Are you familiar with the “Marshmallow Test”? For those you who are unfamiliar with this legendary experiment, select four year old children were given each a marshmallow, but told that if they waited 7-8 minutes longer holding it without consuming it, they could have two then – not just the one. Fourteen years later, when they were tracked down, those kids who waited an extra 7-8 minutes to have an additional marshmallow, turned out to be better learners, more popular, and still able to delay gratification in pursuit of their goals.
That ability to delay gratification hinges on a cognitive skill: concentrating on the good feelings that will come from achieving a goal, and so ignoring tempting distractions. That ability also lets us keep going toward that goal despite frustrations, setbacks, and obstacles. And therein lies its application to entrepreneurs and business leaders.
Every enterprise – particularly a startup – will have rocky times. Successful entrepreneurs often have a history of failures, before their success. Their ability to persist despite frustrations lets them resist the temptation, say, of just taking a secure job. Following their dreams and their own instincts is more important. And that journey will mean many delays of gratification.
What’s interesting to me about entrepreneurs is how they tend to find more gratification in the process of achieving their goals than in the perks that come with financial success. In fact, studies show that the money entrepreneurs make is, for many of them, mainly a way to keep score on how they are doing rather than an end in itself.
How do you then Succeed as an Entrepreneur?
Here are some observations, in no particular order:
Keep Your Personal And Business Wallets Separate. The old adage that business and pleasure don’t mix also holds true when it comes to your business finances. Make sure you set up separate accounts for your business, and handle your business finances in an organized ― not haphazard ― way. When it comes to money, have some in savings and a credit line available to get you through the tough times.
Not All Money Is Created Equal. You need to know when and how to raise capital, (both equity and debt), and how to wisely put your money to work on things that adds value. You should be spending as much time researching what investors and lenders want as you spend understanding what your customers want. Understand the approach that angel investors take versus mezzanine debt investors. The more you know, the better positioned you will be to tap the capital markets and make the appropriate asks.
Work On Your Business, Not Just In Your Business. Time and time again, I hear stories from entrepreneurs about how they are so focused on their product or service that they overlook something important in their finances, in the fine print in legal documents, or in the marketplace. Why is this important? Make sure you understand the “business of being in business,” which means to invest your time and energy on the management side of running a business. And, while you definitely should tap experts in accounting, finance, and the law, you need to educate yourself on those issues so that you can provide appropriate oversight.
Find Your “Business Iowa”. In her book ‘Take the Lead’, Betsy Myers shared how a relentless focus on “winning Iowa” by the 2008 Obama for President campaign brought clarity to an organization “under siege” and provided a strategic “filter” for deciding what to do as well as what not to do. So, try having a focusing question to create clarity. For the Obama campaign, it was “Will this help us win Iowa?” Then, it becomes easier to make trade-offs. Keep distractions at bay and keep your eye on the ball.
Plan, Plan, And Then Plan Some More. Most business owners spend a lot of time planning before they take the plunge and start a business. That makes sense. But, the need to plan doesn’t stop when your business is up and running. You need to still need to plan for business cycles, life events, retirement, and more.
Evolve And Adapt To Thrive. The business owners I speak with are always doing research and speaking to customers, partners, and more. They leverage all types of resources to stay inspired and bring a fresh perspective to their work. A great business starts with a solid business plan and a clear picture of what you bring to the market and what problem you are solving for your client or customer. Then, a great business keeps evolving and adapting.
Form An Advisory Board. Most of the business owners that I spoke with view an advisory board as essential to their success. They use their board compliment their “weak areas” and provide an ongoing, structured means of soliciting feedback. To be effective, make sure your advisory board is made up on people who have different disciplines, backgrounds and life experiences.
Network With Intent. Networking is an important activity whether you are a business owner or corporate executive. However, it is particularly relevant for entrepreneurs. Successful business owners view attending functions and joining business organizations as part of the job — it helps you build awareness for your business. And the stronger your personal and professional networks, the easier it will be to deal with decisions and challenges.