Pros and Cons of Freelancing

  In a recent post I described how I discovered the benefits of being and using a contract CFO. In my last post I dug a little deeper into why companies should consider a contract CFO. In this post I’ll more broadly discuss the pros and cons of freelancing.

I started writing this post as a separate list of pros and cons. However, I realized that pros and cons can be one and the same depending on experience, goals, and personality. Overall, being a freelance CFO has been great for my career and lifestyle. I’ll list the pros from my perspective while also acknowledging that each point could also be a con.

Career development. Freelancers can multiply their experience and contacts by taking on multiple roles at the same time. They can work with different management teams in different industries at different company stages, all at the same time.

At one point I was working in the hospitality, construction materials, furniture, venture capital, and telecommunications industries with companies at pre-revenue, growth, and maturity stages. The companies had many of the same shareholders, but each management team was separate.

Being a freelancer certainly isn’t the only way to get a variety of experience. In a large company, future executives often develop their careers by frequently rotating among different teams and departments. People also tend to change employers often to develop the breadth of their careers.

One down side of multiple roles can be lack of integration within teams. Freelancers can integrate themselves by being as responsive as full-time team members. They may not be able to complete every task immediately, but they can be responsive. I’ve had accountants or law firms take days to respond to my emails, which clearly sends the message that they are outsiders and not integral parts of the team. Freelancers can also make an effort to build strong relationships with individual team members.

Another down side to multiple roles is competing demands. If you prefer to serve one master, being a freelancer may not be for you. There have been times when all of my clients have wanted to schedule a meeting for the same time or have project deadlines close to each other. Sometimes I’m forced to prioritize, and sometimes I have to work long hours to get everything done.

I personally find variety and multiple demands on my time motivating and stimulating, but it’s not for everyone.

Increased Income. Many companies can’t pay market rate for a full-time employee to meet specialized needs, but most can pay a percentage of the market rate. Freelancers can make more than a full-time employee if they find enough clients and charge enough to take into account the costs of being independent. It is good for the company because they won’t have the commitment and fixed cost of hiring a full-time employee.

Freelancers have to remember that their revenue is not equivalent to a take-home salary. They should charge much more than a percentage of market rate based on time to cover costs like both sides of payroll tax, health insurance, travel, laptop, cell phone, and training. They also need to build in time for training, networking, and finding clients.

While a freelancer may generate higher income than a full-time employee, freelancing usually involves trading time for money. It lacks the opportunity for leverage that other businesses might provide, such as selling a physical product or developing software.

Some freelancers have overcome this somewhat by building their services into a practice resembling a traditional accounting or law firm. For example, some contract CFOs offer a full range of business outsourcing services led by the CFO role and hire staff to carry out the lower-level work.

Diversification. Many businesses decline or fail, which gives their executives little job security no matter how valuable they are. If freelancers lose one position, they still have their other clients.

This allows them to take more risk than they might be comfortable with as a full-time employee. I provided services for an undercapitalized, pre-revenue company with a high burn rate and inability to consistently pay my fee. The market potential was huge, but it would take a long time with a high risk of failure. I probably wouldn’t join this company as a full-time employee, but because I had other clients, I was willing take the risk.

Being a freelancer is great middle ground for the entrepreneurial and risk averse. It offers more upside than being a full-time employee, and it doesn’t require start-up capital or risk of loss (as long as you don’t let your clients get behind on paying you).

Autonomy. I don’t like being tied to the same office on the same nine to five schedule every day. I work hard, and I work long hours, but I like to be able to choose what hours I work and where I work from.

I usually work a fairly consistent schedule, but sometimes I keep working until late at night when I’m on a roll and then sleep in the next day. If it’s a nice day I might do something with my family in the afternoon, but I’ll start early and work late to make up for it. And even when I’m not working during regular business hours, I always make sure I’m available by phone or email so my clients don’t know the difference.

I do a lot of work at home and only go to an office when I have a reason to be there. I can be much more focused and productive without a commute and office distractions.

Of course, autonomy can be a challenge for those distracted easily. Even though the office has distractions, at least you’re there for the purpose of working. Home offers many more distractions with no accountability from team members. It takes self-discipline and self-motivation to have a flexible schedule and location.

Conclusion

In general, freelancing can benefit both the company and the freelancer, but freelancing isn't for everyone or for every situation. Hopefully these points help as you consider freelancing.

Question: What are other pros and cons of freelancing?

Why Hire a Contract CFO

In my last post I described how I discovered the benefits of being and using a contract CFO. In this post I’ll dig a little deeper into why companies should consider a contract CFO. The CFO role is perfect for freelancing. All companies need the CFO role, but not many companies need and can afford a full-time CFO. I won’t try to put guidelines around when a company needs a full-time CFO because it depends on size, stage, funding needs, industry, etc.

Many smaller companies struggle at one of two extremes. On one hand, some do without critical CFO-level expertise because they can’t afford an experienced full-time CFO. On the other hand, some companies overpay for CFOs who do CFO-level tasks in some of their time and lower-level tasks for the rest.

Consider the Freelance Model

Let's look a little closer at the part-time or freelance model. What are the services needed to build a company? Product development, engineering, manufacturing process, sales, marketing, HR, accounting, logistics, procurement, and the list goes on.

Companies are accustomed to outsourcing some of the services they need. Only the biggest companies like Walmart have their own fleet of trucks and drivers. Most companies use freight companies to move their product. It's an essential service, but it's not a full-time job for most companies.

Only the biggest tech companies like Google and Facebook build data centers full of their own servers. Even Netflix uses Amazon’s AWS servers. Only the biggest companies have lawyers on staff. The rest use law firms.

If a small company hires a CXO or VP for every area of the business, it will become top-heavy and topple.

Identify Core Skills

It depends on the type of business, but usually product development and sales/marketing are the most critical skills that demand a start-up founding team’s 100% focus. Until it has a viable product and customers to sell it to, there's not a lot for anyone else to do.

The challenge is that businesses need expertise in other areas from the beginning. They need to make sure the business is structured properly and the numbers make sense. For structure, the start-up would hire a law firm, not a full-time lawyer. For the numbers, the start-up can hire a contract CFO.

Find a Contract CFO

There are many solo freelancers and CFO services firms out there. Referrals are always the best way to find people to help, but you can also use LinkedIn, Google, and other online tools.

Many CPA firms offer CFO services, and some of them might be a great option. In my experience, accounting firms are focused on tax and assurance services and typically lack the operating experience and time to be able to effectively provide CFO services.

Hopefully this post opens business leaders' eyes to the possibility of getting financial expertise at an affordable cost.

Question: What benefits have you seen from hiring a contract CFO?

How I Became a Contract CFO

Forbes calls the freelance economy the future of work.  They estimate that one in three Americans works as a freelancer and that by 2020 one-half of Americans will freelance. A freelancer can be defined as someone who does work for more than one client as an independent contractor as opposed to an employee of one company. The CFO role is perfect for freelancing. All companies need the CFO role, but not many companies need and can afford a full-time CFO. I learned about the role and benefits of a contract CFO largely by accident. In this post I’ll describe how I became a contract CFO and then outline the benefits both to the CFO and to the company.

Fresh from University

I began my career with a Big 4 accounting firm in its IT and financial audit departments. I loved the experience and people I worked with, but at the same time I wrestled with the direction I wanted to take my career. Gradually I came to the conclusion that I would eventually love to serve small and growing companies grow in the CFO role.

Full-time CFO

Eventually came quickly. Soon after I came to that conclusion I received a phone call from someone I worked for in high school. He had just started a company that was growing much faster than he could handle. He needed a CFO. I took the position and labored long hours to set up scalable business processes, hire clerical staff, secure financing, and create financial models.

I spent a lot of time on these CFO-level tasks at first, but the initial growth slowed and clerical staff ran the processes with minimal involvement from me. I realized I had worked myself out of a full-time, high-level position. The option of spreading myself out to other companies as a contract CFO never crossed my mind. In hindsight, this may have been a great option. Instead, I left to take another CFO role with another new and fast-growing company.

Full-time CFO (Again)

History repeated itself. I spent a lot of time at first on CFO-level tasks. I cleaned up the books, consolidated the accounting and business processes between divisions, and set up more efficient and scalable processes. I also helped the CEO evaluate the business model, identified the need to evolve, and developed a plan to make the necessary changes.

After a while I realized I had again worked myself out of a full-time job. The business processes had stabilized, clerical staff handled the day-to-day transactions, and the financial crisis had slowed our growth. Again, it didn't make sense for the company to pay a full-time CFO.

Contract CFO

During this time, a business owner I knew was about to lose his controller and was looking for a replacement. As I considered what to do about my CFO role, I had a light-bulb moment. I approached my friend about the idea of replacing his full-time controller with a part-time CFO combined with his clerical staff. He liked the idea, and the arrangement worked out great for both of my employers (now clients).

Benefits of a Contract CFO

After these experiences I took on CFO roles at other companies and continued to see the benefits of a contract CFO for both me and my clients.

The benefits to the contract CFO include: 1. Career development. CFO’s can multiply their experience and contacts by taking on multiple roles at the same time. I was able to work with different management teams in different industries at different company stages, all at the same time. 2. Increased Income. Most small companies can’t pay market rate for a full-time CFO, but most can at least pay the percentage of the market rate that they need a CFO for. 3. Diversification. Many start-ups fail, which gives their executives little job security no matter how valuable they are. If a contract CFO loses one position, they still have their other clients.

The benefits to the client include: 1. Cost. I wasn’t spending more than half my time on CFO-level tasks anyway, so for a little more than half the cost they got the same amount of CFO-level attention. The only difference is they didn’t have as much of my help in other areas, for which they could hire less expensive help. 2. Insight. Working with more than one company gives the contract CFO insights that can benefit the other clients. 3. Flexibility. Clients don’t have the obligation to a full-time employee. As the business needs change over time, they can adjust a contract CFO’s time and pay.

If you are a finance professional, becoming a contract CFO might be a good career option for you. If you are a small company with the need for CFO services without the full-time commitment, a contract CFO is a great solution.

Question: What experiences have you had as a contract CFO or working with a contract CFO?

3 Lessons for Crisis Management

I just finished reading Stress Test: Reflections on a Financial Crisis by Tim Geithner. The book is a fascinating inside look at the financial crisis that started in 2007. The intriguing history alone makes it worth the read. However, I enjoyed the book for more than its entertainment value. I learned lessons about crisis management that I can apply to my role as a CFO and business leader.

The book starts with a brief autobiography from Geithner’s birth to his 2003 appointment as President of the Federal Reserve Bank of New York. This history gives the reader context around the events that prepared him for his central role in the crisis. He lived overseas for most of his childhood before attending college in the US and beginning his life-long career as a civil servant. He was intimately involved with many financial crises around the world in the 90’s and 2000’s, which taught him first hand the effectiveness of various crisis responses.

From there the books slows down and provides a detailed account of the events leading up to, during, and following the crisis. As I read, the following crisis management lessons stood out to me:

1. Accept complexity and uncertainty. By definition, the outcome of a crisis is unknown. Sometimes your actions determine that outcome, and sometimes you’ll find there’s nothing you can do. In these situations I find it helpful to consider the worst case scenario.

During the financial crisis, Geithner and his colleagues needed to identify which banks needed capital and how much. They came up with the idea of a stress test, but they were afraid the tests would reveal a hopeless situation, creating financial panic and meltdown. They realized that the worst case scenario would only confirm what the public already believed, and better results would create confidence.

They were correct; the banks weren’t as bad off as everyone feared, and information gained from the tests allowed them to take the first informed steps toward recovery.

2. Ignore your critics. It’s important to gather as much information as possible given the circumstances, which may include giving critics a chance to speak their mind. However, ignore your critics after determining what you and your supporters believe is the best way forward.

Every crisis is unique, but Geithner's experience with previous crises gave him confidence in the midst of severe criticism from less informed critics. The TARP program was hugely unpopular, but taxpayers ended up with large gains on the investments made in banks at the time.

It may help to examine the reasons behind criticism. When Geithner was nominated by President Obama to be Treasury Secretary, he faced intense opposition from Republicans. During the confirmation process some Republicans privately said they supported him and would vote for him if they needed to. In public they criticized him and withheld their vote because they didn’t want to be seen as supporting the newly elected President Obama.

3. Don’t neglect presentation. In the midst of a crisis, optimistic and confident communication can be as important as a quality solution. Stakeholders’ confidence, or lack of, can become a self-fulfilling prophecy.

In February 2009 Geithner gave his first speech as Treasury Secretary. It was supposed to outline the roll-out of the Obama administration’s solution to the crisis. Geithner severely botched the speech, causing the stock market to drop 5% and sparking severe criticism of the administration and him personally. The plan, including TARP as mentioned above, was ultimately successful, but better presentation could have reduced pain the meantime.

Experience is the best teacher. If we can learn from others experiences, we will be more prepared to face the crises that we will inevitably face as leaders.

Question: What lessons have you learned from managing crises?

5 Ways to Level the Roller Coaster

Building a company is a roller coaster ride. It’s not unusual for those responsible to frequently go from exhilaration to sheer terror and back again, possibly several times a day.

Regular ups and down have become normal for me as I’ve worked with new ventures. We close a large order (this is fun!), we lose a large customer (we’re doomed!), we close a round of financing (we’re invincible!), financing gets delayed (how are we going to make payroll?!), a customer provides a glowing review (everybody loves us!), a customer publicly criticizes us (everybody hates us!).

The past couple of months have been particularly volatile, which has led me to reflect on the strategies I use in an attempt smooth out those ups and downs.

1. Recognize human emotions. I try to remember that life is never as bad as I feel during down moments and never as good as I feel during high moments. Our emotions are coded for survival. The fight or flight response is meant to keep us alive in life or death moments. In our day we rarely face such moments, but our ingrained emotional response can make tough situations feel like life and death. This is a good thing if it motivates us to do all we can to get out of the situation, but we shouldn’t let fear become debilitating.

I don’t know why we tend to be overoptimistic in the good moments. Maybe a psychologist can explain that for us. Understanding the why isn’t as important as recognizing our emotions for what they are - just emotions. I try to acknowledge my emotions and then step back and view the situation for what it really is.

2. Accept the price of success. If building a successful company was easy, everyone would do it. Recognize that success has to be challenging or, by definition, it wouldn’t be success. The history of any successful company that I’m aware of includes many ups and downs and even near-death experiences.

Most of us know the basics of Apple’s history. Michael Dell famously said in 1997, when asked what he would do to fix the struggling company, that he would shut it down and give the money back to shareholders.

In its early years, Google executives bet the company on an ad deal with AOL. If the deal had gone wrong, the company could have gone down with it. Instead, the deal became the foundation of its core business: search advertising.

3. Appreciate the Load. I recently heard a story about a guy who took his new 4x4 truck into the mountains to gather firewood. Despite his confidence in the new truck, he got stuck in the snow near the firewood. When he realized he couldn’t get out, he thought he may as well cut and load the wood while figuring out what to do. With a full load of firewood in the back, he tried again to get out of the snow. Sure enough, he was now able to get out. The heavy load gave him the traction he needed. (https://www.lds.org/general-conference/2014/04/bear-up-their-burdens-with-ease?lang=eng)

We can appreciate the loads we carry because they give us traction in our lives and in our business.

4. Box up challenges. An entrepreneur I work with taught me a valuable lesson. When he has a challenge that he can’t deal with at the moment, he mentally puts it in a box, closes the box, puts it on a shelf, and forgets about it. Only when he’s ready to address the challenge does he intentionally take down the box and open it.

5. Know thyself. It is important to understand our unique emotional thresholds. Not all of us have Amazon founder Jeff Bezo’s nerves of steel. But not all of us can handle the monotony of a factory assembly line. Most of us are somewhere in between. We should take into account our emotional threshold and the other priorities we have in life as we decide where to take our companies and careers.

I’m still on a roller coaster, but these strategies help level it out. Business is not nearly as terrifying or as exhilarating as it used to be, which I think is a good thing.

Question: What strategies do you use to level out your roller coaster?

How to Automate Your Education

I try to use systems in all areas of my life. Systems could also be called habits, and they automate routine tasks that lead to important outcomes. Systems maximize consistency and minimize time and energy. Systems allow us to focus more on the outcome than the routine tasks that get us there.

I use systems to automate my ongoing education.  This makes sure I continually educate myself while not being overwhelmed by the tsunami of information readily available today.

Formal education should just be the beginning, and education should not be limited to our profession. There is much to learn about health and fitness, relationships, travel, sports, and anything else applicable to your life.

My education systems revolve around podcasts, content aggregators, audio books, eBooks, and magazines.

Podcasts. Podcasting is a form of audio broadcasting on the Internet. I use the Downcast app to automate my podcast system. I regularly listen to 25-30 podcasts, and some of my favorites are Entrepreneur on Fire, Entreleadership, and This is Your Life with Michael Hyatt.

I pipe podcasts into my ear through my Bose bluetooth ear piece whenever possible, such as while driving, riding my bike, or doing mindless tasks around the house or in the yard. Podcasts are my favorite way to consume content, and I’ll write a future post dedicated to how I use podcasts.

Content Aggregators. Flipboard is my favorite aggregator. It is an app that aggregates into magazine format all of the web content you want to follow. You can connect to blogs like an RSS reader, but you can also connect all of your social media feeds. I connect to some of my favorite blogs to make sure I don’t miss anything. However, I find that most of the content I want to follow gets tweeted or otherwise posted via social media.

Almost every night I spend about 30 minutes flipping through hundreds of items. I’ll read content that catches my attention, and I use Buffer’s email feature to post my favorites to my social media feeds.

Audio books. I use the Audible.com app to consume at least 2 books per month. I subscribe for about $22/month, which gives me 2 credits. Most books are 1 credit, so the subscription saves a lot of money given that most books are $15-30 each. As with podcasts, I use my ear piece to pipe books into my ear whenever possible.

eBooks. I use the Kindle app on my iPhone and iPad to read books. I prefer to consume books by audio because I can do other things at the same time. However, for some books I want to take more time to read, ponder, and take notes. In some cases, books I want to consume are not available in audio format.

Magazines. I get most of my periodical-type content through Flipboard, but I regularly read some of my favorite business magazines using the iPad Newsstand. These include, in order of priority, Forbes, Inc, Entrepreneur, Success, and Fortune. I’ll usually catch up on magazines in the evenings if I have extra time after getting through Flipboard or on the weekend if I have extra time to read.

Educating myself is a system built into my daily routine. I spend my time thinking about how to apply the content to my life rather than how I am going to learn.

What systems do you use to automate your education?

How to Forget Servers, Networks, and Software - Part 2

In a previous post I discussed the importance "lean thinking” while building a business. One way to facilitate lean thinking is to keep startup and ongoing administrative costs to a minimum. A large administrative cost for many companies is information technology (IT) infrastructure. Costs include not only the upfront purchase but also setup and ongoing support from knowledgable IT staff. Many free or inexpensive “cloud” (available through the Internet) tools eliminate the need for servers, networks, and most software. In my last post I  described how cloud tools can replace in-house email, calendars, file management, and backups. In this post I will tackle software, including accounting, office productivity, and payroll.

Accounting software. Cloud accounting software is available for companies of all sizes, from new startups to the Fortune 500. Some large companies or companies with strict privacy requirements, such as military contractors, may need to keep their financial data on site, but I believe most companies should seriously consider online accounting software.

The Quickbooks desktop version is probably the most widely used accounting software today, but it creates headaches and risk. You must keep track of and make sure you back up the data file. You have to install new versions annually and updates regularly. You must have a physical computer or server to install it on.  Online software handles all of this for you in the background, and you can log in with a browser from anywhere and from any device, including smart phones and tablets in most cases.

The companies I’ve worked with use Netsuite, Xero, and Unleashed. I set up Netsuite for a manufacturing and distribution company because of its requirement for process control and inventory management. Xero is comparable to Quickbooks and is sufficient for many companies. Xero doesn't have have robust inventory tracking capabilities, but it integrates with inventory management software, such as Unleashed.

Word Processing and Spreadsheets. Online office productivity software can replace installed software in many cases. Google Docs and Sheets, Office 365, and Zoho, to name a few, are almost as robust as Microsoft Office and have the benefit of being available at any time, on any device, and to anyone you choose. I use Google Docs and Sheets within Google Drive for almost all word processing and spreadsheet tasks. I still have Excel installed, but I only use it for the most complicated financial models.

Payroll. Online payroll service providers are so inexpensive and efficient that there is no reason for most companies to do payroll in-house. Services like ADP, Ceridian, Zen Payroll, and Intuit handle all payroll processing, direct deposit, and tax filings for a minimal monthly fee. All you have to do each pay period is enter hours (if applicable) and push a button to process payroll. Most companies I work with use Intuit Full Service Payroll. It’s incredibly simple, cheap, and flexible. Netsuite has integrated payroll in the US, and Xero has integrated payroll for some states.

Case Study

I have helped several companies transition from costly and complicated IT infrastructure to inexpensive and simple cloud services. One small company with less than 10 employees had expensive servers hosting complicated accounting software, an antiquated version of Microsoft Exchange for email (with frequent down time and delivery problems), a file management system, and an Active Directory network to manage access to these services. They were paying an IT outsourcing firms several hundred and sometimes thousands of dollars per month for support. They were also spending a lot of time on in-house payroll.

We implemented Google Apps for email and document management. We moved the accounting system to Xero and payroll to Intuit. The servers or network are no longer needed, and unfortunately for the IT outsourcing firm, they haven’t been been called since.

“Cloud” tools have made starting and growing a business cheaper and easier than ever before. Using these tools eliminates the need for in-house services, networks, and most software.

How to Forget Servers, Networks, and Software - Part 1

In a previous post I discussed the importance "lean thinking” while building a business. One way to facilitate lean thinking is to keep startup and ongoing administrative costs to a minimum. A large administrative cost for many companies is information technology (IT) infrastructure. Costs include not only the upfront purchase but also setup and ongoing support from knowledgable IT staff.

Many free or inexpensive “cloud” (available through the Internet) tools eliminate the need for servers, networks, and most software. In this post I will describe how cloud tools can replace in-house email, calendars, file management, and backups. In my next post I will tackle software, including accounting, office productivity, and payroll.

Email and Calendars. Most companies have no reason to host their own email and calendars. This requires expensive servers, licenses for the software (such as Microsoft Exchange), and the headache of user maintenance, backups, and troubleshooting.

Almost company every company I’ve worked with uses Google Apps. You can use your own domain name, uptime is a guaranteed 99.9%, and Google handles backups. Someone without IT knowledge can follow Google’s simple instructions for setting up the service, and ongoing maintenance is mainly limited to adding and removing users. The cost is $5/month/user.

File Management and Sharing. Services like Google Drive, Dropbox, and Box can replace file sharing on an internal network. Google Drive includes 30 GB per user in the $5/month cost. Dropbox and Box have business versions that can be managed centrally. Many small companies will find that the free individual versions are sufficient. I use the individual service and pay $10/month for 200 GB of storage, mainly because I back up other cloud services to Dropbox as described below.

Most companies I've worked with use Google Drive as an archival document management system and for collaborating on Google Docs and Sheets. They use Dropbox individually and within teams for easy file sharing and version control for files they are actively working on.

Backups. In most cases, online file management services have built-in backup systems, which makes separate backups unnecessary. For example, all of my important personal files are stored within Dropbox. Dropbox stores all deleted and earlier versions for 30 days. I pay $39/year for their "Packrat” service, which stores deleted and earlier versions of all files indefinitely.

Because I’m paranoid, I still back up other cloud services to Dropbox using CloudHQ. For $99/year CloudHQ continuously monitors my email, Google Drive, and Evernote accounts and backs up all changes to Dropbox. CloudHQ also supports many other cloud services.

If you store files on your computer outside of other cloud services, or if you want extra piece of mind, you can use online backup services like Mozy and Carbonite.

“Cloud” tools have made starting and growing a business cheaper and easier than ever before. Using these tools eliminates the need for in-house services, networks, and most software.

3 Lean Thinking Principles

How many of us have had an idea we absolutely knew would change our life or business for the better? How many of our lives or businesses are not any better after pursuing the idea? Judging by the number of ads for lightly used exercise equipment on Craigslist, many of us have had this experience.

Several years ago some colleagues and I found a product overseas that we absolutely knew would transform our business. We borrowed short-term money from our investors and ordered several containers of product. It was a happy day a few years later when we finally sold, at a loss, the rest of that first and only shipment.

I’m not saying we should never pursue ideas just because they might not work. However, the following lean thinking principles can save us from wasted time and money:

1. Start Small

Never be afraid to start. But start small. Don’t go all in before testing the idea. Do you want to expand your business? Rent equipment for a while before purchasing. Do you want to start exercising at home? Go to the gym for a while to see what works for you, and most importantly, if you’ll stick to it, before spending hundreds or thousands of dollars on home equipment.

I enjoy mountain biking, and I’d like to start going with my 10-year-old son. We’d love new bikes with all the best components. However, I don’t know if it’s going to catch on. I recently bought used, basic bikes so we could try it out. If we end going often and progressing to more challenging terrain, we will consider upgrading.

2. Evaluate and Test

After you start, evaluate the results and test improvements. Talk to customers and make changes based on their feedback.

As of this writing, my son and I have gone mountain biking once. It was a beautiful clear day in Corner Canyon high above Draper, Utah. We had a blast, but my son was terrified of the narrow trails on the steep mountainside. Also, we haven’t been gone for 3 weeks due to weather and other commitments. So far it looks like we won’t go often, and we won’t be tackling highly technical terrain any time soon.

3. Build Slowly

As you get evidence that your idea is working, continue the cycle of slowly building and evaluating. Often your idea will take a completely different shape than what you originally imagined.

The cases of Webvan and Amazon Fresh illustrate the benefits of lean thinking. Developing profitable grocery delivery services has long been a vexing problem.

Webvan thought they solved this problem in the late 1990’s. They raised hundreds of millions of dollars and were in the process of building 26 different $30 million warehouses around the United States. All of this was before they proved the concept in 1 city. As a result, an untested idea ended in a 2001 bankruptcy as one of the most spectacular failures of the dot-com era.

In contrast, AmazonFresh has been providing grocery delivery services in the Seattle area since 2007. Only after 6 years of testing and refining their concept have they expanded into only two more cities: Los Angeles and San Francisco.

In summary, don’t be afraid to start, but think lean by starting small and building slowly while evaluating carefully as you go.

For more information about getting started, see The Power of Starting Something Stupid by my friend and colleague Richie Norton, and Start by Jon Acuff.

For more information about lean thinking, I recommend The Lean Startup by Eric Ries.

Question: How do you apply lean thinking principles in your life and business?

Why I Started a Blog

I have wanted to start a blog for a couple of years, but until now I haven't made it a priority over other demands on my time. A few factors have contributed to the nagging desire to start, and one factor in particular pushed me over the edge this year.

Two reasons I have been thinking about starting a blog:  

1. Producer vs. Consumer.  I have always been a prodigious consumer of content. I love reading and learning. I use Flipboard to flip through hundreds of articles and social media posts every day. I am usually in the middle of reading several books at a time so I have always have something I'm in the mood for, whether it be business, self-improvement, fiction, spiritual, etc.

I like audio so I can listen at double speed and consume content while I'm driving, exercising, or working around the house. I subscribe to Audible.com so I can listen to at least two books per month, and I subscribe to many podcasts on Downcast.

However, reading Atlas Shrugged by Ayn Rand got me thinking about the difference between a producer and consumer. I realized that all of my life I have been a consumer of content (much of it free) while never giving back by producing content for others to consume. I wonder if I can produce content others will want to consume, but I feel I need to try.

2. Build a platform. I have been following Michael Hyatt's blog and podcast since he left the CEO post at Thomas Nelson Publishers to start his own writing and speaking business. He talks extensively about how and why to build your own platform. I recommend his book, Platform: Get Noticed in a Noisy World.

The reason that got me started:  

Communication. I am an introverted nerd at heart. I love technical and analytics things like numbers and computers. I am more comfortable in front of a computer screen than I am interacting with other people. However, I know if I want to have any kind of positive influence in the world and achieve my personal and professional goals, I need to be able to effectively communicate with others. It's not that I can't communicate with others, but it's an area that I need to work on.

As part of my new year's resolutions, I have designated 2014 as my year of improving communication with two main goals:

1. Join a local Toastmasters chapter and earn the Competent Communicator certificate. I have had a great experience so far with the Parkway Pontificators in South Jordan.

2. Start and actively contribute to a blog. I want to improve my written communication skills, but my main goal this year is to improve my verbal communication. What does a blog have to do with verbal communication? I recently had an epiphany. One of the reasons I struggle to speak clearly is that I struggle to think clearly. In my busy CFO schedule I spend too much time doing and reacting and not enough time thinking.  I believe that writing content someone else might read will force me to organize my thoughts more clearly, which will in turn help me to think more clearly.

I look forward to improving my communication in 2014!

Questions:

If you have a blog, why did you start?

How have you improved your communication skills?

Welcome To My Blog

For the last few years I have served as the CFO for several early-stage ventures. I started this blog to capture the lessons I have learned and hopefully help others. Read more about me and my goals for this blog. I will be adding more content soon, so you can subscribe using the form to the right to be notified of new posts.