Overcoming The Expansion Trap
August 31, 2005
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Employees. You can’t grow a business without them. When there is more work to do then can be completed, the answer seems to be in hiring and adding new staff! Yet simply hiring new employees to do the work you used to do could be a trap.
A Very Expensive Trap!
If all you do is place people in positions to do work you used to do - without adequate systems or processes — all you have accomplished is creating employees that are forced to come back to you for answers. This can become a costly and expensive distraction.
Unless you have proven systems to manage new employees, it could compound the problem and inadvertently divert time, energy and money on:
- showing the new employee what to do.
- answering questions.
- troubleshooting problems.
Do not misunderstand me. You need to do these things to indoctrinate and train new employees. Only one problem — it comes at a time when your business needs to be running at full speed.
Beware Of The Trap
Many businesses start with the entrepreneur doing everything. Chief cook and dish washer! As the business experiences significant growth so does the complexity. Eventually the business grows to where the boss is no longer able to effectively manage the business. It is time for things to change.
Many entrepreneurs rely on employees to just “get the job done”. The problem with this strategy is the staff becomes the “system” and your business becomes increasingly dependent upon their knowledge, experience and relationships. When an employee leaves, their knowledge, experience and relationships leave with them.
The only way to break this cycle of dependence is to focus on developing management systems, processes and controls. Otherwise you may never enjoy the experience of Operating Your Business by Remote Control.
Cultivate A Systems Focus
Build your business upon the strength of your systems. Where every function of the business is based upon a management system that taps into the strengths of your people. That way, no matter who is working in the business, it runs with few problems.
If You Decide To Hire New Staff - Here Are Three Suggestions
- Analyze the profit potential: a service business that has experienced strong growth and indications are the growth trend will continue, should evaluate hiring a new employee. Try to quantify the profit potential. Will the employee be able to step in and quickly assimilate information? How much time and investment will be required until the employee becomes productive? Is the profit potential large enough to warrant the time effort and energy required to get the employee up to speed?
- Make sure the person fits the job: one of the most common mistakes I see business owners make is settling for less than the best candidate. Often business owners feel they will not be able to find the right person or are anxious to get a solution in place to relieve the mounting pressure. You can always afford to wait and hire the right person because in the long run, they will make you more money.
- Set the new employee up to succeed: many times a business owner hires someone only to be disappointed in the results. Often, not always, this is a result of unrealistic performance expectations. Invest the time and energy to properly indoctrinate, set expectations and train the new employee. It will pay dividends every day.
Work On The Business
Set aside time to work ON the business vs. working IN the business. Working ON the business involves tasks such as evaluation,planning and implementing systems.
The cost of not working ON your business and solving your business problem is the continuing cost of repeating the same problem, lost opportunities or unrealized goals.
Each business owner has a different capacity for the changing complexity of business growth. If the complexity issue is related to specific problems or a lack of skills or knowledge, hire a specialist. Recruit someone that is not only going to get the job done, but who will also impart new skills, knowledge and take the time to be trained.
I have a new service, Business Effectiveness Evaluation that provides a report card on over 90 areas of your business. It is a great way to identify areas that need improvement plus it includes an hour of coaching from Greg Balanko-Dickson.
Confessions of an Entrepreneur Turned Business Coach
August 31, 2005
Tough to describe what is in this podcast. It is my story and how the ability to learn, adapt and grow has impacted my business and how it will impact your business too.
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My new web site is www.gregbd.com
I also announce two new services… check them out at www.gregbd.com
Working with Advisors when Buying a Business
August 19, 2005
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Avoid the fog and loss of perspective, information overload when buying a business.
The accountants and attorneys role.
Using an appraiser to help you buy the business.
Asking for help from the coaches in your life, friends, family and professional business coaches.
Eight Deadly Sins of Self Employment, Failure to Follow Plan
August 15, 2005
I have decided to continue on in this series, today I focus on the first of the Eight Deadly Sins of Self Employment, Failure to Follow a Plan.
The Small Business Encyclopedia Project can be found at: community.sbishere.com or from the home page of sbishere.com
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Eight Deadly Sins of Self Employment
August 9, 2005
How is it that a reliable, hard-working and experienced employee can, as an owner, become your company?s greatest liability?
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Small Business Start Up
August 9, 2005
A new business is like a new born baby. A lot of time is spent in the care and feeding of the business.
Starting a business can happen after being laid off, downsized or the result of corporate reorganization.
Regardless, starting a business begins with a dream, an idea. Seeing an unfulfilled need and acting upon your own perspective, agenda and goals you step out into the world to learn how to turn “BusYness into Business” and how to get along in the corporate world.
Green Lights - Go Into Business
- Lack of structure: you thrive on a lack of structure.
- Thrive on challenges: you like even pursue a challenge. You love it when people say “Are you sure you want to do this?”
- Cope with adversity: you view adversity as an opportunity.
- Emotional stability: can separate emotions from the current situation and stress is something you embrace.
- Long hours: working extra hours is not a problem for you and are prepared to put in extra time if needed.
- Long haul: it is normal to take some time to succeed and you can look past your current situation to see the true potential of your business.
- Clear plan: you have a written plan, have researched your market and have tested your ideas in the real world marketplace.
- Resources: you have adequate money, equipment or financing to run your business for the first three years.
- Experience: you have some direct experience in the field/industry of your business.
- Aptitude: a life long learner, you have a capacity and ability to “learn” your way out of problems.
Red Lights - Good Reasons To Think Twice Before Starting Your Business
- Desire for security: you prefer a stable income.
- Prefer Routine: you like things to be the same day in and day out.
- No experience: do not even try to start a business you have never worked in - unless it is a franchise or you have a partner with experience in the industry.
- No plan: if you are unable or unwilling to spend the time to write a business plan — do not waste your time, keep your day job.
- No resources: if you lack the personal finances to start your business you will likely not be able to borrow the money either.
- Technology: how do you plan to use technology? Most businesses, even service businesses must use technology to become efficient.
- Competition: how many legitimate competitors are there? If you do not know or do not care - you are already in trouble.
- Industry Status: if this is a mature business, with long term established players - avoid it and look for a business that is well past the early stage and in growth mode.
- Financial projections: do you know your break even? Do you know when there will be cash flow drops and fluctuations?
- Your desire: how much do you want to be in business? Simply being out of a job is not always a good reason to start a business. On the other hand if you are up late at night thinking about and working on your business ideas…
Now these are my observations based upon what I have witnessed. However, they are not true for everyone - rather these are common issues I have observed in a number of start ups and entrepreneurs over the years.
Strong Growth In Small Business Start Ups in America
In the U.S. Entrepreneurship Outlook article indicated that there are 13.7 million involved in 7.4 million start-ups; 7.6 million owner-managers of 4.5 million new firms [less than 3.5 years old]; and 15 million as owner-managers of 8.6 million existing firms.
Thats a lot of people and a lot of opportunity. I still see a great opportunity for anyone interested in becoming self-employed ansd starting a small business.
Whether you have been thinking about buying a business or a franchise, opportunities abound.
A great way to test your business idea is to learn how to write your own business plan. It will walk you through examining every area of your business idea, reveal potential pitfalls, and oversights.
Freedom from the Box
August 8, 2005
Beware: controversial topic.
Part two of my series on the educational system and how it inhibits entrepreneurs and limits their success.
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What is the best business decision you made in the last week?
August 7, 2005
The best business decision I’ve made is to limit the amount of time I work in the business.
My business is in growth mode and it is very tempting to keep putting in more and more hours and time in the business.
I enjoy my business and is not difficult to become consumed by the opportunities and challenges presented by my business and my client’s problems.
Every day I carefully ask and answer at the following question:
- How much “room” am I going to allow the business to take up in my life?
- How much room is this task, problem or issue really worth? How much room should I allow it to take up?
I have always maintained that a growing business and a shrinking business are in crisis. Both of these businesses are experiencing a crisis — just with different problems and challenges.
A business that is shrinking does not have enough revenue. It may be having difficulty in acquiring customers, keeping existing customers and staff.
The business that is growing has a whole different set problems and issues that need to be addressed. Some of them include:
- Not enough resources to meet demand.
- Overwhelmed staff, systems or equipment.
- Increasing costs, expenses and cash flow.
- The bottom line is — both of these businesses are experiencing stress and a crisis — not being able to meet expectations.
In growth mode I have found a significant time crunch. It seems that everything begs for my attention and often I feel there is not enough of me to go around.
Someone might say that perhaps I should look at adding staff or outsourcing certain types of work — that is something we have considered — however our goal is NOT to employ people unless absolutely necessary. We want to keep it simple and allow for as much room as possible to make the lifestyle choices we want most.
Our business provides a very select service to a small group of growing and successful of entrepreneurs and business owners. Our intent was to never grow beyond our own ability to personally deliver our services.
So what can we do?
We are focusing on streamlining our systems, software and computer hardware to speed delivery of our services and make the best use of our time.
So my best business decision this week involves two key issues:
- Limiting the amount of “room” invested in any specific task. Also, to limit the total amount of “life room” I allow the business to consume.
- Look for productivity and efficiency gains that could be achieved through reorganizing the office and/or purchasing software and hardware.
Avoid The Ego Trap
August 7, 2005
What is an ego? According to the Merriam - Webster dictionary the ego is the “organized conscious mediator between the person and reality, especially by functioning both in the perception of and adaptation to reality”.
I think entrepreneurs are dreamers, and I mean that in a positive sense. They are people that can visualize something and then go out and create it. They want to accomplish something, achieve and succeed. A healthy ego for an entrepreneur is one of balance. That is, one that can dream and yet still strike a balance between reality, morality, rules of society and sound business principles.
I have suffered from what is known as an ‘ego trip’. An ego trip is a strange journey. On this trip I feel an exaggerated sense of self-importance. I know I may be going down a slippery slope when I feel invincible, irreplaceable or especially smart.
The thing I like most about being in business is the ability to set goals and go about achieving them in whatever manner I wish. Therein lies a potential trap. If I am only pursuing my business goals to enhance or satisfy my ego, I may have lost touch with the reality of the situation. After all, the true entrepreneur will always identify more opportunities and ideas than there is time to persue them.
So, what can I do when I find myself in this situation? First, be honest with myself, and know when I need to reel expectations back to earth. When I make improper moral choices, carry an unhealthy attitude, the conscience bothers me, or we feel a sense of guilt, it is time for a reality check. Perhaps I have started to believe my own ’stories’ or my own bloated sense of self-importance.
I think a modest amount of failure is good for entrepreneurs with a strong ego-centric personality. It is the world trying to teach a lesson that they did not want to learn or did not take the time to think through.
Stop yourself, verify your assumptions and get independent advice. It is a lot safer on the ground than flying without a pilot’s license!
Are you or your business crippled?
August 5, 2005
This could quite possibly be one of my more controversial podcasts yet. It is work friendly but it is not politically correct.
I take on a few sacred cows…. let me know what you think. gregbd at gmail dot com or call me at 1-866-281-8281 
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Should I Ask Venture Capital Companies For More Money Than I Need To Create A Cushion?
August 4, 2005
This is a great question. I recently helped a client deal with this issue. Let me share what we learned.
Raising money from VCs is much different than private investors.
Private money is usually friendly money. They know you and are investing because they trust you.
VCs, on the other hand, are more concerned with the business concept and viability. In other words, can you deliver on what you say!?
Asking for an inappropriate amount of money is one way for a VC to begin to question your idea. Test your resolve.
On the other hand, make sure you ask for every nickel you need and not one penny less. Make sure you can validate your request for financing.
They know a business needs adequate financing. They just want to be sure your business idea will work and that you have done enough research and planning to make it a success.
A well written and properly prepared business plan should answer most questions and help you get the financing you need.
SBA Financing for Businesses, U.S. Community Adjustment & Investment Program (CAIP)
August 4, 2005
This is a loan program designed to provide financing for businesses negatively impacted by unfair trade practices resulting from the North American Free Trade Agreement (NAFTA). Eligible recipients must be located in, or relocating to, a specific geographic area designated by the U.S. Treasury and the North American Development Bank.
The CAIP program has a jobs criteria. To be eligible, all applicants must provide a written estimate of the number of jobs to be created or preserved within 24 months of the loan’s disbursement. This number must not be less than the amount of the SBA share on the proposed loan divided by $70,000.
The guaranty of a CAIP loan is available to lenders through either the Business & Industrial loan program of the U.S. Department of Agriculture or the 7(a) loan program of SBA depending on whether the applicant business is located in a rural or urban area. SBA processes the applications on behalf of urban applicants and USDA processes the applications on behalf of rural applicants. Rural is defined as any area outside of a city and its immediate urbanized or urbanizing area with a population of 50,000 or more. SBA can process applications from businesses located in rural areas if requested by the lender. The requirement for payment of a guaranty fee is waived for this program. Except as referenced above, standard 7(a) criteria apply for all CAIP loans.
The Entrepreneur’s Guide to Managing Time & Controlling Distractions
August 4, 2005
The true cost of a failed project isn’t the money spent. No, it’s the time lost. What could you have been doing instead?
Everything Has A Price
One of the best tools for getting control of distractions and your time is to calculate the cost in advance. In terms of time, energy and money what is the cost? Are you willing to pay the price? You can always get more money. I never heard of anyone figuring out how to recover lost time and energy.
Beware Of Boring Projects
There are times when we allow ourselves to become distracted. We know a certain activity isn’t as important as other priorities. We easily set aside current projects in favor of new, exciting opportunities. Don’t get caught in the trap — finish the project!
Look Before You Leap!
Every time we get involved with something new the more important it is to calculate the cost. The real price we pay is what we could have been doing within that same time frame had we known the project would not work. Now be careful. Everyone makes mistakes.
Ask and answer the following questions:
- Do you find it hard to say no?
- Before agreeing to do something, do you stop and consider if the request is more important than what you are currently doing?
- Do you find other people are able to easily get you to follow their agenda or change direction?
- If I do not achieve the goal, what will the cost be?
- Is the cost appropriate? Is there a fair balance between risk and reward?
Update
I was speaking to a client about this subject, and he made an interesting comment. It’s not only whether you made money, but what did you learn along the way?
Even though it appears you were distracted from your normal money making activity, which appears to have been a waste of time, if you learned something or uncovered another opportunity, it could turn out better than what you originally pursued.
Look for the hidden opportunities — those that appear just below the surface and require some probing and even getting a little dirty to uncover.
Greg Balanko-Dickson
Getting a business loan to buy a franchise
August 3, 2005
The franchise should be able to help. After all, it will have been through this before and will know all the questions a bank asks. It might even have a business plan you can use.
Here are some of my thoughts…
NOTE: there are numerous articles on my web site www.sbishere.com look for the link to business loans.
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Getting the Price Right
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