Zane Safrit

Don't Forget the Cash

 “Momentum is the result of both speed and size.” A bullet has tremendous power due to its speed, notwithstanding its tiny mass. An avalanche has tremendous power due to its mass in spite of a slow beginning. Michael Gerber (best selling author of E-Myth Mastery) uses this analogy to describe the cash power within the organization. “The more cash you have at your disposal, and the faster it moves through your organization, the greater your financial momentum.”

We have all heard the stories about growth companies that fail because they outrun their cash. When you first hear about it, it seems kind of strange doesn’t it? After all, a rapidly growing company with new customers, increasing sales, revenue and profitability, what isn’t good about that? Management says “We’ve got the formula for success, let’s push it up another notch”.

Ben Carnevale (Former President of Oxford International Ltd.; a high growth Chicago based multinational corporation serving the OEM automotive industry) says “We learned a valuable lesson. We were expanding rapidly and focused on technology and satisfying the customer, but not paying attention to the financial guy. We out ran our cash”. Fortunately for Oxford they caught it in time. Lesson learned.

Oddly enough the attraction of this scenario is common for rapidly growing companies. We have all heard the stories, but how does it happen? How can you avoid “out running your cash” from happening to your business? Is the only answer to slow the growth? That seems counter intuitive.

Let’s set some context. Why does growth cause cash shortages? We all know the answer, growth is fueled by sales and marketing, and the fruits of those labors don’t pay off until some time later. But if it is so obvious, why do intelligent leaders of rapidly growing companies still end up as a statistic?

We believe it is a combination of factors

• Companies are integrated pieces of a whole. They must be managed by looking at the big picture. Carnevale says “We did not watch the entire process”.
• Lack of formal basic cash management processes. Cash management processes are among the few formal pieces of structure that must be in place initially.
• Lack of adequate measurement. Lack of prediction. If you don’t measure it, you are not objective.
• The attraction of growth and lack of focus on cash management.

Most businesses, says Gerber, think only in terms of increasing revenues and decreasing expenses. Instead, consider the assets you have that can be sold to generate cash without hurting your business. Are there “pools” of cash lying dormant within your asset base?*

Gerber suggests six rules to maximize “cash power.”

1. Decrease assets
2. Increase liabilities or capital
3. Increase revenues
4. Decrease cash expenses
5. Improve productivity
6. Optimize timing

Even these actions speak of the business as an integrated whole. Each can have significant impact on the success of the business.

Get creative!

Graseby PLC, a $30 million laser optics company, owned a building (no debt) with a market value of $3.5 million. The second floor (vacant) was leased to a Fortune 500 defense contractor for $300,000 a year, Graseby then sold the building to an investor and leased their own space back at market rate. As a result they were able to capitalize the two income streams at the then favorable rate of 8%. The building sold for $4.5 million, and freed up $1 million in cash flow.

Don Urbancicz (Founder of The Insurance Noodle) addresses it this way. “In addition to securing a strong financial partner, most of our marketing success is driven by word of mouth referrals. Not only is it more effective, but significantly less costly too”.

John Fox (President of Venture Marketing and author of The Marketing Playbook. Venture Marketing is a marketing consulting firm focusing on its client’s top line revenue) says, “Don’t overlook financing by your customers.” Fox worked with a telecom company who wanted his technology, but could not purchase “new” technology. It had to be established. Fox needed $2.5 million to finance their project, but didn’t have the cash. He sold them a modem for $2.5 million with an agreement to receive the payments up front. He now had the cash, and delivered their project. The customer made it work. Had Fox not asked, the customer would never have thought of it.

So what questions should you always be asking your self? Am I watching the entire process? Are my cash management processes adequate without being too cumbersome? Am I realistic about how soon cash will start flowing from my marketing efforts? What are my cash requirements? Have I found the pools of cash in my business? What levers can I turn and what is their impact on the other pieces of my business?

Steve MacGill

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Steve is the co-founder of PeerSight. PeerSight is the pioneer in virtual Peer Advisory Boards. We provide the platform business advisors use to deliver virtual peer advisory boards to their clients.

Here's his profile page.

Are Measures a Waste of Time?

 

Many business plans somehow imply that the future is predictable, but as any business owner knows, they do not. We all learned that from Steinbeck in Of Mice and Men. Michael Gerber (best selling author of E-Myth Mastery) exhorts us to begin, not with a plan, but with our vision.

The vision includes our strategies, tactics, and a direction to take our company. Our vision also includes our most valuable asset: passion. Vision leads to passion and passion leads to joy. Passion is what gets you out of bed each day to slay the dragon. A mediocre plan with passion is far better than a superior plan you don’t strongly support. But what is the key to executing your business plan, mediocre or otherwise? Kathleen Dahlberg and Ben Carnevale insist the answer is “measuring.”

Measuring quantifies the truth about your business. It allows you to know your business outside of your biases and emotions. “Your personal view will always be distorted when looking at this magnificent organization you have put together through brilliant, unparalleled genius”. Measuring allows you to base your decision-making on solid evidence versus misinformation. It pinpoints where things are going wrong, allowing you to anticipate problems before they materialize, before they cause you to lose customers.

But watch out. Don’t be measuring for measurement’s sake. Here are some good rules of thumb:

• Fewer is better. The process of identifying the really important measures usually results in a better understanding of your business.
• Understand what makes your business work at every level. From top to bottom, (strategy to systems) and side to side, (financial, customer, operations and people).
• Use measures to communicate and improve.
• Include leading indicators. The business environment is constantly changing. Leading indicators are your early warning system.
• Use measures that utilize readily available data, are simple to calculate and credible.

Ben Carnevale (Former President of Oxford International Ltd.; a high growth Chicago based multinational corporation serving the OEM automotive industry) agrees. “You have to measure the right things but measuring delivers a ton of data. You must be careful to make sure it is relevant and worth the effort….otherwise it can be overwhelming and a waste of time”

Carnevale also insists that measuring becomes a powerful improvement tool when you share the information with the people who do the work being measured. Make announcements of key measurements a positive experience. It is meant to connect all personnel with positive, continuous improvement.

Kathleen Dahlberg (Founder of numerous companies and currently the CEO and Founder of oVention, a technology firm ensuring hard returns on technology) stresses the need for leading indicators. “The business environment is always changing and leading indicators are the only way to make sure you know what’s coming. Most small business owners know them in their “gut” but don’t take the time to quantify them. If you don’t measure them they are not objective.”

OK, great. So what do we measure? Gerber suggests that we need to measure at three distinct levels in the business; (1) Key strategic indicators, (2) Key business indicators, and (3) Key system indicators.

Strategic indicators sense the health of your organization and provide the “big picture”, however, they can not be used in managing the day to day operation of the business and are not precise enough to detect or diagnose problems.

Key business indicators provide a picture of the integrated whole versus the piece parts of the business. They are multidimensional and all inclusive. Their creation and use force the discipline that ensures you manage your business as an integrated whole.

Carnevale explains that not watching the big picture has consequences. “As Oxford grew we expanded we focused on technology, and expanded too quickly. We were so determined to satisfy the customer we did not watch the rest of the processes. We weren’t paying enough attention to the financials and we outran our cash”.

Key systems indicators allow you to see the specifics of what is going wrong with each part of the business and fix it. Oxford Limited used key system indicators to measure results in all its production process. “It was the best way to isolate what caused problems by knowing exactly what is happening within any one system. The alternative is frustrating guess work.”

If you don’t measure it you can’t be objective about it.

Steve MacGill

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Steve is the co-founder of PeerSight. PeerSight is the pioneer in virtual Peer Advisory Boards. We provide the platform business advisors use to deliver virtual peer advisory boards to their clients

Listening: Its Necessary for Sustainable Results

Listening: It’s Tough….but necessary for sustainable growth and results

What would you do in this situation? A friend of yours owns a fairly successful small business but recently seems to be working harder and harder and not making progress on any front. As a friend they describe their frustrations to you and ask your advice on what you think they should do.

I suspect we’ve all been in this situation at several times in our lives. What do you do? As a male I can tell you that my first reaction is to solve the problem. I rapidly classify the problem my friend is having, find a similar situation from my experience and presto I have a solution. I’m a fixer. There isn’t anything that with a little focus and will power I can’t fix. Or so I think. And I suspect that somewhere those actions are really all about me. If I can fix the problem I will feel good about myself and my friend will think better of me too…..nothing wrong with that but it does not always lead to a solution for my friend.

On the other side of the coin, if the problem were that easy to fix I suspect my friend might have solved it himself. That’s sort of the nature of many problems. They are complex and seldom lend themselves to the quick fix. So what are we to do? Should we just analyze the situation to death? Doesn’t this create a paralysis by analysis situation?

No one ever said this was easy…..but when you go and see the doctor and describe your symptoms you don’t want to hear “yeah, I’ve seen this so many times before…..take a couple of aspirins and get some rest. You’ll feel fine tomorrow…..Next!” No, you expect them to ask a few questions? Possibly do a few tests and then prescribe. In short you expect them to diagnose first.

In working with several very successful business coaches I have come to appreciate their profession. Unlike most of us who fix first ask questions later, they reverse it. They first ask and then advise. Why? Not because they like to waste time or because they don’t have an answer. No, it is because the good ones realize that in order for sustainable results to occur and for individuals and organizations to grow, goals must be defined and adopted and learning must occur. A good coach teaches us how to fish. They build skills that can be used over and over again. 

But doesn’t this mean that growth and change take for ever? In short, NO, but this too doesn’t happen by accident. A good coach doesn’t allow their client to just explore and travel aimlessly until they somehow accidentally stumble on an answer. They guide them and prod them to find the right answer; the answer that helps them achieve their goals and develop their skills along the way. They achieve a balancing act between analysis and results. 

So what does this mean for small business leaders? Do we all need coaches? No, I think the real lesson for us is in how we lead. How we help our leadership teams and organizations grow, produce sustainable results and exceed expectations…by listening, understanding, challenging, pushing, helping them grow and then holding them accountable.

All the stuff we know how to do but like many other things in leadership it requires us to fight our natural tendencies to “just fix it”. 

Small Business Success Requires The Right People

   

People are the most important asset, then why do small growth companies   still forgo hiring key talent? Why do many businesses put up with the   deadwood, especially in critical roles? * Ben Carnevale (Former President of Oxford International Ltd.; a high growth   Chicago based multinational corporation serving the OEM automotive industry)   says build the team. They solve all the problems. * John Fox (President of   Venture Marketing and author of Marketing-Playbook. Venture   Marketing is a marketing consulting firm focusing on its client’s top line revenue) says the biggest barrier to success is thin management not money.   * Mike Slattery (President of Arthur P.O’Hara, a $5M Chicago based office   furniture distributor) says you can’t afford to keep the wrong people around too long. But how do you hire the best when cash is tight and needed to fuel other   growth investments? How do you find the right people? How do you motivate   talent with limited resources? We all know that owning a small business isn’t a “black or white”   proposition. It is a balancing act of many variables all demanding your time   and resources asking you to make choices.   * Don Urbancisz is the CEO and Founder of Insurance Vianet and The Insurance   Noodle. (The Insurance Noodle is a rapidly growing $25M proprietary web   enabled platform for the distribution of small commercial and property   casualty insurance). When asked how he attracts and motivates talent without   breaking the bank, he says salary alone will never do it. His employees are   not driven by salary, but by opportunity and ownership. Insurance Noodle   offers a good environment with the strategy that if employees feel good about   what their doing, motivation will not be an issue.   Don says “Find people who share your vision, your passion, and want to   succeed. If they want “a job”, let them work somewhere else.” Don also   recognizes the need to offer equity in the business. Within 6 months of   employment new hires are vested. “They have an ownership attitude that   intrinsically motivates them to perform.”   OK, but how do you find the “right” people?   Most small business leaders would agree that hiring the right people   involves understanding your company’s culture and values….who fits and who   doesn’t.   As Oxford International grew to 2,000 employees, team-building was   essential to continue the entrepreneurial culture of the company. In hiring, Ben Carnevale sometimes avoided the brightest students because they didn’t   fit with the team based culture. “An egoistic controller may not be the best   fit for team-driven management. The team was more often right than wrong.”   So I understand my culture and values, who fits and who doesn’t, but how   do I get access to the “best” talent.   * Kathleen Dahlberg, (Founder of numerous companies and currently the CEO and Founder of oVention, a technology firm ensuring hard returns on   technology) offers three simple keys to hiring: Find people with a good moral   compass who are willing to learn, willing to work hard and have a passion for   success.   John Fox adds a different dimension. He believes that everyone has talent.   Some are just in the wrong slot – “round peg, square hole.” Poorly performing   employees are many times the result of qualifying people poorly. To get good   people, hire slowly, and put them in an environment that will help them   succeed. Mike Slattery agrees; “hire slowly, fire fast”.   Urbanicsz hires only known quantities – people referred to him, or whom he   knows professionally. He does not hire “off the street”. Referrals minimize   hiring failures. He also goes to firms who are intimate with the industry,   who can provide temps, who later become permanent.   So ask yourself these questions…the answers may surprise you and your   business may depend on it. What key hires are you avoiding, why, what is the   impact? Are you getting the right people? How do you know? Who are the right   people? Are you getting the most out of your people? What motivates them? How   do you know? What type of people are the best fit for your culture? Can you   define your culture? Steve MacGill ***************** Steve is the co-founder of PeerSight. PeerSight is the pioneer in virtual Peer Advisory Boards. We provide the platform business advisors use to deliver virtual peer advisory boards to their clients.

What Makes a Peer Advisory Board Work?

We often get asked the question what makes a peer advisory board work? I think the real question is what makes one work well. How can a peer advisory board deliver value to your business?

But what does that mean? What does that look like?

Is it when a group of your peers help you resolve a problem you have been wrestling with? A problem that when solved increased your revenue, profit, equity and value of your business.

Is it when your peers provide you with a solution you’ve never thought of? When your peers provide you with perspective or a different way of thinking that stops you from taking an action detrimental to your business? When you help some of your peers get “unstuck”? Or when one of your peers pushes you to take a productive but much needed action outside your comfort zone?

It of course is all of these things. But how does it happen? Is it a rare event? Is it an event that can’t be captured or repeated? Or is it something a bit more predictable? Are there factors that if applied create this value from a group of peers?

As you probably guessed at PeerSight we think it is a much more predictable event. Not that we get it right all of the time, but the factors that deliver a “good” peer advisory board to occur are known, and if applied usually produce a valuable experience for the members, and accelerate the growth of their businesses.

Ok? So what goes into an effective peer advisory board? What are those factors?

Shared goals: As you might imagine an effective group starts with members that have shared goals. Goals that when met fulfill needs of more than just one member of the group. Easy enough eh? This is difficult in any setting much less in a peer advisory board made up of leaders of different businesses. Shared goals in a peer advisory board come from selecting the “right” members for each group.

For a peer advisory board this occurs in the member selection process. As a foundation all members need to have the belief that they can learn from the experiences of others.

In addition they need to be matched in terms of a combination of their business experience, the stage of their business and their business ambitions. The good news is that the 50+ year success of peer advisory boards is founded on the belief that entrepreneurs and small businesses have much more in common than the differences that exist in their industry and specific businesses.

An understanding that no one will ever know more about your business than you do: As a group matures the members develop a better understanding of each other’s businesses, each other as people and leaders. If we have done our job in the first step (matching the right people) the result is greater trust, better advice, better decision making and increased accountability.

Come Prepared: In order for a peer advisory board to deliver maximum value, the members must come prepared. Success in this element of a Peer Advisory Board involves three things:

· Determining your absolute most important issues and priorities. Those areas where the input of the board is most important and will drive the growth of your business.

· Preparing alternatives on each issue. The other members are experienced and share most if not all of the same entrepreneurial challenges you do….but they don’t know as much about your business as you do.  As a result they are of greatest value when they can help you sort among very real and clearly identified options.

· Tools and structure. Tools to help you make sure you are focusing on the most important priorities, and structure in the form of questions from an expert facilitator to ensure that each member is considering options in the right areas of focus.

Diagnose before you prescribe: Entrepreneurs by our nature have strong opinions…so strong that in many cases we provide answers to questions before we have taken the time to understand the real issues and root causes. Hey I resemble that remark.

It is something I struggle with often. In a Peer Advisory Board this can result in a less than valuable answer for each member. So what do we do? Over time the group develops a cadence that addresses this problem. It becomes part of their individual and group behavior. But in the beginning this too is the value delivered by the role of the trained facilitator. Value delivered by ensuring that each member takes the time to step back, ask questions and seek first to understand.

So there you have it. Easy, eh? When you put it all on paper it sounds a bit more scientific than it really is. It is still a art and that is why at PeerSight we continue to research best practices in group dynamics and hire experienced and successful small business facilitators.

Steve MacGill

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Steve is the co-founder of PeerSight. PeerSight is the pioneer in virtual Peer Advisory Boards. We provide the platform business advisors use to deliver virtual peer advisory boards to their clients.

Is Advice Outside Your Industry Helpful?

A common objection we get about the advisory board concept…..regardless of whether we are talking about PeerSight or an informal board arrangement is; “I don’t know what I can gain from a group of people who know nothing about my industry.”

To tell the truth my first reaction is to get frustrated and ask myself how it can be so clear to some and so difficult for others. I mean after all how did the famous phrases “none of us is as smart as all of us”, “wisdom comes from the counsel of many” and of course “I get by with a little help from my friends”, ever become popular? Do they just apply to non business aspects of human need?

I want to respond with all the logical arguments about how we (small business leaders) are limited in our individual perspectives; how much of leadership and growing a business is common among all businesses;  how we all need help to make sure the short term actions fit with our long term objectives;  how we all need someone to hold us accountable; how we need others to challenge us; and how only other entrepreneurs can combine this perspective with the keen understanding of the personal pressures and challenges small business leaders face daily. Have I hidden my beliefs well? Sorry, that’s frustration talking.

But after a few moments of thought I begin to think about the fact that these are not logical objections. They are emotional and to be truthful I am not sure what the emotional barriers are. I could guess. Perhaps it is the American belief that I can pull myself up by my bootstraps and that it is weakness to need others (actually that one resonates with me) or I don’t want others to get behind the image that I have created, (I resemble that remark too). As in many things I am not sure….I’m just guessing. So where does that leave us? Here is what I would like to do but I would like to hear back from you if you have an opinion. Leave us a comment. We would like to learn from you.

Thanks

Steve

Steve is the co-founder of PeerSight. PeerSight is the pioneer in virtual Peer Advisory Boards. We provide the platform business advisors use to deliver virtual peer advisory boards to their clients.

I Get By With a Little Help From My Friends

For those of you who know me you know that I am a firm believer in the actions a small business must take if it expects to grow. Things like leadership learning to let go, trusting and delegating to others, investing in the right systems at the right time, and documenting processes. I could go on but this is pretty basic stuff.

You probably also know while these are the right actions to grow a business, we don’t always do them….kind of like eating healthy and exercising on a regular basis. To make both work requires behavior change and that means changing and breaking old habits, maintaining perspective, trusting, overcoming fear, taking risk and many other challenging human traits.

I also know that while we make these changes for short periods of time, in order to make them sustainable and have lasting impact to our businesses we need something more than just simple awareness. We need behavior change; behavior change that starts with awareness of the need to change and ends with acceptance and commitment. This is easy stuff eh?

To achieve sustainable behavior change I also firmly believe we must have someone beyond ourselves to help us get there; a friend or a mentor. Only they can stand back, observe, provide perspective, challenge and encourage us. This is the primary reason that we built PeerSight. We know that entrepreneurs can support other entrepreneurs if given the right environment and the right structure.

The simple but ongoing practice of one small business owner providing real live potentially behavior changing perspective. Behavior change that results in significant growth rates……and that is exciting stuff to me.

Steve

Steve is the co-founder of PeerSight. PeerSight is the pioneer in virtual Peer Advisory Boards. We provide the platform business advisors use to deliver virtual peer advisory boards to their clients.

Steve MacGill: Taking Community to the "Next Level"

Today I'd like to talk about "community".

Community is a hot topic. “Duh” you say. “Here goes another discussion about community. Please already.” Sorry but guilty as charged. But I am not writing to just promote community…..after all it has been around since man came to be on this earth. I’m writing to talk about the different levels of community and how to make it of real value to your growth and the growth of your company.

We all know that the internet has made community much easier. We can easily find community with those that share our values and beliefs, those that have common interests, those that help us fix problems, and those that push us and help us grow.

The community I want to talk about today fits in the last category. Communities that push us and help us grow….beyond message boards, beyond casual connection, beyond sharing common ideas and beliefs. Communities that grow, that listen, that provide the fuel and support leaders of growing businesses must have. And yes I'll probably end up promoting Peer Advisory Boards too. As you might imagine I am pretty high on the concept. It is proven and gets results.

So what is the “next level” of community? What does it look like? Can it happen on the internet? What value does it deliver? I'll start with the last question first. I think it will help answer the others. “Next level” communities grow only when trust and confidence exist; when members know that the others truly have their best interests at heart; when members truly listen; when members are there to give as well as to get and when members needs are being met.

Of course in a small growing business this means community where members challenge each other’s focus. Members take the time to learn about each other to understand weaknesses and where support and challenge are needed. Ideas (no matter how far out they may seem) can be discussed, and "fierce" and candid conversations are not off limits.

Small growing businesses are all about change and without a solid sounding board it is impossible for the leaders to navigate this landscape.

So can the current communities on the internet get to this level? In most cases they can't, and in fact they were never intended to. Issues of competitive advantage, fears, weakness, new product ideas, and the like can't be discussed in a public forum or without taking the time and energy to understand the person behind the issue. They can’t exist without trust, confidence and the time it takes to develop an understanding of the others in the community.

Actually I'll go a step further. The next level of community can only happen in small groups where relationships can be built. It can only happen when someone can objectively facilitate the group…someone who understands how groups and communities grow…who knows when they are ready to take the next step and when and how they need to be pushed. The next level of community can only happen when members are not competitors.....and innovation can only happen where diversity exists. None of this is simple. It requires time and effort, but all of it is required for growing businesses.

Can this happen on the internet. Not right now. PeerSight's bet is that this can happen on the phone, with professional facilitators supported with simple internet tools and technology that all small businesses have access to.

If you'd like to find out more, talk about community or would like to join us as a member or partner, give us a call or email us. We'd love to talk further.

Steve

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Steve is the co-founder of PeerSight. PeerSight is the pioneer in virtual Peer Advisory Boards. We provide the platform business advisors use to deliver virtual peer advisory boards to their clients.

11 Great Reasons to Have a Peer Advisory Board

I wanted to write a blog about the value of peer advisory boards and then it came to me. Why not be environmentally friendly and recycle. This blog was written a while back by my partner Andrew and it says it better than I could hope to. Hope you enjoy it and learn something about the value of peer advisory boards.

Steve Rucinski at Small Business CEO posted these insights from Anita Campell on 7 Great Reasons to Have an Advisory Board.

We can all benefit from good advice, and that makes advisory boards a hot topic for the savvy CEO and business owner.

In recent years, advisory boards have become an increasingly popular tool for endeavors ranging from Fortune 100 companies to one-person shops. That’s because a Board of Advisors can do more to make your business grow than any other comparable expenditure.

So here’s some advice: set up your own Advisory Board, and here are seven great reasons to do it today.

SEVEN GREAT REASONS TO HAVE AN ADVISORY BOARD:

1. EXPERTISE YOU CAN’T BUY: Advisory Board members typically bring a combination of skill sets that are totally out of reach for most small businesses.
2. BUSINESS CONTACTS WHEN YOU NEED THEM: Choose Advisory Board members with diverse backgrounds and their Rolodexes will become one of your most valuable assets.
3. THE BENEFITS OF A BOARD OF DIRECTORS WITHOUT THE HASSLES: Some business owners equate an Advisory Board with a Board of Directors. Yet, the two are very different.
4. SIMPLE AND INEXPENSIVE TO SET UP AND OPERATE: Advisory Boards are relatively simple and inexpensive to set up.
5. GROW YOUR BUSINESS FASTER: An Advisory Board is a great way to signal to the world your intent to grow your business. Few actions say as much about your commitment.
6. A PERSONAL SOUNDING BOARD: Advisory Boards can serve as a sounding board for fleshing out new ideas or solving weighty problems.
7. MENTORING: Let’s face it: The top is a lonely place. Business owners, CEOs and other executives often have few ways to get support and guidance.

Anita does a great job of hitting many of the core benefits of an advisory board, but there are a few items I’d like to add to her list.

1. Advisory boards give CEOs accountability they can’t find elsewhere.      Not only can board members act as a personal sounding board but they hold      each other accountable for the delivery of the solutions they develop.
2. Advisory boards offer an opportunity to test ideas. Anita touches on this in her      discussion about a personal sounding board, but I think it’s important      enough to reiterate. Entrepreneurs are rarely short on ideas, what’s      needed is help sorting opportunities, picking which ideas to pursue      and where to spend all too valuable capital.
3. Insight into your competition. PeerSight advisory board members are encouraged to play the role of each other’s      competition and offer competitive insight. It’s easiest place to learn how      your competition might behave before they do.
4. Members ask the tough questions. Advisory boards force entrepreneurs to consider tough      questions about their businesses - why, as Michael Gerber would say,      they’re working in their business, instead of on it.

We did a lot of research on advisory boards before we started PeerSight and we really do believe that peer advisory boards are the best tool to help small businesses grow. Thanks Steve and Anita for putting together these great insights.

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Steve MacGill is the co-founder of PeerSight. PeerSight is the pioneer in virtual Peer Advisory Boards. We provide the platform business advisors use to deliver virtual peer advisory boards to their clients.

Do You Really Believe in the Future of Your Business?

One of my “non-negotiable” activities on the weekend is riding my bike on the forest preserve bike paths in Chicago’s western suburbs. Now mind you this is Chicago so there are many weekends, usually starting in November, where I must give in but it is one of my “must dos”. It clears my head and gives me energy to take on the week.

Why am I telling you this? Two reasons. In business as in life there are some “truisms” that are required if a business is to grow. Like exercise is to the mind and body there are some things a business must do to grow. Sort of the laws of business nature. Secondly, during my ride, I had clarity around these ideas so I thought I would share them with you. Here are my thoughts from the bicycle.

It seems to me a debate always goes on where one side says, to grow a business you need to take time to plan for the future; you need to change your leadership style, your role, and invest in resources, people and systems in order for the future to occur. These are the time honored success factors for growing a business and are well documented. The people who talk about this stuff are usually called the theorists.

The other side says, that’s nice, but when you are fighting the fires of everyday business and when you don’t have the cash to do what you need to do today how can you address tomorrow? These people are usually described as practical and live in the “real world”.

So I asked myself who is right in this debate and can the two seek common ground? The answer that came to me during my ride was that they are both right and they both wrong. What is needed is a practical way to bring the theory into application…..because the theory is right but the practical application is hard.

Case in point. I firmly believe in the need to spend time on planning for the future but like all of us I also am constrained by dollars, time and staff. I know that PeerSight will not (repeat, will not) grow unless I make the time for future facing activities, learn to let go, focus on the high impact activities, etc….but just the other day I caught myself doing tasks that needed to be passed on to someone else.

When challenged on it I stepped back and asked myself why? I am not sure of the answer yet but here are the questions I asked myself. I share these with you because this is a very real challenge….which my experience tells me just about all of us will face or are currently facing.

Keep in mind the you I am addressing is myself.

Do you believe in your company’s future? I mean really believe in your company’s future? So much so that to neglect planning for it and making changes in where you focus your time damages your company’s future value?

• As my confidence in the future increases, the necessary resources to make the future happen move from the expense side of the ledger to those of an investment. By the way, in the event you don’t believe in the future of the business that then becomes priority #1.

Is it an escape from the tougher stuff of the day or do you believe that others can’t do those things as well as you?

• I think that escape is OK. I have worked with CEOs of Fortune 500 businesses that dabble in the small stuff of the business because it is fun….kind of a hobby and it brings them back to the operations of the business. But the question remains what is the motive behind it. Is it escape or the inability to let go.

• Every so often I pull out the old Stephen Covey grid and chart the activities of the last week. Often I find myself doing a lot of the busy but unimportant things before everything else….and at the expense of those things that drive the business forward.

Do the near term actions feel more like progress than working on the future? Do they (the short term actions) provide a more immediate sense of accomplishment? Do you know what the planning actions are? Are they measurable? If you had 2 hours a day to work on future facing activities can you identify them?

The good news is we know that just like exercise and good diet lead to good health, business growth requires working on future facing activities. We also know that a significant amount of change has to occur to ourselves as leaders and to the structures and systems of our company…..and that is not easy. At least in my case it isn’t.

But back to the practical. How can we make sure we ask and answer the above questions and more importantly maintain perspective to constantly ask and answer them honestly? How can we keep from lapsing into an I’m just too busy or I don’t have the required resources mindset?

To get at the answer I approached some friends of mine and asked them how they did it. Each is a successful entrepreneur in a growing company. Their answer was simple….but its execution was not. Each of them said you can’t do it by yourself. Furthermore they surrounded themselves with confidants that asked them what they were working on? What their near term priorities were? How those near term priorities fit with longer term plans? Did they believe in the future of their business? Could they let go of some activities? What was in their way? And then they held them accountable.

The good news is the steps to growing a business are known….the theory. The tougher news is that getting there is hard work and that as the Beatles said, I get by with a little help from my friends.

Steve MacGill

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Steve is the co-founder of PeerSight. PeerSight is the pioneer in virtual Peer Advisory Boards. We provide the platform business advisors use to deliver virtual peer advisory boards to their clients.

Listen to Your Customer....What if they don't know what they want?

“Listen to your customer. Change your product to meet the customers’ needs or change your market.” You’ve heard this, I’m sure. But how?

Kathleen Dahlberg (CEO of 2Unify) says that “entrepreneurs spend too much time creating their product and not enough time selling it. They must change the product to meet the demands and needs of the customer. If the customer doesn’t like it, it doesn’t matter what you think of it. They won’t buy it.”

Great, but what if the customer doesn’t know what s/he wants? How do you get the right balance of what they want and what makes sense from a profit perspective? How do you know what they will want in the future? ”This is tough stuff” says John Fox (President of Venture Marketing and author of The Marketing Playbook).

Kent Nelson (former CEO of HRH Illinois), realized most of his competition (insurance brokerage) used the simple approach of shopping for expiration dates and quoting lower prices to find new business. That solved the customer’s cost issue, but only until the next broker came along with a lower price.

In response his commercial property and casualty business offered safety classes, introduced wellness classes, and provided blood screening to small businesses. The value added was obvious to the customer, and shopping price quickly evaporated. But Kent’s customers did not know they wanted safety classes. How did he get there?

Ben Carnevale (Former President of Oxford International….serving the OEM automotive industry) says, “Keep an open mind and recognize the opportunity provided by the relationship. By working hard to understand Chrysler and working closely in a ‘give and take’ relationship, we saw needs well ahead of our competition.” Oxford’s close communication with Chrysler allowed them to develop technology that solved problems. “We began by combining elements that led to higher efficiency for Chrysler. We saw the need for automation and delivered the first automated plant of the 80s.” The result was a better, more competitive product for both Oxford and Chrysler.

But the customer doesn’t always know what they want? What then? Oxford’s thorough understanding of the automotive industry not only brought better efficiency to Chrysler, Chrysler saw them as a problem-solver. “Here is how we did it. We sent three people into the assembly line to study their process. What happened to our product when it went in? We noticed we could reduce cost on packaging, we could provide a lighter product, and better quality was the result. We were perceived as going beyond the scope of a vendor – just by listening.”

So what’s the “so what” of all this? How do you listen to the customer when they don’t know what they want? Your success is tied to the questions you are not asking as well as they ones you are. What does that mean? Instead of merely asking the customer what they want, become the customer for a day. Invest time in understanding them…and their businesses. Ask them how they do things? Why they do them? How much it costs to do them? What keeps them up at night? What are their priorities for the next 12 months? If they could change three things about their business what would they be?

Take specific ideas to them and ask, what if? What would be the benefit to them? See the world through their eyes. This isn’t easy, but it must be deliberate and become a formal part of operating your business. As John Fox says this is tough but very necessary stuff.

Something to consider

Steve MacGill

Steve is the co-founder of PeerSight. PeerSight is the pioneer in virtual Peer Advisory Boards. We provide the platform business advisors use to deliver virtual peer advisory boards to their clients.

Standard Mileage Rate

The IRS has raised the standard mileage rate to 58.5 cents per mile, up from 50.5 for the first six months of the year.

The standard mileage rate can be applied for any miles that your vehicle is driven for business purposes. It can be a large deduction against your business if properly documented. There is no requirement to contemporaneously  record mileage, but that is the best method. Many business owners will try to recreate their miles for the year and they nearly always cheat themselves.

Personally, I record miles in my calendar. I use Outlook and post my appointments there. When I return I put the mileage driven on the location line of the appointment. Also, don't forget trips to the bank, accountant, attorney, office supply store, etc.

The standard mileage rate is not just to capture fuel, but also, depreciation, insurance, maintenance and other fixed and variable costs of operating a vehicle.

A review of innovation in Ireland

Frank Fullard is taking a deep look at innovation in Ireland, using the CSO/Forfas Survey. In his first post in the series, Fullard is surprised by just how much innovation is going on.

Not only are most Irish firms innovating, over a quarter are collaborating to do it.  What really surprised me is that more large firms than small firms say they are actively innovating.

Fullard is continuing the series, presenting results and charts from the survey, focusing in on types of innovation, its impact on turnover, and some barriers to innovation.

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About the Author: Becky McCray's passion is small business in rural communities. She writes at Small Biz Survival about small business and rural issues, based on her own success and failures. 

Strategy: Who Needs It?

If you’ve ever been a part of reorganization, downsizing, rightsizing…or any cost cutting activity this post should interest you. Some cost cutting actions are successful, some are not. What defines the successful from the unsuccessful, and what is the application for a small growing business? I think the answer is found in a clearly articulated strategy.

Entire books have been written on this topic so I am not going to condense it into just a few paragraphs. That would be an insult to all of the excellent thinkers that have dedicated time, research and critical thought to it. I do however want to talk about the role of strategy in any cost cutting activity…..and while we all know its importance, we (I resemble that remark) don’t always practice it. After all, strategy is long term and cost cutting is short term.

Anyway we’ve all seen the cost cutting messages; “we need to tighten our belts” and “watch our expenses”. If you’ve spent any time in corporate America you probably were asked to serve on a committee that identified cost cutting measures, and while any number of good ideas can come from these committees, my experience was they often resulted in “fringe” solutions, and ignored the larger, sustainable issues.

Don’t get me wrong these activities raise awareness of the need for individual responsibility in controlling expenses, but often the fall short and in some cases result in misunderstandings that negatively impact productivity, slow future growth and often result in an internal focus that neglects the customer.

These results can be even more pronounced in a small business, where cash flow demands are the order of every day.

So how do you make the right decisions? Cash flow problems don’t just disappear. Oddly enough strategy is the answer. While it probably goes without saying strategy informs all of these decisions. Strategy tells the business and the team which resources and expenditures are necessary for profitable growth over the long term. Strategy provides the balance between cash flow concerns and the value of the business as measured by its equity.

In a former life I was fortunate enough to work for a business where Michael Porter served as a Director. During our downturn his constant questions were “What’s your strategy? What resources and assets are critical for future profit and growth”? He believed that a clearly articulated strategy was more important in a downturn than in good times. “After all” he argued, “When resources become scarce, determining what to invest in for the future is a tougher and riskier decision”.

In addition, a clearly articulated strategy provides your team with a better picture of what changes are necessary, what is off limits and why?

So if we know this, why isn’t it practiced more often? A quick answer is the pressure for short term results is so strong that it overrides long term objectives…but I don’t think it is that simple. My experience tells me that more often than not it’s because a clearly articulated strategy doesn’t exist, and it is very tough to create one when cash flow demands are beating the door down. It is kind of like going to the grocery store when you are hungry.

So what is the application to a small business?

1. Work with your team to create a “workable” strategy. A strategy that tells you and your team what future customers look like, where margins will come from, what distribution channels will be used, compelling need and competitive advantage, what products and services will be offered, a clear picture of how the organization will need to change and the details of what resources and people will be required to get there.

2. Remain flexible. Strategies often change a bit but the critical resources and people seldom do.

3. Provide the details of your strategy to a close group of advisors. People who are committed to making sure you stay the course.

So the next time cost cutting is the “order of the day”, ask yourself, “What is our strategy and what is off limits to the long term equity value of our business”. You might just be surprised at what is possible in the short run.

Steve MacGill

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Steve is the co-founder of PeerSight is the pioneer in virtual Peer Advisory Boards. We provide the platform business advisors use to deliver virtual peer advisory boards to their clients

Welcome Guest Author, Steve MacGill, CEO of PeerSight Online

Welcome Steve MacGill, CEO and founder of PeerSight Online as another guest author here. Steve opened with an excellent post: Why is Accountability so Important?

…as humans there are many actions and behaviors that are foreign to our individual natures. That’s where accountability comes in. Accountability to ourselves or others can often provide the motivation needed to ensure we overcome our natural resistance.

Steve knows accountability. Steve’s an expert. His business is accountability. PeerSight Online was founded by Steve MacGill a few years ago. It’s a peer advisory board. Steve’s company brings together entrepreneurs and their peers to support, advise, find solutions for, commiserate with, and ultimately hold each member accountable for their goals, their progress to those goals. His company is about helping us all maintain our integrity, first with ourselves, then our peer board and more importantly our businesses and most importantly, our families.

And the result is success.

So when Steve writes about his expertise, you should listen. Here’s why: Steve’s a reluctant talker. But he’s a GREAT listener. That’s a rare combination. That means…when he does speak…he’s got something to say. You should listen. I do. And it’s been one of the smartest things I’ve done with myself and my company at that time.

I’ve raved in the past about the benefits of membership with PeerSight Online. I’m doing it again, here. I’ll do it again in the future.

Steve plans to post each Tuesday. Why Tuesday? Well, he asked me what schedule worked best for me. I said Tuesday.

See what I mean? He's a great listener.

Thanks, Steve.

My other guest authors are:

Becky McCray, SmallBiz Survival. Her first post was Creativity in the Long Term.

Jamie Jacoby, JRRants.blogspot.com, His first post was Choosing a Hospital.

Guest Post: Why is Accountability So Important?

What is accountability? Who holds you accountable? I recently asked those questions in several small business forums and got some pretty insightful answers. Many responses talked about the people (family, customers, business partners) in their lives that held them accountable. Others talked about the pressures of meeting revenue and profit targets to hold them accountable. Some said they held themselves accountable. I believe it is all of these things....and more. What was common among all of the answers is that as humans there are many actions and behaviors that are foreign to our individual natures. For me it is being confrontational. For others it is doing detailed work. It takes intentional effort and discipline for us to do these things.

That’s where accountability comes in. Accountability to ourselves or others can often provide the motivation needed to ensure we overcome our natural resistance. For instance we know we must exercise if we are to stay in shape, but we often allow other things to crowd it out of our daily lives. Accountability to those that depend on us often creates the necessary motivation to make it happen.

So how does this relate to growing a small business? I guess the obvious answer is there are many actions and behaviors related to growing a business that are foreign to entrepreneurs. Huh? I thought being an entrepreneur was all about growing a business? Yes and no. WE entrepreneurs do not like to let go, we do not like to delegate, we like to control and we often dislike structure because we fear it can limit our flexibility to seize future opportunities. These tendencies are all in direct conflict to the growth of small businesses.

Now lets take it one step further. As humans we often don’t see what others see. Others have the ability to see gradual changes that we are oblivious to. The example of the frog in the boiling water comes to mind. We clearly need others to help us here. To speed our progress. To take on the responsibility of holding us accountable.

This is one of the reasons we started PeerSight. To provide small business leaders with a hand picked group of peers that understand the behaviors and pressures of being an entrepreneur, to take on the responsibility of holding each other accountable, to take on the responsibility of challenging each other, and helping each other take on the tough stuff that often is foreign to our natures. To achieve success faster than we can achieve on our own.

Who holds you to account?

- Steve MacGill

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Steve is the co-founder of PeerSight. PeerSight is the pioneer in virtual Peer Advisory Boards. We provide the platform business advisors use to deliver virtual peer advisory boards to their clients.

Guest Post: Failure can change your thinking

Creative thinking expert Roger von Oech shares how failure can change your thinking in Embrace Failure. When we commit an error, when we fail, we know we need to change direction. When things are going well, we don't even think about direction or change.

We learn by our failures. Our errors are the "whacks" that lead us to “think something different.”

My campaign to redefine failure is based on this. If you want to move forward, you are going to have to fail. And as long as we let failure be defined as a negative, unacceptable concept, we can't benefit from embracing failure and using it to change our thinking.

My friend Phil Gerbyshak sent me the link to Roger's article, and many more related to failure.

It's one of my few favorite entrepreneurial topics, and honestly, it's probably one of the reasons I connected with Zane. We're both serious about celebrating failure.

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About the Author: Becky McCray's passion is small business and rural communities. She writes about small business and rural issues, based on her own success and failures. Her blog, Small Biz Survival, is an ideal example for a blog: providing useful tips and resources, honest and personal, building community. She is the co-owner of a small town retail liquor store and small cattle ranch. As a consultant, she helps tourism related businesses from Oklahoma to Africa to maintain their web presence and helps rural nonprofits and governments with grant writing.

Creativity in the long term

Innovation drives entrepreneurial successes. Small business owners crave people who can think creatively. But right now, your public school system is slowly removing every creative program from its curriculum. They have to, because creativity does not fit into the multiple choice standardized test that spells life or death for their funding.

What's the solution? A complete remake of our basic culture and education system to put creativity back into our society. ETA: 30 years. I'm game. Are you?

That's the stated goal of the Northwestern Creativity Project, my local incarnation of the Oklahoma Creativity Project. They gave the estimate of 30 years to reach that goal. There's also a World Creativity Forum, so I'm sure you have a parallel group in your area. We're working together to build events that promote creative thinking. Since we happen to be a bunch of camera nuts, we're doing a photography workshop first.

What does a photography workshop have to do with building a better workforce? It has to do with thinking long term. Our key speaker, Mike Klemme, explained it this way:

I am, in fact working on a "creativity workshop" in Tulsa that will be marketed to Europeans. We will be bringing in budding photographers/CEO's etc. and teach them how to "see" with a camera and to expand their creative thinking abilities. ... I would like to "practice" this format at your event if possible by showing how to use the camera to see things differently and how that ties into entrepreneurism and the ability to find opportunities by looking at things from all angles.

While that's a great explanation (and an idea I support) photography isn't the key here. The key is to get involved in some project, any project, promoting creative thinking in your community. I'm betting the payoff is a lot shorter than 30 years.

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- Guest Author: Becky McCray writes about small business and rural issues at Small Biz Survival, based on her own success and failures.

Guest Author: Becky McCray

This makes me very happy.

More than happy, really, it makes me delighted to introduce you to the guest author, Becky McCray.

Ever since I met her, I've been a big fan of Becky McCray  and what she's doing with her blog Small Biz Survival. I'm trying to be concise, here. But her voice is authentic, her care and passion for small business and for small towns and for rural economies is real and strong and dedicated. She's an excellent writer. She's a risk-taker. And she's one of the rare people who meld the obsessions and technologies of web 2.0/3.0/blogosphere with the day-to-day challenges of growing a small business, growing it in a small town and growing it in a rural area. She's got a great big heart. Her fans are numerous. And if that's not enough...when she's not blogging and running her own retail business, she's out fixing fences and fence posts on her cattle ranch. For me, that's near the ultimate for bridging worlds. And she does it smoothly and smartly every day, every blog post, every tweet.

Her first guest post is today: Creativity in the Long Term. Here's how she ends it:

The key is to get involved in some project, any project, promoting creative thinking in your community. I'm betting the payoff is a lot shorter than 30 years.

See. She's smart, articulate, has the long-term vision and remains practical: Get involved in some project...

I hope you enjoy her posts as much as I do. And don't wait for her posts here. Go read and subscribe to Small Biz Survival.

Welcome Guest Author: Jamie Jacoby

I'm delighted to introduce Jamie Jacoby as a regular  guest author on the blog here. Jamie's already published an excellent post titled: Tax Burden. Jamie's a CPA. That lends a lot of credibility to his thoughts and analysis on taxes and spending. Jamie also has a MBA in Hospital Administration. I hope I can convince him to share some thoughts on, and solutions for, our health care system as seen from the inside.

Jamie blogs at JRrants. That's one of the reasons I invited him to be a guest author here. He writes clearly, directly, thoughtfully, doesn't shy from wading in on topics we all need to discuss.

He's also a small business consultant. One of the most important resources for a small business is a good CPA. And if you find one that blogs...and can see the bigger picture of a small business's needs...you should contact him. We'll be doing some business together shortly.

Jamie and I met through the introduction of Steve Macgill, CEO and founder of Peersight Online. 

People like Steve and Jamie, many others, are why I network every day.