Back in July of 2009, we published a blog post that talked about “The Coming issues in finding and retaining talent”.  At that time I made the statement:

“….what does it all mean?  Nothing today – it’s still too scary in the job market right now.  But once there is some stability back in the workforce – and there will be eventually -  I think there will be a substantial shuffling of bodies across organizations, industries, and geography.”

It has only taken 30 months for me to be to correct!

Some recent surveys show more and more employees ready to quit their jobs and try something different as the economy is expected to improve somewhat in 2012.  It sounds like many employees – particularly those in big companies – are finally ready to show their dissatisfaction and discontent with the way they have been treated during this downturn.  Making up for all that work previously performed by fired employees, while taking a cut in pay and benefits has taken a toll.  And the reward of “…just having a job” is not going to be enough as the economy starts to come back.

I stand by my prediction – people are going to start to leave big companies in droves as soon as they feel safe to do so.  They may not know what they want next – but they know they don’t want to go through the last few years again.  Yes …. this should be viewed as a wake up call for employers.

What is your firm doing to keep those people that survived the last 4 years?

I recently sat down with Adam Baker, Managing Partner of up-and-coming gourmet hamburger restaurant Larkburger based in Colorado.  Larkburger has quickly carved out a nice niche in the highly competitive quality quick serve space in spite of a host of competitors the likes of Red Robin, 5 Guys, Smashburger, as well as numerous local hang outs.  With so many selections, Denver has quickly become what I’d define as the center of the burger universe, and an incubator for new burger startups.

I’m no food critic, but I do love a good burger.  I have to admit our discussion got a little distracted when even the smell of the burger neared our table, but we had to stay on the subject at hand:  Larkburger.   A little history straight from the website:

In 1999, the “Larkburger” was first featured on the menu at renowned chef Thomas Salamunovich’s fine dining Larkspur Restaurant in Vail, Colorado. Overwhelmed by many years of popular response to the “Larkburger,” Thomas recognized that a perfectly prepared, all-natural gourmet burger would be appreciated beyond Vail – so in 2006, Larkburger, the restaurant, was born. 

Larkburger’s quick-casual footprint has grown to 6 restaurants, with plans to double the number of eateries in 2012.  So how, in the middle of a recession, in a capital constrained lending market, in a highly competitive market space, has Larkburger been able to grow?

First, at the core of the strategy is to build a consistent and recognizable brand.  The old adage, “do one thing and do it well” immediately comes to mind.  Larkburger aims for an uncompromisingly high level of quality and consistency in the food and the experience.  “Guests”, as Baker repeatedly referred to them, (as opposed to customers) can expect a varied but limited menu allowing Larkburger to achieve economies of scale, shorter employee training periods and a singular focus on consistency.

Second, and refreshing to hear in today’s business climate fueled by hype, Larkburger has taken a controlled approach to growth.  The company has made the strategic decision to operate company owned restaurants financed by equity.  This strategy supports the culture of controlling the quality and experience as the company culture is built, so as to not outstrip their ability to build their brand.

Underpinning the strategy are 4 company values:  Responsibility (environmental and personal), Respect, Innovation and, of course, Consistency.

Here’s the best part.  Larkburger is accomplishing all this in an environmentally friendly manner.  Their eco-friendly philosophy, Keeping it Natural, is centered around environmental responsibility and sustainability at every turn.  While many companies are scrambling to develop sustainability programs, Larkburger is integrating its program from the ground up, a difficult task when balancing the competing interests of an early stage company.  Check out these ingredients for Keeping It Natural:

• 100% natural ingredients (no preservatives or additives)
• 100% wind powered restaurants
• Cups, containers and utensils are biodegradable and composted along with paper and food waste from the restaurants.
• Canola oil is reused as auto fuel.
• The list goes on…

“Where will Larkburger be in 5 years”, I ask.  Baker chuckles and won’t reveal his hand.  “Bigger and better”, he says.

Much like the burger I had just polished off.

To learn more, visit www.larkburger.com

Internship. We’ve all heard of it, had one, gotten paid to do one, taken a volunteer one just for the experience, or managed a program for them- maybe you have even seen it from all sides. But with companies small and large struggling to stay in business, and highly-experienced candidates willing to take on the most menial of positions, where do the interns fit in this picture anymore?

The first step toward making that determination is to establish what you have to offer an intern, and what in turn, you expect that intern to do for your company. Many people make the mistake of misusing interns; turning them into errand-runners or personal assistants, when that is an entirely different job category. What makes an internship different from any other type of position is the emphasis on give and take. When it comes to typical jobs, an employer generally hires an employee that the company will benefit from (the taking part). Sure the employee will gain some useful experience (hopefully), but there is very little active effort on the part of the company to provide that return (or give) to those workers.

This should not be the design of an internship. Heather Huhman, author of “Lies, Damned Lies and Internships”, proposes that the key aspects of any internship should be education and mentorship. She recommends that “at least 51% of the experience should be spent learning and the remaining time should be spent applying what they learned”. Don’t let this come across as though your business should spend countless hours and indefinite resources coddling its young interns. This is simply a way of laying the groundwork for getting the end results out of your intern that your company will benefit from.

You are probably still asking: why would my company go through even the most minimal of extra efforts for an intern when we could just hire someone who already knows what they are doing? Besides the somewhat obvious: you can pay your interns less (mindful that you should always pay them something), there are two more great reasons not to axe your internship program.

The first is that dedicating a few resources to bringing in quality interns and structuring a solid program allows you to get exactly what you want. Your company grooms the interns, teaching them business skills that allow them to successfully complete projects for you. Remember, internships are about give and take: you give the interns valuable learning experiences that they cannot get in a classroom setting, and in return they give you a high-quality deliverable at the end of the summer. Feel free to structure an internship program around a project that your company has wanted to accomplish for some time, but hasn’t had the resources for, as long as it will impart some relevant knowledge on the participants.

The second reason, stems from the first, but applies over a longer period of time. These interns will one day be full-time job seekers out in the working world, and you undoubtedly need and want talented employees for your business. Teaching them what they need to know to become desirable at an early stage in their working lives ensures that they have time to cultivate those lessons, and come out on the other side as the ideal candidate (or at least closer to one). You may find that one of your interns is a great long-term fit for your company, or you may just contribute one more skilled individual into the workforce, but if enough companies do that everyone is bound to benefit in one way or another.

The most important thing to remember when it comes to your internship program is to give it structure and meaning. Choose real projects, goals, and timelines. Treat your interns as the potential employees they are; don’t waste their time, and they aren’t likely to waste yours. You can achieve tangible results with the help of an intern, and you can make it a life (or at least career) changing experience for them.

I recently read an article that explored the decision making process of Excelerate Labs, an incubator company that funnels money from angel investors and venture capital firms, into start-ups of their choosing. They run these initially promising companies through a boot camp to “groom them for expansion”, and give them $25,000, in exchange for 6% ownership.

The inescapable message of the piece is that first impressions really do matter. With so many pitches to read there is only time for five to 10 minutes per application. If yours doesn’t immediately stand out then you better believe it will wind up in the “obvious no” pile. The key question here: what makes a company’s pitch stand out?

On a very basic level, the start-up company shouldn’t be offering something that already exists in abundance in its market (think travel booking websites). It also should not be targeting too small a market, as investment companies can almost never reap a benefit off of these concepts, even in the most successful cases. If your company passes this initial test, the criteria become a little more rigorous. This can be summed up in two words- prove it. As hopeful and pleasant as being idealistic can feel, demanding money from someone based on nothing more than a theory is a little pretentious. Just as your company needs the money to get rolling; any investor needs to have a tangible company in front of it when deciding whether to pay out. There are three essential things that these board members expect from their prospects:

1) Give ‘em something to hold. If your company will rely on a software platform, have that application ready! Even if it is in the works, or in a beta version, being able to show that the conceptual idea is translatable into a working product is crucial.

2) Get customers. Or at least have a clear-cut plan to do so. If you can’t say with confidence that you will have a consumer base for your product or service, why would anyone want to risk investing in you? Know your target market, and experiment with the best ways to reach out to these potential customers.

3) Generate answers. In other words, have the skills and the knowledge base within your team to tackle the entirety of the project. Don’t expect that someone else will come along and answer your unknowns, approach your concept from as many angles as possible, and work out the solutions. Not having an answer to a what-if or how-to question in an investment interview just signals that your company may not have enough experience to get it to stand on its own two feet.

Of course, these rules aren’t hard and fast. Different investment companies seek different things from their opportunities, and some like risk a lot more than others. Persistence can often overcome a weak link here or there, but it never looks bad to be on top of your game (or website, product, platform, etc).

In case you are curious, here is the list of Excelerate’s protégés (notice that all but one have websites up and running):

A Space Apart; BabbaCo; Beyond Credentials; BuzzReferals; Cookitfor.us; Exchangery; FoodGenius; MapDing; Power2Switch; and Joystickers.

I have to admit, I am a compulsive boater.  My year breaks down into two distinct seasons, boating season and waiting for boating season.  As boating season draws nearer, reaping the full benefit of the season requires adept planning in the face of uncertain conditions.   Being too conservative can result in missing out on weekends enjoying the lake.  Being too aggressive can result in harsh storms damaging the boat.  Next weekend, I’m looking at 80 degree temperatures and an inviting marina – strategic planning at its best!

Today’s economic climate provides many of the same challenges.  We have all spent the past 2+ years scaling back, cutting costs and rightsizing our organizations.  Economic uncertainty has caused many companies to place their growth plans on hold.  With the economy beginning to show signs of life, now is the time to dust off the strategic planning process and set a course for profitable growth.  Chances are that your competition is still waiting to see how the remaining uncertainty will play out.  Timing, as they say, is everything and the precise time to plan your growth strategy is when your competition is being conservative.  Beginning your strategic plan implementation now means that you can nail the economic upswing while your competition is still waiting out uncertainty.

To get a quick jump-start on your planning process, consider an “executive retreat” focusing on the following:

1. Core Competency Assessment:  look to your employees (especially those who came from a direct competitor or customer), customer surveys, customer feedback and customer satisfaction rankings (we suggest Net Promoter Score-link = http://www.netpromoter.com/np/calculate.jsp).  What does your company do well, and where is your product/service offering lacking?  This is often at odds with your stated strategy.
2. Industry Trend / Customer Needs Assessment:  How are customer needs driving current or potential trends in your industry?   How do these changes line up with your core competencies?
3. Refining Your Corporate Vision:   Consider how customer needs, industry trends and your core competencies fit together?  Where are the gaps in your firm’s capabilities?  Can these gaps be fortified to capitalize on potential growth opportunities or market threats?
4.  Aligning Corporate Vision with Corporate Culture:   Consider how changes in your vision and resulting strategic objectives will be impacted by your current corporate culture.  Even the best-laid plans can be trumped by your corporate culture.  Consider how you will introduce and manage organizational transformation and engage employees in the process.

Of course, there is much more to strategic planning (developing strategies, operational plans, implementation strategy and performance management to name a few), but these major drivers are critical to getting your process going.

Time to make your move and get your boat into the water before the lake gets too crowded!

“Entrepreneurs embody the promise of America: the idea that if you have a good idea and are willing to work hard and see it through, you can succeed in this country. And in fulfilling this promise, entrepreneurs also play a critical role in expanding our economy and creating jobs.”

-President Barack Obama, January 31, 2011

Could the Startup America Partnership be the platform this country needs to propel our entrepreneurs to success? More importantly, have any of our small-mid sized startups even heard of this program? I can’t say I would be surprised if the answer was no. Too often government-sponsored initiatives go unnoticed and underutilized. But Startup America may have already avoided this trap by establishing a public-private partnership with some of the nation’s most innovative entrepreneurs and corporate leaders.

It’s no secret that it takes money to get a business up and running, and typically lots of it, but as most of us are already aware there is a catch-22 that surrounds this necessity. Investors are leery of putting their money up for unproven technology or an even remotely risky concept, however, it is incredibly difficult to test new methods or build a guaranteed consumer base without a little seed money. The point of consensus for both groups seems to be this question: how can we effectively link venture capitalists with their ideal startup (and vice versa)?

It is possible that the answer might be found in an initiative such as the Startup America Partnership. It is undeniable that it is a step in the right direction.

According to the Partnership’s website, all net jobs created in the last thirty years have been a product of startups. In economic times like these, with America’s unemployment rate just having dipped below 9% (to 8.9%) for the first time since 2009, we need to give entrepreneurs the resources their ideas call for. Sure, it is a safer bet for investors to stuff money in their mattresses, but it is also a certainty that they next time they check it won’t have grown any. According to the foundations and investors that have elected to take part in Startup America, the risk of investing that money is worth taking. The commitments that AOL co-founder Steve Case, Carl Schramm, and the Kauffman and Case Foundations have pledged include: recreating successful accelerator programs, encouraging mentor support, identifying resources to expand entrepreneurial education programs, and increasing commercialization outcomes at universities.

These efforts are not guarantees for financial backing, but they do provide a service that does not otherwise exist. It is much more straightforward for both the investors and the entrepreneurs to have a portal through which to search for the most fitting audience, rather than wasting time looking for the proverbial needle in a haystack.

It’s hard not to notice that one of the key debates in the energy sector these days centers around which technology (or plethora of) is the key to solving our crisis. There are two opposite approaches to this concern: focus on specializing and perfecting a core technology – or – invest in as many possibilities as can be discovered. This overarching concern is not unique to the energy industry, it is the same issue that many companies face when trying to cement a business plan. Put all of your eggs in one really impressive basket, or spread them out over a series of lesser cartons that cover more ground?

Being the best at something has it’s advantages: you stand out in the market for your good or service, investors want in on the action providing additional capital, and you can charge consumers more for what you offer.  But it also has a major risk, if you don’t stand out in the marketplace, or your technology does not succeed, everything is lost. On the other hand, when your business strategy involves a multitude of services, the failure of one does not necessarily result in a failure of the whole. But trying to be all things to all consumers isn’t exactly an easy task; a company can wind up in too deep to handle all of the demands, or can get little attention because the services they offer are mediocre at best.

While the concept is the same across both scenarios, the most profitable solution is not. Consistently the start-up companies receiving the most attention, and the most investment capital, are the ones that have singled out a niche for themselves. Take NextGen Solar for example, they were one of the four companies chosen to share in a $140,000 prize in the Clean Energy Challenge at the Midwest Energy Forum on March 3. NextGen’s contribution to solar energy is a thin-film solar cell; they will not be building entire systems or installing the cells, they are just seeking to provide the industry with an advanced version of this one piece. Having said that, when it comes to the interests of the nation as a whole, it is arguably better to integrate an assortment of renewable energy sources into an all-encompassing portfolio.

Businesses have the capability to set a goal for what they want to be good at and then work toward perfecting that service or product. A nation cannot foresee where the best technological innovations will emerge, so it is entirely unwise to constrain the realm of possibilities, especially based on whatever limited knowledge we may possess at this one moment in time.

Change is never an easy thing. Once we get used to a way of life it takes a pretty big upset to make us want to risk modifying our behavior. We have a tendency, whether in our daily habits or business ventures, to disregard the opportunities for small adjustments. We convince ourselves that it is a waste of time to make one minute change, and so we wait around for that major change to surface, but when it does we are too risk averse to actually seize the opportunity.

So what exactly is holding us back from building substantial change out of a series of lesser steps? In some cases it may be laziness, in others lack of knowledge, but I think the biggest hindrance is absence of foresight.  I am certainly not suggesting that it is possible to know how the future will turn out, but I am hinting that a little understanding of the long-term influence can shine a new light on these seemingly inconsequential changes.

I just read a Fortune article called “8 Green Stars at Most Admired Companies” and it highlighted the efforts of several high profile companies to move toward sustainability. Before I had even opened the article, my expectation was to see extensive green roofing projects, or brand new efficient production plants. Here’s what I actually found:

• Southwest Airlines plans to make the cabins in their planes lighter. Not by rebuilding an entire aircraft, but by replacing things like the carpeting and seat cushions.
• Proctor & Gamble is reducing energy consumption in the United States & Europe. Not by rebuilding plants, but by perfecting a detergent that allows their consumers to get the clean clothes they want in a cold-water cycle. No more energy is wasted to heat the water in the washing machine.
• McDonald’s is reducing its carbon footprint across the world. Their trick? Switching to low-flow toilets and changing their light bulbs to the more energy efficient LED versions.

The five other companies included in this article have slightly more complex sustainability plans, but the overall message is consistent. They are all taking it one step at a time. Adding one electric vehicle to a fleet, or changing even 1% of the material used in a bottle adds up, and over the long run prevents a sizable amount of environmental damage. Of course the hoards of money it can save doesn’t hurt either.

Urs Hölzle, Google’s Senior Vice President of Operations made this fitting comment about the company’s efforts to lower overhead in their data processing centers: “One of the key reasons for doing that is because it actually saves money. This isn’t an expense that we do to look good, although obviously it does make [us] look good and we’re happy and proud about that.”

The moral of the story? Nothing is too trivial to be worth trying.

‘Startup America’ is a White House initiative to celebrate, inspire, and accelerate high-growth entrepreneurship throughout the nation.  This coordinated public/private effort brings together an alliance of the country’s most innovative entrepreneurs and other leaders, working in concert with a wide range of federal agencies to dramatically increase the prevalence and success of America’s entrepreneurs.

- The White House

Depending on your political ideology, or perhaps on your likelihood to undertake a business venture, you will be prone to siding with one of the following options:

A. You believe that government is, in the least, partially responsible for the well being of our economy and the security of our financial markets.

B. You are of the opinion that the government should stay out of private citizens’ business as much as possible, including the development of markets and investments in economic ventures.

I am intrigued by the possibility that both sides may be able to find some common ground when it comes to case of startups that have the potential to improve and advance our entire country’s well being.

It seems justifiable to argue that the government benefits from a prospering economy, and thus should commit some resources toward creating opportunities for growth, or “planting the seed” as it can be known. If the United States wants to be competitive in the global market, then there has to be financial support available to “germinate” technological advances from cleantech and other key startups. According to an article on TechNews Daily, venture capital firms invested a record $7.8 billion in cleantech last year.  However, as Michael Borrus (general partner at X/Seed Capital Management) pointed out, there are few such firms willing to jump in early when entrepreneurs need funding to prove that their technologies are workable. Government investment at this stage has the potential for the greatest impact. Not to mention that it should have to follow the same rule that applies to private investors; if you want to benefit from the success in the end, you have to be willing to bear the risk in the beginning.

However, the government is a big machine, and it is unreasonable to expect that it can keep tabs on every new innovation and potentially rewarding startup, or that it is obligated to invest in all of them. By the same token, it is equally unreasonable to expect smaller private venture capitalists to have to front all of the money for these R&D efforts.

Startup America, while not a funding solution in and of itself, certainly provides a resource for filling in the gap between the money and the methods. A portal like this one is comparable to the sunlight that allows the plant to grow, it is not enough to guarantee continued life, but it is necessary to give it any in the first place.

For the last few years, owners considering selling their business have faced a difficult environment.  The lack of credit availability forced most financial buyers to the sidelines, and bad economic conditions caused strategic buyers to conserve capital, and focus their efforts on cost cutting.   Compounding the problem, many potential sellers have seen the financial performance of their business flatten or decrease, causing valuations to decline.  The result:  owners interested in selling have been biding their time waiting for the environment to change.  In the meantime, these owners haven’t gotten younger; their offspring that didn’t want to – or couldn’t – run the business still don’t/can’t; and in many cases, their retirement accounts have shrunk and currently earn paltry returns.  The clock is ticking.

But if you listen to people in the business of making deals happen - lawyers, accountants, intermediaries, and strategic advisors  – the tide may be turning.  The debt markets have thawed which helps financial buyers get back in the game.  Strategic buyers seem to believe they have done enough cost cutting, and now they need to grow – and an acquisition is often the fastest way to fill a gap in their growth strategy.  

As for the supply of businesses to buy, there are forces at work there too.  Listen to what LKQ Corp . (LKQX ), a nationwide provider of aftermarket collision replacement products that has grown primarily through acquisition of privately held businesses, had to say in their recent earnings release Q & A session when asked about it:

“The acquisition environment is absolutely the strongest deal market we have seen…… And I would say we are overhearing two things in terms of seller motivation, one is certainly the lack of clarity of what capital gains rates are going to be in that sphere….But I think the other thing we are starting to hear …. the fact that the liquidity of many owner-operators - that’s really been choked and the owner operator who used to be able to borrow say $0.60 in the dollar on the basis of his inventory or inventory and receivables, now his bank says that’s about 20 or 25%…..”.

Much has been written about the coming expiration of the Bush tax cuts  at the end of 2010.  And although no one seems to know for sure what the tax rates will look like, everyone seems to be in agreement that taxes will go up.  Anecdotal evidence abounds that the threat of these tax increases is driving business owners to try to get deals done by year-end.  But the larger issue may be the “fatigue” that has set in as a result of running a business in this environment.  Sure the majority of businesses made it through the recession intact, but at what cost?  Layoffs, cash flow problems, and fights with stakeholders have left many business owners tired.  If you listen closely, a lot of them are saying, “…it just isn’t fun anymore”.

Our take on the rest of this year: there will be an increase in deal activity, but if a company hasn’t started the process by now, they will have a hard time getting a deal done in 2010.  Over time, we believe that transaction values adjust to market conditions – including seller tax rates -  so those owners really wanting to sell will do so no matter what happens with that variable.   

Based on the conversations that we are having with ready and willing buyers – and tired business owners,  the next 18 months could be very busy.