Why do so many businesses fail in the first two years? Why do so many firms make it through the “survival” stage only to stall around the fourth or fifth year? One of the biggest reasons is they start with too little cash. As the old saying goes: it takes money to make money. But that is not what we’re going to look at today, this being a blog about leadership.
Michael E. Gerber, author of the E Myth series of books on entrepreneurship, has observed that most new businesses are started as the result of a sudden “entrepreneurial seizure” accompanied by thoughts of independence and being your own boss. According to Gerber the fatal assumption most business starters make is’ “if you understand the technical work of a business, you understand a business that does that technical work.” The reason this is a fatal assumption because knowing the technical work doesn’t mean you are prepared to handle the management and leadership aspects of running a business that does that technical work.
But the situation is only fatal if you don’t recognize it before the business has to close its doors. Fortunately, both leadership and management can be learned. It is up to the business starter to decide to learn them — even when you are hip deep in alligators and have a million pressing issues vying for your attention.
So what’s the difference between management and leadership? Management is about doing things right. It is about establishing standards and processes. It is about keeping good records and analyzing information. It is about checking and adjusting. You manage systems. Leadership, on the other hand, is about doing the right things. It is about understanding the purpose and goals of your business (beyond just giving yourself a job and making a profit), understanding the environmental factors affecting your business, looking at the possible courses of action in any situation, and making ethical decisions. Leadership is about influencing the stakeholders in your business (employees, investors, customers, suppliers, the community) toward accomplishing the goals and fulfilling the purpose of your business. You lead people.
If you have started a business, you must learn both management and leadership. Every company has two basic systems to manage: the customer acquisition system (marketing and sales) and the customer fulfillment system (delivering what you promised). Then you have the support systems to manage, including finance & accounting, logistics, and human resources. There are plenty of books and classes you can take to help you learn how to manage. Gerber’s books are a good place to start, and your local small business office probably offers very classes and seminars at a very reasonable price.
Even the owner of a one-person company must learn to be a leader, because business is about people. Business is the uniquely human activity by which we collaboratively create and exchange value. You have a purpose to understand, a vision to craft and articulate, ethical decisions to make, and people to influence, and lives to impact for the better. Unlike management, however, you can’t learn leadership from a book.
Books about leadership are helpful in learning about leadership. I have a whole book shelf full of books on the topic, but they didn’t teach me to be a leader. Classes, seminars, and boot camps are useful in getting you pointed in the right direction. My company, Go Beyond LLC, offers leadership development training — as do many other businesses and academic institutions. Coaches and mentors are essential guides in learning the learning process. If you don’t have at least one, find one.
Miyamoto Mushashi, whom the Japanese refer to as the Sword Saint, taught that the only way to learn to fight is by fighting. As a former wrestler, boxer, and student of the Toyama school of Japanese swordsmanship, I agree to a certain extent. Similarly, you can only truly learn to lead by leading. However, just as picking up a sword and challenging an opponent to a duel without preparation likely would be suicidal, trying to lead without any preparation can be fatal to a new business. Unfortunately, this is exactly what many technically talented people who have started businesses as the result of an entrepreneurial seizure are doing.
The good news is help is available.