Category Archives: Entrepreneurship

AUDIO: The cost of not converting to Age of the Customer practices

What does it cost to reject The Age of the Customer shift? Jim Blasingame reveals that the only thing that costs more than converting to Age of the Customer practices is not converting.

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OnAir

Connecting with global prospects and getting paid

This is the second of two articles on small businesses going global.

ENTREPRENEURIn the first article, I allowed that it can be exciting for business leaders to imagine a global prospect base of more than seven billion people. But for a small business to imagine an export strategy, it’s at once exciting and intimidating because of the three elemental global business questions, the first of which we focused on last time: Who are my global prospects? Now let’s focuses on the other two: How to connect with them and how to get paid.

The good news is that there are two government agencies standing by to answer both of these questions. Each one provides digital information, human assistance and global networks designed to help a small business maximize its opportunity to create and execute a successful export strategy.

The, “How do I connect with global prospect?” question can be answered by the U.S. Commercial Services, a division of the U.S. Department of Commerce. This should be your first stop for education on finding and converting global prospects into customers.

When you consider all of their resources, the U.S. Commercial Service is a virtual one-stop shop for developing and executing a small business export strategy: a great website (Export.gov); a toll-free number (800-872-872) answered by a real person; over 100 offices around the U.S., plus dozens more around the globe you can walk right into and ask for help; and their book, “A Basic Guide to Exporting,” includes an excellent tutorial and several case studies.

All of that help is free, with the exception of the book and any direct expenses incurred on your behalf.

Export-Import Bank of the United States (ExIm.gov) can answer the “how do I get paid” question on many levels.

Part of the U.S. government, Ex-Im Bank will assist with the financial elements of your export sale. They will working with the banks on both sides of the transaction to coordinate funds transfers, provide loan guarantees, and even pre-delivery working capital for you and post-delivery financing for your customer.

For generations, big firms have owned the franchise on global business. But shifts in technology and demographics are making the global marketplace more compelling and feasible for small businesses.

Contact these two organizations and let them help you develop a global business strategy.

Write this on a rock…The global marketplace – and 7 billion prospects – are waiting for you.

Identifying your small business global prospects

In case you haven’t heard, the seven billionth Earthling was born recently.

For the global marketplace, seven billion prospects are exciting. But for growing American small businesses, 96% of those folks live outside the U.S.

Once, small business growth meant expanding to the next county. But in the 21st century, shifts in technologies and demographics have made expanding outside America’s four-walls increasingly compelling. But it has also produced three elemental global business questions: Who are my prospects, how do I connect with them and how do I get paid? Let’s focus on the “Who” first, with these global stats from National Geographic (January 2011), plus my editorializing.

  • GlobalBusinessNineteen percent of Earthlings are Chinese, 17% are Indian and 4% are American. By 2030, the first two will invert.
  • By gender, males barely edge out females: 1.01 to 1.0. But my demographic experts report wide swings in median age among countries, which must factor in any export strategy.
  • In a historical shift, just over half of Earthlings are now urbanites. Remember, city folk use different stuff than their country cousins.
  • Here are global workplace profiles: 40% of us work in services, 38% in agriculture and 22% in industry. This means different things to different industries, but it means something to all businesses.
  • English is the international language of business, but is the first language of only 5% of global prospects. When doing business outside the U.S., be culturally sensitive and patient with the translation process.
  • Breaking news: 82% of your global prospects are literate. If you can read and write you can improve your life, which explains the growth of the middle class in emerging markets. A growing global middle class means more affluent consumers.
  • Computers are luxuries for most Earthlings. But cell phone usage is exploding across the globe and billions who never owned a PC, or used the Internet, will soon do both with a smart phone. Two words, Benjamin: global mobile.

Even though India and China are much in the news, American small businesses should consider export opportunities in our own hemisphere first, especially where trade agreements are in place, like Canada, Mexico, Panama, Colombia and Chile.

In the next article we’ll address the other two elemental questions: How to connect with global prospects and how to get paid.

Write this on a rock… Consider business growth outside of America’s four walls.

The Blasingame Small Business Banking Rule of Thumb

For many years, I’ve made recommendations to small businesses with regard to their banking relationships called: The Blasingame Small Business Banking Rules-of-Thumb:

Photo courtesy of Notes From A Chair Blog

Photo courtesy of Notes From A Chair Blog

1st Blasingame Small Business Banking Rule-of-Thumb
A small business should have at least two banking relationships. If you’re turned down for a loan at one bank, you have another place to go where the person already knows about you and your business. One primary reason for this rule is because if only one banker knows you and your story, when he or she gets fired, promoted or otherwise leaves the bank, Murphy’s Law will dictate that it will happen when you most need a favorable banker.

2nd Blasingame Small Business Banking Rule-of-Thumb
At least one of the banking relationships should be with an independent community bank – that means locally owned and managed – and preferably your lead bank. I’m not picking on big banks, it’s just that most small businesses need to be given a little extra consideration for their character and past performance, which is typically not as forthcoming in a large bank.

Loan decisions made by large banks have two elements that may not give a small business this extra consideration:

1) The actual decision is made by a loan committee in another city, by people who probably don’t know the business owners

2) They rely heavily on what is called “credit scoring,” which is a computer program – each bank has its own proprietary model – that receives quantifiable information and produces a numerical “score”. If this week the bank has decided only scores of 18 or more are accepted, a loan request under 18 will likely be rejected. I’ve never heard of a credit scoring system that includes a variable for the applicant’s character.

Over the years, my Rules-of-Thumb have proven to be valuable to many small businesses. But since 2008, with all of the problems associated with big banks, those who have followed my advice were much less likely to find themselves without access to credit. This was because every independent community banker I spoke had emphatically said they had never stopped lending to their small business customers.

Recently, I talked with two presidents of independent community banks about working with small businesses and the health of the banking industry. First, Mike Menzies, who is not only the president of the Easton Bank and Trustin Easton Maryland, but he’s also the new Chairman of the Independent Community Bankers Association (ICBA). Mike’s also a long-time member of my Brain Trust. Secondly, there is Charles Antonucci, President of Park Avenue Bank in mid-town Manhattan.

They agreed with my advice.

In the marketplace, it ain’t over ‘till it’s over

One of sports history’s greatest upsets happened at the 1975 U.S. Open tennis tournament at Forrest Hills, New York, when the Spaniard, Manuel Orantes, defeated legendary Jimmy Connors in straight sets (6-4, 6-3, 6-3), in Connors’ own back yard.

But that contest isn’t the best part of this story. Beating Connors to win a professional tennis Grand Slam tournament couldn’t have happened if the night before, against all odds, Orantes had not demonstrated enormous courage and extreme perseverance.

In the semi-final match between Orantes and Argentinian, Guillermo Vilas, the Spaniard was down two sets to one, five games to zip in the fourth set, and two match points in the sixth game. Vilas was serving triple match point to the seventh power.

If Orantes loses one more point in this game the match is over. And even if he battles back to win this game, he would then have to win the next six games in order to force the fifth set to determine who advances to the finals. Tennis fans know a score of 2-1, 5-0, 40-love, is an against-all-odds, improbable comeback scenario.

There’s another group that can appreciate the long odds Orantes faced—small business owners. Entrepreneurs are no strangers to the marketplace equivalent of triple match point to the seventh power. Here’s what it might look like: losing a major customer, having an unexpected expense, and a cash flow crisis resulting in a call from the bank, all in the same hour. The question is not whether a small business will have triple match point challenges—Orantes faced it only once, small businesses see it all the time—but how well the owner manages them.

Back to the tennis match: In perhaps one of the gutsiest display of guts in the history of pro tennis, Orantes overcame that triple match point to take the sixth game, and then proceeded to win the next six in a row to claim the fourth set 7-5. This courageous comeback not only produced the momentum to beat Vilas 6-4 in the final set and get Orantes into the finals with Connors, but, as you now know, it carried over to the next day when he became the 1975 U.S. Open champion by dispatching one of the greatest tennis champions of all time in straight sets.

Next time your business is down triple match point, remember that as long as the game isn’t over you can survive. As long as you have the desire to win you can succeed. As long as you believe in yourself you can gain the momentum to win today and become a champion tomorrow.

Even when you’re down triple match point, you can still win.

 

Find work you can love

Whether work is a blessing or a curse depends on what you are working on and your attitude about it. James Matthew Barrie, the Scottish novelist said, “Nothing is really work unless you would rather be doing something else.”

Many hard working entrepreneurs were once unproductive employees, but now, with their wagonhitched to their own star, work is the stuff of their dreams. Many productive employees – once unsuccessfully self-employed – now understand the blessings of employment, and become the most valuable of resources: the entrepreneurial employee who loves his or her work.

Work feeds our stomachs with food and our spirit with accomplishment. Work creates, produces, energizes and fulfills all things humans need for survival and happiness.

If work is not a blessing for you – whether owner or employee – the problem is not work itself, but the work you are doing. Lebanese novelist, Kahlil Gibran wrote, “Work is love made visible.”

Life is short. Keep searching until you find work you can love. I did.

It’s good to be a business owner

The military has produced many acronyms, one of which is RHIP, which stands for, “Rank Has Its Privileges.”

RHIP is the unofficial way to point out when a person accrues some benefit by virtue of their position. Mel Brooks’ character said it another way in his comedy “History of the World” with, “It’s good to be the king.”

In that spirit, here’s a new acronym for small business owners: OHIP, which stands for “Ownership Has Its Privileges.” Let’s look – sometimes with tongue-in-cheek – at a few business ownership privileges.

By virtue of being the owner, you have the privilege of working all you want. That means you’ve earned the right to work half-days. And as an added bonus, you get to choose which 12 of the 24.

If you so choose, you can brand the company with your name, which can be pretty rich ego food. But it also helps a plaintiff’s attorney – the one who represents the customer who “slipped and fell” in your business – to identify at least two of the co-defendants in the lawsuit: the legal entity and its founder.

When getting a bank loan, almost all small business owners are afforded the high honor of signing their name twice on loan documents. Having perfected the belt-and-suspenders approach, banks provide you with this special moment to acquire not only the business assets as loan collateral, but also your personal estate as a double guarantee.

But seriously folks, as Mel Brooks might say, here are a few real ownership privileges.

Structure your small business as a Sub Chapter S Corporation (S Corp) or a Limited Liability Company (LLC), both non-tax-paying entities, and accrue the benefit of having business income or losses pass through to shareholders or members, respectively. These two legal entities are handy because personal tax rates are typically lower than corporate rates, plus you avoid double taxation of dividends. Additionally, S Corps and LLCs allow owners the privilege of sheltering personal assets from liabilities that may befall the business.

Finally, there is something I call the stealth benefit of business ownership: owning the real estate your business operates in and leases from you.

For example: John Jones owns the property at 21 Enterprise Blvd. and leases it to John Jones, Inc. John receives rental income, tax advantages and asset appreciation. Plus, as long as it can be justified, John can raise the rent instead of giving himself a pay raise because, as passive income, it avoids payroll tax.

So are you taking advantage of all of the “privileges” of business ownership?

It’s good to be the owner.

Some thoughts on certainty

As we conduct the due diligence on what’s next for our business, we seek the information that will help us acquire knowledge and create conditions that minimize the risks and maximize the opportunity. After all, we want to be as certain as possible that our next step is the right one, don’t we?

That’s an interesting word, certain. Webster says it means fixed, settled, determined, not to be doubted. But it’s a word that isn’t often found in business plans.

The 19th century president of Harvard University, Charles W. Eliot, said, “All business proceeds onbeliefs, or judgment of probabilities, and not on certainties.”

What do you think the marketplace – indeed, the world – would look like if business had been built more on certainties than beliefs? I think we would probably be closer to holding a stone ax on our hand than a smartphone.

It’s important to understand that on the entrepreneurial scale, each of us resides somewhere between the foolhardy and seekers of certainty. The challenge for entrepreneurs is to know when to seek certainty and when to move forward with our beliefs.

No position on this scale is better than another – the world needs all kinds of entrepreneurs. But understanding where we reside on the entrepreneurial scale helps us make better business plans.

Managing the three clocks of small business

“Time Is On My Side,” is the title of one of the classic rock ’n’ roll songs performed by Mick Jaggerand the legendary English band, The Rolling Stones.

This bold statement works in a song, but for small businesses … not so much. The reason is because of the complicated dynamic between time and our most precious asset, cash.

In the marketplace, there are actually three different clocks at work that every business uses: one for operating expenses, one for sales and one for cash. Let’s take a look at how these three clocks impact your small business.

Operating Expense Clock
Every month like clockwork, regardless of sales volume, cash collections or profitability, payroll must be met, rent must be paid, taxes must be remitted, plus phone, utilities, insurance bills, etc., must also be paid. The Operating Expense Clock is hardwired to Greenwich, England for accuracy within a nanosecond per millennium, and nothing stops it short of a global, thermonuclear holocaust coinciding with a direct hit from Haley’s comet.

The only way to influence this clock is through operating efficiencies – you won’t be billed for what you don’t buy.

Sales Clock
This clock is powered by the customer relationships you’ve created so sales result each month. You project when each sale will occur by qualifying prospects and attributing a clock to each potential transaction so that you can budget future sales volume and meet your cash requirements.

How the Sales Clock operates is completely logical and intuitive, but it only works in your favor when the purchase requirements of customers have been met.

Cash Clock
What is not logical or intuitive is the Cash Clock and its relationship with the other two. Think of it like this: Cash is to sales as snow is to cold: You can have cold without snow, but you can’t have snow without cold. You can have sales without cash receipts, but you can’t have cash receipts without sales. And expenses are like weather – you get some every day.

But what hits small business owners hard is that for every glitch in the mainspring of the Sales Clock, there are 1,000 potential sprocket failures that slow or stop the Cash Clock. Consequently, the Cash Clock requires constant maintenance.

Murphy’s Law lives inside the Cash and Sales Clocks, but the Operating Expense Clock is immune to this insidious law and rocks on just like The Rolling Stones.

Small business success requires understanding the three clocks of the marketplace.

Entrepreneurial patience = Success

If you were to identify synonyms for the word entrepreneur, you would come up with things like, risk-taker, industrious, visionary, perhaps even capitalist. But one word that is definitely NOT synonymous with entrepreneur is patient.

It simply is not in an entrepreneur’s DNA to wait for the world to bring him or her things. Entrepreneurs bring things to the world.

But having said this, entrepreneurs who enjoy long-term success have learned entrepreneurial patience. Even the most impatient entrepreneurial farmer understands that a corn harvest doesn’t take place until after the seeds are planted, the plants nurtured and a certain amount of time has passed.

Having entrepreneurial patience means knowing the difference between wasting time and energy and investing time and energy. Successful entrepreneurs are impatient about steps in a process — getting the seed, planting the seed, cultivating the plants, etc. — but not about accomplishing the ultimate goal of harvesting the result of the process.

One of the most prominent guarantees of failure in business is not understanding the simple wisdom of Renaissance author and father of deductive reasoning, Sir Francis Bacon, who said, “In all negotiations of difficulty, a man may not look to sow and reap at once; but must prepare business and so ripen it by degrees.”

When you see someone trying to “sow and reap at once,” you’re witnessing failure waiting to happen. The only thing left to be determined is whether this failure will become a valuable lesson in entrepreneurial patience, or a bitter experience.

Whether in the field or in the marketplace, all endeavors are subject to natural laws, like the time it takes for a seed, or a project, to germinate and produce fruit. Successful entrepreneurs understand this and have learned how to employ their impatience prudently, as leverage for success.

Impatience is often synonymous with failure; entrepreneurial patience is usually synonymous with success.