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 Dave Lavinsky on Monday, July 15, 2013
I wish I could just say that if you do X, Y & Z, you'll magically raise millions of dollars for your venture. But unfortunately, that's not how raising capital works.
One key reason for this is that most sources of money, like banks and institutional equity investors (defined as institutions like venture capital firms, private equity firms and corporations that invest), are essentially professional risk managers. That is, they successfully invest or lend money by managing the risk that the money will be repaid or not.
So, your job as the entrepreneur seeking capital is to reduce your investor or lender's risk.
For example, let's say that two entrepreneurs want to open a new restaurant. Which is the riskier investment?
• Entrepreneur A has put together a business plan for the new restaurant.
• Entrepreneur B has also put together a business plan for the restaurant...and he has also put together the menu, secured a deal for leasing space, received a detailed contract with a design/build firm, signed an employment agreement with the head chef, etc.
Clearly investing in Entrepreneur B is less risky, because Entrepreneur B has already has already accomplished some of his "risk mitigating milestones."
Establishing Your Risk Mitigating Milestones
A "risk mitigating milestone" is an event that when completed, makes your company more likely to succeed. For example, for a restaurant, some of the "risk mitigating milestones" would include:
• Finding the location
• Getting the permits and licenses
• Building out the restaurant
• Hiring and training the staff
• Opening the restaurant
• Reaching $20,000 in monthly sales
• Reaching $50,000 in monthly sales
As you can see, each time the restaurant achieves a milestone, the risk to the investor or lender decreases significantly. There are fewer things that can go wrong. And by the time the business reaches its last milestone, it has virtually no risk of failure.
To give you another example, for a new software company the risk mitigating milestones might be:
• Designing a prototype
• Getting successful beta testing results
• Getting the product to a point where it is market-ready
• Getting customers to purchase the product
• Securing distribution partnerships
• Reaching monthly revenue milestones
The key point when it comes to raising money is this: you generally do NOT raise ALL the money you need for your venture upfront. You merely raise enough money to achieve your initial milestones. Then, you raise more money later to accomplish more milestones.
Yes, you are always raising money to get your company to the next level. Even Fortune 100 companies do this - they raise money by issuing more stock in order to launch new initiatives. It's an ongoing process-not something you do just once.
Creating Your Milestone Chart & Funding Requirements
The key is to first create your detailed risk mitigating milestone chart. Not only is this helpful for funding, but it will serve as a great "To Do" list for you and make sure you continue to achieve goals each day, week and month that progress your business.
Shoot for listing approximately six big milestones to achieve in the next year, five milestones to achieve next year, and so on for up to 5 years (so include two milestones to achieve in year 5). And alongside the milestones, include the time (expected completion date) and the amount of funding you will need to attain them.
Example: Launch billboard marketing campaign over 6 months, spending $18,000
After you create your milestone chart, you need to prioritize. Determine the milestones that you absolutely must accomplish with the initial funding. Ideally, these milestones will get you to point where you are generating revenues. This is because the ability to generate revenues significantly reduces the risk of your venture; as it proves to lenders and investors that customers want what you are offering.
By setting up your milestones, you will figure out what you can accomplish for less money. And the fact is, the less money you need to raise, the easier it generally is to raise it (mainly because the easiest to raise money sources offer lower dollar amounts).
The other good news is that if you raise less money now, you will give up less equity and incur less debt, which will eventually lead to more dollars in your pocket.
Finally, when you eventually raise more money later (in a future funding round), because you have already achieved numerous milestones, you will raise it easier and secure better terms (e.g., higher valuation, lower interest rate, etc.).
It might surprise you what you can accomplish with less money! So write up your list of risk mitigating milestones and determine which must be done now and which can wait for later, focusing first on what is most likely to generate revenues.
Suggested Resource: Want funding for your business? Then check out our Truth About Funding program to learn how you can access the 41 sources of funding available to entrepreneurs like you. Click here to learn more.
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 Dave Lavinsky on Sunday, July 14, 2013
The other day I wrote an article entitled "10 Obstacles That Are Limiting Your Growth." In it, I revealed 10 common things that block entrepreneurs and business owners from achieving the success they deserve.
Those 10 obstacles included:
1. Lack of Skill
2. Bad or Negative Attitude
Written by Dave Lavinsky on Thursday, July 11, 2013
There are many mental and personal blockages that can hinder you from achieving your full potential in business. Blockages in business can be compared to fatty deposits around your arteries that impede blood pumped from the heart from reaching its destination.
For you to succeed in your business, you must identify and eliminate such blockages promptly.
Here are 10 common blockages that can impede your success. As you read through the list, mark any of them that might be affecting you and/or your business:
1. Lack of Skill - As information increases, many business owners soon find out that there is much to learn. Whether it's getting up to date on new tax laws, learning about social media, or practicing negotiation techniques, take the time to keep your skills sharp.
2. Bad or Negative Attitude - While it may be easy to learn new skills, attitude is what makes or breaks a company. Whether you think you can or think you can't - you're right! Check your attitude frequently.
3. Lack of Focus - I always tell people that if they do one thing, they can do an A+ job; but that the second they do something else, they can only do a B+ job on each. And the bottom line is that to succeed in business, you must do an A job or better. So, make sure you focus on specific projects so you can excel at them.
4. Procrastination - Procrastination is high among the top five time wasters. Creating deadlines is an effective way of preventing procrastination. Though it may feel restrictive or even stressful, having a deadline can activate your brain and infuse new thoughts and ideas.
5. Monotony - It pays to try out something new once in a while. There is always a new instructional video with a different method from the text book methods learned in school. Doing something differently offers you the necessary relief from the routine and repetition that is common in many businesses.
6. Control Issues - Sometimes the tiny voice in your head may urge you not to give up control, so you end up micromanaging everything. It is important to have faith in the people you hire. Hiring qualified people for your business helps you to focus on specific tasks and minimizes your chances of overworking yourself.
7. Overworking Yourself - Sometimes you may overwork yourself even without realizing it. When you get overworked, you become less productive. Take it easy, go on vacation if possible. Your decision-making abilities become compromised when you are tired. Stick to a schedule and get some rest.
8. Seeking Approval - In business, you may sometimes unconsciously or even consciously wait for someone to encourage you or give you permission to take a step. Acknowledge your own abilities and make decisions on what is best for business, not based on pride of emotional approval.
9. Lack of Creativity - Keeping a journal can remedy a lack of creativity. Sometimes a new idea will pop up at a random time or place. Jotting down ideas and inspirations helps to unblock your mind. Apart from noting down random ideas for future reference, journals provide a useful way to track personal progress.
10. Thinking Small - With the current technological capabilities, it is easy to access success stories. Surround yourself with people who think big. Read books, blogs and watch motivational videos, etc. In business, if you aim low, you strike low. Aim high.
How many of these blockages did you circle? There is no right or wrong answer. Whether you picked one or twenty, you have work to do. Study the blockages you marked and start with the one you feel is impacting you the most.
Work on removing this blockage for 30 days. Then pick the next one that is having an impact on your business and start working on that one. As you stretch beyond your comfort zone and tear down barriers, your business will grow.
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 Dave Lavinsky on Sunday, July 7, 2013
What Is Crowdlending?
In brief, Crowdlending is when individuals lend you money.
This is important because oftentimes banks don't want to lend money to entrepreneurs and small business owners.
Crowdlending eliminates the banks as an intermediary and allows individuals to lend money to other individuals. Another name for Crowdlending is "peer to peer" lending.
A Brief History of Crowdlending
Crowdlending has been around for several years. The biggest two Crowdlending companies/websites are Prosper and Lending Club.
While the crowd-loans on these sites are structured as personal loans to the business owner, they can be used for business use. For example, small business owner and clothing designer Lara Miller has received three loans via Prosper which she used to launch her new website and clothing lines.
Clearly, you could consider taking a loan for your business from a friend or family member. However, with Crowdlending, you have a much larger number of potential lenders. Also, while not being able to repay your loan is always a terrible situation, it's clearly worse when you know and see the lender often.
Additionally, many individual lenders on Crowdlending websites take a portfolio approach. That is, they lend to several people. So one of their loans defaulting may not be devastating to them as it might to a friend or family member making just one loan.
Debt Versus Equity
In brief, raising equity is selling shares of your company. You are not required to pay interest on the funding or the principal back. However, the investor owns a piece of your company and if/when you exit, they will take their share.
Conversely, with debt, you have to pay both interest and the principle back.
It is important to note that equity is oftentimes MUCH more expensive than debt in the long-run. Let me give you a simple example.
Let's say you sell 40% of the equity in your business for $1 million. A year later, you are able to sell your company for $10 million. The investor would get $4 million of the sales price (40%). So, the cost to you of the $1 million investment was $4 million.
Conversely, let's say the investor lent you the $1 million at 10% interest. In that case, the cost of the funding would have been $1.1 million - which is the principle and interest you would have to pay back.
In this scenario, debt funding would have cost you ONLY $1.1 million, nearly 75% less than the $4 million cost of equity funding.
Crowdlending Versus Debt
Crowdlending, gives you several benefits over traditional debt or bank loans:
1) Your chances of raising Crowdlending are much higher since banks reject many more loan applications
2) Crowdlending gets you lower interest rates than banks because you are eliminating the bank as a "middle man"
3) Crowdlending has much fewer requirements with regards to the application and documents you need to submit
4) Crowdlending dollars are generally raised much faster than bank loans
Crowdlending For Businesses
I have been telling entrepreneurs about Prosper and Lending Club for years. Because they are relatively easy and low-cost forms of funding. However, they both have a big negative, in that you can generally only raise loans less than $35,000.
That's why I will thrilled when I recently spoke with Endurance Lending Network.
Endurance has amassed a bunch of non-bank lenders including successful entrepreneurs, wealthy individuals, family offices and institutional investors. And, these individuals lend between $25,000 and $500,000 to businesses - the amounts entrepreneurs and business owners actually need.
Crowdlending is a great new way to raise money to start or grow your business. It's much easier, faster and less expensive than both bank loans and equity funding, making it a perfect choice for most entrepreneurs and business owners.
Written by Jay Turo on Monday, July 1, 2013
On this great day when we celebrate America, our freedoms and our way of life, please enjoy (and please share with a Facebook like below and on Twitter with the hashtag #SpiritofAmerica) our list of twenty of why this is the greatest country in the history of the world:
#20. Hollywood. Disneyland. Broadway. Entertainment happens here.
#19. Heat - Spurs, Bruins - Blackhawks, The Super Bowl, The Final Four. Sports are spectacle here.
#18. Jesus. Moses. Mohammed. The Buddha. Religion gets along here.
#17. Gates. Jobs. Page. Zuckerberg. BIG stuff - invented here.
#16. Murphy. Martin. Seinfeld. Rock. Life is a laugh here.
#15. Madonna. Mariah. Whitney. Elvis. Michael. Frank. Songs are sung here.
#14. Faulkner. Hemmingway. Roth. Franzen. Stories are told here.
#13. Kaiser. Pfizer. Genentech. Merck. Healing happens here.
#12. Boeing. Caterpiillar. Deere. UPS. FedEx. Stuff gets built here and gets there.
#11. Amazon. eBay. Ecommerce - transacted here.
#10. Facebook, Twitter, LinkedIn. Networks - connected here.
#9. Google. Yahoo. Bing. Information - organized and accessible here.
#8. Kleiner. Sequoia. Mayfield. Ideas - backed here.
#7. The Inc. 500. The Fast Company 50. Entrepreneurs - inspired here.
#6. Alaska. Montana. Wyoming. Space - open here.
#5. Chicago. Boston. San Francisco. NYC. Cities pulse here.
#4. Jefferson, Lincoln, and Roosevelt walked the Earth here.
#3. The first guy in charge here voluntarily gave up power, when he could easily have been named ruler for life. Character stands here.
#2. The current guy in charge was born to an immigrant father and a teenage mother who was so poor that she received government assistance in raising her only child. Possibility abounds here.
#1. The Greatest Generation was born here, fought and won there. And then they came home, put their heads down, and built a new America. Civil rights, cities, suburbs, highways, schools, and more.
So on this day especially, we say THANK YOU!
Written by Dave Lavinsky on Sunday, June 30, 2013
July 1 is a critical day in your business. Because it's the day that officially starts the second half of 2013. That's right, the year is already half-way over.
So right now is the PERFECT time to take an honest look at your business, see how much progress you've made so far this year, and develop your plan for the rest of 2013.
There are three things I strongly suggest you do on July 1 as follows:
1. Give Thanks
I hate to sound too righteous, but I recently watched 'Girl Rising' on CNN. The show "documents extraordinary girls and the power of education to change the world." While this description seems and is uplifting, some of the struggles of the girls profiled seemed unbearable.
In particular, the segment detailing the lives of most girls in Afghanistan left me crying.
So, please take a moment to understand how lucky you are. Lucky that you are even able to run a company and control your destiny.
2. Assess Your Results from the First Half of the Year
You must assess your results from the first half of 2013. Start by looking at your goals and plans for the first half of the year. And then look at your results.
- Were your revenues as high as you had planned?
- Did your profits exceed expectations?
- Did you build as many new products/services as you had planned for the first half of the year?
In assessing your performance, the key question to answer is "why?" For instance, if you didn't achieve your revenues goals, what obstacles prevented your success? And, how can you overcome those obstacles going forward.
3. Create Your Goals & Plans for the Second Half of the Year
Now it's time to detail your goals and plans for the second half of 2013. Hopefully if you over-estimated your goals for the first half of the year, you can now do a better job of understanding what is more realistic to achieve in a 6-month period.
Think about this question: what must I accomplish in the next 6 months to make 2013 a great year?
Use this question as a guide in documenting your goals for the next 6 months and detailing your plans for how you will achieve them.
Remember, you still have half the year left. So even if you didn't achieve enough in the first six months, there's plenty of time left to make 2013 a banner year.
But importantly, make sure you set goals for the rest of the year, and have a way to measure your progress on them. If you don't, as some of you unfortunately just learned over the last six months, you won't achieve the success you desire.
Written by Dave Lavinsky on Tuesday, June 25, 2013
If you don't know Peter Drucker, you should: he's known as the man who invented modern business management. He wrote 39 books on the subject and is widely regarded as the greatest management thinker of all time.
And Peter Drucker is credited with two of the most important quotes in business management.
Here's the first: "If you can't measure it, you can't improve it."
When you think about this quote, it should immediately become apparent how true it is. Because, if you can't measure something, and know the results, you can't possibly get better at it. For example, it's nearly impossible to lose weight without stepping on a scale once in a while to measure your results - if you don't, you have no idea if you are succeeding or not.
Or it's like trying to improve your golf game, but never keeping score, so you don't know if you're actually getting better or not. Makes sense, right?
Now, in business, Drucker's quote is particularly true. If you can't measure every part of your business, you can't manage or grow it.
- Do you know the number of new website visitors you received in the last 30 days?
- And do you know what percentage of them turned into new paying customers?
- And do you know how the level of satisfaction among your customers has fluctuated over time?
- And do you know the precise average lifetime value of your customers?
There are nearly 50 questions such as these that measure each aspect of your business.
And if you don't know the answers, if you can't measure them, then you can't possibly manage or improve them.
And that's why your sales are too low, profits are too low, employee performance isn't high enough, and you need to work too hard and can't take enough time off.
Now, let's move on to Peter Drucker's second famous quote: "Management is doing things right; leadership is doing the right things."
Let's start with the first piece of this critical quote. "Management is doing things right." Well, as we learned from Drucker's first quote, you can't manage and you can't do things right in your business if you're not measuring it. So that's not happening and it's hurting your business.
And now the second piece: "leadership is doing the right things." So, my question for you is this: are you doing the right things in your business? Now before you answer this, let me ask you this: do you know exactly what you should be doing, every single day, to generate the most value from your time?
- Do you know when you should focus on improving your website?
- Do you know when you need to spend time on improving customer satisfaction?
- Do you know how much attention you need to give to securing new clients?
- And do you know when you should focus your time on better training your team?
Unfortunately, most entrepreneurs and business owners don't. Or their businesses would be much more successful than they currently are.
I give you these two Peter Drucker quotes along with their interpretation to help you figure out the answer to the question, what is the #1 Business Mistake you are making.
Which for most entrepreneurs and business owners is this: Your #1 business mistake is that you're running your business blind!
You're not measuring your performance throughout your business, so you can't improve. And worse yet, you don't really know what you should even be focusing on
It's like running around in a maze, and you haven't kept track of where you've been, and you're not sure what to do to get out.
But don't take it personally, virtually all entrepreneurs and business owners operate like this. And that's why business failure statistics are so terrible. As you might know, according to Dun & Bradstreet, 91% of businesses fail within 10 years. And according to United States Census, only 3.9% of businesses make it to $1 million in sales. And only 0.6% of businesses make it to $5 million. And less than 0.1% make it to $10 million and above.
The reason for this lack of success is that these entrepreneurs and business owners are running their businesses blindly. They are not measuring performance, so they can't improve. And they are focusing their time on the wrong areas of their business.
Now the good news is that there is a solution to this common problem of running blind. And it's called BI or Business Intelligence. Business intelligence or BI refers to computer-based techniques used to spot, dig-out, and analyze business data, such as sales, marketing and production in order to make significant improvements.
Importantly Business Intelligence uses the data you already collect in your business. For example, if you have a website, you probably have Google Analytics or another program installed that captures key information like the number of visitors you have to your website each day, where they are coming from, and what pages of your website they are visiting.
And you're probably using an accounting software like Quickbooks that includes information about your revenues, expenses and cash balances. And you might be using a customer relationship management or CRM system like Salesforce.com that identifies the number of leads and sales you generate.
And you might be using an email management system like Constant Contact or MailChimp that shows how many email subscribers you have and how often they open or click on your emails.
With the right Business Intelligence system, all the information from these applications and programs you already use automatically and in real-time is entered and analyzed. So you can quickly see, manage and improve your performance.
Importantly, you not only measure performance so you can improve it, but you instantly spot weaknesses in your company. And those are the areas you should focus your attention on. Remember, "leadership is doing the right things" - now you'll know exactly what you should be doing.
Ready to stop operating blindly? If so, check out Growthink's Business Intelligence solution, The Growthink Dashboard, by clicking here and start expertly managing and growing your business.
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