Category Archives: Business Mistakes

Nice People Can be Bad Bosses. Way Too Often.

September 29, 2010Business Mistakes, Entrepreneurship, Growing a Business, Leadership, Management, WeblogsBob Sutton, Bosses, Leadership, Robert SuttonTim Berry

I’m troubled. The problem, in a nutshell, is that saying jerks and idiots are bad bosses is a bit too easy. It implies that not being a jerk or worse makes you a good boss. And that’s not always true. Nice people can be bad bosses.

I like Bob Sutton’s work a lot. He blogs at Bob Sutton Work Matters, he teaches at Stanford, and his books are good and good for you. I’ve quoted him often on this blog. His latest book, Good Boss Bad Boss, is brilliant. Every boss should read it.

Still, there’s this problem: By focusing so much attention on what not to do, and who not to be, we tend to undervalue the hard side of being in charge. Being a good boss also means following up on unmet expectations and disappointing performance with leadership, advice, teaching, and demanding better.

I think I did this wrong myself. I think I let being a supposed nice guy interfere with my managing a company. You can’t be liked by all and also optimize performance. Sure, some people work best when left alone and encouraged, but – hard, ugly truth – others lose interest and grow entitled. Good bosses deliver both positive and negative feedback. Good bosses make the company better. Whether they’re liked or not.

This is not Bob Sutton’s fault, not the fault of his work. But he tells great stories of jerks and idiots, and stories are powerful, so stories gather. So we unconsciously think being a boss is about being nice. We forget the hard part.

What to Pay That Business Planning Consultant, Part 2

September 16, 2010Business Mistakes, Business Planningbusiness plan writerTim Berry

In my post here yesterday I started to answer “what should I pay a consultant to develop a business plan for my company?” My first take was about the need for planning process and living with your plan over the long term. The key thought there was:

So my first answer to this question is this: don’t pay a consultant to develop a business plan. Do it yourself.

Still, if you’re busy, and you believe in division of labor, and you don’t want to do the plan yourself, this doesn’t really answer the question. So this is part 2 of my answer.

1. The one-time business plan document

Let’s assume for a moment that you want exactly what I say is the wrong thing: somebody to write a 10-20-page document you can call your business plan. There’s no concern about actually planning your business. You don’t want advice or guidance or second opinions, just a damn document. You don’t think anybody’s going to read it anyhow.

For that, find a good freelance business plan writer and good luck. Pay somewhere between $400 and $1,000. Figure the time involved is some listening to you, some shuffling your past papers around, and some writing. It’s a day or two of work.

I just checked average freelancer rates on freelanceswitch. It looks like writers get about $50 per hour, give or take. So $1,000 buys you about 20 hours for an average business writer. $500 buys you 10 hours.

And if you want spreadsheet knowledge double the price, and if you want financial knowledge and understanding, triple it.

Get very specific with the consultant: what services are you buying? Interviewing you? Reviewing your documents? Writing your document? Projecting your financials?

And remember this: that document will be useless a month later. At this point you can refer to my 10 questions to ask yourself before hiring a business plan writer.

2. Business plan help, coaching, and facilitation

The good news in this case is now we’re talking about real business planning to really help you manage your business. This kind of consultant will work with you as much as for you, and help you create your plan based on your goals and resources. Let’s hope you get somebody who will help you build a planning process that generates a living plan that can be reviewed and revised regularly.

This consultant won’t just write a document for you, because that doesn’t work; but he or she will help you do it in a way that will work. Experience in this field is valuable. Don’t reinvent wheels and learn everything the hard way. Get somebody to accelerate that learning.

But the bad news is that somebody with the knowledge of business planning, spreadsheets, and financial standards is worth a lot of money. In this earlier post I calculated at least $200 per hour, maybe more.

And how many hours do you want of that person? Are you going to do the heavy lifting yourself, and optimize the task with leveraged knowledge and expertise? Then you don’t need as many hours. Do you want the consultant to do it all? That’s 20, 50, 100 hours very quickly. And then you need the consultant to transition the changes in the plan, and work with the planning process. I think I’m talking about serious dollars now; I’m afraid to add it up. $10,000? $15,000?

And be very, very careful as you approach this job. These are shark infested waters. Check references of past clients very carefully. In my experience the ratio of real consultants offering real value to charlatans and quacks is about one to four. Remember this: although you can’t get an investment without a business plan, the business plan alone means nothing. Investors buy your team, your market, your product, and your future. The plan is just to show them what you’re planning.

3. My consultant will get me the money

With this one you get even more skeptical. The vast majority of people who sell business plan consulting services promising to get investors are just plain lying. Given that it’s not really the plan, but the team and product and market and such, that investors buy into, then what’s going on when somebody promises to write you a plan to get you the money?

If you do have a great team, market, and product, then a savvy consultant wants a piece of the action. They want to join the team.

Somebody who has the experience and contacts to bring to the party doesn’t just sell that knowledge to the highest bidder. That person can’t bring bad businesses to those contacts. There’s a whole set of worries about reputation. So either your business is really going to be interesting in that upper-echelon world, you have the team and market and product, or that person isn’t what they claim to be.

When somebody promises to get you in touch with movers and shakers, just for money alone, watch out. Keep your hand on your wallet pocket. Something is fishy there.

I knew a guy who did this kind of business for several years. He chose his clients carefully, making sure they had a real shot at getting investment. He charged $25,000 and up, usually along with a piece of the action, and that was 10 years ago. And he delivered on his promise. He used to use Business Plan Pro and the companies he consulted for account for more than a dozen of the successful companies, that got financed, in the bplans.com database of business plans.

But he doesn’t do that anymore. He ended up as CFO in one of his client companies.

If you’re thinking of going this way, check references very carefully. Always talk to past clients. Get a bunch of names and talk to all of them. Too many dishonest consultants can produce one or two names of past clients who are motivated (sometimes with mutual favors, sometimes with money) to speak well of them. Get 10 names and check with all of them.

(Image credit: Ruslan Grechka/Shutterstock)

Is Your Business Either Growing or Dying?

August 30, 2010Advice, Business Mistakes, Business Strategy, Planning Fundamentals, True StoriesBusiness Week, Edward Hess, Karen KleinTim Berry

True story: there were six of us at lunch together on a beautiful late spring day in 1996. We sat on an outside table in the shade and discussed the next big growth spurt. Would we take this marketing-on-steroids proposal, at a high cost? Would it work? Could we afford not to?

I’m not sure any more which of us said it:

The status quo is great. This company is fun. The team works well together. Do we really have to grow?

I liked the idea, but didn’t fully buy it. My answer:

Yes. We’re a software company. We shrink or grow. There’s no alternative.

We did take the growth pill. Sales doubled in the following three years. Today, 14 years later, I still think that basic idea, growth or die, is true. Technologies change quickly. Trends and fashions change. Operating systems and the tools in software change. You don’t stop moving. Settle in, and you’re in trouble.

But is it that simple? I’m less certain than I used to be. And not just because of this recent piece, but still, I’m fascinated by Karen Klein’s Your Perception of Business Growth Is Wrong a few days ago on the businessweek.com site. She interviews Edward Hess, entrepreneur, author, and academic, who says, point blank:

What most business people think about growth, like “grow or die” or “growth is always good,” is not supported by research.

I do have to say that I am not as influenced by the “supported by research” phrase as I’m supposed to be. I’ve seen a lot of foolish notions supported by research. So I’m not that impressed by the results of a team of interviewers talking to CEOs of 54 companies, with average revenue of $60 million. Companies with revenues of $60 million are enormous to me. They have very little to do with the 95+% of businesses that have no employees, or just a few.

What does impress me, though, are the arguments Hess makes in the Business Week interview:

growth that’s not managed properly can lead to dilution of your customer value proposition and risks to your reputation and brand. I think you should approach growth not as an assumption but as a well-thought-out decision. Understand the difficulty involved and go into it with eyes wide open, knowing that you can stop at any time.

companies don’t necessarily have to grow or die, but they must improve or die, meaning they have to continuously improve their customer value proposition or risk going out of business.

if you take on too much growth, it can overwhelm your processes, people, and controls. What we recommend is managing the pace of growth with something like a gas-pedal approach.

Smaller, privately held companies usually don’t have the financial safety net to withstand quality control issues or negative publicity or a legal downside.

All of these arguments, taken from the interview, make sense to me. So I don’t know. What do you think: grow or die? Grow or shrink? Is it different in software, the web, and other high-tech businesses?

(Illustration: 3DProfi/Shutterstock)

It’s Easier to Maintain Business Momentum Than Overcome Inertia

August 24, 2010Advice, Business Mistakes, Entrepreneurship, Management, MomentumphysicsTim Berry

Actually my title for this post is a shortened version. It should have been:

In business, just as in physics, and in life in general, it’s easier to maintain momentum than to overcome inertia.

My two best examples are neither physics nor business: diet and exercise. spinning top You know full well what I mean. Keeping the healthy routine, in either one of these, is easier than letting go and restarting. I’ve known this one from both sides. I’m sure. And I’ll bet nobody’s arguing.

I’ll bet that with those examples in mind you can think of a lot of examples in business. Of course there are the blogs, Twitter and Facebook presences, email campaigns, newsletters, word of mouth in general, awareness, branding, plus a lot of things related to tools and systems, plus teamwork, and even human nature.

Where I see it a lot, because of my special focus, is in business planning. To make planning work for you and your organization, it’s better to keep it going, keep it in mind, keep it easy to access, keep bringing it up and reviewing and revising. If your planning is about a document in a drawer somewhere, then it’s not very useful.

Don’t let down. Ease off if you have to, but don’t let down entirely. If you do, it’s too hard to get the momentum going again.

5 Danger Signs of Frozen Thinking

August 23, 2010Advice, Business Mistakesbusiness assumptionsTim Berry

I posted Beware of What Used to Work But Doesn’t Anymore a couple of weeks ago on this blog, using a change in coffee shop trends to point out the danger of frozen assumptions. This is related to my fresh look idea, which is basically that you can become too familiar with your business, which prevents you from seeing what’s changed.

Key point here: The past doesn’t predict the present, much less the future.

And frozen assumptions is my term for the failure to question assumptions. It’s a kind of business complacency that comes with the passing of time and is part of human nature. It can be bad for business.

And maybe frozen assumptions isn’t as good a term as closed minds. The temptation to know things is very strong, indeed; and I can tell you, from experience, it gets stronger as you get older. But no, please, resist that. Here are five big clues you need to watch for:

1. We’ve been doing that for years, so we know it works.

This was the problem from that earlier post. When things change, you can get caught assuming status quo instead of looking at what’s happening. Just because it used to work doesn’t mean it still does. Danger!

2. We tried that. It didn’t work.

Things change. What didn’t work two or three years ago might work perfectly today. I’ve seen this kind of change for decades, as the businesses that get stuck in the past lose ground to businesses trying something new. I remember when Intuit was scared to death of online bookkeeping, which, at the time, wasn’t working for anybody. But they didn’t get locked into that, continued to experiment, and now it’s working.

3. We’ve always done it this way.

Yeah, right. You’re familiar with this one of course. Everybody in business is. You need to have an automatic alert that rings bells whenever anybody says this one. “Because we’ve always done it that way” is a bad reason to do anything.

4. Everybody else does it like that.

Maybe I spent too long as parent of teenagers. Do you recognize this faulty logic? That’s not a good reason to do anything. Help me in the comments here, please — I know there are a million examples out there, so please add some for me.

OK, there are some things that everybody does like that. But why? Are there good reasons?

5. Nobody else does it like that.

This one is just as bad: maybe nobody has thought of it right, or times have changed, situations have changed, and it’s time for your business to do something delightfully or dangerously different. We call this disruption, and in entrepreneurship and startups we like it a lot, right? Do it differently. Do it better.

(Image credit: vladm/Shutterstock)

3 Stories of Spectacular Trash-and-Burn Job Quitting

August 11, 2010Advice, Business Ethics, Business Mistakes, True StoriesJet Blue, Love Actually, The Bridge Over the River Kwai, theChive.comTim Berry

Talk about letters of resignation! Burning bridges? Well, maybe one of these bridges needed burning. Still, maybe we need to review the 1950s blockbuster movie The Bridge on the River Kwai, on the merit of burning bridges. There is job satisfaction, and end-of-job satisfaction.

There are two great quitting stories in today’s news (or maybe just quasi news) as I write this. First, the girl with the white board quits spectacularly well, an amazing piece of work (fiction or not). Second, the Jet Blue flight attendant who fought with a passenger, cursed all the passengers on the PA system, grabbed a beer, and exited via the emergency chute. Stories like these just have to be told.

If you haven’t seen the girl with the white board, take a minute, click the link, and see it. Have you seen the movie Love Actually? Do you remember the scene in which the guy stands at the door with written messages for the girl? It’s like that, but (if it’s real) different, maybe even better (but only if she ends up with a better job). As I write this I don’t know for sure whether it’s staged or not. I kind of hope it’s fiction, because if not, then she’s had a miserable time and he deserves to be dragged in the muck. But it could be a well-staged hoax. Here’s a link to part of that discussion.

And then there’s the Jet Blue flight attendant’s spectacular farewell. Here is the New York Times summary:

After a dispute with a passenger who stood to fetch luggage too soon on a full flight just in from Pittsburgh, Mr. Slater, 38 and a career flight attendant, got on the public-address intercom and let loose a string of invective.

Then, the authorities said, he pulled the lever that activates the emergency-evacuation chute and slid down, making a dramatic exit not only from the plane but, one imagines, also from his airline career.

On his way out the door, he paused to grab a beer from the beverage cart. Then he ran to the employee parking lot and drove off, the authorities said.

Another Web story said what the NYTimes called “a string of invective” including telling the individual passenger to f*** off, and then, microphone in hand, over the PA system, telling all of the passengers the same thing. Then the beer, and the exit chute.

And the third story is one of my own, from way back when I was on the night desk at United Press International (UPI) in Mexico City. This was in the early 1970s. We communicated via the same teletype machines we used to send the news. The rumor, or company legend, was the guy in some Midwest bureau who walked off the job after sending the following as his last transmission to the wire: “too much work, too little money.”

Which brings me back to the theme of burning bridges. I’ve always believed that you should never ever burn bridges when you leave a job. My advice is never to complain about your last job when looking for a new job. It just sounds bad.

Still, in the case of Jenny with the whiteboard, and what she describes as her work situation there, I think that could be the exception that proves the rule. And, furthermore, she’s done it so spectacularly well that I expect she’ll get a lot of much better job offers as a result. That’s already coming up in the comments to her pictures where they were posted on thechive.com.

And the UPI story? Rumor has it he had another job waiting. So he got some end-of-job satisfaction, for sure.

But with the Jet Blue story, he did get some fame out of it, including his name and picture in national media; but he also got criminal charges, and I think we pretty much call that a bridge burned. Or dynamited, perhaps, like the one over the River Kwai. Maybe he’ll get on reality television?

(Image: a screen shot from theChive.com. Click it for the original.)

Is Flipboard’s Buzz Bad Timing or Good Marketing?

July 28, 2010Business Mistakes, Marketing, Softwarebuzz, Flipboard, iPad, iPad appsTim Berry

What do you think? Is this bad timing, a buzz-killing mistake, or artificial scarcity that creates more buzz?

I was in an email conversation recently with the founder of one of the coolest new news apps available on the iPad, and he asked me what I thought about Flipboard.

I’m guessing why he asked: all that buzz, all at once. This is an iPad app released last week. It’s supposed to integrate Twitter and Facebook, with news and blogs, and a cool iPad look. In case you missed it, try this Google search. Nearly two million hits. Suddenly, everybody was talking about Flipboard.

Buzz envy. Who can blame him? Pardon my cynicism, but it doesn’t look that much different from the new Huffington Post app, or Apollo News, Pulse News, or Skygrid. So how did they get all that attention all at once? Have your marketing people study that one. It’s very impressive.

But here’s the business problem: timing. Wasting your buzz by not having your logistics ready for it. Take a look at what happens today, after you download your Flipboard, when you start to use it:

You guessed it: they’re taking email addresses and building a waiting list. “We’ll reserve your place in line,” they say. The bandwidth wasn’t set up to handle the marketing. I got interested, downloaded, and now have to wait for however long it takes to actually run the app. The buzz happened without delivery. Remember a few decades back, when people talked about vaporware? Credibility gone fast. Buzz wasted. What a shame.

Unless it actually works. After all, I just added another page to the buzz.

Unsend That Letter Award: the Pork People

June 23, 2010Business Mistakes, Business Stories, True StoriesAndrew Sullivan, canned unicorn meet, Daily Dish, Other White Meat, Pork Association, thinkgeek.comTim Berry

Oh dear. Have you seen the pork industry’s “other white meat” advertising campaign? Last April 1 the blog at ThinkGeek.com offered canned unicorn meat as “the new white meat.” Earlier this week they got a cease and desist letter from the pork association. You get the joke, right? The pork association lawyers didn’t. How embarrassing that has to be.

And how funny. ThinkGeek is having a ball with it. They posted Officially Our Best-Ever Cease and Desist on their blog yesterday, obviously enjoying every last detail. There’s an image of the actual letter, as serious as it can be, talking about infringement and dilution of trademark rights. It cites other sites that picked up the joke and ran it with headlines like “the other other white meat.”

ThinkGeek apologizes with all the seriousness of a 13-year-old boy whose wisecrack has the whole class laughing uproariously and the teacher mad. Holding it’s breath, trying to keep from giggling:

We’d like to publicly apologize to the NPB for the confusion over unicorn and pork–and for their awkward extended pause on the phone after we had explained our unicorn meat doesn’t actually exist.

I got it from Andrew Sullivan’s The Other Other White Meat on his Daily Dish blog on the Atlantic site. Which reminds me, if they give out awards for a prolific stream of day-in-day-out interesting blogging, Andrew Sullivan has to get one. He’s been churning out multiple good posts a day, every day, for several years. He jumps over a lot of topics, and I suppose he offends a fair number of people with his opinions, but I’m just in awe of how much good writing he produces.

And I really feel bad for the pork people who didn’t get the joke. We’re all too busy, so easily distracted. And protecting the brand is so important. Still, this is a reminder to us all. I feel like revising my “Stop. Breathe. Think.” holiday post to add “Chuckle” to it. My wife reminds me why angels fly: “because they take themselves lightly.”

Entrepreneurship vs. Education Is A Trap

June 22, 2010Business Education, Business MistakesCameron Herold, Kaufman Foundation, Ted talksTim Berry

Today I’m shocked to find myself not agreeing with a TED talk titled Let’s Raise Kids to Be Entrepreneurs. With a title like that, what’s to disagree with? I’m embedding the talk here too, because I’ve done that on several others, and I’m not going to stop when I disagree. Still, it’s a damn movement now: why get an education when you can just be an entrepreneur instead? I hear it all over the place and it bugs the hell out of me. People acting like these are opposites. I object.

Let me refer you to the TED.com description of Cameron Herold’s talk:

Bored in school, failing classes, at odds with peers: This child might be an entrepreneur, says Cameron Herold. At TEDxEdmonton, he makes the case for parenting and education that helps would-be entrepreneurs flourish — as kids and as adults.

It’s a trap. You’d like to cheer for entrepreneurship as just doing things, as freedom from artificial restrictions like licenses and degrees, getting an idea and building a company. I’m all for that. That’s what it’s been for me in my life. But the very dangerous trap is to use entrepreneurship as an excuse for taking the easy way out of something that would be very much worth working for. Why study? Why work at school? Just be an entrepreneur instead. But first, the TED talk, and then I’ll continue my complaining about it:

http://video.ted.com/assets/player/swf/EmbedPlayer.swf

It’s a trap for two reasons: first, because it’s a cop-out, offering a rationalization for not educating people who struggle. Second, because it relegates education to job training. In both cases it reminds me of tracking people away from school the way they used to do in the 1950s and 1960s, directing the so-called “dumb kids” towards vocational school and job training instead of real school.

So about that first reason, the cop-out factor: In actual life you can’t always walk downhill. Sometimes you have to go uphill. If you don’t, you miss a lot. Baby turtles will walk only downhill after they break out of their shells and that way they either find water or die. Humans need to walk uphill sometimes too. Life takes work. You have to be able to bear down during the crunch times. And knowing how to read, write, add, and subtract is the actual daily stuff of the entrepreneur as much as it is anybody else. Take a look at the Kaufman Foundation’s Education and Tech Entrepreneurship, and you’ll see that in the cream of the entrepreneurship crop, successful founders are likely to be well educated.

And about the second: school, education, ought not to be evaluated according to real or imagined future income. For every self-made genius drop-out like Bill Gates or Steve Jobs there are a few million people stymied as adults for not having stuck with their education, not having done the uphill portions of it, when they were kids. Education is something some people have to forgo because of hard circumstances – struggling families, poverty, true disability – and that is a damned shame. Let’s solve that problem. And let’s not confuse their misfortune with the general rule that entrepreneurs armed with education are more likely to succeed than those who aren’t. And educated humans are better off in their whole lives for having had the luxury of learning to read, write, calculate, evaluate, analyze, and enjoy.