Managing Turnover: The Hidden Cost Black Hole

When you hear the words "turnover" and "churn" do your thoughts turn to chilly fall evenings with fresh-baked apple-filled pastries and a big scoop of ice-cream? Or do the words give you a staffing headache?

A lot of small-business owners make the mistake of not interviewing to hire once. They don't know it, but their hiring practises mean that they have to go through the hiring cycle a couple of times before they find someone that is the rght fit for the job, and will stick around.

There are two main problems here:

1. The wrong person gets hired, and is unproductive. The business owner makes too many concessions for this lack of output, and the company suffers. If you're a small business, you have to be especially aware of the return on investment you get from your human capital. If you keep the person around and their workrate or quality of work doesn't improve, the company suffers for a longer time, but if you fire them you have to find a replacement who will be more productive. And that's hard to know from an interview.

2. A very qualified and skilled candidate is hired, but the job is not challenging for them, and they quit. This leaves the business owner having to go back through the hiring process, which can be time consuming and costly.

If you Google search for "cost of hiring the wrong person" you're going to see a lot of ads for staffing services with some good information attached.

It can cost money, time, productivity, staff morale, customer goodwill and loyalty, when you hire the wrong person. That's why getting it right first time is so important.

So how can you get it right?

It's simple, really, if you pay attention to the skills and behaviors needed to perform the job functions.

Be realistic about the job, and how qualified the person really needs to be to do it. Very often, business owners hire over-qualified candidates. Hiring for where you want to be is a good thing, but you have to get there quickly to keep your employees engaged. Some jobs need the candidate to have specific experience, with or without a degree. Not everyone can be a decision-maker, so hiring people with significant decision-making experiece is only likely to disappoint them. And worse, they might question your ability to lead your company, causing disharmony among your other employees.

Be realistic about how much you're paying. Assess how much you're offering as compensation for the position, then look at the skills and experience of your candidate pool and estimate how much a person with that background could reasonably expect to earn. The bigger the discrepancy between the numbers, the shorter that person is likely to stay. There are exceptions, of course, especially around people changing careers or retraining. But by and large, though, people rarely expect to get paid the appropriate rate for the job they do. They expect to get paid the appropriate rate for the jobs they could be doing with their skills and qualifications.

Don't oversell the job to the candidate. If you know that you're hiring for a dead-end data-entry position, don't sell it up as having management potential. Being honest about that will set the right expectation from the start. It will also cause the people most likely to quit to remove themself from the field. When that happens, you're left with the people who either a) really need a job, any job; or b) really want to work for your company. In both cases, they're much more likely to stick around.

Then there's the question of how to thin the herd in the interview process, but that's covered in another article.

Five Lessons Every Small Business Can Learn From...The Karate Kid

In middle school, me and my friends all wanted to be Danny Larusso. Rocky had turned the sports underdog story into a legitimate genre, but The Karate Kid series made it something that resonated with us as 10-year-olds in a way that Hoosiers just didn't. Okay, maybe it was because it was really about kicking butt and getting the girl. 

On June 11th, we get to see how the classic 1984 movie has been remade. The setting has moved from California to China, Ralph Macchio's title role is being played by Jaden Smith, and Pat Morita, who found fame as the iconic Mr. Miyagi (Mr. Han in this remake) has been replaced by Jackie Chan, in a role that may let him show off his dramatic chops in a way we haven't seen since Ging Chat Goo Si (Police Story) in 1987.

Both the original and the remake are simple stories: a kid, brimming with self-confidence, is moved to an environment where he must make new friends and establish himself in the high school pecking order. While he's doing that, he gets on the wrong side of the local thugs, and realizes that merely defending himself won't earn him any respect from the bullies -- he must stand up to them, and defeat them.

If you're getting your butt kicked, talk to an expert.

Sometimes experts don't look like we expect them to look. Whether it's the handyman who's a martial arts expert or the tech support guy who speaks three languages, we can be surprised by what people know. One of the most common things employers suffer from is that they forget that their employees came to their current job with prior work experience -- and sometimes that experience is in a different but useful field. Social networking, whether it's on Facebook or Linked-In, is vital to contacting people who can provide credible help when you most need it -- however, the cost of social networking is that you must be active and give your own expertise whenever you can. Nobody likes people who just take and never give back.

Know what the competition's like when you move to a new market.

The only way to approach a new market is with confidence. However, that confidence should come from the fact that you have researched the environment, the competition and the opportunities, and that you know you have a better product or a better value proposition for consumers. If you don't do your research and jump in with both feet, you're likely to get the kind of whupping usually reserved for red-headed step-children. Confidence is good, blind certainty is bad.

Practice is boring. But it does improve your skills.

Who says you can't learn karate from cleaning cars, sanding decks, and painting fences? If you want to sell, sometimes you have to practice your pitch, but sometimes you have to practice the other things that make you good at presenting. Firm handshakes, eye contact, active listening, objection handling -- these are all good things in sales. Conversations with friends and family can take care of eye contact and active listening, dealing with your kids will likely make you a better objection handler. What you do on the practice field doesn't always look like a game-time move.

Copying an old formula works -- if you do it well.

Stories of overcoming adversity to become the best are not new. They were around a long time before we ever put them in movies. Who'd have thought that a guy who never went to high school would invent the automobile, or that college drop-outs in Massachussetts and California would invent machines which would revolutionize every workplace in the world? Frachises (and not just the celluloid kind) work on the same principle. Take an idea that works, figure out why, sell it to other people. McDonalds, Subway, Seven-Eleven, Kinkos -- you know what kind of service you'll get in every single one of these places. You know that the menu, whether it's food or services, is the same, no matter if you're in Goose Creek, N.C., or Reedsport, Ore.

Respect and discipline will win in the long run.

In The Karate Kid, Danny wins out because he and Mr. Miyagi have a mutual respect that the Cobra Kai goons and Kreese, their teacher, don't have. Respecting your suppliers and customers helps those relationships to develop. As a result, you may get better deals on credit terms from suppliers, and good word-of-mouth from customers. If you can develop those relationships while focusing on disciplined control of your expenditure, your business will be a winner.

Five Lessons Every Small Business Can Learn From...Mad Men

On July 25th, Matt Weiner's journey through the Madison Avenue advertising world of the 1960s returns to television. Mad Men, has been nominated for 32 Emmys, winning nine of them, and has won four of its eight Golden Globe nominations, including Best TV Drama Series for each of its three seasons. There's a good chance you haven't seen any of the show's 39 episodes, but you can fix that by going here. Like most critically acclaimed shows, Mad Men has a relatively small audience -- averaging less than 2.5 million viewers each week. Jon Hamm plays the charismatic Don Draper, an ad man with a murky past and a talent for persuasion -- both in his advertising campaigns and for the numerous women in his life. It's his way with words that saves many client relationships for Sterling Cooper, the agency where Draper works, based on the real-life agency, BBDO. Maybe some of his words can help you, too.

"Why reinvent the wheel?"

Season 2 Episode 1: Flight 1

There are many things that motivate a customer to buy, and if you Google it you'll see that everyone draws their own conclusions. But, when it comes to why a customer chooses one company over another when they're ready to buy, there are only four reasons:

  1. Do you provide something the customer can't get anywhere else?

  2. Do you provide something at a better price than anyone else?

  3. Is the quality/value of your offering better than anyone else?

  4. Is your purchase process easier to understand than your competitors'?

Consumer behavior is beyond your control. Take a second to digest that. However, consumer behavior is not beyond your influence. You can't change why a customer would choose you over a competitor, but you can make a more persuasive case when your product or service has more "yes" answers to those questions than your competitors do.

"I don't think there's much else to do here but ... call it a day."

Season 1 Episode 8: The Hobo Code

If you've ever worked with anyone in sales, you've probably worked with one who didn't have the word "no" in their vocabulary. See number 8 in this list. 

You value the business relationship you have with a client or a supplier, but when it comes right down to it, it's your relationship with your business that you have to protect. If a client is demanding services that are unrealistic, or generates costs that will never be repaid, even with goodwill and referrals, you have to walk away. If a supplier can't give you what you need (and you should take some time to assess what that is), you're the customer, decide whether you can get that need met by another vendor. 

"You still might need to give us a hint as to what it does."

Season 1 Episode 11: Indian Summer

When one of Sterling Cooper's clients brings a new product to the agency, Don is at a loss for how to market it. The modern day equivalent would be one of those ab-workout belts. In 1962, it was a pair of rubber shorts that did a similar thing, but with unexpectedly stimulating side-effects for female users.

Know your product. Thoroughly. Know its benefits, intended or otherwise, its limitations, and the kind of customers it is best suited to. Too often business owners fail to be honest with themselves about what they're selling -- seeing what they want to see rather than what the customer sees.

The best software testing isn't done by programmers, it's done by end-users who have enough knowledge to be dangerous. Break your product just to see how robust it is. Then go back and make it stronger, faster, better for the user. 

"Don't you have a coterie of trusted advisors, friends, kings...?

Season 3 Episode 7: Seven Twenty Three

You're good at what you do, right? Well, I have bad news for you: if you know another person, you know someone who can do something better than you can. That might mean that they can sew sequins or that they can change the drive train on your truck; maybe they can run faster or make sure that their kids are on time for school every day no matter what. In business, it might be that they have years of experience in outside sales, or that they founded a company that is an industry leader, or that they know how to secure venture capital.

If you're a start-up, it's important to know your strengths and weaknesses. Then you go find people in your network who can help you overcome those weaknesses and challenge your strengths. you call those people your advisory board. Most people will readily agree to be on an advisory board because it's not a big time commitment and the overwhelming attitude of entrepreneurs is one of helping other entrepreneurs.

"I never saw myself working in a place like this."

Season 3 Episode 13: Shut the Door, Have a Seat

If you're in business for yourself after leaving a corporate job, you probably recognize this sentiment. Remember the day when you looked at the length of your to-do list and compared it to the list of things about your job that make you happy? Remember how you found that there were very few reasons to stay and work for someone else?

At company.com we embrace the entrepreneur in everyone (in a very HR-friendly kind of way) and think that every cube-dweller with an idea and the drive to make it a reality should be able to pursue that dream. But we also offer this word of temperance to you if you just started making two lists. Make a third. Hit Google and make a list of other companies who are in the market segment you'd go into. Then make a fourth -- all the companies who provide the product or service you will. Then a fifth -- work out how much it will cost you to turn your idea into reality. Then a sixth and, for now, final, list -- the people you know who can help you to fund your dream. And expect to put all your money into it for a while. And all of your time. 

Remember that, in the end, it's worth the anxiety and sleepless nights. The feeling that you're your own boss, that the effort you expend is related to the results you can see is liberating. Change isn't easy, but it's not impossible, either.

Can Your Business Be Carbon Neutral?

If you open the fridge here at the Company.com, you'll find a couple of plastic containers which now require CDC clearance to open, an assortment of soda, and a few bottles of water. Bottled water has taken a beating lately, with reports that the quality is no better than tap-water, and that the plastic bottles contribute millions of tonnes of land-fill waste every year.

When you think of Iceland you probably think of the unpronounceable volcanic eruption earlier this year that grounded flights across nothern Europe for days. You may think of Bjork, or Vikings. You probably don't think about a carbon neutral certified bottled water company, or that 96 percent of all of Iceland's post-consumer cans, plastics and glass bottles are recycled.

Jon Olafsson is Chairman of Icelandic Glacial water, the company he founded with his son, Kristjan, in 2004. "When we started this it was very clear in our mind that we should build the company, from day one, as a carbon neutral company." Olafsson said.

Easier said than done. To be carbon neutral certified, you need to know how big your carbon footoprint is, how much you need to offset, and where there are projects that will support your goal. And there's a company, The Carbon Neutral Company who do can help you find that exact information.

"In Iceland it's probably easier than in most other countries," Olafsson admits, "because 72 percent of energy used in Iceland is renewable." Which leaves the burden of carbon neutrality not on the manufacturing process, but on the supply chain and distribution networks. 

Olafsson takes things a step further, though, in his quest to be carbon neutral. "We decided that we would offset the carbon footprint of our employees from the time they leave home to the time they come to work." He said, "Whenever we travel around the world, whenever we ship raw materials to our factory, or when we ship finished goods to our end users, we offset that [fuel consumption] by investing in renewable energy projects around the world."

Sadly, the efforts made by Icelandic Glacial and other companies only get them as far as the supermarket shelves. When it comes to post-consumer waste, the environmental organization, Clean Air, claim that Americans throw away 2.5 million plastic bottles every hour. That's almost 16 billion recyclable bottles going onto landfills every year. The trouble isn't that people are lazy, it's that local governments are not addressing the problem. And the problem is that most local governments do not offer convenient, low-cost recycling programs, and some are even proposing to ban plastic bottles.

But there is a bright side to this. The economic downturn has prompted many people to grow their own fruits and vegetables, and many are doing so without the use of pesticides and fertilizers. Green thinking is the silver lining to the credit crunch cloud. 

When asked what small businesses could do, Olafsson said, "Small businesses can direct their purchases to companies who are carbon neutral, or who have a program in place to reduce their carbon footprint. When Icelandic Glacial have the choice of two suppliers, we always go to the one which is green." It's a simple philosophy, founded as much in long-term capitalism as it is in environmentalism. Making those choices might be more expensive now, but without industry support, carbon neutral companies will go out of business, which reduces competition. And competition is good for the consumer.

As focus turns to environmental issues, some businesses will buy carbon off-sets because it fits their ideals and corporate culture, others will feel forced to buy off-sets to remain competitive as the economy focuses on the environment and sustainability. Ultimately, it's uncertain whether carbon neutrality is going to be something every business can afford to do, but it looks set to become an unavoidable cost of doing business in the next decade. 

  

Five Lessons Every Small Business Can Learn From...The BP Deepwater Horizon Oil Spill

In September 2009, the Deepwater Horizon drilled the deepest oil well in history -- 35,050 feet, or about six and a half miles deep. The rig is owned by Transocean Ltd., the world's largest offshore drilling company, and leased to BP plc. Soon after setting the record, BP extended its lease on the Deepwater Horizon to 2013.

At around 10 p.m CST on April 20th, there was an explosion aboard the Deepwater Horizon, an ultra-deepwater, dynamically positioned, semi-submersible offshore drilling rig. The explosion was caused by a blowout after a gas bubble came up the pipeline, bursting through several seals and barriers. Ordinarily, pressure management systems would prevent this kind of event, but on the Deepwater Horizon, those systems failed. 

At the time of the accident, the Deepwater Horizon was drilling a well in the Macondo Prospect region of the Gulf of Mexico, and was not at a stage where the well required a plug, according to Halliburton who cap and plug wells for Transocean. When the explosion blew out the casing to the well, oil began to spew from the open well on the seafloor.

In the early days of drilling, this kind of blowout was called a gusher. You've probably seen old pictures of oil spraying a a hundred feet or more into the air in the middle of the desert. This is much the same thing, but the gusher is underwater, leaking as much as 20,000 barrels, or about 840,000 gallons, every day. 

That's enough fuel to drive a Prius half-way to Venus, or around Earth's equator 1,300 times, every day.

Prior performance is no indicator of future success

One of the most fatal organizational diseases a company can suffer from is complacency. Deepwater Horizon was one of a number of drilling platforms that combined to earn Transocean a Safety Award for Excellence, given by the Department of the Interior's Mineral Management Service, for "outstanding drilling operations" and a "perfect performace period" during 2008. That recognition came at the MMS National Award luncheon in May 2009. Less than a year later, the Deepwater Horizon can be found resting on the sea bed in the Gulf of Mexico. 

Awards can be dangerous -- nobody's saying that having great performance recognized is a bad thing, but awards are always given from a position of looking back at what happened last week, or last month, or last year. In business, if you're not looking at the road ahead, bad things can, and will, happen.

Some costs are controllable -- some just aren't

Deepwater Horizon was commissioned by Transocean in 1998, at a cost of $350 million, and construction was completed by Hyundai Heavy Industries in South Korea in 2001. Transocean leased the Mobile Offshore Drilling Unit to BP, in a contract worth $496,800 per day. Rebuilding the Deepwater Horizon will cost around $700 million. 

Cleanup operations are costing around $5 million per day, and BP's share price has fallen by 25 percent in the month since the accident. Nobody knows how much further BP's stock might fall as the spill is brought under control, but the cost of the lost production is going to find its way onto a financial statement somewhere. That will impact profits and may hinder future growth.

Making unauthorized changes may void warranty

While the Deepwater Horizon was insured for $560 million (and Lloyds of London has paid out on that policy), the total insured losses could reach as high as $3.5 billion by the time compensation, law suits, and clean-up bills are settled.

The investigation into the cause of the accident is focusing on the blowout protector (BOP), and whether it was correctly connected and maintained. There is some evidence that the underwater control panel may have been modified and connected to the wrong ram which, to simplify things a whole lot, is the part of the rig that manages the circulation of drilling fluid around the drillbit. Right now there are dozens of lawsuits being filed which accuse BP, Transocean, Cameron International (who build the BOP), and Halliburton -- or any combination of those companies -- of negligence, careless disregard, and violation of the Oil Pollution Act.  

Lawsuits are never a good thing to be on the end of -- not in your private life, and espcially not in business.

Have a back-up plan for your back-up plan

Engineers working for BP have tried many times to stop the flow of oil from the pipeline. The first solution was to place a 125 ton container dome over the well head. The dome would funnel the erupting oil to a pipeline that would transport the oil to a storage vessel. Unfortunately, methane hydrate crystals clogged up the opening in the dome and prevented the oil from being pumped away. On the surface of the sea, containment booms were put in place -- they're like bumpers to prevent the oil spreading on the surface. They might have worked, too, if the ocean was calm and still, but the wind and waves made the booms ineffective.

Plans to disperse, cap, and contain the leak have been tried and have been unsuccessful, though it's expected that heavy drilling fluids will soon be pumped into the BOP on the well head to reduce the flow of oil, and then the well will be permanently capped.

When you screw up publicly, you can't control the damage

Twenty years after the Exxon Valdez disaster, we still remember the name. Do you remember that Bette Midler's "Wind Beneath My Wings" was record of the year? Does anyone remember what they played at weddings before 1989? The point is that we remember the bad things much more readily than the good things (1989 is the year Seinfeld first aired, and the last wonderful year before anyone knew the names of the New Kids on the Block). When bad things happen in public, or in a public forum like the Internet, you have no control over how it will spread. The lawsuits from this spill could run for a long time, and will be a constant reminder that the Deepwater Horizon was a BP vessel, impacting BP's reputation for years.

Five Lessons Every Small Business Can Learn From...Dr. Horrible's Sing-A-Long Blog

If you've never heard of the movie or TV show, Buffy the Vampire Slayer, the name Joss Whedon will likely mean little to you. But then, so will the word "Internet." A couple of years ago, Whedon assembled some friends, including Neil Patrick Harris of How I Met Your Mother, and made a three-part web-based series, available to watch online, download from iTunes, and finally on DVD. It was hugely successful among nerds and geeks. It was called Dr. Horrible's Sing-Along Blog, and this is some of the wisdom we can glean from Dr. Horrible, himself.

...so that's, you know, coming along.

Sometimes there are expectations in your industry sector that you have to meet in order to establish credibility. Whether it's an evil laugh or a specific certification, being credible is the key to building a customer base, and with no customers you have no business. Working towards meeting those expectations isn't enough, you have to know what the next step is going to be, and if that means you think a coach of some kind will help you, it's a pretty safe bet that the cost of the coach will be money well-spent.

The world is a mess and I just need to ... rule it.

Have a goal. An endgame. An exit strategy. Mitch Jacobs, founder and CEO of New York-based On Deck Capital, says "Build a conservative plan toward a really big dream," and it's great advice. Knowing when you plan to call it quits is something you should consider when you start your business -- whether you sell your company because you've achieved your goals, or close the doors because you're not prepared to keep investing more of your own money month after month, knowing when to get out when you get in will give you something to shoot for.

...successful in that I achieved my objective.

There will be times when you get side-tracked by the things that didn't go as planned, even though your main objective was met. Obsessing over the details that didn't run absolutely perfectly is not productive. Learning from those obstacles absolutely is productive. If your mass marketing campaign got you a better than three percent conversion rate, you did very well, and spending days wondering how you could have achieved five percent takes you away from planning the next strategy that will win you more customers. Conrad Hilton, founder of the hotel chain that bears his name, said "Successful people keep moving. They make mistakes, but they don't quit." Success is not about everything being perfect, it's a simple question of whether you met your goal.

I need to be a little more careful about what I say on this blog.

The Internet is permanent. Anything you put on Facebook, anything your employees blog about, anything that a prospective employee puts up on YouTube ... it's all searchable, and it all reflects on you, your company, and how you might do business. A small business owner can ruin their business in a morning, or add a thousand page-views every second (which was reportedly the traffic that Dr. Horrible's Sing-Along Blog saw when it launched). Be careful about what you put out there with your name on it, because it will stick, and you can change how people think of you in less than five minutes.

I'm qualified for this job and I can't seem to get my foot in the door.

You might have a product that solves world hunger, cures cancer, and keeps Ryan Seacrest off the TV, but without a sales and marketing plan, you're not going to be successful in selling it. Getting your foot in the door of resellers, distributors, and (gasp!) customers is the only way to give yourself an opportunity to show off your product, and to do that you need to give them a compelling reason to listen to you. Elevator pitches are good, being informative, genuine, and confident go a long way, too.

Millionaire Entrepreneurs Who Didn't Need a College Degree

This is the story of an stereotypical college dropout's day. To save time and my sanity, I'm giving you the highlights.

This morning on his way into work, he listened to a CD by Aerosmith or Counting Crows. He pulled his car into a parking space in front of his office building, grabbed the now-empty Wendy's bag that once held his drive-thru breakfast, and went inside.

At his desk he booted his Mac or PC (from Dell or Gateway), sent a quick text message to a friend using his BlackBerry (letting him know that it's about time he upgraded to some kind of smart phone or PDA), and then spent the day goofing off on Facebook.

Tonight, he'll probably flop down into his IKEA sofa and watch Raiders of the Lost Ark on TBS, before firing up Wolfenstein. Which he'll play until he falls asleep on his IKEA sofa at about 2:00 a.m.

In this short narrative, our dropout's life has been touched by 17 other college dropouts who went on to much much bigger things. So what's our guy's excuse? And who were these mysterious dropouts?

For some of the guys on this list, it was a matter of building up enough money to start their own business. For others, success looks easy because they were ... and I can't stress this enough ... insanely smart. Like if they didn't go into business they'd be Bond-villains or President, right now. And there are a couple who caught a lucky break or had the right idea at the right time.

However they found their success, the entrepreneurs on this list are the exceptions -- most dropouts end up in lower-paying employment, and the lack of a college degree is often a barrier to even getting a job interview. Please pay attention to the fact that more than half of these guys quit school because they were already making money -- the others all started their businesses before MTV went on air. So if you're in school, contemplating leaving to start your own company, we officially advise you to try doing both. And if you don't have the energy or time management skills to do both, even for a little while to see if the business can be successful, it's probably a sign you should be concentrating on getting your degree.

Richard Branson (Virgin Records) and David Geffen (Geffen Records) founded record labels which released CDs by Aerosmith and Counting Crows respectively. Branson left high school at 16, and by the time he was 20 has a mail-order business for audio records. In 1972, aged 22, Branson opened a chain of record stores, Virgin Records. In the 1980s, Branson built Virgin Atlantic Airlines and Virgin Records (the record label), and became known for trying to break the transAtlantic water-speed record, and for hot-air-ballooning around the world. 

Geffen dropped out of the University of Texas at Austin after his freshman year, though he forged graduation papers to get a job with the William Morris Agency, who manage entertainers. After leaving William Morris, Geffen managed Crosby, Stills and Nash, and began his own record label while trying to find a label for Jackson Browne. Asylum Records signed artists like The Eagles, Jackson Browne, Bob Dylan and Joni Mitchell before it was acquired by Warner Brothers. In 1980, Geffen launched his own label, signing breakthrough acts like Guns n Roses, Nirvana, Sonic Youth and The Stone Roses.

Henry Ford. If you drive a car, you're in a machine which is, for the most part, much the same as the vehicles that Ford rolled off his assembly line in 1903. Ford didn't have much opportunity for formal schooling, but still managed to work his way up to Chief Engineer at the Edison Illumination Company before starting the Ford Motor Company.

Dave Thomas dropped out of high school when he was 15, and moved in with a local family who ran the Hobby House restaurant in Ft. Wayne, Ind., working as a full-time busboy. After a a short spell in the military during the Korean War, Thomas went back to Ft. Wayne. Hobby House franchised with KFC, and Thomas became instrumental in the growth of the KFC brand. In 1969, he opened Wendy's Old Fashioned Hamburgers. There are now over 6,000 Wendy's restaurants.

Steve Jobs and Steve Wozniak both dropped out of college to found AppleComputer, Inc. in 1976. Jobs dropped out of Reed College in Portland, Ore., in 1973, while Wozniak left University of California, Berkeley, in 1975, without a degree. When Apple went public in 1980, they both became multi-millionaires. Wozniak finally returned to college and earned his degree in 1986. 

Bill Gates dropped out of Harvard after a year, to work with his friend, Paul Allen, at Honeywell in Boston. Allen had dropped out of Washington State University in 1973. In 1975, Gates and Allen founded Microsoft. You know the rest.

Michael Dell dropped out of the University of Texas after starting Dell Computers in his dorm room. In 1992, Dell became the youngest CEO of a Fortune 500 corporation. Ted Wait dropped out of the University of Iowa after one semester to start a company called Gateway Computers with his brother.

Mike Lazaridis was two months away from graduating from the University of Waterloo, in Ontario, Canada, when he responded to a request for proposal from General Motors. The pitch earned Lazaridis a half-million dollar contract, and allowed him to found Research in Motion, which introduced the BlackBerry smartphone to the cellular market in 2002.

One of the most startling success stories about college dropouts belongs to Mark Zuckerberg and Dustin Muskovitz, students at Harvard who created a social networking site for students in 2004. It was called TheFaceBook (then, it's just facebook.com now). When Yahoo! realized its potential, they offered Zuckerberg a check for a billion dollars. Which he turned down. Facebook currently has about a half-billion registered users, and Zuckerberg's personal wealth is estimated to be about $4 billion. 

If you're dyslexic and Swedish, you' need to have some unearthly drive and ambition to succeed in business and become one of the richest people in the world. Which is what you'd expect from Ingvar Kamprad, the guy who founded furniture retailer, IKEA.

You know this next guy's name, right? Steven Spielberg was turned down by the big-name film schools, and went to California State University Long Beach. Spielberg interned at Universal studios where he made a 24-minute short movie, Amblin'. After being offered the chance to direct TV shows for Universal, Spielberg dropped out of school. In 2002, the veteran movie director completed his degree at USCLB.

Ted Turner's start in business ownership came when his father committed suicide and, aged only 24, Ted took over his father's billboard business. Turner attended Brown University, from which he was suspended twice, before being asked to leave in his fourth year. By the late 60s, the Turner Advertising Company was the largest outdoor advertising company in the Southeast United States, and generated enough money for Turner to purchase a TV station in Atlanta (TBS), which he followed up by buying the Atlanta Braves baseball team and the Atlanta Hawks basketball franchise. In 1980, Turner created CNN. 

After spend a year in a juvenile home for stealing Apple II computers from a local school when he was 14, John Carmack attended the University of Missouri-Kansas City for two semesters and then dropped out to work as a freelance computer programmer. In 1991, Carmack founded Id Games which revolutionized the video gaming industry by creating the 3D graphics engine used in games like Doom, Quake and Wolfenstein, and imitated by countless others.

So those are the millionaire dropouts who routinely have a hand in what we do, almost all of us, whether we have Ph.Ds or HSE Certifications. Some can thank a little luck, others can thank their giant brains, but all of them have a determination and a desire to make a difference, do something that will change the world, and spend all day doing something they love. Sure, they're all rich. But the important thing is that, for all of them, it was their passion that drove their business.

  

Five Lessons Every Small Business Can Learn From...Iron Man 2

Robert Downey Jr. returns as Nathan Stark/Iron Man, this weekend, as the sequel to the 2008's Iron Man movie hits theaters. If you haven't seen it be warned: this article talks about the movie, and contains information that might spoil your enjoyment of the movie if you haven't seen it.

You're probably wondering what you can learn from a movie adapted from a comic book, but if you've ever heard anyone say "with great power comes great responsibility" then you've heard people quoting Uncle Ben from the SpiderMan comic books. So clearly there are some things we can be taught.

This is the part where you realize that the author did not have many girlfriends in high school. Or college. Or his 20s.

Patents and copyrights don't guarantee protection from imitators.

Ivan Vanko builds his own arc reactor and suit, and is the movie's bad guy, Whiplash.

Protecting your inventions and products with patents and copyrights is a good idea. Essentially, patents protect the ideas and innovation behind a product while you develop it, copyright protects the design plans of the product, and copyright and trademarks protect the physical product you want to sell. However, there are limits to how much protection you can have under US law. 

Patents protect inventions, methods of manufacture, program code, formulae ... that kind of thing. Since patents are granted for a fixed period of time, they need to be renewed. If your patent expires, your ability to sue for infringement also expires. 

If you have devised a way for cars to be powered by household trash you should patent it. Drawing up the plans for the car and submitting the plans for copyright will not protect the power-providing technology, only the vehicle as drawn in the plans. And you should know that any item submitted for copyright protection is publicly accessible -- so your fancy technology would be accessible in the plans because the copyright doesn't protect the technology, only the plans as drawn. Make sense?

Names are not protected by copyright, but they may be protected as trademarks.

Develop your employees.

Tony Stark promotes his personal assistant, Pepper Potts, to CEO of Stark Industries.

In order to keep employees engaged in the growth of the business, the business should be engaged in the growth of each employee. That doesn't mean you have to pay for employee college tuition, either -- by setting goals and assigning tasks that expand the employee's horizons, and improve their career prospects, you achieve two things: one is that the employee feels respected and invested in, and can see their future career options; the second is that you retain a motivated member of your team who sees their future at your company. You can find that deal in the dictionary under "Win-Win."

Okay, that was a lie.

Just because a person is talented doesn't make them the right fit for every project.

Nick Fury, director of S.H.I.E.L.D, tells Tony Stark that he's unsuitable for the Avengers Initiative, but that he'd like someone more responsible in the Iron Man suit.

This is a case of the right skills being in the wrong personality for the organization. Painful as it is to accept, sometimes the right personality doesn't have the right blend of skills and experience to benefit a particular project, and the opposite is also true -- sometimes the exact skills and experience are in the wrong personality type. Exposing your sales staff to the day-to-day responsibilities of the sales administration and order fulfillment people, or the IT staff to their technology's end-users, will give each an understanding of the pressures unique to each job, and hopefully remind everyone that they're all on the same team.

But really, when you get right down to it, if your technologist can't speak the langage of your clients, you can help them to learn how to overcome that problem, hire an interpreter, or find a technologist that's a better fit.

Your company is the thing that makes you tick. Like a time-bomb.

Tony Stark's arc reactor contains palladium, and while the reactor is keeping Stark alive, the palladium is slowly killing him.

We all get involved in our work, especially if we're passionate about it. But it's important to remember why you're so engrossed. Most of us have loved ones we'd like to spend more time with, family we'd like to enjoy, friends we'd like to cook out with once in a while. The elusive work/life balance is something that all entrepreneurs struggle with, so go see a movie this weekend, take a breath, look at why you work so hard and ... give your cellphone to your spouse and ask them to only give it back to you if you get an email or text telling you that your office or factory or store is burning to the ground. Give up control of your cellphone for a morning, or any span of a few hours. Take the time to reconnect with the people who are supporting you, and most of all, don't let the thing that drives you be the thing that slowly kills you.

No matter how well your last product launch went, the new one can be better.

Iron Man, the first movie, took $585 million in worldwide box office sales. That's about eight cents from everybody in the world. Iron Man 2 looks set to gross around $737 million - or about a dime from everybody in the world. But those are just predicted numbers. What is certain is that Iron Man 2 has already earned back 60 percent of its production costs, and it hasn't played on a single screen in the United States yet.

Paying attention to these simple lessons will put you on course to being an astute business owner and super hero (just like Tony Stark). Ignore them and you may end up a self-involved, alcoholic egomaniac (just like Tony Stark).

  

How to Survive (and Thrive) In a Recession

Making money and staying in business require the same diligence, whether the economy is booming or in the death-grip of a recession. Staying in business, and even thriving, requires that business owners:

•   Manage expenses
•   Maximize margins
•   Earn new customers while retaining existing customers

In times of prosperity, that's easy, the public has a lot of money, so you can get away with simply earning new customers (who have more disposable income and want to spend it) and maximizing margins (because with more disposable income, consumers are more likely to favor convenience over price). And that will work until times get a little leaner, and you find that you have to manage your expenses. Businesses that do not adopt managing expenses as a business practice during the good times, will find it much harder to implement when times get tough.

A recession is defined by economists as two consecutive quarters with a falling Gross Domestic Product. Falling GDP is characterized by reduced public spending by local and federal government, reduced capital expenditure by private enterprise, and an overall reduction in entrepreneurship.

My high school business teacher told me that economies run on two things: responsiveness or elasticity, and confidence. Turns out he was right. Consumer confidence drives consumer spending, which drives production and investment, which in turn raises more tax dollars for government to spend. When consumers tighten their belts, recessions and economic slumps follow.

There is something counter-intuitive about recessions: when the consumers have less disposable income, they should spend more. The opposite is true for the more prosperous times, but most humans aren't wired to behave that way.

Now that economists are close to announcing that the recession is over (no, really, I saw it on the TV so it must be true) we can wonder what qualities some businesses posessed that helped them survive the last thirty months, and what qualities other businesses were lacking.

And it remains a very simple answer. Successful businesses managed their expenses, maximized margins, and built their customer base.

Most businesses, especially business-to-business operations, rely on credit of some kind -- company.com has an article about Cash Flow, Profitability, and How You Can Still Go Broke. Joe Knight, co-author of Financial Intelligence, told Company.com, "The reason small businesses fail is not because they're not profitable, it's because they've run out of cash." 

It's a simple case of managing how much flows in or out of your business, and when.

Wrangling your cash flow is probably the most important thing you can do as a business owner. Failure to do that is the reason many businesses file for bankruptcy under Chapter 11. Joe Knight's advice is "Always focus on cash flow, because that's where you're going to die."

One of the first things that successful businesses did during the recession was to look at their borrowing, and renegotiate the terms to something that, while it may be over more years and ultimately more expensive, has lower payments now. Yes, adding more debt is probably a bad idea for most businesses, but if refinancing existing debt allows you to stay in business, there's a definite upside to doing it.

Other businesses negotiated longer periods for making payments to suppliers, while at the same time requiring faster payments from customers.

Another way that recession-surviving businesses managed cash flow was to manage how much inventory was being carried at any given time - inventory costs money, and inventory which sits on your stock-room floor for weeks has an opportunity cost which can bankrupt your business.

The least desirable expense control is always in human resources, but as orders reduced, many manufacturing businesses laid off staff, instituted freezes or cuts to pay and benefits, reduced investment in hiring and training. Some functions were outsourced, and you can read more articles about outsourcing here.

On the other side of things, the making money flow in side, there were a few tricks, too.

Accounts receivable factoring has appeared on the radars of more small business operators in the last two years -- you can read a more in-depth look at factoring here, but the highlights are that you sell your invoices for between three and ten percent less than the invoice amount. And now you're asking why any business would do that. The answer is that for most businesses, 90 percent of an invoice now is better than 100 percent of an invoice in ninety days. And that's if the customer pays in full. Factoring allowed businesses to get almost all of their invoices paid by a third party, and focus on doing business and generating leads rather than chasing payments. The third party chases the customer for payment.

Many sole proprietorships and partnerships cut the amount the owners were paid, and in many cases, the owners injected more of their own cash into the business to continue operating, while others moved their business into more diverse or profitable areas.

For some businesses which failed, the problem lay in the products on the shelf. Luxury items like big screen televisions were some of the first things people stopped buying. When credit became harder to get, spending $2000 on a television became something many families couldn't justify, even if they could finance the purchase.

Lessons have been learned over the last few years. Businesses have become leaner, more efficient, more productive. What's certain is that businesses and consumers have changed the way they spend their money, and in the economy that will emerge in the next 12-18 months, things will be different.

Ultimately, paying close attention to accounting, business ratios, and analyzing which types of spending give the best return on investment are the tools to navigate the waters of a staying in business, whatever the economic climate, but the tasks the tools are used for are managing expenses, maximizing margins, and retaining and building the customer base.

Five Lessons Every Small Business Can Learn From...The Renaissance Festival (Pirate)

Ye might not think a modern small business owner can learn anythin' from the Renaissance Festival, except that joustin' never really lost its appeal t' the 8-year old kid in us all.

But if ye look closer, ye'll see that all those stores are independent small businesses -- and with most RenFests getting an average of 15,000 visitors per day, there be a lot of pressure t'be better than the next guy sellin' ear-rings made out o' feathers, or cell-phone covers made out o' leather and deer antlers.

Avast! This be makin' no sense. Translate me back t' English

Location, Location, Location

Nobody shops at t'first store inside t’entrance to t’Renaissance Festival. They just don't, not on t’way in, anyway. There usually be dozens of Shoppes in t’festival grounds, and dozens o' places where ye can buy burnt meat on a stick, arrr. Like any other shopper, RenFest patrons be discerning, and will check out t’competition before opening their coin pouch. Getting yer product priced right at a port where savvy shoppers have checked out t’competition, and finally be ready to buy, be t’best way t' maximize yer sales opportunities, matey. Setting up near a tavern also has its advantages, because when people sit t' eat, they looks at what's going on, and if they be looking at yer store fer a good long while, ye've a better chance of selling stuff, me hearties.

Put On a Show

If t’first rule o' Fight Club be not talking about Fight Club, t’first rule o' RenFest be "nothing attracts a crowd like a crowd." Fake accents, grown men wearing Errol Flynn's hand-me-down tights, and buxom wenches on stilts wearing jester hats while juggling swords that be lit on fire will all make people stop and look. And if they be stopping t' look it means ye have their attention. What ye do with their attention when ye have it, well that be another thing.

Give Stuff Away

People like free stuff, matey. Just check out yer local craigslist listings fer free stuff. Count how many broken TV sets, futons, patio chairs, truckloads o' firewood, and VHS tapes people be giving away. People like free stuff. So ye have t' give a little bit. That's not t' say ye have t' lose yer Shoppe -- ye can be smart about it. Give raffle tickets fer free stuff with every purchase - any purchase. Give people a reason t' come back t' yer Shoppe, matey, because t’more times they come back, t’more likely they be t' buy something. And if they be coming back t' yer Shoppe they be not spending their pieces of eight at yer competitors.

Uniforms Be Fun!

Whoever thought that pirate hats could be part o' yer corporate identity? Or bodices, fer that matter? Where else can ye direct customer inquiries to t’wench in t’leather corset and thigh boots? Okay, don't be answerin' that, arrr. Most big corporations also have a dress code, whether it be a branded polo shirt or a baseball cap -- these let shoppers know that t’individual wearing t’uniform be knowledgeable, and be there t' provide assistance. 

T’Money be in t’Margins

RenFest Shoppe-owners know that they be not only space-limited, but also time limited. Most RenFests be weekend-only affairs, so sellin' through inventory be critical -- t'maximize profits in a short space of time, as well as not breaking t’bank when ye give stuff away, it be important that ye get t’product with t’biggest margins in front o' yer customers. Buy low, sell high be t’key to successfully running any business venture, but fer RenFest proprieters, moving unsold product to t’next town means more stuff to pack up, matey, and that takes time and time carries a cost. Sometimes it be just more effective t' sell yer wares at wholesale prices, if doin' so reduces a different cost. And that be why ye should go t’RenFest at t’end of t’last day if ye be looking fer a great deal on a scimitarrrr.

Five Lessons Every Small Business Can Learn From...The Renaissance Festival

You might not think a modern small business owner can learn anything from the Renaissance Festival, except that jousting never really lost its appeal to the 8-year old kid in us all.


Now available in Pirate!

But if you look closer, you'll see that all those stores are independent small businesses -- and with most RenFests getting an average of 15,000 visitors per day, there's a lot of pressure to be better than the next guy selling ear-rings made out of feathers, or cell-phone covers made out of leather and deer antlers.

Location, Location, Location

Nobody shops at the first store inside the entrance to the Renaissance Festival. They just don't, not on the way in, anyway. There are usually dozens of Shoppes in the festival grounds, along with numerous places where you can buy burnt meat on a stick. Like any other shopper, RenFest patrons are discerning, and will check out the competition before opening their coin pouch. Getting your product priced right at a location where savvy shoppers have checked out the competition, and are finally ready to buy, is the best way to maximize your sales opportunities. Setting up near food also has its advantages, because when people sit to eat, they look at what's going on, and if they're looking at your store for a quarter hour, you have a better chance of selling stuff.

Put On a Show

If the first rule of Fight Club is not talking about Fight Club, the first rule of RenFest is "nothing attracts a crowd like a crowd." Fake accents, grown men wearing Errol Flynn's hand-me-down tights, and wenches on stilts wearing jester hats while juggling swords that have been lit on fire will all make people stop and look. And if they stop and look it means you have their attention. What you do with their attention when you have it, well that's another thing.

Give Stuff Away

People like free stuff. Just check out your local craigslist listings for free stuff. Count how many broken TV sets, futons, patio chairs, truckloads of firewood, and VHS tapes people are giving away. People like free stuff. So you have to give a little bit. That's not to say you have to lose your Shoppe -- you can be smart about it. Give raffle tickets for free stuff with every purchase - any purchase. Give people a reason to come back to your Shoppe, because the more times they come back, the more likely they are to buy something. And if they're coming back to your Shoppe they're not spending their pieces of eight at your competitors.

Uniforms Are Fun!

Whoever thought that a pirate hat could be part of your corporate identity? Or bodices, for that matter? Where else can you direct customer inquiries to the lady in the leather corset and thigh boots? Okay, don't answer that. Most big corporations also have a dress code, whether it's a branded polo shirt or a baseball cap -- these let shoppers know that the individual wearing the uniform is knowledgeable, and there to provide assistance. 

The Money is in the Margins

RenFest Shoppe-owners know that they're not only space-limited, but also time limited. Most RenFests are weekend-only affairs, so selling through inventory is critical -- to maximize profits in a short space of time, as well as not breaking the bank when you give stuff away, it's important that you get the product with the biggest margins in front of your customers. Buy low, sell high is the key to successfully running any business venture, but for RenFest proprieters, moving unsold product to the next town means more stuff to pack up, and that takes time and time carries a cost. Sometimes it's just more effective to sell your wares at wholesale prices, if doing so reduces a different cost. And that's why you should go the the RenFest at the end of the last day if you're looking for a great deal on a scimitar.

Company.com Presents... The Most Memorable Administrative Assistants in Television

dIt's Administrative Professionals' Day on April 23rd, and to celebrate PAs everywhere, here's the COMPANY.com list, in no particular order, of the most memorable PAs that have graced our TV screens. 

Joan Holloway - Mad Men

"Sometimes when people get what they want they realize how limited their goals were."

Beautiful, curvy, sassy, and professional, Christina Hendricks brings a Jessica Rabbit element of danger to the queen of the secretary pool on Mad Men. Joan epitomises the kind of 60s style we remember from shows like Bewitched, but brings a sharp awareness of office politics, and the changing role of women in the workplace, to AMC's marquee period drama. Mad Men returns to AMC for its new season on July 25th 2010.

Why we like Joan: She takes no BS from anyone. Ever.

Miss Jane Hathaway - Beverly Hillbillies

"Now, Chief, in all fairness to the employees, you do not display much holiday spirit."

Miss Hathaway never did get her man, but she did get the convertible -- and in Mr. Drysdale, Miss Hathaway had one of TV's most demanding bosses. Nancy Kulp, the actress who played one of TV's most put-upon characters for eight years, served in the US Navy during World War II, and after the cancellation of the Beverly Hillbillies, tried her hand at politics and teaching acting.

Why we like Miss Hathaway: She always got the job done, despite being constantly undermined by Mr. Drysdale.

Jennifer Marlowe - WKRP in Cincinnati

"I don't get coffee, Mr. Carlson. We agreed."

Loni Anderson was catapulted to fame as the serial older-man-dating Jennifer Marlowe. WKRP's elderly general manager, Arthur Carlson, depends on Jennifer to protect him from people and situations he would rather avoid. Rather than playing into the "dumb blonde" sterotype that was almost unavoidable on television in the 1970s, Jennifer showed herself to be smart, resourceful, and sophisticated.

Why we like Jennifer: She has an extensive list of things she does not do.

Pam Beesly - The Office

"I don't think it's many little girls' dream to be a receptionist."

Dunder Mifflin's receptionist, played by Jenna Fischer is not enthusiastic about her job, and the story of her romance with co-worker, Jim, played by John Krasinski was one of the talkng points of the show's first five seasons - which might be a record for a TV show dragging out a will-they/won't-they plot line. Pam is another example of the long-suffering assistant to a semi-competent boss. There's a reason these cliches exist, though. 

Why we like Beesly: Pam blows off work to do something more fun with her best friend.

Corporal Walter "Radar" O'Reilly - M*A*S*H

"Colonel Blake's office, the colonel's in conference, but if it's important I can wake him."

Gary Burghoff played Radar in both the 1970 movie and for the first eight of M*A*S*H's eleven seasons on TV. Working first as Colonel Blake's assistant, then as Colonel Potter's, Radar always tried to do what he knew his commanding officer would want him to do -- though the rest of the cast would almost always find a way to lead him astray.

Why we like Radar: He plays his wide-eyed farm-boy role, but is really the key that makes the 4077 engine turn - that boy could get just about anything from ICOR.

Mr. Waylon Smithers - The Simpsons

"What's wrong with this country? Can't a man walk down the street without being offered a job?"

For more than 20 years, Harry Shearer has played Smithers, the simpering, down-trodden assistant to the evil Mr. Burns. Fired and re-hired numerous times, Smithers devotes himself completely to the care of Mr. Burns. 

Why we like Smithers: If you're more than 30 years old, and a guy, you probably remember Harry Shearer best as Derek Smalls the bass player in the mockumentary band, Spinal Tap. But we like Smithers because he isn't afraid to dance to Devo's Whip It while wearing chaps.

Donnatella Moss - The West Wing

"You can't just randomly tumble into a girl sideways and hope she breaks up with you soon, the way you always do. "

Donna got her job as Assistant to the Deputy Chief of Staff (or the Deputy Deputy Chief of staff as she calls herself in one episode), because she had left her boyfriend and wanted to work on the campaign trail. Not that she doesn't excel at her job, and through seven seasons, Janel Maloney develops the character from an uncertain personal assistant, into an independent, headstrong, and politically aware Chief of Staff to the First Lady.

Why we like Donna: She's not afraid to get into some verbal sparring with the guys, or stand up for what she believes -- but she'll let you challenge what she believes because she might be wrong.

It's not a comprehensive list, so if we missed your favorite administrative assistant, email me and let me know.