This week marks our firms 20th anniversary. In 1999 my naïve business plan for a “fee-only” and “fiduciary” investment management firm fit on a cocktail napkin. It was me, a phone and a computer. Thankfully, much has changed since inception and hopefully I’ve learned a bit in the process that may be helpful to others.
Finance is taught as a discipline of logic and formulas. However, people’s finances and their lives are not logical. Because budgets and finances can be summarized with tidy formulas, we assume the world works that way. It does not! As such, success requires an appreciation for how psychology and human behavior intersects with logic and math. Humans have logical elements, but we are not an algorithm or formula that can be developed and repeated.
No matter your business model, we are all on the earth to serve others in some capacity. Embrace servant leadership and put the needs of others first. Develop a fiduciary mandate. If you do this, somehow things have a way of working out.
People matter. This is a great thing about the tech-heavy, automated world we live in. There is huge demand for customer service. In fact, we are so overwhelmed with rapid choices and information overload that having a human decipher choices is a wonderful differentiator for any business.
Happy clients stick around and become repeat clients. They also tell their friends. This allows you to save money on advertising expenses. Once you get a client, it is much easier to keep them.
When you are a business of one, you do not own a business. Rather, you have a job. Not until you build out your team do you have a business. Surround yourself with people smarter than you and who are willing to challenge conventional wisdom. Push them and reward them. Give them guidance, expectations and feedback, but get out of their way. Otherwise, your most talented people will leave. Sharing profits helps to motivate everyone in the common goal.
Once these people are in place, you gain operational efficiency and make a better world for everyone. Create an environment in which everyone has a chance to succeed and improve as the business grows.
Grow in a controlled manner. We have seen as many businesses fail from growing too quickly as from not growing at all. Growth is always a balancing act.
Find your passion. Life is too short to struggle at something that makes you miserable or just for money. Determine what you are truly happy doing. If you need guidance in this area, consider aptitude testing from the Johnson O’Connor Research Foundation.
You will make mistakes. However, mistakes are only detrimental if you fail to learn from them. Making mistakes is one of the best ways to sear learning opportunities into your mind. Hopefully, all entrepreneurs will continue to make mistakes—just not the same ones repeatedly.
Own your mistakes and fix them. We have made many mistakes. Hopefully, we identified them first and then brought it to a client’s attention along with a proposed solution. Most people are reasonable and know mistakes will be made. How you fix mistakes is what matters.
“Out-work” the problem. Although the hours on the door say 8am to 5pm, volumes of work happens outside of traditional work hours. Entrepreneurs may see customers during traditional hours. After that they fix the toilet, take out the trash, deliver mail and do everything else required to stay afloat.
Rarely will success come from 40-hour work weeks. One of my favorite lines from the book The Millionaire Next Door is, “The harder I work, the luckier I become.” Go make your own luck. Get up early, charge hard and work late.
Early in my career I benefitted from having specific financial information. Now, everyone has information. The tough part is knowing what is important and avoiding the 98% that is unimportant. This allows you to focus your learning and make intelligent decisions.
There are a few things that commonly lead to failure. Substance abuse and leverage seem to be constant contributors. Avoid addictions and borrowed money.
At a time when many argue that capitalism is broken, I’d argue just the opposite. Capitalism and entrepreneurship may not deliver even results, but it is the best system we have. At age 52, I am eagerly awaiting the next 20, if not 30, years of adventures in entrepreneurship.