This is my second year working with OnDeck to provide small business owners advice to run their businesses better. Last year, over 200 small business owners submitted questions, ranging from motivation to competitive advantages, to cash flow. This year, I answered 10 questions from prominent small business blogs and websites, which you can also subscribe to when you’re looking for specific info and direction. I hope their questions and my answers help you be the best business owner you can be.
1) A growing business needs to be smart about its money. How should small businesses prioritize what to invest in/growth investments?
Barbara Corcoran, Entrepreneur and Shark Tank Judge
Every growing business runs short on cash, so you have to be very smart on spending the limited cash you have wisely. You should invest your money only in the things that will directly result in sales, as sales is the lifeblood of every business. Invest your money only in those things that directly result in more sales.
Many young entrepreneurs spend money way too early on expenses that don’t directly produce sales. Spending money on patents, collateral material, PR agencies and administrative staffing may support sales and generate buzz, but it won’t bring money in the door. Spending money on smart advertising, direct sales calls and hiring more people who can sell your product or service gets more sales in the door and builds your business.
2) How have you overcome personal challenges in your business and what advice do you have for other business owners?
Barbara Corcoran, Entrepreneur and Shark Tank Judge
Everyone has personal challenges to overcome, and I’ve had my fair share of challenges, too.
As a kid, I was convinced I was stupid because I couldn’t learn to read or write in school due to my dyslexia. But my lack of confidence made me overcompensate and over-prepare for everything I do in the business world.
When my business partner and boyfriend left me to marry my secretary he told me, “You’ll never succeed without me!” By saying that he handed me the greatest gift of all, an insult, which gave me the motivation to get back on my feet and the determination to prove him wrong. I’ve found that the key to getting back up is not to feel sorry for yourself. I’ve noticed the common ground of every successful person I’ve known is THEY DONT FEEL SORRY FOR THEMSELVES.
3) What criteria should I consider to determine whether a loan or cash infusion would be a good decision to grow the size of my business?
Barbara Corcoran, Entrepreneur and Shark Tank Judge
That depends on what you’ll have to give up and if it’s worth it. There are several criteria to take into consideration, but focusing on the pros and cons of each option is a good place to start. You need to ask yourself – how much money do I really need and am I willing to give up some control to get it? Can the new business I hope to get readily service the debt and if not, what will I have to do then?
Making a list of the real benefits you expect to get and rating each benefit will give you clarity of mind and help you make the right decision. While taking A BUSINESS LOAN allows you to retain your control OF YOUR BUSINESS BECAUSE YOU HAVE NOT SOLD STOCK TO AN INVESTOR, it can also impose financial restrictions on your business. Equity financing can provide relief from any debt service and also give you access to experienced investors, but will cost you equity and control.
4) What’s the best way for entrepreneurs to demonstrate that they’ve thought through the essential aspects of their business, especially the financials?
Barbara Corcoran, Entrepreneur and Shark Tank Judge
When pitching a potential investor, it’s important to have a complete understanding of your company’s financials and prospects. The best way to demonstrate this is to become intimately familiar with your financial position – be able to explain your statements inside and out and even more importantly, illustrate the thinking behind the projections.
When you display a command of the financials, it instills a great deal of confidence in potential investors because they feel you will show the same respect and concern for their cash investment, too.
5) Are there a few rules of thumb you could share with us that would help a small business owner differentiate between good business borrowing vs bad business borrowing?
– FitSmallBusiness
Barbara Corcoran, Entrepreneur and Shark Tank Judge
Borrowing money can be a sound business decision when done strategically and with discipline. But borrowing money without thinking through the consequences can end in business disaster.
When weighing a decision to take out a loan, ask yourself – is this really a good investment? Is this integral and necessary to growing my business? It’s smart to think through exactly how you expect the company to benefit from the BORROWED cash over the long-term and how likely you are to actually RECEIVE the anticipated benefits. Entrepreneurs by nature are optimistic and tend to overestimate the perceived benefits AND NOTHING is more disheartening for a business owner than PAYING a business loan back WHEN THE MONEY SPENT HASN’T GIVEN YOU THE BENEFITS YOU PLANNED ON. But few things in business are as satisfying as REPAYING the business loan after your business has REAPED THE BENEFITS from the wise use of the cash.
6) Many small businesses start out as either family-run, or business owners hire family members (for various reasons). What’s your advice on what to do when you have to lay off or fire a family member, and how can you do that and maintain peace?
Barbara Corcoran, Entrepreneur and Shark Tank Judge
If you need to fire a family member, it won’t be easy and hoping for SOME peace is not realistic. It’s ALWAYS extremely difficult to fire a family member – believe me, I fired my own mother and she WASN’T AT ALL HAPPY ABOUT IT!
It’s important to 1) be certain and resolute in your decision. TAKE ample time to review the situation and make an informed decision, 2) be clear and candid in your communication. Remember THE RELATIVE may not be working for your company anymore, but they’ll still be at your next family reunion. And 3) if you feel it’s appropriate, offer to help them secure their next position and really mean it. Sincere and dedicated actions go a long way in mending hurt feelings, especially with family members.
7) Was there any deal you regret investing in, even if you made some money, and why?
Barbara Corcoran, Entrepreneur and Shark Tank Judge
There have only been a couple and my regrets are for the same reason. WE WEREN’T A GOOD MATCH. The entrepreneur has to fit my work and communication style or it WON’T work out for either of us.
I’ve learned from past mistakes and HAVE MADE it a practice to only invest in entrepreneurs I’M certain I’ll work and get along well with. WHEN there’s genuine trust between us, EVERY challenge gets resolved quickly. But without the trust, EVERYTHING GETS SECOND GUESSED, nothing falls into the right place and nothing substantial REALLY gets done. Trust is the lifeblood of all good partnerships AND WITHOUT TRUST, PARTNERSHIPS WON’T WORK.
8) How can a mentor help a small business owner and do you, or did you, have a mentor?
Barbara Corcoran, Entrepreneur and Shark Tank Judge
A mentor can be an invaluable resource to a small business owner because they not only provide sound business advice based on personal experience, but they ALSO believe in you AND THAT BOLSTERS your confidence in yourself. But finding a mentor who has experience in your field and is willing to coach you through the hurdles is no easy task because all the smartest people are very busy.
My best mentor was my mother, and I was able to take lessons I learned from her growing up under her wing and apply them to my business on an almost daily basis. I credit her with half my business success. But if you don’t have a smart mother, then the next best thing is to find a great mentor elsewhere.
FIRST YOU SHOULD identify the smartest people in your field and ask yourself, what you can do for them versus what you want them to do for you! EVERY day someone asks me “will you be my mentor?” Hardly an enticing sales pitch, and one I never accept. But if you can figure out some way to offer your free assistance to help the person with something they don’t have the time to do for themselves or can’t do for themselves, you can earn their respect AND THEY’LL BE FAR MORE WILLING to mentor you in return.
9) How do you deal with exiting your business when you have a business partner who isn’t ready?
Barbara Corcoran, Entrepreneur and Shark Tank Judge
The best way to address this issue is to get out ahead of it by having an honest conversation with your partner at the beginning of your venture. If you both understand the vision each of you have for the business, including the exit strategy you each envision down the road, you’ll know upfront if you don’t share the same vision and you can put terms in place in the partnership agreement outlining how to deal with such disagreements. You may even learn EARLY you aren’t fit to be partners at all!
But if YOU DIDNT DO THAT at the start of the business, it’s never too late to have an honest discussion LATER ON. Simply sit down and state your feelings honestly and ask for their help in brainstorming potential solutions. But don’t do it on the fly amidst the day-to-day workload. Put the time aside in advance and get out of the office to a quiet space with ample time set aside to have a thoughtful conversation. Last, don’t expect to find a resolution in the first meeting, but make an appointment to resume the conversation a few weeks later.
10) Now that I’ve got a website up and running, what are the top three things I can do to start generating sales leads?
Barbara Corcoran, Entrepreneur and Shark Tank Judge
Here are three things you can do to start generating sales: 1) use social media to your advantage; start posting pictures of your product, WITH links to relevant content, etc., THIS IS an effective and cost-friendly way to build company awareness; 2) get your product into the hands of customers; your customers CAN BE your best advocates as well as a free R&D department – they’ll share your product if they love it and provide feedback on any changes you need to make, and 3) become your own best sales rep! Knock on doors (even if they’re virtual), position yourself as an expert in your space by writing blogs, and become the go-to source for relevant info on social media.
