Today’s Jobs and Economy – Part 4 – Private Business Ownership

This blog touches on the option of starting your own business. Now you’ve got the chance to call the shots … be your own boss. Kind of an exciting idea isn’t it? I’ve learned a lot from others and from my own experience in this area and believe it’s best if I break this into a few different perspectives.

First, in the traditional business ownership scenario, they usually use their own money … life savings, take on debt, and many either borrow money from friends and family or include them as partners in order to get started.

Second, in many instances they take on additional debt through signing leases (offices, buildings, trucks/cars, etc.) and giving personal guarantees.

Third, once they get up and running they find themselves focusing on a myriad of matters of importance instead of focusing on what they have been good at (such as sales or operations) … all of a sudden they have to be all things to all people. They have to address local issues, legal matters, accountants for financial matters, negotiator for purchasing matters (or at least approve all transactions), serve as babysitter for some employee matters, and a collection agency for your accounts receivable matters. Sometimes you will find you are carrying out the garbage, cleaning areas, etc. Seems as if they find themselves doing everything except what they were good at in the first place.

Fourth … all of a sudden they realize they’re in a struggle. Instead of owning the business it seems like the business owns them … 24/7. They have to follow up on everything … be the first in and the last to leave. Then after everyone is paid they are wondering if there is going to be enough money left to pay their own bills, let alone reduce the debts they have incurred to start the business.

Finally, they either succeed or fail over a period of time. The bank, who was willing to be so helpful at the start is suddenly having to deal with “new issues” that have come up due to the economy (or their new policies or ownership, etc.) since you submitted your business plan and worked out your agreements. All of a sudden, what was agreed upfront doesn’t matter … they need to “re-evaluate” everything, and even though you may be meeting the agreed terms and governances. This means based on their input … not your input or experience. If you are being successful and don’t need their money or have other options for money this won’t be a problem. But if not, your position of negotiation has changed and they begin mentioning people whom you have never met before who seem to have more power and authority than you. In essence at some point in this journey the business is either successful, or they fail … many times forcing them to file for bankruptcy and falling back to a corporate or sales job.

Whoa … that doesn’t sound to romantic does it? My suggestion is that if you haven’t started your own business before, ask several friends who have … and be sure and talk to someone who has failed and listen to their input carefully … this is real life stuff. I promise you they didn’t start out thinking there was any chance of failure or they wouldn’t have done it. I believe you will find this description is more accurate than you may imagine. Many people who start their own business aren’t worried about getting a good return on their investment … all of a sudden they just want a return OF their investment … or even to get out whole. The last five years the economy has taken a hard and severe blow on many businesses … and not all are startups. Just be sure you go in with your eyes wide open, that you have done thorough reseach, and you have plenty of cash available.

Next: Financial Investor … earn a living from your investments.

What are your thoughts and comments on owning your own company?

© Phil Hoffman 2013. All rights reserved

Management and Leadership are not the same

Sidebar: Entrepreneur (somebody who initiates enhances new business enterprises)

If you have been in the management world long, you know that the father of business management as a career was Peter Drucker. Mr. Drucker was able to succinctly tell us that “Management is doing things right. Leadership is doing the right things.”

In a small business, a leader is someone who provides guidance and direction while showing the way to a specific goal. At the same time, a manager is someone who has more of a hands-on or direct approach to accomplishing the goal. To manage implies more direct involvement and active control than leadership. Rather than focusing on high-level goals, a manager helps people successfully fulfill responsibilities to attain the goal.

As an entrepreneur with a small business you usually are not in a position to have separate people fill both roles of Leader and Manager … it’s normally up to you, as the boss, to wear both hats. To some this is exciting and to others it is downright scary. The former will be engaged and involved in an inspiring manner with all areas until the company grows too big to do it alone; the latter will most likely be involved in those areas of interest to them and not give the proper attention to areas that are uncomfortable for them to address. This is usually the reason for success or failure of a small company in the early stages assuming finances are adequate.

In reality a small business needs both. Ideally, a small-business owner or entrepreneur should be able to move back and forth between the two roles intuitively … although such a person is rare.

Unfortunately, a formal education normally does not teach these characteristics in tandem with one another so it is important that you know the key elements or functions for both Leadership and Management so that you can consciously strive to integrate these traits into your management style.

The Leader:

• Sees the Big Picture
• Has a Vision of high-level goals and a strategy
• Believes in core values; establishes clear standards
• Inspires through a positive attitude, motivation and optimism
• Provides a sense of teamwork and encourages input on strategies
• Recognizes the opportunities and the threats for all areas of the company
• Outlines and monitors accountabilities for financial and company success
• Involves others and empowers them to take action (thus building self-confidence)
• MBWA – manages by wandering around to ensure things go right

The Manager:

• Lets employees know what needs to be done
• Teaches employees or provides training on how to do their jobs
• Encourages input from employees on procedures and processes
• Outlines opportunities and problems on a day-to-day level (dots the i’s and crosses the t’s)
• Observes, monitors and measures progress and success of each individual
• Anticipates problems to prevent things from going wrong

The above recap of traits and functions seem simple and obvious, but being able to be the Leader AND the Manager can be difficult and needs to be handled skillfully.

As a Manager, your focus will probably be too shortsighted. You will not provide the farsightedness needed for the company to grow and survive long-term. Most likely will be unable to adroitly handle changing conditions, bring new business, and stay up with competition … plus the employees may not be motivated and/or properly engaged.

On the other hand, if you are only a Leader your Big Picture perspective may be too broadminded. You probably won’t be able to handle the day-to-day details and oversight with the guidance needed to be sure things are functioning efficiently in a timely manner within budget … plus your attention to customer service will most likely wane … and profits constrict.

Most entrepreneurs tend to lean toward one trait or the other – Leader or Manager. My experience has been that leaders need to put into effect procedures that ensure accountability from the employees that are clear and comprehensive. What you don’t want is for your employees to feel they are being micromanaged or that they are not trusted.

So, what have I learned from my experiences as a leader?

To put procedures in place to ensure employees are more accountable.

Do not want to be the kind of employer who micromanages employees nor do you want to have a workplace where workers feel mistrusted.

Be involved, engaged, and in attendance every day with a positive and forward looking attitude. Inspire, motivate and get your team involved with you in their areas of interest and expertise.

What are your thoughts on Leading and Managing?

© Phil Hoffman 2013. All rights reserved