business owner
Are you Thinking About Starting a Business?
The last post on Starting a Business was popular, so I wanted to share a key lesson I learned and link to previous posts that offer insights as you launch your own business. If you have any questions, just post them in the comments; I’d be happy to reply.
The COVID-19 pandemic has created a great deal of uncertainty and opportunity. For many, now is the ideal time to explore their dream of starting a business and jumping into entrepreneurship. That can be exciting, fun, stressful, financially rewarding, and financially challenging, all within the same short period of time.
Being prepared for that roller coaster ride and having the ability and strength to continue pushing forward is important. Something to understand is that “Things don’t happen to you. They are the Direct Result of your own Actions and Inactions.” That may sound harsh, but here is a prime example:
When I was closing my consulting business down, I trusted my Accountant and Payroll company to handle all of the required Federal, Wisconsin, Ohio, and Colorado filings – something they stated they would handle, and I accepted at face value. Both companies had done a great job before, so why would I expect any less this time?
About nine months later, I started receiving letters from Ohio and Colorado about filings due, so I forwarded them to the Accountant and Payroll company. I thought this was “old business” and was being handled, plus I had moved on. It was probably just a timing error, something easy to explain away.
Skipping forward nearly three years, I had been threatened by the IRS and the revenue departments in both Ohio and Colorado. I started with a combined total of nearly $500K in assessments. Slowly that dropped to $50K, and then to $10K. I spent countless hours on the phone and writing letters explaining the misunderstanding. It wasn’t until I finally found a helpful person in each department willing to listen and tell me specifically what needed to be done to resolve that situation. My final cost was around $1,000. I was relieved that this fiasco was finally over.
I blamed both the Accountant and Payroll Service for these problems for the longest time. Ultimately, I realized that it was my business and, therefore, my responsibility to understand the shutdown process – regardless of who did the work. I would have saved hundreds of hours and several hundred dollars by gaining that understanding earlier.
I was not a victim of anything – this situation directly resulted from my own inaction. It didn’t seem very important at the time, but my understanding of the situation and its importance was wrong, and I paid the price. Lesson learned. It was my business, so it was still my responsibility to the very end.
Below are the other links. You don’t have to read them all at once, but it’s worth bookmarking them and reading one per day. Every new perspective, idea, and lesson learned could be the thing that helps you achieve your goal a day, week, or month sooner than expected. Every day and every dollar matters, so make the most of both!
- Comments on and a link to an article on Curt Culver about Entrepreneurship.
- Comments on and a link to an HBR article about Start-ups and Entrepreneurship.
- Innovation, Intelligent Failure, and Failing Productively.
- Acting Like an Owner – Good Preparation for Becoming an Owner.
- Profitability Through Operational Efficiency.
- What Are You Really Selling?
- Continuous Improvement and a Growth Mindset.
- The Value Created by a Strong Team.
Acting Like an Owner – Does it matter?
One of the biggest changes to my professional perspective on business came when I started my own consulting business. Prior to that, I had worked as an employee for midsize to large companies for ten years and then as one of the first hires at a start-up technology company. I felt that doing hands-on work, managing, selling, and helping establish a start-up (where I did not have an equity stake) provided everything needed to start my own business.
Well, guess what? I was only partially correct. I was prepared for the activities of running the business but really was not prepared for the responsibility of running a business. While this seems like it should be obvious, I’ve seen many business owners whose primary focus is on growth/upside activities and not the day-to-day. That type of optimism is important for entrepreneurs – without it, they would not bother putting so much at risk.
People tend to adopt a different perspective when making decisions once they realize that every action and decision can impact the money moving into and out of their own wallets.
Even in a large business, you can usually spot the people who have taken these risks and run their own business. I was responsible for a Global Business Unit with $60+ million in annual sales and ran it like a “business within a business.” Having P&L responsibilities meant the decisions I made mattered to my success and the success of my business unit.
It’s more than just striking out on your own as a contractor or sole proprietor. I’m talking about the people who have had employees, invested in capital equipment, and gone all-in. These are the people thinking about the big picture and the future.
What do these people do differently than those without this type of experience?
One of the biggest things is they view business as “good business” and “bad business.” Not all business is good business, and not all customers are good customers.
There needs to be a fair commercial exchange where both sides receive value, mutual respect, and open communication. You know this works when your customers treat you like a true partner (a real trusted advisor) instead of just a vendor, or at least do not try to take advantage of you (and vice versa).
A business is in business to make money, so if your work is not profitable, you should not do it. And, if you are not delivering value to an organization, it is very likely that you would be better off spending your time elsewhere – building your reputation and reference base within an organization that was a better fit. While that may not be true for all business endeavors (think how long it took Amazon to become profitable and where they are now), it generally is true for employees at all levels.
For example, “bad” salespeople (who may very well regularly exceed their quotas) typically do the following:
- Only care about the sale and their commission – not profitability, fit, customer satisfaction, or the effort required to support that customer.
- Selling products and services people don’t need.
- Making promises they know will not be met is a typical sign of a person who does not think like an owner.
- Their primary focus is on personal short-term benefit, and not on growing accounts or the success of the business.
These are examples of someone who does not think or act like an owner.
How you view and treat employees is another big difference. Unfortunately, even business owners do not always get this right. I believe that employees are either viewed as Assets (to be managed for growth and long-term value) or Commodities (to be used up and replaced as needed – usually treated as fungible and easily replaceable). Your business is usually only as good as your employees, so treating them well and with respect creates loyalty and results in higher customer satisfaction.
Successful business owners usually look for the best person out there, not just the most affordable person who is “good enough” to do the job. On the flip side, you need to quickly weed out people who are not a good fit. Making good decisions quickly and decisively is often a hallmark of a successful business owner. The saying about hiring slowly and firing quickly makes even more sense when you are running a lean operation that requires every person to contribute to the company’s success.
Successful business owners are generally more innovative. They are willing to experiment and take risks. They reward that behavior. They understand the need to find a niche where they can win and provide goods and/or services tailored to those specific needs. Agility can be a significant competitive advantage. My company often contracted with Fortune 100 companies for this very reason. We could attempt something faster, for less money, and with less scrutiny than could be done internally. Those companies were outsourcing innovation.
Sometimes, this means specialization and customization, and sometimes, it means personalized attention and better support. Regardless of what is different, these people pay attention to the small details, understand their target market, and are good at defining a message articulating those differences. These are the people who seem to be able to see around corners and anticipate both problems and opportunities. This can be a learned skill, developed out of necessity.
Former business owners are usually more conscientious about money. I created a “my money” policy on expenses. If someone felt something was important enough for their success that they would spend their own money on it, then they had my blanket approal to move forward. This approach created understanding and accountability.
Every dollar in the business provides safety and the opportunity for growth. Most owners are not the people who routinely spend hundreds or thousands of dollars on business meals or who take unnecessary or questionable trips to nice places. Money saved on unnecessary expenses can be invested in new products, features, or marketing for the benefit and growth of their company.
While these are common traits of successful business owners, you can develop them even if you have never owned a business. Hence the title, Acting like an Owner.
When selling, are you focused on delivering value, developing a positive reputation within that organization and with your customers, and profiting from long-term relationships? When delivering services, is your focus on delivering what has been contracted – and doing so on time and within budget? Are your projects used as examples of how things should be done within other organizations? When leading, are you being fair and transparent with your team? Are you spending money on the right things – not wasteful or extravagant things?
These are things employees at all levels can do. They will make a difference and help you stand out. That opens the door to career growth and change. And it may get you thinking about starting the business you have always dreamed of.
Awareness and understanding are the first steps towards change and improvement.
Where Ideas, Experiences, and Lessons Learned Intersect 