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ARE YOU A LEGALLY SAVVY ENTREPRENEUR?

Unless you are a devout Apple follower, you likely a Microsoft product somewhere on your computer.  However, there were numerous situations that could have altered the trajectory of Microsoft that Bill-Gates-thu-398x281would have led to a different company dominating the software market over the last 30+ years.  I would argue that one of the reasons that Microsoft survived to become a dominant global brand is because of the legal savviness of its co-founder Bill Gates.

While Gates’ passion, drive, and intellect helped him become one of the world’s richest people, what many people don’t know is how legally savvy he was in building his business. For example, when 19 year old Gates and Paul Allen read about the Altair computer in the 1975 issue of Popular Mechanics, they knew they could create some software to make it more useful for hobbyists so they contacted its manufacturer (MITS) and pitched them on the idea of building this software.  They persuaded MITS to enter into a 10 year deal transferring the exclusive rights to their first software product (BASIC) to the company.

Gates had a provision in the contract that said that MITS had to use “best efforts” to market the software.  MITS was purchased by another company and they sent Micro-soft (as it used to be know back then) a letter saying that they would never sell to a competitor.  Well, that proved to be the “smoking gun” in an arbitration suit that allowed Gates and team to have full rights back to BASIC which they went on to license to many other people.  The rest, as they say, is history.

When it comes to successful entrepreneurs, we often hear them described as visionaries, innovators, or creative geniuses, but I believe there is another quality that is available for anyone who wants to invest the time and effort.

 That quality is to be a legally savvy entrepreneur.   I don’t mean that you have to have a law degree to be successful.  However, I do believe that it is important to take responsibility for the legal aspects of your business, understand the legal terrain of your business and industry, and make informed decisions on legal matters.

To help you consider whether you are a legally savvy entrepreneur, I have summarized below a series of questions to consider:

(1) Do you delegate all things legal in nature to counsel or are you actively engaged?

(2) Do you read the documents you sign?

(3) Do you understand the key provisions of the contracts your company enters into?

(4) Do you know the key legal issues in your industry? Your business?

(5) Do you view your legal counsel as “necessary evil” or a strategic resource?

(6) Do you understand the key tools at your disposal?

(7) Do you understand basic legal terms and language?

As an entrepreneur, there are numerous issues to consider such as your product/service, competition, staffing, CASH FLOW, and managing risk.  Ultimately, you are trying to build a great business and increase the value of your enterprise.  Whether you like it or not, the law and legal matters are interwoven with all aspects of your compamy.  The question is whether you are addressing them in a proactive way.

Put simply, when you as the leader of your business sit down to negotiate your next deal, if you are not the more legally savvy entrepreneur at the table then prepare for trouble.   In my next post, I will discuss some proactive steps you can take to be a more legally savvy entrepreneur.

HOW TO HIRE FOR SUCCESS

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In this column, I am addressing ways to hire for success.

“I am looking for a new manager for my practice. Do you have any suggestions on how to hire the right person?”

A critical hire is the administrator or manager of the practice. I have seen great managers help grow the revenues and prestige of a practice, and I have unfortunately seen mediocre leaders create a toxic culture that negatively impacted profitability.  Companies that attract and retain great talent know that hiring is important and that it should be done with great care.  I subscribe to the theory “hire slow, and fire fast.”  Great hiring is a process, not a one-time event.  I will summarize below some of the best practices in creating a first class hiring program.

Clarify Your Needs

The first step is to know what you want.  Do you have a job description in mind?  What are the specific duties that you want the manager to handle?  What could this person do to free you up more?   You want to write this description down. There are standard formats to follow, but feel free to improvise and be creative. This is your roadmap for the new employee, not a boilerplate document.   Besides just the tasks and responsibilities of the new hire, it’s also important to consider the skills and abilities that you what the employee to possess.   I consider technical proficiencies such as using Microsoft Excel as well as soft skills such as leadership and communication.  What’s interesting is that successful employers know that the real key is to hire for attitude.  You can teach technical skills and even soft skills, but I have found that trying to get people to improve their attitude is virtually impossible.

In addition to knowing what you want, you need to consider the compensation you want to pay for the position, including any bonus incentives.  I like to consider third party comparable data as well as local market knowledge to find the proper pay grade.  I also consider the impact on the budget as well as think through creating the proper financial incentives to align the employer with the employee.

Build Your Candidate Pool

Now that you have clarity on what you want, the next step is to solicit potential candidates. This can be done in a variety of ways including traditional newspaper advertising, internet search tools such as CareerBuilder or Monster, third party recruiters, and word of mouth. I often receive emails from colleagues looking for recommendations for hires. Another avenue is to get your employees to submit referrals.  Some companies even have bonus programs for employee referrals.  You have to be careful about hiring “buddies,” but it’s helpful to get referrals from employees whom you trust and that actually know the candidates.  In this solicitation phase, you are creating your pipeline of candidates.  You want to make sure that you have a clear timeline and process for intaking and following up with people.

Narrow the Field

Once you have built a good pipeline of prospects, you want to narrow the field through resume review and phone screening.  Does the candidate appear to have the background and training that you are seeking?  Can the candidate communicate clearly? Are they articulate? If you don’t have a good first impression on the phone, then your staff, patients, and vendors probably won’t either.  This process should whittle your prospect group down significantly to a handful of candidates to bring in for an initial interview. If possible, have someone interview the candidate with you.  It’s helpful to get two perspectives on the interview.  If the candidates pass through the “gate” of a first interview then I recommend a potential 2nd and 3rd interview as well as the opportunity for your staff to interview them.  It’s amazing how empowering it is to have your staff participate in the hiring process.

For candidates in critical roles such as being an administrator, I also recommend interviewing them in a social setting such as a lunch or dinner where you can see if the person behaves any differently than in the formal interview settings.  This can reveal a lot about someone that does not always come out in an office interview.  All along the way, you should be respectful of those candidates you are not going to continue with and let them know accordingly. You also want to always be clear with people about next steps and follow up expectations.  This shows respect for people as well as demonstrates the professionalism of your practice.

Trust, But Verify

Finally, you want to check references.  So many people don’t actually check references, but I have seen it help employers avoid huge mistakes by actually taking the time to check them.  Besides the best practices described herein, you also want to make sure that you are following the proper applicable legal requirements in your hiring process.  Hopefully, the fruit of your effort in this process will culminate in a formal offer letter which is accepted by your new hire!

HOW TO VETT A BUSINESS OPPORTUNITY

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Like other high-income earners, physicians are often sought after sources of angel investment funds for start-up or growing businesses. I am often asked to review and analyze these business opportunities for physician clients.  In this article, I am summarizing the key considerations for evaluating potential investment business opportunities in startups or growth companies.

Vision, Values, and Strategy

Can the company’s management articulate a clear vision and strategy for the company? In other words, do they know what they stand for, and do they have a plan for where they are going?  Many companies suffer from a lack of focus.  Research supports that companies with a narrowly focused strategy will generally outperform the competition.  I am wary of any company that can’t clearly articulate their value proposition in the marketplace in 30 seconds or less.  I also look for whether management and employees are all in sync on the company’s vision and strategy.  Many companies overlook the creation of a value statement.  I prefer companies that know what they stand for.  Difficult times will face every organization.  Value statements that have real meaning and adoption provide anchors during turbulent times.

Execution

This is one of the hardest things to actually find out in due diligence, but probably the most important.  Here, I am trying to determine whether the management team can actually execute the company’s strategy.  Many people confuse effort and activity with execution.  Successful companies have high functioning teams that execute with purpose and passion to get things done.  I ask questions about how management creates accountability in the organization or look for examples of past execution to try and determine whether the management is execution-oriented.  Other clues to whether a management team can execute is the level of organization, timeliness, and if they are goal oriented.  I like to see clear written goals and action plans.

Products/Markets

People raising money for a company should have a clear command of the marketplace they are competing in and how their products and services stack up against the competition.  Is the company swimming in the “red ocean” of a very competitive market or the “blue ocean” of new and untapped markets?   If they are in a very competitive market, then can they clearly articulate why their product/service is differentiated from the competition?  In a new market, how are they pricing their products and gauging the overall market opportunity?  Many companies venture out and find that their market is actually much smaller than they thought. It is helpful if the company’s industry has solid data on size and growth.  High growth companies need large and growing markets to thrive.  I look closely at the price sensitivity of the products/services and the barrier to entry of other people to compete.   I also prefer recurring revenue companies versus companies that only have one-time sales.  Is the company a one trick pony or is there a pipeline of other products/services?

Management

No matter how good the products and services a company may offer, ultimately the success of a business depends on the quality of the people.   When you invest in a company, you are really investing in the management team.  Most companies in early funding stages lack a complete management team. I try to determine the strengths and weaknesses of the management group, and I want to understand how they will shore up the deficiencies in the short term and what their long-term plans are for fully staffing the management team.   Does the management group complement each other or is there too much overlap?  Are any of the founders part of the management that may soon have to be replaced?  Replacing a management team member can be a time consuming distraction for a company.  I prefer managers who have experienced both success and failure.  We all know we learn more from our mistakes than our successes.  I would prefer that a management team not learn their failure lessons with my investment.  Great managers are great leaders.   They are high performers and can attract top talent.  I have found that the best leaders are great coaches and know how to get the most from their employees.   You want to avoid know-it-all’s and micro-managers because they will ultimately prove to be poor leaders and will run off talented employees.

What is the Exit?

Most investors eventually want their money back out of the company in a reasonable amount of time.  A typical time horizon is 5-7 years.  What are the long terms plans of the company?  Are the founders creating a lifestyle business or a high growth company?   Typically, lifestyle companies will have slower growth but greater profitability.  High growth companies, often referred to as gazelles, usually focus on top line revenue growth.  These companies will typically lose money at first.  I look carefully at the “burn rate” of these type companies and want to understand when profitability will occur.  It is critically important that the owners and management all be in sync on the trajectory of the company and the goals for exit.

The Deal

Ultimately, the opportunity to own part of the company must be for the right price tag.  All pro-formas tend to look alike with slow growth in the early years and then the proverbial “hockey-stick”  high growth in the later years.  The investment and corresponding ownership should be reasonable based on very conservative financial projections. There are also a number of ways to creatively structure a deal to provide additional risk mitigation for investors.  In addition, the legal terms and conditions of the corporate documents you will be signing are a major factor to consider.  Structuring the financial deal and key terms and conditions will be explored in more detail in a future column.

While this is an abbreviated list of due diligence considerations when vetting investment opportunities, hopefully it will provide you a framework to begin to consider future investment deals.  For an easy checklist summarizing these points and others, feel free to email me, and I will send you a copy.   Good luck in your investment future!

SECRETS OF TIME MANAGEMENT FOR BUSY ENTREPRENEURS

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Time is a precious commodity for most of us and particularly for entrepreneurs. 

Trying to juggle the various roles in life while starting a new venture can be overwhelming.  We all have 1,440 minutes a day to maximize and allocate as effectively as possible.     When you think of great achievers in history like Bill Gates, Mother Theresa, and Leonardo da Vinci, it often seems like they somehow had more time to spend than the rest of us.  However,  as author Stephen Covey aptly stated “The key is in not spending time, but in investing it.”   The truth is that time management is really an elusive concept.  High performers know that self-management is the real key, and they wisely manage themselves to invest their time wisely.

Bridgforth Rutledge is a busy guy.  With six children, a full time law practice as a partner with Phelps Dunbar, a number of commercial and residential real estate investments, and eight restaurants, 37 year-old Rutledge seems to be one of those who somehow has extra hours in the day.   The secret is how he has chosen to invest his time. As Rutledge noted, “I try to be intentional in my use of time.  This allows me to focus on what is most important.”  Rutledge began his entrepreneurial journey at age 20 when he bought a HUD house and renovated it.  At age 25, when most of us were still figuring out what to do with our lives, Rutledge secured the land across from the University Medical Center on State Street in Jackson and convinced the CEO of the Back Yard Burgers franchisor to let him open up a franchise restaurant. Rutledge now has seven BYB franchises and has twice been recognized as having the #1 BYB restaurant in the country.  There are a few core principles that have helped Rutledge in juggling a busy life and to be so productive which I have summarized below.

CUT THE FAT

Early on, Rutledge realized that he would have to be very efficient in his use of time.  For example, his family does not have cable and rarely watches television.  While an avid exerciser, he does not indulge in time consuming hobbies such as golf.  For each person, they will have to determine where the “fat” in their life is that needs to be cut.   The key is to understand your priorities and to diligently rid yourself of time wasting habits that are inconsistent with your goals.

DELEGATE

Similar to the location, location, location mantra in real estate, the same could be said for delegation.   Most entrepreneurs tend to start off trying to do everything themselves which ultimately proves frustrating and unsustainable. As Rutledge affirms, “Delegation has been an acquired skill that did not come naturally at first; however, it has been a critical part of my ability to grow my businesses.”  Like other successful business people, Rutledge believes in taking the time to find the right people and paying them well.  While being very selective is more consuming on the front end, it pays large dividends on the back end by having “A” players on the team who you can trust.

TAKE THE LEAP

When you look at his accomplishments at such an early age, it is apparent that Rutledge has been willing to take the leap and move forward on projects that involve risk. Many people talk and think about taking the leap into entrepreneurship, but stop short of taking the first step.  Usually the concerns over “not enough time” and fear of failure are the two main limiting factors.  Rutledge encourages people to take calculated risks and follow their dreams.

As Benjamin Franklin stated “You may delay, but time will not. So never leave for tomorrow which you can do today.”

In our fast paced world, the ability to manage one’s self and make effective use of time is a critical skill. Bridgforth Rutledge is a great example of what can be accomplished when your life is lived with intentionality and purpose.  I anticipate that we will be hearing about his contributions to the Memphis business community for a long time.

WORK LIFE BALANCE IN YOUR ORGANIZATION

iStock_000058043210_Small-806x300Every organization wants “A” players on its team.  Further, a company’s ability to get maximum performance from the minimum amount of staff is always a great challenge.  In the war for talent in the 1990’s, many companies embraced a variety of work-life balance initiatives to recruit and keep top employees.  While foosball tables, gyms, and onsite daycares may not be in vogue anymore, employers are still facing a new generation of workers with different views and expectations about work and life balance.   The lines between work life and personal life are not as clear as they used to be. 

During these lean times, it would be easy for management to take the position “my employees should just be thankful they have a job.”   While that may be the reality, it is also shortsighted.  Decisions made now will impact the long-term performance of your company, especially as we companies continue to pull out of the previous recession.  Studies consistently show that most companies only tap a small percentage of the true potential of their employees.  For years, forward thinking organizations having been experimenting with how to harness the potential of their teams through work-life balance initiatives.  For those innovative organizations, this often results in being named to “Best Places to Work” lists.  Interestingly, studies have shown that public companies named to these type lists have outperformed the overall market.

One example of a Mississippi firm employing these type initiatives is Grantham Poole, a sixty five employee public accounting firm based in Jackson.   The norm for years in the world of accounting has been for employees to slave away long hours during the long spring tax season which usually runs from the beginning of January through April 15th.  Recognizing that this can have a detrimental impact on both employees and their families, the firm tried a bold initiative last year to limit everyone to 45 hour work weeks and only 4 pre-specified work Saturdays during tax season.   According to one of the founding partners, Jim Poole, “we wanted to pro-actively improve the quality of life for our employees which has resulted in a more balanced and happier workforce.”  Poole acknowledged that the shift has not been easy and has taken a lot of commitment from the firm to try and create workflow that is more evenly distributed throughout the year.  Poole further noted that “we have been pleased with the results and believe that it is helping us attract and keep talented workers.”

As more jobs are based on intellectual know-how and service standards, creating win-win partnerships with employees will be critical.  Many pioneering companies in the work-life arena found that even though they were putting in good programs it still was not creating the intended results.  The problem is that work-life balance programs are not “one size fits all.”  It really involves a dual commitment from employees and employers.  I believe that successful companies should be creative and innovative in their work-life structure and in return expect employees to contribute maximum effort to achieving the company goals.  On a practical note, a best practice that is evolving is to make training courses relevant to both life and work.  Research indicates that strategies for time management, planning, etc. that can be taught from a whole life perspective significantly increase adoption and execution in the workplace.

For employers, these type work-life changes may mean breaking with years of habit.  As Grantham Poole demonstrated in tackling the longstanding tradition of working brutal hours during tax season, positive change can be made with winning results.  As your company is looking for that competitive edge, perhaps it is time to honestly think about the output of your team and the opportunities to improve performance and attitude with some bold work-life initiatives.

Companies that do will be best poised for the continued challenges of 21st century employment.

GETTING THE EDGE

Did you get skip that workout you planned to do today or indulge a little extra at that meal last night?

Did you opt to put off that important customer feedback project that you had been planning to launch?

These are just a few of the many minor decisions we make everyday in our lives and business, and they usually don’t have immediate consequences.  If I choose to skip my exercise today, there probably is not a significant effect on my health.  If I skip the entire week, I am probably just fine. In fact, if I skip a whole month of exercise, there is probably not a consequence except that my pants may fit a little tighter. However, in time, the daily decision to not exercise will catch up with me.  It may be years down the road, but my decisions regarding my health habits will have a compounding effect on my life – either for better or worse.  My point is not to create guilt or motivate exercise fanatics, but to simply point out an important concept that relates directly to our success in business: we are the sum of decisions.

It has been said that if you want to understand where you are today, then you should examine your daily habits in the past.

If you want to understand your future, then you should examine what your daily habits are today.

These principles apply in our businesses as well as in our personal lives. We are always trying to get a leg up on our competition.  We read books, go to seminars, learn knew skills, work harder and faster – all to try and inch out our competition in an ultra-competitive global marketplace.   These are all important parts of building a successful business.  For entrepreneurs desiring to build successful companies, there is another key ingredient that is often overlooked – the “Slight Edge.”  Jeff Olson, in his book The Slight Edge, points out that the keys to your personal and business success are the things you do every single day, the things that don’t look dramatic or like they matter.  He argues that the little daily decisions not only make a difference – they make all the difference.  The Slight Edge is simply a commitment to making the right choices day in and day out in your life and business.  It is a philosophy that helps us understand that we make decisions knowing that the results are long term.  We know that in time, if we make the right choices, our lives and businesses will be better off.

Most of us have seen the chart that shows us that if we start investing a few dollars in our early twenties and stick with it, then we will retire with lots of money.  These charts, which are often used by financial planners, illustrate the powerful principle of compound interest. When you look at the chart, it appears that you are making great progress for a number of years, but over time, the true power of compounding becomes evident.  For entrepreneurs, the key is to begin making good daily choices with your time and priorities early. Don’t let everyday distractions deter you away from doing the rights things for your business.  I often see companies ignore basic corporate housekeeping and other similar non-revenue producing activities in order to deal with urgent, but usually unimportant, issues.  While there is no immediate consequence to your business for skipping over these often seemingly mundane details, they can have long term consequences.  Often, when a company gets ready to sell or raise money and the microscope is turned on their business through due diligence, the compounding effect of poor habits in these areas truly come to light.

Most “overnight” success stories are actually the result of years of hard work and effort.

We became spoiled in the dot-com era of companies starting up and then selling out for millions.  We need to be reminded that companies such as Starbucks, which has over 13,000+ stores in 39 countries, only had 165 stores after being in business 21 years.  The Slight Edge is no “get-rich-quick” scheme. It is an invaluable philosophy to apply in your business to develop positive daily habits which will help maximize its potential to become a fast growth venture.

OFFENSIVE STRATEGIES DURING DIFFICULT TIMES

Screen-Shot-2016-02-19-at-11.00.46-AMIt has been said, “necessity is the mother of all invention.”

Likewise, a recession and layoffs can prompt many people to consider the path of entrepreneurship.  A recent report by the Kauffman Foundation, a leading entrepreneurial think tank, validates this trend.  The report showed that approximately 530,000 businesses per month were created last year compared to approximately 519,000 per month in 2007.  Notably, the formation of high potential income new businesses was down compared to low and middle-income potential businesses which were up. This trend indicates that many of the new businesses were probably formed out of necessity.

There is a myth that entrepreneurship is only for those with a high tolerance for risk. 

The truth is that successful startups are founded by people from all ages and backgrounds with a passion to bring their goods and/or service to the market and who effectively manage risk in changing environments. 

Whether you are exploring a career shift to being an entrepreneur or your business is trying to consider how to weather this storm, I have listed below some of the ways savvy individuals and companies are capitalizing on the state of the current economy:

  1. Offer More for Less Most businesses are trying to stay competitive in a difficult economy utilizing less. Often with fewer people and less budget, managers are being challenged to squeeze increased productivity out of their limited resources. If your value proposition allows your target customer to do more with less, then you will always have a market.
  2. Find Your Treasure in Another Person’s Trash.  Many businesses are buying up fixtures and supplies at a fraction of the cost from companies that are downsizing or closing their doors.  Similarly, proactive entrepreneurs are buying up distressed real estate, businesses, bank loans, and even whole banks at incredible bargains.   These are people who don’t adopt a doom and gloom mentality but think clearly in times of difficulty and make sound long term investments.
  3. Go on the Offense When Your Competition is on the Defense.   As companies are pulling back their spending and hunkering down, customer service, marketing, and  product development often suffers.  This is a golden opportunity to go on the offense to grow your market-share. As big companies have frozen their R&D budgets, now is the time to bring your innovations to market.  Also, many companies are re-evaluating their supplier relationships to find cost savings. Again, this allows you to step in and offer “more for less”.    As one entrepreneur stated “the hungriest wolves hunt best.”   This is the time to be on the hunt, not playing defense.
  4. Go Fishing for Talent Whether you are looking for full time employees or part time contractors, now is the time to find talent at reasonable rates.   Big companies are not just laying off their poor performers, many are laying off some of their best and brightest people as whole divisions are being forced to close.  This is a great time to strengthen your organization by attracting top talent to join your team.    Don’t get caught up trying to make everyone a fulltime employee. Skillful entrepreneurs know the value in “renting” mind share from the best and brightest people.
  5. Show Me the Money Even though bank financing is still a scarcity, you may discover that finding investors is an available option for your business.  Since most real estate and stocks are not attractive alternatives right now, there is a tremendous amount of cash waiting to be deployed.  I am finding that the right deals are still being funded by those wanting to deploy cash in “real” businesses.

I don’t discount at all the pain and hardship that many people are enduring as a result of an economic meltdown.  However, I want to encourage those who seek to find opportunity out of difficult circumstances.  Those with a “glass half full” mindset may find that even career and business decisions driven out of necessity may turn out to be tremendous blessings in the long run if strategic thought and action is properly applied.

BUILDING A FAST GROWTH COMPANY

Recent research funded by the Kauffman Foundation tells us that over 440,000 Americans are starting businesses every month.

Most of these businesses are sole proprietorships or small firm ventures – the type of companies that make up the backbone of our economy.  However, some of these new businesses have the potential to experience rapid expansion and become breakout growth companies.  These types of fast growth companies, often called gazelles, certainly succeed against the odds. Verne Harnish, author of the book Mastering the Rockefeller Habits, notes that there are 23 million firms in the United States and that only about 4 percent ever get above $1 million in revenue.  Of those, only 10 percent ever make it to $10 million revenue (0.4 percent of the total).

These stats lead me to ask the question – what does it take to become a successful fast growth venture?

Uncovering the Principles of Success

I am fascinated with the art and science of how companies with dreams and desires to become fast growth ventures can successfully achieve their goals. For years, venture capital firms have struggled to locate the next big thing; however, we know that out of any portfolio there will likely be far more losers than winners. While that success rate may ultimately work out for the VC firms and their investors, those failures are not good outcomes for the dedicated men and women working in those businesses. Thankfully, recent research is starting to shed more light on how to increase the odds of success for fast growth enterprises. While there is no silver bullet, there are principles that can be applied to help businesses increase their chances of success.

Thinking “On” Your Business

In this article, I will focus on one of the core principles for turning businesses into gazelles – methodically sizing up your business. Management teams need to periodically and methodically stop and honestly size up their business. For most leaders, the path from startup to creating a stable business is a whirlwind of activity. I rarely see owners/management in this stage that routinely take stock of where they are in their business. Most business plans, if there ever were any, are usually collecting dust on shelves.  When you are in survival mode, it is understandable that taking time for seemingly theoretical concepts such as planning, analysis, and goal setting seem like a luxury. However, to help take the business to the next level, leaders need to begin the disciplined habit of critical analysis and planning.

Clarity

While the type of analysis will vary depending on the business and industry, the benefit of this principle is the same – management should come away with a clear vision of the company’s strengths, weaknesses, market position, and where opportunities for growth may be available. For the owner, this is often also a chance to reflect and make sure the business is meeting his or her personal goals for being an entrepreneur. The key is to come away from the process with clarity.  This clarity will help focus the efforts of the team to propel the company forward. Without this clarity, the sheer volume of decisions, challenges, and opportunities can be overwhelming.

Planning For Success

In the late 1990’s, I had a unique opportunity to participate in a venture backed dot.com in Silicon Valley. While the dot.com ultimately failed, like many others at that time, the experience was memorable and invaluable training for working with fast growth entrepreneurs.

I was fortunate to meet many successful entrepreneurs during this period and was struck by their focused vision and execution. Almost every one of these individuals had a disciplined practice of methodically evaluating their business. In addition to these anecdotal observations, this principle of planning is backed by leading research which tells us that it plays an integral role in helping businesses achieve their full potential.

HOW TO GROW YOUR WILLPOWER

At the 2009 U.S. Open, Serena Williams lashed out at a lineswoman in a profanity laced tirade that not only cost her the match, but also $82,500 in fines. Serena, a former No.1 ranked tennis player in the world and holder of 27 grand slam titles, had a lapse in self-control.  Our ability to self-regulate has tremendous impact on our lives.  The lack of self-control by many politicians and celebrities has led to public displays of the disastrous results (e.g. Rep. Anthony Wiener, Gov. Mark Sanford, Charlie Sheen, etc.).  A study published in 2010, tracked one thousand children from birth to age thirty two and found that the greatest predictor of “success” in life was the trait of self-control.  Interestingly, in a study with over one million survey responses, participants were asked to list their personal strengths, and self-control was dead last. We seem to know our own limitations when it comes to our willpower.   Unfortunately, the challenge of self-control has led to alarming rates for crime, divorce and sexually transmitted diseases in our modern times.  In fact, social psychologist Dr. Roy Baumeister in his 1994 book “Losing Control” argued that, “Self-regulation failure is the major social pathology of our time.”

For entrepreneurs and business leaders, the ability to exercise self-control is extremely important.

In today’s business environment, we have constant distractions competing for our focus and energy.  We have the vast array of information of the internet readily available – just tempting us to explore.  We can watch our favorite movies and television shows any time on portable devices we carry around with us.  Even going to the grocery store presents us with a dizzying array of choices as local groceries have now grown into megastores.  Author and performance coach Tony Schwartz noted, “Self-control is the ability to say no, in the face of temptation, and to take sustained action, despite the difficulty of a given challenge.”  I have the good fortune to interview leaders on a regular basis. One of the common themes I hear is that it is critical for leaders to separate “the great from the good” by learning to say no.  By saying “no” to very good things, we are able to “yes” to the truly great opportunities. Leaders have to make difficult decisions and lead by example.  Nobody wants to follow people who routinely exhibit poor self-control.

Schwartz also emphasized, “Over the years, we’ve learned that nearly everything people tend to believe about self-control is wrong. Most of us assume the only way to resist our impulses, or persevere under pressure, is to grit our teeth, furrow our brows, steel our nerves, and tough it out. Precisely the opposite is true.”  In his recently published book entitled “Willpower,” Baumeister shares the results of over two decades of rigorous scientific study on this topic which I believe will reframe how think about self-control.  Baumeister and his co-author John Tierney share that “willpower is a form of energy in the brain. It’s like a muscle that can be strengthened with use, but that it also gets fatigued.”

What the authors found was that our energy is the key to our self-control.  We all have a pool of energy to complete our physical and mental tasks each day.  Each time we exercise self-control in an important or even trivial matter, we draw down on this available energy.  The energy source in our bodies is glucose, the simple sugar produced in our body from the foods we eat.  Researchers found that there was a direct correlation between glucose levels and self-control.  In fact, they found that, “As the body uses glucose during self-control, it starts to crave sweet things to eat . . .”  I know when I skip a meal that I become ravenous and my own willpower to eat healthy tends to go out the door – just give me a piece of pizza!

As we learn more about how our brains and bodies work, we can put this information to use in our daily lives. By learning to improve our willpower, we can create a huge competitive advantage in work and life.  To have more self-regulated lives, we have to learn how to manage our energy.  Below are some of the core concepts from this emerging of field of research that we can start to apply today.

Maximize Your Energy

Based on the research, we could draw the wrong conclusion that we need to have Snickers® bars with us all the time to fuel our glucose so we can exhibit better self-control.  This is obviously not the way to go. However, the key is to maintain healthy glucose levels throughout the day.  Nutritionists would tell us to accomplish that by eating more frequently throughout the day (5-6 times a day).  My own research on this topic has convinced me to be a “grazer” throughout the day and avoid large meals.  This research also validates the advice your mother gave you to “eat a healthy breakfast!”  Starting your work day without having a good breakfast puts you at a competitive disadvantage from the beginning of the day.  We also know that we should eat low-glycemic foods which provide sustainable sources of energy throughout the day.  When our bodies crave the afternoon snack, we need to refuel with good sources of glucose and not the cookie or Coke.   In addition, the research is clear that regular exercise and sleep all help us maintain the right levels of energy.  The average American only gets six hours of sleep, but performance expert Dr. Anders Ericcson has shown peak performers sleep eight or more hours a night on average.  The bottom line is that we can be intentional about improving our willpower by better managing our energy levels.

Make Your To Do List

Baumeister and Tierney also found that one the keys to improving our willpower is have a good “to do” list.  However, this does not mean creating pages of things that we need to get done.  Instead, they noted, “an executive’s daily to-do list for Monday often contains more work than could be done the entire week.” We tend to have too many goals and to-do’s which diffuses our focus and energy.  Baumeister and Tierney shared a best practice for team members to weekly share up to three goals that they plan to focus on for the following week and to create a weekly accountability loop on those goals.  It is also important to pre-plan your reward for achieving your goal.  I enjoy the great feeling of scratching an item off my to-do list. It is a simple act but brings me joy!

Clean Your Room

Research has also found that having a messy workspace leads to less self-control.  Unfortunately, those stacks of paper piled up on our desks actually are hurting our ability to exhibit willpower and achieve our goals. By ordering our workspace, we create positive momentum and don’t deplete our willpower resources.  In fact, a clean workspace is an integral part of the Japanese 5S system of workplace organization used by many companies.

Conclusion

One of the interesting findings from research on willpower is that people with more self-control are more altruistic.  They give more to charity, volunteer more, and are more likely to be concerned about others in society.   It is also encouraging to me to learn that I am not a slave to my weaknesses, but that I can actually learn to have better willpower to accomplish positive things in my life.  Through implementing some of the findings described in this article and others from this emerging field of research, we have the ability to improve not only our own lives, but also those around us.  For entrepreneurs and business leaders, reclaiming this character trait of willpower and learning how to grow it could be the most important element of future success.

THE GIFT OF ENCOURAGEMENT

“How is it going today?”

“Fine.”

“How are the kids?”

“Good.”

“How is work?”

“Busy.”

How many times a day do we repeat these normal social interactions where we all affirm that everything is just fine in our lives.  While these are normal pleasantries that we all participate in, they do mask the reality that for most us – it is not Ok.  Whether it is aging parents, wayward teens, or our own health, marital, or economic problems, the reality is that we are all working through our own difficulties. I have learned that outward appearances do not always give the whole picture. Often just beneath the surface of success and togetherness are lives that are falling apart.

However, this stark reality creates opportunity for each of us. We all have the ability to reach out and offer a precious gift – the gift of encouragement.

I lost my father just as I entered my adult years.  While there are so many things I continue to miss about him, one in particular stands out.  He had a tremendous gift of encouragement.  It was if he had a special sense of when someone was hurting and in need.

Growing up, I could not understand why he would seem to linger and talk to strangers in a checkout line or out at dinner. Over time, I realized that in those moments he was sowing a seed.  He was offering what we all have to offer – a word of encouragement.  While he had his flaws like all of us do, I have particular admiration for how he recognized and used this powerful gift.

In his letter to the church in Rome, Paul describes various spiritual gifts that, by God’s grace, are given in the Body of Christ. One of the gifts he references is the gift of encouragement (Romans 12:8). God knows that we are a hurting people, and yet he gives us the ability to lift each other up.  Paul emphasized this point in his letter to the believers in Ephesus when he wrote “do not let any unwholesome talk come out of your mouths, but only what is helpful for building others up according to their needs, that it may benefit those who listen.”  (Ephesians 4:29).

Recently, after a particularly difficult day, I was about to close down my computer when I received an email from a friend who just stopped to share a word of encouragement. There was no agenda or insincere flattery – simply a note to encourage me in my journey of life. Truly, it made my day. I was inspired to stop and think how often I take time to offer a sincere word of encouragement. Am I truly listening to hear what is going in the lives of others?  Am I pre-occupied with my needs versus being in tuned with the needs of others?  Do I have good intentions to encourage others but never really take the time to act?

As we approach Valentines Day this Sunday, may we recognize the true year round gift of encouragement that we all have the ability to give. May we have a sense of when someone needs a special word of encouragement and freely share. As ambassadors of Christ in the marketplace, may we be known for sincerely sharing this gift in a hurting world.  Happy Valentines Day!