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!

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!

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.

Put your Network to Work

I have had a fun experience just in the past five days on a new business idea that a partner and I have been kicking around. I can't tell you about it, because this business is (naturally) going to change the world! One really cool observation during that short period of time, however, is the extent to which both of us have been able to put our network to work.

This business idea has technical, operations, marketing, and risk considerations which are not unlike many new ideas. For every area in which we have had a question, we have had someone in our network to leverage. We have also been able to ask a specific set of questions for an area that avoids having to pull back the curtain on the entire idea (given that one potential challenge is low barriers to entry). One positive of being able to focus the questions and align them with the person's area of expertise is that you can really just let them roll and share their experience with you. In each case, this has provided a deeper level of understanding that my partner and I can then roll into our larger strategy. For example, a discussion around the financial risks of the idea lead to strategies for mitigating those risks--all from listening intently to people who know that area really well. We can then put that into the mix and have changed our thinking on the marketing based on that input. Again, all within 5 days.

Some of my other posts address building your network and fostering it. Effective network-ers are able to "tag" people in their network with areas of expertise. (They are also able to use "tags" other than "has money" and "no money.") This allows you to come back to them with opportunities and requests. The more you can make those visits about them, the more you will see that investment in your network pay off.

Understand your network and how you can leverage it. In the end, you will see that it is not a one way street. Your ongoing conversations and fostering of relationships will lead to unforeseen mutual opportunities.

Re-Defining a Successful Career

This week, the Wall Street Journal had an article titled "You Might as Well Face It: You're Addicted to Success." The article, while somewhat disjointed with a couple of bizarre examples, points out the extent to which many in Corporate America define themselves by a job. In a time when lifetime employment was much closer to the norm, this might have been a safer bet. But for the current generations in the workforce, you will find yourself tied to a tenuous line. As a friend of mine once commented, "Be careful about loving your company, because it can't love you back."

This is a nuanced problem, to say the least. Why are we addicted to the success? On a practical level, people at all levels of the pay scale find themselves addicted to their paycheck. At the one end of the scale, it is understandable out of necessity. Above a certain point, however, it is simply shocking the extent to which a life (not just a lifestyle) is wholly dependent on the ongoing presence of the next paycheck.

On a psychological level, which I will avoid trying to explain, the addiction to success can fill a need for individuals to prove their worth to themselves or others. On a simple level, using your career as a benchmark provides handy, quantifiable metrics--pay, bonus, rating, title, etc. These black-and-white solutions are much easier to spout than the nuanced and challenging aspects of life outside of work. This may also be why the time spent on work often so easily consumes the time previously spent on those other areas. From here, I will leave the rest to Freud or others.

I will bring this back, though, to the need for your own definition of success. For those itching to leap into an entrepreneurial venture, you had better not covet the titles, pay, or other perks associated with a cushy corporate role. You have to be in it for the long haul, the longer-term rewards, and deeper motivations. Can you live with the new identity that comes with an entrepreneurial venture? Can you embrace it and be proud? You should.

If you truly can, the results will be evident. In fact, this month's INC Magazine has an article on angel investing in which one investor commented that money is still there for managers who clearly are passionate about and committed to their business. Get-rich-quick me-too's need not apply. If you can define (or re-define, if necessary) yourself and your measurement of success, then you have the beginnings of a can't-miss career.

Seek Dis-confirming Data

I am currently working with two partners (I know, I know ... "partnerships are hard") on a new business here in Richmond and find myself being challenged with balancing the desire to get the business going versus paying attention to potential obstacles or pitfalls. To some degree my partners and I know from our own experience the primary issues to anticipate and address up front, but additional conversations lead to questions about how to make the business sustainable and successful.

Entrepreneurs can suffer from tunnel vision on achieving an objective without taking some time to put a strong foundation in place. In contrast, many suffer from being so scared by obstacles that it leads to inaction or reverting to a comfort zone. The right balance is found in acknowledging, filtering, and incorporating the challenges into your plan and actions. This can be done either by addressing them now (which is often difficult or impossible) or creating real options which allow you to make the decision in increments and/or later with additional information. (Real options plug: This may be the single most useful concept I got from business school. It's an incredibly simple, but applicable concept for small business.)

This objectivity can be difficult to maintain, however, in the rush and excitement to launch something new. There is so much that needs to be done. Additionally, you become emotionally invested in making the new venture a success. Challenges from others can be brushed aside or avoided. Resist the urge!

Keep your head and learn how to filter the comments and incorporate them appropriately. What would you do differently now in anticipation of a given challenge? Can you structure your new company or offering in such a way that you create flexibility to keep options open? Some questions may even push you to answers that increase confidence and clarity in your approach.

Hopefully this isn't too esoteric or obscure. I would think that you could quickly identify from your own experience and conversations the people and topics that challenge you and your path. What do you with them? If you dismiss them out of hand, you run a great risk. If you become obsessed and paralyzed by them, you run a great risk. And if you have a hard time maintaining this objectivity, leverage an adviser or friend who can keep you honest. There will come a day for your business, when you will be glad that you addressed the issue ahead of time.

Layoffs: Pushed out of the Nest

Most of my posts encourage those within Corporate America to be proactive in taking steps towards entrepreneurship if that is in fact a long-term goal. Within the fabric confines of your cubicle, you will not intersect the sphere of small business unless YOU take steps to do so. For many, however, the new reality is a rude awakening to the fact that corporate jobs are not as safe and cushy as one might think. Laid off employees are also made harshly aware of the lack of support from empty tools such as COBRA.

There's a broad set of implications to consider at this point for those who have been kicked out of the corporate nest. For example, absolute income needs, severance, and health insurance options (unsolicited advice: dental insurance is a racket!) can be decisions that lop off entire branches from your decision tree. Beyond the objective set, there is the subjective "what do I want to be when I grow up" questions to consider given your new "opportunity."

There are plenty of sites and people to give you more than enough advice on managing your job search, but I suggest you specifically consider an approach that incorporates what I broadly define as small business. Many view this path as too risky or beneath a Corporate America gig. I find these to be short-sighted arguments. You've just had proven to you that Corporate America is not the land of lifetime employment, and you are likely to find a crowded field competing for the next corporate opening.

Spend some time and energy outlining a plan for small business. The three most important things are networking, networking, and networking. You should have more meetings at Starbucks and Panera than you even thought possible. (Entrepreneur secret: It's called Panera Bread, but their bakery stuff really isn't very good ... but it's worth it for free wifi.) Informational "cup of coffee" meetings can lead in directions you never envisioned. I hazard to guess that you will find the conversations stimulate a part of your brain that you forgot you had.

Once you have that ball rolling, look for ways to be creative in your approach. Work in smaller businesses can take a variety of shades. You won't find job postings and interviews conducted in a traditional or consistent manner. Get used to it and leverage that! It puts you on more equal footing than an interview for a job that tends to give the company the upper hand. Instead, you can identify ways to work together on projects, hourly basis, etc.

It's not all sunshine and roses, and it can be time-consuming. I merely encourage you to consider the options you have in front of you. Be realistic about those options. Assess your position and then move aggressively. I will remind you too that any step in the general direction of your goal is better than where you started. Avoid the trap of developing the perfect plan to reach an overly-defined goal. And good luck.

Partnerships are Challenging: Part Two

About two months ago, it occurred to me that I had not yet addressed a common approach to small business -- the partnership. After my first post on the topic, I had several conversations with folks who seconded that experience, suggested other challenges, and/or tried to guess at partners of mine that prompted the post. I figured it was about to time to revisit the topic, however. This time to discuss assumptions and goals when starting a business.

An alarming number of partnerships begin without clear discussion among partners of what individuals are hoping to achieve for the business and themselves. If questioned, the response is often along the lines of "we're all on the same page", "well, naturally we all want to _____", or "we got started so fast we didn't have time for all that stuff." If you find yourself currently in a partnership or starting one and have heard you or your partners utter statements similar to these, beware!

I have encountered no other circumstance in business where there is a better example of "when you assume, you make an ASS out of U and ME." Many small businesses are wrecked when the reality of disparate goals and drivers are brought to the light of day. Whether it is the strategy of the business or the hours you keep, the differences can be stark and, if you are not careful, toxic.

It is amazing, however, that the exact same differences can be reconciled and often improved through early-stage conversations. If necessary, you can find facilitators to help you in shaping the vision of your company from strategy through execution. Either way, the discussions are critical to have sooner rather than later.

Personally, I have seen one of these facilitated exercises that drove to the values of a partnership (and the company). Putting individual opinions and ideas onto white paper forced an incredibly rich conversation. The result of which was a set of company values that endured and guided every difficult decision the company faced. The values then drove the discussion of the vision - mission - objectives.

It was not all wine and roses from that point, but the partnership was much stronger for the exercise. From my experience, there is no greater indicator of a successful partnership that can endure than the ability of the partners to communicate and that inevitably starts at the beginning. Don't forget that in small business, there is no place to hide. You and your partners must learn to live by a set of shared principles to see your company through. The ties within that partnership will be tried at the best and worst of times.

Is Yours a Job or a Calling?

I'm back from the holidays with a bit of a philosophical post to start the year. Over the holidays, I read an article by Michael Lewis that he wrote in response to Wall Street'ers displaced by the economic fallout. The article encourages the recipient and others to determine whether they are looking for a job or for their calling. I also found the responses rather interesting. What I found interesting in the tone of both was the extent to which this question is new or absurd to those in this space. The rats in this particular race are often excused for their lack of attention to this point given the money to be made in the space. With that changing, Wall Street'ers (I thought of using Wall Streetwalkers, but relegated it to parentheses instead) are left to ponder the same question as so many others.

I am also reminded of this point given the scant number of those in the world of finance that seem to have found their calling versus a high-paying job. One of these is an old friend of mine that I had the good fortune to see over the holidays. His discussion of the current situation is both objective and confident. He has been fortunate to find his calling in a space that pays him well for what he really enjoys doing.

The beginning of the year is an opportunity to assess the fit of what you do with what you want to do. If you are in a position of trading hours for dollars, that might be the right place for you right now. But if you keep your eyes on the horizon and consciously take steps in the direction of your goal, you will continue to put yourself closer to that point. Movement is the key, not planning for the perfect path. Michael Lewis' article takes aim at Wall Street as the topic he knows the best, but his points remain important across the professional spectrum.

For those of you less familiar with Michael Lewis, you will see his book Hardball on the right in my recommendations. His book Liar's Poker is also a particularly timely read. Finally, his recent cover story in Portfolio is literally unbelievable.