Read an Excerpt
An Entrepreneur's Guide to Success
By Marc Allen
New World LibraryCopyright © 2009 Marc Allen
All rights reserved.
Imagine your ideal scene.
Many years ago, with the help of a few friends, I started my own business. We were like most founders of small businesses: full of dreams, but short of concrete business experience; full of ideas, but short of cash. We were overworked and underpaid. We were overwhelmed much of the time, and seriously undercapitalized.
We had a great many vague ideals, but had never written a mission statement. We had high hopes, but had never written a business plan.
We set up a small office and furnished it with the bare necessities to take care of business. All three of us continued to work at other jobs, part-time, and poured as much cash as we could into our little start-up. All of our savings (which wasn't much) went into the company. A few friends and relatives invested along the way, and a few others loaned us money. But the money always went quickly, and we were continually strapped for cash.
For those who loaned us money, we made a clear payment schedule, and we made those payments a priority. But that brought with it more pressures to pay more out every month.
For those who invested, we promised a share of ownership in the company. They would become stockholders and officially own some portion of something, as soon as we got around to incorporating. But month after month passed, and we never got around to setting up a corporation. We were too swept up in the vast number of never-ending daily details that had to be handled to be able to step back and do any long-term planning.
One of our first employees quit; he said there was too much stress in the company and too little security. He didn't want to worry about whether his paycheck would be good every pay period. I couldn't blame him; he wasn't getting paid enough to deal with the level of anxiety in that little office. None of us were, but at least those of us who were owners had the possibility of having something of value in a distant, vaguely fantasized future.
My other job was flexible freelance work I was able to do right in my office, so I was there nearly every day, but I always had the feeling that I needed to give my little start-up more hours than I could give it. Everything was constantly behind schedule; we kept missing important deadlines we needed to make in order to get our projects done on time.
I always tried to get out of the office in the morning and again in the afternoon for at least a brief walk. I usually found some kind of errand that needed to be run, or sometimes I would just walk around the block. I needed to get out of that confined, cluttered space to do some thinking, to clear my head of the endless details that threatened to overwhelm me at times.
ONE MORNING, AS I LEFT THE OFFICE, I saw an old man sitting on a bench across the street. He caught my eye because he was motionless, gazing into space ... an old man, far away. When I came back from my walk, he was sitting in exactly the same position. Apparently he hadn't moved a muscle. He was looking in the general direction of our office, but his gaze seemed way beyond any specific focus.
His eyes and facial expression reminded me of something, but I couldn't remember what. It was quiet, reflective. Maybe there was a touch of sadness — but maybe that was just my projection. There was definitely a touch of humor. He looked familiar, but I couldn't remember why.
I saw him a few times after that, always sitting in the same position. I don't think I ever saw him move. I wondered if he was waiting for something — a ride? Godot? Nothing?
He looked so familiar ... then I remembered where I had seen those eyes, and that expression: on the Yoda doll on my dresser — the Jedi master from the Star Wars movies. The old man was striking in his silence and stillness.
THEN ONE DAY he came strolling through the door of our little office. I seem to recall it was a beautiful spring day, though I hadn't paid much attention to it. My attention had been on the crisis of the day. I don't even remember now the particular crisis — each day had its own problems. About all we were doing was crisis management: dealing with one demanding situation after another.
He breezed in the door, uninvited and certainly unexpected. He was wearing a brown old-man suit, with brown shoes — quite conservative dress. Nobody knew who he was. He stood there, hands in his pockets, and carefully looked around the office. He looked as if he almost expected us to welcome him, as if he had an appointment with someone.
He had sharp features, and his wavy white hair was combed straight back, with a substantial amount of gel. His skin seemed taut on his face; he was old, but it was impossible to tell his age. At first it looked like he didn't have a wrinkle on his face, but as he turned into the light, I could see his delicate skin was covered with fine lines.
I walked over to him.
"Can I help you?" I said.
"I don't know," he said with a smile. He held out his hand. "My name's Bernie."
I shook his hand; his fingers were long and delicate and cool. There was something warm and friendly about the old guy, something that immediately put me at ease.
"Nice little business you've got here."
"Well, it's just a beginning, I hope."
"How long have you been in business?"
"Oh, we've had the office about six months, though we've been working on it for over a year now — no, wait, it's been almost two years now." I flushed, a bit embarrassed — where had the time gone?
"I like the way you've furnished the office."
He said it with a smile; I didn't know if he was kidding or not. The office furniture was a hodgepodge of the cheapest stuff we could find at flea markets and garage sales, with a few leftovers from our apartments thrown in. Our front desk was a sheet of plywood with two-by-fours for legs.
"It's low cost," I said.
"That's what I like about it," he said. "I've seen startups that have put all their money into the furniture. I invested in a company a while ago, and the two owners went out and bought Mercedes and custom-built oak desks. I couldn't believe it! They even had custom-built bookcases! I told 'em they needed to spend their money on their business, not on their furniture. They promised me they'd be fine — and they went bankrupt before the year was out. They didn't invest in the future."
He looked around the office, then spoke with a sudden vehemence.
"As a start-up, you've got to spend wisely. Every bit of capital you've got is precious, and you've got to use it on the things that'll make your company grow. And don't buy a Mercedes until you can easily afford it."
His story piqued my interest. I didn't know what to say; there was a pause that felt awkward to me. He simply looked at me, carefully, with that slight smile of his. I felt as if he were assessing something, but I had no idea what.
"Are you looking for an investor?" He said it casually, giving it no more importance than if he was asking me for the time of day.
"Well ... we could use some capital ..."
"Do you have a business plan?"
"Ah ... no, not really. Lots of ideas, and plans of course, but nothing really concrete on paper yet."
I suddenly became aware that we were both standing, somewhat awkwardly, near the doorway. At least I felt awkward. Bernie seemed supremely comfortable, with his hands in his pockets.
"Would you like some coffee or something?" I said. "Would you like to sit down?"
"Sounds good to me."
I gave Bernie a quick tour of the office — it certainly didn't take long to see the entire operation — and we got some coffee and sat down in my little room in the back. Bernie liked his coffee loaded with milk and sugar. As he stirred it in, I noticed the cuff links he sported: large, one-ounce gold coins. And his tie tack was made out of one of the biggest gold nuggets I had ever seen.
He didn't waste time getting down to business. "You need a plan," he said. "I might invest; I might not. You don't know me from Adam — I could be a weirdo off the street who's conning you for a free cup of coffee." He said it with his enigmatic smile. He could have been speaking the truth — I had no idea.
"But it doesn't matter. If all I do is encourage you to get started on a plan, my little visit here will have been worth your time. You need a solid, well-written business plan before any investor will take you seriously. Every company needs a plan, whether they need investors or not. A business without a plan is like a ship without a course. You just wander around aimlessly, without reaching any destination, because you haven't charted out the course necessary to get anywhere. You haven't even determined your destination.
"Your plan doesn't have to be long and involved; it doesn't have to be complex. But it has to be clear, to you and to anyone else who's interested.
"Start with a brief, concise summary, on less than a page. Tell us what your company does, how much cash you need, your projected growth, and how you're going to structure the return on investment — is it a loan repaid with interest? Or is it equity in the company, getting a certain share of the profits?"
"It could be either," I said.
"That's fine. It's good to have some options. Give us your summary on one page and on the next page give us your mission statement. Make it as idealistic as you can, as grand as you want. Then describe your business in more detail in the next few pages: what it is, what you do as a company. Put it in simple words, so it's understandable to someone who's not familiar with your industry. Show us where you're at, as of today. Tell us who is involved and what you do. Then tell us where you want to be in a year, two years, and five years — and show us your map for getting there.
"First do it as simply as possible — and briefly as possible — in words; then show us with numbers. Show us your cash-flow projections for the next five years. It should be clear how much capital you're going to need, what you're going to do with it, and what results you predict."
"Okay," I said. I grabbed some paper and started making some notes. This guy may have been a wacko, but he was giving some very good advice.
"But, you know, I want to suggest doing one thing first, even before you do your plan — a great exercise that'll help you with your plan, among other things. How many people work here?"
"A total of five. Plus a part-time bookkeeper."
"How many of you are owners?"
"The three of us who started the company."
"The other two are paid employees?"
"Right. The owners don't draw anything out of the company yet."
"How are you set up? A partnership?"
I hesitated. "Yeah, though we haven't really finalized the agreement."
Bernie looked at me oddly, coldly. His eyes were a pale gray, almost luminescent. "Partnerships don't work," he said flatly.
"What do you mean?" I said. "There have been lots of successful partnerships."
I laughed. I knew there were many, many successful partnerships in the world — but I couldn't think of any at the moment. Bernie seemed to enjoy watching me squirm.
"What about law firms, and accounting firms?" I said. "Aren't they partnerships?"
"Oh, there are a lot of successful businesses organized as partnerships," Bernie said, completely contradicting himself. "But they don't operate as partnerships."
He left it there, as if it should be obvious to me. It wasn't.
"What do you mean?" I said.
"A partnership usually means two or more people are responsible, ultimately, for the company, right? For the executive decisions. And over time, two or more people will never agree on everything. There are always disagreements; there will always be conflict. Even if the business is organized as a partnership, legally, one person has to be the president. One person has to make the final decisions. One person has to be responsible for the success or failure of the business."
I didn't know if I agreed with his sweeping generalizations.
"Why?" I asked.
"Because partnerships don't work." He smiled; he seemed on the verge of laughter. His smugness was a little irritating. So was his logic.
"Look — how often has it happened in your company that one of the partners assumes the other is responsible for something, only to find that the other one has assumed someone else is responsible — and something important hasn't been taken care of? Has that ever happened to you?"
I had to admit it had, all too many times.
"That's the nature of partnerships," he said. "No one is fully responsible for the whole picture. So things get neglected. The ball gets dropped, because no one person is responsible for that ball being carried the whole distance. And another thing that always happens — always happens — is that one partner will feel they're putting in more time, and energy, and maybe even money, than the other. There's never an equal balance — that's impossible to achieve. One person always feels they're carrying a greater load than the other."
I had to admit I'd had those feelings as well.
"I suggest you form a corporation — an LLC is easy to set up — and put one person in charge."
I jotted down "LLC" in my notebook; I didn't want to interrupt Bernie, and didn't want him to know I had no idea what an LLC was. (Later on, I looked it up: It means "Limited Liability Corporation," and it's far easier to set up than a traditional corporation.)
"Or if it seems premature to form a corporation, at least choose someone to be president. Some people resist this, saying it's hierarchical, but in my experience I've found it's practical. It's efficient. It works. And it doesn't necessarily have to be hierarchical. The president doesn't have to be the boss, and tell everyone else what to do. But one person has to carry the vision of success, and has to be responsible for realizing that vision. The others can be on the board of directors; they can head different departments, different divisions that reflect their area of expertise — but the buck has got to stop somewhere, with one person. If you want to be egalitarian, or whatever you want to call it, or if you have two strong leaders, you could even rotate the leadership role. But at every moment, one person has to be in charge."
"I can see your point."
"Good. Now here's the little exercise I'd suggest you do, before you do your business plan — and it may help you determine who's going to be president, if it isn't already obvious. It'll certainly help you with your business plan.
"Have everyone in the company sit down — or at least have the owners sit down, if the other employees are uncomfortable with this — and have everybody write down, on paper, exactly what they want to be doing five years from now.
"Assume that your business has grown according to plan — in fact assume that everything has gone really well, and you've been successful — then ask yourself what you'd like to be doing. What's your ideal scene? What if money were no object, what if you could have exactly the kind of life you wanted, what would it be?
"Put it in writing, and read it to each other. Do this before you write your business plan. You'll be in for some revelations."
He finished his coffee. We exchanged cards, and he strolled out the front door. I still had no idea what to think of him. He could have been an old man living in a fantasy world, for all I knew. But he had a business card, and it read:
UIC Universal Investment Corporation
That sounded promising. An address and phone number followed; the address looked like it was a room or suite in a hotel.
We did the little exercise Bernie suggested, and dubbed it the "ideal scene process." All five of us in our little company sat down and described, on paper, the kind of life we wanted to be living five years in the future, assuming everything had gone as well as we could imagine.
Bernie was right: We were in for some revelations. I was the only one of the three owners who even wanted to be running the business five years in the future. The other two wanted to use the business as a springboard to launch them into other creative careers. The exercise helped us put not only the future but also the present into a clearer perspective. I became the president of the company, focusing on new product development; the other two became vice presidents in charge of marketing and operations, respectively.
It became my responsibility to write the business plan — with a lot of help from my friends, of course. I needed a lot of help, especially on the financial side.
Excerpted from Visionary Business by Marc Allen. Copyright © 2009 Marc Allen. Excerpted by permission of New World Library.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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