Harvey MacKay Talks Business and Sharks
Since then, the economy has fallen on its face, the number of home offices has grown explosively, and Mackay has completed his third book, Sharkproof. These are not isolated events. As Mackay puts it, “While the Fortune 500 companies were losing 4.1 million jobs in the ’80s, small businesses created 1.5 million jobs in the last two years alone. It’s what saved this country.”
While Sharkproof is primarily about getting and keeping a job in today’s sluggish economy, Mackay has plenty of advice for those who want to create their own jobs by starting their own businesses (also see accompanying excerpt from Sharkproof).
No matter what Harvey Mackay has done, from being an envelope salesman to owning an envelope manufacturing company to writing best-selling books, he has always relied on one principle: Do your homework. As a salesman, he located prospective customers by following competitors’ delivery trucks on their rounds. As a business owner, he compiled comprehensive profiles of all his customers and prospects (based on a list of 66 questions). And as a prospective author, he interviewed successful writers and editors to find out what it takes to bring a book from rough manuscript to national bestseller.
“I am a firm believer in superior information,” says Mackay. “Try to get your hands on people who have done exactly what you want to do. Ask them what they would do differently if they had to start over again. Listen, take copious notes, and thank them with a beautiful follow-up note. Get a mentor if you can. Read everything there is to read. If you get only one good idea from every book or article, it’s time well spent.”
Mackay also advocates getting a second opinion from an industrial psychologist. “You go and take four hours of tests and find out your strengths, weaknesses, what you are truly interested in. It’s not cheap, but it can steer you away from a bad decision or toward a better one.”
Although he admits that no one could talk him out of his youthful ambition of being a pro golfer until reality set in, he contends that starting a business without serious thought can have more significant consequences. For him, understanding yourself is as important as understanding your prospective business.
He is quick to add, “If you have gathered the information you need and you know your business idea has potential, but you still haven’t decided whether to take the leap, you should know one thing. I have never, and let me emphasize never, met anyone who has gone out on his own, who has taken a crack at it, even if he failed, who has been sorry he did it.”
Interestingly, as long as you have sound information and a sound idea, Mackay feels that no time is a bad time to get started–even if the economy is in the tank. He states, “Sometimes the worst of times are the best of times. There are one million people who quit looking for work. They’re waiting for Dan Rather or Peter Jennings to tell them that things are OK again. In tough times, a lot of your competition has already given up, leaving you the opportunity.”
However, Mackay is furious at the government for making tough times tougher by enacting restrictive legislation and saddling entrepreneurs with mountains of paperwork. Mackay minces no words when he says, “I think the IQ of our legislators, senators, and congressmen sometimes borders on 88. Legislators don’t understand small business. They’ve never understood that it’s the backbone of America. Entrepreneurs saved this country. Of the new jobs created over the last couple of years, 70 percent of those were by companies with fewer than 20 employees. Years from now some of those businesses will employ 20,000 if they are given the fight incentives.
“You cannot saddle these entrepreneurs with red tape. You have to make money accessible to them, which it hasn’t been. Applying for a small-business loan takes two years, 2,000 forms, eight days a week.
“The solution is not to take the incentive away from the risk takers. Sometimes it’s risky not to take a risk–if you walk backward you never stub your toe. These are the people who are going to save America. If only the politicians understood that.”
When asked about the recent Supreme Court decision limiting the home-office deduction, he pauses thoughtfully before saying, “This deduction has been abused sometimes.” He pauses again, seemingly concluding that he supports the decision, before he continues, “However, if an entrepreneur is using his home office full-time, even if he does much of his work out of the home, that’s a crime. That again is total ignorance and outlandish discrimination against a risk taker who might eventually be out there creating jobs. It’s just putting up more barriers and more obstacles. When you take incentives out and raise taxes on the entrepreneur, all you’re doing is jeopardizing the future.”
ON YOUR OWN
And what of the entrepreneur who has a great idea and information and who is willing to brave the economy and government-imposed hurdles? What abilities are important in building a successful enterprise? Mackay has several things to say on the subject. “The skills necessary for success in a small or home-based business are identical to those needed by big companies. Excellent communications skills are fundamental. The number one skill lacking today is the ability to make a solid presentation. You can’t make a sale if you can’t make a presentation.
“You must pay fanatical attention to detail. You have to know the market, the competitors. You must be a self-starter and continue to educate yourself. You have to enhance your skills. Here’s the bottom line: Ultimately, what you earn is directly proportionate to what you learn.
“You must remember that no matter how good the business is, nobody is insulated. There are lots of entrepreneurs who do real well for one, two, three years. Then they get soft, they get fat, like the big corporations. It’s like swimming across the ocean: As long as your arms keep flailing it’s OK, but as soon as you rest you will sink or get eaten.
“You have to keep abreast of the trends, the marketplace. If a business is in trouble, most people think, ‘If only we can get the cost of goods sold to 26 percent, we can turn the company around.’ It doesn’t work like that. You don’t do just one thing, you do lots of things. If something is seriously wrong, there is always more than one cause.
“If you want.to sharkproof yourself as a home-based entrepreneur, there are 15, 20 things to do. Get constant advice, keep educating yourself, stay focused, build your network … I swear to you that President Clinton would not be president without his Rolodex file.” Judging by the long list of people endorsing Mackay’s books, he owes some of his success to his Rolodex, too.
Mackay has become successful both by society’s and by his own standards. He points out, however, that success is less about money and fame than about “state of mind.”
“If you find something you love to do, you’ll never have to work again for the rest of your life.”
SIX STEPS FOR STARTING A BUSINESS
OK, you’ve had it with working for someone else. You’ve decided to start your own business. There are thousands of things to consider. Here are just a few of them:
1. Think small. It is a lot cheaper, easier, and smarter to grow bigger than it is to grow smaller. Keep your overhead to a minimum by having your office at home. Hang on to your day job as long as possible or at least until you can begin to see some light at the end of the financial tunnel in your own business.
2. Get advice. Put together an outside advisory team. Find people who know how to do what you don’t. Keep your team in place after your start-up phase is over. You won’t stop making mistakes just because you’ve gotten bigger. You’ll just make bigger ones. Remember, he who rides a tiger can’t dismount,
3. Draft a business plan. You don’t build a house without a blueprint. And you don’t start a business without a business plan. Don’t kid yourself by overestimating or wishing the numbers higher. Be realistic. In fact, don’t be realistic, be pessimistic. Be a devil’s advocate. Make a worst-case scenario and see if the answers still work. Don’t proceed unless they do. Here are the elements you need for your plan:
* Situation Analysis. What is your market? If your answer is “everyone,” you need a new business or a new plan. What area will you serve? How many people or businesses comprise your target market? What makes you certain there are enough potential clients to support your business? Who’s the competition? Why will people do business with you?
* Financing. Where is the money going to come from initially? Where will it come from when that runs out? Can you handle a negative cash flow? For how long? Do you have a cushion if it takes longer to become profitable than you expect? Most overnight successes in business are like overnight successes in show business … they take years. Studies show more businesses fail because of poor management and underfinancing than for any other reason. Don’t start a business unless you have staying power. Your savings should be adequate to support you for at least two years before you have to dip into your new business for income.
* Product Analysis. Who needs it? Why? What makes it salable? Price? Quality? Service? Convenience? How will people learn about your product? About your business?
* Personnel. What talents are absolutely essential to the success of this business?
Where will you find them? Have you priced their services accurately ? Are you considering hiring anyone who is not totally necessary to your success?
4. Be ready to adapt to change. Be prepared to handle the unexpected: an employee who doesn’t perform, a product that doesn’t sell.
5. Get the detalia right. George Will has a great quote: “We need people who have read the minutes of the last meeting.” Insurance, payroll, licenses, permits, leases, legal advice, taxes. Don’t try shortcuts that can get you into trouble.
6. It all depends on yon. Do you have the temperament to work 16 hours a day for months, or perhaps years, when things never seem to be going right? Are you prepared to work longer hours for less money than you ever have in any job you ever held while still maintaining traces of normal human behavior, like laughter and patience and having fun?
If so, maybe you can handle your own business. After all, we work for dozens of reasons…money is only one of them.