Wednesday, 30 July 2014

Billy's Twenty-ninth Law: Entrepreneurs are forward looking,"Future people".

Don't stop, thinking about tomorrow,
Don't stop, it'll soon be here,
It'll be, better than before,
Yesterday's gone, yesterday's gone.
Christine McVie

Entrepreneurs share many characteristics.  We are focused, persistent and often stubborn.  One characteristic shared by many successful entrepreneurs is a forward view of life.  I thought that this was normal until a friend of mine recounted a recent episode he had with a customer.
This customer didn't treat my friend's staff well.  He was interfering, critical and downright rude.  My friend is a great believer in customer service, however; he draws the line at this kind of disrespectful behaviour towards his people.  He brought it up with the individual involved and nothing changed.  He then went over the head of this individual to the customer's boss.  My friend told the boss that he was at the point of refusing the work if the situation did not change. The situation improved, but the bad blood remained for years.
My friend is a proactive fellow.  He doesn't like 'bad blood' so he visited the individual in question.  He went to his house (it's a small town) and wanted to resolve any issues.  He man was so angry he was shaking.  He accused my friend of costing him $20,000, presumably in bonuses.  They had a drink, talked it out and my friend left on better terms.  This happened four years after the original event!  This customer had held on to this for four years...all the time still working with my friend's company.

So Bill...what's your point?

People live lives in one of three ways.  Some people live in the present.  They really live for today.  I envy people like that as they don't tend to worry or fret about the uncertainties of the future or the mistakes of the past. They can take life as it comes and enjoy each moment for its own pleasure. 
Some people live in the past.  They remember the 'good old days', which were often not nearly as good as they thought that they were.  They dwell on past successes, they obsess about past wrongs.  They cannot get past their previous mistakes.  I think of Bruce Springsteen's song Glory Days:

Glory days well they'll pass you by
Glory days in the wink of a young girl's eye
Glory days, glory days

Entrepreneurs live in the future.  They learn from, but don't dwell on mistakes.  They have the sense of urgency to get today's work out today, but keep the medium and long term in mind.   Things are always going to get better.  Mistakes are just 'water under the bridge'. (OK, we use many clichés as well.)  Entrepreneurs are 'future people'.
There is a psychological concept called 'egocentricity'.  It can mean self-centered, but it can also describe the ways in which we see our own behaviour as normal.  If you are forward looking, you assume that everybody else is forward looking as well. This is a problem, especially when communicating with an individual rooted in his or her past.  This difference in perspective causes difficulty, especially in the work place.  When communicating with a backwards looking person, consider the following:

  1. Acknowledge the importance of the past.
  2. If the past was positive emphasise ideas such as carrying on the tradition.  If the past was negative, emphasise the importance of learning from past mistakes.
  3. Sharing your future vision is less important than celebrating past successes. Watch your present/past/future ratio.
  4. Realize that you communicate differently and that you value different things.
Awareness is half the battle.  Effective communication means adapting to the receiver.  This is especially true when communicating with customers and employees.  Remember, not everybody is a forward looking entrepreneur.  Keep this in mind next time communications difficulties arise.

Tuesday, 22 July 2014

Billy's Twenty-Eighth Law: When is it time to throw in the towel?

E's passed on! This parrot is no more! He has ceased to be! 'E's expired and gone to meet 'is maker! 'E's a stiff! Bereft of life, 'e rests in peace! If you hadn't nailed 'im to the perch 'e'd be pushing up the daisies! 'Is metabolic processes are now 'istory! 'E's off the twig! 'E's kicked the bucket, 'e's shuffled off 'is mortal coil, run down the curtain and joined the bleedin' choir invisible!! THIS IS AN EX-PARROT!!
John Cleese & Michael Palin
I was having lunch with George Hunter, the CEO of Small Business BC.  We got to talking about the ways in which we honour small success stories.  George made that point that sometimes it seems that we are honouring the survivors rather than those who are necessarily the best.  Think of the archetypical small business success story.

I started my business after losing my job in the middle of a recession.  All I had was an idea and my true desire to (fill in the business).  It was a lot of hard work, but we persevered.  The banks wouldn't even talk to me, so we took out a second mortgage on the house.  Times were tough, but we put our heads down and just kept going.  We finally got our big break when we made a big sale to (fill in your choice of either big company or level of government.)  Then we continued our hard work and now have 50 employees in three different cities across the (fill in your choice of province, state or country.)  Now I have a big house, nice car and a swimming pool filled with Champaign.  (OK, that is an exaggeration.)
Unfortunately, we never hear about the small businesses that don't make it.  I know from experience that those individuals work hard, they have ideas that they think were great.  In fact, they may even be the ones who came second in the competition for the big sale.  They are those who didn't survive.
Business fails.  Sometimes, it is lack of competence.  Other times it is failing to realize that the idea just is not viable.  Other times, you are too far ahead of the market to achieve your sales targets fast enough to prevent from going out of business.  It is rarely, in my experience, due to a lack of effort! 
Alas, businesses, like cockroaches, are hard to kill.  There is something deep within the entrepreneur that simply won't admit defeat.  They beg, borrow and rob from Peter to pay Paul, just to keep the lights on. This often creates strains on family finances and relationships. The problem is that it is not hard work preventing them from success, yet the message is that hard work is the antidote regardless of the economic disease. It is simply nonsense. 

Math Geek Time!

Supposing five independent, sequential events must occur in order to ensure your business will succeed.  Further suppose that the probability of success is 95% for each of those events.  The probability of your succeeding is 0.955 or 77.4%.  Reduce that probability of success to 90% and the probability of success drops to 59%.  Each event has a high probability of success, but a lot of things must go right for the business to succeed!  Some of those 'success factors' are beyond your control!
All entrepreneurs need to have someone who will provide them with the best possible advice with respect to the future direction of the business.  They need someone who is trustworthy, honest and balances the line between support and clear direction.  Finding this person or people is difficult, especially when you must make difficult decisions.  
Failure is tough; although I heard a business story about a group of venture capitalists who invested in high potential people whom they knew would fail in their first venture.  They knew that it was often the second or third idea which was the big money idea, and that the learning from the failure of the first venture was an investment in subsequent business ideas.
We all love the rags to riches story, that hard work is the key to success.  There are many factors, including hard work, that account for the success of any new enterprise.  Don’t be fooled by anecdotal information…hard work and persistence is not enough to ensure a successful enterprise.

Tuesday, 15 July 2014

Billy's Twenty-seventh Law: Public Corporations are really different from Private Corporations

I was at an event for a small public ‘start-up’ corporation.  The company went public using a ‘reverse takeover’ where a public corporation which has no assets (often former mining exploration companies) and is repurposed for another business. My world is the private corporation, when business owners risk their own money and reputation in order to start and operate a business.  This company, which actually has a product, has different needs and goals than the more typical start-ups.
This was a lavish event.  It was held at a four star hotel. As we entered, we were offered a choice of red wine, white wine or Champaign.  There was entertainment and then the CEO made some announcements regarding the bright future for this company
In a private start-up, all of the focus surrounds revenue, expenses and cash flow.  This means there is an emphasis on marketing, on the plan to produce the product or provide the service, control costs, and get paid. In the public world the same conditions apply, however; there is the added dimension of the shareholders.
Whereas in the private domain, profit and cash flow are the goals, in the public world it is also about the share price.  Although profits affect share price, the profit is not the only determining factor in setting the share price.  If it were, every stock would have the same price to earnings ratio.  Share price is a function of psychology and reality.  If a stock has a seemingly bright future, share prices trade higher.  If profits are up and sales are down or are stagnant, the share price often drops. 
A great deal of business training and the majority of the business press address the needs of the public corporation.  That is great, until we take lessons from the public domain and apply them to the private business world.  SME owners and managers must translate advice and observations provided with a public corporate bias and translate that into the SME world.  As an owner of and SME, your primary job is to protect the enterprise.  This protects you, your employees, your customers and your suppliers. In the public world, it is to protect the shareholder. The board of directors has a fiduciary responsibility to the shareholders of the public corporation.
There are many skills, techniques and principles that are good business practice for firm, public or private. Understand the different perspectives and you will better understand the ways in which you can run a better business. By the way…the canapés were wonderful, but I am still not as comfortable in that world as I am in the world of the SME. 

Wednesday, 2 July 2014

Canada: A great place for business and a great place for life!

Sorry that this is
July 1st is Canada Day…for those of you who aren’t Canadian.  It represents the day in 1867 when Canada was granted Dominion Status…a sort of semi-independence from Great Britain.  Today, many consider Canada one of the greatest places on earth to live.  Notice I say one of the best. I think it is arrogant for any country to claim to be the greatest.  I love Canada, but I have been in other great parts of the world.  The people of Atlanta GA are great…London, England is one of my favourite places to visit and I love Mexico!  There are many great people and great places all over the world.  Here is why I think Canada is a great place to live and to work.
Financially, we have a great banking system.  Our national banking system is uniquely Canadian.  Our banks are big and considered safe.  According to “Ranking the Brand”, All of the Big Five Banks made the ‘top fifty’ list for the safest banks in the world.  What makes Canadian Banks unique is the fact that no one person can own more than 10% of the banks.  Any Canadian with a pension fund or broadly based mutual fund is probably a bank owner.  A strong Credit Union and Caisse Populaire (Quebec) provide local financial services for both individuals and small businesses.   The result is a conservative and stable banking system, which required no government bailout during the recent financial crisis! 
We live in a stable society.  Although income inequality is an issue, Canada sits in the middle of the G7 and the GINI co-efficient has remained stable over the past ten years.  At the same time, Canada has the second highest Per Capita Purchasing Power adjusted GDP in that same G7 group.   Social stability, together with a good education system provides a sense of hope.  Entrepreneurs need a combination of stability and hope to ensure flourishing entrepreneurship.
Canada is a country finding balance.  I would love to report that there is no racism or sexism…but that would not be true.  We are getting better, but there is still work to do.  Socially, our medical system is good, but waiting lists for so-called elective surgery force people to use private clinics or remain inactive for over a year!  Government regulations have a tendency to go overboard.  For example, Vancouver has banned doorknobs for all new construction.  Neighboring suburb Coquitlam forbids off switches for bathroom fans!   Economically, we swing from high debt to emerging as one of the first nations with a surplus after the financial crisis.
Therefore, at 147 years Canada is still a work in progress.  As we strive to find the right social, environmental, legal and economic balance, I hope that we never find it.  My hope is that we remain a dynamic country of change and development, of freedom and hope, of happiness and being “Our True North Strong and Free”.