Key Idea #1: Solve A Big Problem. The difference between founders who do OK in their business and those who do great is the size of the problem they solve for customers who have the money to pay for a solution. People will pay for products or services that they believe will fix a problem they are dealing with in their lives. The bigger the problem, the more they will pay!.

Topic for Discussion: What problem did Shatas solve and how big was it?

Answer: Steve said, "The bottom line is we make a very large problem manageable. Without our product, if you had 1,000 computers you would need 1,000 separate keyboard, monitors and mice." The problem was so big when we met Shatas and Steve that they were up to $228 million in annual sales and as a new public company they had a market capitalization of $2 billion.

We filmed the story of Dr. Neil Clark Warren's goal to fix the marriage partner selection process. Dr. Warren says it has been badly broken in the US by mobility. One hundred years ago, people married their neighbors. This meant they had a greater chance of marrying a person with similar economic, religious and educational background. Parents would even put their children together with the children of friends as a plot, hoping they would fall in love. Parents, aunts and uncles would also network to find suitable spouses for the younger generation. There were many amateur matchmakers helping the process along, too. As Americans left farms to work in factories, we were no longer tied to the land. With completion of the transcontinental railroad and then the invention of the automobile, leaving home became more common than staying home. Now there are singles trying to find the right person to marry, as Greg says, "in the wild." The singles no longer have the benefit of extended families to guide and advise them.

Dr. Warren said, "In 2003, 55 million singles got on the Internet and went to dating sites." He also pointed out that 43% of all people over 18 in this country are single. Therefore, the gut feeling that Dr. Warren had when working with couples in his office was that they did not select the right partner in the first place. That gut feeling led him to develop a product that can be of use to millions. This is why you heard him say this has happened, "in the fullness of time." His theology background caused him to speak in Biblical terms about this idea for a business being the right idea at the right time. After just four years of operation, eHarmony.com was doing $700 million in annual sales. Why? Because they are solving a very big problem.

You think about it: What can you see around you that is broken that you might have the depth of insight to fix?

Key Idea #2: Prepare To Succeed. Shatas was ready to start a business because he had done his homework and he shifted his thinking from an employee mentality to a problem-solving mentality. He worked hard to get a good education and for years he observed what he liked and what he didn't like about companies who employed him.

Topic for Discussion: Why did Shatas take the leap and leave his job?

Answer: He saw some others with innovative ideas succeed and said, "I got the bug of ambition." He was no longer content working for someone else but he started small by doing computer installation. While doing this work, he observed that there was not enough room on desks for computers, keyboards, a mouse and a printer. That got him thinking about what would become his billion dollar idea.

You think about it: What do you need to learn to prepare you to succeed in business?

Key Idea #3: Hire Your Own Boss. Acting on his own insight that he needed to hire a CEO to be his boss was one of the most brilliant moves we're ever witnessed. Usually the bull-headed founder can't look at himself honestly enough to make the decision that he should not be in charge of his own growing company.

Topic for Discussion: How does a business find and hire people who can imagine the future?

Answer: First not every person has to be able to see the future but every person has to have faith in the future. The smaller the organization the more important this is. Young entry-level people who are enthusiastic about life in general are great to have around even though they might not know enough to understand the scope of the vision. Older people who have seen miracles happen are great, too. Again, they might not be the ones who can see the future but their experience tells them that good ideas can change the world and can be embraced by the marketplace and a business can grow.

Shatas found Steve to lead the operations and Bob to lead the engineering and he refused to be affected negatively by any naysayers. Had Shatas not been willing to share ownership in the company, he could not have attracted and retained Steve and Bob. Identify your weak areas, figure out how to value your business and give some ownership to people who are strong where you are weak.

Anne Beiler, founder of Auntie Anne's, has a leadership succession plan in place because she wants the company to out live her. She has acted on her goals by recruiting Sam Beiler and naming him President of the company.

Topic for Discussion:What qualified Sam to be President of Auntie Anne's?

Answer: First, Anne trusts him. They both used this most important word when talking about the success they have had at passing the leadership torch. The inability to place trust in another person is probably the biggest reason entrepreneurs fail to put a leadership succession plan in place. Most companies die with their founder or they die when the founder decides to quit working. Some would throw these types of companies into a category called "lifestyle companies." In other words, the company was a vehicle for the founder to live a certain kind of life. We disagree. Most small businesses would-could-and-should have a life separate and apart from the founder. If the founder would first learn to trust, it opens the way so the founder could find people in which to place that trust. And the business, with all its customers, suppliers, and employees, should continue to perfect relations, systems, and their contributions to their community and world. Happily this is the case with Anne.

Sam's preparation for the job started with years in the field for Auntie Anne's. He and his wife became Auntie Anne's franchise owners in 1989 then he became an employee of the corporation working with franchise owners. He was perfectly groomed. You might wonder about his last name being the same as Anne's. The two are cousins. The fact that Anne and Sam are related could bring up the seemingly endless discussion around family-business issues. Our observation of this situation is that endless communication internally in Gap and externally to the franchisees has made the family relation a non-issue. Sam worked his way to the top. He was not given anything he did not earn simply because his last name if Beiler.

You think about it: What keeps you from passing the torch? Do you have someone you are training that can move into your place soon? Are you nervous that if you pass the torch, you won't have anything to do? Do you think your life might feel empty if you don't have to be in the office everyday? Do you need to hire a boss? Do you need to let go of some of your duties? Do you need to mentor someone to take your place eventually?

Key Idea #4: Balance Idealism With Realism. Another way to say this is: keep you head in the clouds and your feet on the ground.

Topic for Discussion: How did Shatas strike the balance?

Answer: He hired someone who could tell him, "No" to an idea. Next he hired someone who could solve engineering problems to make many of Shatas' ideas real. It is hard for most entrepreneurs to resist a good idea. It is the entrepreneur's fire, but it can cause problems. You may know people who have a constant flow of ideas they would like to pursue. While most people take no action on their dreams, some chase too many ideas while the wise get it right.

Getting the balance right requires you to continuously weigh ideas to decide if they are worth investing time, money and attention to develop. The plague of too many ideas is that it can take us off path so that we never complete or succeed at anything. Fortunately for Shatas he stuck with key inventions which generated the cash he needed to recruit great people and to start other ventures.

You think about it: Are you able to stay the course until you achieve difficult goals

Key Idea #5: Change Systems To Sustain Growth. When Shatas finally landed on the right product at the right time he had to stop doing things on a small scale and look for ways to manage fast growth.

Topic for Discussion: What did he need to manage?

Answer: He has to manage people, product and processes! Shatas immediately began developing a team -- while he worked on the markets and the people, Bob worked on the product, and Steve worked on the processes. To be a business, the business requires continuity, relations and dynamics.

Topic for Discussion: What made it so hard to maintain continuity?

Answer: There was never enough money because they had the wrong business formula for a while. The bankers determined that the Shatas / Thornton formula was not quite right (and initially turned them down for a working line of credit). Even though Steve was a banker before he joined Shatas, they were turned down because of the information provided by the The Risk Management Association. RMA collects data on over 150,000 loans (talk about statistical relevancy!) each year from its 3,000+ member institutions. Bankers, CPAs, attorneys, and many others involved in assessing business use these "Annual Statement Studies" to calculate key critical ratios for every major industry type, and for most subsets of business (SIC and NAICS).

Do you know the average key ratios within your industry? Ask your banker. Or, to really make a study of it, keep any eye out for the next seminar or course by RMA - The Risk Management Association in your area. Courses range in price from $495 (one-day) to $1,250 (three-days). You'll probably be seated next to a banker, so study hard, ask questions, and get rigorous before you waste any bankers time! But even more importantly, you'll be able to read, interpret, and act on your weekly/monthly numbers!

The lines of credit and banking relations provide operational continuity. Marketing and sales build the network of relations and provides important feedback on the product development. The product, as it works and makes life faster-smarter-better, extends the circle. These fellows worked at developing "the right" business formula.

Topic for Discussion: What big process change had to be made?

Answer: They had to stop building the product in house. This caused great disappointment among the team that had worked so hard through the years to get the products built. The leadership discovered that they literally did not have the skill to build the new product so they had to find a factory to take over that work.

You think about it: What process needs to change? Do you have the right business model and cash flow to win the loans you need to grow?

Key Idea #6: Share The Wealth . Shatas figured out how to get money into the hands of employees even when he didn't have the cash to do it.

Topic for Discussion: What did he do and why the urgency which could have put Shatas at great risk?

Answer: To keep people inspired and happy to stay! There were plenty of lean years and when Steve, Bob and Shatas could see that they would realize a profit, they paid a bonus. Since they didn't have the cash to pay the taxes on regular payroll, they paid a bonus. Shatas said, "You have 75 days to pay the cash and still take the expense and we made it just in time."

Zubi Advertising pays bonuses even when the company loses money. Founder Tere Zubi’s attitude is that her employees have worked hard and she’s already "in the red" anyway so why not reward them for their work well done?

Topic for Discussion: Should a business pay bonuses even in years when there are no profits.

Answer: It depends. Advertising is a fickle business with highs and lows. Other businesses have more constant revenue streams and, therefore, earnings streams. What Mama Zubi recognizes is that family expenses for home, transportation, education, vacation, etc., are relatively constant, even though they work in an industry which has big ups and downs over the years. She would be creating a hardship for her employees if she gave no bonuses some years and large bonuses others because it would be difficult for the families to budget the household finances. The important thing is to establish a connection between bonus compensation and performance. Bonuses should be incentives, not entitlements. In an established business with a steady growth pattern, it makes sense to commit to a certain percentage of bottom line profits as the bonus pool. At the end of the year, that amount will be distributed on a discretionary basis based on the owner’s judgment of each individual’s contribution to the profit or under a more mathematical model, such as pro-rata based on salary.

You think about it: Do you give bonuses in your business? Under what circumstances? To whom? Does everyone know your criteria so they are incentivized to benefit from the bonus?

Key Idea #7: The Lightbulb-Stop Thinking Me And Start Thinking Us. Professor Keith Grint has published seven books and over 40 articles on topics ranging from business process, reengineering to appraisal schemes, organizational theory and sociology of work. His current research focuses on leadership. We went to the Saïd Business School, Templeton College, Oxford to meet Dr. Grint. He taught us that leaders don't think about themselves as much as they think about others and that they understand that what motivates them doesn't necessarily motivate the people they are leading.

Topic for Discussion: How do you find out what motivates the people who work for you?

Answer: The short answer is "ask them." And the short answer is the right answer if you have created an atmosphere where your employees are comfortable telling you. That's a pretty big "if." People are motivated by money, by their compensation plan, but that’s only part of what motivates them. Study after study has shown that people are most motivated when they feel they are valuable members of a team. Shatas was, early on, able to transmit to some very sophisticated people that he valued their contribution fully.

Orange Schroeder founder of Orange Tree Imports, a retail shop in Madison Wisconsin, is a team player. She immediately hired employees; and, after being in business only one year, her husband joined the company. She runs her business, she says, as a participative democracy. This means the team makes these decisions. She is also a team player outside of her business. She started the Monroe Street Merchants Association. This means the shopkeepers are working together to bring shoppers into the area and to revitalize the entire business district. Orange is smart enough to know that you can't build a business by yourself and you certainly can't build an entire shopping area alone.

Many of us are working ourselves into a frazzle because we're trying to do everything alone and we're not playing on a team because we haven't built a team. After 22 years, Orange isn't tired. She's ready to do another 22 years with Dean and her staff. If you're tired, frustrated, frazzled -- stop doing everything alone and start building a team. Being a team player is not a quality often found in most small business owners and entrepreneurs. It is more the exception than the rule. Most people start their own business for freedom. They are fiercely independent and have often spent years working for other people who never recognized their talents, much less looked for ways to unleash their potential. Business owners like to be in charge, call the shots, and they have little patience working with people who may take a long time to process decisions and reach conclusions. If you can learn to be a team player there are benefits! You don't have to do everything by yourself or feel as if you're by yourself. When you hire the right people and let them do their work, they will take on the responsibility for the area they've been assigned.

Better yet, if you find ways to reward initiative, employees will do things you would never be able to do because they have talents you don't have. Carol creates regular product training sessions. The one we observed opened was atteneded by all employees and a gourmet breakfast was served. This was an educational experience but it looked more like a party. There was a drawing so one person actually won the appliance being demonstrated. When that person takes the product home and starts using it, he/she will be better able to help customers understand the product. Everyone learns and everyone has fun. Carol also describes how the windows are changed regularly. The team discusses ideas and then develops a calendar of who will do what and when. If Carol were not a team player, she would think up all the ideas herself and do all the windows herself, or, assign workers to the task. Outside the store, Carol builds a team by starting the Monroe Street Merchants Association. She felt a need to get people together to do events and promote the entire Monroe Street experience.

You think about it: Do you delegate within your company or do you personally make or approve every decision? Do you delegate and then get out of the way? Who on your team now needs to grow? What can you teach them to do then eventually turn over to them? What needs to move off of your desk and on to the desk of someone else?

Key Idea #8: Fund The Dreams Of Others. As a child, we learned, "It is more blessed to give than to receive." That same lesson has been taught by nearly every business owner we have studied here since 1994. We all have non-profits and charities we deem worthy of our donations, however, most of us have never considered that investing in a business owner's new invention or expansion should be seen as "giving to the community." It is. Shatas remembers when he was funding his own inventions and how hard it was for his family. He told us he wants to help other inventors avoid the, "starvation phase" of the innovation cycle.

Topic for Discussion: Why does Shatas invest in companies located in the Biz Tech incubator which is located just a few minutes from his office?

Answer: For a company to get space in this particular incubator it must have a written business plan and be leading with technology. This criteria acts as a filter so Shatas doesn't have to search the entire Huntsville business community for investments. However, the word is out that he is an angel investor and many inventors and thought leaders seek to pitch him their ideas. A quality incubator like Biz Tech provides more that cost-effective space. So by being in, or investing in a company located in, an incubator you should improve your chances of success. Shatas says we should invest in Wall Street but we should try a "walk on the wild side" and put some money into local entrepreneurs.

Topic for Discussion: Why would it be good for us to think of investing in a business as a "gift to the community"?

Answer: Because a successful business will create work and wealth for many! Of course, Shatas wants a return on his investment but even more he wants the business to become a community asset. This is what we would call maturity. As soon as you figure out that buying more stuff or owning more stuff is not what makes you happy, you'll probably be ready to start investing in small companies in our neighborhood.

You think about it: Why does this seem more risky than Wall Street and how can we minimize the risk?

Key Idea #9: Give More Than Money.

Topic for Discussion: Why is giving time, what many would call mentoring, to a budding businesses even more rewarding than giving money?

Answer: Think about your investments in stocks. You probably have no contact with the people in the companies because as a shareholder you aren't invited to give your advice unless you're on the board. Being closely involved with the inventors is fun for Shatas. He develops a personal relationship and he can help his protege avoid dozens of small mistakes that can add up to big delays or even failure. This mentoring work brings enormous satisfaction especially to a very wealthy person who just doesn't need any more money.

Topic for Discussion: Why are mentoring relationships important within a business?

Answer: Mentoring in a business environment is a form of coaching and nurturing. Nurtured employees develop to their full potential, have strong loyalties to their employer, and maintain a strong work ethic. Mentoring is not cross-training or providing employees with new skills. Just as you reserve your precious time with your mentor to think strategically, to concentrate on the forest and not the trees, the time the Mentor-Protégé within the business spend together is focused on the strategic plan of the employee and how it fits with the strategic plan of the company.

Mentoring relationships within a company may be informal, formal, or both. Informal mentoring relationships should be fostered between all supervisor-subordinate relationships throughout the company, regardless of its size. We should communicate with those who report to us as mentors. This means nurturing the employee by the manner in which we speak to him or her, praising them for a job well done, and correcting them, when necessary, in a constructive manner.

Formal mentoring relationships, where a mentor is assigned a specific individual to mentor, may also be appropriate in your business, particularly if you have a key employee nearing retirement age (perhaps you) and an heir apparent within the company for the same position. Establishing a mentor-protégé relationship now forces the pair to spend some time together outside of their respective operational functions and reporting lines. It puts the corporate imprimatur on conversations between the two about the challenges of the senior position, the opportunities for enhancing its role and responsibilities within the company, and a myriad of topics that might otherwise never come up. Providing the heir apparent an appropriate venue for mining the intellectual capital of the executive about to retire will reap enormous benefit when the heir is on his or her own.

You think about it: Are you ready to help others get a business up and running? Who should you mentor? Should you be doing more to encourage mentoring among your employees?

Key Idea #10: Plan Your Marketing. We learned here from John that the definition of marketing is really the plan and that the many activities we think of as marketing are the tactics or pieces of the marketing puzzle.

Topic for Discussion: What are the puzzle pieces I need for my marketing plan?

Answer: The eight functions of marketing are:

1. creating awareness
2. building traffic
3. generating leads
4. qualifying leads
5. selling directly
6. providing service
7. customer dialogue
8. building loyalty

Next think of the four P's. Although marketing seems to be mostly about promotion, you have to know your product, understand what is behind the price, and work with all the sales channels, or the places where the product is sold. So, the four are:

• Product. What is your product? How does it compare?
• Price. What is your price? What are your costs?
  What are your projected campaign costs?
• Place. From where is the product being sold?
• Promotion. What's your offer? What is the pending event?

If you have these four things, you have a marketing plan. Now what you need to make sure of in the marketing plan: that your price adds value to your product; that the place you sell it is convenient; and your promotion tells the people what the value is. You don't have to make it complicated; but if you don't do a marketing plan, you aren't going to succeed unless it's pure luck. And if it's pure luck, you won't be able to repeat it because you don't know what you did.

You think about it: What is your weak link? How can you get better at marketing? What is your current customer communication plan? How do you get new customers?