Entrepreneurs Love Risk?

This myth seems to emanate from the media portrayals of entrepreneurs, likening them to old gun slinging, sneering, arrogant cowboys just looking to find and attack risk. My experiences and those of most successful entrepreneurs I’ve met indicate the exact opposite: small business owners with their own money on the line look to minimize, avoid, share, or make risk disappear.

Every time I think of this topic, I’m reminded of Professor Howard Stevenson’s remarks on the subject, essentially saying, “have you ever met an Entrepreneur who wakes up in the morning, bounces out of bed, and says, ‘What a great day! Where can I find risk?’”

I think risk, like beauty, is in the eye of the beholder. By that I mean that risk looks and is different when viewed by an outsider and an insider. An insider is one with good general business experience, and specific industry expertise. This person does not perceive certain risks because he/she knows their way around the risk minefields that the outsider cannot see. Successful business people do their homework to understand given situations. The more knowledge they bring to bear on a situation, the less risky it is. It’s a little bit like throwing more wood on the camp fire: more and more space around the periphery gets illuminated, and it becomes clear that –at least as far as you can see—there really aren’t any wild animals out there. I like Gourmet Coffee marketer Dennis Boyer’s take on this subject. He says, “I think entrepreneurs have a talent for capitalizing on opportunities that have a lot of perceived risk, but because his math is a little more insightful, those risks aren’t quite the same as those for those who see the situation from the outside.”

That is not to say that there are no business risks out there. Of course there are, but the smart businessperson seeks to identify and understand the risks inherent in a given situation. If the risks are too big and can’t be managed, and the risk/reward ratio is out of line, the good entrepreneur will most often walk away.

I also think many business owners do not delineate between Risk to the Business and Risk to One’s Ego. Risks to the business and the assets behind it are real and should be scrutinized with concern. By Risks to your Ego, I mean fear of being rejected by a potential buyer, loan officer, licensor, or whatever. Those should not be confused with Risk to the Business.

A rejection is not a failure. It should be viewed as an opportunity to learn. Successful entrepreneurs have the self-confidence to face all these ego risks and to put their energies into reducing or avoiding risks to the business.

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Listening Is Different Than Hearing

Why is it that in most business and social encounters the mouth is employed much more than your two ears? Many people think they are listening when they are just hearing. If your ears are healthy, hearing is an automatic anatomical response to sound in your vicinity. It takes no effort or skill.

 

On the other hand, good listening, which uses the same two ears as hearing, takes focus and is a skill that can be learned. The most common mistake in good listening is that while someone is talking, you are thinking about what you are going to say. The consequences of that is the other party quickly realizes you weren’t listening to them, as your remarks did not take into account what you should have just heard. Not exactly a confidence builder.

 

How many times have you been introduced to someone and almost immediately forgotten their name? You didn’t forget. You just didn’t really hear it.

 

This listening thing is a big deal. It affects all phases of your business and personal life. In my opinion, it is the key component of successful selling. If you ask good questions and then really listen, most buyers will eventually tell you how to sell them. Silence many times is your best friend. Successful negotiators are good listeners. They learn what’s really important to the other party through good listening. They can then speak to address their concerns and priorities.

Good listening is a major trust builder. People want to know that their opinions are being heard. They will have confidence and trust in people who listen to their point of view, even if they don’t share it. This applies to your employees, peers, customers, suppliers, family members, and all earthlings you meet.

 

Understand that humans process ideas faster than they can be delivered verbally. This makes it easy for your mind to wander when listening. Patience is required to focus.

 

Good listening will improve your relationships at home. Don’t come home and bring all your problems to the dinner table if you aren’t willing to listen to everyone else’s concerns and activities.

 

There is an abundance of books and videos available on the subject. However, just being aware of the situation will make you a better listener. You can always improve on this skill.

 

I strongly believe listening is a life skill that should be a mandatory course beginning in high school.

 

10 Tips to Build Better Trust in your Business

Trust Builds Confidence

 

The single most important thing you can do in starting and building a business is to get people to trust you. Trust needs to be earned and takes time, although you can lose it in a second. Telling people to trust you doesn’t cut it. In fact, when people I just meet tell me to trust them, my antennae is up to watch my back.

 

The benefits of being trusted are enormous. People have confidence in those they trust. Confidence leads to wanting to do business with you. Employees want to work for trustworthy bosses and are more highly motivated when they do. Customers are more likely to write orders for sales people they trust. Investors and lenders will not write the check to anyone they suspect is not high on the trustworthy ladder. A great deal of their due diligence is in finding out your trust score. And in my opinion, the most important thing about being trusted is that you live a better life. The only way to teach your children about trust is to set the example for them.

 

You should always do the right thing. Most people know right from wrong but are compromised when money is at stake. Many people differ on what is right or wrong in a business situation. It takes lots of little things and time to build trust. Some people never even think about it as they instinctively do the right thing. Here are 10 specific trust building ideas to get you thinking in the right direction. There are many, many more.

 

10 Tips to Build Better Trust in your Business

 

1.  Listen to people you deal with.

2.  Admit mistakes right away.

3.  Pay bills on time. If you can’t, call and tell why and when you will pay. Give a date

you can meet or beat.

4.  Acknowledge what you don’t know. Don’t BS.

5.  Don’t duck or procrastinate dealing with a problem.

6.  Demand quality.

7.  Don’t over promise.

8.  Move quickly to correct mistakes no matter the cost.

9.  Keep your promises.

10.  Never betray confidential information.

 

Bootstrapping 101 lists 38 trust building ideas.

 

Also, remember trust is portable. Wherever you go, it follows you: good or bad.

 

Preparation Works in Business as in Sports

The sports media and coaching community consistently attribute the success of our sports stars to their dedication to preparing for their role on the playing field. Football quarterbacks, who besides their extreme physical routine, spend huge amounts of time seeing film of their next opponent and studying their game plans. Baseball pitchers study countless hours of film of the batters they will be facing in their next game. Basketball players do the same as well as spend significant amounts of time practicing with their teammates to develop the team cohesiveness to win. It has been said by many that the key to Michael Jordan’s success besides his talent was his dedication to practice and preparing himself mentally and physically for his games. I do not know the exact ratio, but I would guess that for every hour on the playing field, a successful athlete spends 30+ hours practicing and preparing.

I believe this preparation ethic to achieve success is just as important in the world of business. When I had a game company, we decided there was an opportunity and need to develop and market a line of magic. It turned out to be very successful, and I feel it was because of our preparation and learning. I had little knowledge of the business of magic and certainly knew nothing about how the tricks were done. So among other things to learn how to develop this line, I found and attended a magic school. I was fortunate enough to find a great teacher in George Schindler, a renown magician.

George is still active in magic and is a former president of the Society of American Magicians where he now is a regular columnist. In the current issue of their MUM magazine, he wrote the article below, which I share with you in its entirety. It tells about how we met and proceeded in developing the line. We were very proud of this undertaking as we helped many kids and adults overcome their shyness and develop self confidence through learning how to perform magic. It also provided wholesome fun for many.

———————–

The Dean’s Diary

By George Schindler

Bob Reiss

It was early in the 1970’s when a game company put the “Imaginary” (Invisible) Deck on the market in department stores. The name on the cover said “Jerry Lucas,” a well-known basketball payer who had done The Memory Book with Harry Lorayne. Magicians around the country were really angry. It was one thing to put a magic set on the market but another to expose a highly valuable secret. I recall a meeting of the board at PA 1 where we had a long discussion about what we could do about it. One suggestion was to write letters to the manufacturer asking him to remove it from the market. Another was even worse; one member suggested we flood the market with a cheaper version to make the good one obsolete. Absurd!

Rather than distributing this trick through toy stores, the manufacturer had found a new market in department stores. His company specialized in games and now he had a new product. The decks sold only fairly well, and somehow did not impact the magicians using the trick. Like the Svengali deck, they were sold to one-time buyers as a novelty. But the manufacturer fell in love with “magic.” He saw the SS Adams line sold in all sorts of venues and decided to learn more about magic. So he enrolled in a magic course at the School for Magicians. Fascinated by thumb tips, ropes, and cards, he decided to learn everything he could about magic. And that was how I met Bob Reiss of Reiss Games. Frank Garcia and I ran the school one night each week for a six-week course for adults, who were mostly salesmen, bartenders, and business people. Bob was an excited student who used his new talent to open doors for his business by adding a “toy” item. He also realized that the  “secrecy” of magic added a new element to attract a consumer.

We were indeed fortunate that he chose Frank and me as consultants in his new venture. When I asked him about the Imaginary Deck, Bob said he would have been delighted if we had written that letter trying to stop him. It would have definitely increased sales as a “trick magicians didn’t want you to know about.” Showbiz made a deal with him to buy his inventory, and we sold it to another magic jobber. It was win-win all around: everyone made money, and we took the trick away from the general public.

Frank and I came up with twenty-two tricks that we all had as kids, which were offered in all the magic sets from the 1800s to the present day. The keys to sales were previously unheard of packaging and modern marketing approaches not used in years past with magic sets. Plastic molds were made and easy to follow instructions and patter were written. Packaging and photos made each effect desirable and the words “The purchaser agrees not to disclose the secrets within” were added.

Then came the sales technique never before used in magic. Reiss had all of his sales reps learn one or two of the tricks to do at lunch with the buyers. I scoured the country and found more than 150 magicians to do department store demos during the holiday seasons; Bob hired a publicist to promote TV, radio, and live magic in the department stores. Their toy departments had to add them to their shelves as well. Frank and I traveled the country doing live TV and store promos. At the same time, dug Henning was on Broadway and a new magic fever hit the country. Our timing was perfect. Sales boomed, and it was then that a few traditional magic sets were added to the line. How many of you started your magic with a Reiss Magic Kit? Can I see a show of hands? I recently asked one well-known close-up performer how he learned his magic. He told me he bought the Reiss Magic Kit packaged with a real deck of cards and ten tricks from Magic with Cards, a book that Frank and I wrote for Reiss. But therein lies another column.

No Can Become a Yes in Selling

Would you believe NO can get you a good Yes? Yes, it’s true; sometimes NO is the keyword for successful selling.

In all negotiations and selling which falls into that category, you need to understand the other person’s needs, job responsibility, and goals. One of the major responsibilities of a buyer is to get the best deal they can for their company.

So, when you, the seller, get pushed, cajoled, and threatened for a lower price or more concessions, do not take it personally. It is the buyer’s job to do so. Your job is to get an order that is profitable for you and at the same time maintains your integrity. Although I believe a company’s major focus is on finding and retaining customers, there are times you must say no to a customer when their demands are out of line. There are a number of reasons why a no to a customer is the right thing to do.

Take these instances into consideration: If you just drop your price or give major concessions because a large buyer pushes you, they will never accept your deal the next time around as you’ve taught them to never accept the first offer.

You need to protect your other customers and make sure they are not penalized for not pushing you as hard. You cannot put them at a competitive disadvantage.

Your integrity is at stake. There are times when you need a particular customer or order. However, you should not succumb to the pressure of giving a better deal unless you get something in return, like a bigger order, better payment terms, free advertising, etc.

Buyers might not admit it, but they will respect you more when you stand up to them. If your value proposition is good, your no will eventually become an order on your terms. 
 
Successful salespeople understand the value of a no. No is also a good word to employ in parenting.

A Letter to My Blog Subscribers

To: All Subscribers to my Bootstrapping 101 Blog

From: Bob Reiss

 

First, thank you for subscribing and reading my blogs.

Second, I want to wish everyone a happy, healthy, and fulfilling New Year.

When I started writing these blogs over 15 months ago, I was told by the Internet experts (of which I am the polar opposite) that the Subscribers list would be very valuable  and that I should regularly communicate with Subscribers to help sell my book. Since I never wanted to distract from the blogs and the value some of them may have to you, this is my first communication.

 

So, I think that after 15 months and 60 blogs, I do not feel it is inappropriate to make a few requests.

  • I would love any type of feedback on the blogs. Are they too frequent? Should they be more often? What new subjects should be covered? What subjects should be concentrated on? Any favorite ones or worst ones? Etc.
  • Self-Publishing is hard as you are almost automatically shut out from selling in retail stores where sales must be guaranteed. As you might surmise from my blogs, that would be against everything I believe. My plan was to sell online primarily through Amazon and to Corporations who do business with Small Businesses like Banks, Credit Card companies, Accounting firms, Insurance companies, and many more. These companies would then give away the book to their customers to hopefully make them (the customers) more profitable. The books can be printed with their logo and message. So I would appreciate it if any of you have leads for me with specific names and titles of such type companies that I could follow up with.
  • If any of you are authoring a book, please let me know, and I can provide you with all the details and contacts on how to do it profitably and more easily. It is much more profitable than using a publisher unless you get a sizeable advance. The problem either way is getting people to know about your book and to buy it.
  • For those who have read Bootstrapping 101 and liked it, your recommendation to Small Business Owners or Wannabees that you know is appreciated. They can read all the details on my web site, www.bootstrapping101.com, which can connect them to the order page on Amazon.com
  • If any of you really like the book, reviews on Amazon or Barnes & Noble are appreciated as they do help sell books. In fact, Amazon encourages publishers and authors to solicit reviews. (Hopefully good ones.)

Thank you.

Bob Reiss

 

HIRING AND FIRING—DIFFICULT TO DO

Your Growth Can Depend on It

 

Most small business owners will agree the quality of the people they hire is critical and can help make or break their company. It however, is not an easy task to find and hire the right person, particularly if you have a limited budget. Here are some things to think about to make it a more successful process. First there is no magical formula, but I believe the entrepreneur running the company should be fully involved in the process.

 

HIRING

Before you begin to look for the right hire for your company, ask yourself a few questions:

  1. What is important to the success of your company? Whatever your answer, your hire should possess the qualities or skills that can lead to your success.
  2. What will the person’s responsibilities be, whom will they report to, and how will their performance be measured?
  3. What authorities will your hire be given? You can’t really hold them responsible for an activity or project unless they have the authority to carry it out. Many entrepreneurs have difficulty giving up authority. They need to learn to do so to grow and to accelerate their employees’ growth.

 

WHEN TO HIRE

  1. When you can afford to.
  2. When certain skills are required for the company to advance. These skills can be knowledge or relationship related.
  3. When you have explored the feasibility of outsourcing the functions or skills needed.
  4. When you as the CEO don’t have the time to do the important things critical for the company’s success.
  5. Make sure your company’s sales surge, which normally initiates the hiring process, is not a temporary blip. I would rather wait and have everyone work overtime and pay bonuses before I make permanent hires and discover the sales gains are temporary.

HOW TO HIRE

Your choice is to use a headhunter, which has an expense tied to it, or do it yourself. I would explore the headhunter’s cost, expertise, reputation, and guarantee. If you do it yourself, here are some thoughts:

  1. CEO should be involved. If you already have other people in your employ, use at least one other in the process, depending on the position you are hiring for.
  2. Ask for and check references. This may seem to be a waste of time as you figure the person will only give you sterling references. This is not necessary true. Some of the people you call may not want to answer your questions for fear of being sued. I would describe the responsibilities of the potential hire and ask the references if this is a good match, based on their experiences with the person. Listen carefully to the answers and non-answers.
  3. Look for upbeat, positive people, collaborative, have desire to learn. They can be smarter than you and different than you.
  4. Do more than one interview with the promising candidates.

This will correct for a good or bad day on your part as well as the prospect’s.

 

MOTIVATE

One of the most expensive costs you will incur is a high employee turnover. So, once you hire someone you want to motivate them to be happy and proud to work for you, which will help maximize their contribution to the company. Here are some things to think about in this vain.

  1. Praise people for jobs well done. Many people are quick to criticize for a poor job but never praise for good performance. It is important to do so as most people do not have money as their main goal in their job. They want to feel they contribute to the company.
  2. Teach. Good employees want to improve and learn. When your company is small, the CEO should be involved to some extent in teaching everyone on some level. It can be about your company’s products, the industry, certain skills, how to learn, working with others, etc. You might send some to seminars or encourage them to take some evening courses. Pay for these if possible.
  3. Communicate. Each employee should be updated on the company’s goals and the current status in achieving them. They should have their individual goals and know how they advance the company ones. A big part of communicating is the desire to LISTEN to employees’ questions, concerns, and suggestions. You don’t have to agree with them. Listening takes some effort as there is never enough time in the day of a Small Business owner.
  4. Specify Rules. People want rules in their life. They should be told what the company expects of them. Ethics, treatment of customers, civility with each other, no office politics, acceptance of gifts from suppliers, etc.
  5. Create an Environment where creativity and innovation can flourish. Don’t say you have an open door policy if you don’t practice it. The company founder needs to work at convincing employees to be honest and speak up with their ideas and problems. Their natural inclination is not to. Everyone in the company has something to contribute including the receptionist who I like to call the “Director of First Impressions.” You might think of periodic off-site meetings on a non-work day, where everyone can listen and participate. A rough agenda should be created and distributed in advance. A Christmas party could be good but can backfire if alcohol is served. Maybe a Thanksgiving party or a celebration dinner of landing a new big account or achieving a goal All these and other get togethers build a high morale and encourage people to work together as a team.
  6. Promote from within. This should not be a hard and fast rule, but if all things were equal, I would always go with a current employee for a promotion.
  7. Compensation. This is always a tricky issue as everyone always seems to know their co-workers salary. Also, young companies in many instances can’t afford competitive salaries. However, if you have a proven star in your company and you feel they are important to your future, approach them before they ask you for a raise and offer them what they are worth. It could be in cash, new benefits, or stock options.

 

FIRING

I always found the act of firing someone was worse than a root canal session with my dentist. When I interviewed 27 Entrepreneurs and asked each one what they would do differently in their successful business climb, a majority said they would fire people sooner than they did. Most employees know who of their fellow workers should be terminated. It is not a pleasant task to fire someone yet it is important that it be done or you will begin to lose your good people and decrease the productivity of most of your work force.

I would talk to someone who was doing a poor job before firing them and point out your problem with them and even offer some advice on how they could rectify their situation. If they can’t, then you must fire them without further ado.

You also might seek the advice of an attorney on the proper steps to take before terminating someone to avoid being successfully sued. We are a litigious society.

I’m sure there are many other suggestions or considerations in the hiring and firing process. The ones offered here are from my personal experience to get you thinking about an important aspect of your business growth that you will sooner or later have to deal with.

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