Despite your expertise, skills and education, nothing can prepare you for becoming a business leader. There’s a lot of trial and error and on-the-job-training that you’ll experience as you grow your business.
I’ve been a business owner for almost 10 years now. Over the years I’ve made my fair share of mistakes including several that cost me actually running the business in the way I wanted. Lucky for me, I don’t have to make those same mistakes again.
To help you run your business a lot smoother, here are 25 leadership lessons from millionaire business owners so that you don’t have to make the same mistakes we have.
1Believe in your business
“Give your venture everything you’ve got. A passionate commitment to your business and personal objectives can make all the difference between success and failure,” writes Sir Richard Branson.
“If you aren’t proud of what you’re doing, why should anybody else be?”
“And don’t get suckered into blindly pursuing profits and growth. If you stay focused on being the best at what you do, it’s more likely that the rest will follow.”
2Prioritise and delegate
As all entrepreneurs know, you live and die by your ability to prioritise.” suggests Jessica Jackley, co-founder of Kiva and later co-founder and CEO of ProFounder. “You must focus on the most important, mission-critical tasks each day and night, and then share, delegate, delay or skip the rest.”
3Hire people with superior skills
Jack Ma, co-founder and CEO of Alibaba, says that, “A leader should never compare his technical skills with his employee’s. Your employee should have superior technical skills than you. If he doesn’t, it means you have hired the wrong person.”
4Give employees expectations and training
In his book “Zingerman’s Guide to Good Leading, Part 4: A Lapsed Anarchist’s Approach to the Power of Beliefs in Business,” Ari Weinzweig, CEO and cofounder of Zingerman’s gourmet food company, writes that, “Clear expectations and training tools are all about a better future.”
Ari adds, Small training success build confidence. People are more hopeful when they know what’s expected of them and feel they have the tools they need to do the work at hand.”
5Set the tone
“You can go through thousands of dollars in consultants to shape your culture, but it will still come back to the owner’s approach,” says Kristi Hedges, leadership consultant and coach at The Hedges Company.
“If you’re motivated and happy in your role, then others will follow your lead. And if you’re burned out and tired, that energy will permeate everything. Owners need to make sure they shape their role, and their company, to make them fulfilled and excited. If you put yourself last, you’re hurting the entire organisation.”
It may be surprising to learn that Mark Cuban, owner of the NBA’s Dallas Mavericks and one of the investors on “Shark Tank,” is a nice and likeable guy. He’s known for going above and beyond for his fans and has said that being “nice” is a necessity in business. When your team likes and respects you, they’ll be more likely to rally behind you.
7Plan for fun
Speaking of “Shark Tank,” Cuban’s colleague Barbara Corcoran fosters a culture of fun. “I think drinking together, having fun, having days off doing stupid things, dressing in ridiculous costumes, whatever you mandate as a company culture, what happens is everyone really likes each other and you create a family.”
Corcoran also says that this can bring out the creative side of your employees.
Bill Gates once said, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction.”
Even after Microsoft became an industry leader and was earning billions of dollars in revenue, Gates wanted the company and his team to continue to evolve and diversify their products so that they would remain innovative and relevant, as opposed to being static.
9Mentor and give back to the community
“At the end of the day, we are all part of a community,” said Aneel Bhusri, co-founder and CEO of Workday. “Giving back at the Workday Foundation is just recognising that and being part of a broader community. We are just a small piece of the community.”
“We have been very fortunate and our growth and success is largely due to our community. The most exciting part about the Workday Foundation is that our employees actually drive where we give and they really drive the giving. Our employees get personally involved. It is fabulous when your hire the right people, with the right value system, and they want to give back and they push us to give back.”
10Leaders are lighthouses, not weathervanes
“Weathering changes at Primerica that often lead to uncertainty and chaos helped me develop a leadership philosophy steeped in being someone my teams can turn to for guidance, even during the most turbulent times,” says John Addison, CEO of Addison Leadership Group and leadership editor of Success magazine.
“Whether it was another leadership change or trying to save the company during [the recession], my people could say I would make the best decision for their future, and stand firm on that decision, even if it wasn’t popular with everyone.”
Addison added, “Being a weathervane twisting in the wind wasn’t going to instill the confidence they very much needed, so I had to learn to be a lighthouse: someone they knew would still be standing strong once the storm passed. Thankfully, [my] mentor, Primerica founder Art Williams, demonstrated being a lighthouse for many years, and I was able to follow his example.”
“Through my writing, speaking engagements and position as leadership editor for Success magazine, I am able to share my leadership message with a wider audience and play a role in shaping future generations of leaders. My hope through sharing my message is that one day we will have more leaders who are lighthouses and far fewer who are weathervanes.”
11Create a family-friendly environment
Facebook founder and CEO Mark Zuckerberg made waves in November 2015 by announcing that he would be taking a two month paternity leave. Facebook, it turns out, is one of the leaders when it comes to offering competitive paternity leave.
“Studies show that when working parents take time to be with their newborns, outcomes are better for the children and families,” Zuckerberg wrote in a Facebook post. “At Facebook we offer our US employees up to four months of paid maternity or paternity leave which they can take throughout the year.”
12Treat employees like royalty
“We treat our people like royalty. If you honour and serve the people who work for you, they will honour and serve you,” said Mary Kay Ash.
Warren Buffett has said, “You’ve got to be able to communicate in life and it’s enormously important. Schools, to some extent, under emphasise that. If you can’t communicate and talk to other people and get across your ideas, you’re giving up your potential.”
14Be a man or woman of the people
Jim Sinegal, co-founder and former CEO of Costco, was beloved by his employees. Why? Because not only was his salary $350,000 a year, he was down in the trenches with his employees fighting for them to have higher wages. He had no frills office and everyone called him by his first name.
15Encourage employees to get more sleep
“Sleep plays a vital role in our decision making, emotional intelligence, cognitive function, and creativity – all of which are hugely relevant for both our overall health and our ability to be productive and effective,” Arianna Huffington told Forbes.
“Today, so many of us fall into this trap of sacrificing sleep in the name of productivity. But, ironically, our loss of sleep, despite the extra hours we put in at work, adds up to more than 11 days of lost productivity per year per worker, or about $2,280. This results in a total annual cost of sleep deprivation to the U.S. economy of more than $63 billion, in the form of absenteeism and presenteeism (when employees are present at work physically but not really mentally focused).”
16Boost their self-esteem
“Outstanding leaders go out of their way to boost the self esteem of their personnel,” said Wal-Mart founder Sam Walton. “If people believe in themselves it’s amazing what they can accomplish.”
“I’ve come to learn there is a virtuous cycle to transparency and a very vicious cycle of obfuscation,” said Jeff Weiner, CEO of LinkedIn. When employees are curious and denied access to information, they become resentful and start digging. “That’s when executive management says, well, clearly we can’t trust our employees with this information. So, we’re going to have to buckle down and release even less information.”
Instead, treat employees “like adults” and be completely transparent.
18Stop talking and start listening
“Leaders who listen are able to create trustworthy relationships that are transparent and breed loyalty. You know the leaders who have their employees’ best interests at heart because they truly listen to them,” writes Glenn Llopis, founder of the Glenn Llopis Group.
“As a leader, it’s difficult to really know what your employees are thinking about, what’s troubling them or how to help them get out of a performance slump – unless you take the time listen to them.”
Llopis adds, “Listening goes well beyond being quiet and giving someone your full attention. It requires you to be aware of body language, facial expressions, mood, and natural behavioural tendencies. Listening should be a full-time job when you consider the uncertainty embedded in the workplace and the on-going changes taking place.”
19Write ‘thank-you’ notes
Harvey Mackay, founder of the MackayMitchell Envelope Company, says that, “The cost of praising someone is nil – but every psychological study shows the payoff is huge. Employees want to be seen as competent, hardworking members of the team. You want satisfied, motivated and productive staff members. What better motivator than thanking employees for their contributions to the company’s success?”
Make sure, however, that you’re sincere, specific, share publicly, and keep the praise on-going.
20They don’t tolerate poor performance
“Anyone running an organisation understands how important talent is,” says Duncan Maru from Possible. “But many early stage social enterprises are impatient, cut corners on hiring, or don’t transition people out quickly enough when things are not working. You need to be aggressive and brutally honest about your talent pool.”
21They hold themselves accountable
Accountability, according to Michael Hyatt, “means that you accept responsibility for the outcomes expected of you – both good and bad. You don’t blame others. And you don’t blame the external environment. There are always things you could have done – or still can do – to change the outcome.”
“Until you take responsibility, you are a victim. And being a victim is the exact opposite of being a leader.”
Hyatt adds, “Victims are passive. They are acted upon. Leaders are active. They take initiative to influence the outcome.”
22They challenge the status quo
“Internally, the impact of the status quo is a stagnant culture that pushes away top performers,” writes Matt Wagner, vice president of strategy at Client Focus.
“Your best employees are driven by the need to do something great. When they run into obstacles that don’t make any sense to them, they start thinking about greener pastures. Of course, the opposite is true of your bureaucrats and your go-along-to-get-along employees. They hope to milk the status quo for as long as possible. They hate change.”
23Have face-to-face discussions
“There’s a temptation in our networked age to think that ideas can be developed by e-mail and iChat,” Steve Jobs told author Walter Isaacson. “That’s crazy. Creativity comes from spontaneous meetings, from random discussions. You run into someone, you ask what they’re doing, you say ‘Wow,’ and soon you’re cooking up all sorts of ideas.”
Don’t be afraid to celebrate your accomplishments. Just celebrate those of others more, recommends Nina Vaca of the Pinnacle Group.
With my company, this means that we celebrate even the little accomplishments of others.
25They encourage continuous learning
“Learning is the minimum requirement for success in your field,” writes Brian Tracy. “Information and knowledge on everything is increasing every day. This means that your knowledge must also increase to keep up.”
The best leaders encourage their employees to read, attend workshops, and conferences so that they “can get ahead in every aspect of” their lives.
This article was originally posted here on Entrepreneur.com.
4 Common Myths About Leadership That Can Hold You Back
Alignment with your values and belief systems is the foundation of becoming an effective leader.
To be a great leader in today’s world, being a brilliant knowledge expert or technician is no longer enough. Even harder is trying to learn the golden rules of the wrong and right ways to be a great leader. The amount of content spouted in countless books and resources is overwhelming let alone confusing.
To be unstoppable leaders for our businesses and our people, tuning out from the noise and distractions potentially misguiding us is pertinent now more than ever. Pay attention to any presence of these four myths and make guiding your people a more soul-enriching journey that they and you will want to continue well past your leadership term’s end.
Myth 1: Great leaders are highly ranked individuals
Richard Branson proves a classic example of how great leaders can get to the top without having ivy-league school connections and astounding qualifications. Having had enough of struggling at school, Branson dropped out of the highly reputed Stowe boarding school at the age of 16 to start a magazine called Student. The first publication sold $8000 worth of advertising. We all know the Virgin story from there on. Then there are the likes of Rachael Ray, food industry personality whose empire has amassed a $60M fortune without her having any culinary qualifications whatsoever.
There’s a common entrepreneurial DNA that runs through the veins of such leaders. An avant-garde vision, tenacity and patience seem to be common underlying themes for many. For others, it’s about making sacrifices and taking risks that could cost their life to serve a cause extending far beyond serving their own needs.
By publicly speaking out against the Pakistan Taliban’s extremist rulings, one of which of was to prevent females from accessing education, Malala Yousafzai became a target. At 15 years of age, a masked gunman boarded her school bus and shot her in the head. She survived and many months of rehabilitation spurred her determination to fight for every girl to have the opportunity to attend school. The work she achieved through establishing the Malala Fund with the undying support of her father, earned her the Nobel Peace Prize in December of 2014.
Whether from desperation or a happy place there is always the genesis of a passion driving a persistence to go against the grain and to continue the fight. Often there’s no formal training, qualification or certification in sight.
Myth 2: Following a certain checklist of behaviours will make you a great leader
The ‘fake it ‘til you make’ adage has become a common throw-away phrase consultants and coaches spout as a means to quickly build confidence. Following advice to merely emulate the behaviour of those you admire and respect can pose grave risks, especially when you become a leader by default as opposed to by your own audition. Smart teams can smell falsehood and copycats a mile away. Your integrity will often be scrutinised and your jury will constantly evaluate the values and principles you lead by. One foot wrong might end your leadership term just as quickly as it began and not necessarily by your team’s choosing.
Imagine being tasked with driving credit card sign-ups yet you yourself struggle to make repayments on your own overdraft. How long can you resist your inner conscience? You’ll feel the tug every time you invite a customer to sign up and at every request to your team to follow suit. At some point, you’ll be struggling to face yourself see in the mirror.
This article was originally posted here on Entrepreneur.com.
9 Ways To Get Employees To Buy Into Your Vision
Your business is your dream come true, now it’s time to include your employees in your vision to drive future success.
Your vision statement is the foundation of your business. It is the baseline against which all strategic planning is assessed and the benchmark against which all results are measured. However, as important as it is to have a vision when it comes to business success, it is equally important to get your employees to buy into this vision to ensure that success.
Here are nine ways to get your employees to buy into your vision by making it their dream, as much as it is yours…
- It must be believable – Your company vision needs to be within the realms of possibility otherwise people just won’t believe in it. It must be steady, achievable and relevant.
- It must be inclusive – Employees need to see how they can play a part in achieving this vision to make it relatable and inclusive. If they don’t understand what the business does, they won’t care how well the business does.
- It must be reinforced – Talk about your vision all the time. Don’t assume everybody has read it or is familiar with it as new people may not have seen it and older people may have forgotten. Constant communication is critical to ensure everyone is, literally, on the same page.
- It must be transparent – Make sure your communication around your vision is open and clear. Talk about it with clients, with all staff members, at all meetings and keep on talking until everyone understands it. When a vision is tangible and accessible it is far more achievable than when it is ethereal and vague.
- It must be practical – Don’t make flamboyant statements that are almost impossible to achieve like, ‘We will be number one in X!’. Be practical. It doesn’t matter if you’re not number one, it does matter that your vision is practical.
- It must be shared – Connect people’s careers to the vision by creating opportunities for them. Show them how the work they do is tied back to the vision and the business. If the business is only about profit and customer, then employees often don’t see how they fit in or why they are important. Create opportunities for them and they will be inspired to achieve your vision.
- It must be people-centric – People make up the core of your business. It is bigger than just one person or one idea. So, give them something to aspire to with a realistic, practical and human company vision.
- It must have purpose – Embed your vision and its values into the way you do business. The way you treat your employees and your customers and the choices you make should all reflect your vision. Take it beyond just ‘We want to make money’ and show how your vision positively affects your community and others.
- It must be visible – Put your vision on doors, in emails, on letterheads, in proposals. Show what you stand for at every opportunity. Employees need to feel that there is a cohesive plan for the future. This will not only drive engagement but it will keep them steadfast when times get tough – they believe in the ship too much for it to sink.
What’s Your Number? How To Unpack Company Valuations
Business is booming. Investors want in. But how do you put a price on the value of the company you have built with your own hands?
Company valuations is such a hazy part of the scale-up journey of a private company. Putting a price tag on a business is both art and science. At the end of the day, the number that makes the headlines (if ever disclosed) will be where willing buyer and willing seller meet.
But how do you , as business owner, go about setting your asking price? Before approaching investors, it’s a good exercise to determine your own valuation range for the business. Choosing the right valuation method is the first big question. The answer has many parts to it, but the most important driver is the stage of the business.
Let’s look at some of the most commonly accepted valuation methods in our market:
Applicable stage: Established, profitable companies
Listed companies, institutional players and private equity investors normally invest in a company for its cash flow profit that can contribute to their portfolio income. More often than not, companies will be valued based on their current earnings (bottom line profit after tax).
This method can only be used for companies that consistently make a profit. A multiplier will be chosen based on the company’s perceived risk. Younger, more risky businesses will likely have lower multipliers (as low as 3 and 4) and high growth, well established, lower risk companies will get higher multipliers (8-15).
Sometimes small adjustments are made to current year earnings (like non-standard, non-repeating income statement items) after which the valuation is set at Earnings times multiplier equals company valuation.
Discounted Cash Flow (DCF)
Applicable stage: Post-revenue start-ups, growth companies and established businesses
The most commonly used method in practice, the DCF method argues that a company’s value is determined by the future cash flows that it will yield to investors.
The starting point is creating a five to ten year cash flow forecast for the business. This is no small feat. In order to create a full financial model – income statement, balance sheet and cash flow statement – for the next decade requires a lot of work, both from a strategic and technical perspective.
Investors love this model because if forces the owners to put a clear strategy and expansion plan for their business into numbers. It will include dozens if not hundreds of assumptions – all of which can be scrutinised for reasonability. The result of financial model will be five to ten years’ worth of projected cash flows. These amounts are then discounted to present value at a discount rate that reflects the company’s risk and expected cost of capital.
The sum of the discounted future cash flows plus a terminal value (that represents the value after the five or ten year period of the model) then represents the valuation of the company after some final small adjustments for things like existing debt in the business.
A revenue multiple valuation approach is focused on the market for similar businesses and is underpinned by your company’s current turnover. It seeks out the sales price of other similar companies in the country or worldwide, adjusted for size, stage and market differences.
A company that sold for R100 million at a turnover of R50 million would have a two times revenue multiple (valuation/revenue). If the average revenue multiple for similar companies is in a certain range, this multiple is then slightly adjusted and applied to your business.
If the average sale in your industry has been two times revenue but you are growing much faster than the average with a better competitive advantage, you can argue that two and a half times revenue is a more applicable number for your business. Revenue multiples are often used as a reasonability check in the market for the current asking price.
Most established companies are valued using one or a combination of more than one of the above three methods. At start-up stage, there are a number of other methods like Cost to Replicate or the Scorecard Method that early stage investors look to. When a company is simply in too early stage to practically value it, seed stage investors would also consider SAFE Agreements (Simple Agreement for Future Equity) – an instrument that determines that the percentage of the company the investors are buying with their investment. This is only determined when the Series A round is raised at a future date and under certain conditions, generally at a discount to the price the series A investors are paying.
Company valuations are complex. Many of the above technical factors play a role. A lot of it also comes down to the salesmanship of the owners and the negotiating capabilities of the parties. In ‘How Yoco Successfully Secured Capital And The Importance Of A Pitch’, the Yoco team speak about the importance of the right approach in their recent R248 million fundraising
Don’t go into this process without seeking some kind of expert advice. The price of the wrong valuation is simply too high. Make your numbers and your arguments bulletproof and you will be on your way to defending a strong and exciting valuation for your next raise!
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