Organizing

Many businesses in general and small businesses in particular are oftentimes adept at failure. A primary cause for the proneness to failure is the lack of business organization. Organization in this instance is not the hierarchical structure of the staff but rather the steps taken to ensure that the business heavily emphasizes its strengths in pursuit of available opportunities while it eliminates weaknesses and minimizes to the extent possible any threats. The Report entitled Organizing Business Plans, dated November 11, 2000, published by the Business Rules Group is an excellent primer to study prior to committing any money, time or effort to starting a new enterprise, large or small.

The SWOT assessment, to the right, is one of the many methods described in the Report to help in analyzing the preparedness of a business model to achieve success in its applicable market.

In starting a business, the objective is to minimize the probably of failure (the 'Y' axis) while maximizing the potential for gain (the 'X' axis).

This balancing act, while it may seem simple-minded, is a key area often overlooked by the novice entrepreneur or the business inept. Some with a great idea for a new business or for the recovery of an old business charge into the business set-up and opening without undertaking a SWOT analysis, understanding its results and without initiating remedial action to overcome any highlighted deficiencies.

Invariably, these businesses come crashing down, maybe not in the short term, but most are destined to fail.

To use my favorite hypothetical, my closed golf club, let's look at the possibilities for reestablishing the business and a possible reopening:

Strengths

• Close proximity to large potential customer base. Course is embedded in community of approximately 1000 homes.
• Apparent willingness of current owner to enter into a lease agreement with new management.

Weaknesses

• Little interest by outside individual or groups to purchase or lease premises and reopen as a golf or country club.
• Two large mortgages ...mortgage debt far exceeds the value of the property.
• Facilities / infrastructure in total disrepair ...greens, fairways, bunkers, practice areas, club house and other building structures at end of useful life.

Most recent management / ownership allowed club facilities to deteriorate and, consequently was responsible for large membership and per round play decline. Major hurdle to reclaim lost members, rebuild facilities and reputation of club to attract members and daily customers.

• Maintenance equipment, pumps, sprinkler system well past end of life.
• Left-over management and pro staff seen by many as detrimental to any recovery of the business in current form. Requires a complete restaffing, top to bottom.

If the club was to reopen in current condition, it would be well below the playing conditions, at the bottom when compared to the other golf clubs within the market area.

Opportunities

• Sell to willing buyer who reopens the club in its current form but with all facilities modernized, new equipment bought (and where applicable) installed. Employ new management and staff. Incorporate a fee structure that maximizes membership, per round and tournament play from the relevant market area.
• Split the club property into three or more entities.
• The pool, tennis courts and office space by the pool split from club and offered to the Home Owners Association and/or a business person who will provide as community service or lease to HOA for use as a community recreation destination.
• The club house, offer this space to the caterer as an events hall. Alternatively, offer to HOA as a community center. If neither is viable, demolish the building.
• Hold the golf course as a separate entity. If club house and pool have changed ownership, lease parking and golf cart storage for the short term.
• In the short term erect a small hut or rent small house trailer for (non-merchandise) pro shop.
• Longer term, build a new (smaller) golf club house, sports bar, golf cart garage.

Threats

• Other golf courses in market area have upgraded facilities or have upgrades in plans.
• Hostility of former members ...long memory cycle to overcome.
• Other clubs actively recruiting from old member base.
• Lack of funding to purchase, to upgrade, to reopen.
• Economy is limiting number of member candidates; shrinking the applicable market area (gasoline prices).
• Aging population, golf loosing its luster in the younger set. Need fewer golf clubs to satisfy emerging golfer community.
• Changed interests, values. Many organized sports, other activities supplanting golf as a recreational / family option.

Golf and golf clubs may very well be the dinosaurs of current-day America. Whether or not a golf business can be established or reestablished in this environment is very problematic. Personally, I would not invest(?) my money into a golf club.

Certainly, I would not do it without the expectation that anything invested is more likely to be lost than any potential profit gained.

Planning

Wikipedia again, provides an apt definition of planning as it pertains to the business or organization setting. Forecasting (the topic of a previous blog) can be described as predicting what the future will look like, whereas planning predicts what the future should look like. Planning ...the psychological process of thinking about the activities required to create a desired goal on some scale. As such, it is a fundamental property of intelligent (management) behavior."

In business, two of the fundamental building blocks that help insure successful business outcomes are a business plan and a marketing plan. You should never start a business without these and other well thought-out plans.

Whether you follow a process similar to that of the Fieldstone Alliance, depicted in the diagram to the right or a simpler planning process, one thing is continuously made clear by business in general, whatever the type or size. Insufficient attention to the planning process, up front, before capital is expended or customers sought spells doom for the business, its investors and its customers. Without a clear understanding of the environment, the products and services of the business and the receptivity of its products and services by the customer, there can be little chance of a positive outcome.

Personally, I prefer a much simpler planning process than the one pictured above. The Social Security Administration uses a very simple process, depicted in the diagram shown below.

In this case, the government has it about right.

Whatever your planning process, several key factors must be considered. Businesses, even small businesses who bypass this important process inevitably overlook a major critical path that goes unsatisfied and leads to business failure.

In the case of our dead golf club, any move to reopen must understand and plan for the following:

• Define the environment, potential customer base, analyze and conclude on how the club will attract potential customers to this club.
• Define the product and services that will be made available to potential customers. Describe in detail the products and services, the potential benefits to customers (members and per round), and the cost of each of the offerings.

• Determine and arrange gain commitments for the start up finances that will sustain the club until necessary revenues are sufficient to ensure ongoing viability of the club.
• Determine the skills and numbers of skills necessary for the organization and staff to implement the plan.
• Implement the plan.

Small businesses are notorious for ignoring the planning process. Typically, an individual or group of individuals have an idea. They do a little brainstorming on the idea ...get out the calculator and begin to calculate the revenue that will come in ...usually high-balling it. They estimate the expenses ...here it is usually low-balled. They calculate the number of customers at some rate of pay that will give the desired results ...and wouldn't you know, they start a business ...a business that history shows will likely fail.

Business start-up is tricky business. Frequently, it is done quite successfully. More frequently, businesses crash somewhere down the line. Lack of up-front competent planning will insure that failure comes sooner rather than later.

Management

If you went looking for the definition of Management, I suspect that you will find the Wikipedia definition is as good as any ...the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively.

Henri Fayol, in his 1916 book "Administration Industrielle et Générale" presents his general theory of management. He considers management to consist of six functions: forecasting, planning, organizing, commanding, coordinating, and controlling. While we may think a book written in 1916 can't possibly be relevant in 2011, even today, it's difficult to dispute his findings. Many management experts, a wide array of academics and authors have tried to refine and modernize the definition of management, Mr. Fayol's work continues to have relevance.

The long-term success of any organization is closely tied to how well management is able to foresee its organization future and to develop appropriate strategies to deal with likely future scenarios.

In soon to follow posts, the six functions of management will be individually discussed and in detail using a favorite business (a now defunct golf club) as a case study.

Governments

Whether a duly elected government or a pseudo government such as a commission, a homeowners association, a motorcycle club or any number of governing bodies, very soon the governors fall into the trap of a self-serving body that strives to perpetuate itself. Its purpose quickly migrates from selfless, community service to one of purposeful self-service, self-promotion, self-enrichment, self-perpetuation. Apparently, it's the playing out of human nature.

I know. I shouldn't stereotype all governments or government-like organizations and all the people who serve in leadership roles within these bodies. Unfortunately, it's difficult not to so stigmatize people this way. Maybe it's a flaw in my character, but I am always looking for ulterior motives. So often the broad categorization of self-service is apt.

I would like to think that people are better than my cynical view suggests, but you so often see the worst: A homeowners association board of directors on which a couple of its members receive the majority of the maintenance and upkeep contractor bids for the community. Maybe it is just coincidence that they seem always to place the lowest bid or best match the preset parameters of the bid request.

Homeowner boards, the city commission, the county commission, the state legislature, the governor, state elected national politicians, sometimes even the president bows to the enticement of self-aggrandizement.

So how do we overcome this problem? Will strong ethics codes, close scrutiny of ethical performance, severe penalties for failure to meet community standards ...what will cure the problem?

I suspect the problem boils down to voter apathy. Whether constituents are voting for the homeowners board, the city commission, the governor, a senator or the president, it takes 100% of us casting reasonably intelligent votes. Unfortunately, our elections are considered high turn-out in many cases when 15-25% of those eligible take the time to vote. In a recent election of our homeowner board members, not enough people turned out to the annual meeting (or submitted their proxies) to validate an election. Consequently, these same two self-serving members continue to sit on the board ...making decisions that serve their personal business interests whether or not the decisions are good for the community at large. And so, we are condemned to live with the results.

A recent election held to elect our city commission had a turn-out of about 15%.

Seems as though we did the same in the 2010 state and national elections. Now we have a dysfunctional US House of Representatives, a radical state legislature and a governor drummed out of the company that he founded when the federal courts found that company guilty (some question if the company was found guilty, or settled out of court before the verdict was delivered) of Medicare fraud. By the way, Governor Scott's company paid a hefty fine. (In late 2002, HCA agreed to pay the U.S. government $631 million, plus interest, and pay $17.5 million to state Medicaid agencies, in addition to $250 million paid up to that point to resolve outstanding Medicare expense claims.[24] In all, civil law suits cost HCA more than $2 billion to settle, by far the largest fraud settlement in US history.) Apparently, this is what kept him and other HCA executives from prison terms, delivered Scott up to Florida as a governor candidate and with the ignorance of Florida voters has him now serving his term in the Florida Governors Mansion.

Self-service anyone? Tastes pretty good if you are able to escape prison.

Chance

Ever wonder what are your chances of winning the PowerBall Lottery? Take a look. You will see that your chance is 1 : 195,249,056. Not very good odds. But, heck, if you don't play, you can't win or so they say.

Our society seems to have concluded that financial success is dependent on gambling. With the number of casinos springing up around the country, you would think that games of chance are our only possible way to get ahead. With today's job market, maybe it is true.

There are 1507 establishments identified as casinos in this country. Many other establishments, oftentimes euphemistically called some form of 'Veterans' Internet Cafes are springing up all around. Locally, just this week the 23rd Cafe offering forms of Jack Pot winnings for playing games of chance, some games of skill and chance has gone before the City Commission requesting a license to open. Of course these cafes deny that they are gambling establishments. Interestingly, a couple of weeks ago, an employee of a local cafe called 911 to report a robbery at the "casino". Oops!

"Players" with household incomes under $10,000 bet nearly three times as much on lotteries as those with incomes over $50,000. Sadly, I've seen this very thing manifested at the super market where a customer in front of me made her purchase with food stamps and then purchased her PowerBall tickets with dollars. If you go to Atlantic City, Las Vegas, the Indian Reservation casinos and other gambling portals, this sad fact plays out day after day in our society.

I well understand that some people are desperate and will gamble on striking it rich even when the perpetrators of these so-called games of chance stack the odds against winning. If you think you can win against the casino, just go to Las Vegas, Atlantic City or one of the other casino towns, stand in front of one of the casinos and explain to yourself where these guys got the money to build the casinos if you can be a winner playing their games.

Sorry, I must go. PowerBall tickets are going fast. The payout is up to $171 million for the drawing Saturday night. I can't miss putting my two cents worth (well maybe $5) into the pool. As is often said by the talking heads selecting the winning lottery numbers, "You can't win if you don't play".

Business

I am disappointed that so many businesses seem to believe that the only way to be successful is to be deceitful, to trick potential customers into becoming actual customers.

Have you noticed the car and truck ads on television? "Buy the all new, 2011 Dogmobile X387 truck for just $19,250 dollars". This ad is accompanied by a glossy video of a shinny new truck going through its paces. It shows all the many features of the truck, power this and power that. A sound system that rivals the sound system in Jerry Jones Cowboy Stadium. Mag wheels, sun roof, air conditioning, automatic transmission, lots of miles per gallon ...the works

The ad goes on to describe its on-road and off-road capabilities. This truck is a site to behold, a blessing to own, a pleasure to drive. All your friends will be envious as can be.

It looks great. Where do I sign?

Wait a second. What is this fine print at the bottom of the video ...price as shown, $51,214.18. Something seems wrong. I was shown this Dogmobile truck with a large, prominently displayed price of $19,250 ...where did this new price of $51,214.18 come from?

This is just one of the many ways that companies try to deceive potential customers into becoming real customers. Unfortunately, it works.

One of the come-ons that I like best of all is when golf club manufacturers come out with their new model of driver each year. For those of you who are golfers, getting more distance on your drives is next to the holy grail of golf. No one can hit the ball far enough. So advertising a new driver as a means of increasing your driving distance is an interesting ploy. Club manufacturers have been using this approach for many years. Apparently, it works. Most continue in business with the community of golfers shrinking.

I have finally developed a way to counter this sales pitch of more distance for my drives. I have decided that I will buy a new driver in five years. That way I will gain the cumulative effect of the club manufacturer's promise of ten to fifteen additional yards on each new model of its driver. In other words, if a manufacturer promises fifteen more yards for this year's model and continues to do the same for five years, I can join the tour in 2016 because I will have picked up an additional 75 yards of driving distance

Further, if I add the additional yardage of the golf ball models each of the next five years, I should pick up another forty or fifty yards from the multiplier effect of each year's new model over the previous year model. Five years of improved golf balls and five years of improved clubs should give me the distance that I need to compete with the big boys on the PGA tour. Just think how these young kids will feel when an old codger of 70 or 75 out drives them in the 2016 season.

Golf clubs and automobiles ...did I ever talk to you about the claims of pharmaceutical companies?

Golf

The place for grass. You cannot have a decent golf course without grass. So if the animals are all fed, the lawns are all turned back to native plants, vegetables and fruits, it is time we clipped the fairways and eighteen greens for a round of golf.

A few years back, we lived in the great state of Delaware, down near the beach in the City of Lewes. It was a great place to live ...charming people (locals) who lived year round in Slower, Lower Delaware or was it Lower, Slower Delaware? ...tolerable part timers who come to the beach towns for the summer or just a few weeks of vacation. The summer visitors, emptied out of Philadelphia and other parts of Pennsylvania; Baltimore and its surrounding suburbs; Washington, DC and its surrounding 'burbs crowded in and around those of us who lived full time at the beach ...locals and transplants (from New York, no less) like us.

All these summer visitors helped me in one very special way ...they provided customers for the many golf courses in lower Delaware and the Ocean City, Maryland area. We had some of the finest golf courses, competitive with most any place in the country, including Florida.

What we didn't have was suitable weather to play year-round. While we oftentimes could expect a balmy round at Christmas time, the winter would extend into the month of May, sometimes beyond. We had little snow, mind you, but in the winter and the spring when it should be time for golf, the wind off the Atlantic and Delaware Bay gusted constantly in the 25 to 35 knot range. Try putting a golf ball over the water onto a small island green in that kind of wind. Maybe it can be done, just not on a consistent basis by a golfer of my limited talent and mediocre skills. I donated enough golf balls to the ponds, lakes, and tidewaters to make golf a very expensive sport ...even though I used cheap balls.

While living in this paradise, with only the one flaw (cold winter winds), the real estate market soared. The house that we purchased in the mid-90's was suddenly valued at four times what we had paid ...this was just after seven short years. So what could we do?

We began to feel the cold of the winters. Suddenly, the freezing temperatures became intolerable (even without thinking of golf). When you added the limitations to year-round golf, the choice became abundantly clear. We needed to sell out and move to a warmer climate. Florida beckoned.

This wasn't a decision to be taken lightly. I had always hated the thoughts of Florida ...too hot, too muggy, the hurricanes, all those snow-birds in winter, death's waiting room. Florida was not my cup of tea.

But golf and the cold's effect on arthritic limbs and backs soon overrode about sixty-five years of good sense that had kept us in the northern environs ...the seasons; crisp, delicious apples picked directly from the trees (beats picking oranges and grapefruit at Christmas time). But, anyhow, off to Florida we go.

No one who owns a set of golf clubs can possibly move from the north to Florida and do so without insisting on buying on a golf course. In our case on the 6th hole, a par 5,, on the left side about 150 yards from the green. It is a lovely place, well protected from misfired golf balls by towering live oaks and loblolly pine trees ...a golfers paradise. And so it was for six plus years ending at the close of March, 2011.

But, on that date, society finally failed us. The number of golfers, members and guests, slowed to a level that failed to sustain our club. It was going broke.

At the end of March my golf club failed. It went bust. Bellied up. Shut down. Closed. No more golf on the fairways out behind my house ...nicht mehr Golf in Turkey Creek. Can this be the omega? Paul Ryan seems to think so. The Reverend Camping with his forecast of doomsday believes it is so. But wait a second, no one but those loony tea-baggers is buying Ryan's crap. Wasn't Camping's prediction of Armageddon scheduled for yesterday? I'm still kicking and have a round of golf scheduled for tomorrow at another course, sadly not at our own, now defunct club.

Alas, maybe there is lots to look forward to in the future.

OK! OK! My whining about the closing of our golf club is not one of the major stories of 2011. Even my moaning about the waste of cultivating grass (crab grass called St. Augustine here in Florida) may be a little trite.

Forgive my venting and maybe in the future, I'll move on to discussing something more serious.

Grass

Grass, other than pasturing cattle, horses, sheep, other domesticated and wild animals, why grow it?

Each day when I look out on my lawn, I can't help but think what a dumb place to put money. Sure it is green. It adds some decorative, aesthetic pleasure, but is it a wise place to spend money? Should we be pumping fertilizer, bug killer and weed killer onto the lawn at increased cost while we further pollute our ground water? No rain this week, so if I am to keep the grass growing I'll need to turn the sprinklers on.

Until recently, the State of Florida allowed Home Owner Associations to require that lawns be covered in grass, be trimmed and neat. Homeowner Associations were constantly reviewing member lawn care outcomes and leveeing fines on those who didn't keep their lawns up to HOA standards. While this mandated grass and good lawn grooming was a godsend to Florida's lawn care industry, the law forbade homeowners from transitioning their lawns to a more sensible usage of native plants, vegetable gardens, or other more productive uses for this space. Fortunately, that law was rescinded and now Floridians are able to change their yards to better use. Hopefully, the other 49 will enact similar laws.

Well, you might think I just finished mowing the grass, edging and cleaning-up the debris in this 96 degree Florida heat.

Beginning next growing season, I think I'll plant some pumpkins and water melons out front ...maybe some tomatoes and cabbages in the back. Then I can fire the lawn care company.

Reentry

Several years ago I was into blogging big time. Then I became lazy. Rather than blog myself, I read and commented on the blogs of others. Finally, I have seen the light. I am blogging again as if anyone gave a rat's hoot.

Blogging to me is cathartic. Even though the writings buzz off into cyber space, probably never to be seen, probably never to be read. Nonetheless, the act of writing salves the soul. Anyway, it salves my soul.

So let's start with something that is on my mind. Layers of government. Before I begin on the many layers of government here in the United States, first, let me describe my political philosophy.

I stand in the middle ...maybe with somewhat of a lean to the left. I believe government has a purpose. It serves as a protector of our citizens from those within who would trample individual rights and our country from those outside our borders who would trample our nation. It can be of immense value to those in need. Sometimes it can get in the way. But overall, government has a role to be performed. I am for government performing the role of helping its constituents, especially those least able to help themselves.

With all that being said about my belief in the need for government, runaway government is not included in what is required to administer our small patch of the world. Boiled down to the individual perspective peering upwards you must look through multiple, overlapping layers to see the top of government.

If I just look at the microcosm of my state, my county, my municipality, my gated community, I see four layers of government, much that is duplicative in services provided, regulations and rules enacted. In close examination of local government, there are too many bureaucrats in place to steer the ship of community, of city, of county, of state. The consequence of all these layers of government is a constant clashing of motives, demands of citizens, and confused outcomes in services rendered.

Just a simple example of overlapping layers is our police departments. Do we really need a city police department, a sheriff's office, the state police, the state bureau of law enforcement, nationally, the FBI and probably others within the Homeland Security Department that are not readily apparent? Another example: When 911 is dialed for a medical emergency, should the fired department respond with a fire engine, the police in a cruiser, and the EMS in an ambulance? Duplication even within the same local government.

We can have smarter government. There is no law preventing it, but there is politics as an obstacle. Different political ideologies and embedded self-interest compound the problem of exercising rational government.

In future blogs, we will explore government ...beginning with local government, but when we solve that problem we'll move on to state, national and maybe even venture into the governments of the world. Stay tuned.