Small Business Meetups

I went to a Denver Entrepreneur networking group last night.

As you may or may not know, I am starting a new business. I have tried this before, with a minimal amount of success. The business paid the bills, but it was not quite the business I wanted it to be. I suppose I could blame the economy like everyone else. I could easily say circumstances beyond my control were at fault. In reality, the business wasn't as successful as I wanted because I didn't put the right effort into making it go.

My big issue last round is the same issue a lot of people face as a small business owner. Heck, they even face it as an employee working for another person. People work an hour in order to get paid a dollar. This behavior pays the bills. It puts food on the table. It even brings about moderate amounts of success. But it is no way to run a business. I fell into that trap last round and I'm going to avoid it this time.

I failed to grow the business by failing to do three things: 1) Use networking to find leads and grow sales. 2) Use outside resources to tap available resources to help the business grow. 3) Hire people to do the work.

Last night I met like-minded people. I met small business owners who want to grow their own business. I met a CPR instructor. I met a Shaklee nutrition product salesperson. I met two photographers and a small business lawyer who focuses on I.T companies.

Well, I have been looking for a lawyer to make sure I stay clear of any legal problems and now I have a lead for one that may be a perfect fit for my business!

The networking event was really a pleasant surprise. I was expecting hard sales with the stench of used-car salesman. Instead, it was a bunch of really nice people who were really interested in what they did. The speaker was an expert in Search Engine Optimization (SEO) and he was also a small business owner. I met the speaker and another obvious contact that may be useful down the road. He says he gets people in all of the time looking for companies like mine and doesn't have a place to send them. Now he does. Not only that, his presentation was truly informational and useful for me as an I.T. professional. I learned new things last night and wasn't expecting that walking into the room.

Best thing about the night was that it was free. That’s it for now. Next time I will talk about another small business resource I will be using to help grow my business.

Pillar I: People

Since I am almost 100% certain people are the key to a business’s success, I am going to first focus on building the people pillar. My idea is to start a specialty staffing business that focuses on people in the high technology fields. I have already built a piece of software that lets people enter their skills and resumes. It is searchable, so potential employers can find their ideal candidates. Employers can also post jobs on the site, so potential employees can apply for the jobs they find interesting. This model is very similar to a job site like Monster.com or Dice.com.

The thing about the existing job posting sites is cost. It is expensive for businesses to post jobs on sites like Monster or Dice. It costs a ton for a business to be able to search the various resumes. This pricing model basically shuts out the small business owner. Next time you are on one of those sites, notice how few small businesses actually post jobs on those sites. Small businesses are more likely to use a less expensive venue like Craigslist. Most people don’t know, but Craigslist's revenue model is based on job postings. It costs $50 per job post, and is an inexpensive way for employers to post jobs (most people do not realize that is how the site got started... they just think of it as a free place to find old chairs or something.)

Now, if you have been recently on Craigslist, you already know how difficult it is to search for jobs. It isn’t the most user friendly site out there, but it has a huge following. I am guessing the pricing model is at least part of the reason Craigslist has been successful. It is the right price, but at the same time, the wrong application. I think I have a better way. My website will contain the sophistication of a site like Monster, but use the pricing model more like Craigslist. I will buy my way into the on-line job posting and resume business by offering a great product at a low price. But wait, there is more!

If you own a business or do hiring, you know it is time consuming to sort through resumes, schedule appointments, screen candidates, do the background checks, etc. You may want to schedule an interview with multiple people in your group, so each person has a say in the hiring process. No matter how you look at it, it can be a difficult and time consuming task. Once you find a candidate, there is the on-boarding process, presenting the candidate with the HR handbook, handling the W2 and other assorted paperwork. Again, this is a ton of work. Doing this work for businesses is one reason why staffing companies have been successful. It takes the tedious work and off-loads it to a group who does it for a fee. My company will offer those screening and on-boarding services in addition to the on-line posting site.

Since people are such an important part of any business, I want to the ability to find the best and the brightest. The only way to do is that is to meet a lot of people. But, I need a reason to meet people. People do not just give you all their job history, credentials, and other information for the heck of it. They usually only do so when they are hunting for a job. My business will not only offer an affordable web site to post jobs and to search resumes, but will also include the components of a full-service headhunting company for those businesses that need the additional services. This is the way I can start meeting people in the field and start filing away the names of the best candidates.

At the end of the day, I have a great way to start a staffing business. I will offer two needed services (affordable job posting site and full-service recruitment offerings) and will create a standalone business to fulfill these needs. As a side benefit, I am creating an engine to meet, screen, and help on-board people who have great technical skills. When I move to other potential business ideas, I can leverage the staffing company to help bring on the required resources. The staffing company also exposes me to a great pool of people. I can meet the best and the brightest people and when a new business opportunity presents itself, I can use my virtual rolodex of contacts to put together teams of great people.

Please let me know if this business sounds like a good idea or not.

That is it for now. Next time I will be talking about the second pillar of my business!

What kind of business am I starting?

We finally get to the meat and potatoes of this blog. What kind of business will I start?

Well, I have thought a lot about this business in the last couple of years. The idea has been in my head for awhile, but the plan to actually go forward hasn’t. The economy downturn has been a big factor why I haven’t pulled the trigger on this business until now. Buying a new house is another reason. Starting a business with a partner that backed out of the deal was another. The list goes on and on why I don’t start this business. But I can’t make excuses until I am 65 and decide it is time to retire.

I have a concept I call ‘Bernie’s Basement’. When I was growing up, we had a basement. In that basement, I kind of had a clubhouse of sorts where I can do the things I did as a kid. I did some woodworking, I made model airplanes and radio controlled cars. I had a chemistry set where I played around with chemicals and tried to make new substances. I built a pvc pipe cannon that could launch a grapefruit 100 yards powered by hairspray. When I was in high school, I built a gas CO2 laser that theoretically yields 30 watts of lasing power. In the basement I could incubate ideas and could construct the prototypes of things I was interested in.

My ultimate goal is to have a business like Bernie’s Basement where I can incubate business ideas and experiment with projects. As a kid, I never thought about actually making money with things I created. I figured that would just come in time. Now I know better and realize I need to make that part of it happen myself.

In order the build my ultimate company, I need three things. The first is people. I need really, really smart people to convert my ideas into something tangible. Second, I need infrastructure. I need the equipment and the hardware to do what I want to do. Back when I was younger, that would mean labs and other cool (expensive) things. Now that I am older and spent most of my career in information technology, I am going to need hardware to host my work. Third, I need the basic facilities of a business. I need the bookkeepers, the lawyers, the CRM applications, the Accounting software, possibly a building. I want to make it easy to take an idea, provide the proper resources to make it work, and go. I don’t want to mess around with the business part of the business; I want to make the idea the focus of my efforts.

So I have three pillars to the business: People, Infrastructure, and Business Services. This is my starting point. My goal is to build each one independently. Each one of the pillars will be a business of its own. I will start with the most important pillar first.

That is it for now. Next time I will be discussing the first pillar of the business.

What it means to be an entrepeneur

Being a business owner is not for everyone. Period. End of Story.

I have encountered quite a few people so far who are quite capable of starting a business. In fact, I have tried to establish businesses with some of them. My personal experience trying to recruit people into starting a business together has been unsatisfactory. I do not blame the people nor do I blame myself for these failures. But make no mistake about it… If I decided to wait for the right people to come along before I start a business, it is never going to happen. I now understand that starting a business is not for everyone (including the people who say they want to start a business!) and if this is what I want to do, I better plan now to do it on my own.

I believe most people have a couple of reasons why they are not cut out to be an entrepreneur. First and foremost seems that many people are risk adverse. They see starting a business as an extremely risky endeavor, almost on the order or jumping out of an airplane without a parachute. I find this to be the number one reason why intelligent, capable of people will never start a business of their own.

Almost every endeavor worth doing has risks. Starting a business is no different. When you are the boss, you lose the safety net of a regular job. Mistakes that cost you money, credibility, or even your company fall squarely on your shoulders. Those risks are inescapable for most business owners. An entrepreneur has to be able to identify the risks, define which ones they can live with and decide which ones they need to avoid at all cost.

Not starting a business also has risks. Think about this for a minute. When you work for someone else, you are putting your career and your livelihood in the hands of someone else. You assume the people you work for have your best interests at heart, but they do not. Every month or quarter, you can be certain someone in the company is looking at the numbers and making a determination whether or not to keep you on the payroll. They are deciding if you deserve the 3.5% annual payroll increase. They are deciding if you should stay in your current dead-end job or if you should be given the ‘opportunity’ to try something else. The longer you are doing the same job day in and day out, the less current your skills become. The less current your skills, the less likely another firm will hire you. The less likely another firm will hire you, the less likely you will leave. At this point, you are effectively trapped. Very risky indeed.

The risk/reward equation is why people start businesses in the first place. The key part of the equation is that risks should also present rewards. While risks of starting a company are basically limited to the costs of starting the business in the first place, the rewards have an almost unlimited upside potential. I’m pretty sure your upside reward potential is capped when working for someone else.

The second reason most people will not start a business is timing. In my opinion, people at the beginning or at the end of their careers are more likely willing to start a business of their own. People in the middle are always waiting for their next promotion, or their next office, or their next role. They are waiting to see what is around the next corner. It is also no coincidence these same people are just starting families and see starting a business as too much time and too much effort.

Third seems to be a general lack of capital resources. They cannot ‘afford’ to quit their day job or cannot commit money to start a new business. Lack of capital is the most common response people cite when asked what prevents them from starting a business. To me, it is the typical short-sightedness of today’s culture. People cannot see the big picture. They feel they need to invest in their 401k instead of spending that money on their own business. (The irony is too great for me… Why does it make more sense to invest in a company that I have almost zero influence compared to investing in a company in which I have 100% control?)

One of the problems I have encountered in the past is people wanting to start a business, but then lacking the general follow through to do so. I have made this mistake more than once, so I now have a pretty hard and fast rule. If you want to work for me and you have the skills I need, then I will try to hire you. If you want to be a business partner, than you can buy shares in the company. There is no free lunch. If you want to be an owner, then you are going to buy your way into that position. It will weed out the people who do not have the money, the time, the drive, who are risk adverse, etc, etc.

The rest of the reasons seem to be centered around the common theme of not knowing what to start, not having the next big idea, not knowing how to start the process, etc, etc. This is your basic procrastinator reasoning. I’m pretty sure what you start is less important than starting something, anything. My thought is that no matter what idea you have at first, it will change as you start understanding the market, understanding your customers, and understanding which niches are not being filled by the current products in the marketplace. I think people truly believe they need to have a killer idea in order to start a business. While I’m sure it helps, it isn’t common and it most certainly isn’t required.

My personal experiences attempting to start a business are as follows:

1) Do not wait for a partner or partners. I’m on my own for this one.

2) The risks of starting a business are almost equal to the risks of not starting one.

3) If anyone shows interest in being a business partner, I will do a ton of due diligence to make sure they are a perfect fit. I will not grant them a share of my company, but I will allow them to purchase a stake.

4) Starting the business is more important than what type of business it is. Taking the steps to start the business is the most difficult part. Deciding what to do once it is started is secondary and is a function of the people you have hired.

That is it for now. Next time I will be talking about what business I will be starting.

About the Founder

I'm starting this blog to chronicle what it takes to start a small business. I'm hoping people can use this information to help avoid the mistakes and pitfalls I am sure to encounter and to help present good ideas that people can use in their own businesses.

First, I want to talk a little about me. My name is Bernie Hoffman. I graduated from Michigan Technological University with a degree in Business and I am currently an IT consultant specializing in the Microsoft technology stack. I have been consulting for 13 years and have considerable experience in developing software in the financial services industry.

When I first moved to Colorado from Michigan, I found a job doing sales for a computer hardware distribution company. While working for that company, I encountered many issues when trying to configure a computer system for customers. At the time, many of the parts were not interchangeable. Many errors were made that forced the sales people to go back to the customer and give them the bad news that the original configuration wouldn't work with the selected parts. This, of course, usually meant selecting a more expensive part as a replacement and also introduced a delay as we scrambled to replace the part in the system. Not a good position to be in!

I cut my teeth in technology by creating a web-based application that only allowed parts that worked together to be assembled into a quote the sales force could use to help streamline the sales process. At the time, very few web applications existed. The Internet as we know it today started with the web browser released in 1993 known as Mosaic...

After I had some skills developing web applications, I quickly found myself in a very good position from a career standpoint. It seemed that everyone needed a web developer and I quickly taught myself how to develop enterprise-level software. For 13 years I worked at companies both big and small. I worked in telecommunications, environmental engineering, and the financial services industries. At the end of the day, I have been exposed to some great companies, great people, and a whole slew of experiences that will hopefully give me the skills needed to start and run a successful small business.

That is all for now. Next time I will be talking about what it means to me to be an entrepreneur.