Entries tagged with “Entrepreneur”.
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Posted by Mitchell York under Interviews
Jeff Morin is a Classic Small-Business Entrepreneur (CSBE). Here’s how I define CSBE: someone who has deep knowledge of a market segment that is inefficient or poorly served and develops a way to correct the inefficiency — preferably without too many competitors even noticing — thus assuring higher-than-normal profit margins. That’s Jeff and his Stafford, Va.-based business, Coins for Anything.
A brief background: Jeff is a 27-year-old former Marine sargeant who, at age 19, became interested in something called “challenge coins.” If you’re in the military, you know what challenge coins are. But most people don’t. A challenge coin is a collectible coin that commemorates service in a particular military unit or mission. Jeff noticed that most of these coins were poorly designed and made and so he did what anyone would do at age 19 — not! He borrowed $500 from his mother to start a business to design and make really nice challenge coins. Read more…
Posted by Mitchell York under Franchising
I’m just finishing up writing a book for executives who are thinking about becoming entrepreneurs. I was trying to come up with an anecdote about how entrepreneurs need to be flexible thinkers, about to dodge roadblocks without much time to plan. I think I came up with one.
I went to Columbia Business School. One of my good buddies in class was an electrical engineer, whom I’ll call Todd. He designed photovoltaic cells for industrial buildings. I remember vividly when we took our first Corporate Finance midterm. The test consisted of one problem in which we had to use discounted cash-flow and other analysis to create a valuation for a company.
I got to about Step 14 of a 30-step process and then forgot how to calculate the cost of equity. After a minute of trying to remember, I made a little note in the margin: “Professor, I forgot how to do this step, so I am assuming the cost of equity is 12%.” Then I moved on to step 15.
Meanwhile, I could hear Todd in the seat next to me, and it sounded like….whimpering. Sweat was beading on his forehead….in the middle of December! When the test was over I asked him what happened. He said he got stuck after about 10 minutes (of a two hour exam) and couldn’t go on. I asked him, “Why didn’t you just make something up?” He was too dazed to answer.
We had a long conversation about it afterward. We concluded that the reason I was able to keep going and he was not had to do with our core personalities, our DNA. I am a marketing guy. I make stuff up for a living. If I’m wrong, so what? He is an engineer. If he makes stuff up, buildings are gonna fall down! He has to be right.
Once we talked it through, he was able to adjust for his personality type and vowed next time to keep going even if he didn’t know the answer to a piece of a problem. He got an “A” on the final and the course. I got a “B.” But should Todd be in his own business? Maybe not. Last I heard he is happily designing the most advanced solar panels in the industry for bigger and bigger buildings, and having a great life working for someone else.
Posted by Mitchell York under Interviews
I was in Grand Central station recently and stopped in for a latte at Joe. I love indy coffee houses in New York. I will go out of my way to avoid Starbucks. Joe was espresso done old-style. Nothing automatic. Baristas who know their beans. When I got home I looked up Joe on the web and found a pretty interesting company. Founder Jonathan Rubenstein was gracious enough to give the rest of us entrepreneurs some perspective on what it’s like to run four superb coffee houses in the world’s toughest market.
Tell us about your business. I would love to know how many coffees you serve a day, how many baristas you employ, what kind of growth you are seeing, the basic stuff like that.
We have four locations. On average, the shops serve about 600 customers a day and overall we serve about 3,200 cups of coffee per day. We currently employ 60 people, of which two-thirds are full-time. Fifty are baristas and 10 are support staff.
In the bible of entrepreneur books, The E-Myth, the author says that just because you love baking doesn’t mean you should open a bakery. Yet it appears you started Joe because of your love of coffee. Is that right, or was there something else that drove you?
I read The E-Myth and loved it. I loved coffee, but that didn’t mean I was a “mechanic” or even an expert. I was more of a consumer who looked at it from a business perspective. While I worked many counter hours at the beginning, I never defined the business by making the coffee drinks myself. I instantly tried to train others to do it, so I could focus on other aspects of our business.
So you opened your first store. When a retail entrepreneur opens a first store or restaurant, maybe it’s still a hobby. But not when you open the fourth. That’s a real business. Did you have a vision of having a lot of stores when you started or did getting the first one under your belt change your thinking about what the business was going to be?
I always said I wanted to have five stores. In small retail business, that is often the point where the whole is greater than the sum of its parts. Where we could build the infrastructure, share costs, use purchasing power. Five shops is just shy of what people will perceive as a chain, and still lets us be viewed as a small business, which we really are.
New York City has to be the toughest market in the country for retail. Did you fund your expansion internally, with family, other partners? And how are the banks treating you?
That has changed as the business has grown. The first two locations were funded using money that I and my family raised. The shops were also built out for as little money as we were able to raise. Starting with the third location, banks were much more willing to help us with loans, and we are now at the point–or were, until a few weeks ago [with the financial crisis] where we can more easily raise money privately, or go to the banks for loans.
Who does what in terms of management of the company?
Gabrielle is my sister and partner. We are constantly restructuring the organization as we grow. At this moment, each of the four shops has a general manager and a barista trainer, and most have an assistant manager. Gabrielle works as director of operations, and Amanda Byron is director of coffee, overseeing the trainers and quality of beverages. Consistency and quality of training is perhaps the most challenging area of our growth.
What prepared you to be an entrepreneur? Anything in your genes? Family business? Role models? From your press clippings it looks like you were a complete neophyte in business. Are you the accidental entrepreneur? And how glad are you that you didn’t buy that Long Island summer camp?
Good research! I guess I have always had that entrepreneurial spirit. I used to form clubs in high school and college. I started a day camp in 1988 that is in its 20th year. While I never took a business course, that is just where my skills lie. There have been plenty of other jobs where I didn’t succeed or have what it took.
Seth Godin in his book “Purple Cow” talks about the importance of having a business that is truly remarkable. Starbucks, not remarkable. What your baristas do with latte art — remarkable. What else is remarkable about Joe?
Thanks! As empty a mission statement as it seems, we just try and home in on three things–great coffee great environment and great customer service skills. I’d say the way we treat coffee as a culinary art is remarkable. Otherwise I’d say we are more solid–we do try very hard to be a community place and offer things like classes for home enthusiasts, artwork by local artists, a running club, and free public cuppings.
What’s the most painful lesson you’ve learned in your business?
That is yet to come.
How has the change in the economy affected your business and what are you doing differently now?
So far it hasn’t. I keep waiting and worrying. Some people tell me that a cup of coffee will remain an affordable luxury and it will be one of the last things anyone gives up. I’d guess that some may switch from $4 drinks to $2 drinks.
What will the business look like in five years?
There may be one more location and we may get more into roasting, catering and consulting. But that is probably the extent. Hopefully we’ll do what we are doing now, but do it better and better.
Here’s where you get to give advice to would-be entrepreneurs. What’s the one thing you think everyone who is thinking about leaving their personal Dilbert cartoon and starting a business should know?
It sounds cliche, but just have passion and so as much learning and research as you can.
***
If you’re in New York, you owe yourself a coffee at Joe. I don’t care what the stock market is doing–stop in, order a latte and drink it right there. In addition to Grand Central, Joe has stores at 141 Waverly Place,
9 East 13th Street and 405 West 23rd Street.
Posted by Mitchell York under Small Business Management
The Wall Street Journal’s very informative Independent Street blog carried an item yesterday about getting employees to think like entrepreneurs. The keys are to: Organize them into small groups, share profits, embrace failure, reward ideas and promote risk takers.
Those are all worthy ideas. But they speak to the fact that employers tend to think “programs” when it comes to fostering an ownership mentality. The thinking goes: If we give incentives, share profits, write stories in the company newsletter about successful or unsuccessful ventures and make everyone a hero, we’ll get ownership thinking.
A fundamental piece is missing: The top-down piece.
If owners want employees to think like them, they have to emotionally meet the employees where the employees are. Workers will be more likely to think like owners if they have executive leaders who demonstrate compassion; who take workers’ feelings into consideration when making decisions; who express their feelings about people; who manage their own emotions well at work and project a strong but humanistic image. It is company leaders’ people skills that matter most to fostering ownership thinking.
The company I grew up in, where I worked from age 24 to 41, was such an organization for most of that time. CMP Media sponsored frequent programs to foster entrepreneurial thinking. They sent many employees to every conceivable training course to improve our business and sales skills. They even paid for me to go to Columbia for an MBA.
But what made the company remarkable was the husband and wife team who founded it. (That’s Gerry and Lilo Leeds in the photo above.) They had superb emotional intelligence skills. They could read the mood of the work force and respond quickly. They had values they brought to work every day (the very well-off CEO drove an old station wagon to work for years and years). They were always approachable. That doesn’t mean they weren’t tough when they had to be. They made lots of difficult business calls along the way.
As employees and managers, the idea of “What would Gerry and Lilo do?” was never far from our thoughts as we made decisions that affected the organization. We didn’t own the company, but because of them, we acted as if we did.
Posted by Mitchell York under Franchising
There’s a provocative post on one of StartupNation.com’s blogs. The title is, “Out of Work? Consider Buying a Franchise.” The writer cites the downfall of Wachovia Bank and addresses the 5,000+ workers in Charlotte, NC, who have already lost their jobs.
The author writes, “When the unemployment rate is high and large corporations are downsizing, buying a franchise is typically a good alternative for someone with the entrepreneurial itch.”
Nooooooooooooooooooooooooooooooooooo!
Buying a franchise isn’t good for an itch. In fact, franchising can make you want to scratch that itch until you have a huge rash. An infection. Gangrene. Amputation! You get the point.
When you get laid off (and I know whereof I speak, I was there once seven years ago courtesy of Ziff Davis Media), you may not be in the best psychological frame of mind. Your confidence is shaken, your routine disrupted. You’re disoriented. To distract yourself, you start Googling and clicking and, before you know it, you’re a franchisee. You’re still hurting from what happened in your job as you embark on something that will test your limits as nothing has before.
You are not running toward something as much as running away from something. And it’s just a matter of time before you can’t run fast enough or far enough to get away from yourself.
If you find yourself laid off from a financial services job or any corporate job amidst the economic chaos that is unfolding, and you are fortunate enough to have enough cash in the bank to even think of buying a franchise, my advice is to wait a while. Consider taking a few months to do some things completely unrelated to work. Travel, spend time with your family, read–whatever pleases you. Even if you’re a “Type A” with a short attention span, resist the urge to jump too fast into something else. You may not be the franchise or entrepreneur type, and if the itch goes away by itself, that’s a lot better than spending your nest egg on a dubious prescription.
Have experience with buying a franchise before you were ready? Or one that totally contradicts my point of view? Let me know.
Posted by Mitchell York under Interviews
I first met Emily Sunderman when we both worked at CMP Media, a publishing company on Long Island, in the 1990s. She was a business analyst and a great person. We both moved on and I hadn’t heard of her again until I stumbled upon her online. Wouldn’t you know it, she and her husband, Michael Lee, are entrepreneurs. Their cheese-making business, Twig Farm, is based in Cornwall, Vermont. We reconnected and she and Michael were gracious enough to take time away from the goats to answer some questions about their entrepreneurial journey. I told Emily before she answered these questions that, looking at her website, I wanted to be a cheese farmer in Vermont just like her! After reading her answers, that fantasy hasn’t changed. Thanks Emily and Michael, and continued success!
What has been your greatest success as entrepreneurs? And your biggest failure?
Biggest failure first. We tried raising buck kids for the Easter market this Spring—hundreds of hours of labor, lots of purchased feed, and we lost our shirts at the livestock auction. Live and learn. Greatest success is we make a good product that we’re proud of and that people need, or at least want, very much.
What advice do you have for would be executive-to-farmer entrepreneurs?
Animals don’t take weekends, holidays, or two weeks paid vacation. There aren’t very many people who want to work Christmas so you can drive to Auntie’s.
When I went to your website, my reaction was, “I wish I was a goat cheese farmer!” It looks so idyllic. What’s it really like to be in the cheese-making business in Vermont?
It’s a lot of fun doing one shitty job after another–sort of a definition of farming. If you know that to begin with, it makes it all a lot easier. Specifically to the cheese-making side of things, we’re part of a friendly community that rarely sees one another. We make a ridiculously small quantity of cheese, and have gotten very good at saying, “We don’t have any more cheese to sell you” in lots of very gentle ways.
Why did you get into this business, and what were your goals when you started in 2005?
I don’t remember.
How have your outlook and goals evolved since then?
We have a goal to take a family vacation next year.
What’s a typical day like?
Michael gets up at 4:45 to set up to milk the goats. By around 5:15 he gone out–this time of year wearing a headlamp as it is dark–to find the goats in the pasture and lead them to the milking parlor. Milking and cleaning up are complete by around 7:30 and then Michael gets the milk into the cheese vat to start warming up. We have breakfast together around 8:00 then chase down shoes for our toddler. Michael drives our three year old son Carter to day care and Emily starts email and telecommuting at her job as a web traffic analyst. The cheese is usually ready to stir when Michael gets back from daycare drop-off and the cheese made is usually in the molds by lunch time. We generally have cheese sandwiches together at noon. After lunch Emily goes back to web traffic and Michael moves fences for the next pasture rotation or some other regular farm chore. Michael sets up milk around 3:30 and is done with afternoon milking and clean up around 5:45. Emily goes to pick up Carter from daycare at 5 and is back around 5:45 and we cook dinner and play at being pirates or firefighters. After dinner the cheese is usually ready to move to the brining process in our walk-in cooler, so Michael moves the process along. We take turns putting Carter to bed, and then read the New Yorker and do email before turning in for the night.
Has the larger economy (oil prices, feed prices etc) affected your business and if so how have you adjusted your strategy?
Yes–feed has doubled in price since we started four years ago. We’ve raised our prices a little and are now buying milk from other farms as well so we can make bigger batches of cheese.
What do you love most about your business?
No boss!
What do you like least about your business, or hate most, if you feel that way?
It is no fun when an animal gets sick and neither we nor the vet can make them better.
Michael does cheese-making, Emily does marketing and web support. Who does everything else? Do you two do it all?
Emily looks after the bookkeeping and marketing. We have a high school student that helps us on Sunday mornings with packaging cheese for shipment. We also have help with milking on Saturday mornings when Michael sells cheese at farmer’s market and on Sunday afternoons so we can have family time. Michael takes care of the animals and makes and ages the cheese, and everything else.
I live on Long Island. How can I buy your cheese?
You can buy our cheese sometimes at Lucy’s Whey in East Hampton, or at Saxelby’s Cheese in the Essex Street Market in New York City, or at Bedford Cheese in Brooklyn. Murray’s in New York City usually has our cheese too.
Posted by Mitchell York under Small Business Management
Maybe this situation sounds like your business: you have a highly transactional business with lots of customer orders and deliveries. Orders are taken by phone (not online). Once the orders are taken and entered into a database, a manager (or two) checks them for accuracy. Sometimes the managers are busy and mistakes get through — pricing that’s wrong, items specified that you no longer offer, addresses entered incorrectly. Because of this system, you have an error rate of about 5%. At the volume of business you are doing, that means about 10 customers a week are affected, and are they ever angry about it.
So what’s wrong with this system? A few things:
- The employees taking the phone calls from customers are actually trying to avoid picking up the phone. They are paid an hourly wage; they can see each other in the office. It becomes a game of “it’s your turn to answer the phone.”
- Once they do pick up the the phone and are disturbed by customers, they have no incentive to check and double-check their own work. After all, a manager is going to check it anyway. They make $9 an hour and are watching the clock until it’s lunchtime or time to go home.
This was an actual situation in a sizeable business run by a friend of mine. Here’s what happened next:
He hired an outsider (from the same industry) to head up sales. The New Sales Guy has a reputation for being (can we say this on the Internet?) a ballbuster with employees. Very demanding. Customers love him though–he delivers on his promises with fantastic commitment and quality. Here’s what New Sales Guy did:
- Teams. Reorganized the phone-order takers into teams of three: two salespeople and one to do data entry and quality control. The managers were immediately taken out of the order process.
- Performance Linked to Pay. The teams were given responsibility for checking their own orders. There would be no one else to blame for mistakes, as all orders would be easily tracked back to the team. Most importantly, the team received a commission on each order. If the team did its job well, each team-member could earn up to an extra week’s pay every month. If they made errors, no commission.
- First Ring. When the phone rings, if the customer is new, the salesperson who takes the order now gets that customer for life and a small annuity commission on all orders. That new customer belongs to their team.
Sometimes salespeople complain to the boss about New Sales Guy. The boss rightly says, “He’s your boss now, not me. Work it out with him.” The boss now has a lot more time to work on boss-type things.
The error rate on orders is down 90%. It took six weeks to make the changes and “re-educate” everyone. The teams don’t mind so much about New Sales Guy being a ballbuster sometimes, because they have a pocketful of extra cash, which, let’s just say, cushions the blow quite a bit.
Posted by Mitchell York under Small Business Management
When my CPA recently sent me an email saying he was raising my monthly fee, what do you think I said when I emailed back?
I said, “Thank you, Mike. You deserve it. Congratulations! And thanks for being a great accountant and adviser.”
Sometimes, price increases from vendors are justified not just because of the rising cost of doing business, the skyrocketing price of gas, or other factors. Great service providers get to raise prices regularly and their customers could care less about having to pay more. How many of your vendors would you say that about? How many of your clients would say that about you?
Posted by Mitchell York under Franchising
I like to think I walk the entrepreneurial talk. In addition to writing about entrepreneurship, I do it. I’ve been doing it for over six years in a national franchise. It’s been a long, sometimes painful, but now increasingly rewarding experience.
The franchisee base of which I am a part is a bell-curve of success–some people are killing it, some are getting killed by it, and most are somewhere in the middle. In the past week there has been an email thread going around from some of the people who are on the left side of the curve. One asks if anyone is interested in initiating a class-action lawsuit against the franchisor for selling them “a bill of goods,” for “disclosure issues,” for lack of support.
Over the years, many prospective franchisees have called me and asked my opinion of the franchise. They want me to tell them whether it’s a good idea for them to become a franchisee. My answer is always the same. I try to discourage people from buying this or any franchise. Not because I don’t like the business–I love it and it’s a big success for me. But people who seek affirmation from strangers to make the biggest financial investment of their lives are getting themselves in too deep. So it’s easier for me to tell people who are interested in this franchise (or others), one or more of the following things:
- Why do you want to buy this franchise? Are you running away from something?
- You’re going to invest $300,000 or more (for those who decide to open a retail store). How long will it take you to make that back, and what percentage return on that investment do you expect? How does that compare to taking the same money and buying a no-risk Treasury bill? Are you just bored? How about getting a job you like better than the one you just took a buyout from?
- Have you ever in your life done anything entrepreneurial? If not, what makes you think you will be successful with a franchise? And if you fail, what happens then? Will you lose your house? Your 401(k)? Your marriage?
One franchisee, who has become a valued business partner of mine doing profitable projects together, saw the email exchange and asked me, “What the hell is going on!?” I told her this: “Ignore stuff like this. Negativity = Failure. Positive attitude + action = Success.”
It is incredibly easy to psych yourself into a tailspin when you own a business. Or to raise yourself up and keep going until you find the formula, the business model, the customer set that works.
I’m a collector of franchising stories, so if you have one, good or bad, feel free to share.
Posted by Mitchell York under Small Business Management
One of my clients, Ken, runs a very successful service business. He has two employees who do administrative tasks. His problem: he hasn’t been able to free up enough time to pursue projects that capture his imagination and will propel the business forward — largely because he is not comfortable with delegating. By inventorying his work habits and style, we found that:
- His default work style is to do things himself rather than delegate to his staff. (For example, he opens his own mail, although his staff does put it in a separate stack for him.)
- He listens to dozens of voicemails every day, of which a third to half are solicitations from salespeople he does not know for items he does not need. Also, he listens to them as soon as the red message light flashes on the phone, which makes it difficult to have uninterrupted time to concentrate.
- He has not trained his staff to handle clients as well as they could. They answer the phone for him and take messages but don’t try to resolve the caller’s issue themselves.
Given that Ken is an ambitious entrepreneur who is eager to launch many more business ventures, he wanted to address these issues as soon as possible. Ken agreed to make some critical changes to the way he does business. Here’s what he has done so far:
- Started a weekly staff meeting to delegate projects and get the staff’s feedback on how they can do more substantive work. His employees were thrilled and look forward to bringing their ideas to the meeting. They are being challenged like never before and have more job satisfaction.
- His staff now screen all voicemails and handle everything that does not absolutely require his attention. Ken has given them a list of clients who are priority and must get a call back from him immediately, but most calls can be handled without his intervention.
These changes seem easy, don’t they? For some they are, for many they are not. I almost didn’t write this post, thinking these points were too basic. Then I thought of a time about 20 years ago when I got into a lot of trouble because I was a miserable delegator. Here’s what happened:
I was editor of weekly business newspaper and one of my functions was writing the headlines for page one. Little did I know I was about to have my own “Dewey Beats Truman” moment. I wrote a particular headline that was really exciting and a bit shocking. Problem was, it had little to do with the story that followed it. Our process for putting out the paper was that every reporter and editor in the newsroom read a copy of page one to look for mistakes. They all saw my headline. They all knew it was wrong. But no one said anything!
Why?
They assumed that since I wrote it, it was the headline I wanted. And since I did so many other things myself in my (then) autocractic style, they didn’t think I’d want my authority questioned. Well, I wish they had challenged me. When the paper came out on Monday I was covering a convention and the CEO of the company I’d written the headline about was the keynote speaker. He held up the paper and railed against the false headline. I wanted to sink into the floor.
It’s not easy to trust other people with your business. When you know you can do it better and faster yourself, it’s so tempting to take that shortcut. Entrepreneurs who learn managed delegation (as opposed to delegating without giving clear direction) gain efficiency and have time to create new opportunities. And avoid potentially embarrassing (or worse) mistakes.
