The do-gooders have got it all wrong. They have been telling us for eons that we have to save our planet. Rubbish. Our planet is just fine. It’s our ability to stay living on a planet that’s becoming hot, flat and crowded that’s the problem.

You see, the planet doesn’t care if we are here or not. And the bad news is that we are living on borrowed time and not doing very much about it.

“Hot, Flat and Crowded” by Thomas Friedman goes some way to helping us understand this dilemma and puts together a broad template to help get us out of this mess. But it’s not going to be easy and success is by no means assured.

So what does Hot, Flat and Crowded refer to? Well, in a nutshell…

Hot – greenhouse effect, climate change, fossil fuels, rising sea levels and so on.

Flat – An increasingly connected and enabled world through the internet and improved telecommunications where individuals across the globe can prosper as never before. But this extraordinary expansion of the ‘middle class’ brings its own problems.

Crowded – A global population of 6.7 billion rising to 9 billion by 2050, where are they all going to go? What will they eat? How will they (ie we) survive?

Don’t worry that the book is written by an American for Americans, it is totally relevant for all nations.  The world needs America to take the leading role anyway so get over it. The masterstroke of Hot, Flat and Crowded is how it weaves the key issues in a coherent way and puts forward some practical measures to, well…….save ourselves.

As well as a world that is hot, flat and crowded, throw in the issue of petropolitics, (ie how democracy in the leading OPEC members is inversely proportional to both the nation’s ability to supply oil/gas and the price it can get for it at any given time) and you can start to build your own picture of where the world is going, not just for generations to come but for you and me right now.

To help get that message across, let me highlight just one statistic from the book. It is universally accepted by the world’s scientific community that if the amount of carbon dioxide in our atmosphere reaches 500 parts per million then our ability to live on this planet will be greatly compromised. We are estimated to reach that point by 2050!

More scary still, to reduce carbon emissions sufficiently to stay below this figure, the world needs to commission the equivalent of one nuclear power station every day for the next 36 years.

Have I got your attention yet?

I’m inclined to say that we would all do well to understand how rapidly we are decimating our ability to live on this planet. However since this is a small business website, let me be a little more targeted and put a case for small business, present and future, to read Hot, Flat and Crowded before moving forward.

When assessing a new business venture we are always wise to step back from the immediate opportunity and “have a look around”. If you’re launching a new alcopop, research the alcopop market then step back and look at the alcohol market in total. Then step back and see how the drinks market as a whole is looking. Then step back and consider how the total grocery sector is looking. A little bit further and you can form a view of the economy over the next few years. And so on.

Well, I am suggesting that you go back even further and consider what you’re planet is doing first. Many effects of global warming are already visible and dramatic changes to our ability to live on Earth will have struck certainly within my lifetime (I’m 44 by the way).

But more relevantly, regardless of exactly when these changes hit hard, and even if the scientists have got it badly wrong and there is no such thing as global warming, the momentum of world opinion is now firmly set that we must ‘go green’.

So, whether you buy into the hot, flat and crowded hypothesis or not, your business needs to reflect the mood of the world, your country and most importantly your customers.

All businesses, current and start-up, will be marked against their green credentials whether a new grocery product, motor vehicle or technological beakthrough. Ignore at your peril.

The business needs you down there at the coal face right now. There’s not enough staff, you haven’t got time to train anyone else right now and, hell, you can do the job quicker anyway.

The problem with this mindset for the intrapreneur is that it’s not scaleable. You are not creating a framework for your business to grow.

Work smarter not harder. You are simply rushing from one crisis to another like an entertainer spinning plates hazardously on the end of bamboo poles.

With each stage of growth the crises are getting harder for you to manage. You are losing site of the horizon. The plates are about to come crashing down. You need help.

How can an intrapreneur keep a clear view of long term objectives whilst maintaining control over the inner workings of the company?

Well, it is possible to develop the work smarter not harder theory. The secret lies in breaking day to day activities into a series of self-contained tasks in such a way that they take care of themselves – almost.

These ‘mini-systems’ link together like the mechanism of a clock. On their own, fairly inert. But when working in harmony they can achieve great things.

Doesn’t it therefore make sense to try and mimic the workings of a timepiece to simplify, automate and co-ordinate the multitude of processes within the business?

Define  “mini-system”

A mini-system refers to any activity or process within a business which has a specific entry and exit point. For instance, a mini-system could refer to:

- How staff answer the telephone

- How employee inductions are managed

- Procedures for grievances and dismissals

- How visitors are treated

- How management accounts are prepared for the weekly management meeting

- How stationery is ordered

- How the petty cash system works

- How information from the production department is received and processed

- Credit control procedures

There are in fact hundreds of potential mini-systems within any business. They are yours to create. They can range from minor detail stuff to heavyweight decision making processes. Whatever category they fall into, they will have some common traits:

They will…

- have a specific entry and exit point

- achieve something useful

- be a self contained unit

- link to other mini-systems at both ends

- have a defined objective

- be measurable

We now understand what a mini-system is and how it can help the intrapreneur in the business. So let’s establish our blueprint for building mini-systems and start the journey to work smarter not harder.

Step 1. Identify a mini-system opportunity. In a small business start up, you will use your experience to create the first handful of mini-systems proactively. As time moves on, you will also have to be reactive and set up mini-systems in response to a specific need or crisis.

Step 2. Create the mini-system. One may look quite different from another. As long as they exhibit the common traits mentioned above, you will have an effective mini-system ready to take its place in the business clockwork.

Step 3. Manage the mini-system. In the early days you, the intrapreneur, may need to manage it yourself but your aim is to put someone else in place, properly trained, to take responsibility.

Step 4. Manage the people who manage the mini-system. You are now on the road to scaleability. You can now repeat steps 1 to 4 without taking your eye off that horizon.

In fact as the business grows, the intrapreneur may end up managing the people who manage the people who manage the mini-systems. Like astronauts being catapulted into space looking back on earth, the perspective changes as every mile passes. The earth gets smaller. Other planets come into vision. The view evolves continuously. You can then ensure that they work smarter not harder.

Step 5. Interrogate the people and the mini-systems. Because you have introduced the notion of scaleability, you can now step back to get the astronauts’ view of what is going on. It looks different doesn’t it? Look for continuous improvements.

Step 6. Keep going. Return to step 1 and do it all over again.

Incidentally, have you noticed that this process is actually our first mini-system itself?

We’ve left a lot of questions unanswered of course. How to we measure and evaluate these mini-systems? How do we introduce each one into the workplace? How do we communicate what is going on so that people feel at ease and empowered? How do we train employees to manage the mini-systems effectively?

And perhaps most importantly of all, how do we link together our mini-systems to create our well oiled clockwork business administration?

We have, however, laid the foundations for effective intrapreneurship by allowing scaleability to move the business forward and limit the growing pains. As an intrapreneur, we have started to work smarter not harder.

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Does that really mean that MOST small businesses fail? Ouch.

Like it or not, 75% of all small businesses in the UK fail within their first 5 years. So, why do small businesses fail ? Let’s take a look:

- Lack of experience This is either lack of experience with the main theme of the business or simply lack of experience at running small business.  Or both.  People who have good ideas don’t neccessarily run good businesses. “It’s my train set so I’ll drive the train” tends to prevail. Personally I would rather employ a train driver. a.k.a. The Intrapreneur.

- Insufficient capital This can be expenditure on capital items as well as working capital i.e. the cash needed on a day to day basis to keep the business afloat. Arises from a combination of poor planning, over enthusiastic sales estimates and lack of a contingency fund.

- Overestimating sales The desire to make the business model work bears pressure on a range of small business startup issues. Not least predicting sales. Sales projections are often based on “how much do we need to sell?” rather than “how much can we sell?”. Sales projections are inevitably based on assumptions. So first and foremost make sure your assumptions are rooted in reality. Then divide the answer by two.

- Overinvesting in fixed assets Resist the temptation to buy some piece of manufacturing kit because it will save 10% off your direct costs. You’re a startup business, you have no sales so you have no direct costs. Much better to start with a product that costs more per unit to produce by, perhaps, outsourcing and invest available funds in creating sales. Then worry about direct costs.

- Personal use of business funds Every penny you spend on your new BMW is a penny lost to grow your business. Owning a business doesn’t give you a right to earn profit. Sort the profit first then buy the BMW.

- Too much business Sounds ironic. Businesses often fail as they chase rapid growth. Why? Because they can’t finance it. Growth generally entails buying new plant & equipment, increased stock holding and inventory well ahead of cash received as a result of that growth. It’s all about the planning.

- Poor planning Or sometimes no planning. The better you have planned your road map, the better the journey. Your small business planning should cover a range of outcomes so there is little chance of catching you out in the event of….

- Poor financial control Part of your business planning process is about recording ongoing performance against plan so you can react to any changes in plenty of time. Most commonly cash flow management is either bad or non-existent. There is nothing more likely to scare off an investor or your bank manager than last minute requests for cash.

- Poor customer service You may have spent so much time and energy servicing your big idea that you have overlooked servicing your customers. Get this right from the outset as it is very difficult to claw it back. “No second chances at a first impression.”

- Underestimating the competition A common failing for ‘big idea’ startups is to imagine that because there is no competition now, it won’t be there in the future. I can assure you that as soon as your idea shows visible signs of success, you will have competition. Plan for it now, not when it happens.

- Give up too quickly Ross Perot, one time US presidential candidate, had an answer for “why do small businesses fail ?”  He said, “Most people give up just when they’re about to achieve success. They stop one yard short of a touchdown”. Then there are those who keep going at all costs. Ah well, no one said this was going to be easy.

- The wrong idea.  Let’s face it, some ideas just aren’t very good.  With all the research and preparation in the world, starting a new business with a big idea is little more than a glorious guess.  The key is being able to recognise it.

The most striking of all these is actually the first. When asked “why do small businesses fail ?”, Dun & Bradstreet suggested that 90% of small businesses fail “because of lack of skills and knowledge on the part of the owner” .

This is striking for two reasons: Firstly that it accounts for nearly ALL business failures. Secondly because it is so easily overcome by use of carefully chosen business advisors, small business consultants or intrapreneurs – i.e. people who know about running business.

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EIB Loans For Small Businesses…

Alistair Darling proudly announced last week that £4bn has been earmarked for lending by the European Investment Bank to the UK’s small and medium sized business sectors over the next four years as part of a European initiative to support SME’s through the current credit crunch.

His performance reminded me of the old yarn about a company chairman who stood up at the annual general meeting and announced: “Last year I had to report that the company was standing on the edge of a precipice. This year I am delighted to announce that we have taken one giant step forward…………”

Still, I suppose we should be grateful for anything coming our way at the moment. So what do we know about the EIB loans for small businesses?

Q: Will my business be eligible?

A: Any independent businesses with less than 250 employees and more than 75% of their own equity will be eligible for EIB loans.

Q: What can I use these funds for?

A: The funds can be used for any type of expenditure or investment that can be proved to be neccessary for a small business to grow. This breaks down into 3 sections:

- investment for tangible assets, namely plant or property

- intangible expenditure such as the filing of patents, transfer of business ownership etc

- additional working capital

Q: Will there be any exclusions?

A: Yes. Typically sectors involved in destroying life, ie arms, animal testing, tobacco, gambling (?), or – ironically – promoting life ie human clone testing etc

Q: What’s the minimum and maximum avaialbe for each loan?

A:  – minimum is, er, for very small projects (ie unspecified)

- maximum is for investments up to EUR 25m, with the EIB chipping in up to EUR 12.5m.

Q: What term will I be able to borrow over?

A: Between 2 to 12 years

Q: Who do I contact to get going?

A: The UKs leading commercial banks will administer the scheme on behalf of the EIB.  Contact your bank for more details.

Q: When does it start?

A: Now.

So far so good. However, there is a problem. The participating banks are actually under no obligation to apply for funds from the EIB at all. Worse still, of the six named banks only Barclays so far have made any committment play the game.  A bit of a rum deal if you ask me considering we – the great British taxpayer – now own most of them. And then there’s the question of who takes the risk, bank or EIB….

So, a glimmer of hope for small businesses but clearly the government need to apply more pressure to the named banks to ensure that they remember to particpate and filter the EIB loans down to cash hungry small businesses.

How many employees do I need for my small business startup?

The small business startup process can be a daunting one.  So much to do so little time.  And even less help.

Whether you are starting your business on a shoestring with only a reluctant spouse to call on or an ambitious startup with plenty of shareholder cash in the bank, you will inevitably be shorthanded.  Voodoo’s First Law Of Small Business states that: “No matter how many employees you have, you will always need more”.

Don’t worry though. This is actually a desirable outcome for a number of reasons;

- At the outset of a small business startup, it is impossible to know exactly what roles you need to fill.  Much better to stay short and allow new positions to evolve, to make themselves known to you.

- It’s getting harder and harder to get rid of unwanted employees.  Better get it right in the first place.

- Your investors will demand it.  Nothing will spook a shareholder more than seeing lots of managers rattling around your shiny new premises looking busy.

- I ran my own brewery for 12 years.  It took me ten of them to establish a team that I was truly happy with.

So in other words, always make sure that you have less employees than jobs.

Good employees don’t grow on trees. So try to avoid gorging on the low hanging fruit because the riper stuff is just out of reach.

You’ll only get tummy ache.

Your small business needs effective leadership.  Possibly your most important asset besides your product is your intrapreneur.

You have decided that you are entrepreneur not intrapreneur.  Your business needs an intrapreneur – the entrepreneur inside the business. But how can you identify such a key component of your team? You can’t afford to get this one wrong.

To help, I have highlighted 30 ways to spot an intrapreneur, those key traits which mark him out as the special one, the one that your business can’t do without.

An Intrapreneur ………

• wholeheartedly embraces the entrepreneur’s vision for the company

• earns respect, not demand it

• energises and excites people

• is prepared to admit when he is wrong

• listens to others’ ideas and opinions and takes action on them

• recognises the boundaries of his own capabilities

• is consistent

• exudes positivity from every pore

• never brings domestic crises to work with him

• is prepared to take risks

• defaults to saying “we”, not “I”

• exhibits positive attributes such as fairness, integrity, compassion, loyalty

• understands the full spectrum of business activities

• makes consistenly good business decisions

• deflects praise onto his team

• is a good time manager

• is not afraid to ask for help

• naturally attracts trust and loyalty

• believes in the carrot, not the stick

• makes sacrifices without hesitation

• understands the numbers

• preaches empowerment

• understands that if you never fail, you’re not pushing the boundaries hard enough

• communicates at all levels and in all directions

• seeks never ending improvements, no matter how small

• thrives on change and hates maintaining the status quo

• takes humour seriously

• is not prescriptive or controlling

• loves his staff as much as his customers

• constantly reviews his business planning process

Effective leadership in small business relies on  – the intrapreneurs.

An impossible brief?

Almost.

“An Entrepreneur is someone who has the skills, passion and financial backing to create wealth from new business opportunities and is willing to take full responsibility for its success or failure.”

“An Intrapreneur is someone who manages that business with entrepreneurial flare in line with the expectations of the shareholders.”

Immediately we can start to see a difference.  The Entrepreneur is typically a visionary who spots an opportunity in the marketplace and has the passion, guile and contact base to set the wheels in motion.  The Intrapreneur has passion and drive but also has the operational skills of running the “clockwork” of the business to enable a good idea to be turned into commercial reality.  He is the “inside entrepreneur”.

Both “preneurs” set themselves aside from employees in a number of ways but perhaps the most significant is in their relationship with the business.  It’s a question of committment over involvement. Employees are involved, “preneurs” are committed.  A little bit like the egg and bacon breakfast, the chicken is involved but the pig is committed.

I’m busy setting up a new business and haven’t got time to worry about this.  What’s this got to do with me?

There is a very simple answer to this:

Not every small business needs an Entrepreneur, but every business needs an Intrapreneur.

In the same way that the seed of a business idea needs an Entrepreneur to shape and cultivate it, so the Entrepreneur needs the Intrapreneur to pluck from his grasp those seeds of opportunity, convert them in to a viable commercial plan and then manage that plan to a profitable reality.

Without the intrapreneur, ideas entrepreneurs and small business are doomed to fail.

So before you go any further, ask yourself which you are, Entrepreneur or Intrapreneur, and take action accordingly.