So you want to launch a business...

It's still who you know!

Ain't that the truth?

Yes, it is the truth; and it's also the tag line for an exciting new blog, Handshake 2.0.  As Handshake's Blog Diva, Anne Giles Clelland, reminds us, who you know and who knows you makes or breaks deals.  It's your network that testifies to your credibility.

Talking about networking always reminds me of Charlie, who claimed to know every important person in the world.  Not to be steam-rolled by his braggadocio, I challenged the assertion.  "You can't possibly know the Pope," said I. 

"Go with me to Rome and you'll change your tune," said he. "Loser pays for the tickets."

We made it to Rome, taxied to St. Peter's Square, and arrived just in time for a public appearance by His Holiness.  "Wait here, and watch the balcony," Charlie commanded.  In a few minutes the Pope emerged, followed closely by Charlie.  Needless to say, I was astounded, even dumb-founded.

Just then a well-dressed gentleman to my side tugged on my sleeve and asked, "Can you believe that?" 

"No, I certainly can't," I answered. 

"Yeah, it's really weird," he continued, "Who in the world is that oddly dressed guy up there with Charlie?"

You're not Charlie.  You can't know everybody; but you can know someone who knows the person who knows the person who knows the person you need to know. 

And your Mentors can be the foundation of your business network.  They know, after all, a lot about you and your enterprise.  They also have networks of their own.  If you impress your Mentors, they will connect you to their networks, including nice recommendations, thank you.  And their networks then become part of your network.

Stronger, more successful Mentors equals stronger, and earlier, additions to your own business network.  And, by the way, LinkedIn is a nifty electronic way to formalize and expand that network over time.

Old age and treachery ...

I recently accused one of my old college roommates of being a "geezer."  After bristling at the notion, but only briefly, he passed along this story.  I checked it out on the web, to investigate any copyright issues, and found several variations, some quite long and eloquent.  Here is his 25-cent, straight-to-the-point version -

An old German Shepherd wanders off while on safari with his master, and soon notes that a leopard is stalking him. He knows he cannot outrun the leopard, but just as the cat is about to pounce, he hunkers down over a pile of old bones and declares, "That's one of the best leopards I have ever eaten". The cat bounds away.
 
A monkey has observed this, decides to help the leopard, and tells him the story. The leopard returns, ready for vengeance. Just as he is about to pounce, the Shepherd says, "Where is that damned monkey. I sent him out an hour ago to find me another leopard."

So, as the saying goes, "old age and treachery will overcome youth and skill." 

I don't know anything about old age.  I'm not a geezer, either, after all.  And treachery is a bit too far on the evil side of center for my taste.  But the combination of experience and creativity can be really useful when the world deals you a tough hand.

Where do you suppose a green entrepreneur might gather up some experience and cleverness?  Right, you are.  From Mentors.  For more on Mentors refer to the category of the same name at the right of your screen.

Shirts did not always have pockets!!

Modesty

The only supply in life that can’t be replenished is time.  I have watched people squander significant segments of their life-time attempting to succeed with a flawed plan, based on unconfirmed presumptions about the marketplace.

As smart as you are, and as thorough as you have been, the foundation of your new business probably is not round wheels, sliced bread, or pockets on shirts.  And your prediction of buyer behavior is probably off target, at least a little.  Plan accordingly.

Avoid ready, fire, aim.  Instead, try ready (including checking with Mentors), aim, fire, then aim, fire, aim, fire, aim fire, as results come in and conditions change.  Be prepared for the possibility that you may have to return to the ready stage, too.  You may have only thought you were ready.
Keep your head in the game, not just your heart.  And never, never confuse success (if it comes) with wisdom. 

Rule of thumb:  Keep your ego in check.  And never lose your sense of humor – regarding yourself.  Never forget this.  You saw it first here. 

Dignity is highly over-rated. And its evil twin, pompous self-importance, may be the kiss of death.

A friend of mine offered this observation: 

“Most entrepreneurs who succeed are actually very humble, self-deprecating folks with a lot to prove.  Arrogant stinkers, with nothing to prove and everything to show, usually fail.”

This is as clear as it gets.

Mastery

“We are going to relentlessly chase perfection, knowing full well we will not catch it, because nothing is perfect.  But we are going to relentlessly chase it, because in the process we will catch excellence.”
                                                                                    - Vince Lombardi

Focus, focus, focus.  Practice, practice, practice.

Of course, no one can excel at everything; but excellence in a few, key disciplines seems typically to spell the difference between a painfully stable company (or a failure) and a remarkable success.  In fact, in my experience, a company that masters a few dominant factors can tolerate mediocrity in other areas.

Picture this.  You want to penetrate an office wall.  You run at it, arms and legs flailing.  What happens?  A broken nose, perhaps.  In animated cartoons characters pass through walls, leaving an opening precisely the shape of their bodies.  That doesn’t work in real life.

You have a chance to penetrate that wall, however, with a well-directed and fully committed fist.  The martial arts people will tell you that they strike a target that is beyond the barrier.  To break a board, they strike beyond the board.  That makes the board only an incidental nuisance along the way.

"OK, Jim," you say; "but please boil all this down to something that is usefully simple." 

You win.  Here it is.

To achieve success, you must first define success and fully commit to it.  Then you must focus your limited resources, in order to act with maximum available force, meanwhile reducing barriers to incidental nuisances.  And never confuse the barriers with the target itself.

•    Define success
•    Fully commit
•    Focus limited resources
•    Act with maximum available force
•    Reduce barriers to incidental nuisances

O’Toole’s Corollary was an understatement.

Remember Murphy’s Law? 

“Everything that can go wrong will, and at the most inopportune moment.” 

Then came O’Toole’s Corollary:  “Murphy was an optimist.”

They both ignored a key segment of the empirical data.  Not only will things go wrong.  That implies that uncontrollable forces will act against you, which is true. Unfortunately, controllable forces will also act against you.  You will, in fact, screw up.  Count on it.

Here are some common mistakes that you may be able to avoid because I’ve listed them for you.  Avoid these.  I’ve watched them ruin dreams.

Do not…

• Ignore market information that does not conform to your preferred view of the world.  The market is always right.
• Crash ahead in spite of strong and obvious reasons to stop, or at least to review strategies.  Sometimes the magic just doesn’t work.
• Think too small.  Some businesses just won’t work below a certain critical mass.  Review your model, both market-wise and financially.
• Think too big.  Companies like Microsoft and Google only come along once every 20 years. 
• Insist that a product be perfect.  Excellent is good enough, requires less money, and may actually get to market.
• Hire a résumé instead of a person.  Teamwork is essential to success.  Perhaps the most critical management skill is hiring.

The first Electrolux salesman in Kansas …

This is not a true story, but it could be.

If you’ve never been to Kansas, take my word for it – it’s windy, and dusty.  In ancient times, before air conditioning, people opened windows to cool off their houses in the summer.  And, yep, lots of dust blew in.  In the days before window screens became commonplace; lots of other stuff blew in, too.

Electrolux (a Swedish company) began manufacturing vacuum cleaners in Greenwich, Connecticut in 1931; and they started selling them door to door soon thereafter.  They hired an enthusiastic young man to cover eastern Kansas, and he developed a fool-proof sales pitch.  Charlie Williams was a real go-getter.

One hot summer day he pulled up on the dirt road outside the Smith’s farm house in Pottawatomie County, grabbed his demo unit and briefcase out of the back of his Model A Ford, and bounded up the front steps, ready to make another sale. 

Mrs. Smith answered his polite knock, and, being right neighborly, invited him into the parlor for a cool glass of lemonade.  After a couple of sips, Charlie began his pitch.

“Mrs. Smith, with your permission I would like to demonstrate the finest cleaning machine manufactured anywhere in the world today.  It is my distinct honor to be able to offer it here in Kansas.  May I show it to you?”

“Certainly, sonny.  Go right ahead.”

Charlie produced a paper bag from his brief case, unrolled its carefully creased top, and deposited about a quart of the world’s nastiest dirt and trash on Mrs. Smith’s parlor carpet.  “Mrs. Smith,” he said, “if my vacuum cleaner won’t pick up every last speck of this dirt, I will get down on my hands and knees and eat what remains.”

Mrs. Smith as clearly amused.  “I sure hope you’re hungry, sonny,” she chuckled.  “You apparently didn’t notice that the electric lines ended at the last crossroads, about two miles back down the road.”

Rule of thumb:  The will to buy is one thing.  The ability to buy is quite another. 

Make sure you understand your market's structure in great detail; and never forget to ask who is paying.

"The reports of my death have been greatly exaggerated." Mark Twain

John, one of my LinkedIn acquaintances, posed this interesting question:

"Who made up "80% of new businesses fail within 5 years?""

It's some kind of urban myth. Here's a clarification courtesy of the National Business Incubation Association, an organization dedicated to lowering business failure rates, whatever they may really be.

A fact sheet from the U.S. Small Business Administration’s (SBA) Office of Advocacy reports that “two-thirds of new employer establishments survive at least two years, and 44 percent survive at least four years.” (It’s also interesting to note that people often quote small firm failure rates among the general population to be as high as 80 percent to 90 percent – a statistic that is just plain incorrect. Always go to the SBA’s Office of Advocacy for correct and current data on the success of small firms in the U.S.)

John went on...

"Many thanks for the confirmation."

"That makes me curious....what is their definition of "not surviving"...do they just mean doesn't exist anymore (maybe the owner retired, moved, didn't like operating that type of business) or do they mean complete bankruptcy (I personally doubt this, in Canada only 10% of "dead" businesses declared bankruptcy)."

If you root around in the literature, it becomes clear that everything is unclear, hopelessly confused by the nature of the collected data and the imprecision of the questioning. For example, "not surviving" can include successful sell-outs as well as companies that were never serious attempts at business building in the first place. Many (most?) single proprietor home-based businesses are either hobbies or temporary experiments, rather than solid runs at building something permanent.

Of course, once-published, often-quoted. Pretty soon 90% of businesses fail.

My observation is this: Most businesses that are ill-conceived fail; most businesses that are well-conceived succeed. Ill-conceived businesses are sometimes saved by outstanding downstream management. Well-conceived business are sometimes ruined by poor downstream management. And sometimes, as elsewhere in life, nobody can figure out what the heck happened.

When does self-interest trump integrity?

Me-First Management

Bottom-line, at the end of the day, cut to the chase, whatever, almost everyone behaves with personal best interest firmly in mind.  They think, “ME FIRST!”

My experience tells me that if I presume that sort of positioning in every person I deal with, I’m generally on safe ground.  From the handy vantage point of hindsight, it typically turns out to have been true.

The tricky part is figuring out what Me-First means to each individual.  It certainly does vary widely; and recognizing boundary points is a skill to be cultivated.  Where, for instance, is the point at which self-interest trumps integrity?  Or where altruism supersedes greed?

Quite clearly, if a manager can arrange things so that when the team wins, each of the team members wins, too; then Me-First can be used to everyone’s advantage.  Minimize the sacrifices.  Maximize the payoffs.  Easy to write.  Hard to accomplish.

The process by which Me-First is managed in often referred to as alignment, that is, aligning personal objectives with corporate objectives.  Typically, the most nicely aligned part of the organization is a commission sales force.   Sell something.  The company gets money.  You get money.

Interestingly enough, some schemes that align very nicely at one level of accomplishment fail to work well, if at all, at the low-end and high-end of the volume spectrum.  Take commissions, for instance.  If sales are simply too low, the salesperson can’t make enough money to survive and quits trying.  Sometimes sales are so good that the salesperson has made enough money to be satisfied, and decides to play golf instead of selling more.  Even greed has its limits.

Don’t oversimplify Me-First into job satisfaction.  There is a significant difference between high job satisfaction and the motivation to perform at a high level.  The latest common wisdom on this topic goes as follows:

• Salary, benefits, and stability are satisfiers.
• Achievement, recognition, and bonuses are motivators.

Consider this.  Performers (actors, musicians, and so on) quite generally invest countless hours of practice and endure relatively low and quite spotty compensation in order to receive the incredible high that comes from applause.  Only a very few of them ever make big money; and they all know that from the outset.

People will quit over low salary; but high salary won’t make them work harder.  Weird, but true.  I’ve seen this one in action many, many times.