Inc. 500|5000 Fastest Growing Companies Application Deadline Extended to May 21

Chief Executive Boards International is partnering with Inc. Magazine to remind business owners that May 21st is this year's extended deadline to apply for recognition as one of of the Fastest Growing Private Companies in America. Several CEBI companies have been previously named to the Inc. 5000, including Windy City Fieldhouse and O'Neil & Associates in 2009.

Despite the close deadline, we're encouraging companies who qualify to go ahead and apply now -- the application process is simple, and takes roughly 20 minutes. The only data required are CY 2006 and CY 2009 revenue. If your company is determined to be in the running, the verification process follows at a later date. 

Apply at: 2010 Inc. 500|5000 award

To be eligible, companies must have…

• Generated revenue by March 31, 2006 (not a recent startup)
• Generated at least $100,000 in revenue in 2006
• Generated at least $2 million in revenue in 2009
• Been privately held, for profit, based in the U.S., and independent (not a subsidiary or division of another company) as of December 31, 2009

Let Inc. recognize your company!  If your company has grown since 2006, we encourage you to apply now for the 2010 Inc. 500|5000 award.

Additionally, as a part of the nationwide Inc. 500|5000 ranking, Inc. also compiles “Top Lists” to recognize the fastest-growing companies in a variety of categories. In previous years, Top Lists have included the fastest-growing companies by metro area and industry, as well as the fastest-growing women-run and minority-run businesses.

The deadline is Friday, May 21.

Questions?  Call Inc. at 800-248-0308


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Terry Weaver


CEO
Chief Executive Boards Internationalhttp://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com

A Near-Death Experience

I talked with a business owner this week who told me a fascinating and inspiring story, describing the "near-death experience" he had in his business this past year. Wow, that sounds like serious stuff. And it was. The cause? Lack of access to capital -- the business equivalent of an oxygen shortage. The rescue? A non-bank financing alternative.

This is an owner, like many, who is a good operator. He knows where his costs are. He understands his financials. He has a handle on his capital requirements and he understands the risks and dynamics of his business. And he's in a risky and dynamic business -- contracting -- that's been hammered over the past 2 years of recession.

One thing he realized early on was that he needed to secure his lines of credit, and he did that. He scaled back his work force as contracts became less plentiful. He also realized he had to shed some debt, primarily on equipment he didn't need, and he sold some of that. And, finally, he realized that taking work at or near cost to "keep the crews busy" was an unsustainable exercise in trading dollars. As you'd expect, competitors seduced by that idea drove prices to the mat, and some failed as a result.

Despite those challenges, this contractor managed to clear a small net profit in 2009 and is also profitable for the first quarter of 2010. That's the near-death experience part -- realizing all along that he was one phone call away from his bank calling or reducing the line of credit he needed to keep the company in business.

Fast forward to the spring of 2010. Pent-up demand and increased public sector funding has resulted in an uptick in available work, and competitors are coming up for air -- prices have recovered to pre-recession levels. Some, of course, have perished, leaving fewer survivors to compete for the increased demand. In fact, he says, "The next couple of quarters are shaping up as two of the best in the company's history."

The problem? You guessed it already. His bank that's holding his existing line of credit, doesn't want to loan him any more money. The problem with that is that contracting is one of the more working capital intensive businesses I know of. You have to mobilize jobs, make payrolls, buy material, etc. before you can issue progress billings to customers and before the accounts receivable aging clock runs far enough 'till you get paid. So, a contractor with an increase in contracts is dead in the water unless he can either self-fund the working capital needs of the new jobs or find a source of debt to fund them.

The solution? Right now, it's not banks. In this case, his bank has refused to help any further, citing concerns of "being criticized by examiners for too much risk." Strange, that's how banks used to make money -- by finding solid customers whose business risks they understood and believed in. Not lately.

So, he set about finding alternative sources of capital, in some unlikely places. One unlikely place was a large General Contractor customer. He had won a job that he knew he didn't have the working capital to start up. He went over to see the owner, explained that he'd never start a job for them that he didn't see a way to complete, showed him his financials, and the owner agreed to write a $100,000 loan for six months! He also went to a family member, who ponied up another loan. He confirmed more than once, "You realize this is risky, don't you?", and the relative said, "You've always known what you were doing before, and I don't think that's changed."

Is that strange, or what? A bank, presumably in the business of making money by lending money, won't support him. A customer and a relative, however, say "Sure, I believe in you." Welcome to 2010.

Well, this is an interesting and unlikely tale. The takeaway? Business owners persevere, despite adversity that would stop the average person in his tracks. In this case, we have a business owner who just wasn't willing to take the first ten "no's" for an answer. He knows how to make money in the contracting business. He knows it takes working capital to do that, and knows how much. And he knows that there's capital available out in the marketplace -- it just doesn't happen to be at banks right now. And he found the capital he needed, in a couple of places you'd usually expect only startup companies to be looking.

When this is all behind us, I believe the commercial lending landscape will be radically changed. Banks will be relegated to the lowest-risk segment, providing operating checking accounts and low-risk lines of credit to finance receivables and highly liquid inventories. Nature abhors a vacuum, and the vacuum that's being created by overly-conservative bank underwriting will be filled by an entirely new type of lender -- perhaps small syndicates of independent investors or peer lending by cash-rich companies to peers whose risk they can assess and underwrite.

Welcome to 2010. This isn't a unique case -- see: "Peer Lending - A Non-Bank Financing Alternative"

If you have experiences or stories of peer lending among business owners, please click "Comments" and share those with others.

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com

76% of Employers Blocking Social Media Sites

Perhaps you, like most employers, see Social Media at work as "Social Notworking". Are you wondering what your employees are doing on their web browsers all day? Larger companies think they know, and they're doing something about it.

In general, mid-size companites, like members of Chief Executive Boards International have modest IT budgets, and may be ignoring this potential productivity drain. According to a recently-published Facebook Fact Sheet, the average user spends 55 minutes per day on Facebook alone. Depending upon your assumptions about how many of those 55 minutes happen at work, you can do your own calculation on lost productivity.

Web security and filtering provider Scansafe, recently purchased by Cisco, says:

"Currently, 76% of companies are choosing to block social networking and it is now a more popular category to block than online shopping (52%), weapons (75%), alcohol (64%), sports (51%) and Webmail (58%). Surprisingly, employers don’t take the same stern approach to online banking and less than half (47%) of our customers block this category." Full Article....

At the recent GROWCO Conference, sponsored by Inc. Magazine, activity was brisk at the booth of Spectorsoft, a supplier of web activity monitoring software. Clearly, smaller companies are taking more interest in what their employees are doing on the web while at work.

To share your company's point of view or policies on workplace web use, please click "Comment" below.

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com

Peer Lending -- A Non-Bank Financing Alternative

I heard an inspirational story last week from a member of Chief Executive Boards International. Despite ongoing difficulty in securing additional financing from commercial banks, he came up with a seemingly unlikely source of credit -- another business owner.

This member is a dealer in a capital equipment sector that's been hammered by the recession. He's seen his revenue fall off more than 50% as demand simply disappeared. He's had to close locations, move to a lower-rent facility, reduce staff and cut his own compensation to the bone to survive. Thankfully, he was paying attention early in the downturn and got a credit line in place that's enabled him to make payroll and keep current (although extended) with vendors. Thankfully, he hasn't suffered any major bad debts due to customer bankruptcies. Right now, despite being in violation of most of his loan covenants, he's current with his bank, which is preoccupied with bigger fish, and letting the line ride.

And there's some light appearing at the end of the tunnel. Demand is picking up, proposals are up, and orders are slowly on the rise. He believes he's going to make it. But what he told me last week was an inspiration. He said he got a call from one of his fellow CEBI members who had been following his situation through their regular local meetings. That member offered him credit if he needed it. Just out of the blue, another business owner whose business hasn't been so gravely affected by the recession said, "I know you're in a bind, I know you know what you're doing, and I know I can trust you." "If you find you need a hand with some additional credit, just let me know. I like to help other people when I can." That's taking our mission of business owners helping and advising each other to another level.

Actually, I believe this might be a forerunner of something we'll see a lot more of in the future -- peer lending among business owners. People who know and trust each other are infinitely better positioned to assess credit risk than traditional sources of commercial lending -- namely banks. And they're willing to help each other on a voluntary basis, without even being asked!

This story pretty much made my day, and I hope it does yours, as well.

Please click "Comment" below if you have a peer lending story to share with others.

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com

We do What We do

Focus. It's the key to any challenging endeavor. Precious few difficult things can be accomplished without focus, and business is no exception. Most small business owners, however, believe that they need more, rather than fewer lines of business in order to be successful. Experience has proven the reverse is more likely true, as product/service diversity is the enemy of focus.

This is a tale of two business owners -- one highly successful and another struggling. I watched each of them in person recently, as a new business opportunity crossed each of their radar screens. The difference in behavior was fascinating.

Business Owner A has an interesting stable of businesses. Three, to be exact. They are loosely related, but dissimilar in many respects. Different services and different customers across different geographies -- almost nothing in common. Realizing they're more different than alike, he presents them on his website as three "business units", operating under one brand umbrella. Now, if each of these was doing, say, $10-$50 million and run by an experienced General Manager, it might be a different deal, and he could describe himself as a small "holding company". A couple of them are doing maybe $2 million, and the third is really more of an idea than a business. Not surprisingly, he's having trouble making money. There just aren't enough of his own heartbeats available to focus on any of the three to make them really successful.

Business Owner B has a single business, serving a single industry. He dominates his industry in his home territory -- a single Midwestern state. He is surrounded by 4 other states of similar demographics, size and market needs. His current growth plan, expanding into each of the 4 surrounding states, has the potential for 5x growth over the next several years. All he has to do is cover more territory, perhaps with some satellite offices, and scale up his production operation to do more of what he's already doing. Not easy, but beautiful in its simplicity.

I watched each of them recently as they were approached from outside their companies by someone pitching them on an additional, loosely related business opportunity. Business Owner A got excited. He became more animated, his voice stepped up in pitch, and he completely lost focus on the meeting he was in, which was about improving his three already-unrelated businesses. Like many small business owners, this man believes he needs more, rather than fewer different things to be pursuing simultaneously. I'm hoping he somehow discards this fourth situation, although I'm actually thinking something else will come along and take its place.

Business Owner B, on the other hand, listened intently to a new opportunity being pitched by a person who wanted to start up a loosely-related business under the existing brand and infrastructure. He had a couple of trusted associates and advisors on hand to ask a lot of questions about the new situation and how it fit (or didn't fit) with the core business. It turns out that, other than being in the same vertical market, this new opportunity had few critically-needed skill sets in common with the core business. What it really turned out to be was a person looking for a low-cost startup opportunity, under the umbrella of an established business.

Not surprisingly, Owner B and his associates concluded that the new opportunity, while not without merit, just really didn't fit with their core mission and core competencies. Finally, Business Owner B summed up the entire conversation with one phrase: "We do What We do". That says it all. They know exactly what their business is, and they do it very well. They're growing, profitable, and market-dominant in their corner of the world. They've become that and continue to be that due to relentless focus on "Doing What We do" -- and only that.

They're also generous. They're actually considering some "incubation" services to the would-be startup business, including some space, telephone answering, etc. It's not that he had a bad idea -- just that it wasn't consistent with the core mission of their business. So they plan to help him at arms' length without getting distracted by incorporating him into their business.

Are you chasing too many different rabbits in different directions? Would it be a good idea to narrow your focus to something razor-sharp, so you could also say, "We do What We do"? It's likely to be less complicated, less stressful and more successful.

Please click "Comment" below to share your experiences relative to focus vs. diversity of business interests.

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com

The Barbecue Index -- an Obscure Economic Indicator That's Improving

A little-known economic indicator, the Barbecue Index further confirms the ongoing strength of the recovery from the 2008-2009 recession. Long regarded as "comfort food", even barbecue restaurants suffered precipitous declines in business after the Lehman Brothers debacle of September 2008.

Steve Francis, owner of Pinkie's Barbecue in Hermosa Beach, CA confirmed this week that the economy is indeed on the mend. "January 2010 was our best month ever", according to Steve, the speaker at a meeting of The Rotary Club of Hermosa Beach that I attended this week. Steve and his story have so much in common with members of Chief Executive Boards International, I just had to tell it here.

Steve opened Pinkie's in May 2008, after a failed attempt at "retirement", following the sale of another restaurant business. "I just got bored", he said, and upon finding a failing restaurant for sale, he created Pinkie's from scratch, based on an idea that's been rattling around in his head for years. "With the other business sold, I finally had time to put it together", Steve said. So he renovated the space, got his menu and branding together, and opened Pinkie's in just 21 days. Two months later, he was breaking even.

Then, in the wake of the Lehman Brothers collapse in September 2008, "The world as we knew it changed", says Steve. He had to lay off his managers and go back into the kitchen to conserve cash. "In January and February of 2009, people were just shell shocked", Steve said. Consumer spending in Hermosa Beach, where median home prices topped $1 million in 2006, was not just off -- it was comatose. At least as measured by the Barbecue Index.

Steve's on top of his numbers. As a result, he managed to finish 2009 with only a slight operating loss -- most of it suffered in the first quarter. December was a slow month, as well, resulting from both Christmas and New Year's falling on weekends, the busiest time in his business. We're working on a seasonal adjustment factor for the Barbecue Index.

So he, like myself, is pleased that business is roaring back in 2010. It will take awhile for broad economic statistics to continue to catch up, and for operators like Steve to get confident enough to bring back one or two of those managers he had to lay off. As that happens, the next leg of this recovery will kick in. If you're betting against continuing economic recovery, think again. The Barbecue Index would suggest otherwise. Business owners' attitudes took an about-face in January 2010. It appears most people are looking at 2010 as a "do-over", and that will add fuel to the recovery, as well.

By the way, if you're in Hermosa Beach over lunch or dinnertime, do be sure and stop at Pinkie's Barbecue for a great meal. Ask for Steve -- except on Thursdays, now that he's back to playing golf.

PS: If you're looking for updates on the Barbecue Index, you'll find them only here -- http://www.chiefexecutiveblog.com/

What's your view of the current economy? Click "Comment" below to share it with others.

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com