After Five Years As An Entrepreneur

By Josh | June 18, 2008

The five things I would have done differently.

Since graduating with an MBA in Entrepeneurship in 2003 I have started two businesses, a handheld software company that failed to launch and the other going through major overhaul right now due to our industry, mortgage financing, being transformed through legislation and the start of a significant recession. I have dabbled with nearly a dozen other startups in this timeframe as well, some my own, and others brought to me through my network. Also, along the way I’ve spent a considerable amount of time and money studying and being mentored by many guru’s on how to grow my businesses. I estimate, conservatively, that this number is in the $75k range for just the registration fees, books, cd’s, monthly coaching, etc., not including travel and hotel expenses to attend them.

With the change going on in my current venture, Tower Mortgage, it provided an opportune time to reflect and re-evaluate my plans and what I would have done differently were I given the chance to do it all over. So with that, I came up with the top five things I wish I had known when I started this journey nearly five years ago. Hopefully you will benefit from these items as I would have and avoid learning the same lessons I did the hard way. These are not in any particular order as they are all foundational to me.

There are two things that snuck up on me that I was aware of when I started this path, but because I did not attack them head on, they slowly overcame me. They were both things that Robert Kiyosaki (Rich Dad, Poor Dad) warned of that he made mistakes with and one actually caused his near bankruptcy early on. They were having financial controls in place and not becoming a professional in the ‘S-Quadrant’.

Since I have an MBA, financials are something I have always felt strong with because of the advanced financial analysis I did in various courses, especially Advanced Financial Management. The problem was that even though I was comfortable reading a profit and loss statement or a balance sheet, I never set the systems up to have those reports readily available to me in my businesses. Because I did not have the systems in place, like an in house bookkeeper that keeps track of all income and expenses properly on Quickbooks, I could never tell exactly where we were and what trends were taking place for us to plan from. I could tell you what was in our bank account since I carried the checkbook with me and had to balance it regularly, but that is not running a company ‘by the numbers’ as the majority of truly successful businesses do.

I did have a bookkeeper, but she was outsourced and when I put her feet to the fire to get me the reports I needed, everything was completely askew. Her staff had been mis-categorizing expenses and there was no way to get an accurate view of where we were. I had abdicated responsibility instead of delegate and manage it. It was a complete nightmare getting it straightened out with a new bookkeeper and just getting our history in perspective. Then, creating the systems to manage our finances in house and have my assistant take over their entry and balancing was another mountain to climb. It took nearly a year from finding out my original bookkeeper was inept to having my assistant managing everything and being able to pull reports that are meaningful and accurate. This could have been done in a month if done properly from the beginning.

In regard to becoming a professional, my first venture with the software company did not have this as a potential problem since I was not a programmer and was managing the programming staff and handling sales. I find that running a company in which you do not know how to do the technical work is best to avoid becoming a professional. In the next venture, the mortgage brokerage, since we had no model to grow and train a sales force, I became that sales force and was the primary technician delivering advice and strategy to our clients. It is a sneaky trap, because once you get caught in it, it turns into having golden handcuffs. You can make a decent income, but to breakthrough to the other side of owning a growing business instead of merely a job, you have to choose not to produce and keep being the engine behind the revenue and start recruiting, training and managing the sales force that will become that engine. In the mortgage business, this can take upwards of six to eight months to do and very few people, myself included, can take that kind of risk since cash reserves are not large enough to justify that.

Most small businesses are run by technicians delivering the final product to the clients, like a restaurant with the owner as the head chef, a subway with the owner making sandwiches, an interior design company with the owner doing all the design and consulting, and so on. You can see this everywhere and is a trap that most business owners are not even aware of, because they just want to work for themselves and do not have aspirations of truly being an entrepreneur and owning businesses.

The third thing I wish I had done differently was take more time off for fun and relaxation. Every time I went out of town for a seminar my employees would always seem to get more work done than when I was around every day. They figured out how to solve problems that they would usually come to me when I was there because I could solve the problem nearly all the time and became a crutch for them. Whenever I did take time off, I was refreshed, reduced stress and always came back with new solutions to our problems because I was not distracted by the fires of the day.

At the beginning many entrepreneurs think they have to put in 60+ hours a week to make the business successful, but I think this is a recipe for inefficiency. By forcing yourself to get everything done in 30-40 hours, you get more done because you have deadlines and time restraints and you start doing only that which is truly important. If you do not believe me, just think about the last time you went on vacation. Did you get at least twice as much done that final day before the vacation than you do on your normal days? Case closed. Take more time off to have fun and relax.

Even though I had an MBA in Entrepreneurship I realized that I lacked a lot of knowledge and skills at the beginning. This caused me to become a sponge and soak up everything I could get my hands on. I read and read and read and obviously went to numerous seminars and networked with anyone that was more successful than me, which was just about anyone in business. The problem with this was that I did not really have a filter for what I let in and I wasted a lot of time reading from people that looking back on it, were not really all that sharp or successful with what they were speaking on. A lot of the guys I listened to were full of hype and could not give actionable advice and strategy to implement and get results from.

So here is my shortlist of people that I respect and listen to for the following areas of any business in any industry:

Finally, every business is kept alive by sufficient cash flow from sales. Without cash flow, every business dies. Therefore, creating a compelling competitive advantage with your product or service over every other alternative out there is a must. This competitive advantage needs to be distilled into a Unique Selling Proposition (USP) that clearly explains in one sentence why people should come to you for what you are offering instead of every other company available. Then, once this USP is figured out, you need to leverage it into at least two solid lead generation systems that produce qualified, high quality prospective clients to work with.

A great example of a powerful USP and subsequent lead generation system comes from Domino’s Pizza. Their USP was ‘Fresh, hot pizza delivered in 30 minutes or less, guaranteed.’ It was so clear that you would get your pizza fast when you ordered with them and it would not be cold and limp and they even guaranteed it. They said nothing about good or the best or the cheapest, just fresh and hot. They then positioned them near college campuses and mailed coupons and promotional flyers to homes and apartments near them. Since ninety percent of American’s eat pizza, and that number is higher with college students, they were hitting their target market. Also, college students are always hungry and do not plan out their meals very well. So getting food in under 30 minutes without leaving their apartment was a big benefit.

So when you think about your next, or existing, product or service, compare your offering to what Domino’s gave as a template. And one word of advice, nobody cares about ‘excellent service’ since it is expected all the time. Nordstrom’s could get away with leading with excellent service because they pioneered it, but that cannot be done in today’s markets.

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