MYTH – 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.

Answer to Challenge #6:  GEORGE BUSH—He bugs Gore.

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BE NICE TO YOUR SUPPLIERS — II

    When I blogged my earlier post on Suppliers, I received a great comment from Pierre Martell, the CEO of Martell Home Builders  ( www.themartellexperience.com ) in Moncton, Canada, that I want to share with everyone. Their mission is to build customized homes in 99 days on budget. Their website is their primary selling tool. To accomplish this, they use a network of subcontractors. As a start up in a very competitive industry, Pierre quickly realized how critical the performance of his suppliers were to his success–thus his 100% agreement with my supplier post.
     So, to attract maximum supplier cooperationover  his competitors, he came up with what I think is a simple but brilliant concept. I know from experience, that the single best action you can take to be a great customer to a supplier is to PAY YOUR BILLS ON TIME.
      Pierre brought this maxim to a new level by creating the idea of paying all of his supplier invoices via Electric Fund Transfer (EFT). According to Pierre this has worked to perfection and helped propel his company to formidable success in a short period of time.
       Many times in my life, I have heard of a new idea and said to myself , this is so simple, why didn’t I think of it. This is one of them.I would have jumped on this idea in my earlier businesses. Where were you Pierre?
       I can just imagine the suppliers reactions. They had their payments much sooner, as there is no mail delivery time, which historically gets slower, no clearing the check time, no running to the bank to deposit time, etc. It also clearly sends a message that this customer is committed to pay their bills on time. The end result is loyalty to the customer and 5 star service to satisfy him. Pierre tells me that as of this date none of his customers have adopted electronic payments. Amazing, as surely they have heard about it from the suppliers.
      You might want to think of another way to employ this idea. Reward your best suppliers by creating a special club for them that you could call Suppliers Platinum Club. (My guess is you can come up with a better name) You could spell out the criteria for the supplier performance you expect. These special suppliers will feel honored,while getting their cash faster.
      Thanks for sharing Pierre.
     

 Answer to challenge#1:  DORMITORY =DIRTY ROOM

Challenge #2- Rearrange ALL the letters and using each one only once in the word’s SLOT MACHINES, to form a new word or phrase that has a bearing on slot machine. Answer will be revealed in next blog Monday October 26th.

Entrepreneurs, Be Nice to Your Suppliers!

Suppliers can be a critical component of your business growth and survival. Your approach to suppliers needs to be part of your strategic plan, since almost every company, whether product or service oriented, is dependent on suppliers. Many people seem to get this supplier issue wrong. They feel that because they write the order, they are in the dominant position and can exploit it with unreasonable demands upon their suppliers, including personal perks.

Please let’s get this right! You need good and reliable suppliers. When you find them, treat them like gold. Work as hard on building a supplier relationship as with any other one.

Be loyal to your good ones. They are essential to your good health and your growth. They are a nuanced Bootstrapping strategy.

How suppliers impact you

Let’s briefly look at all the ways suppliers can impact your company.

  • Quality. Whether you purchase a component, finished product, or service, suppliers can positively or negatively affect the quality of your product. Higher quality increases customer satisfaction and decreases returns, which add cash to your bottom line.
  • Timeliness. Their timely deliveries are crucial to how customers view your reliability. Their quick turnaround becomes the key to your minimization of inventory, which in turn translates to less risk of inventory obsolescence and lower cash needs.
  • Competitiveness. They can keep you competitive and one-up on your competition based on their pricing, quality, reliability, technological breakthroughs, and knowledge of industry trends.
  • Innovation. They can make major contributions to your new product development. They are working to be on the cutting edge of innovation of their product. The good ones will understand your company, its industry, your needs, and help you accordingly in your new idea execution.
  • Finance. They can be a major and constant source of financing for you. Your payment terms to them can be an important source of money because their extended terms don’t usually carry interest. If over a period of time you’ve proven to be a trustworthy, considerate, and loyal customer, you may be able to tap into them for additional financing in your growth mode—or if you run into a cash crunch. It may take the form of postponed debt, extended terms on new purchases, a loan, or an investment in your company. . . all of which improve your cash position.

The best way to become a great customer of a supplier is clearly to PAY YOUR BILLS ON TIME.

Will paying your bills on time in your personal life improve your credit and integrity rating?

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