Just about every major business school offers executive programs these days. Sure, it's tough to drag yourself away from your business to take a class. And yes, these programs are pricey -- one entrepreneur had to choose between taking a course at the University of Pennsylvania and buying two new tractors for her warehouse. But these courses provide a rare opportunity to step back and bring the big-picture issues into focus.
Here are a few entrepreneurs and some lessons they learned in the classroom.
Lesson: Stick to your niche.
Course: Harvard Business School's Owners, Presidents and Managers (OPM) program.
Executive: Susan Bishop, chief executive officer of Bishop Partners, an executive-search firm in New York City.
"At the very beginning of the program they asked us to state what business we are in, and what business we are not in," Bishop stated. That simple exercise made her realize that while her firm claimed to specialize in certain industries, it really took on whatever clients walked in the door. Accepting assignments where the firm couldn't do its best work was impeding its growth.
Back at the office, she gathered her troops and laid out a core identity. "We define ourselves as a management-consulting firm that specializes in senior-level searches," she reminded employees. And she reaffirmed her shop's focus on the media industry. Bishop Partners soon began turning down assignments outside her firm's niche -- a scary move for a small business. "We have fewer clients, but more profitable ones because we get more repeat business," Bishop said.
The firm is also able to market itself more aggressively. She explained, "We can pitch our services without waffling, which we couldn't do before. So we win more new business."
Lesson: The right management team is a competitive advantage.
Course: The e-fellows program at the Wharton School of the University of Pennsylvania.
Executive: Amy Rand, founder, BrainCore, a records-management firm in New Castle, Del.
As corporate-record storage services become less about moving boxes than about moving bytes of data, BrainCore has been able to expand away from a very local customer base toward a global one. The experience of Rand's classmates made her confident that she was pushing her business in the right direction. But it also made her realize, "We're going up against big companies that have specialists in marketing and finance and can eat us for lunch."
So to add to her team of generalists, she brought aboard financial and marketing experts, along with an operations chief who cut his e-commerce teeth at Amazon.com. With these specialists behind her, Rand is confident she can compete for new clients in places like Spain and Singapore. "Some of the deals we have in the pipeline are bigger than my entire business right now," she acknowledged.
Lesson: It's not called "the bottom line" for nothing.
Course: OPM at Harvard.
Executive: Arthur Edstrom, president of Edstrom Industries, a medical equipment and software provider in Waterford, Wis.
"It sounds simple, but I didn't realize just how important profitability is," Edstrom related. A series of case studies drove the point home: The amount of money a company aims to make -- and the amount it actually makes -- determines, among other things, the amount of debt it can take on, the product mix it can offer, and the types of customers it should seek out.
So Edstrom firmed up the company's loose financial goals and made sure every worker made them top priority. "We give our employees flexibility in terms of budgets and expenses, but we make them understand how spending a lot hurts the whole company, and hurts them."
Employees must be getting the message: Last year, profits were large enough to trigger a federal limit on the amount of profit-sharing dollars that can go into employee retirement accounts.
Edstrom remarked, gleefully, "We had to hand out the difference in cash."
Lesson: Market to the user, not the middleman.
Course: A marketing course for executives at the Tuck School of Business at Dartmouth.
Executive: Russ Clark, former CEO of Major Group Inc., a maker of roofing materials, and founder of SunCure Inc. in Boston, which makes a longer-lasting alternative to house paint.
Major Group sold its roofing products to distributors, who sold them to contractors. The contractors in turn used them to build and renovate commercial buildings. But Clark wanted to see growth more quickly.
At Tuck, the entrepreneur read about "pull-through marketing," a strategy used by companies like Andersen Windows. Rather than advertising to the distributors who are their direct customers, these companies generate demand by pitching directly to their end-users -- in this case, homeowners.
Clark stopped vying with his competitors for ad space in the building trade press, and began advertising in mainstream business publications, like The Wall Street Journal, and in airline magazines.
"We reached out to the executives who hire the contractors, and those people actually began asking about our product," Clark remarked. "So the industry had to accept us." The move gave Major Group the boost it needed. Clark was able to sell the company and launch SunCure. He now sells paint to contractors and painting stores, but he still advertises to homeowners.
Lesson: Alliances can be anything you want them to be.
Course: Executive Program for Growth Companies at Stanford Business School.
Executive: Tom Sturgeon, managing partner, Nexop, a private-investment firm in Palo Alto, Calif.
"My partner and I took this course at different times because we expected it to expand our network and we wanted to make the most of that," Sturgeon commented.
They also came to appreciate a wide range of informal alliances. Fourteen years as a consultant at Andersen Consulting left Sturgeon well-grounded in formal match-ups like mergers. But he now views as an ally anyone from a joint-venture partner to a colleague who provides informal advice. "We learned to think about alliances in a whole new way," he declared.
Now Nexop has more than a dozen advisers, partners and co-investors it works with regularly, plus a network of occasional allies. Before investing in a company based overseas, for example, the firm called on a Stanford professor from the country where the company was based for some insight on the local business scene.
"For a start-up," he says, "being able to tap into the right person for a phone call, a quick meeting or something more formal is invaluable."
Lesson: Some clients are better than others.
Course: Harvard's OPM program.
Executive: Judy Robinson, CEO of H&R Brokerage, an insurance brokerage that serves nonprofit groups in New York City.
For a service business, a good client is one that needs your services so critically that he involves you in his businesses in a significant way. These are also the clients most likely to refer you to others. Robinson understood this in theory, but a fellow student showed her how to turn it into a business strategy.
"They have a method for rating clients on a scale from one to seven," Robinson explained. "'Ones' consider you to be part of the family and vital to their business; 'fours' can take you or leave you. 'Sevens' are the clients from hell who don't even act in their own best interest," she says.
When she rated her own customers, she advised, "We had no 'sixes' or 'sevens,' but we had more 'threes' and 'fours' than we wanted." So H&R put more emphasis on value-added services -- like providing clients' employees with online access to benefits -- to turn neutral clients into enthusiasts. Then, the brokerage sold a smaller block of business --those clients who didn't require the more specialized services -- to a firm that focuses on smaller companies.
"We're smaller in some ways now, but our revenues are bigger and our bottom line is stronger," she maintained.
The author is a freelance writer in Brooklyn, N.Y., who specializes in management and financial issues.
Used with permission from StartupJournal.com, a Web site from Dow Jones & Company.