Invest In My Idea

Business challenges come in all forms and sizes. It may be a cash crunch that you are unprepared for or losing a huge account. While it is impossible to predict what sort of challenges you will face in your business—and you will face challenges—it is possible to give you some advice about how to prevent the preventable ones.

 

Business Jujitsu

 

A new business must have a plan, but it must also be adaptable to an ever changing marketplace. One thing most new businesses have in common is that they may not have the experience of another more well established company. This means that you, the new businessperson, need to prove yourself to potential clients. Businesses that have been around the block a few times have established customers and practices. Your task seems more difficult, but it doesn’t have to be. Turning a perceived business problem around is not only possible, it also is smart.

Think about it. Yours is a new business. That can be seen as a disadvantage but, seen in the right light, it can also be a tremendous advantage. Your job is to show potential clients and customers that being new is far more an asset than a liability. For example, you could explain to potential clients that because you are new:

If you use your noggin, you should see that any perceived liability can be turned into an asset, because it is just that—a perception. For example, let’s say that you are a man who wants to open a ballet school. Sure, that is a traditionally female business. You may stand out like a sore thumb—and that’s just what you want! The very difference that your business embodies is exactly what can set it apart, make it distinctive, and really help it to take off. Think smart and any perceived business shortcoming can be turned to your advantage.

Here’s a famous example: In 1984, Ronald Reagan was running for reelection against a younger Walter Mondale. At the first of their presidential debates, Reagan looked and sounded like a doddering old man. The buzz was that if he didn’t do dramatically better the second time around, he might lose the election. When it was time for the second debate, everyone was watching the 72yearold president closely. Soon after the debate began, Reagan took the initiative and broached the subject. He acknowledged that age was an issue in the campaign and then, straight faced, promised not to “exploit, for political purposes, my opponent’s youth and inexperience.” With that quip, Reagan turned his disadvantage into an advantage, the issue never again came up, and he walked off with the election.

That is what you have to do. If you are able to turn your “liabilities” into assets, you are halfway to entrepreneurial success.

If you think about it, this form of business jujitsu can be used to handle almost any problem you face. The basic idea behind jujitsu is to use an opponent’s own weight and strength against him. By turning the tables on an opponent—using leverage, balance, and motion—the jujitsu master can overpower superior opponents. In that sense, one’s problem might become an opportunity.

In the area of business, this translates into an attitude. Just as a new business can turn a perceived business disadvantage into an advantage, so too can almost any business turn a business problem around by endeavoring to see it as an opportunity more than an obstacle. But don’t think that I am saying that all you need is to have a positive mental attitude, because I am not. Rather, business jujitsu is an attitude that you can adopt to turn almost any business problem into a unique opportunity.

Here are some examples:

• Let’s say that you can only afford rent in a low income area. The business jujitsu master can use this to his advantage by viewing the local residents as another possible client base or profit center.
• Let’s say that you are a lawyer and the legislature just radically changed the law in your area of expertise. The business jujitsu master can learn the new law as quickly as possible and then go teach it to other lawyers, making even more money than before.
• Let’s say that your main distributor just went out of business. The business jujitsu master can see this as an opportunity to infuse his store with some new products.

Business jujitsu is an attitude that you can adopt that will help you through tough times. Part strategy, part mental trick, part ancient plan of attack, it can keep you one step ahead.

When Bad Things Happen to Good Companies

Something bad will happen to your business, you can count on it. While reading books like this can lessen the likelihood and impact of those unfortunate occurrences, it can prevent them from happening. That is the nature of life, and of business. You can bet that Microsoft, probably the most successful company in the last quarter century, was illprepared for a lawsuit by the Justice Department that accused it of being a monopoly that needs to be broken up. Similarly,

• Firestone never expected that its tires would disintegrate.
• Tylenol never expected that someone would poison its product, nearly destroying the brand.
• Cantor Fitzgerald never could have anticipated that it would lose two thirds of its 1,000 employees in the World Trade Center attack.
• Pets.com and Webvan didn’t expect the dotcom bubble to burst as quickly as it did, putting such well funded star tups as these out of business.

So something bad is going to happen; that is not the question. The question is: What are you going to do when it does? Business jujitsu allows you to turn it around so that you are not overwhelmed by it and you see the possibility in it.

The first thing you can do is to be prepared, to the extent possible. You can never know what will be coming down the pike, but the more you know about business and the more you learn, the better prepared you will be when the time comes to handle a problem.

The first thing you can do to prepare your business to handle the inevitable challenge is to read more, take classes, go to seminars, listen to business tapes, and otherwise continue your business education. Knowledge is a very useful and valuable asset to lean on when problems arise.

■ Real Life Example

 

In El Segundo, California, Marium Industries (name changed to protect privacy) was rocked when a colleague was shot and killed by his wife while he was at work. That the man was much loved and admired in the company made the situation that much worse. “The first thing you must do is ensure the physical safety of your employees. After that, you must look after their emotional wellbeing. Business must come last,” said Hunter Marium, president of of the company.

Marium took the lead as the crisis unfolded, and then helped comfort those traumatized by the incident. He brought in grief counselors, gave people extra time off, and patiently prodded the business back toward normalcy after it was all over.

Mr. Marium’s role illustrates that in a time of crisis a business leader must lead. Says Marium, “A crisis is not the time to retreat behind the office door, but rather, the time to be most visible. You must be strong and empathetic. You must communicate clearly and without fear.”

A business crisis can take many forms, including:

• Financial (losing customers, theft, a money crunch)
• Violence (terrorism, war, armed robbery)
• Accidents (customers, the public, or employees get injured)
• Products (bad lots, recalls, negative publicity)
• Natural (earthquakes, floods, tornadoes)

Kim Polese was the chairman of Marimba, a software company that had a Manhattan office near the World Trade Center, on September 11, 2001. She was in New York that day about to attend a meeting at the World Trade Center when the attacks came. She never expected that her business crisis would take that form. What Polese discovered was that a business in crisis requires that the president or CEO be strong and available. “The role of the CEO is really being a rock, a source of emotional stability,” Polese said.

When a business leader is faced with a crisis, the lessons are clear: Be empathetic, be strong, care for your people, and tell the truth. After that, the best thing you can do is to get everything back to normal as soon as possible. What people want in a time of crisis is some familiarity—a feeling that things can be regular again. You are the one who can lead them there.

■ Handling the Media During a Crisis

 

• Get a spokesman out there quickly to get out your side of the story.
• Set up a central command post.
• Be honest, credible, forthcoming, direct, and sympathetic.
• Remain calm and courteous.
• Use your Web site to release information.
• Don’t speak in jargon; use plain English.
• Avoid saying “No comment.”
• Do not speculate. Stick to the facts.
• Avoid discussing fault.
• The media loves a crisis. Resolve it as quickly as possible and let them move on to something else.

Avoiding Common Mistakes

 

Beyond those moments of crisis, if you are going to survive and be a long term business success then you need to be aware of the most common mistakes and pitfalls that can ruin the best laid plans. Business jujitsu requires preparation. The following are potential problems of which to be aware.

Insufficient start up capital. This is a real killer. You can have the best plan in the world, but if you don’t have enough money to get it off the ground and survive for those first few scary months, you are wasting your time and money. Don’t start a company if you cannot come up with more capital than you think you’ll need—at least enough money to cover the first year, and preferably the second year as well.

Going first class from the start. This is the opposite of the insufficient funds crisis. Until you know what you are doing and until you know how to turn a consistent profit, you need to conserve your funds, no matter how much money you have to start. Dropping $20,000 on an office remodel, new furniture, and a top of the line computer is a prescription for failure. It is analogous to throwing a graduation party for yourself in the first semester of your freshman year. Smart entrepreneurs part with their capital only when they are convinced it will make a real difference.

Failure to analyze the business objectively. Failure to do adequate market research, including getting out into the marketplace and talking to potential customers, is an easily avoidable mistake. You must decide whether there really is a market for your business. Many entrepreneurs have failed because their projections were far too rosy and not grounded in reality. Being optimistic is great, but not at the expense of sound business judgment.

Litigation imbroglio. Lawsuits are legalized war. And they are a danger to the financial wellbeing of your new startup. Prosecuting a suit can cost a fortune, as can getting hit with a judgment. Either way, you lose. Justice is all too often not realized. The vast majority of the time, entrepreneurs would be better served by biting their tongues, settling out of court, and getting on with building their businesses.

■ Real Life Example

 

In the 1980s, Coca Cola was having some serious problems, despite being one of the biggest, most recognized, companies in the world. At the time, its biggest rival, Pepsi, had begun touting the Pepsi Challenge—a head to head taste test whereby cola drinkers were asked to compare the tastes of the two colas. Of course, the television ads always showed Pepsi winning the taste test, but even more troubling to Coca Cola was that the test results were real. In blind taste tests in the lab, consumers thought Pepsi tested better than Coke. Coke was losing market share, and the company was scared.

So, in what may be the dumbest decision in the history of dumb business decisions, Coca Cola decided to mess with the greatest brand in history and create what would become an unmitigated disaster, New Coke. Changing the taste of Coke was a radical idea. They might as well have banned moms and outlawed apple pie while they were at it. Nevertheless, on April 23, 1985, New Coke was released to a great deal of fanfare. The reaction to New Coke was swift and strong. People hated it. The Coca Cola Company suddenly became something of a national joke.

How did this happen? Coca Cola failed in the most basic business fundamental—it didn’t analyze the business properly. Amazingly, Coca Cola did no test marketing; it never actually tried out the new formula in a few cities to see how people would react to it. Even worse, it never explained to people that liking New Coke meant that there would be no old Coke. A big mistake and a waste of its $4 million worth of research.

Not giving the customer a reason to change. I’ve said it before, but it bears repeating: You have to give your potential buyers a great reason to consider purchasing your product—better prices, better service, something that distinguishes you. If the buyer has no reason to switch to you, he or she probably won’t.

Betting the ranch. As has been stated time and again throughout this book, great entrepreneurs are not big risk takers, they are calculated risk takers. Never risk it all on one venture.

Avoid the Cash Crunch

 

Nothing can diminish your enthusiasm for business more than a cash crunch. Being short on funds when the mortgage is due or when a supplier is supposed to be paid is the secret sad downside to being an entrepreneur. Not only can a shortage of funds hurt your business and your reputation, but it can wreak havoc on your marriage and family. If you want to retain your sanity, protect your significant other, and keep the dream alive, you must beware the cash crunch.

Usually, a cash shortage is the result of poor planning. In the beginning of your venture, you cannot be faulted for not knowing when money will come in the door, but as you proceed there should be no excuse for not planning accordingly. You must know your business cycle and when money is supposed to come in the door, and budget for that. Having a cash reserve in the bank for the proverbial rainy day makes good business sense.

If you find that you consistently run short of funds, then it is time to do something fundamentally new. Essentially, your options include:

• Give yourself a raise. Successful entrepreneurs respect themselves and charge a fair price for their services. Because you are your own boss, you set the prices. Although you should be concerned that you will drive away clients if you do charge more than you have been, it is still worth a shot. If your fears are valid, you can always lower your prices again; but if your fears are ungrounded, you will be giving yourself a well deserved raise and thus eliminate the cash crunch.
• Receive your receivables. When you allow someone to buy your product “net 30” (that is, payable 30 days after the purchase), you are essentially lending that person money. Permitting these people extra time beyond 30 days to pay for a purchase is a commonplace, yet easily correctable, mistake. Would your bank allow you an extra 60 days to pay your loan? Of course not. Your business should be run the same way. Always remember that receivables are the lifeblood of your business, representing your business’s cash flow and liquidity. Getting your receivables current, therefore, can bring in immediate cash.
• Get a loan. Sometimes business owners just need a short term infusion of cash to get things moving again or maybe a long term note or a line of credit might help.

Good businesses, long term success stories, are not beset by consist needs for large cash infusions. You want to run your business the same way. Plan appropriately, budget accordingly, pay your creditors and suppliers on time, build a good business credit rating, and you will avoid the cash crunch dilemma and build a solid business.

 

Succeeding in Business during Tough Times

 

When times get tough, what do you do? The best recourse is to remember what has worked best for you and fall back on that. The business jujitsu master knows his strengths and weaknesses. When weak, it is not the time to attack. Rather, it is the time to fall back and concentrate on that which you do best. Succeeding in business, even in uncertain times, is possible if you follow some of these tips.

Use your best recipe. After some trial and error, successful businesses figure out what works. After that happens, they do the same thing over and over again. It could be an ad that works, a sale that brings in customers, or a monthly seminar. Whatever it is, it is a “recipe” for success. You make your business dough by utilizing a successful business recipe. Repeating a successful formula is the hallmark of any wellrun business, and it is what you should do in tough times.

Advertise, advertise, advertise. Advertising is one of the most important things a small business can do. All too often when times get tight, the advertising budget is the first thing slashed. That is a big mistake. Various entrepreneurs through the years have said that when hit with a cash crunch, they refused to scale back. In fact, they opine that the best way out of a tough time is to expand business, not contract it, and advertising is a big part of that.

Play good defense. Entrepreneurs like to play offense. They like to come up with new ideas and implement them. That’s great, but if you don’t have a good defensive scheme in place, it’s easy to get blindsided. Good defense is a twofold process. First, it means having structures in place to protect you, most notably, insurance and incorporation. The second part of playing good defense is to avoid stupid mistakes.

Try, try again. The path of the small businessperson is not always an easy one. Growing a business often takes trial and error, followed by a few mistakes, a couple of bonehead moves, and then, maybe, a home run.

 

Get Advice

 

Business jujitsu works when you have a problem to overcome. But what if you just need a friendly ear; someone off of which to bounce some new ideas? As you go about setting up and running your business, you will likely find that you need advice about all sorts of various and sundry matters. Where do you get it, especially if you have set up the business without a partner? The answer is from a board of advisors. A board of advisors is an independent group whose purpose is to give you ideas and feedback about your business. Board members can be business associates, colleagues, customers— anyone whose advice you will trust. Having people around who can give you a different perspective can be invaluable.

When looking for board members, you will want people:

• Who are strong. You don’t want a rubber stamp. The whole purpose of a board of advisors is to give you a second (and third!) opinion. Getting some honest feedback can only help your business.
• Who have different skills. Even the best entrepreneurs only have some of the skills necessary to run a great business. Having board members who complement your skills can create a positive, synergistic effect. Similarly, having board members with skills and backgrounds different from one another can give your board an even broader base.
• Who are experienced. It is not uncommon when looking for outside funding that potential investors and bankers will call your board of advisors. When they do, it is far better if they find some experienced businesspeople and not your best friend from high school.

Board members are often compensated for their time, either with money or stock, although some are willing to assist for free. Those folks do it because they welcome the chance to be involved in a startup. Sharing what they know and watching the company grow is pay in itself.

Another good thing about creating a board is that it can help you build credibility in the business world. A strong board full of professionals and businesspeople indicates that you have contacts and can take criticism.

 

The WorkLife Balancing Act

 

Finally, business jujitsu requires balance. It is very easy for new businesspeople to become consumed by work. Even though you might think your new business is all you can concentrate on right now, it is also important to remember that, however trite it might sound, there is more to life than business. Losing your balance can lead to burnout, marital problems, health problems, and business setbacks. If you don’t strike a balance, you may come to resent your business.

What is a balanced life, exactly? There are probably as many definitions as there are people, but a simple way to look at it is to imagine your life as a pie chart cut into six equal pieces. The six slices represent the following:

1. 1. Your new business. You already understand the importance of this slice of the pie.
2. 2. Your family and friends. It is imperative that you spend enough time with your loved ones.
3. 3. Leisure time. Balance means that you take time out to go to the movies, watch a game, hang out, play with the kids, or otherwise do those things that are fun for you.
4. 4. Physical and mental health. It is easy when you are in business for yourself to be so stressed about time that you let your exercise routine and eating habits falter. But one reason you go into business for yourself is that it frees you up to do what you want. This is one of those places where you should take advantage of that freedom.
5. 5. Personal enrichment. You need to take classes, read a book, learn something new, listen to music, go to a concert or play, and stay involved. Business becomes a burden when it is the only thing in your life.
6. 6. Spirituality and religion. Go to church or synagogue, meditate, take a walk—however you connect, keep with it.

Each one of these six areas need to be fulfilled if you want to have a life that is fulfilling. There is little point in creating a great business if you end up being married to it 24/7. If you can figure out in which areas you are lacking, you can start to re-balance your life. The important thing is to take the time to reflect on what is important to you. It is usually not until something is out of balance that it actually comes to our attention.