Category Archives: Entrepreneurship

As CEO, you’re the futurist of your business

Every small business owner should display in a prominent place this John F. Kennedy quote: “Change is the law of life, and those who look only to the past or present are certain to miss the future.”

As the CEO, you’re the futurist of your business, and the product of a futurist’s work is foresight.

Professional futurists are neither inspired by God, clairvoyant, nor have ESP. But they do look at the world differently than the average person. They typically see things before others do, largely because their focus is influenced by the following factors:

Extreme curiosity: This isn’t first by accident. Curiosity is to foresight what oxygen is to life.

Orders of implication: Futurists imagine the impact of multiple possibilities from a single scenario that hasn’t happened yet.

Collaboration: Futurists study the work of other futurists, work together, and welcome peer reviews.

Foresight tools: Some resources are sophisticated, some not so much.

As you can see, there’s nothing supernatural about these. Nothing you don’t already have or can’t acquire, at least at the level of CEO futurist. Let me lower the intimidation factor and make foresight easier with CEO foresight tools. You’ll recognize the first two:

Curiosity: The only person who’s more curious than a futurist is an entrepreneur. Curiosity is your most powerful tool-unleash it.

Watch for implications: When you see something new – a thing, idea or a development – unfocus your eyes and imagine the short and long-term implications. Play the “what if” game with your team.

Read: Professional futurists call it scanning. Read everything you can get your hands on about your universe and your customers’ universes. Start connecting dots.

Pay attention: This is the first cousin of curiosity. You pay attention to your business every day. Now add what’s outside your four walls to your scan.

Experience: Never underestimate the foresight value of past successes and failures, especially to the implications element.

Peer relationships: This includes CEO roundtables, whether formal or informal, but also attending industry events to listen to and compare notes with other CEO futurists.

Intuition: This is the love child of experience and curiosity. You have intuition, plus experts say you can grow it. Intuition is educated by experience and employed by curiosity.

These CEO foresight tools will help you track trends for opportunities and disruptions in areas such as: demographics, customer behavior, society, production/supply, politics, technology, and global events impacting large customers.

With tomorrow, next year and the next decade in mind, use questions like these to include your stakeholders in the foresight process: What will my industry look like? What will my market look like? What will happen to my existing customers? What will my new customer profile look like? What will be their expectations? What kinds of products and services should we sell?  How will we capitalize growth? What kind of technology will I need? What will be the greatest opportunities? What will be the greatest disruptions?

Use the tools, ask the questions, uncover and prepare for the possibilities that will allow you to take advantage of opportunities and minimize disruptions. Leading change as the CEO means applying the foresight tools of a futurist in order to avoid surprises. All surprises.

Even if a surprise turns out okay, you still shouldn’t celebrate. In fact, you should be just as frightened as if it turned out badly. Because it got through your foresight filters unnoticed until it manifested in front of you. That means a bad surprise could do the same thing.

Remember Blasingame’s Law of Surprises: Surprises are for birthdays — this is business.

Write this on a rock … “The future doesn’t fit in the container of the past.” Rishad Tobaccolwala

Blasingame’s Three Laws of Aggregation (or Two reasons your small business is like Sakrete)

Sakrete is one of the handiest products ever developed. It’s basically a bag of rocks and sand, but to a weekend warrior with a honey-do list, it can be a magic dust.

Packaged in small bags almost anyone can carry, Sakrete is an aggregation of Portland cement, sand and different size gravel. Just stir in water, apply it to your small construction project, wait a little while and, badabing badaboom, you’ve got real concrete supporting your project.

So, what does a small business have to do with a sack of rocks? Two things.

1. Chemistry.

When the components of Sakrete come in contact with water, a productive reaction occurs that, in a short time, manifests as a handy and enduring result. In the marketplace, productive chemistry between people and organizations is has long been known to be critical for sustaining successful performance. Whether Sakrete or your small business, the right chemistry is critical.

2. Aggregation.

Sakrete doesn’t just aggregate the correct combination of stuff, but also different sizes of masonry material. The larger pieces provide critical mass and structure, while the smaller ones bind everything together and nimbly fill in the gaps to eliminate weak spots. But unlike chemistry, aggregation is not as much of a natural law and requires more maintenance. Which is why there are no Blasingame Laws of Chemistry, but three Blasingame Laws of Aggregation.

Blasingame’s 1st Law of Aggregation

Find your success in aggregating the success of employees. 

Simply put, this is servant leadership, a term Robert Greenleaf coined in his book titled, you guessed it: Servant Leadership. But the concept goes back thousands of years to the ancient Chinese wisdom of I Ching, “The highest type of ruler is one of whose existence the people are barely aware.” And in his gospel, Mark quotes Jesus, “Whoever wants to be great among you must be your servant.”

Leaders who sustain success, year after year, are those who subordinate their ego by helping their people to be successful professionals, and then aggregate those success stories for the benefit of the company. They celebrate others first.

Blasingame’s 2nd Law of Aggregation

Aggregation prevents aggravation.

In business, aggregation is also known as strategic alliances, which small businesses must build with other organizations, especially larger ones.

It’s aggravating at least, and dangerous at worst, to manage threats and take advantage of opportunities without strategic resources. Compare the merits of forming a strategic alliance with an organization that already has what you need before you risk the expense and possible delay of capitalizing the ownership of that resource. And if you prefer, you can call it strategic aggregation.

Blasingame’s 3rd Law of Aggregation

Associate your brands with those that are more established. 

I also call this the “Forrest Gump Strategy.” As you develop strategic alliances, look for partners with brands and influence that have a higher recognition factor than yours, and arrange for the relationship to include your brand being presented in the marketplace alongside theirs. Brand association is smart aggregation, but you have to step up your game to earn the right to that level of aggregation.

Write this on a rock … If you’re not having the level of success you want, perhaps you should take some lessons from Sakrete.

Diaper Changing Stuff (DCS): Five critical questions for startups and veterans

Small business owners have to deal with two universes every day: the Marketplace, and what I call, the Diaper Changing Stuff (DCS).

The Marketplace is the fun place, where you buy and sell stuff. Playing in the backyard of this universe is why you became a business owner in the first place. And the good news is, most entrepreneurs are pretty good at the rules and expectations of this universe before they start their business.

The DCS represents mostly backroom, operating tasks (read: not much fun) that have to be done in order to present the business and its products to the Marketplace – accounting, cash management, banking, capital allocation, payroll, regulations – you get the picture. Just as no one has a baby because they like changing diapers, no one ever went into business because they’re passionate about inventory management or accounts payable. And yet, those tasks are as critical as the fun ones.

If you’re thinking of starting a business, don’t do it until you’ve compared my quick DCS checklist to your abilities. If you’re a business veteran, road test your DCS skills against this list to see where you might need improvement.

1. Cash and accounting

Do you know the difference between cash and accounting? Gain this understanding before you hock the house to start your business, because it’s the most imperative financial dynamic you’ll face every day. In fact, it’s the number one business issue that will wake you up at 2am. Remember, you can’t make payroll with a debit or a credit.

2. Capital allocation

Do you know how to properly allocate operating and non-operating capital? Don’t use operating cash to buy long-term assets, or borrow money to operate on. Create a capital source and allocation strategy before you crank up your corporation.

3. Banking

Do you know how to talk banker? If you need a loan, can you explain what you’re going to accomplish with the money, AND how you’re going to pay the bank back? If you make a loan request without this information, you’ll just burn a banking bridge. Bankers are easily frightened, and no one ever got a loan from a scared banker.

4. A/R Days – A/P Days

Do you understand the relationship between Accounts Receivable Days and Accounts Payable Days? If you extend credit to customers, you have to fund those accounts until they’re received, which is usually later than when you have to pay vendors. If you’re not tracking this relationship, you could literally succeed yourself out of business. And the first indication you’re in jeopardy will be a call from your banker telling you to make a deposit, or a vendor putting you on C.O.D. Sometimes these calls come in at the same time.

5.  Quality Process

Do you know the difference between Quality Service (QS) and Quality Process (QP)? QS is always making the customer happy, no matter how many times it takes to get it right. QP means getting it right the first time. QS is an expense you have to pay for over and over. Having a QP is an investment in excellence that stops the bleeding and moves customers from complaining to placing new orders and referring you to their friends.

Bonus question: Can you operate the business you had the entrepreneurial vision to create? Not everyone can. Don’t start your business unless you’re ready to change the diapers on your baby.

Write this on a rock … Blasingame’s Fourth Law of Small Business: “Successful small business owners have the spirit of an entrepreneur and the heart of an operator.”

The wonderful world of small business niches

One of the things Sears Roebuck is famous for is their Craftsmen tools, especially their mechanical socket wrenches. Once, while buying one of these, I was confronted with the options of “Good,” “Better,” and “Best,” a strategy for which Sears is also famous. Asking about the difference, I was told that the Best model had more notches, or teeth, inside the mechanism, allowing for finer adjustments when tightening a bolt or nut.

For the past 30 years, the marketplace has increasingly become like that “Best” socket wrench: every year, it acquires more notches, except in the marketplace, notches are called niches (I prefer “nitch,” but some say “neesh” – tomato, tomahto). And just as more notches in a mechanical wrench allow for finer adjustments, niches create finer and more elegant ways to serve customers, which they like – a lot.

Webster (and Wikipedia) defines a niche as, “a place or position perfectly suited for the person or thing in it.” If ever a concept was perfectly suited for something, it is the niche and small business. Indeed, as one small business owner creates a new niche, another is creating a niche within a niche. It’s a beautiful thing.

Rebecca Boenigk is the president of Neutral Posture, Inc., a Texas company she and her mother founded in 1989. This small business manufactures REALLY comfortable and ergonomically correct office chairs. As a guest on my radio program, she told me they attribute their success to filling a niche: Their chairs aren’t for everyone, just those who are willing to pay a little more for a chair that promotes the best posture at work. Many small business fortunes have been made with the Neutral Posture model of being the best-in-niche, rather than trying to conquer the world.

The mother of niches is what Adam Smith called “the division of labor,” which today often manifests as outsourcing. Outsourcing is when individuals and businesses spend more time focusing on their core competencies and contract for the other stuff. For example, there are more professional lawn businesses today because folks are increasingly realizing they can earn more by sticking to their professional knitting, than it costs to hire their grass cut.

And across the marketplace, it’s become an article of faith that the best way to stay on track is by outsourcing non-core tasks to a contractor – often operating in a niche – whose core competency is that task. I’ve long said that the best thing that ever happened to small business – after the personal computer – is outsourcing, because it manufactures niches, which are pretty much the domain of small business.

As niches have increased in number, so have entrepreneurial opportunities, resulting in the most dramatic expansion of the small business sector in history. It’s difficult to say which one is the egg and which is the chicken: Have entrepreneurs taken advantage of niche opportunities presented to them, or have they carved out niches while pushing the envelope of an industry? The answer is not either/or, it’s both/and.

In the future, there won’t be more mass marketing, mass media or mass distribution, but there will be more niches – lots of new niches. Even niches of niches. And that’s good news, because more niches means a healthier small business sector, which I happen to believe is good for the world.

Write this on a rock … Most small businesses will find more success by creating and serving niches.

Small business lessons from big business mistakes

Here is a true story from which several business lessons can be learned.

A while back, I needed to reach a friend who worked in the local office of a national company. Searching online, and yes, even the phone book, I found only a toll-free number that connected to an answering system for the entire company. That’s right – this business didn’t publish a number for the local office. And incredibly, the automated system did not offer an option to connect to any local branch or person. I’m not making this up!

Lesson 1: Don’t create barriers to customers. Even if you think you don’t have barriers, look anyway, because you might. Ask employees and customers to help you find them.

Undaunted, I finally acquired the local number (yes, they had one), but the person who answered said my friend, who was in sales, had been laid off. It turns out, this publicly-traded corporation was losing money, so in order for the CEO to impress Wall Street analysts, who influence the stock price, almost 2,000 employees across the company were told to hit the bricks.  Never mind how valuable these employees were or if those cuts would hurt the company’s long-term performance; the quickest way to increase profits was to cut payroll.

Lesson 2: Performance goals are important for planning, but customers don’t always buy on your schedule. Don’t let short-term expense pressures cost you sales, and worse, long-term customer relationships.

I learned that my friend had been a top producer, but since he was the last one hired he was the first to go. He’s no longer a payroll drain on his former employer, but one of their competitors quickly snapped up this winner.

Lesson 3: In the 21st century, seniority doesn’t trump performance.

So what if this big business CEO had simply installed a phone system that made sure customers could connect to his local offices? The answer is that my friend and several hundred others may not have been fired. And who knows? By simply eliminating one customer barrier, this company might actually have needed to hire more salespeople to handle all the business that would not have gone elsewhere.

Lesson 4: How you run your business – including people, systems, technology and policies – is not more important than the fast-evolving expectations of prospects and customers.

By the way, that big business that taught us these valuable lessons is no longer in business. Big surprise.

Write this on a rock … Think you don’t have customer barriers? Neither did that big business CEO.

Six questions and answers on being a successful business owner

As many of you know, for almost 19 years I’ve conducted over 1,000 live interviews annually on my radio program, The Small Business Advocate Show. I get to ask four really smart people a lot of questions. But occasionally the tables are turned are turned on me, like when Alignable.com podcaster, Alan Belniak, asked me several questions about small business on his show. I thought you’d be interested in that interchange.

Belniak: What’s the biggest problem small business owners don’t know they have?

Blasingame: Too many business owners don’t realize that their customers’ expectations are changing faster than ever before.  If you want to find out what your business should be doing tomorrow or next year, that information is inside the heads of your prospects and customers. Ask them.

Belniak: What advice do you have for small business owners in order to make a successful new hire?

Blasingame: Focus on the 3Ps: Be more patient, professional and proactive. Don’t make a hiring mistake by rushing to fill a slot. Use professional methods and practices to increase your chances of making a successful hire. Be more proactive by grooming employees to step up to a key assignment, so that you’re hiring for the lower position.

Belniak: What advice can you give to those who are seeking funding?

Blasingame: Strategy and forecasting. Create a capitalization strategy that includes multiple capital sources and terms. Don’t use operating cash for long-term capital expenses. Don’t finance something you can lease. Don’t use investors when you should get a bank loan. Use an electronic spreadsheet to create a 12-month cash flow projection so you can forecast beginning and ending cash. This will make you smarter and your banker happier.

Belniak: What is one way that operating a business today is the same as 15 years ago, and one way it’s different?

Blasingame: It’s Old School fundamentals and New School tech. Old School: The fundamentals never change: you still have to buy low, sell high and keep good records; cash is still King; people still want to be treated well. New School is the digital elements, and most is good news: Small businesses have handy cool and affordable tools available, but it’s not good news if you’re not keeping up. You don’t have to win the digital race, but you do have to participate.

Belniak: What are some of the character traits common among successful entrepreneurs?

Blasingame: You have to have a high tolerance for risk. If you don’t, clock in tomorrow. You have to believe in yourself. Many days all other elements of your business will let you down. If you can’t believe in yourself, there will be days when you won’t come back. You have to love working. You’ll never work harder than when you own a business. If you don’t love working, clock in tomorrow.

Belniak: What’s one thing you see small business owners failing to do?

Blasingame: They fail to set aside time at least every week to stop being a manager and assume the role of the CEO. Fire yourself from jobs you no longer have to do and promote yourself to jobs that a growing company needs someone to perform, but that only you can do.

Write this on a rock … Being successful in small business isn’t complicated, but the degree of difficulty is hard to explain.

What politicians, small business and mice have in common

maze-2Almost 20 years ago, Dr. Spencer Johnson wrote a legendary book titled, Who Moved My Cheese? It tells a story about four characters who ate only cheese.

Early in the story all four characters went to the same place in their world – a maze – to get cheese. The first two were not picky about their cheese or where they found it – it was just food. In fact, the current place in the maze where they found and ate cheese was literally just that. So when someone moved their cheese, they immediately started looking for the new place where cheese was being put.

For the second two characters in Johnson’s story, cheese represented more than food; they had allowed themselves to become defined by the specific cheese found in that specific place in the maze. To them, this cheese was more than nourishment, it also represented their esteem, success and happiness. You’ve heard of being hidebound. Well you might say these two were cheesebound (my term, not Johnson’s), which really wasn’t a problem until someone moved their cheese.

Twenty-five years ago, in his book (and film), Paradigms: The Business of Discovering the Future, futurist Joel Barker defined a paradigm as a set of rules that: 1) establishes/defines boundaries; and 2) tells you how to be successful within those boundaries. Barker says paradigms, both written and unwritten, can be useful until there’s a shift, which is what happened to the cheesebound characters in Johnson’s story. When someone moved their cheese, instead of looking for new cheese like their maze-mates, they whined and dithered so long in the old place – now devoid of cheese – that they put their survival in jeopardy.

Johnson’s cautionary tale – and the two sides of Barker’s paradigm coin – apply to all parts of life, especially politics and business.

For generations, the Democrat and Republican Parties each showed up at the same corner of their own political maze where they had always found the same cheese. Like the second characters in Johnson’s story, both parties had been nourished and defined by the cheese they found in that specific spot. But when someone moved their cheese, as the electorate is doing now, the cheesebound members whine and struggle to maintain their identity instead of taking action to find new cheese. In his book Johnson said: “Old beliefs do not lead you to new cheese.”

Meanwhile, Bernie Sanders and Donald Trump are like the first two characters in Johnson’s story. Neither define themselves by the old cheese in the old location. They went looking for and, to the surprise of their party leadership, found new cheese. Johnson says, “Movement in a new direction helps you find the new cheese.”

Small business owners should watch the clinic that the Democrats and Republicans are putting on this year on the wages of being cheesebound. Like the electorate, customers are moving cheese and shifting paradigms all over the marketplace . You cannot afford to become cheesebound.

Write this on a rock … Blasingame’s Law of Business Love: It’s okay to fall in love with what you do, but it’s not okay to fall in love with how you do it.

Four factors that stopped the American Startup

As the financial crisis was being resolved in December 2008 I heard someone say, “Wait ’til the startups get going – they’ll end this recession and crank up the economy again.” Of course, this maxim had caught on previously because when you start a business, you create at least one job.

But as I thought about how that entrepreneurial expectation had been true in past recoveries, I considered the environment we were entering and concluded that this recovery was going to be different. Indeed, in my 2009 predictions I reckoned that there were going to be fewer startups in this recovery cycle than ever before based on two conditions I saw coming. Unfortunately, things got even worse due to two factors I didn’t forecast.

Typically, the founding of most Main Street startups are funded initially with access to the personal credit and home equity of the founders. I saw problems coming for both of these sourcesbecause:

1.   One morning in February 2008 – months before the financial crisis but with storm clouds on the horizon – millions of credit card holders woke up to discover their card issuers had withdrawn any available credit they had the day before.

2.   Then, over the next year, the bursting of the real estate/mortgage bubble – the prime cause of the 2008 financial crisis – resulted in wiping out or significantly reducing the home equity of millions of U.S. households.

The two factors I did not forecast are:

3.  The youngest – and largest – of marketplace participant groups, Gen Y and Gen X, age 20-44, apparently are not as entrepreneurial as their Baby Boomer parents were at that age. According to the Kauffman Foundation, since 2009 startup activity for those two demographics has been declining.

4.  In my half-century career, and my study of the history of the American marketplace, prospective founders of new businesses have never been subjected to the level of anti-business rhetoric and policies from the federal government as they have in the past seven years.

One of the seminal findings of the Global Entrepreneurship Monitor (GEM) is a direct connection between a country’s entrepreneurial vitality and its economic growth. The Great Recession ended in June 2009. But the subsequent U.S. recovery, now well into its sixth year of moribund performance (2% annual average GDP growth), has been stuck in a kind of circular reference: expansion-creating startups aren’t happening because of the four entrepreneurship-repressing factors.

Write this on a rock …Real economic expansion – more than 3% growth – will require a return to favorable entrepreneurial conditions lost since 2008.

Next week my column will reveal counter-intuitive ways the lack of startups since 2008 have been positive.

Replace worry and fear with business performance

In his book, Blue Highways, William “Least Heat Moon” Trogdon said his Osage Indian grandfather, William “Heat” Moon, taught him this about worry: “Some things don’t have to be remembered; they remember themselves.”

Owners are justified in worrying about their small businesses, but sometimes they waste emotional energy worrying about things over which they have little or no control, or aren’t likely to happen.

In the movie, Bowfinger, Eddie Murphy played Kit Ramsey, an action movie star also famous for being a pathological worrier. He leads a frightened and miserable life because he worries about strange things that would never happen.

Ramsey’s greatest worry was being captured, killed and eaten by space aliens. He also worried about being crushed by a gigantic foot, or that his body might burst into flames. Pretty silly, huh?!

Watching Murphy play this unstable character is hilarious. But it’s not funny or silly when you and I worry about things that, like Ramsey’s obsessions, probably will never happen.

·  Instead of aliens, how much do you stress out about your business being killed and eaten by the dreaded Internet competition?

Stop obsessing about online competitors. First, you should be an online competitor yourself. Second, without a fixed base, online-only competitors may have what customers need, but you have something more powerful: You know what customers want.

·  Instead of being stepped on by a giant foot, do you obsess about being squashed by one of the Big Boxes?

In The Age of the Customer, prospects often rule you in or out before they know how much you charge. You can establish a level of relevance with prospects and customers that no Big Box can, as they continue to focus first on being competitive.

·  Instead of bursting into flames, do you wake up in the night obsessing that your business might go up in smoke if customers abandon you?

In The Age of the Customer, you actually should obsess about customer expectations, otherwise they won’t really leave, you’ll just become irrelevant.

Instead of living a frightened and miserable life like Kit Ramsey, put that energy into performing so well that any competitor would be hard-pressed to take customers away. Build relationships with customers to the degree that when something they want pops into their heads, as Trogdon’s grandfather would say, your company remembers itself.

Write this on a rock – Don’t live a frightened and miserable life. Replace worry with action and performance.

Jim Blasingame is author of the award-winning book, The Age of the Customer: Prepare for the Moment of Relevance.

Four kinds of Vitamin C prevent professional scurvy

For centuries, prolonged service at sea resulted in sailors contracting a malady called scurvy.  Those so afflicted bruised easily, had joint pain, gum disease, tooth loss — you get the picture.

By the mid-18th century, researchers discovered that eating citrus fruit, like lemons and limes, would prevent scurvy. We now know the active ingredient in this “remedy” is vitamin C in the ascorbic acid found in these fruits. Ascorbic literally means “no scurvy” in Latin.

One of the maladies often found in business owners is a condition I call professional scurvy. This kind doesn’t cause your teeth to fall out, but symptoms do include high levels of negative energy, low levels of performance and an easily bruised ego resulting in an unfortunately high business failure rate.

The good news is, like the seagoing kind, professional scurvy can be cured with vitamin C — actually four kinds of professional vitamin C.

1.  Vitamin Courage

Challenges ignored turn into ugly problems that can bruise a business. But facing challenges with courage reduces the negative impact and provides a chance to morph them into opportunities.

Courage is being brave AFTER you’ve had time to think about it.  Catch challenges early so you can administer a dose of Vitamin Courage.

2.  Vitamin Confidence

Thomas Edison is alleged to have said failure is successfully identifying what doesn’t work. Pure success tends to build ego, which in high concentration can be professionally dangerous. But success alloyed with failure actually builds confidence, which is essential for long-term performance.

Vitamin Confidence in business is nothing more than faith in your ability to sail around present and future challenges, as well as seize opportunities that come your way.

3.  Vitamin Character

Contracts are the transactional laws of the marketplace. But like the relationship between captain and crew, it’s character that counts, not legal words or signatures on paper.

Those who demonstrate high levels of Vitamin Character —like doing the right thing even if the contract doesn’t require it — have no difficulty finding customers or crew.

4.  Vitamin Credential

This one is critical because courage without skill is the definition of foolhardy; confidence without resources is what Texans call “all hat and no cattle;” and character without knowledge is a well-intentioned commitment that may not be kept.

All the best intentions won’t help you succeed if you don’t acquire Vitamin Credentials — education, skill, experience and resources — that can back up your business plan and commitment to deliver.

Write this on a rock….

Prevent professional scurvy with regular doses Professional Vitamin C.