Mistake Number 1 – Failure to Focus
In 1997 I started a solo legal practice. Going against conventional wisdom, I started my firm with no capital, partners or resources. I literally had a rolodex of a few colleagues, a dream and a lot of faith. The business gurus will tell you this is not the recommended approach and, in a perfect world, starting a business on those terms would not be advisable. However, we all know that life rarely hands you the luxury of perfect timing or resources. Sometimes you have to just grab the ball and run with it and that is what I did.
Ralph Waldo Emerson said, “Once you make a decision, the universe conspires to make it happen,” and that’s exactly what happened in my case. Once I grabbed the ball and started running, I was able to obtain client referrals, an office to work out of and even an assistant to help me get started. Within three years I went from an initial retainer of $250 dollars on my first case, to over one million dollars in annual revenue. In that roughly three year period I learned numerous lessons that serve me to this day and will serve your business as well, if acted upon. That is the great thing about principles – they work the same way all of the time and they have predictable results. What worked for me will work for you – principles are no respecter of persons.
In the early part of my venture I didn’t know very much about timeless principles. I simply got out my rolodex and started to “hustle” – to call upon everyone I knew to let them know I was open for business. I also began to join networking groups, trade associations, lawyer groups, small business groups, trade-fairs, multiple chambers of commerce, multiple professional connection groups and the like – if there was an event, I was there with business cards in hand. Within a few months I realized that I was wearing myself out!
On top of that, I became aware that I was obtaining mixed results from all of the associations and events that I was attending or participating in. Particularly because I was a lawyer, many small businesses wanted free or very close to free advice and several groups wanted my involvement on committees or other time commitments from me with little return on investment. I further discovered that from a business-building standpoint, even the legal trade associations were a waste of time because who attended those meetings? You guessed it – other lawyers! Thus, I would always be just one of several other similarly situated professionals in the room and that was getting me nowhere very fast.
When this reality came home to me, I admit that I was tempted to “keep plugging away” hoping that if I just kept networking, eventually being involved in all of these groups and associations would somehow pay off – one day my ship would come in. There is something about the human mind – once we’ve mentally committed to a course of action, we have a tendency to cling to that course even if it clearly fails to yield results. It is somehow difficult to put down even a failing strategy and to move in a different direction. Yet this is exactly what you must do (and often) to succeed in business – there are no sacred cows. You have to discern when a strategy is not working and then to go about making the needed changes.
The Robert Frost poem, The Road Less Traveled says “Two roads diverged in a wood, and I – I took the one less traveled by, and that has made all the difference.” Everything changed when I stopped and assessed the roads before me. On the one hand, I could continue on the path of “networking” at multiple events and driving myself batty with little result or I could take the road less traveled – the road of reflection.
On the road of reflection, a business owner must cease from his efforts, reflect on his purpose, direction, strategies and results to see if it is working. If it is, then wonderful! That business owner should just continue to build on that solid foundation. But if not, as it was in my case, the business owner has to have the courage to make needed changes.
When I realized the dead end of involving myself in multiple organizations with little result – that is, spreading myself too thin – I made two key decisions that you should also consider. I immediately cut the ten or so organizations that I was involved in to two organizations that I would focus upon for business-building. Second, I decided that I would put in meaningful time, financial resources and service with those organizations in order to build relationships and to serve others.
Thus, I went cold-turkey on all of the evening business mixers, luncheons, match-making events and others and began to focus on the two organizations that I felt I could best build upon, substituting quantity for quality. As the quote from the Frost poem above states, this made all of the difference. In a short period of time, I had built significant relationships within each organization and I leveraged those relationships into a business that went up like a rocket.
Sometimes our business relationships are a mile wide but an inch deep. I would suggest narrowing your focus to your best prospects and deepening those relationships. A few quality relationships will yield a much greater harvest than several superficial ones. Ultimately, you are the benefactor of this strategy on many levels.
You will develop business relationships that last a lifetime – the kind that keeps on giving – year in and year out. You will cut down on your “busy time” and increase your quality time; and you will develop actual business much faster because you will build rapport and trust with your targets. People like to do business with people they know and trust.
Perhaps you are making Mistake Number 1 right now. You are spread too thin, looking for leads and business in too many places. This may be your time to stop and assess your business and your strategy. If you have fallen victim to this deadly mistake, then you can reverse your direction right now. Take a few hours aside and think this through. It will make all the difference!
Mistake Number 2 – Failure to Specialize
One of the most powerful business strategies that I employed in building my business is avoiding Mistake Number 2 above – Being a Generalist. At the start of my law practice, I accepted cases across several areas of the law. Although I was trained as a commercial litigation attorney, within the realm of my professional capabilities, I handled many general matters.
Shortly after, I took a business-building seminar and I learned a few powerful facts. First, I learned that generalists made significantly less dollars than specialists across many industries and professions. Second, the world was changing so rapidly and technology was changing the way in which the world does business so pervasively, that you simply couldn’t effectively know enough about a general area of business fast enough to be effective. In other words, the world was looking for specialists, and it was willing to reward them handsomely for their expertise.
Finally, it is very difficult to market a general business. The marketplace simply doesn’t trust that you know a little about everything. A business that markets itself as a generalist will face a credibility problem in the market place. For example, if you claim to be in “telecommunications.” What exactly does that mean?
Do you deal with landlines or wireless? Do you deal with residential or commercial? What about public sector? Are you limited to telephony or are your services broader? Do you handle enterprise networks? Are you on the programming side or application or research? The questions are endless. You must drill down to who you really are and then develop a marketing message that appeals to your target audience. The more general your business direction, the harder it is to focus and target your message. This will greatly impact your effectiveness.
I learned this lesson early on and it served me well in building my business. After taking that seminar, I recognized that I needed to become a specialist. I began to look at all the areas I had experience in and realized that those areas already had market leaders – firms that had developed a great reputation, client base and market position. I knew that it would take me many years to build a firm that could even begin to compete in those areas, if at all.
I realized that I had done some work in an area of the law that most of those firms had never worked in and were not particularly interested in. I then decided that I would wind down the general matters and I would begin to specialize in this one discipline. By specializing, I would focus like a laser beam at being the best in the arena. I would join the relevant professional organization that supported this practice area; I would develop the practice, publish articles and teach seminars on topics in my zone of interest. In short, I would establish myself as a recognized expert in this very narrow piece of the law – in short, a niche market.
This strategy worked wonderfully! By establishing myself as an expert in a narrow discipline, I was able to attract clients large and small for those particular services. I eventually had the pick of clients and could accept or reject clients based on my own specifications and desires. Large corporations had no issue hiring me because they trusted me within my niche.
I did not ask corporations for their complicated mergers and acquisitions work or multimillion dollar, multinational, complex litigation. That was not my zone. I simply positioned myself as an expert in my niche and many top corporations were pleased to hand me multi-millions in business in my niche. Of course, the work I did was not as sexy or glamorous as a multi-national litigation or big-time mergers. However, it was very profitable work and it enabled me to build an outstanding business.
Thus, I would suggest that you also avoid the mistake of being a generalist and begin the process of positioning yourself as an expert in a particular area of your industry. If you are able to create that awareness, you will not lack business. Even if you are a relatively small business, large companies will flock to use your services if you are excellent. In fact, they will be more comfortable dealing with a smaller, but thought-leader in an industry, than a much larger generalist. You will be able to demonstrate custom service which is what all major companies are looking for.
Do your business a favor and become a recognized expert in a narrow but profitable segment of your industry and watch the clients and profits stack up. Don’t be a generalist – find your niche, master it and prosper!
Mistake Number 3 – Failure to Set Realistic Expectations
One of the biggest mistakes made by small and minority businesses is failing to set realistic expectations about attracting large corporations as clients. I have been in minority business development circles for many years. There is a consistent complaint from some minority businesses that the system is broke and that it is impossible to get business from large corporations.
First, there is a spiritual principle that states that you will have what you say – or what you expect. Thus, if you say getting business is impossible then it is – you will receive according to your belief. But that is a topic for another publication. On a business level, I would like to set a few things straight. It is true that our nation has a long way to go for minority businesses to get their fair share of the national business opportunity pie. There is no doubt that it is becoming increasingly harder for small and minority businesses to compete. The frustration felt by many small businesses is real.
Nevertheless, there are strategies that have worked for the minority businesses that are winning this battle and they will work for your business as well. As difficult as the road to obtaining that large contract may seem, there is a pathway and you can learn how to access it. However, as suggested above, much of this begins in your mind. Armed with the correct outlook, you will position yourself for success and it will eventually come to you.
First, I would encourage small and minority businesses to take the long view on obtaining corporate business. Small businesses often overlook medium sized companies and even fellow small and minority businesses in order to camp out at the corporate tent. In my experience, it is much easier to attract several small or medium, sized clients than one corporate giant.
Minority businesses should continue to knock at the corporate door, but simultaneously, they should act as if they will never receive a corporate contract and focus their energies on more accessible targets. This is a matter of placing a positive spin on the theory of cognitive dissonance – keeping two seemingly different ideas in mind. On the one hand, you continue to work for that corporate contract. But on the other, you work as if you will never receive one and develop your business, in spite of, corporate contracts.
This serves many purposes. When the time arrives for you to receive that corporate contract, you would have been well-prepared to handle the business having taken the time to build out your infrastructure and services with smaller clients. Second, large corporations want to do business with companies with a track record. The long view will allow you to develop experience, references and capacity. You will also develop self-confidence and grit along the way.
This was true of my business. It took me about one year to develop my first large, corporate client and that was miraculously quick! But before I developed that client, I had built a sustainable business on several small and mid-sized companies. Having a sustainable business in place, I could then play the waiting game of developing the larger clients. Once I obtained the first corporate client, their credibility and endorsement of my services enabled me to win many more. Today my firm services many world-class corporations.
Note however, that the first client and the first endorsement came because of outstanding service delivery and results. Assuming that you can deliver on that in your area of business, then you can have those corporate clients in due time. Along the way, develop your business, expertise and testimonials and be ready for the break. Your realistic expectations will make you a better business person – it will keep you hungry, yet never despairing. Not having obtained, but always learning – always sharpening your saw.
In truth, the worst thing that could happen is obtaining that corporate contract but not being ready for it. If you blow that opportunity it could be a long time in getting another – word travels somehow. I’ve seen very tiny minority companies attempting to do business with gigantic, global conglomerates. Not that this is impossible. Remember how I began this chapter – anything is possible. Also, by avoiding Mistake Number 2 and developing a niche market, it is quite likely that even a micro firm can do business with a giant.
The point is that in some of these instances, the small business owner is unrealistic about the needs of the conglomerate that it can solve or even its own capacity to meet that company’s global demands. These are obstacles that minority businesses have to realistically face with real solutions, like filling a niche or by teaming up to build capacity. The problem is that many minority businesses fail to do this and in so doing, they make Mistake Number 4 – Failure to Partner Together.
Mistake Number 4 – Failure to Partner Together
One of the major issues facing minority businesses today is corporate consolidation of suppliers. In other words, corporations are contracting with fewer suppliers with greater geographical scope or capacity. Because the vast majority of minority-owned suppliers in the nation are relatively small businesses, the minority business community has been disproportionately impacted.
Corporations are in the business of returning value to stakeholders. Corporations are facing challenging economic times. One of the ways in which they are looking to leverage economies of scale in order to return value in tough times is to consolidate the supplier base. Corporations believe that they can save money by dealing with fewer suppliers with greater reach.
Thus, it is highly likely that this trend will not be reversed in the near future. This presents a huge challenge to minority businesses. To a degree, this also challenges corporations to think more creatively about how they are utilizing minority businesses, but this is primarily an issue for the minority businesses that are looking to partner with large corporations. You may read some suggestions of how corporations can think outside of the box with minority companies in my first book, Tales My Grandma Told Me – A Business Diversity Fable (www.talesmygrandmatoldme.com). I believe that corporations can and should do more in this area.
But minority companies will have to come up with some solutions of their own. One such solution is for minority companies to find creative ways to team up together. Regardless of the area of life, success always requires a team approach. There is oftentimes the myth of the “self-made” success but no success is fully self-made – we need others; partners in our endeavors to help us succeed.
Minority companies can take advantage of this fact on many levels. At the most elementary level, minority companies can come together to network for business, brainstorm and share insights about business. A slightly higher of involvement would involve partnering together on a larger project. This works well with two companies in the same industry but with differing expertise. For example, two minority companies in the technology field could come together on a project which involves programming and hard wiring. One company writes the program and one company handles the hardware and wiring that goes along with the implementation.
Neither company would be able to handle the project alone, but together, they can both prosper. This can easily be accomplished through the construct of creating a Joint Venture – a coming together of two companies for the purposes of a specific project. Each company would keep its own identity, client base, etc, but they would share in work and the profits of one particular project. My firm has used this vehicle with great effectiveness and as a targeted growth strategy. This is a powerful way for small companies to team up.
This can also be accomplished with companies in different, but complimentary industries. For a sufficiently large project, small companies could team together in areas such as law and accounting or sales and marketing; each company taking a part of the project within its expertise. Minority companies must release all limiting beliefs about teaming together and also develop creative ways of building capacity for corporate clients.
On a higher and more involved level, minority companies should also consider consolidating operations by out and out mergers of interests. Unlike a Joint Venture, companies that merge together become one company. All of the assets and liabilities become a part of the new entity created by the merger. Two companies “merge” to become one.
Merger is the most involved and the most difficult of all of the teaming strategies discussed in this paper. This is because merger actually changes the structure of both companies and rearranges everything, including ownership interests, etc. Thus, it’s important that owners resolve to put egos aside and embrace the possibilities of teaming with another company with complimentary resource to become a bigger company that can win larger contracts. It is the dynamic of choosing between being a 100% owner of a struggling company or a smaller percentage owner of a larger company with more possibilities.
In 2003 I merged my start-up law firm into a larger firm and took a smaller equity stake in the larger organization. Since that time, the larger entity almost doubled in size and has returned greater dividends in every area: financial, client base, growth, opportunity and status. Of course, when the merger (or you could say acquisition of my firm) occurred, my name was taken out of the title of the business. I became one of several equity partners, I had a CEO and a Managing partner to report to and I was no longer the final authority on everything.
However, the pay-off in growth, in benefits to my staff, in succession and business planning for the future pale in comparison to what was given up. My firm was prosperous on its own. I could have easily continued without a merger. But at the end of the day, if I desired to play in a bigger league and to have accelerated growth, I had to seriously consider and implement a growth strategy. As the corporate consolidation trend continues and they continue to contract with fewer suppliers, minority companies will have to seriously consider this strategy. It is a huge missed opportunity and one of the biggest mistakes minority companies make.
Mistake Number 5 – Failure to Properly Invest In Yourself
If I asked you to list your best investment, you may tell me about your real estate, stocks and bonds or certainly your business. However, your best investment is you. Therefore, you must be certain to invest in yourself. The investments that you make in yourself will enable you to obtain tremendous returns on your other important, but lesser pursuits.
There are two particular areas of investment that you should pay attention to. The first is your education. Business by itself is one kind of education. You may not receive a diploma marked “PhD,” but you get the equivalent in hard knocks and life lessons. However, as your business grows, you will find a need for specialized knowledge in order to take it to the next level. You should not hesitate to take these opportunities when they are presented.
Numerous local institutions and community colleges offer courses of instruction in sales and marketing, leadership, technology and a smorgasbord of numerous business related topics. These classes are often extremely affordable but well-presented and valuable. The business owner must always be sharpening his saw in his area of interest because everything moves so rapidly in this day and time. Also, competition is ever changing, adapting and innovating to take your customers. Thus, you must remain ahead of the curve.
Minority owned businesses that are certified through the NMSDC and its affiliates are enabled to obtain a minority business executive MBA from the Kellogg School of Business at Northwestern University in Chicago. Dartmouth University, Tuck Graduate School of Business also offers a similar program. These programs are an excellent source of executive education. Prior to the merger of my business, my law firm administrator and I each attended one of these programs. The information obtained was invaluable. It caused us both to think differently about our business and inspired to take the steps to go to another level of service delivery and success. That process led to the merger described in the previous chapter and multiplied our business several times over.
In both instances, we were sponsored by corporate clients that set aside funds to invest in their minority suppliers so there was no cost to us. Nevertheless, there are many years when it takes some effort to gather a few minority companies to take advantage of such an excellent educational opportunity. Again, it’s the simple things – the fundamentals that lead to success. It could be one nugget of information or one person that you connect with in such an environment that can make all of the difference in your business.
Finally, one of your greatest selling strategies is to be the recognized expert in your field. Take the educational opportunities in front of you to gain that expertise and differentiation from your competitors. One new process or innovation learned and implemented by you could be a turning point for you. The successful person never “arrives.” That person is always learning, always growing and always willing to make an investment in his best asset: the man (or woman) in the mirror.
I would also advise you to invest in professional help as much as possible. By “professional help” I mean a lawyer, accountant and marketing support. In a start-up phase money is always tight. Thus, professional services are seen as a luxury item and placed on the back burner. The truth is that to ignore this area or to get cheap (but bad) advice can cost you far more than you could save by cutting them out of the budget.
This was painfully demonstrated to me during the second year of my business. Although I had made some money, I considered myself frugal and asked a friend to help me file my corporate taxes “for free.” My friend prepared my taxes and to make a long story short, ended up earning me a $40,000 IRS tax bill, which I paid. So his service wasn’t “free” at all – it was quite expensive. Later, when I hired a serious small business accountant, he showed me the folly that caused my predicament but it was already too late.
Thus, it may take a little bite to get some professional help in the key areas of your business, but it will pay off down the road. Your business will be established on a proper foundation and you can sleep at night knowing that you have challenges like any other company, but that your challenge is not self-created. If finances are tight, you will find that most small business professionals will work with your cash flow, including establishing favorable payment arrangements. Remember, it could potentially cost you far more to make Mistake Number 5 than to avoid it by investing in proper professional services.