See my newest post at Open Forum by American Express.

Learn HOW and more importantly, WHY to measure what happens in your company.

In fact it’s useful for this reason:  companies at any stage need all the functions performed by big companies. But they usually don’t need them full time. Nor can they afford a full time position for many functions. That’s why employees have to wear many hats.

One other characteristic of these companies is they are frugal.

What’s missing is they often don’t have time to plan for the future. They tend to management from crisis to crisis thinking they don’t have time to be strategic. And that often becomes a barrier that prevents growth. That is a bad thing.

What’s the Solution?

The first place to start is The Company Blue Print. My program called 20 questions will help you specify what you want from your company at this time in your life and translate that into a blue print that will help develop your company so it can achieve your personal goals.

After that we usually work on better cash flow management. Why? Because taking time away from the day to day to focus on the future requires cash.

The next step is to document work flows and job expectations. Expectations (rather than descriptions) define what you expect a person to produce. This leads to better management, fewer crises and a more organized company.

Would you like to Learn More?

Call me. 203-775-6676. I’m on eastern time. Or shoot me an email: john@betterceo.com.

Let me know what questions you have and we’ll see if it makes sense for us to work together.

Which instrument do you play best?

Would you like to Learn More?

Call me. 203-775-6676. I’m on eastern time. Or shoot me an email: john@betterceo.com.

Let me know what questions you have and we’ll see if it makes sense for us to work together.

That means you need systems and managers in place to deal with the ongoing operations and keep them up to the standards that have got your company where it is. In other words, the wisdom and experience that you’ve developed can’t just live in people’s heads. It has to be transferred throughout the company.

The way to do that is by having standardized processes for routine tasks. This must be done in a way that doesn’t burden people with needless bureaucracy. You should also allow for new ideas to arise and be incorporated into the systems quickly.

But what about your job? As CEO you’ll now have time to focus on the more strategic aspects of growing the company.

• Looking toward new products and new markets
• Deepening relationships within your industry
• Improving relationships with vendors

Programs I have that help with this include:

• Coaching to focus on building your CEO Skill Set.
• 48 Point systems assessment to determine which systems in your company are functioning well and which need shoring up.

Would you like to Learn More?

Call me. 203-775-6676. I’m on eastern time. Or shoot me an email: john@betterceo.com.

Let me know what questions you have and we’ll see if it makes sense for us to work together.

There are 4 kinds of small companies. What makes them different is the potential scope of the business and this is defined by business model and the owner’s goals.

• Lifestyle & Legacy Business. These are the companies that 50% of Americans work for. They usually have fewer than 100 employees (most have way fewer).  They range from a Mom & Pop storefront or janitorial company started to put food on the table to construction companies or manufacturing plants that become a legacy of wealth for future generations.
• Scalable Startup. These are the companies that founders hope will become the next Google, WalMart, or Ford.
• Large Company Entrepreneur. These are skunk works or other protected enclaves in a large company carved out to protect them from the bureaucracy of the large firm so they can start something fresh.
• Social Entrepreneur. These companies are in it to make money, but are started with a vision to improve the world. They often focus on ecology, social justice, or empowering the poor.

To get over the hump of being a start-up it’s critical to know which kind of company yours is. Then develop a plan to raise money and scale in the most appropriate way.

Programs for Start-ups

• Finding your Business Model Using Customer Development / Hypothesis
• How to Pitch to Investors
• Devil’s Advocate. If this is your first time or you’re starting with only an idea and some passion, this two hour session will tell you what you’re in for. It may keep you from losing your shirt.

Would you like to Learn More?

Call me. 203-775-6676. I’m on eastern time. Or shoot me an email: john@betterceo.com.

Let me know what questions you have and we’ll see if it makes sense for us to work together.

Technology Risk

This is the risk that your product won’t work. This is why drug companies say they need such high prices: because it costs to much to find a new drug that works. This is also why some things can only be accomplished by non-commercial organizations. No sane board of directors in the 1960′s would have let their CEO bet company money on sending a man to the moon. But it was a great thing for government to invest in. For economic as well as other reasons.

Market Risk

This is the risk that enough people won’t want to buy it at the right price. MySpace is currently experiencing this problem right now. The price is FREE and yet they just announced a lay-off of half their employees. Why? Even at FREE not enough people want to buy it. They prefer Facebook.

In some ways these two risks are opposite ends of the same line. The cure for cancer is entirely technology risk with zero market risk. If you can make it work, people will buy it. Making a video game, however is the opposite. There’s no doubt you can get the technology to work. The entire risk is in the market.

The web has reduced technology risk for a lot of new ideas. It’s now cheaper and easier to build things that people could barely conceive of  a few years ago. FourSquare anyone? But that has not eliminated market risk. This is what makes the Customer Development Methodology so powerful. You start early in the process to connect with customers so you don’t waste time building something people don’t want to buy. And you learn quickly how to sell to them.

Management Risk

This is the risk that even with a technology that works and people who will buy it, management won’t find a business model that makes a profit or won’t be able to execute on that model, or scale the company properly. It’s common that inventors often don’t make good CEOs (and vice versa). One is all about technology and one need to focus on running the company.

A key to minimizing this risk is first to understand that being a CEO is a definable skill. And that being a CEO of a start-up is a different skill than being CEO of a growing company. Experience helps here as well. Experience on the team, experience in your board and experienced advisors. Don’t shy away from asking for support.

Even large established companies are not immune to this risk. It’s what led to the need for General Motors to need a bailout to survive. They had a sizeable market, wonderful technology, ample capacity but for decades management just couldn’t put the pieces together properly.

Deal Risk

This risk is to the investors. The risk is that the technology will work, people will buy the product, management will run a profitable company, and you still won’t make a good return on your investment. Maybe there won’t be an exit. Maybe the deal will be structured so that only some of the investors make money.

There are different types of investors and investment vehicles. Be sure to pick the right ones so everyone’s goals are aligned as much as possible.  Of course bootstrapping is one way to go – without investors you don’t need to make deals with them. I’m a big fan of bootstrapping. But there are occasions when not taking on investors slows your growth and that can open up the risk that a competitor will get exploit the market before you do.

We must respect the other fellow’s religion, but only in the sense and to the extent that we respect his theory that his wife is beautiful and his children smart.
– H. L. Mencken

We all love our own ideas. But they are not as valuable as we think. If you try to raise money from investors based on the strength of an idea, you’ll quickly see how little the market values ideas.

Business idea from xkcd.com

Many of us have had the experience depicted in the cartoon. If you read about the history of almost any technology, you’ll find that many breakthrough ideas occurred to several people independently around the same time. I think 5 people lined up behind Alexander Graham Bell to patent the telephone.  Leivnz and Newton are usually both credited with the invention of calculus. Charles Darwin had delayed publishing his “Origin of the Species” because he feared the repercussions, but changed his mind when it looked like someone else had come to the same conclusion and would publish first.

The market values the action, products, sales etc that comes from ideas – but not the ideas themselves. And usually when ideas get loose in the real world, they don’t survive unless they change, adapt, morph, evolve etc. It’s the result of the changed idea that produces value.

Takeaways:

• Make it easy for your ideas to get tested in the real world.
• Be ready for them to change, evolve or even die.
• Don’t worry – there are more where they came from.

I think one thing that contributes to this phenomenon is that while business people are very innovative when it comes to products, they often focus too much on the traditional and the short term when it comes to politics.

I posted four years ago that typical pro-business political positions are often bad for business because they are short sighted. In my experience working with business owners, lack of strategic planning is something they are almost always “too busy” to do, so it doesn’t surprise me that this problem expends to their politics.

Today Seth Godin writes a post with a similar conclusion – though Seth adds some more profound insights as he usually does. One interesting line from Seth is “At some point, a healthy and fairly paid community is essential if you want to sell them something.”

A business transaction must be considered as something that benefits both parties. I get what I want by selling you something that you want. And the result is not a zero sum game, but a bigger pie for all. Political forces, must take that into account to provide for a stable business environment. If I vote for policies that benefit me now and never consider you or the future then my business may prosper in the immediate but that prosperity will be short lived.

Before you vote, ask the candidates what their policies will do to ensure a healthy, prosperous, and stable market for your company, not just what effect it will have on your tax rate.

Takeaway:

• For long term business success, political policies must focus on the customer (aka markets) not just immediate cost cutting.

If you run an American business, check out this guide to the new Health Care Bill. Thanks to Andrew Tobias for pointing it out.

If you have fewer than 50 employees, you may be able to get a tax credit to help pay your health insurance.

Now that the bill has passed, the furor seems to have ended, but the problem is far from solved. I believe the new bill is a step in the right direction, but we must continue to think about this problem and work toward a better solution, so here are some thoughts.

The last though is one I’ve not seen anyone else talk about. Ever. But I hope you’ll really click through on #8.

1. Insurance is a way to spread the financial burden. Don’t be mislead by advertising hype that insurance “protects” you from anything other than financial consequences. Auto insurance does not protect your car or your safety. It just spreads the financial burden of a crash among those who pay for insurance and never have a claim. So the more who pay, the more fairly the burden is spread.
2. Insurance, like any free and fair economic transaction, requires that neither side be privy to what economists call “informational asymmetry.” That’s why, if you sell your house in most states, you’re required to disclose if there’s been mold, or the basement floods.
3. If either side is able to adjust the deal after the fact – like insurance companies reducing coverage after you get sick – then it’s not really spreading the financial burden, it’s taking unfair advantage of the other side.
4. From an economic point of view, one of the most ridiculous aspects of health care in the US is that it is tied to employment. I understand the history of why this happened, but that doesn’t make it good policy. It basically keeps people in jobs (or out of jobs) for reasons that have nothing to do with them or their job. And that makes it harder to run a business.
5. It also keeps people from leaving their job to start companies and that’s bad for the economy.
6. It puts small companies at a disadvantage to big ones because any administrative function or cost that must be amortized over 15 employees is more burdensome than one that can be amortized over 1,500 or 15,000.
7. It puts American companies at a disadvantage to firms in other countries where health care is not a line item on a company budget.
8. Americans are getting ripped off by the system. Check out this post. And click on the graphic. It blew my mind. This makes me believe that we could solve the problem entirely at an over all cost savings – system wide. Many others are doing it with better outcomes for cheaper. So it’s obviously possible. The problem is that the savings would not be universal. Some would pay more than they are now even though on average, all would pay less. Unfortunately, our legislative system is organized so that those that would pay more have much stronger clout than those that would pay less.
9. Sick people are bad for business. If your customers have to choose between paying for pills and paying for groceries, they won’t have a lot of money to spend with you. If your employees are in a similar situation, they won’t be their most productive. I know most people’s situations are not that extreme but I think the point still holds.

One of the biggest challenges I deal with in helping people improve their companies, is changing beliefs. All of my clients are successful and what they’ve done (based on their beliefs) has gotten them where they are. But many times what got us here, won’t get us there – wherever we want “there” to be. And facing up to that reality often requires real courage. I think health care is one of those situations.