Dear Norm,
When I was in high school, my father and I made furniture pieces that we sold at craft shows. The business could easily have grown, but my father didn't want it to get bigger. Now my brother-in-law and I are talking about starting a furniture business that we'd build into a substantial company. Our problem is that we have trouble imagining ourselves doing it. How can two men from poor backgrounds get over the difficulty of visualizing themselves in a situation that's so different from anything they've ever experienced?
--Jace

Continue reading "How Do You Visualize Doing Something You've Never Done?"

Dear Norm,
I'm 34 years old, and I'm struggling to get my business up and running. I feel as though I'm riding on the edge of disaster, trying to hold the business together and build it at the same time. I've made mistakes in advertising, cash management, and just about everything else. You name it, I've blown it. I think my strongest attribute at this point is my willingness to endure pain. I'm just hoping my cash flow catches up with my stupidity before it's too late.
Scott

Continue reading "Will My Cash Flow Catch Up With My Stupidity?"

Norm,
My home-based design business sells store fixtures and related equipment to the retailers we work with. I try to operate on a 25% to 30% gross margin, but I don't know if that's appropriate. I always wonder how much more revenue we could get if we charged less.
--Norbert

Continue reading "Sometimes Less (Revenue) Is More"

Here's an idea I recently got from a reader named Pat, who lives in New York City. Pat's tired of having his car get nicked and dented whenever he leaves it in a parking garage. He has an idea for a product that would protect the car -- a shadelike tube that would clip on to the front and rear bumpers and that the driver could pull down over the bumpers to protect them.

Continue reading "Not All Fabulous Ideas Make Money"

I recently got a question from a reader named Aaron, who's been in the records storage business, just like me, since 2002: "The challenge I am facing now," he wrote, "is getting the accounts that are not so obvious to find. I can't seem to tap into the legal market or schools. How do I build relationships with attorneys who won't make the time to meet with me in the first place?"

Continue reading "How Do I Meet a Nice Lawyer?"

I recently got this question from a reader named Doug:

Hi Norm,
I'm a typical start-up and can't seem to get my "first customer." I've started a thermography company (infrared inspection), and I provide preventive maintenance inspections. This is the problem: I've never had to start with no customers before, and I have a real hard time cold calling. Any thoughts on getting my first few customers to start the ball rolling?

Continue reading "How Do I Get My First Customer?"

Remember Nova? You may recall that that's the outfit that tried to buy my company. We spent much of last year negotiating and for a while there I really thought we had a deal - until one of Nova's board members, a guy named Frank, tried to reopen the talks and put the squeeze on me (here's the column I wrote at the time). I decided to walk away, leaving quite a bit of money on the table. (Not to worry. Things are working out just fine for me and my company, as I'll explain in a future column.) After the deal fell apart, I did some investigating that I probably should have done before the negotiations heated up and learned that this was hardly the first time Nova had pulled something like this. After I wrote this up in my column, I heard from a lot of people who wondered how Nova was going to continue its strategy of buying up companies like mine -- we were supposed to be the platform for their expansion -- now that the world had seen how they operate. Well, the answer is in.

It seems Nova's expansion is over. It's come to my attention that the people at Nova have put their company up for sale. Is it possible that Frank finally found out that when people are selling their companies, they have to trust the buyer? Is it possible that the rift on the Nova board that my deal exposed has gotten worse? I don't know, but I heard rumors that several other deals they had in the works fell through after mine. And I do know that an investment book promoting the sale of Nova was sent out to a small number of prospective buyers. We tried to get a copy, but they wouldn't give it to us. I guess Frank's ego is such that he can't contemplate allowing me to buy his business after I declined to let him buy mine. Hmmm. Could I have had something to do with this turn of events? You know what they say about what goes around ...

What a great response to my recent blog post, "I Will Lose Everything." And what great ideas from the people who posted comments. Yes, factoring, or any other type of receivable financing, was one of the things I was trying to allude to. I was particularly taken by Jennifer's suggestion of brainstorming with an outside business person or friend who has no interest in your business and can give you a better perspective. The outsider carries no baggage and can often see things that the person running the business can't. When people come to me, that's exactly what I try to do. I also agree with Roger that most people -- myself included -- don't look closely enough at their expenses. I use the expression "creeping expenses." When we start a business, we tend to pay attention to every dollar. Over time, you lose that focus and expenses start to creep up. At our company, at the end of every 12 months we now take another look at all of our expenses and reevaluate them to make sure they're in line. It's amazing what you can find.

Try to check out MSNBC's "Your Business" this Sunday at 7:30 a.m. ET when you'll find me serving as one of the judges in the Elevator Pitch contest. I'm usually a pretty tough sell, but I liked this idea so much that I even volunteered to kick in some dough. What's the big idea? You'll have to tune in to find out, but I can tell you this: It's pretty tasty. (If 7:30 a.m. is too late for you, MSNBC will re-broadcast the show the following Sunday at 6:30 a.m.)

And keep in mind: If you're struggling with some aspect of your business, if you have a question, please send it to me at asknorm@inc.com. I can't answer all of your emails, but I'll answer as many as I can.

Politics is not my favorite subject, and it’s not my favorite activity. I get a little involved in local politics. I support a few local politicians. But on the national level I think the best scenario is real simple: a split government. That way nobody has control and nobody can enact too many laws. The Republicans have blown the last few years, and when one party does something not so good or doesn’t listen--as now, with the war--things swing the other way. That was obvious in the last election when the Democrats took over both houses. There’s still a long time before the 2008 election, but I think it’s very scary. I think it should be scary to all business people.

Continue reading "Why Business People Should Be Scared"

I recently received an impassioned, well-written letter from a business owner named Jerry. Here it is:

Hey Norm,
I happened to find an article you published in June 1998 ["Multilevel Mischief"]. I will certainly be relieved if you reply and tell me you changed your view. As a small business owner myself, I felt your outlook about multilevel marketing was very narrow-minded. While I tend to agree that most companies are a lot of hype, I think that you are missing the big picture. Multilevel marketing is how all businesses function. I, myself, own a company and have marketing managers. They recruit salespeople all the time with the promise of a lucrative commision. They sell and take a percentage, my managers get a percentage, then I get a percentage. That's multilevel marketing.

I started out of my home and so did my managers. There has been a huge marketing trend since you wrote that article of people working from home. Literally thousands of companies, from insurance to retail, are now farming out work to people at home. Online marketing and communication has exploded the possibilities. The truth is that CEOs are becoming outraged because the corporate mentality is slowly becoming a thing of the past. People are tired of filling other people's wallets with money.
There are a lot of terrible MLM compaines. But there are a lot of phenominal companies that provide quality service to their customers. For you to generalize about all MLMs is just plain foolish. I strongly encourage you to reconsider your opinon.

Sincerely,
Jerry

Dear Jerry,
No, thanks.

I’ve been following the recent troubles of Merrill Lynch CEO Stan O’Neal with interest, though not much sympathy. After reading an excellent article in the New York Post yesterday about “O’Neal’s Hubris,” chronicling how he systematically purged everyone who challenged him, I thought it might be a good time to rub a little salt in the wound. I first became aware of Stan O’Neal through my daughter, Beth, who was working as an intern at Merrill Lynch the summer that he took over from his predecessor, David Komansky. She could hardly believe how quickly and how completely the culture changed. Overnight a chill settled on the company. Komansky had made a point of eating lunch with his employees in the cafeteria from time to time. O’Neal never showed his face there. Beth and the other interns were given a strict set of rules governing how they should behave in the presence of the new CEO. If they saw him walking down the hall, they were to stay out of the way and not speak to him. If they were waiting for an elevator and the door opened and they saw him inside, they were not to get on. If they were already in the elevator and he got on, they were to step to the rear and keep their mouths shut. Given O’Neal’s fear of interns, it’s hardly surprising that he would fire Merrill Lynch’s leading authority on asset- and mortgage-backed securities, Jeff Kronthal, when he dared warn about the risks the firm was running in that arena. Apparently, O’Neal never learned the most important rule of leadership as he made his way up the corporate ladder: A company is only as good as the people who work for it, and the CEO’s main job is to create an environment in which they can thrive.

I recently received the following question from a reader named Scott:

I started a transportation company two years ago in Virginia. It grew so fast that it killed my cash flow, and I have struggled ever since. We grew to $9 million in annual revenue within 12 months, but my start-up costs and growth contributed to $587,000 in cumulative losses. I have slowly gotten it down to around $395,000, and we are making money (P&L shows a profit every month this year) but it will take a long time to get out of this hole. I have made deals with all of the vendors I owe, but I am looking for a partner to buy 10 percent to 49 percent of the company, if necessary. I have everything I own in this company and will lose everything if I can't find someone to help me get through this tough time right now. Have you got any ideas or contacts that I might be able to talk to about investors? Any help would be greatly appreciated.

Continue reading "I Will Lose Everything"

I walked out on the roof of my building the other day and was a little surprised to see someone who looked a lot like the President of Iran, Mahmoud Ahmadinejad. As you probably know, he recently visited New York City for an appearance at the U.N. I might have been concerned to find the President of Iran on my roof -- except that this Ahmadinejad was actually participating in the filming of a Saturday Night Live skit that aired this past Saturday. If you caught it, you may have spotted the mural on the side of our building that says "Welcome to CitiStorage." If you missed it, you might want to check it out on youtube. It's pretty funny.

I usually go out on the first sales call with any new sales person we hire. After we leave that first meeting, the new sales person's comment is usually, You didn't tell them what we do.

My answer is always, they know what we do. And they know we're there to make a sale. But the best way to close a sale is by building a relationship. Every time I go into somebody's office, I look at the plaques on the walls, the trophies, the memorabilia, the photographs. I always try to learn something about the person I'm meeting. More times than not, I steer the conversation toward their hobbies, their passions, their families, and try to relate my experiences to what they like. In our business, which is a service business, we never close on the first call anyway. But when I leave that meeting, I want them to remember that we've been there.

Reminder: I'm looking for volunteers: Would you like to have me visit your company, analyze your business, and offer suggestions on how you might improve it? The deal is that you have to be willing to let me (and my co-author, Bo Burlingham) write about your business. If you’re interested, send me a note at asknorm@inc.com and tell me about yourself, your business, and any particular challenges you may be facing. Please be sure to include your address and telephone number.

Would you like to have me visit your company, analyze your business, and offer suggestions on how you might improve it? I’m looking for volunteers. The deal is that you have to be willing to let me (and my co-author, Bo Burlingham) write about your business. If you’re interested, send me a note at asknorm@inc.com and tell me about yourself, your business, and any particular challenges you may be facing. Please be sure to include your address and telephone number.

People are always asking me for advice -- and I encourage you to send any questions you may have to asknorm@inc.com -- but something funny often happens when the question involves a new idea for a business. A lot of people get to the point where they're going to tell me what their business idea is, and then they stop. They say, I'm not going to tell you the idea. This always makes me smile. Forget about the fact that I have more than enough on my plate, and I am not looking for ideas I can steal from other people. More to the point, you shouldn't be afraid to tell other people about your idea, and you shouldn't be afraid of competition. I always ask these people a few questions: Are you going to do this in New York (where I live)? Do you think everyone in New York is going to use your product or service? Even if you do manage to keep your idea a secret, you're going to have to launch it eventually, aren't you? Potential competitors will certainly hear about it then, won't they? The bottom line is, don't be afraid of competition. If you have a good idea and you execute it well, you‚ll be fine.

Here's this week's business tip:

It’s important to learn from what other people do -– both the things they do well and the things they don’t. Here’s a great example: I was going to a movie with my wife, and we had an hour to kill. I’m a sucker for a good salesperson, and I met one in a men’s clothing shop who proceeded to sell me two suits, four pairs of slacks, and three ties. I was treated special, but the clincher came two days after I got home. I received a handwritten note in the mail from the salesman, thanking me and expressing how much he'd enjoyed serving me.

That really made an impression on me. Ever since then, every time we get a new customer, my wife hand writes the customer a note thanking them for becoming our customer. Most importantly, we tell them that if there’s ever anything we can do for them, they can always get ahold of us personally. The response we get to those notes is terrific.

Inc.’s annual conference honoring the fastest growing private companies in America opens today in Chicago. If you’re at the conference, please come by and say hi. You’ll have several opportunities to do that:

First, I’ve got a breakout session Friday morning at 10:45 where I’m going to take questions about my attempt to sell my businesses and the nine-part series I wrote for Inc. chronicling the whole fiasco. I might even tell you what my plans are going forward.

Second, whenever there’s a break in the program, I’m going to be hanging out at the IncBizNet booth in the Marketplace in the grand ballroom. Look for me at 10:15, 1:00, and 4:30. The IncBizNet is the new social networking site Inc. is introducing -- think Facebook for entrepreneurs -- and I strongly encourage you to stop by the booth and give it a test run.

Third, Friday at 5:00, I’m taping a session of MSNBC’s “Your Business” in the International Ballroom. I’ve done the show before -- in fact, one of my appearances will air Sunday morning at 7:30 a.m. -- but this time I’m going to be a co-host. I’ll be interviewing other entrepreneurs, including Tom Szaky of TerraCycle, Greg Wittstock of Aquascape, Katrina Markoff of Vosges Haut Chocolat, and Tom Stern, who created the CEO Dad comic strip. I’m not sure when this show will air, but I’ll let you know in my blog.

If you’re not at the Inc. 500 conference, you might think about coming next year. There’s really nothing quite like it.

Here’s a question I got from a reader named Jose:

"I'm a one man band. I do it all -- sales, invoices, labor, everything. I have a few clients, and I got them by word of mouth. I do pretty good, and I know my business well, but sometimes there is only so much I can do for my clients. I’d like to take my business one step further. What do you recommend I do?"

Continue reading "How Do I Take the Next Step?"

Here’s my business tip this week: Treat your customers as if they’re prospects.

You know how this tends to work: When you have a prospect you're trying to turn into a customer, you go out of your way in every way possible. You offer not only the best prices but also lots and lots of attention. And then if he or she signs up, your attention moves elsewhere. But if you continue to treat your customers as if they're prospects, you'll find that you have a much better chance of keeping them forever. If you want to know more, take a look at a column I wrote called The Return of Customer Loyalty.

Ask most people that question, and you’ll hear a lot of talk about risk-taking and passion and independence. But here’s the real answer: They all want to open a restaurant. I can never understand it. I myself have owned three. And I’m thinking of starting a fourth. God only knows why! It’s certainly not for the profits. Is it the glamour? Sitting behind the bar when your friends come in? I really don’t know. But the allure is always there, and as you can tell from this question, I'm not the only one who feels that way:

“Hello, Norm. I am currently working a new business plan for a restaurant I am trying to start up. I am so lost when it comes to the funding section. I have no start up money, so it will all have to be funded by others. What percentage of the company are they entitled to? I am not even sure how much money I need. I know this is very vague, but do you have any suggestions?"

Continue reading "What Do All Entrepreneurs Have in Common?"

You can tell something's happening. It's in the air, and it's in the news. The credit markets are in turmoil, interest rates are fluctuating wildly, and going forward, the private equity firms aren't going to pay what they've been paying for companies. The upshot is this: If you've got a tempting offer to sell your business, take it -- if it's not too late.

Continue reading "Sell!"

Here’s the kind of question I get all the time. It comes from a young man named Tony Wagner: “I am just starting out and would like to know, Where would I get the best business knowledge? What books? What seminars? What schools? I want to be the best I can be.”

Continue reading "Where Do You Learn How to Run a Business?"

Welcome to The Morning Norm. If you've read my column in Inc. magazine, you may know that when I take on a new venture I insist that it meet three criteria: 1) it has to be an idea or concept that's been around 100 years, 2) it has to be an industry full of antiquated competitors, and 3) I have to have a niche.

If you want to know why I feel this way, you can read that column, but clearly, writing a blog does not meet my first two criteria. And that's part of the reason I'm so excited about this. I like to try new things. It wasn't that long ago that I didn't even know what a blog was, but I think this is going to be a great new way for me to communicate with other entrepreneurs, and of course, that's my niche: talking to other entrepreneurs.

Continue reading "For Entrepreneurs Who Feel They Have Nowhere to Turn, This Is The Place to Turn"