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After my WordPress account was hacked by someone who inserted a photo that I was not happy about, I have moved E2Ecoaching.com to its own place. So if you subscribe to this blog please go to E2ECoaching.com and subscribe there. Thanks!

 

The Entrepreneurial Art of Joe

I was in Grand Central station recently and stopped in for a latte at Joe. I love indy coffee houses in New York. I will go out of my way to avoid Starbucks. Joe was espresso done old-style. Nothing automatic. Baristas who know their beans. When I got home I looked up Joe on the web and found a pretty interesting company. Founder Jonathan Rubenstein was gracious enough to give the rest of us entrepreneurs some perspective on what it’s like to run four superb coffee houses in the world’s toughest market.

Tell us about your business. I would love to know how many coffees you serve a day, how many baristas you employ, what kind of growth you are seeing, the basic stuff like that.

We have four locations. On average, the shops serve about 600 customers a day and overall we serve about 3,200 cups of coffee per day. We currently employ 60 people, of which two-thirds are full-time. Fifty are baristas and 10 are support staff.
In the bible of entrepreneur books, The E-Myth, the author says that just because you love baking doesn’t mean you should open a bakery. Yet it appears you started Joe because of your love of coffee. Is that right, or was there something else that drove you?

I read The E-Myth and loved it. I loved coffee, but that didn’t mean I was a “mechanic” or even an expert. I was more of a consumer who looked at it from a business perspective. While I worked many counter hours at the beginning, I never defined the business by making the coffee drinks myself. I instantly tried to train others to do it, so I could focus on other aspects of our business.

So you opened your first store. When a retail entrepreneur opens a first store or restaurant, maybe it’s still a hobby. But not when you open the fourth.  That’s a real business. Did you have a vision of having a lot of stores when you started or did getting the first one under your belt change your thinking about what the business was going to be?

I always said I wanted to have five stores. In small retail business, that is often the point where the whole is greater than the sum of its parts. Where we could build the infrastructure, share costs, use purchasing power. Five shops is just shy of what people will perceive as a chain, and still lets us be viewed as a small business, which we really are.

New York City has to be the toughest market in the country for retail. Did you fund your expansion internally, with family, other partners? And how are the banks treating you?

That has changed as the business has grown. The first two locations were funded using money that I and my family raised. The shops were also built out for as little money as we were able to raise. Starting with the third location, banks were much more willing to help us with loans, and we are now at the point–or were, until a few weeks ago [with the financial crisis] where we can more easily raise money privately, or go to the banks for loans.

Who does what in terms of management of the company?

Gabrielle is my sister and partner. We are constantly restructuring the organization as we grow. At this moment, each of the four shops has a general manager and a barista trainer, and most have an assistant manager. Gabrielle works as director of operations, and Amanda Byron is director of coffee, overseeing the trainers and quality of beverages. Consistency and quality of training is perhaps the most challenging area of our growth.

What prepared you to be an entrepreneur? Anything in your genes? Family business? Role models? From your press clippings it looks like you were a complete neophyte in business. Are you the accidental entrepreneur? And how glad are you that you didn’t buy that Long Island summer camp?

Good research! I guess I have always had that entrepreneurial spirit. I used to form clubs in high school and college. I started a day camp in 1988 that is in its 20th year. While I never took a business course, that is just where my skills lie. There have been plenty of other jobs where I didn’t succeed or have what it took.

Seth Godin in his book “Purple Cow” talks about the importance of having a business that is truly remarkable. Starbucks, not remarkable. What your baristas do with latte art — remarkable. What else is remarkable about Joe?

Thanks! As empty a mission statement as it seems, we just try and home in on three things–great coffee great environment and great customer service skills. I’d say the way we treat coffee as a culinary art is remarkable. Otherwise I’d say we are more solid–we do try very hard to be a community place and offer things like classes for home enthusiasts, artwork by local artists, a running club, and free public cuppings.

What’s the most painful lesson you’ve learned in your business?

That is yet to come.

How has the change in the economy affected your business and what are you doing differently now?

So far it hasn’t. I keep waiting and worrying. Some people tell me that a cup of coffee will remain an affordable luxury and it will be one of the last things anyone gives up. I’d guess that some may switch from $4 drinks to $2 drinks.

What will the business look like in five years?

There may be one more location and we may get more into roasting, catering and consulting. But that is probably the extent. Hopefully we’ll do what we are doing now, but do it better and better.

Here’s where you get to give advice to would-be entrepreneurs. What’s the one thing you think everyone who is thinking about leaving their personal Dilbert cartoon and starting a business should know?

It sounds cliche, but just have passion and so as much learning and research as you can.

***

If you’re in New York, you owe yourself a coffee at Joe. I don’t care what the stock market is doing–stop in, order a latte and drink it right there.  In addition to Grand Central, Joe has stores at 141 Waverly Place,
9 East 13th Street and 405 West 23rd Street.

 

Getting Employees to Think Like Entrepreneurs

The Wall Street Journal’s very informative Independent Street blog carried an item yesterday about getting employees to think like entrepreneurs. The keys are to: Organize them into small groups, share profits, embrace failure,  reward ideas and promote risk takers.
Those are all worthy ideas. But  they speak to the fact that employers tend to think “programs” when it comes to fostering an ownership mentality. The thinking goes: If we give incentives, share profits, write stories in the company newsletter about successful or unsuccessful ventures and make everyone a hero,  we’ll get ownership thinking.
A fundamental piece is missing: The top-down piece.

If owners want employees to think like them, they have to emotionally meet the employees where the employees are.  Workers will be more likely to think like owners if they have executive leaders who demonstrate compassion; who take workers’ feelings into consideration when making decisions; who express their feelings about people; who manage their own emotions well at work and project a strong but humanistic image. It is company leaders’ people skills that matter most to fostering ownership thinking.
The company I grew up in, where I worked from age 24 to 41, was such an organization for most of that time.  CMP Media sponsored frequent programs to foster entrepreneurial thinking.  They sent many employees to every conceivable training course to improve our business and sales skills. They even paid for me to go to Columbia for an MBA.
But what made the company remarkable was the husband and wife team who founded it.  (That’s Gerry and Lilo Leeds in the photo above.) They had superb emotional intelligence skills. They could read the mood of the work force and respond quickly. They had values they brought to work every day (the very well-off CEO drove an old station wagon to work for years and years). They were always approachable. That doesn’t mean they weren’t tough when they had to be. They made lots of difficult business calls along the way.

As employees and managers, the idea of “What would Gerry and Lilo do?” was never far from our thoughts as we made decisions that affected the organization. We didn’t own the  company, but because of them, we acted as if we did.

 

Franchising After a Layoff: The Cure May be Worse than the Disease

There’s a provocative post on one of StartupNation.com’s blogs. The title is,  “Out of Work? Consider Buying a Franchise.” The writer cites the downfall of Wachovia Bank and addresses the 5,000+ workers in Charlotte, NC, who have already lost their jobs.

The author writes, “When the unemployment rate is high and large corporations are downsizing, buying a franchise is typically a good alternative for someone with the entrepreneurial itch.”

Nooooooooooooooooooooooooooooooooooo!

Buying a franchise isn’t good for an itch. In fact, franchising can make you want to scratch that itch until you have a huge rash. An infection. Gangrene. Amputation! You get the point.

When you get laid off (and I know whereof I speak, I was there once seven years ago courtesy of Ziff Davis Media), you may not be in the best psychological frame of mind. Your confidence is shaken, your routine disrupted. You’re disoriented. To distract yourself, you start Googling and clicking and, before you know it, you’re a franchisee. You’re still hurting from what happened in your job as you embark on something that will test your limits as nothing has before.

You are not running toward something as much as running away from something. And it’s just a matter of time before you can’t run fast enough or far enough to get away from yourself.

If you find yourself laid off from a financial services job or any corporate job amidst the economic chaos that is unfolding, and you are fortunate enough to have enough cash in the bank to even think of buying a franchise, my advice is to wait a while. Consider taking a few months to do some things completely unrelated to work.  Travel, spend time with your family, read–whatever pleases you.  Even if you’re a “Type A” with a short attention span, resist the urge to jump too fast into something else. You may not be the franchise or entrepreneur type, and if the itch goes away by itself, that’s a lot better than spending your nest egg on a dubious prescription.

Have experience with buying a franchise before you were ready? Or one that totally contradicts my point of view? Let me know.

 

StartupNation Home-Based 100 Contestant

When I’m not coaching, I’m a small business entrepreneur. I started the business in 2002, around the same time I started coaching. I had no idea that those two career paths would intersect. But now I coach executives who are, or want to become, entrepreneurs. I entered a contest sponsored by StartupNation and I think I have a shot at winning. So if you’re reading this, please click and vote for me!

 

These Entrepreneurs Move their Own Cheese

I first met Emily Sunderman when we both worked at CMP Media, a publishing company on Long Island, in the 1990s. She was a business analyst and a great person. We both moved on and I hadn’t heard of her again until I stumbled upon her online.  Wouldn’t you know it, she and her husband, Michael Lee, are entrepreneurs. Their cheese-making business, Twig Farm, is based in Cornwall, Vermont. We reconnected and she and Michael were gracious enough to take time away from the goats to answer some questions about their entrepreneurial journey. I told Emily before she answered these questions that, looking at her website, I wanted to be a cheese farmer in Vermont just like her! After reading her answers, that fantasy hasn’t changed. Thanks Emily and Michael, and continued success!

What has been your greatest success as entrepreneurs? And your biggest failure?

Biggest failure first.  We tried raising buck kids for the Easter market this Spring—hundreds of hours of labor, lots of purchased feed, and we lost our shirts at the livestock auction. Live and learn.  Greatest success is we make a good product that we’re proud of and that people need, or at least want, very much.

What advice do you have for would be executive-to-farmer entrepreneurs?

Animals don’t take weekends, holidays, or two weeks paid vacation. There aren’t very many people who want to work Christmas so you can drive to Auntie’s.

When I went to your website, my reaction was, “I wish I was a goat cheese farmer!” It looks so idyllic. What’s it really like to be in the cheese-making business in Vermont?

It’s a lot of fun doing one shitty job after another–sort of a definition of farming. If you know that to begin with, it makes it all a lot easier.  Specifically to the cheese-making side of things, we’re part of a friendly community that rarely sees one another. We make a ridiculously small quantity of cheese, and have gotten very good at saying, “We don’t have any more cheese to sell you” in lots of very gentle ways.

Why did you get into this business, and what were your goals when you started in 2005?

I don’t remember.

How have your outlook and goals evolved since then?

We have a goal to take a family vacation next year.

What’s a typical day like?
Michael gets up at 4:45 to set up to milk the goats. By around 5:15 he gone out–this time of year wearing a headlamp as it is dark–to find the goats in the pasture and lead them to the milking parlor.  Milking and cleaning up are complete by around 7:30 and then Michael gets the milk into the cheese vat to start warming up.  We have breakfast together around 8:00 then chase down shoes for our toddler.  Michael drives our three year old son Carter to day care and Emily starts email and telecommuting at her job as a web traffic analyst. The cheese is usually ready to stir when Michael gets back from daycare drop-off and the cheese made is usually in the molds by lunch time.   We generally have cheese sandwiches together at noon.   After lunch Emily goes back to web traffic and Michael moves fences for the next pasture rotation or some other regular farm chore.   Michael sets up milk around 3:30 and is done with afternoon milking and clean up around 5:45.  Emily goes to pick up Carter from daycare at 5 and is back around 5:45 and we cook dinner and play at being pirates or firefighters.  After dinner the cheese is usually ready to move to the brining process in our walk-in cooler, so Michael moves the process along.  We take turns putting Carter to bed, and then read the New Yorker and do email before turning in for the night.

Has the larger economy (oil prices, feed prices etc) affected your business and if so how have you adjusted your strategy?

Yes–feed has doubled in price since we started four years ago.   We’ve raised our prices a little and are now buying milk from other farms as well so we can make bigger batches of cheese.

What do you love most about your business?

No boss!

What do you like least about your business, or hate most, if you feel that way?

It is no fun when an animal gets sick and neither we nor the vet can make them better.

Michael does cheese-making, Emily does marketing and web support. Who does everything else? Do you two do it all?

Emily looks after the bookkeeping and marketing.  We have a high school student that helps us on Sunday mornings with packaging cheese for shipment.  We also have help with milking on Saturday mornings when Michael sells cheese at farmer’s market and on Sunday afternoons so we can have family time.   Michael takes care of the animals and makes and ages the cheese, and everything else.

I live on Long Island. How can I buy your cheese?

You can buy our cheese sometimes at Lucy’s Whey in East Hampton, or at Saxelby’s Cheese in the Essex Street Market in New York City, or at Bedford Cheese in Brooklyn. Murray’s in New York City usually has our cheese too.

 

The New Franchise Landscape

I had lunch the other day with a franchise consultant who helps people find a franchise that’s right for them. He is a franchise veteran in addition to being a consultant.  We agreed that for the past half-decade or more, franchising has been driven to some degree (I think a large one) by middle-aged Baby Boomers who grew tired of their jobs in corporate America and found an easy way to buy themselves a job through the equity in their homes. They bought an unprecedented number of franchises, writing checks from easy-to-get equity lines of credit.

I knew some of those people personally–the ones who would have been better off spending $10,000 on a Club Med vacation, rather than $200,000 on a franchise, because all they really needed was a change of scenery for a while. Now, many of those people have closed their businesses because they did not find the success that their franchisor and their own fond wishes had promised them. Along with shuttered businesses, many have lost homes and/or their kids’ college savings.

I’m not one to look for silver linings in bad news. The stories I have heard are  harrowing. There’s no “Oh, well, it’s a learning experience” to be said when someone loses their house.

The future landscape, which became a reality in the last month but has been taking shape all year, looks very different. My friend the franchise consultant is already seeing it in the people who come to him looking for a business to buy. The people who were going to buy a franchise out of boredom, or because they couldn’t find a job after a layoff, are gone. They are being replaced by people with maturity, management experience and cash.

It turns out that not everyone can or should own their own business. Entrepreneurship is not something everyone can do. That’s why, when I’m asked by prospective franchisees about whether the particular franchise I own might be good for them, I do everything I can to get them to run for the hills. If they’re crazy enough to be entrepreneurs, they don’t need encouragement from me. They’ll go ahead and do it anyway.

 

The Softer Side of Entrepreneurship

For many entrepreneurs and executives, emotions don’t have a place at work. I have met and worked for many senior managers who expect employees to show up in uniform, ready to play, with their game face on. I have also been that manager at times—the one with his own problems who just wishes everyone would do their jobs without complaint and let me do mine.

If only people-management were that simple! In fact, emotions rule in the workplace, whether you want to admit it or not. You think the fight your controller had last night with her husband doesn’t affect you? That you can turn your back when one of your salespeople tells you he’s being ridden so hard by his sales manager that he can’t focus? That it’s not your problem when a customer made your customer service manager break into tears?

I’ve been giving a lot of thought lately to the impact of emotions at work as I go through the process of becoming certified as an Emotional Intelligence coach. There are a variety of emotional intelligence skills noted by Genos America, an expert in the field. They are emotional self-awareness, emotional expression, emotional awareness of others, emotional reasoning, emotional self-management, emotional management of others, and emotional self-control.

The other day I was working with a client on emotional awareness of others–the skill of perceiving and understanding others’ emotions. After taking a self-assessment and having several people from her organization take the assessment to score her, she found that while her self-score was high, the score given to her by her raters was quite low. The ratings were based on how frequently she identifies the way people feel about issues at work, understands what causes people to feel specific emotions, and demonstrates an understanding of others’ feelings at work.

She said something interesting when reflecting on her results. “I care really deeply about my people, but I guess I don’t always show it.”  Wow, you don’t hear management types show that degree of self-assessment very often! She’s now doing a fieldwork assignment to think about a situation where emotional awareness was important to a business outcome, what she could have done better, actions she can take to develop her skill and how she’ll be able to measure her progress.

Have you had an interesting Emotional Intelligence experience in the workplace? Let me know.

 

Sometimes You Gotta Bust Some Balls

Maybe this situation sounds like your business: you have a highly transactional business with lots of customer orders and deliveries. Orders are taken by phone (not online).  Once the orders are taken and entered into a database, a manager (or two) checks them for accuracy. Sometimes the managers are busy and mistakes get through — pricing that’s wrong, items specified that you no longer offer, addresses entered incorrectly. Because of this system, you have an error rate of about 5%. At the volume of business you are doing, that means about 10 customers a week are affected, and are they ever angry about it.

So what’s wrong with this system? A few things:

• The employees taking the phone calls from customers are actually trying to avoid picking up the phone. They are paid an hourly wage; they can see each other in the office. It becomes a game of “it’s your turn to answer the phone.”
• Once they do pick up the the phone and are disturbed by customers, they have no incentive to check and double-check their own work. After all, a manager is going to check it anyway. They make $9 an hour and are watching the clock until it’s lunchtime or time to go home.

This was an actual situation in a sizeable business run by a friend of mine. Here’s what happened next:

He hired an outsider (from the same industry) to head up sales. The New Sales Guy has a reputation for being (can we say this on the Internet?) a ballbuster with employees. Very demanding. Customers love him though–he delivers on his promises with fantastic commitment and quality. Here’s what New Sales Guy did:

• Teams. Reorganized the phone-order takers into teams of three: two salespeople and one to do data entry and quality control. The managers were immediately taken out of the order process.
• Performance Linked to Pay. The teams were given responsibility for checking their own orders. There would be no one else to blame for mistakes, as all orders would be easily tracked back to the team. Most importantly, the team received a commission on each order. If the team did its job well, each team-member could earn up to an extra week’s pay every month. If they made errors, no commission.
• First Ring. When the phone rings, if the customer is new, the salesperson who takes the order now gets that customer for life and a small annuity commission on all orders. That new customer  belongs to their team.

Sometimes salespeople complain to the boss about New Sales Guy. The boss rightly says, “He’s your boss now, not me. Work it out with him.” The boss now has a lot more time to work on boss-type things.

The error rate on orders is down 90%. It took six weeks to make the changes and “re-educate” everyone. The teams don’t mind so much about New Sales Guy being  a ballbuster sometimes, because they have a pocketful of extra cash, which, let’s just say, cushions the blow quite a bit.

 

What to Say when a Great Vendor Raises Prices

When my CPA recently sent me an email saying he was raising my monthly fee, what do you think I said when I emailed back?

I said, “Thank you, Mike. You deserve it.  Congratulations! And thanks for being a great accountant and adviser.”

Sometimes, price increases from vendors are justified not just because of the rising cost of doing business, the skyrocketing price of gas, or other factors. Great service providers get to raise prices regularly and their customers could care less about having to pay more. How many of your vendors would you say that about? How many of your clients would say that about you?