Monthly Archives: November 2022

The Money-Trapped Entrepreneur

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There are many motivating factors for becoming an entrepreneur. Some of us want to be in control of our own destiny. Others are overwhelmed with passion for a particular idea. And still others want to change the world. As we embark upon our entrepreneurial journey it’s important that we understand exactly what is motivating us to do so. Are we seeking recognition; do we want to build something important; do we desire to express greater creativity, or do we want to become wealthy? Likely our motivation is a combination of a number of these factors and even others not mentioned here.

As we contemplate our motivations there’s something else that is very important for us to consider. I’m going to call it the Entrepreneur’s Trap. It could also be called the Money Trap. The thesis goes something like this. An entrepreneur – let’s call him Dylan – wants to start a business. His friends ask him why and he professes that he has a novel idea that will make a real difference in the world. He doesn’t fit the corporate environment and has always wanted to be his own boss. These friends along with members of his family shower him with accolades for the purity of his motivations and encourage him to take the plunge.

What Dylan doesn’t tell anyone is that he really believes he can make a ton of money. He wants a massive mansion and a 70-foot yacht on an exclusive beachfront somewhere in the world. In fact, he may be suppressing this urge and trying to fool himself into believing that wealth and materialism really isn’t his main motivation. And of course, if he were to state publicly that he wants to become filthy, stinking rich, he would be viewed in a negative light by his friends and family.

Let’s get one thing straight. There’s absolutely nothing wrong with the desire to amass great wealth. An entrepreneur who denies that making money is a motivating factor may struggle to succeed. Why? Because driving profitability is vital to the survival of every company. The investment of capital and time along with the inherent business risks deserves a return. Where it goes off the rails is when wealth and materialism is the ultimate objective. On the other hand, if achieving wealth and materialism is a means to a bigger end, the calculus is healthy.  

What does all this mean in a practical sense? If Dylan is obsessed with making money so he can build his massive beachfront mansion and buy the 70-foot yacht, he may become quickly frustrated when he misses his profit forecasts early on. He may lose patience just when it is needed the most. Certainly, there are examples of instant wealth that can be cited. But often, creating and building wealth is a marathon, not a sprint. The quest for being a “one percenter” can be fraught with other baggage. There may be an inclination to take shortcuts that are deficient in integrity or even legality. And how exactly do we build an organizational culture that is solely about making money for the entrepreneur? That’s certainly not a very inspiring mission for a team.  

I’ve written and said before that earlier in my career I was more inclined to worship the almighty dollar. But it seemed that the more I chased it, the more elusive it was. As I grew older and more mature my focus changed. There’s no doubt that wealth accumulation was still important, but it wasn’t my singular focus. Eventually my wife and I determined that we wanted to build wealth for the purpose of giving it away. Thus, was born the notion for us that generating wealth through entrepreneurship was a means to a bigger end. In our case, we established a family foundation with a mission and a purpose that will eventually provide funding for our preferred charitable causes after we are gone. But we aren’t waiting until we’re dead and buried to start this process. In 1999 we launched a scholarship program to help young people with their college expenses who aspire to become teachers. Not only do we know that in the future our financial assets will be directed to doing good work, but we get to witness the difference it makes right now while we are still alive.

We can avoid the Money Trap by using wealth and materialism to a bigger end. When we focus on that greater calling – whatever it may be – wealth will become a healthy result.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

The Opportunity-Driving Entrepreneur

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There’s a Netflix series that I used to watch entitled, “Better Call Saul.” It’s about a scummy low-life ambulance-chasing Albuquerque lawyer named Jimmy McGill. Spoiler alert – in one episode, McGill becomes a minor celebrity when he rescues a man hanging from a billboard. A wealthy eccentric rancher sees the local newscast video of the rescue and calls McGill for a meeting. The rancher proceeds to announce that he and his multi-thousand-acre ranch are going to secede from the United States. He needs a lawyer and offers Jimmy $1 million to handle the case – $500,000 up front and the other $500,000 when secession is final. You can see McGill sitting in the rancher’s living room – about to burst into a massive happy dance. The rancher goes to his safe and brings back a tray with bricks of 100-dollar bills. Wait for it . . . when McGill looks at one of the bricks, the bills are emblazoned with the face of the rancher! Perfectly legal tender portends the rancher, in his newly formed country. The scene ends with McGill driving away from the ranch in his beaten-up two-tone Suzuki Esteem.

You may be wondering what this television episode has to do with entrepreneurship. Jimmy McGill was clearly “opportunity-driven.” In other words, opportunity knocked, and he answered. You may also be wondering what’s wrong with this – why wouldn’t every entrepreneur grab opportunity as they emerge? And that’s just the problem. Being opportunity-driven is effectively allowing external factors to shape our businesses and lives. Sometimes we win and sometimes we end up with a brick of fake 100-dollar bills.

There’s a great temptation for young organizations (and young people) to “grab” opportunities as they see them. This is certainly understandable. Perhaps we don’t have a lot of traction or credibility yet and need to pay the bills. The entire career of many entrepreneurs is stuck in the opportunity-driven mode. I call it the “Jim Rockford $200 per day plus expenses” approach. Those of you old enough to remember James Garner’s Rockford Files television series from 1974 – 1980 can relate to this. As a private investigator, Jim Rockford would do anything (mostly legal) for $200 per day plus expenses. I loved that show, but it taught me a great lesson – the lesson of personal limitation. Rockford would pretty much take any case that came his way and limited himself to a fixed amount of compensation and lived hand-to-mouth in a trailer on the beach.

There is another way. It’s called “opportunity-driving.” The difference between being opportunity-driven and opportunity-driving is rooted in strategy. The entrepreneur that is opportunity-driving is operating on a very strategic basis. He or she has a winning aspiration; knows where to play; knows how to win; has developed core capabilities and resources and has created the necessary systems and processes.Utilizing this approach, the entrepreneur is focused on creating opportunities that fit the strategy.

I can relate this concept to my own business interests. In the earlier days of our organizational evolution, we would take pretty much any business that dropped in our lap. Our property management operation handled all sorts of properties – apartments, condominiums, office buildings, shopping centers, industrial facilities, and even a golf course at one point in time. We rationalized accepting assignments of all types by positing that we were in the property management business. It’s true that we developed enough critical mass with these various types of properties, but I know for a fact that not all the business was profitable. In fact, we lost money on certain assignments. We also claimed that we were taking assignments to develop relationships that could grow into something bigger and yes, profitable. Occasionally that happened. Often, it didn’t.

Today, we are much more targeted with what we do. Our different business units are disciplined in handling projects that are strategically aligned. And yes, we once again were involved with a golf course, but only because it came with the 612-unit apartment community that we acquired as part of a strategic initiative. Fortunately, we found a competent operator to whom we contracted the golf course operations since this specialty is outside our wheelhouse.

Being an opportunity-driving entrepreneur will almost always produce better results than being opportunity-driven. To accomplish this, we must be strategic and disciplined.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

THE ROCKFORD FILES — Pictured: James Garner as Jim Rockford — (Photo by: Fred Sabine/NBC/NBCU Photo Bank)

The NPS Entrepreneur

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Every entrepreneur understands how critical it is to take care of the customer – that’s old hat. We know that unhappy customers will cause our businesses to suffer. This fact has been magnified by social media and how a few damaging reviews can really cause severe and long-term problems. If your organization is like ours, you regularly send out customer satisfaction surveys. Much time is spent parsing the verbiage and trying to determine exactly the right questions to ask. All this is fine and good – we need to ask several questions to better understand who our customers really are and what they prefer. But how do we get an overall handle on exactly what our customers think about us and our product(s)? Enter the NPS.

OK, you are probably wondering what NPS means. It stands for Net Promoter Score and is a tool that measures customer loyalty. The Net Promoter Score was developed in 2003 by Fred Reichheld, the private equity firm Bain and Company and Satmetrix (and is also a registered trademark of these individuals and companies). It is based upon the theory that our customers are either detractors or promoters. A detractor is unhappy to the point that they can drive away other customers. Promoters do just the opposite. The NPS is calculated based upon the response of a single question, “On a scale of 0 to 10, how likely are you to recommend this company’s product or service to a friend or a colleague?” The numerical answers to this question become an index ranging from -100 to +100. A raw score of six or less puts the respondent in the Detractor category. Passives are those who give a score of seven or eight. And Promoters give a score of nine or ten. The NPS is calculated by subtracting the percentage of Detractor respondents from the percentage of Promoter respondents (Passives are disregarded). Generally, an NPS of +50 or greater is considered outstanding.

In January 2018, our companies implemented the NPS. It’s fascinating how focused we have become on trying to move the number. Incentive compensation plans can be tailored to include the NPS – especially for team members who are able to greatly influence customer satisfaction. What we’ve learned is how very important it is to have as large a survey response as possible. Sending out 500 surveys and generating 15 responses that lead to an NPS of +60 may be very misleading. Smart companies have figured out techniques to boost the number of responses including drawings for prizes and continuous follow-up with the customer until a response is rendered.

For the NPS to be most effective, customers need to be identified when responding to a survey. This does present a bit of a dilemma as some customers are reluctant to share their true feelings when a survey is not anonymous. But the value of being able to follow-up and resolve issues that may have been encountered by the customer is well worth the extra effort to solicit responses for non-anonymous surveys. The goal is to ultimately convert Detractors and Passives into Promoters.

Hundreds of large companies including Delta Airlines, Southwest Airlines, Citigroup, Best Buy, Sony, GE, Apple, American Express, Four Seasons Hotels and AT&T are using the NPS. A large percentage of entrepreneurs with whom I’ve spoken are unfamiliar with NPS. Having a universal methodology to measure customer satisfaction and enable “closing the loop” with the customer does not have to be limited to the big boys in the business world. And software is available that can help take the NPS question from survey results and calculate a running score.

This is a new journey for us and we’re still working to get “buy-in” from all our team members. One of the advantages of NPS implementation is that everyone can see the difference they make – positive or negative – with customer satisfaction. If the product is defective, the bathroom in the store is dirty, or the service is sloppy – all can show up in the survey results. The “weak link” in the chain may drag down the score from nine or ten to a six. We expect accountability from peer pressure will improve over the next few months and years.

Our customers are the lifeblood of our businesses. We can become more precise at measuring their satisfaction with our products and services by utilizing the Net Promoter Score.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

The Mobbed-Up Entrepreneur

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Entrepreneurs should do everything possible to avoid the Mob. If you are thinking the Mafia or La Cosa Nostra, that’s not what this is about. Our society is currently experiencing a phenomenon that I call the Mob Mentality. And there’s nothing good in it for us. If you are wondering, there are examples abound. The #MeToo movement certainly raises legitimate concerns about sexual harassment, but there are many people who are being convicted by the Mob without any opportunity to offer a defense. The same is happening with Mob convictions for racism, homophobia, and a score of other real or perceived slights. And more recently, the Mob has become focused on guns and is convicting companies that might have some association with the National Rifle Association.

I don’t get into political discussions in this blog. This is about entrepreneurship and what we can do to become better entrepreneurs. But it’s hard to avoid becoming ensnared by the Mob when its fevered pitch ratchets out of control and overwhelms us with political correctness and hyperbole. I listen to a podcast regularly about start-ups and angel investing. The host, who makes his political proclivities known every chance he gets, asked a founder he was interviewing, whether he would accept funding from a certain well-known venture capitalist that has political leanings that are out of favor with the Silicon Valley crowd. And the host and his guest pondered this question, and it became apparent that there is actually a Mob Mentality that would prevent some founders from accepting funding from this VC. Incredible!

Successful entrepreneurships are built on diversity of thought and culture. The Mob advocates monolithic thought. Rather than engaging in civil discourse, the Mob will attempt to intimidate an entrepreneur through boycotts, adverse posts on social media and via other means. This is dangerous territory for us to be in. Facts be damned, the Mob is always in search of an enemy to destroy. If we are anywhere close by, we run the risk of being swept up in the hysteria of the moment.

So, how are we supposed to avoid the Mob? If we don’t have well-thought Core Values and a healthy, positive Culture, the Mob may be waiting for us right around the corner. Why is this important? Because focusing on Core Values and Culture will help our organization and its team members move down the right path. Entrepreneurial endeavors that are drifting along without an intentional culture are more prone to make the kind of mistakes on which the Mob will pounce. Why? Because the guideposts provided by Core Values are missing. One of the five Core Values for our firm is that of Team Member Fulfillment. We work hard to evaluate decisions that we make as a company and as individual team members and align them with the concept of a positive workplace experience. In so doing, it’s clear to everyone that there’s no place in Team Member Fulfillment for sexual harassment. Obviously, someone who feels harassed or threatened can’t feel fulfilled. Does this guarantee that it won’t happen – of course not. But we believe we’ve decreased the chances because of our cultural development.

Another way to avoid the Mob is to decline to participate. The Mob Mentality is mostly fueled by emotion. Entrepreneurs who choose to enter this arena are playing with fire. Remember as kids when we wanted to do something and used the emotional (and fact-less) argument, “everybody is doing it?” I certainly did, but fortunately my parents weren’t buying it. There were several things that had I been allowed to participate, would have turned out badly for me. Just keep in mind that if you decide to jump on the Mob bandwagon, your team members and your customers may be watching. And the consequences could be detrimental to your business.

Finally, avoiding the Mob requires active leadership. Not only must we model our Core Values, but we should take the opportunity to lead our team away from or around the crowd. We should not make decisions simply to please or placate the Mob. Instead, we do the right thing for our enterprise and the team members that support it. In this day and age, we can’t hide from our leadership responsibilities, or the Mob will fill the void. Unfortunately, I’ve seen several business leaders that think they are protecting their companies from the Mob by siding with it. In most cases, this has simply caused more controversy and chaos. Strong, active leaders will chart a proper and measured course that avoids being trampled by the herd.

The Mob Mentality in our society is a dangerous thing. Entrepreneurs can avoid the Mob by adopting well-defined Core Values, creating a strong, positive Culture, declining to participate in Mob initiatives and demonstrating positive, active leadership.  

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.