Entrepreneurship, Personal Growth

Your Big Idea

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A few years ago, I spent a day selling wine with a young salesman for a distribution company in the Midwest. I was there to represent Six Sigma Ranch in his territory, so he graciously introduced me to his accounts. After a few stops it was obvious that he was a nice guy, but not passionate about selling wine. So I asked a few questions about his life and interests as we traveled, and quickly learned his passion was flying airplanes. But he had exchanged this big idea for a sales job because it seemed more safe.

By the end of the day, he had changed his mind. He decided to quit his sales job, and start school to become a commercial airline pilot. We skipped the last account (he wouldn’t have followed up on it anyway), and instead went out for coffee to celebrate his new direction in life.

Every honest person I’ve ever asked has a big idea in mind. Some big ideas are buried, but surface with a few prying questions. Some big ideas are on the surface, because their owners are already living the dream. It seems everyone has a business, a book, a mountain or a pilot’s license in mind to conquer. But most of us never pursue our big idea. We don’t because it’s unreasonably large, or we don’t have enough resources, or it just isn’t a responsible thing to do. What if we failed? What would people think? And besides, some ideas simply can’t be done!

And that’s why most of us leave the big idea alone: It can’t be done.

But chances are it can. Think of human flight. It was widely known to be impossible until it happened.

And fortunately for most, the big idea doesn’t mean quitting a job one day, and applying for pilot school the next. Most of us can work on the big idea one little bit at a time, until it starts to make sense, and doesn’t look impossible at all.

That mountain you want to climb? Start by walking a mile each morning. The book you want to write? Write a page. Then two. The farm?  Begin by growing tomatoes in your backyard, and then chickens. And if you want to fly airplanes, celebrate with a cup of coffee and go get it done.

Christian

PS. Since I’m a person of faith, I believe big ideas come from God. He built each of us for a unique mission, and he planted a passion for that mission in our hearts so deep that it won’t go away. Most likely, that mission is too big to make sense. But, again because I’m a person of faith, I believe God gives us missions that are too big for our capacity on purpose, so he might empower us to do them, and prove that he is God. In fact, if the idea in your heart seems reasonable, it’s likely too small to be from God.

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Entrepreneurship

For the Love of Business

silver-birch-bark_mediumI was nine years old in the fall of 1992. It was a cool afternoon in northern Denmark, as the sun began to set behind the trees. I was working with my father in the front yard, cutting and splitting firewood for the winter.

At the end of the day, we had a substantial birch log left on the lawn.   At three feet long, it was too large to split. So my father issued a challenge; if I could saw the log in half by the following weekend, he would issue a crisp 100-kroner bill, equal to about $15.

I was on the job immediately after school on Monday. With that much money on the line (my allowance at the time was a weekly $3), the work simply had to be accomplished. But I was the smallest kid in my 4th-grade class, and it became obvious that the log would be a challenge.

My father heard my daily reports, my sinking into despair, as the weekend closed in and the log appeared triumphant. “If only I could have a bigger kid help at the other end of the bow saw,” I said one evening. My father smiled. “I told you I would pay 100 kroner when the log was cut. I didn’t make any rules about how you go about it.”

That day I learned the difference between schoolwork and the real world, a difference that cannot be overstated. In school, you have to do your own work to get the points. You have to follow the rules to complete the assignment. But the world is different. The world cares about results, not about made-up rules. The world lets you find your own assignments, as many as you want, and write your own rules. The world has customers instead of teachers, and happy customers don’t care how you got it done.

With that in mind (a lesson that I’m sure my father was pleased to stage) I hired a friend.   I paid him $3 for his efforts, and made full disclosure that I would myself pocket 4 times that amount. That fact didn’t bother him at all; he would make a week’s worth of allowance in an hour’s work (he was much larger and more effective at sawing than me), and he was quick to accept the invitation before I offered it to someone else. An entrepreneurial seed was born.

Christian

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Choosing Products (that Create Profit)

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A friend asked this week about picking products that balance customer needs with his own farming interests. We don’t have all the answers, but we’re happy to take a stab at it!

Here are 6 things to consider:

Grow something you like! I would make a terrible lettuce farmer. I think it’s boring. For that reason, I have no business growing lettuce! Picking a product you enjoy helps you to produce it well, sell it with enthusiasm, and enjoy the leftovers.

Grow something people eat. This is obvious, but often missed. Don’t start emu eggs or badger-hair brushes unless you have a strong conviction about them. Instead, pick something people are already buying and create a brand and quality that outperforms existing options. Hint: Check out your local grocery store to see what gets shelf space. If there is a giant cooler full of eggs, they’re likely a hot item. If there is no section for pomegranates, they’re likely less popular.

Consider cash flow. Some products sell seasonally (think turkeys), while others grow seasonally. Obviously, a turkey farmer has to plan for the influx of cash during Thanksgiving to last the rest of the year, while an egg farmer has to acknowledge that chickens produce less in the winter. Financial discipline, or a mix of seasonal products, will keep seasonality from causing problems.

Consider your climate. Merino wool sheep hate hot weather (for obvious reasons) while California grows terrible coffee. So, if you’re settled on a location, pick crops or livestock that fit there. Or, if you’re settled on a product, move to where it will thrive.

Consider perishability. Before planning a business around a product, remember that some products have a great shelf life (think honey) while others don’t (think lettuce). While neither is necessarily better, it’s worth keeping in mind, to make sure your product fits your schedule and temperament.

Consider consumption rates. At Six Sigma Ranch, we sell beef by the quarter (100 lbs.) because people eat a lot of beef. For that reason, we can do a lot of business with a few hundred customers. If we were selling only olive oil, we would need to acquire and maintain more customers to hit the same sales numbers.

Christian

Ps. We love writing on topics from blog guests, so keep them coming!

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How to save the Family Farm: “Put Your Name on Your Work!”

That phrase, commonly associated with frustrated elementary school teachers, is also priceless wisdom for any entrepreneur.

On the contrary, ignoring that idea results in the death of the small farm.

Allow me to illustrate with two stories:

In the first story, Farmer Sharp has three cows. He feeds them well and milks them efficiently. A truck from a generic milk brand (let’s call them Dairy Inc.) picks up his milk daily.

In the second story, Farmer Donaldson also has three cows. He also feeds them well and milks them efficiently. But, instead of selling his milk to Dairy Inc., Farmer Donaldson has it processed according to local regulations and sells it in grocery stores and at farmer’s markets using his own label, Donaldson’s Dairy. Farmer Donaldson puts his name on his work.

I oversimplify the dairy industry here to make a point: One business model has the capacity to be profitable, while the other doesn’t. Why?

When customers buy milk from Dairy, Inc., it doesn’t matter much to them who produced it. To them, the brand they know and trust is Dairy Inc., not Farmer Sharp. For that reason, Farmer Sharp is in perfect competition with the other farmers supplying Dairy Inc. (Perfect competition, according to my dear economics-trained wife, means that he is selling a good that is identical in quality to everyone else.) Subsequently, Dairy Inc. has the luxury of selecting suppliers by price, which means the price goes as low as it possibly can without driving every supplier out of business. The least efficient do go out of business. The most efficient (think big guys) may make some money. But everybody else (that is, every dairy supplying Dairy Inc. that isn’t the most efficient) is working on slim or zero profit margins.

Meanwhile, Farmer Donaldson has his own customers that know his brand. He is in especially good shape if his brand is distinctive in quality, story and appearance. That distinction may be as simple as being the only small, family-run dairy in town.

In summary, Farmer Sharp is forced to grow big (efficient) or go broke, while Farmer Donaldson gets to create value for his customers with a friendly brand.

That may make the difference between the beginning or the end of the family farm.

Christian

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Great Expectations

I had an enlightening incident with a major retailer last month. Let’s call them Walmart, and let’s say I placed an order for a children’s swimming pool using their site-to-store shipping option.

The confirmation email said the pool would arrive at my local Walmart after two weeks. That’s longer than Amazon. But, Walmart offered the item much cheaper, and that made it worth the wait. I was happy with the promise.

But, after two weeks, it hadn’t arrived. When I called customer service (an epic maze of phone robots), they said it hadn’t left yet. They promised instead to deliver it to my house in another two weeks. But, after two weeks, it again hadn’t arrived. It took an additional two days.

At first, I found all that very irritating. Then I began to consider why it was frustrating me. I thought, what if the retailer had promised delivery in five weeks, and then delivered in four? Would I have been angry then? Much less so. Why? Because it wasn’t really a matter of the time. It was a matter of trust. They made a promise, and they broke it.

Zappos.com, the world’s biggest shoe retailer, has learned this concept and flipped it around. Instead of promising a bit too much and then coming up short, they intentionally over-deliver. If you order a pair of shoes from Zappos.com, they will likely arrive faster than promised, by design. The result? Customers rave to their friends about the over-performance.

I think the lesson here is that meeting expectations builds trust, and trust keeps customers. Exceeding expectations builds trust even faster, and makes customers rave to all their friends.

Christian

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What’s Your Problem?

Here’s a small secret of business: You need a problem. To be more clear, somebody ELSE needs a problem, and the purpose of your business is to solve it.

One of my first business ventures was a lawn mowing company that I started in college. The business plan was very simple: I bought a mower, borrowed a trailer and leased a garage in exchange for mowing the lawn in front of it. Then I printed fliers advertising my services, and distributed them to mailboxes in the fanciest neighborhood in town. This seemed like a good plan, until a wealthy-looking fellow in a Dodge Viper pulled up to my parked Jeep to give me a little insider info: “The homeowners association mows our lawns, son. You’re wasting your time.”

In that neighborhood, there was no problem to be solved. They already had a GOOD mowing solution, and it even happened to be free.

A problem can be local, like a lack of decent Mexican restaurants in small-town, Kansas. Or a problem can be much larger, like a lack organic wine grapes in Northern California. But if there is no need for a better (or first) Mexican restaurant, or no need for more grapes, there’s no reason to build a business that provides either of those things.

I’m surprised at how often this “secret” gets ignored. How often do you see a new restaurant, surrounded by other restaurants, close in 6 months? Was there a need for another restaurant? There may have been, if the others were poorly run. Otherwise, a new restaurateur is wasting his time. (Also, he should start with enough cash to survive more than 6 months without revenue, but that’s a blog for another day.)

Brewing beer or making pizza is a hobby, if it doesn’t solve a problem. If I start a brewery because I like to brew, but nobody has a lack of excellent beer, it won’t be much of a business.

Some of the best companies in the world solve problems people never knew they had, like Henry Ford’s Model T (horses were too slow), Apple Computer’s iPod (MP3 player’s were awkward and bulky), and Garmin’s Vivofit (fitness bands had terrible battery life and limited water resistance.)

Fortunately, there are plenty of problems to be solved, needs to fill and variations of existing solutions to invent. For every one neighborhood that doesn’t need a better lawn service, there are 10 others that do.

Christian

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The Finest Burger in the World?

If you visit Queenstown, the self-proclaimed Outdoor Adventure Capital of New Zealand’s South Island, it won’t be long before a local or fellow visitor suggests that you eat at Fergburger.  Image

The person recommending the establishment will likely include the fact that Fergburger claims to serve the world’s finest hamburger, and the recommender will likely submit his or her opinion as to whether or not the claim is true: “yes they do,” or “no they do not” actually serve the world’s finest hamburger.  In my experience, there is no correlation between the likelihood of the dinner recommendation and the recommender’s personal opinion of the quality of the burger;  lovers and haters will both point you in the right direction to try it for yourself.

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Queenstown attracts 1.9 million visitors per year for skiing, biking and hiking in the mountains surrounding a giant, beautiful lake.  That’s not bad for a city of 16,000 people.  And most of the visitors seem to visit Fergburger.  Needless to say, the city and the burger place  do very well for themselves.

So how do the owners of Fergburger do such a fantastic job?  I don’t know them, so this is speculation, but here are a few observations from my own visit:

1.  Location. Fergburger is in a fabulous location in a fabulous town.  And why not?  If I were to start a burger joint, (or berry farm, or brew pub or equestrian center), shouldn’t I put it where the people are?  With 1.9 million tourists, its likely Fergburger would get some guests by pure chance.  And they increased the odds by setting up shop at the bottom of the gondola leading to Ben Lomond, Queenstown’s most significant hiking, skiing and biking trail.

2.  Basics.  Fergburger has a great staff, great ingredients and a classy interior.  They get you in and out in a hurry.  The restrooms are clean and the cook is smiling.  No failures on the basics inhibit the experience.

3.  Focus.  The moment Fergburger claims to have the world’s finest burger, something happens.  Hint: This is often what makes the difference between a good company and an extraordinary one.  Suddenly the staff has a focus.  The guests have a reason to visit.  The owners know where to invest.  “Do we spend money experimenting with new salads, or displaying modern art on the walls?  NO!  We make the world’s finest burger!”  And the only purpose of the restaurant is to connect the world with that magnificent fact.

Now for the burning question:  Does Fergburger actually serve the finest burger in the world?  That is a very personal matter, really.  In this humble farmer’s opinion, after scaling Ben Lomond to 5,300 ft. and landing back down at Ferg’s front door, the answer was definitely yes.

Christian

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Dream. Big.

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I was admittedly surprised when Ken Grossman called my cell phone.  I had sent him a few bottles of wine, with a polite letter asking for his input on a school assignment.  But I knew very well that the founding owner and CEO of America’s second largest craft brewery wouldn’t have time to connect with every college student who wanted his attention.  And yet, there he was:  “This is Ken at Sierra Nevada.  What did you want to talk about?”

The assignment for class was to profile a “sustainable business.”  Sierra Nevada is certainly that, with everything from solar panels and fuel cells to a hybrid Peterbilt, but what I really wanted to know was this:  How did Sierra Nevada, founded in 1980 along with hundreds of breweries during the same decade, create a mob-like following of consumers who now support production of one million barrels per year?  Fortunately for me, Mr. Grossman withheld little information on that topic.

What followed was a great business leader’s humble recollection of starting a company in a barn, and growing it into a national brand.  It included all the expected, the focus on hiring and retaining great people (the brewmaster is the original, the company’s second employee) and a quest for quality over profits and growth.  It included being at the right place at the right time.  (Have you ever noticed how great leaders take very little credit for success, almost as if they stumbled upon thousands of great decisions by pure luck?)

And then came the most interesting answer to a question I had hesitated to include.  “What would you do differently, Ken, if you were starting again with a small brewery at age 30?”  (He must have guessed that I had a personal connection with the question.)  “What would I do differently?”  He repeated the question.  “I would have dared to believe that Sierra Nevada could become what it is.  From the start, I didn’t believe it.  And so I didn’t plan for it.  If I had dared to dream it from the start, imagined that we would physically outgrow the block with buildings for the brewery, I would have planned it better from the start.”

Christian

http://www.SierraNevada.com

 

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New Strategy: Ignore the Competition

Mr. Brown finished his career in software at age 50 to start a farm.  He bought a plot of land in Smalltown, Kansas, and moved his family to live on the 40 acres.  Observing the neighbors, Mr. Brown, saw that they were growing corn, wheat and soybeans, and selling their crops to the local Co-op.  He considered that strategy, therefore, to be what his previous industry would have called “best practices.”  

Mr. Brown (now Farmer Brown!) bought a 60hp John Deere Tractor, planted his fields and began to farm.  After the first harvest, he saw that the profit margins were tight.  He realized that he had to become very efficient, as his neighbors were, to have a profit left over after covering expenses.  His neighbors were familiar with that strategy, and also became more efficient.  Prices went lower, as efficiency increased.  Farmer brown eventually took a job in town to support his farming habit.  

Hold the story there for a minute.  Lets try a different, daring and possibly dangerous strategy from the start.  IGNORE THE NEIGHBORS.

Take it from the top:

Farmer Brown bought 40 acres of land in Smalltown, Kansas.  He looked around to find some potential CUSTOMERS.  A half hour drive from Smalltown, he found Middlesize, Kansas, with a population of 400,000 people.  Farmer Brown planted 2 acres of pumpkins and a small apple orchard, and advertised both in the local paper in the fall.  Many of the folks in Middlesize had never seen a pumpkin growing on a plant, and found it fascinating.  Parents were happy to pay full retail price for both pumpkins and apples, especially if the kids got the glorious experience of picking the crops themselves.  (And Farmer Brown was happy to let the kids do the work, and save him the trouble of storage, shipping, and loss of margins to a wholesaler.)  For his second year, Farmer Brown added a corn maze and a hay ride, and expanded the pumpkins and apple orchard.  The local paper wrote an article on Farmer Brown, because NOBODY HAD EVER SEEN A BUSINESS LIKE HIS in Middlesize before.  

In 2004, Authors W. Chan Kim and Renee Mauborgne published a book called Blue Ocean Strategy: How to create uncontested market space and make the competition irrelevant.  The idea, in summary, is that existing markets are “red oceans,” bloodied by the competition of companies fighting for the same customers (market share).  The authors encourage a search for “blue ocean,” wide open markets uncluttered by competition.  Blue Oceans take a little effort to discover, but they reward the adventurous with open waters and endless opportunity.

Christian 

 

 

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4 Steps to a Second Career (Without Going Broke!)

Its a lot of fun to run a winery.  Its so much fun, in fact, that many are willing to run one at a loss.  The same goes for other industries, like hobby farms, breweries and coffee houses.  But most confess that living the dream is more fun if it doesn’t drain the retirement fund, and on that topic I learned some good wisdom from the owner of an excellent coffee house.  

Steve Hines had built a successful event-planning company by the time he and his wife Beth decided to start a coffee shop near their home in Gardner, Kansas.  I’ve known Steve for a long time, and know the idea behind Groundhouse Coffee was to unite the community (i.e., no profit motive).  But, as often happens when a company serves customers selflessly, it turned into a decent little business.  Naturally, I interrogated Steve over a cup of coffee.  

Here are the lessons learned on launching a second career:

1.  Scale according to your resources.  The Hines’ built the shop within their means, and left some cash available for operating expenses.  If they’d had less cash, they would have built it smaller.  There’s no reason to stretch; if the idea won’t work when its small, it likely won’t work when it gets bigger. 

2.  Plan.  Groundhouse Coffee existed on paper well before the couple bought the building and hired the staff.  Even if you’re self-funded, it’s a great idea to build a business plan on paper as if it were being offered to investors.  The process forces you to think it through, and paper is a lot cheaper than bricks. 

3.  Learn.  Steve read a lot about running a coffee shop.  He had visited a lot of coffee shops.  And when the place opened, he spent a lot of time in his own coffee shop.  Its also a good idea to take a part-time job or volunteer position in the industry you want to join.  It’s easy to get a job when you offer to work for free, and the lessons learned from the “inside” are well worth the effort. 

4.  Borrow some talent.  Knowing that he didn’t know everything about running a coffee shop, Steve recruited somebody that did: a former manager from Starbucks.  He wisely got her on board from the beginning, so the plan could take shape with her input.  

If you ever find yourself visiting Kansas City, stop by Groundhouse.  It is, in my humble opinion, the finest coffee house atmosphere available in the United States.   http://www.groundhousecoffee.com

Image  Christian   

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