The Mobley Strip

By Michael A. Mobley, CONTRIBUTING EDITOR



During my years of assisting entrepreneurs and small business owners, I have been amazed at the frequency with which otherwise intelligent and accomplished people ignore certain basic tenets of operating a successful venture. I have identified five areas that will no doubt appear quite obvious to you. Yet, be assured that these issues occur more often than not in my discussions with entrepreneurs. Further, the inability or unwillingness to address these issues is a formula for failure.

First, identify the customer, figure out why he/she needs your product or service and why that person should purchase the product or service from you. This is a common challenge for technology-oriented enterprises. They become enamored of a technology or process, then wonder why success eludes them. Generally, they have poor customer focus.

As Vic Hess, former head of the Howard County Center for Business and Technology Development, says, "If you have no customer, you have no business." Therefore, you must determine the needs you are fulfilling for the customer, the problem you are solving, the pain you are alleviating. James Carville, Bill Clinton's presidential campaign manager in 1992, famously said, "It's the economy, stupid." Well, substitute "customer" for "economy" and adopt this as your business mantra.

Second, understand that you can't do everything for your business. In fact, you put your business at risk when you embrace more than a couple of tasks for the enterprise. Capital to hire staff is often an issue, but performing multiple functions usually means that none are performed well. A person insistent on this path is likely to fail. As Clint Eastwood said, "I like a man who understands his limitations."

There are a number of compensation schemes available to attract good people. One of the barriers to this is the refusal of business owners to include equity as part of key employee compensation. The unavailability of cash necessitates the use of equity. If a business owner is committed to sustaining growth and profitability and is cash poor, he/she must be willing to sweeten the pot. This, then, leads to the third point of discussion.

Hire good people. For key positions, hire people that are smarter than you. So many small business owners complain about the inability of their staff to help take the business to the next level. All too often, they are primarily functionaries who excel at assigned tasks but have a minimal sense of vision. Clearly, every business requires people in the trenches for day-to-day operations. Yet, continued success requires an ability to expand thinking beyond the immediate or expedient.

Bill Marriott, chairman and CEO of Marriott Corporation, is an accomplished businessman. He moved the company into the hotel business nearly 50 years ago and is one of the most respected people in the industry. When asked the secret of his success, he said that he hires people who are smarter than him, empowers them to do their jobs and holds them accountable for results. In other words, Bill Marriott is an effective leader. He understands how to attract resources and allocate them to their most productive use. Similar opportunities exist for small enterprises. This segues to the fourth point.

Ask questions. If you can't figure out the answer to a problem, then ask somebody. There are resources in Maryland that likely can answer any business question.

The first person you should question, though, is yourself. Why do you want to be an entrepreneur? What are your expectations of the business? What expectations do you have for yourself? I always recommend a personal S.W.O.T. analysis. S.W.O.T. stands for strengths, weaknesses, opportunities and threats. This is an excellent starting point for answering questions about you, your people, the business and the competition. There is nothing wrong with developing your own business model, but test it with other businesspeople. Listen to their feedback and be open to change. Remember, focus and purpose do not equate to inflexibility.

Finally, make appropriate use of your business plan. Generally, the business plan serves three purposes: It develops a roadmap for the business; it attracts capital; and it leads and manages the enterprise.

While most entrepreneurs incorporate the first two, they often ignore the final one. The business plan should not gather dust on a shelf after the business is capitalized. It should be a critical element in leading and managing the business and should be updated consistent with changes in economic and market conditions. If a business loses its way, it is likely that the business plan only exists as a vague memory in the mind of its author.

Few things in life are universal, so addressing these five issues is no guarantee for success. On the other hand, ignoring them will almost assuredly lead to failure. This is not rocket science. Entrepreneurship has enough challenges. Go after this low hanging fruit.



Michael Mobley is executive director of j-ref (www.jref.org), a small business financier that provides loans and consultation services to Howard County entrepreneurs. He also teaches a course on entrepreneurship at Howard Community College. He may be reached at 410-313-6170 or mmobley@jref.org.