Overcoming Business Failures With Mentoring

 

According to Bill Warner, co-founder of EntreDot, approximately 26,000 new companies are formed each year in North Carolina and, in that same year, over 23,000 companies fail due to poor management and operational mistakes. Warner further states that, “The statistics are worse in rural and minority populations. This means that good ideas go to waste along with the grant and investor funds that helped get these companies started. As a result, the potential growth of revenue and new jobs is lost also.” These comments are very similar sentiments to what Dun and Bradstreet found in some surveys conducted during the period of 2007 – 2010. D&B found that the rate of business failure went up by an average of 40% during the recession years.

D&B SMB Lowest Failure Rate by State 2010

 

Many of the states with lower failure rate increases are less heavily populated states. In fact, of all the states that have seen a decline in the rate of small to medium sized business failure, only North Carolina makes the list of 10 most populous states in the country. Of states (below) with large increases in failure rates, only California is heavily populated.  

D&B SMB Failure Rate by State 2010

 

 

 

From 2007 through 2010, Western states in the West had the highest increase in failure rates. Reasons D&B provided for the uptick in failures include continued instability in the residential housing market and drop-off in the tourism, travel and hospitality sectors. Interestingly, Tennessee has been home to the highest small business failure rates for four years in a row.  

D&B Largest SMB Industries 2010

 

These trends have been occurring at a time when the number of retail establishments and corresponding retail employment have both dropped by 15-20%. On the other hand, the number of SMBs in the Business Services category more than doubled and these businesses experienced a 30% increase in the number of people they employ. The fastest growing industries for SMBs are summarized below:

D&B Fastest Growing Industries 2010

 

As you can plainly see, nothing else comes close to the growth of  the Business Services category. Bear in mind that many software as a service companies are part of this category and have been launched in only recent years. The macrotrends that become evident are that retail is on the wane, highly populated states are more stable in terms of business failure statistics, and the business services category’s growth will be a key cog in the engine of our economy.

Warner points to the following issues of significance to these small businesses:

  • Business strategy and planning to make sure their business is focused on a viable market with a winning product and/or service that has a competitive edge
  • Forecasting and financing ensuring that sales forecasts are realistic and that revenue, cost, expense and cash are well managed
  • Operational discipline and judgment to increase the chances of success by making fewer mistakes
  • Industry connections that can help accelerate the business and its operations
  • Start-up company experience that can instill the wisdom of what it takes to really start and manage an emerging business

 

He feels that these companies need the dual combination of basic business know-how and mentoring. The situation in North Carolina, where Warner and I live, is that our state has a comprehensive array of entrepreneurship education programs throughout the community college and university systems including various other private and public organizations. The problem is that we have little help for entrepreneurs once they have completed these programs and actually try to start a business. We recommend assistance for entrepreneurs who are struggling to create successful businesses, the failures should decline considerably. Entrepreneurs should be seeking out business mentors that can help them through the early years of their business.

 

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Get Emails Read – Follow 7 Guidelines

Most businesses rely on emails for the majority of their communications. Yet, most of us are certain that some of our emails are ignored by the recipient. If you are trying to get your emails read, consider the below guidelines offered by Jonathan Borge of ToutApp. (Borge was contacted by Tom Searcy for a recent article for Inc.com on the subject.)

1. Subject lines: Remember that only 20 percent to 40 percent of your emails will actually get opened, though most of your subject lines will be seen. To boost your open rates, think of short, catchy, and informative subject lines. You should try to dangle compelling information (“The future of sales emails”), and you can even try adding some mystery (“Strange question”). We also recommend personalized subject lines, if possible (“Hunter Sullivan suggested I contact you”).]

2. Your tone: Portray yourself as someone that other people can connect to. You’ll want to show your recipients that you care about hearing back from them… so you can’t simply sound like you’re just sending another mass email. Never use “Dear sir or Madam,” and stay away from overly formal language.

3. Email content: Make your emails short, simple, and easy to quickly digest. Your leads are busy people with jobs, too, so you need to maintain their interest. Do your research and find out what resonates for your prospects. Try to get an introduction to them or, if that’s not possible, figure out in more detail what they or their company do. Tell them why you’re emailing them, specifically. Talk about how you can solve a problem for them.

Email

4. Your sign-off: End your emails with a definitive, clear call to action. Make it dead simple for your recipients to say yes—whether it’s to a meeting, phone call, or product demo. Don’t ask them for permission. If you want a phone call, then say “Call me right now at X for more details.”

5. Your timing: Reach out to your leads when they’re not too busy. Make sure you avoid heavy traffic times like Monday mornings. Based on our tracking data, we recommend the middle of the week, mid-day, as the best time to send emails.

6. Your image: First impressions are important both in person and online. The tone and formatting of your email is all your recipients have to judge you by. Make sure you are being professional, clear, and easy to understand. Stay away from over-formatted emails that look gimmicky, but don’t hesitate to call out important information in bold or bullet points.

7. Your homework: Send yourself a sales email. Put yourself in your leads’ shoes. If you were them, would you open this email? Would you spend more than two seconds reading it? If so, what would you do next?

Searcy notes that the list sounds almost too basic. Yet, when he went back and examined the last 10 recent emails he had sent to prospects and clients, he found that he only employed four of these guidelines on average per email. Why don’t you take the same challenge? Hopefully, you can learn from it –as he and I have!

 

 

Creative – or Not? Characteristics to Consider

Innovation and intrapreneurship rely on creativity. How do you know whether you or others in your organization are creative? We’re not talking only about artists when the term “creative” is used. By examining behavior and thoughts, it is possible to get a feel for what a broad audience my agree constitutes creative talent. Jeffrey Baumgartnerauthor of the book, The Way of the Innovation Master, believes that two behavio(u)rs are predictive of creativity:

Behaviour One: Make More Use of Their Mental Raw Material

It seems that when highly creative people are trying to solve a problem or achieve a goal, particularly when the goal is related to their area of creative strength, they use much more of their brains than do ordinary people or, indeed, even themselves when not focused on a creative task. If the average person is asked to draw a picture of a cat, she will most likely think about the physical appearance of a cat and replicate it as best she can with pen and paper. The creative artist, on the other hand, will think in much more depth. She’ll think not only about the cat, but the placement of the cat; what the cat is doing; the lighting; the kind of lines to use and much more. She may decide to humanize the cat and give it emotions. Perhaps she’ll decide to draw a sexy cat with a human body wearing an evening gown. Maybe she’ll simply draw a blur representing a cat in motion.

By using much more of her brain to achieve her goal, the highly creative person in effect provides herself with more raw material from which to construct ideas than the average person. The average person thinks only about drawings of cats and the basic characteristics of cats. This limits the level of creativity she can achieve. The highly creative person thinks about much more — all the while retaining some connection to cats. It is not surprising that, with so much raw material, she is able to be more creative in the realization of her ideas.

They Think Before They Act
It takes time to run through all that raw material in the brain. This is why creative people tend to think before they act. The play with the issue in their minds for a time, looking at a range of possibilities before choosing a direction. I see this when I work with creative people. When you give an average person a creative challenge, she tends immediately to try and come up with ideas. But because her mind is too focused on the issues of the challenge, her ideas are limited in scope as well. 

Incidentally, the highly creative person does not focus on her left brain or right brain for a simple reason: it’s a myth (Christian Jarrett (June 2012) “Why the Left-Brain Right-Brain Myth Will Probably Never Die”; Psychology Today.) Creative people use a lot of their brains, not one hemisphere or the other!

Curiosity Is Creative Play
Rather than simply collect information, their brains play with it. One person might see a horse standing in a field and think it is a magnificent looking animal. Another, more curiously creative person, might wonder what the horse thinks about all day in the field. She might wonder how the horse can cope for long hours of inactivity without a book to read. 

Spontaneous Ideas
For instance, it is by asking what use could be made of not very sticky glue that some people discovered Post-Its. Pablo Picasso wondered how he could depict three dimensional reality, as viewed from different perspectives, on a two dimensional canvas and came up with cubism.

Creative mind
Behaviour Two: Less Intellectual Regulation

The dorsolateral prefrontal region of the brain is responsible for, among other things, intellectual regulation (Simon Ross (2008) “Dorsolateral prefrontal cortex”; Psychlopedia). It includes the brain’s censorship bureau; the bit of the brain that prevents us from saying or doing inappropriate things. It seems that in highly creative people, this part of the brain becomes much less active than normal during the period of creation. It is not that highly creative people are not afraid of ridicule or criticism (indeed, many artists are highly sensitive). Rather, it never occurs to them that others might ridicule their ideas.

Creative People Are Not as Rebellious as You Think
Instead, they follow their own rules or systems for evaluating ideas and deciding whether to move forward with those ideas. These rule systems are often logical, at least to the creative thinker. An artist, for example, will not make a name for herself by studiously copying current trends. Rather, she will become famous by being unique. 

Creative People Are Logical
That logic may be based in part on emotions and feelings — especially in some artists. If anything, by not feeling compelled to fit the demands of popular culture, the creative artist needs to be even more logical than the average person who assumes that if everyone wears and buys a particular style jacket, then it is safe to buy and wear such a jacket.

Creative People Tend to Be Less Honest
Research by Francesca Gino and Dan Ariely (Francesca Gino, Dan Ariely (2011) “The Dark Side of Creativity: Original Thinkers Can be More Dishonest”; Harvard Business School Working Paper) confirms that, in general, highly creative people are less honest than averagely creative people. The reason for this seems to be that creative people can use their creativity to justify their actions in ways that less creative people cannot do.

Develop Innovation Skills Through 6 Techniques

When we write of intrapreneurship, we are addressing the need for businesses to foster innovation. While process and procedure can create a friendly environment in which creativity can occur, there are times when some individuals inside an organization need a jump start. How does an organization encourage its people to overcome what would be called in literary circles “writer’s block?” For, if your company can identify how to unleash the power within the minds of its employees, great things can happen on behalf of the customer and the company and its stakeholders–including the employees!

 

Catch 22Woody Bendle penned an article for Innovation Excellence recently highlighting that innovation instincts can be sharpened and expanded. It is necessary, according to Bendle, to “sharpen your instincts.” Bendle reminds readers of Malcolm Gladwell’s writings (Blink and Outliers) on how to become more intuitive. Gladwell, says Bendle, “provides several deliciously compelling examples of the human “Adaptive Unconscious” at work. This Adaptive Unconsciousness is discussed as one’s ability to intuitively connect a myriad of seemingly disparate dots in a split second in order to form an accurate expert opinion. And, fortunately this Adaptive Unconsciousness is something that one can develop over time.”

Furthermore, writes Bendle, Gladwell makes the case for developing “expert” knowledge and abilities through what he calls “The 10,000 Hour Rule:”

Gladwell’s thesis is that after 10,000 hours immersed in a particular field or activity, one begins to have a seemingly innate level of knowledge or capability. Put another way, with 10,000 hours of effort you can take your Adaptive Unconsciousness (instincts and intuition) to a new, almost uncanny level. But at this point, one’s expertise is potentially narrow, and one way to bring even more value to your innovation process is to expand your instinctive base.

Bendle suggest the following 6 techniques to awaken your latent innovative capability:

  1. Occasionally take yourself out of your daily, weekly and monthly routines. You’ll be amazed by what doing something different or doing something differently can do for your mind.
  2. Purposefully seek out the new and the different – and pay attention. There is a whole lot of life going on out there and to borrow a quote from Ferris Bueller – “If you don’t stop and look around once in a while, you could miss it.”
  3. Go Wander and Wonder. Go see, do, and experience something completely out of your wheel-house. Get out of your comfort zone and whet your appetite for confusion. Seek out things that are amazing to you.
  4. Challenge your senses. Take a moment every now and then to mentally catalogue what your senses are experiencing and then, maybe even push them a little further.
  5. Make note of things that inspire. Each of us are moved in different ways. Pay attention when you are inspired. Ask yourself why you were inspired. Make note of what this feeling is inspiring in you.
  6. Play! Have you ever spent any time watching two young animals playing around or rough-housing? They are developing their instincts and this is one technique that we human simply don’t do often enough.

Try these techniques the next time that you are trying to solve a tough problem at work. See if they propel your thinking toward greater objectivity and clarity. If you find that the techniques are working for you, take it to the next level by sharing your experience with co-workers, a supervisor, or subordinate. As more people learn to think about the everyday work world with more innovative mindsets, “breakthroughs” should become far more common and frustrating “Catch-22” situations less so!

 

 

 

Midlife Entrepreneurs Better Prepared Than Younger

One of the most gratifying things I get to do is work with entrepreneurs and business owners to optimize their businesses. In the area where I live, most of the media attention is focused on technology startups usually run by people in their 20s. What I find interesting about the new businesses in our area is that the founders who are willing to rent an office and hire a consultant or take some classes tend to be mid-life entrepreneurs. These older entrepreneurs actually are more prevalent than the younger ones. Dane Spangler, a researcher at the Ewing Marion Kauffman Foundation wrote in a 2009 report, “in every single year from 1996 to 2007, Americans between the ages of 55 and 64 had a higher rate of entrepreneurial activity than those aged 20-34.” Also, according to the 2011 Global Entrepreneurship Monitor U.S. Report — a survey of a representative sample of the U.S. adult-age population — 15.4 percent of Americans aged 55-64 and 12.8 percent of Americans aged 45-54 run their own business, compared with 0.8 percent of Americans aged 18-24 and 4.9 percent of Americans aged 25-34.midlife entrepreneur

Bureau of Labor Statistics data on both incorporated and unincorporated self-employment show an even more extreme pattern. The rate of self-employment is higher among people in their 60s than even those in their 50s, let alone those in their 20s or 30s. In fact, the bureau’s surveys of American workers reveal that people aged 65 to 69 are self-employed heads of corporations at four times the rate of people aged 25 to 34. 

The Small Business Administration reports in its recently released publication Small Business Economy that, from 2000 to 2011, self-employment among people under 25 dropped 9 percent. Among those aged 25 to 34, it fell 8 percent, and for those between 35 and 44, it declined 24 percent. By contrast, self-employment among those aged 55 to 64 rose 54 percent, while it increased 36 percent among those over 65.

Scott Shane (A. Malachi Mixon III professor of entrepreneurial studies at Case Western Reserve University) shares an interesting observation that, even in high technology, entrepreneurs are much more likely to be over 50 than under 25. Research by Vivek Wadhwa, Richard Freeman and Ben Rissing shows that these older entrepreneurs, while they fly under the media radar, are very prolific and on the rise.

Shane asks (as you might), “Why are baby boomers more likely than their kids to be entrepreneurs?” He goes on to answer his own question:

Researchers have two hypotheses, the second more plausible than the first. The first explanation is a cohort effect: Today’s young people don’t want to run their own businesses as much as their parents did were when they were young. The more plausible explanation is an age effect.

The reason Shane provides for the cohort effect being a weaker argument is a body of research conducted at UCLA within the Cooperative Institutional Research Program (CIRP). CIRP points to a trend over the past quarter century whereby college freshmen are less likely to want to be a “business executive,” “accountant,” or “actuary.” Instead, a higher percentage want to own a business now than previously.

So, while more freshmen want to be business owners, fewer people in their early twenties are actually starting businesses. This is where the age affect provides an explanation. Those who prefer this argument would say that the experience gained and savings accumulated over a period of fifteen years or more give one more confidence to start a business later in life. While there are certainly more responsibilities for the stereotypical midlife entrepreneur on the home front, this age group appears to have figured out how to address those responsibilities and still be willing to start businesses at a higher rate than the younger counterparts.

What’s holding you back? Start a business as a second career!