The Benevolent Dictator E-Book

Michael Feuer

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 347

Veröffentlichungsjahr: 2011

Beschreibung

An unconventional philosophy for starting and building a business that exceeds your own expectations What does it require to take a concept rapidly and effectively from mind to market? The Benevolent Dictator recognizes that entrepreneurship is a gauntlet. Those who succeed are benevolent dictators--able to make the intricate process happen in days, weeks and months to win. The Benevolent Dictator gives you no-nonsense how-to advice and examples that have worked. This non-traditional, gung-ho guide is not afraid to lay out the leadership methods that can effectively get a new business off the ground, and through the requisite fast-track growth phases that produce tangible success measured by your bottom line and your wallet. * Learn critical specifics on how to move from idea development to build-out, through steps for continuous improvement, and on to the big cash out * Features proven tools, strategies, and tactics that will help you bottle entrepreneurial lightning over and over again * As the cofounder of office retail giant OfficeMax, the author turned a $3 million investment into a $1.5 billion sale in his 16 years as CEO Beating the competition is never easy. For those times when you need an iron hand, then you also need the wisdom to know when and how to use it. Whether you're a business student, aspiring entrepreneur, or a practicing executive, you need to discover the winning ways of The Benevolent Dictator.

Leseprobe

Contents

Cover

Title Page

Copyright

Author's Note

Phase One: Start-Up

Lesson #1: To Successfully Launch a Start-Up, There Must Be a Benevolent Dictator

Lesson #2: The Best Ideas Can Come from What's Right in Front of Your Nose

Lesson #3: How to Find the Money to Make Big Money

Lesson #4: Once an Entrepreneur, Always an Entrepreneur

Lesson #5: It's Better to Be Lucky Than Just Good

Lesson #6: “GOYA”—The Only Way to Really Test an Idea

Lesson #7: Don't Underestimate the Power of Focus, Discipline, and Follow-Up

Lesson #8: Competition Stinks

Phase Two: Build Out and Put the Idea to the Test

Lesson #9: Business Is a Series of “Go” and “No-Go” Decisions

Lesson #10: Treat an Idea Like Clay

Lesson #11: Always Be Prepared with Plan B . . . And Sometimes C and D

Lesson #12: You'll Never Reach Critical Goals without a Definitive Timetable

Lesson #13: Never Be as Weak as Your Weakest Link

Lesson #14: Raising Additional Capital Requires Creating Demand

Lesson #15: Everything You Wanted to Know about the “D” Word but Were Afraid to Ask

Lesson #16: Managing People Is about Achieving Objectives through Others

Lesson #17: Good Intentions Will Get You Only So Far

Lesson #18: Don't Open the Doors until the Start-Up Passes the Smell Test—And Don't Be Afraid to Call Time-Out Just to Be Sure

Phase Three: Constant Reinvention

Lesson #19: Pot Stirring 101—The Key to Continuous Reinvention

Lesson #20: Is Perception Reality? How to Manage Risk, Take Chances, and Remain Standing

Lesson #21: How to Keep Lethargy at Bay . . . Or Why Time Is Your Most Precious Resource

Lesson #22: How to Avoid Analysis Paralysis by Learning When to Make “Battlefield” Decisions

Lesson #23: Don't Drink Your Own Bathwater—You Could Choke

Lesson #24: When the Wolf's at the Door, What You Do Can Make the Difference between Living to Fight Another Day and Going Down for the Count

Lesson #25: Using the “Mother Rule” Can Help You Avoid Costly Hiring Mistakes

Lesson #26: When Communicating, Cut to the Chase

Lesson #27: Survival Math—Business Is Not a Zero-Sum Game

Lesson #28: Manage by the Three Ps—Persistence, Perspiration, and Performance

Lesson #29: You Can't Live with 'Em—How to Manage Prima Donnas, Employees Who Think “It's Not Their Job,” and the Perfectionists

Lesson #30: The Golden Rule of Trust and Respect: You've Got to Give to Get

Lesson #31: Why You Must Look at Business through the Customer's Eyes, Not Just from an Operator's Perspective

Lesson #32: When It's Time to Pull the Trigger and Fire a Customer or a Vendor

Lesson #33: Spurring Growth—How to Eat an Elephant One Bite at a Time

Lesson #34: If You Don't Like the Competition . . . Buy Them If You Can

Lesson #35: The Easiest Path to Hypergrowth Is with Other People's Money

Lesson #36: Beating the Competition Requires That You Know More about Their Vulnerabilities Than They Know about Themselves . . . And Knowing Yourself Better Than They Know You

Lesson #37: If You Negotiate with Yourself, You Have a Fool for an Opponent

Phase Four: The Payday

Lesson #38: Payday . . . And Lessons from the IPO Road Show

Lesson #39: If the Flame Starts Flickering: How to Tell If the Fat Lady Is About to Sing

Lesson #40: How to Put Lightning Back in the Bottle Again and Again—Many Entrepreneurs Are Serial Entrepreneurs

Epilogue

Index

Copyright © 2011 by Michael Feuer. All rights reserved.

Answers for Healthy LivingTM is a registered trademark of Max-Wellness, LLC © 2010.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Feuer, Michael

The benevolent dictator: empower your employees, build your business, and outwit the competition/Michael Feuer.

p. cm.

ISBN 978-1-118-00391-6 (hardback)

ISBN 978-1-118-06152-7 (ebk)

ISBN 978-1-118-06153-4 (ebk)

ISBN 978-1-118-06154-1 (ebk)

1. New business enterprises–Management. 2. Entrepreneurship. I. Title.

HD62.5.F493 2011

658–dc22

2010050405

Author's Note

“We don't need no more stinkin' business books.”

The above is my version of the famous, frequently misquoted, and oft-parodied line from the movie The Treasure of the Sierra Madre. It is uttered by the Mexican bandit leader, played by Alfonso Bedoya, after Humphrey Bogart's Fred C. Dobbs challenges him by demanding, “If you're the police, where are your badges?”

Disgusted, Bedoya scoffs, “Badges? We ain't got no badges. We don't need no badges! I don't have to show you any stinkin' badges.”

Drop the word “badges” and substitute the words “business books”—and this statement says it all. The world doesn't need another business book. But there is a need for a hands-on digest that uses proven street-fighter methods to build a business from scratch, create significant value, and help entrepreneurs figure out what it takes not just to survive, but to excel. To achieve these lofty and elusive objectives, The Benevolent Dictator focuses on lessons that will help you to build your business, empower your employees, and outwit your competition.

I have written this book with my long-time editor, Dustin S. Klein, of the management journal Smart Business. After producing more than seven years of monthly columns for Smart Business—which is published in 17 markets nationwide and read by more than 750,000 monthly readers—I finally decided that perhaps others could benefit from what I've experienced during my career of building businesses from the ground up.

And I've certainly read my share of business books over the years. Some were great, some were okay, and some really were stinkin'.

For that reason, I have steered clear of the theoretical, sophisticated hypothesis of what “should” work in this book. Instead, I've written a narrative of what has worked for me well beyond my wildest dreams—tactics that have returned millions to me during a time when my most fervent hope was sheer survival. Punctuated throughout are real-life experiences that enabled me to launch OfficeMax and grow it into a more-than-1,000-store international retail chain, followed by several other ventures, and now a new business, Max-Wellness, a first-of-its-kind health-and-wellness chain. With each of these undertakings, I had my share of both the thrills of victory and probably too many agonies of defeat—albeit none of which proved anywhere near fatal.

My aim in writing The Benevolent Dictator was to essentially create a road map for executives, managers, and want-to-be entrepreneurs. Is this real-life, how-to guide for absolutely everyone? Probably not. Can everyone at least learn something from the lessons and examples in this book? I certainly think so.

I've tried to explain throughout these pages how I got started, why I did it, and where I wound up, at least with OfficeMax. True confession: When you read this book, you'll realize—as I have—that I've been incredibly lucky. However, I also hope that you'll recognize that people do indeed make their own luck—and that the real skill lies in being smart enough to recognize when luck is staring you in the face, and then seizing the opportunity when it's presented.

I'm also a self-confessed shameless promoter—and proud of it. I've always felt that it's a lot like flirting: If you do it in the dark and your intended recipient doesn't see you, you're really not flirting. Over the years, I have fine-tuned my own style of turning the lights on in that proverbial dark room and shining the spotlight on my undertakings. You'll find examples of that creative marketing sprinkled throughout the following pages as well.

My venture with OfficeMax allowed me to start with almost no money and build a $5 billion company in a relatively short period of time. This book tells you how I did it, the obstacles I encountered, and how I dramatically exceeded expectations for my team, investors, customers, and myself. By no measure were all of the times rosy. But I quickly learned how to stay off the rocks and, when I did hit them, how to extricate myself quickly and with as little damage as possible—even occasionally turning negatives into positives.

I had a number of “aha” moments while writing The Benevolent Dictator. I realized that it's just as important to learn from mistakes as from successes during one's career. It didn't take me long in my first job to recognize how much wasted time, energy, and money go into analyzing stuff about which a reasonable person would simply say, “Who cares?” This is because businesses are really no better off from the effort expended if they don't accrue tangible benefits for the customer, investors, or employees. On the flip side, too many projects never get off the ground because of a lack of creativity or determination. What really frustrates me is how many good things never make it off the drawing board because a management sponsor determines that there isn't anything “in it” for him or her.

As I wrote this book, I recalled the many hundreds and hundreds of lessons I learned during the earlier stages of my career, and constantly in the back of my mind I wondered, “What if I could do it my way?” I don't think I gave this truly serious thought during my early years; only later did I crystallize the concepts that I could employ in my next life, starting with OfficeMax. It's a lot like going on a vacation and not really understanding the positives of what you're experiencing while you're traveling about. It's usually not until a month or two later when you think back on that trip and recognize, “Damn, that was great.” The same phenomenon occurred with the lessons to which I was exposed while I was just trying to get a job done. The ones I cover in this book that stand out most in my mind are:

If you don't ask, you'll never get. This applies to vendors, employees, and even bosses.The word “no” is just a synonym for “maybe.” This realization led me to train my team to comprehend that the “no” you receive the first nine times is merely a disguised “maybe”—because the other guy is looking for a reason why not to proceed, or doesn't understand what you're asking. It's only after the tenth time—when the other person hangs up on you or walks out of the room and slams the door—that “no” really means “no.”You must always look at a new idea through the customer's eyes—not just from an operator's perspective.The journey had better be as much fun as the destination.Always play by the “Mother Rule”: if you don't want your mother to know you did something, don't do it—because it is probably wrong.Never fall in love with the underpinnings of your idea. Instead, fall in love with the expected results that you might achieve. To put it more crudely, “Don't drink your own bathwater.”Know when enough is enough and it's time to pull the plug on the project and pack it in.Know how to put lightning back in the bottle again and again.Understand why the best start-ups are run by a benevolent dictator.

I would take great pleasure and will have realized my goal in writing this book by knowing that readers obtained just one idea that they could translate into a successful reality in their own world. I would be ecstatic if a young entrepreneur read this book and used it in some small way to take his or her company to new heights. I would be absolutely thrilled if I provided the impetus to a dreamer to stop dreaming about starting a business—and just do it.

It's been said many times that imitation is the greatest form of flattery. Nothing would be more satisfying to me than if a reader created the next OfficeMax, starting as I did with my severe birth defect—poverty. In order to do so, however, the reader must start by understanding the four key business phases, which I've outlined in four distinct sections:

1. Start-up

2. Build out and put the idea to the test

3. Constant reinvention

4. The payday

I invite you to take from this book whatever is applicable to your needs and improve on what I did and the way I did it. I hope that along the way, you'll find it entertaining, a bit iconoclastic, and, most of all, useful. I learned a long time ago that one is allowed to do just about anything except bore an audience in writing, speaking, or actions.

And if this book helps me to create a new breed of benevolent dictators, then that will put a “W” on my personal scoreboard.

Phase One

Start-Up

Lesson #1

To Successfully Launch a Start-Up, There Must Be a Benevolent Dictator

The term “dictator” conjures up thoughts of the world's most despicable evildoers, from Idi Amin to Saddam Hussein, and many even worse. However, this designation is not always a pejorative when combined with the modifier “benevolent.” In fact, the case could be made that being a benevolent dictator can make the difference when starting a business from scratch and with a scarcity of time and money.

Entrepreneurs fantasize, ponder, and calculate how to come up with that next big idea and translate it into fame and fortune, thereby fulfilling their own version of the American Dream. However, more often than not, people spend too much time dreaming and not enough time doing. The difference between success and failure is often simply a matter of getting started, fleshing out an idea, and then creating the building blocks to get from point A to point B—and from point B all the way to Z.

Doing this is certainly easier said than done. As business history has taught us, success comes from a combination of focus, determination, diligence, pure grit, a good dose of luck, and a touch of chutzpah. The successful entrepreneurs I've known possessed all of these qualities and one other characteristic that is seldom discussed—that of being an autocrat.

The reality of business today is that there are countless minefields along the climb to success. A seemingly innocent misstep in the wrong direction can spell not only disaster but also obliteration. Many a great idea has begun only to be stopped dead in its tracks by a miscalculation, lack of diligence, pure bad luck or timing—and typically a combination thereof. Many great companies that made it to the top began the start-up phase with a singular idea and one individual who knew that it was he or she who had to take the chance and pull the trigger. In nearly every case, deep down inside that person was a benevolent dictator.

On the surface, much of this may sound a bit nefarious. But in reality, navigating the path of a start-up venture is about as close as you can get to a 24/7 ride on the world's scariest roller coaster. Every morning, when the entrepreneur gets out of bed, it's show time. And every evening, when that same would-be tycoon restlessly drifts off to sleep, he or she says a silent prayer giving thanks for having survived the preceding 18 hours or so, and asking to be granted the strength to fight another day.

So what exactly is a benevolent dictator?

Well, the “benevolent” component means that the person always puts the entity, the employees, and, most important, the customer first—way ahead of him- or herself. Somebody has to take control in a start-up, and the trick is to ensure that this somebody can also be benevolent by doing the right thing for the right reasons, for all stakeholders.

The “dictator” piece of this designation simply means that—just as it is in a fast-tracked giant corporation—somebody in a new venture has to know when to say enough is enough. Debate, conversation, and analysis can take an organization only so far. The job of the entrepreneur, manager, or CEO is to say, “We're taking this fork in the road, for better or worse, and it's on my head.” He or she is the one person who makes the important decisions when it counts—while others vacillate, the clock is ticking and resources are dwindling.

Most people cannot deal with this type of immense, almost constant pressure, and the monumental decisions that need to be made day in and day out. That's why so many companies often suffer from “analysis paralysis”: the persistent indecision that usually leads to failure or plain old-fashioned inertia. It's a lot like treading water in the middle of a beautiful lake. You're doing fine until exhaustion sets in, and then you begin to sink like a rock. When you spend too much time trying to build consensus, you quite simply fail to accomplish anything that moves the venture forward, which will inevitably lead to a one-way trip to the bottom of a dark body of water.

My experience has been that although many individuals claim to want—and be able—to be a leader and make the big decisions, these claims usually fall short when push comes to shove. Indeed, most people just want to follow or be a bystander, because it's easier and much safer—and some simply want to get out of the way. I respect those people who know what they are and what they are not. It's the people who claim to be one thing and are another when put in a leadership position who cause the serious damage.

My management style is theatrical at times: It's intended to make the big point. It may even be hard-hearted and unrelenting when necessary for the greater good—but this is just another aspect of being a benevolent dictator. The real benefit of leading in this way is that it allows me to move faster than the competition and save time, money, and energy to capitalize on the opportunity. I know that I've made the decision, and the time for talking is done. One of the most important factors in business today is the ability to move from mind to market measured in hours and days instead of the usual weeks, months, and years.

I learned this trait growing up in Columbus, Ohio, when I was around 9 or 10 years old. I didn't go to camp in the summer like many other kids, because my family couldn't afford it. So instead, I played a lot of baseball in the streets. I learned early on that if I brought the ball and bat, the game started and ended when I decided. The same applies in business. Though I'm not a traditional consensus-builder type, that's not to say I don't try or that I'm not a team player. Building a consensus has its place—after the start-up process is a distant memory, when every dollar won't mean the difference between staying in the game and folding the tent. But when it's time for an “all-in” move, one person has to say “yes” to get things going.

Keep in mind that being a benevolent dictator doesn't mean being a jerk. You still need to sell people on your ideas and build champions who will follow you to the ends of the earth—not because they have to, but because they want to. Part of the trick is getting people to think that your idea is really their idea. However, that type of management style unfortunately doesn't work when you work for someone else and aren't making the final call.

Yet one of the best ways to hone your style is to work in a larger organization that you don't—and won't—own. It's a great way to gain the requisite experience on someone else's dime. Following this path has served me well while fueling my desire to lead rather than follow. With both OfficeMax and Max-Wellness—my most recent venture—being the benevolent dictator provided the critical leadership necessary to take an idea and transform it into reality as fast as possible, which is a huge competitive advantage.

Before co-founding OfficeMax, I spent about 15 years at Jo-Ann Fabrics now known as Jo-Ann Stores—the country's largest craft and fabric retailer. I started in a marketing position, and as I rose through the ranks during those 15 years, I moved up quickly to number two or three in the organization. Although I enjoyed my time there, I always felt that I could make a huge difference—and create a company that could better serve the customer—if I could do things my way. That is why, midway through 1985, I decided to take one shot to try to change the trajectory of Jo-Ann Stores and its leadership.

Over the years I had developed many good contacts and made many friends on Wall Street. One was the group at Drexel Burnham Lambert in Los Angeles, the then “go-go bankers du jour.” I recruited a few Jo-Ann comrades to join me in California so that we could meet with a Drexel team and explore the possibility of taking Jo-Ann—at the time, a public company operating under the name Fabri-Centers of America— private through a leveraged buyout (LBO). After a series of discussions, Drexel gave me a nonbinding commitment, subject to full due diligence, for about $50 million to lead a buyout of the company.

That was all I needed to take the leap. We then went to the owners, explained the potential deal, and told them, “We can make you a lot of money.”

The CEO thought it was a great idea and told me I could work with his son to take the company to the next level.

That wasn't exactly what I had been thinking. I wanted to run the show myself—make it a solo performance. Fortunately, I had gone into this proposed offer with a degree of confidence and from a position of strength. The first year that their son came into the company, I went to the owners—the Rosskamm family—and received a guaranteed payout contract. It provided that whenever I wanted to leave—or they wanted to fire me—I would receive several years' salary and benefits as though I had retired from the company. This gave me the cushion to make my move, knowing my family wouldn't starve to death (at least for a couple of years), no matter how my hand played out.

After my LBO offer fell on deaf ears and failed, I knew I'd have to do something different with my life. In reality, I suffered from a syndrome I call “too cushy too soon.” By age 27 or 28, I was a senior vice president making a respectable six-figure annual income. As with any job, one gets good at it and can do it quickly after a while. As a result, I got bored my last couple of years at this fabric retailer, which had grown to more than 600 stores during my tenure. When I realized I'd never be CEO or own a big piece of the place, I started making plans to do something else. I needed to be my own boss. I also subscribed to the great singer Frank Sinatra's management style that teaches us to accomplish objectives using our own methods, as explained in the famous song “My Way.”

In 1987 I started putting out feelers to Wall Street friends and business acquaintances that I was interested in an entrepreneurial challenge. I talked to people in New York and California, as well as Chicago and Cleveland. I decided that enough was enough and made a deal with the fabric company owners that called for me to leave the company on March 31, 1988. I gave the family almost six months' notice so that they could prepare for my departure. To this day, I like to say that OfficeMax was my April Fools' joke on the naysayers who said I couldn't do it—because April 1, 1988, was the date on which we formally started OfficeMax.

It was in the fall of 1987 that I actually started making decisions about what I would do in my life after Jo-Ann. The most interesting opportunity that came my way was from the then-high-powered, certainly non-white-shoed street-fighter investment banking firm Bear Stearns. I had met Ace (Alan) Greenberg and a number of his managing partners over the years, which had led to discussions about my moving to New York City. Bear Stearns proposed to teach me investment banking and suggested that I could ultimately become a mergers and acquisitions banker focusing on the retail-chain sector based on my many years of experience.

Under normal circumstances, and if it had happened a few years earlier, that probably would have been the path I would have taken. But an important event had occurred a year earlier in 1986; I had married Ellen. She is very close to her family in Cleveland and, at that time, had her own professional career there. When I started talking about the attributes of the Big Apple and maybe moving to New York, Ellen was less than enthusiastic.

After leaving Jo-Ann, I maintained a close relationship with the entire Rosskamm family because of a lesson my late father, Lou Feuer, taught me—and that was to never burn a bridge. It's a lesson that I still not only preach, but also promote with my team. We can all have differences of opinion, but that does not mean we can't move on and still treasure past relationships. We should always value what we learned during our time in an association—which in my case provided building blocks for many of the ways I conduct business today.

I have also learned that in order to focus on building anything, you need a strong and supportive partner. For that reason, I knew that “peace in the family” must be a top priority—which caused me to look at other alternatives than moving to New York. The one that interested me most was figuring out how to become CEO of another retail chain in the Midwest.

I had offers to become president of several retail chains where, if I produced, I would be named CEO. But every company I spoke with left me stuck on the same issue—bureaucracy. There was no place for a benevolent dictator in the position of president of a traditional company; there was no feeling of entrepreneurship. And so, around the fall of 1987, I started thinking about starting my own retail chain. As luck would have it, a longtime acquaintance heard through the grapevine what I wanted to do and got in touch with me.

Lesson #2

The Best Ideas Can Come from What's Right in Front of Your Nose

In my view, some of the biggest—and occasionally easiest—money you can make in this world is often derived from the most obvious ideas. Think about two fairly significant music-playing devices: record players and the iPod. Each one is nothing more than a machine that plays the same kind of music that the likes of Frank Sinatra sang. The brilliance is in the distribution method, the ability to change it, and the capacity to capitalize on those changes by leveraging economies of scale and developing different packaging that makes owning the product “cool” to a new generation. When you really think about it, it's the same music; it's just a different way of sharing and listening to it. But both inventions required someone to look at the obvious and come up with the idea of creating a product—or better mousetrap—that people would both want and perceive they needed.

One fairly reliable reality in life is that most people will find reasons not to do something. They'll look for a way to keep the status quo and not challenge what can easily be tested or improved. It is the people who spend their time looking at what could be—based on the obvious—that rise above the rest.

However, even that kind of outlook doesn't always ensure success. Most people fail in the planning stage of a start-up venture because they make it much more difficult than it needs to be. Whatever you end up doing—whether it's selling something, developing a product, or finding a cure for cancer—it must first be something that people want and need. They may not know they want or need it yet; that's where marketing comes in. Creating a demand for a product is about communicating why it's a must-have item and what's in it for the customer.

Some of the best ideas—such as the ones in which I specialize—must be something so simple that they don't require a lot of time or effort to educate people about why they should want and need it. It's got to be something they see or hear about and say, “Yes, I get it, I want that.” It might even evoke the feeling that “I can't live without it.”

My ideal business would have been to enter the toilet paper industry. Why not? It's a product that most people use daily, and it's one that they keep buying and using until the day they die. In terms of a cradle-to-grave product, it doesn't get much better than this.

Ideas, in their most basic form, are like coffee or fine wine; you have to let them either percolate or age. You take something you think somebody may need and determine whether there's a market already in place for it. Or, you figure out if there is some way you can improve on how it's packaged and delivered, or whether you can create something from scratch to replace what's out there.

How do you do this? It's simple: You listen—specifically, to the people who are users and who'd be your customers. However, you also need to interpret what they mean, because people don't always say what they want, need, or are looking for in the exact words you'd hope to hear. My favorite way to conduct market research is to walk around and listen and talk to people in the obvious—as well as the strangest—places. My other approach is just to read—not necessarily what you'd read for your own enjoyment, but material that gives you clues to what might be of interest to people in the market you're considering serving. Talk on planes. Walk around. Go to other retailers. Watch TV. Read newspapers and magazines. Go on the Internet. Keep your eyes, ears, and mind open. It's really that simple.

My own method is a bit voyeuristic; I'm actually surprised I haven't been stopped by the police yet. I watch people's habits. I learn. I find out the answer to one basic set of questions: How do they do things, what are their needs, their concerns, and their sources of fear, satisfaction, and utter joy? After I've gathered these facts, I then begin to analyze how they do things and start thinking about how it might be done differently and more efficiently. I ask myself, what industry and new market could be created to improve upon what is already there?

This methodology applies to the process of creating most good ideas. You find a need—or where you think there's a need—learn what solution people currently have, and start inquiring as to whether there's a better way to do this than what's currently being done. Then you start to modify the idea and give it some time to germinate as you continue to ponder it from various perspectives.

I used to work out late in the evening—around 9 PM—in the early days of OfficeMax, jogging six—sometimes seven—days each week. I would use that roughly 45 minutes to ponder an idea. I'd start thinking about the problem and its possible solutions. It was a valuable exercise (pun intended) that produced incredible results.

I've found a fairly consistent habit when it comes to business ideas: Most people will talk themselves out of any solution before they reach it. They see the problem as a wall. They hit it and say, “Oh, somebody's most likely already thought of this.” Then they give up and go back to the beginning and start with a different idea.

An entrepreneur is a completely different animal. If entrepreneurs have an idea they think is great, they see that wall and say, “Well, I can go over it, under it, or around it, or just knock the darn thing down. Okay, now how do I do that?”

That's the real difference between the people who make things happen and those who just talk about it. When you find that idea, you need to spend time thinking about how to nurture it and then figure out how to translate it into a reality. And damned be the walls that you face along the way.

In the beginning, you have a jumping-off point where you know the idea you've developed is viable and workable. You know that you want to take it from concept to something actionable. In order to make that happen you need resources, which come in many different forms—including time, money, and people. Resources are also your own and others' commitments to the idea.

The support you get from the people around you is critical. If you went to your husband, wife, or significant other and said, “I'm going to write the great American novel,” your partner might say, “Terrific.” But, if you added, “I'm going to quit my job and you're going to have to get a second job working at night flipping burgers to make ends meet,” well, then their reaction might change a bit. You need your own dedication—and that of others in your life as well—in order to move an idea forward.

Some of the resources and initial commitment I was able to secure came from my meetings with another accomplished entrepreneur. I met with this operator, who was a wholesaler and distributor, during November and December 1987 as I was preparing for my exit from Jo-Ann Stores. My soon-to-be-partner had owned several companies over his career, and we initially discussed the viability of launching a retail chain. He had heard about Staples and Office Depot, two regional office supply start-up chains, and liked the idea of bringing this new concept to middle America. Although there were about 18 other companies in this space that had all launched within months of each other, none were big players yet. Where there wasn't an upstart superstore chain, those smaller, traditional office supply stores cared more about selling goods to the customers when they wanted to sell them—instead of focusing on when the customer wanted to buy them. They essentially lacked product depth and a variety of conveniences. Entrance into this industry made sense to my potential partner and me because the customer was being underserved and, in most cases, gouged by high prices.

Our idea was to create something different. We planned an office supply prototype that was bigger than life for the Midwest, where no other operators yet existed. Our stores would offer the products that home offices and small businesses wanted and needed, and we'd be open for them when they wanted to shop, without the usual restrictions. We would feature lower prices and better service than the other guys, and make it an exciting place to shop. We would bring the products to life by taking them out of the then-brown boxes, and put them on open display so people could touch, feel, and experience using them.

We knew that if we could do all that, we could replace those mom-and-pop office suppliers the same way supermarkets had replaced mom-and-pop grocery stores.

Ultimately, this way of thinking became a formula for an interloper like OfficeMax to spring up and fill an obvious void, initially in states like Ohio, Pennsylvania, and Michigan. Before we started, we went “to school” to learn from the things that Staples and Office Depot did right and wrong.

The deal between my partner and me was simple: I'd be the benevolent dictator, and he'd be the money-finder guy. And luckily for me, he was one of the best of the best. His job was to find the first-round investors to supply the funds necessary to get the business off the ground, and also to focus on the initial real estate selections. My job was to put all the pieces together to get the business moving, build the team, develop the marketing strategy, and work with banks and vendors. I would also serve as the closer for the investors because I had the 15 years of executive retail chain experience, which added requisite credibility to our undertaking.

We literally took a blank piece of paper and began working on what would eventually become OfficeMax. We believed that improving the state of office supplies was an obvious idea for a business; after all, it provided something people needed, wanted, and used every day.

However, after a relatively short time, we parted ways. It wasn't because I didn't like my partner or I wanted him to leave; it was simply a matter of style. He was what I then thought epitomized the gun-toting entrepreneur. He came on strong and got stronger. He was good at what he did, because the word “no” wasn't in his vocabulary. That applied to me, too, in some ways; however, I was also a strategist who used facts and figures, and then processed them with my head, my heart, and my gut to get to an answer. Though I admired his methods initially, I knew that in the long haul we were in—as they say—a marathon, and not a sprint. I could tell that his instant gratification style didn't mesh well with my more patient approach, which I felt would pay a much bigger dividend.

Lesson #3

How to Find the Money to Make Big Money

It takes money to begin any venture. The necessary funds can come from a variety of sources—from the very mundane, such as digging into your own savings, or appealing to FF&A (friends, family, and affiliates). Another possibility is going to private equity types, including venture capitalists. I don't like the latter for a pure start-up because of the time and effort it takes to woo professional investors. They also tend to be much too skeptical for their own good, and often want to have too much influence. Although this certainly makes sense for them, it is not necessarily the best situation for the entrepreneur.

In addition to finding initial investors, ideally private individuals, who want to make 10-plus times their money, I have developed a few other unique twists to raise capital that have worked well for me, especially in the early stages of development. These alternatives, although they are a bit unorthodox, have proven to be my most successful. They include attaining backing from suppliers, vendors, and landlords, and providing them with added incentives that serve both sides' needs. I have one simple rule when it comes to most things (that I mentioned in the Author's Note): “If you don't ask, you'll never get.”

Raising money is an ongoing process when you're building a business—one that takes time and a lot of effort. Though most entrepreneurs don't like doing this, they must learn to live with the process, because it's a stark reality of growing a company. If a new business venture proves successful, more funds will be needed to take it to the next level. I resolved early on in my career that begging, borrowing, and creating a unique vehicle to raise money were just part of the game—and I learned to enjoy the process.