No B.S. Business Success In The New Economy

Ultimately, the single most significant fact is that the entrepreneur must be smarter, more strategic, more creative, more customer-centric, and more disciplined and determined than ever before. Given the presumed and probable tax burdens required by the unprecedented, gigantic deficits, it is going to require three, four, maybe five times as much income to create net wealth as was required in the past decade or two. The legacy of the recession and the government spending it spawned is a debt to be discharged through inflation, a type of tax imposed on all, and a plethora of increased and new taxes to be imposed on business, on high income earners, and on wealth creation. This is what it is, and neither rage or depression will alter its reality. If you intend to use entrepreneurship as a pathway to personal and financial independence, you have to recognize that path is much steeper than before. This means you must be much smarter about the allocation of every resource you own, borrow, rent, or otherwise assemble. Of every resource. If you would go back and read this book a second time through this single prism, you will see that most of my recommendations are directed at optimum results from resources.

There will always be rich, and most, as always, will get rich from scratch, through their ingenuity, initiative, and enterprise. There probably won’t be fewer either. All efforts to flatten the economic pyramid have failed and will fail for good and rational reasons. The numbers are and will forever be 1% very rich, 4% rich, 15% doing very well, 80% dependent on today’s wages to pay yesterday’s bills, or on government subsidy or outright welfare and care. Further, in every separate population—everybody in your category of business, industry, or profession; everybody in your age range; everybody in your town—sorts itself the same way: 20%/80%. The fact of the top 20% is a permanent fact of life. Those in that 20% and what is required to be there with them has changed, is changing, and will change. But the 20% is unchanging reality.

Choosing to be an entrepreneur is, to my way of thinking, a courageous and noble choice. Without us, nothing else could occur. We provide the overwhelming majority of jobs, new jobs and new types of jobs. We create the products and deliver the services that make family and home life better and safer, people healthier, life more interesting and rewarding. Those of us who become rich, quick or slow, through our entrepreneurial efforts make an even greater subsequent contribution to society, by providing the investment capital required to, as example, turn medical research into breakthrough drugs, technology, and treatments brought to market; turn blighted neighborhoods into renovated, rebirthed, vibrant communities made livable. We also provide enormously important support for educational institutions, hospitals and medical centers, cultural institutions and charities. Finally, of course, we carry a disproportionate share of the tax burden paying for everyone’s government services—as I was writing this, roughly 40% to 45% of the entire federal income tax load was being lugged by only the top 5% of the income earners. It’s a very, very good thing we’re around!

I have spent my entire life as an entrepreneur and as a teacher, coach, consultant, advisor to entrepreneurs, and I consider myself a champion advocate for entrepreneurs. I understand you and appreciate you, and it’s in that spirit that I’ve invited you numerous times in this book, and again one final time now, to join me in a continuing dialogue and relationship, by accepting the free gift offered on pages 272–273. In The New Economy, we in the entrepreneurial community will be more important than ever. We have much work to do and many bills to pay. There is and will be greater, grander, more expansive opportunities than ever before, as well as tougher challenges to our autonomy and prosperity than ever before. It’s no time to go it alone.

Businesses Launched During Recession and Emerging New Economies

TRADER JOE’S started as a chain of small convenience stores under another name during the slow financial period of the late 1950s. In 1967, the company changed its name to Trader Joe’s and began carrying its own privately branded foods and beverages. It now boasts hundreds of stores.

GENERAL ELECTRIC was established by Thomas Edison in 1876, in the middle of the six-year recession following the financial panic of 1873.

SPORTS ILLUSTRATED was founded in 1954, at the tail end of a recession.

WALT DISNEY started the company we know as Disney today just as the Great Depression was beginning.

HEWLETT-PACKARD was born in a garage at the end of the Great Depression.

IHOP opened its doors in 1958, and began national franchising just three years later. BURGER KING started with a single restaurant in 1954, and during the recession in 1957, introduced its signature burger, The Whopper.

MICROSOFT was birthed in 1975, in the mid-70s recession attributed to the Carter administration, by Harvard drop-out Bill Gates.

CNN began as a cable station—not a network—in recession-plagued 1980. MTV began a year later, while the economy was still in a serious slump.

W. CLEMENT STONE, author of The Success System That Never Fails, started a door-to-door, office-to-office insurance sales organization in the depths of the Great Depression, built it into Combined Insurance Companies of America—for a time the largest company of its kind, and sold it for a fortune, creating billionaire personal wealth.

AMAZON.COM, originally named something different, that no one could spell correctly, was launched in a recession.

The Only Time You Have Is “Now Time”

RECESSION BOOSTS SOME. Family-owned Skinner Baking Co. in Omaha saw sales rise 18% from ‘07 to ‘08. In December, a big 25% jump. Its ovens are running 6 days a week vs. 5 before and they are hiring (!) to keep up with demand. They supply coffeecakes, cinnamon buns, etc. to supermarkets. They’ve been in biz since 1911, so their V.P. thinks he understands why they’re up: “This is comfort food.” The owner of Bathroom Magic in Fairfax, Va. reports ‘08 revenues up 75% vs. ‘07, and ‘08 being the best year he’s ever had. Why? People who, in boom times, would bring in contractors to completely re-model their bathrooms, in these times, choose a service they would otherwise sneer at: the one day bath make-over, with refinishing glaze and fit-over components ... to re-finish a tub like new, just $425. The economy lets him get mass-affluent and even affluent customers—“When the economy goes down, my business skyrockets,” he says. Interstate Batteries opened 43 new stores in ‘08—hiring to staff them, on top of the existent 125, and expanded the variety of batteries carried, although they’re known for car batteries. “October and December were the best months in the company’s history,” reports the president of this 56-year old company. Why? “With the recession, whether it’s cars or laptops, people are keeping what they own and trying to extend the life of their products.” (Source: larger article, with more examples in USA TODAY 2/2/09). OK, go ahead and get it out: your business is different. Your business isn’t designed to get a boost from the recession. Duh! You can fix that. Any restaurant can create comfort food menus, comfort food nights. And since more people are staying home to eat, expand pre-prepared meal offerings—didja notice Pizza Hut’s pushing lasagna? Any remodeler, contractor, furniture seller could reach up to more affluent customers than he normally attracts with value packages and/or develop new, reduced price offers for present market. Any retailer can alter or expand his product line to support a message right for these times. The question is not: how can I excuse myself from business modification so I keep my excuses for suffering? ... not: how can I survive the recession? The question is: how can I be nimble, agile, creative, modify my business, alter my marketing to get a boost from recession?

Reprinted from NO B.S. MARKETING LETTER, March 2009

Buying When Everyone Is Selling

In tough economic times, the world is rampant with distress merchandise and cash is king. One such distress acquisition by John Paul Getty was the Hotel Pierre in New York City. The Hotel Pierre had a prestigious location with a full view of Central Park. However, in 1938 the prolonged Depression had taken a severe toll on the revenues of the Pierre. The hotel was in serious financial difficulties, so although Getty had no understanding of or interest in the hotel industry, he knew a bargain when he saw one. Discovering that he could buy the virtually new hotel for one-fourth its original cost, he realized that there was a huge upside potential with very little downside risk. He immediately paid $2.35-million cash and began using it as his East Coast home. Fifteen years later, when friend Frank Ryan called him with an offer of $17.5-million—over 7 times his cost—he took the offer on the spot and walked away with a $15-million cash profit. Many such cash deals were made over the years. The more deals he made, the more deals were offered. Garth Young of Signal Oil described his chief competitor Getty as a man who “could see further than any other guy I knew”.

Whatever It Takes

Jeff Bezos’ mantra was: “Work hard, have fun, and make history. Wake up petrified and afraid every morning. I know we can lose it all. It’s not a fear. It’s a fact.” During the early years, he wore every hat in the organization and seldom left the office. Dana Brown, head of ordering, often worked through the night ordering books. When the orders were finally transmitted at 4:30 in the morning, no one else was there except Jeff. She admitted to working 15 to 18 hours a day and told the media, “Jeff was always there. I never saw him go home.”

Another observer said of Jeff: “He is the most single-mindedly focused person I’ve ever met. It’s all he cares about. He lives, eats, breathes Amazon.com.”

A worker at Amazon said: “You can work long, hard, and well. At Amazon, two out of three won’t work.”

From Entrepreneurial Genius by Dr. Gene Landrum, www.GeneLandrum.com.

Gene created the popular restaurant chain Chuck E. Cheese, has assisted with numerous high-tech startups, and is a specialist in the psyche of the super-entrepreneur. He is the author of nine books probing the entrepreneurial mindset. He has appeared as a speaker at Glazer-Kennedy Insider’s Circle^™ events and on our audio learning programs.