For today’s blog I’m straying from my usual format & embarking on a 2 part partial book review of Felix Dennis’s “How to Get Rich” which I’ve recently been reading again – more for the entertainment of Felix’s unique way of writing and his mad bits of homespun advice that really do make a lot of sense. Also for his poems & the quotations from others he sprinkles throughout his writing which always make me smile. Whatever you might think of Felix Dennis, you can’t argue with the fact that he’s made a helluva lot of money through his own hard graft & through doing things his own way. Many of his enterprises he owns outright so he hasn’t had to accommodate the views of investors or VCs – he’s made a lot of his own calls.
I’ve enjoyed the book more second time round 2 years later – it annoyed me a bit the first time I read it. I think the main reason I’ve enjoyed it more is because it’s written in a much more refreshing style than the hundreds of other “business” books I’ve read in the interim.
Before I start let me tell you about my own rather tenuous connection to Felix. One of my friends, Catherine Bishop, used to be my partner’s accountant when he was just starting out & when she was just starting out – about 20 years ago. She (wisely) moved from Alan to Felix & in that way she has been personal accountant to one of the richest British entrepreneurs and also one of the poorest!
The chapter I’m reviewing today is Felix’s opinion of the 5 most common start-up errors – Blog no 2 will be on the Cardinal Virtues of the entrepreneur – both themes I’ve touched on in previous blogs. I’m going to give you what Felix says & augment that with a few real life stories of my own. So – let’s get on with the errors – bad news before good:
1. Mistaking Desire for Compulsion – we’ve talked about this before folks. To be a start up entrepreneur you’ve got to be driven to succeed in a way that most people just aren’t. Most people just aren’t prepared to make the sacrifices needed, have no social life, neglect their families, risk everything they own and work every waking hour – not just for a month or two but for years. If anyone had told me 5 years ago how much work & personal sacrifice was going to be needed to get Learning Pool up & operating like the beautiful machine you see before you today I’d have run a mile – or cried a lot. It creeps up on you incrementally – each week you just do a bit more and a bit more until you seriously do start considering if you can manage on less sleep. Other people will tell you about successful entrepreneurs who don’t work very hard – they’re either lying or they’ve set the bar very low. If you know in your heart of hearts that you lack this compulsion walk away now – don’t put yourself through it. Felix talks about how an invisible sliver of ice exists in everyone’s heart but people keep it small & hidden away. Being a successful entrepreneur requires that sliver to grow over the years – I’ve seen it in myself – we need it to slay demons, beat off competition, harden ourselves against loss and disappointment. If you don’t want to become like that – walk away.
2. Over optimism Concerning Cash Flow – something else we’ve talked about before. Competent cash flow management seems to me to be such a vital requirement in any enterprise that it always horrifies me when other entrepreneurs seem to disregard it. There’s at least one person in the Learning Pool team who’s experienced over optimism in a start up’s cash flow before & more importantly had to deal with the consequences of poor cash management. I’m sure you’ve all witnessed it. As an entrepreneur you can leave balance sheets to your accountant but you must grasp the concept and importance of cash flow – it’s your organisation’s life blood. This is one of Felix’s pet topics and his views on how companies waste money is well worth reading in full. With cash flow forecasts, plan for the worst and hope for the best but don’t bury your head in the sand.
3. Reinforcing Failure – this is about making a call to cancel a project which isn’t going to work. It’s one of the hardest things anyone involved in a project ever has to do because they have personal buy in and also because they fool themselves into believing that things are better than they really are and in this way justify continuance. Felix talks about the millions of dollars he’s lost carrying on publishing magazines that no-one was buying; we’ve done it with pet projects that seem like a great idea – but which at the end of the day no one will pay for – even though they may want it. Remember that you are running a business and without sales it’s not a business but a hobby.
4. Thinking Small and Acting Big – oh dear! I love this one because I’m 100% positive that neither myself or my business partner does this. I used to work for a start up CEO who wasted money on stupid things whilst the rest of us scrabbled around trying to get enough cash together to meet payroll and pay our creditors. He travelled business class but even worse used to pretend to the people that worked for him that he was lucky and got upgraded a lot – he said that a number of times to colleagues that met him by accident at the airport and wondered why he wasn’t also flying economy to the West Coast. He rented an apartment instead of staying in hotels, even though he was hardly ever there. He insisted that Hertz had his hire car ready & running with the keys in the ignition when his plane landed & he didn’t care how much extra that cost. Not for him the modest lifestyle of IKEA’s (very wealthy) CEO, taking the bus or using a 20 year old car to run around. He was the BIG ME. At least once a day we would hear him shout “How dare you – I’m the CEO” – that used to really make us chuckle. It’s not nice to strut around like some obnoxious mini-mogul – that’s what Felix says and he’s right. We need to think big & always act small. Be a nice person & set a good example to everyone else.
5. Skimping on Talent. This is so easy to do and for so many reasons. Hire great people that are more talented than you are. Seek them out & offer them whatever you need to in order to bring them into your organisation – it isn’t always money – it might be something else. Don’t hire people that you believe to be lesser people than you. It’s easy to do because it stops you from feeling threatened – but remember in all likelihood they will do the same and in this way your start up will become a den of mediocrity. Look for great people. For a long time at Learning Pool we used to struggle to attract great people but in the last little while we’ve been living with the motto – Better a Hole than an Asshole – and it seems to be working because our team is stronger than ever before. Remember this when you’re recruiting.
I hope you’ve enjoyed this chapter review & I’d love to hear your views on common Start Up errors – so please share.