Small Business

How to 'recession proof' a small business

Small businesses already have plenty to worry about. What about surviving a recession?

Thomas Ulbrich, executive director of the University at Buffalo's Center for Entrepreneurial Leadership, said small businesses can "recession-proof" themselves, but it's really more basic than that.

"Instead of trying to predict the next recession, let's just agree to try to run a great business each and every day," Ulbrich said at a recent small business conference in Buffalo. "If you can run a great business, we can live through a recession."

Ulbrich said too many small businesses fail to scale over time, threatening their long-term survival. Here are seven common mistakes he sees small business owners make, and his advice for avoiding them:

• You believed in the "self-employment myth." "If your business depends on you, you don't own a business, you have a job," he said. "And it's the worst job in the world, because you're working for a lunatic: yourself. You can't close it when you want to because you believe there's nobody there to do the work. You can't sell it when you want to, because who wants to buy a job?" (quote from Michael Gerber, author of the E-Myth)

 • You are a control freak and you can't let go. It's hard to keep good employees if a business is controlled by a single person who is "constantly barking orders at people and running at a speed that just doesn't work for those around us," he said. Try delegating responsibility and developing employees. And don't expect them to learn through osmosis.

• Many small businesses have no idea where they're going. All businesses should have a plan, but it doesn't have to be complicated. "Typically the best plans I've seen are one page and they can sit right on your desk, and it needs to become part of the culture of your business," Ulbrich said. He cited Southwest Airlines' "wheels up" mantra: When its planes are flying, the airline is making money. That strategy flows through everything Southwest employees do to help keep things moving, from the pilots who assist passengers with getting into wheelchairs, to cabin crew members who start cleaning the plane as passengers are exiting.

• You don't have the right people. Small businesses can be "loyal to a fault," locked into relying on the original team of employees even as the business grows. "It doesn't mean that those people need to go, but often what got you here is not the skill set that will get you to the next level," Ulbrich said. "Businesses stall because they don't build teams, and they try to use what they have." One solution: Create an organizational flow chart that lists functions instead of employees' names, and identify what specialties are needed. And constantly build a "virtual bench," identifying people who could fill future openings.

• You have no systems in place. Small business owners might think they don't have time to create systems. But if they create systems, they will make things easier on themselves, Ulbrich said. Subway has visual guides behind the counter for its employees to follow to make sandwiches. Airline pilots use checklists to make sure they attend to every safety detail.

• You don't hold people accountable. Owners need to overcome their aversion to having tough conversations with employees, Ulbrich said. Otherwise, they might end up firing employees who had no inkling they were falling short. "It is your responsibility to set your expectations, communicate them clearly and often, constantly coach, and ultimately hold people accountable," he said. "You've got to learn to have critical conversations."

• You fail to innovate. Find a way to stand apart from competitors. "You really have to understand how you're different," Ulbrich said. "Way too many small businesses have no differentiation." Businesses might try to compete as the low-cost option, by being innovative, or by aiming for "customer intimacy," which Ulbrich described as relationship building that goes beyond customer service. He cited Ritz-Carlton hotels as a model. "I have stayed in a Ritz-Carlton before where I had a Buffalo News under the door in a faraway place," maybe Boston, Ulbrich said. "How it got there, I have no clue. But that is customer intimacy."

Ulbrich spoke at "Level Up," a conference organized by M&T Bank and Amazon Web Services to help small businesses grow. The session was aimed at meeting small businesses' needs for training, education and enhancement of skills to scale up their operations, said Eric Feldstein, head of business banking for M&T.

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Matt Glynn– Matt Glynn has been a business reporter with The Buffalo News since 2000. He is a native of Youngstown and lives in Buffalo.

Six Signs That You’re Not Cut Out for Entrepreneurship

IStock-951702988In the current age of successful entrepreneurs being treated like rock stars, who wouldn’t want to be an entrepreneur? Today it’s “cool” to be an entrepreneur and it’s a big part of popular culture, but it wasn’t always that way.

There was a time when many people looked at you funny and thought you were a misfit unable to “make it” in the corporate world if you even mentioned “self-employment” or entrepreneurship. It sure wasn’t a badge of honor to call yourself an entrepreneur and not a choice that parents wished their children would embrace.

How times have changed. Today entrepreneurship is looked upon as an admirable career goal, not only by would be entrepreneurs, but also many parents. People willing open their bank accounts to send their kids off to learn about entrepreneurship.

There are high school clubs and college classes focused on entrepreneurship. There are even universities whose whole focus in on training students to become entrepreneurs.

The current reasons touted to embrace entrepreneurship as a career path include everything from the opportunity to manage your own time, the ability to say goodbye to “working for the man”, to the potential to become wildly wealthy.

Posters of Mark Zuckerberg and the Holstee Manifesto replace rock stars and sports heroes as the decoration of choice for dorm room walls.

Tales of nomad tech entrepreneurs working remotely from beaches around the world have replaced the office cubicle in a high rise on Wall Street as the ultimate dream job.

The potential to build a company, sell it and “make it big” replaces the decades old dream of a steady paycheck.
Entrepreneurship is everywhere but is it right for you? Not everyone needs to leave their job and start their own business to be successful in life. Quite frankly, many of us shouldn’t even think about it.

It’s not for everyone and here are a few signs that might warn you that you’re not cut out for entrepreneurship as a career path.

You prefer predictability, certainty and order in your life.

Entrepreneurship can be great, but it is often unpredictable with little certainty for what tomorrow will bring, especially if you are starting a new venture. You will spend much of your time validating your idea, talking to potential customers, gaining information and then making constant adjustments to your product or service in an effort to spiral in on a solution that your customer’s want to buy.

The process is iterative and although certainty can be gained over time, there is a long path to get to that point. If not knowing what tomorrow brings makes you a little queasy then you might want to work for someone else, where there is at least the appearance of certainty. You’ll sleep better at night.

On the other hand, if you see life as an adventure with lots of exciting twists and turns, then entrepreneurship is a great choice.

You prefer working alone and are not a big fan of teams.

Entrepreneurs aren’t solo practitioners. Almost every successful venture has been started by a team, not an individual. We often recognize and remember the public face of a company and forget that there was a team behind them. The best companies usually have at least two founders, one often is on the technology side and the other on the business side. It is a rare founder that encompasses both.

Think about some of our current tech giants and their founders. Apple had Steve Jobs and Steve Wozniak. Microsoft had Bill Gates and Paul Allen and Google had Larry Page and Sergey Brin. This holds true for most successful startups. Teams matter and are an important component of success.

So, if you prefer to work in isolation and do everything yourself, entrepreneurship may not be the best option and you will likely struggle. Instead consider a career where you can be part of a larger organization with a role that doesn’t require a ton of collaboration.

If you recognize your own shortcomings, love to work in teams and get jazzed by accomplishment through teamwork (including strategic partnerships for the free-lancer world), then entrepreneurship might be a game you want to play.

You prefer working 9 to 5 (or less), knowing you have your weekends off.

Although it is true that you may have freedom and ultimately create a lifestyle of leisure as an entrepreneur, I’d be lying if I told you it wasn’t hard work. Entrepreneurship is hard work. Period. Exclamation Point. Long hours can be the norm and you need to recognize that when choosing the entrepreneurial path. It is a rare entrepreneur that starts a company by working a 30-hour work week with set hours, six weeks of vacation and weekends off.

Entrepreneurship will be hard work. There is no question about that. In the end you may build something great that enables you to enjoy a comfortable lifestyle where you can control your hours and spend lots of time on a beach enjoying life, but that’s often just a dream when starting out. Don’t fool yourself and be disappointed. Success requires hard work and many hours of dedicated effort.

If you prefer a 9 to 5 job, you are best suited to work for someone else.

If you are willing to be flexible with your time, put in the extra hours when necessary and love the accomplishment that can come from hard work, then entrepreneurship may be for you.

You prefer a world where everything is black or white.

If you live in a world where everything needs to be right or wrong, black or white, yes or no; you won’t be comfortable with entrepreneurship. Although we see more and more of what I’ll refer to as the “I’m right, you’re wrong” type of thinking on our social media feeds, the news and especially in politics; the reality is this isn’t the world we live in. The real world is full of uncertainty, partial information and lots of grey.

If you really hate ambiguity and prefer a career with clear right or wrong answers, then entrepreneurship probably isn’t a great choice and you’d be better pursuing a field where there are clear answers with little flexibility.

If you like asking lots of questions, digging for answers, A/B testing and solving complex puzzles then entrepreneurship may be just what the doctor ordered.

You prefer clear goals and checklists to drive your work day.

If you prefer that your boss gives you a “to-do” list in the morning and you get jazzed by being able to check off the boxes as you complete a task, then entrepreneurship is likely not something you will enjoy.

If you like solving complex problems and discovering what the next step is by gaining information and validating assumptions, then entrepreneurship is a career you may joyfully embrace.

You prefer to give your time and talent away at a discount.

There is a saying in entrepreneurship, “You don’t have a business without a paying customer.” I might expand that to include the word profitable, “You don’t have a business without a paying customer that is profitable”. Much of being a successful entrepreneur is understanding markets and people’s ability to pay for your product or service.

It involves market segmentation, supply and demand, cost of customer acquisition, understanding overhead and cost of goods sold. Success demands that you find a price point that allows there to be demand for your product in a crowded world of alternatives while leaving you enough left over at the end of the day to show a substantial profit.

In order to do this, you have to understand your product or services value to your customer. You’re selling value, NOT hours if you are in a service business or cost-plus priced widgets if selling a product. If there is a single reason entrepreneurs fail it is the inability to place the proper value on their product or service in the marketplace. Many under charge and it becomes the demise of their business.

If you are willing to do the hard work to determine the true value you are offering your customer, understanding the true costs of doing business and willing to endlessly test your pricing strategies in an effort to find the sweet spot that maximizes sales volume and profit then entrepreneurship will be an interesting and fun riddle to solve.

If you are not willing to learn basic finance, then don’t become an entrepreneur. If you feel bad charging people for your time or product, don’t start down the path to becoming your own boss. Unfortunately, way too many people carry their personal experience and relationships with money into their pricing decisions and woefully underprice their offerings.

There is no right or wrong. You decide.

These are just a few of the more common warning signs that entrepreneurship might not be the best path for you to follow. They are not the only signs, but if you notice any of these six in your life then you should at least sit up and pay attention before starting your own venture. Consider your decision carefully.

At the same time, entrepreneurship can be an amazing experience that enables you to build wealth, gain the freedom of being your own boss and creating jobs and opportunities for others all while pursuing your personal passions and dreams.

There is no right or wrong. You decide!

Trapped! Seven signs your business may own you and how you can escape.

Do you own your business or does it own you?

The inability for a business to operate without the owner present is a sure sign that you are captive to your business. It likely feels like your business owns you, instead of you owning it.

Businessman stuck in spiderwebYou may be surprised to learn that there are over 28 million businesses in the U.S.[1]  Despite that huge number, most businesses fail to scale. They exist solely because the owner is active in every detail of the day to day operations.

 There are plenty of additional statistics to support this idea:

  • Of all employer firms in the U.S.[2]:
    • 55% have fewer than 4 employees
    • 86% have fewer than 20 employees
    • 95% have fewer than 50 employees
    • 7% have fewer than 500 employees
    • 96% gross less than $1M annually

I’d be doing you a disservice to suggest that the quantity of employees or volume of revenues are the only markers of business success. They aren’t! We all know the small business owner that has a handful of employees, works 30 hours per week and takes home an incredible salary. But they are the outlier, not the norm.

In working with hundreds of small business owners over the past ten years I’ve come to recognize that there are just a handful of things that separates a great business from a struggling one.  Most of those struggles lie in the small business owner’s inability to scale their business beyond their finite abilities and available time.

For the sake of this article I will define a successful business, not as a certain number of employees or volume of revenue, but rather a business that can run without the owner making every decision.  A business that can run day to day without the owner being present every moment.

Can Your Business Run Without You? Take the test.

A good friend of mine and business consultant, once challenged a group of business owners to ask themselves if they had a successful business by having them answer this simple question…

“Can you leave your business for three weeks and not have the phone ring or open a business email?”

That’s a simple test to see if you have a business that can scale. 

Anyone can go away for a few days or even a week and the world won’t end, but as you move to two and then three weeks without hands-on contact the weak links will break. For many of you, your phone will surely ring. 

So, what does it take to have a business that can pass the three-week test? 

My seven observations as to why most small businesses never scale:

  1. You believed the self-employment myth
  2. You can’t let go
  3. You have no idea where you are going
  4. You don’t have the right people
  5. You have no systems in place
  6. You hold no one accountable
  7. You fail to innovate

Let’s tackle them one at a time.

You believed the self-employment myth

Do you have a job or a business? The key question you need to ask yourself is… “are you creating a true business or a self-employment charade you call a business?” 

Michael Gerber summed this up in his famous book The E-Myth.  There is no sense in me trying to do a better job than the master, so let’s hear it direct from Michael…

“If your business depends on you, you don’t own a business; you have a job. And it is the worst job in the world because you’re working for a lunatic… You can’t close it when you want to, because if you leave there’s nobody there to do the work. You can’t sell it when you want to, because who wants to buy a job”

Way too many people own a business like this.  If you do there is hope and you can escape the grind of this situation, but you’ve got to make some changes.  .

You can’t let go. Look in the mirror.

Many small business owners we work with feel overwhelmed. The good news is that you are not alone. They express frustrations at the helpless feeling of barely holding things together and they are just one mistake away from disaster.

 Why is that?

I think that most of us really need to look in the mirror.  If we are honest, the source of our angst is looking right back at us.

Many business owners are action oriented. They are driven by tasks that need immediate action.  They often lack processes, don’t communicate well and believe that no one can do the job like they do.  They’re moving at 100 plus miles an hour and stressing their company and employees alike. 

You might say they enjoy fighting fires and spend most of their time doing just that. Sound familiar?

Running at that speed usually means we manage our business by barking out orders. Or more typically, we have no ability to delegate and instead expect everyone around us to absorb what it is they need to do through some magical process of osmosis.  We expect them to read our mind.

It is important to build a business that doesn’t rely on us being there every moment and making every decision. To fix it, you must recognize it. Start by looking in the mirror and accepting that much of the problem is looking right back at you.  That’s a great first step.

You have no idea where you are going.

As Cheshire Cat once told Alice, “If you don’t know where you are going any road will take you there”.  In business the concept of taking any road may be very costly as we want to have the right road leading us to our destination in the most efficient and profitable way possible.

Do you have a strategic plan?

If you don’t have a clear strategy that you can communicate in 35 words or less, you don’t know where you are going.  If you don’t know where you are going, how can you expect your team to know where you are going?

Having a plan is critical. Strategy counts and it starts with a plan. A great strategic plan doesn’t need to be lengthy and complicated, but it does need to be thoughtful, supported by your unique set of competencies that give you competitive advantage in the marketplace. It also must be a living breathing document that can be responsive to changing market environments. 

Simplicity will always win.  Take for example Southwest Airlines and their storied “wheels up” strategy. When the “wheels are up” on their planes they are making money.  To that end they have built systems and processes to support this. From the way they load passengers, to the types of aircraft they fly, to the culture of fun that is exemplified in their culture…it is all in support of a strategy with a clear destination. 

If you don’t have a strategic plan, don’t over complicate things. Keep it simple. There are some great resources available and my favorite is the One Page Plan available from Verne Harnish and the folks at

You don’t have the right people.

Would you enthusiastically rehire everyone on your team?  That should make you think and the answer for most is a quick, “no”! This is perhaps one of the greatest challenges, NOT having the right team.

 Often this starts with the inability to recognize that the people that got us here won’t get us there.  We are loyal to employees that were with us from the beginning or those that are family and friends.

I’m not suggesting you toss your team, but I am suggesting that as a company grows there is a need to layer in some more professional management practices and not everyone that was with us in the beginning will have those skills.  Some can grow into new roles, but many can’t, and this is a difficult realization for the small business owner.

No one should be promoted to COO or any other leadership role solely based on tenure and that is too often the result in small business. There will be times when it is necessary to find some new leaders with broader experience and skills to help us grow to the next level.  These are the key people that can help you take your company to the next level.

Business guru Jim Collins famously summarized this with a simple but brilliant premise that surmises that we will have a great team when we make sure that “we have the right people, in the right seats, doing the right things right.” 

A great tool to make sure you have the right seats is to build a functional organization chart for your business.  Focus on the functions you need to run the business successfully first and only then go back and add team member names to those functions. It is a great tool to prevent you from promoting people into the wrong seats by accident. 

There are many good articles and tools out there and we will provide an article just on this topic in the next couple of weeks. Stay tuned, but in the meantime, you need to be considering whether you would enthusiastically rehire all of your team members.

You have no systems in place. 

When every decision must be made by the owner, you become the bottleneck. If you ever expect to take that three-week vacation, we talked about earlier your team must be able to operate without waiting on you to make every decision.

You must have policies, processes and procedures that allow quality and replication of repetitive functions.  These don’t need to be complicated, but they need to be discovered, captured and continually refined. 

You don’t need to overdo this in a small business. In its simplest iteration you are building checklists. Surgeons use them. Pilots use them. Why shouldn’t you?

If you have no processes or systems, start by capturing those activities that your organization does often.  Start with a few and don’t feel like you need to do this all at once. Even capturing one frequently repeated process into a checklist will begin to cut back on everyone knocking on your door.

Add a new process to the list each week and collect the checklists into a binder and before you know it you will have a complete operating manual for your business that will simplify daily activities, speed up new employee training and offer continuity in your business offerings.

You hold no one accountable.

All the procedures and processes in the world are useless if you don’t hold people accountable.

It can’t be through the process of osmosis where we just expect our employees to know what to do.  It is the leader’s responsibility to set clear expectations, communicate them often, constantly coach and ultimately hold people accountable for their actions. 

We don’t like to do that. Most of us don’t like confrontation, but holding people accountable is not confrontation, it is simply being a good leader.  A great way to think about this is the concept of radical candor. Done regularly it doesn’t have to be confrontational.  There is a great resource to learn more about how to both “care personally” about your team members while “challenging directly” at

You fail to innovate.

Finally, if you do all the above well and you still aren’t able to scale it is likely that you fail to innovate in our rapidly changing world we live in today. 

Innovate or die. 

We live in a world that is changing at a pace like no humans have seen before us.  In just 20 years technological advancements will be hundreds of thousands to a million times more advanced than today.

 We need to be on top of this change or our businesses will quickly become irrelevant.  Companies die when they get complacent and lazy.  We used to have a lot longer runway to adjust and fine tune our direction, but that is not true today.

You can engage innovation by creating a culture of continuous learning. Challenge status quo. Stay up on the latest technological trends in your industry by attending conferences, keeping an eye on your competitors and reading industry related journals.  

If you really want to know where the future is headed visit Singularity University at to explore the opportunities and implications of the exponential change on your industry and business.

Now its your turn. Take control.

We’ve identified the seven areas that might be holding you and your business back.  Any one or all of them may be at the root cause of your frustration. 

The good news is that each is not that hard to change once you’ve identified it and are willing to put your mind to implementing incremental changes.

Get started. Commit to change. Don’t be overwhelmed. Take small steps.

  • Dismiss the self-employment myth and build a business that doesn’t require you to be there 24/7
  • Let go and build a team to support you
  • Build a simple strategic plan so you have a clear vision of where you are headed
  • Build a great team. Make sure you have the right seats, right people and they’re doing the right things right
  • Build systems and checklists
  • Embrace a culture of accountability
  • Create a culture of continuous learning and innovation

Good luck on your journey to building and owning the business the will enable you to pursue your passions and your dreams!

[1] SBA Office of Advocacy – United States Small Business Profile 2016

[2] U.S. Census Bureau. Fact Finder. Accessed 1/26/2018 – 2012 Census Data

Lifestyle Business vs. Innovation Driven Growth Business. There is no right or wrong, the choice is yours.


Note:  I first posted on this subject nearly two years ago, yet it seems to always be on my mind.  I was especially reminded of this discussion on my visit last week to the Platter's Chocolate facility in Tonawanda, NY last week.  The owner, Joe Urban exemplifies all that is great about a small business owner and team growing a successful operation. With a nearly 80 year history under their belt they haven't gone public and don't employ 1,000s, but they have built a great business that employs many, is creating memories for its customers and is a critical part of our community.  I was inspired during that visit to remind all of us just how important the small business community is to our economy. I've updated that original post here with new numbers and a couple fresh thoughts.  I hope you enjoy it. If you do, join the conversation.

Having recently read an article discussing the distinct differences between today’s “tech bubble” and that of the “dot-com” disaster of yester years, I was reminded of a conversation I had with a local entrepreneur attempting a tech startup.

In the course of the conversation, it became clear that he had little respect for the lifestyle entrepreneur. In his mind, if you aren’t building a rapidly scaling innovation driven enterprise, you are insignificant.  I found his attitude a little off putting for many reasons.  We’ll get there in a minute, but let me start by saying I fully support investment in the innovation-driven economy. 

I will be the first person to say yes to government agencies “priming the pump” in communities like Buffalo, NY to get the high-tech flywheel spinning.  It’s critically important.  This is the world of commercializing innovative ideas and new technologies.  Successful technology-driven companies have the potential to scale quickly and create jobs at a faster pace than lifestyle businesses. However, they also have their own challenges - high failure rates, large capital investment and tradable jobs that can easily be moved around the globe. 

That being said, there is another huge sector of our economy driven by small businesses that doesn’t get the credit it deserves. We need to acknowledge and support the importance of the small business community and the positive impact it has on our communities and economies.  

Consider some of these stats:

  • There are over 28,500,000 Small Businesses in the U.S.
  • U.S. small businesses employed about half or 56.8 million of the nation’s private workforce or 48% of the workforce
  • They make up 99.7% of all employers nationally
  • 97.7 percent of U.S. export firms are small businesses
  • 88.5% of U.S. employer firms have less than 20 employees and only .26% of U.S. businesses employ more than 500 people
  • 96% of all U.S. businesses gross less than $1M annually
  • Small business start their businesses on their own backs. 77% of small businesses rely on personal savings for their initial funds

Here’s the most interesting part.  Many of the businesses mentioned above are lifestyle businesses.  These are local businesses that we all rely on as part of our daily lives.  They include everything from your corner gas station to the pediatrician that cares for your children.  They are the local butcher, retail store, insurance agent and small community bank.  These business owners are your neighbors, friends, and community leaders.  They are woven tightly into the fabric of our communities, they create jobs and provide significant economic impact.  Without them, our local economies would quickly collapse and the concept of community would likely be lost.

Yes, innovation-driven entrepreneurship is an important piece of our economy, but please don’t discount the critically important role that lifestyle entrepreneurs play in the fabric of our society.  They deserve much more credit than most take the time to give them.

There isn’t a right or wrong - both have their advantages and disadvantages.  If you are starting a business, it is simply a choice you make. If you want to run a business that leaves you in control of your own destiny and allows you to create the hours and income that is right for you, then a lifestyle business is a great choice.  On the other hand, if you want to swing for the fences, scale quickly, and don’t mind giving up control to investors, then an innovation-driven enterprise may be the perfect choice. 

In the end, the choice is the individual entrepreneur’s. Whatever their choice, let’s be certain to acknowledge that neither is more important than the other and both have the potential to create jobs, inspire wealth and invigorate our communities through entrepreneurial development.

If you want to explore for yourself just how important small business is to the U.S. economy, download the latest issue of Small Business Administration’s Small Business Profiles for the States and TerritoriesIt is packed full of information about small business and its importance to our economy.