Today I wanted to tie off on our discussion concerning risk and reward by sharing three lessons I’ve learned over my last 14 years in the trenches. Running a small business where the risks are high and the potential for profit low, can at times be an incredibly lonely and depressing affair. In hopes you’ll be spared the expense of a therapist, I thought I’d focus on some ideas you might not hear from folks who don’t have skin in the game.
Lesson 1: Hope and optimism don’t pay the bills.
Unless you’re in the business of selling hope and optimism
Evaero is a small manufacturing company that specializes in CNC machining of complex precision aerospace parts out of titanium, aluminum, and steel. I love the fact that our business forces us to, in the words of Aristotle, “dwell in intimate association with nature and its phenomena” and I’m passionate about the fact that we get to make things for the customers we serve.
Although there are clearly times when Evaero benefits from my enthusiasm, during difficult times, I have not, frankly, found great utility in the power of positivity. Hope and optimism may have gotten Frodo to Mordor but in my experience, do not pay the bills when things are going down the shitter.
In a business where the margins are as small as they are, the bottom line is, well, the bottom line. As such, whether you like it or not, during difficult times you have to focus on financials. I realize this sounds terribly obvious but I cannot tell you how many people I’ve met who allow their love for what they do to cause them to forget that if they are not making money, eventually they will go out of business.
Lesson 2: Be at peace with failure.
During the first six years of running this business I was horribly afraid of failing and, suffice it to say, my personal well being and my relationships all suffered as a result. Somewhere along the way another business I owned failed and as a result I gained a huge amount of clarity and perspective.
How did we go bankrupt? In the words of Ernest Hemingway:
Two Ways. Gradually, then suddenly.
Although there was a lot of pain involved in closing the doors, with the failure behind me, I was essentially set free because my greatest fear had been realised.
In 2008, the author of the Harry Potter novels J.K. Rowling gave a speech at Harvard University on the subject of failure and her words are worth quoting at length:
Ultimately, we all have to decide for ourselves what constitutes failure, but the world is quite eager to give you a set of criteria if you let it. So I think it fair to say that by any conventional measure, a mere seven years after my graduation day, I had failed on an epic scale. An exceptionally short-lived marriage had imploded, and I was jobless, a lone parent, and as poor as it is possible to be in modern Britain, without being homeless. The fears that my parents had had for me, and that I had had for myself, had both come to pass, and by every usual standard, I was the biggest failure I knew.
Now, I am not going to stand here and tell you that failure is fun. That period of my life was a dark one, and I had no idea that there was going to be what the press has since represented as a kind of fairy tale resolution. I had no idea then how far the tunnel extended, and for a long time, any light at the end of it was a hope rather than a reality.
So why do I talk about the benefits of failure? Simply because failure meant a stripping away of the inessential. I stopped pretending to myself that I was anything other than what I was, and began to direct all my energy into finishing the only work that mattered to me. Had I really succeeded at anything else, I might never have found the determination to succeed in the one arena I believed I truly belonged. I was set free, because my greatest fear had been realised, and I was still alive, and I still had a daughter whom I adored, and I had an old typewriter and a big idea. And so rock bottom became the solid foundation on which I rebuilt my life.
You might never fail on the scale I did, but some failure in life is inevitable. It is impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all – in which case, you fail by default.
Failure gave me an inner security that I had never attained by passing examinations. Failure taught me things about myself that I could have learned no other way. I discovered that I had a strong will, and more discipline than I had suspected; I also found out that I had friends whose value was truly above the price of rubies.
Lesson 3: Outside perspective is good but be careful who you take advice from.
After taking a high paid consulting job with a management consulting firm, in The Management Myth, Matthew Stewart describes having a last lunch with a philosophy professor and being asked:
How can so many who know so little make so much by telling other people how to do the jobs they are paid to know how to do?
As Stewart takes on famed gurus such as Frederick Taylor, Elton Mayo, Peter Drucker, Michael Porter, and Tom Peters – exposing piles of bullshit along the way – I couldn’t help but be reminded of William J. Bernstein’s quote in The Investor’s Manifesto, that the reason “guru” is such a popular word is that “charlatan” is so hard to spell.
Suffice it to say that finding someone outside your organization who has your interests in mind when putting things in perspective, giving advice, and holding you accountable is not an easy task. I do however think it’s incredibly important; especially, if you want to be true to yourself.
Where to start?
One option is a formal peer-to-peer business group. Vistage is probably the best known but there are others including the Women Presidents’ Organization, the Young Presidents’ Organization, The Founder Institute, and Aileron. Alternatively, consider setting up an informal peer-to-peer group where you simply meet with a group of trusted people to discuss issues and opportunities.
Another option is to find a coach/mentor. The trouble here will be the time it will take to find someone worthy of your time and trust. Indeed, as noted by Jason Zook, these days “business coaches are like real estate agents, you can find them anywhere and there are thousands of them.” Asking people you trust for recommendations is certainly a good place to start but so too is an organization like SCORE, whose sole mission is to support small businesses through mentoring and education.
In small business, it’s easy to find yourself trapped inside a burning building feeling like you’ve got to keep the countertops clean. While helping you develop strategies for putting the fires out, a peer-to-peer business group or a coach can help push you to gain some larger perspective and hopefully better position you for success or failure.
Before checking out, for this week’s music recommendation I’d like to introduce you to a young lady from South London named Kate Tempest. If you live in the Bay Area it looks like she’ll be performing at the Independent on May 20th. The Independent is a very small venue so if you’re looking forward to seeing an up and coming artist up close and personal don’t wait to buy tickets!
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Finally, someone asked me for a “playlist” of the songs I’ve recommend in this blog. I’ve set one up in Spotify as Fu Xian under the heading “Manufacturing Peace of Mind.” Please note that the song I recommend last week by Fantastic Negrito isn’t on Spotify so I posted an equally good song of his called “The Time Has Come.” If you like the music kindly consider supporting the artist by seeing them live or buying their music!
In your service…xian
Having said that, I am interested to hear from you. Good, bad, or otherwise, please feel free to drop me a line at firstname.lastname@example.org. I’m the only person who will read your email and, as time allows, I’ll do my best, at a minimum, to personally acknowledge receipt.