I'm launching a new business

This week I am starting a new business.  Late last year I began attending auctioneer school, and last week I passed our state exam and earned my license.  This week I will begin the process of starting an auction business.  This will be a very part-time career as I continue to serve in my calling as a minister, but I am excited about it just the same.  Although there are many licensed auctioneers in the state, many of them are not very active.  It seems that only a handful in most of the counties near me handle most of the auction business, and some of them are ready to retire and have already started cutting back on their work-load.  I believe this is a good time for a new auctioneer to enter the profession even if it will just be part time.

Auctions have long fascinated me.  As a young boy I was taken to a farm auction by my father who asked me to buy a corn planter he wanted.  He also worked off the farm and could not attend the auction, but he wanted to buy that planter.  He explained the strategy I should use in bidding and gave me a maximum amount to bid.  I ended up buying the planter for less money than he was willing to pay and found the process enjoyable.  In recent years I've been attending a number of auctions which led me to pursue my own auctioneer license.

Like many business people today, I also believe this is a good time to start a new business.  There are tax advantages to owning a business which could be helpful depending on how the tax laws change over the next year or two.  This is also a good time not to depend on just one source of income.  There remains much uncertainity in the financial and economic worlds due to the leadership failure that exists in Washington.  While some politicians try to convince the American public that our economy is coming back, most of us in the real world do not see much evidence of that.  Multiple streams of income provide the average American a safety cushion that is more preferable than hoping our government leaders will find a solution to the economic problems our nation has.

My previous experience at owning a business came from obtaining ownership of an existing business.  This one I will be starting from scratch, and already I feel an excitement as I begin that process.  I learned so much from our previous business that I will apply to this start-up which should help me avoid many of the mistakes I made the last time.  I'll keep you posted at how this business progresses.

If you would also like to learn from my previous mistakes you can find those discussed in my book Mistakes: Avoiding the Wrong Decisions that Will Close Your Small Business.

Going smaller with your business

Since this blog is primarily for small business owners the idea of going smaller may be the furthest thing from your mind.  Chances are you are trying to find ways to grow your business, and there is nothing wrong with that if big is how you define success.  However, there is much to be said for small as well.

What would happen if you fired half of your customers?  You know, the ones who always pay late, complain about your prices and/or service, never give you a positive recommendation, and take up large chunks of your time over the most miniscule of issues.  Right now I'm thinking of a woman who complained to me about the cost of a service call our company did for a rental house she owned.  She didn't feel she should have to pay as much for that call as someone in a community less than ten miles away because she lived in a poorer area.  I reminded her that our supplier charged us the same for the part we used regardless of where we used it.  Our serviceman had to drive that extra ten miles to do the service call, and she was the one who chose to buy rental property in that poorer community.  She was adament that I reduce the bill which I did.  Life is too short to quibble over ten or twenty dollars.  We also never accepted another service call from her.

What would happen if you fired half of your employees?  Barbara Corcoran of Shark Tank fired the bottom 20 percent of her sales staff each year. Don't just dump them out on the street.  Help them find other jobs before letting them go, but keep only your top talent and give them substantial raises.  You would lose the employees who come in late, are less productive, and often infect other employees with their bad attitudes.  Your overhead would go down, you would be working with your top talent, the atmosphere in your workplace would be less toxic, and the ones you keep would be more productive because they are no longer carrying dead weight.

Doing these two things would change the way you could do business.  You could begin to pick the projects you actually enjoy doing rather than the ones you have to do to make payroll.  Your stress levels would go way down because now you are working with your very best clients and team members.  You would probably be more profitable at the end of the year.  Think about that: less work, less headaches, more on the bottom line.

Again, making this type of change first requires a change in how we define success.  If you want to grow your small business into the next empire, fine.  Just know that your dream could turn into a nightmare before it's over.  If you want to enjoy the things in life that really matter: your family, your friends, your faith, your life, and enjoy a good living then you may want to consider going smaller with your business.

For other tips on small business success be sure to read my e-book Mistakes: Avoiding the Wrong Decisions that Will Close Your Small Business.

Who is really to blame when a business goes under?

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We owned and operated a small family business for fifteen years until we were forced to close it.  The last few years the company was not profitable, and it was a struggle to keep it open.  We continued to think things would turn around as they had during previous downturns, but that time we just could not turn the corner.  After an auction we had enough money to pay our creditors.  We were lucky.  Many who lose their companies are forced into bankruptcy, lose their homes, have their credit destroyed, and/or deplete their life savings.

The news continues to be full of stories of small businesses failing, and the owners point their fingers at a lot of causes.  The economy is bad, taxes are too high, there is too much governmental red tape, Obamacare, inability to compete with foreign-made goods, fiscal cliff uncertainty, too much competition especially with the big box stores, dishonest employees,, and a rapidly changing environment.  Of course, this is not an exhaustive list of reasons why businesses fail.

Each of these are a severe hindrance on small businesses, but are they really the reasons why a business fails?  The fact is that businesses fail in a good economy, and many small businesses continue to do well in our present economic downturn.  I agree that taxes are too high, but they are basically the same for every business, and some seem to prosper despite high taxes.  Every one of these reasons are a challenge, but some small businesses are able to meet those challenges and do well while others end up closing their doors.  The real reason a small business fails isn't due to outside challenges; the real reason is internal.  The owners failed to make the decisions that were needed for the company to prosper despite the challenges it faced.  In a good economy our mistakes don't hurt us too badly, but in a poor economy our mistakes cause us major problems.

When our business was struggling I blamed a number of issues that were all true, but each of them were outside my control.  It wasn't until later I realized that the real reason our company closed was because I failed as a leader to make sound business decisions and operate the company in a way that would ensure its profitability.  I could write a book about all the mistakes I made as the president of our business.  In fact, I did.  It's called Mistakes: Avoiding the Wrong Decisions That Will Close Your Small Business.  For thirteen chapters I describe in detail the mistakes I made that led to the closing of our business.  In each of those chapters I also describe the lessons I learned that, if they had been applied at the time, would have led to better decisions on my part.

Success and failure are both inside jobs.  You can't depend on Washington to bail out your small business.  That is not going to happen.  You can't even depend on them to not do something stupid that will add even more risk to your business.  The big box stores are not going away.  Taxes are not going to go down; in fact, it is likely they will continue to go up because Washington is convinced we are not yet paying enough to fund their programs.  If you want to ensure your company's success you have to work smarter, and one way to do that is to learn from the mistakes of others. 

That's why I wrote this book.  I want to help others avoid the mistakes I made so their businesses don't fail.  If you started your company it was because of a dream you had.  Perhaps you are now the head of a business that has been passed down from other generations, and you want to keep their dreams alive.  I believe this book will help that happen.  It is currently only available on NOOK devices and can be ordered here.

Don't be this salesman

On Christmas Eve I drove to Best Buy to get myself a Christmas present, a sound bar for our TV.  I had done some research and had two model numbers written on a piece of paper that I was interested in.  Soon after walking into the correct department a young salesman asked if he could help me.  I asked him to show me my first choice of a sound bar which he did.  However, almost as soon as we got to it he began telling me the flaws in that model.  That surprised me a little as it had been one of the highest rated sound bars on the Best Buy website.  He offered to show me a better one in the same price range which turned out to be my second choice.  After spending a couple of minutes telling me about its features I told him I would take it.  He then told me he didn't think they had any in stock!  He spoke with another salesman who came over and told me they had just sold the last one earlier in the day.  Of course, he offered to order one and didn't seem too pleased when I told him I could order one myself.

It being Christmas Eve I wasn't bothered by the fact that they had sold out of that model.  What was so bad was that no one even asked if I would be interested in the first one I had looked at or another one in the same price range.  Why in the world would the salesman try to talk me into buying a different sound bar than the one I asked about knowing that they didn't have any in stock?  I drove one hour to that store with the intention of spending $300.00, and I walked out of the store with that $300.00 still in my pocket because two salespeople do not have a clue how to sell.

Sales is difficult enough without talking yourself out of the sale.  It is one thing to try to talk a customer into an upgrade.  If he or she is not interested you can always return to the item they are interested in purchasing, but to lose a sale trying to make a lateral sale is stupid.  A smart salesperson would have affirmed the positive qualities of the product I asked about and sold it to me.  If there were no positive qualities about that product then, first of all it should not be carried in the store, and secondly he should have pointed me to a product they actually had in stock.

Some might be wondering why I didn't ask about buying my first choice after the one was not available or why I didn't ask about other models that were available.  I considered it, but I don't feel it's my job to train the salespeople at Best Buy on how to do sales.  By the end of the week I will be in a different city near me with many stores like Best Buy and I'll buy my sound bar at one of them.  That store will get my $300.00.

Would your salespeople know how to have handled this potential sale?  Why don't you run this scenario by them and see how they would have responded?  You may need to do some training of your own if they don't respond properly.

The power of a dream

Although I don't watch every episode I do occasionally enjoy watching Shark Tank.  The people who often have the greatest success on that program are people who have had a dream and have worked hard to see it happen.  They are on the show in hopes of getting the financial backing to take their dream to the next level.  Some have described enormous sacrifices they've made as they have pursued their dream.  These stories resonate with the sharks because they've been where these hopefuls are now.  Although I don't know the stories of all the sharks, the ones I do know are stories of sacrifice, hard work, and a refusal to quit.  Their dreams were bigger than the obstacles they were facing which allowed them to continue until they became quite successful and wealthy.  When someone comes on the program with a similar story that rings true, and has a dream that can succeed, that person usually walks away with one of the sharks investing in their dream.

When we think of powerful dreams the first person we often remember is Dr. Martin Luther King, Jr. because of his famous I Have a Dream Speech.  Even now one cannot hear that message without feeling the power of his dream, a dream which he was totally committed to seeing occur even at the cost of his life.  As a graduate of Liberty University with two degrees from that school I think often of Jerry Falwell's dream of starting a university for Christians that would compare with any other university in the world.  Starting very humbly in classrooms in his church that school nearly closed in the early 1990s due to finances.  His dream refused to allow Falwell to give up, and today over 92,000 students are enrolled in their residential and online programs.  It has 253 undergrad programs of study and 87 graduate programs.  Barbara Corcoran, one of the sharks I referred to above, was a straight D student in high school and college and had 20 jobs by the time she was 23 years old.  But, she had a dream and borrowed $1,000 from a boy friend which she turned into a real estate business which she later sold for $66 million.

What is a powerful dream?  John Maxwell defines a dream as "an inspiring picture of a future that energizes your mind, will, and emotions, empowering you to do everything you can to achieve it."  Each of the persons mentioned above had such a dream driving them to succeed.

If you own a small business you probably started it with a dream of doing something different with your life.  One problem with dreams is that sometimes in the course of everyday business the dream gets lost and forgotten.  When dreams are forgotten they lose their power to compel us to do our best every day and we begin to accept mediocrity.  Such mediocrity will never allow us to see our dreams fulfilled.

As we enter into a new year this is a great time to revisit your dreams.  What exactly do you want to accomplish with your life and your organization?  How are you going to make a difference in 2013?  Be very clear with your response, and you may even want to print it out and frame it so you can keep it in front of you every day as a reminder of why you are here.

One final thing should be said about dreams.  Not all of them are equal.  Many who go on Shark Tank leave disappointed because they could not getting backing from any of the sharks.  Some had not thought through their dreams to determine if there was actually a need for their product or service.  Some of the dreams are, frankly, rather foolish and not deserving of a person's efforts.  John Maxwell wrote a very helpful book to help a person evaluate his or her dreams that I would recommend as you examine your own dreams.  It's called Put Your Dream to the Test: 10 Questions to Help You See It and Seize It and can be ordered by clicking on the title.

This will be my last post until after Christmas so let me wish each of you a very Merry Christmas!

Don't treat everyone the same

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In every company there are some people who rise above everyone else in their work ethic, their sense of knowing what to do, their attitudes, and their ability to execute.  Even if you have an above average team in your company, there will be a few shining stars who helps raise that average even higher.  These people are critical to the long-term success of your business, and it will be a mistake to treat them the same as everyone else.  There are so many things a business owner cannot control, but one thing he or she can control is the development of the people in the company, and these star employees need to be developed.  Providing them with the right resources will only make them even more valuable to your business.

These are the people you want to invest a significant portion of your time in through coaching and training.  A company I worked for would pay the tuition for any employee to go to college as long as the course even remotely would benefit the company.  They defined that benefit very loosely, and they paid all my tuition while I earned my undergrad degree.  A small business might not be able to do that, but most could offer at least some financial assistance to their star employees.  Owners would want to seek nearby seminars that would help their best employees learn new skills.  Top employees should also be cross trained so they can learn the various jobs that exist in the company.

Top performers should be rewarded differently than other employees.  They should receive higher pay raises and larger bonuses.  Larry Bossidy and Ram Charan, in their book Execution: The Discipline of Getting Things Done, explains that "When the wrong people get rewarded, the whole organization loses.  Problems don't get fixed, nonperformers get ahead, and the good performers start looking for jobs at places where their contributions will be recognized."  You are under no obligation to pay everyone the same or to give all your employees the same bonus.  It's your money.  The only people who will get upset if they are not treated "equally" are the lower-performing team members.

Speaking of lower-performing team members, they need to be treated differently as well.  Every six months Barbara Corcoran of Shark Tank would fire the lowest performing 25% of her real estate sales people.  While that may be extreme, their lack of success does need to addressed quickly by the owner.  It may be that they are were not hired for a position best suited to their gifts, or they could need additional training, but the cause of their poor performance needs to be corrected or they do need to be replaced.  In today's business economy no small business can afford to have a group of people who are not producing.  They are not only a drain on your bottom line; they are also a drain on your top performers.

Treating all your team members the same is not an issue of fairness and only your less productive employees insist on everyone being treated "fairly."  In fact, it is unfair to your top performers to treat them the same as you treat others on your team.  Even worse, it is very de-motivating to do so and will soon cause them to either leave you for another employer or begin to function as the lower performers.  Either way, you lose.  Invest in your top performing employees and your business will reap the rewards for years to come.

Firing customers

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When I owned our heating and air conditioning business we had a customer who owned a number of rental properties.  He had used our business even before I took it over, but he often complained about our work and especially our prices.  Nearly every bill he received sent him into orbit.  One day he came into our office yelling at our office administrator about the bill he received and promising to never do business with us again.  When I went to the office later she was still upset.  I explained that I hated to lose a long time customer too, but we would probably be better off without the drama his business always created.

A few weeks later I answered the phone, and it was him calling about an apartment that needed the HVAC repaired.  I reminded him of his outburst the last time we did work for him and told him I was under the impression he was not going to use our company any more.  He gave a nervous chuckle and responded that since he had used us for so long there wasn't any sense in calling another company now.  I thanked him for that but then explained, "We will be glad to do business with you, but we will not tolerate any more outbursts like the last one.  We have always been fair with our pricing to you and always will.  If you have a question about a bill you receive from us, please call me about it, and as long as you are reasonable in the conversation then I will be glad to talk with you.  If you get out of control like I heard you did the last time I will hang up and we will never do another job for you.  Are these conditions acceptable?"  He said they were; we did the work he asked us to do, and he never again complained about any of our work or our bills.

Running a small business is tough enough without having to deal with unreasonable people.  I gave him a second chance only because he had been such a long-term customer.  There were others we simply refused to do any further work for after our first encounter with them.  Their expectations were unreasonable and their attitudes were toxic.  Trying to collect the money they owed us was often a challenge.  They were exactly the kind of customers we were glad to see our competitors have.

When someone is starting out they are afraid to turn away any business.  That is understandable, but it's not healthy for you or for your company.  Such clients will often cost you more time and money than what their business is worth, and they will stop doing business with you if they can save a nickle by patronizing your competitor.  If you find someone consistently complains about your product or service, wants you to lower your prices, and expects you to provide him or her with priority service over all your other clients you have a customer that you probably need to fire.   Chances are you'll see little difference in your company's bottom line at the end of the year, and you'll find that operating your business is a lot more enjoyable once the're gone.  For more about the dangers of being too loyal to the wrong customers be sure to read my e-book Mistakes: Avoiding the Wrong Decisions that Will Close Your Small Business.