Write It Down

It never fails to amaze me how many entrepreneurs fail to put things in writing and I’m not just talking about contracts. The act of writing down your ideas, documenting processes, writing a business plan, template sales letters and everything else forces us to view things differently than if we just “think” about them. The process engages different cognitive skills and parts of the brain which will in turn bring about new perspectives, ideas and realizations about what we are doing which we may not come to as easily, if at all, when we don’t write things down.

A few benefits of writing things down include:

1) Business continuity: Even if you are the business, it makes it easier to recall things, especially after an extended happy hour the night before.
2) Gaps in the business or process will be much more evident allowing you to fill them in. The single biggest “mystery” why your business is struggling may be right in front of you and documenting things may help you see it.
3) It gives you a chance to view your business from the top down from big picture to tactical details so it can become repeatable. How else will you improve your business and make it truly turn-key?
4) It shows investors and potential partners that you are serious about what you do.
5) You will develop new ideas in the process.

A few thing to make it easier:

1) Most of us hate watching someone thumb-tap away on their Blackberry at happy hour, but as an entrepreneur we have to be light on our feet and you never know when ideas will come to you so be prepared to tap them out in an email to yourself so you’ll remember later.
2) Use diagrams. The ubiquitous PowerPoint can be annoying and overused but there is an art to taking your complex ideas and processes and distilling them down so they can be easily understood by anyone (including you). It takes time but is worth it and by doing so you will often be developing your own intellectual property (IP) which can add a tremendous amount of value to your business.
3) Do it but don’t over-do it.
4) Leverage from others and learn from what they have done. Sometimes what you need is a variation on what someone else has done so look before you leap. You might just improve an existing process and give yourself a competitive edge with less effort to you.

There are a many other benefits and techniques but the point is to get the ball rolling. The biggest reasons we don’t do better with documentation is because we are lazy, it isn’t glamorous and it takes time. But if you are truly serious about your business you’ll find the balance between documenting as needed without letting it consume you and becoming a distraction from running your business. Writing things up is an essential part of moving from working “in” your business to “on” your business.

Tools of the trade: I have taken to documenting everything I reasonably can in MindJet Mindmanager. It makes the brainstorming, organization and distribution of notes, documents and almost everything else not only easy but (believe it or not) kinda fun. Not inexpensive but it will save you loads of time and really help you capture a lot of information in an easy, intuitive manner.

Using Market Forces to Your Advantage

In conjunction with a long time friend, business partner and physician, Dr. Brad Bichey, M.D., we recently released a whitepaper entitled “Using Market Forces to Drive a Competitive Edge.” While the paper is targeted at medical and life sciences companies, the principals can be applied to almost any business. When markets turn down belt tightening begins; it is in that down turn that we have the best opportunity to explore creative ways to market our companies. For small business, creative marketing techniques are often a necessity. We just don’t have the dollars the big guys do but in many ways, not having a lot of money to work with can be a blessing because it forces us to think of new and more efficient ways of accomplishing what we have set out to do. In the paper Brad and I briefly introduce the concept of using market forces that already exist to your advantage by restructuring relationships and leveraging the higher volume and higher ROI channels that are often overlooked. If you are interested in more read the paper and let me hear your thoughts on how you might apply the concept to your own business. If you would like to hear more about our ideas on applying this to your business feel free to reach out.

Start Up Business Tips: The Law

I recently had an opportunity to attend a breakfast meeting sponsored by NTEC (North Texas Enterprise Center for Medical Technology). The breakfast was an opportunity for start-ups and entrepreneurs to learn about the legal considerations when forming a new company, including the preferred types of corporations, handling intellectual property and being prepared for your exit strategy. I’d like to share with you just a few thoughts which came out of the presentation that you might find interesting. All of the main presenters were attorneys and even though NTEC’s focus is on Medical start-ups, the information was general and could apply to any start-up business. (Disclaimer: these are just some notes of mine from the breakfast, NOT legal advice. Depending on what you are doing your needs may be very different).

1) Before quitting your job review all relevant agreements with your current employer. Contrary to popular belief non-compete agreements ARE enforceable.

2) The type of corporation (LLC, LP, S-Corp, C-Corp, …) of course depends on your tax profile, risk profile and whether or not you will be seeking investment capital or an IPO. VC’s will prefer C-Corp’s but you will have to deal with the double taxation. Angel investors will prefer pass-through entities (S-Corp, LLP,…). Note, it is not difficult in most case to convert another type of corporation to a C-Corp when necessary. I personally use S-Corp and LP right now. I’ll deal with C-Corp when the time comes.

3) Unless you are doing business almost exclusively in or have a major client in a specific state, it is preferred to incorporate as a Delaware corporation. This particular consideration is particularly applicable to those who will seek funding, and IPO or to eventually be acquired through a ,mergers and acquisitions (M&A) transaction.

4) Stay away from boilerplate Internet incorporation and forms. Get it done right or you’ll end up redoing it.

5) Don’t use stock as currency to pay everyone you do biz with. Keep your shareholders as few as possible. It causes too many problems down the road.

6) If you have partners be very clear (document) who owns what and what happens if someone leaves (create capitalization table).

7) On the formation and exit of your company, ALWAYS use qualified advisers. Namely attorney’s, accountants and if appropriate an investment banker. They really will make your life easier and keep you from making mistakes that could be catastrophic down the line. They can also smooth out a lot of processes for you such as complex things like setting up your company for an IPO or protecting your IP. Don’t think you can do it all.

If you sell your company expect a portion of the purchase price to go to escrow (10% is standard). This is standard practice to cover additional expenses/legal matters that can come after the transaction. This protects you and the buyer.

Those are just a few things to ponder but should get you thinking. My advice (and I drink this Kool Aid too) is to hire professional, seasoned attorneys. Don’t make the mistake of thinking you can’t afford it. The truth is in this complex business environment and litigious world, you can’t afford not to.

If you are in Texas and need referrals on Corporate, Transaction or Patent attorneys feel free to contact me. I’m happy to make personal recommendations.

Killing the Killer: Complacency

I read a great story this morning that is somewhat true while inaccurate in it’s factual details. But for the purposes of this discussion the accuracy of the details isn’t what’s important (visit Snopes if you want to know more). Even as a fictional story it does an excellent job of illustrating how complacency can creep in and that we should continually question the “why” and the “way” we do things. If our end goal is to create a business that is efficient and repeatable so as to be low maintenance or easily expanded then complacency can become a killer particularly at the Established Stage of building a business.

And it’s not just businesses that suffer. The United States, despite it’s many obstacles has become the dominant force in the world though determination and innovation where nations that were once huge empires have fallen largely because of complacency, an issue that is quickly becoming a seriously problem here.

Even the best processes from time to time need to be re-evaluated for effectiveness and improvement. Take for example process geniuses McDonald’s. While they essentially do the same thing they always have, make burgers and fries, do you think the process for doing so looks exactly the same as they did in 1940? Of course not! It’s still an assembly line from cow to cardboard carton but a lot of things to bring you a burger have evolved in technology, transportation, testing and so on.

But back to our story, keep in mind this is narrative not perfectly factual but illustrates how easy complacency can creep in and have unexpected effects. In the business development framework reaching a point of sustainability and maturity is driven by continual improvement which leads us to our goal of automation (i.e. low maintenance, well controlled, measurable, manageable and profitable).

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Does the statement, “We’ve always done it that way ring any bells?

The US standard railroad gauge (distance between the rails) is 4 feet, 8.5 inches. That’s an exceedingly odd number.

Why was that gauge used?
Because that’s the way they built them in England, and English expatriates built the US Railroads.

Why did the English build them like that?

Because the first rail lines were built by the same people who built the pre-railroad tramways, and that’s the gauge they used.

Why did “they” use that gauge then?

Be cause, the people who built the tramways used the same jigs and tools that they used for building wagons, which used that wheel spacing.

Okay! Why did the wagons have that particular odd wheel spacing?

Well, if they tried to use any other spacing, the wagon wheels would break on some of the old, long distance roads in England, because that’s the spacing of the wheel ruts.

So who built those old rutted roads?

Imperial Rome built the first long distance roads in Europe (and England) for their legions. The roads have been used ever since.

And the ruts in the roads?

Roman war chariots formed the initial ruts, which everyone else had to match for fear of destroying their wagon wheels. Since the chariots were made for Imperial Rome, they were all alike in the matter of wheel spacing. The United States standard railroad gauge of 4 feet, 8.5 inches is d erived from the original specifications for an Imperial Roman war chariot. And bureaucracies live forever. So the next time you are handed a specification and wonder what horse’s a** came up with it, you may be exactly right, because the Imperial Roman army chariots were made just wide enough to accommodate the back ends of two war horses.

Now the twist to the story

When you see a Space Shuttle sitting on its launch pad, there are two big booster rockets attached to the sides of the main fuel tank. These are solid rocket boosters, or SRBs. The SRBs are made by Thiokol at their factory at Utah. The engineers who designed the SRBs would have preferred to make th em a bit fatter, but the SRBs had to be shipped by train from the factory to the launch site. The railroad line from the factory happens to run through a tunnel in the mountains. The SRBs had to fit through that tunnel. The tunnel is slightly wider than the railroad track, and the railroad track, as you now know, is about as wide as two horses’ behinds.

So, a major Space Shuttle design feature of what is arguably the world’s most advanced transportation system was determined over two thousand years ago by the width of a horse’s rear. and you thought being a HORSE’S A** wasn’t important!

Focus on the Future

One of the central issues that plagues many of us when starting or running a business is focus. It’s easy to be distracted by new ideas, other things we “need” to do, our rationalized distractions or other obligations. When I decided to redo my site and focus on small business and helping others with theirs, the first thing I asked myself was whether or not I was doing this as a distraction or an excuse for not doing actual work on any of a number of start-ups I have in progress. For once, I can say that I wasn’t, and in fact I learned a quick lesson that I want to make the first I share with you.

There will always be distractions and they will dominate us if we let them become our excuses for not doing what we really want. Why do we do that? Because the reality is, that no matter how much you love whatever business you are running or starting or working in, it won’t always be fun, and it is in those moments that we are most tempted by outside distractions. I quickly figured out that there are some things I really enjoy doing (blogging is one of them) and am not going to stop, yet I knew I couldn’t allow them to continually be a distraction from working on my businesses. The answer that came to me, like most great answers, was deceptively simple. Use that interest or hobby to help you focus on what you are trying to accomplish instead of as a distraction from it. Hence the departure from personal blogging and the entry into business blogging. Now I’m excited and energized to see how I can transform other hobbies and distractions into positive business momentum. I expect the compound effect to be tremendous and hopefully profitable.

OK, so how does business blogging help focus my entrepreneurial energy? By keeping my mind on business for one. But more importantly, when you have to articulate something verbally or in writing, it forces you to think through it differently than if it just rattles around in your head. It starts to take form as you externalize it, ideas mature, new solutions come to light and new questions are asked starting the cycle all over but from a new point, not the same place you just were.

So how do we get there? The first step is to get honest with your self about what your distractions are. It’s OK, we all have them and should, it’s how we use them that gets us into trouble. So my challenge to you is to think about how you can take one (just one) of those distractions and turn it into something that will help you focus on your business or financial goals.

In return, let us hear what you come up with. I’ll bet there are some brilliant solutions out there and many people may share your distraction who would benefit from your ideas.

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