Washington Post graph of Federal Deficit as a percentage of GDP

We are surrounded by budget crises these days. There’s the City of Chicago, the Chicago Transit Authority, the State of Illinois, and of course, the Federal Government. Hearing about these financial crises can be discouraging to business owners. Is this the new “normal,” where it’s ok for expenditures exceed revenues?

If it were “normal” for businesses to consistently spend more than they made, they wouldn’t be in business for very long. With that in mind, is there any advice you can offer our elected officials on how they can balance their budgets? Let us know what tactics you would take if you were in charge of balancing a governmental budget.

Dex is a well known publisher of yellow page directories, a business that has been getting hammered in the last few years as a larger and larger percentage of small business ad budgets have switched from yellow pages to online. How does Dex respond?

First, they repositioned themselves. Their new ads don’t present them as directory publishers, they are “marketing consultants” helping small business people to sort through the wide variety of options that they face in trying to reach their prospects. No one wants to talk to a yellow page salesperson, but everyone wants help with their marketing!

Second, instead of fighting against the Internet as a marketing channel they have adopted it as a product that they are selling. Now I’m not making any comment on the how good their product is, but their ads position them as experts that can help the small business owner “get found on the web” something that most small businesses need a lot of help with.

The thing that makes the ads most compelling to me are how they put the prospect, the small business owner, at the center of the ad. Dex really listened to what the small business owner is thinking and feeling and by expressing that in their ads, they gain instant relevance with their target demographic.

Is there some part of your offering that is becoming a commodity? How can you do a better job listening to your customer, speak in their language and attract more prospects?

On the one hand the Chicago fireworks on July 3rd is a unique tradition.  Where else do they have a big fireworks display on the 3rd?  It allows everyone to stay out late to watch the fireworks and still get to work on the 5th.  It’s unique and part of what it means to celebrate in Chicago. It also meant that a lot of suburban folks could make it down and celebrate in the City on the 3rd and still be in their community on the 4th.  In our city neighborhood we traditionally have our block party on the 4th, but many of us would go downtown for the big display the night before.

Further, there is something powerful about community celebrations that bring us all together.  The lawn of Grant Park was nothing if not a spectacular melting pot of all that is Chicago, city and suburbs.

I’m sure the security is an issue for events like this.  The last several years have seen some violence and even shootings during or immediately after the fireworks.  Further, the huge crowds and press to get on the trains and busses must seem like an easy target for a terror attack.

How then could what is good about the event (the unique July 3rd date, the melting pot, a way to celebrate together) be preserved and still meet some of the city’s goals for cutting costs and reducing security risks?

Spreading out the celebration is the easiest way to reduce the security risk, but we lose the essence of all of us celebrating together.  While I don’t want to be arrogant and say, “We have to have this celebration, we need to just find a way to make it secure.” I’m also aware of the irony in canceling a celebration of our country’s founding out of fear of terrorist attacks.

When I mentioned this in my recent newsletter I received several comments about getting sponsors to reduce the cost.  People questioned the lost revenue for the downtown businesses and the effect that has on the overall budget equation.

Will Chicago’s decision be a case study for how slashing your budget can solve an immediate problem while creating a long-term problem at the same time? Or, will it be be heralded as one of the greatest cost-cutting moves/compromises of all time? What do you think?

Switch is a follow up to Chip and Dan’s excellent first book “Made to Stick” about how to communicate in a way that people will remember what you said.  In Switch they look beyond communication to actually getting people to make change.  As a business growth advisor my business is entirely dependent on getting people to do things they may not want to do, I do this every day.  But the Heath brothers not only taught me some new things about making change, they also gave me a simple framework that helps me think more clearly about why change might be difficult for a client, for a friend or even for my kids.  The book is broken down into three sections, each describing one necessary ingredient for successful change.  First there is The Rider, the rational part of the brain that steers the course.  The Rider needs good reasons, and needs to understand why.  But The Rider’s influence is limited because he sits on top of The Elephant, our emotional dinosaur brain that so often interferes in The Riders lofty plans. The Elephant responds to feelings, to emotions and needs to be on board to make any real change.  Then there is The Path, the situation or system surrounding the person trying to change even a well coordinated Rider and Elephant can’t find their way if The Path is obscured or full of obstacles.  Sometimes a change in the system is all that’s needed to get change to stick.

This framework is immensely helpful when trying to identify why people aren’t making the change you expect, is there a lack of skill, a lack of will, or an environment that hampers their success?  The book even provides little practice cases where they give you an example and you can diagnose what you would do.

My first read through the book is reminding me of my first pass through some of my favorite books of all time.  I keep finding nuggets that I carry around through my day, that are immediately practical and usable.  I also know that there is stuff in here that I will need to ponder and practice for many years.

If this sounds intriguing to you, and you want to learn more, Chip and Dan will be all around the country to discuss the ideas and sell some books.  They will be in Chicago March 11, you can get more information and register at the Switch Book Tour page.  I look forward to seeing you there!

Switch is available starting February 16th, I received a free advance reading copy from Chip and Dan’s Web site.

Just Added:  I found another great review at the San Jose Mercury News: “You Wanna Change Things?”

Donald Miller has a rambling, self-examining style, reminiscent of Anne Lamott and in “A Million Miles in a Thousand Years” he points this verbal magnifying glass toward his experience of writing the screenplay for the movie version of the autobiographical “Blue Like Jazz”.  In doing so his director mentions that they are going to have to make some changes to his life because it’s “a little boring”. This revelation leads Donald to explore what he would need to do to make a better story for his life.

It’s hard to describe or summarize Donald Miller, so instead here’s:

Ten Things I learned reading “A Million Miles in a Thousand Years”

1. You are the lead character in your own story.
   If you want your life to tell a great story YOU have to make decisions that will create that story.  You need to make choices that require risk and that may cost you something.
2. Great stories have characters who want something.
   “If you watched a movie about a guy who wanted a Volvo and worked for years to get it, you wouldn’t cry at the end when he drove it off the lot…” It takes wanting something big and unreachable to get us to really care.
3. We care about characters who overcome obstacles.
   Life has curves, but those curves are actually what drive us to do more, care more, and make our lives more interesting and the curves themselves help us to build character.
4. We care even more about characters who sacrifice themselves for a cause.
   It’s not enough that we just go through life and navigate the curves that come.  If we want to create a really compelling, even epic life story we need to sacrifice; give more than is comfortable, or reasonable or smart.
5. Fear can keep us from creating great stories.
   “Fear isn’t only a guide to keep us safe; it’s also a manipulative emotion that can trick us into living a boring life.”
6. Great stories have unique moments that are memorable.
   This one really got to me.  You can live a happy, enjoyable life and if you don’t do anything out of the ordinary, if you don’t take a few things ‘too far’, you can have a really enjoyable life, but nothing memorable.  Memorable experiences stand out from the ordinary.
7. Extreme experiences are not enough.
   Hiking Machu Picchu is something few of us get to do.  While the natural beauty and extreme nature of the trail are unique, it’s still just a nice walk.  What is the stakes?  How are you putting yourself on the line and taking bigger risks?
8. There’s nothing like a good redemption story to make me cry (unless it’s the next story about the death of a spouse).
9. “I’m a tree in a story about a forest… and the story of the forest is better than the story of the tree.”
   This is one of the more lasting lessons from this book for me.  Though I want to be the central character in my story, that story is not central to anyone else but me.  I may have successes and tragedy, I may want the world to stop to congratulate or comfort me, but that’s not going to happen.  The best thing I can do is find the places where my story can weave together with the story of those around me and create that rich tapestry we call life.
10. Donald Miller is a man who is wise beyond his years.
    Seriously, this guy is in his mid-thirties, and while he’d be the first to tell you he doesn’t have it all worked out, he’s got some great insights for folks of all ages.

After reading this book cover-to-cover over the course of a long weekend (I could hardly put it down at points) I’m now soaking in some of these lessons.  I know that my story will be different for having read it.  Stay tuned and you can let me know if I’m telling a better story with my life or not.

What story are you telling with your life?  Would it captivate you if it was made into a movie?

E-Myth is the classic work on running a small business.  Michael Gerber has some crucial insights about how to structure and organize your small businesses to so that you can run your business instead of having it run you.  If you feel like the whole business depends on you, and you can’t get your employees to take responsibility this book has the answers.

Jim Collins is my #1 most favorite business author.  Built to Last & Good to Great are must read books for every leader in business.  I think that Built to Last is the best of his books, it’s clear and actionable, and holds terrific insights into how you can create an enduring great company. There’s also a great monograph, Good to Great for Non-Profits, highly recommended after you’ve read the books themselves.

David Maister is the unchallenged guru of professional service firm management.  As with Jim Collins it’s hard to pick favorites, but I find clients are most often impacted by the business development lessons in The Trusted Advisor.  True Professionalism can be a terrific book to take younger professionals through to help them to orient themselves to what the job of a “professional” is.  Managing the Professional Services Firm is a more advanced work, more applicable for larger firms, but with lots of meaty lessons. These books are must reads for my team members.

Vern Harnish’s The Rockefeller Habits, has a great structure for how to run a business well. He has the best system for reporting and a meeting rhythm to keep all the parts of your business connected and well fed with information.  It’s short, but packed with practical information.

Lastly, Crucial Conversations by Patterson et al is a terrific book about how to have conversations when the stakes are high. So many of our conversations with employees, partners, prospects and clients get emotionally charged.  Each person is bringing in their own story about what’s happening and what should happen.  This book can help you to keep a clear head and communicate effectively even when others can’t.

Lastly, there are a number of Harvard Business Review articles that have been as useful and powerful to me as any book, Who’s Got the Monkey for managing tasks with your subordinates, Manage Your Energy, Not Your Time is important work for keeping you fueled, and energized for the long haul.

This is quite a reading list, and of course it’s not exhaustive, just my favorites.  What books, articles or Web sites keep you up to date and growing?

You know who lives with a lot of fear everyday? Business owners. I know, I’ve seen it in their eyes and heard it in their voices.  They are afraid of all that is out of their control.  Customers and clients, employees and partners, the government regulators and tax collectors, lenders, investors; there are so many forces that bear down on a business owner it’s easily overwhelming.

If these fears aren’t enough, there is one fear that almost every business owner I’ve ever talked to has that is bigger than all the rest.  We all feel like frauds, like we were lucky to get this far.  Yes, we worked hard, yes we are smart, but really… Someone’s going to find out that I don’t have a license for this, that I’m not trained for this, that I can’t do this and they are going to take it all away.

It’s true.  Almost every business owner I’ve ever talked too is secretly afraid that they are doing it all wrong, that they are screwing everything up.  That they are making big mistakes, that they will never recover from.

What makes it worse is that the people around the business owner most likely look up to them for their risk taking ability, for their courage and strength at taking on new challenges.  No one sees the fear that’s inside. So it stays there, inside.

But it is there and it’s making you stupid. What does that worry do for you? Does it motivate you, or hold you back?  Does it make you too cautious, or too reckless?

You have worked hard, you are smart enough, and experienced enough.  How do I know? No one is that lucky.  If you have gotten this far, you have what it takes.  I know that you could have made some better decisions along the way, and you could have done more at times.  But think about your employees, do you think that they make mistakes sometimes?  How much does that bother them?  Are they losing sleep over those mistakes? So they are making mistakes and sleeping well and you are making mistakes and not sleeping?

What’s the difference between their mistakes and yours?  When they don’t know something, or make a mistake, they can get help.  Their boss (or you) might bail them out, or show them a different way to do it.  But if you own your business, who do you ask?

Find someone who can help you out.  Don’t go it alone. We are pack animals, find a tribe who can point you in the right direction. Who is excited when you succeed, and disappointed when you fail?  Who knows all the risks you have taken?

Because there is one thing that fear will never get you, in fact that fear will keep you from ever achieving.

Peace.

The first observation is that the four predictions I heard had widely varying views. I don’t remember a time when I have seen more divergent opinions about what the future holds. This reflects significant uncertainty that exists in the marketplace, political uncertainty, uncertainty with global markets, and some uncertainty about how businesses and individuals are going to react to these forces.

The political uncertainty is perhaps most obvious. Massachusetts seems to have put a nail in the coffin of the healthcare reform bill (as it stands right now), but the administration needs to pass something, so changes in how the country handles healthcare (17% of the US economy) stand as a significant uncertainty in the short term. Once congress gets through the healthcare debate, they will move on to environmental reform (cap and trade) and questions about what to do with the expiring Bush tax cuts. Additionally of the $700B+ in stimulus money approved, only about $250B has been spent, so the government is also wielding further stimulus opportunities. Each of these has a huge impact on businesses of all sizes, but in concert they make it very hard for business leaders to have confidence in making decisions for the future.

With all this uncertainty it is difficult for businesses and individuals to spend money. In fact, both businesses and individuals have stopped spending money for most of 2009. Corporate profits are up, and corporate balance sheets are strong. In 2009 large companies saw net cash influxes of over $250B, five times what we would see in a normal year. Households have been paying off debt and the net household savings rate has gone from -1% to +4% or so. But with the economy improving and inventories growing that may change.

Still there are some pieces of good news. Everyone seems to agree that the economy grew in 4Q09, maybe as much as 4% – 5%. Some of that was stimulus related (Cash for Clunkers, etc.) but some if it was building inventory. This is a very positive sign and 3 out of the 4 economists that I heard felt like that trend would continue through the first half of 2010. Particularly strong sectors are healthcare (despite the reform bill) and exports. With another $500B of stimulus still to be spent, the economy should have a bit of a tail wind for two quarters or so.

The world economy has recovered much more quickly than the US and with record level deficits and near 0% interest rates we should see the dollar continue to weaken through the year making US goods highly competitive on the world market. This trend has a chance of pulling the US out of this funk. However, a weak dollar is not in the best interests of the rest of the world, and could eventually set the stage for strong inflationary pressures in 2011 and so the Fed is likely to issue a token (1/2 point or so) rate increase toward the end of the year.

China is now the largest consumer of commodities in the world, and their economy’s strong growth (over 10%) is holding the prices for metals, and oil, high. Can China keep up this growth pace without triggering inflation, or a currency revaluation?

So how do we know which of the forecasts is right? I’d suggest watching some key indicators. Now that the Obama administration has suffered some defeats, and have a better understanding of the constraints that they are under, do they shift back toward the center? If so, expect stronger second half growth. David Hale suggested that the Administration was floating the idea of extending the Bush tax cuts “as is” until 2012. This would have a horrible effect on the deficit, but would be stimulative in the short term. China needs to continue to tighten the reigns on their economy to control growth and keep commodity prices reasonable. Do they continue to raise interest rates, or go further and revalue their currency? Lastly, in the face of significant unemployment and uncertainty, do US households go back to spending some money, or do they continue their efforts to de-leverage and save? Any of these would increase the likelihood of expansion this year.

One other trend to watch; State and local governments need to raise money, in some cases a lot of it. They have a limited ability to raise taxes in this environment, so we will likely see a move toward selling more assets. Chicago is ahead of the curve on this trend with the parking meter sale, the Skyway sale and the attempted sale of Midway Airport. Arizona even tried to sell their statehouse last year. Outside the US the majority of airports are owned by for profit operators, the US should start to follow that trend in the next couple of years.

So what should you do now? If you sell to large companies, and particularly if you are selling goods or services that improve efficiency, you should hit those customers hard now. Large companies have cash and they have laid off a lot of people. They want to do more with less, if you can help them to do that they will spend right now. If you have customers who are exporters, their business is likely to pick up in the short term. We should see hiring and expanding inventories to support that growth. Healthcare has strong underlying fundamentals, and as long as the healthcare reform bill creates a straightforward path to get paid, these businesses should continue to grow effectively. If you are not positioned in one of those industries, look for the companies in your niche that do have exposure there and chase after them. There are always healthy companies in any economy, we just have to find them.

It’s going to be a wild ride in 2010, and there may still be a lot of pain, high unemployment and slow growth for the next 12 months or so, but the dark days are behind us and we should start to shift our focus forward. I urge you to move from a defensive stance and begin the process of aggressively expanding your sales and marketing efforts toward those sectors seeing growth. Get help from a professional sales coach, or create a more comprehensive marketing plan to capitalize on this window of positive momentum to grow your business while your competitors are still hiding in their caves.

Something is shifting and I think it’s just the current incarnation of the shift that’s been in progress for a long time, but it’s getting faster, and spreading wider.

9 years ago when I started Anchor Advisors, Ltd. I noticed how easy it has become to start a business.  You go to VistaPrint and choose a business card, find a template for a Web site that looks good with the card you choose and you are in business. Total cost, 10 hours of my time, $0.  The friction, or barriers to entry for creating credible collateral were very low.  Once the business got going, I eventually designed a card, and got a professional Web site, but why invest the money until you know it’s a going concern?  The production value of the templated solutions was “good enough” to get started with, and it took no time or money to execute.

Then came Blogs, and YouTube, then Facebook and now Twitter.  More and more of what we read and look at is created by amateurs.  The production value of most of the blogs that I read is low, they are produced by their owners with little or no help from “professionals”.  The production quality of the most popular videos on the Internet is basic.  We don’t have our blog posts edited by professional writers, we don’t have our tweets crafted by a copywriter.  More and more creative content is being made in some form of DIY manner.

And the tools to do that are expanding as well; the Flip camera makes video easy to shoot and even edit.  You can edit your photos using online tools without even buying expensive photo editing software.  OK, nothing makes writing easier, good writing is still hard, but at least Twitter has forced us to keep it short!

Phil Johnson posted an article on the AdAge Small Agency blog about this trend and how it’s forced him to create a whole new department in his agency that’s focused on lower budget, quicker turnaround, higher volume content to feed social media.

Is this the erosion of the creative class?  Have creatives lost their place as the crafters of communication and design?  No, there will always be a need for elegance, effective design and well written copy.  However, there is also a tolerance, even an appreciation for the unproduced, unvarnished, amateur production as well.  Lowering the bar has resulted in an explosion of content being created, and much of it is DIY.

The really excellent design is going to be reserved for only those projects with large impact and budget.  Company identities for successful going concerns, packaging for consumer products, annual reports, etc. will always deserve the value of a professional design.  It might even be valued more as it “stands out” from the crowd of amateur produced stuff we look at all day.

But there is also going to be more and more content created by amateurs, and the are going to want their stuff to look and sound good.  Teaching basic design and writing principals to the masses represents a huge opportunity.  Creating tools to enable easy, high quality DIY content is another.

It’s a brave new world and I don’t think the trend is going backwards any time soon.

How do you see this trend impacting your business?

bike-race Originally uploaded by indywriter

Earlier I discussed how I am making some changes in how I set goals for 2010.  I’m trying to make my goals with very compelling outcomes, I’m creating specific action plans and I am going public with them.  In that spirit I am sharing my goals in three categories (Personal, Business and Health) over the next few days.  These are my Personal Goals for 2010.

1. Weight below 205 by 12/1/10
I weigh more than is healthy, and I want to live into my 90’s. I don’t just want to hang on, I want to live a healthy active lifestyle even when I’m old, so I need to lose weight. Plus I like to ride my bike FAST, and the leaner I am the faster I will go. In 2009 I had a goal to reach 225 lb by Dec 1. Though I lost 30 lbs in 2009, I still had 20 to go on 12/1/09. This year I am still shooting for roughly one lb per week, for a goal of 205 by 12/1/10.

How is 2010 going to be different from 2009?
I got an indoor bike trainer for Christmas, connected with the Cadence Revolution Podcast and am committed to working out 6x per week.  In the spirit of going public, I’m posting my workouts at DailyMile.com (My Profile). If you want encouragement and support for your exercise goals you can join to, send me a friend request and we can ride “together”.

I’m terrible at keeping food logs, but I know that’s an important part of any weight loss program. I came across this idea of using your camera phone and flickr.com as a food log and I jumped in. You can see what I’ve been eating on a dedicated flickr feed. I’m also recording my perceived hunger (before I eat) on a scale of 1 (Full) to 10 (Famished) . This helps me calibrate my portions and “get real” about what I’m eating.

I’ll evaluate these actions and my weight on 3/31 and see if more changes are needed.

2. Ride one bike race in 2010
Biking has been my sport of choice for the last few years, and as I’ve gotten in better shape, I’ve gotten better at it. Signing up for a race would give me a goal to drive toward and a measure of how much I’ve achieved. It could provide me confidence that I am getting fitter, or provide me with motivation to do more. Plus it would be fun!

How I’ll do that:

1. Find a group to ride with. I need some experience riding in groups. I’m thinking about riding with the XXX Team on Saturday mornings when the roads thaw out.
2. Book an event. I need to pick an event an book it now, so that I have a goal to shoot for.
3. Get advice from others about what I’m getting myself into!

I welcome any ideas or resources that you know of that can further help me achieve these goals in 2010.

You can see my Personal and Business goals as well.