Many (but not all) entrepreneurs feel that selling is scary, horrible and not nice!

However, this view is typically based on a misunderstanding of what selling is really about.

Yes, there are hard sales people who will flog you anything they can (actually, anything that generates a large commission) but these people tend to burn out – as do their businesses.

Instead, non-pushy people can become great sales people simply by thinking about sales in a different way.

Here’s how…

For this piece I am indebted to Geoff McClure who provided me with great definitions.

Firstly, according to Geoff,  ”selling is about solving problems”.

Anyone have an issue with that? Of course not. So, think ‘problem solver’.

Of course, before you can solve a problem, you have to identify it. Hence, Geoff defines generating leads as ‘finding problems to solve’.

So, the act of building a sales pipeline is really about finding people who have a problem that you can solve.

What might these problems be? For businesses they might be;  lack of sales, falling profit margin, marketing costs, costs going up, inability to hire the best people, lack of funding etc…. For individuals it might be, need to build a pension, need transport, need to heat home, need to eat, need a holiday.

In the current climate these problems might be defined as ‘affordable’ – so I need ‘affordable transport’ etc….

So how do you generate those leads? Again, Geoff tells us to ‘create “Noise” about the solution’.

“People buy solutions to problems – from people who listen, who can show how their products solves the problem.”

Lastly, sales people do need to be enthusiastic about their solution. And yes, they also need to be persistent unfortunately!

But there is an ocean of difference between the pushy sales person who wants to solve HIS problem (ie a sales target or commission) vs the persistent sales person who wants to solve YOUR problem and does so by listening carefully.

As Geoff says

“Given a lead, two ears, some thought and enthusiasm anyone can sell.”

So there you have it.

Selling is not so scary – when you turn it around and see it as problem solving, and it all starts with listening – not talking!

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Why not take a look at our other article about sales and sales people
http://www.ragstowreckages.com/2011/01/what-do-you-call-an-entrepreneur-with-a-great-idea-but-no-sales/

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The worst mistake I’ve made – and now see others make – is to think that if I build it (a great product, web service etc…) that the customers will come.

They will not.

Sadly!

Okay, Google is an exception – but do you really want to play 1/1000 kind of odds?

The most common reason why a business doesn’t take off or move forward is because of a lack of sales.

Yes, some will say it is the lack of funding and it is true that the funding will run out – but only because the money spent so far has failed to generate sufficient revenue to either make the business break even, nor, to persuade investors to keep funding the business in the hope of future revenues.

To often a business has a great idea or piece of research, but is not making enough sales or is not engaging with its market early enough..

If, having built your splendid product or service, you expect buyers to flock towards it then you are make the classic error of engagement with the market at the END of the product / service development cycle – instead of DURING the product development phase.

Above and beyond the ability to recruit great people to support your business, this failure to engage with your potential customers DURING the product development or research phase is the principal reason that businesses fail.

Note, the harsh truth here – businesses do not fail because they lack funding – there is plenty of money available to back great ideas and strong entrepreneurial teams. No, instead, entrepreneurial businesses close because they lack either the right team to commercialise their business or fail to engage with the market soon enough.

Or, to put it another way, the money runs out before the ‘great’ idea is adopted and bought by the market.

Hence, the issue with standard business plans

Too many biz plans make the assumption that you begin by hiring senior marketing or sales director. Of course, this is a 3 month search and then you need to allow them to give notice too. That makes it a minimum of 6 months before any real work gets done.

And, following the same pattern, you can not hire a marketing manager, web manager, account managers, SEO managers etc…. until you have your sales or marketing director in place. So, recruiting a team might take a year.

Can early stage businesses afford to wait a year before it starts to market? No!

This corporate recruitment approach has shocking outcomes for early stage businesses…

1. One year of time required to build a sales and marketing team

2. Significant costs are incurred both in the recruitment costs AND also the cost of running the rest of the business whilst you wait for your sales and marketing to *finally* get going.

But it can get worse – you might hire the wrong person and you might only discover this when you review the quality of middle management that he or she hires.

Or, that you don’t need a super salesman – what you may need is a super digital and new media team.

In this case, you’ve wasted 6 to 12 months, tens of thousands of pounds and now have to unravel your mistake before you can begin a second 6 month process of recruiting the right team. In the meantime, your competitors are on your trail and you’ve burnt through your funding with precious little to show your investors to support an additional round of funding.

Okay, okay, you can see – this isn’t going to work. We can not simply build great products and services and then hope we can find a place in the market.

You see, smart VCs and Business Angels will not fund businesses with this kind of plan.

Instead, VCs – especially in this current environment – want to invest in business that have ALREADY delivered sales. And, have built product and service innovation into the DNA of the business. That is, that they are responding to market needs and developing products – or accurately forecasting where those needs are moving.

The circular argument to avoid is this: You can’t get funding without sales, you can’t hire without funding, exactly what is he to do?

The answer?

Well, the answer is to forget the idea of hiring a senior marketing or sales director.

Instead, hire a freelance or contract team to deliver a short term project – quickly – and use the results and insights to improve your products and services and/ or change and adjust your marketing strategy.

So, put together a small team of key individuals – all working freelancers or from small key agencies – and give them a fixed budget and objective to deliver.

This approach will allow you to test your market early-on DURING your product development and to use the customer insights / preferences and behaviour to create better products that meet customer needs more directly.

What is the benefit of this freelance approach?

The benefits are simple

1. Your products and services can get to market in a matter of weeks instead of months and years

2. You will know almost instantly if your products and services will succeed, and if not, you can quickly stop your marketing spending and avoid very costly product / service development mistakes

This will then allow you to go back to the drawing board and improve your products / services or adjust your marketing strategy until you can sell profitably.

3. This approach will massively appeal to investors and hence, by demonstrating that you are able to find a far cheaper and lower risk way of taking your products and services to market, you massively increase your appeal to investors.

To sum this up, the freelance / project approach is faster, cheaper and you are more likely to succeed and get funding.

Okay, convinced? Then how to do you do it?

How do you implement a freelance approach to sales and marketing?

You now have two choices.

1.) You can either build a contact list of freelance marketing, sales, IT, PR, writing, design and sales people – such that you can quickly build teams to deliver your marketing projects

or…

2.) You can hire someone else to run the project and recruit the freelance team for you.

If you want to go down the DIY route – then sign up to the next Enterprise Freelance Fair in Liverpool on the 16th March or Cheshire/ Daresbury on 31st March – where you can meet a wide range of freelancers from many different walks of life who can help deliver your marketing and sales projects

or… if you don’t want to engage with freelancers directly, and have the money to do so, then hire Project2Sell to put the team together for you and project manage the piece of work.

Regardless of which path you choose to take (and you may choose to do both – ie. directly recruit key freelance talent whilst outsourcing certain projects) you no longer have the excuse for your business not getting into its market place.

Now, no one can guarantee that when you take your products to market that the customers will want them, but, even if this is the case, you can find this out early (before investing your entire life savings) and either adapt your products/ services or start with an entirely new idea.

Either way, your chances of success in your current or future business will be massively increased.

That’s why ‘HOW’ you engage with your marketing and sales effort is such a key determinant of whether you will succeed or not. It is also why lack of funding is not a good enough excuse anymore.

So, don’t believe in the myth of ‘build it and they will come’ – instead make your engagement with the market an interative process that feeds and supports both the development of your product / strategic AND your marketing strategy at the same time.
If you can achieve this – and this is no mean feat – then you are far more likely to succeed and to be able to raise any additional funds that you might need.

Successful investment proposals come in many shapes and sizes – they may be long documents – or they may be short documents. Sometimes, there is little or no document at all (although this is more rare).

The key thing that all proposals do is they find a sweet spot between the conflicting demands of putting together the best team, developing the best product and creating a profit with return to shareholders.

These three elements – team, product/ service and finance (ie cashflow, investment and profit) are like the base elements – fire, water, air and earth. Without them, nothing can be created – but equally, they are in conflict.

Team, product and finance in conflict?

Yes!

Think about it, a top team might include the CEO of a FTSE 100 company – but he or she might cost you £50k to £100k per year. Can you afford this? Or, perhaps, would you want to afford this?

Equally, you might be able to design or develop the perfect product is only you had £1m – but, would you be able to make a profit?

Lastly, if you cut costs so far that you have no money to spend on sales and marketing, how will you ever launch your product or service?

Hence, these three areas are in conflict – more spent on marketing means you need to raise more money and will offer lower returns in the short term (although, with the prospect of better returns in the future).

Equally, you want to build a non-exec and management team with the right experience, knowledge and contacts. But, are they all committed to your project? Will you be able to pay or reward them sufficiently? And, if you are giving shares and options away to your management team, have you left enough on the table to make the investment attractive to investors?

That’s why the search for funding is really about the push and pull between these three factors.

And, that’s why, when you take our questionnaire – Is My Business Ready for Investment - you’ll begin to see whether your proposal has adequately dealt with all three elements – team, money and product – and therefore, whether your business is truly investment ready.

Of course, many entrepreneurs don’t take finance – but, they still go through the process. Why? Simple – they are investing their time and money and so want to know that they are making a good investment.

That is why, even if you don’t want to take on external finance it is still a great idea to ask – Is My Business Investment Ready?

So, now is the time to take the survey and find out…is my business investment ready?

Hmm… yes, this might seem strange to ask about cutting at the beginning of a new year – but shouldn’t we be looking set goals to expand and grow, you might ask?

Well yes, but, before you can grow, you have to cut out the deadwood or the slow growth businesses, products and services in order to focus on new opportunities or expand those things that really are working.

At this time of year, it is customary to layout a set of goals for 2011. I suggest you put at the top of your goal list ‘cut or prune any favourite projects that aren’t working’.

Okay,  you might ask, what is the difference between cutting and pruning?

Well, in the words of Jack Welch of GE fame, any business (or product/ service) that isn’t working should be fixed, sold or closed.

What you must not do is duck the decision. If you can’t fix it, then you need to sell it (if it has revenue or value) or just close it.

So, if you have been true to your entrepreneurial spirits in 2010, then you will have set up some pet projects that you really believed would work, but for some reason, they didn’t succeed. And if they haven’t succeeded yet, then you either need to prune them, sell them or close them.

Yes, I am doing this too.

I am closing two digital web magazines.

The first, Official Property Guide, was a good idea – selling advertorial to property agents and developers – but it the property market is horrible and agents are suffering terribly. Just no point in continuing. The idea is good, so perhaps in 5 years time….

The second, Wealth Manager International, was another good idea. There is a growth market in this sector but the website needs investment of time and money. I’ve decided that this area of publishing is not core to our strategy in 2011 and hence, whilst this is a good website, I’ve decided to close it.

A third website, which has been successful but is in a non-core area will be tidyed up for a sale later this year.

The good news is that this pruning or cutting reduces my costs and has helped me refocus my main business – Media Modo - on one area, and that is, helping entrepreneurs, freelancers and business angels to succeed in 2011.

As a result, we are now ready to launch an innovative and affordable Non-Exec Director type service for launch and fast growth business in the North West of England and will be following this with an Entrepreneur Accreditation service soon.

Lastly, don’t forget that the growth of Twitter and social media means we are great at announcing our new plans and wins but rarely do we see someone saying that they are cutting or pruning. However, this doesn’t mean it isn’t happening.

Take a leaf out of Diane Hall’s book - the Frazzled Freelancer of Enterprise Freelance Fair when she says

This is actually very cathartic, to admit that I’ve made mistakes.  We’re all human. It’s how we overcome them and use the experience to shape future decisions that gives us that wonderful thing called experience. 

What kind of business will be successful coming out of this recession?

And, how do we build it?

That is the big question for every entrepreneur who is either starting up now – or already on the journey.

So, what will happen… and what do we do about it?

The end of Jobs

Firstly, jobs – they aren’t making these any more. The statistics show this to be true – UK self-employment has grown strongly to over 1m in the past couple of years, whilst PCG – the trade association for freelancers – estimates that there are 1.4m freelancers in the UK (excluding casual trades such as construction or hotel workers).

Equally, the US jobs market has demonstrated that despite the economic bounce following the near catastrophic fall in 2008, there has been no over all increase in the number of jobs.

Similarly, anecdotal evidence points to the fact that the US is rapidly becoming a freelance economy too with a sharp rise in the number of people opting for a freelance lifestyle.

Okay, so from this, we can see that the end of jobs is near – the opportunities of the future will not be salaried positions but something different.

Work of the future – a video game

JP Rangaswami, BT’s Chief Scientist, forecast at a recent BVCA event in Manchester that work of the future will be more like a video game. In fact, he predicted that we would be actively ‘gaming’ or perhaps working on a number of video games (sorry, projects) at any one time.

What he is really saying is that all work will become project based. A project will have an end goal – such as reach the top level and defeat the evil genie – and that there will be a series of levels to work through and challenges to overcome at various stages.

The arrival at the final destination is not certain in time – so this is not a 3 month project – but a project to solve certain challenges and deliver a solutions or outcomes – so it could take a week or 6 months.

And, we might play/ work on a number of different games/ projects for a variety of different businesses at the same time.

So what does the entrepreneur do?

Firstly, if you are starting out – don’t fall into the old trap of hiring jobs. Instead, take everyone on on a freelance or contract basis.

Not doing this – because you feel that you can control employees or can protect your IP – is a critical mistake. It is an error which I made and it resulted in me closing a company that had grown to £4m turn over. The sharp changes in our market, rigid employment laws and hidden growth of entitlements end employee rights meant that we closed the company instead of re-investing it in.

It was better to clean and tidy up – and begin again. So, now, my business is entirely virtual and freelance. My strong recommendation is that you don’t repeat this error.

So, what does the entrepreneur do? The entrepreneur must become adapt at setting the objectives of each project and hiring in the right people.

Of course, hiring is an extremely difficult and dangerous (ie we get it badly wrong half the time and fail to get the best/right person 85% of the time).

Therefore, build your resource with freelance talent and outsourced resources. This will ensure that you can switch it on or off according to how the market responds to your product.

For instance, high quality marketing will also include feedback on how your product/ service is received – and that means that you may wish to stop the production line and begin to redevelop or rework the product.

With freelance marketing talent – you can start and stop – to fit your production – but with employees you can not.

Sudden growth / demand in your market might be followed by intense price competition – with freelance resource – you can respond – profitably – to this. With large fixed pay roll, it will cost around £100k to restructure your business each time your market shifts.

Do you want to set up future costs of £100k for restructuring? Obviously, not.

All of this is leading to what companies will look like in the future.

When I say ‘look like’ what I really mean is that as usual many companies will fail and what we will be left with are the successful businesses. These will be highly flexible businesses that have solved how to engage freelance talent and resouce.

The virtual businesses will be the agile businesses able to take advantage of opportunity with low cost of changing direction.

It means, of course, the end of firms as we know it. Instead, we will join project teams, be given certain objectives and set on our way.

The smart entrepreneur is preparing for this. Why? Well, watch what the big companies are doing – they are slowly laying off staff – first the IT department, then HR gets outsourced. Next up will be the marketing department.

The shift is already taking place, wise entrepreneurs recognise this shift and are positioning themselves to take advantage.

What are you doing with your business?

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Do you want an efficient way to recruit the freelance talent to lead your business – without it costing you a fortune?
http://www.enterprisefreelancefair.co.uk/
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Oops! Did I mean FIRED?

Actually, no!

As Lord Sugar’s new edition of the UK’s The Apprentice gets under way this week, we have to ask ourselves why do all these thrusting young entrepreneurs want a job?

What is it about the mystical value of ‘I’ve got a job’ that makes them delighted?

Is it the sense of ‘I’ve won , phew, safe at last, never going to have to work so hard again in my life’?

Or is it that these thrusting entrepreneurs who join the programme are really just sales directors in disguise using that old trick of applying for the next job to get an increase in pay?

This the question I’m left with – if these contestants truly were entrepreneurs then why are they accepting a job?

Is this programme really about getting a job, after all?

Perhaps, to be fair, the job is seen as temporary anyway but an opportunity to learn alongside some very successful business people?

Still, putting the show to one side for a moment, why is so much of our culture focused on achieving a job or employment?

Governments talk about saving jobs, newspapers report jobs created and jobs lost. People who have jobs can (or used to be able to) get a mortgage and buy a house, buy a car and run up credit card debt on holidays and too much shopping.

A job, perhaps, is seen, subliminally as a ticket to spend. That might explain why everyone wants one. And answers the question of why Lord Sugar’s show is really just a job candidate contestant show.

This modern obsession with jobs is also one of the biggest barriers to entrepreneurial activity – that is, lots of work, little pay in the early days and lots of opportunity to lose money.

Fathers-in-law are in favour of jobs, because it means (or used to mean) job security and the ability to safely raise a family. The fact that this no longer applies sometimes takes longer to reach the older generation.

Perhaps it is time for Lord Sugar to express his deep regret at tying people to employment; by burdening them with massive tax rates, the illusion of wealth via debt and credit cards and the subsequent disappointment when the job career fails to develop as hoped, and all the wasted years that could have been fruitfully used trying and failing and trying again to create a business with long term residual value.

Lord Sugar, next time you deliver the bad news, I hope to hear you say…

“…with much regret and a heavy heart, you are HIRED!”

… and to your winner, you can rightfully say, “congratulations, you don’t need a job“.

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Looking for freelance jobs and contracts? Want to meet entrepreneurs looking for local freelance talent?
http://www.enterprisefreelancefair.co.uk/category/freelance-events/
==============================

* I am much indebted to my youngest daughter and her very good school friend who came up with this headline. They are both 11. Who says the young can’t make it in business?

Instead of just being a way to save costs, freelancers are discovering that they bring original ideas and solutions to their clients. But does it work? Can freelancers help avoid failure and stimulate innovation?

To find out, we are conducting a survey with an analysis of the results and some thoughts on how businesses, agencies and departments might go about resolving those challenges and find new ways to innovate and grow. Please complete our survey and in return we will email you the full results once analysed.

She says that had she not experienced the failure, she might never have gone on to write one the worlds’s most popular series of books.

JK Rowling’s most memorable quotes, taken from the video, include

I talk about the benefits of failure – simply because failure means a stripping away of the inessential – I stopped pretending to myself that I was anything other than what I was and began to direct all my energy into the only work that mattered to me – the one arena in which I truly belonged – I was set free…

it is impossible to live without failing at something unless you live so cautious you might as well have not lived at all – in which case you have fail by default.

The knowledge that you have emerged wiser and stronger from set backs means that you are, everafter, secure in your ability to survive.

You will never truely know yourself until tested by adversity. Such knowledge is a true gift and it is worth more than any qualification won.

Rock bottom was the solid foundation on which I rebuilt my life.

What can entrepreneurs learn?

Firstly, failure is a part of life and a part of business life. It might be small – you missed out on a contract or sale. Or it might be bigger – your business fails. It might affect your marriage and it affects your finances and the car you drive (or perhaps, for a few years, you just walk).

Secondly, to avoid failing, means taking no risk at all – so means could never achieve anything thing and therefore is failure by default.

Thirdly, having experienced failure, whether small or great, the opportunity is to use it to strip away the inessential parts – to know yourself and focus on what you do brilliantly.

Only when you know what you can do brilliantly can you truly be successful.

Hence, failure is the rock on which all future innovation and long lasting success is based – just as JK Rowling said.
Thirdly,

Ernst & Young's says Get Agile

I recently got sent a link to the report that Ernst & Young launched at Davos earlier this year and it has some important lessons and advice for successful entrepreneurs – you’ve got to become agile.

Davos, you may already know, is the economic summit attended by global CEOs and world economists to discuss the current major business and economic trends and therefore the issues facing their global businesses.

So, essentially, this is top quality stuff – but the question remains – what value or use is this for small and medium sized businesses (SMEs)?

The answer is that what affects our big brothers will impact on us, the successful entrepreneurs, too – only, traditionally, SMEs get to find out about it later. Often, a lot later….

So, interpreting the Ernst & Young report – what can we decipher? Quite simply – if you want to grow your successful business then you need to build agility into its DNA.

Steve Howe, Managing Partner, Americas — Ernst & Young said “leading organizations need to look at talent and the value of different perspectives in a new way to drive innovation, mitigate risk and support new ways to achieve success.”

Mr Howe is encouraging established western businesses to find new ways to drive innovation and mitigate risk. And, in his view, this requires a new way of looking at talent – or perhaps our staff and teams.

Okay, so, we are right back to the issue about people – it is what makes or breaks a successful business. And what the EY team are really saying is that we have to find new ways to engage that talent to bring new perspectives on our businesses and find ways to innovate with lower risk.

How do you do that then?

The most effective way to acheive this flexibility is to create and use flexible pools of local freelance talent.

Also in the report, Donald Sull, Professor of Management Practice at London Business School, expressess the idea that establshed/ western business have high absorbtion rates – that is they are able to weather shocks with a protected core market, diversified cash flow, a strong brand or long-term customer contracts.

However, the risk is that new companies growing up in the large emerging markets (India, China, Brazil for example) have a a much great agility which is what allows them to spot and exploit new opportunities.

He says “companies from developed countries, by and large, have the advantages of absorption — size, established brands, technology, diversification and so on,” however. “lacking these advantages, emerging-market firms typically rely on agility. To me the striking thing is how fast agility can trump absorption.”

So, what Professor Sull is saying is that the emerging market business will thrash the established market businesses – unless those businesses can become agile!

Let’s put it another way – your business will go bust if it doesn’t become agile.

Okay, so getting back to agility – how do you do it? Well, as we said in the beginning, draw in a different perspectives and innovate with lower risk. How do you to this? The only way to acheive this must be to open your business up to more people with a wider range of experiences, whilst reducing the risk.

The only way I can see to do this is to engage with an expanded pool of freelance or outsourced talent – who can get to know more about your business and who are given more opportunity to innovate for you.

I put this to Richard Burton, Brand Strategy and Development, Ernst & Young Global Marketing and he told me

“Finding a way to embrace and leverage flexible freelance talent seems like a very smart thing to do”

So, there you have it.

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Looking for more tips on how successful entrepreneurs can grow their business? Check out our 7 Point Plan to Growing Your Business in 2010…

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Where Might Your Business Goal Take You?

Guys – it is time to ditch the old ‘build a business and sell it for zillions’ goal!

Just as easy credit has passed into history so too have the dreams of becoming instant dot.com millionaires as a result of a few lucky breaks and some unknown buyer waving cheque books.

As most successful entrepreneurs know, it doesn’t really happen like that – unless you are incredibly lucky.

But, it is a common battle cry from entrepreneurs that they want to sell their business for £5m in 3 years time – or some similar sort of goal.

This type of goal seems to be partly a response to the need to ask for funding – which inevitably invites the question ‘why would I fund your company’ to which the prepared reply can be ‘because I’ll make you rich and here is how…’

So, now that the old credit flows have dried up and we are living a more chastened business life, what kind of business goals should a successful entrepreneur set him or herself?

This is a tough question.

Okay, it has taken me about 1 year to come up with an answer – and here it is

£1.5m / 10 / 3

Okay – it looks simple, it seems simple, but what on earth does it mean?

Well, it is a ratio.

It is a ratio that ensures that the business is strong, sustainable and adaptable – it has the flexibility to adapt to abrupt economic impacts or changes in customer behaviour.

To explain – the first number – £1.5m – in this case, is the annual revenue or turnover.

The last number – 3 – is the number of employed staff. Now, I include myself in this – and you should include yourself too. So, that leaves two more staff – one of whom will be your right hand man/ woman and probably a very able PA/ Marketer/ Credit Controller / Fixer – who can help hold everything together.

So, what is the middle number – 10? Well, that is the number of equivalent staff (including the 3 actual full-time employees). That is, the number of freelance or contractor staff based in your office or at home that regularly provide you with 5 full days work per week. Now, probably you’ll have 15 to 20 part-time or periodically hired contractors – but these are equivalent to 7 full-time posts – which make 10 in total.

Right – enough of the explanations. Why?

Simple, the goal is to build sustainable businesses with strong market positions, great products and a really efficient and effective way of delivering them.

If you have revenue of £1.5m and an equivalent full-time staff of 10 – then you have £150k per revenue per employee. So, unless you are paying exceptionally high wages – on average – then you have a strongly profitable company.

You also have the flexibility to grow the company to £3 or £4m – or if you lose a contract to temporarily reduce to 8 or 5 full-time equivalents.

With a broad and experienced freelance workforce, your business can respond to changes in the market place with minimum difficulty and equally, be ready to exploit any opportunity that presents itself.

You now have a fantastically strong company. And, one that will be very easy to sell – because you have minimum employment issues and it is highly portable – so the new owner can pick it up and merge it into an existing office.

Your business sale costs will be low – because the legal due diligence will be simple – and most importantly, your business sale has a much higher chance of going through.

Best of all, because you have a highly flexible business, it is unlikely that you’ll be the exhausted / flaked-out entrepreneur desperate to sell – so you can sit tight, happily, and choose your moment to sell.

The point is that no matter how your business grows or shrinks (as it will) your job remains the same – to keep the same ratio. So…

£4m / 20 / 6 is good too, as is
£1m / 6 / 2
£0.5m / 3 / 1
etc…

So, the new goal of successful entrepreneurs is no longer to sell for £zillions, but to build sustainable and strong businesses – and then let the dividends roll in while you wait for a preferred buyer. And so long as you keep focusing on this ratio – you’ll be fine.

The great thing about this ratio is that it tells us one other thing too – that is, you are on your own until you get to £500k turnover – and only then do you think about a second full-time employed member of staff.

In the meantime, get building your local freelance talent pool. Your are going to need them.

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You can learn how to grow your business in the 2010 post credit
crunch environment whilst building your local freelance talent resource
at the Enterprise & Freelance Fair. Event are taking place in Chester,
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ps. If you subscribe to the slightly tougher view that entrepreneurs should never employ anyone, then just put your ‘full time’ staff on long term freelance contracts. The effect is the same – continuity – need for a small office space – etc…. but the flexibility remains.

Seven Point Plan

The credit crunch is hardly over, but at least we can now focus on how to grow our way out of the problems we are in – rather than worrying if everything was going to collapse.

So, in this new credit chastened environment, how do you, the successful entrepreneur, grow your business in 2010?

To help, here at Rags to Wreckages, we’ve put together a 7 point plan on how successful entrepreneurs are moving ahead and starting to grow their businesses again this year.

Each point of the plan will be an individual video clip and we’ll make that available to newsletter subscribers early next week.

So, if you want to get access to these videos on what you need to change, what you don’t need to do and what successful entrepreneurs are focusing on, click here.

Firing the old guard?

Luke Johnson, a successful entrepreneur, wrote in the FT last week that it is important to fire your existing management team if you want your business to discover reinvention. He says that gradual revolution is not enough and that when systems are broken small steps won’t work.

Whole swathes of businesses no longer work the way they used to. Book publishing and local newspapers are at the top of the list, but other business such as estate agencies, state education, financial services are all looking for new ways to do things.

We are not looking at a gradual revolution here - we are looking at business models that no longer work.

What does the successful entrepreneur do?

So, in these situations, how does the successful entrepreneur respond? Fire your management team, says Johnson.

In effect, the proposal is that you should remove your entire management team that was linked with the old business model. Why?

Firstly, turn around situation are short on time and demand decisive action. This is hard for anyone to implement, but particularly hard for a management team that have been working hard to save the existing model – or adapt it gradually to the new circumstances.

Therefore, existing management is weakest at performing major surgery.

I saw this happen in my previous business, where it was extremely difficult to get the existing teams to accept that things had changed radically and a more direct approach – removal of all management – might have brought about change faster.

Secondly, management is probably your most expensive single cost in a business. Yes, I know we all say that staff are your biggest cost, but actually, it is probably the management that is the largest part of that cost.

Thirdly, removing management shouldn’t affect day to day operations – at least not in a situation where the business volumes have shrunk.

Therefore, your front line customer facing and sales staff remain.

Lastly, your management team is paid to develop the business. In situations where radical action is required, the existing management are actually poorly positioned to do this because of the legacy and deep relationships they have built up with co-workers.

Contrary to popular thinking…

Contrary to popular thinking then, your management do not become more valuable as time goes on – but become more and more wedded to doing things the old way – or a gradualist process of change. Therefore, a management team with years of experience is not such a great asset after all and may become a liability when markets change quickly.

Indeed, if you yourself the entrepreneur are ALSO part of the management team, then you also need to fire yourself!

So, how do you fire yourself and the management team and expect the business to survive?

Okay, this simply isn’t going to happen - because you have set the business up wrongly.

Hand over – Mr(s) Successful Entrepreneur…

Therefore, instead of the entrepreneur growing with his or her business, he should aim to hand it on to managers very early on whilst still on an early upward growth path.

This allows two things

1. you, the entrepreneur can start new businesses and bring that experience via a board role in the business back to the existing enterprise

2. you, the entrepreneur are still available should a clean sweep of management be required

Now, if we set out to run and grow our businesses in this way, then we have the capacity to implement a clean sweep of management. Then the entrepreneur take control for a short but intensive time whilst searching for the new revenue model, whilst also developing the next generation of management for the new model.

Of course, the entrepreneur then has to leave the nest and go and do something else.

Therefore, entrepreneurs must leave their businesses - either by selling them, or by handing them onto a management team. This action early on in the growth cycle is likely to give the business the greatest chance of surviving the next business downturn.

The only question we are left with is this – when is the optimal time for the entrepreneur to exit the business?

That’s what Robert Craven says at
http://robert-craven.blogspot.com/2009/06/business-support-bsbis-industry.html

Will this dog let go of his bone?

Do successful entrepreneurs never give up?

Is a top entrepreneur like a dog with a bone, and just won’t let go?

True or false?

Well, true but only to a point. A smart entrepreneur will “try, try and try again – and then give up. No point in being a damn fool about it”. (WC Fields).

However, many young entrepreneurs believe they must keep going and avoid failure at all costs. However, sometimes the costs are too high and the fact that some entrepreneurs make it to the other side of the river, doesn’t mean that this is the only course of action.

Sometimes, to continue the analogy, it is better to give up and try to cross the river at another point. Or, if you simply can’t get across, then wait for the water to subside and then try again.

So, strangely, although resilience is rightly regarded as a great trait in an entrepreneur, there are times when too much resilience is bad. Sometimes you find another way or truly you should give up.

Now, let’s be really clear here, if you give up on a business, this is only so that you can take your time, energy and resources and go and focus on another business. Investors do this all the time when they sell shares and buy new ones.

If you were employed and left one job to take another, would that be giving up? No, so then why is leaving a business giving up?

The answer is that entrepreneurs need to know when to persist and have the capacity to persist and persevere. And, they need the capacity to give up, cut losses, learn from mistakes and move on.

The truly great entrepreneurs are those that can do both and know when to use persistence or a willingness to cut losses.

It is the ability to create a synthesis between resilience and a willingness to cut losses that counts – not the possession of a singular quality.

All it takes is a courageous decision

What makes an entrepreneur different from a small business man or woman?

Well, the best definition of what entrepreneurs do is provided by Peter Drucker. He said

Entrepreneurs innovate. Innovation is the specific instrument of entrepreneurship. It is the act that endows resources with a new capacity to create wealth. 

Okay, so what does that mean?

Well, if you are selling your time just as a web designer, then you are not innovating. Yes, you are in business and perhaps you have increased the chance that you might eventually innovate, but in what way are you endowing resources (here the resource is time) with a new capacity to create wealth? Unless you are offering a new service, and then perhaps hiring a team of consultants to carry out that service, then you are not endowing time with a new capacity to generate wealth.

An alternative example might be to compare opening a burger restaurant which usually is closer to creating a job for yourself than it is to being an entrepreneur. This is because providing burgers for cash in a location of establish restuarants is not a new idea – although it might be commercially wise.

Yes, you may be meeting a demand and may even make money, but the point is that the demand existed before you built the restaurant. Your role is to satisfy existing demand.

Whereas, Apple is an entrepreneurial company because their new products create new demand. I am not an Apple customer, I have never bought one of their products for myself (neither iPod nor iPhone) but soon, I will be. Yes, I will buy the iPad and the result of their innovation is that they are creating millions of new customers including me.

Hence, being an entrepreneur is about creating a new service or product that wasn’t previously available, or rather as apple do, taking mixing existing technology with new technology and coming up with a radically different product. Or take the apple iPhone, it wasn’t the first smart phone, but it was the first smart phone to do things in the Apple way – and that stimulated huge demand. It created new customers.

But, don’t stop there, you don’t need to be Apple to innovate.

You could be running a burger restaurant and create new sauces and launch those sauces – that would be innovating. If they work, then why not sell them through the supermarket and create a food brand? Or perhaps you could write and publish a book on how to cook the perfect burger? Or perhaps you start to make turkey burgers or carrot burgers or something new and different that creates a new set of customers.

You might even be selling your time as a consultant and this has the potential to be entrepreneurial if you are offering original services. If you write a book about your method and sell the idea/ concept, then you can start to train other consultants on how to do it your way.

The difference then is both very small but huge at the same time.

Peter Drucker also said

Whenever you see a successful business, someone once made a courageous decision

This is another great saying because the small step across the divide of doing what everyone else does and doing something unique and new and going out on the streets to sell your new idea, yes, that takes courage.

So, have courage, do something new and don’t look back. That is how to get from running a small business to becoming an entrepreneur.

Freelancing is a hit - even for business old boys?

The article points out that the hiring process for CEOs is ‘hopelessly inefficient’ yet ends with the old adage that

The most successful companies, such as Procter & Gamble and General Electric, are more than just ever-shifting nexuses of contracts. They are self-replicating organisms that possess distinctive cultures and unique habits—cultures and habits that are preserved and perfected by a loyal cadre of managers. You can certainly buy lots of wonderful managerial skills on the open market. But true corporate greatness is home-grown.

Now, this is an important point, but is this true?

I think firstly, it is important to distinguish between an entrepreneurial company and a huge global conglomerate or business. In the case of entrepreneurial companies, you will almost certainly want to hire on a contract basis.

Larger companies may also like to consider this – if we can deal with three key prejudices.

Firstly, a CEO directs a number of senior managers and is him or herself directed by a board of non-exec directors (or at least this is the best balanced solution).

In this scenario, it is already well established that the non-exec are part time, perhaps one day per week or one day per month. It is also agreed that they are more effective in their role if they hold a number of non-exec posts.

In addition, any decent CEO is going to appear on boards on a number of other companies. Hence, the idea of freelancing or contracting or part time work is well established and considered to have benefits.

Secondly, if the board and the directors of the business do their job well, then the CEO is not the be all and end all of the company. Therefore, continuity in this particular seat is an overblown concern.

Lastly, if a company hires a team of senior execs to launch a new product and that project comes to an end, then one of two things will happen. Either the management of the project will be considered a success or failure. In the later case, the contract will no doubt be completed. But in the case of a success, then the key players may be offered a new role in a different company within the conglomerate or a part time role to maintain continuity, or the manager may leave for a new project, but return to the original company in 12 or 24 months time.

Essentially, if contractors are treated a key members of the team, then the freelance legal structure underpinning the relationship should increase the likelihood of success and the ability to maintain continuity will depend on whether both the contractor and company are happy to do so.

Which is what everyone would want wouldn’t they?

3Bs - Beg, Borrow and Barter

I’ve been asked to advise Liverpool John Moores University entrepreneur students on getting finance for their new businesses.

Controversially, my view on finance for young entrepreneurs would be, don’t.

Here’s what I would recommend:

a) avoid finance if at all possible and always for as long as possible – learn to beg, borrow and barter
b) focus on the ability to implement – not the idea
c) no one will invest in your idea unless you can sell – so what proof do you have of sales skills?

The only exception are silicon valley type VCs which invest heavily in ideas from untested entrepreneurs. If this is the kind of project and experience that you offer, then your best bet would be to catch a plane to San Francisco as this is extreme high risk investing and most investors are not willing to do this.

The essence here is that you have to be offering to create not only new customers (the standard definition of entrepreneurship) but also a new industry. But be careful, this is not as easy as it sounds – and many young entrepreneurs fall for this mistake. (See the business parable of the Rock that Wouldn’t Budge).

New industries don’t come along often, so, a VC is going to expect a high risk (or potentially very high risk) to the enterprise in return for a huge ‘google’ like return.

However, the more normal path to investment is essentially, don’t take investment in stage one, but look at investment in stage two and three – and what investors would look for at these stages.

You can define these stages as

1. Idea – pre-sales
2. Sales – pre-profit
3. Profit – pre-national or global expansion

If you approach investors at stage 1, then you need a track record because the likelihood of the idea failing is very high – and not least because you may or may not know what you are doing!.

The only way to reduce risk – once the idea is proven as new and potentially interesting – is to focus on the management team.

If you are still young and inexperienced and approach investors at stage one, then expect the investors to demand a majority stake for a small cash investment, which is a bad deal for you, and the investors know it.

So, any entrepreneur worth his salt is going to reject such a poor deal and work on the idea until sales are proven and preferably profitable.

At these later stages the young entrepreneur can already show a degree of resourcefulness and ability to implement. Now, you are no longer the greenhorn entrepreneur, but someone with a proven (albeit limited) ability to make stuff happen.

Hence, at stage one, you must begin by Begging, Borrowing from rich uncles and aunts and Bartering.

Learn the rule of the 3Bs – Begging, Borrowing and Bartering – first, and then you will find raising funds infinitely easier – not least, because you won’t need so much money.

Will Hiring Freelancers Lead to Success or Failure?

…that you have to hire the best. … and hiring the best means you have to offer the full time employment – the best package – a full time employment contract and for CEO’s golden handshakes to welcome them and golden parachutes should they fail, share options if they don’t etc.

And therefore, you might think, if I don’t offer a full employment contract why would they ever leave their current employment to join my organisation?

Let me be blunt about this. This is rubbish. People will join your organisation mainly for the opportunity and excitement you offer – much less for the terms of a contract.

Here are six reasons why freelancers are better than employees;

Firstly, freelancing and contracting is more fun and the freelancer earns more money. The freelancer gains by being treated as an equal – they are in business too – albeit for themselves and the relationship between you and the freelancer is a much more grown up one. No longer do freelancers expect you to provide for them – as a parent might to a child – instead, it is a relationship of equals. This benefits the person hiring the freelancer just as it benefits the freelancer him or herself.

Second, freelancing and contracting allows your team to work on projects in natural bursts. It is more like going to college, you work hard or very hard for 10 or 12 weeks to reach a goal or set objectives in that term or timester. Then you take a break. I haven’t seen any studies, but I believe you could argue that it is more natural for us to work like this than to be expected to work week in and week out. Thinking about this a bit more, our ancestors used to work according to the seasons and this required short bursts of activity – sowing and harvesting being the busiest times.

Thirdly, in the UK and European countries the first 6 months of a new job are pretty tenuous anyway as they just offer 1 weeks notice. When taking on a contractor you can offer 1 month notice for the first 6 months. This is a great deal for the contractor as they actually have far greater certainty (ie a month) than if they have a full time employment contract. The point about the contractual structure is that you don’t offer one month notice for ever and you don’t allow it be silently become two months or three months or six months as they spend more time in your organisation. This will make a considerable difference if some relocation is required.

Fourthly, freelancers who leave your organisation can and do come back – if they enjoyed their work with you – and often come back more motivated and with a fresh set of ideas. This is great for both the freelancer and for your business.

Fifthly, not all brilliant candidates will fit your company culture. Think of football. How many times does a great manager turn down the offer of a great player because the great player wouldn’t fit into the team? It happens all the time. You are looking to fill roles in your company, that doesn’t mean you want the best player, you want the best fit.

Sixthly, men (or women) are as their times are. This is a line from Shakespear when a young soldier complains when he is told to carry out a contract killing. His Sargent replies that he should go and do it for  ’men are as their times are’. Often your ‘good’ people in a high growth company will become your ‘bad’ people in a sudden slow down. This isn’t because they have changed, only your company circumstances have changed and their motivations within the company and those circumstances may have changed out of all recognition.

A freelance or contractual structure allows you to let them go quickly and without fuss. The cleanness of the parting of the waves is actually a lot less controversial than you might think and allows you to rebuild the relationship with them later on, should conditions improve.

At the end of the day, you are looking for the best fit for the role you have now.  If you markets and products change, the role may well change. If you switch from high growth to low growth or a sharp decline, most of your people won’t fit any more no matter how good they were in the first place.

Lastly, if you have decided on an entrepreneurial structure then you need the best fit with that – enterprising people. And I can guarantee you they will not be standard employees looking for the apparent security of a standard employment contact, as that is the last thing either you or they want.

Employ or Hire Freelancers and Contractors?

Okay – here is a radical business strategy for entrepreneurs that some of you won’t like – and that is that you should not employ anyone. Please, if you disagree, please don’t switch off but take a moment to think about the argument… you can always respond below…

Work with people on a freelance and contractual basis – yes, absolutely, you simply must. You can even have an office or a factory if you must, but never sign a standard UK or European employment contract.

(I accept that employment law in the US is a lot simpler and so this does not apply to the same degree, but employment law is bad in the UK and terrible in continental Europe for the entrepreneurial business).

Here’s how to start. Find a Human Resources training company’s website and look at all the training you’ll need to go through to be allowed to hire people. Here are three I selected from the UK

1. Employment law, discrimination, grievance, discipline, dismisal, data protection, maternity, paternity rights
2. Conducting disciplinary investigations, guides to contract law, workplace stress, unions, guides to managing redundancies
3. Employment law insurance – for when you really mess it up…

Now, let’s compare all this to something we all know about – qualifying to drive a car. Well, in comparison if you thought getting a licence to drive a car was tough, this is 10 times harder and takes 10 time longer to master.

Of course hiring people is different from driving – you are allowed to do it before you pass the exam – but you’ll be sued and screwed if you don’t know and follow the letter of the law. So read through the websites above, the message is clear enough. Either you need to perfect employment law – all aspects, you never know when you’ll need it, or you need to find another way.

And, the worst of it is that the more successful you are then the more people you hire, the more work you need to do to comply with legislation. In other words, as you get bigger, so the burden becomes greater and employment law becomes stricter.

Okay, you might say, I’m in the UK and once my business gets to 50 staff, I’ll just hire an HR (Human Resources) person, won’t I?

Sounds good, but has two problems.

But ask yourself, why should you do this? This is an entirely bureaucratic role required simply because you are a growing company. It will attack your profitability weakening your company.

Hiring an HR person will also create an extra layer between you and your revenue producing team and confusion between your managers and the HR person about who is responsible for employee performance. This is truely dangerous.

Recall that in nearly all start-ups and fast growth businesses the employee costs will be the largest component and will probably make up 80% of your costs and be responsible for 100% of your revenue.

If your managers are going to be responsible for the costs of their division, then they must be responsible for the staffing costs – including the time and monetary costs of any disputes. This can not shift to a central HR person, otherwise you’ll find the the HR person is actually running the business, which is your job or your Managing Director’s job.

Okay, I’ll make it simple for you – follow this link to see employment law training and note the headline quote that:

“100,000 employment tribunals in the UK each year, costing British business more than £250 million”

So, not only do traditional businesses using traditional employment need to hire a full time HR employee – who will deliver no benefit, but you also now face the risk of time consuming tribunals that could result in loss of time and more cash.

Of course, an HR person will be brought in to develop your staff, but hey, this happens when you get to 50 staff and have a successful business. How is it we are sold the idea that the HR person now adds value? Instead your aim should be to stop corporate and legalistic rot setting into your business.

So, you have the costs of the HR person. You have the cost of the tribunals or at least defending yourself and you have the distraction from the goals of the business. If you must go down the employment route then I would recommend that you put aside an additional 10% of employee costs to meet this extra drain on your time and money.

However, how much better would it be if your managers had to learn to live with large pools of freelancers and contractors who could walk out at any moment? They’d become great people managers right? And isn’t that what you want?

If you follow this business strategy then throughout your business growth, your managers would have learned to deal with staff being available and staff not being available. Staff who didn’t want to work for them anymore would just walk, and you would immediately know there was a problem with your manager because there would be a staff shortage.

Also, your managers will have to develop large networks of talented and motivated people they could call upon in an emergence. Many of those people will have developed new skills by working elsewhere which they can regularly bring back to your company (and the best part is that you didn’t pay for the training course, nor the days out of the office to take the course, nor the manager to set up and purchase the course!).

In this scenario, where is the problem now? We don’t need an HR person to ‘develop’ our staff – our managers have demonstrated an ability to do this and our ‘staff’ are actually freelancers and contractors who have an utterly different approach to work – they need to make each project work in order to get the referral for the next piece of work or contract or project. And, usually, they are improving and upgrading their skills on their own time under their own motivation.

If your managers can not develop and keep your staff, and by that I mean freelance and contracting teams, then they have no place acting or being paid as managers of staff.

If HR managers are so good at developing staff as is often claimed, then they should be hired as managers (on a contract) with a revenue or p&l responsibility and given the task of building and holding together a team whilst delivering good profit to the original shareholders and investors.

If the HR managers can not do this, then they have no place in an entrepreneurial growing business and that means you need to develop a different culture – one based on personal motivation and the freelance and contracting concepts.

You need your business managers to grow up in this freelance and contracting climate so that they can cope when the business grows strongly.

You do not, I promise you, want to trade your role as an entrepreneur to become an HR expert. You are an entrepreneur, nothing will kill your entrepreneurial spirit faster than the dead hand of employment law and the endless tribunals that they entail.

Please, if you are a true entrepreneur and dedicated to a life of discovery and adventure – carried out in the business world – then value your freedom and don’t build a traditional business based on the screwed up incentives of the employment contract. If you can avoid this horror trap, you will go a long way to keep the spirit of enterprise alive in your business and what is more, you’ll encourage like-minded people to work with you who also share that spirit.

Give up on the excitement of the enterprise and you will chase away all your best people and nothing will achieve this faster than traditional employment contracts.

Now why on earth would you want to do that?

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Please note, as an entrepreneur I find that diversity of my teams in terms of age, race, religion, disability, criminal record or sexual orientation, is no hinderance to performance. In fact, often your best people may well be people who have suffered some form of discrimination and those who have life handing to them on a plate are lazier.

And if you focus your business on performance then you will allow people to prove themselves based on what they can deliver and not what they look or sound like or how they move. So my recommendation is in no way to avoid the intention of  employment law, but is has every intention of avoiding the spirit destroying effects of employment law on an entrepreneurial business.

“Serial entrepreneurship is not a matter of success and failure but rather boredom”

Great quote – but is it true or false?

Alan Sugar

Alan Sugar, a UK entrepreneur with more than his fair share of grey hair, stoked controversy by stating that 85% of UK businesses that failed to receive bank finance had nothing to complain about.

Amid the controversy of whether he actually said this or not, we can still ask ourselves whether he has a point.

Essentially, he is saying that the reason that businesses don’t get finance is because they aren’t good enough.

His description is that many entrepreneurs are living in a Disneyworld.

Okay, let’s start with what did he actually say. He said

“The problem is that some younger people who have lived through the last 10 years or so of business and prior to that 10 years they may have just come from education, they lived through that period of the last 10 years where they think the irresponsible manner in which the banks dealt is the norm.

“Let me tell you, you lived in the Disneyworld, you have lived in the unrealistic Disneyworld in the way banks dished out money.”

“The moaners are bust. They are bust and they don’t need the bank – they need an insolvency practitioner.”

Okay, actually, he has a point.

Perhaps it is not so much our education or some people’s youth - but perhaps it is because our businesses became more and more unhinged (or leveraged) and the value they added became less and less clear.

Not so much that we became lazy during this period of excess – I certainly worked harder than ever – but we became relaxed. Relaxed about profits believing that so long as revenue was growing, we could always sell the business. Relaxed about staff performance, knowing that replacing mediocre staff was hard and may not deliver any improvements.

It is certainly true that during this time of excess we’ve seen huge salary and employee wage rises. Which is understandable, because you now need to earn a small fortune to buy a small flat.  Again, perhaps we became to relaxed about profit and too willing to share it with those who didn’t put up the risk in the first place.

We’ve also enjoyed higher taxation during the boom years which has swamped the public sector in money and built weak competitors that are poorly attuned to drought conditions.

Essentially, we have lived, as entrepreneurs, too well for too long and the arguments for the war on talent etc has encouraged us to turn a blind eye to poor or average staff performance and that coupled with the increasingly restrictive employment  legislation and ‘fear of losing good people’ has perhaps been the root cause.

Still, Alan Sugar is right when he says most businesses are not worth investing in. Especially those businesses built in the boom years and used to the easy sales that came with that time.

We now face a period of hard work grinding out results and delivering clear value. And that requires a major shift in the way we run our companies. It has been argued that the success of new start up businesses – or restarting enterprises -  is down to the quality of implementation and not the idea. This is a major shift in thinking.

The good news is that in this environment we can forget about our competitors and their threats to steal our carefully nurtured talent – we can now just get on with paying a fair rate for a great days work and focus entirely on the quality of implementation.

As entrepreneurs we have the opportunity to turn our businesses around or begin again, but this will be achieved mainly by going back to the simple things, making a profit always and being intolerant of mediocre performance from highly paid staff and becoming crystal clear about how we add value to our customers.

New businesses need to be value driven, they need to be grown without debt or with small business angel investments in order to prove the business model. And all business investment needs to be justified in clear revenue terms, questioned on a regular basis and pulled if it fails to achieve its objectives.

Growing a business without debt is hard work, but it is the most certain way to achieve success as it allows you to adapt your business model as you learn about how the market responds to your offering.

I am using parables – or stories – to express the ideas about business which will form the basis for this blog and the subsequent book Rags to Wreckages … to Riches.

Lots of people are asking me why, or expressing scepticism that it is worth writing business parables. So let me explain why…

Parables are used to teach and change us. They reach beyond the mere logical or reasoned understanding to touch our hearts and our emotions. Perhaps parables are a little like the picture above, they stir us up and allow each of us to see what we need to see.

Our actions are mainly based in our emotional thoughts and responses are only occasionally driven by logic, although we might like to think otherwise. This does not mean we are unthinking, but that we tend to think with our hearts first and

foremost and usually engage our rational mind later. After the event rational thinking is usually in the form of worry and is often more of a hindrance than a help.

The fact that we think emotionally explains many things including why stock markets are famously driven by the emotions of fear and greed despite the many maths experts attempting to reduce it all to a calm irrefutable logic.

Likewise great entrepreneurs and investors alike learn to develop and act on their instinct and not just logical deduction.

Therefore, for any business book to be successful – and by that I mean it inspires you to make changes in how you run your business or investment life – then it must speak to your heart. It must stir you up so that you emotionally buy into the decisions and actions that you must embrace if you wish to be successful.

In using parables, I don’t claim to be unique or original. In fact the world’s best selling book the bible – uses the parables of Jesus to teach. When asked why Jesus uses parables we are told

Though seeing, they do not see;
Though hearing, they do not hear or understand

and

You may be ever hearing but never understand;
You may be ever seeing but never perceiving.

For when people’s heart’s have become hardened,
They hardly hear with their ears,
And they have closed their eyes
Otherwise they might see with their eyes,
Understand with their hearts

In writing business parables for Rags to Wreckages and speaking to business owners and investors I’ve been told that the advice they contain is ‘common sense but rarely considered because they it is so obvious’

So the challenge for us as entrepreneurs and investors is not that we don’t know what needs to be done, but that it is a supremely harder to do it than to talk about it.

Many times our business lives become too complex with a constant barrage of new opportunities and risks, from social media to finance and leverage, such that we lose sight of simple common sense actions that we need to take or focus on.

The aim of Rags to Wreckages is not to lay out new management theories or grand business ideas. We’ve had enough of those already in the past twenty years. Instead, its aim is to reignite our understanding and perception of ourselves our business and investments more clearly and most importantly to do this with our hearts as well as our minds.

For if we see with our hearts, then we perceive and we can act.

This is why I have write these business and investment stories and experiences in parables and then to explain the meaning and implications those stories.

My desire is simple. That the parables will lodge themselves somewhere in your heart and so give you a framework for dealing with the decisions you need to make now and will need to make in the future.

I hope that you avoid the mistakes that I have made without having to repeat those mistakes yourself. If this book can succeed in that goal, then it would have achieved all that I had hoped for.

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You can download and read the first chapter by subscribing in the right hand bar. I’ll be added more parables and stories as time goes and will send those out to anyone subscribed…   >>>>

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The new way to work, for nearly all white collar work, is freelance.

In recent years, freelancers have established their own trade body – the Professional Contractors Group.

And now they are celebrating National Freelancers Day on 23rd November 2009. This day will bring together freelancers and innovative business leaders to discuss and explain business on a freelance model. The point here is that it works for everyone – the investors, the entrepreneurs and the freelancers.

• Why Many Great Sounding Businesses Ideas Don’t Make Money – and – The Rock that Wouldn’t Budge
• Why Brittle Businesses Break – and – How Glass was Cursed with Brittleness
• Goldilocks and the three Shareholders
• They Know What Needs to Be Done But They Don’t Do it – and – The Bug and the Light
• New Entrepreneurs Don’t Say No – and – How the Rhino got his Thick Hide
• Why Government Schemes are the Death of a Great Business – and – How the King was Fooled by his White Knight
  
• If You Could Hire the Best Person Tomorrow Why Would you Traditionally Employ Anyone Today – and – Why Fear Drives Man More Than Success