The next six newsletters will focus on coaching entrepreneurs. We will explore one challenge each month facing those who are “ahead of the curve.” Much of the material today is drawn from personal experience in developing and managing a fledgling home-health care business in 1986. However, the principles are taken from the chapter of the same name by Barry Dym, Stephen Jenks, and Michael Sonduck in Executive Coaching: Practices & Perspectives, Davis Black Publishing, 2002. According to Dym et al there are six challenges for entrepreneurs:

• Perceiving the need for change versus denial and isolation
• Moving toward commitment and planning versus indecision and procrastination
• Accepting the pace of change versus doubt and uncertainty
• Tolerating instability and uncertainty versus regressing to old ways
• Working toward resolution versus fragmentation
• Reintroducing entrepreneurialism versus succumbing to bureaucratic lethargy

 

Perceiving the need for change: Back in 1986 home health care for the developmentally disabled was taking a back seat to institutional care. In the few instances where community-based services were provided, these services were state-run to provide the stability for parents that there loved ones would be taken care of without risk of bankruptcy or dumping clients on the streets—a fear that was promoted by the public sector to insure continued state funding for bureaucratic, inefficient, and unaccountable services that were sorely lacking initiatives or the latest technology. My partner, Dr. Jon Hannum and I began a privately run group home business for persons who might benefit from long-term care in a less restrictive setting. The state of Texas was in the midst of a class action suit that required downsizing of state schools for persons with mental retardation and “outsourcing and privatization” became buzzwords for offering an alternative business model for providing services. We were able to secure two state contracts in Texas and North Carolina to run six-bed group homes. We were responsible for the strategic plan, business plan, securing a line of credit against pledged receivables (which banks were unwilling to do in 1986 because of the short-term nature of federal funding), hiring and managing staff, and insuring quality services—a small feat for two idealistic former state employees who cashed in their state retirement to form Texas Community Living Ventures. We grew from a staff of two (the principal owners) to 160 in just two years and from one location to 18 locations in two states serving 108 clients and managing two workshops. Needless to say we had no roadmap on how to do this and convincing parents to place their child with us was no easy task. After the first group home was opened in October, 1986, in Houston, Texas, and the first six clients were placed a parent came up to me after a visit with his daughter and said “I’m glad she is here with you; I want you to make a profit because if you don’t you’ll go out of business and my daughter will have to return to a state school.” I was overwhelmed with his comment. He was business savvy and knew that sound management would prove crucial to maintaining longevity for his daughter.

 

The first two years were start-up. I busied myself with our attorney, insurance rep, housing rentals, community civic organizations, and various other local entities in Houston as we began the push towards privatization. We were an oddity in 1986. People didn’t know quite what to think of us: Were we a public entity masquerading as a private enterprise? Were we greedy business types without compassion or training in the field? Were we going to crash and burn? Believe me; I was introduced to scenario thinking immediately. Many a night I spent my four-hour shift worrying about anything and everything that could go wrong. We didn’t turn a profit until the fifth month. Jon and I were excited when we finally wrote ourselves a mere $3,000 salary each after five months of working pro bono. The isolation and denial that Dym et al talk about in their chapter about entrepreneurs is very real. One day we were perceived as “trailblazers” who had all the expertise and knowledge. Other days, I scratched my head wondering if we could continue to expand without jeopardizing financial economies of scale and quality services for our clients. It was very lonely those two years for two men in their thirties who knew what to do, but required the backing of a very understanding banker and local communities who believed in what we were doing. Only one community out of 18 ever took us to court over infringement of deed restrictions (there is no zoning in Houston but deed restrictions dictate local housing use). We won at both the local and state court level on the definition of “family” being expanded beyond blood relatives to allow for housing and care in single-family residential neighborhoods. These were upper-middle class neighborhoods with houses priced in the low 100s back in 1986. The typical floor plan was 2400 square feet with four bedrooms (the master for the live-in house parents) to accommodate six clients. More about the programming later, but our business plan was very successful, and we proved that we could provide better services at the current cost per bed-day being offered in institutional settings.

 

Helpful Hints:

1. Write a strategic plan using the SWOT (Strength, Weakness, Opportunities, and Threats) analysis to examine if you can segment your current service or product into a smaller niche that might produce a better result at the same or increased profit margin.
2. Look around your office and list at least ten areas of redundancy and inefficiency.
3. Talk to a private banker or business loan officer about the types of businesses receiving loans now and what makes these business ventures less vulnerable to failure or delinquency in defaulting on their loan.