Over the last several weeks at Northstar Ventures we’ve had to trim our costs and hunker down just like so many other companies. It’s been a gut-wrenching process. We’ve trimmed our staff by 35% and it’s not been fun for anyone…but it’s especially painful for those who end up on that chopping block.

As a CEO, the hardest part about making layoff decisions is trying to set aside emotion and make decisions based on performance and quantifiable value. I’ve found that in times like these, it actually becomes quite apparent who on your team is vital and who can be let go without much negative impact to the business.

Whether you are the decision maker about “who stays and who goes” or if you’re worried about ending up on the chopping block…here are some things to consider:

• Top sales people stay. They keep fuel in the engine.
• Unless paid on 100% commission, mediocre sales people who barely or rarely meet quota must go; now.
• Management team members should only stay if their departure would cause the company to falter substantially. Otherwise, it’s time to say goodbye. One big salary can pay a lot of bills.

• In a season of deep financial concern and widespread layoffs, those who remain should also sacrifice. Trim remaining salaries by at least 5%.
• If you almost fired someone in the past, then they should be near the top of the list when considering layoffs. Unless they’ve made a dramatic improvement, they’re gone.
• Marketing assistants (and assistants in general) are targets. Any worthwhile Marketing Manager (or Managers in general) should be able to absorb the tasks of an assistant until the situation improves.
• Employees who have done a good job of pointing out and proving why they are a resource that you can’t do without should survive if at all possible. You want useful fighters in a time like this.
• Employees who are barely noticed are usually barely noticed when you let them go.
• Don’t underestimate creativity. A reduction in time or pay from three people can equal a full headcount reduction. Find out what people are willing to do before making final decisions.

In July, 2007, Inc. Magazine surveyed business owners on the topic of downsizing. I thought some of the results were insightful:

“Who did our respondents fire? Well, it didn’t always pay to be close to the boss: 12% fired their secretaries or assistant.

The most fired department: Sales and Marketing. Other endangered staff members, IT Specialists, Project Managers, and ironically, the Head of Human Resources.”

My friends, this is most definitely a season of change. It’s a season of scarcity and real lives are being affected.

In the end, these times make us stronger and new opportunities are created. In the end, we’ll be better for it.

Until then….Bosses, chop carefully, thoughtfully, creatively, and with compassion.

And to those who are worried about being chopped? Get out there and do everything in your power to drive sales or become a part of the business engine that’s expensive and difficult to replace. Be the transmission.

Check out this great post for more information about this topic:

10 Tips for Downsizing with Grace in Difficult Economic Times

Top 7 Survival Tips to Deal with Downsizing in the New Economy

One of my favorite entrepreneurial thought leaders, Guy Kawasaki, provides yet another extremely insightful article.  In a recent guest posting for Sun Microsystems, he spells out his 5 lessons of becoming a successful entrepreneur. I’ve summarized some of it here:

1. “Focus on cash flow”: Guy explains how P&L profitability is important, but that’s not specifically what pays the bills.  Cash on hand is what’s key. With cash you literally pay your employees, vendors, and all other overhead. Cash is king.

2. “Make a little progress everyday”: Guy is suggesting the value of small steps…it’s no longer about major marketing campaigns.  Instead, his focus has turned more toward closing another sale, focusing on a better product and even ensuring a website is just a little more user friendly.  These baby steps are essentially what’ll bring the big picture to life.

3. “Try stuff”: Guy Kawasaki explains that luck happens only to those who try new things – not those who wait for things to happen.  Some of us sit back and pass up opportunities only to see someone else take it and run. You became an entrepreneur to become adventurous, so don’t forget to go out on a limb and experiment every once in a while.

4. “Ignore schmexperts”: Sometimes our gut is screaming so loud that we can’t hear anything else.  When it does, listen to it and not those so called experts.  They’ll always say “I told you so” whether you succeed or fail. Your gut instinct is usually more reliable!

5. “Never ask anyone to something that you wouldn’t do”: Don’t ask your client, employee, or vendor to do something that you wouldn’t be willing to do yourself.  This includes the small stuff—if you aren’t willing to do it yourself when it makes sense, you won’t have the respect of those you lead.  Sometimes we forget that we are dealing with people with busy and active lives… treat everyone as equally as possible.

I’ve given a summary, but go get it from the horse’s mouth!

Read Guy’s original post here: Lessons of Becoming a Successful Entrepreneur

Here are some related blog posts about this topic:

10 Myths of Entrepreneurship

What Makes a Successful Entrepreneur

Secrets of Successful Entrepreneurs

Four Steps to Becoming a Successful Entrepreneur

11 Killer Instincts of Entrepreneurship

Today’s guest author Brian Rutledge, is Managing Partner at Search Marketing firm Get Page One, LLC., which he founded in 1998. Get Page One specializes in helping small to medium sized business grow and manage their online presence through organic search engine optimization, social media optimization and paid search marketing campaigns. Based in Austin, Texas, Get Page One helps clients worldwide with holistic internet marketing campaigns focused on sales, brand awareness, and reputation management.

Jeff Chavez Discusses Killer Entrepreneurship

Jeff Chavez runs one of the most successful small business coaching companies in the United States. In addition to his duties as CEO of Northstar Ventures, he’s active in the professional speaking industry.  At his latest event in Austin, which also featured his friend Tito Beveridge, Jeff discussed the 11 Killer Instinct of Entrepreneurship, a topic which had the audience deeply engaged.  There was so much feedback from the event that Jeff is now writing a book entitled, The 11 Killer Instincts of Entrepreneurship.

Jeff Chavez: Serial Entrepreneur

As founder and CEO of Northstar Ventures, Jeff is able to apply the lessons that he has learned while starting each business, whether successful or not.  He explains in his blog that some of the best lessons he’s learned was from failure, and not from the success some of his companies realized. With each failure, he grew stronger, and was able to pick up the pieces and move in a new direction; with more resolve, experience and commitment to making his next business more successful.

Jeff Chavez began his entrepreneurial career in 1992, as the Founder of Foothill Fire Safety Co. He continued to manage FFSC while forming a second company, Home Healthcare Direct, which distributed medical supplies to assisted living facilities. Both companies were successfully acquired in 1997.

From 1999 to 2002, Jeff Chavez served as Co-Founder, Chairman, and CEO of DispenseSource, Inc. (now Nexiant, Inc.) where he established it as one of the leading providers of automated inventory systems within the industrial and manufacturing industries. The company has emerged as the world’s leading provider of automated inventory systems.

Jeff Chavez Launches Northstar Thinktank

Northstar Thinktank is the newest edition to his business repertoire. Acting as a resource center for entrepreneurs, his team of researchers scour the internet, magazines, books, newspapers, and blogs searching for the most relevant insight that any small business owner would appreciate.  Updated nearly daily, this concept allows for professionals to select any helpful tip which is divided into the three categories of the business cycle: research and planning, marketing and sales, and growth and execution.  This site is especially helpful to those just starting their entrepreneurial journey.

Jeff Chavez: Expert Business Coach

Jeff Chavez is also writing another book called Survive-olution: How successful companies survive and thrive through innovation and evolution. The book focuses on how the success of business hinges on the ability to be flexible and change as needed.  Jeff hopes the book will be published by early 2009, where he will start his book tour and speak on this topic around the country.

Jeff Chavez also appears on The Big Idea with Donny Deutsch as an expert business coach for struggling entrepreneurs. His role requires him to become familiar with each business plan, uncover the problems, and then suggests several ways to improve their concept, brand, finances, and focus.

Information has always moved pretty quickly on the Internet. But the new technology allowing information to move in an organized, highly targeted way is changing everything about Internet marketing.

Entrepreneurs and small businesses who understand how to tap into the online world of community and customization will be able to reach buyers in ways we never dreamed before.

Take a moment and watch this powerful video below (over 2 million views), The Machine is Us/ing Us but before you do, if you’re not a “techie”, don’t focus on that aspect of this clip because you might glaze-over in the first 20 seconds. Instead, stick with it through the end and focus on what this video illustrates about the future of customized online information. What does it indicate to you about where the internet is going? What does it indicate about your need to understand the new speed of the Internet?

Brad Fallon, a search engine optimization expert had some interesting thought on this video:

“It’s a very cool combination of screen capture and video which makes some really salient points about the future of web technology and the effects it will have on how people interact and express themselves…This piece, “The Machine is Us/ing Us,” covers the changes occurring online that are democratizing and socializing the shared online spaces we occupy.

It’s got me thinking not just about what this means for “community” online, but what it can mean for business and commerce. In a lot of ways this kind of interactive development has brought the web full circle. Rather than having global mega-stores that sell everything, we see more and more mom-and-pop corner shops appearing, albeit with a potentially global customer base.”

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Venture Capital firms do well because they are thoughtful and methodical. (Most of the time, that is.)

They know what they want, they guard their interests at all costs, and they have a clear picture of what their “end game” looks like.

Entrepreneurs often thirst for funding so intensely, that they’re not prepared with an equally clear “end-game”.

Seth Godin offers 15 insightful tips for the VC-money-seeking-entrepreneur that can help one get thoughtful about their “end-game”.

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Check out these great posts for more information about this topic:

The Founders Fund Has The Right Idea

The Next Steps After the Meeting