Category: Leadership

There are so many variables to address when starting a business. Idea validation, overhead estimates, revenue estimates, your marketing scheme; the list goes on. But there’s one critical factor that gets overlooked far too often. Just as important as any other consideration is the answer to one question: why are you building this business at all?

That’s not a rhetorical question. It’s a question that needs a clearly defined answer, because that answer is the foundation of your business. It’s the key to its possible success— not because answering it “correctly” will make your business succeed, but because the answer is your definition of success. Without that definition, you lack an overall goal. Not knowing what you’re aiming for is the easiest way to miss.

Motivation Matters

All things being equal, no one is more successful than someone who knows why they’re doing something. This is true for everyone from athletes to politicians to business people. In business, the motivation may seem obvious: profit. But there has to be more to it than just that, even if it’s only to define how much profit and what, exactly, all that profit is for.

Before you make the huge commitment that the entrepreneur’s lifestyle requires, explore your motivations. To define success in a way that’s personal to yourself is what will give you the edge. It’s what will allow you to push forward when the well-paid but poorly motivated would maintain the status quo. It’s what will move you to innovate and test your limits, even when you don’t have to.

For example, some want financial independence. In that case it’s not the money a person’s after. It’s the ability to put their conventional job behind them. Some want to take care of a struggling family, or provide their children with an education. Some just like to compete. For alpha-types, the amount of money doesn’t matter as long as it’s more money than their competitors make! The point is that there’s a “why” beyond the profit.  

For some, the goals are even less tangible. Some entrepreneurs mostly seek recognition. The satisfaction of being a trendsetter or thought leader is worth just as much to them as their earnings. Some seek validation, the sense that their audience proves their worth in the industry. Some work on sheer principle, with a genuine wish to change an industry for the better, angry at the thought of customers being underserved or competitors profiting from sub-par products. These people have a “why” that’s more potent than any promise of revenue.

The Right Biz For Your “Why”

It’s important to not only start with a clearly defined “why,” but to periodically check in with it. You may find that your aspirations should be changed or modified. You may also find that your business—regardless of profits—is moving you further from your ultimate goal instead of closer.

For example, let’s say your hypothetical “why” is a vision of independence that would allow you to travel. Lots of entrepreneurs (especially the online kind) use the freedom of self-employment to see the world while they work. But what if you’re working so much that you don’t have time to travel? You may be making money, and business may be booming, but if your passport doesn’t have any new stamps you’re not succeeding!

Alternately, say you’re writing books. These books are informative, helpful, and well-received by a grateful audience, but they’re not making a lot of money. Books usually don’t! While writing books can be a great marketing tool, it’s not usually that profitable. If a certain level of financial success is your “why,” it’s not going well. Perhaps what you really enjoy—what you really want—is recognition, to be influential in your subject area. Maybe it’s time to realign your “why” with the reality of your work.  

Soul Search

Tony Robbins likes to say that different people have different values. That’s not a moral judgment. It’s meant literally; we each find value in different things. Some value security. Some prize family or spontaneity or influence. What’s your own priority? Do you value freedom more, or stability? Fame or craft? Money or recognition?

Only you can answer these questions, but answer them you must. You’ve got to discover your “why,” and it has to go beyond the obvious profit motive. Yes, we all want to make money. But some of us make far less than we actually could, because we make enough to get what we value. Some people make far more than they could ever use, simply because they value competitiveness.

If you want to travel frequently, you can do so on a relatively modest salary. If you want to provide for a family, you can do it without becoming a mogul. If you want to educate people or change the way a certain service works, or simply kiss your corporate job goodbye, you can. You simply have to ask yourself what it would cost, and then make that much!

Put this principle into practice with a simple exercise. Sit down with a piece of paper (or word doc), and ask yourself what success would look like to you. What is winning? Where exactly would you be if you “made it”? Write it down. Be ruthless in your honesty, even if it means reevaluating your approach to your business. Every so often, repeat this exercise to make sure that your business is taking you where you really want to go.

There are no wrong answers. No one’s values are more valuable than anyone else’s. It’s ok to want money, if you know how much and what you want to spend it on. It’s ok to want to have an impact, to be known for changing the way something works. It’s ok to just want to live near the beach. Whatever it is, have the courage to define it before you chase it down.

The boxing biopic Cinderella Man tells the true story of a mediocre fighter who is only able to keep his children fed during the Great Depression by becoming a champion. Asked by a reporter how he so drastically improved his fighting record, the protagonist explains that he started winning once he knew what he was fighting for. Asked what that was, he replied simply, “milk.”

Work hard, and you’ll move forward. Know why you’re working hard, and you’ll be unstoppable.

Business is the art of overcoming obstacles. Too many entrepreneurs go into business with the notion that big challenges are possible, but avoidable. That’s a dangerous mindset. A better approach is to know from the start that business is all about solving the problems that will definitely come your way. Successful entrepreneurs don’t avoid. They prepare.

This is true no matter what you sell.  Problem-solving is the industry we’re all in. Seeing challenges as burdens sets you up to be overwhelmed by them. Rather, cultivate a mindset that sees the joy in overcoming obstacles. It’s the mindset that doesn’t get discouraged by hurdles, because they’re part of the independent lifestyle. It’s the mindset that never assumes things will go smoothly—and doesn’t need them to.

The 3 Types of Challenges

Look back over the course of any business and you’ll see a trail of challenges. For us here at Business Republic, challenges big and small rose up at every turn, and still do. If that sounds like pessimism, it’s not. It’s realism, and it’s not a complaint. Problem-solving is the entrepreneur’s burden. It’s the price we pay to make our living on our own terms—and it’s well worth it.

In my experience, most challenges fall into one of 3 categories. While you can never predict the specifics of a given challenge, there are some general commonalities. By preparing for the typical kinds of kinks you’re likely to face, you can set yourself up to do so efficiently.

1. Financial Challenges

This kind of challenge is the simplest to address, but it causes the most stress! Financial difficulties happen. The market is unpredictable. Circumstances change. While money trouble is a scary thing, it’s par for the course—and you can handle it.

The best way to prepare for financial issues is to save. Yes, it’s that simple. Again, it’s a matter of mindset. You have to see revenue not just as money to enjoy or reinvest, but as part of your defense system for the future. Establish a “rainy day” fund, and manage it with the same care you manage your other expenses. Don’t spend enough to hold back growth, but spend enough to be effective.

I suggest putting between 5-10% of all monthly revenue into the rainy day fund. At the beginning, you can stick with the minimum, while you’re running lean. As revenue grows, consider arming yourself against the unexpected by bumping that percentage up towards 10. The more you contribute, the less you’ll sweat when suppliers suddenly raise their prices or equipment breaks down.

After a while, you’ll have a pretty comfortable safety net. Establish a minimum necessary monthly revenue; if you don’t reach it in a given month, use the fund to make up the difference. Every 6 months, reevaluate the state of your fund. If you’re more than prepared for an emergency, consider freeing some of it up for reinvestment.

Maintaining the fund requires discipline. But hey, so does business.

2. Growth Challenges

Growth challenges can be subdivided into two opposite problems: not enough growth, and too much.

In the first case, if revenue isn’t climbing, sales aren’t increasing, etc., consider that a potential use for the “rainy day fund.” Spend some money on marketing efforts like Facebook ads, which are pricey but effective. Have a stable of product innovation ideas that can be implemented when it’s time to give the business a boost. When hiring, look for diverse skill sets so that you can redefine employees’ roles when it’s needed.

All that said, prepare for excessive growth as well. There is such a thing as too much success if you’re not ready for it. The key to preparation here is in hiring practices. When staffing, don’t just hire your favorite applicants and forget about the rest. Use what I call the “medal” system: Hire the best, or “gold medal” applicants for each position. Then, maintain contact with the “silver” and “bronze” applicants, even when you’re not hiring. Simply drop a friendly email now and again. Make a point of saying hello at industry events. That way, you’re ready to beef up your team when the pace picks up.

Also, consider an incentive program for current employees. Our business offers a bonus to any team member who brings in a successful new hire. Because of this, we know that when we need more hands on deck, we’ll have plenty of good ones.

3. Team Challenges

Problems with employees can be the most awkward. Employee misbehavior, disagreements with partners, personal friction—team challenges can snowball into crises if you’re unprepared. The best way to be ready is through one magic word: procedure.

At the very beginning, establish fair procedures for dealing with conflicts. Utilize them consistently and equally. Make sure all team members are aware of them. Make sure they’ve agreed to them before problems arise, so issues can be dealt with professionally and impersonally.

For example, when partners disagree, they shouldn’t feel free to simply have it out. Establish a procedure in which disagreements are addressed at an appointed place and time. Make that place and time separate from the normal schedule. This allows everyone to carry on with their work, cool down, and find a solution in a setting that’s removed from the feelings involved. Establish a time limit for coming to an agreement. Have a third party officiate if necessary.

For employee misconduct, have specific consequences (up to and including dismissal) in place. Again, they’re to be applied dispassionately, without malice or resentment. People make mistakes, and occasionally poor choices. Be ready to deal with them equitably. Also have a procedure for employees who feel aggrieved, including a chain of command up which they can report issues. This way, you don’t have to be distracted by seeing personally to every disagreement.

Keep shared documents outlining procedures available to everyone on the team. With the procedures laid out, everyone will know exactly what to expect.

Redefining Optimism

Optimism shouldn’t mean fooling yourself into thinking that you won’t be facing challenges. It should mean knowing that you can handle them. Challenges are what happen when things don’t go the way you planned—otherwise known as life in general. They’re not crises unless you let them be.

Challenges are necessary and vital to your growth as a business person. Without them, you don’t develop the skills and dispositions that real success requires. No one gets better at any game by winning all the time. For every great success in business, there’s usually a dozen bloopers that preceded it. To never be challenged is to never mature as an entrepreneur.

Of course, there is one way to avoid the challenges that entrepreneurs face. It’s called a regular job. Independent business people choose to sacrifice the relative predictability of conventional work in favor of more independence. That independence is sweet, but it requires preparation.

So get ready.

Sometimes new entrepreneurs are overly worried about beating the competition. They start a business, they set up shop, and they get to work—but then a bad habit develops. They start comparing. They spend too much time watching other businesses and sizing themselves up against them. It can become an obsession. Eventually, they’re spending less time innovating and more time stalking their competitors.

Not literally. What I mean is, they spend precious time looking at what their competition is doing. They lurk on the competition’s website. They follow the conversations on their social media threads. They make a weekly or even daily habit of seeing what the competition is up to, and try to plot their own strategies accordingly. They watch their videos, read their blogs, and follow their news. They think this is smart business practice.

It’s not.

How Comparing Derails Your Plans

Being aware of your competition is all well and good. It’s even necessary. But studying them without specific goals in mind doesn’t help you build a better business. It distracts you from it. It creates a habit of reactiveness that takes you away from pursuing your own vision. It turns you into a follower instead of a creator. It takes you off of your path and down one that—while different from the competition’s—is still parallel to it.   

If you focus too much on the competition, it WILL influence your own decisions about your own business. This is a bad thing. Even deciding to do the opposite of what another company does still amounts to having your decisions dictated to you from the outside. The smart approach to independent business is to be exactly that—independent. If your business succeeds, it’ll do so because it’s got a unique approach based on your own vision.

If your approach is based only on trying to do something better than another company, you’ve already lost your way. For example, some companies try to do exactly what their competition does, but at a lower price. There’s a word for the products and services that result: cheap. Trying to do what others do at a better price point is a race to the bottom. Trying to do what others do at all is an inherently losing proposition.

How to Address the Competition

Of course, you do want to know what the competition’s up to. I’m not suggesting that your approach should be formed in a vacuum. But there’s a right way to study them, and a wrong way—by which I mean a productive way, and a distracting way.

The key is to limit the time you spend doing reconnaissance, and to confine it to the methods that promote independent thinking. Whatever your business is, start by defining your approach first. Before you even peek at a competitor’s website, take a few minutes to establish exactly what makes your approach different. I like to use the following method:

1. Write five sentences describing what makes your approach to your industry uniquely valuable. What defines your vision? What elements are you trying to bring to the customer’s experience? You’re looking for the aspects of your business that are rooted in your creativity. What is your idea of the best product? That’s what you should be selling. If not, it’s time to go back to the drawing board.
2. Once you’ve articulated your own ideas, then (and only then) it’s safe to check out the competition. Google the sort of product you’re selling, and visit the websites of the top three hits. Spend no more than 20 minutes on each site. Take notes. Record your impressions. Be as thorough as possible, because you won’t be coming back to these sites for a long time.
3. Now compare your notes on the competition to your own 5-sentence manifesto. Do your ideas stand out? Do they utilize a unique angle? Will you truly be pursuing your own notions of what’s best for the customer? Confirm that your business is based on a foundation of creativity, not on some attempt to “beat” the competition at their own game. If it isn’t, proceed directly back to Square One.
4. Refer to these notes—not the competitor’s websites—whenever you need to consider how your business stands out from the crowd. Don’t expose yourself to the persuasiveness of their websites. Have, on paper, your perception of their operation. Your notes are in your voice, and they’ll help you to continue thinking in your voice.

The Problem With Competing

If you approach business as a competition, you’ve already defined yourself in terms of other people’s actions. That might work in the corporate world where huge companies with vast resources battle for the lowest common denominator, but it’s a horrible approach to independent business. Entrepreneurship only works if it’s done by innovators, by people who don’t want to be anyone other than themselves. No one can ever beat you at being you.

If you do give in to the temptation of monitoring the competition, you’re likely to regret it. You can get sucked down the rabbit hole, never feeling like you understand your opponent enough to defeat them. Thing is, there’s no need to defeat them at all. Especially if they’re staying true to their own vision, you can’t beat them. Not at that.

A better idea is to see the “competition” as your colleagues in the market. You may want to collaborate with them. You may find yourself on the receiving end of their professional courtesy, and vice versa. Small business is a small world. The people at the other company may be the people you can learn from, or who can learn from you. You want friends in your industry, not enemies.

That doesn’t mean you have to lack ambition. But your ambition should be the ambition to perfect what you do. That has nothing to do with anyone else. The more unique and specific your solutions are, the more successful they’ll be. It isn’t about running faster down the track than the other guy. It’s getting off the track and choosing your own destination. Competition is for Pizza Hut. You’re an entrepreneur.

Don’t ignore the businesses that exist in your field. Acknowledge them. Learn from them. But don’t dwell on which of you is “better.” Rather, compete against yourself. Challenge yourself to redefine how business in your industry is done, to conceive of new solutions. Your job is to pursue your ideas, and no one else’s.

Business requires confidence. There’s simply no way around that. Neither your team nor your audience can trust in you if you don’t trust in yourself. With a loss of trust comes a loss of credibility—and in entrepreneurship, credibility is everything.

When you’re held back by a lack of confidence, you also lose the flexibility and dynamism that keeps a business from stagnating. You become overly risk-averse. Unable to move in any direction, you become stuck. For business people—especially the independent kind—that’s starting the countdown to disaster.

Fortunately, there are ways to gain and maintain the confidence every business person needs:

1. Stay Busy

Sometimes, making yourself too busy for doubt is the best way to keep it at bay. By the time you finally take a breather, you’ll have accomplished enough to make the doubt seem like it was a silly notion in the first place.

Keeping a consistent schedule is crucial to this. By having your days, weeks, and months planned out with specific timeframes for specific tasks, you’ll be less overwhelmed. You’ll always have the confidence to take just the next step on your list. After a while, looking back on that staircase will give you even more self-esteem, and a sense of accomplishment.

Simply engaging in the business of your choice, day in and day out, will make you feel more qualified. Blogging, conversing with your business community, getting involved in industry-related activities; all of these things are low-risk, high reward in terms of confidence. These things—regardless of their financial impact—are the cures to “imposter syndrome,” the very common (but incorrect) feeling that you’re not truly qualified.

Simply producing content (besides being good for marketing) builds on your credibility and self-possession. And for every item you produce, you increase the odds of one of them making the kind of splash that will really boost your esteem.

Stay busy. Build the momentum, and it will take you beyond your doubts.

2. Don’t Compare Yourself to Anyone Else

If your goal is to destroy your confidence, measuring yourself by other people’s rulers is the way to do it. There’s always someone better. If you see making a hundred dollars as a letdown because someone else made a thousand, you’ll see a thousand as a letdown compared to ten thousand. You’ll think a hundred thousand is nothing but short of a million. You’ll create an endless procession of things you didn’t do as well as…whoever. And it will wear you down.

You aren’t just your toughest competition. You are your only competition. Your job is to surpass the person you were yesterday, not the person next to you. No one wins this game unless they’re improving themselves. No one loses it unless they give up on themselves. Somebody will always be able to outshine you, unless you’re Elon Musk. And he wants to live on Mars. Stop comparing.

Sometimes it’s helpful to take a break from things that trigger comparison. Social media is one of the worst offenders. At its most sinister, Facebook is nothing but a stream of people’s attempts to look better, prettier, more clever, or more happy than everyone else on their feed. Jason Zook, he of the wildly creative business ideas that can only come from a place of confidence, once took a 30-day social media fast for this reason.

Rather than sighing wistfully at the online tooting of people’s own horns, make time to spend with people who inspire you. Hang out with colleagues you admire or friends who are there for support rather than competition. Get some perspective, then get back in there and do better than you did before.

3. Frighten Yourself. Regularly.

There is one surefire way to encourage the development of your overall cajones: do things that scare you. Do something for which you lack the confidence necessary to pull it off. Do many things like that. Get on stage. Host your first webinar. Put yourself into a position you have no business being in, and improvise your way out of it. At worst, you’ll become immune to embarrassment and self-doubt. At best, you’ll discover abilities you never knew you had.

One of my favorite guests on The $100 MBA show was Jia Jiang. His lesson on how to triumph over fear was an eye-opening look at how totally surmountable your doubts are. To build his own confidence, Jiang put himself through a 100-day boot camp of frightening and/or embarrassing activities, from asking a cop for a selfie to making unorthodox orders at Krispy Kreme. The takeaway? Fear is a poor estimator of what you can accomplish.

4. Recognize Your Accomplishments

Part of competing with yourself is acknowledging your victories, even the small ones. Especially at the beginning, it’s important to celebrate—quietly—each step you take. Simply publishing your first blog or building your own website are worth giving yourself a quick back-pat. Creating your schedule, doing your research, building a product; each of these things is more than you did before you did them. Having done them is a win. Each is a reason to believe you can do the next thing.

As time passes and these small accomplishments build into bigger ones, their value will become even more apparent. Looking back will fuel your confidence. Odds are, after a few months of dedicated work, you’ll have accomplished more than you thought you could have at the outset.

Business is a long-term endeavor. Confidence, like profits, grows best gradually. Experience is earned a day at a time, and with it comes more and more proof that you can do it. Every successful entrepreneur I’ve ever known has had this belief.

It isn’t about being better than anyone else, it’s about not letting anyone else’s idea of what you should be determine your fate. That takes a little hubris, even in the face of your setbacks. You’re going to take risks. You’re going to make mistakes. If you stay true to your vision, the path you make for yourself is the one you’ll never regret taking.