STAYING OUT OF THE WEEDS

Weeds are diversions, inefficiencies, and even short-term successes that distract you from the course you have set for yourself. Weeds can be either negative or positive forces. They may take the form of being stuck with a large team that you just can’t find a way to keep motivated. They might involve becoming so mesmerized with the profitability you’ve achieved that you forget to move on to your next step. Your personal weeds might have to do with a tendency to continually react to everyone else’s demands instead of moving toward your goal.

Just as important as establishing the values that will serve as your road map is your need to set up the guardrails that will keep you out of the weeds. The guardrails you’ll need to keep you out of the weeds are very personal and will differ according to your circumstances and objectives. Everyone should have guardrails in place for the various parts of each zig and zag so that you are always in control of your financial number, your allocation of time, your duration of time, and your financial target. Your other guardrails will be determined by factors such as your tolerance for risk, your family’s tolerance for risk, your value system, and what portion of your personal network you are willing to expose to your endeavor.

I’m going to share some of my guardrails, but remember that these are my rules, not yours. I share them only to illustrate how important it is to give careful, specific thought to your guardrails, rather than attempting to put them in place when you’re in the middle of heading over the cliff. Here are some of my guardrails:

I will not jeopardize the financial stability of my home or family. I am not going to mortgage my house for my business.

I like to keep my teams small (under 15 people).

I will be very careful in taking venture capital. I want to retain ownership in my companies.

I must control the finances of my business.

I will not sign personal guarantees on a business I do not personally control.

I will protect my personal network.

I will not get involved in a business that goes against my personal moral values.

I will not do anything illegal or unethical.

I will not work with people I do not enjoy. Whether it is a customer, a vendor, or an employee, life is too short to work with miserable people.

My list is actually longer, but these are a few examples of my guardrails. If I find myself getting near the edge on any of these, my wife, my business partner, and my executive admin each knows me well enough to tell me I am starting to cross the line. And I expect them not to stand by silently.

The following are brief elaborations on the rules I have set for myself—the reasons behind each guardrail. Again, remember that your circumstances and needs are different from mine, just as each ski slope is different. The key is that you need to define what guardrails you need in your life.

I WILL NOT RISK MY FAMILY’S FINANCIAL STABILITY

Before I took the plunge into full-time entrepreneurship, my wife and I had paid off our home. This was a huge milestone for us, and it provided us with some sense of security as I undertook pursuits that involved a much higher degree of risk. I have committed that I will not jeopardize my home because I do not want to take risks with my family’s financial security.

I KEEP MY TEAMS SMALL

Whether I’ve been working for an organization or running a small business, I have always preferred to keep my teams small. I know myself well enough to know that this is where I excel. I have found that if I keep my teams under 15 employees, then I can know the needs, interests, and desires of each person. I can get to know what motivates them so I can push the right buttons to keep each person going. I have run much larger teams, but keeping them small results in the highest output for the amount of input I can give.

I AVOID VENTURE CAPITAL TO START OR GROW A BUSINESS

I have a good friend who had the courage to become an entrepreneur 15 years ago. He and his family came close to living on wheat and water so he could create his business. He maxed out credit cards and used whatever he had to become successful. And, indeed, he did become successful and profitable. He and his business partner then decided to grow the company even bigger, and they were able to raise a couple million dollars in venture capital. They continued to work hard and became even more successful. They were the rave of all of the business magazines in our area. They won awards and were highly regarded. However, bit by bit, as financial challenges hit, they sought out more venture capital. But each time, they also signed away a bit more of their lives, to the point where the venture capitalists had diluted the ownership of the company they had sacrificed so much to build. Now my friend is at a point where he has minimal ownership in the company, and yet he is contractually obligated to run it for the venture capitalists. Of course, the venture capitalists demand that he put in the same amount of work and energy as when he started the company. After years of hard work, he still never gets to spend the time with his family that he was hoping this business would allow. He is now middle-aged, and he is burned out. If he would have stayed on his initial course and built his business a little more slowly, he could have zigged and zagged his way to permanent success. He now either has to start all over or continue to work in a company he no longer controls. There are times and places for venture capital, but not as frequently as people think, and it is not my desired funding method.

I CONTROL THE FINANCES OF MY BUSINESS

I have learned the hard way that every time I do not keep my finger on the pulse of the finances of my company, it goes into the weeds. Once, I returned from a vacation in Nepal to find that my partner had obligated us to a bunch of expenses without our having the income to pay for them. To cover his commitments, he basically sold off our inventory in a fire sale. He was so proud that he had sold so much product, but he did not bother to look at the bottom line, and we took a huge loss on the items he sold. He seemed to have forgotten that sales don’t really count for much if they don’t actually make a profit.

I really do not love doing the finances, but I have learned that no one else is going to manage my money the way I manage it. I always pay my bills on time, and I always know exactly how much is in my bank account. I simply do not spend money I do not have, and if I’m not keeping track of my finances, I know I could find myself in a position that would force me outside of my guardrails.

I WILL NOT MAKE PERSONAL GUARANTEES ON THINGS THAT I HAVE NO CONTROL OVER

Years ago, I was hired as a young CEO of a small start-up company. I did not have ownership, but I was eager to impress the owners and show that I was in the game. The company needed a batch of new computers for the employees. I thought I was demonstrating my commitment by volunteering to sign for the lease on these new computers. So, I signed a personal guarantee that obligated me to a three-year lease. Needless to say, the business collapsed along with the rest of the Internet bubble. Here I was without a job, and I had to pay $800 each month toward these computers. I brought them home and lined them up in my basement. They had absolutely no value to me, other than my kids learned great computer skills. I did fulfill my obligation, but I vowed never to sign a personal guarantee on something over which I do not have complete control.

I PROTECT MY PERSONAL NETWORK

One of my guardrails is that I will protect my personal network. I’ve been offered countless opportunities to get involved in businesses that would have been dependent on tapping into my networks of family and close personal friends. At times, I would have been looking to them for capital. At other times, I would have been using them as my primary pool to market to. For me personally, I’m very protective of my family and friends because I know that they will be very hard to replace if a business goes south.

I STAY FOCUSED ON MY VALUES

I try to always ensure that my business life conforms to my personal beliefs and values. Obviously, I will not do anything that is illegal or unethical. For some, that line may be a bit fuzzy, but my guardrail is whether I would ever have to justify or rationalize my actions to my wife or my children (or my mother!).

Sometimes, my decisions are made by the simple measure of whether an opportunity feels right to me. Not long ago, I was approached about doing business with an individual who was manufacturing and selling diet products. The opportunity seemed promising, so I went home and told my wife about it. Given her experience as a registered nurse, she examined the product and then told me why she felt it was not safe and why she felt this venture wasn’t something I should have my name associated with. The product was perfectly legal. But it was not something my wife believed in, so I did not pursue the opportunity.