Despite that conviction, I will admit that I fell for one of the more pervasive myths that are out there – the astoundingly high percentage of business failures!  I think part of the reason that people easily believe the idea that 80+% of businesses fail in the first couple of years is that you feel like you can support it anecdotally by just driving around.  I remember a wrap sandwich place that opened up about the time I started considering a change.  It had a great location – the product was different and interesting, the price was reasonable and the service was good. 

They didn’t make it 6 months.

I still feel bad for the owner – I didn’t even know his name, but I’m sure this wasn’t the outcome he was planning for.

Ultimately that wasn’t the reason I didn’t buy or start something at that point (I went back into corporate consulting), but it certainly impacted my thought process.

I was reminded about all of this by an article that I saw on the NFIB (National Federation of Independent Businesses) website:  Debunking Small Business Myths.

I don’t agree or relate to everything they cover, but there were several that I definitely recognized as things I thought about and that I hear people talking about a lot.

It takes money to make money. 

There’s no point in starting a business until I have a huge nest egg – I’ll just stay in the dead end job for a few more years and then I’ll start that dream business.

Although it’s undoubtedly easier to start something up when you have money, there are literally thousands of small businesses in Kansas City area alone that started out with next to nothing.  It takes hard work, diligence, commitment and a willingness to do without for a while, but you can obviously be successful starting from scratch (or close – I know some bankers you can talk to if that will help…).  Nothing ventured, nothing gained!

80% of small businesses fail in the first 2 years.

We pretty much covered this above, the actual number of failures that I had found previously on the SBA site was ~56% failure after 4 years (which corresponds to the research in this article).  Obviously that’s still a big number, but a lot of those closures probably didn’t ‘fail’ as much as the owner decided that the work wasn’t worth the effort – they were never able to get in control and get systems in place (they probably didn’t work with their local, friendly business development firm…!).

Small firms only create a small share of new jobs.

I’m not sure I would have called this a myth, but the statistic that small firms (under 20 people) create somewhere between 60% to 80% of new job growth is pretty amazing.

The Health Care Crisis is created by the media.

This might have been a valid myth a couple of years ago – I’m sure a lot of politicians worked hard to spread that story, but I think the last couple of years has thoroughly destroyed the idea that the health care crisis isn’t real.  Listen in on almost any discussion (corporate or small business) and you’ll likely hear someone talking about how they can’t afford their health insurance and it’s having a tangible negative effect on their business.  There’s something wrong when people are making long term strategic decisions to account for health care costs…!

What myths do you battle?  Are you making decisions based on things that aren’t actually true?  We didn’t cover any marketing, sales or Internet related topics here – I can think of quite a few things that might fall into that category.

What about you?  Let me know what you think.

Shawn Kinkade  www.aspirekc.comSimilar Posts:

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Generally we play dealer’s choice, which includes the standards like Texas Hold-em, several variations of Seven Card stud and the occasional gimmicky game like 7 – 27, Dimestore or Pass the Trash.

However we’ve found that the favorite game of the night for most of us is a variation of Liar’s Dice.

The game we play is pretty close to the ‘Individual Hand’ rules that’s listed under Liar’s Dice in the wikipedia.

The essence of the game is that everyone puts up 3 stacks of chips in front of them and the first player rolls the dice and declares the starting hand (i.e. Pair of Jacks with a Queen) and then hands the covered dice (in the rolling cup) to the player on his left.

That player has the option to agree to the hand, which obligates him to ‘make’ a better hand or to call him out on the declaration.  If you’re called on the declaration and you don’t have a hand at least as good as what you called, you lose a stack of chips.  If you do have at least that hand, the player challenging you loses a stack.  Whoever loses the stack gets to start the next roll.  Once you lose all 3 stacks you’re out and the last 2 players standing split the pot.

If you agree to the hand, then you get to the opportunity to roll none / some / or all of the dice either in the cup or up and then declaring the new better hand than you received.  (i.e. you roll 3 under the cup from the previous example and declare 3 Jacks and a Queen to the next player).

The beauty of the game is the amount of strategy, mis-direction and perception that are required to do well.  It’s often greatly to your benefit to treat your neighbor well and indirectly work with them to set up somebody on the other side of the table.  However to ultimately win you will need to compete with them directly as well, so partnerships can only go so far.

So what lessons does this game have for the business world?  Here’s a few ideas that I came up with:

1. Strategy is critical.  If you’re going to succeed, you have to think ahead.  The ideal play is to try and squeeze the player that’s got the most chips left (or to get someone out), but you also don’t want the hand to come back to you.  In business, you must have a plan for what you want to do, otherwise you’re at the mercy of the rest of the table (i.e. the market).  If you don’t drive a strategy for your business, someone else will drive it for you and it likely won’t be a good thing.
2. Perception is generally more important than reality.  As long as the guy next to you believes that you have 4 Kings and a Jack, it doesn’t really matter what you really have.  I’m not a fan of the “fake it ’til you make it” approach, but you must be aware of how you’re perceived.  If you don’t have a professional appearance, website, logo, email address then people are much less likely to take you seriously.  (and by professional, I don’t mean corporate/stuffy I mean well thought out, representative of what you want to convey to your customers and consistent).
3. Trust is important, but in measure.  If you don’t trust anyone in the game, you’ll quickly be the first one out.  However if you always trust them, you’re also likely to be an early victim.  The key is to be generally trusting, but use your common sense and basic knowledge to know what to do.  As the stakes go up, your level of trust should go down.  If the guy on your left just rolled 3 dice and went from a pair of Jacks to 5 Jacks, you probably need to challenge him.  In business you can take a chance on a small purchase from a new vendor.  However if you’re putting it all on the line – signing that long term lease for example, you really need to be sure you know what you’re doing and that you trust that vendor.
4. Awareness of what’s going on around you can make or break you.  Knowing that the guy that started the roll declared 2 Kings but the guy next to you just declared 3 Jacks and only rolled 2 dice is important.  Knowing that the guy sitting next to you will always believe you as long as it looks reasonable and that you’re giving him room is priceless.  In business you need to know what your competitors are up to and you need to be aware of what your customers are asking for if you’re going to win.
5. Luck can be a game changer.  Actually hitting that 1 in 6 chance of rolling an Ace to give you 5 Aces makes up for any missed strategies, observations or other issues you might have.  When you just happen to run into your perfect customer by sitting next to them on a plane and striking up a conversation – that’s luck coupled with a friendly approach to life, another combination that’s hard to beat…!

I’m sure there’s several more – let me know what your insights and lessons are from the games that you play.  I’d love to hear them.

And if you miraculously roll the 2 Jacks with two dice – I’m going to challenge you on it, no matter how often you seem to roll it.

Shawn Kinkade  www.aspirekc.comSimilar Posts:

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In some cases, your friends and family are your business network but usually there are people that you wouldn’t necessarily classify as a friend but they are a valuable part of your network – and if you want it to stay that way, you better be a valuable part of their network.

The first story I ran across was this impossibly cute tidbit from the Daily Mail:  Abandoned Monkey finds friend in Pigeon complete with this over the top picture!

It seems that this monkey was abandoned as a baby and was befriended by this pigeon, giving him a ‘new lease on life’.

The second story (no cute picture on this one) is about a really unusual spider web that was found in Texas that was over 200 yards long!  You can read the details of the story here but after extensive research they determined that there was a bunch of spiders working together to form this Meta-Web (my term).  Even though spiders like these normally are competitors, the unusual concentration of food prompted them to work together for the benefit of all.

Granted it’s a bit of a stretch, but here’s what this got me to thinking about in terms of a small business owner.

Are you actively building a network?  Not just a network of prospective clients, but a network of potential partners, support vendors or just people that you know, like and trust that you can use as a sounding board.

Are you having conversations with people you know to see how or if you could be of mutual benefit to each other?  Could you build a Meta-Web – even if you overlap in your business in some way?

Are you finding people that are drifting a bit, maybe they need some help or guidance, and doing what you can for them?  The essence of a network is value that you add (without specifically seeking anything in return).  Have you met anyone that you could help out today that would build up your network?

If you’re not doing these things, you should be!

Building (and keeping) a network can be really hard.  It’s easy to fall into the trap of focusing on your day to day problems or to just spend time with your immediate circle, but the value of a strong, diverse network is immeasurable – both professionally and personally.

Here’s a suggestion – make a weekly activity on your calendar to help out at least 1 person in your professional network.  It could be as simple as sending them a link to an article, website or resource that pertains to what they do.  You could make an introduction to a potential prospect or partner (potentially helping 2 people at once…!).  Or you could just setup some time to meet with them and see how things are going.  Give them some support and some time and let them know you’re interested.

Let me know any ways that you build or keep your network.  I’d love to hear from you.

Shawn Kinkade  www.aspirekc.comSimilar Posts:

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The Plaza Art Fair runs from Friday, September 21st through Sunday and features 230 artists from all over the country.  It’s consistently rated one of the top 5 Art Fair events in the country. 

Not only are the artists always interesting, but you’ve got lots of great restaurants with outside booths, live music and all of the people watching you could ever want to do.  And it’s all on the Plaza, which is always just a great place to walk around.

If you’ve got some time this weekend, do yourself a favor and make it down to the Art Fair, maybe I’ll see you down there.

Shawn Kinkade www.aspirekc.comSimilar Posts:

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“If there are no stupid questions, then what kind of questions do stupid people ask? Do they get smart just in time to ask questions?”

Scott Adams

Of course as teachers down through the ages have suggested, the only stupid question is the one you didn’t ask (although having been in a number of corporate all hands meetings, I’m not sure I agree with that…).

So if the stupid question is one you didn’t ask, what stupid questions regarding your business are you guilty of?

Have you asked your customers what they want from you?  Lately?

Have you asked where the growth in your business is really coming from?

Have you asked how you should best spend your marketing money – primarily on existing customers or on new acquisitions?

Although it doesn’t seem like it, this is leading to something. (no really…)  These are hard questions – and not likely ones that you’re currently asking, but I believe that you should be asking them.

As an example, take a look at this Blog entry from the Inc. website:  Do you focus on your Existing Customers?

Although it’s a short post, they make some great points about the criticality of Customer Service:

1. It’s substantially cheaper and easier to get existing customers to buy from you than to get new customers to buy from you.
2. Most businesses focus their efforts on acquisition rather than expanding sales within their base.
3. This particular example indicates over 75% of revenue comes from repeat customers.

It’s not explicitly mentioned here, but generally new sales come with reduced margins and are generally less profitable.

This ties in really well to an ongoing conversation I’ve been having with a Sales and Marketing Analysis company here in Kansas City.  The crux of it is that it’s pretty common for 80% + of revenue to come from the top 15% of your Customers and that your best bet to grow your company is to get your existing customers to buy more of your products (rather than getting new customers in the fold).

Obviously you don’t want to take this to extremes, but allocating your marketing budget at least partially towards your existing customer base will likely go a long way towards increasing your bottom line.  It’s not the traditional line of thinking, but there’s a lot of common sense to it.

And building your bottom line is never stupid…!

What Stupid Questions are you not asking about your business?  How do you treat your customer  base today?  Please share your thoughts here.

Shawn Kinkade  www.aspirekc.comSimilar Posts:

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