Lessons Learned-Tweaking the Plan

What I Think

I think some of the faithful readers may have missed the daily digests of articles posted on the LinkedIn Applied Entrepreneurship. I’ve taken a little leave of absence from this blog for a couple of weeks.

On the one hand, with the economy turning around, I’ve been busier than usual (a good thing) in the for-profit arena. On the other hand, I’ve gotten a couple of not-for-profit projects closer to their “happy place,” so some of my time is starting to free up again. I mentioned in an earlier post that I feel compelled to give back as much as I can, and allocate a substantial amount of my time to various not-for-profit activities, such as volunteering as a SCORE counselor, serving on some community organizations, and various not-for-profit boards. I try to keep a balance, but with all these balls in the air, the ebb and flow of projects takes some careful project management.

For that reason, among others, I periodically try to evaluate the ROI for those I try to serve. This, of course, includes clients of my law firm and consulting business, but also includes readers of this blog. I have been happy to see a relatively rapid increase in the number of readers, but, frankly, am not getting the feedback I had hoped for. Granted, much of the content of each post, since I changed directions initially many months ago, was a digest of the articles written by others. These articles were carefully selected by me for posting with the Applied Entrepreneurship group I started in late February of this year.

The LinkedIn group is thriving and growing. We’re working on our first live event in Louisville, probably between the end of this year and Derby 2010 (i.e. early Spring). We have members in quite a few states and in over a dozen countries.

Tonight, I just posted the tenth article of the day on the LinkedIn group site. That brings me to just short of 1,400 articles I have posted on various aspects of entrepreneurship since February. Rather than being satisfied with the plateau this blog has perhaps reached, I have now decided to try to tweak it again, to see if I can increase the value to those who read it.

I have spent the last couple of weeks considering alternatives. Originally, I wrote periodic posts on topics, which seemed appropriate for the original stated purpose of the blog. After starting the Applied Entrepreneurship group, it seemed appropriate to synchronize these posts with the articles I was reading and posting on a daily basis with the Applied Entrepreneurship group. My hope was that this would help reinforce the lessons learned, or to be learned, from reading the articles themselves. I tried to post the digest a few weeks after the original articles were posted on the LinkedIn site, so the digests would not serve as a crutch or replacement for reading the actual articles. I added my take-aways, and tried find common threads in the articles.

The benefit of this, as far as I was concerned, personally, was that I had to read and reread these articles in order to be able to digest them and comment upon them. As with seminars I teach for other lawyers, consultants and other entrepreneurs, when you have to teach someone else about something you’ve been doing for years, you have a tendency to relearn and sometimes conduct a self-audit of sorts on yourself and your own practices.

My personal ROI for creating these blog posts has been tremendous. It has definitely helped me gel my thoughts in a number of areas and to explore many new and emerging areas, such as where Web 3.0 is likely to take us. Frankly, I miss not having the personal benefit of carefully rereading and analyzing the articles I have been posting. I feel like I have been missing something important in these few weeks I’ve been missing from this blog.

In my effort to tweak the plan for this blog, I am again trying to find balance between what I strive to do for readers here, and what I try to do for others. As with all negotiations, there has to be a win-win. Part of that equation for me must be getting back to having an opportunity to again do the closer analysis of these hand-picked articles. What must give way is doing this on a daily basis.

This is where I could use your help and input if you have an interest in this blog. My present thinking is that this could tie in with another project I started several years ago, and have let malinger. That project was writing a book, to be published online, about starting a business in the bubble-burst period following the initial online business boom. That roller coaster has now been around the circuit a few times since I started the book, and I did publish quite a few chapters in the form of articles, which remain on my law firm Web site.

What I am considering now, is combining the book project with the blog project and the Applied Entrepreneurship project. I plan to keep posting the ten or so articles a day on the LinkedIn, Applied Entrepreneurship site. I enjoy looking for, reading, and posting the ten best articles I can find every day. I also continue to learn quite a bit by doing this, and hopefully, the Applied Entrepreneurship members do also.

Having reached the 1,400 article mark, I find that I now have quite a variety of articles on applied entrepreneurship, but some are obviously better than others. I have scores of “the ten best” or “the fifteen most important” type articles, many of which are on the same subject but come to different conclusions. My thought is that I will try to “mine” these articles and post my thoughts about what is really most important or helpful, one topic at a time.

If I post about once a week, what I might be able to do is give links to the articles I’m considering on a particular topic. I will then do my own analysis and thoughts in the topic and post that. If there is feedback, as I hope there will be, then this blog can really gain value from readers lending their own opinions on a topical and searchable basis.

Another part of the present plan is to try to put myself back in the role of a start-up entrepreneur, considering those things that typically come up first in the process. I then plan to work my way through those issues entrepreneurs face, in more or less, typically life cycle order.

There are several challenges to this plan. One is that many of the articles I have posted already deal with more than one subject. Unless I reread all 1,400, and keep up with the new ones as I post them, I will undoubtedly miss some articles on a particular topic. Another is that there are many entrepreneurial startup variations. Some entrepreneurs are offered a business by a departing boss who would like to retire. Some want to convert a hobby to a business. Some family members are expected to join the family business and seem to have little choice but to take over when the family requires it. Some entrepreneurs come across a franchise opportunity and go that route, which is clearly much different than starting a business from scratch or buying a going business. These days, there is a surge of big companies offering employees an “opportunity” to take limited operations of the business and split them off to a new company for the new entrepreneur/former employee.

There are many other scenarios, but the main path I plan to take is that of someone who has a general idea of the sort of business they would like to start from scratch, but who is uncertain how to proceed. That being the case, I plan to work with the process and see where it takes me.

The extra “fun” of this new project for me is that a group of very bright individuals I worked with on a board of directors, is now thinking of taking up the challenge of continuing to try to work together in our respective lives after rotating off of this board. We have a variety of skills, would like to make some money, have some fun, we like each other (so far), and would certainly want to remain friends. We are planning a social get together very soon, and coming up with an idea for how we could work together with the above goals in mind, is a challenge.

For these reasons, the first topic I plan to tackle is how to come up with the best idea for a business. Clearly, many topics intersect and overlap at this and essentially every other stage of the entrepreneur’s business life cycle. We all have to start someplace, and trying to figure out how to get started and what to get started on, is a common issue with many of my clients.

I would appreciate your thoughts on this plan and your support with my intended tweak. Please let me know what you think.

This is the preface to the startup series. Here’s the first article:

Lessons Learned – Refining (or finding) the Initial New Business Concept

Join the Applied Entrepreneurship group on LinkedIn. Membership is free and I try to post about ten articles a day there. We have some great discussions going and if you are an entrepreneur, we hope you will join us.

Lessons I Learned Today 6/9/09 – Innovation Playbook; Turning the Titanic in a Bathtub

This is a digest and recap of highlights, quotes, and comments from articles and discussions posted on this date on the Applied Entrepreneurship, LinkedIn group site.

 

*The Innovation Playbook by J.P. Donlon

“With almost $10 billion in annual revenue, Heinz has leading brands in some 200 countries. (Its top 15 brands account for 70 percent of sales.) In trying to build a platform for future growth, Johnson and his senior team had one major advantage. Heinz ketchup, according to a Harris poll, was identified along with Coca-Cola as the most familiar brand in the U.S. The company is also a brand leader in beans, soups and infant foods in the U.K. and Australia. But iconic brands are not enough in a competitive world food market dominated by numerous brands and tight margins. The challenge was to grow the core portfolio, accelerate growth in emerging markets, and leverage its brands on a larger global scale.”

“At this moment you have two choices. You either recognize the changed circumstances and deal with it and move forward, or you try to live in the past. I’m a forward-looking person. There was no point in going back and reliving that. The market had spoken to us.”

“You don’t turn the Titanic in a bathtub. You don’t make fundamental changes in two weeks.”

“Although we have wiped out the not-invented-here attitude, there are occasionally pockets where we want to do something, and somebody is resistant. There are two ways to convince those individuals. One is with facts and logic, and the other is to tell them to do it anyway. We’ve upgraded our capabilities dramatically, but we are nowhere near perfect. That’s what makes this job challenging.”

 

*My Boss Wants to Sell Me The Business by Tim Berry

“Where do I start? My boss said he would sell the business for $500,000. What would be the best way to go about getting this business; and what should I know?”

“Of course this might be the opportunity you’ve been waiting for, but let’s also understand that your question is even more open-ended and complex than if you’d been offered a house to buy. You start with the problem of what it’s worth, objectively, then add the problem of how you’re going to finance the purchase. And all of that rests on the problem of whether you want to run a business and know how to run it. Books have been written on this stuff. In fact, the amazon.com search for books on “buying a business” produces 18,623 results.”

This article provide links to resources on business valuation, and gives brief comments on issues such as leveraged buyouts and seeking professional advice when buying a business.

 

*Do You Have an Exit Plan? by John M. Leonetti

“As a CEO, and most likely owner or part-owner of your enterprise, you are responsible for grasping the big picture of how the company is performing; you make critical decisions in order to succeed and direct the future of the company. With that said, how well prepared for your company’s future do you think you are? Have you taken the time to outline your ultimate goal of how you plan to exit the business? If so, how confident are you that this move is the most profitable option, and, at the same time, the best strategic move for the company?”

“Creating an exit plan for your company should be considered standard practice, a regular component of your business planning. An exit plan does not, and should not, imply that you are currently considering selling the business or looking to retire in the near future. On the contrary, well thought out exit plans occur over many years and often times selling the business is only one of the many options considered in the plan.”

“What your exit plan should do is analyze the possibilities for the ultimate succession of the business’s ownership and control, the tax and business implications of each option, taking into account the wants and needs of the company’s ownership.  What then will creating an exit plan give you if you do not believe your company’s ownership is nearing an exit? The answer, it will give you confidence that the decisions you make today are supporting your ultimate exit plan as well as providing you with the maximum exit value when the time is right.”

The article discusses the various steps in creating an exit plan, including looking at the current ownership of the company to determine how prepared they are for an exit, understanding all the options, executing on the plan, and then protecting your wealth.

 

*Succession Planning Crucial For Corporate Image by Fayazuddin A. Shirazi

“For Ken Makovsky, succession planning is all about safeguarding a company’s image. According to him, if the succession issue goes unattended, it can seriously dent the reputation of the company. “One of the main responsibilities for a CEO and the company’s board is the development of a succession plan to insure the continuity of the company. The company’s reputation can be seriously tarnished if the succession issue is left unaddressed,” he says.”

” A survey of more than 2,500 senior HR executives by Boston, MA, based talent development consultancy Novations Group reported that despite having succession planning in place, more than a fifth of the survey respondents believed it was valueless because, more often than not, they ended up recruiting someone externally anyway.”

“The report which was released last year further revealed that barely half of US firms regularly update their management succession plans, meaning that when valued high-flyers depart for greener pastures, it is more than likely that their only option will be to throw money at the problem.”

 

*Succession in Practice by Beverly A.Behan, Jeff Kirschner and Susan M.Snyder

“To understand the perspectives of today’s CEOs on succession planning, we spoke with 18 sitting CEOs, one recently retired CEO and one sitting chairman, as listed in the sidebar on p. 30. To gain varied perspectives on this important topic, we spoke to CEOs from a variety of industries and different company sizes, with our sample group admittedly weighted towards larger public companies.”

“I think the days of the imperial CEO are long gone but while they lasted, succession planning was a subject that a CEO could defer,” noted James Cornelius, CEO of Bristol-Myers Squibb. “In today’s world of governance, it’s impossible to defer what is probably the most important decision, namely who will be the next CEO.”

Most describe an effective CEO succession process today as a partnership between the board and the CEO. While the ultimate decision rests with the board, the CEO nonetheless plays a critical role in the succession process. “The board is the ultimate decision maker about who the next CEO should be,” explains Don Shippar, CEO of Allete. “The CEO, however, needs to weigh in on issues about what’s important in the CEO job, and the criteria for someone to be successful in that job, and should help the board to come to agreement on these things.”

Formal executive assessments are increasingly becoming an important feature of the CEO succession planning process. “We do 360 [reviews] with all of the executives, including me,” reports Carlos Cardoso, CEO of Kennametal. “As a result of those 360s, there’s coaching and feedback.”

“While the role of the CEO in succession planning may have changed, today’s CEOs feel their role in succession is more important than ever – in partnering with the board on succession, developing a pool of candidates and mentoring candidates to the point that they can successfully step into the CEO’s shoes. They emphasize the importance of starting early, incorporating formal assessment tools into the succession process and avoiding public horse races along the path. They recognize the CEO’s role in giving the board meaningful exposure to succession candidates and in giving candidates experience in learning how to work with a board.”

 

*Small Biz Blogging 101-Getting Started by NicoleR

“Most startup blogs are small, but with time and regular updates your audience can grow. As a small business it is important to start your blog early because this can be one of the most cost effective ways to start marketing your business. As your business grows so will your number of followers and those who become faithful, will appreciate your information and possibly become future consumers.”

The article lays out a few tips to get you on your way:

• Use other people′s blogs to establish yourself as an expert
• Use your blog as a form of communication
• Define you topic and stick to it
• Stay current and up to date
• Don′t forget about spelling and grammar

“It′s not necessary to be a professional author or multi-million dollar company to have a blog.  All you need is opinions, information and insight in your area of expertise.  If you prove to be genuine and knowledgeable your readers will notice and your blog will become one of the most cost effective marketing tools your small business could invest in.”

 

*Lifecycle Quiz for CEOs by Robert M. Donnelly

“Company’s, (sic) like people, go through a natural evolution from their entrepreneurial beginnings or embryonic phase, through the growth phase into maturity, and if they are not careful they can age prematurely and eventually die. The individual products that make up the company sales have their own product lifecycles as well.”

“The problem is that many CEOs do not know where their company lies on the lifecycle curve. Nor do they seem to know where their products fit in the natural evolution of product lifecycles. As a result they are frequently surprised when they realize that it is often too late to reverse their situation.”

“Nobody plans to fail…they just fail to plan.”

“The lifecycle of a business mirrors the biological cycle of humans. The stages of the business/product lifecycle have been well documented and are played out in the marketplace every day. The question is – where is your business in this age old evolution? Do you know?”

“Every company generates immense amounts of data. However, all that data has to be converted into information and that information used to develop insights to determine where the company and its products are in their natural lifecycles.”

“Each stage of the lifecycle of a business has natural strategies that can be implemented successfully to continue the profitable evolution of the company.”

 

*Small Business Networking for your Bottom Line by NicoleR

“Traditional means of marketing are not dead; in fact, they are still very much alive and proving to be effective. Tactics such as face-to-face networking and word-of-mouth is proof of this. When deciding on what business networking methods you will use, it is important to first, understand how networking can work for you. Second, research what groups are right for you. Third, make a goal for what you want to accomplish.”

“Business networking in the form of joining and meeting with trade groups, industry associations, chambers of commerce and similar organizations in person can flat out increase your bottom line. By meeting other professionals in person, on common ground and at a place of mutual interest, you will begin to form relationships among your community. Once you start building relationships and regularity among these groups, members will begin to remember you, your abilities and your expertise. The next time a member needs something in your field; they will remember you and therefore will probably reach out to your small business. In essence, you will form a loyal network of followers who may at some point need your business, refer your business or want to collaborate on a joint goal.”

“Business networking in the form of joining and meeting with trade groups, industry associations, chambers of commerce and similar organizations in person can flat out increase your bottom line. By meeting other professionals in person, on common ground and at a place of mutual interest, you will begin to form relationships among your community. Once you start building relationships and regularity among these groups, members will begin to remember you, your abilities and your expertise. The next time a member needs something in your field; they will remember you and therefore will probably reach out to your small business. In essence, you will form a loyal network of followers who may at some point need your business, refer your business or want to collaborate on a joint goal.”

 

*BizEquity: What’s Your Business Worth? By Tim Berry

“If you own a business or want to start a business, then you care about valuation and how it works. Even if you don’t now, you will later.”

“Businesses that seek investment need to anticipate valuation as part of the exit strategy, which is how the investors make money. You get investment now, but only if investors believe they’ll make money when the business sells later. “

“For estate planning, you need to estimate valuation if you deal in shares of a business for your wife, partner, significant other or children. Tax code defines how much you can give in any given year, and that depends on valuation. “

“Lots of people who never thought of exit during years of running a business start thinking of selling as they get into their 60s and 70s. And that means selling the business. “

“Valuation is obviously critical for buying or selling a business.”

The article outlines a trial run of BizEquity.com where “you can search your ZIP code for estimated valuations by type of business. You can search for your specific business by name. Most interesting, and a new feature, you can sign up and run through a valuation based on your business numbers.”

 

*Do You Really Want to Find Investors? by Tim Berry

1. Are you really sure you want to go that way?

2. Do you have a business plan?

3. Do you need enough money to interest investors?

4. Can you grow your business a lot, in a few years?

5. Do you have a convincing team?

Investors are going to want track records, people on your team who can run the production, marketing, sales, and administration of your business. They want people who have done that kind of thing before, successfully. If you don’t have them on your team, then the investors won’t be interested.

If you can answer yes to all of those questions, then you’ll likely be able to get investment

 

What I Think

I think, as Donnelly’s article points out, “nobody plans to fail…they just fail to plan.” Many of the articles posted on this date demonstrate both sides of the planning equation. Those entrepreneurs who think up front about their businesses and their own mortality, should do better than those who don’t. Those who start their planning too late in the life cycle of their business or their own lives, have corresponding less chance of success. Those who plan on the basis of incorrect or insufficient data, as well as those who don’t understand the data, are as likely to succeed as they are to be able to “turn the Titanic in a bathtub.”

These all seem like pretty basic rules, but that is a matter of perspective. If you understand the rules, they become obvious to the point of being second nature. If you don’t know the rules, perhaps because you are in unfamiliar territory, you don’t know what you don’t know.

A perfect example comes with the employee whose boss and company owner offers him an opportunity to buy the business. With the economy in the shape it is currently, this is likely to be happening at a record rate. So, what are the rules in this situation? Perhaps they not so easy to tell.

Based upon some of the articles posted on this date, the issue of valuation arises. There are certainly many ways to value a business, each method having its own rules. Once again, in this economy, many of those rules are changing, but all according to a higher level of rules.

The stages in the life cycle of a business or product are sometimes so long and so subtle to the uninitiated, they are harder to see than the movement of the hour hand on a clock. Likewise, other than gray hair, the life cycle of a business owner can be deceptive for both the employees and the owner too. Following one rule from these articles, starting early in the process, whether it be working toward buying a business or finding a successor to run your business, may just allow you to turn the Titanic, but not to make fundamental changes overnight.

 

If you enjoyed my impression of these articles, why don’t you read them for yourself and see what you and I missed or hit? Join the Applied Entrepreneurship group on LinkedIn. Membership is free and I try to post about ten articles a day there. We have some great discussions going and if you are an entrepreneur, we hope you will join us.