Written by Jay Turo on Sunday, September 22, 2013
Individual Retirement Accounts, or IRAs, in all their forms - traditional, Roth, 401k, Defined Contribution, Simple, SEP, 403(b) and 457, have become increasingly popular vehicles for private equity investing.
For the individual investor, investing in private equity via a "Self-directed" IRA has a number of key advantages:
First and foremost are tax savings - both at the time of investment and as the investment appreciates. In some circumstances - for pre-tax contributions via a SEP-IRA for example - up to $49,000 can be invested on a pre-tax (i.e. tax deductible) basis.
Secondly, the power of tax - free compounding of interest, dividends, and capital gains - via both traditional pre-tax IRAs as well as the increasingly popular (and increasingly tax-advantaged) post-tax Roth IRAs is enormous.
In high-return and payout scenarios, where there are larger cash dividends and/or capital gains paid on an annual basis, the value of tax free compounding can lead up to a doubling of total investment return when compared to taxed compounding.
And thirdly, investing in private equity via an IRA addresses "de facto" arguably the key negative of private equity investing - its illiquidity. This is because, to encourage a long-term, retirement-focused time horizon, under the IRA umbrella there are significant, structured penalties for early withdrawl.
In short, IRAs are ideally designed to house long-term investment assets with high capital appreciation potential. This is, of course, the core objective of almost all private equity investing.
Written by Jay Turo on Tuesday, September 3, 2013
Last week, I wrote about the power of business intelligence dashboards.
How, for the first time, smaller businesses can harness the power of big data to more efficiently and profitably manage their companies.
Some readers expressed skepticism that this "stuff" actually works.
That it is just more "noise” that causes entrepreneurs to get “lost in the weeds” versus long-term thinking and planning.
There is some truth to this.
Heck, “Big Data” at its worst is probably best personified by Wall Street “quant jocks” who equate positive expected value "bets" with larger, more foundational truths of right and wrong, and of good and bad.
To these concerns, let me offer a few suggestions as to how to best utilize business data to support, but not drive, leadership and managerial decision-making.
The first point is that for the vast majority of small businesses “getting lost” in the data is the least of their concerns.
A far bigger one is simply analyzing anything more than the barest minimum of balance sheet - "i.e. How much money is in the bank?" and profit and loss statement - i.e. “What were our sales last month?” data.
And when broader data, like the number of incoming leads, sales proposals, average call hold time, marketing spend per action, e-mail open and click-through rates, is analyzed…
…so much of it is either incomplete or just flat-out incorrect to make doing so an exercise in futility.
AND the data that is complete and accurate sits in so many places, Excel worksheets on the sales manager's computer, deep in a little understood (and used) CRM, in the reporting functionality of software as services like Grasshopper, IfByPhone, Constant Contact and Google Analytics to name just a few…
…that a way too high percentage of the time and energy set aside to analyze it is outright wasted in simply accessing the reports from the data sources that house it!
The simple answer to these challenges is to utilize a best-of-breed business intelligence dashboard that:
• Automatically collects and updates all the data in one easy to access place;
• Has alerts built-in to flag incomplete or way-out-out-the ordinary data; and,
• Is arranged and presented in a visual and formatted way that works for the executive reviewing it.
But it goes deeper than this.
You see, leading and managing a business based on proper data collection and analysis is no longer a choice - it is a necessity.
Because all of our best competitors are doing it.
And doing so along with proper and appropriate strategic repositioning as the consistent and correct interpretation of the data allows, affords, and demands.
Or, as David Byrne of the Talking heads once so famously said “This ain't no party…this ain't no disco…this ain't no fooling around. “
You see, when it comes to data-driven decision-making, it has become a matter of going big or staying home.
As in admitting that one is really not that serious about growing and sustaining a business of lasting value - one agile enough to adapt and evolve in the face of technological and marketplace change, and of competitive threat.
Now, I don't believe this.
No, the best entrepreneurs I know are as serious as they can be about not just surviving but thriving in this massively opportunity-filled world of ours.
Just take it one step, one click, one API integration at a time.
Sooner than you think, your business will be running more responsively, more nimbly than ever.
Then watch the profits follow.
P.S. Like to demo the Growthink Business Intelligence Dashboard? Then click here to learn more.
Written by Jay Turo on Monday, August 26, 2013
This past week, I had the pleasure and honor to present to John Morris' Woodland Hills, California Vistage Group.
For those that don't know it, Vistage is one of the world's largest CEO and business owner organizations, with more than 17,000 members in 15 countries.
This is an impressive group - leaders of companies with average sales revenues of $32 million and competing and prospering in industries that run the gamut - from services and manufacturing, to construction, retail, and real estate.
At the core of Vistage are their peer advisory groups -"Mastermind” meetings of 10 to 15 executives that over time develop a productive and high-trust dynamic through which to attain breakthroughs of insight and accountability around and about strategic, tactical, and management challenges.
Expertly moderated by trained chairs like John - a tour de entrepreneurial force in his own right as co-Founder and Chairman Emeritus of the Tech Coast Angels - Vistage groups are where the hard, methodical work of small business building and growth gets done.
I was asked by John to present on best practices, as they apply to smaller companies, of data-driven decision making and business intelligence dashboards.
It is obviously a very timely topic - as “BI” tools and software have matured in the last few years to become for the first time truly easy to use, effective, and affordable for smaller companies and organizations.
In my presentation I talked about how the companies getting the highest “BI ROI” connect the dots between their "old" and "new" school strategic planning and thinking.
They are old school (in the absolute best, non-pejorative sense of the term) in that they recognize that strategy…
…arrived at through Mastermind get-togethers like Vistage, through board and advisory board meetings, through corporate “retreats” and through any form “step back and reset” get togethers - remains fundamental in attaining and maintaining long-term business success.
And they are new school in their leveraging the very many best-of-breed business application software as services to arrive at this strategy.
Tools like CapitalIQ, Simplycast, The Resumator, Box, Grasshopper, Wufoo, Smarsh, IfByPhone, SnapEngage, Docusign, Hootsuite, Infusionsoft, and Interspire that automate traditionally laborious and repetitive business functions.
And, as they do, collect massive reams of data on much of the marketing, sales, operations, finance and management activities of a business.
And, for the first time, the technology has finally matured to where all of this collected data can be automatically organized, standardized, and consistently presented on an always-on, always-accessible, and graphically “Appleized” Dashboard.
I was thrilled that John offered me the opportunity to present both Growthink’s "Old School meets New School" business intelligence philosophy, along with our dashboard offering.
And as I did, I truly felt blessed to live and work in a time when technology has created such promise and power to allow companies to run better, easier, and more in alignment with their missions than ever before.
And as they do, well…
…the best numbers on the best dashboards are starting to show increasing piles of profit and cash, too.
Written by Jay Turo on Monday, August 12, 2013
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Last week, I talked about the communication breakdowns that occur when investors and entrepreneurs talk about risk.
Well, in most forms of angel and early-stage private equity investing, these breakdowns flow from a misunderstanding of the power and nature of outliers.
The concept of outliers and how they apply to early stage private equity investment was best described by the Lebanese thinker and writer Nicolas Taleb, in his best-selling books "Fooled by Randomness" and "The Black Swan."
In the Black Swan especially, Taleb described the nature and importance of outliers in a modern, inter-connected economy:
“What we call here a Black Swan is an event with the following three attributes. First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable."
Taleb continues, "I stop and summarize the triplet: rarity, extreme impact, and retrospective (though not prospective) predictability. A small number of Black Swans explain almost everything in our world, from the success of ideas and religions, to the dynamics of historical events, to elements of our own personal lives."
Less famous, but more helpful when it comes to designing an effective private equity investing strategy is Taleb's theorizing on how technological interconnectedness vastly intensifies Black Swan impacts.
This idea of technological interconnectedness is related - though not exactly the same – as that of the much ballyhooed Network Effect that is so much at the heart of many of the biggest technological and investment success stories of the last 15 years, Facebook, Twitter, and LinkedIN, being first and foremost amongst them.
In its simplest form, the Network Effect posits that the value of a network increases exponentially with each new user on it.
Or, in other words, the primary reason why folks use Facebook, Twitter, and LinkedIN is because there are a lot of other folks that use Facebook, Twitter and LinkedIN too.
And, as more users join, such the value for others to join grows that much greater.
And so on and so on.
Thus, one of the first screens that the intelligent early stage investor should utilize is the degree to which a network effect is present in a company's business model.
Now, let’s get to the rub of the matter as to how Taleb’s interconnectedness concept both informs and signals danger for the thoughtful investor.
Simply put, global technological inter-connectedness drives the winning business models to heights never seen before …
…and because of this, there are a lot fewer of them.
Simply put, the winners are bigger and happen faster than ever - Facebook's IPO was bigger and faster than that of Google’s which was bigger and faster than that of Microsoft’s, which was bigger and faster than that of Apple’s.
And because the winners are bigger, there are less of them.
So that giant sucking sound you hear is the consuming of so much of the energy and return in the deal economy into fewer, bigger and more lucrative deals.
To put it another way, turning $500,000 into $1.8 billion in seven years as Peter Thiel did as a small minority investor in Facebook is just not beyond extraordinary - it is also unprecedented.
And, correspondingly, returns of this scale crowd out and widely skew the distribution to fewer, higher returning deals.
Now, how should we respond to this brave new and highly challenging investing and entrepreneurial world?
Well, one obvious response is to proceed extremely carefully.
Investing in early stage private companies can be great fun and you can make money beyond your wildest dreams if the stars are aligned right doing it….
…but the probabilities of doing so in any one company or deal are low…and getting lower.
And unfortunately, this is true no matter how enthusiastic, how passionate, how hardworking, how brilliant the entrepreneur that is pitching his or her deal happens to be.
So does this mean that early stage private equity investing is for the birds? And that we all should just stay away?
Of course not.
You just have to do it right.
Next week, we’ll share how today’s most successful investors and entrepreneurs do just that.
Written by Jay Turo on Monday, July 29, 2013
A joy of my work is that I get to connect often with smart, “out-of-the box” and impressive businesspeople that can be best described as "Investors – Entrepreneurs.”
The most talented of these fine folks evaluate opportunities through the complementary perspectives of the two mindsets.
As investors, they do so dispassionately - with the lenses of risk and reward, and of expected value.
As entrepreneurs, they are more operational, more tactical.
They know that numbers on financial statements are byproducts of collective, human effort - of sales, marketing, and operational strategies and project plans, all underpinned by cultural commitments to excellence and to winning.
Now, when things get dicey is when these Investor - Entrepreneurs don't properly distinguish in their otherwise able minds where investing and entrepreneurship do NOT intersect.
The problem reveals itself in a number of ways.
For the entrepreneur, it is a cognitive dissonance, a denial of the simple fact that an incredibly large percentage of their net worth and earnings power is often concentrated in a single, and very high risk asset - i.e. their own business.
For the investor, it is the dark and dangerous side of that usually, admirable human quality of commitment and consistency.
This is the tendency we all have to stick to decisions that we have made in the past even if and when the original evidence that underpinned those decisions has changed dramatically.
The classic example of this is basing an investment decision on the original purchase price of an asset, its sunk cost, even though the faulty logic of doing so is almost self-evident.
Yet, following this truism, because of our emotional human wiring, is always far harder to do in practice than in theory.
So, how should - let’s call them “Entrepreneur Mind” and “Investor Mind” - properly work together?
Here are three ideas:
1. For Investors, view with an extremely jaundiced eye records and claims of past performance.
Let's be clear, doing so is extremely hard.
Both because of the aforementioned “human wiring” matter, and because the brokerage and insurance industries have a massive, vested interest in manipulating and exploiting this wiring to prevent us from doing so.
To best resist this manipulation, invest like an entrepreneur - pointed toward the future and leaving the past where it rightfully belongs, in the past.
2. For Entrepreneurs, just for a few moments, step in the space of not believing one’s own propaganda.
This too, is hard as what makes entrepreneurs who they are is their unshakeable and often irrational self-belief, in spite of often much evidence to the contrary.
This self-belief serves them well as leaders and as creators, but as shareholders not so much.
And as shareholders, the irrefutable principles of diversification, of long-term and global planning, and of the overriding importance of small differences in return, multiplied over time, so fundamentally apply.
3. And finally, as Investors - Entrepreneurs, to recognize good professional guidance as a success requirement, for the simple reason that one’s most dynamic competitors are getting it.
And if you are not, then you are wanting.
And in both investing and entrepreneurship, this wanting, this disadvantage, even if small, multiplied over time is usually the difference between failure and success.
What does this look like in practice?
Well, for one, a best-functioning team of professional advisors should include a great strategy and exit planning advisor, a great accountability coach, and a great wealth manager.
And they should all work together, especially and effectively toward that most natural and glorious and appropriate goal of all entrepreneurs and of all investors.
Which, of course, is asset building and earning power.
Built both slowly and methodically over time as an investor and in sudden, large green and creative shoots as an entrepreneur.
P.S. Click here to complete our survey on investing and entrepreneurship and have a free cup of coffee on us!
Written by Jay Turo on Sunday, July 21, 2013
My column last week, where I praised leaders that channeled legendary Green Bay Packers football coach Vince Lombardi’s “tough love” leadership approach, prompted a lot of responses - some nice, some not so nice (and not just from the Minnesota Vikings fans out there!).
The most thoughtful ones came back and said, “well that style maybe all well and good if you are running a factory in China, but when it comes to managing younger people (i.e. Millenials - those born after 1982) in modern service businesses, to be effective a "softer" touch is needed.
Points well-taken, so do let me offer here five "Managing Milllenials" best practices:
#5. Revel in the Importance of Company Culture. In a world where everything can and is easily and quickly borrowed, copied, and sometimes just plain old stolen - the only sustainable competitive advantage is how a company organizes and aligns, inspires and challenges its people.
Or, in a word, its company culture.
Taking it further, the modern manager is doubly vexed by the unsettling (yet exciting) reality that the plan today will almost certainly not be the plan tomorrow, and as the plan changes, so must change both individual roles and team dynamics.
And thereby so must the culture change.
Please let’s not jump over this point too quickly. It is all too easy for the ambitious, hard-working, and often older manager to just throw up his or her hands and lament over “these kids” and how “if they only knew how things were like when I was starting out” that they would think and act differently.
And how they should be just happy to have a job and not just be so – well young and self-absorbed.
Well, that is dead-end talk.
Building high-performing 21st century teams requires winning hearts and minds and doing so each day anew. The best managers REVEL in this challenge as opposed to shirking from it or whining about it.
#4. Empowering and Coddling are NOT The Same Thing. Some may read the above and shake their heads and think that this is a “coddling mindset” or entitlement culture and is exactly what has gotten us in America in trouble in the first place and a big part of why China is kicking our you know what every which way.
This is where leadership and administrative creativity are of such importance in building win-win work structures that both inspire and challenge the younger worker to work harder and get better faster.
AND allow for balance and acknowledge those aspects of work that are not so “goal-driven.”
What are these? Well, that sense of community and common cause and healthy friendship and competition that make the best workplaces, for lack of a better word, fun.
And fun, as high-performing cultures like Southwest and Richard Branson’s Virgin have demonstrated so inspirationally is - surprise, surprise - very good for the bottom line.
#3. Understand that Entrepreneurship and Youth Go Hand-in-Hand. Most ambitious young people today don’t grow up dreaming about getting that “good state job” or to work for the same company for 30 years.
Rather, and following up on that overriding sense of “specialness” with which we now raise our children, young people want their star to shine. They want to come up with the new, great ideas, and to be acknowledged and rewarded for it.
They, in essence, want all of the recognition and empowerment and self-definition and financial opportunity that attract people of all ages to become entrepreneurs.
This is a great and good thing, and is at the heart of why we live in golden, global age as young people the world over are being raised with the right kind of high self-esteems to dream and act BIG.
BUT many of even the best of them on balance do not want the headaches and heartaches and vexing, painful choices and compromises that are just as much part and parcel of the real entrepreneurial “lifestyle.”
So how do you work with this? The deep desire and burning ambition that all companies desperately want in their people on the one hand, and a wariness and even a distaste for all of the prosaic, “not fun” stuff on the other?
Well surprise, surprise, this is tough.
A general rule here is as opposed to fighting this energy, go with it and reframe the “tough stuff” as opportunities for personal and professional growth and then profusely recognize and acknowledge these “less fun” challenges are taken on.
Not easy to do for sure, but it is this leadership that both modern organizations and younger workers desperately need and want.
#2. Recognition is Key. Having 2 young sons has helped me immeasurably in understanding the sometimes gentle psyches of younger employees. Long gone are those days of fear and punishment-based parenting and schooling. Rather, understanding that a recognition-based milieu is how most high-performing young people have been raised and schooled is a key to effective organization-building.
The best guidance I have seen on effective “recognition-based” leadership comes from authors Chester Elton and Adrian Gostick in their awesome book “The Carrot Principle.”
They describe recognition done right as being “positive, immediate, close, specific, and shared:”
Positive - managers sometimes mistakenly use a recognition presentation as a time to talk about how far someone has come, or how they could have done even better. This is not the time or place. Comments must be positive and upbeat.
Immediate - too often by the time a worker is recognized for a job well done, weeks if not months have passed. The closer the recognition to the actual performance the better.
Close - recognition is best presented in the employee’s work environment among peers. Invite team members and work friends to attend.
Specific - a great presentation is a time to point out specific behaviors that reinforces key values.
Shared - typically, recognition comes from the top down; however, recognition that means the most often comes from peers who best understand the circumstances surrounding the employee’s performance. Peers, as well as managers and supervisors, should be able to comment during the presentation.
#1. Embrace Fluidity. This is perhaps the hardest reality and where the rubber really hits the road with building 21st century, knowledge-based entrepreneurial organizations dependent on younger people.
They just get up and leave.
On a moment’s notice and often for the simple and defensible reason of valuing experience and variety over the often hum-drum and slow career - building that is part of staying and growing with one organization over time.
Again, as opposed to fighting this energy, go with it. Work to design the organization and refine the business model based on relatively short tenures - say 3 years or less - and with the ability to plug new people in and have them produce quickly.
To accomplish this requires strong and well-defined training styles and processes, clearly defined and “bounded” roles and responsibilities, and a knowledge management system that captures and processes the intelligence of the organization so that it doesn’t walk out the door when that “year overseas” calls.
How About Investors?
As for investors looking for emerging companies to back, my strong suggestion is to evaluate these softer “above the line” qualities in a corporate culture and a leadership team as much as the below line technology and balance sheet factors that are usually at the forefront of an investment evaluation.
For it is the right company culture - one that gets the best out of people of all ages - that both endures and provides for success for the long term.
Written by Jay Turo on Monday, July 15, 2013
Green Bay Packer tackle Henry Jordan once famously described legendary football Coach Vince Lombardi’s coaching style as “He’s Fair. He treats us all the same – like dogs.”
Well, with the Big Data, “Moneyball” and “Freakonomics” management and investment revolutions, where it is a matter of high faith that you get the behaviors that you reward and that you measure, we are seeing a clear and strong movement back toward high accountability, no excuses “get it done or get out” management practices and cultures.
For entrepreneurs looking for organization structures to model and for investors looking for companies to back, here are four trends to watch:
1. Look for Companies That Harness the Power and Avoid the Danger of “Corporations of One.” Never before in human history has the world afforded more opportunities for talented individuals to work for themselves, by themselves.
The amazing tools of modern, virtual collaboration – text, email, video conferencing and every cloud-based business productivity application that you could ever dream of (and ever use) available in the palm of your hand - have eliminated most of the collaboration advantages of the traditional corporate form.
The smart, modern company understands when to marshal their power - in the form of utilizing contractors to fulfill bite and mid-sized projects - and when to resist it.
How? By focusing vigilantly on building distinct and equity - filled brands, strong barriers around their customers, and company cultures and management styles that demand and reward high performance and results.
2. And Ones That Let Virtuality Touch Them, but not Kill Them. With the now universal business adoption of “everything and more that was once only on your desktop is now in your pocket” mobile phones and apps, all of us worldwide are truly on line 24/7.
Books like Jason Fried’s “Rework,” Tony Schwarz’ “The Way We’re Working Isn’t Working,” and John Freeman’s “The Tyranny of E-mail” address from various angles the promises and drawbacks of virtual work.
A common theme is almost universal doubt regarding email and other tools of instant communication and the “react versus respond” culture they foster.
What to do about it? Well, continue to look for “end of email” company movements and cultures to continue to gain steam and social currency, and for social networking mainstays like Facebook, Twitter, and LinkedIN to slowly but surely lose their business luster.
Companies that embrace this re-emerging “culture of the deliberate” will have the leg up where it really counts – in more thoughtful strategic positioning and consequently, more sustainable profits.
3. And Ones That Are Learning Organizations. The pressing need for organizations to innovate or perish, and of young workers equating quality work environments with ones offering intense personal and professional development almost makes the definition of a successful company as one that propels its people forward.
This company as a learning organization motif is an old one, but never before have the reductionist pressures of virtuality combined with young worker expectations made it so paramount for companies to either grow their people or see their businesses shrink.
4. And Finally, Look for Leaders that Channel Coach Lombardi. There is a fine line between an encouraging company culture and a permissive one. Inspired by the success of high accountability cultures like Amazon, Apple, and FedEx, smart investors are backing leaders that give BOTH pats and kicks on the backside.
In a paradoxical way, the typical, high encouragement environment in which most young people (i.e. the Millennials) were raised and educated has created in them a deep desire for structure, to be told exactly what is expected of them and the consequences for poor performance.
Leading “tough” like this is hard, draining work, but is a key and easy-to-identify quality in a company poised to breakout.
Find, back, and grow with companies that embody the above and winning will be more of an everyday thing for your business and your investments.
Written by Jay Turo on Monday, July 8, 2013
Every day I see entrepreneurs trying to find that right balance between keeping their intellectual property confidential while sharing and promoting their business model - especially to investors - whose interest they so very much need to pique.
My bias generally falls strongly on the side of transparency - both because it is a virtue unto itself - and because it takes a lot of effort in our “post your business on the Internet for all to see” age to truly maintain confidentiality.
However, I have a more fundamental reason why I generally advise entrepreneurs and investors not to worry all that much about confidentiality.
Supply and demand.
Quite simply, there are so incredibly few entrepreneurs out there with the “right stuff” to actually build profitable businesses.
And those that have it are on balance, either too busy, too rich, and/or my favorite - of the should be expected ethical type that 999 times out of 1,000 – that as opposed to the problem being someone of substance stealing a business idea, that the far more likely reality is a vast and unrelenting sea of apathy toward it.
Now, this does not mean that there is no place for confidentiality in modern business.
But the reason why it is important is almost always more subtle than the fear of idea theft.
You see, for the vast majority of entrepreneurs without eight to nine-figure research and development budgets, the reason why confidentiality is important has to do with the under-appreciated context of mystique.
Oxford defines mystique as "a fascinating aura of mystery, awe, and power surrounding someone or something."
I would combine this definition with one of my favorite lessons from my long ago MBA marketing class – namely that in a modern marketplace there is zero difference between "actual" and "perceived" value.
So, in these contexts, the value of business confidentiality derives not so much from the threat of a nefarious competitor stealing an idea.
Rather, it is how the aura of confidentiality can bestow on a business that lovely element of mystique that draws people and resources to it, and does so in such a way that a nicely high perception of value follows.
And from this perception flow many wonderful things: brand equity, pricing power, and marketing effectiveness being chief among them.
Now for those who say that this is quite the cynical view of things, I would encourage them for the next seven days to not take in any entertainment media - no movies or television or Internet - nor to appreciate the lovely design of an iPhone, and certainly to not gaze fondly on an elegantly dressed and coiffed woman or man.
In other words, to suffer for just one week like the terribly poor, extraordinarily unfortunate and very marketplace mystique - deprived people of North Korea must unconsciously suffer through every day of their lives.
And then come back and tell me that mystique doesn’t matter.
So appreciate mystique - that beautiful elixir of the modern marketplace – for its own sake as the incredible gift and blessing it is.
And you entrepreneurs understand how confidentiality and discretion, when utilized gracefully and not ham-handedly, can help create it.
As for investors, look for this “you know it when you see it” quality in entrepreneurs and business models to back.
Written by Jay Turo on Monday, June 17, 2013
Holding constant for socioeconomic factors, the typical entrepreneur makes less money, works more hours and suffers more work-related stress than their employed counterparts.
And when we combine these statistics with those that show a very low percentage of businesses ever attaining meaningful profitability, it is remarkable that people ever even dream to be entrepreneurs and start businesses at all.
But start them they do!
Quite possibly the most amazing and inspiring number in all of American business is 550,000.
That is the approximate number of new businesses that are started in American each and every year.
Now these opposing statistics beg the question, “Why?”
Why would 550,000 people - who statistically are far better educated and wealthier than the population as a whole - engage in behavior that on the surface clearly seems contrary to their self-interest and dare I say, delusional?
Well, on the cynical side, many of these brave folks probably think the odds of economic success are greater than they really are.
And even if they know the odds, they think that they don’t apply to them.
On the slightly less cynical but still not totally inspiring side, one could argue that businesses are started out of boredom - out of the need for that “action rush” that in the realm of business often only an entrepreneurial endeavor can truly provide.
Inspirationally, many believe like I do that entrepreneurship is the greatest force for positive change in the world today, and they start and grow businesses to be positive change agents, on levels big and small.
They start restaurants to create and share beautiful food, service, and atmosphere.
They open day care facilities to provide quality, spirited child care for working families.
They start creative agencies - graphic design, publish relation, web development firms, and the like to leverage their business and creative talent to its most effective end.
And they start drug development and medical device companies to help people live longer, healthier lives.
And thousands of types and forms and sizes of business in between, led by entrepreneurs with aspirations big and small, driven by motivations both pedestrian and soaring.
But at the heart of all of their reasons for starting businesses, at least of the ones that survive, is that often begrudged but really most inspiring motivation of them all.
They start businesses to make a lot of money.
Now the key word in that sentence is make - as in bringing into existence through creativity, effort, and as often as not more than a little serendipity and luck, something that did not exist beforehand.
Now often, for the entrepreneur and those that back them, the touching of this money often takes many years, even decades, of under-paid, hard, and often thankless work, before a cash windfall in the form of a business sale or a public offering.
But that is a story for another day.
For now, find those entrepreneurs and businesses that can truly make money, encourage and back them, and you and the world will get to a better place.
Written by Jay Turo on Monday, June 10, 2013
GREAT businesses find the balance between:
a) Making the right changes at the right time and
b) Having the discipline to “keep on keeping on” and just doing more of what is working.
Note well that b) is particularly hard to maintain when the tasks and activities that ARE working become repetitive and lack in excitement and drama.
So how do executives find this balance - between being creative and just keeping their heads down and plowing forward?
Well, luckily in the past few years a large and impressive business literature has sprung up that codifies best practices of how to find this all-important balance.
It can best be summarized by the phrase “immersion plus spaced repetition” and goes like this:
1. Everything, of course, begins with ideas, with the best ones arising from a series of introspective strategic planning and goal-setting sessions that clarify objectives and the obstacles standing in the way of their accomplishment.
This immersive process - done at least annually but at the best companies quarterly - both defines what needs to be done and inspires all to take on the hard work of getting it done.
The value of inspiration cannot be underestimated – Thomas Edison famously said that “genius was 99% perspiration and 1% inspiration” but that 1% “spark” is uber-critical in propelling an organization through the first threshold of change.
2. But, as anyone that attended an exciting or invigorating conference or strategic planning session can attest (and as I am sure Mr. Edison reflected on often during long nights at the lab), inspiration fades over time.
Even worse, when the inspiration is not followed through on, cynicism can set in and actually leave an organization worse off than if the planning sessions were never done in the first place!
So how to avoid this distressing fate?
3. Well, by keeping the ideas, goals, and objectives of the planning session alive through their regular review and adjustment.
Think of it this way - if a well-run strategic planning session is the essence of good leadership, then repetitive goal reviews are the essence of good management.
Great managers check in with their teams as often as daily - if only for 5 or 10 minutes - to review the day’s objectives and to keep the shorter term work flow aligned with the longer term planning and mission objectives.
The old adage that the only way to eat an elephant is one bite at a time is never more true than when is comes to these spaced and repetitive management check-ins.
When done right, they measure, acknowledge, and reward incremental progress and prevent the desire for the perfect from getting in the way of the doable and the done.
Then, the organization reconvenes and reviews progress against stated goals, assesses what worked and what didn’t, and then refines and updates the key goals and objectives.
And after this next round of strategic planning, what is done?
Well, the spaced and repetitive management check-ins begin anew.
Wood is chopped, water is carried.
Following this simple but disciplined formula, over time great ideas become great realities, businesses are built, and legacies and fortunes are made.
And for investors, far more than technology these “above the line” leadership, management, and company culture disciplines separate the well-run companies to back from the disorganized ones to avoid.
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