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Trapeze Moments in Business

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Leap!

One of the most common drivers of success is how we handle Trapeze Moments in business. All too often the most sensible response is the wrong one.

A couple years ago we were looking to publish Making Money Is Killing Your Business, our first book. It was in the hands of the largest business book publisher in the world. As I learned what the contract would look like, I discovered what a lousy deal every author gets with giant publishers. We would lose ownership of the book to the publisher, get paid a tiny fraction of the revenue, and not see any of it for up to 18 months.

But the alternative was equally uninviting. If we didn’t let the giant publisher own the book, we would have to start our own publishing company with no knowledge of the industry, give up on distribution through all traditional bookstores and spend at least $25,000 on design, layout, websites, printing, and fulfillment.

Two years ago publishing a book yourself was an even scarier option than today – it was a generally new way of doing things. Doing a deal with a giant would save us the $25,000 we didn’t have, and get the book into all major brick and mortar and internet book channels immediately.

We had a decision to make. We believed in our book and that it would have a major impact for small and local business owners worldwide for decades to come, long after a giant publisher would have lost interest in it. But we had no clue how to publish a high-end hard back book and get it out to the world around us. And we didn’t have $25,000 to risk on printing thousands of copies of something that might sell less than 100 copies.

Decisions Based on Where You Want to Be
This was a Trapeze Moment for us. A Trapeze Moment is one of those times in a business where the only way to get to the next place in your business is to let go of something you’re hanging on to for dear life. We had been profitable for a couple years and were “hanging on” to that with a death grip. The last thing we wanted to do was go backwards again and throw another $25,000 at this business.

But businesses don’t grow by hanging on to what they’ve got. They grow by making decisions based on where they want to be, not on where they are. If we make decisions based on where we are, where do we think we’ll be next year? The same place – on the treadmill.

So we dove in once again, let go of profitability, borrowed $25,000, started a publishing company from scratch with no knowledge of the industry, and printed thousands of copies of our book. A year later Making Money Is Killing Your Business was rated #1 Business Book of the Year by NFIB, not because it sold a million copies, but because they believe it was the book that had the greatest impact that year. That was what we were shooting for – a book that transformed businesses, not just an interesting read.

Risks Create Rewards
Two years later we’re into our second printing and book sales are increasing every month, something the giant publishers said could never happen after the first year. The book has been translated to Chinese and is selling well in China. Other translations are on the horizon. Because the revenue deal is so bad with giant publishers, we would have to sell 100,000+ books through them to equal the profit we have realized from the first printing. And we would still not own the book.

As the book gains momentum, we are glad we made the decision to start our own publishing company. Others are now coming to us to publish their books and we have three more of our own already in the works. And publishing isn’t even our core business, just something we did because we had to in order to keep control of a book that is central to driving 3to5 Clubs forward throughout the world.

Leap Forward
Every business has Trapeze Moments. It’s scary to let go of the one we’re hanging on to, do a backflip and trust that as we reach out the next trapeze will be there. But it’s what business owners do. They make decisions, not based on where they are, but where they want to be.

What Trapeze Moment are you facing right now? Make the decision based on where you want to be, otherwise you’ll end up where you are again next year – on the treadmill.

Make the leap!

Growth Can Kill Your Startup…

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And Profit Can Kill Your Growth

Huh? Aren’t profit and growth both good? Only in the right sequence. Focus on the wrong one at the wrong time and either one of them can drive you out of business.

At Startup, It’s All About Profit
Startups make the mistake of thinking what they need right away is growth. We measure growth in a number of ways, and all of them are largely unhelpful to an early stage business:
1) Revenue (is not profit!)
2) Market Share (lots of new customers)
3) Operational scalability (lots of new people, machines or square footage).
4) More investors (lots of cash being invested early on)

Problem: The ONLY thing that matters in the very early stages is finding something that can and will make us profitable for the life of the company. Why? Amar Bhide says 93% of all businesses leave their prime objective to become profitable. I think it’s even higher. If you focus on growth first, you’re almost certain to grow something that won’t be your long-term profit center, and backing out of it could be disastrous.

In 2006 we started Crankset Group believing our main profit center was something we stopped doing two and a half years later, and will never do again. It took us longer than normal to find our profit center, and I’m very thankful we didn’t invest a lot in making it go. Committing a lot of resources to it early on might have us mucking along trying to keep it alive just because we were too vested to move on.

An emphasis on growth before you’re 100% convinced you’ve found your long-term profit center will drain your resources and drive you out of business, by chasing an idea or a product that hasn’t been tested by your customer’s checkbooks (the only true focus group). Find your REAL prime objective, the one that will create long-term profitability, first. It almost certainly isn’t what you planned.

Found Your Profit Center? Forget Profit!
The game shifts radically once you’ve found what will make you profitable in the long run. Most business owners miss this one. I worked for a company that became profitable, decided to stop investing, and three years later, profited and saved their way right into bankruptcy.

Most small business owners do the same thing. As soon as they become profitable, they have something to protect (profit), and they’ll protect and defend that profit so fiercely that they either never hire anyone else to build the chair (I can do it cheaper myself) and never get off the treadmill, or their business becomes obsolete and just fades away. This is where Ray Kroc’s (founder of McDonalds) terse warning applies, “If you don’t want to take a risk, get the hell out of business.”

After finding your profit center, if you are worried about profit, you will likely never grow.

Growth means one of two things – you grow enough to build a true business that can make money while you’re on vacation. Or if you want to be Giant Corporation, Inc., then growth means figuring out how to capture the most market share. Most business owners will never want to be Giant Corporation, Inc., but all of us should grow our businesses to the point where we are no longer hostages, but can very regularly get away and enjoy the fruit of our business. To do that, focus on profit first, than be willing to take the risk to focus on growth, even at the risk of short-term profit.

It’s Worth the Risk
If you take the risk to grow, you’ll make a lot more money in a lot less time, for a lot longer than if you focus solely on profit.

Risk what I risk, not what I say.

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Grab the flag. Lead the charge.

Recently a client and good friend said, “I would be willing to bet a smart guy like you with a lot of success in your past wasn’t in danger of losing your house when you started your business, even if it had failed.” She’s wrong, but she’s not at all alone in believing that. Why?

Does anybody lead by example anymore?

For years I’ve ranted about going all in, burning the bridges, sinking the ships, shredding the parachutes, being willing to lose it all to be successful. I’ve shared all the research I can find on this, and my own experience in five businesses of waking up at 3am in cold sweats wondering if we would make it.

Yet it’s still hard for people to believe that I actually lived at risk in any of these businesses. For some of them I didn’t, but for the ones that were most successful (including this one) I was at the most risk. That correlation between success and risk is not surprising to me, because when we don’t have a back door, we are more likely to be successful. Survival is a very strong instinct.

Risk and commitment go hand in hand and are fundamental to success.

So why don’t people believe me? I’d love your thoughts. My own two cents:

  1. We have apparently lost most if not all connections between what leaders say you should do and what they themselves actually do. We’re indoctrinated with the academic model where information goes from head to head, not life to life. The professor spews info and goes home.
  2. The “training” and “success” industries follow the academic model. I know a number of trainers who were hired to learn to impart tools and tactics for how to live life who never did any of what they taught. And I know success trainers who have never been successful. In many if not most cases, it’s not even expected.
  3. We’ve gotten use to separating the private and public lives of actors, politicians, big business CEOs and others as if who we are in public is magically different than who we are in private.
  4. “Experts” and “Gurus” have created images of themselves that are nearly messiah-like, where they can’t be seen to ever struggle or do dumb things. So they spout the “miracles”, “secrets”, and “5 easy steps” they used to make life so easy that they have no problems any more. We actually believe these people don’t struggle (they make more money when we believe that).

I struggle. I have bad days. I have to work at seeing everything as “fascinating!”. And I risked everything in a number of businesses when I truly believed it was worth doing. I’m not an expert, or a guru, and I’m not smart, I’m just relentless. It’s how successful business owners build businesses.

What the Christchurch earthquake teaches us about business.

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Safety is not the objective.

We were in Auckland when it happened. Everyone there knows someone in Christchurch and felt the impact, if only emotionally. Among the business owners there was a single thread: life is full of risk and we’ll all just have to get back on the horse as quickly as we can. I think there’s something else in this tragedy for business owners as well.

In the early 1980’s, a mentor of mine was recounting to me his best friend’s journey to find the safest place on earth to retire. He told of how his friend and his wife researched and traveled the world for over two years and were overjoyed when they found a remote and bucolic set of islands off the coast of South America that seemed to fit everything they were looking for. They had no record of volcanoes, earthquakes, hurricanes, tornados, pestilence, poverty, or even hard crime. It was indeed the safest place on earth.

They moved in and six months later the British invaded their paradise from the beaches on one side and the Argentinean’s invaded from the other. Over 900 people died in the Falklands war, and their dream of finding the safest place on earth was crushed.

Business owners should take heed.

Two things happen when we focus on the big three distractions from a remarkable life – 1)safety, 2)security and 3)stability.

First, no matter how much energy you put into avoiding problems and building walls around your business, you will never achieve safety, security and stability. It’s not in your hands to do so. In response to the earthquake, one New Zealander said: “There’s no guarantees. You could get run over walking across the street.”

Second, when we live to achieve the big three distractions, we ensure only one thing – nothing remarkable will happen.

The lesson from the New Zealand business owners I talked to? Fear the probable, not the possible. There are hundreds of bad things that COULD happen if you take a risk to build a business that works when you’re not. But our job is to figure out those very few things that are LIKELY to happen, and then plan for those while we take the appropriate risks to create success.

Want a business that makes it? Stop focusing on how to keep bad things from happening and be willing to take the measured risks to do something remarkable.

Fear the probable, not the possible. Get back on the horse. Take risks. It’s the only shot you’ve got.

Why Purell is Bad for Your Business

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Eat Dirt. Be Strong.

I walked into the bread shop and there it was – a Purell hand sanitizer dispenser on a pedestal right in the middle of my path; not up against a wall somewhere, but standing like a security guard five feet inside the entrance, loudly reminding me that life is full to the brim of things that just might go wrong. Dodging that sad monument to the sterile life I realized it was symbolic of so many things that keep us from being successful.

Hand sanitizers may kill your germs, but the hand-sanitizer mindset is a deadly germ-ridden disease for business owners.

The hand-sanitizer mindset is so logical. Why wouldn’t you want clean hands? Are you looking for trouble? Do you want to invite sickness? Shouldn’t a business owner have the same safe, secure view of their business? Wouldn’t you want a business that is all cleaned up, sterilized from potential trouble and running without risk of sickness?

Two big problems with this mindset:

  1. When you focus all your energy on mitigating risk, you also remove the opportunity for reward.
  2. When you focus all your energy on mitigating risk, you can never remove it – it’s still there in spades.

Removing Reward
Outside of winning the lottery, which has the same odds as getting hit by lightning, great reward doesn’t come without being willing to take a risk. Living without risk means living without significant reward. The desire to live without the possibility that bad things could happen ensures that nothing much of significance will happen either. Living without risk condemns us to the great unwashed “middle” where nothing remarkable happens.

Removing Risk
You can’t – that’s the sad truth. People who live focused on removing risk, never do. A friend of mine told of good friends of his who were looking for the safest place in the world to retire to in 1980. After a year of research, in 1981 they moved from the U.S. to a bucolic set of islands. Six months later war broke out all around them and 1,000 people died in the Falkland Islands war between Argentina and Great Britain.

No matter how much you sanitize your life and business, you can’t completely remove risk, but that doesn’t stop us from trying. I know someone who used skin sanitizers to remove risk so much that it affected their immune system. The only cure was to go cold turkey for many months with no sanitizers at all so the good germs (reward) could grow again.

The hand-sanitizer mindset in business has at least the following negative results, along with some you’ll come up with on your own:

A hand-sanitizer mindset:

  1. Kills the good germs (reward) as well as the bad (risk). When we remove risk, we also remove reward.
  2. Reminds us to live defensively and reactively, not proactively and with forward movement.
  3. Dries things up – destroys the creative, innovative part of us.
  4. Creates co-dependency. When the good germs are gone, the need for the sanitizer continues to increase all the time.

Sanitized living creates victims, not strong fighters.

There is an epidemic of allergies among young children. A 10 year study found that one of the biggest causes was that we were keeping our kids too clean, keeping them from confronting risk and developing the strong immune systems that would allow them to function in a healthy way in the world around them.

Our kids need to eat dirt in order to become strong! Your business is no different. If you’re business is set up to run without risk, you’re going to experience a 40 year run on the treadmill with no chance of building a strong, healthy business that runs without you.

The irony of it all – you’re the Purell sanitizer that keeps your business from growing up healthy!

Why do we crave the Purell approach in business? Because the bankrupt Industrial Age mindset we’re all suffering from taught us that the highest values in life were safety and security. Achieving safety and security as the OBJECTIVE ensures we will achieve nothing remarkable. The highest values in your life should be to live a life of significance, to be the creative business owner you were meant to be and be fully committed to building a business in support of your Ideal Lifestyle. You won’t get that without risk.

Eat Dirt. Be Strong.

Act your way to a new way of thinking – get disoriented.

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Bob Parsons of GoDaddy says simply “get and stay out of your comfort zone”. I agree and would add that adults don’t learn unless we are disoriented.

When we believe we ”know”, that is when we stop learning. We must be disoriented from the comfortable zone we live in.

Learning is helpful, but teaching is usually a waste of time. Teaching is someone filling my head with information when I’m not disoriented enough to learn. Learning is me filling my life with a new way of living.

We do not think our way to a new way of acting.
We act our way to a new way of thinking.

Our education system has it backwards. Therefore, give people new ideas when they are in a place that they want to learn them and they will stick. ”Teach” them the same ideas when they are not disoriented from what they already know in their heads about the subject, and you’ve both wasted your time. The old adage “more is caught than taught”.

Business owners best learn and adapt when they are disoriented enough to gain new Clarity (vision for the future – they see it), that brings Hope (they believe they can do it), that allows them to take measured Risk (they will take action). If they have Clarity about where they are going, they will have Hope, and will take the Risk to learn and adapt. Clarity, Hope and Risk.

Healthy disorientation happens best in community. Business owners rarely live in community, but are taught to go it alone, which gives them even less feedback to disorient them, making them all the more sure that there myopic view of the world is just fine.

John Wayne is dead and we should have buried the rugged individualist with him. Get into community, get disoriented from your reality, and keep learning. The more I learn the less I know.

Clarity, Hope and Risk – growing a successful business.

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In the big picture there are really only three things we need to grow a Mature Business.

Clarity

Successful business owners know where they are going and when they intend to be there. They have a vision for the future that drives everything they do. Do you know where you’re going? What does your business look like at Maturity? Get clarity on where you’re going – it’s the first step in growing a Mature Business.

Hope

When we get Clarity on where we’re going, that creates Hope. We know where we’re going and we have something to begin to invest in mentally and emotionally that gets us excited about the future. He who aims at nothing hits it every time, but those who have a clear direction are busy getting after it. Do you have Hope for your business? If not, you need more Clarity on where you’re going and when you expect to be there.

Risk

Clarity brings Hope, and Hope allows us to take measured Risks to get there. Bob Parsons says “Get and stay out of your comfort zone.” It’s the only way to grow a business. Ray Krock was a little more blunt – “If you don’t want to take risks, get the hell out of business.” If you aren’t taking Risks, you don’t have Hope, probably because you don’t have Clarity on where you’re going.

Clarity creates Hope, and Hope allows us to take Risks. Successful business owners have all three.

Wandering and Wondering In Business

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Are you wandering through your business wondering what it could be like when/if…?

We almost always get something close to what we intend. Most people never think about what they want out of life, so they never figure out what their business should look like to support a life of significance. As a result, most people never accomplish the things that would have made their lives count for so much more. We wander through life wondering how it could be different.

I talk to people all the time who can give me some picture of an idyllic life they find attractive, but being able to verbalize what something might look like some time in the undefined future is much different than intending to achieve it.

Let’s not wander through life wondering what we could have done if….

Bad plans carried out violently many times yield good results. It’s not how good your plan is, but how commited you are to the bad plan you’ve got. What does your ideal lifestyle look like? What impact are you making. WHEN do you want to be there?

What does your business need to look like to support your ideal lifestyle. WHEN will it get there (maturity)?

Clarity brings Hope, and Hope allows us to take measured Risks. Wandering through our business only makes us wonder what it could have been like if…