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The Street-Smart Entrepreneur: 133 Tough Lessons I Learned the Hard Way
By Jay Goltz
The Street-Smart Entrepreneur: 133 Tough Lessons I Learned the Hard Way by Jay Goltz should be read by all serious entrepreneurs. The book is divided into 133 short sections, each giving a lesson Goltz learned in building a large, picture-framing company in Chicago.
Entrepreneurs owning manufacturing companies will benefit the most from reading this book. But, nearly all entrepreneurs will find much of value.
Some of my favorite lessons:
* Don't demotivate your employees and hire carefully. Goltz suggests a "BATH" criteria for hiring employees. Do employees Buy into your company's concept and way of doing business? Are they Able? Are they Team players, who are also ready to take individual responsibility? Are they Hungry? (Not for lunch, but to excel and succeed.)
* Distinguish between "work fors" and "work withs." Goltz tells us that not all employees want the same level of responsibility. Some just want to be told what to do. Others want to contribute more and are willing to work with you in building your business. The optimal extent of oversight and guidance depends upon the type of person the employee is.
* Don't stop delegating just because screw-ups happen. Especially, distinguish between poor performance and accidents. Let good employees who make mistakes know you don't hold it against them and that accidents are just part of the cost of running a business. Poor performance, however, can't be tolerated. Goltz says mediocre employees belong with the competition.
Goltz writes: "There's nothing to be gained by screaming at employees who make an occasional mistake or standing by while they eat themselves up with guilt or embarrassment. ...I don't want my employees ...worrying that I'm angry at them."
Goltz emphasizes you shouldn't just sit back and expect employees to come to you. Go to them and find out what's up.
* Have a good computer-accounting system and effective ways of doing things.
Goltz writes: "...Have good systems in place that give you the numbers you need. You know how much inventory you have, how much you sell each month, what your receivables are, and what your expenses are."
* Understand out-of-control growth can kill a company. Goltz emphasizes controlled growth that can be funded is better than explosive growth that leads to bankruptcy, because the company can't pay its bills.
Goltz notes: "There's a mathematical formula to determine how much you can grow and remain self-funded. To do that calculation, you first have to figure out how much money you need to invest in your business to generate a sales dollar. As your business grows, you will need more money to finance your inventory, receivables...."
The Street-Smart Entrepreneur, however, is easy-to-read, with no mathematics. Goltz suggests having your accountant help with such a calculation, if you desire one.
* Listen to what your customers say they want and need. Don't just assume you know what your customers want. Especially, focus upon figuring out who your best customers are and finding more like them.
* Learn to say "No" to unprofitable customer orders and don't be afraid of losing a bit of business due to your prices. Goltz says you can't provide the best of all three of price, customer service, and quality. Rather, aim to be the best at two of the three.
* Read business publications and adapt other people's good ideas to your business. Goltz emphasizes talking to other business owners, customers, and anyone who can provide insight into your business endeavor.
* Don't worry about coming up with a brilliant, unique idea. Goltz writes: "If you want to be successful in business, execute well."
* Do keep an eye out for industry trends. Goltz said he noticed that his customers' cars were getting smaller, but their picture frames were getting bigger, so he offered delivery service.
* Take care of your health. Goltz says we need to balance family and personal demands with business demands.
* Develop a thick skin. Goltz writes: "If you're in a position of authority, no matter how nice and fair you are, some people will dislike you. ...There are many times when, for the good of your business, you will have to say or do things that upset people. It's naïve to think if you fire someone who has been doing a bad job, he/she will say, 'Oh, listen, I totally understand. If I were in your shoes, I'd do the same thing.'" Kick butt, when necessary.
* Deliver value to your customer. Goltz says: "To me, customer service is an issue of ethics. The reason why your business should give customers great service isn't because you will lose business otherwise, but because you have promised to deliver a product or service in exchange for their money." Further, many entrepreneurs just feel better when they offer great products and services.
* The competition isn't the enemy. Don't spend your time watching them. Goltz says mediocrity is the enemy. Spend time improving your products and your customer service. Mediocrity doesn't just happen, it sneaks up on a company.
While many of Goltz's lessons are valuable for all entrepreneurs, some are a bit more specialized and are of most value to companies producing physical, industrial products or services. For example, Goltz tells us to be sure your employees are properly classified for worker's compensation. The wrong classification could cost money. This applies more to industrial workers and people whose jobs might pose physical danger or an appearance of danger than, for example, an accountant.
Goltz also tells us his utility rates are partly determined by his maximum electricity usage during the day. So, rather than turning all lights and machinery on at once in the morning, he staggers turning stuff on over the first two hours. This is more useful for a manufacturer than for a small, computer programming company.