Lessons from Aircraft Carriers

If you watch a movie involving aircraft carriers, you may have noticed this. On the carrier, the crew are wearing different colored jackets. Some of the crew are wearing blue, others yellow, others gray. Watching more closely, you’ll notice that each crew member interacts almost exclusively with other crew members wearing the same colored jacket as himself.

Each crew member has a given piece of responsibility. She must trust the rest of the crew to do their jobs properly, just as they must trust her to do her job properly. Somewhere further up in the hierarchy, there’s one person in charge, who knows what each person is doing. On the deck, however, each person has tunnel vision, focused on their own tasks, and trusting that other people are doing their tasks.

A business is like this too. At the top of the chain is one person who knows what’s happening in the company. Smaller tasks get delegated down the chain, until they end up in the hands of the person who is going to do the work. Each worker must focus on their own tasks, and trust the people around them to do their tasks.

What should you not be doing? Unless you’re the person at the top, you shouldn’t be trying to oversee every piece of work being done around you. While there are certainly many successful people who do manage every aspect of their businesses, it does not foster strong businesses.

That’s not to say you should turn a blind eye to what’s happening in your business. But if you give someone a task, to some extent, you need to trust them to do their job, while they trust you to do yours.

Five Stories – One Lesson

The finale for Season 5 of Dragons’ Den was devoted to the 5 constant figures in the Den, the five Dragons. The show was titled Path to Riches and went through the story of how each Dragon reached their current success.

What was especially fascinating about the show was that while discussing 5 unique stories, they all contained a single common lesson.

  • All five Dragons came from modest roots.
  • All five Dragons worked hard to get to their current positions.
  • All five Dragons had to rely on themselves.

Brett Wilson talked about his roots with family, how at one point, he let his family take second place to financial success, and learned the hard way why a person shouldn’t do that.

Arlene Dickinson talked about her roots of growing up in poverty, being a single mom with 4 children, with no formal education or training. She earned her way to the top of Venture Communications.

Jim Treliving and Kevin O’Leary both talked about the downside to working for someone else, not being in control of your own destiny.

Robert Herjavec talked about family values, and how you don’t get a free ride in life.

If you’re planning on pitching your business to the Dragons, you should really watch this episode. If you wonder why the Dragons act the way they do, the answers are all here. The key points, though, are that:

  • You have to believe in what you’re doing
  • You have to have worked hard to get to where you are
  • You have to know what your business is about

Besides that, you also need to know the following, which will help you get closer to a deal:

  • What is your company’s current financial condition (get out that balance sheet)?
  • What were your revenues in the past?
  • What are your projected revenues, and how did you figure that out?
  • Who would buy your product?
  • Who are you competing with?
  • Why does anyone care about your product (this goes back to the first point in the previous list – you have to believe in what you’re doing)?

Anything for a Buck

What would you do for a dollar?

This question was put to me the other day, and made me think about how a business grows. To answer the question, I started by looking at what I used to do for money and what I currently do for money.

I used to accept money for anything that occupied my time:

  • Write something for you? $20 per hour.
  • Tutoring? $35 per hour.
  • Teaching? $50 per hour.

I settled down. I have a full-time job. I do some consulting. I do some programming.

  • Review your online presence? $200.
  • Custom programming? $50 per hour.
  • Plan technology strategies? $75 per hour.

Is this a way to grow a business? Not really. If you look at what I’ve been doing over the last few years, I’ve been all over the map. I’ve charged a variety of fees over time. I’ve done a wide variety of tasks. I rarely turned down an offer for some work.

A business doesn’t advance that way. In a well-balanced business model, there are certain core aspects to what the business does. Everything else becomes secondary to that. When asked about what your business does, you should be able to state that in one or two sentences.

I help small businesses acquire appropriate technology so that the business can grow sustainably.

That’s not complicated. What might be complicated is how I do that.

  • I buy hardware and software
  • I write custom code
  • I build web applications
  • I help with marketing and branding
  • I establish social media outlets
  • I develop technology infrastructure

However, all those tasks are secondary to my clients. I don’t get hired to write a web application, but to solve a problem.

Perhaps the client needs a custom scheduling application to coordinate his 25 employees. I’ll look to see if there’s a solution already out there that I can buy. If not, I’ll arrange to have one built. Maybe I’ll build it myself. To my clients, that’s not relevant. What’s important is that when I’m done, they are able to coordinate their employees.

In your business, what defines your services? What value do you offer your clients? Are you accepting work to earn a buck, or are you accepting work to grow your business?

The Network Reaches Completion

In any given day, I spend in excess of an hour working on my networks. Some of that time is spent on this site – writing articles, responding to comments. Other time is spent talking to colleagues to keep up-to-date on what’s happening around me. I visit a variety of sites (see my list of sites for more information about which sites I visit and why).

I’m constantly reaching out to others, probing for information and strengthening ties.

Then I met the right person, and suddenly, I truly understood why I put in all this effort into growing and maintaining my network.

I’m jumping ahead of myself.

I’ve been consciously networking for a little over a year. When I went to my first event, I was excited about developing new relationships, and wrote an article describing the experience. Since then, I’ve attended several other networking events, and pretty soon, the novelty began to wear off. I still thought I understood why I was putting in the effort, but I wasn’t seeing the rewards. I started getting discouraged, that my efforts were for naught.

Perseverance is one of the keys.

Knowing what you’re looking for is another.

Fortunately for me, I did persevere, continuing to reach out despite not seeing the hoped for results. I wasn’t being called after each event with requests for my time. New clients were hearing about me from old clients. My referral network was strong, but my new network? Silent.

Then, late in 2009, I started getting contacted randomly from readers of my site. I then understood why it took so long to hear from them – it took almost a year to establish credibility. The comments of Chris Brogan and Julien Smith in their book Trust Agents (link to review) were started to set in.

My site was starting to pay off, but what about the hours spent on LinkedIn? What about the time spent meeting other consultants? When would those start to pay off?

I met Susan Varty, the most recent piece of the puzzle.

After being featured in the AdviceTap newsletter, Susan reached out to me to connect, and a few days later, we were sitting down to discuss our businesses over coffee. Susan is a writer, and as her site says, she helps you finish your writing projects. While her actual business has diversified from there, it still remains her core focus.

The conversation we had gave me a lot to think about, from adjusting my consulting rates (Susan felt that I could easily double my rates) to potential sources of new clients. As I left the meeting, though, I continued to think about what we had discussed – how our business constantly evolves, how we recognize new opportunities. Tied in with this was the work I’m doing for one of my clients, assisting in developing a complete technology infrastructure for his business, and which I had been mulling over for the last few days.

I put the two together, and am now working on a new direction for my business. I’m developing what I’ve tentatively called the Small Business Technology Kit which will contain the various hardware, software, systems and processes that small businesses need to grow and expand.

Susan provided me with the target market. Jeremy warned me about the limitations. Ron gave me a concrete example of the applications.

It was my network that provided all the pieces. I just put them together.

It took over a year to get the right set of connections to figure out where I want to take my business. It took people I met in a variety of places – family, friend, networking sites, events, bloggers. But when all the people were there, I knew what it was I was trying to find, and it appeared.

Sometimes the answer to what are you looking for? stays hidden until you find that something, and then you know that you were looking for that all along. But the sooner you recognize what you’re looking for, the easier the search will be.

Digital Network

This post is a little different than usual. I’ve just taken inventory of my online presence, and wanted to share it with you. Each network or site has strong points, and weak points. I’ve tried to adapt each so that I’m getting as much benefit out of it as possible, and would love to hear how you make use of each of these sites (or others not mentioned here that you think might be useful).

  • Facebook – this is primarily where I keep in touch with family and friends online. While I promote my business there as well, I consider it to be more of a social than professional environment.
  • LinkedIn – my business profile, where I look to establish new connections. My time on the site is spent answering questions and participating in various groups. I keep my profile up to date, and encourage my clients to find me there.
  • Twitter – a news feed over which I have limited control. I try to interact a bit, but mostly, I’m watching, looking for trends, interesting articles, and active news.
  • Google Reader/Buzz – I use this to follow what others are reading. Similar to my use of Twitter, except here I can apply better filters by person. I also pull in various RSS feeds here to provide me with reading material when I have the time.
  • Answers.onstartups.com – curious to know what other start-up owners are asking? Check here. I’ve asked questions, and try to provide as many answers as I can.
  • AdviceTap – a small network of consultants, this site is dedicated to issues and questions that consultants of various types face. As I do consulting, this site provides me with valuable information and questions that I can use to further my own business, along with valuable connections.
  • Sprouter – a network devoted to entrepreneurs, this site has a really high ratio of quality content to noise. Again, like Twitter, I try to watch and listen for what others are talking about.
  • Blellow – a varied network, I haven’t really nailed down how to use it for my business, but it isn’t really a social network. So far I’ve gotten some technical answers, seen some interesting work.
  • Stack Overflow – if you’re in a technical position, this site will become a lifesaver. You can get technical answers in a matter of minutes that are specific to your particular scenario.

What sites do you visit for growing your network or your business? How do you find they help you?

Time for Work, Time for Play

I was reading a book to my daughter the other day, and the opening words struck a chord with me:

This was no time for play.
This was no time for fun.
This was no time for games.
There was work to be done/
The Cat in the Hat Comes Back by Dr. Seuss

Two kids, instructed to clear the snow from the sidewalk in front of their house, have their work interrupted by the Cat in the Hat, who just wants to have fun. In the process of having fun, he makes a mess of the house and yard, but at the end, of course, the snow is cleared, and the mess cleaned up.

Running a business is like that too. There are parts to the business that we like to do, others that we consider to be a chore. There are two ways to approach balancing the two portions of the business.

We can be like the two children in the book, segregating the work from the fun. We can try to do just the work or just the play. While this is often more efficient and productive in the short-term, it also generates a distaste for these required tasks.

On the other hand, we can be like the Cat in the Hat. We can try to have fun all the time, and along the way, get the work done. While this tends to be less efficient, it avoids creating a distaste for those chores.

If your business is large enough, perhaps this isn’t relevant. You can hire someone to do your chores. Don’t like maintaining your books? Hire a bookkeeper. Don’t like writing newsletters? Hire a copywriter.

If you’re still small, though, you likely need to do many of these tasks yourself, because it’s not financially viable to hire someone for all these tasks. So, while it may be more efficient to do these tasks in batches (for example, spend one afternoon a week bringing your books up to date), doing a smaller amount throughout the week may avoid turning those tasks into chores.

If you want your business to succeed, you do need to work hard, but you also need to have fun. You need to enjoy what you’re doing, or you may find yourself neglecting certain tasks that will prevent you from seeing your potential.

So work hard, but don’t forget to enjoy the journey!

Million Dollar Deal with no Numbers

Caution: Spoiler Alert – visit Dragons’ Den on CBC to watch the episode if you have not already seen it.

If you are an entrepreneur, you likely know the importance of keeping accurate records, and that potential investors will be taking a careful look at those numbers before deciding to invest in your company. Apparently, someone forgot to tell James Krane and Ron Whittick to bring their numbers along when making their pitch – and it didn’t matter.

James Krane and Ron Whittick appeared on the March 10, 2010 episode of Dragons’ Den to pitch their business – Insect Defend Patch, which could double as a hang-over cure. It works by releasing Vitamin B1 into the skin, which acts as a deterrent to mosquitoes and other insects. As well, one of the effects of alcohol is a reduced ability to absorb vitamins, which does not affect the patch, which works by absorption through the skin.

Asking for $5 million for a 75% stake in the company, it would have been safe to assume that there would be impressive sales to back that up. Maybe there were, but James and Ron didn’t know what the sales were, beyond the fact that the company was, in fact, profitable. Their inability to show specific numbers meant that some of the Dragons, at least, were not going to be interested.

But not all the Dragons were scared off. Starting with Brett Wilson, then joined by Jim Treliving, an offer was made, despite the lack of numbers. From his perspective, due diligence would turn up the company’s revenues, costs, obligations, and so on. He was more interested in the idea, which, with the right marketing, could easily become a multi-million dollar deal.

The offer was for 75% of the company – for $500,000 in cash, and the balance of the $5 million to be paid as a royalty from future sales.

Shocking? Yes, but remember, we only see part of the presentation on the show. James and Ron may have known a lot about their product, and the company’s rights to the technology. While they may not have been able to justify a valuation of $7 million, from Brett’s perspective, they merely need to earn $500,000 for him to recoup his investment (after paying the royalty), and the applications of their invention certainly have that potential.

If you’re planning to pitch your idea, it may not be that important to know your numbers at the first presentation. What you need to be able to present is the viability of the product as a business, and that it is making money (even if it isn’t much at the moment.

The Most Important Client

You never know where your next lead will come from.

In any business, there is always the dream client or customer. While the precise details of what constitutes such a customer depend on the exact business, there are a few common factors:

  • The profit margin is high
  • The value of the contract or purchase is large
  • The risk is low (i.e. the customer will pay promptly and the work itself is low-risk)
  • The visibility of the work is high  (i.e. you’ll get good PR from it)
  • The customer is easy to deal with

Often, such a customer can stimulate the growth of a business. These are the customers you want. The only questions you have are:

  • Who will the customer be?
  • When will the customer first show up?

Unfortunately for you, there’s no way to know the answer to these questions in advance. That means that any customer or client you work with could be or become your dream client. Or, any of your existing customers could refer your dream client to you.

However, while you might consider a particular customer to be the most important, the truth is, it’s your dream customer that’s the most important to your business. Therefore, you need to treat all of your current customers as though they were the path to your dream customer, because any one of them might be.

Even when you think you’ve determined who your dream customer is, you still need to treat the rest of your customers the same as your perceived dream client. When your dream client has moved on, or you’re ready to expand and grow your business again, you will once more need to rely on the relationships you established by how you treated your clients to facilitate that growth, and to find your next dream client.

Make sure you treat all your customers like gold. It’s possible that one of them is holding the pot at the end of the rainbow.