Why I Stopped Running (And Then Started Again)

In a previous post I wrote about holding the ground we have already won. I related my experience of losing 30 pounds (winning ground) and then gaining 25 of it back (losing the ground I had gained). Holding the ground we have won is tough, particularly when we forget (or even don’t realize) the major factors that helped us gain ground in the first place.

Running was a major catalyst for gaining ground in all areas of my life. When I starting training for a half marathon and eating better about four years ago, I lost weight and gained more mental clarity, motivation, and energy. This led to better performance and therefore more advancement in my career. More energy meant more quality time with my family. Better health meant almost no down time due to illness. Life was better overall.

Over time I forgot what got me to that place. By January 2014 I had gained some weight back, especially after letting go during Christmas. I embarked on a month of running 25-30 miles per week, no sugar, and no diet soda. At the end of that month my weight hadn't budged.

At the same time I had been listening to health podcasts and reading health books. I became convinced that “chronic cardio” (i.e. running) was bad for you. I was sold on the idea that a Paleo diet, combined with 10-15 minutes of high intensity strength training twice per week, would pack on muscle and melt away fat. I went to a holistic practitioner who recommended a large assortment of vitamins and supplements. I had to buy one of those Sunday through Saturday pill holders to keep it all straight (which made me feel very old)!

It all made perfect sense (and was appealing). I liked that I didn’t have to get up early on cold mornings and run for 4-5 hours per week. I liked that I could eat as much fruits, vegetables, meat, and even butter as I wanted. I liked that I could cheat on my diet once in a while (which became more often than once in a while).

It was great! Except that it didn’t work.

6 months later I had gained 10 pounds. I had a hard time getting going in the morning and lacked my usual motivation during the day. Instead of using the extra 4-5 hours per week (plus prep and cool-down time) to get more done, I slept more than I needed to.

It took me 12 months to replace the missing piece. I guess I’m a little slow. I guess I trusted the “experts” a little too much. And I can’t even take much credit for replacing that piece. Some of our friends had the crazy idea of running Ragnar this June, and my wife had the crazy idea of taking their idea seriously.

2 months ago, soon after starting to run several times per week, I realized running was the missing piece.

The results have been amazing.

I've lost 5 pounds, and I’m not even back to eating as well as I should be (those Easter treats are a little too appealing). More importantly, I have regained the mental clarity, motivation, and energy that I lost a year ago.

In the process I have learned a few things that apply to all areas of our life, including business:

1. Don’t be afraid to experiment with new ideas, but don’t stray too far from what has worked well in the past.
2. The "experts" aren't always right, or at least their advice doesn't always apply universally.
3. Be skeptical of promised shortcuts. I’m a big fan of trying life hacks, and a few small hacks have dramatically improved my life. But there are very few effective shortcuts. Improvement in life generally comes with a lot of hard work and discipline.
4. Listen to your body. Our bodies are incredible at giving us feedback. Feel great after a run? There’s a reason. Feel sick after eating a donut? There’s also a reason.

I stopped running because I forgot how I had gained ground in the first place. I started again because of my wife’s encouragement, but I have continued because it is helping me win that ground back.

Question: What have you stopped that is causing you to lose ground, and what can you do to start again? 

4 Ways to Automate Your Accounting

I try to use systems in all areas of my life. Systems 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. In business, these systems can take the form of processes. Accounting is a business function particularly conducive to structured processes. The value in accounting comes with the ability to analyze timely and accurate numbers that your processes generate and not in the processes themselves.

Of course, all large business have complex accounting software and processes to make sure their transactions are recorded accurately and their financial statements prepared timely.

I will focus on on 4 ways freelancers and small business owners can automate their accounting:

1. Use checklists

The less you have to think about routine tasks, the more brainpower is freed up for more important activities. Checklists are a great way to minimize the thinking required.

Checklists can be used for any repetitive task, which includes most of the activities a business engages in. Examples include:

• Onboarding a new employee
• Setting up a new vendor
• Setting up a new customer
• Closing the store or restaurant at night
• Preparing an order for shipment

Checklists are especially helpful in nailing the month-end end accounting close, which brings me to my next point…

2. Nail your month-end close 

"Month-end close” or the “financial statement close process” might sound like a complicated activity that only big companies worry about, but it simply refers to the activities that provide accurate financials after the end of a month.

The sooner you can get financial statements after the end of the month, and the more accurate those financials are, the better decisions you will be able to make.

This process should be so well defined and refined that it’s automatic. It doesn’t mean smart and skilled people aren’t required to carry out the system, but it means these people don’t have to figure out the process every month. Instead, they can use their valuable time and brainpower to analyze the financials and identify areas for improving the business.

Checklists in a Google Sheet have worked well for me. A tab lists all the tasks required to close out month end, when each task needs to be done, and who is responsible for each. Those responsible sign off on each task, giving me a real-time status.

Setting up bank feeds helps to automate month end. Most accounting software packages, such as Xero and Quickbooks Online, connect directly to bank accounts and credit cards and download new transactions every day. Bookkeepers only have to assign the correct account code to each transaction before reconciling the account.

Software that doesn’t support bank feeds should at least support transaction import, which allows you to download the transactions from your bank account and import the downloaded file into your accounting software.

3. Use dashboards and scheduled reports

It’s good to review a full set of financial statements monthly, but you’ll often need information sooner to make decisions. While it’s not practical to perform the full accounting process more than monthly, important transactions such as sales should be recorded in real time.

As a business owner, you should have access to as much real-time information as possible. Some accounting software will email you reports on a set schedule. For example, for one company I get a daily automated email with customer payments received, new orders received, and orders shipped. This allows me to keep a daily pulse on the business.

4. Outsource your bookkeeping

It doesn’t make sense for many freelancers and small businesses to hire full-time bookkeepers. In some small businesses, employees wear multiple hats, and the office manager, for example, may double as a bookkeeper. This may work out okay if you have team members with sufficient time and are comfortable with bookkeeping.

However, in most cases it’s better to outsource your bookkeeping. This allows you to hire for specific skills needed to add value to your business. You can outsource to accounting firms, but this is often quite expensive. I recommend finding offshore bookkeepers though a service like Elance.

All of the companies I work with have used offshore bookkeepers for several years, and it works great. We pay between $6 and $12 per hour, depending on the complexity, and the bookkeepers are accurate and dependable. For example, we forward any invoices we receive, and they do the accounting software entry and file the digital copy. They also complete most of the month-end checklist.

Automate Your Business

Accounting is an obvious candidate for automation, but you can automate any area of your business. It can help to recognize anything that is done on a regular basis and think about how it can be automated.

Question: What other tips do you have for automating accounting? 

How to Boost your Career by Nailing the Job at Hand

I crave challenge and growth. I don’t like to stagnate. As a result, I'm constantly looking ahead to the next challenge. Growth and progression is a good thing, right? However, I heard some simple advice that has caused me to reconsider how I think about growth.

Indra Nooyi has been the CEO of Pepsico since 2006. She joined the company in 1994 and was promoted to President and CFO in 2001 before her promotion to CEO. She is rated among the top CEO’s in the world.

Her simple explanation for her career success is this: nail the job at hand.

She has given variations of similar advice in several venues, including Howard University and the UT Austin McCombs School of Business.

She’s saying focus on doing your very best in your current job or responsibility or circumstances. Don’t worry about your next job or the following one, which distracts you from nailing your current responsibility. If you nail the job at hand, the future will take care of itself.

As someone who likes to plan for the future, this advice hit me hard. I’ve been thinking about how I can do a better job of nailing the job at hand, and here are some ideas:

1. Stop the “I’ll be happy when” cycle

Sometimes we focus on the future because we are not content with the present, and we think each new step will make us happy. We’re all guilty of this. I’ll be happy when I’m out of high school and have more freedom. I’ll be happy when I’m done college and have a real job. I’ll be happy when I get married. I’ll be happy when I’m promoted. I’ll be happy when my business has more stability.

Eventually we should recognize that progression is good, but if we’re not content now, we won’t be content in the future. The way to be content with the present is to make the most of it.

Enjoy nailing the step at hand, and then enjoy nailing the next step of the journey.

2. Be grateful 

Gratitude has a powerful effect on your present state of mind.

Gratitude has a backward-looking component to it. We should take time once in a while to look back and realize how far we have come. We can be grateful for the people and circumstances that have helped us get there.

Looking back helps us be grateful for the stage we are at now.

3. Schedule time for future-focused thinking

I don’t think Nooyi is saying we should never think about the future. I believe she is saying we shouldn’t let future-focused thinking distract us from nailing the job at hand. We can limit our tendency to get distracted by the future by scheduling time to think about it.

Almost three years ago I read Michael Hyatt’s Life Plan ebook and spent a lot of time putting my life plan together. I identified the major areas of my life, and for each area I wrote down my purpose statement, envisioned future, supporting statements, current reality, habits, and goals.

Hyatt recommends setting aside time once per week to review your life plan. I schedule time every Sunday morning to review my goals and make sure I’m moving toward them. I give myself permission to think about the future and whether or not I need to make any course corrections. I need to do a better job of limiting my future-focused thinking to once per week while nailing the job day-to-day.

Nail the job at hand

As we nail the job at hand, our future will take care of itself. It worked for Indra Nooyi, and it can work for us.

Question: How do you nail the job at hand? 

"IndraNooyiDavos2010ver2" by Jeff Bedford from Arlington, Virginia, United States - posted to Flickr as Indra Nooyi, PepsiCo CEO, Speaking at the World Economic Forum 2010 Annual Meeting. Licensed under CC BY-SA 2.0 via Wikimedia Commons - http://commons.wikimedia.org/wiki/File:IndraNooyiDavos2010ver2.jpg#/media/File:IndraNooyiDavos2010ver2.jpg

4 Ways to Develop a Leader-Leader Culture

I recently finished the book, Turn the Ship Around by David Marquet. The author was appointed captain of the submarine USS Santa Fe. At the time, it was performing at the bottom of the fleet. He tells the story of  how he turned the submarine performance around with the leadership style he developed. The leadership methods he learned also apply to building and turning around companies. Startup founders in particular can benefit by using these principles from the beginning rather than trying to change the culture later on.

The main premise I got from the book is that leaders should treat those they lead as other leaders rather than followers. He calls it the leader-leader model rather than the traditional leader-follower model.

Here are four ways to implement a leader-leader model in our organizations:

1. Use empowering language 

Words have a strong impact on our culture. Every organization develops unique methods of communication, such as acronyms and common phrases.

The author gives examples of phrases that indicate disempowerment (said by those who are led to their leader), such as “I would like to…” or “could we…” or “what should I do about…” These are passive phrases that require the leader to dictate, or at least contribute to, the solution.

On the other hand, empowered phrases include, “I intend to…” or “we will…” These types of phrases encourage people to think and decide for themselves. If the action requires the leader’s permission, the leader can simply reply, “very well,” or ask questions if clarification is required.

We can empower those we lead to act and not be acted upon, and that empowerment can start with the words we use.

2. Have a servant mindset

Leaders should consider themselves servants to those they lead. As Jesus said in Matthew 23:11, "But he that is greatest among you shall be your servant."

My job as a leader is to make it easier for those I lead to do their jobs. I can help solve problems, provide coaching, and give advice from my training and experience.

3. Specify goals, not methods

I am guilty of not following this principle. I am system-oriented, and as a leader I think it’s my job to specify the step-by-step processes for others to follow. Sometimes I think I’m the best qualified to know the best way to do things.

Periodically I'm reminded that I’m not usually the best qualified to specify the how. As a leader, I do need to work with other leaders to define and communicate priorities and goals. However, I need to let those I lead develop the methods to achieve those goals.

A few years ago I was given responsibility for the operations of a factory. The team was struggling to load outgoing trucks within a reasonable time, and they often made mistakes by loading the wrong products. As a new leader, I thought I could save the day by dictating the methods for reaching the goal of loading quickly and accurately.

I worked out of a different city, but I would spent at least a full week every month for a few months on the ground, working side-by-side with the team, showing them what I thought was the best way to reach the goal.

Before leaving, I would document the process and encourage them to follow it. Invariably, the process would break down after I left, and I would go back the next month and try to fix it again. Frustrated, I couldn’t figure out why they couldn’t simply follow the process.

After a few months I gave up. I simply told them I didn’t care how they did it, but we needed trucks loaded quickly and accurately. Miraculously, within a few weeks trucks were being loaded quickly, and mistakes were rare. Several years later, I still oversee that factory, and I have no idea what the system is for loading trucks.

4. Don't be missed after you depart

Why do we want to lead? So we can be in a position of power? So we can have a secure job? So we can make more money?

Leaders who lead followers make sure their organization and people can’t function without them. If the leader leaves, the organize is worse off, at least until another leader steps in.

On the contrary, we should lead so we can leave our organization and those around us better than we found them.

It’s hard to think that way. As a leader, I like to think of myself as indispensable. They can’t do it without me! However, this attitude is self-serving.

By following the leader-leader model, we can build an organization full of leaders. Leaders who make good decisions when left on their own. Leaders who take good care of the customer when the supervisor isn’t watching. Leaders who identify and solve problems without being directed. Leaders who continue to build a great organization after you are gone.

Question: How do you build a leader-leader culture? 

Relationships Are More Important Than Accomplishments

While growing up I had what is probably a relatively unique experience. I had the same group of friends from elementary school through high school. We were all born in the same small town, and, with one exception, all of our parents still live there. Last weekend most of us got together for the first time in about 17 years. I was surprised by the deep fulfillment I felt from renewing these relationships. I thought we had all moved on, and since high school I haven’t made much effort to keep in touch. I didn’t realize what an enduring bond we had built during those formative years.

I tend to be more task-oriented than people-oriented, but this experience reminded me how fulfilling relationships can be. I realized I haven't put that much time and effort into many relationships since then. I realized I have been missing out.

I've been thinking about how to build relationships while still satisfying my “need to achieve” personality. Here are some thoughts:

1. Don’t be afraid of imperfection 

My drive to maintain my habits and accomplish my goals can get in the way of relationships. Many of the experiences that build the meaningful relationships can’t be scheduled. Often they are spontaneous activities, such as late-night discussions or last-minute ice cream runs.

I often miss out on these opportunities because I want to maintain my habit of getting enough sleep before my structured morning routine. I want to stick to my healthy eating program. And so on.

I need to remember that I can still accomplish my goals if my normal habits get disrupted once in a while.

2. Look beyond instant gratification 

Accomplishing a task and checking the box provides instant gratification. While experiences along the way should be enjoyable, building the most fulfilling relationships usually takes a long time accompanied by sacrifice of our own needs.

3. Believe that relationships trump accomplishment

Building relationships can be hard for goal-oriented people because they tend to focus their efforts on measurable outcomes. It’s difficult to set goals to build relationships, and it’s even more difficult to measure progress.

However, goal-oriented people like me need to acknowledge that relationships trump any other accomplishment. This is especially true for family relationships. As David O. McKay said, "No other success can compensate for failure in the home."

4. Choose carefully 

Of course, we don’t have the time or emotional capacity to build deep relationships with a large number of people. Consequently, we can be selective with who we build relationships with.

Jim Rohn said, “You are the average of the five people you spend the most time with.”

I’ve resolved to make it a priority to build relationships with those who will help me become the best person I can be.

Question: What tips do you have for making relationships a priority? 

5 Ways to Love What You Do

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. I’ve always had an entrepreneurial itch, but I wasn’t in a position to start my own company. Gradually I came to the conclusion that I would love to follow my passion for business, finance, and entrepreneurship by supporting startups in a CFO or similar role.

Soon after coming to that conclusion, I took the opportunity to join a startup as their CFO. Since then, I have filled the CFO role for several startups. I have been very blessed to be able to make a good living while following my passion.

However, just because I’m doing what I love doesn’t mean I always love what I do. I have days and sometimes longer periods of time when I feel bored, stressed, and/or stuck. Sometimes I feel that I’m not advancing in my career quickly enough. Sometimes I feel like I’m in over my head.

On this journey of ups and downs I have realized that it’s first important to do what you love. Doing what you love starts you down a good path. But it’s even more important to love what you do. There’s a difference.

In this way, a career is like marriage. We marry who we fall in love with, but that event is only the beginning. We have to choose to stay in love by our thoughts and actions every day. We marry who we love, and then we need to love who we marry.

Here are 5 things to do when we find ourselves no longer passionate about our passion.

1. Create a vision 

Some days are more enjoyable than others. To consistently love what we do, we need to have a clear vision of where we want our daily activities to take us. According to Simon Sinek, we need to "Start with Why." We need a "why” that goes beyond today.

2. Set short-term goals

It’s important to have a vision for what we want to accomplish, but it’s easy to get sidetracked and frustrated if we don’t have a more concrete plan for getting from here to there. Setting short-term goals helps us focus on how our daily activities contribute to our grand vision.

3. Celebrate milestones

It helps to recognize the progress we have made, no matter how slow it seems to be. Levi King, CEO of Creditera, warns that there can be danger to celebrating too much, too early, such as celebrating a fundraising closing with a lavish party. However, celebrating milestones in simple, yet meaningful ways reminds us of the progress we are making.

4. Get over ourselves

Sometimes our daily lives get mundane or difficult because we are too focused on ourselves. We are worried about what we are getting out of our careers and what other people are doing for us. We should instead focus on how we can make our customers, team members, vendors, owners, etc more successful. As we lose ourselves in serving others, our success and happiness will take care of itself.  Like Zig Ziglar says, "You can have everything in life you want, if you will just help enough other people get what they want."

5. Make a change

So far I have focused on how to maintain love for the path you are on. However, sometimes it’s simply time for a change. Sometimes the path we set out on is not the best one to continue on. Before making a change, we should carefully consider our motives. We should consider whether or not the previous four steps will get us back on track. The grass usually isn’t really greener on the other side, and any worthwhile pursuit will have periods of boredom and difficulty and seemingly impossible obstacles.

In summary, start by doing what you love, and then work to continue loving what you do. Loving what you do is a conscious choice.

Question: What helps you love what you do?

What Does It Mean To Think Big?

I recently read Zero to One by Peter Thiel and Blake Masters and Moonshot! by John Sculley. They are both inspiring books about identifying opportunities to solve world-changing problems (and building multi-billion dollar businesses in the process). Reading these books got me thinking about what it means to think big.

I grew up on a small farm outside of a small town in southern Alberta, Canada. Until I took my first plane ride when I was 19, the furthest I had been from home was a trip to Disneyland.

My parents love their quiet life, but they taught me that I can go anywhere and accomplish anything I want to. They taught me to think big.

While growing up, big was anything bigger than a town of 3500 people, and I looked forward to getting out into the big world.

I thought Brigham Young University was big with its 30,000 students in a county of 500,000 residents.

I saw that the world is big when I spent two years near Melbourne, Australia.

I didn’t think life got any bigger than California's Bay Area. While living there I was in constant awe of the many iconic company headquarters along the 101 between San Francisco and San Jose.

After living in California I moved back to that town of 3500. I had just joined a startup, and I planned to open an office in Utah after a brief orientation period. That brief stay turned into 6 years before I actually did move to Utah.

Going back to that small town helped me realize that big is not necessarily living in a big city working for a big company and traveling the big world. Big is stretching yourself beyond what you think you are capable of. Big is making the biggest impact you can on the people around you, even if that impact seems small in the grand scheme.

While living in that small town I helped 150 families through Dave Ramsey’s Financial Peace University as the lead facilitator. While living there I helped start a venture capital fund and built several startups with offices in the US and Canada. While there I turned my health around by losing 30 pounds and running a half marathon. While these are relatively small accomplishments, to me they were big.

So how do we think big if we’re not trying to cure cancer or build a billion-dollar business or become President of the United States?

What's big to you?

What’s big to you might be small for someone else, and vice versa, but that’s okay. You are you, not someone else.

What are your unique talents?

Chances are you have talents and skills that set you apart from most other people. Sometimes these are hard to identify and develop, but we all have them.

What mark do you want to make on the world? 

Think about what you are passionate about. Is it building a business? Is it helping underprivileged kids? Whatever it is, you can find a way to apply your unique talent to make a mark.

What's holding you back from taking the first step?

We often cite fear of failure as what holds us back, but what about fear of success? Do you like your comfortable life, and are you afraid success will take you out of that comfort zone? I like Eleanor Roosevelt’s famous quote: "Do one thing every day that scares you."

I believe thinking big means thinking BIGGER than we are now. It means forcing ourselves outside of our comfort zone. It means doing something that scares us. It means making our own small mark on the world.

Question: What does thinking big mean to you?

The Illusion of Balance

Do you strive for a balanced life? What does a balanced life look like to you? Zig Ziglar’s Wheel of Life is a good representation of a balanced life. It identifies seven areas of life we should pay attention to. Our wheel will be flat if we neglect any of these areas, giving us a bumpy ride.

I believe balance is important. The Wheel of Life has strongly influenced how I set my goals and prioritize my time.

However, I believe the way we look at balance can cause us to miss the mark. To me, the illusion of balance is not that balance isn’t important or possible. The illusion is that we have to be (or even can be) perfectly balanced every day.

Our ideal day may be to wake up early for exercise (physical) followed by prayer or meditation (spiritual). We go to work and make a valuable contribution (career) with a break to have lunch with a friend (social). On the way home we think about picking up dinner to go, but we first check our carefully-planned budget (financial). We eat dinner as a family, followed by games or talking (family). After the kids are in bed we read a good book (intellectual).

It’s a great day - we nailed all seven areas of life! Not a bad ideal to shoot for.

I don’t know about you, but most of my days don’t go like this. And I think that’s okay. We don’t have to be balanced every day or even every week to live a balanced life.

So what does a balanced life look like?

Balance over time

To me, it’s about balance over time. The acceptable time period will be different for everyone and for each area of life. Only you know how long you can neglect an area before the damage becomes difficult to repair.

Life has its seasons.

Having a new baby or caring for a sick family member may lead you to spend more time on family and less time on socializing, working, or exercising for a season.

A demanding work project might take you away from your family for a few weeks. Most families will be fine, knowing the project is temporary. However, the damage to your family may not be worth the career advancement if neglect turns into the norm.

To be balanced over time requires us to be intentional. Prioritizing and setting goals can help us find balance over time:

Prioritize

A leader in my church gave an address titled Good, Better, Best. He encourages us to consider what is good, better, and best in our lives and prioritize accordingly. Sometimes good is the enemy of best.

I wrote a post reviewing the book The ONE Thing by Gary Keller and Jay Papasan. The authors ask, “What’s the one thing I can do such that by doing it everything else I do will be easier or unnecessary?”

To me, physical health, including exercise and nutrition, is The ONE Thing that gives me the energy and clarity of mind I need to perform my best in other areas of my life.

Set Goals

I wrote about my goal-setting process here and how I work towards goals here.

We can decide what our priorities are, set goals that move us toward our priorities, and evaluate our progress.

Finding balance in our lives over time requires us to be intentional about our actions.

Question: How do you find balance in your life?

Are you a Founder, Consigliere, or Investor?

Last weekend I attended the first StartSLC conference in Salt Lake City, Utah. It brought together thousands of entrepreneurs and investors for a weekend of speakers, panels, and other activities. It’s exciting to see the development of a strong startup ecosystem in Utah! As I participated, I thought about the roles that come together to make a startup successful. There must be a founder or small group of founders. As the company gets going, the founders need consigliere (supporting staff - I had to look the word up when I first saw it). Often startups seek investors to provide growth capital.

As I met with and listened to people in these roles, I thought about what role I fit best and what it takes to be successful in each role.

Are you a founder?

Being a founder is tough, and it’s not for everyone. The role is epitomized by visible superstars like Steve Jobs, Jeff Bezos, and Mark Zuckerberg.

Founder attributes should include the following:

Confidence. Often founders leave a seemingly secure situation, such as a regular job, to pursue an idea. They must have supreme confidence in their idea and in themselves to make this leap against high odds of failure.

Focus. It can take years to build a startup into what you might consider an established, stable company. Although circumstances may call for changes in direction, the founder needs to have narrow focus for a long period of time.

Fortitude. As a startup grows, much weight is placed on the founders’ shoulders. They feel responsible for the customers, employees, vendors, and investors that have placed their faith in them. Founders must be willing to push ahead through the ups and downs without giving up.

Leadership. Founders must get people to follow them. Most importantly, customers must follow or there will be no business. Founders need team members to follow them as the company grows. They may need to convince investors to put money behind them.

Are you a consigliere?

I first saw this word in the book, The Startup of You, by LinkedIn founder Reid Hoffman. I like how it describes the supporting role. It is Italian for “counselor” and was popularized by use in the mafia, including the The Godfather book and movie. It refers to a low-key, right-hand to the front man.

Hoffman writes, "Most super talented people want to be the front man; few play the consigliere role well. In other words, there's less competition and significant opportunity to be an all-star right-hand man."

This term usually applies to THE right-hand man or woman, such as Sheryl Sandberg at Facebook. But it can also apply to any team members who support the founders.

Consigliere attributes should include the following:

Humility. They are critical to the company’s success. Hopefully the founder, as a good leader, will recognize their value, but they probably won’t get much public glory.

Loyalty. They don't need to commit to the founder for life, and they don't even need to be full-time employees. But they do need to be 100% loyal to the role they agreed to. If their circumstances change or they lose interest in the role, they should move aside so they don’t hold the rest of the team back.

Are you an investor?

You don’t need personal wealth to be an investor. Yes, investing takes money, but often investors are entrusted with someone else’s money to invest on their behalf.

This is common in the venture capital industry. VC’s form a partnership and invite limited partners (LP's), such as institutional investors and high net worth individuals, to invest their funds into the partnership. The VC's invest those funds with the expectation of providing a good return for the LP’s.

Whether investing their own money or on behalf of others, investor attributes should include the following:

Experience. Education is important, but it takes experience to recognize the makings of a good investment. They must also be capable of helping the company through the ups and downs of growth.

Quick learner. Every potential investment requires a learning curve. It may be in a new industry, and certainly every company is different. Investors need to be able to quickly size up the company and its position in the industry to make a good investment decision.

Hands off. Investors must be comfortable with helping to guide a business without being involved in day-to-day decisions and operations. This is difficult for some people.

Big picture view. Founders need to be laser focused on the specific industry segment they are competing in. In contrast, investors must stay current with trends across the economy as a whole. Even if their investments are focused in one area, they need to know how other trends may affect that area.

We Evolve Over Time

As we think about the startup role that suits us the best, we should also recognize that we evolve throughout our careers. Often people start in the consigliere role to gain experience, move to a founder role when the opportunity arises, and then move on to investing.

The opportunities and variety are what make the startup world so exciting!

Question: What roles suits you the best, and why? 

4 Ways to Prevent Personal Finance from Hurting Your Business

Successful entrepreneurs want to pour everything they have into their businesses, including time, attention, energy, and money. 100% commitment increases the odds of success in an area with high risk of failure. However, 100% commitment doesn’t necessarily mean giving everything you have. Giving too much in one area may prevent you from giving enough in more important areas. This principle applies to various aspects of life, but I will address the financial.

It’s obvious that your business performance impacts your personal financial situation. But it’s not as obvious that your personal financial situation also impacts the success of your business.

Sometimes pouring all of your money into a venture prevents you from giving something more valuable: your undivided attention. Personal financial struggles create stress, which distracts your attention from your business.

Here are four ways to avoid distracting personal financial struggles. Although I’m addressing entrepreneurs specifically, these principles apply to anyone.

1. Keep your overhead low

Keeping overhead low is a business principle that also applies to personal finance. Overhead is a company's fixed, ongoing expenses, which could include rent, utilities, travel, and debt payments.

Successful businesses keep their overhead as low as possible. The lower the overhead, the faster a startup can get to the critical breakeven milestone. The lower the overhead, the more prepared a profitable business can respond to fluctuations in revenue or investment opportunities.

Similarly, low personal overhead means you don’t need to generate much personal income to cover your basic expenses. You know you can quickly adapt to changing circumstances, such business cash flow struggles. The resulting peace of mind allows you to focus on your business.

One way to keep overhead low is to avoid debt, especially when used to purchase depreciating assets. Getting a loan to buy a vehicle, RV, or furniture set commits you to paying for it over time, no matter what happens to your finances. These types of purchases usually drop in value faster than the loan is paid down, which means you can’t simply sell the asset to pay off the loan if you don’t want the payments anymore.

Besides, debt payments get in the way of savings money for emergencies and investing, which are covered in the next two points.

2. Set aside at least six months of expenses (and don’t touch it even in an emergency)

Having at least six months of expenses in savings, while also having low personal overhead, provides even greater peace of mind. You will make better decisions for your business knowing that you don’t have to consistently take money out of the business to live on.

Consider this stash sacred. I’m being facetious when I say not to touch it even in an emergency, but something close to that should be your mindset. It’s not vacation or nicer car or home renovation money. It’s there to help you weather the ups and downs of your business.

Most startups hit rough patches, and being able to go a few months without taking money out might make the difference between success and failure. You will also be less dependent on outside capital. Taking on debt increases your business risk, and the payments add to overhead (see point 1). Giving up equity dilutes your ownership and control.

3. Develop an investment strategy separate from your business 

Entrepreneurs, by nature and necessity, are eternal optimists about their business. You know you will succeed and want to pour everything you have into it. You wonder why you should invest anywhere else when you can invest in your own business.

But what if your business doesn’t succeed? What are you left with?

No matter how confident you are in your business, you must diversify. We all know we shouldn't have all of our eggs in one basket. No matter how attractive that basket looks right now, unforeseen circumstances can quickly crush all of the eggs.

I suggest consistently investing 10-20% of your personal income somewhere other than your business. If you take just enough out of your business to live on, take out 10-20% more to invest.

You’re likely spending every waking hour building your business, so you’re not going to have much time to research other investment opportunities. The good news is you don’t need to. For most people, investing in low-cost index funds is the way to go.

If you can break away from your business to read, I recommend Tony Robbins new book, MONEY Master the Game: 7 Simple Steps to Financial Freedom. I just finished reading it, and it provides unbiased advice for minimizing fees and risk while maximizing returns, all while spending very little time.

4. Take money off the table when given the chance

At some point you may have the opportunity to sell all or part of your business. What to do in this situation is an intensely personal decision with numerous factors.

I can’t suggest what to do in every situation, but it’s often a good idea to take money off the table when given the chance. This is especially true if you’re not well diversified in other investments.

Taking money off the table doesn’t necessarily mean giving up your business. You could sell shares to a trusted partner or spin off part of your business.

In another post I wrote about creating value vs capturing value. Entrepreneurs like to create value, but there comes a time when that value should be captured.

Hold back for success 

You will be most successful by putting almost everything you have into your business. By carefully choosing what to hold back, you increase the likelihood of achieving your goals.

Making smart personal financial decisions will give you peace of mind, which will allow you to give undivided attention to your business.

Question: What personal financial strategies have allowed you to focus on your business?

What is the Difference Between Creating and Capturing Value?

I recently heard an entrepreneur speak about the founding and growth of his company. It was a fascinating and instructive story overall, but he mentioned one concept that I’ve been mulling over since. He talked about the difference between creating value and capturing value.

This topic came up when asked how he decided when to take outside capital and how much. He described how he, as a founder, is focused on building value in his company. As he was looking for capital, he found that most potential investors, including venture capitalists, were more focused on capturing value. He found this to be a problem because he believed that capturing value too early would inhibit their ability to create value.

I’ve been thinking about how VC’s and other investors can help entrepreneurs both create and capture value.

First, what does it mean to create value?

The activities that make up the economy are not a zero-sum game. Gains in one area do not have to come at the expense of losses in other areas. The economy grows, and value is created, when entrepreneurs create outputs more valuable than the sum of the inputs.

The process of creating value can include focus on the following:

Creating a network effect. Some products become exponentially more valuable with more users. The classic example is the telephone. One telephone in the world is worthless, but that one phone becomes more valuable as more phones are placed into service. More recent examples include Facebook, Twitter, and other social media sites. Some of these companies created billions of dollars of value even before turning a profit because of the number of users they have been able to attract.

Building brand strength. The stronger the brand, the more a customer is willing to pay for a product. A brand is built over time through marketing and a reputation for high quality and good service. Apple is a good example of value created through brand strength. Consumers are willing to pay more for Apple products than comparable products because they trust the brand.

Developing efficient operations. Manufacturers create value by selling a product for more than the cost of the materials, labor, and equipment needed to produce the product. The more efficient the operations, the lower the cost of production. The lower the cost of production, the more value is created. Value can be considered both the profit to the manufacturer and utility for the customer relative to price.

Second, what does it mean to capture value?

Agriculture easily illustrate the difference between creating value and capturing value. Farmers create value by planting and growing crops. However, creating a valuable crop doesn’t do any good unless the crop is harvested and sold.

Value-capturing activities include:

Monetizing users. Social media companies often struggle with capturing value. Twitter created enormous value by rapidly building a large user base, but they have struggled to capture the value through monetization. Facebook’s stock has been surging because they have found effective ways to monetize through advertising.

Pricing effectively. The value of a strong brand and efficient operations can’t be captured if the product isn’t priced appropriately. Again, Apple is a great example. They earn high margins because of their brand strength and quality product, and they protect these margins by controlling their high pricing carefully across all distribution channels. It is difficult to find lower than usual price on Apple products.

Providing liquidity to shareholders. A company can capture value by monetizing users and pricing appropriately, and then they can pass on that value to shareholders by providing the ability to sell the more valuable shares. This can be done in many ways. Profits can be distributed through dividends. Private companies often raise money at higher valuations and allow new investors to buy out existing investors. The goal of public companies is to allow investors to capture value by increasing their stock price.

Real Value Must Be Created Before Being Captured

Both creating and capturing value are necessary, but it’s important to recognize where to place your focus at a given stage in your company’s growth.

In general more focus should be placed in the early stages on creating value, and as sustainable value is created, some attention can be turned to capturing that value. Even while capturing value, management should stay continually focused on creating value, or the ability to capture value will be short-lived.

Beware of artificial value, such as that created by financial engineering. Failure to recognize this distinction is one of the causes of the housing bubble and subsequent economic collapse. Low interest rates and creative financial products led to a flood of capital into the housing market. This caused housing prices to artificially inflate, creating the illusion of value creation.

Banks allowed homeowners to capture that “value" by borrowing against the inflated value of their homes. The illusion was eventually exposed, leaving behind severely underwater mortgages and general economic disaster.

Entrepreneurs and investors should work together to recognize the distinction between activities that create and capture value and prioritize their resources effectively. As they do so, they will be able to maximize both the value created and the value captured.

Question: What are other value creating and value capturing activities?  

Should Sales or Accounting Handle Collections?

I’ve worked with startups for several years. I’ve had a lot of experience with both the giving and receiving end of collections efforts. In my role as CFO, I’ve seen what brings in our receivables most effectively and what tactics best encourage us to prioritize vendors when cash is tight.

Collecting bills is a balancing act. You must keep cash flowing to pay your own bills, but helping customers through difficult times can build loyalty. It’s important to have an effective strategy for finding the right balance.

An important part of the strategy is defining who contacts customers whose bills are overdue. A common debate is whether sales or accounting should take this role.

Before I share my preference, here are some of the arguments for either side:

Reasons for accounting to handle collections: 

1. Sales should focus their time and attention on selling and not administrative tasks.

2. Hounding customers for payment might hurt the customer relationship.

Reasons for sales to handle collections: 

1. Sales can use their relationship to encourage payment. Faceless accounting people are easy to ignore.

2. Knowing the customers' account status and payment habits helps sales understand the customer better.

3. Sales will be more motivated to sell to credit-worthy customers if they know they also have to collect.

You can probably guess my preference from the length of my arguments. In businesses that have sales reps with direct customer relationships, I strongly prefer that the sales reps make the collections calls.

This preference comes mainly from my experience from the customer side. As I wrote about in a previous post, the startups I work with sometimes don't have enough cash to go around.

Prioritizing precious cash is difficult when I desperately want to pay everyone on time. Often my decisions about who to pay and when are based on relationships. It's easy to ignore an email or voicemail from an accounts receivable person I don't know. It's difficult to ignore a sales rep whose relationship and service I value.

Yes, there is a risk that pushing customers for payment will damage the relationship. But customers understand they need to pay their bills on time. If they're offended when asked nicely to pay, they aren't the kind of customer you want anyway.

Yes, collections takes time that a salesperson could be using to generate more sales. But they should be in regular contact and familiar with the customer anyway. Mentioning a late bill shouldn't take much extra time.

Here are some tips for salespeople who want to collect effectively:

1. Set expectations from the beginning. When onboarding a new customer, make it clear that you expect them to pay their bills on time or they will hear from you.

2. Follow up promptly. After telling them they will hear from you if they get behind, follow through. The contact doesn't have to be threatening. The day after a bill is due, give them a friendly reminder. Sometimes late payments are simply the result of a misplaced invoice.

3. Be patient and understanding. For honest business people, not being able to pay the bills is stressful. You can make it clear you expect to get paid while empathizing with their situation. Helping a good customer through difficult times goes a long way toward build lasting loyalty.

4. Blame accounting! And it will be the truth. Accounting and management set the collections policies, and as a salesperson you are just doing your job.

I encourage you to at least consider giving sales the responsibility for collections. Let the salespeople leverage their relationships to keep the cash flowing.

Question: In your business does sales or accounting handle collections, and why? 

What to do When Your Startup Can’t Pay The Bills

Business schools teach all kinds of cash flow principles. Find the optimal mix of debt vs equity financing. Minimize the operating cycle, or the time between purchasing inventory and collecting cash. Take early payment discounts. Use credit lines. And so on. These principles are all important, but I didn’t learn in business school what to do when a startup doesn’t have enough cash to pay all of its bills. The reality is that many businesses wouldn’t even be started if they had to fit nicely into the theoretical box of optimal cash flow practices.

It always takes much longer and much more money than expected for a startup to become profitable, if it gets there at all. Even profitability may not be enough to cash flow the business when working capital and capital expenditures grow with sales.

Most startups struggle to pay all the bills before the business cash flows itself. It’s important to have a plan for getting through these tough times. Cash flow struggles do not need to equal failure (even though it may feel that way when you’re in the middle of it).

Here are some things to do when you can’t pay all the bills:

 1. Communicate

It’s hard to communicate with those we owe money to when we don’t have good news. We may hope they don’t notice we’re behind. If they start reaching out to us, it’s tempting to avoid them until we’re able to pay.

We tend to fear the worst reactions, but it's surprising how patient most vendors will be if you communicate well. Most won’t yell at you or insult your mother. Most will be willing to give you extra time or put you on a payment plan without too much fuss.

2. Prioritize 

Not being able to pay all the bills is tough for honest people. We want to pay everyone in full and on time, if not early.

However, sometimes this is simply not possible. We have to prioritize carefully, or we’ll end up killing our business by giving our precious cash to those who can wait (i.e. vendors with mean collections people) and not having any left for those who can’t (i.e. employees).

Payroll can’t wait. People are everything, and if you can’t pay the people critical to running your business, they will leave. When times get better, your reputation will prevent you from hiring good people.

Notice I said “critical” people. You need to pay everyone on payroll, but you don’t need to keep everyone on payroll. Tight times give you a good reason to identify team members who are coasting or holding the team back. Cutting back your payroll not only frees up cash for other bills but also refines your team.

Payments with severely punitive default terms can’t wait. For example, some bank or hard money loans may require late fees and a drastically increased interest rate if payments are late.

Most other bills can wait. Every business is different, but think carefully about priorities.

3. Be creative 

There many options for raising money when you are struggling with cash flow. Don’t be afraid to look beyond the traditional friends and family, bank loans, credit cards, etc.

Loyal customers can be a source of financing. If you're running a great business, you should be important to your customers’ success. They don’t want to see you fail.

I know someone who sourced the product he sells from several different manufacturers. He provided great service to his customers, and they loved him. However, in some cases the manufacturers wouldn’t deliver on their promises, which made it difficult to meet his customers’ needs.

He had the opportunity to set up his own manufacturing facility but needed funding for the equipment. His loyal customers knew this would provide them with much better service. Several of them prepaid for large orders at a discount, giving him the time and capital to set up the plant.

Conclusion 

It goes without saying that we should do our best to pay all of our bills, on time. However, when building a business sometimes it simply isn’t possible, at least in the short term. When this happens, it’s important to have a plan for getting through the tough times with the least damage possible.

Question: What tips do you have for startups struggling with cash flow? 

4 Ways to Make Steady Progress Toward Goals

Jim Rohn said, "Success is steady progress towards one's personal goals.” I find the most happiness and fulfillment as I make progress to my goals. I find that making progress toward a goal is even more rewarding than achieving the goal. It’s the journey, not the destination, that matters. In my last post I wrote about how to set goals. In this post I’ll describe 4 practices for working toward goals.

1. Be consistent

Another Jim Rohn quote is, “discipline is the bridge between goals and accomplishment."

Achieving worthy goals takes disciplined, consistent effort over a long period of time.

Darren Hardy teaches this principle in his book, The Compound Effect (see my post on the topic here). The main premise is that small efforts, compounded over a long period of time, can yield amazing results.

2. Review goals regularly 

A common New Years resolution practice is to think of some goals, go to the gym a few times, and then slip back into old habits.

One way to avoid that pattern is to write down goals and review them regularly. I review my goals at least weekly.

Every Sunday morning I set aside some time for a review of the past week. I review each of my main goals, evaluate my progress, and make plans to improve. I always review my top goals, and most weeks I also read through my entire life plan to make sure I’m not deviating significantly from my ideal in any area of my life.

3. Don’t give up

It’s easy to get excited about a goal when first setting it, and at the end we get to bask in the glory of accomplishing something great. But the middle can get pretty messy. It can be long, boring, and difficult.

Steven Pressfield describes a force he calls the Resistance. Michael Hyatt also talks about it in one of his podcasts.

The Resistance basically describes feelings like opposition, discouragement, and self-loathing as we work toward challenging goals. We all experience this force, but the difference between the successful and mediocre is how we react to this force.

Having a clear purpose, or why, helps sustain motivation through Resistance in the messy middle. How many of us have quit something because we asked ourselves, "why am I doing this?” and couldn’t think of a good answer?

As I’ve written about before, one of my goals 3 years ago was to run a half marathon. I set the goal because I wanted to lose weight, but I soon found that weight loss alone is not a strong motivator. Any given run only burns a small fraction of a pound of fat. That is hardly motivation to get out of my warm bed on a cold morning.

However, after struggling to get started I discovered an even stronger why. I found that running boosted my mood, energy, and brain function. The “runner’s high" sometimes lasted an entire day after a good run. It was those benefits that kept me going through the training. I happened to reach my weight loss goal in the process, but the weight loss was a side benefit, and not my primary motivator.

4. Give up

Wait, what? I just said don’t give up. But quitting doesn’t always make us a quitter. Sometimes our refusal to quit halts our progress. Sometimes we need to give up on one pursuit to free our time, energy, and money to pursue something better.

It’s not easy to know whether or not to quit. It can be hard to distinguish Resistance against a worthy goal from legitimate realization that we would be better off focusing on something else.

This dilemma is common with startup companies. 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. If Steve Jobs hadn’t stepped in and saved the company against significant Resistance, we probably wouldn’t have the Mac, iPod, iPhone, and iPad as we know them today.

On the other hand, in many cases founders and investors need to stop throwing good money and time after bad. It’s never easy to distinguish the best path, but sometimes giving up is the noble one.

Having a yearly goal-setting process doesn’t mean waiting for the end of the year before making changes. Don’t be afraid to adjust your priorities throughout the year.

Shoot High

As a final thought: don’t be afraid of failure. It sounds counterintuitive, but I don’t feel like a success if I achieve all of my goals. If I reach all my goals, I probably wasn’t shooting high enough. Even if I don’t completely achieve a goal, intentionally working toward it will put me in a better place than if I hadn’t set it in the first place.

So shoot high, consistently work toward your goals, review them regularly, don’t give up just because it’s difficult, but don’t be afraid to give up if your priorities change. Make this a great 2015!

Question: How do you make progress toward your goals?

4 Elements of My Goal-Setting Process

Near the end of each year I review my goals for past year and set goals for the coming year. As I think about what I want to accomplish in 2015, I thought it would be helpful to write about my goal-setting process. 2014 has been a good year. I achieved some goals and made good progress toward others. At this time last year I decided that my primary focus for 2014 would be to improve my communication skills.

Specifically, to improve my written communication I set a goal to create a blog and write a post every week. I launched my blog in May and haven’t missed a week. It was good timing because later in the year LinkedIn launched their publishing platform, which has given me a wider audience.

To improve my verbal communication, I set a goal to join Toastmasters, attend every meeting possible, and do a major speech at least once per month. I didn't miss a meeting without a good excuse, I earned my Competent Communicator certificate, and I only missed one month of speaking while transitioning between manuals.

I’m far from being a great writer or speaker. My audience can be my judge, but I’m happy with the progress I’ve made.

With that introduction, here are four elements of my goal-setting process:

1. Think about goals in the context of a life plan

In late 2012 I read an ebook written by Michael Hyatt called Creating Your Personal Life Plan.

The book is available for free here.  As I read this book, I took a full day to create a life plan in the format he recommends.

Here’s a quick summary. First, list the major areas of your life, such as family, health, spiritual, finances, etc. (I have eight). For each area, write a purpose statement, an envisioned future, supporting statements (such as quotes), your current reality, and goals to move your current reality to your envisioned future.

I have been goal-oriented for as long I can remember, but creating a life plan provided context and purpose that took my goal-setting to a higher level.

2. Recognize that all areas of life are connected

In mid-2011 I learned in a powerful way that all areas of life are connected. I set a goal to run a half marathon and lose 30 lbs, which I wrote about in a previous post. I thought I was just trying to improve my health, but I didn’t realize accomplishing that goal would lead to progress in other areas of my life.

In general, my family and social life was better because I had more energy to spend on my wife, kids, and others. Specifically, within a week of running the half marathon, I joined a venture capital fund, which gave me the biggest career and income boost of my life. During that time I was also given a demanding assignment in my church, which I don’t look at as an accomplishment, but rather a significant opportunity to grow personally and spiritually.

Reading The ONE Thing by Gary Keller recently (see my book review here) showed me more clearly how I can intentionally integrate all areas of my life (rather than just letting it happen like in 2011).

Keller asks, "what is the one thing I can do, such that by doing it, everything else will become easier or unnecessary?"

This year I only want to have one goal for each major area of my life. To choose these goals I will think carefully about how that one thing in each area will make other things in my life easier or unnecessary.

3. Limit the number of goals at one time

This is related to the last point, but I have learned over time that I can’t focus on too many things at one time. In past years I have tried to accomplish too much, and as a consequence my attention was scattered.

I try to have one goal in each area of my life plan, and even then I prioritize these eight or so goals. As I mentioned, 2014 was my year of of improving communication skills. I haven’t finalized what my main focus will be for 2015. I have a lot to work on, so I need to narrow down my list!

4. Distinguish habits from goals

Each year I start focusing on new things, but I don’t drop what I worked on in previous years. Most goals in one year become habits in future years.

For example, I don’t need to set a new goal in 2015 to post to my blog every week. Writing is now a habit ingrained into my weekly routine that I plan to continue indefinitely.

It’s the Journey, Not the Destination 

Establishing a regular routine of setting, working toward, and reviewing goals is a powerful way to make progress in our lives. I find the most happiness and fulfillment in my life when I’m making progress toward my worthwhile goals. I find that making progress toward a goal is even more rewarding than achieving the goal. It’s the journey, not the destination, that matters.

Question: What is your process for setting goals?

5 Reasons Why All Leaders Are Readers

Harry S. Truman said, “not all readers are leaders, but all leaders are readers.” I love reading both because it’s enjoyable and it plays a critical role in helping me become a better leader. I normally consume at least two books per month, mostly as audiobooks through Audible.com. I’m usually in the middle of three or four books so I can choose what I feel like at any given time, such as a religious book for Sunday, a fiction book for when I want to relax, and one or two non-fiction books for when I’m motivated to learn.

Here are five reasons all leaders are readers:

1. Reading elevates us above our current situation

It’s easy to get bogged down in our day-to-day lives, and reading elevates us above the daily grind. It can inspire us with stories of great accomplishments. It can give us new ideas. It allows us to step back and view the forest while day-to-day we only see a few trees.

I enjoy biographies for this reason. I’ve recently read Winners Dream, the autobiography of SAP CEO Bill McDermott, and The Innovators, the story of the computer and Internet pioneers.

2. Reading multiplies our experiences 

We don’t generally experience life very quickly. Building anything of value as a leader takes time, and the process is typically challenging and messy.

Think of building a family. It takes almost 20 years to raise a child, and we only get a limited number of children to practice on. Older couples will say it takes a lifetime to build a successful marriage, and again, opportunities to practice are limited. However, by reading we can learn from the experiences of virtually unlimited numbers of successful parents and married couples.

The same applies to leading in business. We only have time to lead in a handful of business during our career, but by reading we can learn from the experiences of an unlimited number of leaders.

I wrote a blog post about the power of learning from others experiences through stories.

3. Reading allows us to spend time with smart people

You may not be able to have lunch with Michael Hyatt, Andy Andrews, Dave Ramsey, Jim Collins, or Peter Drucker (especially because he’s passed on). But you can spend as much time with them as you want by reading material written by them.

I used to get frustrated with reading. I would read a lot of books, but I didn't feel like I was retaining much of what I read. Michael Hyatt changed my outlook. In one of his podcasts he mentioned that he doesn’t read with the intent of retaining much. He reads to spend time with smart people.

4. Reading can quickly build our expertise

Without reading, our expertise will be limited to our direct experiences. We don’t experience life quickly, so our direct experience are limited.

I wrote a blog post about ways learn a new industry. The post was inspired by the wealth of knowledge I gained from reading the book, The Business of Venture Capital.

I’ve been working in venture capital for over three years now, but my experience is limited to my circumstances, such as the stage of our VC fund, the companies we work with, and my role. However, by spending a few hours reading The Business of Venture Capital, I was able to expand my expertise to all areas of venture capital.

Of course, book learning is not as good as hands-on experience, but it may open the door to opportunities for hands-on experience and make us more effective when we get the opportunity.

5. Reading gives us an escape

When thinking about reading for leaders, we normally think about non-fiction, such as leadership principles, self-improvement, biographies, etc. While I primarily read non-fiction, I believe it’s important to also read fiction.

Fiction reading provides an escape. It helps you mentally disengage from your circumstances, which facilitates rest and recovery. When you come back to real life, you can face your challenges with new ideas and renewed energy and focus.

If you want to be a leader, you must be a reader!

Question: In what ways has reading helped you become a better leader? 

5 Reasons to Consider Xero for your Accounting Software

I’m a huge fan of Xero online accounting software. I started using Xero for two companies in 2010, four years after Xero was founded (you can read more about their history here). I now use Xero for seven companies in the US and Canada.

Before adopting Xero, I had been using the Quickbooks desktop version. I was sick of managing data files, sharing with multiple users over a network, and maintaining the IT needed for remote access. I chose Xero after researching online / cloud / Software as a Service (SaaS) accounting software.

I would have been happy to move to Quickbooks Online, but it contained only a portion of the desktop version’s features, and there was no way to directly convert a Canadian data file to Quickbooks Online. In a classic case of Innovator’s Dilemma, Intuit (maker of Quickbooks) has missed out on the rapid rise of the SaaS model.

I realize that no software is one size fits all, but I think every startup and small- to medium-size business should at least consider Xero for their accounting software for the following five reasons:

1. Xero is Software as a Service (SaaS)

SaaS software simply means that the software is hosted on servers somewhere in the world (in the “cloud”), and you can access the software through a Web browser or mobile app. You don’t have to manage software installations or data on your own equipment.

I was on the Salesforce.com audit team while working for Ernst & Young in 2006. That experience indoctrinated me into Salesforce.com’s “No Software” mindset even before SaaS was cool. I use cloud software for everything except Microsoft Word and Excel, and even then I prefer to use Google Documents and Sheets whenever possible.

I wrote two blog posts on this topic here and here.

2. Xero is well-funded and rapidly improving

Xero does have some drawbacks. It offers a limited number of standard reports, and reports can’t be customized beyond grouping accounts. The Global version doesn’t have check printing capability (the US version does). You can't batch pay invoices that aren't in the functional currency, which takes extra work to reconcile separate payments in Xero with one payment in the bank account.

However, over the last 4 years, the product has rapidly improved, and I am confident that the drawbacks will be addressed soon. The company has raised over $230 million and are putting those funds to work with product improvements. For example, I understand that significant reporting improvements are coming soon.

3. Xero is simple to use

Accountants familiar with any other accounting software can quickly become proficient in Xero. You don’t even need to be an accountant to use it. The menus and processes are intuitive, and help links are context-sensitive.

In many cases Xero replaces standard accounting lingo with more layman’s terms. Instead of accounts receivable, it’s sales. Instead of accounts payable, it’s purchases. Instead of post expenses, it’s spend money.

4. Setup is quick and easy

You can be up and running with a new company within minutes by running through a simple setup wizard. Uploading logos and customizing invoice templates is easy. The default chart of accounts is a good start for most businesses, and editing is simple.

Converting from one accounting system to another is usually challenging, but Xero minimizes the pain with good import tools. They even have a free tool to convert a US Quickbooks file directly to Xero.

A few months ago I converted a company mid-year from Microsoft Dynamics GP to Xero. It took some work to reconcile the ending balances in GP with the opening balances in Xero. Most of the work was getting the data out of GP. Importing opening balances into Xero was easy.

5. Xero has a large Add-on Marketplace

Xero doesn’t try to be all things to all companies. It’s not an all-in-one solution like Netsuite or SAP. It handles sales, purchases, bank accounts, fixed assets, and payroll very well. For other business functions, it integrates well with a large number of add-ons built by development partners.

For example, Xero doesn’t handle inventory and cost of goods sold. One company I work with is a manufacturer and distributor of physical products. We use Unleashed Software for warehousing/manufacturing, and it integrates with Xero to communicate the financial information.

Give Xero a Try

In summary, I highly recommend you at least consider Xero for your startup and small- to medium-size business.

It may not be worth the switching cost for companies already using different accounting software, but I think it’s a no-brainer for many startups. You can always convert to a larger (and more expensive) system when you’re on your way to becoming a billion-dollar company.

By the way, I reviewed Xero on TrustRadius, which you can read here.

 Question: What has been your experience using Xero been like? 

5 Tips for Making the Most of Podcasts

I love podcasts. They allow me to consume a huge amount of educational and entertaining content during times my brain would otherwise be underutilized, such as while driving or cleaning out the garage. Podcasting is a form of audio broadcasting on the Internet. Think of it as on-demand and free radio programs. Podcasts also come in video format, but this post is focused on audio-only podcasts.

I first started listening to podcasts in 2005, soon after they became available in the iTunes store. I discovered the Dave Ramsey Show and diligently synced my iPod with my laptop every day via cable to get the newest episode for my commute.

Podcasting has exploded in popularity since then, and new technology has made listening to podcasts a much easier and more enjoyable experience. Instead of syncing with my laptop daily, I use the Downcast app, which automatically downloads new episodes of the 25-30 podcasts I listen to regularly.

Here are 5 tips for making the most of podcasts:

1. Turn up the speed

Most podcast players allow you to change the playback speed. Downcast has 0.5, 1, 1.25, 1.5, 2, and 3x speeds. I listen to most podcasts at 2x, which allows me to consume twice as much content as regular speaking speed.

If you haven’t listened to sped-up content, it may sound too fast at first, but it doesn’t take long to get used to. Our brains can listen a lot faster than we can speak. I’d like to listen at 3x speed, but I find that content often gets skipped.

2. Use playlists to keep track

I listen to so many different podcasts that I need a way to track and prioritize, which is where playlists come in.

I make sure I listen to every episode of a few of my favorite podcasts, such as Michael Hyatt, Andy Andrews, and Entreleadership. I have a Favorites playlists that all new episodes automatically appear in, and an episode disappears once I listen to it.

I enjoy some podcasts that are too long and frequent to listen to all episodes. For example, the Dave Ramsey Show and Entrepreneur on Fire have daily 30-45 minute episodes. I have separate playlists for these podcasts, and I listen to them when I’m done with my Favorites playlist.

Playlists can also have customized settings. I want some podcast episodes to disappear after I listen to them, and others I listen to more than once. I listen to most at 2x, but I prefer some at 1.5x. For example, I listen to LDS General Conference talks/episodes more than once during the 6 months in between sessions, and I prefer to listen at 1.5x.

3. Listen whenever possible

It’s important to give our minds down time. We need time to think, sometimes about nothing. But we also have a lot of time we can educate ourselves while doing other things. I use my Bose bluetooth to listen to podcasts and audiobooks whenever my brain doesn’t have to be fully utilized.

For example, I listen while getting ready in the morning, driving (unless I’m with someone and want to be good company), running, biking, and cleaning the house, garage, or yard.

4. Look for recommendations

Thousands of podcasts are available, so it’s tough to narrow it down to the best ones for you. Many websites and blogs in your areas of interest will provide recommendations for the best podcasts.

Click here to see all of the podcasts I regularly listen to.

5. Periodically review the top podcasts lists

iTunes has top 100 podcast lists in several different categories. I often review the business, health, and technology categories to see what’s new and popular.

As you can tell, I’m a huge fan of podcasts. They are a great way consume educational or entertaining content while doing other things that don’t fully occupy your brain.

Question: What are your favorite podcasts and podcast players? 

The One Trick that Completely Changed How I Process Email

Do you find yourself drowning in email? Do you have trouble prioritizing what emails to address, knowing what emails you have already addressed, or even worse, completely losing track of emails you were supposed to address? Maybe you don't have a huge email problem, but you spend a lot of time on email and like learning tricks for being more efficient.

I recently learned a trick that has led to the single biggest improvement in the way I process email in over 6 years (since dropping Outlook in favor of Gmail through a web browser). It has increased my focus and productivity, reduced my stress, and allowed me to get to inbox zero every day.

First, I’ll describe how I have been processing email, and then I’ll share the trick I learned.

How I Have Been Processing Email

Without learning a lot about inbox zero, I assumed it meant addressing every email and moving it from the inbox to organized folders so your inbox stays empty. I didn't think inbox zero applied to the Gmail interface. Two of Gmail's selling points are (1) you never have to delete an email because of the amount of storage space, and (2) search is so effective that you don't have to take time to add labels (the equivalent of folders).

My email system was to leave all emails in my inbox. Unread messages meant it still needed to be addressed. To me, inbox zero was not having any unread messages. This system worked okay for almost 6 years, but it has the following drawbacks:

1. The latest 100 emails are always visible and distracting, Even though I know I’ve addressed non-bold (read) emails, they were still in front of me. Case in point: I just went into All Mail to see how many emails show on one page, and I got sidetracked by reviewing some emails I have already taken care of.

2. Emails needing attention need to be marked as unread or they get lost. This means manually marking an email as unread if I open it but need to address it later, which is easy to forget.

3. Processing email this way on a phone is challenging. On a computer you can usually see all unread messages on one screen, as long as you don't get too far behind. However, it's difficult to keep track of unread emails on a phone, especially when I'm away from my computer for a day or more. It's time-consuming to keep scrolling through the list to decide what I need to address now and what can wait for my computer.

One Simple Email Trick

One simple trick solved these challenges for me. In fact, it’s so simple I can't believe I wasn't doing it all along, and I’m afraid I’m stating the obvious by writing about it. However, if it took me several years, perhaps I can help someone else discover it.

The trick is ARCHIVE! Gmail, and probably other email systems, have archiving ability. It's a simple way to quickly move the email out of the inbox while still having easy access through search or the All Mail list.

Now I can truly get to inbox zero by archiving and forgetting about emails I have already addressed.

Here are some tips for making archive work for you:

1. Use keyboard shortcuts While using Gmail in a web browser, as long as keyboard shortcuts are enabled in settings, you can hit “e" to archive open or selected emails. While viewing emails as a list, you can select multiple emails by using “j” and “k” to move down and up and hitting “x” to select the email next to the indicator.

On the iPhone Mail app, you can swipe to the left to see options like Flag and Archive. You can hit Archive or simply swipe left twice.

2. On an iPhone, use the Gmail app for searching Searching Gmail in a browser is powerful, and by default it searches archived emails. I've never not been able to find an email I'm looking for. However, search in the iPhone Mail app is awful! Searching in the inbox only searches the inbox, so you have to go to All Mail in the specific account to search archived emails. Even then, the search results are terrible. I can rarely find what I'm looking for.

Instead, I use the Gmail app for searching, which seems to be just as good as a web browser. I prefer to process email using the Mail app, so I have the Gmail app for searching only.

3. Only touch an email once I like David Allen’s Getting Things Done (GTD) tip: if a task will take 2 minutes or less, do it right away. When I take time to process my email, I will address emails right away if they can be handled in less than 2 minutes. This could be a quick reply or a quick task before archiving the email.

If it’s going to take longer than 2 minutes, I will quickly add a to-do to my task management system, Remember the Milk. When it comes time to address it, I will search for the email to bring it back up. As a result, the pending email doesn’t distract me, and I stay at inbox zero.

Much More Efficient

Archiving has truly changed the way I handle email, which is significant because I spend much of my work time processing email (25-35% of my computer time according to RescueTime, plus the time I spend on my phone). It has relieved my stress, increased my focus, and reduced the time I spend on email.

Question: What tricks have made you more productive with email?

5 Lessons About Building a Business from a Disneyland Trip

I spent the last week at Disneyland with my family. I tried to unplug from work as much as possible, but I couldn’t help but notice aspects of my experience that I could apply to the businesses I am helping to build. Disney gets a lot of attention from business writers for good reason. At the risk of tackling a cliche topic, here are five lessons I learned about building a business from my Disneyland experience:

1. Stand out from the competition Traditionally, my wife and daughters spend five days in Disneyland, and my son and I take one of those days to do something else. Last time we went to Legoland, and this time we went to Universal Studios.

Those would be incredible parks when experienced on their own, but they don’t measure up when experienced during the same week as Disneyland. Even though we had fun, we wondered if we would have preferred an extra day at Disneyland.

Businesses have to stand out from their competition in a significant way to attract loyal customers.

2. Be present with people Disney characters are masters at being fully present with the one child at a time. Meeting their favorite characters creates much of the Disney magic that kids experience, and the characters make sure each interaction is memorable.

Meeting Elsa and Anna from Frozen is one of the most popular attractions. It requires waiting in line to get an assigned time to wait in line again later in the day. Only one family at a time is allowed in the small room with Elsa and Anna. The interaction only lasts for a few minutes, but the characters are fully present. They make kids feel like they are the only people in the world at that moment.

3. Enforce the rules In most cases, Disney “cast members” are extremely friendly, kind, and accommodating. However, they are not afraid to enforce the rules when a guest’s behavior infringes on the experience of others. We watched as someone cut to the front of the Disneyland Railroad line and jumped on the train. The conductor loudly called him out as a line cutter and ordered him off the train. The one man was probably offended, but it enhanced the experience for the many people watching.

To build a high-performance business, some rules need to be strictly enforced. Of course, unethical or illegal behavior can’t be tolerated. Lackluster performance by one member can also bring down an entire team. It’s often better to deal firmly and swiftly with one person that let an entire team suffer.

4. Bend the rules On the flip side, rules should be bent when they don’t infringe on others experience.

At the Haunted Mansion a person appeared to be cutting in line before approaching the nearest cast member. At the first the cast member good-naturedly called her a line cutter, but he let her through as she explained that she had been separated from her family who were now further ahead in line.

5. Get out of the comfortable routine This last point is not directly related to Disney, but it’s something I learned on the trip.

My family’s default is to find a hotel when we travel. There are many options, we know what to expect with the brand we choose, and it’s easy to book and cancel as needed.

We had a hotel booked for this trip, but someone mentioned they found a vacation rental through VRBO for their last Disneyland trip. My wife and I settled on a townhouse that is over 50% bigger and 60% cheaper than the hotel we had booked. It was immaculately clean and nicely decorated with Disneyland themes.

I also tried Uber for the first time. Our townhouse was about 1.5 miles from the Disneyland gates. I would drop them off every morning and pick them up every evening, which added 3 miles to my daily walking distance.

After one particularly tiring day, I wasn’t looking forward to walking back. I could have tried to figure out the bus routes or paid for an expensive taxi. Instead, I decided to try Uber. The app showed a few drivers in the area, so I requested a pickup. Within a few seconds a driver called me from across the street. I was back to our townhouse within 5 minutes, and the app automatically charged me $4 so I didn’t have to worry about payment or tip.

We often get stuck in our comfortable routine. There are many ways to rethink conventional wisdom. Consider virtual assistants instead of full-time employees for some roles. Build a virtual team to save on office space and find the best talent regardless of location. Use VRBO or Airbnb instead of a hotel. Take Uber or Lyft instead of a taxi or bus.

Conclusion 

It’s important to take time off and unplug from work. During these times our minds can be freed from the usual distractions, making us more open to lessons we can apply to our careers and other areas of our lives.