A Matter of Perspective

There is a known pair of sayings from Albert Einstein:

No problem can be solved from the same level of consciousness that created it.

We can’t solve problems by using the same kind of thinking we used when we created them.

This can be explained as once you see the solution to a problem, the problem itself no longer exists. Perhaps you have to do something to remove one of the side-effects of the problem, but the problem itself is now a non-issue.

Some people are better at resolving problems than others. In a certain sense, we might say that someone who is unable to see the solution is unable to change perspectives. If, when a solution is proposed, they remain unwilling to change perspectives, this would be a form of close-mindedness.

Sadly, when this happens, it is often being done subconsciously, in that people are unaware that a shift in perspective can resolve a significant number of problems they face. In business, this can be extremely detrimental to the potential success of a business. This is, perhaps, one of the main reasons that business owners should be paired with someone that they can discuss and debate problems in the business.

Most people have such support around them, whether a co-owner or manager in the business, a professional advisor, a family member, or a friend. If you find yourself without any of these, your best first step is likely to bring someone into your confidence who can point out the problems you can’t or won’t see in your business, and help advise you on potential solutions.

In short, every business needs a mentor, either internally or externally. The purpose this mentor serves is to offer an alternative perspective on the business, who can help you, the owner of the business, to identify and resolve potential problems before they cause significant damage to the eventual success of your business.

Owners and Managers Don’t Mix

On a fairly frequent basis, I have occasion to talk to business owners and business managers through my work. One owner made a fairly astute observation about the role an owner plays in a business versus the role a manager plays in a business. It was summarized as follows:

An owner and a manager of a business cannot exist for an extended period of time in a single individual.

Of course, there is a limitation built into the statement itself – most businesses start out as a single person, or a couple of people, and only over time does the business grow to the point where ownership and management can be split into separate people. Perhaps another way of looking at this is that when a business starts, its concern is tactics, or how it will survive in the short-term. As the business grows, an additional concern begins to take shape in the form of strategy, that is, how the business will survive in the long-term.

The same person cannot deal with both tactics and strategy at the same time. The simple reason for this is that the two are frequently at odds with each other. An action might be needed to manage cash-flow today which removes funding from a project that will carry the business through the next year. Neither option is right or wrong, but a single person is not likely to be able to balance both needs fairly.

The owner is generally concerned with strategy, since their role is the ultimate bottom-line of the company. This means that the owner is likely to be out chasing sales, to be out bringing in more business of the nature in which the business is intended to grow. That being the case, it would not be possible for that person to also manage the day-to-day business of the company. As a result, one of the first hirings a business will find itself making is to get that of an operations officer, or office manager, who will take over that aspect of the business, allowing the owner to focus on the future.

Personal Mannerisms and Business

In the workplace, whether large or small, the personalities of people in the environment are rapidly recognized by all. Whether it’s peers, supervisors, or subordinates, people understand how those around them will act in many scenarios, especially those common to the workplace. Failure to recognize this fact can have serious ramifications.

Of course, most people are aware that abusive behavior is not acceptable in the workplace, not inclusive of the eventual lawsuit when the abuser explodes at one too many people. However, this is merely the tip of the iceberg, as other forms of manipulation and control can be exploited based on an understanding of the human nature of the people in your work environment.

What must be remembered is that “business is business” and is therefore cold and calculated. That doesn’t mean the people involved in business are always cold and calculating, but the bottom line for business is results, and what will achieve the desired results. As such, attitudes, and mannerisms should reflect this fact, according to each person’s natural tendencies.

Awareness of the attitudes and mannerisms of those around us leads to manipulation, whether deliberately or subconsciously. Children intuitively know how to do this, knowing which parent for permission to visit a friend, to stay up late, or get some candy. Adults are no different, knowing which co-worker will be willing to cover a shift, which supervisor to approach for approval on a project, and who is likely to take credit for work done by others.

The knowledge of all this human nature results in an environment in which manipulation is occurring, whether people like it or not, whether acknowledged or not. If people ignore this fact, they will eventually discover that they are the ones being manipulated. Being aware of this fact will change who is manipulated. The one aware of the manipulation can project the appropriate mien to achieve their own goals, to give the appearance of being manipulated when it suits their objectives, and at all times, to consider their implications.

The second result of being aware of the implications of your mien on the people around you is that you can retain control of what happens in any situation. Whether you choose to project a loud, irate look, or a dominated, submissive impression, it is done with absolute calculation, in that a desired result can be arranged via that particular mien. Neither projection is right, neither is wrong. Both are merely tools in the arsenal of the person on the road to success.

Everything is Good – Until It’s Really Not

I’ve been called a cynic many times, perhaps because I tend to see situations with a negative spin, or, as I prefer to call it, a realist’s perspective. It’s not that I don’t believe in having an optimistic approach, it’s that history has demonstrated that being prepared for the worst is rarely a bad thing.

In business, this certainly holds true. While one might hope for the best possible outcome, you must also be prepared for the worst. What if your competitor launches a product similar to yours at the same time you do? What if that product is actually better than your own? What if it’s also cheaper? Do you know what you would do in that situation?

That’s not to say you should focus on the cynical approaches to life. Doing so is more likely to frustrate people around you as they attempt to cope with your dour outlooks, and long for the days when everything was cheery and bright.

However, while your energies and focus should be squarely planted on the direction you hope your business will take, there should also be some nagging thoughts garnering some attention. That attention should be devoted not to hampering the efforts of your goals, but rather, on preparing an alternative plan, or, as it’s more commonly referred to, your Plan B.

A small business looking to launch a product might have a focus on one market, but at the same time, spend a little bit of effort in pursuing some alternate markets, with slight modifications to the product. Alternatively, a service-based business might run some consulting on the side to generate some cash-flow for a rainy day.

If you truly understand that your best-laid plans can come to a complete stop on account of some event out of your control, you will make sure that you don’t have one set of plans, but rather, several sets, and as each gets side-tracked or waylaid, you immediately shift over to the next plan.

The ability to maneuver easily to changing conditions might be what sets aside your business in the turning tides from those that find themselves stranded high and dry.

First Steps for a New Business

I just helped another business get started. No, I wasn’t involved in the product or service being run by the business, but rather, in setting up the business in the world of mass communication and interaction.

My wife registered as a Fitness Instructor, and is running a few classes in the area. As she just started running a couple new classes, she wanted to make sure that enough people knew about the classes to get a decent showing each time. This is where I came into play.

While she focused on getting her classes set up, finding a new location for each one, and working out details with the various locations, I thought about her ability to market herself online. She already had a page on Facebook from some previous classes, so she quickly posted an advertisement there.

Next, we registered her domain name – lindsaykochman.com – to make sure that we had something to start with. While she may not always use her own name for her business, it would buy her some time until she decides what name to operate under. Additionally, with her name becoming in use and people searching for her online, it is prudent to own your own name online.

She would need more than a domain, though, she would need a website. Nothing terribly fancy, but a place where she could post her class schedule, push out additional information about herself and the classes she runs, and most of all, begin working on her mailing list. For all this, the answer was a basic hosting plan with WordPress running on it. The famous 5-minute setup actually takes a little longer in elapsed time, but also means that once set up, she could manage the content of the site on her own.

A couple hours after starting, she had a website up and running. It included a mail sign-up form (using G-Lock Opt-in), a basic schedule, and some basic information. Analytics for the site were added so that she can track visitors to her site, and a contact form to allow people to get in touch with her was added.

The entire cost for this was less that $100, the elapsed time was about 3 hours from start to finish. The result was that she’s set up and ready to go, with all the basic pieces in place for whenever she chooses to use it.

When you started your latest idea for a business, did you put all this into place? What else did you do to help your business get itself off on the right start?

What You Can and Can’t Learn from Watching

When in university, I worked in a biology laboratory that followed a basic system of instructing members of the team in various techniques. One person would show another how to perform the technique, the student would perform the technique themselves under supervision, and then instruct the next student in line.

In business, this is no different. One can learn by reading books and watching other businesses operate. However, while these lessons can provide valuable insight into the operations of a business, they are limited in that they have not been experienced by the reader.

The business owner can apply what they’ve learned, and by doing this, internalize those lessons. Abstract concepts described in textbooks now have practical ramifications, the reasons for some more subtle concepts suddenly become clear, while other lessons are discovered to contain fallacies which don’t hold up to real-life experience.

However, it is not until the business owner tries to teach someone else how to run a business that they truly understand how their business works. It’s not until the lessons need to be explained that they realize just how complicated some of those lessons are.

Perhaps that’s the real value of events such as Freelance Camp TO which bring together people in business who want to learn with those who are able to teach. The benefit might seem to be mostly for the attendees of the various presentations and seminars, but really, the presenters, themselves business owners, are completing their own course of study by attempting to teach and instruct the next generation of business owners in the lessons they’ve already learned.

Why I Use QuickBooks

A little while ago, I wrote an article extolling the virtues of the QuickBooks sales staff and customer relationship management processes. The end of the story, though, is that I ended up with a copy of QuickBooks for managing my business’ finances.

When I posted that fact on Twitter, I was asked by various people why I chose QuickBooks over a much more cost-effective solution such as Freshbooks. A fair question, considering that as an advocate of start-ups and their projects, I would normally choose to support their efforts, especially if it would save me money. QuickBooks, at least the version I purchased, cost me almost $200, while Freshbooks starts at free for limited use, and would take me quite a while to get to $200 in fees.

Additionally, I’ve used Freshbooks before, when a vendor sent me an invoice using their system, and a client requested online payments, which I chose to run through their interface. As such, I do have some familiarity with the product, while my exposure to QuickBooks at the time was extremely limited.

However, I still chose to go with the commercial product for a few reasons:

  1. The product is complete in terms of managing my business’ finances. From quoting to billing to managing accounts payable, the software can handle it. If I choose to expand, I can add a module to handle payroll. Taxes are automatically computed, and I can file those returns directly from the program.
  2. My accounting firm integrates fully with QuickBooks. They have me email them a file on a quarterly basis, they make sure there are no major corrections to be done, they import it into their system, and they can cut the amount of time needed to handle my file. For any company which makes use of an accountant for managing their finances, using proper programs which integrate well becomes important.

That’s not to say that I wouldn’t advocate Freshbooks. I believe that the product is well designed and constantly improving. Perhaps eventually it will be a full-fledged accounting system that would integrate with other programs properly. Perhaps your company doesn’t require any of the other features of a program like QuickBooks. If such is the case, I definitely recommend at least taking a look at Freshbooks.

As for me, I’ll stick to QuickBooks for as long as it serves my needs well. Should it fail to do so at some point in the future, my first fall-back will be to take another look at Freshbooks.

Brokering Investments and Referral Fees

For a growing start-up, a major event in its early development as a company will be the acquisition of capital, whether in the form of a loan, a gift, or an investment. Founders who seed the company from their personal funds can consider their company as the recipient of a gift. When the money comes from outside, it will either be a loan, which can be quite difficult to acquire unless the arrangement is being made privately, or as an investment, in which case equity is being given in exchange for cash.

Rules differ between countries, but there are a few basics which seem to be fairly common which govern the acquisition of investment capital.

First, there is often a limit on the number of investors you can approach before you will be required to file a formal prospectus with the appropriate regulatory body. As such, it is important that you limit your discussions regarding investments to the smallest number of prospects as possible, and only those you realistically believe will actually personally invest in your business.

Second, before your investment can be completed, you will need to have a formal entity for your business – that is, some form of corporation which can issue shares – along with associated banking and financial accounting in place for accountability.

Because of these restrictions, finding a potential investor, at the early stages of development of a company, can be difficult. If a corporate structure does not yet exist, there is nothing to invest in. If you cannot broadcast your interest in acquiring capital, potential investors won’t know about you.

This is where your network can come into play. You may have a family member or friend who does know investors, and can make an introduction. The value of such introductions can be quite high, but that should not be taken to mean that the price is also expensive. Be wary when making use of such a referral in regard to payment – in some places, payment can only be made to a registered broker, while in other places, no such restriction exists, at least from a regulatory perspective.

However, investors will not be pleased to see their investment dollars going to a third party who has done little to no work in growing the company. An introduction, while invaluable in terms of opening doors that might otherwise not exist, is only a drop in the bucket in terms of the effort that will be needed to close the deal.

The investor will question the founders and their team intensively to determine the potential value of the deal – the broker will have little to do here. Lawyers will be hired to document the terms and finalize the arrangements. Accountants will be needed to perform due diligence on the finances of the company to determine, as closely as possible, the actual value of the company.

That’s not to say that the broker should not be rewarded. However, the reward should either be handled privately, in the case of a private introduction with no risk, or perhaps outside the terms of the deal. For example, if the broker runs a company which performs a service that your company is in need of, consider giving the broker rights to exclusive bids on projects, which will survive an audit of your company’s actions.

If the broker is asking for equity, beware. Even if it is allowed by the regulatory bodies for such a transaction to take place, there is going to be a conflict of interest, and the broker is likely being overpaid for their work. There are plenty of ways to reward the broker without giving up a piece of the company.