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Tuesday, February 2, 2010
WBR17 Stinkers and clinkers in the world of real business
Most people know me as a newspaperman or even as a political candidate – yet, the truth of the matter is, for most of my life I have been a businessman.
And during all these years in business, we have had our successes, which we cherish, and our failures, which we bemoan.
For many years, I was asked to be a guest lecturer at the various entrepreneurial programs around the state called Next Level and Fast Track and other names.
For a long time, most of my talk centered on my successes with just a little time spent on what I called “clinkers.” When it came time for questions, they ALWAYS asked about the clinkers. The losers.
Finally, I ended up spending most of the time talking about these business failures – it seems that most budding entrepreneurs have seen enough success, but to actually hear about failures really piques their interest.
• They want to know how a perfectly good partnership can suddenly go bad?
• Or what happens when your worst case scenario actually occurs? Or ends up being worse that you ever possibly imagined it to be?
• How could a business investment in Maui not be perfect?
• What do you do in the newspaper business when you have to fire your entire printing crew on the spot for smoking pot? Or your entire advertising sales staff for collectively stealing from you?
• Or dealing with a competitor who has unlimited funds and a grudge against you?
All these things have happened to me and none were any fun.
But you deal with them and you survive.
There is a reason that less than 10 percent of the population is entrepreneurial. That reason is that most people don’t want to deal with problems like this. Or they have seen their parents struggle with problems like this or friends or neighbors or whomever.
Thus, they end up working for other people. Or for the government. Or getting advanced degrees and doing research. And believe me, there is nothing wrong with any of these fields. There were times when I wished that I could pass along my problems to some “boss” rather than having to live with them and having to solve them myself.
An old saying claims that “the hotter the fire, the harder the steel.” Another one says that “minds are like cement. All mixed up and permanently set.”
My personal business guru is Wyoming native W. Edwards Deming, who is given credit for turning around the Japanese economy after World War II.
Deming says “what gets measured, gets done.”
He also says you have succeeded when your customers say positive things about you. “Do the unexpected so that your customer brags about you.”
When American industrial titans visited Japan in the 1980s, they were stunned to see how well Japanese factories produced stuff right the first time. Although Deming probably didn’t coin this phrase, he no doubt lived it: “If you don’t have time to do it right, when will you have time to do it over again?”
Another important business rule is the 80:20 rule.
As a small-town newspaper publisher, I saw scores of businesses go under because their owners didn’t understand the 80:20 rule. What this means, is that usually 80 percent of your business will come from 20 percent of your product line. Or 80 percent of your sales will come from 20 percent of your customers.
Often, you would see a retailer selling that first 20 percent and not re-stocking it, because he or she still thinks they had a full store of inventory. Only problem was the products their customers wanted weren’t there any more. They quit coming back and pretty soon, that building owner was looking for a new tenant.
If I could think of eight things for entrepreneurs to do, it would be the following:
1. Networking. Get acquainted with people who are successful in your business.
2. Most successful new businesses are “incubated” from other existing businesses. Odds greatly improve when this happens.
3. Copy, copy, copy – why re-invent the wheel? Take somebody else’s successful model and copy it.
4. Barter – try to preserve your cash. Can you trade something to someone else for something you need?
5. Mentors if you like a business, find somebody who does it and spend some time with him or her. Buy them lunch or coffee most people like to talk about their business. If they aren’t your competitor, be open with them and tell them your idea.
6. Remember, your unique idea is usually one of two things:
a. It really is unique.
b. It really is a bad idea.
7. Cash, cash, cash. You have to manage the cash. This is no knock against bankers, but you must remember their job is to treat their money safely. They truly will loan you an umbrella when the sun is shining, don’t talk to them when it is raining. Your suppliers will be your bankers. You must get your customers to pay you promptly.
8. Good accounting is absolute must. You MUST know how you are doing. You people in retail can go gaga over all that cash in your cash register right after you open. You must re-stock.
We can’t really talk about business success without talking about luck. My favorite saying here, is one that I really believe: “The harder I worked, the luckier I got.”
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