Sunday, 30 April 2006

I take a look at why its good to keep talking.

From the awkward silence of a lift-full of strangers, to the ‘smile and nod’ acknowledgement of those around you on a train or bus, or even the ‘I have my headphones in so don’t talk to me’ approach opted by so many on flights, I am astounded by the inability of people to interact with those around them!

Let me give you an example; It’s been a busy week, more so than usual, and a week involving a lot of travel, on trains, planes, tubes, taxis and more. Not only that, but a week of living solo, in and out of hotels, without the company of people I know!Scenario A: I chose to stay ‘reserved’ only interacting with people where necessary.
End Result: Quite an uneventful week

Scenario B: Made a concerted effort to talk to the people I came into contact with, wherever that may be (eg: on the train, in the hotel, in bars, etc).
End Result: Some new friends, new contacts, and potentially new clients for business ventures I am involved with!

Clearly therefore you can see the benefits of keeping an open mind to new people in your daily lives. The same is, however, true of the business environment, and particularly start-ups

There have been many occasions where, unfortunately, I have seen businesses fail simply because the owners of the enterprise had not the courage (or nouce?) to talk to people about their ideas, their company, and how they could grow!

Whenever I discuss this issue with clients, or during events I speak at, I am usually greeted with a lot of people who seem altogether scared by the prospect! Here are some common reasons given to me for holding out that steely faced British reserve…

1) Ideas being stolen!
Amazing now that all ‘entrepreneurs’ who see me arrive brandishing reams of non-disclosure-agreements, and play cards so close to their chests that often, I cant even understand what they want! The truth is, if someone is going to steal your idea then, invariably, they will – HOWEVER – by being more open and communicating, you can rapidly build the right network of people and contacts to make a project/venture happen. Cynics amongst us may consider this a slightly ‘na├»ve’ approach when considering the value of ones ideas, but the truth remains that unless you are cash rich and/or resourceful enough to execute your ideas WITHOUT support, you must communicate. One of our businesses, for example, is a financial recruitment company. Overwhelmingly the business and client base has developed simply by keeping an open mind and talking to people! Remember my busy week? (above) this resulted in three new clients for that company!

2) I don’t have the confidence to just go up and talk to people!
Unless you happen to be someone who enjoys living on the ‘edge’, chances are you will get nervous (at some level) talking to someone you don’t know. That fear could be rejection (in the case of a prospective other-half), disinterest, hostility, lack of acknowledgement or any one of hundreds of other things. The key is to always realise that whoever you are talking to, whether “prince or pauper”, they are just people, and (the way I always look at it) “talking to someone else surely is better than talking to yourself” And, to be fair, whether it was at school, college, university or the workplace I doubt there are any of us who haven’t crossed that psychological barrier before!

By being open, and creating dialogues, you can even develop the ‘support network’ you need of individuals who are there for you to bounce ideas and problems off, ‘without prejudice’ (simply as they have no reason to NOT be honest with you). I have, for example, a number of people who I have been talking to in this capacity for many years. Not once have we done ‘deals’ with each other, but nevertheless, act as a small network of support for each other. On more than one occasion, this has helped me reach the sudden and vivid realisation that I was, for example, about to make a very bad decision or that, in other cases, my new business idea was not as world-changing as I had previously thought.

So, to conclude this month’s instalment I would simply suggest that you keep an open mind and try to talk more to everyone around you! Who knows…. You might meet someone interesting!

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Thursday, 6 April 2006

The trend for entrepreneurs to flash the cash! Even when their businesses don’t have the resource

Whatever media I come across relating to entrepreneurs these days (whether it’s a TV show, magazine article, newspaper piece or otherwise), the overwhelming focus seems to be on wealth. A thirty second tv clip, for example, will cover the nature of the individuals enterprise for all of five seconds, before devoting twenty five to his boats, cars, plush houses and shiny teeth!

Anyone in business would, I feel, be lying if they said that at some level they weren’t “in it for the money”, but they would also be lying if the said it wasn’t ridiculously hard work, with long hours, unbelievable personal stress, and for the first year or two (at least) very little return.

The media focus, however, has created a generation of entrepreneurs who have the misguided belief that they will become millionaires overnight, and from the first few months of running their business, will be able to enjoy all the trappings of wealth!
The simple fact is, businesses CANNOT grow unless the owners re-invest profits into the infrastructure of the company (whether that be plant, machinery, staff, marketing, and so forth) all of which are costly yet important aspects. If the business owner effectively “rapes” the business of this profit to give themselves a better lifestyle, they are creating a number of massive exposures:

• The business will not have the cash it needs to re-invest in growth.
• The business will not have the cash it needs to ride out changes in market conditions.
• The business will fundamentally not be able to generate a good return for other investors!

One of my customers, for example, has a very strong import company. They have been running for over twenty years, and have a few million in the bank The business now has the stability which means the owner(s) are able to enjoy the toys & trappings of their hard work. On the flip side, other businesses I work with, which are barely out of their infancy, see their owners lavishly investing in fast cars, expensive toys, and so forth, leaving the business at (or often below) breakeven. On many occasions, I have seen organisations in the latter scenario crash and burn, whereas, in the former they are able to ride out massive changes in market conditions, and generate LONG TERM returns for owners and investors alike.

Part of the problem is the need to “show face”. With so much focus on wealth throughout every aspect of our lives, from our celebrity & sports-star idols (all on mega money), through to lavish lifestyles on TV, and weekend-millionaire-champagne-culture, the underlying trend is for individuals to measure their own self-worth, on net-worth, which creates a dangerous self-perpetuating cycle of spending outside means, and inevitably adding to the £1TRILLION (yes, trillion, not billion) of consumer debt in the UK.

HPI checks on most of the fancy cars you see floating around, for example, will reveal that most are financed to the hilt!

It also leads to a sap of good thinkers out of creative and science pursuits, into the service oriented corporate world, effectively turning our country from being an innovator and market leader, into a giant number-crunching-heirarchical-living-for-the-weekend-call-centre!

This kind of behaviour, ultimately, is damaging not only to the individuals involved, but to the economy as a whole. SME entrepreneurs contribute to a large proportion of our nations GDP, and unlike spangly-multinationals, these firms are loyal to the country, and contribute to money-flow, and ultimately ‘wealth’ of the country. The multinationals, for the most part, while basing offices here, will take their profits abroad to countries which are more tax efficient than hours (Yes, Mr. Brown, I am pointing the finger of blame there at you….)

Ultimately, there is nothing wrong with wanting nice things, and working hard to give yourself the ability to enjoy them, but the simple facts are that the overwhelming majority of people who GENUINELY are high-net-worth (other than inheritance), have built that wealth over decades (not a couple of years), and have often lived lives of priviledged mediocrity until the stage where their business is stable enough for them to cash-in.

So come on guys, keep it real eh?

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