Wednesday, May 20, 2009

How Do You Run a Business with No Money?

Please re-read the title of this with an emphasis on the YOU. This is not how-to run, but about how you operate, function, work in a business with no money. I had a discussion recently with someone facing this problem in their company, and he said, "You should write about that on your blog." It was an overdue push, given I've been suffering from a combination of writer's block and busy-ness of late. So, let's have a go.

I believe the example that might be most salient is that of a business that begins in parallel with a fund-raising effort. Many one-person businesses knowingly start on a shoestring, but larger efforts often begin with partners (both business partners and supporters offering their services) while outside funds are being sought. Things typically start with a flurry of activity and energy. The plan often includes optimistic assumptions about how quickly funds can be raised and time to revenues. As the reality establishes itself, the energy will cycle, but the need for activity remains and increases. On top of this, the needs of the business change quickly as more is learned about the business, feedback from investors, etc. Meanwhile, those involved in the business learn a lot about their partners and how they work. Herein lies the lesson.

Even at this point in my description, I guarantee that you have assumptions about how you and any logical person would function in this environment. There are two challenges in this. First, you do not know how you will function until you are in the situation. Second, I guarantee you that your assumptions about how "anyone in this situation" would act are not going to be true of your partners.

Let's get specific for a minute. After you have gone six months beyond your initial projections of when funding would be closed, how do you work with suppliers on work you need from them when you haven't paid their last two invoices? Do you use your credit card to buy that plane ticket for that industry meeting that will generate some good leads, but no sales for a year? Do you call your old boss or start looking for "a real job"? Does your spouse tell you to get "a real job"?

Many people will put heads down and plow ahead to get done what needs to get done, but the reality of money is the big strain. Some people become strategic and want to retrench or determine a new plan of attack, but the cost is time. Some people will curl up in the fetal position and need to be cut loose.

If we assume success for the purpose of this discussion (which I have seen perseverance often yields, although in a different form than you may have sought), you will also be amazed at the difference in how people operate after the first funding obstacle is cleared. Lifting the burden of running a business with no funding is a relief that can elicit a dramatic change. Some people view it as having been living a lie. Those who put their head down with less (or no) regard to money, will often show little or no change. But within a business, it is safe to assume that some partners will behave dramatically differently. This has an impact on the overall business, and this cannot be underestimated.

As is typically the case in my musings here, I will tell you that there is no right answer, but I am telling you that this will happen to many a new business. Consider your own situation and how this inevitable reality will impact you. Then consider your partners and the impact on them. It all adds up to an impact on your business, and it can be the difference between your surviving this trial or not. Good luck!

Wednesday, March 25, 2009

The Thrill of Hearing "Yes"

Get your mind out of the gutter! I'm talking about the entrepreneurial rush from hearing a client say "yes" to your proposal. For those of you in the space already, you know of what I speak. For those of you looking out from the cubicle farm and wondering, I share this with you as something I had not fully considered before I began.

The experience has some important differences from the experience of a sale. Additionally, the rush can be found in establishing relationships other than just selling something. The reason is that in this space that "yes" is a vote for you. Work gets done in the smaller business space based on relationships. Nothing earth-shattering in that statement and it does extend beyond this arena, but it is particularly true with owners of small and mid-sized businesses.

Networking and relationship-building constantly present new and unique opportunities for entrepreneurs. All of these go through phases with their own highs and lows, but the "yes" is the final affirmation that the investment is paying off. What can amaze many is the pace at which you can get there. Entrepreneurs will operate on feel--sometimes for better and sometimes for worse. This eliminates many of the dances that lead to sales, partnerships, or other relationships in Corporate America.

While the "yes" is an indication that you are heading towards another payday of some sort, the lasting encouragement comes from the reality of attacking the work you anticipated during development of the relationship and the sense of control you have in making that reality a success. It tells you that someone believes in you--someone who you often did not even know a couple of months prior! They believe your vision, and they believe you will do what you say can do.

I've used other posts to provide some reality checks, but on a cloudy day with pending drizzle here in Virginia, I'll keep today's focused up. This is truly a unique reality for entrepreneurs, and one that you have to experience to appreciate. You got the "yes" and you are in control of fulfilling the promises. Congratulations, celebrate, and then go do it again!

Tuesday, March 10, 2009

Be Part of the Solution

In the past week, I have had more frequent conversations with entrepreneurs and others voicing some degree of hope in the economy and wishing for a decrease in the media's dire and dour coverage. For some small and mid-sized businesses, this is a time for belt-tightening and holding on. For others, it is a time to expand and grow. The latter group does not typically get much attention, but they exist and it can happen.

It has struck me in the discussions with companies facing this growth opportunity that there is a really cool chance here to create solutions. There are great people out there looking for jobs. There is still money looking for investing in right opportunities (it's just different than the drunken sailor investment strategy of the past). Some of these companies are "new economy" and have huge upside potential with investment and the right strategy and execution. Other companies are "old line" companies in industries that stand to do well in the downturn. For both, the business opportunities have remained largely the same. Now, however, there is the added "cool factor" of being part of solving a problem of unique proportions. Seriously, how great would it be to know inside that the growth of your business is putting people to work and providing a valuable product or service at a critical time? Forget about stimulus checks from the government! These are proven, lasting solutions.

Part of me right now is picturing the philosopher Chevy Chase in Caddyshack instructing Danny to "Be your future. Make. Make your future." But the bottom line is that there is a very real opportunity here. I tend to be a (sometimes too) pragmatic thinker about strategy and execution, but look at the big picture here and realize the impact you can have. Embrace the opportunity to lead your business and create solutions.

There are plenty of other ways to contribute as well. A movement is afoot this week, in particular, led by Duct Tape Marketing. The effort is simply "Make a Referral" Week. Please check it out and sign up yourself. Mobilizing entrepreneurs to support one another, this group is pushing its own grass roots stimulus. Brilliant! Social media avenues spread this like wildfire as well.

That's it for the pep talk this week. To be honest, it was largely a therapy session to remind myself to keep my eyes on horizon ... above the current fray. Now, go make your referral.