Tag Archives: Entrepreneurship

The Go-Getter Dilemma

A close friend reached out to me recently with a story I’ve heard and experienced way more than I care to admit.  He had started out in a new company and began to rapidly climb the corporate ladder.  Unfortunately, he was recently fired and the reason for his dismissal was personal.  In this post, we’ll find out why and we’ll identify the single greatest challenge for a go-getter.

Before we dive into this post, it’s best I provide my definition of a go-getter.  In my experience, most go-getters are highly educated (e.g. master’s degree or higher).  This is not always the case so don’t get offended. I’m just sharing my experience here.  A go-getter is an individual with significant drive, determination and an unwavering passion to be the best they can be.  They want to learn and grow in their work.  They are enterprising, ambitious and aren’t afraid to pursue what they want.  They are also intelligent, get things done and are able to accomplish work without direction.  I know….that’s a lot to cram into one person.  But they exist.  I know many people like this.  You might even expect that these people would be highly successful.  They are but not always with respect to position on the corporate ladder. With that, let’s talk about why go-getters can’t always climb to the top.

My recently unemployed friend told me about another high level manager in the company that didn’t like him and his meteoric rise.  This manager monitored his actions closely for a way to get my friend terminated.  Well, he found a way.  The disturbing part of the situation is that the other manager spent a lot of effort and time into something that was not good for the company; that is, eliminating the company’s national sales leader.  A logical person might feel that to grow the company, it is useful to have a high rate of sales. I’ve learned over the years that when people do things that are illogical, it’s usually because the driving force is emotion, not logic.  To make matters a little worse, the company’s senior leadership admitted to knowledge of the situation but chose to fire the national sales leader to keep the more senior but spiteful manager.   Low performance harmony is better, right?

You would think that companies would run their organization like an NBA team; that is, hire the best and brightest, tell them what you want them to do, give them the resources to do it, and then get out of the way.  Logical?  Well, authority and power are not always logical.  In my experience, most aren’t.  You see, most managers feel some anxiety about their role.  Maybe they earned it and maybe they didn’t.  Either way, they are in a leadership role and feel they must lead (even if they don’t know how).  In my friend’s case, this other manager couldn’t manage his meteoric climb.  “If you can’t manage them, they have to go.”  Managing the smart and talented is not easy, especially when your abilities fall below theirs.  That’s why you see so much information about leadership on the web.  There just aren’t that many great leaders out there and most of the ones we study are dead.

So as you go out into the world to obtain high levels of formal education and achieve great feats, don’t expect that it will shower you with accolades.  Here are few things you will run into.

I can’t manage you.  Some managers shouldn’t be managers.  They will be unable to handle the difference between your abilities and their own.  The only way to handle that is to get out of the situation entirely, which means YOU have to go.

Don’t threaten me.  If you’re too good, you will threaten your boss with your success.  They may not view your success as a reflection of their leadership abilities but rather in a more selfish light; that is, you took their success.

I’m a prick.  Some managers are just mean.  I had manager write me up on a dozen infractions during a two week holiday shutdown.  I was asked to work a solid month in December to get some challenging products created, tested and shipped by the end of the month.  I worked with several vendors since my company was home on holiday. In a highly successful completion, my boss wrote me up for breaking company rules such as working more than the company allowable hours in a day, pulling parts from inventory without following full process (i.e. remember, no one is on-site), and numerous other things that were a result of everyone being on holiday.

It’s a competition and I’m the boss.  Have you ever been around people who were highly competitive? They are always trying to outperform every story they hear.  It’s unusual to have a boss that will work hard to help you grow.  If you’ve got one, hold on.  If not, try to avoid any confrontation with your boss.  It’s not in your best interest….ever.

Many believe that your boss has the greatest impact on your career.  I disagree.  I think it can be many people in the organization.  It can be other managers or those who influence them.  In my experience, your greatest career challenge will be other people who will push things in your way and try to drag you down.  It can easily impact your employment, as my friend found out recently.  It’s also important to realize that fighting the system rarely gets you anywhere.  HR, regardless of their intentions, is too ineffective in such situations.  Senior leadership will usually side with their management team, regardless of the validity of the argument.  It’s really hard to believe but the people who can do the most for your career are actually the least likely to do anything.

How do you get away from this?  Be your own boss.  Be an entrepreneur!  Put yourself in a position where your limits are set by your own abilities.  Get in a place where you can run as fast as you can run….and not as fast as your boss can.  Be in a place where your rewards are a direct result of your effort.

The One Question Your Business Must Answer to Survive

….notes from my own entrepreneurial journey.  Walk with me!

It’s been a year in my business thus far.  It’s been a hard year and one that has taught me more than almost any other year in my life.  Some lessons I wish I hadn’t learned but every one of the lessons are valuable in some way.

My initial planning was great. I knew how to build a business plan.  I was an engineer and loved to dig into details.  I took several months to create it.  It had all of the right elements in it.  I had defined what the business was, how it would operate, what services would be offered, how it would be sold and marketed, what the operating costs would be and how much we would make in the first year.  I even included a competitor analysis, growth plan for expansion and customer profile analysis.  I had all the information I needed.

After I put the business plan down, I began to work on the business case.  Why? I knew that selling my service would be difficult.  First, my potential customers didn’t know they had a problem.  So, I needed to define that before I began to sell anything.  My first attempt at this was from the financial perspective.  To define the issue, I identified the amount of money my customer should be getting from their efforts.  I was hoping this would prompt my customer to look at how much they were getting and compare it to what they should be getting (my analysis).  This should have launched salvos in their brains but it only worked for a very few.  Some saw the huge delta and realized there could be something they could be learning.  For most….nothing happened.  I thought it might have been that they didn’t trust my assessment.  This made sense as I realize they didn’t know me.  So I changed the assessment to reference all of the official sources of data that I used.  It identified the authorities in their field.  The data and analysis were solid.  I used the data and mathematical methods from the experts in their field.  Easy sell, right?  Unfortunately, it did very little for the customer but it did solidify the case.

So maybe they needed to see the business case from a cost perspective.  The financial perspective essentially said that their processes were inefficient and that they could make more money if they did things differently or better yet, let me do it for them.  Perhaps they needed to understand what the cost was for their inefficient process.  I prepared a benefit cost analysis that illustrated their cost to perform the same functions that my company does.  Yes, you would expect that we were less expensive.  And, we are.  Our processes are automated, electronic and keep track of everything.  These are the benefits I shared with them, along with the fact that we are a fraction of the cost they are.

I took this new analysis and threw it in front of potential customers.  It was met with disbelief.  I soon realized they had never seen any analysis like this before and weren’t sure what they were looking at, although they realized that it didn’t paint an efficient picture of their process.  Eventually, discussions would go off track.  Once I started to see that customers were getting a little emotional about the topic, I realized that this discussion no longer hinged on the merits of the argument.  We had transitioned from the idea of what’s good for their company to what’s good for them.  It was clear that this was becoming a personal decision.  More importantly, my customer is apparently struggling with the “what’s in it for me” question.

I’ll have to admit that I should’ve seen this coming and that it should have been the first question I should have addressed.  No matter who you talk to, you must be able to convince them that your efforts are worthy of further discussion.  The challenge always comes with figuring out what interests they want to serve first: their own or the company’s.  Never assume any one is looking out for the greater good first.  Also, this is a never ending process.  As you move up the chain from contact to contact, you have to keep asking that same question.

Now, I’m embarking on a journey to figure how to assess what personal needs people are most interested in.  Do they want to look like a hero, avoid embarrassment, etc?  This will probably be the most difficult part of my journey as I’m sure to meet all kinds of people with various interests.  The challenge comes in developing a process to filter contacts into specific categories where I can have a process on how to deal with them.

Stay tuned!  This will be fun.

Entrepreneurs: Optimists or Realists?

There’s no doubt that you’ve heard that most businesses fail.  When you look at the statistics, it’s very easy to believe that entrepreneurs are dreamers that either ignore the statistics or are just plain naïve.  If you knew 96% of companies fail within ten years, would you still do it?  We know entrepreneurs are smart and willing to take calculated risks, despite these overwhelming odds.  Do they even consider the realities of the entrepreneurial journey?

The first thing to realize about the odds of failure is that they are directly related to the amount of cash in the company.  Bill Camody stated in his article “Why 96 Percent of Businesses Fail Within 10 Years” that “cash is a fact.”  Once you don’t have any more cash, you can’t pay your bills.  This is a reality and certainly hits home very hard.  Now consider that the most significant source of funding for all business startups is the founder’s personal savings, which is roughly four times greater than any other source, according to the Kaufman Institute.  Venture capitalists and angel investors don’t engage heavily in startups.  If you’ve seen ABC’s TV show, Shark Tank, you know the sharks don’t like to invest in an unknown.  They want to see a cash flow before risking their money.  So, if you’re going to get money from others, either do it very early in the launch or you’ll have to grow the business before you can get a cash injection.

Most startups fail.  Most founders use their own money.  What can they be thinking? Do entrepreneurs overlook the realities of startups?  In a survey by Kauffman, many founders shared their thoughts on the factors that prevent others from creating their own startup.  These factors just might be the realities that one needs to consider (and constantly measure) when engaging in their own startup.

  • Risk – over 98% of respondents ranked an inability or lack of willingness to take risk as an important barrier to entrepreneurship.
  • Time and effort – 93% feel that entrepreneurs often underestimate the time and effort requirement to get their startup off the ground.
  • Capital – 91% identify the difficulty in obtaining capital as a major inhibitor, which may explain why most use their own money to start their new company.
  • Management skills – 89% cite management skills and the ability to start a company as critical to success.
  • Family pressure – 83% believe that family pressures to get a steady job and paycheck are real and challenging.

Other challenges mentioned in the survey include stress, maintaining a work-life balance, developing products and services for changing markets, government regulations, taxes, and the costs of employee benefits.

While it’s very hard to identify the right combination of the aforementioned factors that will lead to business success, there are some factors that will certainly lead to failure.  In a study by the University College London, it was found that businesses with entrepreneurs who held no real business experience did not increase profits.  The premise here is that nascent entrepreneurs don’t apply the appropriate weight to opportunities and threats.  In other words, their alertness to identifying threats and use of cognitive skills to recognize opportunities are not in balance.

Optimism has been shown to have a positive impact on entrepreneurial success, in terms of both actual firm growth and financial performance.    Realism, which also affects financial performance positively, is defined as the consistency between growth expectations and actual growth.  As with most entrepreneurs, and as verified by this study, optimism dominates over the impact of realism.

With regards to a balance of both optimism and realism, a dose of realism has the effect of modifying the overconfident cognitive bias of optimism.  For example, watching more cash flow out of your company than in for a long period of time has a propensity to dampen high expectations of future success, forcing one to reevaluate the current situation and cognitive strategy.  A lack of business experience can lead to a late recognition of this imbalance, resulting in failure.

In my experience, most entrepreneurs do a fairly good job of identifying threats and opportunities.  The things they incorrectly assess about them are the magnitude and timing, such as running out of money.   An important thing to remember is that most businesses are not creating something that hasn’t been done before.  There is a lot of literature, experience and information in the world.  Entrepreneurs should always seek it out and ensure they are correctly and constantly assessing their expectations, measuring performance factors (for a dose of reality) and maintaining just enough optimism to keep striving for their aspirations.  Additionally, before you begin to establish any expectations for your business, ensure you have fully applied your cognitive abilities to the factors mentioned above; that is, risk taking, funding, time and effort, management skills and family.

Business Startup: What skills do you need?

When you are unemployed and begin searching jobs listed in Job banks, like LinkedIn, Indeed, Monster and so on, you seek out job descriptions that match your skills and experience.  But when you start your own business, the job description might look like a book full of blank pages.  The skills, knowledge and abilities needed will be many.  They will be hard to define in the beginning.  In fact, the requirements will reveal themselves every day.  If you want to get a sense of what you’ll need, take time to talk to entrepreneurs who’ve failed and who have succeeded.  You’ll want to know every lesson you can.  Here are some lessons I’ve picked up along my own journey.

Before we look at skills, you need to understand a few other required characteristics of startup entrepreneurs.

  1. You need to be self-motivated. There’s no one around to push you to do things you need to do or tell you what you need to do.
  2. You need to very passionate about the business. Things will be difficult in the beginning but you need to keep pushing for success.
  3. You’ve got to be able to handle stress (and lots of it). It could take 2 years for your company to get off the ground. I’ve started companies with a family. When times are tough and no money is coming in, everyone will pressure you to fix it. (I’ve got a great post for this coming soon).
  4. You need to have a clear vision of your business, that is, a good business plan. My blog tells you how to do that (The Blitz Blog – The Source of Inspiration for High Achievers ).
  5. You need to know how to take a small success and create more success. This is the process for building your business.
  6. You need to be a quick learner. This includes learning from others because you won’t know everything you need to know.
  7. You must be customer friendly.   People will buy the service or product because of you.  If they like you, they’ll buy.
  8. You need to be the expert.  Whatever you sell, you need to be the expert on it.  You want people to seek you out.
  9. You need to be organized.  Startups need planning and focus.  You should have enough information to operate on autopilot (but drive it yourself).
  10. You need to be decisive.  Startups need money fast.  You can’t afford to overanalyze situations.  Make decisions and move on.

The typical skills needed for the startup entrepreneur are:

  1. Legal sense – you’ll have to create the business and operate within legal guidelines for your location and the industry.
  2. Accounting – how will you track your expenses and revenue? You will need a CPA but it helps to understand what they do because it could be you doing the accounting in the initial phase.
  3. Business development – You’ll have to decide what customers to market to and how they do business.
  4. Finance – How will you fund the initial phase of your business? You’ll have to establish the original budget and put the money in place.
  5. Marketing – You’ll need to create the social media and marketing materials for the business.
  6. Customer Relationship Management – You’ll need to be a salesman. People won’t buy products or services. They buy into YOU.
  7. Conflict resolution – Hopefully, you don’t make too many mistakes in the beginning but you need to fix them quickly.
  8. Collaboration – You might need to partner with other companies to sell your products or services. What kinds of arrangements can you have? You’ll have to figure that out too.
  9. Contracts – You’ll need to develop contracts, statements of work, proposals and other documents to support winning business for your company. Guess who gets to do that?
  10. Hiring – Once you bring people on board, there are a lot of government regulations that are required to hire people. You’ve got to know those too!
  11. Budgeting – You’ve got to be able to assess your costs to ensure you make a profit. Estimating labor and materials can be difficult, especially when your service is long term or customized.
  12. Writing – You’ll need to be able to create processes and policies that your company will use, such as privacy, nondiscrimination, quality, reporting, business plans, and so on. You’ll need documentation for your customer, the government and your company.
  13. Presentation skills – You need to be articulate as you’ll have to hold meetings and provide direction for your people. It must be clear and actionable. Otherwise, you waste time and money.
  14. Innovation – You have to keep your products growing and developing with the needs of your customer. Everyone usually talks about the APPLE model. It’s not a bad one to follow, if you can find out what they did in the beginning.
  15. Willing to learn – I can’t tell you how much I had to learn to get my business off the ground. Opportunities to learn are everywhere you turn.
  16. Adaptability – Very little will work the way you think it will. You’ve got to learn to adapt.
  17. Creativity – There will be many times where you will need something that doesn’t exist.  You’ll have to create it.
  18. Negotiation – Business is all about the deal and you must learn to master it to grow your business.
  19. Emotional Intelligence – You must be emotionally stable and able to handle the emotional swings of success and failure.  They are only bumps in the road to success and you have to hit some to get there.
  20. Focus – Businesses are built by defining a plan and implementing it.  Things change but you can’t let that happen so often that nothing gets done.

These are just a few of pieces to the puzzle of success.  Entrepreneurship is one of the greatest learning experiences you’ll ever have and it will also be one of the most challenging.  It isn’t for everyone.  When you’re in the middle of your startup, you’ll easily identify those who like the idea of entrepreneurship and those that don’t.  It’s a completely different mindset.  So, get out there and fill in the pages of your book with all the things it took for you to build your dream.

A NEW DEFINITION OF TIME

One of the most noticeable differences between working for someone else and starting your own company is the personal definition of time.  As I look back on my many years building someone else’s dream, it’s very clear how much time was wasted during the work day.  In this post, I want to share my revelations from my own experience in the hopes that you will find some appreciation or recognition of this transformation in your own definition of time.

Time for an employee.  Working for someone, it always seemed as if my time was dictated for me.  It was hard to really grasp control of it.  There were two major factors that devoured my time each day.  The first, and the greatest thief of my time, was my leadership.  Meeting after meeting, we spent so much time and energy talking about the work that needed to get done.  My managers mostly held meetings to keep themselves updated, not to provide direction. For example, they would gather everyone in a meeting room every week, providing me the opportunity to listen to a lot of people talk about what they are going to do for the week.  Since our tasks didn’t overlap any, this new information didn’t have any value to me.  It was just for the manager to keep up with what was going on in the company.  You would always hear people mumbling “what a waste of time” as we left the conference room.  But this was part of the ritual time wasting activities that occur daily in established businesses.

The second force that targeted my available time for work was myself.  When I became well entrenched in my roles and responsibilities, I didn’t always feel pressured to get everything done as quickly as possible.  I realize time is money but when I was building someone else’s dream, and they were the biggest user of my time, I couldn’t really understand the value of time (at least not by their definition).  They spend my time like it was unlimited.  I would spend hours and hours every month listening to other managers talk about their projects.  Their projects weren’t my responsibility and the requirement to attend a full day of these updates provided no value to me.  With my leadership so eagerly burning time, I began to wonder if they really understood the impact this has on their employee’s definition of time. You see, with such time wasting activities, real value added activities would take longer than necessary.  The average time to perform services offered by the company kept growing.  The danger with this is that employees begin to accept that things will take longer, so there’s no rush to get things done.  Remember, time is money.  We always wasted both.

Time for a startup entrepreneur.  Starting up my company, time is defined by two factors: me and my customers.  When you’re in startup mode, you have considerably more actions to accomplish than time to complete them. The idea that time is money is what I live by.  It’s not anything like it is when working for someone else.  The longer I take to complete the actions to get my business off the ground, the longer it might take for cash to begin flowing in.  The impact of time has a more immediate and noticeable impact on me.  The faster I contact potential customers, the faster I can sell my service.  When they ask questions, I answer them right away.  All of my actions are now driven by my new definition of time, meaning that I must move as quickly as I can to bring in money.  The other definition of time that an entrepreneur must abide by is the customer, who is always right.  My potential customers don’t feel the same sense of urgency as I do and it drives me crazy.  I’m, at times, driven to push a little harder than I should.  Sometimes, my customers are nice enough to tell me to slow down a bit and yet others feel threatened or bullied by the constant barrage of communications and simply shut down.  To my customers, I’m new to the industry and have to learn their ways.  While I may bring something new that they haven’t seen before, I must be respectful and honor their ways of doing business.  When you’re just starting out, time can be the biggest hang up and a huge source of stress. But if you have a solid product/service and you know your customer likes it, it becomes an opportunity to develop patience.  Yeah, I know, nothing easy about that.

In bigger companies, time isn’t such a priority as actions are completed through the collective actions of many employees.  It’s easy to feel that when you’re working with someone else.  You’re in a meeting and the boss says, “let’s get this done in the next week or two.”  With big companies that’s tolerable, but startup mode seems to apply significant time pressure.  Startup entrepreneurs measure time in dollars.  Once the dollars are gone, so is time.  Actually, you can see this intense pressure in bigger companies when they begin to burn their backlog or fail to meet sales goals for a few quarters.  It often forces irrational behavior, such as signing contracts with financially distressed customers, further plunging the decline of performance due to lack of payment from the customer.

My suggestion in dealing with this time pressure is to understand your customer’s definition of time.  You do this in your planning phase; that is, when you put your business plan together.  Your chart showing cash flow should provide a reasonable timeframe that has been validated through interactions with potential customers.  If it takes them 8 months to approve a contract with you, then you must reflect that in your plans.  To think you can do that any sooner is risky.  You’ll have enough stress starting out so there’s no need to intentionally add more.

These are the ramblings of Todd during his walk into entrepreneurship.  Hopefully, you can relate to this.  If you want to share your experiences with us, contact me at todd.rhoad@blitzteamconsulting.com.

SEVEN DEADLY SINS OF STARTUPS

When I was young, I always wondered why there was so much talk about leadership.  I tried to read as much of it as I could and then look for signs of it in organizations.  After many years of working inside other people’s organizations, the light was turned on in my brain as to why Leadership is such a hot topic.  When you look at companies that are in existence today, you don’t really think about how poorly they are run.  Mostly because it isn’t discussed and is hidden from the public to protect stock prices.  But you can see little signs that troubles exist.  For example, big companies play around with benefits all the time.  I once thought this was done to keep the costs low but it turns out that it is usually done to help boost the bottom line.  If you’ve got parents that retired from major corporations, they’ll tell you that their benefits are constantly declining.  Running a big business is difficult but they can adjust things to account for mistakes.  However, these little mistakes can grow and turn into major disasters that destroy the whole economy. When you’re in startup mode, failures come with a much higher cost since you don’t have much cash flow and you can’t afford to delay it any.

Combining all of the things I’ve seen from companies in the past, I’ve tried to outline the seven key failures that leadership engages in that results in either the destruction of the company or a massive decline in their earnings.  Here’s what I’ve seen.

MYOPIA.  This shortsightedness often results from a failure to plan your startup.  The most common example is running out of money because the startup took longer than you had expected.   When you’re engaging in business areas you have no experience with, it’s always best to find someone who can help you identify and plan for common risks.  A good planning template will go a long way to improve your vision.  See Robert Donnelly’s Plan-for-Planning Process.

SLOTH.  Laziness is a common characteristic for those entrepreneurs that try to startup their business while working a regular job.  Well, maybe they aren’t so lazy but they fail to put sufficient energy into the business to drive the startup.  It’s the same thing I hear from MBA graduates who can’t figure out why their career didn’t take off after they earned their MBA.  The MBA degree is a piece of paper (i.e. diploma), just like you’re FEIN is a piece of paper.  It guarantees nothing with regards to your success.

PRIDE.  No matter how smart you are or how great your business idea is, you will always need to be thinking about ways to transform your company to remain competitive and relevant.  I’ve seen way too many companies fail to adapt to changing customer demands. Every generation is different.  Only 71 of the original 1955 Fortune 500 companies are in existence today.  Here are some notable flops:  Blockbuster Video, Kodak, Borders Books, Sears, Pan-Am, US Postal Service, Hummer and Blackberry.  If the big guys can fail from this, so can you.  Jeff Stibel, cognitive scientist and serial entrepreneur, says that once the human mind sets out to do something, it will do it.  If you’ve ever worked for a company on the downslide, you probably noticed that leadership did very little to stop the disaster.  Maybe they thought they had all the answers.

MISANTHROPE.  When I started my first business, I wanted to do everything so I would understand all aspects of the business.  Hey, I went to college for 14 years.  I’m a smart boy.  Well, I learned the hard way that you have to bring people on board to help you achieve great things (which usually takes great effort).  Oh, my first business failed horribly.  What was I missing?  The customer’s perspective.  The customer holds the key to my success but I never took the time to listen deeply to what they needed.  In the book, The Cluetrain Manifesto, the authors share a key piece of wisdom; that is, markets are conversations.  If you want to be successful in your startup, you have to engage in conversation and trust what you hear.

GLUTTONY. This little terror wreaks havoc on you in multiple ways.  First, new entrepreneurs are often chock full of ideas.  All of them are brilliant and destined to be a huge success.  Trying to implement too many of them leads to a quick lesson; that is, they aren’t all brilliant and you’ve just wasted valuable time and resources.  When in startupville, keep your focus on the main idea behind the business.  Get it up and running before diving off into other ideas.  Second, once success begins to roll in, it’s tempting to build your own palace to work in every day.  Early success can lead to lavish spending and the creation of an unsustainable burn rate of income.

OPAGUENESS.  Those ideas that make us gluttons can also cause us to spin our wheels for years without developing our product or service.  My close friend, Mike, has been working on his startup for 7 years and has yet to develop a product for his international market.  While he has managed to capture some investments, he has isolated his own workforce because they can’t seem to understand what the company is trying to accomplish.  Once the money from investors came in, Mike seemed to lose focus of his original dream.  Corporate death is only a short time away, as the confusion is causing his workforce to seek employment elsewhere.  Your workforce needs clarity and focus.

AVARICE.  A new startup surely induces visions of extreme wealth, leisure and control over one’s life.  It’s fun to think about, I’ll admit.  However, allowing the desire for wealth to overcome you and drive you to engage in risk that is unhealthy for the business.  There are way too many examples of these types of failures, where are often brought upon by too much funding.  My favorite picture of this problem is Enron.  There level of greed was unprecedented and led to numerous convictions of fraud and conspiracy.  I know what you’re thinking….too much money is a bad thing?  I don’t think it is but allowing the desire for money to drive your actions in an unethical direction is not healthy.  As a entrepreneur, your business is who you are.  Don’t allow the business to change who you are.

If you’ve seen some other things that we all need to know, please share your story.  Starting a company is hard enough all by itself and we need every lesson we can get.

RISK VERSUS COMMITMENT

Starting your own business is fun and challenging in ways you never imagined.  I get a lot of questions about these challenges.  Most budding entrepreneurs are trying to estimate the barriers they’ll run into.  This assessment helps them understand the amount of risk they might face, which is a good thing to do.  But, I think they have the concept backwards.  In my experience, it’s your level of commitment that defines the amount risk you’ll encounter.  If you don’t invest much, you don’t have much at risk.

My kids love the TV show “Shark Tank.”  For me, it’s entertaining.  The Sharks have a lot of money, so the risk they take is small, considering it is only a fraction of the value they possess.  But for most of the small business owners on their show, the risk is much greater.  Well, most of them.  I do remember a recent episode when the Sharks asked the business owner how much she had invested in the company so far and she said not much because she was still working her day job.  I think Mark Cuban jumped out of his chair in shock and gave her the “I’m out” response after chastising her for her lack of commitment to the company.  Apparently, the Sharks believe you have to be “ALL in” to really achieve the success you desire.  Why? It shows everyone your level of commitment to your business and dream.  Sure, we can work in a job we don’t like but would someone really build a business that didn’t encompass their passions?

Napoleon Hill once said “Great achievement is usually born of great sacrifice, and is never the result of selfishness.”    For most entrepreneurs I work with, great success is their quest; more specifically, financial independence.  They seek the freedom such success affords.  After all, we only have so much energy to put into building dreams.  If we spend a lot of energy building someone else’s dream, we have little energy to build our own.  This is why Mark Cuban didn’t appreciate the young entrepreneur’s efforts in building her company.  This approach is attempted by so many professionals; that is, working for someone else while starting a company on the side.  We already know investors aren’t crazy about that idea, but what else could this approach be missing?

Just as an investor doesn’t think you can put all of your energy in a side business, an employer doesn’t think you can do your best in your job if you have a business on the side.  Employers will worry that each day you’ll be focusing on your company and not theirs.  It will threaten your job security, which might make your side business your only business.  If you have a business on the side, don’t share that with your employer.  Managers don’t have entrepreneurial mindsets and won’t understand that you can separate the two activities.

According to Forbes, 90% of startups fail.  Even when you start out under the best conditions, you’re likely to fail.  Yes, there are outliers that prove you can build a business on the side and then jump into it full time once it takes off.  But considering that 10% are successful, I would suspect that a small fraction of these started as sideline businesses.  While I’m not a big fan of side businesses, there is one reason you might try it.  Forbes identified the main reason startups fail.  Essentially, half of startups create a product no one wants.  However, starting your business on the side might give you sufficient time to assess the market for your product, especially if you don’t have the money to contract someone to do a market study for you and you have to do it yourself.  Taking the time to study the market will greatly improve your odds of success or help you keep from becoming another startup failure statistic.

Another challenge for part-time startups is the ability to truly focus your energies on figuring out how to reach your market and build a business.  Without employees, you’re forced to wear all hats of a business.  That can be overwhelming, especially when you realize that you are not an expert at many of them.  It takes time to learn about legal requirements, accounting, marketing, sales, and planning.  Now, consider that your day job may require travel and times of intense efforts requiring long work days, and you can begin to see how your startup could remain in startup mode for many years.  Eventually, it becomes easy to push off making decisions about your company because of other responsibilities.  Without sufficient consideration of issues, you run the risk of failing to consider everything you should consider which can result in poor decision-making.  For example, if your company began to grow to the point that you needed to contemplate going all in but were afraid to make that step because you didn’t have enough funding to pay your salary for a year or so, then you might not decide to get funding to grow the business.  So, you remain in your safe job and keep the business at a level of work that you can manage while you’re working your main job.  This is the risk versus reward scenario.  Little risk with earn you little reward.

As a sideline business owner, your risks aren’t too bad.  You already know most knowledgeable business people, especially investors, may not take you seriously, much less invest in your business.  Your startup time is likely to be very long (e.g. multiple years).  If time to market is important, you’ll likely miss it.  Also, the longer it takes to start, the more risk you have in your day job.  It gets hard to hide your real passion from everyone at work and telling the wrong person could bring your employment to an abrupt end.

As an “all in” entrepreneur, the challenges are much greater.  When I started that business, I forfeited my job.  I sold my house.  Moved my family and rented a house.  As I began, I felt I could earn business and move out of the startup phase in less than a year.  This sounds easy, right?  Its okay for first few months but when it begins to take longer, around months 7 through 9, your family and friends begin to wonder if you’re going to make it.  I began to wonder too.  But you can’t lose faith. The slightest crack will set off those around you and spin your world into a huge panic. Relationships can be easily strained, mounding more pressure on top of you. With no customers, will I need to tap into my own personal funds if I pass the first year mark without success? If I do, then all future plans could be at risk; vacations, cars for the kids, college, retirement and all of those luxuries we all enjoy.  But….if it does work as planned, the reward is much more than I can get working for anyone else in any given year.  No more 1 to 3% annual increases each year or that tasty spiral cut ham for Christmas.  I’m working for myself, pushing a business I built. With significant income flowing in, I can start building my own Shark Tank and diversifying my investments.  It’s chasing financial independence and as an entrepreneur, I can get there much faster.  And when I’m tired, I let my kids run it.  Yes, the risk is much greater, but so is the reward.

I’ve tried starting businesses both ways; part-time and full-time.  Full-time certainly has considerably more risk than the “playing it safe” part-time approach.  I think the decisions you make and the effort you put into your business are considerably different between the methods…and the results typically reflect that.  It’s amazing the energy you’ll put into a business when your next meal or rent depends on it.  You will become bolder, especially in the face of any adversity.  There are many things to learn and procrastination has a price that as a full-time, “all in” entrepreneur, you can’t afford to pay.  Success becomes your only option.  You strive very hard to gain that first customer so that you can call yourself a legitimate business.  Then, you have to learn how to take that first success and create more success from it.  It’s a never ending learning process.  As a father of three, starting a business is much like raising a child.  It takes effort…constant effort.  It’s painful.  It’s risky.  It totally changes your life.  Sure, you can raise a child with little effort but we all know what those results look like.

So, what you think?  Are you ALL IN?

GET OUT OF THE FAST LANE

In the last week of the year, my son and I took off down I-75 towards Tampa, Florida for a Lacrosse tournament.  Just a few hours into the trip, I noticed a common trend that lasted the whole 8 hour trip.  I looked over to my son and asked him to tell me what he saw.  He stated “everyone is in the far left lane.”  I reminded him that the far left lane is the fast lane and designated for the drivers going a little faster than everyone else.  But why would almost everyone flock to the fast lane?  As we moved over into the fast lane, we quickly noticed that traffic was actually slower.  The cars in the other lanes were traveling faster, with the exception of a few cars that forced drivers to work their way around them.  But they had two lanes to maneuver in so they didn’t have any problems getting around the slower cars.  The fast lane was a different story.  The only way to move forward was if someone moved out of the way.  Even though we were all going slower, we were in the fast lane and drivers remained there despite our speed.  Sound familiar?

fastlane

So many of us do this with our career.  It’s a sick version of the herd mentality.  We do everything people tell us to do but only seem to get the same results most everyone else gets.  That is, we are stuck in line waiting for the person ahead of us to retire, transfer, quite, get promoted or simply kill over before we get a chance to move up.  “Get out of the fast lane,” my son said.  “We’ll get there faster.”

Many people stay in the fast lane because it’s easy, doesn’t require any thought and you always know where you are (i.e. stuck behind the person ahead of you).  It’s like being on autopilot.  You’re moving but you aren’t sure if you’re getting there because you can only see taillights ahead of you.  Still, it doesn’t require much effort, so we drive on.

Scientists at the University of Leeds discovered that it takes a small minority (just 5%) to influence a crowd’s direction – and that the other 95% follow without even knowing it.  I know, moving over to the slower lanes would require you to make decisions constantly because there are slower cars that you will have to move around.  It gets to be a lot of work moving in and out of the lanes.

Staying in the fast lane may just be your problem with achieving the success you desire.  Research led by the University of Exeter has shown that individuals have evolved to be overly influenced by those around them, rather than rely on their own instinct. As the fast lane slows down, so do you.  As it speeds up, you speed up.  You do what they do.  As a result, groups become less responsive to changes in their natural environment.  Let’s say that the fast lane is full of MBA aspirants.  They haven’t noticed that the corporate world is full of them already and many of them have gained no flexibility in their career by earning the MBA.  It does little to improve their upward mobility.  If only a few people in the fast lane aren’t paying attention to the population of MBAs in their industry, they’ll stay in their lane to earn the degree and fall into the same situation as the others.  Everyone else will follow.  While the fast lane population may have dreams of getting into management, the MBA isn’t the only way to get there.  Get out of the fast lane.

So why do so many think the MBA is the only way to get there?  Social learning may be the reason.  It is likely that many aspirants are surrounded by a few people who believe it’s the answer.  Of course, once you go on campus, everyone will tell you it is the answer.  With so much bias towards the degree, aspirants will forego any analytical processing and go directly to the analytical response.  This does happen and was proven in a study published in the Journal of the Royal Society Interface, which found that a strong social bias may very well decrease the frequency of analytical reasoning by making it easy and commonplace to accept without thinking.  Well, I do remember something about us all thinking the world was flat, until that 5% of scientists convinced us it wasn’t.

What are other ways to get into management?  You can always start a company or join a startup.  Small companies offer the opportunity to learn more about management, since there is less of it.  Outside of these options, you might find yourself waiting in line for a long time.  Of course, you might occupy that time by building a nice list of credentials that you can put on your resume. Then, when somebody moves over, you can hit the gas and move into a new position.  Or….you can get out of the fast lane!  Some say “success is a choice.” Well…this is one of those choices.

If you’re considering taking the entrepreneurial route, let us know.  We’ve got plenty of folks who can help you with your idea.  Contact us at info@blitzteamconsulting.com.

The Plan-for-Planning Process – Step 4

Step 4 – How are we going to get there?

Typically called – “Strategies” – this section/chapter lays out the strategies that the company has developed to grow revenues and profits for implementation during this business planning period. You’ll want to answer all of the questions for each strategy to ensure full consideration.

The format for this section is (for every strategy):

  1. What the strategy is (a description of the strategy)?

2.  What the rationale is for the strategy (why we are implementing this strategy)?

3.  Who is responsible for implementation (a specific manager)?

4.  How long is the implementation going to take and what is going to be accomplished quarter-by-quarter (specific activities by quarter)?

5.  How much is going to be spent on each activity each quarter (a quarter-by-quarter listing of expenditures)?

6.  What is the expected return on the successful implementation of each strategy (the ROI for the strategy)?

When completed, this section should present a clear picture of what the management team plans to accomplish to continue to grow the revenues and profits for the company, and how much that will cost.

This section is particularly important because it lays out the quarterly strategic milestones that have to be reviewed on a quarterly basis, so that depending upon the success or failure of the expectations for each strategy for that quarter, decisions can be made as to how to continue to proceed strategy-by-strategy. And how to continue to allocate investments based upon these results.

This way management can better control the investments in the company’s future depending upon the levels of success or failure of each strategy on a quarterly basis.