I went back and reread my post about becoming profitable. I laid out the factors that I believe turned around my company’s financial state: six actions and circumstances that allowed me to survive the recession and put my company on the right path. What I neglected to discuss is my personal reaction to the idea that I might finally be able to breathe easier about money.

In my mind I continually replay a scene from a couple of years ago: a Christmas party I attended in 2008. My wife has lots of friends, and one of them invited us to a big bash at her house. It was a fancy affair, and the enormous house was decorated exquisitely. Several hundred people attended. Everyone was dressed up: men in suits and ties, women in fancy gowns. Catered goodies were heaped in every room, and drinks flowed freely.

I had met a few of the guests before, and found myself in a group of men my age, making conversation as one does in these situations. The others were professionals: doctors, lawyers, accountants. None of them owned their own business. They were discussing their vacations, their boats, their golf scores. I was acutely aware that nothing I was wearing had been bought after 1985, that I couldn’t afford a trip to Paris, a motor cruiser, or country club membership, and that I would be driving home in a ‘92 Camry that emitted a dense cloud of smoke when I started the engine. Soon I was at the edge of the group, smiling politely as I had nothing to add to the conversation. Did anyone want to hear that I had just laid off two more workers, and I was about to run out of cash? After a few minutes, I got my wife and went home. Read more…

Courtesy of TerraCycle. TerraCycle invites graffiti artists to decorate its offices.

As I’ve built TerraCycle, one of my priorities has been maintaining our unusual company culture. While I don’t believe in overdoing it — we have no pool tables, yoga studios or climbing walls — I have found a few affordable yet surprisingly effective ways to build morale and have some fun.

1. LUNCH: About a year ago we adopted a lunch program whereby we order lunch from a nearby restaurant for participating employees, changing up the menu every day. We ask for a $4 contribution per person, but the company picks up the rest. We bought plates and installed a dishwasher. The effect on productivity has been amazing. Instead of various teams taking long one- or two-hour lunch breaks (where people have to drive to a local restaurant, wait to order and then eat) everyone grabs lunch, eats and typically is back at their desks within 20 minutes or so. Funny how spending about $6 per person (on top of the $4 employee contribution) can make a difference. Read more…

In my last post, I discussed whether it might be a good idea to sell your business before (or after) 2013 — a complex decision that is looking even murkier. What seems crystal clear, on the other hand, is that now is a fantastic time to give shares of a business to family members.

At the end of 2010, Congress increased the lifetime gift tax exemption to $5 million, from $1 million, for individuals and to $10 million, from $2 million, for married couples. These changes, however, are set to expire in 2013, creating a two-year window of opportunity for business owners to keep more of the family business in the family and less of the business from going to Uncle Sam in the form of federal estate and gift taxes. “We are in the prime transfer tax situation,” said Rebecca Hurst, a tax and estate planning lawyer with Friday, Eldredge & Clark in Fayetteville, Ark.

But before you rush out and start bequeathing stock to your progeny, it’s worth noting that not everyone in the business community gets warm and fuzzy when it comes to passing shares of a business to subsequent generations. While it may seem like both a loving gesture and a way to ensure the longevity of the enterprise, gifting can be the worst possible option for both the business and the family that owns it. Read more…

Lots of business owners wish they could be less involved in the day-to-day operations of their businesses (see “It’s Never the Employee“). When you have 10 or even 20 employees, you can be intimately involved in all aspects of the business from sales to finance to operations to purchasing. But if you want the company to grow and perhaps get to that elusive “next level” everyone’s always talking about, you have to build an organization that can get the job done without you managing every detail.

Over the last 33 years, I have gone from running my business with one employee to five, 10, 20, 50 and now 105. For many years I felt like the old-time entertainers who would spin dinner plates on poles, running from one to another as the plates started to slow down and wobble. For me, it wasn’t entertaining at all. It was stressful, it was frustrating and it was exhausting.

Today, I have an organization, and I have less stress and aggravation with 105 employees than when I had 10. It has allowed me to work on marketing, new business opportunities, this blog or absolutely nothing (which I don’t do often). Below are what I believe to be the issues that must be hurdled to make the transition from doer to manager to executive. Naturally, surmounting these hurdles is easier said than done and can take years to accomplish. This list does not have all of the answers but should at least provide you with the right questions to ask yourself. Read more…

Jeff Swensen for The New York Times Naomi Poe, founder of Better Batter Gluten Free Flour

As today’s small-business guide to pricing makes clear, a lot of small-business owners are reluctant to raise prices — sometimes even when they are losing money on every sale. Naomi Poe, who founded Better Batter Gluten Free Flour, initially priced her product to compete with nongluten-free competitors even though her costs were higher than theirs. Eventually, she decided to increase her prices and found her customers were encouraging.

Have you tried to raise prices? What has your experience been?

At TerraCycle, while we’re trying to keep stuff out of landfills and change the way people think about waste, the ultimate goal is to make money. Over the years, I have been challenged again and again to find ways to build our revenue and refine our business model to make us profitable and to maintain aggressive growth. Along the way, we have changed our model numerous times.

The original plan for TerraCycle was to develop an eco-friendly waste management company. People would pay us to take organic waste and instead of dumping it in landfills we would feed it to worms. But at the roughly $50 per ton we were paid to cart the waste, we couldn’t come close to making money (or getting a date!). By the end of one summer, our plan had evolved. We would still take organic waste and feed it to worms, but we would create most of our value and revenue by selling worm waste as premium fertilizer.

TerraCycle started packaging liquefied waste in used soda bottles as “TerraCycle Plant Food.” With this model change, TerraCycle grew to $3.3 million in revenue in four years, selling our fertilizer to major retailers like Wal-Mart and the Home Depot. To source used soda bottles, we created what we call our “Bottle Brigade.” (If you go to our Web site, you can sign up free and send us used soda bottles.) We paid the shipping and a 5-cent donation per bottle to the school or charity of the sender’s choice. The program was well received by schools, and within two years, 4,000 had signed up. Ironically, the success of the program almost destroyed us. We had to pay hundreds of thousands of dollars in shipping and donation costs, and we simply couldn’t afford them. Read more…

Last year at my aunt’s 80th birthday gathering, I talked business with one of my cousins, Phil Ochoa. Phil and his wife, Sharyn, started a company, Federal Defense Industries, out of the garage of their Southern California home. Ten years later, they are the family success story, with eight-figure revenue, and they have traded way up and out of their office with the Genie door opener.

They have an interesting niche business that finds and sells spare parts for military equipment that the United States has sold to its overseas allies. Phil talks about entrepreneurship with a mixture of reverence and sport. Quotes from Sam Walton and Zig Ziglar pepper his conversation. He and Sharyn asked me to come out to California for a couple of days to review their marketing strategies and to suggest some new ones.

So, last December, I visited the Los Angeles area, learned a lot about their business and left them with some marketing strategies and tactics. But it was I who really benefited, getting to see how astutely they ran the business side of their business. Oh, that, you say! You see, I opened my advertising agency 16 years ago with a love for doing creative work. Years later, I’ve hired people who are much better at that than I am, and my role has shifted to managing the business. There is no pride when I admit this, but we’ve been in business for the better part of two decades, and I have never had a business plan or an annual budget. (I hope my banker isn’t reading this!) Read more…

Chris Koszyk Mussels kimchi.

When Colicchio & Sons switched to a prix fixe only one month after opening in January, I had to smile. Excellent timing. For me, if not them. We were entertaining the same change during our hiatus at Southfork Kitchen. (Restaurant definition of hiatus: stop serving, start debating.)

When Tom Colicchio said that only one out of 300 diners protested the change, it was encouraging: an owner institutes a new policy, guests adapt and accept readily, and everyone comes out ahead. Mr. Colicchio’s decision informed our decision; it was as if he cast the tie-breaking vote, like a virtual vice president in actual absentia.

We went to a $55 three-course prix fixe when we reopened in March. Read more…