Interview with th e author of the book Tipping the Odds for the Entrepreneur: Big Ideas on Success for the Small Business Owner
This week I had the chance to interview Mr. Kevin C Maki, author of the book “Tipping the Odds for the Entrepreneur: Big Ideas on Success for the Small Business Owner” (www.TippingTheOdds.com). I will make a review of the book soon, but in the meanwhile, during the interview I was impressed to find out Kevin’s ideas about persistence, entrepreneurs willingness to delay gratification and what makes a successful entrepreneur:
Cristian: Hi Kevin, welcome on board. Tell us a few words about yourself.
Kevin: When I was a teenager I took a job working at a hotel owned by a couple who had come to the US from Eastern Europe. I learned a tremendous amount from them about how to run a successful business. During the 10 years I worked for them the number of rooms in the hotel increased from just over 100 to more than 400 (including a second property they built next door). This experience triggered a life-long fascination with entrepreneurship and the factors associated with small business success and failure. I am trained as a scientist and have managed to combine my interests in science and entrepreneurship in a business that designs and conducts clinical trials to tests food and pharmaceutical products.
Cristian: You recently published a book on entrepreneurship. I’ve read the book, but for the readers, what is the book about?
Kevin: I have spent more than 25 years studying entrepreneurs, as well as running my own businesses and business units within larger organizations. These experiences have led me to the conclusion that there are several reliable predictors of business success and failure. A majority of new businesses don’t last five years. My book is about strategies and tactics that the small business owner can use to tip the odds of success in his or her favor. For that reason I called the book Tipping the Odds for the Entrepreneur: Big Ideas on Success for the Small Business Owner.
Cristian: Who should read your book? Start-up entrepreneurs? Managers willing to improve their business?
Kevin: Anyone who owns a business or is considering starting a business would benefit from the information in my book. Also, those who run a department or a business unit within a larger organization would likely find the information helpful.
Cristian: I would say that your book it’s mostly about doing the business the right way. Maybe with smaller immediate profits but with great benefits on the long run. Do you think the knowledge shared in the book is also applicable to start-ups (that we all know they focus mostly in making to the end of the month).
Kevin: In my view, the purpose of a business is to obtain and retain profitable customers. In general, businesses who market their products or services well and who deliver good value to their customers will thrive. Value means that the customer will feel that what he or she paid was worth it for the product or service delivered. Many customers are happy to pay a premium price if the resulting experience meets or exceeds their expectations. Expectations will be different for customers of a Holiday Inn Express compared to those of a Ritz Carlton hotel, but either can deliver good or poor customer value depending on the price charged and how well they do at setting and then meeting (or exceeding) their customers’ expectations.
Business owners are often faced with decisions that have both short and long-term consequences. Every interaction a business has with a customer or potential customer will either enhance or detract from the strength of the relationship with that person. Successful business owners have a long-term perspective. They will focus on doing what is right for the customer and do so in a manner that will strengthen the relationship. They will not take advantage of customers for their own short-term gain. There is an old expression that says a sheep can give you a lot of sweaters, but only one coat. Successful business owners focus on building the relationships with their customers so they keep coming back and recommending the company to their friends and colleagues.
Cristian: Are the business principles described in the book only applicable to the US?
Kevin: I have tried to focus on key concepts (the “big ideas”) that are applicable no matter where the business is located.
Cristian: So what are the traits of a successful entrepreneur? What tips the odds?
Kevin: Some characteristics of a successful entrepreneur include dogged persistence, a willingness to delay gratification, a bias toward action (rather than analysis paralysis), and a reasonable understanding of one’s personal strengths and weaknesses. I cover these in detail in the book, which may be helpful to someone who is considering starting a business.
Cristian: What do you think, entrepreneurs are born or made?
Kevin: In my opinion, the skills necessary to become a successful small business owner are learnable. However, some people are more likely to be successful than others. Those most likely to be successful tend to be optimists who will keep pushing ahead in the face of obstacles and setbacks. They also tend to be obsessed with providing the best possible experience for their customers. Owning a business is not a 9 to 5 endeavor, so those who are unwilling to go to extreme lengths should probably not start a business. One of the entrepreneurs I profile in the book, Seattle Sutton, Founder of Seattle Sutton’s Healthy Eating, would run relatively low-cost commercials on late-night television. She would set her alarm for 1:30 or 2:00 am so that she could be available to answer the telephone herself when a commercial ran. That is the kind of dedication that is often required of a successful entrepreneur.
Cristian: From your findings, what are the traits of successful businesses?
Kevin: Successful businesses come in all varieties. In general, successful businesses deliver a product or service for which there is a demand, they market their product or service effectively (the best product or service offering will be unsuccessful without adequate promotion), they do a good job of setting customer expectations, and they execute in a way that meets or exceeds their customers’ expectations. The result is what I refer to as a SLEEC business. SLEEC stands for a business with good Sales and marketing that has Loyal and Engaged Employees and Customers.
Cristian: When you are small and need to hire on a budget, what are the most important things to look at? Skills, desire to work, price?
Kevin: Price (salary) is an important consideration, but I am much more concerned about value than price. The Pereto or 80/20 principle applies to employees. Typically a small percentage of employees (perhaps 20%) will account for a large percentage of productivity and positive outcomes (perhaps 80%). It is not always possible to tell ahead of time which will be the high producers. Once a high producer is identified, he or she should be rewarded with money, recognition and extra training to allow them to take on more responsibilities. It is also important for all employees to truly accept the company’s mission and commitment to customer service. I like to say that our company has high turnover in the first few months and low turnover thereafter. The high turnover in the first few months results from weeding out the people who are difficult to work with, have poor customer service skills that do not respond to efforts at correction or who just don’t fit with the mission and values of the company.
Cristian: Controlling how your employees are working with customers is very hard when you have a large business. How can you make sure your customers are getting the right treatment?
Kevin: It is imperative that everyone in your company is friendly and devoted to providing exceptional customer service. Rude, apathetic, or condescending interactions will result in lost customers and such behavior cannot be tolerated. It is up to the owner and his or her managers to ensure that the staff understands what is expected and is held accountable for this level of performance. Good training and regular feedback will help to ensure that everyone knows what is expected. It is also a good idea to elicit feedback from customers and even to employ “undercover evaluators” to evaluate the customer experience and provide feedback and suggestions for improvement. The old saying that the way a manager treats his staff will be reflected in the way the staff treats the customers is absolutely true. Successful performance and achievements should be acknowledged and celebrated. Staff should feel challenged and that the management cares about each of them as individuals. Management should regularly elicit feedback on what can be done to minimize frustrations and provide the tools necessary to get the job done. Happy staff members will help to generate happy customers and disgruntled staff members will generate disgruntled customers. It pays to keep your employees “gruntled” (which I presume to be the opposite of disgruntled).
Cristian: On delegation. I know from my own experience that as an entrepreneur is very hard to delegate. What’s your advice? What should be delegated, what should be outsourced?
Kevin: Many entrepreneurs find delegation difficult. However, once a company grows beyond a certain (relatively small) size, it becomes impossible to manage it effectively without substantial delegation. It is impossible to devote adequate time to working “one the business” if one is spending all of his or her time “in the business.” Delegation is easier if one takes the time to adequately train staff members. Checklists are an enormous help and have been shown to reduce errors in many settings ranging from auto repairs to hospital emergency rooms. High performers should be tasked with training and system development to improve the effectiveness of average performers.
Cristian: You say in the book that doing layoffs should be the last resort in saving money. From my experience (unfortunately) sometimes you don’t realize you should downsize until is too late. So how do you know when it’s the latest moment to let people go?
Kevin: Some wise person said that good judgment results from experience and experience results from lacking good judgment. There is no formula that I know of for telling a business owner when it is time to institute layoffs. Other strategies can be tried first, such as asking for volunteers to reduce hours and take vacation time. Also, layoffs can sometimes be avoided by not over-hiring in the first place. Peaks and valleys are inevitable, so staffing for something in between is best with temporary help, “as needed” staff, or outsourcing used to cover peak periods. If layoffs are inevitable, it is best to err on the side of cutting too many people rather than not enough. This avoids the need for repeated rounds of layoffs, which can be quite damaging to morale.
Cristian: I must say I enjoyed your view on working on one’s strong points/ weak points. If I understood correctly, you say people should improve their strong points and work and make a passing grade on the weak points?
Kevin: Peter Drucker, who is often acknowledged as the father of the business management as a social science, emphasized that good managers play to the strengths of their employees and manage around weaknesses to make them irrelevant. This applies to self-management for the owner. If one understands his or her personal strengths and weaknesses, strategies can be employed to leverage the strengths and work around the weaknesses through delegation, partnering or outsourcing. That way the owner can focus more of his or her time on high value activities, particularly new business development.
Cristian: Where could people wanting to become entrepreneurs learn about running a business?
Kevin: There are many good resources available, including your web site, www.entrepreneurship-interviews.com. A particularly good resource for those in the US is the Service Corp of Retired Executives, (SCORE) which is a nonprofit association dedicated to educating entrepreneurs and helping small businesses start, grow and succeed nationwide. Entrepreneur magazine is a good resource and they have a publishing division that produces useful materials. Also, there is no substitute for experience in the field. Unless the business is intended to provide a new type of product or service, I recommend investing the time to work directly in the field as an employee to “learn the ropes” before venturing out on one’s own.
Cristian: What would be your advice for people looking to start a business that are afraid to start or wait for a “better moment?”
Kevin: While it is certainly prudent to prepare for starting a new venture by saving money and learning everything one can about the field before launch, I have known many people who talked about starting a business for years but never got past the planning stage. Starting a business is similar to starting a family. If one waits for all of the stars to align in just the right way, that day may never come. Many successful businesses have been started as part-time ventures while working at a job. For anyone interested in starting a company, I recommend taking some action every day toward that goal. Initial progress may be frustratingly slow, especially if these activities have to be done during evenings and weekends while working full-time. Nevertheless, no matter how big the tree, a few whacks every day with a sharp axe will eventually bring it down.