Entrepreneurs are hesitant to pull others into their start-up plans. The whole point is to avoid sharing the power and prestige. Consider this:

A total of 56% of the firms included in the 2007 Inc. 5,000, which is the 5,000 fastest-growing private companies in the United States, were starting by two or more people. (from Inc. - November 20, 2007)

The trouble is that there is no training or education for how to work in a business partnership. B-schools don't teach it. Medical schools and law schools don't teach it, even though the vast majority of the professional lives of their students are going to be spent in partnerships.

I first saw this sort of data in The Partnership Charter by David Gage. He covers the topic throughly and raises questions you would never think of asking before getting into a partnership like "What happens if the company receives an unsolicited buyout offer from a competitor?" It's a great book to get you thinking about all the right things when forming a partnership. And not the legal ones; the more powerful emotions ones.

BTW, The Partnership Charter is one of The 100 Best Business Books of All Time.]]> Small Business 2008-11-14T13:36:26-06:00 http://800ceoread.com/blog/archives/008556.html Can we finally put to bed the idea that starting a business is super risky? I was looking at What Stopping You? by Bruce Barringer and Duane Ireland today and they quote research from the SBA: According to Brian... 8556@http://800ceoread.com/blog/ Can we finally put to bed the idea that starting a business is super risky? I was looking at What Stopping You? by Bruce Barringer and Duane Ireland today and they quote research from the SBA:

According to Brian Headd, an economist for the U.S. Small Business Association, 66% of new businesses are still operating after two years, 50% survive four years or more and 40% survive six years or more. Additionally, about one-third of all businesses that close or are sold are considered to be successful by their owners (1).

The book Startup Nation presented some similar research in 2005. Joel Kurtzman's work with PricewaterhouseCoopers presented in Startups That Work says the same exact same thing.

The point is that the oft-quoted statistic that 9 out of 10 business fail in their first few years is completely false.

Adjust your future plans accordingly.

Murphy recounts his abrupt decision to move his life and family to Paris, his early struggles to gain a foothold in a foreign business culture, and his eventual success with McArthurGlen Europe, "which created nearly 8,000 jobs, opened 1,500 stores featuring 500 brands, and attracted nearly 40 million shopping visits per year." The Wall Street Journal calls Le Deal "a tale fraught with frustration and filled with insight." In the essay below, Murphy explains the challenges he faced when attempting to run an American business model in a European market, and the ways he had to both change and be changed by the work culture around him.

The Management Mirage: Creating Teams in Foreign Cultures
by Byrne Murphy

In late 1992 I found myself alone at the kitchen table of a rented apartment in Paris. I had just arrived in Europe with an idea for a new business. In front of me was a pencil, paper, and a phone. The only thing missing was someone to call.

I didn't know anyone to call; not in Paris nor anywhere in Europe. Yet, eight years later, McArthur Glen Europe had opened thirteen specialty retail centers in five countries featuring 1,200 stores, over 300 brands, and was generating nearly one billion euros of sales from almost three million square feet. Approximately eight thousand jobs had been created. The company had restored abandoned factory buildings in England, added revitalization to small towns in France and Scotland, created leisure destinations in Wales and Austria and much more. The company was a success.

But it was a success born out of agony...in fact many agonies.

The toughest challenge was not with the ruthless local politics nor with blackmail and graft nor even the grinding, endless hours. The most relentless, exhausting challenge was the most fundamental of all management tasks--creating an effective team from an ever-growing group of multi-national, multi-cultural, polyglot Europeans who held as many centuries-old biases about each other as they did about Americans.

The challenge was elemental but was also mission-critical: within a few years the company comprised nearly two hundred people featuring more than a dozen nationalities working from seven offices across Europe. The pressure was intense. Our success had attracted serious competition in every market. The race was on and time was not our friend. Effective teamwork was the key success factor. The question was how to get all those national oars rowing in the same direction and to the same cadence?

Americans have an advantage when operating overseas. Despite our reputation for being naive and heavy-headed there is respect for the longstanding success of American business. There is often a willingness to grant the benefit of the doubt to American managers regarding the many new concepts and innovations emanating from the States. But this benefit of the doubt is precariously balanced, as though on an old-style scale with two plates on which a new substance is measured against known values. On one plate is a heap of respect for America and what it stands for. On the other plate is resentment for what America has achieved and how it handles those achievements. When starting up an American-inspired venture abroad, if the listening and hearing skills of the American manager are not acute enough to take into real consideration the context of the culture in which the venture is operating, the weight of resentment will quickly outweigh that of the respect. The benefit of the doubt has worn off and the scale is out of equilibrium. The manager's task becomes infinitely more difficult.

At McArthurGlen we were most successful when we derived clear objectives and worked hard in listening to each office on how best to achieve them. We did put in place a classic, American-style profit-sharing scheme to reward success in one's home market and to encourage cooperation across borders. Interestingly, the plan met with only partial success and eventually lost credibility. Bare-bone entrepreneurial tools only go so far in most European settings. The more effective tactic was the listening and the hearing.

Europe is not America, not in its values nor in its practice. It is not the land of entrepreneurs but rather the land of large governments which play pivotal roles in the economy. Many Europeans--in some places most Europeans--do not live to work and to constantly achieve in the traditional American sense. Those differences must be taken into account. It is vital to realize that though it may be your concept, it's their country. Context matters--a lot. The host culture matters...a lot. If managers ignore the context in which they are working then surprises are surely headed their way--most of them unpleasant.

At the same time a manager is striving to understand the host culture he/she needs to quickly establish him/herself as the unwavering leader in the effort. And not just any leader but one exhibiting certain key attributes. These attributes include:

• Leading decisively from the front, ready to spearhead the struggle and, importantly, to absorb the first and the second wave of adversity, showing the team he/she is willing to suffer more than they are expected to suffer. They need to know when all the external responses to the team's efforts are "NO NO NO," that their manager insists on "YES YES YES"--they need to know, in effect, their manager is sincere. Over time, sincerity and integrity transcends all languages.


• Believing completely in "The Mission" in order to have others buy-in. If the manager does not truly believe in The Mission, the team will perceive that and will not commit themselves.


• Setting and maintaining simple and clear goals, easy for all to understand even with language barriers. A lack of clarity leads to debate, then to confusion, then to lack of buy-in and a "not my job" mentality. Once that sets in, there is no team.
  Our newly globalized world presents both significant challenges and great opportunities to American businesses and entrepreneurs. Only by recognizing that when operating abroad it cannot be business as usual can those opportunities be realized. After sixteen years of working overseas, I have found that the most important step to take is addressing management philosophy.

* * * * *

Byrne Murphy, MBA, is an entrepreneur who has created several companies across Europe over the last fifteen years. His book, LE DEAL: How A Young American, In Business, In Love, And In Over His Head Brought A Multi-Billion Dollar Industry To Europe, was recently published by St. Martin's Press.

An anonymous writer under the byline "Uncle Saul" wrote The Author's Dilemma - Why Most Business Books Suck for socialtech.com. The piece is clearly written by a book reader as it points the vast number of ways business books fail the entrepreneurs. Among the reasons:

Entrepreneurs Need Tactical Guidance -- Obsessing about strategy is a luxury that only Big Dumb Companies ("BDCs") can afford. Entrepreneurs must define a series of skirmishes, they do not need to devise elaborate battle plans. Entrepreneurs need only develop a basic strategy and craft an evolving and iterative tactical plan which guides them in the general direction dictated by their overall strategy. Although a few books attempt to act as entrepreneurial field guides that offer tactics in specific areas (e.g., selling, marketing, PR, etc.), their usefulness is often limited. Books that highlight tactics are valuable for entrepreneurs whose specific circumstances match those outlined in the text. However, specific tactics are often difficult to translate into markets outside of those described in such books.

Entrepreneurs Have Corporate ADD -- A pithy format, offering bite-sized data, serves entrepreneurs well. If you prefer to pour through 400-page academic tomes, you may be a nice person, but you are probably not an entrepreneur.

Entrepreneurs "Get It" -- Consistent with their Corporate ADD, entrepreneurs tend to excel at digesting numerous disparate facts and making quick, gestalt decisions. This inherent impatience causes entrepreneurs to quickly become frustrated with books that repeatedly reinforce their central point through multiple examples, analogies and anecdotes.

Entrepreneurs Are Contrarians -- In general, the use of multiple examples is an appropriate means of convincing someone to change their behavior. However, since most entrepreneurs have no allegiance to the status quo, they find books which rely on numerous examples as a means of changing the reader's behavior to be frustrating and largely irrelevant.

Uncle Saul does like one book: Guy Kawasaki's The Art of the Start, saying, "Guy succinctly addresses a number of relevant startup issues in pithy chapters and offers concrete, tactical suggestions for addressing a number of typical challenges faced by most startups."

I'll take this opportunity to mention something our sister company, Schwartz Bookshops, is participating in this winter. It's an alliance of Milwaukee businesses called "Our Milwaukee" and their mission is this: "Our Milwaukee advocates for locally owned businesses that provide a genuine, quality experience - in celebration of our community's unique character."

At 800-CEO-READ, we believe strongly in supporting our local economy. So if you're in town at all, we encourage you to check out some of our favorite establishments:

Harry W. Schwartz Bookshops
Alterra Coffee Roasters (It's scary how much of their coffee we consume each day.)
Beans & Barley
Lakefront Brewery
Laacke & Joys
Outpost Natural Foods
The Pabst Theatre and The Riverside
Brewers Credit Union

In this follow-up to his first book, Cheat to Win, Robert MacDonald shows professionals, business leaders, and entrepreneurs how to overcome the bureaucracy that smothers the innovative, entrepreneurial spirit essential to long-term business success.

Beat the System provides real-world advice for building an entrepreneurial culture in your entire organization, your department, or in your individual position.

A true entrepreneur is not determined by the measure of his or her results, but by how those results were attained. Being an entrepreneur is more about attitude than aptitude. There have been some very talented business managers who failed because they failed the test of entrepreneurialism. (We call them bureaucrats.) Likewise, there have been some people with very little apparent talent who achieve remarkable success as entrepreneurs. (These types are usually abysmal failures in a bureaucratic world.)

Entrepreneurialism is a way of living life, not a way of managing life. The real entrepreneur has a certain spirit, an elan and an approach to issues that is just different. And that is the key. In a system that demands sameness, the entrepreneur is willing to be different. Only by being different can things be made better. That is the philosophy at the heart of being an entrepreneur.

Continue reading the excerpt here: http://800ceoread.com/excerpts/archives/007487.html

This chapter is about challenging conventional wisdom and accepted practices.
The author profiles two women who in traditionally male-dominated positions, at a time when it was an accepted belief that they would fail, became successful leaders of major corporations.

Conventional wisdom often stops people in their tracks. This is not necessarily bad. If the conventional wisdom is that a small business will not survive and grow without proper financing -- a truism that has been shown to be true countless times -- and this rightly should act as a stumbling block to the nascent small business owner who intends to start a venture on a shoestring and hope for the best.

But conventional wisdom should not stand in the way when the belief is based on outmoded facts, wrong premises, or prejudice.

Here's a direct link to the excerpt: http://800ceoread.com/excerpts/archives/007422.html

Keep this book on your radar: No Man's Land: What to Do When Your Company is TOO BIG to Be Small but TOO SMALL to Be Big by Doug Tatum.

Portfolio, the publisher, is really excited about this book. We first heard about it when we were in NYC in May. Here's a snippet from the introduction:

The entrepreneurs I encounter are routinely stymied by their inability to "get out of the weeds," to rise above chaotic operational firefighting and see their businesses in a new strategic light. To traverse No Man's Land, however, entrepreneurs need to become radically objective about their situation and knowledgeable about the strategic choices available to them.

They also need a plan.

Tatum proposes a four-part plan which he calls "the four Ms." These are "fundamental navigational principles for managing a rapidly growing company." Here they are:

• Understand the transition that will occur in the business's Market.
• Address the changes that will be required in its Management.
• Test its economic Model to assure continued profitability as the business scales upward.
• Understand the practical requirements for attracting the needed Money.

You'll hear more about the book after its pub date, but for now, you can hear about it from Doug Tatum himself in an Inc. Magazine interview here:

http://www.inc.com/magazine/20070901/welcome-to-no-mans-land.html

Here are the books and resources he recommended. Click through on the WSJ link to read Shaer's comments.

• Long Walk to Freedom by Nelson Mandela
• The Lessons of History by Will Durant and Ariel Durant
• The Innovator's Dilemma by Clayton Christensen
• Crossing the Chasm by Geoffrey Moore
• The Last Lion: Winston Spencer Churchill: Alone: 1932-1940 by William Manchester
• Shackleton's Way by Margot Morrell and Stephanine Capparell
• Mao's Last Dancer by Li Cunxin
• TechCrunch
• Apollo 13 (the movie)
• An Inconvenient Truth (the movie and the book)

I figured we should start with the definition of a small business. This is from the Small Business Administration website:

A Small Business is one that:

• is organized for profit;
• has a place of business in the United States;
• makes a significant contribution to the U.S. economy by paying taxes or using American products, materials or labor; and,
• does not exceed the numerical size standard for its industry.

  The business may be a sole proprietorship, partnership, corporation, or any other legal form.

  SBA has several general Size Standards. A business in one of the following industry groups is small if it is not greater than the size standard indicated.

  Industry Group	Size Standard
  Manufacturing	500 employees
  Wholesale Trade	100 employees
  Agriculture	$750,000
  Retail Trade	$6.5 million
  General & Heavy Construction (except Dredging)	$31 million
  Dredging	$18.5 million
  Special Trade Contractors	$13 million
  Travel Agencies	$3.5 million (commissions & other income)
  Business and Personal Services Except:	$6.5 million
  >Architectural, Engineering, Surveying, and Mapping Services	$4.5 million
  >Dry Cleaning and Carpet Cleaning Services	$4.5 million

Now that you know where you stand, we can move onto the books.

1. They are trying to solve a problem.
2. They are looking for ideas.

We have a tendency to talk about idea books here. Those are what we are attracted to. Tom's essay this morning on the FT/Goldman Sachs Awards is case in point.

Problem solving books are just as important. If you have just been given a new project or a new job, there are all sorts of questions jumping around in your head. Often, you will just listen to those around you for advice. Books can give you a great third-party resource.

Amacom is good at these sorts of books. Sell Your Business Your Way by Rick Rickertsen is a perfect example. Here is a book that deals with a very specific subject - the things that business owners need to think about when they are deciding to sell their firm. Rickertsen talks about valuation, motivation, and what life after the business might be like. A couple other Amacom titles that match this profile are Effective Succession Planning by William Rothwell and The Complete Guide to Sales Force Incentive Compensation by Andris A. Zoltners, et al. ]]> General Management 2006-10-06T13:33:55-06:00 http://800ceoread.com/blog/archives/006398.html Barry Moltz (You Need to Be A Little Crazy) is hosting the Carnival of the Capitalists this week. If you are not familiar, each week a different blog hosts a compilation of the business blog posts. The COTC has... 6398@http://800ceoread.com/blog/ Barry Moltz (You Need to Be A Little Crazy) is hosting the Carnival of the Capitalists this week. If you are not familiar, each week a different blog hosts a compilation of the business blog posts. The COTC has been going on for almost two years. It is a great way to keep up with everything going on and find some new people you should be reading.

It is called Small Business Reads. We are trying to post one or twice a week.

Our latest post is on a great list of summer reads from the National Dialogue on Entrepreneurship.

You might want to check out all the other channels running over there. They are up to 22 blogs now!

Ellen Lupton and the students at the Maryland Institute College of Art wrote and designed a great book called D.I.Y. (Design It Yourself). The book's purpose is to make the idea of designing something less intimidating.

They start the book with a series of essays on designs and do-it-yourself design. It eases you into the idea that it is possible for you to design and that it is not just for the cool, hip kids who went to art school.

The rest of the book lays out 27 different products you can get your hands dirty with. They ranging from t-shirts to stickers to books. There is an overview and a series of projects in each chapter. The projects are rated by cost and difficulty so you know what you are getting yourself into. And there are LOTS of pictures.

The online version at designityourself.org is a wonderful compliment to the book. You will find condensed materials from the book. The resources section is alone worth the visit.

D.I.Y. is a definite How-To book, but it is really more about inspiration. I think Lupton and her students give readers the license to try their own stuff and see what happens.

I have been asking people lately if they have read anything by Peter Drucker and I am shocked by the number of people you have never read anything written by the Father of Modern Management. While I was getting my MBA, we were never assigned to read anything by him. I sit here shaking my head wondering how this can be.

I decided to do some more research. Last week, we asked the inBubbleWrap crowd two questions having to do with Drucker.

First, we asked if they knew who Peter Drucker was. It was hard to give you an exact answer by I would say 15% of the people did not know he is was. I don't consider that too bad considering the often reported polls showing people's lack of knowledge on current events and world geography.

The second question we asked was "Have you read any books by Drucker?". The following is a list of all the books that people listed and the number of times they were mentioned in the answers.

The Effective Executive - 52
The Essential Drucker - 45
The Daily Drucker - 28
Managing for The Future - 21
Innovation and Entrepreneurship - 18
The Practice of Management - 16
Management: Tasks, Responsibilities, Practices - 11
Managing The Non-Profit Organization - 11
Adventures of a Bystander - 6
Managing in Turbulent Times - 5
Management in the 21st Century - 4
The End of Economic Man - 4
The Age of Discontinuity - 3
Temption To Do Good - 3
Classic Drucker - 2
Drucker On The Profession of Management - 2
Concept of the Corporation - 1
Effective Executive in Action - 1
Future of Industrial Man - 1

It was good to see one of Drucker's complete works beat the two "best-of" books. For my money, I would recommend The Effective Executive and Innovation and Entrepreneurship (both of which I am going back and reading again).

We have some plans for bringing back some of the classics. Stay tuned for that...