Resolutions for Entrepreneurs in 2009

2009 is finally here.  The socially acceptable period for drinking egg nog and wearing obnoxious themed sweaters and ties has passed.  The gruelling holiday party circuit has more or less come to a close save for some clever folks that decide to have their in January so as to “stand out” from the crowd.  Regular music has returned to the radiowaves (honestly - is the Twelve Pains of Christmas or Grandma Got Run Over by a Reindeer the least bit funny anymore?) and there’s no more Grinch cartoons for 11 months

And, of course, we have the New Year’s Resolutions.  We’re going to stop smoking, or start exercising, or eat less, or drink less booze.  Stop watching so much TV, read more.  Cut down on Diet Coke to under a 1/2 gallon a day.  Stop swearing at people who cut me off on I-285 (which means I swear my whole commute).  Those are all good resolutions.  For me, I’ll stop being mean to pay to pitch services or unregistered capital “finders”.  I’ll try to stop being a pain in the neck to David Adams, or sending anonymous “dark fiber’ deals to Secret Sig.  Well - I guess I need resolutions that are achievable.

Resolutions have their place, even if they are rarely followed through upon.  I’m going to make an offer on that at the end of the post.  But they do prompt us to take stock of our lives and think about how we might be better people one year from today.  Good businesses do the same thing (actually, they do so much more frequently than annually, but the start of a new calendar or fiscal year is always seems to create much more urgency and focus on improving ourselves.

With the help of some friends, I’ve put together a list of suggested resolutions for entrepreneurs in 2009.  Few if any of these suggestions will be particularly novel.  However, having healthy concepts brought to your attention by someone else always adds a sense of urgency.  I always knew I needed to cut out sausage biscuits from my diet, but having a bad cholesterol test come back and your doctor tell you your life expectancy on your current path indicates that you’ll be a net contributor to Social Security really strikes home.  (Did you know that on the cholesterol scale, after a certain level they just stop using numbers and put a little picture of a gravestone and a lilly?)

Like switching from sausage biscuits to fruit, following these resolutions will improve your business’s life expectancy.  And if you can stick with them for a month or so, the likelihood increases dramatically that they will become durable habits.  In a tough economy, to survive you need to do things better, more effectively and more efficiently than you are used to.  The 10 resolutions you entrepreneurs out there should continue adopting:

Assess and Accept the New Reality - In case you haven’t heard because you just awoke from a catatonic state caused by the appreciation of your eBay stock after the IPO, the economy is bad.  (Do I really need to add a link to tell you this?).  I’ve heard predictions of the economy starting to recover by mid 2009.  As far as I can tell, the main rationales for that prediction are the influx of huge amounts of borrowed dollars by an Obama Administration New Deal on steroids, and the fact that few recessions last more than 18 months (so from December 2007 to May 2009 is 18 months).  Personally, I find that optimistic.  Borrowing the kind of cash needed to execute the stimulus could do more economic damage than it repairs (with all due respect to John Maynard Keynes), and saying that our recession has to last 18 months because that’s what history says is just devoid of intellectual content.  The Fed is just about out of bullets, and I buy their forecast, as falling property values, tight credit and rising unemployment will continue to restrain growth.

Be a better networker - I’ll come out and say it - most entrepreneurs in Atlanta that I’ve encountered are just flat-out bad networkers. That fact is as responsible as any environmental factor in the Atlanta economy that makes it tough to raise early-stage capital.  Look, I’m not naturally an extroverted person.  I went into finance hoping to never have to interact with other humans.  Oops.  But if I can make the capital contacts I’ve made in the 5 years I’ve lived here, then anyone can.  David Cummings suggests having lunch with at least one new person a week to tell your story and get advice.  You are killing your company if you’re not building relationships. If you’re not got at it, get good at it.  Now.

Identify Opportunities of a Down Economy - Personally, I don’t think we start to see a statistical recovery until the start of 2010 and an on-the-ground recovery until the 2nd half of 2010.  That doesn’t mean to necessarily quit.  Even in a recession, the economy generates between $13-$13.5 trillion each year.  Somebody is selling something.  Recessions create opportunities by virtue of the associated dislocations, as economic conditions weaken or break established vendor-customer relationships.  Some industries do well in a recession.  Remember inferior goods from Macroeconomics 101?  Used car sales and Ikea furniture sells well as Lexus and Ethan Allen sales suffer in a recession.  Think bankruptcy attorneys are making money right now?  Enterprise customers are almost forced to listen to anything that will save them margin.   So you need to figure out if you can be one of the somebodies selling something, and if so, how. Entrepreneurial ventures are very well positioned to capitalize on dislocations and that may be the key to your success.

Don’t Give Up Looking for Funding if You Need it - Investors in the StartupLounge community are continuing to tell us that they are mostly still open for business.  They may be writing fewer checks, writing smaller checks, setting higher standards, and demanding tougher terms (in accordance with the market), but capital is out there.  Investors are focusing on technologies that lower enterprise costs, since that is what enterprise customers are focused on.  Selling ad or Web 2.0 community deals in Atlanta is particularly tough right now.  And by “particularly tough” I pretty much mean “almost doomed from the start”.

Do Your Own Homework - Don’t let the talking heads on TV, radio or the Internet dominate your decision-making on how to react to the economy and your market.  You are getting opinions that are distilled to fit into 30-second sound bytes.  You need to put in the time to understand the economy and your market in depth so that you can make intelligent, informed decisions.  Everyone knows the economy is bad right now.  Do you understand why?  Do you have a view on which sectors are likely to do better than others?  Do you have a view on when a recovery might happen?  Unless you’ve hired a PhD economist as your consigliari, take the time to learn what’s going on out there.  Any idiot can say “the economy sucks”.  Idiots tend to run their companies into the ground, regardless of the environment.

The media is no substitute for research

Read - Reading is critically important for business.  You can access some of the best minds in business for a measley few dollars, rather than paying thousands of dollars for consultants.  It’s always tempting to say you don’t have time to read, but intellectual curiosity is a characteristic of almost any high achiever.  Reading makes you a better leader, a more articulate communicator, a more effective manager and improves your networking acumen because it makes you a more interesting conversationalist and enables you to share more interesting information.  Cordelia Blake made this her top resolution for 2009.  You don’t even have to read about business, though you probably derive more value from Good to Great than from a book of Garfield cartoons (How many jokes about lasagna and Mondays are funny anymore?)  I am convinced that reading makes you generally smarter.  But of course, it’s not enough to read -you have to understand, as Jamie Lee Curtis points out.

Update your Business Plan - If you wrote your business plan (or paid someone to write it for you - ugh!) and you don’t review it and update it regularly, you’ve wasted your time and money.  Conditions have changed, and you need to update your business plan to reflect current circumstances.  David Cummings provided a cute little framework for business planning - SMART goals (Specific, Measurable, Achievable, Relevant, Timeline).  As you make these updates, assess your performance vs. last year’s plan.  What went right?  What didn’t go as right as you wanted?  Were the performance drivers mainly things you did, or were they the result of environmental conditions or just plain luck?

Focus resources on revenues - This was offered by StartupLounge co-conspirators Scott Burkett and Stacy Williams Shuker.  It’s tempting to go completely on the defensive when the economy turns sour.  The fact is that, unless you have a substantial cash warchest, nothing in your business matters without revenue.  Focus on collecting accounts payable, closing sales, getting more sales into the pipeline - whatever it takes.  Even Guy Kawasaki would tell you just get product out the door and update it along the way.  Scott’s blog post elegantly makes the point.  I use that metaphor all the time now.  Stacy, Scott and Guy can’t ALL be wrong!

Make Hard Decisions Quickly - Putting off hard decisions just makes the decisions harder and reduces the benefit you get from making them.  If you need to lay people off, do it quickly.  It doesn’t do them that much good to work for you an extra month, and that’s cash you need to survive and advance.  If you need to put money in marketing, don’t delay.  You’re pushing back the sales cycle.  If you need to invest in capital or make a hire, start the evaluation process today.  Do your analysis but don’t procrastinate.  In a crisis scenario, speed is life, as combat pilots say.

Survival is the Goal Right Now - Your realistic goal may be just to surive the recession, and that becomes your business plan.  My boss David Adams said a couple of weeks ago that it’s not about what your company is worth today, but if your company will be worth more than $0 a year from now.  Here is a great list of survival keys.

Will this be your company or your competitor?

These 10 resolutions have one thing in common - if you adopt them, they give you more control over your company and its destiny.  Recessions generally don’t kill companies - but they do reduce the margin for error in terms of competent management or lack thereof.

Here’s my offer to those wanting help to follow through on your resolutions. Send me your business resolutions that you will make for 2009 by January 31, 2009.  I will post them onto a new page on this blog by entrepreneur a company.  At the end of the year, you need to tell me how you did, offer proof that you kept the resolutions and tell me what the impact is.  For the winner, I’ll do a profile of your company and its resolutions in a dedicated blog piece, will send you some StartupLounge gear, and we’ll give you some love on the podcast - maybe even invite you on to talk about your resolutions!  My decision on the winner is qualitative and will be final.

Most of the resolutions listed above are things you probably knew you should be doing, but sometimes it take an ominous symbol to get you to trade in your sausage biscuits for fruit salads.  We all can look like management gurus when the economy is swell.  We find out who knows what they are doing when times are tough.  And you if your company survivies it will be more profitable and valuable on the other side of the recession.