85.01.soberentrepreneurship

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SOBER EN TR EPR ENEUR SHIPWhy Modern Entrepreneurs Wont Succeed Under the Inf luence

Carol Roth

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The Modern Entrepreneurial Paradigm

(a.k.a. Its Not 1930 Anymore)With a struggling economy, the current zeitgeist is that we need innovation, entrepreneurship

and small business activity to become the engine or sustainable growth. Entrepreneurship

has long been a hallmark o our capitalistic society. In 1931, the concept o the American Dream

was coined and entrepreneurship ourished. Over the past 80 years, hungry individuals with

innovative ideas have created businesses ranging rom the groundbreaking (Microsot) to the un

(Nike) to the mundane but necessary (the corner dry cleaner).

But its not the 1930s anymore and the American Dream needs to be looked at dierently.

Entrepreneurship today is more accessibleand more complicatedthan ever beore.

Given technologies that enable access to inormation, the good news is that you can work

rom just about everywhere. The bad news is that you can work rom just about everywhere.

The amount o additional administrative and non-revenue producing tasks that an entrepreneur

needs to do today is staggering. The lines between our personal and proessional lives

are getting blurred, whether its with our time or even our social media interactions. Balance

in our lives is harder to defne and to achieve.

Lets also not orget that we already have virtually everything that we need and most o the

things that we want (and a bunch o stu that we dont really care about). Most o the biggest

employers in our country didnt exist in the 1930s. But despite the number o products and

services available to us and the increasing challenges o business ownership, we are ostering

entrepreneurship blindly. According to the Kauman Foundation, we are seeing approximately

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6 million new businesses created every year. Most o those arent driven by innovation and i recent

history is an indicator, they wont grow or even exist fve years rom now.

I we are going to hang our hat on entrepreneurship, we need to ensure more successes, avoid the

number o true ailures and make sure that we have the right people pursuing the right opportunities

at the right time with the right preparation.

Friends dont let riends start businesses under the inuence.

Following Your Heart vs. Your Head

vs. Your GutThere is an intoxicating element about starting a new business. It gets your head spinning and

your adrenaline pumping as you antasize about the possibilities o being in charge o a new empire.

But is that emotion business lust or business love? Lust is just as intoxicating and leads to

poor judgment (and oten regrets). I call this business beer gogglingwhen you are so intoxicated

by a business concept that the business idea looks a lot better to you than it is in reality.

Emotion can uel you to get outside o your comort zone, but business decisions need to betempered with sound judgment. This is not just rom your headwhich can hold you back

by rationalizing earbut also rom your gut. Is what you are evaluating realistic? Where are the

issues that you arent seeing? I you are so close to it that you are having a cant see the orest

through the trees issue, you need some input rom trusted business wingmen (or wingwomen).

Passion will get you going, but perseverance will keep you going.

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The Wedding vs. Happily Ever AfterHow many people do you know that have their entire wedding day planned out in excruciating

detail? They have spent months retting over tablecloths and the song or the frst dance.

They have tasted every cake flling rom vanilla buttercream to strawberry preserves, have arranged

or 20 doves to be released when the ceremony is fnished and have an hour-by-hour honeymoon

itinerary. What happens ater that? They fgure that they will live, happily ever ater. However,

the real hard work in a marriage isnt planning the wedding or the honeymoonits when the

honeymoon is over. Working on the relationship to keep it strong and thriving day-in and day-out

is the hard part. And a lot o couples who orget about this end up divorced.

The same thing goes or business. Entrepreneurs spend a lot o time brainstorming the idea,

perecting prototypes, products and services and planning or the launch. Thats the

wedding and the honeymoon. The real work begins though, in the business, once it is

launched. More time and seriousness needs to be given to happily ever ater.

Passion will get you going,but perseverance will keep you going.

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You conceive your business idea, model and plan once, and in the grand scheme o things

its airly low risk, with little difculty and little work. However, you have to do a whole cadre

o activities on an ongoing basis, including:

This is what happily ever ater is all about. Its about the execution, not just the idea.

The sober reality o our competitive environment is that we have hundreds o choices or cola,

let alone sot drinks, let alone beverages in general. Its not 1930 and the landscape doesnthave myriad Greenfeld opportunities.

Ideas are no longer enough. Fabulous ideas ail, stupid ideas succeed and the same companies

are brought to the brink o bankruptcy and back to the pinnacle o success by dierent management

teams. Success is brought about by execution, not ideas. The happily ever ater is what counts.

We need to oster a culture o execution, not just ideas.

Fine Tuning Business Model

Creating Updated Business Plans

Hiring Employees

Managing Employees

Training Employees

Investing Money

Taking on Risk &

Opportunity Cost

Designing Products/Services

Manuacturing Products

Finding Retailers or Resellers

Building Out Your Store

Perorming Services

Identiying Customers

Marketing to Customers

Servicing Customers

Perorming Customer Service

Automating Your Systems

Managing Logistics

Following the Competition

Outmaneuvering the Competition

Creating New Innovations

Managing Your Brand

Protecting Intellectual Property

Decreasing Operating Costs

Managing Your Service Providers

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Drinking the Passion Flavored Kool-AidWith tough economic times and demanding lives, we are in search o balance and ulfllment.

This has created a huge ollow your passion movement, which suggests that you should earn

a livingperhaps by building a businessrom your greatest lie passion.

Its time to put down the passion avored Kool-Aid and think about opportunities rom your

customers perspective as much as rom your own perspective.

While I think that successul businesses have leaders (and oten employees, by the way) who are

passionate about the business opportunity and their customers, you do not need to start with your

lies passion as a starting point. I you are passionate about the television show Dexter, Im pretty

sure that doesnt translate into you starting a serial killer business (despite being amoral and illegal,

I dont think the market opportunity is that large). But seriously, why do so many people think that

you need to earn a living rom what you love to do the most?

Pai it a tatig pit: Zappos.com is a business where passion ollowed opportunity,

but wasnt the starting point. I cant imagine that Tony Hsieh is more passionate about shoes

than most o the women I know. He is, however, completely passionate about customer service,

which has taken the business to the top o its game. But peoples lie passions generally arent

around concepts like customer service, which drive successul businesses. Kids grow up wanting

to be fremen, ballerinas, baseball players or Star Wars characters, not community builders. I

you ask someone their passion, I can guarantee that 99 out o a 100 times or more you will get

answers like gol, dancing, wine, scrapbooking or sex beore customer service, community

building and customer loyalty. I you start with passion, Imelda Marcos or Sex & the Citys Carrie

Bradshaw end up running Zappos.com beore Tony Hsieh.

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Successul businesses identiy a customer need or wantan opportunity. When the entrepreneur

is incredibly passionate about flling that customer need and is uniquely positioned to be the best

person to do so in some way, shape or orm, thats where business success happens.

And heres the brilliant part: where are you going to fnd an opportunity? As long as you arent

a bandwagon hopper trying to jump on whatever is hot, you will likely fnd an opportunity rom

an area o interest. I you have no interest in green technologies, its not likely you will notice

a customer need in that area. On the other hand, i you are a oodie, its quite possible that you

will run into an opportunity in or around ood.

Th a w i t all hbby: One o the ways to truly have some semblance

o balance in lie is to try to keep your work lie rom seeping into the rest o your lie (increasingly

difcult, I know). But truly, i you have something that you do to relieve stress or add joy to your

lie, do you want to layer on the requirement o earning a living rom it? Once you depend on some-

thing to put ood on your amilys table and to pay your mortgage, it changes the entire nature o

the relationship. Sometimes, work can be un, but its not called that or a reason. Plus, we werent

designed to always be on. We need time to recombobulate and relax.

Passions are magical, but businesses are grounded in realities. Do you remember when Dorothy and

the gang peered behind the curtain to fnd out the Wizard o Oz wasnt an all-powerul being, but

rather, kind o a loser? Or when you ound out that Santa Claus wasnt real? Or when you fguredout that your parents werent superheroes, just people with aws? It sucked, right? Our hobbies are

about escapism. There is a bit o magic and antasy in them. When you make that your business,

you are privy to the nuts and bolts. That tempers the magic.

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It t all abt y: Having a hobby is a total sel-indulgence. It is something that you can do

that is mostlyi not entirelyyou-centric. While you may think that you can have a business

that is all about you, you would be wrong. A business is about your customers. In your business,you only get a say i it jives with your customers wants. Otherwise, they dont buy rom you.

I you are approaching a business rom what you are lacking or missing or passionate about, you

are completely ignoring those who allow you to have a businessyour customers. Again, our

environment is raught with competition. Customers, whose attention spans are contracting, are

bombarded with messages and are harder to reach than ever. You have to make the customers

the most important part o your business.

I you want to ulfll a passion, do it. Thats what hobbies and ree time are or. But i you intertwine

that desire with a business, remember that your passion does not pay you or goods or services.

Bi i abt ig a bi: Your job when you run a business is to run a business.

Ask how many hours the photographer spends shooting photos, the oodie spends baking and

the wedding planner spends picking out linens and owers vs. doing a bunch o crappy administra-

tive tasks. Its a bit out o balance. Just because you love doing your hobby, you dont get to do

that particular acet o it 100% o the time when it becomes your business.

Passions are magical, but businessesare grounded in realities.

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Moreover, theres no relationship between loving something and being good at running a business

related to doing that something. A passion or cooking lasagna doesnt automatically qualiy

you to run an Italian restaurant or start a ood company (neither does a passion or eating lasagna,or that matter).

While you may fnd an opportunity rom things you are passionate about, I dont think its the best

starting place to create a business. O course, there are exceptions to every rule. However, the

exceptions dont make or a good strategy. It is possible to win the lottery, but that doesnt mean

that you should invest all o your money in lottery tickets.

At the end o the day, while you absolutely need to be passionate about making your business a

success, you dont need to make a business rom your greatest passion in lie. Dont let anyone

tell you otherwise. Find the opportunities that ignite a passion within youthat is where the success

will happen.

I you are drinking the Kool-aid, sober up beore you move orward.

Find the opportunities that ignitea passion within youthat is where thesuccess will happen.

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Living SoberGetting sober about business doesnt equate to having no un. It means having a clear head.

It means doing the prep work. The boy scouts know the value o preparation and statistics show

that businesses with plans succeed at a higher rate than those without.

We need to be real about this. Are you:

Mtivat by th ight at? Do you understand that the customers are the boss, not you?

Are you inspired to serve them and meet their needs? Or are you hopping on the hot bandwagon?

A y pig a pptity that ma ? Is the opportunity and business model

that you are pursuing big enough to justiy the risks that you have to take on to make it happen?Is it remarkable, viable, scalable and suitable or you?

I it th ight tim? Timing plays a huge actor in business success and I am not talking about

market timing. Do you have your fnances in order? Can you prioritize the business in your lie?

Do you have the right experience?

Hav y vythig y a t ta th i y av? Have you tested

out the business, ailing ast on a limited budget beore betting the arm? Have you put the right

network in place?

I your answers to these questions are no, take the time to get it right up ront. Theres a lot o moti-

vational just do-it stu around, but action without purpose can have you just spinning in a circle and

getting tired. I you want to get somewhere, research it to make sure it really is what you had imagined,

set it as the goal and fgure out the path to get there. It doesnt help to jump in the car and drive north

i you are trying to get to the South Pole. Action or actions sake doesnt make a lot o sense.

Y mt ll p y lv a th am w, bt ma that y at

lig at tphip thgh bi b gggl.

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ABouT THe AuTHor

Carol Roth is a business strategist, deal maker and author o the New York Times bestselling book,

The Entrepreneur Equation. Carol has worked with hundreds o companies, ranging rom a singleentrepreneur with an idea to Fortune 500 businesses, on all aspects o business and fnancial strategy.

Collectively, she has helped her clients raise more than $1 billion in capital, complete $750+ million

in mergers and acquisitions, secure high-profle licensing and partnership deals, create brand loyalty

programs and more. You can fnd her online at carolroth.com and on Twitter at @CarolJSRoth.

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