3 Precepts To Turn Your Biz World Upside Down
Disruptive innovation. Within the hallowed halls of the country’s top business schools, there’s a fierce debate raging over the concept of disruptive innovation. Some scholars even claim it doesn’t exist. If I can steal a line from former Supreme Court Justice Potter Stewart when writing his opinion on the landmark 1964 Jacobellis v. Ohio pornography decision: I may not be able to define disruptive innovation, “but I know it when I see it.” Most “innovation” is evolutionary. It effects the flow of commerce in marginal ways, like “veering to the left” at a five-point intersection. Disruptive innovation is like hitting the brakes and swerving to take a sudden sharp right-hand turn that seemed to come out of nowhere. Hacks get hacked Consider Uber, Lyft and Sidecar, the app-based services that connect riders to drivers at cities all across the country. Are they disruptive? Just ask any of the cabbies who are protesting from sea to shining sea. Uber pioneered the idea of connecting riders with private drivers via an app and having the fare settled in the virtual world. Any area of business is susceptible to disruptive innovation. You might be very close to coming up with an innovation that changes the course of your business. The first step you must make is to not idealize disruptive innovation. Do not elevate the concept thinking that it’s only within reach for a few specially blessed individuals. Thomas Edison—whose lightbulb cartoonists use to illustrate an idea—is the one who said that “genius is 1 percent inspiration and 99 percent perspiration.” That leads to the first precept: To develop a game-changing concept, you must be willing to sweat. Don’t go with the flow If we look at notable recent disruptive innovations, they generally occur when two “rivers of commerce or technology” are merged into one new stream. The iPhone merged computing with mobile phones. Uber merged rides with cloud computing. Netflix merged video rentals with online browsing. To sense these opportunities, you have to move beyond the four walls that currently define your business model. Second precept: To develop a game-changing concept, you must engage the world outside of your sandbox. I think my final point is pretty obvious: committing to the development of a disruptive innovation is not for the faint of heart. By its very nature it means that you’ll be navigating through uncharted territory and you are far more likely to fail than succeed. Third precept: To develop a game-changing concept, you must be bold and not afraid of repeated failures. Are you up for a new adventure? If so, step back and start taking in the bigger picture. Grab a copy of Scott Anthony’s “The Little Black Book of Innovation,” talk to people, capture your ideas and go change the...
read moreIndependence Day: The Spirit of America and Entrepreneurship
After adopting the final draft of the Declaration of Independence on July 4, 1776, the document was read in public in cities throughout our young country. It was a time of celebration and patriots exploded in cheers. While historians call our early ancestors, patriots, I call them entrepreneurs. They were visionaries who sailed to an unknown land to build their dreams. It truly was something to celebrate. John Adams wrote to his beloved wife Abigail, (who by the way was at home running the family business), “I believe that it will be celebrated by succeeding generations as the great anniversary festival. It ought to be celebrated by pomp and parade, with shows, games, sports, guns, bells, bonfires, and illuminations from one end of this continent to the other…” And so we celebrate around the country on this special day with fireworks, parades, community festivals or simple backyard barbecues. Personally, I think it’s a time to celebrate more than just the independence of our country: It’s also a time to be thankful for our personal independence as well. While things certainly aren’t ideal in our country right now, it is still the land of opportunity. I rail against the fiscal policies of our government which stifle entrepreneurial growth, and I argue against the burdensome regulations that affect our ability to grow our businesses. Nonetheless, I have to admit that I am living a life where I get to do the work I enjoy, when and how I want to do it. That is the benefit of being an America. The opportunity to build wealth and to create your own destiny remains despite the economic and political turmoil. So however you’re celebrating Independence Day, take time to be grateful for your own entrepreneurial opportunities. Here’s to our...
read moreHow to Keep Employees From Becoming Competitors
Many of you submit questions through my website. I do my best to respond in a timely manner with information to help you succeed in your business. Recently, I’ve been getting a lot of questions regarding employees who leave to become a competitor so I thought I’d take this opportunity to discuss ways to protect your small business. Eric from Wisconsin wrote that had successfully grown his marketing business over several years and had reached the pivotal moment where he felt he needed an employee to help him manage his current workload so he could add more clients. Eric’s fear about adding staff wasn’t focused as much on the financial risk as it was the risk of training someone on the unique strategies he used for his clients, then watching the employee take that knowledge and start his own firm or go to work for a competitor. Yes, that can happen and it is a risk every business owner takes. Whether it is intellectual property, a customer list or even something as simple as excellent hands on training, an employee may leave and attempt to take valuable information with him/her. My father groomed a young man in the funeral business, taking him in as an apprentice and teaching him the business for over 20 years. We learned from a family friend that he was in the process of building a new funeral home and was copying files at my family’s business at at night. My parents and I confronted him and found out that it was true. We asked him to leave immediately. He cried and said he was sorry, but the damage was done. Fortunately, the my family business continued to prosper while the former employee, buried in debt, struggled to build his business. There are two important things to acknowledge. First, you can’t build a successful, sustainable business without a team. I call it the MYTOP theory. Multiply Yourself Through Other People. Secondly: There are unethical people in this world and one of them may end up working for you at some time. It is the risk of building a business. There are, however, a few things you can do to protect your business. Make your company a place where people want to work. Create an environment that is empowering and fun. Give your staff the opportunity to profit as the business profits. Allow them to feel part of the success and they are more likely to remain loyal. When your staff feels a real part of the business, there is less incentive to leave. Ask employees to sign non-compete/non-disclosure agreements as a condition of their employee. Non-compete documents must be reasonable in time and scope, and you cannot bar an individual from making a living except to the extent that it is necessary to protect your business. The extent to which non-competes are allowable varies per jurisdiction so it is a good idea to consult with your business attorney. Some people believe non-competes don’t provide much value, but in my opinion it minimizes the risk of an employee from jumping ship to go to work for a competitor or to start his own business. At least when the employee signs the document, they are aware that there may be serious consequences for actions they take that could cost...
read moreNeed a Vacation? Uncle Sam May Help Pay Your Way
Business travel is part of my life. Practically every week I’m on a plane headed somewhere. For many years, my husband couldn’t travel with me on these trips because someone had to be at home to manage family matters. But today our situation has changed, and he has the availability to go with me. So I’ve been extending my stay on some business trips so my husband and I can take in the sites and enjoy a little leisure time. While it’s fun to travel with my husband, it also makes our mini-vacation more affordable. Often times, a client is paying for my transportation, hotel and meals. Therefore, we only pay for his transportation costs, the additional hotel nights and of course, our personal meals and activities. Tax Deductible Expenses. Even when a client isn’t paying my expenses, it’s still more affordable for my husband and me to combine business and personal travel because business travel is tax deductible. The IRS has no problem with business owners deducting legitimate expenses as long as the travel benefits or advances your business. What’s considered legitimate? Anything that is an ordinary and necessary expense. The IRS notes an ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. You can find a more information about deductible expenses on the IRS website. Stay the Weekend. Most of us conclude our business on Friday, but if airfare costs make it more economical for you to stay over the weekend, then you may be eligible for what’s known as the “Saturday night stay-over rule”. The IRS allows you to deduct the out-of-pocket cost of staying the extra time even though you spend it vacationing. Just make sure the extra cost of the stay-over is less than or equal to your airfare savings. Reward Programs One advantage of being a road warrior, is racking up points on loyalty programs. Many of the hotels offer special packages for their frequent guests, such as a second or third night free, or a reduced weekend special. You can take advantage of these programs to reduce the cost of your personal stay. Ask a Tax Professional When you combine business and personal travel, make sure you keep detailed records of all your business related expenses. And before you start deducting, consult with a tax professional. Do you plan to travel with your significant other or family this summer? Share your...
read more4 Tips to Prevent Employee Theft in Your Small Business
The statistics are shocking: * 75 percent of all employees have stolen from their employers at least once. * $50,000,000,000 is lost to employee theft each year in the US. * 33 percent of all business bankruptcies are caused by employee theft. Most of us look out over our team and think nothing but good things about them; however, the numbers point to another reality. And even if we believe that we’ve done our due diligence and pulled together a crew of good, honest, hardworking men and women, we can’t bury our heads in the sand. Small business owners need to be vigilant. Here are four ways to tighten up your operation and help prevent theft and fraud. 1. Thoroughly screen applicants The time to start is before the hire. With that knowledge, you might want to know who is least likely to steal. Women fare better than men — about 41 percent of women steal while almost 60 percent of men are guilty. Also, of all the various educational categories, those with post graduate degrees are the most honest: only 11 percent of that group steals. So if you’re in a position to hire a staff of women Ph.D.s, you’re in good shape. The rest of us need to do a better job with background checks. Unfortunately, laws regarding pre-employment background checks vary widely. However, there’s no question about references; check them thoroughly. Get solid legal advice about what you can do in your area, write a procedure and stick to it. 2. Make it the culture Consistently highlight and reinforce your concern about theft and fraud. Starting the first day an employee is hired, communicate your policy. Employee tips are the single biggest way theft is discovered. Make sure you have systems in place so employees can safely report questionable behavior without fear of retaliation. 3. Audit Implement systems to check up on employees. This means that first you need to keep clear and accurate records. Further, your record keeping system needs to be well designed so people actually use it. Make it too burdensome and even your good employees will start to let things slide. Stir the pot occasionally. Reassign people so they don’t get so comfortable in a position that they know no one will ever come along and check what they’ve been doing. Cross training is also good for your small business’ flexibility and efficiency. 4. Be sensitive to employee disposition Disgruntled employees are more likely to steal. They begin to see it as a way to “even the scales.” Also, when employees are struggling under too much pressure, they may lash out at an unresponsive or uncaring management by stealing. Look for signs that things aren’t right with your employees. The Small Business Administration says to keep your eye out for these red flags: * A sudden, unexplained change in behavior, * Financial records sometimes go missing, * Being overly protective about a workspace, * Working at times when there is no supervision, * Unexplained debt, and * Refusing to take vacations. If you follow these steps, you can do a lot to help your employees stay among the 25 percent who haven’t stolen from their employers. And that’s good for your business....
read moreTwo Court Decisions Set to Shape US Commerce
It has been a big week for businesses, workers, government, unions and the First Amendment. The US Supreme Court handed down two 5-4 decisions that will certainly affect commerce in the years to come. The most widely anticipated decision was the Hobby Lobby case. The Hobby Lobby chain of craft stores is a closely held corporation. On religious grounds, its owners objected to the Affordable Care Act’s mandate that requires providing contraception services. Decision applies narrowly While the Supreme Court decision didn’t let all corporations off the hook, if the corporation is run by a small group of individuals, those employers can claim a religious exception. In practical terms, they will now be treated like nonprofit religious organizations, which have already been able to opt out of the contraceptive mandate. Less direct government control over the day-to-day operations of small businesses is a good thing and this decision seems to go in that direction. We’ll have to see how it plays out in practical terms. Unions take a hit The Supremes also dealt a blow to unions. In the perpetual standoff between business and unions, this seems like a win for business, but only in the most general sense. The decision centered around public sector employees and did not cover private sector employees. Home health care workers who have opted out of union membership cannot be required to pay the union a fee to cover collective bargaining activities. If they disagree with positions taken by the union, requiring payment would violate their right to free speech, the Supreme Court ruled. This could lead to a significant drain on union coffers and membership. The only real increase of union membership in recent decades has been among public sector employees. Weakening the public sector union base, would generally weaken the US union movement overall. While US business didn’t have a dog directly in this fight, I suppose most leaders are cheering the decision. White knuckle outcomes And while each of these decisions will shape the future of commerce, perhaps even more significant is the fact that both were 5-4 decisions. That’s the US legal system’s equivalent of a World Cup soccer match going to a penalty kick shootout. Winners come out knowing that they narrowly escaped defeat and losers have a hard time accepting the decision. I sure like those 9-0 Supreme Court decisions and I wouldn’t object to the US team winning one down in Brazil by a score of 3-0. Both events seem quite rare nowadays, especially when the stakes are...
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