Written by Dave Lavinsky on Sunday, January 13, 2013
Venture capitalists (VCs), unlike angel investors, are professional investors that invest other people's money. Similar to angel investors, their goal is to earn a solid return on this money. In fact, VCs are judged and compensated by the performance of their investments. As a result, they are extremely rigorous in their investment decision-making process.
Here's how VCs earn returns for their investors:
1. Finding high growth companies
2. Making investments in them at favorable terms
3. Guiding and nurturing them
4. Enacting a liquidity event. This typically occurs by selling the company or taking it public.
VCs swing for the fences and only invest in companies they think can give them a "10X" return or 10 times their money back. This is because even with all their relevant experience, the average venture capital firm will lose money on half the companies they invest in and only break even on a third. Where VCs make their money is on the approximately 20% of companies they invest in that see explosive growth and provide remarkable returns of 10 times or more on their investment.
So, the first criteria when seeking venture capital is that you can offer the potential of a 10X return to them.
The second criterion is that is your company must have significant market potential of $50 million, $100 million or more. Now, you might think that if a venture capitalist invested $100K in your company and got back $1 million (a 10X return) that they would be happy. This is not the case. This is because venture capitalists like to be "hands on" on their investments and help the companies they fund (called "portfolio companies"). And since each partner in the venture capital firm can only nurture so many portfolio companies, they want to invest in fewer companies, each of which can provide not only a 10X return, but a check of $50 million or more when it reaches liquidity.
To summarize, when approaching venture capitalists, remember the 3 hurdles:
1. Their primary goal is to make significant money from investing in you
2. You need to show them how they can earn a 10X return
3. You need to show them how your company can eventually be valued at $50 million or more
Now, if you meet these criteria, you should be a good fit for venture capital. But, raising this type of funding it is virtually impossible if you don't know what you're doing and haven't done it before. So follow this plan:
1. Develop a list of VC firms.
Start by creating a list of venture capital firms.
2. Narrow your list.
Each venture capital firm invests based on particular characteristics (e.g., some only invest in software firms), so you need to make sure your list only includes VCs that are interested in your type of venture.
3. Make sure the VC is active.
Many VC firms that have websites aren't active. That is, they aren't making new investments. You don't want to waste your time contacting and talking with these firms.
4. Find the appropriate person to contact.
This is critical. Venture capital firms are comprised of individual partners and associates. If you contact the wrong one, you'll be dead in the water.
5. Send the VC partner or associate a "teaser" email.
You don't want to send the VC a full business plan or executive summary initially. Rather, you need to send them a "teaser" email to see if they are interested. You don't want to "over shop" your deal.
Once the VC "bites" on your teaser email, the next step is generally to send them your business plan. Following that you'll do an in-person presentation(s), receive and negotiate a term sheet, and then sign a formal agreement and receive your funding check.
The venture capital raising process is a lot of work, but once you receive their multi-million check with which you can dramatically grow your company, you'll agree it's worth the effort.
Suggested Resource: In Venture Capital Pitch Formula, you'll learn exactly how to find and contact venture capitalists, exactly what information to include in your presentations, and how to secure your financing. This video explains more.
Written by Dave Lavinsky on Saturday, December 29, 2012
Isn't it funny how doing less can sometimes be the best way to get a handle on things?
Maintaining a healthy life balance is vital; not only for your health and overall well-being, but also for increased productivity in your growing business! If you're a balanced person, you are very likely to achieve your long-term goals. Because the odds are, you're going to run into both ups and downs over time. That's business.
So what would a balanced life look like for an entrepreneur? Can you recognize when one is or isn't? How can we have a balanced life when our schedules are so overwhelming?
Fortunately, there are some tips and tricks that will help you regain balance and control of your life. When you will see the first results, you will be a lot more motivated to work hard (when it's time to work), and play hard during the time you choose to reserve for that vital part of living.
The secret lies in changing one thing at a time; you need to make small adjustments in order to see what works for you and what doesn't. Slowly but surely, you will get a brand new set of positive and healthy habits!
Here you will find 9 simple yet effective tips that will help you regain control of your life:
1. The weekend is all yours!
As soon as Friday afternoon comes, simply get away from everything that bothers or stresses you. I've heard all sorts of excuses - I know it's hard, trust me, but try to do it completely at least one day per week.
You will be amazed to see how good you will feel without the hustle and bustle of projects and to-do's. Spend some time with your close friends and family: a nice dinner, TV/movies, and even some board games will help you relax after a tensed week at work! I figure it will be waiting for me Monday, so why not tackle it in a relaxed state of mind?
[Note: if your business operates on weekends, figure out your slowest day and at least take that one day off; you need time off!]
2. Make a selection
Write a list and get rid of everything you do not need or that does not add value to your business or life anymore. Simply eliminate everything that has become a stress factor for you and is no longer worth the investment...no mercy!
3. Don't neglect your health!
Everybody knows that it is better to prevent than to treat, so make sure you pay attention to your health. Stress can have devastating effects on both your physical and mental health, and that reflects on your life. Eat healthier, sleep more than you used to, and do some kind of fun, physical activity regularly-your customers and clients will see the difference in no time!
Importantly, put your health into your routine. For me, everyday after work I head straight to the gym or go for a run outside. Because this is part of my daily routine it's easy to do, and I always do it.
4. Get rid of toxins
The term "toxins" refers not only to what we eat or breathe, but also to those toxic people that surround us. Keep an open mind and gather positive, cheerful people around you. Their positive energy is addictive!
This also includes avoiding toxic people; not always easy, but it has to be done.
5. Spend some time alone
If you have a busy schedule like I do, then you certainly know how difficult it is to spend some time on your own. As difficult as it may be, spending some time alone is of utmost importance-it not only relieves stress, but it also encourages creativity! Do something relaxing, something you enjoy doing. You deserve some time for yourself.
6. Strengthen connections with friends and family
They are the most important people in your life and they deserve a place in your busy schedule. Talk to your friends and family, invite them over for dinner, have a cup of coffee with them. Your loved ones are the constants throughout the fast changes of your growing business.
No successful person has ever told me they wish they had spent less time with their friends and family during their careers. Rather, it's the opposite, they all wished they had spent more time.
7. Treat yourself! You are important, never forget that
Get a new haircut, buy a new shirt, get your nails done, schedule a massage, or go shopping! Isn't that why we got into business in the first place...to have some perks here and there? Being dedicated to your business doesn't mean being austere. Being dedicated to your own well-being, however, will absolutely help you perform at work.
8. Expand your horizons
Leaders make better decisions when they have knowledge in a variety of fields and topics. Try to know more about the world that surrounds you-take a stroll in the park, visit a new town or country, attend a local performance, read or watch something outside of your norms. Try something you haven't done before!
9. Last but not least, remember to laugh
Laugh as loud as you can! Have fun, play or learn new jokes and you will see how beautiful life really is! Being a successful entrepreneur is a long and hard journey; you need to laugh and have fun along the journey!
Keep these nine tips in mind as you celebrate the New Year, and make them part of your life in 2013 so you achieve more and have more fun doing it!
Written by Dave Lavinsky on Tuesday, December 25, 2012
One problem many entrepreneurs and small business owners run into is that they are simply thinking too small. I often have readers writing to me asking for help getting their business ideas off the ground. I also often hear from folks who have run their small businesses into the ground.
You may have heard of the expression "Shoot for the moon...even if you miss it you'll land among the stars." Plan big and even if you only get halfway there, you're still further than if you planned small.
Here are five key areas where it's possible to think too small - and doom your business to failure.
1. Too Small of a Niche
Is your niche too small? Finding a popular market for your business to target is critical to your success, but sometimes people narrow down their niche too much.
For example, while doggy dental products could be a wonderful niche (as almost any dog owner can attest) you could narrow your focus down to a certain type of dog (such as German Shepherds). But going for one specific breed might be taking it too far, as it would reduce the pool of available buyers by 90% or more (my best estimate on dog breed ownership percentages :).
2. Too Small of a Target Market
Is your target market too small? If you are looking only at one community or small geographic region then you may well doom your product or service to failure.
It is far too easy to saturate a small market and for any marketing mistakes to end your campaign before it gets off the ground. In today's economy, with the availability of global marketing you need to think bigger when you are planning your target market.
Even if dominating your local market is your initial goal, make sure that you're ultimately heading for something greater or you might become a big fish in an inadequately small pond.
3. Too Small of a Budget
Is your budget too small? You don't need a million dollar advertising budget, but you should have some seed money to get your business and its marketing campaign off the ground.
It is possible to build a business from nothing but it is also a lot more difficult and you might find yourself making some mistakes that cost you a lot more down the road than putting a little money up front.
In fact, when planning a project or borrowing money, come up with a figure of how much you'll need and then double it! No one wants to come back to the well later when they run out.
4. Too Small of a Schedule
Is your schedule too small? Do you have enough time to devote to your business? Starting, running, and growing a business takes time. Some people get swept up in the planning and dreaming stages and never really start their business. Other people start before they have completely planned everything out and quickly get mired down by unexpected difficulties.
Some others do everything right in the planning and startup but once the business is running they get overwhelmed by day-to-day business and never think about ways to improve and grow their business.
Schedule some time right now to work on growing your business - launching whatever the next project is that will increase your profits and/or the value of your company.
5. Too Small of a Mindset
Is your mindset too small? You need to open up your mind's eye to see new possibilities, and continually seek new opportunities to find new customers, new potential partners, new ideas for products/services, and new marketing opportunities.
Flexibility and adaptability are key to survival in today's rapidly-changing business climate and you always need to have new ideas cooking to grow and expand your market and your business.
This means raising your head up and out of the trenches once in a while. Yes, you might need to dodge the occasional missile lobbed your way but this is the only way to see those opportunities.
If you do your best to avoid these 5 ways of thinking small, you'll have removed the single largest obstacle to growing your business...yourself.
Written by Dave Lavinsky on Thursday, December 20, 2012
"I always knew I'd be a millionaire by age thirty-two. In fact, I am going to be the richest black woman in America."
Oprah Winfrey said this in 1987.
And then it took her 19 years to accomplish this goal.
So, how did Oprah achieve this incredible feat and become one of the richest and most successful people in the world.
Well, the first thing she did is set her goal. Seems simple enough, but the vast majority of entrepreneurs don't have concise goals that they physically write down (or type and print out).
Do you have a written goal for your company? If not, create one now using these two guidelines:
1. Be specific. Of course you would like your company to be successful. But how successful? Do you want it to generate $5 million? $100 million? Do you want to eventually sell it? If so, for how much? And when?
The more specific you are with your goals, the more likely you will be to achieve them. And, because they are specific, you will be able to measure your progress towards achieving them.
2. Make your goals realistic. This does not mean you can't set a goal of taking your company public with a billion-dollar market capitalization. But such a goal would be unrealistic if you're running a single restaurant with no plans to develop new locations.
So, make sure your goals are realistic with respect to your business. And go ahead, be aggressive. As Donald Trump said, "As long as your going to be thinking anyway, think big."
Once you've set your long-term goals, the key is to break them into smaller pieces that you can attain in shorter periods of time. For example, over the past year, one of my key goals was to publish my book, Start At The End. In doing so, I created a series of smaller goals including:
- Write the book proposal for the publisher
- Outline the chapters
- Write chapter one, chapter two, etc.
- Edit the book
- Send copies to reviewers in seeking testimonials
- Create the interactive workbook
- Create that book website
Completing all of these tasks took hundreds of hours over many months. But it got done, because I laid out the steps and methodically completed each one.
To do this in your business, figure out what you'd like to accomplish in the next year that will progress you towards your long-term goal (that you developed above). The key question being: what portion of your long-term goal can you accomplish in just one year?
For example, if you ultimate goal is to get to $20 million in annual revenues, what must your revenues be 12 months from now? And if you envision ultimately having 200 employees, how many must you hire and train within the next year?
Once you do this, you'll know what your ultimate goals are, and your goals for the next year. From here, you must continue to work backwards. What are your goals for the next quarter, next month, next week?
By creating your big goal and then breaking it down into smaller goals, you can ultimately figure out what you need to accomplish each and every day to move closer to achieving it. Because that's all you can control right now -- what you do today. And then tomorrow, you can control and do what needs to be done tomorrow. And so on.
As the New Year approaches, make sure you determine the ultimate goal for your business and your goals for next year. Then figure out your goal for next month. And then do whatever you can to accomplish that goal next month.
After doing that, you might adjust your ultimate and/or annual goals. That's fine. You will have made real progress, and whatever your goals, you will have moved closer to achieving them. Just like Oprah Winfrey did every day, week, month, quarter and year for 19 years.
If you'd like additional guidance on setting your ultimate goals and working backwards to create shorter term goals and an action plan for achieving them, pick up a free copy of my book, Start At The End: How Companies Can Grow Bigger And Faster By Reversing Their Business Plan.
Written by Jay Turo on Monday, December 17, 2012
I had the great good fortune this past weekend to co-host Growthink's third and final Business Blueprint Live event of the year.
This is a conference where entrepreneurs and business owners gather for three days and nights to dream, plan, and network as to how to best grow the revenues, increase the profits and better fulfill the missions of their businesses.
What is really neat is that because of its longer group and in-person format, there is time and space to really listen and, correspondingly, to be heard and to share best business practices, ideas, and inspirations for the New Year.
Golly - what a weekend!
The attendees that ventured from near and far and from the comforts of their homes and regular routines took a chance.
The chance that by "mixing it up a bit," that breakthroughs would follow.
And they did.
From a medical device entrepreneur having that flash of insight as to how to best position his business for a strategic sale, to the software entrepreneur reflecting on how best to integrate a traditional marketing channel (radio) with a burgeoning one (texting), new and powerful business ideas and tactics were hatched and committed to.
And I was reminded of an old wisdom that I forget way too often.
It goes like this: when there is something “nutritious” in my life and business that I am resisting, it is that thing that above all else I need and should be doing.
It could be getting up early and doing that workout.
Or not having that second glass of wine.
Or sending those holiday cards.
Or taking that vacation.
Or, in business, making that call, writing that plan, structuring that partnership.
Going to that meeting, that conference.
And when you do, hold nothing back.
Don’t let any nagging doubts about whether this strategy, this decision, this job is the right one.
Just dive in.
Wasn't this so much at the essence of Steve Jobs' genius? This full commitment to do with fierce excellence whatever it was that he was working on at that particular time?
I saw and felt this full engagement this weekend.
Those there were fully there.
And from this full engagement, millions of dollars of business and conceptual breakthroughs and lovely relationships naturally flowed.
And when I reflect on these amazing outcomes, and then when I think back to the resistance I felt of not wanting to organize, not wanting to go to the event…
Well, it hits home that so important wisdom that when I really don't want to do something that I know in my heart that I should…
…well that is the exact thing that I must do.
And then let the magic happen.
Written by Dave Lavinsky on Wednesday, December 12, 2012
The Jumpstart Our Business Startups Act (called the JOBS Act) was passed with support from Republicans and Democrats alike and signed by President Obama in April 2012.
In this article, I will give you an overview of the JOBS Act and most specifically its potential for equity-based crowdfunding, and give you an update on what's occurred since April.
[And for a little trivia, the term "the skinny" as used in my title was coined during World War II. During the war and for years thereafter, military orders in the Marine Corps were copied on paper that resembled the skin of an onion. It was extremely thin and fragile, and translucent in appearance. Orders written on them were referred to as "the skinny."]
The JOBS Act makes equity-based crowdfunding much easier
The JOBS Act makes it possible to raise funding from investors and donors through certain crowdfunding sites in exchange for equity in your company.
If you have tried to raise funds in the past by going a public offering, you'll know that it's expensive. Being able to bypass this is huge, especially if you are raising smaller amounts of funding.
The passing of the JOBS Act also means you won't have to seek out accredited investors specifically (people with incomes of $200,000 or more, or a net worth of $1,000,000 or more-not including their residence). You can receive funds from people of all income ranges, which makes the pool of potential investors MUCH bigger.
What's happened since April
When the JOBS Act was past in April, the SEC (Securities & Exchange Commission) was given until January 1, 2013 to propose the specific terms by which equity-based crowdfunding would operate.
For example, the SEC wants to make sure standards are in place with regards to how much money individual investors can invest (e.g., what portion of their annual income), the type and amount of information companies must show prospective investors, how to monitor the amount of money raised by individual companies, measures to protect against fraud, etc.
However, with just a couple weeks left before January 1, the SEC has not come to an agreement on how things will operate.
One key event which is probably both good and bad is that current SEC chairman Mary L. Schapiro announced last month that she will step down this month. Elisse Walter, one of the agency's commissioners is expected to fill the position. The bad news with regards to this changing of the guard is that it will most likely slow the finalization of equity-based crowdfunding laws beyond January 1st. The good news is that once Walter takes the helm, we can expect the SEC to come to decisions more quickly.
Massive Spike in Crowdfunding Websites
In January 2012, according to the North American Securities Administrators Association, there were less than 900 websites whose names included the word "crowdfunding" in them.
Today, there are nearly 9,000 of them. So, once equity-based crowdfunding laws are set (probably within a few months), there will be many, many websites upon which entrepreneurs will be able to raise crowdfunding dollars.
Preparing for Crowdfunding
Whether you want to raise crowdfunding today via rewards-based crowdfunding, or wait until 2013 for equity-based crowdfunding, here are some things you can do:
1. Broaden your network: the key to Crowdfunding is marketing; the more people that trust and like you, and/or who are convinced you have a winner, the more money you will raise. So continue to network both online and offline to expand the network of people who know and like you.
2. If you're already in business, keep growing it: As with any kind of funding, you will be in a much stronger position to ask for funds if you can demonstrate success in the past. So keep doing whatever you can to progress your business without funding.
3. Work on your business plan: Make sure you have a solid plan for how much funding you need, how you will spend it, and what effects it will have on your operations and revenues. You don't want to raise too much or too little, and once you raise your funding, you want to most effectively use it.
Crowdfunding is an extremely interesting and exciting new way to fund your business. It has grown dramatically as a funding source over the past two years and is poised to grow even more in the coming months and years once the JOBS Act laws are finalized.
Written by Dave Lavinsky on Sunday, December 9, 2012
There are several reasons why you'd want to build systems and processes in your business. The main ones are:
1. Precision and consistency. By having set processes for how tasks should be completed, you will get consistent quality results.
2. Time and money savings. When employees know precisely how to do something and do it the same way each time, they eventually become much better and faster at performing the task. This saves time and money, and gives you a competitive advantage.
3. Scalability. When you have set processes for completing tasks, it's much easier to hire and train new employees and grow your business.
4. Free your time and build business value. Developing and implementing systems allows your business to run without you. This frees up your time to focus on building your business further (and taking time off) and makes your business more attractive and valuable to potential acquirers (because it's not dependent on you and the acquirer can see how the business could continue to scale and provide value).
Each of these are compelling reasons to build systems and processes in your business, and is why building systems is one of the pillars of an 8-figure business.
Here are 4 simple steps to follow to develop systems in your business:
Step #1: Look at your current business processes
In developing your business systems, you should first look at the key tasks and processes your company performs on a daily basis.
For example, if you operate a laundry business, your business processes will include cleaning the laundry machines, managing customer drop-off orders, sweeping the floors, paying the bills, ordering supplies, etc.
Next, assess each of these processes to figure out which ones to focus on systematizing first. For example, figure out which processes, if improved, could most improve customer satisfaction, revenues and/or profits.
Step #2: Develop your business systems
Once you've identified the initial process(es) to improve, it's time to develop your business systems. In developing your systems, start with the outcome, that is, how should the task or process look at the end when it is completed flawlessly.
Then work backwards to figure out the best steps to achieve that outcome. When doing that, and comparing this to your current processes, try to look for the most efficient steps and eliminate any unnecessary ones.
Importantly, in doing this, you must write down the system on a sheet of paper. Yes, it's as simple as "Step 1, do this" and "Step 2, do that." The key is to make it easy and foolproof so any of your employees could follow it.
Step #3: Test and redesign your system
When I develop a new system, I like to complete it myself a few times in order to test it.
Importantly, when doing this, I look at the most challenging and/or time consuming parts of the system and then brainstorm ways to improve it. Consider this: if you create a process that allows a task to be completed in 9 minutes instead of 11 minutes, and that task is done twice a day by two employees, that improvement will save your company 49 hours of labor each year.
Also look for routine things that can be automated, such as the payment processing. For instance, manually writing customer receipts might take a minute while an automated register could create a receipt in seconds.
Step #4: Test-run with the team
Once you're done with redesigning your first business system, now is the time to implement it. To make teaching others faster, it helps to prepare as much as you can, and to actually demonstrate or allow them to see a demonstration of how the work is to be done.
If you're there in person, show them or have them watch someone in action to model going through the system. If it's work that is done on a computer, create a screen recording so others can watch to learn it.
The best way to train employees is by having them perform the process on a real-life order or project. Then the work that needs to get done is completed, and you get to see their performance and give feedback.
Then, over time, encourage your employees to try to improve your existing processes and systems. Have your checklists and flow charts readily available so they can follow them and propose new ways of doing things. Because as more and more of your business' processes become systematized, and your systems become better and better, your revenues and profits will soar and your business will be the envy of your market.
Written by Dave Lavinsky on Thursday, December 6, 2012
There is a big difference between marketing and sales. The act of selling generates revenue when a product is sold. Marketing, on the other hand, is the act of attracting attention, branding a product or person, and creating a buzz that will eventually result in sales.
Peter Drucker once said, "The point of marketing is to make selling superfluous." In layman's terms, this means that if you do a great job of positioning your business in your ads and build a strong reputation, you won't have to do a lot of convincing and selling once prospects come in the door (or to your website). They will already be convinced that are the right company for them.
Below are 5 marketing strategies to use to make selling superfluous and to grow your business.
1. Improve Your Unique Selling Proposition (USP)
Having a strong unique selling proposition (USP) is a critical element of your marketing plan. Your USP separates your product or service from your competitors. It makes your product or service a "unique, must have" item.
In fact, the USP of Domino's Pizza: "Fresh hot pizza delivered to your door in thirty minutes or less, guaranteed," has widely been credited as the reason for the company's success in a highly competitive and fairly commoditized business.
Ideally you can come up with a great USP for your company like Domino's did. But at the very least, you must be able to clearly articulate reasons why customers should buy from you instead of competitors.
2. Use Multiple Marketing Channels
Once you have the right USP, you want as many of your target customers to hear it as possible. That's why you need to market yourself through multiple channels. The key is this: the more channels you use, the more prospective customers will hear about you. Importantly, some of your target customers prefer one channel (e.g., print newspapers) while others may prefer a different channel (e.g., radio ads).
While one marketing channel may be the most profitable for you, the more marketing channels you can make work for you, the more you will be able to dominate your market.
So, which of the following marketing channels can you start using?
- Direct Mail
- Email and Print Newsletter Marketing
- Event Marketing
- Press Releases/PR
- Print Ads
- Radio Ads
- Search Engine Optimization and Marketing
- Social Media Marketing
- TV Ads
3. Understand Your KPIs
"KPIs" or Key Performance Indicators are the metrics that judge your business' performance based on the success you would like to succeed.
Knowing your KPIs and constantly working to improve them is critical to your marketing. For example,
- How many leads do you generate per dollar of advertising (per channel)?
- What % of your leads turn into buyers?
- What is your average revenue per sale (and have you improved this through upselling, cross-selling, etc.)?
- How often do your customers buy from you?
The more you understand and improve your KPIs the more your revenues and profits will grow. In fact, creating and managing your KPIs is one of the pillars of an 8-figure business.
4. Make Buying From You Easy
We've all been to businesses that don't accept credit cards. Or they only accept certain kinds of credit cards. As a result of this, they lose out on some customers. So make sure you offer multiple purchase options, from credit cards to possibly payment plans.
Likewise, you can make buying from you easier by having your products and services distributed elsewhere. For example, if you offer a physical product, you can also sell it on Amazon.com or eBay among other website. These are essentially buyer search engines; people are searching them for things to buy - what a perfect place for your product to show up. Or, if you offer a service, you can develop joint venture partners who sell it to their customers.
5. Provide the Right Information to Prospective Customers
Remember how good marketing will make selling superfluous? Customers need certain information in order to make a decision.
Specifically, be sure to provide information educating your customers on how your product or service can 1) solve problems and/or help them avoid pain, 2) improve their lives and/or increase their pleasure, and 3) save customers time, as that's a growing need for customers today.
Convey this key information in graphics, articles, videos, case studies, interviews and/or any other way that your prospective customers prefer to consume information.
By following these 5 marketing strategies, you can dramatically grow your sales and profits, and not have to resort to high pressure selling.
Written by Dave Lavinsky on Tuesday, November 27, 2012
With the 2012 presidential election wrapped up, and January's inauguration looming on the horizon, life is getting (somewhat) back to normal in the United States. But the past few months have been filled with stories of great presidents, leadership and change, and tales of how those have impacted America's direction over the course of the past few centuries.
A few good presidential examples can be used to guide a business toward success, as well. Business owners would do well to follow a few of the examples set by Abraham Lincoln, long considered one of the most respected presidents in American history. His reputation is not an accident; instead, he carefully crafted an expert team, sought leadership from multiple subordinates and cabinet members, and turned debate into his best chance for success.
And while it's true that business owners won't be fighting any wars, Lincoln's policies of leadership and discussion are a powerful way for entrepreneurs to get ahead and maintain strong footing in their industry.
You CAN Hire Others Who Disagree with You
One of the most notorious aspects of Lincoln's administration was that it was largely comprised of his rivals. One of the best examples of this is Lincoln's choice for Secretary of the Treasury. The job is typically reserved for those who agree with the president's policies, and have a strong desire to remain above the political fray while ensuring the nation's fiscal sanity.
Lincoln saw it quite differently, instead believing that the Treasury -- and every other department -- should be run by someone who was highly capable of the job, regardless of their ambitions, political viewpoints, or personal relationships with the president.
Lincoln boldly appointed Samuel Chase to the lead the United States Treasury. Lincoln did this despite Chase's well-known political ambitions, and his thinly-veiled efforts to undermine Lincoln for his own political gain.
The same pattern can be seen in Lincoln's appointment to what was then known as the War Department. Secretary of War Edwin Stanton rarely saw eye-to-eye with Lincoln on policy matters. He was the best man for the job, however, and that was good enough for Lincoln.
At every turn, Lincoln followed a basic business philosophy: hiring capability, regardless of ideology. Business owners could learn from this example, as we often expect the ideal worker or partner to look or think a certain pre-conceived way, which blinds us to possibilities.
Rather than leading without any debate or argument, and rather than picking those who merely agree with everything we, the business owners, believe, pick a team full of rivals and strong-minded professionals who will set the business up for success. All ideas will be properly debated, vetted, and implemented -- but only if they're the best ones for the business.
A business that enjoys healthy debate among its employees and leaders is one that makes the best decisions for the entire company, rather than the best decisions for the company's owner. Out of a brief ideological struggle, a commitment to sound leadership and decision-making can emerge.
Shoulder the Blame and Share the Credit
Abraham Lincoln was well-known as the type of leader who preferred to share credit with his expert cabinet members, while also shouldering the blame of the administration's failings. In fact, he often shouldered the blame for issues that weren't entirely of his own creation.
That type of compassion and leadership is often missing in business, and it creates an adversarial environment that can be damaging to the growth of the enterprise.
Small businesses need to work as a team. That team can debate (sometimes for days on end), but they must work to create goodwill at the end of the day (and individual team members cannot be blamed for problems). When everyone feels good about their coworkers, and about how their ideas are being integrated into the growing company's policies, they're more motivated to do the best job they can.
Additionally, happy employees and executives are more loyal in their positions -- preferring to stick with a business through the good and bad times, as opposed to jumping ship to a competitor or starting their own company.
It was Abraham Lincoln who said, "Give me six hours to chop down a tree, and I will spend the first four hours sharpening the axe."
Lincoln knew that before you can achieve success, you must prepare. You must know where you want to go and what you want to achieve, and then create the plan to achieve it.
Have a Commitment to Leadership
Above all else, what Abraham Lincoln showed during his time in office was a commitment to excellent leadership. It takes a very strong individual, and a very capable manager, to hire a team of rivals. After all, a lesser man or woman would find themselves overwhelmed and entirely too stressed by constant debate over company policies.
Lincoln, however, thrived on the discussion. Discussing his views was something he enjoyed; conflicting ideas helped him moderate his own views and policies, allowing him to best enact policies for the majority of a war-torn nation.
In today's business climate, it's all too easy to get wrapped up in a self-centered drive for success, especially for small business owners working mostly alone. But when that motivation is expanded to a larger team, and their conflicting viewpoints are brought in as part of the company's policies, the whole organization stands a better chance of making sound decisions.
With shared credit, proper planning, the right employees (who don't always agree with you), and an understanding leader (You!), your business can grow carefully and strategically, making strong tactical moves that set it up for more sales and profits, and continuous growth.
Written by Jay Turo on Monday, November 26, 2012
Take this short quiz to find out:
Are your revenues growing month after month without fail?
Are your profits rising, and allowing you to pay yourself enough money to spend freely on the things you want?
Do you have plenty of customers, with no need to get more?
Do your employees care as much about the success of your organization as you do?
Do you have enough cash flow to radically grow your company?
Would your business thrive if you took the next month off?
Are other companies regularly approaching you to buy your company?
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with no growth and declining profits.
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