05/28/15

Weathering the Economic Storm as a Small Business

I was making a presentation to my networking organization this week, and was asked what I was seeing in terms of what is happening to small businesses, or how they are reacting to the economic situation. I immediately have two responses to that question.

Riding the Waves of Cash Flow

First, cash flow is the problem. People are busy. They have work and projects, but money is flowing slowly in drips and drabs. People are taking much longer to pay, paying partial, and asking for discounts.

The positive side to this is that people are creating new alliances, and seeing that cooperative relationships are working rather than competitive ones. As small businesses, we are interdependent upon the business ecosystem. We provide services or products and have people provide us products and services. If there is an interruption in that cycle we are at an imbalance and disadvantage.

While we are all nervous and frustrated, those who are able to work cooperatively with others as a team on the same ship in this storm have the greater chance of success. Chaos forces the building of alliances larger than your own business. We need each other to survive, and those with whom I am able to build cooperative relationships with in difficult times will be those I continue to work with when the waters are smoother.

We are seeking certainty now, which at the moment is difficult to find. As a small business, I am eager to work with you to re-negotiate an agreement if needed, if we build trust and can know that the re-negotiated agreement is solid.

For example, a client received 35 cents on the dollar for work completed. Reaching out they came to understanding each other’s situation and intent better. This strengthened the trust they had initially developed, and they understood what was needed to get full payment, and importantly when to expect it – diminishing uncertainty. While the principal depends on payment from the client before paying the sub-contractor, there is a new communication and cooperative relationship between both parties with an understanding that going-it alone will not get you through this storm.

Bracing Against the Winds of Uncertainty

The second response was about uncertainty – uncertainty as to when, how, and how well the stimulus initiatives will take effect. And will we, when they start to have an effect, go back to the same thinking that got us into much of this situation in the first place? It was Einstein who said that we can’t solve the problems by using the same kind of thinking we used when we created the problems.

Business is happening. Certainty is a requirement for growing a business. I know lots of businesses that are busy while experiencing cash flow problems. But the future is uncertain, and as a result there is anxiety and frustration. I talk with business owners expressing anxiety with uncertainty who feel they are alone with this concern. But know this: YOU ARE NOT ALONE.

Uncertainty is prevailing, and as a result we are all being conservative in our behavior. But despite the doom-and-gloom messages in the media and the uncertainty, business IS happening. To weather the storm focus your energies on what you CAN do to keep moving forward, focus on your cooperative and mutually beneficial relationships, and keep on keeping on. The storm will not last forever.

05/28/15

Leadership Development Should Be Key Part of Your Small Business Development Strategy

If you are the leader of a small or medium-sized business, take a lesson from the playbook of large corporations by incorporating leadership development into your on-going business growth strategy. Large corporations weave leadership development into their planning. They consider future leadership requirements for the initiatives they are working on now, as well as the possibilities that can arise from a strong team leadership.

Certainly, the role of the head of a small business differs significantly from that of a larger business. The principal of a small business will be more involved in the day-to-day operation of production, fiscal, system and people management, and sales and marketing, while leaders in large corporation focus on achieving results through other people. Success for the large corporation is accomplished by the integrating leadership development into the strategic mindset at all levels. The growth for a small business to an organization that is both self-sustaining and equity producing also requires strategies for leadership development.

There are several things that the small business owner can do to make leadership development part of their growth process.

  1. Make leadership development an integral part of your daily workflow as well as your training and hiring process. Consistently think about getting tasks done by other people as the primary way you do business. This will free you up to be your business’ visionary, keeping your eye on the big picture at all times. Successful large businesses, such as General Electric, IBM and Allied Signal, institutionalized their leader development process across the entire talent cycle from selection, to development and retention.
  2. Articulate a vision for your business that is exciting so you can attract top talent. Large companies realize that a lack of talent is the biggest constraint to pursuing growth opportunities and surviving in today’s dynamic world and economic climate. One place to start, if you are uncertain of your firm’s vision, is to describe in what way your best clients – those you most enjoy working for – are better-off because of what you do for them. If you don’t know, you better find out before someone else does.
  3. Move from a manager role to an educator role. Teach your leadership team how to run the business, as well as how to develop leaders in their reports. If you don’t the business will never grow beyond your own capabilities and limitations. Great organizations, cultures and communities are built on the wisdom of many. If you are afraid that your employees might walk off with the business, it might be that your vision for yourself and the business is not compelling enough.
  4. Create space. Give people roles and let them learn as you did, by trial and error.
  5. Look for opportunities that are now available to you because of the new leadership. Look at and plan for the new leadership that is needed for new and potential opportunities.
05/28/15

If Henry Ford had asked his customers …

… what they wanted, it would have been a faster horse. A simple yet intriguing statement from Silicon Valley entrepreneur Judy Estrin (Wikipedia for more) in an interview about her new book, Closing the Innovation Gap: Reigniting the Spark of Creativity in a Global Economy. Innovation is the business topic of today. Estrin says innovation is how we are going to close the gap in energy, climate and healthcare, and grow our economy. We have been trained to get close to our customer, to understand what they want and to give it to them. These are all “today” needs. Future growth, which is what Henry Ford did, depends on innovation.

Innovation is the subject of another book in 2008, The Game-Changer: How You Can Drive Revenue and Profit Growth with Innovation by A.G. Lafley, Chairman, Proctor and Gamble, and business author, Ram Charan.

Lafley and Charan write that small companies can be effective at innovation because they are nimbler and have a more coherent sense of purpose. Large companies have advantage in having scale, resources and management capabilities. They list principles of innovation to include: motivating purpose and values, stretching goals, choiceful strategies, unique core strengths, enabling structures, consistent and reliable systems, a courageous and connected culture and inspiring leadership.

I work with small service businesses; and would like to hear your thoughts about what innovation means to you as a small business leader.