Inc.com

Would You Give Up Citizenship for $1 Billion?

Minda Zetlin — Wed, 16 May 2012 15:14:26 -0400

Eduardo Saverin turned in his passport ahead of the Facebook IPO. Proof that entrepreneurs are fleeing because of high taxes?

It's a fun thought exercise for most of us. But whether or not to drop his U.S. citizenship for $1 billion was a legitimate question for Eduardo Saverin, one of Facebook's co-founders. Depending on what happens when the IPO actually launches, Saverin could get more than $3 billion. As an American, he might have owed about a billion in capital gains tax, but he won't owe any now because he decided to renounce his American citizenship.

Reactions have fallen into two extremes. One is exemplified by Forbes.com, where libertarian Daniel Mitchell crowed, "We now have a very high-profile tax expatriate." Rich folks, he went on to say, are fleeing the United States at an unprecedented clip due to our onerous taxes on the wealthy. Noting that more people gave up their American citizenship in 2011 than any previous year, he argues that Saverin is merely the latest example of "taxpayers escaping countries controlled by politicians who get too greedy."

Not so Fast

There are more than a few problems with this logic. First, if people are indeed fleeing the United States due to capital gains tax, you'd think that the highest rate of departures would be when capital gains taxes were most onerous. That time is not now: Throughout most of the 1970s, maximum long-term capital gains tax percentages were more than twice as high as they are today. OK, so capital gains taxes are low, but perhaps all these fleeing Americans are running from plain old income taxes? Same deal: Average income tax rates for those making $2 million a year or more are at the lowest or second-lowest point in 50 years.

While hard data is difficult to come by, anecdotal evidence, along with a New York Times article about American expatriates, suggest that a significant number of those renouncing their citizenship have moved to Western Europe. If they think they'll have lower taxes there compared to here...well, we just don't need them in the gene pool.

At the other end of the spectrum are those who vilify Saverin. They feel betrayed by an entrepreneur who made millions here, but would rather unfriend the U.S. than pay his fair share of taxes. "Writing this article without profanity has been almost physically impossible," begins post by David Gewirtz at ZDNet called "Why Facebook co-founder Eduardo Saverin is a schmuck."

What should an entrepreneur owe?

It's an interesting question, isn't it: What exactly does an entrepreneur owe to the nation where he or she started a business? I'm not sure, but I don't think the right answer can be citizenship for life, in which case a lot of Americans should be applying for Chinese citizenship about now. Conversely, if you owe citizenship where your company's customers are, then a lot of Chinese ought to be on their way here.

And the question of where Saverin made his money is murky. He was born in Brazil to wealthy parents, and his first big windfall came from investing in the Brazilian stock market. As to the IPO, that's a reflection of future expectations more than past earnings, and Facebook's future is not primarily American. The U.S. currently accounts for less than a quarter of its total usage.

On top of all that, Saverin doesn't even live here anymore: He's been in Singapore for the past three years. All things considered, if I were in his place, I think I very well might make the same choice he did, rather than pay $1 billion to a country that I no longer call home.

Honestly now, wouldn't you?

How I Use YouTube to Market My Business

Tim Rice — Wed, 16 May 2012 14:40:03 -0400

Terrence Kelleman, owner of Dynomighty Design, a product development firm, found a huge audience on YouTube. Here's how.

How to Ask Better Questions

Erik Sherman — Wed, 16 May 2012 14:38:00 -0400

You may have what sounds like the best idea in the world. But before you do anything else, try to poke as many holes in it as you can.

Some newfangled ideas are just too tempting to pass up. So entrepreneurs and managers rush to jump on them. Never mind asking key questions like, "How exactly will this work?" and "What do we want to accomplish?"

Take C&A Brazil, a South American clothing store that recently launched an interesting marketing campaign. Customers can go to a special collection online and press a Facebook "like" button on specific articles of clothing. The votes get tallied and are displayed in real time on the hangers of the items in the company's São Paulo flagship store.

It's a clever idea that has received a lot of press. But it's also the type of idea that could trip the company into making a bad decision. Tying fashion to fast-moving popularity votes could artificially drive sales to the more favored items without allowing merchandise buyers adequate time to react and adjust inventory levels. Maybe it's something to do only for a short time, in which case the company must justify the cost of implementing the technology for limited use.

The Basis for Good Decisions

The impulse to want to innovate and run the organization more effectively is a good one. However, it can break down early on if no one is asking good questions. Unless you ask the right questions, based on what you're really trying to achieve, the results may be a waste of money, time, and, worst of all, the "willingness" capital of employees to work hard and make something new a success.

A great example of the phenomenon is chronicled in the 2003 book by Michael Lewis, Moneyball: The Art of Winning an Unfair Game. On the surface about baseball, it's really about business and the irrational way in which people make decisions.

Many who came up traditionally in the game would resolutely look at the statistics they had learned to follow, such as runs batted in and number of home runs. But it turns out that those statistics weren't the ones that would statistically lead to winning games.

Far more important were numbers like the percentage of times batters would actually get on base. That's because to win games, you need to have people in position to score runs and you also have to reduce the number of outs you make, because reaching three outs ends your turn at bat and completely resets your attempt to score more runs. For years, people running baseball franchises were looking at the wrong numbers because they hadn't closely examined the connections between what those numbers meant and what they were paid to accomplish.

How to Ask Better Questions

The right questions will change, depending on the company and circumstances. But here are some general ones to modify for your deliberations:

What is our corporate strategy goal in undertaking this initiative?
How would the initiative positively and negatively affect marketing, operations, finance, and other specific aspects of the business?
Are there legal, regulatory, or contractual implications?
What resources are necessary to make this work?
What are the hard benefits to which we can put a dollar sign?
Do the hard benefits at least pay for the initiative?
What are the soft benefits?
What are the pessimistic, realistic, and optimistic projections for success?

Success is never a given, but you're more likely to find it when you look the right way, and that means asking the right questions up front.

Inc. Business Owners Council holds its first CEO Roundtable and announces its third event for 2012!!

Alf Nucifora — Wed, 16 May 2012 14:24:32 -0400

15 members get to discuss burning issues at the top of San Francisco!

On April 19th, fifteen business owners gathered on the 59th floor of the luxurious and newest high-rise in San Francisco, One Rincon Hill at 489 Harrison St. Besides the spectacular views, the participants engaged in a meaningful, moderated discussion on challenges they face in their respective businesses.

This CEO Roundtable is a feature of the Inc. Business Owners Council and brings together CEOs and business owners in a confidential setting where they can discuss burning issues they face in their businesses and/or give advice on how to best resolve them. A great time was had by all and everyone wanted to continue talking way after the evening ended.

Our next event, to take place on May 24th at the Fairmont Heritage Place in downtown San Francisco, will be a new member invitational event with our guest speaker Mr. Lewis Schiff from our New York Office. The topic is "What's your number?", an owner's guide to maximizing your business' value! If you are planning to sell your business, just exploring options or might consider this course of action for your future, this is the event for you! And, of course, all the networking you can handle with business owners, like yourself! This event is limited only to business owners and/or CEOs of companies with more than $2M in annual revenue and at least 10% ownership. Click here to register for this event!

6 Tips to Boost Your Web Presence

Jeff Haden — Wed, 16 May 2012 13:45:00 -0400

If these tactics worked for LanceArmstrong.com, they can work for your business.

If you built your website a few years ago it's time for an update, if for no other reason than the fact that usage patterns have changed dramatically: The number of mobile Internet users is expected to surpass the number of desktop users in the next two to three years.

That means your website is unlikely to be as effective a marketing tool as it once was, especially if your site doesn't automatically resize and rearrange content for all possible devices. (Go ahead: Check out a few sites on your mobile phone. Find one that doesn't resize automatically. You'll bail in seconds.)

I asked Adam Moore, co-founder and CEO of Austin-based SpaceCraft, a website publishing platform for small businesses, to share simple ways to make websites more effective for small business owners—and for Lance Armstrong, one of SpaceCraft's first clients.

1. Make it mobile.

The shift to mobile makes it crucial for your website to be optimized for all types of devices, especially smartphones, and tablets. One approach is to create device-specific versions of your website, but a better approach is to use a new responsive design layout that works seamlessly on all platforms—both now and in the future.

Lance fact: Lance's huge global following consistently accesses his website from mobile devices. (His site gets tens of thousands of visitors each month.) Lance insists his fans have a great experience on his site, no matter where they are or which device they use.

You should, too.

2. Update your own content—regularly.

Long gone are the days of static websites. Today's most effective websites frequently update content to give visitors a reason to come back.

And quality is just as important as quantity, so make sure your company information is up-to-date and communicate relevant details about your business through regular blog posts or updates. Frequent updates not only help better sell products and services, but also play a key role in getting higher search results.

Most importantly, make sure to use a content management system (CMS) that makes it easy for you to make your own updates. The right CMS will make managing content as easy as using a Web browser, and when you do it yourself you can make sure your personality and your brand shines through.

Lance fact: His team feeds the latest press into his website, ensuring that search engines time stamp his site with a recent date. And Lance can easily add photos from races and training so fans have even more reason to come back frequently.

3. Integrate social media.

Social media is an essential tool for every business seeking to build a powerful web presence—from promoting your online brand to managing customer service issues.

Go beyond including social media buttons by adding your Twitter and Facebook feeds directly on your website so customers can stay up-to-date. Invite customers to engage by allowing them to like your products and services so they can become your biggest advocates.

You can hire a developer to integrate social media on your website, or better yet choose a tool that allows you to add and manage your own social media content on your website.

Lance fact: Lance uses Twitter several times every day to interact with his 3.5 million followers. His tweets automatically feed directly onto his website, enabling fans to discover and participate in real-time conversations.

4. Remove annoying features.

Lots of restaurants, for example, upload a PDF of their menu. That's easy for the restaurant but a pain for site visitors. The same is true of any content that requires an application launch, especially on mobile devices.

As the site owner your experience is irrelevant; all that matters is the customer experience. Get rid of anything - anything—that could potentially irritate your visitors... or worse, drive them away.

5. Keep it simple.

The goal of most websites is to get visitors to the content they seek as quickly as possible. A simple, intuitive design is the best way to accomplish that.

Fewer page elements—which can distract visitors—keeps the focus on your website's content and leads them to your desired outcome, whether it's a phone call, email inquiry, or sale. Work with a web designer to clean up your site or choose a build-it-yourself website tool that offers simple design options.

Lance fact: An easily navigable layout ensures a high engagement rate and makes it easy for visitors to find what they're looking for. For example, photos of Lance are a key component of his Web presence, so the site features high-quality images set on a simple backdrop. The photos, not the design, are what's most important.

6. Stay in the driver's seat.

If you do choose to hire freelancers for design or development services, make sure you choose a CMS that you understand and can update yourself. That way, if the relationship ever sours, you're in control of your content.

And if freelancers help create content, make sure that ultimately you own that content. If you currently don't, start creating new content to replace what you don't own.

Facebook Predictions: 6 Things to Know Now

Michael Mothner — Wed, 16 May 2012 13:00:39 -0400

Back in early 2011, I predicted Facebook's $100 billion valuation. Here's what I think is coming next.

In January 2011, I wrote what was at the time an outlandish prediction: that Facebook Will Be the Next $100 Billion Company. While I was right about the outcome, I was wrong about was how it would get there; it turned out to be pure user growth—riding investor enthusiasm and pent-up Wall Street demand.

Trouble is, that's not a good recipe for Facebook out of the gates of its IPO; I expect rough waters ahead.

Here are my predictions for Facebook after this week's IPO, as a public company.

1. Facebook Will Not Disappear

I want to make clear that as bearish as my predictions may be around valuation and expectation, I am equally confident that Facebook is not going to disappear any time soon. The network effect—i.e., the more people that use it, the better the utility for everyone—is past the point of no return. So expect it to be ingrained in more aspects of the products and services in our lives.

You already can see your Facebook friends' reviews rising to the top in Yelp and TripAdvisor, or your friends' song choices in Pandora and Spotify. This is just the beginning. Facebook is here to stay.

2. Facebook Shares Won't Exactly Soar

Understand this: Facebook shares are already overpriced. Google had 2011 revenue of $37 billion in 2011; Facebook had revenue of $3.7 billion. That's a whopping 10 times higher, and yet at $200 billion, Google's market cap is only double the roughly $100 billion Facebook is going to IPO at.

The takeaway with this enormous disparity is that Facebook's value (much to the delight of employees and early investors) has already created a bloated valuation. The flip side is that Facebook needs big revenue growth to play catch-up to its valuation—which in turn implies that buying at today's valuation is buying high.

Some IPO buyers may enjoy a quick profit while the euphoria of the IPO lasts, but it won't last until the next quarterly earnings, so I am a firm "sell" at today's valuation.

3. Revenue Growth Won't Meet Expectations

For Facebook to meet expectations (or even justify its valuation today), revenue needs to grow, a lot. But in the first quarter, its revenue growth slowed to 45% this year from 90% in 2011.

I believe that Facebook will look to increase revenue by growing its user base, showing more ads, creating more engaging ad units, monetizing mobile and launching an ad network. And without a doubt these will increase revenue.

But if the gold-medal barometer of success is to be the next Google, Facebook has to grow by 1,000%, and I do not believe these initiatives (even combined) can create anything near that sort of extraordinary growth rate.

4. Monetizing Mobile Is Not Enough

One of the most lauded opportunities that Facebook bulls point to is that there are no ads on mobile--and half of all users use Facebook on mobile devices. While that is absolutely true, and adding ads will most definitely add revenue, this is in no way the silver bullet that some would lead you to believe.

The reason is alarmingly simple: There simply is not enough screen real estate on mobile devices like iPhones to add much in the way of ads without severely and adversely affecting the Facebook experience. That is the reason we do not yet see ads on mobile devices today.

In order to prevent ads from destroying the experience (or just driving users to use third-party apps that access Facebook with less invasive ads), ads need to be minimal and non-invasive—and, let's face it, non-invasive ads are less likely to drive significant revenue. So mobile advertising is not the answer.

5. Facebook Will Launch an AdSense-Like Ad Network

Facebook launching an ad network was the thesis of my argument last year justifying an eventual $100 billion valuation. I still think this is the greatest asset and opportunity that Facebook has--and yet still nobody is talking about it.

The concept is simple. Google generates enormous amounts of revenue (some 30%, or more than $10 billion last year) from showing ads not on Google.com, but third-party sites—from mainstream news sites to blogs. Google shows ads related to the content on those sites.

If Facebook were to do the same, it wouldn't just be matching ads to content; rather it could tap into a truly enormous wealth of data based on everything they know about you—from demographic information to anything you have ever "Liked."

So why hasn't Facebook launched this yet? I think the answer is Zuckerberg himself, who in his IPO letter declared, "we don't build services to make money; we make money to build better services." This ad network would not be a service, but a vehicle to make money through and through.

If the company's priorities change or Zuckerberg bends to meet investor demands, I bet we see this product launched. But as it stands now, unequivocally...

6. Facebook Will Not Be the Next Google

Fundamentally, the Google experience is to let users search for products, services, and information—and then be connected directly to what they are seeking. The brilliance, and runaway success, of Google boils down to the fact that its "product" is directly intertwined with the way the company makes money.

Facebook is far more like, say, television, than Google. Granted, Facebook has amazing granular targeting and far more data to pull from. But it runs into the same wall: The value of its "product"—interacting, communicating, and posting pictures—is diminished and not enhanced by the advertising that drives the revenue model.

The fact that the user experience is not tightly linked to the advertising implies less relevant and effective advertising than Google; GM's decision to pull all of its Facebook advertising should send shivers down the spine of new Facebook investors.

Long Term vs. Short Term

All in all, have no doubt that Facebook is and will continue to be an integral and growing part of our lives, the way we communicate, share and explore. And as such, it will be a powerful and successful company in the long term.

However, in the relatively short-term "post-IPO" view, there are some sky-high expectations that will come back to haunt them—in the eyes of Wall Street and the average investor hungry to get in on the action.

That party ended before the rest of the world got the invitation.

Agree? Off-base? Now's the time to sound off and comment.

4 Smart Ways to Be More Creative

Kimberly Weisul — Wed, 16 May 2012 11:53:01 -0400

We spoke to Jonah Lehrer, author of the bestselling Imagine: How Creativity Works, to learn how entrepreneurs can be more innovative.

For some entrepreneurs, a great “aha” moment is the spark that leads to the formation of their company. But just one ‘aha’ isn’t going to do it. Once you’re up and running, you may need new products, a better way to deal with your hotheaded marketing chief, or a knotty production issue you can’t seem to solve. So how do you get more everyday creativity into your company – and enhance the odds that when you need a breakthrough, you’ll get one? Inc’s Kimberly Weisul spoke with Jonah Lehrer, the author of the best-selling Imagine: How Creativity Works, to get his advice for entrepreneurs.

Stop brainstorming. That’s right. Despite the fact that brainstorming is one of the most widely-used tools for coming up with new ideas, Lehrer says it doesn’t work. Why? Because the first rule of brainstorming is not to criticize. And criticism is great for idea formation. It’s crucial if you want your ideas to be any good. As Lehrer says, “Criticism draws us out. It wakes us up.” He also says that groups that engage in criticism come up with 20-25% more ideas than other groups, and their ideas are rated as more original.

Surround yourself with diversity. Real intellectual diversity. If you studied engineering at Stanford, and all your friends are Stanford engineers, it doesn’t matter how much racial diversity you’ve got between you. You’re not getting the diversity you need to enhance your creativity.

If you want to be more creative, you need to widen your social circle to include people who really are different than you. Lehrer cites a study of 766 Stanford Business School grads who went on to form their own companies. Those who had a diverse circle of friends—their buddies ran the gamut from biologists to ballet dancers – were three times more innovative than the rest, as determined by the number of patents and trademarks they held.

Talk to strangers. This is a good way to get new people and new ideas into your life. Talking to strangers has been shown to improve your luck, for the same reason. It exposes you to new ways of thinking and new connections.

Imitate the city. Cities never die, says Lehrer, while even Fortune 100 companies last, on average, about 45 years. Why? Lehrer says cities force us to mix and mingle, but unlike companies, they don’t micromanage. “The mayor can’t tell you where to live,” he says.

A successful company should be run the same way, says Lehrer, using the example of Pixar under Steve Jobs. Jobs wanted it to be easy for employees from different departments to get to know each other. So he put the cafeteria and the gift shop in the lobby of the building. It didn’t work, because the animators, for example, still had lunch with other animators. They never had conversations with the folks in accounting.

So Jobs decided there would be only two bathrooms in the whole building, and he put them in the lobby. Predictably, everyone hated it at first. No one wanted to have to walk all the way across the building just to use the bathroom. But now, says Lehrer, pretty much every Pixar employee has a tale of their “bathroom breakthrough.”

You may not be able to relocate the bathroom in your building. But what else can you do to make sure your startup is run like a city – and not like a big company?

Leaders: Are You Trustworthy?

Brian Evje — Wed, 16 May 2012 10:50:56 -0400

It's not fair to expect others to trust you if you can't trust yourself. But how do you know if you're trustworthy? It's more complicated than it might seem.

You can’t expect others to trust you if you can’t trust yourself.

Your first reaction to that statement may be, “Of course I can trust myself.” But it’s a bit more complicated than that. We can take a cue from a saying that connects philosophy, track and field, and leadership: “The run determines the jump.”

Think about the long jump. Poor speed and technique in the run inevitably lead to a poor jump. Proper speed and technique, well-coordinated with the jump, bring the best results.

In leadership, the analogy is similar, if a little less concrete: The invisible—the work you do developing yourself--determines the visible—your leadership characteristics. And the key to both is self-trust.

1. Self-trust is about your relationship with yourself

Self-trust is the ability to have an honest, trusting relationship with yourself. Sound basic? Well, just as in your relationships with others, the extent to which you trust yourself depends on how you view the honesty, quality, and consistency of your actions.

With others, it is not possible to understand, or even to be aware of, all the motivations and intentions that lead to a decision. Within ourselves, of course, we know both sides of a story. We are privy not only to what we do, but to the reasons that we give ourselves for doing it. That makes it fairly easy to see when we are lying to ourselves, or acting without integrity, or over-rationalizing a decision we know we should not make.

Like all relationships, self-trust exists over time and is subject to ups and downs. A key to developing self-trust is to recognize it as a process that grows and changes. The more you engage in honest self-development on all levels, over time, the more you will trust yourself.

2. Needing to be right is not helpful for developing self-trust in leadership. Neither is wanting to be liked.

From a leadership perspective, the issue of self-trust is entwined with the fact that leaders have authority over others. Some leaders deal with this pressure by prioritizing a desire to be right or to be liked. While being right (or “competent”) or popular are not bad things, the pursuit of these two goals may be at odds with the wiser course of action.

You can often see this in the aftermath of a poor hiring decision. I’ve worked with several leaders who eventually recognized that they’d hired the wrong person for an executive position. Rather than reexamine the decision, they tried to ignore the bad fit.

Often, this desire to bury a mistake comes from not wanting to look incompetent or less like a leader. However, the leader who admits a serious mistake only to himself, and not the organization, very subtly erodes his sense of self-trust. Trust is often determined when the path of greatest convenience could be taken, but should not be.

It is during challenging times that we learn the most about how to trust others, and that we learn the most about trusting ourselves. Leaders must ask themselves how to stay honest and consistent. Over time, this practice of addressing the difficult decisions, rather than taking the most convenient or most popular route, builds a strong sense of self-trust.

3. “Know thyself” before knowing and leading others

Discussions about the visible, external signs of leadership are only useful if the invisible, internal signs are addressed first – and addressed best. From the Greeks to Peter Drucker, the exhortation of “know thyself” encourages leaders to spend time and energy learning about themselves. That means recognizing your values, principles, likes and dislikes, the things that frustrate you and calm you, actions that fill you with pride, and circumstances that tempt you to be less than your ideal self.

Only after you attend to yourself can you delve into the messy elements of genuinely leading people. This inner work provides a deep resource and quiet credibility when asking difficult questions of others; when challenging others to move beyond their own limitations; when encouraging others to take risks; and when inviting others to be open and honest because you have done so first.

Leadership self-trust means not having the answers and being right. It means aligning the run and the jump inside you, and constantly striving for the most appropriate way forward based on what you believe is right. This is the visible, active state of Shakespeare’s insight: “This above all: to thine own self be true.”

There are no shortcuts.

Facebook IPO Got You Eyeing Entrepreneurship?

Michael Alter — Wed, 16 May 2012 10:30:42 -0400

Some guidelines to help you decide if this is the time to jumpstart your new venture.

Facebook's IPO will likely spawn a new generation of entrepreneurs. A number of Facebook alums have already invested in their own start-ups, but there are millions more young people who will now look to create the next big thing.

It's an exciting time to be a young entrepreneur, given how easy technology can make running a business. But first you have to ask yourself: Do I have what it takes? Do I really want to start a business? Is now the right time? Is it too risky?

No one can tell you the answer. There's no calculation that can make it a sure bet either way. But here's how I look at it. In my view, there are two types of entrepreneurs: those who come to this vocation by nature; the other by nurture.

A natural entrepreneur is someone who takes risks no matter what, and sees some of them hit really big. Mark Zuckerberg and Steve Jobs come to mind. That said, the majority of entrepreneurs are "nurture" types; they are people who take a calculated risk to start a business because they have a particular skill set that enables them to.

If you're a nurture type, you will probably think through your decision to start a company very carefully. The odds may be against you, but you see some reasons a venture may not be too risky, especially if you are young and starting your career.

Here are some reasons to start your entrepreneurial adventure sooner rather than later:

Freedom. People are waiting longer than ever to have kids and get married. Before that life transition, and the accompanying responsibilities and expenses, throw yourself into your business. Make it count by selfishly devoting yourself to your dream.

Passion. The vast majority of entrepreneurs don't go into business to become rich. There are thousands more 10-year successes than overnight successes, so you better enjoy what you're doing. This is a chance to make a career out of something you love.

Jobs. You may start out on your own, but eventually you could be building a place for other people to work and prosper. The more growing new businesses that sprout up, the more job growth we'll see.

Education. You learn the most from failure. If your first entrepreneurial go doesn't work out, you can still work in the area where skills lie. Or, maybe you'll be more prepared a second time around. Building a business takes lots of patience.

Hats off to those who can sell a new app for a billion dollars, but it's more likely going to be a slow climb. I know it was for SurePayroll. No matter what happens, you'll discover great things about business, and yourself, along the way.

See How Facebook Grew

Inc. staff — Wed, 16 May 2012 10:15:00 -0400

You know what's cool? $100 billion. Check out Facebook's growth, Facebook style.

Can This Start-up Shake Up the Art World?

Jon BurgstoneBill Murphy, Jr. and — Wed, 16 May 2012 10:06:00 -0400

Consumers can already rent dresses, cars, and DVDs by the day. Why not fine art?

Everyone wants nice things. The problem is, most people can't afford everything they want.

That's a basic, simple example of customer pain—and as an entrepreneur that should get you really excited. Especially so, because there's an obvious cure: the rental business model. (Sometimes it's referred to as collaborative consumption.) Instead of selling new goods, some smart entrepreneurs have built businesses around the idea of renting them in bite-size morsels.

Think about it: Rent the Runway, as the name implies, rents high-fashion by the day. Airbnb rents short-term real estate. Zipcar rents cars by the hour. Netflix sends DVDs to people who still actually rent DVDs (yes, we know they stream online too).

Now we're about to find out if the same model will work in the world of fine art.

The Big Idea

Lorenzo Thione, a native of Milan and a serial entrepreneur with a successful and eclectic background, found his first success with the technology company Powerset (which he sold to Microsoft) before producing Broadway shows including Catch Me if You Can, Addams Family, West Side Story, and Allegiance, among others.

His new company, Artify.it, just began a soft-launch in San Francisco. It offers customers, "free delivery, white glove installation, [and an] amazing database of original fine art."

The company rents great art to customers, with an ever updated selection of new works—at a fraction of the cost to purchase. Customers can also freshen the art hanging on their walls and experiment with different artists, styles, and media.

"Talk to anyone who has ever bought or thought about buying original art," Thione told us. "They will tell you that their first foray in the art-collecting market was a painful, long, and intimidating experience."

But building a rental business "lowers the stakes for both artists and would-be afficionados," he continued. "Artify.it increases the total size of the art-collecting market, providing an instrument to begin the journey to become a collector of contemporary art."

But Will It Work?

It's an intriguing model. But it remains to be seen whether it will work for at least two reasons.

First, can Thione's company maintain its highbrow image without becoming the Rent-A-Center of the art world?

And second, many sharing services operate on the theory that people would rather not pay for assets when they're not using them. Why pay for a car when it's just sitting in the driveway, or for a designer dress when it's hanging in the closet?

But is the art world different? When you return a car or a dress, presumably you no longer need it. But if you return a painting, you're left with a blank space over the couch.

So far, industry experts we talked with say they think Thione can overcome these issues, in part because the idea seems a natural extension of existing art museum rental galleries that have been sharing and renting art for years.

Laurie Ghielmetti, who advises clients on major art purchases told us, "It offers a different and additional level for customers who can't take the time to view the resources of rental galleries."

Artify.it says the company has already raised about $800,000 in seed money from investors, including ex-PayPal CEO Peter Thiel and former Google and Facebook exec Benjamin Ling, and recently opened offices in San Francisco. Will renting work in the world of fine art? We're about to find out.

6 Habits of Truly Memorable People

Jeff Haden — Wed, 16 May 2012 09:46:00 -0400

How to stick out in the minds of your colleagues and customers--no gimmicks required.

In order to succeed, almost everyone—whether business owner or employee—must be memorable.

While you don't have to be The Most Interesting Man in the World, being known is one of the main goals of marketing, advertising, and personal branding.

Out of sight is out of mind, and out of mind is out of business.

But if your only goal is to be known for professional reasons, you're missing out. People who are memorable for the right reasons also live a richer, fuller, and more satisfying life. Win-win!

So forget the flashy business cards and personal value propositions and idiosyncratic clothing choices.

Here's how to be more memorable—and have a lot more fun.

1. Don't see. Do.

Can you speak intelligently about how clothing provides a window into the inner lives of Mad Men characters? Do you find yourself arguing about how the degree of depth lost in the Game of Thrones TV series as compared to the books?

Anyone can share opinions about movies or TV or even (I'll grudgingly admit) books. That's why opinions are quickly forgotten. What you say isn't interesting; what you do is interesting.

Spend your life doing instead of watching. Cool things will happen. Cool things are a lot more interesting and a lot more memorable.

That's especially true when you...

2. Do something unusual.

Draw a circle and put all your "stuff" in it. Your circle will look a lot like everyone else's: Everyone works, everyone has a family, everyone has homes and cars and clothes....

We like to think we're unique, but roughly speaking we're all the same, and similar isn't memorable.

So occasionally do something different. Backpack to the next town just to see how many people stop to offer you a ride. (Don't take them up on it, though. Unless you appear to be in distress, the people who want to give you a ride are the last people you want to ride with.) Try to hike/scramble to the top of a nearby mountain no one climbs. (Trust me; take water.) Compete with your daughter to see who can swim the most laps in three hours. (If you live in my house you'll lose. Badly.)

Or work from a coffee shop one day just to see what you learn about other people... and about yourself.

Whatever you do, the less productive and sensible it is, the better. Your goal isn't to accomplish something worthwhile; the goal is to collect experiences.

Experiences, especially unusual experiences, make your life a lot richer and way more interesting. You can even...

3. Embark on a worthless mission.

You're incredibly focused, consistently on point, and relentlessly efficient.

You're also really, really boring.

Remember when you were young and followed stupid ideas to their illogical conclusions? Road trips, failing the cinnamon challenge, trying to eat six saltine crackers in one minute without water... you dined out on those stories for years.

Going on "missions," however pointless and inconvenient, was fun. In fact the more pointless the more fun you had, because missions are about the ride, not the destination.

So do something, just once, that adults no longer do. Drive eight hours to see a band. Buy your seafood at the dock. Or do something no one else thinks of doing. Ride along with a policeman on a Friday night (it's the king of all eye-opening experiences.)

Pick something it doesn't make sense to do a certain way and do it that way. You'll remember it forever—and so will other people.

4. Embrace a cause.

People care about—and remember—people who care. When you stand for something you stand apart.

But...

5. Let other people spread the word.

People who brag are not remembered for what they've done; they're remembered for the fact they brag.

Do good things and other people will find out. The less you say, the more people remember.

6. Get over yourself.

Most of the time your professional life is like a hamster wheel of resume or C.V. padding: You avoid all possibility of failure while maximizing the odds of success in order to ensure your achievement graph climbs up and up and up.

Inevitably, that approach starts to extend to your personal life too.

So you run... but you won't enter a race because you don't want to finish at the back of the pack. You sing... but you won't share a mic in a friend's band because you're no Adele. You'll sponsor the employee softball team but you won't play because you're not very good.

Personally and professionally, you feel compelled to maintain your all-knowing, all-achieving, all conquering image.

And you're not a person. You're a resume.

Stop trying to seem perfect. Accept your faults. Make mistakes. Hang yourself out there. Try and fail.

Then be gracious when you fail.

When you do, people will definitely remember you because people who are willing to fail are rare... and because people who display grace and humility, especially in the face of defeat, are incredibly rare.

Getting to the 'Ahhh' Moment With Customers

Steve Cody — Wed, 16 May 2012 09:20:30 -0400

What's better than data to a marketer? Getting a true emotional response from your audience. Here are the questions you need to ask first.

Marketers are positively drowning in data. You don't need to take my word for it: A recent survey of some 1,700 chief marketing officers worldwide by IBM Consulting said marketers are being in some ways paralyzed by the reams of research they're being provided.

Aside from eye strain, migraine headaches, and other occasional physical side effects, the mounds of data are impairing, if not disabling, the one quality great marketers (and entrepreneurs for that matter) depend on: their gut instinct.

Indeed, Christa Carone, Xerox's chief marketing officer, recently opined, "I fear that marketers' access to and obsession with measuring everything takes away from the business of real marketing. It's impossible to measure squishier, meaningful intangibles, such as human emotions, personal connection, and the occasional 'ahhh' moment. Those things often come with a marketer's intuition and they deliver big time.”

I agree with Ms. Carone. It's important not just to collect data, but to feel what your audience is feeling on a personal level: as humans, rather than data points in a report. That's why my team has begun asking the "why" question whenever we have the opportunity to go beyond a client's market research data. The latter is superb for answering the who, what, when and where questions necessary to sell a product, service or organization. But, data fails miserably when it comes to providing answers to the why and how questions. Stated simply, market research disconnects marketers from the human contact that is so crucial to triggering an executive's gut instincts and eliciting an ahhh.

Here are three recent examples of how we've used the why question to glean insights left unearthed by the clients' market research:

A major technology corporation conducted quarterly surveys of its employees that told them everything except why their workers weren't engaging with the organization's internal communications. By sitting alongside a handful of employees at different levels and from different business units, we found out why. We learned that they were already overwhelmed with information from internal and external sources. And we could see first-hand, as they worked in real time, that there was no space on their computer screens for any more input. How, we asked, can internal information become a must-read? Easy, they responded, explain how the company can help us do a better job, get a raise and promotion, and we'll find the space. We've since retrofitted the employee communications and workers are now engaging.
A professional services firm was trying to connect better with chief financial officers. Thanks to decks upon decks of research, they knew all there was to know about the world of a CFO, except how to engage with him (Note: more than 90 percent of the CFOs in the client's target base are male). Empowered to speak to a number of CFOs for an hour each, we asked a series of why questions. Why you do ignore our client's thought leadership? Why do you instead go to certain conferences to learn what's next and make connections? And, why are you having so much difficulty making connections at those conferences? The answer to the final question produced one of many ahhh moments for us and our clients. CFOs were too busy to connect with other CFOs in advance of the conferences they attended. If our client could become, in effect, an eHarmony for CFOs, they'd provide a clear value-added benefit that would set them apart from competitors. Guess who is now setting meetings for CFOs?

A financial services firm in a highly competitive, highly commoditized industry was desperately trying to appear hip and relevant to the college and university students it needed to recruit for future growth. Yet, despite endless surveys and on-campus seminars, no apparent differentiator bubbled to the surface. So we took the time to follow a mix of undergrads and graduate students from our client's target schools on their online job search journeys, as they made various decisions about a future employer. At each step, we asked why they visited a particular chat room, web site or blogger. When they finally arrived at our client's site and then exited just as quickly, we again asked why. "Simple," one female student told us. "I'm a triathlete and am worried the 24x7 nature of your client's business will prevent me from pursuing my passion." Market research had told our client that work-life balance was a big concern for incoming employees. They thought they had adequately addressed it online. But as the recruitee told us, "I saw a lot about work, but not much about life." We confirmed that oversight when we analyzed their online presence. As are result, our client not only switched the mix, but, critically, told one work-life balance story through the eyes of actual triathletes working at the firm.

Nothing is more challenging in today's frenetic workplace than pausing to put yourself in the shoes of your audiences so you can find out why they do, or don't, engage with your product, service or organization. But, I'd argue it's never been more important to find the time to ask the why and how questions. If you do, I guarantee you’ll be the one emitting the next ahhh.

Make Smarter Decisions: 3 Easy Steps

Paul J. H. Schoemaker — Wed, 16 May 2012 09:14:03 -0400

Want to feel more confident that you're making the right decisions? Check out how a few simple steps can dramatically improve your decision process.

It's not often that a CEO sends a public note to key constituents taking responsibility for a bad decision.

But Netflix CEO Reed Hastings did exactly last September in his apology letter to customers. While some bloggers commented that the confession was like suicide, many others found his willingness to share the decision making process refreshing. He wrote:

Last year, Netflix create Owikster to spin-off the video streaming part of its business from its core DVD-by-Mail operation. To encourage on-line downloading, it unbundled its virtual and snail mail offerings, jacking up the combined price about 60 percent. Hundreds of thousands of enraged customers dropped their subscriptions in response. Netflix's profit was badly hurt as well as its image and trust: its stock price has declined over 65 percent during the past year.

One wonders how a successful entrepreneur seasoned by years of growing his company could make such a bad call. In his note, Hastings revealed the flawed assumptions about what customers’ really valued and he acknowledged that their priorities were not properly evaluated. He bared his thinking process and offered a mea culpa, and in the process invited derision as well.

The bigger the job, the loftier the title, the weightier most decisions get.

Employees and others usually help prepare the tough decisions that the chief gets to call. Whether it's executing a big strategic move, evaluating resource tradeoffs, or addressing a minor issue, it’s assumed the more experience and seniority the leader has, the better their decision making will be.

You need to find a middle ground between shooting from the hip and forever analyzing without pulling the trigger. Sometimes experience and personality get in the way, not to mention market changes.

This is a dangerous assumption. You need to find a middle ground between shooting from the hip and forever analyzing without pulling the trigger. Sometimes experience and personality get in the way, not to mention market changes.

In contrast to Netflix's rash decisions, quite a few leaders get wrapped around the axle due to "analysis paralysis." They are loath to make a call without proof to support their decisions. They seem unable to set an appropriate risk threshold that allows decisions to be made in a timely fashion. Their quest for the perfect decision causes them to miss windows of opportunity windows while frustrating their minions in the process. As Winston Churchill warned, the maxim "Nothing but perfection" often translates into costly paralysis.

In our recent survey with over 15,000 managers, the ability to decide ranked lowest among six distinct skills essential to strategic thinking. Many leaders scored themselves poorest on the essential act of making a choice. Formal feedback on decision-making is usually non-existent in companies. Most people are evaluated on results– not on the quality of a decision.

Improve your decision process

Effective leaders combine experience and a strong decision process that forces them to evaluate, listen, adjust and learn from each decision. Strategic leaders typically build in these three core steps when evaluating and arriving at Winning Decisions.

1. Carefully frame and then reframe your decisions. Strategic thinkers consider what truly needs to be decided right now. They ask themselves: What is the crux of problem you need to solve or the opportunity you want to capture? Will the decision advance overall goals?

2. Balance speed, rigor, quality and agility. Endless analysis loops do not make for a good decision; it takes courage to decide based on incomplete information and conflicting opinions, or when uncertain consequences lurk, and naysayers abound.

3. Remain flexible. Strategic leaders often break the decision down into smaller options or sub-steps. They reframe a binary yes/no decision as entailing more than two alternatives. They stage the decision over time and run pilot tests on key assumptions if valuable.

If CEO Hastings at Netflix had applied these basic steps, he likely would have changed the timing of the decision, tested it with a pilot customer group, and reframed the decision toward things customers truly cared about. If so, he would have made a very different call. But his remarkable candor by admitting his mistake, and then publicly dissecting his decision process, is a welcome lesson for all of us. We should likewise learn from our mistakes by conducting post mortems and then turn these into pre-mortems so that we – or others we care about - don’t repeat the same mistakes.

This article was co-authored with Samantha Howland and is fourth of in a series examining the key components of strategic aptitude: anticipating, thinking critically, interpreting, deciding, aligning, learning. For an overview of all six skills see 6 Habits of Strategic Thinkers.

Have an invention? Launch It With Quirky

Aaron Aders — Wed, 16 May 2012 09:10:00 -0400

A new product development platform known as Quirky allows inventors to share and get help with their inventions.

Whenever Gary Rose shops at Target with his daughter he walks through the kitchen tool department just a little bit slower. Soon enough, his young daughter points out her father's invention on the shelf, and erupts with pride and excitement. This is Rose's biggest payoff on his journey from idea to invention.

It will be quite a few years before Rose's little girl can enjoy using her dad's product, which may be the biggest thing to hit the wine industry since the sniff test. Rose invented the brilliantly simple kitchen tool Tether, which allows wine glasses to be cleaned in the dishwasher without them breaking. Rose had help with his invention from more than 700 other collaborators from around the world. How is such an achievement possible? Only through a product development platform known as Quirky.

When most people think of innovation, they think of the lone tinkerer in the garage or the best-of-breed scientific teams at companies like 3M and Proctor & Gamble. The Quirky platform utilizes a new process of innovation, known in academia as 'Open Innovation' to develop products and quickly bring them to market by combining a social network that cultivates innovative ideas with a cutting-edge product development team. Open innovation is a new approach that opens up an idea for the public to innovate, invent, price the product, and even perform market research. Quirky does all these things with the goal in mind of making it possible for ideas from people all over the world to show up on retail shelves.

The Quirky process goes something like this:

1) A user submits an idea for review and modification by a community of more than 210,000 other innovators.

2) Upon receiving a critical number of votes, it is then analyzed by the Quirky product development team.

3) If the Quirky team decides the product is viable, then full product development begins.

4) The product is then sold through the Quirky Website as well as retail shelves in stores like Target and Bed, Bath & Beyond.

5) Royalties are paid out to all users who had influence on the final product according to the weight of their influence (The original idea-maker keeps the lion's share of the profits).

Innovative minds are already reaping the rewards from the opportunities that Quirky presents. Jake Zien, the inventor behind Pivot Power, a flexible power strip, was mostly driven by the community's positive reaction to his idea, "I was thrilled I wasn't the only guy with this problem!"

Angelo Cacchione, the inventor behind Verseur, a multifunctional wine opener, got his inspiration from watching McGuyver as a child. Cacchione values the relationships forged with other brilliant minds in the Quirky community as well as seeing his influence on products unfold.

Rose suggests that users submit their ideas early in the week, when the energy is high, for the best chance of success.

"There is always a problem to solve, and this is the most important part," Rose says.

Quirky founder Ben Kaufman has a grand vision for the future, envisioning it as the Proctor & Gamble of the 21st Century and adding that he sees Quirky making it possible for ideas from people all over the world to show up on retail shelves.

Think you have an innovative idea that solves a problem? Go to Quirky and create the solution!

How It Feels to Be an Overnight Success

Clarissa Cruz — Wed, 16 May 2012 08:49:30 -0400

This restaurant went from being a quiet nook New York City's West Village to an always-packed hotspot, overnight. Here's how its owner dealt with the good and the ugly of being an instant hit.

When an accolade comes—whether it's a glowing New York Times review, a shout-out from Anthony Bourdain, or a twinkly new Michelin star—a restaurant needs to be prepared. Takashi went from being a quiet Japanese eatery in New York City's West Village to an always-packed hotspot after Anthony Bourdain tweeted it was the "most exciting cooking" he's seen in a long time, and featured it on his show The Layover. But for every Takashi, there are a few more like New York City's Heartbreak, which closed one week after receiving a Michelin star last year. Takashi chef Takashi Inoue tells us how he dealt with the positive and negative aspects of being an instant hit.

I visited Takashi a few months after it opened in 2010 and it was relatively quiet. I tried to come again in February 2012 and there was a two-and-a-half hour wait. When did you notice the shift?
Sam Sifton's review in the New York Times came two months after we opened, and it put us on the map of new and interesting places to eat in the city. It all kind of exploded from there on.

Anthony Bourdain loves Takashi and is very vocal about it. Did you recognize him when he first came in? Did you treat him any differently from other customers?
Yes his assistant called to ask if she could make a reservation for him, and I'm a huge fan so I said, "yes of course." I went up to him to say "hello," but apart from that, he ordered like any regular customer who'd walked through our doors.

How has his endorsement affected your business? Have other endorsements been as influential?
His endorsement was astronomical. I didn't quite realize what a rabid following he has worldwide. We've had people as far as Australia say they came to Takashi because they saw us on his show. His stamp of coolness—selecting us for his one layover dinner in the entire city—was quite an honor.

How have you handled the increase in business?
We expanded our hours slightly to accommodate the added demand for tables. We're a cozy establishment with no real room to expand seating, so that was the best we could do.

Are there any plans for expansion?
Not at the moment, but having introduced Japanese-style yakiniku horumon (grilled innards) to New York, I might want to try a whole new concept next time.

How I Rebuilt After Katrina

Wed, 16 May 2012 08:30:20 -0400

After Hurricane Katrina, New Orleans chef John Besh lost everything. Here's how he staged a comeback.

Naming a Business Is a Competitive Sport

Jessica Stillman — Wed, 16 May 2012 08:19:02 -0400

A naming professional reminds entrepreneurs to keep their competitors in mind when choosing a name for their company.

You have a business idea and a rock-solid business plan. Maybe you've got a great partner or have even been eyeing up the perfect premises. Now all you need is a name.

Your first consideration is probably your customers. What will potential names convey to your clients about what your business does and what it stands for? You're probably also thinking about yourself—communicating something of your taste, your preferences, your style. But a recent post on OPEN Forum reminds budding business owners that a name is as much about your competitors as it is about your character and the character of your business.

The post by Elizabeth Sile rounds up recommendations from a handful of naming professionals to help out entrepreneurs searching for that elusive perfect name. But one point in particular from Laurel Sutton, principal at Catchword Brand Name Development, quoted in the post, bears repeating. Her point?

"Naming is a competitive sport."

Rather than simply thinking of a moniker that conveys the essence of what your business is about, Sutton recommends thinking of your name as encapsulating everything that sets your company apart from competitors in the space. Sile writes:

Sutton says that businesses should not only check out their competitors’ names, but the styles, tonality and messaging of their brand. Find what makes your brand totally different, and base everything on that…. small businesses should avoid falling into the trap whereby their names’ sole purpose is to describe what the businesses do.
"A descriptive naming strategy overlooks the fact that the whole point of marketing is to separate yourself from the pack," she says. "It actually works against you, causing you to fade into the background, indistinguishable from the bulk of your competitors."

On a more practical note, Sutton also notes that, once your have a contender name in mind, you should make sure no one has beaten you to the punch. "If your business is looking to form an LLC or incorporate down the road, checking to make sure a name is not already taken now will prevent headaches when it's time to start the registration process. You can search the availability of a name through your state’s secretary of state office," Siles writes.

Interested in more tips on naming? Check out the post for many more tips from experts.

What other considerations often get overlooked when entrepreneurs set out to name their new business?

Selling Your Business? Reel In a Buyer

Mike Handelsman — Wed, 16 May 2012 08:04:20 -0400

One of the first steps to marketing your business for sale is creating a selling memo. Here's what to include that will pay big dividends down the line.

Whether you're selling your business on your own or through a broker, you'll need to be ready to present a thorough written overview of your business and why it's a good purchase prospect.

Some brokers call this document a selling memo. Others call it a confidential description book or an offering memo.

If your business is very small, uncomplicated, and likely to sell for under $200,000, you can probably reduce the selling memo to a terms sheet that presents little more than a business description, financial information, and presentation of price and terms.
If your business is large, and if its assets, products and systems are complicated, your selling memo will likely run considerably longer in order to adequately explain your offering and its higher price.

A few quick exercises can help you develop the right content for a complete selling memo, along with advice for how to distribute the information to prospective buyers and why and how to obtain confidentiality agreements beforehand.

Step 1. Prepare your selling memo.

Your selling memo is the first comprehensive description of your business that your prospective buyer will see. It needs to strike a careful balance between delivering facts about your business while also offering an inspiring description of its future potential.

It presents facts about what your business is and does and what makes it an attractive purchase opportunity without revealing sensitive information that you or your ultimate buyer won't want non-buyers (especially competitors) to know.
It doesn't stretch the truth or overlook weaknesses, as you'll need to warrant the accuracy of all information you've provided before a sale closes.
It shows earnings and asking price information without disclosing complete financial statements.
It inspires buyers to take the next step by contacting you for more information.

The following chart lists information included in the selling memo for a business that aims to sell for a price over $200,000.

Selling Memo Contents

Table of Contents if memo is longer than 4-5 pages.

Summary if memo is longer than 10 pages. (See Step 2.)

Business Description

Summary of business history.
Business structure (sole proprietorship, partnership, corporation) and ownership.
Short description of products, staffing, markets and operations.
Financial information including annual sales and earnings; description of products/services; description of key strengths; reason for sale.

Location

Geographic location, building description, lease information.

Business Strengths

List of business strengths and competitive advantages.
List of business challenges accompanied by statements of how the issue could be overcome or provide a growth opportunity.

Competitive Overview

Description of number of competitors without listing names.
Description of competitive position and advantages of your business.

Products/Services

Brief description of business offerings including product list.
Description of distinguishing product/service features.
Product sales trends.

Operations

Information on operating hours and seasonality.
List of operating equipment.
Inventory information and list.
Production processes.
Staffing overview.

Marketing

Industry information and growth trends.
Geographic information and growth trends.
Customer profile including information on client lists.
Description of competition and competitive rank.
Description of marketing approach, marketing plan and untapped marketing opportunities.

Key Management and Employees

Key employee job titles, job descriptions, length of employment, compensation, benefits and credentials (but not names) including information on contracts.

Future Plans/Growth Projections

List growth opportunities, along with the investment in time, financial resources and staff required.

Potential Buyer Concerns

Issues, if any, that buyers might see as purchase barriers.
Statements describing business, marketing, or transition plans that ease or overcome each potential concern.

Financial Information

Statement of accounting method: Accrual or cash basis.
Revenues, net income, and seller's discretionary earnings for past three years presented not as financial statements but as one-line summaries.

Offering Price and Terms

Asking price (example: ABC Company, a California Subchapter S Corporation with all shares held by the owner. Asking price is $XXX.XXX).
Contents of sale (example: Sale includes assets. Furnishings, fixtures, and equipment have a fair market value of $XXX,XXX, detailed in the Appendix. Inventory to be included at cost).
Terms, including whether seller-financing is available (example: Seller requires $XXX,XXX at closing and the balanced financed by SBA note or seller-financing to qualified buyer at X percent over X years).
Buyer qualifications, if any.
Seller's time frame including sale timeline and seller's willingness to remain during a transition period.
Statement of seller's willingness to sign a non-compete agreement.

Appendix

Statement of seller's discretionary earnings.
Financial statements as recommended by broker and accountant.
Asset list showing values.
Seller's disclosure statement, prepared with assistance from broker or attorney, providing an accurate assessment of business condition, a list of licenses and regulations that apply, and descriptions of any legal issues.
Market area information if business relies on local clientele.
Photos of business location, building and equipment.
Copies of marketing materials.

Step 2. Create a summary of your selling memo to use during early communications with prospective buyers.

If your selling memo runs many pages long, as a first step present only the memo's summary that includes the following information:

Business name, owner's name, contact information.
Business description, as in the selling memo.
An overview of business strengths, competitive position, financial performance.
Offering price and terms, as in the selling memo.

Step 3. Create a plan for sharing your selling memo and summary.

Consider the following approach:

When you receive inquiries from business-for-sale ads, don't send your full selling memo if it is long and provides a detailed description of your business. Instead, respond with a copy of your selling memo summary. This allows you time to assess the buyer's interest and financial capability before sharing further details.
Share your selling memo or summary only with prospective buyers you deem - based upon the information they've provided - to be qualified prospects, and never before obtaining a signed confidentiality agreement, covered in the next step.

Step 4. Be ready to obtain confidentiality agreements before releasing your selling memo.

Buyers understand they'll need to sign confidentiality or non-disclosure agreements before receiving information on businesses for sale, so be ready and don't be hesitant about asking.

Use a form provided by your broker or attorney. Talk to them about steps to follow when screening and qualifying potential buyers, including when to obtain confidentiality agreements before sharing information. At this point, you just want to be prepared by having the forms ready to use.

In next week’s installment of “Selling Your Small Business” we’ll discuss how to protect your confidentiality while marketing your business.

Editor’s Note: This article is the tenth piece in a series taken from BizBuySell.com’s Guide to Selling Your Small Business. The guide is a comprehensive manual to help small business owners maximize their success when the day to sell arrives. Each Wednesday, Inc.com will publish a new section of the guide outlining BizBuySell.com’s best practices, from the initial planning stages of a sale all the way through negotiations and post-sale transition.

Best Industries 2012

Wed, 16 May 2012 08:00:20 -0400

11 Best Business Opportunities for 2012

Starting up is risky. Get in where it's hot--in industries such as water, restaurants, mobile games, and e-commerce. These will provide the best business opportunities for budding entrepreneurs in 2012.

Featured Articles

Best Industries for Starting a Business in 2012

What industries offer the best business opportunities right now? Our annual list features mobile games, pet care, big data, environmental consulting and more.

Featured Slideshows

11 Best Business Opportunities for 2012

Darren Dahl — Wed, 16 May 2012 08:00:17 -0400

Industries such as residential construction, mobile games, and big data will provide the best business opportunities in 2012.

Starting a business is always risky, especially if your business is trying to swim against the larger economic tides. That’s why many savvy entrepreneurs take a broader view of the forces shaping supply and demand before taking the plunge and founding a company. What those broader forces reveal: Now is a great time to get in the game.

The economy is growing again, with gross domestic product up 2.3% compared to 1.7% last year. Interest rates also remain at historic lows, with no sign of significant inflation. There is also plenty of capital to be had, as venture capitalists continue to make deals at a brisk rate. Even the IPO market seems hot these days, especially with Facebook set to debut this week. Add all that up, and you've got some pretty favorable business conditions.

But what type of business, exactly, should you start? After scouring the data, the team at Inc. has identified the industries with the best business opportunities for start-ups. Here are 11 industries that the smartest entrepreneurs will be targeting this year:

This year’s list is the product of old-fashioned reporting, boosted by data and insight supplied by a trio of independent research firms: Sageworks, which performs financial analyses of privately held companies; Plunkett Research, a business intelligence firm that studies trends affecting the world’s most vital industries; and IBISWorld, which provides industry growth figures, five-year revenue projections, employment growth, profit margin averages, and industry competition ratings.

To make the list, industry have to be not only fast-growing but accessible to entrepreneurs. In other words, we excluded growing industries like energy production, nanotechnology, and auto dealers because they are typically too capital-intensive for most start-ups to break into. We also omitted several professions that are growing nicely but require years of additional education or training: law, medicine, and accoutancy, for example.

Economic drivers

The list also reflects macro- and micro-level economic drivers that continue to shape the U.S. economy. For example, not only are millions of Baby Boomers now reaching retirement age, some 90 million so-called Millennials or “Gen-Yers” are now entering the workforce—and creating new patterns of consumption and demand, says Jack Plunkett, CEO at Plunkett Research. Those Millennials are one key reason Plunkett is high on the growth prospects for the residential housing market—an industry that was severely hit by the Great Recession. “We are already seeing steady improvements in the existing housing market where unsold inventory is drying up,” says Plunkett, noting that new building permits were up 34.3% in February 2012 over a year ago. “That means we are going to see a significant new demand for housing from this maturing demographic over the next several years.”

Another trend with wide impact is the increasing demand for eco-friendly products and services, says Nikoleta Panteva, a senior analyst with IBISworld. Not only does that boost the residential housing market, where 'green' homes and renovations are increasingly in demand, but it also drives business-to-business demand for services such as environmental consulting and water conservation. “There is a definitive shift toward finding ways to make things more efficient and longer-lasting,” says Panteva, who notes that government programs such as Energy Star are also helping drive consumer demand for eco-friendly products.

As the U.S. economy continues its slow recovery, consumer confidence also recovers. That promises to unleash some of the pent-up demand that has built up during the past few years. “Both businesses and consumers are sitting on tons of cash,” says Plunkett. “As their confidence increases, we’ll start seeing some spending sprees, like we’ve been seeing with people replacing their automobiles.” Full service restaurants will be one beneficiary of that swing in spending. “When the stock market goes up like it has, it makes people feel better, which feeds demand for little luxuries like dining out,” says Plunkett. “People are little less likely stay home and eat leftovers while watching TV.” While margins are typically razor-thin in running a restaurant, the barriers of entry are fairly low, especially if you want to start with a trendy new food truck.

Increased discretionary spending is also good news for the pet care industry—particularly pet grooming businesses. “There is a clear trend where more and more people are living alone and delaying having kids,” says Panteva. “People are now spending their money on their pets instead.”

But it's the mobile and social gaming industry that is projected to show the highest growth over the next five years. Plunkett cautions that low barriers to entry make this market highly competitive, which could make starting a venture here risky business. “It might not be the best industry to start a business in for the entrepreneur who is faint of heart,” he says.

Selling to businesses

It's not just consumers who are expected to increase their spending -- there's plenty of opportunity to be had selling to businesses, too. And here, no trend is more powerful than the continued burgeoning of information technology throughout the global economy. “There was an expectation that e-commerce would peak several years ago, and that simply hasn’t been the case,” says Plunkett. “A growing number of people and companies have turned to e-commerce as a way to save money and gain efficiencies.”

The growth of the digital economy has also spurred demand not just for IT consulting services, but also for Big Data services. Big Data companies provide sophisticated software tools that mine and analyze the terabytes of information created by each purchase, doctor’s visit, and new 'friend' on Facebook. These Big Data firms help other businesses better understand their markets and customers using the data they collect.

Transportation and logistics companies are also expected to be winners over the next five years. “Supply chain management can involve anything from just-in-time sourcing in China to buying a truck and offering a delivery service,” says Plunkett. “It’s all about creating efficiency and saving clients money.”

4 Mental Tricks to Build Your Confidence

Barry Farber — Wed, 16 May 2012 07:42:01 -0400

Use these four rules to make sure your next presentation, demo, or sales pitch is a success.

Whether you are stepping up to the plate to face a 95 mph fastball or making a sales presentation, confidence can make or break your performance. Your body language and your physical presentation have a lot to do with your overall success.

In sales, top performers find their enthusiasm and belief to be among their most important assets. If you're not at the top of your game already, use these four tricks to keep your confidence strong.

1. Be Prepared

The act of preparation itself can shift your attitude positively. The simple act of taking the pen to a pad of paper to write out your goals for a meeting--with a prospective or current customer, or even an investor--can move your attitude in the right direction.

Fear can be one of the most debilitating emotions--and simply focusing on meeting preparation can take your mind off worrying about what might going to happen. When you go into a sales call prepared and enthusiastic, you create your own mental confidence, imagining you've closed before you've even opened the door.

2. Get Smarter About Setbacks

Don't fear doors shut being in your face. Just as important as preparation is the action you take when faced with rejection. Setbacks, failed attempts, and lost business don't do much for your confidence unless you battle back and dig deep.

When faced with a "No," always ask yourself: What is this situation telling me? Do I need to call at a higher level? Find a more qualified prospect? Rework my presentation to fit the key needs of the customer?

Recreating your approach based on what you've learned gives you a better chance for success. This type of action teaches us how to work smarter and not give up on qualified opportunities. After all, landing the tough deals gives us extended confidence--and makes it easier to succeed the next time you face a similar situation.

3. Study Your Customer's Customer

When you are trying to learn critical information about your customer, you can learn more by trying to see though their eyes and understand their goals--and the goals of their customers. Think of yourself as an employee of your customer would, as if you were seeking new ways to grow the business.

When you understand your customers' business challenges and goals, and understand how your solution can help them, you gain tremendous confidence in your own approach.

4. Create Your Own Change

There are certain universal truths that create positive changes in our attitude, confidence and behavior. One critical one: As you think, so shall you become.

If you want grounded confidence that lasts, be choosy about the people and ideas you surround yourself with. Read material that will contribute to your personal and professional growth, and realize that the environment you create has a huge impact on your internal beliefs and performance.

Successful people have the confidence to take risks that unsuccessful people try to avoid. If you want confidence that stays strong in difficult situations, you need to change the ways you work and think.

How to Sell if You Hate Selling

Geoffrey James — Wed, 16 May 2012 07:08:44 -0400

Your success in business depends upon your ability to sell. It's time to get over your bad attitude.

"I hate selling."

I've heard that statement a thousand times–often from entrepreneurs whose success depends upon their ability to sell their ideas, their firm and their products.

And that's a shame, because if you hate selling, you'll never be good at it, and that means at least lost revenue–and in the worst case, company failure.

In my experience, it's the entrepreneurs who really love selling who are the most successful. Steve Jobs, for instance, was incredibly good at pitching his products. Watch any video of Jobs at an announcement, and you can absolutely feel his sense of joy–not just in the product, but in telling a story about the product. Jobs loved selling; there's no question about it.

Time for an Attitude Adjustment

When I interview the CEOs of start-ups, I can usually predict whether or not the company is going anywhere by the way the CEO talks about selling. If they think it's the soul of success, they're going to do well. If they think it's a chore, not so much.

So, if you hate selling, it's absolutely in your interest to get over it–and, even better, cultivate a love of the selling process. And that's what this post is about.

To help you through this process, let's examine the root of this "hatred." In my experience, people "hate selling" because they hold one or more of the following beliefs:

Selling is manipulative. Many people (entrepreneurs included) swallow that hokum that sales is all about manipulating people into buying something that they don't really want to buy. By this line of thought, the typical salesperson is a fast-talking slick-head. Who wants to be like that?
Selling is annoying. Selling sometimes involves repeated emails and phone calls, both of which tend to be unwelcome. Most people have had unpleasant experiences with pesky salespeople who won't take no for an answer. And who wants to be a pest?
Selling is boring. Most business tasks can be undertaken full speed, with progress limited only by the amount of time you're willing to spend. Selling, however, involves plenty of "hurry up and wait" while prospective customers mull things over before they "get back to you."

If you personally hold any of those three beliefs (much less all of them), there's no way that you won't "hate selling."

So the way to change your emotion about selling is to undercut those beliefs with different beliefs that will create a different emotion.

Selling is actually helping. Once you make the decision that you'd never, ever sell somebody something they don't need, you're free to see selling for what it really is: helping somebody else get what they want. Most of the time, selling is all about making people happy by providing them with what they truly need. What's manipulative about that?
Selling is actually sociable. If you make the decision that you're not going to annoy anyone–much less a prospective customer–you're free to look at the selling process in terms of making new acquaintances and having interesting conversations about stuff that interests you. (Hey, isn't that why you got into business?) It's fun for you and it's fun for the other person, too.
Selling is actually learning. When you decide to learn something valuable in every sales situation, selling becomes far more interesting than watching TV or playing a computer game. People are fascinating–and never more so than when they're making decisions. Get curious and you'll never be bored again.

Is it really possible to change your beliefs and consequently learn to love selling. Oh, you betcha. I'm a perfect example.

When I started my own freelance writing business more than a decade ago, I dreaded selling for all the reasons I listed above. However, I quickly figured out that my success would be just as dependent upon my ability to sell as my ability to write.

If You Aren't Selling ...

Back then I was writing mostly about high tech, but over time, as I learned more about selling, I was drawn to start writing about it. Now I think it's one of the most interesting parts of the business world–because if sales aren't happening, you don't have a business.

I've also learned that selling is like any other human endeavor: The more you do it, the better you get at it. Also, when it comes to selling, a little bit of effort put into training yourself goes a long way. Ultimately, it becomes like riding a bike, automatic and easy. Fun, too.

So, if you still hate selling, I strongly recommend that you put those old beliefs aside and change your attitudes. After all, whether you like it or not, you're going to have to sell in order to be successful. Learn to love it, and you'll achieve your goals far faster.

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Retail Trick: How to Boost Revenue

Tom Searcy — Tue, 15 May 2012 15:00:08 -0400

With smart planning, you can create sales spikes throughout the year. Here's how one store does it.

The retail world's biggest challenge is the calendar. No matter what your business, you probably know that the period between "Black Friday" (the day after Thanksgiving) and Christmas Day is a retailer's most important sales window.

So how can retail businesses redistribute their revenue spikes? During the annual shareholder's meeting for Berkshire Hathaway, held earlier this month in Omaha, I spoke with Adrienne Fay, director of marketing and advertising for Borsheim's–a Berkshire-owned jeweler and one of the most successful single-location jewelry stores in the U.S.

She passed along some of the insights that have helped Borsheim's create a "second Christmas"–a separate sales spike that comes alongside the annual Berkshire meeting.

Leverage real-world events. Go beyond spring or fall sales: Annual festivals, sporting events and celebrations can all bring people (read: shoppers) together. Omaha has the Berkshire Hathaway meeting; Louisville, Kentucky, has the Derby; Indianapolis has the Indy 500, and Lincoln, Nebraska, has every Cornhuskers home game. These special events boost normal traffic for short windows. Use those other events as your springboards for maximizing retail revenues.

Get your staffing right. Borsheim's figured out early that even a few minutes of extra waiting for service or checkout had a big impact on total revenues. Make sure you are staffed for speed; your customer's buying attention is a precious commodity. Don't be "penny wise and pound foolish" by not having enough staff on hand.

Plan for security. People need to be safe, with environments controlled and your inventory secure. Make certain you have planned for the safety of people and assets.

Watch the weather. Events are strongly impacted by weather. Make certain you don't leave everything up to luck: Have outdoor tents and space for people to be inside during bad weather moments.

Create comforts. Monitor the temperature and crowds, and be sure you can provide food, drink, and restrooms. Details matter; you want to encourage people to take their time.

Be creative. Sales prices and promotions may not be enough to keep people on site, so think theatrically to get people to stay longer and return frequently. At Borsheim's, Warren Buffett himself plays ping-pong in the store against an Olympic champion. Be creative to pull the attention from the event itself to the shopping event.

Plan carefully. To smooth out the rough spots in the retail calendar, build your annual plan around these secondary sales opportunities. If you build a very active model for maximizing each event, you can change your revenue trajectory.

Fay told me that Borsheim's "second Christmas" is bigger than their regular Christmas selling season. That is unheard of in the jewelry business.

After having seen the event, however, it is easy to see why that is true–because the company designs it that way, with every detail buttoned down to make the event a retail revenue maximizer.

Double-check Your Marketing Materials

Scott Gerber — Tue, 15 May 2012 13:43:49 -0400

Make sure your promotional content is effective. Tips from Yael Cohen, founder of Fuck Cancer, an early-detection non-profit, and Scott Gerber, founder of the Young Entrepreneur Council.

7 Great Ways to Help Employees

Margaret Heffernan — Tue, 15 May 2012 12:35:57 -0400

What's a cheap, fast, and easy way to stoke employee productivity and interest? Tell them how they're doing.

Most executives are more knowledgeable about hardware infrastructure and software applications than they are about the people they work with. But investment in people delivers far higher returns. Companies don't come up with ideas; people do. So stop agonizing over your IT spend and start developing your people.

Here are seven approaches to keep in mind:

Dole out feedback immediately

Feedback should be relayed as soon after an event or action as possible. Otherwise, the input isn't memorable and may not come across as sincere. If someone was very helpful, creative, or insightful at a meeting, say so before you leave the room. One of the reasons computer games are so compelling is because they deliver instant feedback to drive engagement. There's a lesson in that.

Make it frequent

Don't wait for annual or quarterly appraisals. On a regular basis, think about the key people you work closely with and ask yourself: What have they done recently that was great? Then email or call them and communicate these messages. Make this a habit. Actively look for feedback moments.

Offer detailed comments

Generalized, vague feedback–"You're doing a great job"–is nice but not effective because it doesn't tell the recipient what they can do more of. So describe specifically what was good and why it was important. This kind of feedback is more powerful because it shows you paid attention and it shows you are sincere. It also tells your colleague what to build on and repeat.

Be appropriate, of course

Negative feedback should almost always be articulate privately and is always better face to face. It should always be accompanied by recommendations for improvement. "This didn't go well but it will go better if you..." Negative feedback without any recommendation provokes anger or frustration and is likely to leave the recipient feeling powerless.

Make sure you get your facts right before making a judgement, too. Don't just assume you know why a mistake happened. Questions are better than answers here: What went wrong? How do you think we could have handled this better?

Consider how the individual receiving feedback likes to communicate. Some like email, others like phone calls, some prefer texting, or instant messaging. Different generations have distinct preferences too. Where possible, give feedback how the other person desires to receive it.

Offer relevant points

Only give feedback on stuff that matters. Compliments on clothes, sun tans, or, say, weight loss are great for friends but not for colleagues. All feedback should focus on behavior that makes a difference to the business or an individual's ability to conduct business.

Be careful with comparisons

Where appropriate, make comparisons with prior performance ("We're getting much better at this!") or with competitors ("Exxon could never do this!"). This builds pride and a sense of accomplishment, which both drive the desire to do better still. Do NOT ever compare employees with peers or direct reports or any one else inside the organization. That only creates gossip and politics.

Make a difference

Without feedback, people feel invisible and insignificant. They may feel that they, and their hard work, are taken for granted, or that you don't care about them or their work. This only makes it more likely they won't care about you and your work either. Feedback builds and reinforces the connection between you.

Zuckerberg's Reign: What to Expect

Erik Sherman — Tue, 15 May 2012 12:09:00 -0400

Graduating from founder to public CEO usually means giving up some control. But Mark Zuckerberg isn't your usual CEO.

When an entrepreneur graduates from start-up CEO to head of a public company, typically the new role comes with a host of new management challenges—answering to a board, for one, not to mention shareholders.

But Mark Zuckerberg isn't your typical CEO.

It's natural for founders to have some degree of control freak in them—they've got a lot on the line and want to make sure their baby succeeds. Zuckerberg, however, takes the concept to a new level. Thanks to some savvy maneuvering, he'll maintain an iron grip on Facebook even after it goes public.

Control that knows few boundaries

Zuckerberg's level of control goes far beyond that of most CEOs. According to Facebook's SEC filings, between his own shares and those that he will control through agreements, he will govern well more than half of the votes that shareholders can cast. Here's the explanation that Facebook's lawyers put into the paperwork:

Mr. Zuckerberg, who after our initial public offering will control approximately 57.3% of the voting power of our outstanding capital stock, will have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of our directors, as well as the overall management and direction of our company. In the event of his death, the shares of our capital stock that Mr. Zuckerberg owns will be transferred to the persons or entities that he designates.
Because Mr. Zuckerberg controls a majority of our outstanding voting power, we are a "controlled company" under the corporate governance rules for NASDAQ-listed companies. Therefore, we are not required to have a majority of our board of directors be independent, nor are we required to have a compensation committee or an independent nominating function. In light of our status as a controlled company, our board of directors has determined not to have an independent nominating function and to have the full board of directors be directly responsible for nominating members of our board.

This has some interesting and, for potential individual investors, disturbing ramifications. For example, Zuckerberg would have absolute control over any of the following issues that might come before shareholders:

Election of directors (including himself)
Any merger, acquisition, or consolidation
Any sale of the company's assets

As the filing goes on later to point out, board directors have fiduciary responsibilities to the shareholders. So does Zuckerberg, and he must act in good faith for the best interests of the shareholders. However, as a shareholder, he has no obligations to anyone else and can vote his shares—and make absolute determination over key issues—however he wishes, whether it is good for other shareholders or not.

The precedents

For founders to maintain significant say over their companies when they go public isn't unusual. CEO Mark Pincus controls about 36.2% of the total voting power for Zynga. When Google went public, Larry Page, Sergey Brin, and Eric Schmidt held 40.9% of the votes in that company. A dual stock class structure has become high tech's vehicle of choice to keep control. Both Zynga and Google did it, as did Groupon, LinkedIn, and Zillow. The Google triumvirate at this point (after additional stock awards) has a 57.7% voting block, and still the company created yet a new class of common stock with novoting rights because, as Brin and Page wrote, "we want to ensure that our corporate structure can sustain these efforts and our desire to improve the world."

In other words, they don't want anyone else to have a say.

And still, Zuckerberg's situation remains unique because such absolute voting control in the hands of a single person after a company goes public is virtually unheard of, at least in a major corporation.

What to expect after the IPO

So, just how worried should shareholders be?

Some pundits say Zuckerberg has become a mature CEO in his mid-20s. It's true that he's grown up some since his Harvard and early Facebook days, if any number of the stories from that period are true.

Yes, he's been successful so far. But this is also the young man who negotiated a $1 billion acquisition of Instagram without talking to his board about it in advance. The same young man who dressed in a hoodie while meeting Wall Street bigwigs.

Now, I'm not suggesting that Zuckerberg should be judged by his sartorial choices and lack of convention. Making mistakes is human.

That's why public companies have checks and balances. Boards of directors exist to provide oversight of management, pay attention to the varied and often conflicting needs of shareholders, and hire (and sometimes fire) chief executives. The CEO generally must pay attention to the board, and a smart leader wants a strong board that can offer collective business wisdom. But when the CEO can hire and fire the board, the check will bounce.

How soothing it would be to think that Zuckerberg would eventually have to answer to a board and shareholders in at least some ways. But as long as he can reasonably say that he's fulfilling his fiduciary obligation to shareholder interests, then, no, he really doesn't. The Instagram acquisition without the full participation of the board in the process—a board representing institutions that have invested $2.24 billion into the company—already shows this inclination.

Oh, if things got really bad, shareholders could sue the company, but it becomes a cost of doing business, and the company pays for the insurance to indemnify the board members and officers, including Zuckerberg. A public fuss that causes embarrassment might be another corrective mechanism, but only if the CEO cares.

Zuckerberg has the luxury to care only to the degree that he wishes. For better or worse, that will pervade his legacy.

What Fast-Growth CEOs Really Think About the Economy

Kimberly Weisul — Tue, 15 May 2012 12:07:38 -0400

At a recent gathering of fast-growth inner city companies, founders and CEOs were surprisingly optimistic about the economy.

At a recent gathering of fast-growing inner-city companies, the consensus was clear: We’re back. Manufacturing is back. Things are getting better.

Granted, these are all companies being recognized for their fast growth. But many of them are in industries that also give them a bead on how the larger economy is doing.

The one CEO who said he wasn’t sure which way the economy was headed was Jeff Silver, CEO of Coyote Logistics. Shrugging, Jeff says he doesn’t know what’s going on with the economy “any more than the guys on Squawk Box.” But ask how many employees his company has, and he replies, “1,025 today; 1,040 by Monday.” Revenues were $560 million last year, up from $328 million the year before.

Coyote Logistics in the winner of the Initiative for a Competitive Inner City’s annual Inner City 100, which is a ranking of the fastest-growing inner city companies. Over five years, the companies on the list have racked up an average compounded annual growth rate of 39% and have created, collectively, 4,634 new jobs, according to ICIC.

Silver’s nonchalance about the economy seemed to be unique. As a group, the other CEOs were much more optimistic. Deborah Fennick, co-founder of Fennick McCredie Architecture (number 57 on the list), says her firm is seeing more public spending thanks to the stimulus bill. But she says the business environment is improving even aside from that spending, and sees it continuing to do so.

Julie Hakman agrees. She’s President and CEO of Tulsa-based AmericanChecked, which runs background checks. Her company placed at number 70 on this year’s Inner City 100 list, and since 2009, she says, the economy has got “better and better and better.”

Mike Chaudhary is the CEO of DMC Consultants, a construction and consulting services company in Detroit (number three on the IC100 list). He says he has “full faith” in Detroit, and points to increased investment in the midtown section of the city. The business environment, he says, “is getting pretty good.” He’s less worried about the economy than about his ability to find qualified staff. He interviewed 40 people to find the “one capable person” to come on board as a project manager.

Drew Greenblatt, President of Baltimore’s Marlin Steel Wire Products (number 95), says he’s “very bullish” on the economy and on American manufacturing in particular. He says that “a lot of conventional wisdom misses what is happening in American engineering.”

First, he says, costs are getting pretty high in China. Greenblatt says it costs more to hire a mechanical engineer in China than it does in the U.S. In three to four years, he says, factory workers in China will be earning $7.50 an hour.

And unconventional methods of drilling for natural gas (fracking), have made the U.S. “the Saudia Arabia of natural gas,” says Greenblatt, dramatically pushing down energy costs here. In the U.S., natural gas costs $2 per btu. In China? $20.

What to Do if You're Failing

Penelope Trunk — Tue, 15 May 2012 11:03:21 -0400

Start-up founders tend to say everything's great, all the time. So what happens when that's not even close to true?

There is only one real difference between a startup that exits and a startup that fails: who quits. If the entrepreneur keeps going then the startup isn’t a failure. It’s just in a rough spot.

Here are four ways to get through a rough patch:

1. Tell people.

There’s this terrible code of silence in the startup world. You never tell people when you are having trouble. Your products are great, your customers are great, your cash flow is great. You have to say all this in order to get funding. At least this is the common wisdom.

In fact, though, I have found that the more honest I have been about my funding troubles, the more help I’ve received. At one point, I wrote about how my company was at the edge of financial ruin and I was an emotional wreck. The post did not attract any funding, but it did attract an incredible number of emails from A-list entrepreneurs who offered moral support and encouragement. And that is what got me though the rough spot, mentally, so that I could get myself to the funding sources I needed.

2. Play mental games.

So much of a startup is having a crazy, irrational faith that you are going to be the one in ten that actually makes it.

But no one is perfect. You can’t be perfectly crazy every moment. Which means that either you go completely nuts (not healthy) or you have bouts of rational self-doubt (healthy). During this time of self-doubt, you should find some mental tricks for forcing your brain to remember what it feels like to have faith in yourself. Each person finds their own ways of reaffirming their faith in themselves. Here are five things that help me regain faith in myself.

3. Pivot. Big.

I know that the idea of the pivot is very hip right now. That is, if things are not working with your current model, just change it. You can do this pretty easily if you ride another trend as well: lean startup. If you pivot with a lean startup you get lots of chances to mess up with a very low cost (Bonus: When you talk about what you’re doing, you’ll sound like the king of jargon).

Something I’ve been thinking about is that people don’t pivot big enough. For example, I’ve been thinking that homeschooling is a huge trend right now. And the parents who are jumping on this trend are not religious fanatics. They’re upper middle-class and educated: a perfect market. So why not take a failed startup and open it up for kids to run? Then it’s a homeschool model, with a self-learning component to compete with the VC darling Khan Academy. See what I’m talking about? The farther afield you get with your pivot the more opportunity you have to succeed.

4. Sell your company for a dollar.

Really. The thing you really need from a company is an exit. Because then you’ll be able to get funding for your next company, and then you’ll have more fun and excitement with a high learning curve. It’s hard to say that you’ve failed if you can keep your career full of times like that.

So if your company is faltering and you fear its demise, think about selling at almost-give-away prices, just so you can say you had an exit. Often times, your story is more important than the reality behind your story. I’m not saying lie. But when you say, “I had an exit,” no one says, “Was it for a penny?” Here’s how to do the quickie sale and move onto your next, great thing.

The bottom line, for each of these ideas, is that you are never truly backed into a corner. It’s always up to you to decide if you are better off with this company or without this company. That’s the great thing about owning your own company. You push your very hardest because it’s yours, but also, you’re the one who gets to decide when enough is enough.

Find Growth Beyond Profits

Inc. staff — Tue, 15 May 2012 10:54:49 -0400

New Orleans chef John Besh has found the secret to success: Give back. After Hurricane Katrina forced his city--and company--to rebuild, Besh made growing a community-focused company culture a top priority.

3 Ways Facebook Changed the IPO Roadshow

Tim Donnelly — Tue, 15 May 2012 10:29:16 -0400

Facebook's tour to meet with investors before its initial public offering was like no other IPO roadshow. Here's what you can learn from it.

This wasn't your run-of-the-mill IPO roadshow, all power-suits and PowerPoint.

No, Facebook's IPO, which wrapped up this week, was less of a series of boardroom meetings and more of a traveling circus, complete with sideshows and a ringmaster, and newspaper men swarming the doors. Media coverage so far has focused on the rock-star atmosphere and has centerd the spotlight on everything from the star-seeking crowds to Facebook founder Mark Zuckerberg's deliberately slouchy clothing choices.

"It's like trying to get into a Bruce Springsteen concert," one attendee told the Boston Herald. "Usually at a roadshow, there's no security and no wait. This is unheard of."

Turns out, there's more to Facebook's IPO roadshow that could potentially change the game for how companies going public pitch their stock, and present themselves, to the country's biggest underwriters and investors.

1. It took aesthetic risks—of the Hollywood variety.

Aside from the media hype, once inside Facebook's presentation, what truly stood out was the video. It was wasn't just a PowerPoint slide deck, which is the usual. Instead, it seemed more like a half-hour jazzed-up infomercial on the history of the company, with high production values and a soundtrack, designed for someone who knows little to nothing of how Facebook works. It ran longer than a TV newscast, and not only sold the vision of a single company, but also the grander idea that social connectivity is the future of business in a global marketplace.

That video could break the mold for future IPO roadshows, says Sam Hamadeh, founder and CEO of PrivCo, a business and financial services research service based in New York City. "From now on I bet other Internet companies will look at that and say 'I never thought of that,'" he says. "Why not do a commercial, a movie about the company?"

2. It shifted strategies mid-game.

But the most crucial segment in a roadshow stop is not the video: it's the question-and-answer period that follows the video and presentations. This is the big chance for underwriters to feel out the company—and to get to know the intangible essence that you can't pick up from SEC filing documents, says Timothy J. Loughran, a professor at finance at Notre Dame's Mendoza College of Business.

"What investors are trying to get is some sense of future profitability," he says. "The analogy of job interviewing is exactly right. You get them into your office and say 'This is not a good fit.'"

Facebook was criticized in its early roadshow in Boston for relying too much on its 30-minute-long video presentation and leaving time for just a handful of questions.

The company subsequently dropped the video and let executives Sheryl Sandberg and David Ebersmann give a 15-minute presentation and answer several more questions, and continued on that path for the rest of the tour of eight cities across the country, from Boston to Denver.

Loughran says: "The big picture is: It gives the opportunity for investors to kind of see how articulate management is."

3. Stay true to yourself.

Zuckerberg, one of the world's youngest billionaires, riled up the business community by wearing his trademark hoodie and jeans in New York to kick off his cross-country pitch of the company he started in his Harvard dorm room. Some say that's fitting; others say that's disrespectful of the buttoned-up investment community Zuckerberg was apparently attempting to woo. Well, we all know one thing: Rebelling is cool. Also, tempers seemed to cool by the time the roadshow got back to California Friday; Zuckerberg wore a grey T-shirt and got little gruff.

Chief financial officer David Ebersman and chief operating officer Sheryl Sandberg both went for more traditional business attire at their presentations, showing that dark colors, clean lines, and grace under fire are never out of style.

The Best (and Hardest) Way to Start a Company

Jeff Haden — Tue, 15 May 2012 10:00:00 -0400

How to live the entrepreneurial dream while minimizing your risks and maximizing your success. (Warning: This ain't easy.)

Starting a business is easy. You can do it in a day.

Starting a business that lasts is a lot harder, even if you put all your time and money into it. And the all-in approach is a lot riskier, since the more time and money you invest the more you put at risk.

So if you haven't yet taken the entrepreneurial plunge, how can you live your entrepreneurial dream while minimizing your risks and maximizing your chances of success?

Simple: Start your business—and keep your full-time job.

Except in rare cases, keeping a full-time job is the best approach for first-time business owners.

It's also the hardest approach, since sacrifice, discipline, and a massive amount of hard work will be necessary. But that's okay; if you aren't willing to work hard and sacrifice, your new business will fail whether you keep your full-time job or not.

Here are six steps to minimizing risk while building a solid foundation for small business success:

1. Live like a college student.

Almost every business venture requires spending money before making money. (And if money isn't required, time certainly is... and time is money.) Some small businesses take years to turn a profit.

A huge percentage of start-ups fail because they run out of money, and even if you do not, chronic money problems can lead to making poor long-term decisions.

Never assume personal savings will see you through. Eliminate every bit of personal spending that isn't necessary.

Before you start your business, cut all your personal expenses to the bone.

2. Work incredibly hard at your current job.

When small business capital and cash flow are tight, losing your income is the last thing you can afford. Be a superstar. Work as hard and efficiently as possible. Get more done than anyone else you so you can leave on time without regret—and without raising concerns about your performance and dedication.

Work incredibly hard at your job so your evening and weekend time is yours, not your employer's.

You'll need it.

3. Set a daunting schedule.

When your "normal" work day ends, your start-up workday is just beginning.

Decide how many hours you think you can spend on your start-up every evening and add 25 to 50%.

Then commit to that schedule. Write it down, and if your schedule says you will work from 5.30 p.m. to 9 p.m. every evening, and from 8 a.m. to 3 p.m. on weekends, work those hours.

See the schedule you create for your start-up the same way you see your schedule for your current job—as non-negotiable.

Then work that schedule.

4. Ignore the temptation to whine about your daunting schedule.

Say you start a consulting business. Once you land a few clients you'll be working every evening and most weekends.

That's not a bad thing; it's a good thing. Landing clients means you're generating revenue.

You may have to get up early every day to take care of emails and voicemails before you head off to work. In large part your clients will choose your work hours for you.

Don't whine. Don't complain. Keep reminding yourself that having demanding clients is great because it means you actually have clients.

Resist the temptation to complain or feel sorry for yourself. Happily pay the price—it's a price most other people won't pay.

5. Be Ebenezer Scrooge.

At first you'll be tempted to spend your profits. That's natural.

Don't. Reinvest every dollar you earn. Use profits to set up the business infrastructure you need (not the one you want, but the one you need.) Buy supplies. Buy equipment you've been renting. Advertise. Or save cash to tide you through inevitable revenue downswings.

Don't think of profits as income; think of profits as a tool to further establish your business.

6. Keep your full-time job longer than you want.

Deciding when to quit your job and go into business full-time is the hardest decision you will make.

It's impossible to make an objective decision when you're tired, stressed, sick of your full-time job, sick of your boss... or when you just want your life back.

But don't quit too soon. When in doubt, hold out. Always focus on numbers, not emotions.

Your financials—personal and business—will tell you when it's finally time to quit your job.

Why Better Products Don't Always Win

Karl Stark and Bill Stewart — Tue, 15 May 2012 10:00:00 -0400

You may have superior technology or a great feature set, but if your product doesn't create value for the customer, its chance of success is slim.

We've heard a number of CEOs say, "Our product is more advanced than anything else on the market. How can we fail?" Unfortunately, you don't have to look far to find great products that were commercial failures. Take for example,

Betamax vs. VHS
Sony Playstation 3 vs. Nintendo Wii
Android (4G) phones vs. iPhone 4 (3G)
The Slanket vs. The Snuggie

In each, the creators of the first product believed they were creating a better product, but the market proved, through better customer adoption, that the competing product created more customer value.

When does the better product win?

Better products win when the total value - that is, the benefits minus the cost - is clear and measurable to the customer and creates more value than comparable offerings.

Unfortunately differentiating factors aren't always clear, and consumers don't always get the right to choose. Consider the battle between Blu-ray and HD-DVD; while consumers could buy either product, ultimately the war was fought over which content providers would exclusively back each format. Since more content was available on Blu-ray, it ended up creating more customer value, despite the possibility that HD-DVD was a technically superior product.

So when is better just not good enough?

When your superior features don't satisfy customers' needs
When consumers can't observe and easily quantify these "better" features
When the benefits don't outweigh the incremental costs - whether they be cash costs or indirect costs (e.g., total cost of ownership)

What's the lesson for entrepreneurs here?

Entrepreneurs building a new business often falsely assume that their novel product will succeed based on its great new feature set or superior technology. While the next great technology may in fact sell regardless of the competition, few products are so lucky. In most cases we need to shed our rose-colored glasses and instead focus on building what the customer wants.

How can an entrepreneur build a great business around an average product?

Only build the features that customers want and are willing to buy.

Make your product's value proposition a clear comparison to the market alternatives, and work to lower barriers to acceptance.

Build a complete business model, including sales channels and distribution partners that allow you to deliver on the value you aim to create.

Understand the underlying economics of your business model, and build them to scale up as your business grows.

Build an investment plan that will fund your business growth and allow you to drive customer awareness, trial and adoption.

Are you trying to build the "next best product?" Share your questions and best practices with us at karlandbill@avondalestrategicpartners.com.

Avondale Associate Chris Lyman contributed to this article.

'How I Rebuilt After Disaster'

Inc. staff — Tue, 15 May 2012 09:30:35 -0400

In 2005, New Orleans chef John Besh was living his dream as a high-brow chef. Then Hurricane Katrina hit, and he lost everything. Here's how he staged a comeback.

Increase the Power of Your Sales Force: 3 Tips

Matthew Swyers — Tue, 15 May 2012 08:59:00 -0400

The secret to increasing your sales is to win the hearts of your sales team.

At some point every sales manager watches Alec Baldwin in the 1992 movie, Glengarry Glen Ross, and dreams of the day they can deliver that iconic speech, "As you all know first prize is a Cadillac Eldorado. Anyone wanna see second prize? Second prize is a set of steak knives. Third prize is you're fired."

While frustration may lead you to dream of a speech such as this, rarely will such an attitude lead to positive sales growth. Rather, if you really want to turbo boost your sales, you must first win the hearts and minds of your sales force. You must make sure that they believe in what they are selling.

Here's how:

1. Importance

Let them know how important their job is. They are the life blood of the company. Without them the company does not exist. Without them customers cannot buy your products.

2. Belief

They must believe in what they are selling. If your business is the sale of hip t-shirts, they must believe they are selling the hippest t-shirts. If you are selling a service, they must believe it is the best service in the industry. Sit them down and make sure they understand why customers are calling. When they believe that your goods or services offers the best solution then they will be able to sell more effectively.

3. Execute

Empowered by the knowledge of their importance emboldened by the belief that what you offer provides the solution your customers need they must allow these tenets to color everything they say to a prospective customer.

Make Your Vacations Good For Business

Jessica Stillman — Tue, 15 May 2012 08:52:24 -0400

Too anxious to take a vacation? An expert insists stepping away can actually improve your business--if you do it right.

Vacations: We all know we should take them for our mental health and the health of our relationships, but many entrepreneurs stress that stepping away from work responsibilities will harm their businesses and land them with a painful backlog of tasks upon their return. But j2 Global, a company that provides cloud-based communication solutions to small firms, insists that actually, getting away can significantly improve lnot just for your marriage or your stress levels but also how you run your company long term.

Mike Pugh, vice president of marketing at j2, explained to Inc.com in an interview that while j2's recent poll of small business owners revealed that more than half are planning on either skipping their vacation entirely or working through their time away, his experience working with small businesses shows that "vacations are good for the soul and for the business."

A recent Intuit study confirmed this, finding 82% of small business owners who took a vacation experienced an increase in job performance when they came back. So how can you manage both to get away and to get a post-vacation productivity boost? Pugh has four tips.

1. Tell people you're leaving.

Yes, it sound simple, but Pugh insists many business owners neglect to inform those around them that they're leaving, robbing themselves of lots of freely available assistance. "Between instant messaging, email, text messaging, and phone, if someone wants to find you, they will work very hard to find you. That makes for nagging presences while you're out on the beach," he explains, suggesting that the simple step of telling colleagues about your trip in advance, setting an away message on your email or changing the voice greeting on your phone can make a big difference.

"Most people want to help someone on vacation, and if they know that you're gone, they'll leave you alone until you come back. But people don't take enough advantage of that help they can get from their network," Pugh says.

Of course, not all businesses can afford to tell their customers they're jetting off for awhile, but more can than are willing to admit it to themselves, according to Pugh.

"If you're running a retail store and anonymous customers are wondering where you are, that's different," he concedes, "but if you're a real estate agent you can very easily tell one of your clients that you're going to be away for a long weekend. It's contextual but it definitely works with vendors, with other suppliers and contractors and, in some cases, can work really well with customers also."

2. Use your vacation as a forcing function to delegate.

"Sometimes you don't do something until you have to, so use a vacation to delegate and empower others," Pugh suggests. "Small businesses tend to carry the weight of the world on their shoulders. There are vendors, employees, your next door neighbor in a retail establishment, an outsource person that you use for some of the work, people within your network who can take on more."

Using your vacation to force yourself to get these folks to shoulder a larger share of the load "can be a great way not only to get away, but to realize that you don't have to do it all yourself when you come back."

3. Set office hours.

This limits not only your stress, but the stress of those you're vacationing with. "In the ideal world you leave on vacation and never think about work again until you come back, but then reality strikes and you realize either you worry too much to let go, or an issue comes up that actually needs your attention," Pugh says. "If you need to work while you're on vacation, pick a time of day and a finite amount of time—maybe an hour in the morning and an hour at night—to check email, check messages, return phone calls. You'll be available if there is work to be done, others know that they have touch points when they can check in, and then you can disappear with a clear conscious."

Your traveling companions will thank you too. "As a person who's taken this advice to heart myself, my office hour in the morning has turned out to be a great time for my wife to get a massage," Pugh says. "Office hours are a way to not impose on the rest of your party so that work can't break the flow of a trip."

4. Pilot cloud-based solutions for more efficient working.

"If businesses can divorce themselves from all the premise-based components of their business, especially the communications, IT, and back-office parts, they make it much easier to keep the important stuff flowing," Pugh says, suggesting that vacations offer a great opportunity to try out simple cloud-based solutions that allow small businesses to stay lean and agile. Trying out things like Google Apps, Dropbox, or phone-routing solutions like j2's own eVoice, helps entrepreneurs to work from their hotel rooms, andt can also benefits their businesses after they return home.

"Going on your vacation brings you back as a more productive person. It's the change of scenery but also thinking: 'How would I do the important stuff if I wasn't in the office? How would I do it faster and more efficiently?'" Pugh says.

All in all, Pugh's advice boils down to using your vacation not only as an opportunity to work on your tan or practice your fishing or golf skills, but also a way to reflect on what's really important in your business, what you're needlessly obsessing about and what you could accomplish more efficiently. Vacations, he says, function as a reality check. "We look at how busy our day is and we think we can't possibly get away and then we find a way to get away. We find out that some of the stuff we were doing beforehand really wasn't as important as we thought it was," he says.

"When we come back and see 100 or 1,000 emails, we realize that 90 percent of them didn't really need to be dealt with. Opt out of newsletters or wean some of our network off of daily contact and on to weekly contact. Then, on the flipside, realize what were the things that I was doing on vacation that were important to the business. Focus on those because that's what really makes my business go. Breaking away lets us see what's important."

What tips do you have to reduce vacation anxiety?

5 Everyday Lessons From LBJ

Bill Murphy, Jr. — Tue, 15 May 2012 08:20:00 -0400

The nation's 36th president, Lyndon Johnson, offers five tips you can use every single day to make your business stronger.

For the past 30 years, author Robert Caro has been working on a five-volume biography of one man: President Lyndon Johnson. The fourth volume, The Passage of Power, came out this month.

So far, the tomes run more than 3,000 pages. President Bill Clinton reviewed the latest installment in The New York Times.

You probably don't think of LBJ as an entrepreneur, but any list of the most impactful political leaders of the past 100 years would have to include him. Moreover, as a politician, I think Johnson put into practice the Harvard Business School definition of entrepreneurship: "the pursuit of opportunity without regard to resources currently controlled." That definition is near and dear to me, as well, as Jon Burgstone and I wrote at length about why this definition is so well thought-out in our recent book, Breakthrough Entrepreneurship.

So with that in mind, here are five leadership lessons from LBJ for today's entrepreneurs:

1. Network, even when it might seem counterintuitive.

LBJ was a classic networker. When he first came to Washington in 1937, he lived in a large boarding house with other members of Congress. And they shared a communal bathroom. Wanting to know as many fellow legislators as he could, he pantomimed getting to ready for work multiple times each day, figuring that he had an opportunity to build relationships by standing next to fellow legislators as he brushed his teeth and shaved, over and over again. He lived up to the true entrepreneur's mantra: It's not who you know; it's who you get to know.

2. Think big, and pick big goals.

From the passage of the Civil Rights Act, to the Great Society, to even the Vietnam War, it's hard to dispute that Johnson was a hugely impactful leader. This was not a president who played small ball, or who devoted his time to less school uniforms. You don't have to agree with his ideology to acknowledge that while he only lived to be 64, he spent his time on this earth working toward really big goals.

3. Strive for balance.

Okay, when historians think of LBJ they likely don't think of "balance." But clearly his family was important to him. Interestingly, Johnson and First Lady Lady Bird Johnson named both of their daughters so that everyone in their family would have the initials "LBJ."

4. Maintain focus, and don't split your attention.

Here, LBJ's story is a cautionary tale for modern leaders. Regardless of what anyone thinks today of the Vietnam War and the Great Society, the United States simply couldn't pursue both of these goals at once. It's probably the same thing for your business: Pick the few things you really need to accomplish, and do them. Don't divide your attention.

5. Know when to quit.

Johnson became president upon the assassination of John F. Kennedy in 1963 and was elected in his own right in 1964. But by 1968, the Vietnam War was immensely unpopular, and Johnson nearly lost the New Hampshire primary to Senator Eugene McCarthy. Days later, Senator Robert F. Kennedy joined the campaign, and Johnson announced he would not seek reelection. Things didn't work out too well for Johnson's party—Richard Nixon won—but at least he knew to get off the stage when there was no chance he could win.

5 Tricks to a Better Company Retreat

Les McKeown — Tue, 15 May 2012 08:00:51 -0400

Strategy retreat: Two words that make even the toughest leaders cringe. Here's how to make the process less painful...and maybe even a little fun.

It's only spring, but you're probably already thinking about next year.

Yep, with Q1 down and Q2 well under way, it's time to start thinking about the traditional Q3 event: The oft-dreaded company retreat to plan next year's strategy.

Sadly, apart from perhaps 'performance assessment', no two words are more likely to induce acid reflux and facial tics in an otherwise well-balanced and competent executive than the phrase 'strategic retreat'.

What should be a valued and enjoyable opportunity to escape the grind of day-to-day tactical implementation, so often becomes death by Powerpoint. Basically, these retreats become an endless sequence of presentations that cram too much information into too little time, even leaving the presenters with a sense that they'd rather take a paper clip, straighten it, and stab themselves in the eye.

Having participated in hundreds of strategic retreats, I know that this doesn't need to be so. Here are five ways you can make this year's retreat a resounding success:

1. Don't hold it on a Monday. You want your participants to arrive at the retreat clear-minded and able to focus. So don't hold it on a Monday when everyone has forty-seven things they need to do to start off the week. Also, don't do it on the last day of the month, when everyone is racing to hit their quotas, or on any other day that requires the majority of people's attention to be elsewhere. Instead, pick the least event-laden day you can find: likely a Tuesday, Wednesday or Thursday in the middle of the month.

2. Go off-site. Find an offsite location, far from the office, preferably with spotty Internet access. If your team is clustered in a conference room at head office, the likelihood of interruptions (and the probability of disengaged participants 'finding' an emergency to deal with) is too high. Poor Internet access removes the temptation to 'multi-task' (read: disengage).

3. Get a seasoned facilitator. Find someone from outside the company who is experienced in dealing with C-level executives to facilitate your retreat. This doesn't mean yielding the overall goals of the retreat to them. You still must set those, but it does mean entrusting them to manage the process of achieving those goals.

Why bring in an outside facilitator? To engender rich interaction by leveling the status pyramid. Un-facilitated retreats tend to be heavily influenced by the status of those in the room, with discussions (and the resulting decisions) skewed by the relative position in the org chart.

A skilled facilitator, unencumbered by the subliminal influences of where he or she fits on the org chart, will create a more neutral environment in which everyone can contribute equally, and will encourage a stronger challenge factor in a non-threatening manner.

4. Make pre-reading mandatory. In most strategic retreats too much time is spent on presenting information, and not enough time on analyzing and acting on it.

Make it your goal to reverse that situation: Have whatever presentations and background reading material are required for the retreat available at least one week ahead of time. Start each session with the presumption that the underlying information has already been read by everyone, and use the time for analysis and decision-making, not presentation.

5. Pre-schedule implementation accountability. Most strategic retreats bring with them an unfortunate reminder: "Gosh, look at these great decisions we made last year that we never actually implemented!"

The looming shadow of previously unimplemented strategic initiatives can produce a sense of guilt that undermines the ability of the leadership team to take the process seriously.

Break the cycle by pre-scheduling post-retreat accountability sessions: 45-90 minute conference calls to discuss the progress of action points arising from the retreat. Schedule the calls monthly for the three months immediately after the retreat, then quarterly after that.

(Hint: Initially, schedule everyone to participate so the sessions get into their diary. After the retreat, the list of actual participants can be whittled down as appropriate, depending on content and subject of the agreed action points.)

Is Sheryl Sandberg the Real Brains Behind Facebook?

Geoffrey James — Tue, 15 May 2012 07:18:01 -0400

After the Instagram megadeal and "hoodiegate," Facebook investors may be taking comfort from the COO's leadership.

The hit movie The Social Network depicted Facebook CEO Mark Zuckerberg as a genius among slackers. However, it's hard not to wonder whether COO Sheryl Sandberg isn't providing the business experience and (let's go ahead and say it) basic maturity that's kept Facebook from crashing and burning.

Before you shake your head in disbelief, consider that there are, and have been, plenty of "second in commands" in who have actually been running the show. Steve Ballmer, for instance, was "officially" No. 2 to Bill Gates for years, even after Gates was spending most of his time on his foundation. And Tim Cook was, in effect, running Apple when Jobs' health problems forced his absence.

Big Zuckerberg Blunders

With that in mind, let's look at Zuckerberg. Over the past year or so, he's:

Made himself infamous by killing progressively larger animals (slitting the throat of a goat, for instance).
Cut a deal to buy the firm Instagram at a wildly inflated price and without consulting his board of directors.
Wore a hoodie to meet with investors, many of whom apparently felt that dressing so casually was disrespectful.

These last two items have the flavor of desperation about them–as if Zuckerberg is determined to cling onto the geek cowboy image popularized in the movie. In any case, none of these pranks has helped Facebook achieve its goals, unless you believe the oft-disproven saw that "any publicity is good publicity."

By contrast, consider Sandberg.

Her resume prior to Facebook includes being VP of Global Online Sales and Operations at Google, during the heyday of that firm's growth, as well as serving as as chief of staff for the United States Department of the Treasury.

And she's been COO of Facebook since March 2008, before Facebook saw really explosive growth.

Most recently, Sandberg proved both her maturity as an executive and her sense of security in her position by revealing to the world that she doesn't feel the need to work insane work hours--and, in fact, leaves work at 5:30 to be with her family.

Making Things Run

From an outside perspective, it's hard not to guess that, as far as day-to-day business goes, Sandberg is probably running the show. And that's not surprising, because that's the role that a COO often plays–even more so when the CEO is, well, kinda flaky.

According to a July 2011 profile of Sandberg in The New Yorker, she was responsible for determining Facebook's ad-centric business model--and was reputedly the first executive to sound out Wall Street on the possibility of an IPO. In other words, while Zuckerberg has been slaying goats, she's been building Facebook from a slacker hobby into a real business.

Of course, by all accounts Zuckerberg has a major hand in technical development of Facebook. However, despite the company's huge growth, Zuckerberg has made some glaring blunders, most notably bungling user privacy and failing to integrate well with smartphones and tablets.

Facebook's growth notwithstanding, I'll bet that most big investors would be less enthusiastic about the company if Sandberg weren't there to ameliorate Zuckerberg's obvious immaturity. Furthermore, once the company goes public, one wonders how long investors will tolerate Zuckerberg's hijinks when there's a clear alternative available–one who has already shepherded Facebook (and possibly Zuckerberg as well) into the current market position.

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Every Business Should Have a Cause

Inc. staff — Mon, 14 May 2012 16:59:36 -0400

In the wake of Hurricane Katrina, New Orleans chef John Besh gave his booming catering company something it desperately needed: a social mission.

Inc.com

Would You Give Up Citizenship for $1 Billion?

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