Saturday, April 30, 2005

Good bones

I keep feeling a need to start writing about the blue-sky stuff swirling around start ups. That part is so fun and so beguiling, I can't wait. However, I also hear the cartoon "good" angel whispering in my other ear, over and over, "Good bones first. Good bones first...".

If you don't build in good bones from the outset - that is, a solid structure to support your enterprise - you can quickly drown in blue sky. In my opinion, you shouldn't even start until you get the following things underway. It doesn't cost you anything to get smart. There are low cost entry points for all the following subject areas. You just need to find the pieces that fit you and your budget.

Accounting. You need to talk to a few CPA offices before you start. You need to present the case for your enterprise and how much of it you want to do under their supervision. Ask if they want to be involved and how much it's going to cost. The CPA won't do your books. You will do the books initially, and you'll be supported as needed by one of their lower rate employees. Good people, that they've trained in their systems. So that at year end you're not scrambling at tax time. It's all there, done correctly, consistently and independently. Good CPA outfits would be wise to have some kind of free start up tools in a box available for this situation.

Others will disagree, but I believe even the smallest enterprises need numbers that are certifiable by outsiders for those numbers to be worth a damn. It's not a cost to you, it's a benefit to you. You can trust the numbers and sleep better at night knowing you haven't blown something important inadvertently. Unless of course, you really love reading business and tax law.

If not today, then sometime in the future, when you've got less time and capabilities for making it happen, you're going to need to present numbers certified by outsiders. You'll need to show your numbers to someone you really need to understand your situation... bankers, investors, grant folks, tax auditors, god-forbid. Start now. Start when there are no problems of retrofitting your accounting data into yet another software program. That always, always, always beautifully illustrates the famous efficiency task of stuffing 10 pounds of crap into a 5 pound bag.

Once you get your accounting protocols in place, it becomes easy background noise for the fun stuff ahead. Without those protocols in place, I sure hope you're really lucky.

Insurance. You need business liability protection. It's not expensive. You can add bigger umbrella coverage cheaply. Yes it's a cost, but you get to sleep at night. My kind of benefit. We're trying to make this sustainable, remember?

It doesn't matter how benign the stuff of your enterprise is. Get the insurance. Talk to several agents. Get it from an agent you like. They're business people also. They need to do their best for you to keep themselves sustainable. Good ones will explain carefully what each part of their policy does for you. Most small start ups will need coverage for general liability and medical expenses. Most startups (my kind anyway) don't typically have much physical property involved so the costs of that portion should be cheap.

Personal health insurance is another subject for another blog. That's the 500 pound gorilla in the corner for small start ups, and I want to give it it's due.

Insurance companies would also be wise to put insurance specific start up info in a box and hand it out to attract business.

Data management. While I was traveling this week, the first comment came into the blog. Thanks, Don! What Don posted should be a good lesson to anyone reading this. I can tell Don's been through the start up wars because he's talking about seemingly boring stuff that makes or breaks enterprises. Don knew to focus on it as mission critical... "We also spent the first two, very difficult, years standardizing on the tools we use and our businesses processes. That's how we're still around...". Word from the trenches. He's right. Pay attention.

You can start with pencils and notebooks, but you'll need to go digital as soon as possible. There are many tools and many approaches to this problem and we'll parse them out in time here. For now, try to anticipate every separate data point that you can think of and find a way to capture them in a way they can be searched and manipulated in every single way possible. You won't get them all but if you're smart about designing your info systems they'll stay flexible forever and can grow with you. I'll blow up this data management section into a million more postings as time goes on because, well, I love this part and it's REALLY important.

Banking. A little secret here. In spite off all those puppy kissing bank billboards and electronic ads, you're not really big enough for them to really care about. Sorry to break it to you. However, until something goes haywire, it's possible that someday your company will be one that banks would run down an alley after. As long as you're not expecting too much, banks have a lot of good perks for small start ups.

Banks are not a good source of start up money. It's not their job. They are better at financing on-going operations. You'll want to have a demonstrable "good citizen" track record in place before that first real money meeting; you know, the one you wear your best clothes to. Build your track record with a bank you like, starting now.

Most banks are OK with new business mechanicals, but every one I've worked with could have been a LOT better. I've got an idea... what about a banking version of "everything in a box" kits? Have I heard this somewhere before?

Legal. As an attorney, I'm a very good plumber. Everyone's circumstances will include a greater or lesser need to lawyer up your enterprise from the beginning. There are simple, low cost ways to do the initial registration stuff on line. This is ideal for a single person as owner. For most of us, we may not need much more lawyering at this stage of our enterprises. When you add a second person as an owner (please don't tell me you're friends and nothing can go wrong) you need to get advice from an attorney. The problem is not how either of you are going to get INTO business together, the problem is how you're going to get OUT of business should that become necessary. More on this later. For other people with more complicated financial lives, you probably need better planning up front. That's going to have to be your call.

Law firms are businesses, too. They need new blood in their customer pool just like everyone else. Even if you can organize and register your business without a lawyer, you'd better be thinking about finding one you'd like to work with, should it become necessary. Talk to a few. Most will explain their fees and requirements without charge. It can't hurt. Many lawyers even tell lawyer jokes!

Summary. If you want you and your business to be sustainable, then build in good bones from the beginning. Accounting, insurance, data management, banking and legal.

For those professionals interested in start ups, I should start helping them design "Start Up In A Box(TM)" kits to fit their circumstances. Good idea. Note the TM. Starting 'em mid blog. Damn.

Professional enterprises need to be sustainable too. They need effective ways to find you to keep growing their own enterprises. It would be a great benefit to these professionals to get you up to speed as fast as possible about what it takes to work with them.

As start ups, we would benefit from user friendly introductions to their brands of information. Start ups and expanding enterprises should always be looking for a great fit with market partners. Start Up In A Box Kits. It would sure make our jobs as start ups one hell of a lot easier. Then, bring on the blue sky.

This emphasis on good bones is NOT an unnecessary paper pushing exercise, slowing down your ascent into lofty entrepreneurial heights. Without good bones, your new enterprise will turn into just one more thing causing problems in your life.

Done right, with good bones in place, your own sustainable enterprise can be one way out those problems.

Rick's 3 key things for a sustainable enterprise

There's only three key things you need to focus on to keep your enterprise sustainable. Easy to remember too. I'll probably get drummed out of the start up club for telling you this deeply held secret stuff.

Most of us who've been through start ups a few times will tell you we've screwed it up six ways to Sunday and lost, or nearly lost everything we've bet because of three key issues. If somebody tells you they've been through start ups and haven't screwed up one of these three key issues, they're lying.


Rick's 3 key things for sustaining your business:
Cash flow, cash flow and cash flow.

Everything else in your enterprise can be hitting on all cylinders, but if cash flow goes bad my friend, I promise, you're out of the pool.

If you forget the second two, just remember the first. It's the most important. Don't tell anyone I told you.

Thursday, April 28, 2005

Let's talk about what's risky

One of my favorite cartoonists (BEK) has a great piece in the April 11, 2005 New Yorker magazine. A middle aged guy is sitting in an interview chair looking for a job. He seems forlorn and lost.

He's saying this to the interviewer; "I'm looking for a position where I can slowly lose sight of what I originally set out to do with my life, with benefits."

Working jobs you don't like is basically giving away control of your life, for benefits.

To me, starting a new enterprise is far less risky than not doing it.

Let's say you have a dumb, boring job that isn't building time, quality and competence into your life. If you get whacked by a bad economy and lose your job, what have you got? Nothing. If you act (wisely, please) on your dreams and fire up your own enterprise, what are the downsides? If your new enterprise gets whacked by the economy you can always get a job. You showed initiative. You organized it. You took a chance. That's what smart corporations are looking for now anyway. You just upped your pay grade as far as they're concerned.

However, it doesn't work the other direction. If your job gets yanked and you haven't got anything else in place, the word toast comes to mind. You're not likely to be able to start up an alternative job on demand.

Tell me why starting your own new enterprise is risky? It's risky NOT to do it! Start now. Start small. Start smart, but just start.

Simple stuff. Fixing problems.

Professional Engineers (PEs) are not a notoriously funny bunch.

Oh, they'll drink a beer with you, but you wouldn't search them out if you were looking for the funniest thing you could do on a Saturday night. That's probably good, though. They are smart folk who are damn hard to fool with.

My day job company got picked for a nice award recently by the Wisconsin Society of PEs. Our outfit makes very rugged, very simple tools for a really nasty problem. Nothing high tech. You couldn't plug them in if you wanted to.

There's a good lesson in this for you, my start up friends.

It was sort of a beauty contest for innovation and new products. Entries were judged on design, engineering, innovation and economic impact. No bathing suits for this crowd.

They announced the winners from the bottom up. By the time they got to second place, I thought we were toast. Second place went to a very cool company that had figured out a new way to limit radiation needed for medical treatments. Right. Even I didn't think we should beat this company.

Then a most remarkable thing happened. The presenter started telling a story about his brother. He said the guy was a big deal. He'd owned a number of businesses with heavy numbers attached. Commercial experience all over the place. The presenter said he wanted his brother's opinion of the winners they'd picked and showed him the list, without telling him who'd won. The brother said every single one could win and how cool it was to have so much innovation around. But, his brother said, could you get me the telephone number of the guy with the oil recyclers? I've had that problem in every plant I've ever run.

The presenter quit his story there and said, "That's what we're here for. To fix problems, to make people's lives better." Then he announced us as first place, best of state.

Simple stuff. Fixing problems. Get it?

I was supposed to say a few words when they presented the award. I should have pretended I knew something profound about innovation and technology, but I only had one thing on my mind.

"Thanks very much", I said. "Could I get your brother's phone number?"

Monday, April 25, 2005

The case AGAINST small business

John Koten, the Editor of the always helpful Inc. Magazine, has just brought up a wonderful set of questions in his Editor's Letter in the May 2005 issue.

John writes, "Obviously there's nothing wrong with small businesses per se. I just don't like the label. 'Small business' is diminutive. It's belittling. It understates the vast creativity and importance of the American entrepreneurial economy. Worse, when the economy is divided into big and small, it becomes dangerously easy to dismiss the concerns of the very businesses we ought to be paying the most attention to - in everything from crafting the case studies taught in business schools to drafting important pieces of federal legislation."

I've always loved the way John focuses his writing. He's right, of course. Yet when I'm around a bunch of people, in or out of business, and the subject comes up of what we all do for a living, I end up saying something like, "I help run a small business." What follows is usually close to pity. The unstated impression of what they seem to want to say is..., "Gosh, sure hope you can work that into a big business or a real job someday."

Big business? Small business? In the end I think the measure of a business should include the quality of life these businesses generate for the folks working with them. I'm just as tired after our 18-hour days as someone in a "big" business, but probably a lot more fulfilled by it. I'm just as elated over battles won.

John Koten's topic of labeling is important beyond what we all probably understand. In a cool new book by the writer Malcom Gladwell called " Blink: The Power of Thinking Without Thinking," Gladwell posits how enduring and powerful first impressions are. The term small business does set a pejorative tone that doesn't really reflect our perspectives from the inside of these enterprises.

Look, I don't want people to think of all small business people as automatic heroes or titans either. We're just doing our jobs in the way we're called to. Some are great; some are idiots.

John Koten closes his Inc. editorial this way..., "Size does matter, but it's not all about revenue and capital formation. Sometimes what matters most is the size of an entrepreneur's dream."

If control over your time and efforts matters, if quality of life issues have a place in the definition, the next time I'm asked what I do for a living I might just answer that I help run one the coolest businesses they never heard of.

Thanks John

Sunday, April 24, 2005

Dr. Buckminster Fuller and you

Bucky Fuller is my hero.

Here's what he said... "For the first time in history it is now possible to take care of everybody at a higher standard of living than any have ever known... All humanity now has the option to become enduringly successful."

He proposed that we get there by designing and creating a world where we do increasingly more with increasingly less. He was a philosopher of the information age long before many people had electricity.

So what does Dr. Fuller have to do with you and start ups?

He told us in a million ways and many wonderful books, to wake up and smell the opportunity. To recognize our privileged position on the shoulders of ancestors who've worked millennium to get us here. The need for innovation has never been more pressing. Bucky defined sustainable development as our way out of the historical problems that have plagued our species. He's calling for all of us to change, for all of us to innovate the planet...

"People living now, for the first time in history, have the opportunity, privilege, and responsibility to help make [peace and prosperity] come true. All of humanity has struggled, dreamed, hoped, worked, and prayed for this moment in history. It is up to us to help make it happen"

R. Buckminster Fuller

How cool. 28 patents. Starting with hay reinforced concrete and ending up with ways to understand and harness the structure of the universe. Talk about somebody making the campground better.... Go get smart about Dr. Fuller.

A great water resource book

I think smart start ups and innovative individuals change the planet more than anyone accounts for. Progress is all around us, but it's often measured one drop of water at a time, while the headlines rage on about bad news. In my day job, I'm a water recycling guy working in heavy industry. From my perspective, smart policies, hard work and innovation always win out because the bean counters see how much money it saves. Even in North America there are still big wins available. There is a ton of low hanging fruit for conservation minded manufacturing firms to pick.

From a wonderful new book The Water Atlas by Robin Clarke and Janet King. Short, concise, great cartography and data presentaion. One page per topic. Easily accessible by anyone. A great meta resource for pros.

"Industries in developed countries,driven by regulations and the desire to cut costs, have generally reduced the amount of water they use. Steel can now be produced using less than a quarter of the water it once used. In the USA industrial use per person halved between 1950 and 1990, while industrial output nearly quadrupled. Unless the newly industrializing countries learn the water conservation lesson, they will place unacceptable demands on water resources"

This book is a great business model for today. Focuses on real problems and quantifies them. Offers solutions to change the world in 128 pages... My kind of folks.


Saturday, April 23, 2005

sales tales 1


The best sales people know how to shut up. They listen. They want to understand your needs first. Only then do the great ones start peddling.

Case in point... Very early in the history of Banner Graphics we decided to make a big bet and sign our little business up for a trade show at McCormick Place in Chicago. One of the biggest trade show venues in the world. A huge show with exhibitors from all over the world. We weren't betting the farm, but the barn, the back 40, and most of the seed corn were on the table. I was determined I was going to sell every single person that walked down our aisle.

Our booth was perhaps the worst looking, low budget booth in the history of McCormick place. However, the first day was pretty good. The pitch was in place and working. I was on a roll. I looked up late in the day and one of the most beautiful women I'd ever seen in my life was waiting to talk. Dressed to the nines. Smiling at me and my handsome booth.

She was so pretty I almost couldn't talk. I took a long, long breath and launched into my pitch. Banners for promotion, banners for special events, banners for advertising your services. I just kept going and going. Her smile turned to a grin that kept getting wider. I kept talking.

When I stopped she did the most unexpected thing I could have imagined. She leaned over and kissed me on the cheek.

She smiled in a way I'll never forget, handed me her card and walked off, saying, "I'll be back next year."

Her card read "Honey-Girl Escort Service"

My recommendation is that when you're with beautiful people or good sales prospects, just shut up.


Wednesday, April 20, 2005

What sustainable means to me


Sustainable doesn't mean navel gazing.

Sustainable means being able to quickly get at purchase orders and invoices and contact info for some screwed up job from 3 years ago with someone from that company on the phone screaming at you about god knows what. Sustainable means having those docs available to prove your point and cover your ass.

Simple, basic, bulletproof data control is essential. The blue sky stuff is equally essential of course, but without data and document mastery in place, that blue sky stuff gets cloudy fast.

If you want both you and your business to be sustainable, you need smart, rugged control systems in place from the start.

Then you can go navel gazing in peace.


Tuesday, April 19, 2005

I'm a start up guy


I'm a start up guy.

I don't know how to make you rich. I have no idea what business you should start, though I do know something about how you should start. I don't know how to get you into fancy cars.

I don't know jack about managing companies with more than a dozen or so people involved as owners. I don't know jack about taking companies public.

I do know about starting businesses. Small, cool enterprises. Ones that help you and help the planet. Most importantly, ones that keep going. I'm a start up guy. I know how to make startups smarter and more sustainable.

I've been involved in more startups over the past 30 years than I can probably remember. Here's what I've learned: you'd damn well better get smart about what makes them fail.

The startups I've been involved with have been across many industries and markets, non profits and for-profits (and those that hoped to be profitable). Some ideas were dumb. some were great. Some were done with toxic partners, some done with partners and friends I'd give my life for.

I've started new businesses as a sole proprietor. I've started partnerships. I've started LLCs. I've started S Corps and I've started C Corps. Most have been done with owner's money. In recent years, I've worked within the start up system to raise outside money. I've been through angel investment rounds. I've been through venture capital investment rounds. I've raised outside money for our manufacturing business during the worst recession in manufacturing history since the Great Depression. I've been blessed by magical mentors who’d been through many startups of their own. They will forever be my insiders. I've set up outside boards of directors to help run our start ups. I've also squeezed hands with my wife, best friend and business partner during vicious cash flow meltdowns.

This isn't easy, but it's much better than not trying. Are you going to wait for a better life to come in the mail? Nothing happens until you take a shot. My point is to aim carefully.

I'm going to use this blog to talk over ways to help get your enterprise started smarter. I want to help you aim it.

I want your new business to keep going. For your sake and for all the rest of us.

Once you figure out how to get rich, famous and laid, eMail me.


Tuesday, April 12, 2005

What I'm trying to do


I'm glad you've found you're way here. Welcome!

I've got this idea that I'd like to start a million more small, sustainable enterprises. However, I'm 50 something and I have a perfectly wonderful 90 hour a week job now. So I'm just going to have to talk about it here in my spare time. Hopefully I can help other people along this path. Can we get to a million new small enterprises? Come on along. Let's try. I look forward to sharing this site with you.

All the best,