The Problem of Big

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I’m a Smallist.

In 2009 our economy was rated by the National Security Agency as a higher threat to our national security than terrorism. One side blamed big government and the other blamed big business and big banks. But virtually no one was angry with local business or local government. This is very instructive as to where the problem is and where the solution lies.

It is universally accepted that “too big to fail” businesses that are cozy with big government who will bail them out are the cause of recessions, and small business brings us out of them with no assistance whatsoever. Yet both sides patronize and ignore small business and are committed to big business or big government getting even bigger.

The issue is not with capitalism, free markets, government systems or bureaucrats; the issue is simply “the problem of big”.

Macro-Decisions for Micro-Problems

One problem with “big” is that both giant corporations and massive federal government make macro-decisions (national) to solve micro-problems (local), and every time they do it, somebody gets left out, hurt or dismissed as decisions are made to benefit the 80% and ignore the 20%.

The other problem with big is that Macro-capitalism results in the accumulation of wealth and decision-making in the hands of a very few people in business, and macro-government results in the accumulation of power and decision-making in the hands of a very few politicians. And as we’ve seen throughout political history, the reality is that these two “bigs” have a parasitic relationship that both sides use regularly to preserve and grow their own centralization of wealth and power, all to the detriment of local business and local government.

Local Business and Local Government

Does small always work better than big? No. It is easy to find both local businesses and local government that make self-preserving decisions that aren’t in the best interest of their employees or customers. But the negative affects are not as damaging and are always more apparent. And removing that local politician or shunning that local business is a lot easier.

Micro-solutions for Micro-problems

Even with the best of intentions it is simply too big a task to ask macro-entities to solve local problems. The problem isn’t government or business, but simply the size, massive reach and slow-grinding gears of both.

We need to return to local government and local business for answers to our local problems, and push as many decisions down the food chain as possible. This is difficult for both national politicians and big business leaders because they lose control over their own macro-wealth or macro-power. There is a place for both big business and big government, but I believe we would be better off and safer as a nation with less of both.

Big is Still the Problem

Neither government or business is inherently good or bad, but the bigger any system gets the more difficult it becomes for it to truly serve those in the system. Our economy would flourish with more and smaller competition, and societal problems would find much better solutions closer to home than in D.C. This is why I’m such a fan of local businesses and local government and am so committed to seeing them both flourish.

My focus is to take local businesses from survival, through success to significance. The better we do this the more partners we will have to solve local problems and create great local communities everywhere.

A Business Plan Will Not Make You More Successful

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Palo Alto Software, which makes business planning software, just did a survey to their own users to show that those who completed business plans that they started with Palo Alto were nearly twice as likely to successfully grow their businesses or obtain capital as those who didn’t finish.

This research is a classic example of “there are lies, damnable lies, and statistics” (stolen from Twain who got it from someone else). An even more reasonable conclusion – people who DO SOMETHING and follow through on it are twice as likely to successfully grow their business.

My second book (to be published in December 2010) is titled “Bad Plans Carried Out Violently” and promotes the idea that DOING SOMETHING trumps pre-planning almost without exception. I’ve talked with hundreds of successful business owners and asked them two questions:

  1. Did you do a business plan before you started your business?
  2. If you did, how well did it project what actually happened over 1 yr, 3 yrs and 5 yrs?

The number of successful business owners who do a business plan before starting their business is statistically insignificant – well less than 1%. The only reason the small minority gave for doing one is because they had to in order to get money from a bank or investor (almost no one does one just for themselves). That should tell you something about the classic “pre-planning” Business Plan we’re all taught is so important.

Of those very few that did do a Business Plan before starting, virtually none of them say their Business Plan projected accurately what actually happened in the next 12 months, or 3yrs or 5 yrs. To the contrary most said their Business Plan was wildly off from what actually happened in the real world.

The conclusion is that successful business owners don’t do a classic Business Plan unless banks or investors are involved, and that they never look at it after that. So it has real value for getting a loan, but not for running a business.

Stop planning and get moving! Do a simple 2-page Strategic Plan and revise it every month with the input your business gives you – you’ll be better off.

“Committed Movement in a Purposeful Direction” and “Implement Now. Perfect as You Go.” – two concepts from my next book – are much more instructive to success than pre-planning. Knowing the end goal is extremely important – knowing beforehand the path for how you will get there is fortune-telling.

See the new book from 37Signals called Rework for others affirming this as well.

Why We’re Leaving Our Giant Bank

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And why we didn’t do it earlier. UPDATED Jan 2013

Wells Fargo is likely the “great bank” among the big ones, with the highest integrity and the lowest tolerance for bad banking practices among the bigs. But if my experience is typical as I believe it is, that should scare us all.

In early 2009 Wells Fargo took away our business credit line without so much as a letter to tell us why – it just vanished from our online banking screen one night. They did this to every single small business account in America without regard to the viability of the business. The $25 billion in 2008 Federal bailouts to WF never trickled down from Wells to their clients. I personally know of many very healthy businesses that were destroyed by this single act, and tens of thousands were damaged for years after because of it.

IT’S ALL ABOUT THE BANK
When it happened, we showed our local Wells Fargo branch manager our perfect credit and they said, “Frankly, we took away everyone’s business lines with no regard for their credit. We just had to make our own balance sheets look better.” That honest Wells Fargo manager said their credit requirements had tightened to the point of being “ridiculous.” She’s no longer there.

Many business owners switched to using their personal credit lines and had their interest rates jacked up right AFTER using them, not before. We did this to see what would happen and sure enough, within a week our rate was jacked, too. All while Wells Fargo was receiving the lowest interest rates from the Feds in history and had lined their pockets with $25 billion in free bailout money that had no strings attached to it.

This is the great bank, the good one amongst all the bad ones. If this lack of integrity is how good one acts, what are the bad ones like?

OUTTA HERE
In 2010 after more incidences of bad customer service, we told our Branch Manager we were leaving and were looking for a small local bank that wouldn’t make macro-decisions that ignored their customers. We also told them we would wait until our revenue was significant enough to make Wells Fargo stand up and take notice.

UPDATE – JANUARY 2013
We set up our one international business with a local bank in early 2012, not Wells Fargo. But our main focus is Crankset Group, which grew 392% from 2008 to Dec 2012, which has been with Wells for six years. They requested a meeting in December to introduce us to four business bankers they now want us to work with, and told us we didn’t have to interact with the regular branch folks anymore. We’re special now that we’re big enough.

Our growth and the complex merchant account changover required is making it hard to invest time in changing banks. But we’re committed to doing it before the end of 2013. We are thinking of hiring a marching band when we do. And when we meet with Wells Fargo to close out, we hope they’ll learn from our experience, but based on their disregard for us as a client until we were “big”, we’re not holding our breath.

Do the small banks do better? Our experience with our other business is that they are much more better at paying attention and meeting our needs. And much less expensive.

2013 – MORE FEES – CHARGING FOR THE LOLLIPOP?
Pert of the 2013 update – we got a form letter from Wells Fargo yesterday, January 3, stating that they will now be charging their clients for cash deposits. They are now charging you to put cash deposits in their bank so they can make interest off of it. Mind-boggling, but not surprising.

In the same letter they outlined three other new fees, including charging their clients for transfers from Wells Fargo savings to Wells Fargo checking – $15 a pop to do that. My community bank will transfer to another unrelated bank anywhere in America for $7.50 and sometimes nothing. Watch closely – Wells is taking their cues from the airline industry. Next they’ll be charging to use their pen, and then for the lollipop.

GO LOCAL
Our lesson? Go local whenever possible. It’s not a panacea, but it can never be worse and more than likely a local bank, as with any local business owner, is more likely to pay attention because they live there, not in some skyscraper 1,000 miles away.

What’s been your experience with big banks/big business vs. small banks/businesses?

 

 

Sorry, but failure is NOT the road to success.

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Practice instead.

The books are all wrong. The standard claptrap in the shelf-help books is that we fail our way to success. Nobody fails their way to success and you need to stop listening when experts tell you that you will.

The whole Failure-Success model needs to be revisited anyway. As the old tome goes – “treat both failure and success as the impostors that they are.”

Failure enters the picture when we think we have to do things “right” the first time. We’ve been taught all our lives not to make fools of ourselves in public by doing something stupid, and that the cool kids with perfect clothing and big houses whose lives look perfect on the surface are our example of how to make it in this world. Just pretend you and your business don’t have any problems and make sure nobody ever finds out you’re not perfect and you’ll be fine.

The problem is that the solution we’ve been given to this by the gurus is to embrace “failure as the road to success”.

Failure is NOT the road to success! There is plenty of research that shows people who chronically fail will continue to do so. I believe many of them have actually drunk the kool-aid that all they need to do is keep running into brick walls until they find their way out of the maze. They’ve been sold a bill of goods.

Failure is not the road to success – PRACTICE is the road to success. People who succeed do not fail over and over again. Instead they commit to practicing their craft every day, learning from what they did every day, then taking that daily feedback and using it to practice better the next day. The only way to succeed is to be totally and fundamentally sold out to practicing every day until you get good.

Failing is not practicing. Failing is just failing. Practicing is the art of understanding that you will not be good at something the first few times you do it, and the only way to become good is to constantly take the daily feedback from your practice sessions, learn from it, incorporate it into the next day’s practice, and take the long view that diligent practice will make you the best.

A classical musician doesn’t fail their way to a solo career and a recital at Carnegie Hall. They practice 4-6 hours a day for years and build on every day of practice by improving the next day. A world class runner doesn’t get to a 4 minute mile by failing to run well, but by diligent and disciplined daily practice, and getting better at running every single day. A great business owner doesn’t magically find success by mucking around at dozens of bad ideas and failed attempts, but by fundamental ongoing commitment and focus on their craft and to getting better at it every day.

You won’t be successful by fishing around for magic products and “moving on” every time you hit a roadblock, or by changing out your marketing for the next “secret” process. And you won’t become successful by failing over and over at different things, or by attending all the varying get-rich quick schemes until you “hit it big”.

You will be successful by putting your hand to something, committing to it, practicing it every day and knowing that you will be lousy at it to begin with (that’s not failure, that’s how you start). The only way to get better is to stick to one thing, take the daily feedback, and use it to get better tomorrow. You will become successful by stacking one great day of practice on top of another and building a lifestyle of getting better all the time.

Stop trying to fail your way to success, put your hand to one thing, practice it daily and become great over time. Failure is not the road to success – focused and committed PRACTICE of the same thing over and over is the road to success.

Business Owners Should Always Be Normal, But Never Average

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I think businesses should grow up. I don’t mean “it would be nice if it happened.” I mean we should all, every one of us, expect our businesses to grow up and start giving back to us and to the world around us. We should assume that at some point in the first few years our business would move from survival right through success to significance.

There are many artificial constructs in life that mark various stages of maturity, but the only artificial event we’ve been given in business that tells us we’ve arrived is “selling the business”. The problem is almost no one actually wants to grow a business just to sell it anymore than we want to raise children with the express purpose of never seeing them again.

So we spend decades changing the diapers in our business and continue spending as much time, emotion, and money on our business as we did the day it was born. Why would we so eagerly anticipate the maturity of our children and never expect the same for our business?

If you want a mature business you can enjoy for decades and that makes money while you’re on vacation you might need a new view of business to get there. For years your business has trained you to focus on making money (and other unproductive distractions), and unfortunately when you look at other businesses you see that most of them are focused on making money, too. But these “average” businesses all set a bad example for us.

The point? It’s not normal to have a business that never grows up. It’s clearly average; everybody’s doing it, but it is definitely not normal. I intend for my business to have the minimum basics of maturity (run and make money without me while I’m on vacation and not be a mess when I get back) on February 18, 2011, at 10am, which is four years after I started the business. I believe that’s normal and that any business can get to this minimum level of maturity in 3to5Years from the printing of a business card.

Are you building a business that will depend on you for decades, or give back to you and the world around you for years to come? We get what we intend, not what we hope for. Don’t intend to work hard and just hope your business will grow up. It doesn’t work that way. Intend for your business to grow up so you won’t have to work so hard the rest of your life. Intend to move your business from survival right through success to significance.

Intentionality is everything.

Successful business owners respond quite differently.

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He who makes the rules wins.

On the way from the Charleston airport to speak at a conference last Thursday evening. I engaged our cabbie in conversation, which of course always gets around to food. I asked what seafood he liked since he lived on the coast, and his first response was “I don’t eat shrimp.”

I found his response in the negative to be interesting so I pursued it. He told me his cousin worked on a shrimp boat in the early 60’s and had drowned, and that he had never been able to get over it. So now he doesn’t eat shrimp because it reminds him of his cousin drowning over 40 years ago.

I empathize with his loss but I don’t understand letting that circumstance rule his entire life even in one small aspect like eating shrimp. I lost a cousin at the age of 41 from a massive heart attack as he went out the door for a run, but I would never think to stop running or exercising because of my loss.

The moral of this story?

Circumstances don’t make me who I am. How I respond to them does.

I met a woman once who was a quadriplegic from birth who always introduces herself by saying, “I have the gift of cerebral palsy.” As someone who has every right to claim true victim status, she is a bright light in a world full of self-made victims.

How are you responding to the circumstances in your business? If you decide you’re not a victim and respond accordingly you’ll enjoy life and business a whole lot more.