Entries tagged with “small business”.
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Posted by Mitchell York under Small Business Management
The New York Times has a sad story on seven small businesses that shut their doors in 2009. The owners were brave enough to talk about what went wrong and offer up valuable lessons for all small business owners:
- A 12-year-old concierge service that peaked at $2.5 million in revenue fell to $80,000 in 2009 and closed its doors. The owner reflected that she should have sold the company when it was flying high, and in fact had interest from buyers.The lesson: When you’re in a business that is dependent on the economic cycle and not recession-resistant, look to sell when times are flush, or diversify. Read more…
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 Small Business Management
As you prepare your business for the next year, how do you make sure it isn’t a rerun of the past year? Even if this year was a great one for you, there’s no reason to do things the same way, and you’ll probably want to take your small business in some new directions. Maybe you’ll fix some nagging problems, or finally seize on an opportunity that’s been there for a while but you haven’t gotten around to tackling. Read more…
Posted by Mitchell York under Small Business Management
If you’re a small business owner, you can spend an awful lot of time in the muck of collecting, or trying to collect, bad debt. There’s a good piece about this on the New York Times site today in which Jay Goltz, an owner of five businesses in Chicago, explains his experience in collections.
Goltz notes correctly that the biggest trap most small businesses fall into is extending credit when a client already has a significant balance due. You don’t want to lose their business, so you let them have another $5,000. And then, surprise! They don’t make any payments. Read more…
Recently, I was interviewed by Allbusiness.com on the subject of franchising and how people can know whether it’s right for them. If you’re considering going into business for yourself and thinking about the franchise model, take a listen. if you want even more, check out my book on the subject.
Posted by Mitchell York under Franchising, Uncategorized
As many of you know, I own a franchised business in addition to being a coach for people who are considering franchises or other business startups. My franchisor refers people to me regularly for what are known as “validation” calls. Prospective franchisees call around to existing franchisees to do research on the franchise and learn what it’s like to be in the system. If they ask good questions, they can come out of the process with a much clearer decision path (pro or con). The trouble is, 90% of the people who call me ask the wrong questions! Read more…
Posted by Mitchell York under Small Business Management
In the small business I own, I’ve noticed an ebb and flow through the years–periods when I am really “on it” and other times when I am either coasting or not as engaged as I need to be. Fortunately, I’ve been very much on my game for the past two years (thanks in no small part to my collaboration with my coach). For the two years prior to that I was up and down and, no surprise, my results were erratic. I have been thinking about what’s different now compared with then in terms of my activity and attitude. I bet that anyone with a small business goes through the same cycles. Maybe if you read this you’ll snap out of a down cycle and get back on your game. Read more…
Posted by Mitchell York under Small Business Management
Entrepreneur/blogger/author Jonathan Fields has a post today asking for opinions about whether there’s truly such a thing as “critical mass” in business. He writes:
“In business, it’s the moment your client base begins to grow largely by referrals or word of mouth. In publishing, it’s the moment you’ve got enough readers who love your work that the impact of their voice outstrips the impact of your marketing. In blogging, it’s the moment that you move beyond having a small number of friends help promote a particular post or idea and watch it just explode across social media.”
I replied on his blog (and revised slightly since this morning to present here):
“I think critical mass works great in nuclear explosions but I am not so sure about in business. Yes, there are certain franchises (everything from McDonald’s to Seth Godin) where the brand has momentum and velocity–all those physics-y terms that go with critical mass. But McDonald’s still has to spend $100 million a year on advertising, and Seth still has to blog every day and write brilliant new books to keep the momentum going. If critical mass in business were really true, Mickey D and Seth would be on a beach somewhere. Or maybe not. Good question though.“
And now I’m giving his question more thought. I think if you pinned me down for a real answer that was not so flip, I’d say there is no such thing as critical mass in business. The concept implies a chain reaction that takes off by itself and produces more energy. I think any business, big or small, needs more and more and more and more and more and more energy to sustain itself.
When businesses think they have hit so-called critical mass, when great stuff starts happening without their having to do much, that’s when they start failing and other companies start taking their market from them. Can you think of a dozen companies that were market leaders, hit critical mass, then let competitors start eating their atoms? I’ll start the list, you finish: Dell Computer, Microsoft, General Motors, Yahoo!, Starbuck’s….
Few small businesses get to the cruise-control stage like the aforementioned big guys. We all want to live by the example of The E-Myth and work on, not in, our businesses. In most cases that happens, at best, some of the time. Startups with one or two employees, virtual companies that operate with subcontractors, and even firms with a few dozen employees are usually fueled by the owner’s vision and work ethic. The owner delegates a bit, but re-engages frequently, even in the smallest processes, because the links in the critical mass chain get messed with by others and the process gets out of control. This isn’t because the owner hasn’t hired smart people or because the owner can’t delegate. It’s because business is inherently a difficult process with many moving parts, and the person who owns it has a special relationship with those parts.
Some break through to be huge and scaleable, but the vast majority are highly resistant to things done in a mass of any kind, critical or otherwise. And that may even be a good thing. It assures quality, even if it also assures that the business may never get to be huge. For many small business owners, it’s not about being huge, it’s about being in control. Can I get an “amen” for the people who are okay working IN their businesses without apology to anyone. AMEN!
Jonathan, thanks for a provocative post. I always like that you ask your readers for reaction, so I’ll do the same here. So who has it right, me or Jonathan (whose book, Career Renegade, is now out and definitely worth a look for aspiring entrepreneurs), or is there another way to look at the question?
Posted by Mitchell York under Uncategorized
In Summer 2009, I will publish Franchise-Freedom or Fantasy? How to Know if a Franchise is Right for You After Your Corporate Career. The book is based on my seven years of experience as as a successful franchise owner and coach for entrepreneurs.
In my coaching practice, I work with executives who are considering entrepreneurship–which often includes an evaluation of buying a franchise. In the book, I lay out for the experienced business person a process for understanding whether franchising is a potentially viable alternative and, if it is, how to move forward. The book includes critical information including:
- Knowing whether you are pursuing a franchise for the right reasons
- The critical skills you need to be successful in franchising
- What reserves you need before you start
- How to negotiate with franchisors
- How to evaluate non-franchise alternatives
If you’d like to be notified when the book becomes available, please email me with BOOK in the subject line, and I will let you know.
Posted by Mitchell York under Small Business Management
I was feeling rather shaggy this morning so I stopped at my local barber shop for a haircut before heading to the office. (Yes, that’s a picture of my haircut. I feel so much lighter!) The barber and I talked over the CNN News and got around to the subject of the economy. Turns out his boss, Mr. Tony, just bought one of the town’s oldest barber shops a few blocks away, on Main Street. They do about 350 haircuts a week there (at around $11 each). He reportedly paid less than six figures for the shop, which has a fabulous lease–the rent is only $900 a month. So the shop does around $200,000 a year in cash sales and rent is around 5% of that.
Mr. Tony also owns two other shops in town–the one I was in this morning and another two blocks away. He owns the land and the buildings they sit on as well. When Dunkin’ Donuts moved in next door they wanted to buy his shop to make room for additional parking, and offered him quite a lot for it. He turned them down. He didn’t need the money. He also owns two more barber shops in the next town over…and has a few rental properties in the area. He keeps a low profile. He’s only 34 years old. He does not invest in the stock market. Why bother? His businesses generate plenty of cash dividends for him.
I think small business entrepreneurship is going to look more and more like Mr. Tony’s model in the coming years. Smart people will find a niche that may not be sexy but has low overhead and is reliable (i.e. recession-resistant). They’ll take advantage of opportunistic moments to buy out competitors, for cash. Then they’ll pick up a real estate investment here or there, just a simple house or two, with reliable tenants and a residual income stream. Mr. Tony could care less about the recession.
