Existential Threats to the Entrepreneur

That’s an ominous sounding title for this blog – right? But not necessarily for reasons you might be thinking. When most entrepreneurs think about what can “kill them” – in a metaphorical sense – they might list undercapitalization, the inability to hire a qualified and competent workforce, or chronic issues with their product. While these can be serious problems, they are much less severe than the existential threats I’m going to discuss.

I believe that the most menacing threat to an entrepreneur’s existence is his or her own mindset. Do we truly believe we can succeed, or do we feel victimized and constantly under siege? Great entrepreneurs are eternal optimists. We know we can win – there’s no doubt about it. We will pivot when we have to, but we are absolutely convinced that we will reach the Promised Land – whatever that might represent for our endeavor. Entrepreneurs who are too skeptical or pessimistic are destined to fail. They become tentative and can be paralyzed when making important decisions. Negative Nellies will usually crash and burn. They live in a world of lack and limitation. They can’t escape the negative energy that always surrounds them and eventually impacts their team.

Hand-in-hand with the negative mindset is another existential threat – that of low resilience. Look, we entrepreneurs get beaten up a lot. We make a ton of mistakes. We hear from plenty of people who don’t like us or what we are doing. If we can’t get up off the ground when we’re knocked down, then we’ll die lying there – again, metaphorically speaking. And it’s not just the ability to bounce back that’s critical. We do so with a smile on our face and new resolve that we have actually taken a step toward success with our setback. Does that sound contradictory? It’s this kind of thinking – that we’re actually moving forward when it seems that we’re failing – that is the real definition of resilience. The existential threat melts away when we are always tougher than the problems we encounter.

The next existential threat is that of a lack of vision. Entrepreneurs absolutely must be able to see into the future. The ability to be a visionary also leads us to think more strategically and work on our business more than in our business. An entrepreneur who is a good operator but lacks vision will eventually “die.” It may be a slow death, but death nonetheless. Why? Because without a vision – especially one that inspires our team – we are simply stirring the pot. Over time, things begin to unravel. Key people leave because the future is unclear. Important customers leave because a competitor (with vision) has offered a more innovative product or service. Rather than create a clear vision, the operator-entrepreneur takes tactical actions to try and solve the problem. This may include belt-tightening measures or price increases, neither of which addresses the underlying issue. R.I.P.

Poor communications skills are another existential threat to entrepreneurs. This encompasses many elements. The entrepreneur who can’t persuade through artful communications won’t be able to sell his or her ideas to customers, team members or anyone else. The entrepreneur who is unable to communicate effectively will have difficulty building important relationships. When communications are non-existent or garbled at best, misunderstandings will occur and feelings are hurt. I have found that a very large percentage of challenges that we encounter are the result of inadequate communications. Entrepreneurial leaders must communicate clearly, concisely and constantly to eliminate this existential threat.

There’s one more existential threat that’s a biggie. Entrepreneurs who operate without integrity will eventually die. Our stock in trade is our integrity. It matters not how positive and optimistic we are, how strong our ability to bounce back, how grand our vision might be, and how well we communicate, if we lack integrity we’re dead as a doornail. Customers want to do business with entrepreneurs who are honest and forthright. Team members want to work for entrepreneurs who always do the right thing. Of course there are examples abound of CEOs and companies that seem to have “gotten away” with underhanded behavior. It may take a month, a year or even longer, but eventually the jig is up. Maybe it’s karma or there’s some other explanation, but the entrepreneurs who don’t play it straight will lose in the end.

There are many existential threats to entrepreneurship. A negative mindset, low resilience, a lack of vision, poor communications skills and a deficiency in the integrity department, top the list.

You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Click here to listen to Audio Episode 112 – Asshole Self-Test.

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 Entrepreneur Who Cried Wolf

Harkening back to my childhood days, I remember a wonderful Aesop’s Fable called The Boy Who Cried Wolf. As the story goes, a little boy had a tendency to sound a false alarm that a wolf was attacking a flock of sheep. After doing this repeatedly, the villagers eventually stopped taking him seriously. Then when the wolf actually did eat the sheep, the little boy’s cries fell on deaf ears. In some versions of this story, the wolf also eats the boy. I believe that this fable is more apropos for our society today than perhaps at any time in recent memory. The current state of political affairs comes to mind as a perfect example of how over-the-top proclamations about how our country is doomed are being bandied about on a daily basis.

We can expand a modern-day Aesop’s Fable to include entrepreneurs – more specifically, entrepreneurs who engage in lying and distortion. There’s a distinction between puffery and lying. Puffery involves hyperbole which by definition is “obvious and intentional exaggeration not intended to be taken literally.” For example, if we say that our widgets are the “best,” there’s no objective way to measure this claim and the public generally understands the context to contain a degree of hyperbole. On the other hand, if we say that 99% of all our customers agree that our widgets are the “best,” then this is a factual claim that can be verified. And it becomes a lie if this fact is manufactured or we can’t prove that 99% of all our customers agree with our statement.

Where this gets really dicey for entrepreneurs is when the integrity line is crossed. Alex is the CEO of a start-up company and is pitching a group of investors for funding. During an interview with the investor group, he says, “Our firm has 35 customers and we’ve generated $500,000 in revenue.” What he doesn’t reveal is that he doesn’t really have 35 paying customers. He actually has 25 prospective customers that are using a beta version of his product for free; five current customers that are currently paying for his product, and five former customers that quit because they had issues with the product. What he also neglected to say is that his company has been in business for three years and $500,000 is the cumulative revenue generated during that time period. Did Alex lie about his company’s progress or did he engage in a form of puffery? While it’s not quite the false cry that a wolf is eating the sheep, Alex has definitely crossed the line through omission of key facts. Any savvy investor will drill down and quickly learn that Alex has misrepresented his situation – which will probably cost him the investment.

As entrepreneurs our integrity is our most valuable currency. When we go to the bank for a loan, it’s important that we put our best foot forward, but in an honest manner. We should be fact-based with our approach and present a true picture of our operations. At the same time, there is nothing wrong with sharing data trends that portray our company in a growth-mode. When we are reporting to our investors, we share the true, unvarnished facts. If things aren’t as rosy as we’d like, we provide an explanation about the issues we are experiencing. We have a real estate fund and write a quarterly report for our investors. Periodically I like to include a section called, “What’s Not Working.” In it, we discuss some of the challenges we are facing and what we are doing to overcome them. We’ve had feedback from investors who appreciate the fact that we’re not always trying to sell them on unicorns and rainbows.

Another problem area for entrepreneurs is that of overpromising and under-delivering. In fact, we would be much better off doing the opposite. We would do well to find one of the most skeptical members of our team and have him or her help set expectations. It’s likely that our optimism would be dialed back to a more realistic degree. Overpromising once may be forgivable. But if it happens over and over then we’re probably moving past the realm of hyperbole and into the arena of deception.

We all want to win which is a critical element of entrepreneurship. Doing so in an honest and forthright manner may not be the easiest path to take, but it will likely keep us from being eaten by the wolf.

You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Click here to listen to Audio Episode 106 – A Boomer’s Advice to Millennials.

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.

Little Steps to Sweet Success

A friend of mine has a company he started several years ago and he’s on an unbelievable roll. If he’s not there already it won’t be long before his top line revenues exceed nine figures. When I first met him his business was grossing nearly $10 million. Not only has he seen a gigantic increase in his sales, but his profitability is off the charts. I fully expect to read about him in Forbes one of these days. How has he done it?

My friend is not a particularly flashy guy. He didn’t design fancy strategies or engage in crazy risks. Instead, he concentrated on taking little steps. You or I might see them individually as pretty mundane. But when viewed collectively these small steps have become giant leaps, propelling his organization to dizzying heights. What have I learned over the years about how my friend has built such a successful company?

In the early days my friend was the classic bootstrapper. He literally did everything. He and one key associate were the “executive” level management. They paid attention to the little details and obsessed over their customers. I remember urging my friend to spend more time working “on” his business than “in” it. Over time he took this to heart and began to be more strategic. But initially he was the chief cook and bottle washer as well as the CEO.

Also in the beginning, this man was allergic to debt. He re-invested his profits and made sacrifices to get through the leaner times. I suggested that he procure a line of credit to which he responded, “Why? I don’t need it.” I explained that at some point in the future he would need a lending relationship with a bank and that he should establish it sooner rather than later. He could borrow against it and then pay it right back if that would make him feel better. Ultimately he did obtain a line of credit and it was eventually quite helpful in accelerating his growth.

My friend was very particular about the business he would take. There were opportunities abound, but he showed great discipline in staying in his lane. He did not set out to be the biggest company in his industry, nor did he care if he developed a national footprint. By only taking assignments that he knew he could handle, he avoided the pitfalls that many entrepreneurs have made (including yours truly) by gobbling up every piece of business they could. At first I thought he might have an affliction of limited thinking. But I was wrong. Though it wasn’t articulated, it was obvious that he had a winning formula that was taking shape as a result of his intuition.

Over time, my friend learned how to scale his company. He gradually created the infrastructure necessary to meet the needs of more and more customers. Today he hires more than 50,000 people a year to staff the industrial operations of his customers. He attributes his continued growth to his ability to identify and value talent. The “value” part is especially intriguing. He genuinely cares about the team he has assembled. It would be easy to view 50,000 workers as a commodity. But he doesn’t. My friend goes to great lengths to make certain that everyone is treated fairly and with respect.

Above all, he’s played it straight as long as I’ve known him. He makes certain that he only hires team members who are legal and I’ve never seen him cut corners. Over many breakfast meetings and other encounters, I’ve observed this man to be grounded in principle and integrity. We’ve all heard about high-flying businesses that came crashing down when it was revealed that they had been involved in some form of cheating. My friend is Mr. Straight Arrow and has marched to that tune from Day One.

Overall, I think I can ascribe his level of success to his ability to execute. Some leaders are born to perform – my friend seems to do so effortlessly. I’m sure he’s stubbed his toe along the way. But I’m not aware that he’s made any major mistakes that would have jeopardized his future. I can’t say that he was studious about creating strategic plans and organizational charts or subscribed to the Harvard Business Review. Maybe he did. My guess is that he simply exercised a great deal of common sense and had an amazingly deep understanding of his industry.

My friend is a living example of how taking little steps can lead to sweet success. What he has done can be instructive for the rest of us as we grow and flourish as entrepreneurs.

You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Click here to listen to Audio Episode 79 – The Disneyland Story.

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.

Apologies to Rodney

Successful entrepreneurs display many different leadership traits. But there’s at least one aspect of leadership that an entrepreneur cannot just automatically possess – instead it must be earned. Of course I’m talking about Respect. Many believe that respect should be granted simply due to a station in life or perhaps a position that is held. Certainly there may be some truth to this but true respect is not something that is simply bestowed. Yes, the Queen of England, the President of the United States and other heads of state command respect. But it’s for the office and not necessarily the individual.

Rodney Dangerfield made a living as a comedian with his trademark phrase, “I don’t get no respect.” With apologies to Rodney, respect is no laughing matter. It should be viewed with the utmost of seriousness because it can be a life or death factor for businesses and organizations of all sizes. When CEOs misbehave not only is the individual disgraced but the company he or she represents is shamed as well. On September 28, 2015, the EPA announced an order to recall Volkswagen cars built from 2009 – 2015 due to software that was programmed to cheat on emissions testing. Two days later the company admitted to this malfeasance and on September 23 the CEO resigned. As of this writing, Volkswagen faces enormous financial penalties and long-lasting reputational damage that would bankrupt smaller firms. Rebuilding the respect of the public for the VW brand will be a long and arduous process. And who knows if the former CEO will ever again be truly respected.

Earning respect doesn’t just happen. There is an intentional process that is required and it consists of multiple facets. From my perspective it all starts with integrity. Do we always do the right thing even if it’s seemingly detrimental to our best interests? And do we always do the right thing even when no one is watching? Integrity cannot be turned on and off on a whim. Either it’s there or it’s not. Our team members, customers, suppliers – everyone is watching. If we keep our moral compass centered we will have taken a giant step toward the pinnacle of respect.

Hand-in-hand with integrity is authenticity. It’s impossible to be authentic and genuine without integrity. Are we comfortable enough in our own skin to be ourselves? We’ve all seen others who are struggling with inner demons and insecurities. They “put on airs” and engage in bragging and blowhard behavior. It’s pretty hard to respect someone who is living in disguise and can’t deal productively with his or her personal issues.

Entrepreneurs who have empathy and genuinely care about others are more likely to earn respect than an insensitive tyrant. Think about this. An individual is completely honest; does everything in an above board and straight forward manner; is totally authentic – but he’s also a flaming asshole. How much respect do you suppose those people with whom he interacts have for him? Treating people poorly is a fast way to lose the respect of others. The leader who is courteous and thoughtful is earning respect. The leader who shows a real interest in others and their welfare is earning respect. The leader who subordinates his needs or desires to the wishes of another, is earning respect. When a leader enjoys success but publicly gives the credit to members of his team, he is earning respect.

Consistency is the final ingredient in this recipe for respect. We can’t be hit or miss with our integrity, authenticity or in the way we treat people. Inconsistency sows seeds of doubt about our real motives. In a worst case scenario others see us as being manipulative and conniving. Clearly when we stay true to our principles we have no problem remaining consistent.

Earning respect takes time and once achieved the quest to maintain it should be sacred. Earning and keeping respect is best accomplished through integrity, authenticity, empathy and consistency.

You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Click here to listen to Audio Episode 37 – Master’s Degree.

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.

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Trust Me . . .

There’s a priceless element to an entrepreneur’s success when it comes to his or her customers, employees and investors. This element can be broken. It can be elusive. And it can be very difficult to regain when lost. Of course I’m talking about “trust.” But this isn’t so much a blog about trust as it is one of the foundational components to building trust. Let’s explore the concept of transparency.

Transparency is a word that is used a lot these days – sometimes it becomes a bit trite as well as overused. Don’t you just love print advertising and television commercials that implore us to “trust” the company peddling the product? My guard goes up when I hear this sort of naked appeal – I probably am much more cynical about companies that resort to this messaging. If we start with the premise that “trust” is the given baseline, why then, is there a need to say, “Trust me?”

If I do a poor job of delivering what I promise to my customers, I’d much rather admit in an open and honest manner that I screwed up. Too many times we see companies stonewall, deny and otherwise obfuscate when the train goes off the track. Of course this results in mistrust rather than accomplishing whatever we had hoped for by not being transparent. The old saying that the cover-up is worse than the crime certainly applies here!

Transparency begins with the basic core value of integrity. Either we have it or we don’t. We use this core value to guide us in the actions we take to fulfill transparency. I know that there are those who will say, “I’d like to be more transparent but in today’s litigious society I can’t say what I really want to say – I’ll be sued if I do!” However, there are ways to be open and honest without creating legal jeopardy.

We must also remember that most people don’t like surprises – at least not the negative kind. This is especially true when we’re working with our team members and investors. A number of years ago we acquired some land and launched a residential subdivision which turned out to be a bad idea. Shortly after we completed the purchase, installed the streets and sold our first three lots, the financial world came to an end (2008 – 2009). Our lot sales came to a screeching halt and remained very anemic for several years thereafter. We had raised substantial investor equity for this project and needless to say, the lack of sales was a difficult thing to report. Nevertheless, we dutifully wrote and sent investor reports every year laying out the facts. There was no sugarcoating nor did we try to sound overly hopeful. Eventually there was good news to report and we were naturally pleased to do so. I’ve been told by several of our investors that they never lost confidence or trust in us because we were totally transparent throughout the process. It also helped that we explained in detail what we were doing to try and solve the problem.

Transparency means getting in front of the message rather than being behind the curve. Here’s an example. We learned that a major employer was about to close its doors in a market where we had an apartment property. Immediately, we contacted the investor and let him know that this was happening and apprised him of how we thought this closure might impact the property. We also laid out our plan of action for minimizing the negative impact to the investment. He was also an investor in another property in the same market that was handled by one of our competitors. He told us he never heard from the competitor and appreciated the fact that we delivered bad news as soon as we knew it. Our transparent approach built trust and enabled us to do more business with this investor.

Transparency is one of the cornerstones of trust. By operating with integrity we are never afraid to deliver good news or bad, and share all that is relevant with our customers, team and investors.

You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Click here to listen to Audio Episode 24 – Disruptive.

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.

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The Verdict: Not Guilty!

Question: Sometimes I have to make decisions that adversely impact others. Then I feel guilty about this. Should I have this reaction or not?

Answer: Guilt is one of the most unproductive emotions we can have as humans. Why? Because often it’s used in a manipulative fashion by others. As entrepreneurs it’s important that we not buy into the guilt game. Acting upon guilt may produce very undesirable results because rational thinking is often abandoned.

It’s relatively simple to avoid the guilt-trap. All we have to do is operate with integrity at all times. This needs to be an intentional process whereby we create a set of values for ourselves and write them down. It is these values by which we will live and by which we will measure all our actions. As entrepreneurs we have to continually make tough decisions. And sometimes these decisions may not be favorable for everyone involved. But if upon reflection we determine that we have been true to our values then our integrity is intact.

I refuse to allow guilt into my life because I live my values. Yet, I’ve had plenty of situations where others try to make me feel guilty. Sometimes it’s as subtle as someone saying, “Well, I sure would have done it differently,” to as direct as, “I don’t know how you can live with yourself.” I both cases a quick check against my values confirms that whatever the issue, I handled it with integrity.

The mantle of guilt is easy to assume unless we are well-grounded in our integrity. Guilt has actually become institutionalized through certain religions and endlessly stereotyped as in “You haven’t called your mother for weeks.” Along with guilt we often find its kissing cousin . . . shame. By getting us to feel shame over our actions or inactions, the guilters are attempting to coerce us into doing something that they want us to do.

Should we feel guilt and shame if we do not operate with integrity? That likely depends upon how far out-of-bounds we might be. An illegal or immoral act may warrant such emotions. But if our transgressions are minor in nature and we recognize our mistake as a result of back-testing our actions against our values, then what point is served by succumbing to guilt and shame? The more productive response will be to learn where we went off track and not do it again.

Clearly defining our personal values and living to them shapes our integrity. And through integrity we have no use for guilt or shame.

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.

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