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Establish Your Principles Early

In contemporary management thinking, business values seem to get the limelight, and while they’re important, so is setting your principles, and doing so early.

Peter Castleden

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When I talk about principles in a business, what I’m referring to are the fundamentals pillars which serve as the foundation for the business. In contemporary management thinking, business values seem to get the limelight, and while they’re important, so is setting your principles, and doing so early.

What’s the difference between principles and values?

Steven R. Covey gave a pretty good description of the differences between the two.  In his view, principles are permanent, unchanging and universal; while values are internal, subjective, and may change over time.

Related: The Unwritten Rules: Real Start-up Advice To Launch A Game-Changing Business

In a business context, principles are the internal laws you will establish which are set in stone. And when you set up your principles, you do not compromise them. Ever. They determine who you are, and become the bedrock on which your business is grown.

Why is it important to have principles?

I believe that having a set of principles is an incredibly powerful tool to help you understand who you are.  And more importantly: they help you understand who you are NOT. And knowing these things means decision making is so much easier.

There are so many businesses out there who don’t know what they are not. And in these cases they try to be everything to everyone. A clear indication of when a business is in this position, would be when a cross section of employees is asked to explain what the business is. If you get an array of different answers, it’s a tell tale sign that that business doesn’t have firm principles. And if this is the case, you may find yourself pulled in all sorts of directions.

Establishing a set of principles serves as a compass, which the business can use whenever there is doubt, or the business needs to decide on competing priorities, or which opportunities to pursue.

When you are in the early stages of building a business, with the hunger for growth constantly at the back of your mind, it is very tempting to say “Yes” to everything that comes across your path.  This could ultimately be your downfall. And this is where principles shine. You should never say yes to anything that compromises your principles.

Finally, you shouldn’t think of hiring people who are not willing to embrace your business’s principles.  Sharing these with potential recruits early often helps to make better hiring decisions in the long run.

How do we treat principles in IndieFin?

At IndieFin, we hold tightly to our principles, but loosely to our practice.  What this means is that we are very flexible on execution, and embracing new ideas. But, are dogmatic when it comes to our principles.

Principles should necessarily be difficult to accomplish, and highly opinionated. Everything we do hangs off our principles, and new ideas or directions are tested against these. We have about 10 principles in our manifesto, and I won’t bore you with all of them, but can give you a taste to illustrate what I mean.

Related: 15 Of South Africa’s Business Leaders’ Best Advice For Your Business

We’re our own first customers

We build the kind of products that we want to use. We prioritise product ideas that inspire us. If the product or experience is not good enough for us, it is not good enough for our clients.

When clients succeed, we succeed

Our business priorities are our customer’s priorities. This means we will always build products that profit the user first, and us by implication. When the client loses, we lose.

We build good products

Good trumps easy. Good trumps price. Good trumps profit. We’d rather do nothing than do something poorly.

How do you determine your own principles?

If you’re setting up a business, and you’re currently a one-man team, then it’s a little easier to do. This is because you only have to convince yourself what your principles should be.

A good thought experiment is to ask yourself, “what are the laws you would put in place to govern your business and your decisions”.  An alternative approach is to ask yourself the negative version.  Something like, “what will you never do?”.

Related: How to Get Clients When You Hate Asking for Business

For me personally, I grew tired of building financial products for an abstract group of clients. I seldom found myself inspired by the products I was building, and very rarely bought the products that I had built. It was therefore incredibly important to me that what we build at IndieFin are things we would buy.

If you’re an already established business with a few people in your team, setting the principles needs to be a collaborative exercise, where everyone participates and contributes. After all, you and your people will be the ones who will need to live with what you decide.

Peter Castleden, CEO of IndieFin, writes about all the lessons, mistakes and pitfalls he’s encountered in building a start-up from the ground up. Having been woefully ill-prepared for what was to come, Peter has had to learn fast, especially from his mistakes. Here he shares what he’s learnt, in the hope that it might help others who find themselves in similar situations.

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Leading

What A Grade 1 Sticker Business Taught Me About Business

It’s the very fundamentals that are frequently overlooked amid ambition and “blue sky thinking” – yet, these remain the most crucial element of any business.

Grant Field

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When I was a kid, my father believed that instead of getting pocket money, my brothers and I should learn how to make money. Stickers were the school craze when I was in Grade 1, and we wanted a collection for ourselves, so Dad said if we wanted to buy the stickers, we needed to make the money. So, logically, we started a sticker trading business. Dad gave us the start-up money and took us through the basics of business.

We had a cash float for purchases, and learnt about cost price, mark-up and selling price – very basic accounting. We kept recycling that money, making extra and using it to buy more stickers. Then we worked out that if we increased the mark-up, we’d make a bigger profit – so why not make the mark-up as big as possible? The obvious happened. Our prices were too high, and we lost customers.

Valuable business lesson learnt, we came back down to a mark-up that other kids were willing to pay for.

More lessons to learn

Then people came to us and asked if they could take a sticker today and pay us tomorrow. We saw no reason not to trust them. Guess what? They didn’t pay us back. We had bad debt on our hands. When we sold out of stickers, we had cash-flow issues and couldn’t buy more stock. Dad was there to help us out, though, so we received another capital injection to get back off the ground. And this time, if we did extend credit, we loaded it for the privilege of “buy now, pay later” – another lesson learnt.

We ran a proper ledger for the business, tracking our inventory, sales and profit. Even if our “bank” account was a piggy bank, we had a clear record of what was going on. When I look back on it, none of what I learnt was irrelevant.

Today, I run a leading financial services company with billions of rand running through our bank accounts. Even though the finances of the business are run on a much larger scale, the principles of business – those basic principles that we learnt trading stickers – still power our company. And when I see entrepreneurial ventures failing, or when friends come to me for advice because their business is struggling, it’s almost always because they haven’t got these basics right.

Related: Successful SA Entreps Share Their Most Valuable Business Advice Ever Received

Clarity

One of the most important lessons I’ve learnt is that if you don’t fully understand how the money is being made, walk away. Whether you are dealing with stickers or financial services, the business principles should be straightforward: money coming in, money going out, and profitability.

Every day, I look at an Excel statement of my company’s forty bank accounts. Every day, I look at the cashflow, and unusual big-ticket items get a note so I know what’s going on. It’s just like that Grade 1 business, only on a bigger scale.

Entrepreneur, thwarted

Once the other kids saw the success of our sticker business, they started to want to get in on the action, so they came to market with their own competing products. At first, we were able to innovate as the competition squeezed our margins and started to impact on our profits. Eventually, the whole situation got completely out of hand and the school banned sticker trading for profit.

While I didn’t become a sticker magnate, the lessons I learnt in Grade 1 remain central to every business I am involved with – get the basics right.

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Leading

How To Handle A Director Who Always Says No

Diverse opinions on a board is a good thing — but is it boosting your business, or hindering growth and decisions?

Carl Bates

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Do you have that director on your board who always says ‘no’? Regardless of what the issue is, regardless of the context, who raises it or whether or not it is indeed a good idea, their response is either a simple ‘no’ or an elongated perspective on why they disagree? It can even feel at times that they are actively working against the company and against the board. Although they obviously do not see it that way.

Experienced directors will have multiple war stories related to this subject. Aspiring directors should be aware of how to approach these situations when they arise and how to avoid becoming the subject of such stories.

Develop a culture of trust, candour and professionalism

A board’s conduct must be characterised by trust, respect, candour, professionalism, accountability, diligence and commitment. It is the board’s collective responsibility to build this culture and to engage with one another in a productive and effective way.

Dissent should be welcomed when it is constructive and engaging. The idea of being the ‘devil’s advocate’ for the sake of it however, is not the best way to approach this. Dissent should be based on a real belief that the issue has not been fully debated or creates a real challenge for the company going forward.

If you have a director who genuinely believes a different path is right for the company, hear them out and engage in the discussion. In my experience, this often opens up an issue or changes a detail that when taken as part of the whole, improves the decision-making outcome for the board and the company.

Related: Contributing In The Boardroom

Remove the politics from the boardroom

At the heart of this issue is often politics. Politics between directors, who are also shareholders or executives. Politics between the ‘new guard’ and the ‘old.’ Regardless of the genesis, politics really do not have a place in the boardroom and directors who engage in it should be called out by the chairman or another senior director.

In local government I have heard stories of councillors who always vote ‘no,’ so that whenever something goes wrong, they can say “I told you so,” and show the public why they should be re-elected. But that is indeed politics. The boardroom is a very different space. It is private and discussions should be confidential.

Board rotation, a simple solution

While the removal of an errant director should never just be left to resolve itself, there is a simple solution that can support the easy removal of the most difficult directors. The challenge is that it requires forward planning prior to the appointment of any new director.

Directors should only ever be appointed for a predefined term, with automatic rotation at the end of that term. This does not stop you from reappointing a director for a further period. It is, however, always easier to ask someone to consider a further term than it is to tell them that their time has come and they should resign from the board.

Having a predefined term for a director essentially ensures an automatic resignation period. A simple rotation policy for directors is not just good governance, it is a practical step you can take to provide a way out of a sticky relationship.

Ultimately the board as a whole must address issues that detract from the board fulfilling its function as and when they arise. A rotation policy might provide an effective backstop. A high-performance board is one that will tackle the issue head-on.

Read next: How Diversity Drives Board Performance

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Leading

The Power Pose: Using Body Language To Lead

Use the way you move and stand and interact with others to become a better entrepreneur and leader.

Howard Feldman

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In 2012, the power pose became a global sensation. A Ted Talk by Amy Cuddy hit a staggering 46 million views and became the second most popular Ted Talk in history. The premise was simple – hold a powerful pose and it will not only affect the way you behave but it will even change your body chemistry. Since the talk, the power pose has met with heavy criticism and been labelled as nothing more than pseudoscience. Fortunately for believers, they were proven right. Amy Cuddy released further research this year and it fundamentally proves that this bold stance works exactly how she said it did back in 2012.

The power pose isn’t something that you’d adopt in a meeting or around the office but the science behind it shows how important it is to pay attention to your body language as it can fundamentally change how you are perceived.

Notice how you are noticed

People spend a lot of time reading one another’s body language and the way a person stands or holds their hands or moves can influence how others see them. It’s very natural to judge someone else’s posture, but what about the way they are judging yours? Few people look at how their body language is affecting the way people engage with them.

Related: [Quiz] How Good Are You At Reading Others In Business?

So, what are you supposed to do?

Fake it until you make it

Want to know how can you adapt to become a better leader? You can fake it.

The power pose isn’t the only way to change your mood. Research has shown that whether you laugh naturally or put on a smile and make yourself laugh, your body still releases the same levels of serotonin.

Whether you are really laughing or just pretending to laugh doesn’t matter – they both have the same impact on your demeanour.

Change how others see you

Think about the pose that every athlete adopts when they win a race or achieve something that’s been physically taxing. They hold their hands outstretched in the air. Even blind athletes hold the same pose. It’s big, it’s bold and it’s a physical manifestation of success.

Now consider the defensive pose. The tight hunched shoulders or inward curve of the spine. These poses immediately make a person look nervous, afraid and lacking in confidence. Like the porcupine curling in on itself for protection.

The same ideas apply to daily business life. While the power pose and the athlete pose are not necessarily a team activity, ensuring that you hold your body upright and with confidence means that you’re conveying an attitude of strength. You come across as confident and capable and positive. You are ready to take on anything and overcome the odds.

By contrast, if you are hunched and withdrawn, you come across as nervous and lacking in confidence and these are not the qualities you want associated with you as an entrepreneur and a leader.

Related: (Slideshow) 5 TED Talks That May Change Your Perspective on Life

Body language for entrepreneurs

  • Shake hands like a hero. The way you shake hands with someone is very significant in terms of establishing equality. Be even, be firm but don’t pull people towards you or turn their hands under your own. This makes them feel like you are trying to establish dominance.
  • Create an atmosphere of openness. Maintain eye contact, say hello to people with warmth while holding a strong posture. A warm and open greeting is essential to establishing trust.
  • Do the power pose for two minutes before any meeting or interview. This will get those chemicals stirring and make you feel confident and in charge.

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