want it and why. Next you want to plan a trip with this idea, which is launching your idea into a business. Tell the whole story about how you get ready for the trip, what you will need and where your going to get it from, how you will replace what is used. Then start your trip/business and tell how the first day, then week, then month is going to happen. Don’t forget to add a tornado or monster who is going to keep you from completing your journey. No story, or life, is complete without challenges on the road. If you plan for then you can over come them. I am serious here too. Write it out just like a story and plan every step of the adventure. The only thing your story cannot have is a magic wizard or fairy Godmother. We do have both in the real world but they only show up when we don’t plan for them.

What you are doing is getting clear about how your idea will actually happen. You are making it reality by transferring it from your brain to paper. The more you get clear about how it will work, the more likely it is to become reality. You are also writing a business plan for your idea. It sounds more fun to write a story but that is what a business plan is. You are also becoming familiar with what your business is going to require from you. There are going to be surprises and obstacles you did not think of that will pop up in your story, so you’re going to be better prepared for the real ones that come along in life.

Find an Audience

A good story needs an audience. It has to see the light of day in order to be appreciated and made real. So now you need to share this idea. Many people fear this step because they think this great idea is going to be stolen by someone. Perhaps, but the reality is that will not happen. Sure it has happened to people before, but far less often than we believe. The reality is that this is your idea, your energy and your desire. Your the one who is going to make it happen. But you need to share it for that to occur.

You are not going to share this great idea with your buddies at the bar, pool league or fishing tournament. The people who need to hear this idea are people you respect and admire. You share it with your banker, your father, the retired wealthy guy down the road, a college professor, and the Business Development committee in your area. Share it with 7 people of different walks of life. Let them read the story first, rather than tell it to them. This is important because you have put a lot of time into writing it, so it will come across clean and accurately. If you tell it to them verbally you may forget something, get nervous and fail to get the idea across the way you want. After they have read the idea, there will be questions and time to elaborate.

What is going to happen is this: Some people will say your nuts. Some will smile and wish you luck. And one or two will buy into it. All of the feed back is good. We need to hear it all and get through it because this is what your going to encounter in business. No idea is greeted with the success in real life that we envision in our heads. So, you are learning to overcome those same objections that you will meet in business. The other great thing that will happen is you will find people willing to give you a hand. They will tell you honestly what you did not consider, what needs more attention, where you did a great job and where you missed. Your buddies at the bar will not give you the same feed back nor would you value it as much.

Get Serious

Okay, you have done the easy part. If you are truly serious about this idea after getting good and bad feed back on it, you need to write a completed story. This will be your business plan. You can find lots of templates on the inter-net that walk you through how to do this. You can also buy books at the book store. I like SCORE, which is a group of retired executives who help small business owners build their business. Look them up on the inter-net or go to http://www.score.org.

I want you to also dedicate some time to consider your escape plan. This is one part of business that many people fail to consider. We become kamikaze pilots when we start a business, it is do or die for us. But reality is many businesses fail and you need to know when to get out of yours with the least amount of damage to your financial security possible. A small amount of time investing in planning this at the start can literally save your home and marriage down the road.

If you start with this type of outline, your chance of success will increase 3 fold. Ben Franklin’s adage applies here: An ounce of prevention is worth a pound cure.

Happy Ending

So the budding mushroom importer is devastated emotionally and financially. He told me the other day this was a defining moment in his life and marrying a Protestant shaped his future from this point forward. I’ve no opinion on Protestants but I am impressed with his wife. He came home and told her what had happened, expecting compassion, sympathy and a sounding board on how to navigate these troubled waters. She said,and this is a direct quote, ”What do you want from me? I’m not your mother. This is your problem and you are going to fix it. Get to it.”

When you own a business, all responsibility’s rest on your shoulders. My friend learned this lesson that day and he did survive. Barely, with some lucky breaks and the timely appearance of an angle. Today he is still selling mushrooms and thousands of other food products imported from around the globe. His business exceeds his wildest expectations from those humble beginnings. I thought this was a good story and that you might be the perfect audience to share it with.

Brent McFarland has worked as a Financial Advisor, Registered Investment Advisor, owned a Real Estate Investment company as well as numerous businesses, and served as Business Development Director at the Lac du Flambeau Tribe and is the 2010 Apple Peeling Champion of Bayfield Apple Festival. He is currently an Adjunct Professor at Nicolet Area Technical College. He can be reached at bmfarland@gmail.com or 715-604-2275

Small Business Corner- Strategy

I recently re-read the history of Ray Kroc, who bought McDonalds at age 52 and turned it into the world’s largest franchise. As I am about to turn 52 I still hold out optimistic hope of similar success in the second half of my life.  Although it sounds like a lot of work at this age, when I am looking forward to afternoon naps. Still I like the idea it is possible to achieve ridiculous financial success at any age.

I’ve known a lot of brilliant people who never owned their own business. And I’ve met a similar number of people, in the “not so bright” category who were immensely successful business owners. Brains and education do not automatically guarantee success, and sometimes contributes to failure through arrogance. But a good idea combined with a well planned strategy, can lead to all the success its owner wants. So I want to talk about how to build a good strategy, because it is the foundation of a successful business.

Concept and Vision

It all begins with a Business Plan.  Each week I will address a different element of the business plan. This week I want to use Ray Kroc as an example of ingenuity and flexibility in conceiving and implementing his strategy.

When Ray came upon the McDonalds restaurants, he was selling milkshake mixing machines. The McDonald brothers bought 7 of these machines from him for their thriving restaurant business. Kroc saw an opportunity to sell more machines if the brothers kept opening restaurants. So he offered to be the franchise agent for them, which they accepted, and opened his first McDonalds in 1955. From his original concept of selling more milkshake mixers, he developed a vision of opening restaurants across the US.

Now Kroc understood how to franchise a business. He made it easy for each owner to operate their business because he gave them a blue print for doing so. His ingenuity was to adopt Henry Fords strategy for mass production and apply it to food, so that every burger tasted exactly the same at every restaurant. He was originally driven to sell milkshake mixers, and discovered a greater opportunity in the process. Krocs flexibility lead to him to take successful strategies from others and implement them in his own business model.

Strategy

Ray Kroc recognized the need for consistency at all levels within the franchises. So he made this the standard at every level, from pricing, to quality, to staffing. By standardizing all these elements, he gave every owner the keys to a successful operation. He knew if they had they were successful, other people would want to become owners. And it worked. Between 1955 and 1965 over 700 new McDonald restaurants were opened in the US.

Kroc took a successful idea and made it better. He conceived and implemented a strategy that proved to be easily replicated and followed by owners. It made them successful as well as him. None of this would have been possible if he simply tried to grow the business model he bought from the McDonald brothers. It needed his vision and strategy to become what it is today.

Simple not easy

Walmart has a sign somewhere that say, “No one can out Amazon Amazon”, or something to that effect. It means don’t try to be them because there is only one Amazon. And there is only one McDonalds as well as one Ray Kroc. If you are going to start your own restaurant chain, absolutely use Krocs ideas but don’t expect his success.

Concept: Your idea for business

Vision: What that idea looks like in operation

Strategy: The step by step process to take these ideas and turn them into reality

Putting down on paper your strategy and vision will increase your chances of success 5 fold.  Being willing to amend them and adopt new ones will be necessary too. But you have to start with writing it down, thinking it through and looking at it from as many angles as possible. That is what a business plan helps you do. It really is that simple but not so easy. In doing this you will take your vision from a vague concept and bring it into sharp focus. You will develop strategy for implementing your vision and you’ll create a road map for getting to your goal.

If you’re like me, when I first had an idea for a business it was a concept. I really had no idea how to make it reality. As I fumbled around to find answers on how to do that, someone told me to build a business plan. At that time there were very few computer programs and mostly one had to write it out or type it. I brought my first business plan to a banker and he said, “Try again”. So I went back and re-wrote it, about 15 times, and then presented it again. This time he commented it was the best he had ever seen.

That praise has stuck with me. But more important than that was the knowledge of my business I gained in writing and revising that plan. I knew every aspect of my business from front to back. It was not easy but it really was very simple.

Here are some of the resources I find helpful:

SCORE, Small Business Mentoring and Training, www.score.org

Small Business Administration, www.sba.gov

Vilas County Economic Development Corporation, www.vilascountyedc.org

Oneida County Economic Development Corporation, www.ocedc.org

Brent McFarland has worked as a Financial Advisor, Registered Investment Advisor, owned a Real Estate Investment company as well as numerous businesses, and served as Business Development Director at the Lac du Flambeau Tribe.. He is currently an Adjunct Professor at Nicolet Area Technical College. He can be reached at bmfarland@gmail.com or 715-604-2275