Family Businesses

Family Businesses

Action Hero – Erick Slaubaugh

Erick joined his dad’s business when he was 19. He helped build the alarm system business and became CEO. To Erick, starting a business means making sacrifices. You have to sacrifice to put your money and time into making the business successful. You will put in extra hours, even on weekends to grow the business. In addition to sacrifices, starting a business takes courage. Erick believes that anyone can start a business if they really want. Asking questions is a good thing. It is not a sign of weakness, but a sign that you want to learn and improve. Having mentors helps to make sure your thinking is on track. There will be times when you have to make tough decisions. One of those for Erick was when he had to let his dad go from working in the business. Downsizing is difficult as well because it affects the livelihood of other families and individuals. Erick also learned that you should focus your efforts on what you know. He tried to get into a different business market, but realizes that he would have been better off investing in his current business rather than a new and different venture.

Family Business Equity

In the family business, dividing up ownership or equity does a few things. Equity would be what is left after expenses are subtracted from the income. If each family member owns a certain percentage, the business can eventually either be sold or equity can be bought out from another business owner that doesn’t want to continue in the business. Having equity also gives each member responsibility with the debt the business acquires.

Research the Business

It is important to do your due diligence when considering a new business. It should be in an industry you have researched and are familiar with.

Business Plan and Vision

In a family business the successor should have a vision for the company. The vision needs to incorporate potential for expansion, growth and development.

$100 Challenge – The Perfect Cookie

I have learned that “The Perfect Cookie” is not so perfect a business. I burned my arm when making one of the cookies due to the style pan I was using. (It separated causing one part to fall on my arm when removing it from the oven.) I also had to replace my decorating kit and had added costs of cooking parchment paper to more evenly cook the cookies. I started working on the PowerPoint. It is hard convincing investors to invest in a business that I no longer want to invest in.  All my sales are done.

Franchises

Franchises

Strive for an “A” Business

Lynn G Robbins gave a talk titled, “Making a Living and a Life.” I learned that pride is wanting more than others. We need to focus on not just making a living, but making an honest living. In our business and life, are we building the kingdom, being honest, filling our life with good works? If we are at the “A” level, we should seek for the kingdom of God to do good before seeking riches. Our focus should be the love of God and our fellow man. We will be a kingdom builder. Business is products and services rather than needs. At the “B” level, there is still a love of fellow man, but the primary motive is money. A “C” level company will sell you something but not service it as selling the service and receiving money is the primary motive. The “D” level focuses on filthy lucre and is harmful to customers or clients. Finally, the “F” category harms society. We need to strive to have an “A” business. In all businesses, what is our focus?  Can we ask the Lord’s blessing in our endeavors? When questionable products or services are involved are we directly or indirectly involved. Does the product or service hurt society? This article really makes me think about what kind of work I want to be involved in. Finally, in the end, are we neglecting the most important class of all in how we treating mankind? Mankind is our true business.

Nicole Donnelly – Action Hero

Nicole had an idea to use legwarmers on her baby and discovered it helped prevent baby’s leg rash. This inspired Nicole to start her own business. She created the product, “Baby Legs” which is now available in stores worldwide. Nicole shares that we should embrace fear and work through it. She was into snowboarding and shared a lesson that she learned. The lesson was to “commit to the trick.” In other words, if we are in the middle of the air on a snowboard, we don’t quit half way, we need to follow through. She has learned that business requires both leadership and teamwork. She recommends that we know our numbers and understand the accounting in the business. Now that Nicole is doing well, she is giving back to the community through donations of her product. Getting a business to a point of giving back is what makes it most rewarding.

Franchisees

I had the fortunate opportunity to interview Marv Mackin, a long-time franchisee of four Taco Bell locations in California. Marv purchased his first location in 1967 while attending college. When financing, Marv suggests getting a SBA Loan (small business loan) and then using small banks for additional funding. SBA’s like working with and funding franchisees. If you finance 40% of the project through SBA loan, you can usually get a small business loan for 5% over 20 years. The bank loans are usually higher and for shorter durations. Running a franchise takes a person with high energy and attention to detail. Marv warns that if you don’t watch closely, you won’t be successful. He taught me that a lot of work and money goes into making a business successful. But most importantly, doing it right was more important than the number of restaurants.

 Which Franchise is right for you?

There are several factors to consider when deciding if a franchise is right for you. The article on, “How Franchising Works” tells us to consider the following: What is the work environment like? What are the projections on sales? Can you put together an accurate business plan and qualify for business loans? Additionally, you need to research the market and fees involved in the franchise, get advice from an attorney who specializes in franchises. Have them negotiate points on the final contract, and know the renewal laws and options for the franchise including what is required to transfer the franchise to another owner.

$100 Project – The Perfect Cookie

The Perfect Cookie is ready to wrap up. I have one more possible order. I talked to someone about making another cookie for Easter. I didn’t do anything else in the business this week because I had no sales. I did make a giant cookie for the missionaries, but didn’t sell it. 

Business Process

Burt’s Bees

I think the business should not be sold until either the profits slow or until Roxanne and Burt really want out. For now, I think Roxanne and Burt should start production in North Carolina and see where it takes them. When Quimby applied for a credit card she needed a cosigner. I do think that even though the company had money in the bank is would be wise to have a large credit line just in case the start-up production costs were high initially. She also didn’t have a lot of business education and would need to hire some experiences business help. Like Quimby I don’t like debt, but I think in business it may be necessary to expand if it is done wisely. Initially Quimby was doing things right by building slowly without going into debt.

In my recent interview the business owner did not acquire any debt in his business. He said that it is too risky to owe interest on top of start-up costs for a business. He also said that he would never get a loan that was 10% or higher. That is why Quimby should get a line that doesn’t have to be used and won’t acquire interest unless it is used. I think it is a safety net for her business until she has progressed the production phase and sees continuous profit in mass production.

United in Building the Kingdom of God – L. Tom Perry

The Book of Mormon teaches us cycles of human behavior. We see how people fall when they turn to worldly possessions and needs. Whether we have too much or too little, the Lord wants us to use our resources to build the kingdom of God. The Book of Mormon teaches us to not discriminate, but to share what we have. If we seek first for the kingdom of God and then obtain riches (invest in things of an eternal nature), we will use those riches to do good. In business, our first priority should not be to seek for profit, but to have a greater purpose. Small things often become great things. Even in business, we can begin small and build one step at a time.

Entrepreneur Tips

In building our business we should not settle for less than the best people. Get people you like that you agree with. We also should aspire to be experts. Get to know your product or company idea very well before you start to hire employees. Technology is a great market to get into. The priority is to build a business instead of building a brand. Engineering degrees are very helpful in startups. Prove your model locally. Build a business because you love it and want to change the world, not for the money. Build the next big thing.

Catherine Rohr – Action Hero

Catherine was a Wall Street investor, but changed her business plan to teaching prisoners about running their own business. She taught convicts how to use their talents to run businesses. Most companies won’t hire convicted felons. Giving felons a goal and purpose after they get out give them a reason to do something with their lives even if they cannot find a regular job. At first, Catherine was judgmental about prisoners, but realized they were making big changes in their life and had untapped potential for greatness just like you and I. When she got knocked down, she had a resolve to get back up and not quit. There were obstacles, but Catherine was committed to make it work. Catherine suggests to seek out the best people and stay close to them. They will be a great resource in your business. Her vision to help these prisoners become productive citizens by teaching them skills while in prison has come to pass and inspires her daily.

Business Processes

The ways to avoid problems with implementing a new process are to "follow a process in the development and implementation." If things are not going smoothly, select what needs to be improved and analyze the way things are being currently done. Next include those in the process to get team feedback on ideas and structures that are currently in place, the order things are being done, and what things would help to make the flow or process work better. Ask "skeptics" that challenge the process to get feedback. This will help you avoid potential problems. Then get the resources to make the changes. It could be a new employee or a new system, etc. Once you have the ideas and new system in place, explain the new process to the members it affects and implement the changes. Make sure team members clearly understand the process and are constantly trying to find ways to improve the process as problems arise. As the process is working be sure to continue to evaluate the functionality and continue to review, improve, and adjust as needed. Problems will be sure to rise, but they can be minimized with proper communication and processes in place. 

$100 Challenge – The Perfect Cookie

I did not make any sales this week for my cookie challenge. To date I have made 16 cookies, one was a sample cookie not for sale. I made the $100 profit and will make more if there are more sales. I spent 1 hour on the design order page, 2 hours shopping on several occasions for supplies and ordering boxes online, 1 hour on delivery, and an average of an hour per cookie including the decorating. The total time spent was 20 hours. I was only successful because I had to do several cookies for a big event, but I am a terrible sales person. I don’t feel as though my product is something people want. I think smaller packages for a lower cost would have been better. 

Hiring

HIRING

In Hire Slow Fire Fast we learn to be selective a careful when hiring a new employee. We also learn that if things are not working out, to fire quickly. My husband is in charge of hiring and firing a team here in San Diego. He has plenty of openings and plenty of applicants, but he is very conservative in hiring and takes time to find the right people. The person must have ample qualifications on his/her resume. The person also must pass a phone pre-interview where if they are not extremely confident in their ability as a sales rep or difficult to understand, they won’t be called for a follow-up interview. Training begins immediately and new employees are mentored for each sale until they have the strategy down to a science. My husband is also very quick to fire. If the new employees don’t start off flying after training, he gives a performance review and pending the following week or two, they are usually out of a job. Following these hiring measures has enabled him to have the top growing team in the US for his company.

Jet Blue

Making Money in Jet Blue and the Advantageous Approach: JetBlue hired experienced leaders in the airline industry to create a new airline that focused on what customers really wanted: efficiency (paperless tickets and quick turnover) quality service (including more legroom and leather seats), and affordability. One thing they cut were the hot meals and for a fraction of the meal cost they instilled leather seats and TV monitors. They realized that people who flew didn’t care for airline food, but did enjoy watching TV and sitting in leather seats. To maximize profit, they focused on locations where there was a high demand for travel and reducing unimportant costs (like food no one likes).

Hiring GREAT people: Hire people with experience who share in the vision of the company. Ann Rhodes was in charge of human resources. She had worked for Southwest and knew what to look for in hiring the right people. Hiring committed people with experience and a focus on customer service added great value. The other top executives also had worked for other airlines in leadership positions (the executive VP, CFO, COO, VP of HR all had airline experience). Aside from upper management where experience was key, other hiring was focused on having the right attitude which meant many people did not have experience, but they had the right attitude. With the right people, deep funding, and experience as to what things could be improved on in the airline business, Jet Blue had a foundation for success. The focus of the company was safety, caring, integrity, fun, and passion.

I learn from Jet Blue to hire top executives that share in the vision and have experience. I learn to hire others with the right attitude. I have also learned that we can create a company by taking a current market and making changes to make it better (i.e. focusing on the non-flyer market who would rather drive or not go unless the fares were cheaper). See what is going wrong with the industry and find a way to improve it.

Michael Gerber’s E Myth

I have learned through Michael Gerber that we should follow the principles outlined in The E Myth Revisited. Develop the Entrepreneur, Manager, and Technician. Create a clear vision for the company. Develop a business model and follow a process. Work on your business to create a turn-key system. Specify job descriptions, hire the right people, and make the environment a place your employees thrive. Above all, be aware of the customer’s wants and make adjustments accordingly. As Michael Gerber has taught, let’s get started and create “a place where we can practice implementing ideas in a way that changes lives.”

Matt Stewart – Action Hero

Matt Stewart has started many businesses and corporations. He has experienced success and failure in business. The businesses that failed were the ones where his focus was on profit instead of teaching and learning. The successful businesses had a different approach. They were founded on core values and principles and focused on a mission. His original plan was to go into the legal profession and head off to law school, but this came to a halt when he lost his job. So he and some others started a painting company going again. At first he was an employee and then ended up buying half the business. This business taught him integrity and core values. At one point an employee died on the job. Matt used this very difficult experience to change the way the business was done, to change the equipment that was stocked. Sometimes entrepreneurs get overly excited about something they should never go into business over. Matt learned the hard way that even if you think you can do anything, sometimes you need to stay focused on what you know and be more careful with which businesses to pursue.  

Hiring

Mark Zuckerberg (Facebook) looks for raw intelligence when hiring. Intelligent people can adapt more quickly than people who might have years of experience in the same field. Some of the best people he has hired were right out of college.

People who LOVE the product or service are the people we should hire. Also hire people better than you. Finally, hire the people that you see waiting for the interview that you instantly want to go up and meet because you are hiring someone who will be part of your business family. – Guy Kawasaki

$100 Challenge – The Perfect Cookie

This has not been an easy project. I haven’t had a car this semester and so delivering the cookies, buying ingredients, and selling has been challenging. This week I replaced some ingredients in my home so that I would be able to make more cookie orders if they come. I had my sister donate money towards two cookies that I made for a function. I made them last week, but collected the money this week. I worked so hard last week on the cookies that this week has been a breather and I focused more on getting my interview done for the class.