Chapter 8 Mastering networking ... and the hand-off

While networking at a MeetUp.com group called BarCamp (no, it is not a drinking group), I met Sara Hand, co-founder of BarCamp and Spark Growth. Sara seems to know just about everyone in the area, or at least way more people than I know.

When I asked to interview Sara about networking for my podcast series, Been There, Done That! with Dennis Zink, she enthusiastically accepted. What follows are excerpts from that interview on a topic that should be of interest to all small businesses:

Q: Why should someone network?

A: Networking is about increasing resources, about connecting to sources of energy, sources of information.

Q: How effective can networking really be?

A: For a lot of people, networking is not effective at all. My goal is to build relationships with other people who have similarly aligned interests that want to make a difference in their community, that want to grow their business. ... I'm looking for people that have purpose.

For me, networking has been one of the most important things that I do.

Q: What would you consider networking with a purpose?

A: It's really understanding what your goals are. If you know what your unique value proposition is as a business, and you know who you best serve, then I'm looking for prospects. I know that everybody is not my prospect, and that's OK. I'm looking for people who could be referral partners or strategic partners. I'm looking for centers of influence, people who understand the value of networking. I'm looking for several different things.

When I go to an event, if I make three to five really great connections, that's it. Anything above that is extra. I'm not trying to meet everybody.

Q: How many people do I need to know as a networker?

A: I guess it really depends on how well you know people and how well you stay connected. I think when you go to a networking event, if you aimed for any more than three to five, you'll simply come away with business cards.

If you don't know who the person is and what makes them uniquely valuable and how that's the same or different from you, if you don't have a story about who they are, then you're wasting your time.

Q: What do you think of a business leads exchange group where they exchange business cards? Do you see a value in that?

A: A leads group where people are just handing leads and they're all about the number of leads that they can give and they're not trying to qualify those at all -- time is short. Just because I can doesn't mean I should.

I'm not looking for another hundred leads. I'm looking for things that are referrals or endorsements. I think that's key in networking, because we have lots and lots of information, but there's a difference between information and insight and how we approach problems, and I believe there's a difference between leads and referrals or endorsements in where I'm going to spend my time.

Q: Where are good places to go to meet people?

A: There's a lot of community initiatives that I think people miss. A lot of times, people are so focused on their leads groups, BNIs, chamber events -- those types of events, and they miss the community initiatives, like the one that we've run with BarCamp, Sarasota-Bradenton.

SCORE puts on some great events that are not necessarily networking events per se, but there's great networking there because, depending on what the topic is, you have people in a room that have similar interests.

You want to look for places where the types of people who you want hangout, people who have similar interests or people who have the same interest or the same characteristics that your prospect has.

You may look at groups that are focused more around business.

Q: What do you do in the circumstance where you get in front of somebody and they just are talking your ear off, and you just can't get away from them?

A: There's a technical term called a hand off. You graciously introduce them to somebody else, and if you have to excuse yourself to go to the restroom, that's kind of the last resort.

Q: Are there one or two thoughts as a take away?

A: I would say, be focused. Know what it is that you want to do. Know what it is that you want to accomplish, and be real.

Take the time to find out what makes somebody special. You don't have to go to coffee with everybody. You do have to listen.

Focus on what somebody is saying and not what you're going to say next.

Chapter 9

Why business plans come in two flavors

Published: Monday, April 28, 2014 at 1:00 a.m.

Will a business plan ensure the success of my small business? If I don't need financing, why do I need a business plan?

Isn't it true that most of these plans reside in a desk drawer or file cabinet, never to see the light of day?

I posed these and other questions to Richard Randolph, president of Florida Creativity Centers, Home of Practical Creativity in Bradenton. Richard is an expert on traditional business plans and the Business Model Canvas.

Business plans have two purposes -- thus, two different versions.

The traditional, lengthy one with all the details is used when you need to present to a potential lender or investor. This should include everything, including your marketing plans, operating plans and financial details.

The other plan is for internal purposes. It is a shorter document to keep you and your team aligned on purpose and priorities.

Creating a business plan greatly increases your chances of succeeding in your business. Doing this homework for your company forces you to think things through. For example, do your assumptions make sense?

A comprehensive business plan will help you answer many important questions. You'll have to do a lot of research, there's no way around that! But the more variables you consider, the greater your chance for success.

So why doesn't everyone do this?

There are several reasons, the most obvious is that creating a business plan requires lots of tedious and time-consuming work. Maybe you don't know where to begin, or you just don't understand why a plan is needed in the first place. (Some people may be lazy or complacent, but not you!)

Perhaps you should consider the alternative approach, the Business Model Canvas.

Initially proposed by Alexander Osterwalder in 2008, the BMC "is a strategic management template for developing new or documenting existing business models. It is a visual chart with elements describing a firm's value proposition, infrastructure, customers and finances. It assists firms in aligning their activities by illustrating potential trade-offs," according to its Wikipedia entry.

According to Randolph, a BMC offers several advantages for a new venture.

It allows you to see the big picture -- it's like the picture on the outside of the 1,000-piece puzzle. It helps you determine how the pieces fit together.

It allows you to be creative in how you approach the marketplace. Do you want to be like everyone else in your industry, or is there an innovative opportunity to be different? You can test various approaches before you commit your resources.

It helps you identify your hypotheses -- those guesses and assumptions you're basing the business on -- so you can test them quickly and inexpensively. You can find out what really works in the marketplace and what you thought might work but doesn't resonate with customers. It helps you explore ways you can pivot your business to achieve greater success.

If a typical business plan is 40 or more pages, why is the BMC only one page?

They are two different approaches. Think of BMC as a photograph, and a business plan as a written description of the same thing. A picture is worth a thousand words.

What is the structure of this single page plan?

The BMC's one-page diagram has nine cells: Customer Segments, Value Proposition, Channels, Relationships and Revenue Model comprise the left side of the canvas (the customer-facing side of the business) while the right side includes Key Resources, Key Activities, Key Partners and Cost Structure (the "behind the scenes" part of the operation).

What is pivoting? If you ask any successful entrepreneur how their business evolved, they will almost always tell you that the business started off in one direction that didn't work out so well, but something different -- often even unexpected -- did work, and that's how they became successful. You do what works.

The switch from "what you started doing" to "doing the new, somewhat different thing" is called a pivot, taken from basketball. You keep one foot planted (in your vision or core idea about who you are) and move the other foot (do something different or do something in a different way).

It's a process of learning and growing and changing to discover and deliver what customers want.

A quick way to learn about the BMC and how to build your own is to watch a YouTube video entitled "Business Model Canvas Explained," at http://bit.ly/htbmc.

If you'd like to explore further, email me at centreofinfluence@gmail.com and I will send you more links.

I HAD THE OPPORTUNITY to hear Justin Su'a speak at a recent Breakfast of Champions meeting sponsored by the Lakewood Ranch Business Alliance.

According to Justin, head of mental conditioning at IMG Academy in Bradenton, "Where the mind leads, the body follows." He provided three strategies to develop and sustain the high-performance mindset of world-class athletes, Olympians, military personnel and successful business professionals. To develop confidence, do the following:

Master your self-talk. Stop listening to yourself and start talking to yourself. Don't believe negative thoughts that may permeate your thinking. Talk positive to yourself.

Develop a bounce-back plan. Use adversity as a chance to improve. The important thing to remember is that no matter how hard you get hit, you need to keep moving forward.

Flex your optimistic muscles. It's easy to be negative; instead, focus on what you did well today.

How do you develop this mindset of success?

Some of the best advice I received on this topic was from Earl Nightingale, through a Nightingale-Conant motivational series called "Lead the Field." The key message for me was the need to develop the habit of doing those things that unsuccessful people don't do.

An exaggerated, humorous example of this was portrayed by the Seinfeld sitcom character George Costanza, who admits to being a loser and decides to do the exact opposite of every instinct he has, which, of course, helps him to succeed.

Suddenly "opposite" George finds himself getting incredible dates with beautiful women and succeeding at everything he does.

Most people are not willing to pay the price of success. It generally takes a level of commitment very few will make.

To better understand the business mindset of success, I posed the following questions to Justin.

They have the growth mindset: Performance is a journey, and they want continuous growth.

According to Carol Dweck (Stanford University), the fixed mindset is represented by people who fear failure, don't like to do the hard things, and don't like to review feedback.

The professional athlete is always looking for coaches to guide them in the different facets of their lives. This can apply to business as well as athletics.

Attention to detail -- The elite athletes are very focused on the details. They do the mundane, boring things that most people say: "I don't want to do that!"

Ability to focus on what they can control: As Bubba Watson said when interviewed after the Masters, he had to tell himself: "One shot at a time."

These principles are the same across different fields.

Clarity of roles is important. Great athletes know their roles, they know their team mission, and they know what their job is.

The culture conducive to key performance of the team is shaped by four stages: forming, storming, norming and performing.

Forming -- where you hire, make trades, assemble the team.

Storming -- getting used to each other.

Norming -- accepting each other and your role on the team.

Performing -- developing trust; you go out and do your job, and you have each other's back.

Q: How do you pick yourself up when you suffer a big defeat?

A: We all tend to do catastrophizing (making a mountain out of a molehill). I recommend three things for someone who has hit rock bottom:

Train to change the way you look at things. Easier said than done, but look at things through a different lens. How can the situation make me stronger, and what can I learn from the situation?

Focus on what you are going to do about it now. Don't focus on what has happened.

Quickly revisit your motivation.

After finishing this column, I went out, played tennis, took a bad fall, and broke my right leg. The X-ray now looks like an erector set, with eight screws.

My new mindset and focus will be on writing more and asking friends to drive me to important meetings. I hope you enjoy your week more than I will.

By the way, I did make a winning shot.

Justin would approve.

As an employer, I have compensated employees or independent contractors with salaries, hourly pay, commissions, bonuses, time off, extra vacation time, work per piece, a set amount for x, profit sharing and stock. I have mixed and matched salary plus commission, more of one, less of the other, in a see-saw attempt to provide the right incentive for accomplishing what I needed done.

If an employee was willing to bet on themselves in sales, willing to take a smaller salary, then I was willing to pay a larger commission for results. Sometimes, I paid on activities performed: Calls made, phone numbers dialed, people seen face-to-face. My hopes were that if specific activities were performed, the desired results would be achieved.

I came to the conclusion that every job was only worth so much. The true measure of pay should be based on the replacement theory. Simply stated: If the employee got hit by a truck, quit in the middle of the day, went to lunch and never came back, fled to Mexico, or whatever, how much would it cost to replace this person? All else being as equal as possible, finding and hiring someone with similar experience, education, ability, background, work ethic -- the variables are endless, but it comes down to having a job that needs to be filled by someone who is capable and willing to do it. End of story. Case closed. Period.

The dichotomy is this: The employer wants to get the job done the best it can be done, in a reasonable time, for the lowest amount of money; the employee wants to do a good job and be paid the highest possible amount for his combined level of experience and education.

His favorite FM station is WIIFM: What's In It For Me. It is only through negotiation (in the absence of a gun to one's head) and compromise that a mutually agreeable deal is reached.

An obvious problem and political football is the current hoopla over paying "a living wage" or a minimum wage that might or might not be a living wage.

If an employer can hire someone for a specific job and get someone for the minimum wage, chances are this person is either very young, just entering the work force, very old, re-entering the work force, uneducated or with little to no experience. If this low-level job can be filled for $8.00 per hour, meaning there are takers, then that is what the job is worth. No more, no less -- give or take a wee bit of negotiation.

At this pay grade, this employee is no doubt going to struggle just to get by. Paying for the basics, such as food, clothing and shelter, will be a challenge, let alone covering transportation and health care. What if this person has a spouse, children and/or parents to care for? They are up a creek without a paddle.

Whose fault is this? Society's? Yours? Theirs, because they did not get a good education, for whatever reason?

Should the employer pay more because it is the right thing to do? What about the stockholders, the owners of the business? Right for them may be wrong for the employee, and vice versa. If everyone is paid more, will prices have to increase to the customers? Will the company's profits be eroded? Will inflation be increased?

This is a financial tug of war. Are we really talking about income redistribution?

Now, let's look at the higher end of the pay scale, where more variables must be considered. Will I tend to get a better employee if I pay more? If you do your HR homework, you will see that there is a strong likelihood that the answer might be yes.

Now for the $64,000 question: Should there be a maximum for CEO pay? What kind of dis-incentive might this have on business? At the same time, for those people who make millions, is it just a way to keep score? How many homes do they need?

A business-savvy friend once told me, "Hire the best you can -- they will always find a way to make you money." Yet I can recall plenty of times that I overpaid for people who were a bust.

Perhaps the key is to hire slow, fire fast -- though most of us do the exact opposite. Using hiring tools or head hunters might improve your results, but there are no guarantees.

Will you get better employees if you pay more money? Sometimes yes, sometimes no.

Please let me know your experiences with hiring for possible inclusion in a future column.

AS A SMALL-BUSINESS owner, it is extremely important for your business to be profitable. In fact, the money made in a business after all costs and expenses are paid should be the single most important focus for your business success.

This might seem obvious, but here are some specific reasons why this is true:

Rule No. 1: Without profit, your business doesn't continue to be in business. Sure, if you have a start-up, it may take a while before you are profitable. But, ultimately, you must be profitable to continue to operate.

Rule No. 2: Cash flow is not the same thing as profits.

Cash flow is the life blood of your business. When you are out of cash (blood) your business is dead. You can usually stretch paying some bills to achieve positive cash flow, but if this gets out of hand, it may be a forewarning of impending demise.

Rule No. 3: There is no talent needed to lose money. Anyone -- yes, absolutely anyone -- can start and run a losing business. Some people are really fantastic at losing lots of money. (These people also may be experts in hope; see Rule No. 4.)

Rule No. 4: Hoping will not affect your profits. Doing the same thing over and over and expecting a different result (hoping) is how Einstein defined insanity.

Rule No. 5: Sooner is better than later, but later is better than never. The sooner you can put your business on a trajectory toward profitability, the better. It's easier to dig out of a shallow hole than a deep one.

Rule No. 6: A manageable amount of debt can be your best friend. Generally, no debt is better than some debt, but sometimes you absolutely need a manageable amount of debt to grow your business. The penalty for lack of capital may be slow growth and missed opportunities.

Rule No. 7: A business without profits will eventually fail (when the cash runs out). Profits are the raison d'être (reason for being). Why be in business without a goal of being profitable? While it is true that Amazon has never been profitable, this is a totally different scenario than for a small business.

Rule No. 8: A business without profits has little value. (See Rule No. 3.) Since anyone can start a losing business, and there is no talent needed to do so, why would anyone in their right mind pay more than a token amount for your good will, should you want to sell your unprofitable business? Stale inventory is also going to be worth less than you paid for it. Any potential buyer will realize that it may be a lot easier to start fresh and build a good reputation, rather than buy a failed business and attempt to turn it around.

Rule No. 9: Profits ideally should increase consistently and annually. There are some exceptions, but generally this holds true. Financial dips encountered in pursuit of new product introductions could be an exception.

Rule No. 10: Increased equity should be your focus. You can make money two ways. Cash flow paid in your salary and owner benefits, or realized equity paid upon a sale of some or all of your business assets.

If you are in a cash-rich business -- a wonderful scenario -- you should leave enough money in your business for working capital, to pay expenses and to manage debt payments (such as leases), and either take most of the excess in distributions or use it to initiate a strategic growth plan. This might include paying the troops incentive pay for achieving the goals that got you to the promised land.

Rule No. 11: When it comes time to sell, a buyer ideally wants a company with stair-step annual growth, whose profits have been aligned and managed well.

The selling price will be an agreed upon multiple of your most recent year's profits. A buyer buys the future potential but wants to pay for it at last year's prices. A seller wants to sell the past (financials provided) and receive equity for the future profits and prospects of the business.

Rule No. 12: A deal gets consummated only when both parties agree, usually somewhere between the buyer's and seller's prices, often at a multiple that is common to that industry.

Some final thoughts.

If you are thinking about selling to your competitor, there are pros and cons to doing this (which will be covered on another day). If you are considering selling or passing the business to your children, this should be carefully thought through.

Do your children really want to be in this business? Owning and eventually realizing equity from selling a small business is truly one of the great wealth builders in this country.

Operating a small business you enjoy can bring tremendous personal satisfaction to you and your family. But being a slave to a losing business is hell!

Do you know the difference between urgent and important?

When the phone rings, is it urgent that you answer? It could be your son, Robby, who needs you to pick him up after his tennis match. Perhaps it's a solicitor trying to sell you something you don't want.

The call may or may not be important. There is no way to know unless you answer.

Let's look at the definitions of these words. Urgent is defined as needing immediate attention. Important is defined as having serious meaning or worth, deserving or requiring considerable attention. Urgent represents an immediate need, whereas important things deserve significant attention, but maybe not right away.

That phone ringing may have seemed urgent because you didn't know who it was or what they wanted. It may or may not be an important call.

Okay, now that you know the difference, what does this mean to you?

Every event that happens on any given day may be either or both urgent and important.

You have a list of items to accomplish. Should you do those things first that are important but not urgent, or should you do those things that are urgent but not important?

If you are to truly be in control of your day, of your accomplishments and of getting things done that need to be completed, then do the following.

Make a list.

Next to each item, indicate U (Urgent) or I (Important) or UI (both Urgent and Important).

First, do those U items that will be viewed as important if you don't complete them, the UI items. (For example: Picking up Robby from tennis is something you better make sure gets done in a timely manner, whether you do it or delegate it to someone else.)

Next, prioritize the I items and work on these in order of priority.

Let your phone ring. Check it later in the day (once or twice a day should suffice for most businesses) and return only those calls that need more immediate attention (they are urgent).

Most things can wait 24 hours. After all, what if you were sick or at a funeral?

Do not be a slave to urgent.

If people are constantly at your door, asking you to sign things or interrupting you, then you are not going to be in control of your day. You will bounce around throughout the day, doing what others want you to do to make their day run smoothly.

Don't do it!

Your employees need to schedule a specific time of the day to meet with you to handle the tasks that are urgent for them but may not be urgent for you. Do not let their emergency become your emergency. With proper planning and respect for each other, this type of chaos could and should be eliminated.

You only have 24/7 like everyone else. It's what you do with these hours that separates those who get tons of things done versus those who wonder "Where did my day go?"

Here's how to prioritize.

Use a forced-choice prioritization method by forcing a choice between two items. This is the same method used when you have an eye exam and your eye doctor asks: "Which is better, this one or that one -- A or B?"

If you have three or more tasks to prioritize and do not know how to make up your mind, do this: Compare choice A to choice B; B wins out. Next compare A to C; C wins out. Last, compare B to C; C wins out.

Now you know that C is the most important item to complete first, because it won out over choices A and B. The second-most important item is B, because B won out over A. So, in this instance, your prioritized order is: C, B, A.

Do the first item, then the next most important one, and the next. You are now in control of your day. Doesn't that feel great? Afterward, you will look back and see how much you got done.

If you plan your work and work your plan -- on a daily, weekly, monthly, quarterly and annual basis -- keeping deadlines in mind, you shouldn't have to deal with putting out fires all day.

Your anxiety level should diminish. Your employees need to learn from you how to do this; they will be happier and less frustrated, and they will accomplish a lot more in less time.

At the end of your day you can sit back, relax and have a glass of wine. Red or white? Your choice. If you need help with this, please write me. My choice would be red!