In Search of the Small-Business Bible

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Most authors have some pet area of specialization, even if they don't admit it. While many claim to write for entrepreneurs in general, in practice they emphasize one type of business or another -- typically, whatever type they have or once had. Handily, my three best books are each best suited for a separate common species of business: the traditional high-growth company; the classic small business with employees but no big growth plans, such as a small retailer; and the new generation of computer-powered sole proprietors described in our January issue. (See "Do-It-Yourself Job Creation," [Article link], by Anne Murphy.)

Now my job is done. It's time to send my list off to Jennifer and leave the rest up to her. I finish knowing far more about cash-flow projections, trademark law, and market research than ever before. I also have a sense of relief that among the scores of bad books out there, there are some good ones containing smart ideas for company owners at all stages. I hope all those legions of displaced-managers-turned-entrepreneurial-types find them -- and I hope my friend does well.

Research assistance for this article was provided by Robina A. Gangemi.

THE 25 BEST BUSINESS IDEAS FROM MORE SMALL-BUSINESS BOOKS THAN YOU'LL EVER WANT TO READ

A good business book is full of tips. Although most decent how-to books provide standard information -- how to structure a business plan, what a partnership agreement should include -- I found the better ones contained unusual tidbits that got me thinking. Here are some ideas from the start-up bookshelves that caught my attention:

1. If you meet someone you want to stay in touch with at a conference, later send that person a newspaper article on a subject of common interest. It's a good way to build on the relationship. (A)

2. When designing a credit application, ask for five credit references. Because most people ask for three, you will increase your chances of getting useful information by calling five references.(B)

3. If substantial growth is in your plans, consider designing an organizational chart that has empty slots -- above the titles of the people you are hiring now. By letting early hires know that someone may be brought in above them, you avoid awkwardness later on. (C)

4. Offer a business customer a discount if the customer will include your brochure in a mailing. (B)

5. There are some critical sales questions start-ups often forget during prebusiness planning. Before you start out, be sure you have an estimate of the following: your sales cycle (how long it will take a prospective purchaser to decide to buy -- and to pay you), the size of your average sale, and the expense involved in making a typical sale. (D)

6. Confused by your state's regulatory requirements? Many states offer a free or inexpensive booklet about license and permit requirements. It's often available through the state small-business office or department of commerce. (E)

7. Consider having a written agreement with employees that says you may switch their hours. Otherwise, if you switch employees' hours and they quit as a result, they may be eligible for unemployment benefits. That can lead to higher premiums for you. (F)

8. If you are an expert in your field, give talks to local organizations. They're excellent publicity. (G)

9. You can use a good business plan for many purposes besides securing funding. One example: a solidly prepared business plan gained one author merchant credit-card status -- which is often tough for start-ups to obtain. (A)

10. One good way to save time as a manager: develop a "problem flag" system. Pick key indicators for your business and ask employees to flag certain conditions. In other words, they should let you know immediately if a certain circumstance occurs -- such as a big order's falling behind schedule. Then back off and do other work. (D)

11. If you can't reach an agreement with a potential investor about the value of your company, consider accepting his or her valuation -- but build into the agreement an "earn-out" provision. With such a provision you earn back stock if the company actually hits the earnings milestones you think it will. (C)

12. Share your year's goals with a friend and fellow business owner. Then trade progress reports each month. (A)

13. If both you and your landlord have property insurance, include what's called a "mutual waiver of subrogation" in the lease. Without it, you could be sued by the landlord's insurer for damage you've caused. (E)

14. Looking for a good manufacturer's representative? Phone the buyers you want to sell to and ask for the names of reps they respect. (B)

15. Here are four possible routes for determining if an insurance company is in good financial health: Best's Insurance Reports, Moody's Bank and Financial Manual, Duff & Phelps (Insurance Company Claims-Paying Ability Rating Guide), and Standard & Poor's. A company called Weiss Research (800-289-9222) also offers ratings, for a fee. (E)

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