The Women Entrepreneurs Blog @ Simon

Tip of the Week - Hire Great People

During this economy, if there is one positive aspect, it is the abundance of very qualified people willing to work in a new start up or emerging enterprise. The key to building a successful organization is to hire great people. While that may sound trite, or obvious, it isn't.

I often wonder why companies don't spend more time hiring the right people. The right people are positive thinkers, upbeat, ethical and are of good character with an internal stake in the success of the organization. Our Dean at the Simon School, Mark Zupan recently distributed a copy the best seller: Good to Great by Jim Collins. I thought the book was wonderful because as a business owner, what I knew intuitively about hiring great people was reinforced by the many examples Collins offers in his text. A good portion of the book is devoted to leadership and the people equation.

Successful business owners recognize that their most important asset is not people but the right people. Take advantage of the downturn in the economy and if you are hiring use this opportunity to find the very best talent you can in the marketplace. They are out there; abundant, loyal and willing to work hard just for the opportunity. The recession could be viewed as an opportunity - an opportunity to engage the right people.

New Year Predictions

2008 has certainly been an eventful year with historic presidential campaigns as well as a financial crisis which saw the disappearance of several large financial institutions. We can certainly expect that 2009 will be a difficult year for companies as they try to survive in the aftermath of the wounded financial system. There will be more layoffs as companies seek to restructure after the holiday season and we can certainly expect further dampening in the retail sector. That being said, there are a few other occurrences I expect to see during the next year:

Web tip of the Week - Be an effective communicator

When the economy began to tumble and into late fall at the beginning of winter, a number of my employees began asking supervisory personnel how our company was doing in this recession?

After the second employee asked me, I decided to communicate with our management and let them know. After all, they had a right to know if their positions were in jeopardy or if our company was doing okay during this economic downturn.

The degree to which you want to share internal P and L results with employees is up to you. It is helpful for morale and workplace stability to let your staff know when "belt tightening" is in order to save jobs or that despite the economic storm, you are doing okay. It is not okay to say nothing during the severe economic turbulence we are currently experiencing. As major retailers are filing bankruptcy, your employees will no doubt wonder about the financial health of the company they work for.

Good honest communication can go a long way towards ensuring a stable work force and productivity.

Web tip of the week – capitalize well

Most often the greatest challenge facing the entrepreneur is a ready source of capital. No doubt you have scoured all of the available sources and have come up short to launch your enterprise.

In today's severe economic environment, borrowing from a commercial bank is going to be even more difficult. It will be hard to secure an uncollateralized loan even if you pledge receivables and inventory. You may have to pledge stock and most likely, sign personally for any loans.

Don't be surprised if your spouse is asked to sign as well and if you have a partner, she/he will be asked to sign personally. A bank note in that form will often permit the bank to pursue either partner to collect on the loan beyond the corporate entity.

In a nutshell, try not to launch the enterprise until you are capitalized to reach specific hurdles.

You Need a Plan

Here at the Simon Graduate School of Business, one of the courses I teach is Entrepreneurship 423, otherwise known as "the business plan" course. At the Simon School our research has revealed that ten years after graduation, approximately one half of our graduates migrate into their own business or some form of entrepreneurial venture.

While not a required course, it is usually a sell-out as entrepreneurially inclined students recognize the importance of knowing how to prepare a business plan. The value of a solid, well conceived business plan cannot be overstated.

All businesses require capital to begin the venture. Whether you are funding the venture privately or soliciting funding elsewhere, the business plan provides the reader with the required information that is critical to understanding many aspects of the business.

The authorship of the plan forces the creator of the business to examine many of its elements by thinking through the process and articulating it on paper. It is designed to detail all of the major elements of the product or service as well as the financial implications, needs, start-up capital, return on investment and income projections. No one, other than a delirious relative is going to advance you any significant amount of money for your venture without having a thorough review of a business plan.

Simply put, a business plan is expected when asking for funds to invest in a new business start up.  A well conceived plan answers most of the questions an investor will have. If there are no outside investors, there is great value in writing the plan for yourself, simply to chart the course for your venture.   

Business Franchising

This evening, I spoke to my class of MBA students at the University of Rochester's Simon School of business. The subject was franchising which generated much discussion. In addition to my teaching responsibilities at Simon, I am the owner of two franchised restaurant concepts. Burger King and Friendly's. Friendly's® is a regional, casual dining chain of about 500 restaurants headquartered in Wilbraham, Mass. with an emphasis on ice cream that is made at Friendly's own plant.

The class discussed at length the value of the franchise model and its many advantages.

Some of the advantages that I pointed out include: a uniform system, mass purchasing power, brand identification, a proven format and an advertising program. There are disadvantages as well including: franchise fees, royalties, advertising fees, a limit to your own ideas and others.

On balance, the better franchises are a good value in that the successful format drives sales and profitability. You often receive on going training and a defined standard of operation, leaving little to your own imagination. There are exceptions to that as well.