By: Martin Grunburg
Quick shout out to the real boss in my life, wifey! 18 years today…an amazing editor ; ) and the most unbelievable wife and mother a man could ask for!
Having the benefit of hindsight, and having worked and collaborated with some of the best and brightest entrepreneurs as well as new and struggling startups, I have identified some basic paradigms and principles that help to make business (any business!) a winnable adventure.
In fact, this is the article I wish I’d read 25 years ago. (I also wish I had the maturity to understand the information.)
Quick reference: A paradigm is a model/way of thinking that frames a belief system, along with any related operational instructions. Paradigms frame and direct the logic and perceptions that ultimately drive new assumptions and decisions.
For instance, the belief that the world is round radically changed our understanding of how we could interface with our planet. Consider all the decisions that sprang forth from that simple shift — the idea that we could circumnavigate the globe (thanks Magellan!).
1) Effectiveness First, Efficiency Second:
When you first begin a new business, the tendency is to start optimizing and refining processes right away. To do this better and to do that better, finding more efficient ways to do everything. However, as Brian Tracy puts it, a Bentley on the wrong road will still take you to the wrong destination!
The idea is first to take a BIG step back and ask, “Am I on the right road? Is this where we want to be going?”
Effectiveness is first knowing your end game — the desired end result — and then ensuring you are moving in that direction as efficiently as possible.
2) 80/20, The Pareto Principle:
Successful entrepreneurs consistently perform this exercise by identifying what services, products, and customers are responsible for approximately 80% of their income. When working with any new entrepreneur, one of the first exercises we’ll perform is a basic 80/20 analysis.
Once this is understood, entrepreneurs are able to focus more on what is working. They can then put less energy, time and attention into what is ineffective — perhaps even phasing out those aspects of their business.
3) Q2: Quadrant #2
Before we delve too deeply into this idea, I recommend you read or re-read “The 7 Habits of Highly Effective People.”
Q2, or quadrant #2, comes from Stephen Covey’s classic bestseller, where he urges people to shift away from our “Busy-ness” and focus on aspects that are NOT urgent, but still important, such as planning, strategy, learning, renewal, and reflection. All of these are essential to growth and effectiveness, yet none are ever deemed “urgent” and therefore are rarely addressed. For more on this, check this blog post or listen to this podcast episode, Q2.
4) People Before Process:
The most successful entrepreneurs spend the most time making sure they have the right personnel for their teams. It really is not hyperbole to say that having the right people makes all the difference.
How do you know they are the right people?
You should begin with a values evaluation. We use a checklist of 50 values that we have a potential employee circle and then rank in order. This helps to ensure a cultural fit.
This book is also a great resource for how to get hiring right: “WHO Solve your #1 Problem.”
5) On vs. In the business:
Thanks to a great mentor and thought leader (another MG), Michael E. Gerber, who changed the game many years ago with his bestseller The E-Myth Revisited.
I read his book in 1996. It was a great gift from one of my best friends who knew that I would need all the help I could get as I embarked on my entrepreneurial journey.
Sure, it’s a bit of a catch 22 when you are just starting out: The more you can work ON your business the faster it will grow, but to stay alive you must be working IN it!
It’s a delicate balance, and Gerber’s classic book shows you the way. (BTW, it’s also a Time Magazine Top 25 business book of all time, alongside The 7 Habits of Highly Effective People.)
6) Karma: Otherwise known as, “The law of cause and effect.”
I’m still amazed by the number of people who don’t think karma is real. According to Sir Isaac Newton’s Third Law of Motion, for every action there is an equal and opposite reaction.
Great entrepreneurs understand this law.
Still, I’ve seen this same law destroy more businesses (and people) than perhaps anything else. More times than I can count, I’ve seen a successful entrepreneur push the boundaries — mistreat employees, vendors, and suppliers, or take advantage of clients. Then, at the peak of his or her “success,” the entire operation fails.
The most successful entrepreneurs operate within the “Golden Rule” Paradigm. By treating clients, vendors, suppliers and partners as they wish to be treated, they not only save their reputation, but they help their businesses thrive.
7) Nobody Is As Smart As Everybody:
It’s a fine balance. As a leader, you need to have some ego, and you certainly don’t want to be perceived as dumb. However, the best entrepreneurs frequently check their egos at the door.
The old paradigm might have been: “It’s my company; I’m the smartest person here. It’s my way or the highway!”
Today, the best entrepreneurs never want to be the smartest person in the room and constantly seek to hire intelligent people who share similar values.
If your ego is running the business, you can bet you’ll be out of business soon enough!
8) Cash:
I probably should have started with this one. The most successful business owners know the value of cash. No cash flow, no business. They watch expenses and refine ways to maximize cash flow. Cash is the blood of any business. No blood, no business.
One of the most significant shifts that we made to our service business 20-plus years ago was putting our clients on monthly recurring billing method. This was a game-changer for our business.
Cash Part Deux: Credit lines! In the event times get tough and payments slow — and even as a way to support growth — having established lines of credit will help to ensure your business can buy time during a tough cycle.
2 Paradigms Most Entrepreneurs Still Don’t Get
1) Time = Money. NOT!
Most entrepreneurs still believe that time equals money. Ultimately, though, and hopefully not too late, they will realize that time is far more precious than money. Businesses can lose money and earn it back, but time can never be recouped.
However, regardless of how much time or money you have, the entrepreneur without energy has nothing.
As Mark Twain once said, “What is a man without energy? Nothing, nothing at all.” And it was Emerson who reaffirmed as much, stating, “HEALTH is the first wealth.”
(Side note: Too many entrepreneurs are overweight; they don’t take the time to care for themselves, even though a legendary entrepreneur like Richard Branson will share that his secret to success is working out!)
2) Habit! (Here we go again ; )
Entrepreneurs spend vast amounts of time working from a To-Do list rather than focusing on core, recurring behaviors — HABITS. Further, they will spend hours in strategy sessions, yet never ask this simple question, “What habits should our employees be developing?”
This brings us right back to energy: The entrepreneur who understands that a company’s culture is based upon recurring behavior patterns (habits) and aligns those habits to the company culture will achieve the desired result far more quickly.
Habit equates to character (based on its Latin root). Therefore, a company’s culture (character) has little to do with what the company says and everything to do with what they do, repeatedly.
BONUS: You’re still reading this, but you’re not an entrepreneur?
Here’s a little paradigm shift for you: Change your thinking from that of an employee to an entrepreneur.
OWN your operation; take responsibility for everything as though it’s your business. Care more, do more, work harder and longer — and the beauty is you will make yourself indispensable to your company and develop the positive habits that you’ll need should you decide to bust out on your own someday.
Keep evaluating your paradigms…remember, The Habit Factor (itself) was a shift in how people view and achieve their goals!
Until next time,
~mg