Dangerous The Lies We Tell Small Business Owners

This was first posted here on LinkedIn. Have a look at the comments.

I’m talking about the lies we tell small business owners that keep them struggling and keep them small. This advice sets impossible expectations that erode their confidence. The business methodologies and advice we give comes from research done on large corporations in the middle of last century. Most of this advice was good advice for large business, but it’s debatable whether it is still good advice for big business.

It was never good advice for small business.

The most successful small business owners I know, ignore most of this advice. They focus on sales and on delivering the best they can to make their customers, not just happy, but ecstatic.

Meaning, mastery and money are all essential in today’s business environment. Meaning and mastery will lead to more money. Many small business owners instinctively do these things, but we as business advisers only focus on the money. We tell them to make the money first, then they can invest in mastering their business and making meaning in their community and life. Unfortunately that sets up a cycle that never gets them there. We need to encourage them to invest in meaning and mastery from the beginning.

Most small business owners are very good at the work of their business. As Michael Gerber says, they are technicians who get an entrepreneurial twitch. Usually in response to working for another technician who had an entrepreneurial twitch. Which means they are not clear on what it means to run a business.

In reality, most small business owners are freelancers, not owners of businesses. Why are we pushing them to act like a business?

Let’s have a look at these pervasive lies.

You have to wear many hats

This perpetuates the myth that business owners have to do it all. Even worse is the myth that they have to know and understand it all. Who can possibly know all that? This is the single worst bit of advice and it is what makes small business owners feel inadequate.

The most important hat a small business owner needs to wear is the sales hat. Making sales is what defines a business. Making sales will pull a struggling business into the black. Making sales is the crucial first step to everything else that follows. The best advice we can give our business owners is to go make sales.

After they are making sales, we should teach them the strategy of business and how to lead a team, not how to do everything in business. Offering ‘101 workshops’ on how to do bookkeeping and how to market, lull our business owners into thinking that all they have to do is execute on the tactics properly in order to succeed. We should be telling our business owners to get help as often and as early as possible.

The worst ways a beginning business owner can be spending their days is in designing their business cards or a poster or trying to set up their bookkeeping.

Starting business owners don’t have enough money to invest in themselves or their business

So we give them yet another free ( or cheap with lunch!) 101 workshop. The most successful small business owners I meet are the ones who invest in themselves early and often. They understand their strengths and they outsource the rest. They know the highest and best use of their time is in talking to customers.

And we tell them, by the way your time isn’t worth very much. When I owned my bookkeeping business, I would tell people I can do your bookkeeping faster than you can worry about it. It was true. Business owners were given 3 hour workshops on how to do their bookkeeping, then they were expected to take a couple of Sunday afternoons a month to do it. I could do their bookkeeping once a month for $200. And it would be right. And they got advice from a professional. They told that their 2 Sundays of stress a month were worth more to them than $200. That’s assuming they need bookkeeping done on a regular basis, which most didn’t.

We don’t teach them how to engage a professional. We tell them that when they get big enough they can hire a marketing expert to take care of their marketing. What they really need is to hire a professional to help them refine their message. A professional has the experience to tease out the words and message that matters. Never mind about flyers, radio or newspaper. Get the message right first.

Marketing, finance, operations and HR are the fundamentals of business

Maybe. If you have a big business with a division of people with expertise to take on each functional area. Again, no one person can master all of these. These are functional areas of business, the understanding and management of which makes the running of the company work better. but they come after, much after the customer is clearly defined, the problem your offer is solving is nailed and you are ready to scale up in a big way. Having all of these perfectly in place will give you a well-run company, not necessarily a successful one.

Business development takes several years of talking to customers, testing offers and making sales. Until then, the focus is on doing the work of the business, not managing a company.

During the first couple of years, bookkeeping and financial information is only needed to file taxes. It’s more important for our business owners to be nimble, to experiment and to always be testing. Financial Statements are backwards looking documents and they only track money. For instance, it’s not enough to know the impact on revenue of changing prices. It’s more important to know who the new pricing attracts and repels, the cost of delivering on the new pricing and the change in expectations.

The message, loud and clear is, you have to learn all this stuff and do it yourself. It’s good for you, because then you get to understand your business from the ground up. The truth is that struggling to do a bad job at a task you are not suited to is not good for you. Doing a bad job at copy writing doesn’t help you understand your marketing message. We should encourage our business owners to hire professional help, so they get a professional result.

You can indulge in soft skills after you get the hard skills down

Every tricky business situation I’ve been in has been solved by focusing on the virtues of courage, wisdom, truth and beauty, not marketing, finance, HR and operations. The reality of business is that there will always be pitfalls, problems and setbacks. You cannot manage your way around those. They take finesse, people-skills, courage, wisdom, truth and beauty.

The real fundamentals of business are trust, love, respect and vulnerability. With those, you have empathy with your customers, you develop a deep relationship and your customers feel heard and valued – which is how we all want to feel. When coming from a place like that, it’s easy to develop an offer that resonates and provides exceptional value.

All the hard core business skills will not get you to that place.

Business tactics, strategies and best practices help with managing a business, but they will not help you develop a business with which people want to engage.

Profit is the most important number

Big business uses many metrics, not just profit, to run their business and yet we tell small business people that as long as they do their bookkeeping, they have their numbers covered. The most important metrics to track may not be on the Financial statements.

For the first couple of years spending is going to be skewed towards startup costs. Every available penny is put back into the business to help it grow. A true picture of the financial health of the company won’t emerge for a few years, yet. Our job is to help the business owner manage their money and their cash flow and in giving them tools to evaluate the opportunities that will help them grow their business.

The business won’t settle enough to show trends emerging out of the noise until several years in. How much effort needs to be put in to make the information granular? Does the phone expense need to be separate from the office expense? Does the mobile phone need to be broken out? Focus on what’s really important like landing another $5000 a year customer, not saving $20 a month on the phone.

A business plan is crucial in starting a business

We’ve all said it “Fail to plan and you plan to fail.” What about “No plan survives first contact with customers”?

Creating a business plan is premature before a single sale is made. It can’t be done until customers are identified, what they want and how they want it. These questions can’t be answered at a desk. They can only be answered by talking to customers. When that step is done properly, the business is up and running and the business owner’s time is best spent in making sales, delivering and testing.

For instance, Brad comes to you wanting to open a pet store. The first task you set him should be to send him out to find his first 5 customers to find out what they really need and want. If Brad can’t do that or isn’t willing to do that, then all the ‘entrepreneurial traits’ tests won’t help and the best laid business plans won’t make the business a success.

That goes double for marketing plans. The first year should be devoted to sales and not marketing. We all know 100 people, who know 100 people, etc. Fifty pet owners spending $50/ month will give Brad a base upon which to build. That takes sales, not marketing. Those sales should be well under way before signing a lease and paying for inventory.

The business plan focuses on financial projections, market analysis and demographic customer analysis. That’s great if you know who your customers are, which you can’t know if you don’t have any. The best way to do a market analysis is to spend a week selling into that marketplace, not a week spent searching statistics and playing with spreadsheets.

We should encourage focus on business models, feedback loops, iterations and pivots. Then on customer engagement, automation rollouts or scaling. When our business owner is ready for scaling up, hiring and financing, then that’s when an executable business plan can be written.

Work hard

We give workshops on how to be more productive and on time management, but not on courage. Any person having procrastination issues is dealing with fear, not the wrong method for managing to do’s. The greatest service we can give our business owners is to name it and help them deal with fear and courage..

We teach our business owners how to do all the work of running a business instead of teaching them:

What are my clear objectives?

What are the fewest tasks to help me meet those objectives?

How can I get those tasks done? (Instead of how should I do it?)

We should be helping them focus on what not to do as much as what to do. On causing things to get done rather than doing them. The “Really busy” answer to the question, “How are you doing?” has become a badge of honour. We let them get away with that. We tell them we appreciate them taking time away from their busy day to meet with us.

We should demand, not just encourage our business owners to take time away, time to think every day. We should make it clear that they are the most important piece of their starting business and therefore looking after themselves is vital to business success. We should encourage them to meet together for coffee and masterminding every week.

Working harder on the wrong things won’t get better results, it will only get our business owners to burn out.

The Answer

The sooner we encourage our business owners to ‘get out of the building’, talk to customers and make sales, the sooner they will get over the fear. Yes, it’s hard and they will push back, but that’s our job. They will be stronger, more capable and more resilient because of it.

Set up small business owners into cohorts that can help each other. They can trade off services. They will encourage, hold accountable and support each other.

We need a new paradigm for small business support. We all know business is changing – the way customers engage, the way it’s delivered, even the way people pay. Shouldn’t the support we give change too?

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What small business owners really, really need

Over the past 1 1/2 years or so, since I wrapped up Crystal Clear Bookkeeping Ltd., I’ve sat down for coffee with business owners to find out what they really need. I am continuing this work. In the mean time, I wanted to report my findings so far.

Who

I choose to talk to small business owners (SBOs) who have been in business for more than 10 years. They all felt things are harder now than when they started. They are excited by the prospects of these times, but they aren’t sure how to take advantage in their business. By small business I really mean micro business – my definition of that is one where the business owner fulfills all the C level roles. It’s not about revenue or staff size although that tends to go hand in hand.

What They are Told They Need

After SBOs get through the startup phase in 3-5 years, their focus turns to managing and growing their business. It’s at about this time that SBOs hear they need to develop competencies in traditional business skills. SBOs think that’s what they need because that’s what they were told they needed. All the needs assessments and surveys I’ve read come at it from that premiss so this myth perpetuates itself.

Every business development officer told me that business owners need more basic skills like marketing, operations, HR and accounting with supplemental instruction in things like delegation, time management, social media strategy and leadership.

There isn’t a single person who has all the competencies that are said to be required to run a successful business. Look at the top CEOs of the world and every successful business leader and they will happily tell you their strengths and their weaknesses and go on to tell you about the team they have around them who take care of those parts.

The most successful SBOs ignore all that and focus on providing the best service or product they can. They are the ones who don’t seem to have to market, because everyone talks about what they do.

Everything I heard confirmed that small business is not a little big business. The thinking that it takes an MBA (or MBA-like knowledge) to succeed in business makes small business owners feel inadequate. When I told them that it sounded to me like they knew their business and that they only need to know was how to make their customers ecstatically happy and how to tell their story in order to attract the best customers for them, they visibly relaxed. That they could do. That was manageable. They could get their heads around that and see a way forward to continue that work without being distracted by trying to figure out Marketing, Operations, HR and Accounting.

What They Say They Need

Every business owner started by saying they needed more sales. Deeper probing revealed some very interesting things.

They talked about their customer base being much wider than it was in the past. This wider pool meant that they could see more clearly that not every customer was the same. They recognized that they wanted more of the right customer, not just any customer.

They felt they may be missing the boat in how they do or deliver their business. They had tons of ideas, but weren’t sure which ones would work best for them. There is a sense that the internet is the way of the future, and they are willing to play in that sandbox, but they didn’t have the capacity to make too many mistakes,

The more business owners put learning traditional business skills on the back burner in favour of focusing on the specific skills they needed to run their business the better off they were. When they did that, time management was less of a concern.

Peeling Back the Layers and What They Really Need

Information is not a limiting factor. Another workshop is not what SBOs need. What all business owners wanted was a way to assess ideas and the necessary support to implement the chosen ideas.

The way business is done is shifting, so business owners are wondering about whether their business model is still valid. A deeper probing of the ‘more customers’ problem uncovered several things: they need more of the ‘right’ customer; and they haven’t engaged deeply enough in using the power of today’s automation and connection to make it easier for their customers to buy and use their offerings.

They are working harder to make the same or less money with their traditional offerings and, while they had great ideas about what else to offer, they are having a hard time devoting the time and resources to introduce these new offerings. in fact the main reason they weren’t jumping right in was that they knew they needed to make it pay off pretty quickly and they weren’t sure they could accomplish that.

They are frustrated with advertising, they don’t feel like they understand marketing sufficiently to tackle it, but they know they need to ‘get the word out’. Oddly, there is a mismatch between how they think their customer wants to engage with them and how they themselves want to engage with other business. Business owners understand that they need to tell their story, but they don’t have a visceral understanding of what that means and how to do it.

HOW

Some quick notes about how I’m doing this work.

I didn’t know I was doing a needs assessment when I started this so it has been pretty organic.

I’m not making any effort to sample a random group. These are very particular small business owners.

I came across a research method called Grounded Theory and it seems to be right up my alley. http://en.wikipedia.org/wiki/Grounded_theory

As I go forward, I will use the Grounded Theory method and introduce some rigour. It still won’t be a random sample, but  that’s because I’m trying to solve this question for a specific group of small business owners.

Does this resonate with you? What do you think?

What’s at the Core of Entrepreneurial Ecosystems?

People are at the core!

It’s all about people. It’s always about people.

People who are excited to try new things.

People who feel safe to take risks.

People who have capacity to continue trying, failing and taking risks.

With the downturn in the economy and the changes in the world, there is a tightening up – a closing in – an attitude of looking out for oneself – a resistance to change. The capacity has disappeared.

Gone are feelings of abundance, openness to sharing and tolerance for trying new things. There is a militant flavour to our giving. As though we expect every cent we give to perform miracles. We want a clear, guaranteed return on our investment of time, money or attention.

That goes double for our investments in our community and the people doing good works in our community.

I want to talk about 1 group in our community in particular who are deeply effected by these factors – our volunteer leaders.

These are the people who organize, start and run organizations and create projects for the nonprofit sector. They are the ones that make the programs happen, then pass the work along to others. Now that funding goes only to program delivery, they aren’t being paid. These are the people who are only too aware of the lack of dollars in the purse and are the first to offer ‘a few hours a week’ that turns into full time.

Some of these volunteer leaders are in trouble. It’s hard to make a living when the best of your time, energy and creativity goes into keeping a nonprofit going and not getting paid to do it.

They have reached a time in their lives when they would like to take it easier, to pass on their wisdom. They are seeing their friends start to retire with pensions. The nonprofit sector isn’t known for its pension benefits (or usually any benefits).

The economic creep means they are losing ground, the attitude changes mean that the usual ways of picking up some money are drying up and the new ways of doing business means having to start over. The worst part is, they feel it’s on their shoulders!

If we want to encourage entrepreneurship within the nonprofit and social business sector – and we do! – we need these people to be at the top of their game. It’s time to think about how we can help.

Ernst & Young G20 Barometer

The EY (Ernst & Young) G20 Entrepreneurship Barometer 2013 is designed to help leading countries benchmark their progress and performance on the vital issue of entrepreneurship.

For this second edition of the EY G20 Entrepreneurship Barometer, our analysis of the entrepreneurial ecosystems across the G20 countries is set against five pillars, as co-developed with the G20 Young Entrepreneurs’ Alliance (YEA):

  1. Access to funding
  2. Entrepreneurship culture
  3. Tax and regulation
  4. Education and training
  5. Coordinated support

http://www.ey.com/GL/en/Services/Strategic-Growth-Markets/The-EY-G20-Entrepreneurship-Barometer-2013

13 Ways to Kill Your Community

Doug Griffiths is an MLA in Alberta and minister of Municipal Affairs. He toured most of the 422 communities in Alberta to determine what was happening to Towns. He took all he learned an created a presentation about how to fix your Town. After fielding questions and being called back to repeat his presentation, he realized that people were not hearing what he was saying.

Doug flipped his presentation from what to do to save your community to how to kill your community. Experience, research and listening led him to the ‘13 Ways to Kill Your Community‘. Everyone could see their Town and the mistakes they were making.

Here are 13 Ways to Kill Your Community:

Water – you can tell everything about a community by the quality of it’s drinking water.

Youth – youth need to go and experience the world. It’s our responsibility to give them a reason to come back.

Values and Needs – If you don’t know, you can’t get there.

Shop elsewhere and discourage companies from coming into Town that may compete with existing business. Competition encourages customers.

Don’t paint – if you don’t care why should anyone else.

Don’t cooperate – everyone compete for the community capacity.

Live in the Past – overly nostalgic or mired in old feuds.

Seniors – are the keepers of the past and they have time and money resources to spare.

Reject everything new – look to see what works in other similar communities and bring it home.

Ignore outsiders/newcomers/immigrants. It’s incredibly difficult and lonely to come to a new country with whole new ways of doing everything.

Become complacent – If we aren’t making it better, it is slipping. We have to think of this as a relay that works best when we pass on the baton when we become tired.

Don’t take responsibility – Our community is the way it is because WE made it that way.

It’s up to us to make our community the best it can be. Which of these mistakes are you making?

Georgetown Conference

First day of the Georgetown conference in, you guessed it,  Georgetown PEI.

They have attracted the community doers and leaders. That is the real value of this conference.

the first session was a panel with a focus on success stories. Importance and benefits of location and sense of place. Overcoming challenges.

Panelists were Zita Cobb, founder Shore Fest Foundation, Fogo Island, NL

Donna Butt, Artistic Director, Rising Tide Theatre, Trinity. NFLD

Gilles Lepage, Blueberry Farmer and former CEO, Caisses Populaire Acadiennes, Caraquet, NB

Moderated by Ray Ivany, President of Acadia University and Chair, NS Commission on New Economy.

Donna spoke about the value of non-profits, social enterprise and community groups. Zita talked about cooperation between varioius related parties. She says that the local university and the National Film Board were instrumental in the Fogo Island growth. She also talked about the value of youth going away for a while to experience the world to bring back new ideas. Gilles talked about the value of entrepreneurs working together.

Questions followed around the value of catalysts and doers in our communities. The fact that local people often won’t support business in their community. The entrepreneurial history we have here in Atlantic Canada. Youth have a different way of looking at the world that is easily squashed every time we say, “That’s not how we do things here.” If we want our young people to come back, there has to be something to come back to.

Then there was supper. Lobster provided by the Town and the most amazing coconut pie. And the great conversation and connections. That will be the best value we get.

What does Building an Entrepreneurial Ecosystem mean?

People ask me how help build entrepreneurial ecosystems. What do I do?

I’m writing an ebook about what it takes, but in the mean time here is an outline of what it takes.

Start where you are

Start with your community assets. What makes your community special and unique? Bear in mind that most communities say they are great places to live, so you actually have to go deeper.

In my larger community, we are an agricultural region with small family farms and boutique wineries. That makes this a community with a slower pace, a deep connection to our food and wine and a sense of shared community – it’s hard to break bread with people and not have that sense of community.

In my local community, our Town is the County Seat, including court house and it is the business and professional centre. We are chock full of lawyers, accountants, banks and financial planners. Our way forward is to embrace that while updating our business thinking into the new ways of doing business.

Remember your history

Kentville was an incredibly entrepreneurial place 100-150 years ago. We need to remember that. I look at a couple of the older buildings in Town and wonder how they had the vision and the support of the community to do these amazing projects.

Your community has a history, too. Embrace it and celebrate it!

Baby Steps

Making change is hard, and let’s not kid ourselves, change is what we are talking about here. “We cannot solve our problems with the same thinking we used when we created them.” – Albert Einstein.

Change is easier to take in small steps. Multiple approaches work best. People engage in different ways and at different levels. That means it is best to engage many leaders and groups all working towards the same aims.

How will you know you are there?

The answer to this question will help you make the decisions about what to do, how to do it, with whom to engage and how to roll it all out. The answer to this question tells you what to measure so that you know you are still heading in the right direction.

Celebrate

Celebrate often! As you decide on what you are measuring, choose milestones and celebrate them. Celebrate your history, celebrate your success stories, celebrate the people in your community.

What do you think?