Episode 208: Why Most Startups Fail (And How to Do It Right) | Business, Cash Flow & Leadership Principles.

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Today Counts Show Episode 208

Preview

Winston: Let’s get into some of the nitty-gritty.

Jim: And so that’s what this business was going through. They were friends, they knew each other, they started business together, they didn’t draw up any documents, any rules. And so what happened that went bad for them is not when it went bad, but when it went well. Because when it went well, certain things—

Appreciation of our Supporters

Winston: Hey, before we jump into the podcast, we want to thank all our donors and supporters who make the Today Count Show possible. It’s through your generosity that we’re able to shape leaders through this content and this podcast. And be sure to like, subscribe, and follow wherever you find yourself coming across this content. All right, let’s get to the podcast.

Introduction

Let me ask you something. Have you ever had a business idea, a real one, and then talked yourself out of it before lunchtime?

I think we’ve all been there a time or two. I know I have. But here’s the thing nobody tells you about starting a business. It’s not about having the perfect idea or the perfect plan or even the perfect moment. It’s about deciding that the cost of not starting is finally higher than the cost of being wrong. My name is Winston Harris, and I’ll be your co-host today on the Today Count Show. I’m joined by Jim Piper. How are we doing today, Jim?

Jim: Yes, sir. We’re doing well.

Winston: We’re back at it.

Jim: Yeah, we’re back at it. Let’s do this.

Winston: Back in the saddle. We literally just released a podcast previously talking about what it means to consider starting a business, all the things that you have to take into consideration. Maybe you’re on the fence. You’re in your nine-to-five and you have a desire but don’t really know how to think through that.

The Myth of the Perfect Idea

Now we’re talking about starting the business. We’ve made the decision. Somebody’s like, screw this nine-to-five. I’m starting the business.

Jim: We’re going to do it.

Winston: And we’re going to jump in. And we want to go right to the biggest myth in entrepreneurship: that you need to have the perfect idea before you start. What do you actually need, Jim, to start the business? Ground zero. We’re getting into it.

Jim: Well, I’ll just say it this way from my own perspective. Starting and owning your own business is not for everybody. So let’s make that really clear.

Winston: It’s not?

Jim: No, I mean, if all—How many people live on the planet? Is it 8 billion?

Winston: Yeah, 8 billion.

Jim: Are we going to have 8 billion businesses? I don’t think that’s going to work. But starting and owning your own business is not for everyone.

But looking back at my life anyway, I’ve realized that it’s in my DNA. So I would say it’s got to be in your DNA. You got to really want to do it. It’s hard work, but it’s different work. But we can kind of smooth out those wrinkles here in a little bit.

Winston: Yeah. I mean, if we’re just going straight to the ground zero, what is that pain point? Is it solving a need? Is it testing the market, understanding what the market demands are for that space? Or is it just kind of scratching your own itch, if you will? What is that starting point?

Jim’s Early Business Experience

Jim: Well, I think there’s probably a zillion different stories. I don’t even know if that is a number, zillion.

Winston: Sure.

Jim: Yeah. There’s hundreds of thousands of stories, I’m sure, that are all different and that would add different perspective. But before I widen my reach to include others that I’ve met and known and have worked with, I’ll say it this way.

I started a business. I’m not talking about mowing the lawns and raking the leaves when you’re 12 years old, but I started my first literal business with a wrestling buddy of mine in high school.

Winston: Wow.

Jim: And I never thought about, can you do that? Should I do that? I didn’t get paralyzed by anything. I just knew that I was making, I think it was, a buck ninety an hour at the grocery store.

Winston: Yeah, that’s not going to work in today’s market.

Jim: And then we saw this other opportunity, and we just took it. I worked for the better part of a decade as a business banker. Now, that was when I was in my 20s, so still a very young man, but man, did I learn a lot because I was exposed to all kinds of different businesses and all kinds of different characters. I’ll say that.

Ministry, Business, and a Starter Mindset

And frankly, ever since then, I’ve been starting ministries and businesses. My undergrad is in business at the University of Redlands in Southern California. I felt a call to ministry, never really being released from being a starter, but there was another application that came. So while I earned a master’s in divinity at Bethel, Minnesota, what do you know? My entrepreneurialism moved into what we call, in the world today, church planting.

But remember, one hand I was doing church planting, and on the other hand I had other things going on, did some post-graduate work at Bethel, and as I said currently—well, I guess I didn’t say this exactly—but currently I’ve started both a business and a ministry focused on encouraging leaders. That’s what this is about. Coaching, teaching, advising kind of all came into one, which of course includes ministry applications, business applications, entrepreneurial applications. So that’s me in a nutshell.

Winston: That’s a whole lot. There’s a lot going on.

Jim: Is it? I feel like I have to hurry because my life is running out.

Winston: You sound like a busy guy, Jim.

Jim: I’m a busy.

Winston: Busy guy. I mean, I’ve never formally started a business, but about a decade into leadership and worked with entrepreneurs, and there’s a lot of mistakes that you can make. Entrepreneurs can make a lot of mistakes. Obviously, you can make a lot of mistakes anywhere, having a nine-to-five formally. But what would you say, just in your experience, has been some of the major pitfalls in the conception phase, in the phase where you’re having to be like, okay, I’m doing it, I’m stepping off the cliff, but what am I actually doing?

A Business Built on Optimism and Sloppiness

Jim: Well, sometimes you start a business on accident. We will get into that birth cycle that we promised that we would last time on this podcast, but in my notes, I wrote down something so I wouldn’t forget. Sometimes you simply run into an opportunity that turns into more if you’re paying attention.

So one quick story is there was a successful business, financially speaking. They were put together as a quasi-partnership, loosey-goosey, which goes back to your conception phase issue, not really thinking. To answer your question most specifically, most people who start businesses are optimists in nature.

So what do you know about optimists? Optimists believe it’s all going to work out, and they’re smiling, and they say, “Oh, we’ll worry about that later.” Well, that’s a big mistake. You can’t worry about that, whatever that is, later. No, you got to worry about that now.

And so that’s what this business was going through. They were friends, they knew each other, they started business together, they didn’t draw up any documents, any rules. And so what happened that went bad for them is not when it went bad, but when it went well.

Because when it went well, certain things got in there like sloppiness and maybe some greed and maybe some didn’t seem like they were working as hard as the others and all of this thing.

Conflict as a Doorway into Business

I forget how they learned about me, how the majority owner learned about me. I don’t really remember. Oh, actually, now that I’m talking, I do remember. As usual, I knew somebody, and he knew somebody, and they brought us together.

But basically what happened is they asked me if I could maybe help, since my whole life has been conflict, right? The ministry is conflict, business is conflict, and sports is conflict. Everything’s conflict, right? Everything’s conflict. And I began to realize everything’s conflict. And so I didn’t realize it, but conflict was a doorway into business.

Winston: Wow.

Jim: And so what they said is, “Can you help fix us?” But we can’t pay you. And because they got themselves in such a big mess financially, even though they were profitable. So I used my entrepreneurial ideas, and I said, “All right, if we fail at putting this together, then you don’t owe me anything. But if we succeed”—and what success looked like, we had to define that—“is that the founder wanted to buy out everybody and keep the business for himself.”

And I said, “All right, if we pull this off and everybody settles, then I become a 35% equity owner in the company.”

So that was going to be my pay. And we were successful, and it did happen. And then, lo and behold, there I was being 35% owner of a business services business.

Starting a Business with Friends

So sometimes you run into opportunity because of who you are as a person. You don’t even necessarily say, “I’m going to become an advisor and help businesses out in critical situations.”

No, I never had that thought. I was just being me. And so I got in a head-on collision with an opportunity. Does that make sense?

Winston: Yeah, that makes sense. I kind of want to lean into something you mentioned in relationship to this case study here, where you said these are friends.

Jim: Well, they were one, two, three—there, I think it was three or four of them.

Winston: So usually, I’m assuming when you’re starting a business, correct me if I’m wrong, more than likely, if you’re going to start a business with somebody, it’s going to be somebody you’re in proximity to.

Jim: Yes.

Winston: Do you suggest that? What are the challenges with starting maybe a business with really good friends, people that you trust? Obviously, you want people that you trust, but what are some considerations even there?

Jim: Well, the business is going to end. And I think that one of the other things people don’t realize is when they start a business, it’s going to end. It’s going to end one way or another. So with that in mind, you need to decide how and what you can do to end the business in the best way possible. So that’s called a buyout agreement.

Keeping the End in Mind

In other words, if you’re going to—let’s don’t talk about whether we should or shouldn’t go into partnerships or not because I think that’s a 50-50 thing.

Some will call in to us and say, “No, don’t do it. It’s the craziest thing. Don’t ever have a partner,” blah, blah, blah. And then, of course, other people will say, “Man, a partner is how we scaled. It’s how we grew.” And so everybody has a different opinion. It’s usually based upon their experience.

Winston: Their context.

Jim: Yeah. Their context.

So putting that aside, we can say that every business is going to come to an end. Every endeavor is going to come to an end. And so, keeping the end in mind, how might I want to end it? I think I’m going to get into that a little bit more as we go further on here.

Winston: Yeah. Maybe the person listening who’s made the decision to start the business, they’re in this, once again, this conception, this planning phase. How do they not get stuck? How do they not get caught up in the paralysis by analysis and the overthinking? When do they know it’s time to pull the trigger? What is the key thing in this stage, in this planning stage.

Planning, Side Hustles, and Personality

Jim: Again, assuming that we’re planning, right?

Winston: Let’s not assume. First things first, plan.

Jim: Yeah. You probably have some sort of experience or some sort of success, and you’re probably using Patrick Lencioni’s Working Genius, entitled wonder, where you’re wondering, well, gosh, I’m doing this for so-and-so, and I’m earning a certain amount, and that so-and-so is getting a cut of that. Well, what if I were to step out on my own and do it? What greater opportunities would I have?

I think it goes back to what you said in our last episode to some degree. Which do you want? Would you rather try and fail, or would you rather just stay where you’re at and live with what you have? And I think that there comes a point in time where somebody—we call it side hustles nowadays—but sometimes we’d start a part-time thing. And I think sometimes it’s okay to start a part-time thing because it’ll wet your whistle, so to speak.

I don’t think you’re going to be successful doing it part-time, but you might learn enough to know whether you want to go all in, or you go, “Yeah, I don’t even like this and this about it. I like the security of the paycheck.”

Entrepreneurial Solitude

Some of it has to do with your personality, too, because if you’re going to be an entrepreneur and you’re an extrovert, that might be kind of tough because entrepreneurialism, in many ways, starts alone because you’re the inventor of whatever it is. So you’re going to start by yourself at some point, and a lot of your time is spent alone.

Now, if you build a big industry, then of course that will change as time goes on, but there’s a lot of hours, a lot of days, and a lot of weeks where you are working by yourself. And so that’s something to think about as well.

Winston: And you’ve already alluded to the DNA factor, the bent toward optimism. What are some other characteristics maybe that somebody’s even learning in this kind of conception phase about themselves?

Seeing Opportunity in Frustration

Jim: Great question. We walked into a Mexican restaurant the other day, and you knew I was going to bring up hospitality sooner or later. It already happened. I was in Arizona visiting my parents, and we walked into this brand-new Mexican restaurant. Brand-new. And the hostess had her head down, didn’t even look up at us, and mumbled something. I think she said, “How many in your party?” I think, but it was a mumble.

And then the next thing you know, she walks around from the little desk there and walks somewhere and just leaves us standing there. As we’re watching, we’re noticing that it appears as though she’s kind of setting up our table. We’re going, “Okay.”

And then she still doesn’t look up, but she kind of moves her body in our direction and waves us over. Then we come, we sit down, and it began. It’s pretty obvious that this young lady did not have any training. And I’ll talk about that in a little bit. But it’s pretty clear that she was doing her job.

Job Mentality vs. Entrepreneurial Mindset

Now, it’s obvious that she wasn’t trained as to the how or the why, which we’ll get into later, but she just has a job mentality. She’s there just to do the job.

Now, what happened to me? As soon as I sit down at the table, I looked at my wife, who was on my left, and I looked at my mom, who was on my right, and I said, “I just feel like we need to hang a shingle about Piper Management Group and create a vehicle that just teaches hospitality.”

And so there’s the two different mindsets right there. One sees an opportunity, one is doing their job. She doesn’t see that we as customers are an opportunity. She didn’t see us as an opportunity. She’s just going through the motions.

So that’s one. If you’re constantly going places and you get ideas about it should be this way, it should be that way, that could be this way, you might have some entrepreneurialism in you because you don’t like what you see. And that’s what entrepreneurs do. They solve problems, right? They’re trying to solve problems. I was more upset with the fact that I haven’t started a hospitality advertisement company than I was in being treated the way I was.

Winston: That’s an entrepreneur.

Jim: Yeah, it’s the entrepreneur. Does that—

Paying Attention to What’s Wrong

Winston: Yeah. That’s great.

Jim: So if you notice what’s wrong, you might— I’ll come up to, and we’ve talked about this before—but I’ll come up to a restaurant, and when I see fingerprints all over the windows, and I see trash leading up to it, I’m going, and I go in the bathrooms, oh, well, what does the kitchen look like? So that’s how entrepreneurs think.

Winston: Yeah, I think that’s really great. I think I’ve heard it said something to the effect of the spaces of your greatest frustration are usually the places where there’s a need to be met, an opportunity, a ministry.

But those places, paying attention to what makes you most frustrated, because you’re seeing a need. You’re seeing a place that people need to be served. Usually it’s not what makes you feel really good, what makes you happy, though.

Yeah, for sure. Something that you’re doing and have purpose can make you happy, but it’s usually the origin phase, the conception phase, is, man, that really frustrates me. Does nobody else see this?

Jim: Yeah. When you take Patrick Lencioni’s assessment on the six geniuses—is it six? Yeah. Six geniuses. I don’t test as my strength in tenacity, but that’s one. Customer service and tenacity, I think, are a lot related. They’re related. And so, people who like things done right—I think about construction crews, and I think about how the sites look when they’re working and when they’re not working. I think about how they button up things when they leave. They say the job’s done, but is it really done? Those kinds of things.

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What are some things that need to be considered maybe about the customer? We’re about to get into revenue. What are those considerations as we’re starting off?

The Conception, Prenatal, and Birth Phases

Jim: Yeah. So before we get into revenue, let’s just walk through real quick something that we touched on last time: planning without paralysis. When it comes to starting a business, I’d like to suggest thinking about it in the same way that a human being is conceived and born.

So in the conception phase, you want to think through everything. You want to think through everything that you can imagine. The idea, what you do and what you don’t do, meaning what you will do and what you won’t do. You got to narrow what you’re going to do because your enthusiasm might spill out, like it has with me many times. “Oh sure, I can do that, I can do that, I can do that,” but there’s no direction.

The need. What makes you the obvious choice? What makes me the right person to take this on? Which is a marketing idea. And then the money. Where are you going to get the money? The team, the partners, no partners—we were talking about that before. Where is the money coming from? And then how are we going to end this thing? Because this thing is going to end.

Prenatal phase. So we got the conception phase. That’s where we want to just think about everything we possibly can.

Launch and Growth Planning

Then what we do is we take that big list of everything that we can and we narrow it down to the things that we think we got to finish or have done or have in line prior to birthing this thing. And those things we put in what we call the prenatal phase. And I simply call that the things you must get done before starting.

Then the birth phase, of course, is the grand opening of whatever that looks like. Obviously, the term grand opening suggests some sort of retail center, but it could just mean that you hung up—

Winston: The launch.

Jim: Yeah. The launch. That’s better.

So how are you going to start? Meaning, you might have a vision for 14 services or 10 products, but you’re not going to start with 14 services. So that’s the first thing I’d like to say to everybody. You’re not going to start with selling all your products. You’re not going to start with selling all your services. But you got to think about the ones that you think would bring the most ROI, return on investment, get your lift going as fast as you can, and then you can add as time goes on.

So how are you going to start? When are you going to start? What are you going to provide in the beginning?

Then there’s the growth phase. And the growth phase is, you got to plan for it. You got to believe that it’s going to come.

Planning for Growth and the End

And as I kind of suggested a little bit earlier, if you’ve got a possibility of seven services or seven products that you’re going to specialize in, or three, or whatever it is, but you’re going to start with one, then you know that success and demand is going to have you move from one to two or one to three.

So what’s your plan for that? What’s your plan? How are you going to do that? So in other words, growth will not catch you by surprise.

So this isn’t getting paralyzed over planning, but it’s doing enough imaginative thinking so that you don’t get caught by surprise as much as possible, so that you’re ready to actually grow.

And then the final piece is the end, right? It’s going to end. So how do you want to end it? Are you going to sell it? Are you going to take it to the grave? Or are you going to franchise it? Are you going to hand it off to the kids? Or are you going to put it to death at some point so that you can start something new, whatever new is?

Winston: How many people don’t do their due diligence would you say?

Jim: It’s a big number.

Winston: Because everything you said was pretty exhausting just to even hear you kind of work through that.

Why Most People Skip Due Diligence

And you were given a summary. So imagine the actual work it takes before you even launch the thing. And you’re talking about kind of starting with the end in mind. How many people would you say, in general, need to do this due diligence to avoid some of the pitfalls many people experience because they don’t?

Jim: Yeah. Well, failure number one was the first business that I opened with my buddy Rod. And we started a firewood business. I might have mentioned that last time. We started a firewood business because we lived in the mountains. And we never asked the question, when will we be done doing this?

What we forgot in our naivete is we would have to buy a truck, we’d have to buy chainsaws, we’d have to buy gloves, we’d have to buy a winch, we’d have to buy a log splitter. We got to service all this stuff. Then where do you store this stuff? At some point, mom and dad’s not going to let you store all this stuff. You’re going to have to get legit. All these things.

But because you never really ask the question, how are we going to end this thing, then you don’t know how to sell stuff when you’re trying to dump stuff, and so you make some really bad decisions. So in this kind of a planning stage, you would already think through that. Was it just to get us through high school? Was it to get us through a couple years in college? Or were we going to go firewood nationwide.

Learning from Early Failure

Winston: Global.

Jim: Whatever it is. So I would just say, based on my experience as a business banker and as somebody, as a practitioner, I would say the vast majority do not do what we’ve just said. I don’t know what that majority is. When I say majority, it’s not 51%. It’s got to be 70%, 80%. It might even be 90%.

Winston: Which probably lends itself to why most businesses don’t make it. But I don’t know what the statistic is. Within the first five years, for sure, majority of businesses don’t make it.

Jim: Well, the crazy thing is Rod and I made a ton of money for high school kids. And so if we would have been a little wiser, we probably could have stretched that out better. But you fail. You fail as an education in and of itself. But then again, I was a sophomore or junior in high school. I don’t remember exactly. But I would never take that experience back.

But why won’t people listen to what we’re talking about right now and save them all that headache? I think this episode in and of itself—No, let me back up. The advice of “think about how you want to end it” is worth listening to this whole episode.

A Scripture on Creativity and Responsibility

And that goes back to Stephen Covey’s idea, keeping the end in mind. I think we just don’t want to think about the end, or it’s so far down there that you go, “Oh, who knows? It’s all going to work out.”

Well, that’s going to bring you nothing but hardship and disappointment.

Winston: And you mentioned something in this space of just doing our due diligence to think through and plan and not get paralyzed by planning. I think you mentioned the word creative, and it led me to this scripture that I came across the other day in the Message version that I think is applicable to this point.

Jim: Eugene Peterson.

Winston: Yep.

And it says, “Make a careful exploration of who you are”—talked about that—“and the work you have been given, and then sink yourself into that. Don’t be impressed with yourself. Don’t compare yourself with others. Each of you must take responsibility for doing the creative best you can with your own life.” And I think you’ve just touched on that.

Jim: Have fun.

Winston: Get creative, right? Think through all the things that could be. It doesn’t have to be this overwhelming, weighty exercise of all the things that, man, I can’t do or all the things that I don’t know. But once again, what’s in your control? What do you want this to look like?

Getting into the Money Stuff

Getting a really good vision, not just an optimistic vision, but a logistical vision like, okay, what resources do I have? What is the need? What do I feel passion or purpose for doing? And what could that look like if I really, according to the scriptures, sunk my teeth into it? But let’s get into the nitty-gritty, the money stuff.

Jim: Throw it at me.

Winston: The money stuff. What does it look like when we get into cash flow and budgets and investments and capital to get the business going?

Jim: It’s fun stuff. It really is fun stuff. Usually when we talk about business and you talk about acquiring money, unless you’ve got a ton of money and you’re just looking to build upon that foundation to make your money work for you, most of us, when we start businesses, we don’t have money, so we have to get money.

Now, there’s a couple phrases that we’ve all heard. It takes money to make money. You’ve heard it said that time is money. And both of those statements are generally true.

Where it gets complicated: if you’re going to start this business and reduce your risk as much as possible, then you’re probably starting it as a side hustle, and you’re probably using the money out of your own pocket, whether you get it through trading time for money or whether you’ve got some savings or whatever.

Loans, Equity, and Risk

But when you decide to be a big girl or a big boy and go after money, you’re going to have to get it in primarily one of two ways. And again, we touched upon this a little bit last time. You got to go get it from people who love you, people who believe in you, people who trust you. That’s a really dangerous thing, though, because the odds are not in your favor.

And so to look at all those family members and high school buddies and college buddies and be able to tell them that you’ve lost all their money, but you promise to pay them back some other way—you don’t want to be in that position. Even if you somehow become that stand-up guy and pay people back by going back to work and paying them $5 a week for the next billion years, you got to really think about it.

But the money comes in either by loans through people that you know, or you create some sort of equity share where they own a piece of the business. But you got to spell that out. What does that mean? How do they get dividends, so to speak? How do they get a profit share of your profits?

Certain businesses that you start, you probably can’t start without doing that.

The Solar Business Example

I’ll give you an example that comes from my business banking days. And again, I might be repeating myself from the other episode, but I’ll leave his last name out of it. But Ed came to me, and I don’t remember the exact amount. A half a million dollars sounds like it. That could be in a line of credit.

Solar was the big experiment in the 1980s, and the government stepped in and gave big tax credits. And so it was a great opportunity for entrepreneurs to put the big solar panels on your house, and you’d get all these benefits on your tax returns. And of course, guys are making a ton of money in selling you the product and the installation and maintenance contracts and all these things.

Well, to make a long story short, he raised a lot of money, and he did such a good job of it that he even came to our bank, and our bank gave him that line of credit. To be more specific, I gave him that line of credit. It wasn’t my money but the bank’s money, but I was the gatekeeper for that money.

Political winds change every time a governor or a president changes, at least can. And just as fast as that came about, so did the tax laws, and so did Ed’s business.

Not Having Enough Capital

But I took a hit, too, because by giving that money out, I lost all that on the bank’s behalf. For some reason, I wasn’t fired for that. I guess that’s kind of part of doing business, the cost of doing business sometimes in that.

But that’s an example. When we go through the five C’s of credit—which again I think we should do real quickly on this episode, not right this second—but money is a big deal. So you asked me earlier on, Winston, what are the main mistakes? And when it comes to money, the number one mistake is not having enough. People might say, “Duh.” Well, it’s not as simple as you might think.

So if you get in the retail business, for example, and your store does well, and any of what you sell is a big deal for either back-to-school or Christmas, you usually don’t have the money to buy the inventory that you could sell. It’s very difficult to get a line of credit to buy all the inventory that you need to get ready for Christmas. So instead, your shelves are bare when you could be making money. So you end up going out of business because you don’t have enough capital to get you through good times, not to mention bad times.

Weathering Good Times and Bad Times

In fact, it’s been a long time since I’ve studied retail numbers, but I believe that the numbers are astronomical. If you take Christmas in America out of most retailers’ profit and loss, they’re done. They’re done. It’s a crazy number. It’s way north of 50%. Way north of 50%. So clothing stores, toy stores, or any department store that has that.

So thinking through the money thing, thinking through, okay, what if we don’t meet our projections for 12 months? Can you weather that storm? So that’s a big deal.

Winston: Yeah, money is one thing. But then people, right? Building the right teams. Do you even know what kind of team you need? Some of that comes back to the personality type and who you are, and are there people that you need around you that complement you? But maybe talk to us about the leadership aspect of entrepreneurship because it’s not just, man, I’m just going to run and gun and do my own thing, but at some point, even if it’s just leading yourself. What are the leadership aspects that come into this play?

Your Team Represents You

Jim: Well, if you and I went into business together, our temperaments are really closely aligned, and that’s not bad. That gives us alignment easier. But generally, I’m just going to say this. This one’s going to hurt. If you’ve grown your business and if you want people to see you, they’re going to see you through your team.

Winston: Wow.

Jim: Through your employees. And so when we went to that Mexican restaurant, that’s all I needed to see, and I knew that whoever started that restaurant wasn’t a leader. Maybe they’re a chef. I don’t know. Maybe they’re a salesperson, and they went and raised the money to get this great idea started. I don’t know. But I know they’re not hospitality-minded, and that employee did not represent him well.

And that goes back to how well do you know yourself? How much do you realize that owning a business is more about leadership than anything else? In the story of that gal there that we met—and it wasn’t just her, unfortunately. We met many like her there.

Winston: It was a culture.

Jim: Yeah. When you have a business, you can’t simply tell people what their job is. You have to tell them what their job is and how to do it and why it’s that way.

The Five C’s of Credit as a Business Model

So if I can digress just real quickly to what I think is very helpful that you’ve led us to in this question, if I go back to the five C’s of credit, it really is a good business model.

First C: Character

The first C is character, and that is knowing yourself, right? It’s not just that you’re going to pay your loan back. It’s not just the fact that you don’t lie and steal and cheat. No. Character also means that you’re agnostic sometimes to your strengths. Sometimes you got to do what you got to do. That’s what character really is, right? Character is different than strengths.

It’s great if all of your strengths fit in the lane that you’ve placed yourself because you surround yourself with complementary team members, but you know yourself, you do what needs to be done, and you surround yourself with complementary people. So if you want to build your character as a leader: know yourself, do what needs to be done, and surround yourself with complementary personalities.

The other ones—we’ll go real quick. When it comes to competency, which is the second C, competency is really about growing beyond yourself.

Competency, Capital, Collateral, and Conditions

Leading people and creating culture has to replace your initial turnkey competency.

So let’s just say you’re that chef. If you’re back there in the kitchen and you’re the owner and you haven’t hired a like-minded general manager, or you can’t afford it, so you’re doing the GM work and the chef work, you’re just going to crash and burn. So the competency, in my mind, is that you grow beyond yourself. And your competency in leading people and creating culture has to replace whatever my main strength is.

Capital—we’ve already talked about it. Enough cash.

Collateral. If you have collateral to offer, that means that you’ve probably got the opportunity to get some capital through a loan.

And then really the conditions part—that’s the fifth C—is, as a young banker, I had to be smart enough to realize that the solar business was very, very risky because it wasn’t tested. And Ed did the same thing. He was more seasoned as an entrepreneur, but he made the same mistake. We both—you know, I give a talk about becoming the leaders we need to be, and one of the points is beware of the cutting edge. So if you’re going to go into business for the cutting edge, wisdom says don’t be the first one in. Be the second or third.

Early Adopters, Late Adopters, and Market Fit

Winston: Real briefly, as we land the plane, though, it made me think about the early adopters, late adopters. What should a business owner think about when they’re thinking about their industry, their market, and those who either, if it’s a trendier topic or product, there’s going to be maybe more early adopters versus maybe your service is a little more nuanced or complex and it’s going to—even fashion, for instance, certain fashion-forward ideas, it takes people a while to catch on. What are some considerations in that?

Jim: That’s definitely me.

Winston: Yeah, that’s a whole—maybe we should do a fashion topic next podcast.

Jim: Yeah. You’ll be doing the talking.

That’s a really great question because it’s a 360-degree question. When you talk about the doors that I’ve walked through, some of them have become doors that I wanted to do, and they weren’t necessarily seen as valuable to the potential client or customer as I thought.

But what’s strange is, as time goes on, if it’s legit, whatever it is, it does take hold, but you could go out of business before it takes hold, right?

Creative, Developing, and Maintaining Types

And I think that’s kind of the magical question you’re asking. I don’t know that I have a really good answer for that. All I know is that, take what I’m doing today: when I was in my 40s, I really had to hustle in the sense of bringing value, and today—I don’t mean this to sound like it’s probably going to sound—but it really is an evaluation on both sides of the table if there’s a good fit. There’s no sense of desperation. And desperation is a scary thing. On one side, it can give you the hustle that you need, but on the other side, you could make decisions that are not in your best interest.

So keeping yourself centered in how important you are to God and who you are and all of those kinds of things. But I want to respond because you used some important terms on the old bell-shaped curve you’re bringing back. So that’s typically on the receiving end. But if you’re on the giving end, I think one of the things—and everyone can Google it if you want, do a word study on it—but you’ve got the creative side of folks, and you’ve got the maintaining side of folks, and then you’ve got the developing side, which is kind of in the middle.

If you’re watching this on YouTube, I’m creating a bell-shaped curve.

Listening to the Customer

I got the creative folks on one side—those are those starter type— And then on the right side you’ve got the people who keep the house in order, and then you’ve got those people in the middle, and then, of course, you’ve got two in between there.

I think the best entrepreneurs either come from the developing, the middle-of-the-road section, or maybe bleed a little bit left. And I don’t know if they bleed right, but I’d say middle to middle-left is where I think most entrepreneurs are.

So if you’re a creative, most creatives are not going to be happy as an entrepreneur, but they would make a great partner for the lead entrepreneur. And depending upon how complicated and how many numbers are involved in a business—for example, manufacturing, where the numbers have to be in the thousands and thousands—then you can have a partner who leans right because there’s so much more to keep in line.

But anyway, on the customer’s side, just humbling ourselves and listening to the customer, listening. Whether you want to do your market research—but even if you believe in your product, what will get your product to stick better is not being so arrogant about your product and your service. Try to humble yourself and just ask your customer, how could this be better? What do you like about it? What could you do away with?

Too Many Bells and Whistles

My mom and dad were looking at buying a car, and the sales guy showed us this car that had every bell and whistle known to man. It was overwhelming for them. They go, “We don’t want all that.” But it was so cool. All these different buttons could do everything that you want to do and the things that you don’t want to do. And they’re just saying, “We don’t want that. We don’t want to pay for that.”

But look how cool this is. Yeah, that’s cool. We don’t want that.

Winston: That’s great. Yeah. And as we land the plane here, we talked about kind of ideation, we talked about planning, the nitty-gritty of finances and leadership. My biggest takeaway is obviously leadership. This all hinges on leadership and knowing yourself. But for the person listening, what’s one takeaway? What’s one thing you want them to walk away with as they’re starting the business?

Final Takeaway

Jim: I would just say that if you know deep down that you are a person that has energy, that you have an independent side to who you are, you’re competitive and positive, those are good additions to what I talked about with that developer. So if you like doing your own thing and you’re willing to learn and build a team, then start a business.

Winston: All right, you heard it. Start the business. If that is you, Godspeed to you. And until next time, we’ll see you on the Today Count Show.

Outro

Thanks for spending part of your day with us on the Today Count Show. If today’s conversation encouraged you, challenged you, or helped you grow, share it with someone in your circle because we’re better when we grow together. And be sure to subscribe, leave a review, and stay connected with us on Instagram, YouTube, LinkedIn, and Facebook. And remember, real change doesn’t happen someday, it happens today. Until next time, keep showing up, keep building, keep making today count.
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