It takes a lot of hard work in the summer to be ready with enough wood for the winter. This picture was taken on August 11, 2009; six weeks before guests at the Idyllwild Inn are allowed to start having a wood fire in their cabins. From October to May, guests are given a free bundle of wood to enjoy in their rustic cabins. During the rest of the year, because of the danger for wildfires, they have to use Duraflame logs.

Josh White, the 4th generation owner, told me that he used to do this job when he was young. It taught him the importance of hard work and the need to prepare for the future. This is now a summer job for a few high school students in the area.

Photo: © 2009 Paul Mobley (OC)

Now that we live in a flat world (see: The World Is Flat 3.0: A Brief History of the Twenty-first Century) you’ll start to see more organizations (entrepreneurial, non-profit, government, etc) that no longer act like “small businesses” but rather “quasi-small businesses”.  They use the leverage, manpower, and distribution systems of  large multinational organizations and media channels to accomplish their goals.

They may have some attributes that resemble a small business like a corporate office with “4 dogs and 12 employees”. They will have some, but not all of the features of, what we traditionally know as a small business.

Small business is traditionally defined as 500 direct employees or less. Yet, with collaboration between people utilizing various legal entities to protect their assets (including intellectual property) it is becoming the norm to have small business silos that operate cooperatively without engaging in a corporate merger or acquisition. Leaders are moving with ease between multiple organizations utilizing the power of their worldwide networks to accomplish their tasks without the need to obtain a passport or work visa.

It no longer requires a corporate structure, a board of directors, or a shareholders meeting to get things accomplished in this flat world. Yet when they are used it is not a surprise to find out that the board of directors meeting was actually just a foursome on the golf course or a conference call between people who have never met in person.

Quasi-Small Businesses, business mashups, and the hiring of the “majors” is occurring every day. It is being done by smaller and smaller organizations as the barriers to entry are getting less and less. The power brokers are the ones who represent talent and creativity. It’s the innovators, the out-of-the-box thinkers who will be successful in this new world. These are the people who don’t observe and design in the same breath; who don’t accept “business as usual”; who think big and get other people excited about their visions.

Find people like that and become like them. You no longer need to work for the large multinational to accomplish your career goals. Let the large multinationals work for you!

At various times I have used the wrong strategy. (Honestly, it has happened more than I care to admit). I had no one to blame as it was a strategy that I came up with all on my own.

Stop trying to be clever and original. Instead look for the best strategy for accomplishing your goal and copy it. Except in the cases where this is a violation of intellectual property rights it is the best way to quickly identify the right strategy for right now. Build in feedback mechanisms to identify trends. Then watch for the unexpected success or unexpected failure. That is the market saying the strategy is right or wrong!

Basically: Follow the leader and listen.

I’m in the process of setting up an internship program with the Crowell School of Business. This is the same school that I did my undergrad and MBA. It turns out that one of the people who is point-of-contact was my old ‘Intro To Marketing’ professor. I got a D in his class and when I started my MBA I was on academic probation due to that one grade.

Honestly, I really enjoyed his class. Les Harmon is a great teacher. His classes were engaging and I don’t think I missed a single lecture. His presence at the school caused more people to chose marketing as their emphasis than any other field. (I still chose management).

If the class was so great, why did I get a D? I arrogantly thought that if I knew the material then that would be enough. I even went so far as to sit down in his office and say, “I can summarize the entire course in one sentence.” After listening to what I had to say he said something like, “You’re right but I still have to give you a D because you didn’t complete enough of the daily assignments.”

While it doesn’t show up on the transcript… that was one of the best lessons I learned in college. You can’t just know what to do… you have to actually do the hard work on a daily basis. I think that is the problem with a lot of really talented creative people who are not successful. They think that their talents will be enough so they don’t bother to do the daily things that would make someone even less skilled a success.

This was actually a wonderful reminder to me as I start the next phase of my startup company. All the plans in the world are not going to work unless we do the daily tasks that are necessary for success and let honesty and hard work be our constant companions.

A lifelong friend taught me a lesson this week. There is a lot of power when you start talking about your dreams as if they already exist. If you say something might happen then very few people believe that it will come to pass. You might not even believe it to be true. Yet, when you say, “This is going to happen and we’re excited about it” a funny thing happens… People believe you. Then when other people believe it’s much easier to push the doubts away and catch the vision yourself. I’ve seen first hand how something that was just an idea gets momentium, people join the team, and before you know it the idea is a thing or an event or a business.

One word of caution, this can also work against you if you apply the same practice to something that doesn’t have value. Granted it could be harder to excite people with the story but the principle can be used for bad as much as good.

Language and the stories that you chose to share have more power than you think. Chose them well.

1. Clear Vision
2. Take Baby-Steps
3. Be Patient

Quote from Aaron Ross of PebbleStorm
(07/28/2009 – MOTM)

How often do you review progress? For many things a weekly review is the most frequent that is needed. More than that and you don’t have an opportunity to get the enough data to make meaningful decisions. Too long and you might not be able to identify cause and effect.

Take the time to review and make meaningful goals. When you succeed, great! If you miss the mark then you have the ability to make quick adjustments.

Back in August 2008 I wrote an article about Pandora. I mentioned that while the service was currently free they would likely go to a subscription format in the future. That day has arrived. (insert I told you so).

You can now subscribe to Pandora for $36/year and enjoy an ad-free experience.

Previously they only used web ads (which were easy to ignore). Now they’ve started to deploy audio ads inserted into your music station(s). They appear to only be a few seconds in length but they’re much more noticable.

Wouldn’t it be nice if there was a FICO for your small business?

Judging personal credit is easy. You just look at the FICO scores from the three credit agencies and see how you stack up to the statistical average. What if that existed for small business. A FICO type score that took into consideration your branding, competitive advantage, innovative ideas, and market share. This would be a useful tool for the entrepreneur in determining which ventures warranted continued investment and effort.

Unfortunately, this tool doesn’t exist. Some of the best business ideas were launched at the wrong time and others were under-captatilized. The best in those four areas doesn’t guarantee success. Rather luck often plays a role.

Yet, despite the propentency to failure… America was founded on the idea of independence. That we are free to create our own path, and therefore, our own success or failure. If you have an innovative idea then you should cultivate it. If you have consistent branding then you should be rewarded. If you have a competitive advantage then you should exploit it. If you have market share then you should defend it.

If there was a FICO score that graded your business would you listen to it or continue to forge your own way? Would you abandon a business that had an excellent small business FICO but was under-capatilized or experiencing economic difficulty?

Do you have a process for identifying unexpected success? Are you surprised when your business is generating sales in markets different than you had intended? Many web-based business have done a good job of implementing analytics that allow them to modify their approach and maximize profitability. Unfortunately, in other businesses the same feedback mechanisms don’t always exist. If they do, arrogance may prevent us from capitalizing on them.

• What do you need to learn about your customers that would shock you?
• Are you successful in niches that are not your primary target market?
• Do you have services that are highly profitable that you stumbled into by accident?

Often the way you view your company will prevent you from taking advantage of the largest opportunities. For example, what if a manufacturer of packaging equipment refused to resell plastic wrap even though their customers were asking for it. The belief that they’re in the equipment business instead of the packaging business might cause them to lose out in millions of dollars in profit.

What if the way that you’ve defined your market is different than you intended? Shifting gears and investing effort to this new market may be just the strategic shift that your company needs.

Keep an eye out for the unexpected success. The market knows what it wants…. we just have to be humble enough to listen.

Things might be tough for your small business right now but it could be worse. Imagine if your ownership and board of directors was 90% union and government. That would really suck. So if you’re feeling down, take heart, you’re not GM.

American Express is continuing it’s attack on small business owners. The latest battlefield is the credit lines of small businesses who have never been late on a payment or gone over their limit. It’s understanding that the risks have increased for AMEX but you would think they would try to keep the best customers instead of kicking them when the economy is down. Here is a short excerpt from letter directly from American Express to an employer of six people.

Given today’s difficult economic environment, all of us need to think about how we control expenses and reduce risks. At American Express we want to be a responsible lender during prosperous times and more challenging ones. This means carefully reviewing the spending and debt profiles of our Cardmembers – and making difficult decisions.

Translation… we over extended ourselves and we need to cover our butt. We believe that the short-term risks are greater than the long-term impact of not being there for our best customers when they need us most.

Your credit limit may have changed, but your value to us has not. We remain committed to our relationship with you.

Translation… please try not to hate us to much. Even though our actions say that we don’t trust you we want you to continue to believe that you are important to us.

Good luck American Express. You’re actions are tarnishing your brand. You used to be the best friend of small business. Now you’re becoming a fair weather friend. We’ll remember how you treated us during these “challenging times”.

Right now is a great time to add talented staff members (at a discount). Due to no fault of there own… there are many talented people who are looking for work right now. They just might have the skills your small business needs to grow.

To borrow from real estate “it’s a buyers market” if you need talented individuals. This means that you can be more profitable and maybe grow even faster than you would normally.

Obviously, you should make sure that you have sufficient resources allocated for the expanded staffing budget. Being conservative is smart just don’t starve your company if you need more manpower.

If you’re able to pull the trigger now there is a good chance that these people will stick with you when the rest of the economy picks back up (even if they’re offered higher salaries somewhere else). People remember who treats them well in the bad times.

So go hire that MBA that you’ve had your eyes on… and see what happens. After all, it’s the small business owners who are the engines of job growth.

Small business has been told they’re going to be financing a portion of the most recent stimulus package. Any business that offers health care and is subject to federal COBRA or simular requirments under state law is required to pay 65 percent of the premium on behalf of the COBRA participants. To recover the subsidy employers have to wait until they file Employer’s Quarterly Federal Tax Return (i.e. Form 941). This means that the float has to be financed by small business working capital which is already streached thin. Additionally, the additional administrative expense in complying with this program is lost productivity when we can’t afford it. While it generally doesn’t apply to businesses smaller than 20 employees this is going to impact a large number of companies. I don’t have a problem with the assistance provided to these unemployeed workers but the way that it is being implemented puts the burden on the employeer. It’s just another example of how governement shifts the burden over to business.

On April 1st California will have another 1% added to the state sales tax. This additional tax comes at a very bad time as small businesses are struggling to survive the economic uncertainty. The last thing we need is to have higher prices that don’t result in higher profits. California is taking money out of an economy that is already having a hard time. This will not only impact consumers but also businesses and non-profits that now have to pay more to buy supplies, computers, software, equipment, etc.

Many small business owners that I’ve talked with have said that they don’t believe that this tax will be temporary. Sacramento has a spending problem and once they have implemented a higher tax rate it is very unlikely that it will be allowed to expire in the future. Luckily we have an option to defeat 1A and force them to come up with some other way of keeping these taxes in effect for a longer period of time.

This higher tax puts California small businesses at a competititve disadvantage as many other states have lower (or even non-existant) sales tax rates. This may increase the incentive for some small businesses to move to other states further decreasing the economic activity in California.

There will be a lot of damage as a result of this latest tax increase. “Thank You” California for the anti-bailout. Kick us when we’re down. Tax us more when we have less to give.

Is anyone else burned out on taxes right now? This year I am charge of a couple different corporations, a trust, and multiple individual returns. If I didn’t have a great CPA I think I would go crazy. The thing is that there is a lot of talk about productivity in America but what is the national cost associated with preparing tax returns? Isn’t there something more important that we should be doing? Don’t even get me started on the time it takes to prepare returns for business property taxes in Orange County, California or monthly sales tax returns broken down by district!

Small Business has enough to worry about without having to waste so much time on these types of things. I don’t have many options for how to change the system…but I wish it wasn’t such a burden!

On of those house keeping things that all small business owners should do is to make sure the copyright information is up to date for your intellectual property. For our web-based world that means doing a double check of the fine print for your websites, blogs, etc.

(Note: This is not legal advice. You may wish to consult with an attorney)

I don’t recommend replacing an older copyright like “© 2008″ with “© 2009″. Also, you shouldn’t update the copyright if you haven’t updated or added to the content. However many sites add new content every year that should be protected.

For multi-year works I like to use something like: “© 2008-2009 Owner, Inc. All Rights Reserved” This should go in the footer on all your pages. Additional credit should be given on individual pages if content is used by permission (i.e. license, authorized reproduction, etc)

Finally, if you’re having a problem with infringment you’ll need to register your copyright in order to be eligable for punitive damages. Yes, you can register websites and there are expedited methods available.

In an information economy copyrights, trademarks, and other intellectual property are important. As a small business owner you need to keep an eye on these things because nobody else will.

I’m torn right now between two different strategies. One says that you should bunker down and try to simply wait out the storm. The problem is that by building the walls and trying not to get hurt you might just miss out on the opportunities that will save you. Another strategy says now is the best time to get out there and gain market share. It’s easier to win the game when there are less players. The problem with this is that the game might not be one that can be won in the traditional sense. It might be wise to regroup, rethink, and wait for things to calm down before you attack.

What is the right answer? I don’t know. There are costs and risk in both. It’s clear that there is a lot of opportunities out there but there are a lot more threats then there used to be.

In a world of “instant” communication it’s easy to forget that most of the time we’re not having a conversation with someone we’re just sending messages their way. I was reminded today that the personal touch is sometimes just the thing to get things done.

A project that I was working on was stalled in the contract phase because we were communicating exclusively via e-mail. After not receiving a response I picked up the phone and with a short conversation made more progress than had been made in 13 days. In fact the contract was completed within the hour.

Is it great that we have so many tools to “communicate” these days? Absolutely! However, if the tools are getting in the way of the conversation then they need to go. Sometimes it’s important to have that face-to-face meeting or simply chat on the phone. Tone and body language are often lost in an e-mail or text message.

We need remember that our customers, prospects, vendors, and business associates are people first. We should communicate with them in the way they talk best, that won’t always be with an e-mail, sometimes it requires a phone call.

More than ever right now results matter. The people who keep their jobs or stay in business are ones that get results. If you’ve got results then you have less fear right now.

The opposite of results is a story. Don’t get me wrong… I love a great story. They’re necessary to connect with a community. However, the wrong type of story is one that you get instead of results. I hate these stories.

If you arn’t getting results don’t bother to waste effort on making up a story for why not. Instead spend your time working on changing the results. If you can’t it’s time for a new business or a new job.

The worst thing for a business, small or big, is to lose momentum. Loss of momentum usually occurs first from external factors and then it begins to impact the team (i.e. layoffs, extra stress, etc). Once the team is effected then you stop doing your best and the purpose of why you’re there to begin with get’s all fuzzy.

At the end of the latest Bond film M is asked, “Do you have any regrets?” She replies, “No, that would be unprofessional”. That struck me as a perfect message for us in this challenging economic time. It reminded me of something Jeff Lilley once said to me at dawn by a quiet lake. He said, “You never know what a day will bring”. The best business opportunity or change in your life could occur at any time (even in a recession) but that might not happen if you’re not open to it, act in an unprofessional way, let feelings cloud your judgment, or let the world control you.

I should get off my soap box and get to the point:

To keep your momentum in business you need to continually be in the present and looking towards the future. Don’t have regrets but rather live today the best way that you know how. If you did that every day: How would it impact your business? How would it impact your life?