Crisis

The housing crisis shows signs of slowing down, but it is still very much a huge crisis that is spreading around the globe. Even China is experiencing a housing crisis of its own.

What does the economic crisis mean for small businesses exactly? It appears that for many small businesses, it means tough times. For others, it could be a bonanza. Donald Trump is hardly a small business owner, but he seems to think that the crisis is full of opportunity for entrepreneurs. He gives seminars all over the country, including right here in New York (at swanky hotels like the Roosevelt Hotel in Midtown)where super-energized real estate salesmen/investors try to sell small business owners and entrepreneurs on the idea in investing in distressed real estate. But it appears that exploiting these foreclosure deals is a very complicated scheme. No matter what Donald Trump's "professors" say. So investor beware.

At a time when many small business are finding it more difficult to obtain financing from traditional banks, it may strike some as counterintuitive, if not suicidal to get in on some of these schemes. And it could very well be. And obviously, if a small business is not in the business of real estate, but, rather, is a health food store, for example, the likelihood that such a person or entity could be persuaded to invest in distressed real estate is slim.

However, for those adventersome types, this crisis could be chock full of chocolate nuggets and opportunities to turn lemons into lemonade. You may want to sign up for one of Trump's classes - and maybe if you haven't yet formed your small business, this could be it - investing in distressed real estate. (By the way, when Trump purchsed 40 Wall Street, it was a foreclosure. He got it for $1 million. It is now worth over $400 million!)

At about $1,500.00 for a 3 day course, Trump's seminar sounds like a bargain - for what you could reportedly gain.

Obama

Obama pulled off a stunning and emotional win tonight to become the 44th President (elect) of the United States of America. The historical significance of his win cannot be over-stated. Many are jubilant in the streets of America, regardless of their color, national origin, orientation, religion or gender.

What will Obama mean for small business? Only time will tell, but if what he said during the campaign holds up, small business can expect less taxes (this will please Joe the Plumber), assistance with health care (this will please Hillary Clinton), and possibly increased funding opportunities. According to the Wall Street Journal, "SBA-Backed Loans have dried up and the substantial decline in Small Business Administration-backed lending is fueling criticism that the federal government isn't doing enough to help small businesses that are in dire need of cash." Surely, this will change with an Obama adminstration.

The President Elect has made it clear that if a business makes less than $250,000 that business will not get a tax increase. So small businesses should like that since only about 5% of small business generate revenues anywhere close to $250,000 per year.

The Obama administration will probably have one of the most developed green strategies of any president in recent memory. Big on his agenda seems to be the issue of alternative energies and reducing the country's dependence on foreign oil. This will also impact small businesses just like it will impact multinational corporations with global geopolitical influence.

Obama's style has been a conciliatory one throughout this campaign. If that continues, that is going to be very good for America and for America's small businesses. By working in a non-partisan way with the Congress, Obama will surely get more of his agendas (including those that pertain to small businesses) across than if he doesn't.

Obama supports young people and he supports education. Young people are one of the most experimental, innovative and business-minded demographic in the U.S. today. They are the computer geeks, the IT gods, the next Sergey and Larry. And Obama owes a big debt to young people in America. They voted for him resoundingly in this election. So Obama is likely to support more grants to assist these youthful friends, to support bills that are geared to assisting small businesses, to support educational and financial assistance for not only college bound students, but those young people who are involved in a trade as well.

As a community organizer, Obama is sure to know the power of transforming neighborhoods, and revitalizing towns by bringing new businesses to these areas. New businesses can mean jobs for the young, and the elderly too. New businesses can simply restore a sense of community to areas that are hit by the recession. An Obama administration is likely to do all in its power to support these community initiatives.

There are more ways in which an Obama Administration will impact small businesses. Overall, I would say he will be a net gain for small businesses in America.

Green

There’s all this “green” talk. But there has been no clarification or standardization of the term. The talk twitters across geopolitical borders, with even China trying to make the Green Leap Forward, a feat infinitely more difficult than it sounds. Many multi-national corporations across the globe have actually been busted for "greenwashing" - saying their products are green when they are not.

Everybody wants to be green but nobody seems to agree on exactly what that means. However, most in the business sector agree that there is such as thing as a “green strategy” for a business. Joel Makower, an author who stops at calling himself the authority on the science of carbon footprints, wrote a book called, Strategies for a Green Economy. He strongly advises all businesses to formulate and implement a green strategy into their best practices.

But first, what is “green”? What does that really mean? And then, why should a small business care about having a green strategy? If I had to hazard a guess, I would say that green is a “mash up” of climate change, global warming, renewable energy, pollution, toxic chemicals, food, the environment, the earth, toys, safe products, air, water, biodegradable recyclable ingredients, plastics, carbon foot prints, deodorant and everything to do with life, business, culture, and prosperity… Yes, I know. That was a lame answer.

The truth is, I don’t exactly know what the term “green” means. But I do know that all the experts like Markower seems to agree that a green business, including a green small business, is a less wasteful and polluting entity that, based on their business practices, “can reduce costs, risks, and liabilities by cleaning up their act” and as a result of these business practices, routinely experiences higher profits and enjoys an enhanced reputation, and higher customer satisfaction.

Even car makers are on the green planet. Honda and Toyota are competing to see who can make the most eco-friendly cars in the marketplace – cars that are smaller in size, guzzle less gas and curtails emissions. Homemakers are constantly on the look out for safer products to use in their homes, safer toys for their children, safer food to feed to their families.

So it is not just about cutting costs, but greening up opens up new highways for small businesses to travel as they search for innovative ideas to not only curb the harm that has already been done to the environment, but to create products and services that could possibly turn back time. Within this challenge, obviously, is the opportunity for heightened profitability with these economies of scale from cars, to bespoke, to eco friendly building materials, to light bulbs, to literally the engineering of devices that can stop the caps from melting, to non-toxic toys for our babies.

The Federal Trade Commission is very much aware and awake and involved with the green movement. As a small business owner, you better believe that the Federal Government will eventually standardize the term and lay out the ground rules for how businesses must conduct themselves in a new green world and economy.

Until then, a small business owner should understand fundamentally that his/her ability to sustain innovation as far as the quality and distribution of products and services that are perceived by consumers as sufficiently “green,” will, in the long run, determine the sustainability of that business.

But companies need to be careful as consumers are very savvy and are fully aware that they have often been duped by various industries such as the food industry and others who claim to be selling green products when in fact they are guilty of “greenwashing” – pretending that products are greener than they really are.

In the final analysis, whatever green is, be assured that this trend is not going away anytime soon, the federal government will eventually standardize the term, and force all businesses to comply to these standards. So make this eventuality a part of your planning from the start.

Ideas

Ideas are like belly buttons. Every body has them. The question is, what do you do with your ideas? As a small business owner, hopefully you find a way to take your ideas and turn them into a lucrative franchise, or, maybe even, the next Google. Think about it: Sergey Brin and Larry Page were a couple of geeks till they took their brilliant idea (I believe it started with them writing a thesis at Standford) for organizing the world’s information, and ran all the way to the billionaires club with it. Now they own their own boeing 767 and are both listed on the Forbes List of Billionaires.

What is the price of an idea? The beauty about it is that ideas are priceless. They cost you zero dollars but could make you a gazillion. All you have to do is think them up. How hard can that be?

Ideas can come to you from all sources, places and people. Ideas can come in your dreams, from your soap lather as you shower in the morning, from the glass of wine that loosened you up over dinner, from the clouds. You don’t have to be in any special place to get really good ideas. Ideas have no sense of timing. They pop up all the time, sometimes even when you are busy doing really important things, wink wink.

Different people, including quantum physicists have different ideas of where ideas come from. Jack Foster, author of How to Get Ideas suggests that each person can actually program themselves to be more “idea prone.” He seems to think there is a science to getting ideas to flow. Whether his theory is right or wrong, it is probably true that every body has at least one brilliant idea in their lifetime. Those who become millionaires or, in Bill Gates’ case, billionaires, just seem to know when and how and what to do with it.

There is not one small business or big business that did not start with an idea. Nothing in the entire universe – even the creation of the universe itself – started without an idea. The Big Bang was an idea. Something, somewhere, thought it up. Kentucky Fried Chicken was an idea. The P.C. was an idea, so was the light bulb, jogging shoes and Victoria's Secret underwear. Every book that was ever written and published began with an idea. Microsoft was an idea. So was Starbucks. Every fashion show in Milan and Paris starts with an idea. Vogue Magazine was somebody’s idea and it wasn’t Anna Wintour’s. The International Monetary Fund was somebody’s idea. Video games were somebody’s idea. New York Sports Club, Disney and Liposuction – all ideas.

Probably no other business is more filled with ideas than Hollywood. Hollywood is literally an idea tank. People with ideas gravitate to Hollywood more than they do to Silicon Valley. Hey, Steve Jobs would be lucky if he got half the ideas that floats around Hollywood in a given day. Putting Brad Pitt and Angelina in a movie together. Who’s idea was that? The movie industry has spawned many derivative industries and companies, from production companies, to PR outfits, Studios to Cinemas, to MTV - all of which depends on other people's ideas to keep going.

If you are stomped about what kind of business you want to start, or how to take your business to the next level, maybe you need to get in touch with your idea lobe, that side of the brain that does the thinking. The trick seems to be not to censor yourself and your ideas. It seems to be that the more you can allow yourself to become like a kid, the more likely you are to come up with something brilliant.

Politics

What, or who, is not impacted by politics? Arguably, even the wine you drink is a decanter of politics going down your throat, gulp by gulp. In his book, Wine Politics, Tyler Colman makes the argument that “government, environmentalists, mobsters and critics influence the wine we drink.” It should not come as a big surprise that the wine business is mired in politics. Wine making in the U.S. alone is a $25 billion dollar industry. Globally, the wine industry is in the region of $240 billion dollars with the Chinese market rallying hard for global dominance in a decade or so. That is why there are so many stakeholders. With the kind of cash flow involved, how could it ever be free from the influences of “politicians?”

Small businesses are not free from the influences of politicians either. Small business owners have to be very mindful of their politics, as a matter of fact. In making the argument that small businesses have to mind their politics, I am not really talking about who you will vote for in the next presidential elections, although, that is a part of it. After all, both Barack Obama and John McCain indicate that they have strong ideas of the roll small businesses will play in the economy, the extent to which they will be taxed, and the amount of federal aid they can expect in the years to come. In this context, a small business owner’s politics might be influenced by a candidate’s take on such things as taxes, immigration, healthcare, funding and other matters such as job creation and recession. So it is important to be active in that process, as to do so is a small business owner's way of protecting their interests.

But what I am really talking about with this blog entry is the politics of doing business – and the extent to which a small business practices good politics with customers/clients and prospects as a part of their strategy for growth and profitability.

What is meant by "practice good politics." Well, for one thing, a small business has to have good PR with clients and competitors. There is such a thing as bad publicity and bad PR when you are a small business. Depending on what the issue is, negative PR can actually destroy your business. That is why the small business owner may want to think about their political strategy as it relates to not only their customers, but also to the competitors, the media, and their environment.

A small business must understand how to attract and keep customers, what to say, how to present their products and services to optimize the number of positive responses and ultimately, the small business owner must understand the sheer dollars and cents that are generated by their politics. Is it a game? Yes.

Good politics involves leadership, likeability, customer service, product proliferation and availability, quality of services and products, strong social and economic networks, crisis management, cost benefit analysis, knowledge and information, sharing values, work ethic, pricing, proper exercise of power, accountability and transparency.

In a sense, every small business, even if it is a vineyard in Napa or Bordeaux that distributes 500 bottles per year, should think of itself as a spa. That's right. A spa. It should think of itself as the Ananda Spa in the Himalyas. Or better yet, the Pezula Spa in Knysna, South Africa. Have you been there? Me neither. But I hear it is a thesis in "business politics." Pezula is situated on the coast of the Indian Ocean between soaring cliffs and the Knysna Lagoon. I am told that it will surely demonstrate rather than explicate how small businesses practices good politics, why it is important to do so, and how profitable it can be.

Sales

How do you sell buckwheat pancakes and macrobiotic rice milk to somebody like, say, Viacom’s resident tough guy Sumner Redstone? You probably don’t even bother to try. Or, you get Gwyneth Paltrow to email him her newsletter GOOP, instead, hoping he’ll be receptive to the pictures. By and large, he doesn’t seem like somebody who would be into a macrobiotic diet. As Gwyneth said of her father Bruce Paltrow, Redstone would probably think that eating macrobiotic food is like “biting into the New York Times.” (Although, I should point out that the octogenarian Mr. Redstone allegedly swears by a elixir called MonaVie - a Brazilian concoction made with Brazilian acai berry which he swears is a "miracle drug" which will cause him to live to be well over 100 years old) So who knows? Maybe he would go for the buckwheat.

As a small business owner who needs to make Sales to stay in business (whatever type of business you are running) you have got to figure out who your customers are, and find a way to give them what they want when they want it, the way they want it. That, basically, is the trick to sales. Don't try to sell buckwheat pancakes to the Sumner Redstones of the world unless you have reason to believe they want or need it. Cause if they don't, they're more than likely not going to buy. But if you try to sell buckwheat pankcake to Gwyneth and her wannabes (my hand is in the air), you will probably have much better luck.

According to Linda Richardson, author of Perfect Selling, there are five steps which must be perfectly executed in order to make the perfect sale. The steps are: 1) connect 2) explore 3) leverage 4) resolve and 5) act. All five of these steps must be mastered in order for you to make that sale. It doesn't matter what you are trying to sell, whether you are in a service business or whether you make goods and produce things. These are the five steps to making the perfect sale.

When you think of “Sales” you probably think of the cold caller from Wall Street who is trying to sell you one or the other stock. The truth is, everyone is a salesman. And everyone is a customer. Of something. At some time. You have probably heard the expression “you’ve got to sell yourself” whether in the context of an interview, or getting a small business loan, or convincing a venture capitalist to sponsor your hedge fund or IPO, or convincing the customer to buy the coat in your high end boutique, or you're a lawyer or doctor, or accountant or what have you trying to sell your services to clients. It doesn’t matter who you are, how big your business, whether you are a service industry or you make Good Year Tires. You are a seller of a want or need of something, at some time, to some one and you've got to figure out how to connect with that customer and make that sale.

The trick with Sales is to figure out what your customers want and need. The Sumner Redstones of the world probably don't want or need buckwheat pancakes. But I am certain there are other things that he wants and needs and the right sales person can get him to buy, so long as they connect, explore, resolve, leverage, and act.

Every small business is in the business of selling, as I’ve indicated. What are you selling? Goods? Services? A combination of the two? Is there a market for what you are selling? In other words are there consumers/customers who need or want your good or services? As a small business owner you have to determine whether what you are selling has value to the people you are trying to sell it to. Otherwise you probably won’t have much sales success.

Martha Stewart is probably the ultimate sales woman. A former Wall Street stock broker, she has “mastered the art of style and entertaining” and has sold this mastery to her customers under the umbrella of Martha Stewart Omnimedia – “a one stop shop for lifestyle, content and products via television, radio, magazines, books, retail channels and the web.” In October’s Equities Magazine, Martha says, “I am really an entrepreneur in the highest sense of the word. I am willing to take an idea and run with it.”

She does not say she is the ultimate at selling that idea to her consumers. But ultimately, that is what she masters – the selling of her ideas to the masses. She admits in the interview that “part of my business model from the start was to provide consumers with consistent high quality information where ever and however they want it.” She understood from the get go that success at selling her ideas meant observing her consumers, and seeing what they want and giving them what they want the way the want it, when they want it.

Architecture

If you read the literature for the Temple of Dendur at the Metropolitan Museum of Art, it might inspire you to think of your small business as a sort of Egyptian temple, and of yourself as a designer, architect and builder of said temple. As you read about the Temple of Dendur, you will learn that “Egyptian temples were not simply houses for a cult image but also represented, in their design and decoration, a variety of religious and mythological concepts.”

When constructing a small business, from its microscopic DNA to its macrobiotic evolution as a successful and profitable enterprise, it might be useful to keep in mind that what you are trying to build is not necessarily the next Google, or some other entity of mythic renown, but something that incorporates your own sense of values, your worldview and honor code. Structurally, your company should reflect, in its design and “décor” those concepts, issues and qualities that will shape your brand image for years to come.

In reading about the Temple of Dendur during one of my recent visits to the MET, I was intrigued to learn that “one important symbolic aspect was based on the understanding of the temple as an image of the natural world as the Egyptians knew it.” The Egyptians understood about following the trends of their times; they knew that in constructing the Temple, it would be more relatable to their audience if they incorporated images and concepts into the infrastructure that are readily identifiable. Thus, in constructing a small business and building up, and building up your “Temple of business” it is important to consider who your target market is, and what and how they identify in and to their environment.

The Egyptians, in building the Temple of Dendur, “lined the temple base with carvings of papyrus and lotus plants that seem to grow from water, symbolized by figures of the Nile god Hapy.” As a small business person, you may have no idea who the Nile god Hapy is and what he stood for. And that is fine. But it is important that as a small business owner you know what your clients and customers value and you find ways to build a company that reflects what your customers want, and who and what they hold sacrosanct.

It is not just the customers’ needs that you have to consider when defining your mission and setting your strategies. The Egyptians were concerned with more than just their gods and friends. “Above the gate and temple entrance are images of the sun disk flanked by the outspread wings of Horus, the sky god. The sky is also represented by the vultures, wings outspread, that appear on the ceiling of the entrance porch.” As a small business owner, you have to keep in mind that your competitors, too, are a part of the calculus and must be factored into the blueprints you draw up for the construction of a successful company. As they say on the street, keep your friends close and your enemies closer.

Change

Is change always good? Barack Obama would have us believe so. Is he right?

I was in Borders the other day having a cup of Earl Grey and a wedge of chocolate cake when I noticed that there was a stack of books from the person who had been sitting at the table before me. I absentmindedly started to poke through the mountainous pile: The Bitch Switch by Omarosa Maningault-Stallworth; Inc Magazine; Who moved my cheese by Spencer Johnson; The Hip Chick’s Guide to Macrobiotics by Jessica Porter; and The Giving Tree by Shel Silverstein. An eclectic mix to be sure. But an intriguing combination. I felt inspiration coming on.

I began with Maningault-Stallworth’s The Bitch Switch. What could this self-proclaimed “bitch” and former Trump Apprentice tell me about running a small business which I could in turn share with my readers on smallbizsociety.blogspot.com?

It turns out quite a lot. Here’s a woman from humble beginnings who went on to earn a PHD, work for the Bill Clinton administration, and who has become the most recognizable apprentice from Trump’s reality TV franchise. How did she do it? First of all, she was a Purple Cow . There is no other like Omarosa. Apres Omarosa, c'est la deluge. Second of all, she knows how to capitalize on opportunities and trends. Third, she knows how to build and expand a brand. Then of course, she knows how to use the media and different mediums to sell her brand. And she is bold and innovative for writing this book and doing all the other things she does, including her philanthropic work. What I admire most about her is how she embraced the changes that came about in her life after the Apprentice, and how she exploited the market place and how she has made herself into a big reality TV star. She is the ultimate "small business person" that became big cheese. Her change has been "macrobiotic." Change has been big for her. Change has been good for her.

As I started to browse through Inc Magazine looking for more inspiration (with the word CHANGE on my mind), I stumbled across an article called, The Beer Crisis of 2008. Again, I noticed a theme of change. According to the Beer article, change has been good for the beer industry. Thanks to the bad economy (btw another article in the same issue blames the economy and Sarbane Oxley for the fact that IPO’s are at a 30 year low and this opens up other applications of the concept of “change” which I won't get into with this particular blog entry) but when the price of hops started to go through the roof after major producers like the Czech Republic and Slovenia were hit by bad weather and a reduction in supply, small U.S. breweries became desperate for supply and became competitive with one another. But instead of trying to run each other out of business, they created these lottery systems to distribute the hops supply in a fair and democratic way so that small breweries across the country could stay afloat. A change in circumstances called for them to find new ways to operate within their industry so that they could all remain profitable. And they did. They began to use collaboration and cooperation as strategies to deal with the changed circumstances.

The theme of change also ran through Who moved my cheese, by Spencer Johnson. In the book which is a Wall Street Journal Best Seller, the author espoused the idea of adaptation, preparation, foresight and innovation. The theme was: forget about who moved the cheese. The point is [small businesses] should anticipate that the cheese will get moved and they need to have contingencies and strategies in place (or adapt quickly) to cope with inevitable changes in the market place. Spencer definitely saw change as being a good thing – a thing that can expand an individual's life. I thought to myself that change can also be quite good for small businesses that can anticipate what's coming and adapt quickly to the change.

I did not get a chance to really delve into The Hip Chicks’ Guide to Macrobiotics by Jessica Porter. The security guy came around and said the store would be closed in 30 minutes. So I quickly skimmed the introduction. Knowing nothing about a macrobiotic diet, except in so far as I read that Gwyneth Paltrow was into it before she wasn't into it anymore I wanted to find out what the diet entailed, and whether there was anything useful I could learn about "change" by reading about it.

It turns out that the art of macrobiotics is about the “art of creating a big life.” It’s a whole "philosophy" about "change coming from within," that we "change the world by changing ourselves," that we change ourselves by what we choose to eat (this includes a lot of brown rice,) and how we choose to eat it and how we choose to live. I thought to myself, that a macrobiotic diet could be applied to a small business owner. In taking a macro-biotic approach to his or her business, a small business owner would be looking for ways to big up his or her business. They would also be looking for ways to change their business practices to make it more compatible with the environment – in other words, they would probably be going “green” and trying some other trendy ideas which eventually could become a part of their DNA.

Shel Silverstein’s classic children’s story, The Giving Tree was probably the most fascinating of all. Here was a character who spent a lifetime changing. He was first a young boy, innocent, with very few needs. He loved the tree simply and unconditionally and the tree loved him in return. As time went on, his life changed, even though the tree remained contant. His needs got bigger and more complex and he had less and less time for the tree. In the end, the tree was like his sacrificial lamb. He sacrificed the tree to achieve his goals and objectives, to get what he "wanted." He took everything the tree had to offer in order to get what he wanted and needed. The tree was demolished, changing from a beautiful, full, rich character, to a mere stomp by the time the boy (who was now a grown man) had taken all the tree had to give. The only thing that did not change was the love the tree felt for the boy as he grew into a man who wanted more and more things: a house, a wife, kids, a boat, everything his mind could conceive. And he got it all by exploiting the tree. But in the end, after taking it all from the tree, the boy (who was now a man) was right back where he started: alone with the tree, sitting on the stomp he had reduced the tree to, being too tired to want anything more - and even if he wanted more, the tree had nothing else to give.

As a small business owner, you will change. Change is good. You will get bigger and you will expand over time if success comes your way. But the thing with change seems to be taking it with a grain of salt. And in making change, always pay attention to the trade offs.

Trends

Cabbage patch dolls, mercifully, have gone out of vogue. At least they had. But the other day, I read on the Internet that somebody had made a Sarah Palin Cabbage Patch doll. It was cringe-inducing to say the least. When I heard that a trend which I thought had gone its merry way back in the 80's and 90's (just like those atrocious shoulder pads) is possibly making it's way back, I just threw both my hands up in despair.

The way that a small business owner exploits/does not exploit prevailing trends say a lot about their strategy and DNA and even their profitability. However, in exploiting trends, it probably behooves a small business owner to stay true to their brand, and not go so far left or right, that as they say in street parlance, they wind up jumping the shark. Just because Cabbage Patch dolls are the rage doesn't mean you make it your business to specialize in their manufacturing.

If you ask Elie Tahari the Israeli clothing designer about his global lifestyle brand of women's wear, he'd probably say it is sexy, sophisticated, elegant and cool. He would be correct. No matter how the actual fashion, fads or TRENDS change, Elie has remained true to his brand, never becoming a slave to the vicissitudes of fashion, and always making clothes that are always sexy, sophisticated, elegant and cool. Mr. Tahari is a true visionary who saw opportunity while clubbing at places like Studio 54 in the Seventies and checking out all the young pretty girls who frequented the clubs, including the iconic Bianca Jagger. He wanted to create clothes that would become these pretty young Manhattanites.

Elie is no longer a small business owner. Though he came from very humble beginnings he was able to take his small business, which started initially in New York, into a $500 million a year company. He did this by focusing tightly on his target market, delivering good quality, capitalizing on trends and building a strong and recognizable brand.

How can you, a small business owner capitalize on current trends? What even are the current trends? According to Faith Popcorn, a leading trend expert who Gourmet Retailer Magazine points out the New York Times calls the "trend oracle," current societal trend right now is a move towards "simplicity." She also sees a lot of "cocooning." Meaning people are staying home more, entertaining themselves at home more, dining home more, and otherwise keeping life simple.

As a small business person, how do you capitalize on that trend? That is a question you have to explore within the context of your business and come up with a framework that makes sense for you.

Marketing

Back in June, before Bear Stearns, Lehman Brothers and Merrill Lynch did their final tap dance, Kelly K. Spors wrote an article in the Wall Street Journal in which she interviewed Stefan Tornquist of Marketing Sherpa Inc. The gist was the importance of small businesses expanding their marketing efforts in a downturn. At the time, I thought it counter intuitive. After all, during a downturn, most people and small business owners are looking for ways to trim the fat, cut costs and otherwise conserve cash. Marketing is usually one of the first places people look to make strategic budget cuts.

Now, after Wall Street has literally been turned on his head, I am starting to re-think that position, and I wonder whether Mr. Turnquist's observations don't make sense after all. It was basically his position that the reason to increase one's marketing at a time like this, is because the competition is usually going to decrease theirs; so it's a great time to really develop a brand, and a great time to get some attention from new and existing customers and rev up sales.

Mr. Tornquist was big on internet marketing as an inexpensive alternative to traditional paid print media for small businesses. However, it seems that he advocates a combination of both forms of marketing. He does not eschew one for the other.

It is not that he speaks of anything that is out of the ordinary, though. Every idea he discussed, most small business owners have probably heard a million times. Fundamentally, a small business needs a website. That's just basic common sense at this point. Check out www.ebranz.com to get ideas of how to optimize your website. Tornquist discusses direct mail - in fact he says that direct mail is still a "larger industry than all online put together." He also talks about "local-search marketing [results that appear where people search for local businesses]" as being a smart investment for small businesses right now.

There is also the pay per click google adsense advertising that small businesses can affordably add to their marketing efforts. If all esle fails, small business owners can start a blog. Just make sure to optimize it.

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11/3/08. Here is an additional thought. Have you ever heard the concept of "multi-sensory marketing?" Well, I was browsing through this book called Whiff by C. Russell Brumfied and in it, he suggests that the new direction of marketing is something called "Scent Marketing." He advocates creating a scent that is part of your company's brand and using it in all your marketing materials including business cards, stationary, everything. He says scent marketing is definitely a trend to watch. You be the judge

Flexibility

So you’ve got your small business and the one thing you know for sure is that “failure is not an option.” That’s nice. But saying it and doing it are two different things. In the Ten Commandments of Business Failure, Donald R. Keough, former President of the Coca Cola Company, writes that “inflexibility is a terrible disease.”

Some small business owners have a rigid, set in stone vision of what they want to do and how they are going to get it done. Confidence is good and you almost can’t have too much of it. But hubris has a negative connotation. It is important to be confident but not so certain that you are right about everything, that you can’t listen to other ideas, explore other options, or change. Just because something is the status quo does not mean it’s the best and only way. Small business owners have to think outside the box. Otherwise, they may find themselves out of business when innovation and competition and new trends steals their show.

Competition

Who are those imitators trying to muscle you out of the game? They are called competitors. Just like large conglomerates and corporations, small businesses are going to have competitors. If you don’t have competitors, maybe you are not really in business?

But how to deal with idea-stealing imitators who try to one up you at every juncture? Well, you start by protecting your intellectual property by seeking copyright, patent and trademark protection where you can. But to some extent, you are not going to be able to eliminate your competitors completely. They will muscle you out of business with price wars, aggressive advertising and marketing, and bigger budgets and balance sheets.

Entrepreneurs understand that competition drives innovation and invention. Innovation and invention drives fiscal success. So competition is good. Healthy competition is good. The trick is not to let your competitors run you out of business with superior products and services in the market place. The way to avoid that is to constantly look at trends, nurture your own and others’ creativity, adapt and change when needed, and have a true passion for whatever it is you do.

Study the competition also. Maybe there is something they do that is better than what you do, and by studying them you can improve your own game. It is probably error to be an imitator only, however. A successful business person, to some extent must be able to blaze their own path, stand out. Be a Seth Godin “Purple Cow.” And ultimately, the aim is to better the competition at each juncture, while, contemporaneously, being the best that you can be.

DNA

I once knew a guy who I will call “Wall Street Tycoon.” He had dreams of starting a hedge fund on Wall Street. So what did he do? First, he got really good stationary. And then he went out and he recruited about ten of his friends, acquaintances and associates from his private club and then he asked them to come aboard his newly formed corporation. Now, the only vetting criteria he used is where they went to school and what their resumes sounded like. PHD in French Literature from Standford? Check. BA in political science from Yale? Check. Former Harvard Law School Dean of Students? Check. You name it, he got every elite school grad he could find and he asked them to join his company.

And he got really good stationary and really good paper. Then he proceeded to set up a hedge fund that traded heavily in real estate. Sounds good so far? It was. The only problem is, for all their PHDs and impressive educational pedigree, not one of these people understood the fundamentals about starting or running a hedge fund. Many of them did not know for sure what a hedge fund did. Actually, the only person who knew anything about hedge funds was Wall Street Tycoon.

I was getting pretty fed up hearing him bad mouth everybody when deal after deal fell through. “But why did you bring this guy aboard in the first place?” I asked one day in exasperation. “He knows nothing about what you are doing and you knew that from the start.” Wall Street Tycoon got really angry and impatient with my ignorance. “This guy is a PHD!” he rasped.
“Yes," I concurred. "But PHD in what?!”

He was a real genius this guy, Wall Street Tycoon. He personally guaranteed about $5 million dollars using his house as collateral for the debt, and proceeded to spend money, a lot of money on things like sponsoring scholarship funds for major universities in the city in an effort to get on “the Board” so that he could be in the right circles, and get investors for his fund.

But when you really got down to asking him what exactly his company does and what his vision was for the firm and what his strategy was for accomplishing his vision and how any of these people fit into the mold other than to add impressive resumes, he got defensive and told you things like “this is very creative. You are not going to get it. I know what I am doing. This is what I do. I am a financial engineer.”

Well, I was not an engineer but I got a bad feeling about this company from the start. I told him he needed to sit down and do some root canal and figure out what it was his company was about, and give everyone clear goals, and surround himself with some people who knew how to run and maintain a hedge fund. In short, I was asking him to figure out the company’s DNA before going one step further.

Do I need to recount in numbing detail how this story ended?

The moral is, before you take a step further, figure out the DNA of your company. Believe me it is a lot more complex than fancy resumes and stock paper.

Momentum

It is all about the build up, and sustaining rhythm. As a small business owner, you have to build your company up from nothing, in a sytematic, logical way. As the visionary for your firm, you have got to get a certain rhythm going that leads to the ultimate fulfillment of your vision for your company.

Stop go, hot cold approaches don't seem to work as well as really sitting down from the get go and drawing the blue prints, creating the architecture for your vision, and then going out and taking steps and action that compliment that vision and those goals so that you can construct the building.

Momentum is about the rate of action, speed, motion, force, proportion, mass, rhythm and change of a person or object. So as a small business owner, its about how you do what you do to make your business work, to achieve that breakthrough, no matter how brutal the process and path. It is almost always a mistake to start off too fast, or too big. A gradual build up is best. Then crescendo, then plateau, then build up again...it's almost like surfing, riding the wave. It is the thrill of the thing.

"Sustainable transformation follow a predictable pattern of build up and breakthrough. Like pushing on a giant heavy wheel, it takes a lot of effort to get the thing moving at all, but with persistent pushing in a consistent direction over a long period of time, teh wheel builds momentum eventually hitting a point of breakthrough."
-Unknown source

Opportunity

A smart small business owner knows that success often comes down to the ability to exploit opportunities as they come knocking – and also knows that sometimes, if opportunity does not knock, he must sculpt it out of nothing.

The thing with opportunity is that it is often disguised as a crisis or problem and one’s natural inclination in a crisis or problem is to wait it out, hope to be rescued, or run for cover. It is the few who, after a major crisis or problem, will act as rescuers. And it is they who rightfully call the shots. They often create a triage in this case, and those of us who waited to be rescued are completely at the mercy of our rescuer’s judgment and sense of equity.

Take for example, the current mortgage crisis, the current mess that the economy is in. Most people are sitting around with their mouths open trying to make sense of a phenomenon that probably will never make much sense. Most people are feeling gloomy and negative. Many are feeling depressed and devastated – at least financially. Still others are full of anger and blame – If Clinton hadn’t repealed Glass Steagall we wouldn’t be in this mess; if Alan Greenspan hadn’t reduced interest rates to 1% we wouldn’t be in this mess; if Wall Street hadn’t securitized all those mortgages, we wouldn’t be in this mess; if it wasn’t for globalization we wouldn’t be in this mess; if it wasn’t for the War in Iraq we wouldn’t be in this mess…the excuses go on and on.

But there are a few people who, while the rest of us are busy analyzing that which cannot be analyzed, are busy trying to figure out how to make something good, how to reap a crop, out of a very bad soil.

They are looking for OPPORTUNITY. They are looking to see if there are economies of scale in distressed properties, they are looking to see what stocks they can pick up on the dirt cheap, they are looking to see what new technologies they can develop to exploit new and emergent markets that will literally self-pollinate as a result of these economic challenges, they are forming new consulting firms to assist the government and borrowers with finding solutions to the problem....they are creating new hedge funds. Sounds crazy, doesn't it?

They are not covering their heads. They are not twiddling their thumbs. They are revved up, turbo-charged, motivated and energized. Crisis? What crisis?

A smart small business owner is able to exploit even the worse situations and come out with a net gain from the opportunities seized.

Arbitrage

A former acquaintance of mine (I call him Wall Street Tycoon) likes to live large. He drives a Bentley, lives in the middle of the Village of Southhampton, New York; and only dines at restaurants where the bill for dinner for two is close to two hundred dollars.

But he's broke. One day, utterly perplexed by how he continues to live at the level he does when he complains that he's literally being crushed by the weight of his debts, I asked, "how do you afford it?!" He replied, "arbitrage." He stomped me for a moment. "Arbitrage?" I asked like a dummy. "What do you mean? What is arbitrage?" "Look it up in the dictionary," he said.

I looked it up. It means "the purchase of securities on one market for the immediate resale on another so as to profit from a price discrepancy."

Sounds brilliant? It is, if done properly. When handled by amateurs, however, global recession can be the result - I am talking the apocalyptic colapse of major economies. So be careful. Be so very careful.

The small business owner has to become adept at arbitrage, to handle it like a pro. Donald Trump is someone who seems to do that well. As does a lot of highly successful business people. They use other people's money to make money for themselves. Obviously, Donald Trump is not broke like my Hamptons acquaintance. At least I don't think so. The fact that his latest project in Chicago is said to be about $1 billion dollars in the red at this point is academic. He'll find a way to restructure, leverage and pull a rabbit out of a hat. I am sure of it. He is king of aribitrage!

But both of these men, in their own capacities, know how to leverage debt, and leverage other people's money to amass either a fortune (as in Mr. Trump) or the high life (as in Wall Street Tycoon).

Arbitrage. But don't let the roof fall in on your head.

Patience

If patience is a virtue, impatience is a vice.

The small business owner is probably someone whose personality is already formed. He or she would describe themselves as either "I am a patient person," or, "I am very impatient."

The former is more likely to reach success than the latter. Why? Because starting, growing and sustaining a business is hard work and takes diligence, focus, drive and nerves of steel. It is not for the person who wants quick fixes and quick riches.

Achieving success in your small business is hard. It takes time to reach a breakthrough. There is a bestselling book on the market right now, From Good to Great by Jim Collins that talks about how certain personality types are more inclined to lead companies to greatness. He never comes right out and uses the word "Patience." But if you think about what he is saying, he's saying that the way companies go from "good to great" is they are lead there by CEO's who are, among other things, patient; these men (he only identified men in these positions) by making adjustments, changes and innovations, finally reached a breakthrough that changed the direction, scope and reputation of their companies.

As a small business owner, it is a critical trait - Patience. A small business owner needs stick-to-it-ness, grit, determination. The one thing Collins says in his book that is interesting is that these companies did not go from good to great by making big, loud splashes and calling a lot of attention to themselves. They did it quietly, and patiently.

Donald Trump seems to be a very patient man. Sure, he runs the Trump Organization. That is not a small business. But the scale of his business is not the point. He has revealed in some of his books that he is a very patient man. He has waited years sometimes in order to purchase a piece of real estate for the right price and under the right terms. If he was rash and impatient, it could have cost him not just his reputation, but probably a few of his billions.

Are you patient? Or impatient?

Passion

What does passion have to do with it?

As a small business owner, you have probably already figured out what role passion plays in your business, if any. If you haven't yet figured it out, or you are having trouble getting your passion up, here as some questions you might ask yourself to try to figure it out: What gets your engines turbocharged? What do you like to do? What are you good at? What is the one thing in the whole world that you could do better than anybody else, given enough time and practice? What are your ambitions? What are your natural born talents? What would you do even if you were not being paid? What makes you feel good? What excites you?

Passion. Every small business owner would be well served if he or she remembers to chose a business for which they have a passion. Choose a business they would run even if they were not making a truck load of money. Choose a business that utilizes their natural talents. Choose a business that gets their energies revved and turbocharged.

When one thinks of the word "passion" it evokes episodes of romantic desire or lust. Physicality. Heat. Magic. The same is true in business. You can have a lust for your business, and whatever it is you do. You can so enjoy your work, that that simple enjoyment makes your business sucessful because you work harder at what you like, you sacrifice more, you give more, you take less. Having a passion for business also invokes a certain element of heat, magic and physicality. But there is a caveat.

No relationship can survive on passion alone. Passion in business (like in your personal life) must be balanced with hard work, innovation, discipline, adaptation, negotiation, and revenue-creation. Passion alone can't pay the rent. Excitement alone can't pay the creditors. Action needs to be taken that is directed, focused and relevant to take that business idea from the romantic stage, to full commitment.

Globalization

Whether you run a textile mill in rural China, or an organic juice factory in the South of France, a hedge fund in Mumbai, a winery in Southhampton, or a IT outfit in Silicon Valley, you would have to literally be living under a rock not to realize that business has gone global.

The internet has shattered barriers and ceilings and have opened up all nature of commerce to global consumption. It is imperative that small businesses, just like large businesses, learn to think globally even though they may be local actors.

That is going to mean getting technologically literate. At the bare minimum, you need to invest in a website. That is your primary point of sale (POS). With a website, while you are acting locally, people around the globe can find your business and you may be surprised that you can generate customers that way. Of course, the key will be optimizing your website, using the kind of key words that Google would pick up in a search done around the globe. That is not easy or inexpensive but small businesses need to keep these issues in mind as they develop their strategy and chart their goals. And this is just for starters. There is so much more to think about in this shifting global economy.

Just because you are a small business in New York city, for example, and your services are strictly confined to New Yorkers, doesn't mean that over time you could not or should not expand to other markets. You can bet that your competitors are keenly aware of this phenomenon called Globalization, and they are constantly thinking of ways to exploit these global markets - as should you.

If you are interested in even more sophisticated and proven ways to get the job done, check out this blog.

Creativity

To be creative is to be like Edouard Manet, the French Impressionist of the late 19th Century. His was a style that was innovative, bold, transparent and visionary. He “broke new ground in representation and technique” and was both focused and flexible.

As a small business owner, these are qualities that will serve you well. Your first task is to figure out what your customers want then you’ve got to experiment, look to emerging trends as a guide, be willing to change to capitalize on the trends, and steadily build momentum towards making your vision manifest.

Being creative means using a certain calculus and “visionary leadership” to form strategy and to execute strategy using cutting edge methodologies rather than using a sort of haphazard approach, doing things willy nilly with no rhyme or reason just because it is the status quo. Creativity, therefore is not a euphemism for a lack of discipline. Nor is it an excuse for a totally laissez faire attitude. It is really a "juxtaposition of innovation and imitation." It is where “scandal meets triumph.” It is art.

So get that adrenaline pumping, be true to your values, mission and goals. Creativity, as Manet came to realize, is about purity, a willingness to boldly act on ideas and vision in such a way as to challenge pre-conceived ideas, and the old way of doing things, and to do so with a healthy degree of transparency. It is about risk, daring to “look for the grand light and grand shadow.”

Bureaucracy

One of the blessings of small businesses, is that they don't tend to get as bogged down by red tape and bureaucratic nonsensicalness like a lot of big companies do. But that doesn't mean they don't have their share of headaches, stonewalling and pettiness that can derail goals, mess up strategy, block vision and otherwise leave the business in flux.

The thing with having bureaucratic red tape in charge of the simplest bottle of white out, is that it wastes a lot of time. And it produces nothing but unproductivity. So one of the goals of any small business has to be to "trim the fat." Make the operation as lean as possible. Cut costs, green up, and always strive to maximize output. Maximize production. Whatever the calculus that is needed to achieve this, get on board and create a conduit.

And if it ain't broke, don't fix it. But if it is broke, fix it fast but keep the bureaucrats out of the building.

Advisors

Small businesses need good advisors. If possible, the business may even need an advisory board. But getting people to sit on your advisory board may not be all that easy if they don't perceive there's anything in it for them. Even just getting a mentor is hard. People want pay offs and pay outs for their time and advise. There is no free lunch.

What is a small business on a budget to do? Well, depending on the type of business you are, advisors are probably not a negotiable lot. You need them. Period. Certain tech start ups for example, need people whose experience has been vetted that they can call and ask questions, people who can advise them on management issues, strategy, methodologies and ideas for implementing their vision for the growing company.

You may just have to pay them a stipend if it comes down to it. Or offer them stock options. Or try some sort of barter. If you are an attorney, for example you might trade legal services for management advice. It really depends on what your strengths are, and what they do.

But definitely think about an advisory board. They are often worth their weight in gold.

Instincts

You may not always know right from wrong, but you always get a feeling in your gut about something or someone. We are all endowed with a sixth sense. It is the way that nature protects us from ourselves, and our own bad judgment.

In business, good instincts are a prerequisite for success. That is not to say you can't make mistakes. Because you will make tons of mistakes. But how many of them can be avoided if you simple listen to your gut?

The person who is a “jinx” the person who always has “bad timing” the person who is too trusting, the person who can’t keep a secret, the person who is a double-dealing back-stabber, the person who is a thief of ideas: TROUBLE. All sorts of dream-busting trouble. Some of these are all people who can ruin you, knock you out of the race, destroy your business, reputation and sometimes your life. But don't be your worse enemy. Don't sabotage yourself.

As a general rule, though, if it seems too good to be true? It probably is. Whether you are talking business relationships or other relationships - but especially business. And do not, under any circumstances, mix business with pleasure. Well, very rarely is it excusable. Be very measured in your dabblings.

The small business owner needs a good head on his/her shoulder, a healthy dose of skepticism and the innate ability to trust his/her gut without being overly paranoid.

Risk

What is your tolerance for risk? Have you ever heard the phrase "no pain no gain?" What about "the bigger the risk the bigger the rewards?"

Some of us are risk averse. We know the devil we have we don't know the one at the bottom of the sea. So we stay in the boat. We don't come out. According to the Harvard Business Review, we who are in this particualar boat "have an aversion to risk that chokes off value-creating growth opportunities." This is probably bad from the sound of it. What do you think?

There are others among us who need to live life on the edge in order to feel alive. Look at Richard Branson. He is a risk-taking dare devil. Maybe he's even slightly crazy. He jumps out of parachutes, sails across oceans alone, swims from one island in the Caribbean to the other, tries business ideas that makes other people blanche. Now he has a vision. He wants to fly people to outer space as if space is the new Mauritius or Vegas.

Needless to point out, Branson's networth is $5,000,000,000.00. He is not a small business owner. He is a big business owner. He owns record labels, airplanes, private islands, all sorts of stuff. But the irony is, he started out as a small business owner. He was not always a billionaire. It's just that he was more willing than the rest of us to take big risks.

What is your tolerance for risk? How are you with creating risk management tools to minimize different and/or potential risks? How much risk are you willing to take to have your business in the first place? Are you willing to bet the farm on your business venture? Should you? It's a fine line between risk and reckless gambling. As a small business owner, you have to be willing to take some risk. The bigger the risk, the bigger the reward. The bigger the risk, the bigger the loss.

It's about leap-frogging but with a parachute. Or maybe without. Which do you prefer?

Currency

Where are you supposed to get money to run your small business? You're broke. Your 401K just got swept away in the Wall Street tsunami. But you have a vision. It's this great start-up you want to try. It's a dot com. You really believe in the premise, in the idea. You know you are cut out to be a tech entrepreneur. Everybody knows it. Silicon Valley here you come. But you need money. Where's the money?

Well, you always have your parents. But if that fails, you can try to find a private equity attorney to help you approach some venture capitalists who might be interested in your idea. Venture capitalists and angel investors are still doing deals and they are still one of the best sources of generating currency for your business - especially if you are a "start up" with a techy mission. But make sure you have a good business plan. Nobody is going to take you seriously if you don't have a business plan. They will think you are an amateur.

If you are not a start-up (maybe you want to start your own accounting firm or your own law firm, or a health food store) then venture capitalists may not be the way to go. You may need to seriously consider asking the bank for a loan. Now, the banks are not exactly feeling all that generous right now. But that is bound to change in the months to come. How long can there be a credit freeze before the whole world colapses? It's a matter of time before the banks are giving money away again, and small businesses are going to be at the top of their agenda - especially if they are backed by the Federal Government if the loans are guaranteed. Everybody seems to understand that small businesses are the backbone of the economy and without small businesses, this recession will turn to a Depression. They can't afford that. So small bussinesses are going to be in a very good place very soon.

But what if you do not qualify for a loan for some reason? Or maybe you don't want to go into debt. Well, don't you have lines of credit from your credit cards? You must have a few dollars on the bank? A CD? Retirement accounts? What about real estate? Any equity there?

Another way to generate currency for your business is to take side jobs, like waitressing, bar-tending or babysitting. These types of jobs allow you the flexibility and time you going to need to develop your business and your idea. The only problem is that most don't offer health insurance. So don't get sick.