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

There are two central ingredients to success: Risk and Persistence. I refer to them as “The Catalyst of Success.”

There are thousands and thousands of great entrepreneurial ideas out there. Millions of people have big financial hopes and dreams. There are a lot of people who can talk about their concept or idea with great conviction and flair—or about how they could improve an entire industry with their unique insight and experience.

But for all of the millions of ideas, concepts and plans only a very, very small number of them ever come to fruition.

I’d like to point out two of the most overlooked principles of making any business endeavor a success—in fact these principles apply to any worthwhile endeavor that we might choose to pursue.

The first is RISK and the second is PERSISTENCE. These two principles are absolutely necessary ingredients for success.

When I was a teenager I shaped and glassed my own surfboards. I became very familiar with the process of solidifying fiberglass using a mixture of resin and catalyst. In order to create a bucket full of solution that would cover the entire surfboard, I would add three or four cups of marine resin and just about a tablespoon of catalyst—that tablespoon made all the difference—it was the key ingredient that caused the entire mixture to eventually solidify into a hard fiberglass finish.

In my opinion, Risk and Persistence are like the catalyst that will complete the business plan, or any plan for that matter. It’s what takes a project through to the finish line.

The trouble though, is that many people are either paralyzed by the potential costs of taking risks and choose to avoid something potentially great altogether, OR after taking a risk; lack the patience and tenacity, aka: Persistence that’s required to see something to the finish line. In a sense, they throw in the towel prematurely.

I think you can start to recognize the importance of these two principles.

Do you have some insight and experience about how the principles of Risk and Persistence have affected your life? Or do you have a comment or point in regard to these principles from which the readers can benefit?

Leave a comment and I’ll follow up with a reply as soon as I can…

Sometime after 8pm or so, there are a bunch of rickshaws for hire in downtown Austin. You know, a rickshaw, a two-wheeled cart which seats a couple people. You see them all over New York and Asia. In Austin, it’s a perfect way to get from one music venue to another that’s a mile or so down the road.

All of the rickshaw operators ride bikes and pull their passengers from place to place. It’s become a very competitive little business out here.

Recently I met a rickshaw operator that found a way to differentiate himself from the sea of competitors.

He found a way to be different, grab attention, earn loyalty and beat the competition. In fact, I was so impressed that I added him to my contacts in my iPhone—he’s there as “Energizer Phil.”

Energizer Phil wears these funky bunny ears and is the only guy in Austin who literally “runs” his rickshaw business the old fashioned way—the way it all started in Asia—by running his passengers from place to place. He’s got a ton of energy. Forget the bike, this guy truly earns his cash!

(And the funny thing was, he would run right past the guys cruising along on the bikes!)

His outfit, his hustle, and his uniqueness captures the attention of almost everyone on the street as he runs passengers up and down Sixth Street.

When I got out of a concert, I called him back up so he could take me to my car. And I tipped him really well. I doubt any of those regular bike rickshaws get that kind of repeat business and generous tips.

It doesn’t matter how common or competitive your business environment is. If you’re willing to be creative, unique, and go out on a ledge; there’s always an interesting way to out-do your competition.

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

Tips for Entrepreneurs

Are You An Innovator, Immitator, or Idiot?

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

I have been fortunate enough to be asked by the producers of CNBC’s “The Big Idea with Donny Deutsch” to come on the show as a expert business coach and offer advise to some struggling entrepreneurs.

Here are the two most recent appearances on “The Big Idea.”

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

Finding a Niche

Are You Prepared for the Next Disaster

Do You Need Success Intervention?