Family businesses often happen by accident. The entrepreneur drives the start-up while the spouse and family chip in. Underpaid and overworked, these people are often willing to  sacrifice to make the dream come true.

Serendipity may bring success to a family business; however, the heads-up business owner builds practical solutions for potential family friction into the business plan.

• Identify the members of the family with potential to perform successfully within a structure. “Family” can mean a married couple, parents and children, or siblings and their spouses. In short, there are family members, and, then, there are family business members. Share that picture with the family.
• Separate family issues from business issues. Share an understanding at the very start about what you bring to the worksite and what stays at home. It may take some practice, but everyone needs to know where to discuss family baggage. Everyone needs to know what the process is to solve issues.
• Budget vacation, holiday, and personal time with the family. Keep business out of those moments. However, remember that children are competitive; the best families suffer some dysfunction. So, clarify an understanding for the handling of dependency issues, hostile behavior, and divisiveness.
• Pay fair competitive wages. If early revenues do not permit this, clarify the value of their sweat equity. Create a compensation plan that will reward their effort later – proportionate to their contribution and talent. Seek advice on framing the plan and communicate it clearly.
• Hold regular “tailgate” meetings, family retreats, or key member meetings. Let members vent simmering complaints– within reason. Approach these as learning opportunities. Collaborate and incorporate fairly offered ideas.
• Plan for succession when it makes sense and you are ready. Build cautions into the plan to discourage challenge to the plan. Communicate it well. A well-structured plan should reduce infighting.

Finally, enlist a third party coach – not a crony or other family member. Retain the advice of a specialist in family business matters to get things right from the start and to bounce things off as you succeed at your goals.

Finding – then obtaining – small business funding to start or grow a business can be confusing. Interest rates continue to be amazingly low, and summer reports showed a surge in small business borrowing, (up 25% in May and 28% in June, according to Federal Reserve Board Governor Elizabeth A. Baker).

So, why can’t you get your hands on it?  Read on for three tips to help you get your fair share of small business funding.

Find a lender  The US Small Business Administration has an invaluable website. Just click on your regional SBA office and enter your zip code for a list of lenders authorized to make loans for small business funding. The page provides banks, addresses, phones, and maps. It also provides extensive information on resources in your state and locale including workshops on loans and application.

Think small  The SBA Micro-loan Program makes loans available for as much as $50,000, the average loan is more like $10 to 15,000. The loan can be used for most business purposes – except the payment of debt or the purchase of real estate. Interest rates are determined by the lender but must reflect current Fed rates. The lender has the right to demand collateral and continuing training for the borrowing owner.

Have the courage to borrow  The Fed’s rates are close to 0%. The White House continues to press SBA approved lenders to account for their small business lending. Moreover, the banks decline fewer than 12% of the applicants and fewer than 5% of small business borrowers default on their loans.

The overwhelming majority of small businesses start with personal investments – in addition to those of family and friends. What appears to discourage small business borrowing from approved lenders is the process itself. Applying for and obtaining small business funding is detailed and slow. Among reports  oft required are detailed balance sheets, expense statements, business plans, and proof of a loan declined.

There are consultants lined up to show you how to make application for SBA loans, but you can do it yourself. Study the SBA website, attend a workshop, and talk to your banker and CPA. Among other things, this is good discipline:  planning, detail, and patience are virtues you need to succeed, whether or not small business funding is something you need.

Heuristics influences marketing, management, software development, and decision-making. It contributes to algorithms and that pesky way that Amazon always “knows” what you want. This knack for cutting corners mentally to solve problems quickly and efficiently – heuristics – is one of many things that sets successful entrepreneurs apart.

Sometimes, small business owners get stuck. Worried about risk, debt, and growth, we can sometimes overthink things.

I admit that the best decisions are those made with the best information.  The better your input the less likely you are to decide poorly. Good information reduces bias and develops structure for good decision-making.

Enter heuristics. Very simply, there is value in an approach that is more rule-of-thumb than the management school process of testing a hypothesis with evidence and results. There is a real place for decision-making on a trial and error basis. Mistakes may happen, but it encourages learning, solution evaluation, and deeper understanding.

Setting this fancy talk aside, you want to respect and develop a talent for cool thinking. For example, when you are up against a seemingly large and complex problem, with no clear solution, you need a system to help you think.

1. Block out unessential information.  Someone said, “when the going gets tough, the tough relax.” Remember that “C-file” we all learned about in time management classes? I suggest that you don’t even keep such a file; just burn it. Run away; take your laptop to some place quiet. Turn off any internet access. And, work on the problem without distractions for a pre-determined period, say, 30 minutes.
2. Understand the Pareto Principle. 80% of the importance of a task comes from 20% of the work put into it. So, if you focus your energy on the critical 20%, you won’t overthink the non-critical 80%. Think of the pilot being forced to land on a river or a highway; there isn’t much training to fall back on, and there’s no time to weigh Plan A against Plan B.
3. Separate important tasks from the urgent ones.  It might be important to work out, read a good book, or have a nice lunch. But, these won’t make or break your business. Instead, determine what your personal peak productivity time is: early morning, mid-day, or even the middle of the night. Create walls around your peak productivity where you can work without bother or distraction.
4. Set up a debriefing process.  Knowing you are going to be making a difficult decision or a daring move, schedule a process where you can review and evaluate your decision, adjusting follow-through or implementing remedies.
5. Take aim and fire.  Think simple, and you will do a good enough job of solving enough problems. Move past indecision and take action. Visualize the result. Imagine yourself crossing the finish line. Clarify the problem in one sentence, and take a shot at fixing it. Jot things down, draw a picture, and make course corrections. Be ready to figure out things as you go along.

Imagine you need to move a product cross country despite a transit strike, inclement weather, and a three-day holiday. Think in a straight line until you hit a barrier. Move right until you can see a way forward. Go forward until you hit the next barrier, and continue as before. Eventually, you will see yourself at the end of your plan.

The right Small Business Coach can challenge you to set and achieve bigger goals in 2012, while helping you navigate the obstacles.  Know what you are looking for in order to choose the best candidate.  Read on for some practical advice for choosing the right candidate:

Let’s start with what you don’t need in a Small Business Coach:

• Nice is not a virtue. You want someone to hold you to high expectations. If you think you are a good manager, then, you probably have a skill in holding employees to performance accountability. You will best benefit from the advice of someone who practices the same demands. Expect to be pressed to the edge of your comfort zone.
• Expertise is not a priority. You need someone who is a good coach. What you need is cross-disciplinary skills: communication, planning, training, etc. These are valuable transferable skills that help you see the short and long-term.
• Avoid a therapist. Don’t pay someone just to listen to you and all your problems. Look for someone who will turn your path around. You need someone focused on action, plans, and deliverables. You don’t have the time for the coach to worry about your feelings.

So, what do you need?

• Someone you can afford. Bargain basement coaching is not worth the money. It will cost you time and money, and some outcomes may require additional investment. So, you need to be at a point where all this makes sense: the need, the expectations, and the price. Shop available coaches; seek word of mouth; look for referrals. It’s a big decision, and deserves focused investigation.
• Someone you can listen to. Coaching is partly a matter of style. If – and only if – you are ready to take a close look at what you are doing, you need to find someone with the rapport you need to take a few hits. You are paying to be told things you may not want to hear, to get tough about what you have been doing, and to push your face into some bad decisions you may have made. For this to work, you need someone you can work with.
• Someone with a plan. Demand a schedule and agenda in writing in advance. Expect the coach candidate to demonstrate goal-setting and effective planning. Ask to see models and samples of what the coach has done for other clients, and make him/her connect the dots between plan and results. Ask the candidate to introduce you to previous clients with your intent to seek their story of the relationship. And, be sure you talk to more than just one.
• Someone who knows what you don’t know. Remember, you are looking for someone to bring something new to you. Much of this should be in the form of plans and direction. But, you also want insights, product knowledge, marketing strengths, and fresh perceptions about your business. I am reluctant, for example, to recommend a coach who claims to be “all things to all people.” You’d be better off with someone experienced in your line or business or business sector.

A final caution is that you do want to see the track record or credentials of a coach who does this for a living. I am reluctant to recommend the coach who is an out of work MBA. Interview candidates with their experience in mind.

The increasing importance of credit union financing in small business operations and lending has recently been the topic of an SBA Advocacy report. As of this posting, a million customers have moved their checking and savings plans from banks to credit unions. Coincident to the Occupy Wall Street activity and ostensibly prompted by Bank of America’s ill-advised debit card fee, credit unions are swamped by applicants while major banks don’t even seem to notice. What does this “revolution” mean to small businesses?

As recession-bound banks hold back on loans to small businesses, credit unions are taking the initiative. And, with their sudden growth in deposits, they appear ready to move aggressively when Congress raises their cap on loans.

The Small Business Administration watched bank lending to small business decline by 6% in 2010. It also reports credit union financing increased by a comparable percentage. Still, commercial banks lend 200% more than credit unions, so we will have to see if this trend continues. Nonetheless, it’s worth looking at your local credit unions to see what they can do for your small business.

For starters, credit unions account for only 5% of the total lending pool. However, the Small Business Lending Enhancement Act, introduced to Congress in March, could raise the current lending cap to 25% of their assets. This more than doubles their lending potential. With their lending cap raised and their influx of deposits, credit unions will expand, multiply, and hire.

 It is also likely that, as economic confidence returns, lending underwriting guidelines will loosen allowing businesses to borrow more with less secure experience and collateral. Among other things, credit unions are exempt from federal corporate income taxation. They do not belong to the FDIC; instead, they have a separate deposit insurance system and fund – with lower premiums. Such features help them to provide lower-priced products and services. They are non-profits, and this may reduce performance incentives for management.

 Small businesses have been underserved by banks in recent years – despite a $30 billion commitment by Washington. In addition, only 30% of the nation’s credit union lend to small businesses. But, credit unions are seeing gold in the weaknesses in today’s bank market and are upping their staff training to underwrite and market small business loans.

Give it some thought: look at what your local credit unions can do for you, check their credibility with CUNA, move your money if and when it is in your own interest. Remember, that most credit unions – unlike banks – are local and “behave” like small businesses in your community. You may find you have a lot in common.

Is your website an empty grave? Is there any life to it? This is not just a question of content and design; you need to find out if top search engines can find your site.

If search engines cannot locate you, your site is dead in the water. It needs a tombstone to locate it.

It helps to understand that Bing, Google, Yahoo, and other search engines cannot find pictures or animation effects. Search engines do not look for “pretty.” You can build the most visually striking website, but no one can find it if it does not have what search engines need.

I hate to oversimplify, but in general, your website should have tabs, headlines, and content. To see if they are search optimization live, place your cursor on anything that you want to check for life. If the cursor turns into a small hand, the spot is alive and can be found by search optimization engines.

Build your Website with these tips in mind.

• Tell your website designer that “pretty” is nice but not priority. It is more important that a header provide a live link back to your homepage. In addition, the site’s pictures, logo, and company name should link to the site’s blog and Contact Us page.
• Enter a live email address and Skype phone number on the Contact Us page. And, put a footer, including your email, website, and phone number, on every page of the site.
• Never put a design artist in charge of your copy. You want print, size, font, color, and background that can be read easily. Comprehension trumps appreciation.
• Outsource content writing to a professional who understands search engine optimization (SEO). This includes keywords, key phrases, and relevant hyperlinks. Make sure your descriptions, tags, and metatags include these keywords and key phrases.

Now, if you build your own site, revisit it frequently to refresh these keys. Then, ask someone else to explore the site with these tips in mind and build on their advice. If someone else builds your site, stand over their shoulder and pester them towards perfection.

Absent this approach, your website has no life, that is, search engines cannot find it. Save your money and prop a tombstone against it.

Ever tried to define the value that you offer your customers?  A price is the dollar sign on a product, the tag on the item for sale, but that is not the same as value.  I’ve been mulling this over lately, and wanted to share some of my thoughts.  While this post is somewhat of a textbook discussion, it lays important groundwork for additional posts. 

Pricing of products and services has traditionally been cost-based, determined by adding a desired profit to a cost determined by cost analysis. That is, the seller/vendor figures out what the product cost is in terms of parts, materials, labor, sales/marketing, packaging, shipping, etc. Then, s/he added the desired profit margin, say 25-35%. Or, the lawyer/doctor/consultant charges hourly fees in an attempt to place an arbitrary price on a service that portends to cover operating costs plus the alleged value on professionalism.

The cost methods are not value based because they don’t clearly and unambiguously determine what value means to the customer.

In traditional costing, the attitude has been: “here’s the price; take it or leave it.” Small businesses hanging onto this tradition may not be serving their customers well – and are leaving money on the table. The tradition does not understand that a customer’s opinion of a product’s value determines the value to him or her. This value differs from the market price which has typically determined by competition and accessibility.  

I find that customers buy from the source that offers the highest perceived value; i.e., “the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives.  Customer perceived value is the exchange a customer would be willing to make before dropping down to the next offer.”

Small business customers do not place the same value on three martini lunches, big promotional items, or glossy marketing efforts. Frankly, they do not care what you paid for the item or how the economic crunch is hurting you.

Customers are more interested in the following:

• Overall, do you convey an image that respects your own self-image?
• Do you communicate frequently and with a caring attitude?
• Are your services offered on a timely and dependable basis?
• Are you available and responsive?
• Can your customer expect fairness and accountability from you?
• Is your work efficient and effective?
• Do customers feel they have learned something about the services/product and about what you have brought to the party?
• Do customers feel they have done the right thing – and that you have done right by them?

Notice that these are criteria separate and distinct from market values. For example, I knew a newly hired marketing manager at a manufacturer who promised to secure customer loyalty by delivering product as soon as possible. Trouble is most of the customers did not want the product until a specific later date because they did not have storage room. So, in this case, prompt delivery was not a value to the customer.

Small businesses can do better if they realize that loyalty is a strategy and not a tactic. Loyalty is not to be presumed. Target loyalty as a goal worth securing and developing – rather than as something you can bank on.

How you move from cost pricing to value-based pricing may be difficult. You may be turning around a big ship. And, the move may be more treacherous in some lines of work than others. I believe there is profit in making the move sooner than later, but here is the big question:  How do we clearly and succinctly identify what it is that our clients value? Stay tuned…

Optimism about the economy is on the upswing, according to recent surveys.  Big indexes are reading well – with high holiday sales, record cyber sales, and reduced unemployment. But, really – just how do small business owners feel?

A recent survey of small business owners’ problems and priorities conducted by the National Federation of Independent Businesses (NFIB) reports some good news. Attitudes about the future have improved, and priority concerns have changed.

There is a certain conservative element to small business futures. And, I think if you allow for that, there is a measurable sense of optimism about the coming months. For example, 14% of small businesses report having job openings and 3% expect to increase hiring. In addition, 21% plan on making capital outlays, and 7% feel it is a good climate in which to expand. The numbers may seem low, but they are increases over the past month.

There are continuing negative concerns about credit conditions, earnings trends, and overall economic improvement. However, these indexes reflect improvements over previous months.

The survey shows that financing and credit sources remain the #1 business problem. In October, reporting showed only 9 % felt all their credit needs were satisfied, and 11% found loans were harder to get. Of those surveyed, 26% report poor sales as their top concern. The optimism here is in the fact that, in most of these metrics, there has been cautious improvement.

I thought it might be interesting to look at the problems that rank among the lowest in the 75 measures of concern in the survey:

66. Competition from imported products is less a problem than it had been. This sense of balance is supported by recent reports on US trade balance.

67. Credit Rating does not seem to be a problem, suggesting that the owners have a confidence about their stability.

69. Competition from Internet Businesses is not the concern it was, admitting that, while there is competition, owners are more confident about their ability to manage it.

70. Undocumented Workers do not present the problem they did because employers are getting better at meeting their recruiting and documentation obligations.

71. Winning Contracts from Federal/State/Local Governments is a low concern, either because the businesses choose not to compete in such markets or because they have gotten better at the process.

72. Obtaining Short-Term (Less than 12 Months or Revolving) Business Loans is very low in the priority index because such loans are easily secured.

73. Obtaining Long-Term (5 Years or More) Business Loans is surprisingly low in the index and may indicate that owners have likely despaired of such financing sources.

Small businesses will feel economic recovery first. I am banking on the fact that their optimism is likely to be cautious and reserved. If I’m right, their measured optimism will underestimate the force of the recovery.

Are dependable employees myth or legend?  Small business owners tell me that they are desperate for dependable employees. And while I’m sure they are hurting for reliable and accountable workers, I sometimes find that part of the problem is confusion in the employer’s expectations, and the other part arises from their failure to structure their hiring interview to these needs. 

Employers look for personal chemistry and, in so doing, miss clues to specific behaviors. They would be smarter to structure the interview around specific desired behaviors. For example, dependability should not be a generalized characteristic. It should be a virtue defined by specific behaviors.  

Dependability is a measure of things that the boss wants to depend on. Employers need employee support in their business process. They need people to show up and be on time. They need workers who respond to customers’ questions and complaints on a timely basis. They look for new hires that are willing to work on teams and go the extra mile. These are all measurable behaviors for which you can structure interview questions.

 Make your list of dependability behaviors:

• Completes assignments as scheduled
• Arrives at meetings or events on time.
• Completes reports to teammates and superiors on time.
• Follows business’s rules and regulations.
• Solves customer problems on time.
• Willingly takes on work when peers are overloaded.

If dependability is delivering on promises, an interviewing employer may want to ask:

• People miss work from time to time. What would you say are good reasons to miss work?
• What would you say is satisfactory attendance at work – 75%, 90% or 100%? How many days work did you miss last year?
• Tell me about a time when you accepted responsibility for a problem at work.
• Describe the reaction of your coworkers when someone is late for work.
• Give me an example of how you prioritize things.
• We expect employees to keep in touch with customers. How frequently would you make contact to keep customers satisfied?
• Only 4 employees showed up when 6 were on the schedule. How would you handle this?
• Suppose you woke up and heard the weather and traffic are bad. How would you react?
• Many things happen in our personal lives. Just what would affect your dependability at work?
• What happens if your car doesn’t start?
• How do you handle a customer problem if the call comes as you are leaving for lunch?

These are all questions you can ask in a qualifying phone interview. If you want to save them for a face-to-face interview, stick to your plan. These questions won’t take more than five of the minutes you allocated for the meeting. Structure the questions, make your list, and take notes. If nothing else, the job candidate will walk away with a sense of how important dependability is to you.

The Khan Academy is a non-profit organization with a mission to bring free world-class education to anyone anywhere in the world.  So, what does it mean to the small business owner?  Think “Finance.”

We can all use the occasional “brushing up” on our financial knowledge and skills.  In fact, most entrepreneurs didn’t get into their position by majoring in finance or related fields. I think the Khan Academy affords a great opportunity to learn about financial skills for the non-finance type.

For example, look at the inventory of 24,000 videos currently posted:  Core Finance, Banking and Money, Valuation and Investing, and Venture Capital and Capital Markets.  Yours for the asking, and all for free.

Do not expect glossy videos with high production values. (When he started, Khan used to record the videos in a closet at home.) However, they are illustrated on a blackboard like screen with color accents in simple language and visuals that seem to stick with you. Some of the courses fall in sequence, but one of the values is that the study is self-paced.

The videos are exercise-based, but the value is here is in the trial-and-error learning. You learn fast – or you don’t – and, then, you move on. The retention comes from this process; it deepens you understanding, even if you stumble on solutions.

Parents should check out the website for free videos of 15 – 20 minutes in length that tutor your child on all levels of math, most levels of science, and even a few in Art History, Civics, and History. As founder, Sal Kahn, says, “It doesn’t matter if you are a student, teacher, home-schooler, principal, adult returning to the classroom after 20 years, or a friendly alien just trying to get a leg up in earthly biology, The Khan Academy’s materials and resources are available to you completely free of charge.”

The inventory of courses includes a huge number of math lessons, statistics, and SAT Preparation lessors. It includes tests you can self-administer, and it offers courses in lessors on Humanities you might just have a curiosity about. But, keep an eye on the growth in courses related to small business and small business management.