Steve Huey’s Blog

What do lawyers and your mom have in common?  They both want to protect you.  Your mom tells you to wear a helmet, take your jacket, look both ways before you cross the street etc.  All good advice just as your lawyer gives you good advice.  In most cases you should take their advice.

Sometimes moms can be too protective.  My wife once spent 20 minutes dressing my son for outdoor play in the winter.  It took 20 minutes to put on all the clothing, get a second pair of socks, get a hat, a winter coat, a set of gloves, good boots and then finally he was ready to go out.  Open went the door and in 15 minutes he was ready to come in and play with toys inside.  Sometimes lawyers can be too protective as well.

In some companies they call legal, “The business prevention team.”  Too much power is given to a team or person who gets paid to avoid all risks.  At some point it is not worth the effort to play.  This is a terrible problem in that business is about risk and taking risk.  Risks are minimized based on experience, and consideration of the people involved.

So what is the “1 risk” lawyers do not warn you about?  The risk of not trying.  See if you give them too much power over you, like your mom, they will protect you.  You will never skin a knee or worse break an arm.  But I would argue you will never live.  Like life business is about taking risk.  Remember no risk – no reward.

Some risk is ok.  Go ahead jump in.

Remember a while back that the Mission Statement was thought of as the thing you had to have to effectively run your business.   Then they fell out of favor because they became long corporate type meaningless Hooey!

The idea of the Mission Statement is not wrong!  It is not Hooey!  It is just that people lost their way in creating them.  The Mission Statement became this public declaration to be issued in a press release for the world to see instead of a becaon for the people of a company to ralley around.

We must get back to making the Mission Statement be a ralleying cry to have the people in your company gather around.  A single unifying statement that has purpose.  A mission statement is written as a press release.  A MISSION STATEMENT is written for the members of your Tribe to ralley around.  A MISSION STATEMENT can unify your team, help guide their actions, give them the internal strength to say “No” to bad customers.

A mission statement is a scourge.  A MISSION STATEMENT is a Savior!

When do you sell as an entrepreneur?  A few answers:

• When you have the next business idea!
• When you can sell for enough to start your next idea!
• When the thought of the next idea makes you happier than the current one.
• Before the organization out grows you.

The 135th Kentucky Derby was run yesterday on a sloppy track, in the cool air, on a cloudy day.  It was hardly the best weather for the world’s greatest horse race.  As it turned out it was a perfect day for a “Long Shot” to win.  Mine that Bird waited for an opening and then doing something that most don’t slipped in through a whole on the inside of the track to became a 50-1 winner of the Kentucky Derby.

The conditions set up the Long Shot win.  Just as the current economic conditions are setting up opportunities for long shot wins all around us.  I sat in a pitch for a real estate fund – raising ten million to take advantage of “Fire Sales” currently available in the market place. 

A colleague sat in a reunion presentation where the dean of the school stated that now was the time not to cower in a hole but to boldly step forth and take advantage of the opportunities that the economy has produced.

I agree with the dean.  Now is the time!  It is a sloppy track out there right now and right NOW is the time to be bold and make your move.  Long shots do pay and usually it is in sloppy conditions.

The number one thing you can do to build a great company is to build a great team.  I call this the “FIRST FACT”. 

There have been tons of books written on this topic and on the fact that building a great team is the most important thing a manager can do.  Good to Great put forth “first who then what”.  The Five Dysfunctions of a Team is devoted to getting the team to work better together.  The whole “Strengths series” is dedicated to either finding your strength or you peoples strengths.  Book after book expounds on either how to build a team, pick a team,  or wring the most out of your team.

So why do we forget this simple First Fact. 

Every day you should be working on the FIRST FACT.  Here are my thoughts on what you should do:

1. You should work every day to attract the right people to your cause – Tribes by Seth Godin is dedicated to the idea that we need leaders who can do this.  Find people who have diverse skills and actually believe in what your company does (simple for what your company’s mission is).
2. Make the people around you better.  Each person you manage should have a development plan.  You should have a development plan.  What can they do to be better?  What five things should they be working on to be better?  What can you do to help? 
3. Build the team!  You have to continually Build TRUST, promote constructive CONFLICT, promote COMMITTMENT to results, establish within the team ACCOUNTABILITY and focus the team on RESULTS that further the cause.

I encourage you to start tomorrow by thinking of the FIRST FACT and how you can help attract great people, make them better, and help them work as a team.

At an angel meeting today.  Heard a decent company pitch where the guy ran out of time.  He didn’t communicate all his points because he was side tracked showing how his sight was quoted in a few blog posts.  First getting quoted in blog posts is not that impressive if I have never heard of the Blog.  Second it took way too much time to describe the benefit and tie it to the story.

The net was make every word count.  If you have 20 minutes to present don’t spend 5 on the story of your last company.  Yes establish credibility but squeeze it down to a proportionate size – remember you have a ton of points to cover and the pitch should only serve to get Angels interested in finding out more.

 Define for me the qualities of a place where you would like to work.

Here are mine:

• Where we can have fun, 
• Where we work as a team, 
• Where hard work is rewarded, 
• Where we can make a difference, 
• Where we are challenged and can grow.

Tom Peters frequently issues the advice of the 1% rule.  What he says is to go to the company / department budget and look for 1% to cut that is money not spent well.  I have always liked the idea but feel that in these times cutting the budget by another 1% just adds to the company anxiety.  My idea is more fun…

Go through the revenue being generated and find the opportunities to increase sales by just 1% – heck find more if you can but look for 1%.  Don’t do what the airlines did and impose a baggage fee or look for ways to gouge your clients for more.  No way!

Look for a way to sell 1% more or increase value for your client or find just one more client or increase traffic to your site by just 1% more.

Its challenging but I bet that if you turn the subject to finding 1% more in revenue to your leadership team the mentality will begin to shift from cost cutting to growth.  Growth is what we all need now.

The great thing about entrepreneurs is that they have a lot of cutting edge ideas.  The bad thing about entrepreneurs is that they have a lot of cutting edge ideas.  They frequently try to do too much, too fast, too soon.  They stretch their organizations too thin and never focus on the things that could or are making them successful.  How do you balance focus with cutting edge ideas and opportunities you should exploit?  What about the following scenario:

• Is the new idea currently within the scope of what your company does?  An example – if you are an accounting firm, should you also provide car washes – answer is easy: No! but what if the new service is tax preparation?  If you have no tax experts in your shop and your specialty is book keeping services the answer may be no as well.
• What if you have one person that knows taxes but that person is currently your best skilled bookkeeper managing a great and growing client?  The answer may still be no.
• What if that one person is serving your best client and you can see that bookkeeping services are being off shored to India?  Then the answer may be yes.
• What if your firm does bookkeeping and you are growing at 35% a quarter and there are clients who want your services but you just can’t serve?  The answer should be to focus on growing your current business instead of adding a new one.

The scenarios are many – there are a few key questions:

1. Is your current business growing at an acceptable pace? If yes, then stay the course.
2. Is there some systemic threat to your current business that requires you to look for profits somewhere else?  If no, why divide your attention?
3. Do you have the resources to adequately serve the new initiative?  Can you get them?  If no, then don’t stretch.
4. If you try and fail at the new services, do risk your current clients and business?  How great is that risk?  If yes, and the risk is great don’t do it.
5. Is the adjacency or new initiative within the perceived scope of your current business?  If it is outside do not tie the business together.

In all most of the time you should not move too far afield.  A start-up should focus and give the original model time to grow.  You should be worried if you are spending too much time thinking about expanded services and not growing the core.

If you are walking into the den to pitch your company you should get a feel on how a potential investor will be evaluating your idea.  I know there are a ton of advice that focuses on the business idea.  The following few examples are part of the whole but not the whole:

• Market Size
• Management Experience
• Business Model
• Ability to attract clients
• What problem are you solving
• Can you identify the people who want the solution
• Can the people who want the solution afford to buy it
• etc. etc.

These are great things to think about but I would like to add the following for consideration:

• The Idea: This is probably the superset of all questions asked above so answer them.
• Management: Why did I pull this one out because in Louisville “You always bet on the jockey not the horse”.
• Timing: First is this an idea or product that will take years to catch on or is it a little too late?  Second how long will it take to grow the company and how long will it take to get my cash back.
• Valuation: Too frequently a management team does not address the valuation question in the pitch – preferring for the investors to set the price.  Hey that falls under that quaint rule “Who ever names the price first loses.” – Don’t believe it – name the price get your money and grow your business.

Look I hate to add four more things to the mix but thinking about them before you do your pitch really will help.