Can you swim with the sharks?

I confess, I love the show “Shark Tank”.  In it, 5 venture capitalists are pitched a variety of business ideas and are asked to invest in the business for a percentage of ownership.  The sharks ask questions of the investor and either decline to invest or make offers and negotiate with the business owner.  Sometimes the sharks end up bidding against each other to cut a deal.

What I like best about the program is that the sharks ask probing questions about the business and the owner needs to have thought of the answers in advance to defend why his or her business is a good one to invest in.

As our company continues to provide funding for small businesses, I think every business owner should watch at least 3 episodes of the show – it will make you think about your business in a whole different way.

Here’s a link to the show http://abc.go.com/shows/shark-tank/

And a link to a great article about it http://www.thedailybeast.com/articles/2012/05/11/shark-tank-s-sneak-attack.html

Here are the 5 Signs

1.  If a client seems indifferent.

2. If there is no hard deadline for a decision.

3. If you aren’t dealing with the decision maker.

4. If your price is too high.

5. If you’re asked for a proposal instead of a conversation.”

 As with almost all selling situations, the key is asking questions that address these 5 issues.  All too often as business people we are chasing people who are not really interested in our product instead of finding those people who are .

• US stock markets are at with levels not seen since 2008 with the Dow flirting with 13,000.
• The US Labor Department said that seasonally adjusted new jobless claims is the lowest since March of 2008.
• Per the Commerce Department homes for sale (inventory) is under 6 months – and the lowest level in the last 6 years.
• A survey by Rueters/University of Michigan shows that consumer sentiment is at the highest in a year.

All that is good, but as has been the case recently the information is still mixed. Home sales at 321,000 units is less than half what a healthy real estate market should be and prices continue to decline. Employers are still not hiring at any significant levels.  Finally, oil and gasoline prices have spiked and could threaten the weak recovery.

What does that mean for your particular business? The short answer is that there is opportunity out there – but you’ll have work hard to find it and even harder to make it grow – but it is out there.

Go for it.

They are Relationships, Results, Retention, Referrals and Revenue.

For most businesses, Relationships are the understated part of success.  Before I bought my leasing company I was privileged to learn from Steve O’Neill, the owner.  Steve got more done from building informal relationships than anyone I ever met – it probably represented over 90% of his business success.

How about your business?  What relationships do you have with  clients, suppliers, partners, competitors, etc.?  And, how do those relationships lead to referrals?

We’ll touch on these “R’s” in future posts, but it’s a good topic to think about – if you are interested in increasing your Revenue.

So here goes:

2011 GDP growth will come in at a little under 2%.  That beats a recession but isn’t enough for real growth.  My estimate for 2012 is slightly better at 2.5%.  That’s worse than most post recession recoveries which are generally 4-5%.

Jobs.  There are a couple of keys to recovery and one is the job market.  What has gone largely unnoticed is that the job market has improved.  There has been a net job increase exceeding 100,000 per month over the last 5 months - the last time we had numbers that good was 2006.  Additionally, new unemployment claims dropped to their lowest level since 2007.  All of this is positive, but we are still not seeing growth.  When you add young people who start working and people who come back into the job marketplace, 100,000 new jobs per month is a replacement number not a growth number.

At 2011 year end, the unemployment rate is a stubborn 8.6%.  I expect next year to see a decrease to 8.2% by year end 2012.

Housing.  This is the recession’s most difficult problem.  Current forecasts predict housing will be stuck until 2013.  There is a huge glut of unsold homes, both those now for sale as well as an estimated 1.6 million homes that are vacant and not for sale yet or have people in them who are not paying (called the shadow inventory).  This will continue to drag down mortgage equity and pricing.  This is very regional so some parts of the US are doing quite well (North Dakota), while others are not (Stockton, CA).

Business lending.  There are two issues effecting lending today, supply and demand. Normally they move opposite to each other but now we have both low supply ( little access to money) as well as low demand (few businesses who wish to borrow).  In 2011 lenders began easing requirements from incredibly tight parameters.  Credit started to release for for the largest companies but is only now making its way to the small businesses.  The other side is demand.  For the last three years, businesses have been both de-leveraging (paying off debts) and cash hoarding.  What businesses have not been doing is much investing, which is the activity that creates new GDP and new jobs.  In 2012 there won’t be an increase in cash hoarding and will be an increase in capital expenditures.  There won’t be a huge rush for expansion - even though this is a great time to do so.

Risks.  There are couple of risks that could derail the US recovery.  Here is what I think they are:

Europe.  The continent is struggling.  The Eurozone is in a no-win situation in that they can’t let Greece, Spain or Italy fail; but the costs to prop them up both monetarily and politically are enormous.  Europe will continue to struggle and is already falling into a recession.  If the recession is mild it shouldn’t derail the US recovery.  If it becomes a major one and if Europe allows Spain and Italy to fail, all bets are off for US and the rest of the world.

US politics.  If 2011 showed anything it’s that politicians are more interested in party politics than in crafting good economic solutions (in this writer’s opinion).  The downgrade of US debt in 2011 was both unnecessary and avoidable.  The consequences of that were not felt immediately, but will be a problem long term.  Since then the US political system has lurched from artificial crisis to crisis with no end in site.  In 2012, nothing the politicians will do will help the US economy in a significant fashion (a bipartisan agreement along the lines of the Bowles/Simpson program would help, but that is about as likely as snow in Washington DC in June).  While I don’t think that the political system will do much to further hurt the US economy, a government shutdown or default on paying its obligations would be a problem.

Okay, here’s the summary:

For 2012 I predict (drumroll please).  GDP will be slightly better at 2.5%.  Unemployment will be slightly better at 8.2%.  Real estate prices will remain flat in 2012 or drop slightly.  Access to capital will gradually increase and rates will stay the same as they are today.  In short a continuation of 2011′s almost imperceptible recovery – but better than the alternative.

Feel free to tell me what your predictions are.

If you have a small business, there are other options than banks for financing.  Today banks cater to businesses and individuals that don’t need to borrow.  For those clients banks will provide the best rates and other perks (you could call those folks the 1% if you will).  For everyone else, banks are not interested in you except as source of funds (you leave your money with them and they give you zero interest and often many fees in return).  That’s incredibly frustrating.

I recently looked at mortgage financing.  I found it incredible at how difficult a conventional bank made the process.  When we borrowed to purchase our home 17 years ago, we opened and closed escrow in 13 days.  When we got a home equity line 8 years ago, the process was completed in 1 day.  For this transaction, not much different than either of those it will take longer than a month (really???).

A private funding source such as a lease company like www.fitleasing.com will help deal with the stuff that a big bank puts you through.  You may pay a little more (or maybe not) but it’s definitely worth having someone working on your behalf who knows your needs and how to work through the bank’s baloney.  It will certainly be a more enjoyable experience. 

I suggest two steps.

First, ask yourself “what did I do right?”  All too often we get caught up in the blame game.  I blame others (employees, customers, the economy, the world) and most of all myself.  This becomes a vicious cycle that doesn’t make things better.  Celebrate success, even if it’s the smallest step.

Second, ask “What can I learn from this?”  Every encounter can be a teachable moment.  We can learn from the successful events, but we learn much better from the unsuccessful ones.

Lastly, put into practice what you learned.  Feedback, unapplied is just noise.  Knowledge applied leads to results.

That doesn’t mean it is.

I read this brief article that said the “misery index” is measured by unemployment and inflation and it reached it’s highest number in 3 decades at 13.  However in 1980 when we had both unemployment and inflation the index reached 20 http://lifeinc.today.msnbc.msn.com/_news/2011/10/27/8510395-good-graph-friday-and-you-thought-you-were-miserable.

The fact is, while 9% of us are out of work, 90% of us are employed.  In the last three years Americans have increased savings at the highest rate in decades and shed debt at the same time at unprecedented levels.

Maybe I’m wearing rose colored glasses, but it seems to me that all this upheaval is creating new opportunities somewhere.

Now if I could only find where I left that “finding opportunity” manual.

1. E-Myth Revisited by Michael Gerber – It causes you to think about your business in terms of systems of delivery and the process of doing whatever it is your business does.  http://www.e-myth.com/.

2.  Think & Grow Rich by Napoleon Hill – Written in 1937, this is the classic about focus and determination.  http://www.naphill.org/.

3.  The 4 Hour Workweek by Timothy Ferriss – Reevaluate everything you thought about what is success and what it takes to achieve it.  http://www.fourhourworkweek.com/blog/.

4.  The Tipping Point by Malcolm Gladwell – Laugh at the hair if you must but this is A book to help you think out of the box about why change happens.  http://www.gladwell.com/.

5.  The Richest Man in Babylon by George S. Clayton – Originally published in 1955, another classic, not about business, but following this advice will make you wealthy and secure – if you can muster up the discipline.

6.  How To Become A Rainmaker – By Jeffrey Fox – Really one of the best books and great salesmanship.  http://www.foxandcompany.com/index.html.

7.  How I Raised Myself From Failure To Success In Selling by Frank Bettger – In my opinion the first, best book ever written about great salesmanship, written in 1949 and still the best today.

8.  The Five Temptations of a CEO – by Patrick Lencioni – A great parable about taking responsibility for yourself and your company.  http://tablegroup.com/.

9.  The Ant and the Elephant by Vince Poscente – This wasn’t originally on my top 10 list – it is an excellent book about how the subconscious mind guides or decision-making and how to actively direct it, but didn’t originally make the list.  However, earlier this month I met Vince Poscente and heard him speak.  He is an Olympic athelete and professional business coach and hearing him speak really brought his principles to life for me.  http://beinvincible.com/.

10.  The Idiot Factor by Larry Winget – A take no prisoners approach to personal responsibility in business and in life.  Don’t read it unless you want to be confronted by the Truth.  http://larrywinget.com/.

And one to grow on:

11.  The Breakthrough Company by Keith McFarland – I’m reading this now, I had an opportunity to meet Keith last week when he spoke at a Vistage meeting (coaching organization for CEO’s).  If you want to take your business from entreprenurial to large enterprise, Keith offers great advice.  http://mcfarlandstrategy.com/.

Next year, I’ll probably have a whole different group although some of these have been on my list for over 20 years.

Happy Reading!