Business

The Pros And Cons of Bootstrapping Your Business

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business planLast week I had a lunch conversation with a friend about an interior design firm she wants to start soon.  She doesn’t want to be held financially accountable to anyone, and she has decided to fund the business with both her savings and income from her day job at a furniture design shop.

This led us into a longer discussion about when and why it might be a better idea to bootstrap your business.  Let’s look at the pros and cons:

Pros

More Freedom – Usually, when you invite monetary support from venture capitalists, angels, and even loans from friends and family, you lose some or even most control over how the business is run. This is because the people giving you money are expecting you to use it a certain way and properly repay them someday.  Many people instead use their savings or moonlighting to start and run the business until it is making a profit.  Of course, no one will tell you how to run the business because you are using your own money.  With this said…

More Money:  When you are bootstrapping, you don’t owe money to anyone.  You have nothing to share with anyone else so that you will have more take-home profit.

More Pride: When you are bootstrapping, you tend to feel a sense of pride in your business, and thus, you will work harder to make it successful.

Learn Resourcefulness: Using your own money forces you not to waste it on things your business probably doesn’t need.  You quickly learn how to be creative with the resources you have access to and how to react to new situations.  Resourcefulness is an excellent skill that more of us need to have these days.

Cons

More Stress: Bootstrapping can be very stressful.  Many entrepreneurs either work at one full-time job or several part-time jobs in addition to running their dream business.  This can take a toll on both your professional and personal lives.  Working a day job while moonlighting literally becomes a 24-hour, seven days a week job.

More Trouble?: On the subject of moonlighting, check with your current employer about their moonlighting policies for employees. Don’t get terminated from the job that is financing your business on account of your business!

Slower Business Growth: Unless you’re independently wealthy, in many cases, your business will grow much slower because you are working with a limited budget and resources.  You might have to work from home and not be able to hire employees for a while.  Again, this is why you need to be resourceful.

Access to Networks: One of the better things about getting external funding is that many investors can also act as mentors and are willing to give you access to their network of other people who might want to do business with you.   Many bootstrappers don’t have that kind of access unless they are willing to find mentors that can barter resources instead of money.

More Risk: When you are using your own money, it is riskier.  Many bootstrappers go a year or more without making a profit.  Whereas, when you have investors, the risks (and successes) are shared.

Most entrepreneurs have mixed feelings about bootstrapping.  This is not for everybody. Personally, I think bootstrapping makes sense, depending on the type of business you are running.  I have never used external money to fund any of my business ventures.  I am a bit of a control freak when it comes to my affairs. Instead, I barter resources from trusted individuals, and that has worked out best for me.

I am also very resourceful.  All of my businesses are online for a reason.  I decided early on that renting a physical office would be too much for my budget.  I think it only makes sense to have an office if you have the type of business where you have to meet with clients regularly.  Technology like video conferencing and e-commerce has made a big difference in how I run my businesses and make a profit.

Another example of smart bootstrapping is another friend of mine who is about to open a restaurant in Los Angeles.  For the last 13 years, he has always wanted to run his own restaurant, but he was not able to get the funding he thought he needed to get the idea off the ground.  He originally had two investors eight years ago, but they were not able to agree on how to use the money.  So he decided to take a detour to his dream by starting a part-time catering business.  He kept his day job as a sous chef at another restaurant, while catering on the weekends.

This worked out for him in many ways.  He was able to save money from his regular day job to help finance his catering at the beginning.  He made sure to learn everything about running a restaurant from his day job, where he eventually became a manager.  The catering business allowed him to experiment with new foods he wanted to cook for new clients.  He was also able to network with many clients who were powerful in the entertainment business, and who also gave him referrals.  During this time, he was able to test out, develop, and finalized a menu, scope out potential restaurant locations and create a business plan for his restaurant.

Fast forward eight years, and now he is about to open his Asian fusion restaurant in West Hollywood later this year.  I am so proud of him, and I plan to go out to Los Angeles to celebrate the restaurant opening.

The lesson here is if you are going to bootstrap your business, make sure you think it through and have a plan of action, which should include a pro forma financial statement (very important), a strategic plan and a business plan.

The Benefits of Workforce Diversity in Today’s Economy

Multiethnic People with Startup Business Talking in a Cafe

Last week I discussed the importance of cultural competencies in our global economy.  But what about diversity within your organization?  Workforce diversity is not just a buzzword; it’s the norm for doing good business today.

Over at Global Wire Associates, we pride ourselves on making sure we hire the best and brightest from all walks of life.  Under each of our job openings, we list the following:

Global Wire Associates is an equal opportunity employer and committed to workforce diversity.  We encourage applications from qualified women, ethnic/racial minorities, people with disabilities and those from Least Developed Countries (LDCs) as recognized by the United Nations.

Unfortunately, even in 2015, there are still many people who don’t get it.  So here are my reasons why you need to care about workforce diversity.

Diverse Employees, Diverse Perspectives – Studies back up that the more diverse your staff is, the more success you will have in business outcomes.  Bringing employees together from different life experiences can support innovation and more effective problem-solving.  The same is true about diversity in business ownership and management, as it helps to increase employment and economic outcomes.

Avoid Embarrassing Work Mistakes – Even today you still hear humiliating stories about how a high profile person, a newspaper or the marketing department at a company do something that is perceived as being offensive to a particular group of people, whether it is race, class, gender, sexual orientation or disability.  One of the benefits of having a diverse staff is that someone with cultural awareness is more likely to call out a potential faux pas before the world sees it and save the company from embarrassment.  In this situation, it might be time for the staff to have a diversity training session from the human resources department.

Other People Want To Do Business With You – Clients and vendors nowadays like to do business with other companies that value workforce diversity and understand that qualified workers come in every stripe.  Also, people are more likely to want to do business with companies that have staff that look like them too, since clients and vendors are also just as diverse.  With that being said…

A Globalized Workplace Matters Today – Technology has made the world a smaller place.  With one click, we can get services and products from anywhere on the planet.  So that means your customers could be any race, culture, religion or nationality.  It is also very important to not offend international clients, like making light of the serious deforestation crisis in Brazil or trivializing human rights abuses in Tibet.  In today’s economy, businesses are expected to have globally-minded employees that understand intercultural communication.

Better Intercultural Communication Is Doing Good Business

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Global Wire Associates has served thousands of clients in 55 countries since 2005

Technology has made the world a smaller place, especially in today’s global economy.  Now more than ever businesses have to interact with customers and vendors from all over the world and across different cultures, religions and languages.

Naturally if you want to do business internationally, you would think that all you would have to do is learn another language (or two).  I first started learning Spanish in high school, and today I am able to converse professionally en español.  Also, having worked in international development for over the last decade, I have also picked up some French and Arabic.

Learning another language is a great and valuable skill to have today, even if you are not fluent in that language.  In my experience, most people I have interacted with who don’t speak English appreciate it if you even make the effort to learn some keywords in their native language, like “Hello”, “Excuse Me” or “Thank You.”

However, I must say that while language skills are vital for international business, it is just as important, if not more important, to understand social intercultural communications.

What I mean by this is do you understand how to maneuver yourself in the culture where you are trying to do business.  For example, did you know that a business card isn’t just a business card in Japan?

Years ago, I started doing business with a new Japanese client.  Right after our first in-person meeting, we exchanged business cards, or meishi in Japanese.  While I put his business card immediately into my bag, the client held up my business card and looked at it like it was a piece of art.  He kept telling me how much he liked the minimalist design of the card and how I was able to put so much contact information on it.  At that point, I immediately took out his business card and tried to look at it with the same admiration.

It was then he said to me, “You don’t need to do that. I know you are American.”

Then I first felt puzzled and then embarrassed.  He then explained to me that business card exchange in Japan is actually a very formal one.  In fact, the card presenter judges how they will be treated by the card recipient based on how they receive the card.  (You can read more about meishi exchange here.)  After he schooled me on this tradition, we both laughed it off.  Luckily, he wasn’t offended by how I received his business card, and, yes, he is still a client today!.

But I refuse to let another cultural faux pas happen to me ever again.  Now when I have to do business internationally, I try to read up on customary business etiquette in that culture.  In many countries, there is a lot of value in the handshake or eye contact.  Sometimes you are expected to bring a gift for the client.

Email etiquette is a big deal.  I’ve learned to make sure that email messages don’t have poorly conceived jokes or double entendres, as they can be misunderstood or taken the wrong way by an international recipient.

I have also learned that in some countries like South Africa or Germany, it is not customary to discuss business during a business dinner, but rather discuss family or sports.  I make an effort to keep up with what is happening in the soccer world, such as popular athletes or specific games, as that generally becomes the topic of discussion at many business dinners.

Also, being aware of who you are in a different cultural context is very important and knowing how to overcome it.  Being an American businessperson, sometimes international clients might have a preconceived opinion of you based on what they already know about American culture, both the good and bad.

For instance, Americans are viewed as rude and arrogant among some French citizens.  Race plays a role in international business politics as well.  Being African-American in global business can be a double-edged sword.  I have met people outside of the United States who say to me that they admire black Americans for our culture and endurance for civil rights, and hold up Dr. Martin Luther King and President Obama as role models.  However, I have also experienced discrimination, especially in Sub-Saharan Africa of all places, because of this horrible stereotype that all African-Americans are violent criminals.

Gender politics are also viewed in variety of ways around the world.  For example, in Muslim countries, men don’t generally shake hands with women.  However, in some countries like Ghana, it is generally expected to wait for the woman to extend her hand first.  Sometimes I have potential international male clients who contact me about doing business with my company.  However, many times they think I am the secretary and not actually the business owner.  I had one guy actually ask me to transfer our phone call to the male owner of the business because they didn’t think I was the person in charge.  Needless to say, that guy did not become a GWA client.

The bottom line: doing good intercultural communication is doing good business.

The Benefits of Meditation for Entrepreneurs (and Everyone)

Stone Balance
The holidays are all over now.  Time to put away the Christmas tree and stop eating holiday treats (yes, really). Time to get back to normal everyday life.  However, for those of us who run businesses, hustle and bustle is normal everyday life.  I was busy the last couple of weeks redesigning this website, that website and creating content and digital strategies for clients.  Also, Global Wire Books released its latest ebook this week and Global Wire Design launched a new year’s marketing campaign.  On top of that, I have to start working on 2014 tax returns for my staff.

Yes, I am very busy and sometimes it can be stressful.  A few years ago a good friend of mine recommended that I take up yoga and meditation to bring some relief to my life.  This was one of the best recommendations I could have ever received.

Yoga is great as a physical exercise.  Taking a 90-minute weekly yoga class has really helped me get fit over the last few years.  However, I really appreciate the breathing and meditation exercises in these classes, as it has made such a difference in my work and personal lives.

We all know the health benefits of meditation, such as decreased blood pressure and anxiety and increased energy, self awareness and peace of mind, but many of us get so wrapped up in our busy lives that we don’t take the time to breathe, literally.

So here is how I meditate and I hope you will find this useful in your own life.

Logistics:

  • Find time – This is very important.  This could be five minutes a day.  I like to meditate first thing in the morning, as it is a great way to start the day on the right foot.  If you are not a morning person, do it just before you go to bed to whine down.  Also, you can meditate many times during the day, like if you are waiting to pick up your kid at school or during lunch break, or for that matter, any break you can take during the day.  I like to meditate during my commute on the train or bus.
  • Find a quiet place – This is why I recommend meditating in the morning or evening when your living space is at its quietest, but you can close the door in your office or sit in your car.  If you have an office cubicle or commuting on public transit or anywhere that is noisy, put your headphones on and listen to some soothing audio, either chill/downtempo/lounge/yoga music like Thievery Corporation, MC Yogi, Enya or natural sound effects like waterfalls or waves crashing or birds singing.

Practice:

  1. Position yourself – sit down in a chair or cross your legs on the ground.  You can also do this standing if you are not in the position to sit.  Then close your eyes, try to forget about what is happening in your life at that moment and concentrate on breathing.
  1. Sama Vritti – this is the ancient Ayurvedic practice of “equal breathing”, where you inhale the same amount of air that you will exhale.  First concentrate on your natural breathing first.   Begin a slow count to four as you inhale through your nose. Then also count to four as you exhale out the noise.  Some people practice inhaling in the nose and exhaling out the mouth.  Others inhale, keep the air in for a few seconds, and then exhale.  As you feel comfortable you can increase the count time.
  1. Nadi Shodhana – or “alternate nostril breathing” is when you hold the right thumb over the right nostril and inhale deeply through the left nostril. At the peak of your inhalation, close off the left nostril with the ring or pinky finger, then exhale through the right nostril.
  1. Guided Happy Thinking – go back to Sama Vritti or normal breathing and think of a positive thought or image.  Maybe think of an inspiring quote by your favorite philosopher or poet.

When I started doing this practice a few years ago, I thought this was kooky, hippie stuff.  But after doing this breathing and meditating for the first couple of weeks, I started to feel less stress,  make better decisions, and think out things more rationally when dealing with work and family.

Today I try to do this practice at least 10 minutes a day.  You know I don’t do new year’s resolutions, but if you want to try doing something about reducing life stresses with a simple plan that can be immediately implemented, try meditation.  You will thank me later.

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