Note: This is the second in the series of blog posts about stuff that has served me well in the world of business. The success of Own Web Now, ExchangeDefender and Shockey Monkey has been well chronicled, these posts are more about me – some stuff I was born with, some I learned after hitting the wall with the head too hard and often. Take it for what it’s worth, forward it to your friends if you like and if you’re interested in these please feel free to join my private list by clicking here.
Last time I wrote about the importance of tolerating failure. In business and life setbacks are natural and they come and go. There is really one failure you won’t be able to overcome – death – so as long as you can accept that with each day you get another chance you will put yourself in the right frame of mind to be successful. You can always change things up, try something new, learn to let go of things and not let stuff bother you. It’s a process.
Failure is a part of it.
But what if it’s a really epic colossal failure?
So long as you’re still alive, things will be alright.
In short, you do not want to let things get so far that a mistake ruins you. With these three simple steps:
You can and will be wrong about things.
Some decisions will be bad and you will make mistakes.
It’s easier to change your mind and admit defeat than to die trying to be right.
For example, let’s say you’re about to add a new line of business. Or hire a new employee. Or take up a new marketing campaign. Or lease a car.
Establish a timeline.
Establish a review period.
Establish conditions: success or failure.
The new business you start might generate millions of dollars of profits. New employee could lead your company to the new heights and become someone to run the whole place while you move to a tropical island. Marketing campaign could transform your organization and win loyal clients for life. You can race the leased car in the underground drag racing circuit and make a six figure income after work. Awesome.
Or the new line of business could bankrupt your whole company. The new employee would steal money until you confront them and they show up in the office with a gun. The really clever marketing campaign might turn out to be horribly offensive to the general public and people would throw stale vegetables at you everywhere you go. The day after you lease the car you get fired and your new job is 60 miles away from home. Shit happens.
The key to success is knowing when to quit, knowing what is at risk ahead of time and being able to make business decisions based on facts and data not feelings and mood when you’re stressed and not thinking clearly.
To make it work, follow these three simple Vlad rules:
Rule 1: Set your risk
Before you undertake something, know what you are willing to risk.
All business decisions come with a $ value attached. Before making a decision, whether a purchase or investment, I like to know what it’s going to cost me. I also like to guess how much it’s going to make me. So if I’m going to have to spend $100,000 to earn $120,000 and I stand to potentially lose $70,000… I’m going to pass. I know what my loss tolerance is: $50,000. I know by when I expect to see the return on my investment and I know that I will need to keep an eye on it leading me to..
Rule 2: Be a disciplined failure
Stick to your schedule and make decisions based on data and your own plan, not your gut instinct. In business you almost always fail hard when you’re not paying attention.
Business deals happen without you in the room. Technology changes the landscape of the industry. Operational efficiencies render things useless from time to time. Things change. This is why it is so important to evaluate your decisions on a preset timeline and realize when you are just wrong and heading in the wrong direction.
This is where half of the people lose it. They cannot tolerate failure. Their ego will not let them admit to themselves that they were wrong. Perhaps I’m just a jerk but I could care less about what you think of me when it comes to business – that’s why I run a business instead of a political campaign or Ms. Congeniality contest. Let. It. Go. If your plan ahead of time called for certain results to be in place by a certain date and those results aren’t there – you’ve failed. Game over. The more you try explain to yourself how you were right and everyone else you’re wrong the more wrong you become with each passing day.
Rule 3: Don’t buy your own BS
Never lie to yourself. Extend that as a service to others and stick to your own definition of success/failure.
About a decade ago I coined this phrase “I just sold you a dream” that most business owners and managers can probably relate to. As a leader you have to convince people that you know what you’re doing and that they should follow you. If the only one following your dream is you then it’s pretty much the same thing as digging a hole to try to get out of one. It’s futile.
This is where the other half of the folks I know fail miserably: they have a good idea that just keeps on getting better and better the harder it fails and the worse it performs. It just needs another tweak, a little more money, a little more effort and.. yeah. Endless cycle of failure upon failure. If you’re constantly going from one business model to another, from one job to another, barely making ends meet – it’s time to reassess your core expectations and get back to the drawing board.
Balancing Quitting & Patience
How do you know when to quit and when to be patient? The answer is: you don’t. But if you establish your tolerance, risk and failure levels ahead of time and continue to review them along the way.. you stand much better odds.
This is something that has lead me to phenomenal level of success in business: My odds of success have been better because I knew the outcome I wanted and when I wanted it by before I begun. So if at the due date things didn’t look right – I changed things or scrapped them altogether.
Not everything is a winner. I’ve learned to take business one year at a time (you know, like real companies) and extend my expectations to all areas of the business not just typical annual stuff like finances. I started to look at employment, goals and incentives on an annual basis too. I’ve hired people that for one reason or another did not immediately work out. Had I cut people that failed me quickly I probably wouldn’t have had one of the most valuable employees I’ve ever had. But by the same token, I’ve allowed worthless toxic people to sit around and ruin the company atmosphere day after day, one HR policy after another.
Ever notice that there is a sense of relief when something is over? Let’s say you had a terrible employee and eventually you just had enough and fired them. Not only did they fail as an employee but you failed as the manager – to lead them, mentor them, communicate to them how to become valuable to you. As you sit there and make that long, deep exhale you feel a sense of relief – and you wonder why you didn’t make this decision sooner? Or you just quit that crappy job and wonder why you didn’t do it the first time your boss was mean to you or the clients didn’t respect you or you didn’t get what you wanted?
The balance of knowing when to quit and when to be patient is a myth. There is no such thing as balance – you’re always either quitting too soon or being patient with a failure for too long. So forget the notion that you will be able to get it done just right (again, don’t be afraid to admit failure)
In absence of balance there is always sound judgment: Establish your expectations ahead of time. One year from now I want _____. Within the next 3 months I expect ____ and if it doesn’t look like that will happen in 6 moths I will do _______. If within 9 months neither stage is set, I am better off doing _______.
Then it becomes pretty simple. You look at your annual plan every 3 months, look back at what you expected, compare it to the way the world may have changed since then and decide if you were just wrong or if the underlying facts have changed.
If you were wrong – quit.
If the facts changed – draw up a new plan and set up new expectations.
Just don’t wing it. Do not sell yourself a dream – pinch yourself every now and then. Do not dig yourself into a hole you can’t climb out of – look up every now and then and see what is around you. Planning and awareness will trump balance and instincts every single time.
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