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Oct 24, 2013

Planning for Success

Analytical Ones is the third small business I have owned.

The first business was more out of necessity. I graduated from college during the early Reagan years. That was before the go-go 80s were going anywhere. The only job offer I got out of college was to be an assistant manager at a Pizza Hut in Cornville, Arizona. I went to college for this? Out of desperation – or what Marx termed “economic determinism” – I joined my brother’s small business: Apollo Lawn Service. That venture went from a two person business to a company employing over 10 people and grossing $30,000 a month. In the 80s that was real money.

Lawn businessHere are the business lessons I learned at Apollo:

  • Your first priority is always to get new clients. Every other decision is secondary. Until you land a client, your business is just a really expensive hobby that you can’t afford.
  • Clients’ needs come first.
  • The concept of “sweat equity.” Basically, that’s the concept of substituting time instead of cash for “buying” equity in a company.
  • If you ever say “no” to a new project from a client, you force them to work to find an alternate solution; which means the next time they have a project they won’t bother to ask you again.
  • It’s difficult to plan to have a day off. You will have days off – you just don’t know when those days will be in advance. Best to just to accept this from the get-go.
  •  Many people don’t consider cynicism and sarcasm to be humorous.
  • I will never have a harder job than pushing a lawn mower everyday through Phoenix’s 110 degree summers. Whatever I do in life will be easier than that.

My second business was Analytical One. Or as a good friend of mine called it: Analytic Alone. Here’s what I learned in that business:

  • A one person business is tough. You have heard of the feast-famine cycle right? Well, in a one-person business that is a reality. Here’s how it goes: You don’t have any work, so you are spending all of your time in business development. Then suddenly, you have more work than you can possibly handle, so you work day and night. Then once you get all the work out the door, you realize that since you haven’t had time to do the business development, you have nothing to do. And the cycle begins anew.
  • Though it is hard running a solo shop, the truth is that the profit to heartache ratio of having employees is even more unfavorable.
  • Focus on doing work that you are absolutely confident you can do really well. Accepting work outside of your sweet spot is a costly proposition.

I can’t tell you how much my experience in each of these small businesses have influenced my approach to being the managing partner of an analytics consultancy today.

Analytical Ones is the first company I started that actually had a very specific vision in mind:

  • I hoped for this company to become the smartest solution for research and analytics in the nonprofit sector. (This meant it needed to include people much smarter than me).
  • Since this company had to involve others, I wanted to work with brilliant and talented analysts in the nonprofit sector whom I enjoyed being with. (That meant the culture of Analytical Ones needed to value cynicism and sarcasm.)
  • This company will never hire employees. Everyone who is a part of Analytical Ones is going to hold a meaningful equity position in the business. (That meant I needed to come up with an easy way for people to “buy-in.”)

That was and remains our vision.

To fulfill this vision, I had to come up with a business model attractive enough to convince brilliant but risk-adverse analysts to join.

I couldn’t offer a big salary and benefits package.

I couldn’t offer job security. Which I believe is a total illusion anyway. All you have to do is look back at the recent recession to see there were plenty of brilliant people who lost their “secure” jobs.

But I could offer one thing that few other businesses are willing to offer: Equity. And with equity comes influence and autonomy on how the work is done.

And that is a huge advantage over working at a big company.

The vision for Analytical Ones was never about getting rich.

It’s about serving clients in the best way possible. Minimizing BS. Maximizing potential.

It is about making enough money so that one could have autonomy in their work and balance in their life.

It’s scary starting and running a business. If you start enumerating all the risks you won’t get past reading this blog. Instead, you must focus 100% of your attention on planning to succeed.

I love the scene in the movie Gravity where Sandra Bullock’s character is re-entering the earth’s atmosphere. “I don’t know how this is going to end, but it’s going to be one hell of a ride.”

The honest answer is that none of us knows how things on this earth are going to end. However, we do have a choice on what kind of ride we are going to take. To quote Teddy Roosevelt: “Far better is it to dare mighty things, to win glorious triumphs, even when checkered with failure, than to take rank with those poor spirits who neither enjoy much nor suffer much, because they live in the gray twilight that knows not victory nor defeat.”

 

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