Running a business is hard.
Today we'll talk about how the concept of "survive and advance" is evident in college basketball, history, and your business.
Then, we'll talk how to stack the odds to give you the best chance of success.
But first, today's sponsor.
Thanks PEmarketplace for sponsoring this issue.
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Survive and Advance
Read on kurtishanni.com
March Madness season is here, which means that I’m watching way too much college basketball. In my defense, it’s way less than it was in the past.
March Madness, for those who don’t know, is the tournament at the end of the college basketball season where the best 64 teams play in an end-of-year single-elimination tournament to determine the National Champion.
It got its name from the abundant upsets and intense competition, which has been going on since 1938.
As an Oklahoma State Alumni and fan since birth (my grandfather was a professor there), I grew up seeing “my team” go to the “Final Four” in both 1995 and 2004. As a senior in high school during the 2004 run, I remember seeing John Lucas III make the game-winning shot in the Elite 8 and running around the house screaming.
For the last 15 or so years, I had the yearly tradition of taking off Thursday and Friday on the first weekend of the tournament, setting 3 TVs up in my living room, inviting friends over, and watching basketball games from 11 am to past midnight for two straight days.
It was glorious, but as all traditions do, it ended this year. So, while I still watched games, they weren’t as numerous as they were in the past.
The mantra of most teams in the tournament is to survive and advance.
And as I watched basketball these last few weeks and considered the “game” of business, this mantra seemed all too correct.
You’ve all heard the stats: Over 50% of businesses fail within 5 years.
For the first few years, the game in business is to survive and advance.
And it isn’t strictly business. On top of the sports analogy I’ve already addressed, we see another example in Abraham Lincoln.
Most look at him and see a huge success. He’s the US President who was the leading figure in freeing the slaves. Both are huge accomplishments that would make anyone’s life a “success.”
But when you read about him, you see he had a life filled with hardship and failure.
Abraham Lincoln was born in 1809 in a log cabin into a difficult upbringing. When Abraham was only 9 years old, his mother died, leaving his 11-year-old sister Sarah in charge, along with his father. Then, just 10 years later, his sister Sarah died while giving birth.
In 1935, Lincoln’s “first love” Ann Rutledge died before they could ever allow their romance to flourish, which put Lincoln into a depression.
Of Lincoln’s 4 children, only one lived past the age of 18.
Both President Lincoln and his wife, Mary Todd, struggled with depression because of these losses.
Alongside these personal struggles and hardships, his political career wasn’t treating him much better.
Taylor Welch put together a list of all his defeats and they weren’t short:
1832: defeated for legislature
1833: failed in a second business
1836: suffered traumatic mental breakdown
1838: defeated for speaker
1840: defeated for elector
1843: defeated for congressional nomination
1846: elected to Congress
1848: defeated for Congress
1855: defeated for Senate
1856: defeated for Vice President
1849: defeated for Senate
1860: elected POTUS
He had 2 successes: being elected to Congress in 1846 (but failing to get re-elected in 1848) and being elected President in 1860.
In 28 years, 8 failures in politics to 2 wins. A 20% win rate isn’t even good in baseball, where a .300 batting average will put you in the Hall of Fame.
His successes were built on a foundation of the failures that came before. The toughness that came from all the personal trauma and rejections in politics was what allowed him to make the tough decisions while in the White House. This ultimately led to his death, as his assassination by John Wilkes Booth was fueled by his decision to abolish slavery.
He was known for saying “This too shall pass.” Those are the words of someone who has seen it all and yet is still standing.
You cannot win if you cannot survive.
And the same goes in your business. Surviving takes grit, discipline, and a little bit of luck.
So how do we stack the deck in our favor and “survive and advance?”
Be adaptable
When you read about the greatest entrepreneurs, the narrative is always about their big win and “big idea.”
But behind those big ideas are a series of either failures or pivots that led them to their path today.
Instagram started as a location-based social discovery app and pivoted solely to a photo-sharing app after seeing users flock toward those features.
Slack was created for internal use by a team trying to build a now-defunct online game called “Glitch.” They pivoted to the idea of an internal communication tool as their game was failing and seeing how it improved their productivity.
Wrigley Company started as a soap and baking powder manufacturer but switched to chewing gum when they saw how popular the promotional gum inserted in their packaging was.
Being willing to know it’s time to pivot, or adapt, is key to continuing on and beating those five-year odds.
Build a strong team around you
Entrepreneurship is an inherently lonely place to be. As a CFO, I saw firsthand the island the CEOs I worked for felt they were on.
I did my best to “act like an owner,” but now as someone who has my own business, I can feel the distinct difference. No matter what I did, I couldn’t completely understand or relate to the weight they carried.
Despite this, I know there were times I was able to fill in their gaps of knowledge and provide a sense of comfort or ideas to help them move forward.
Because of this, a good team is invaluable.
And not just your exec team and direct reports, but your external team: a good lawyer, insurance agent, and Fractional CFO (gotta promote, you know?). Yes, these advisors can be costly, but above and beyond the real monetary return on investment, they provide an immeasurable peace of mind return that provides 100x the value.
Manage your risks
The best way to manage your risk is to have a plan. This may seem counter to being adaptable, but a plan isn’t meant to be concrete and final.
A plan is meant to get you pushed off in the right direction, and measure against that direction until it’s time to pivot to what’s next.
Those with that plan are better off than those without it, because as conditions in the market change, a plan done right provides a leg up. What do I mean exactly?
A good plan has:
- Thorough market analysis
- Scheduled check-ins
- Contingencies
Understanding the market means you’re able to adapt more quickly when things go off plan.
Scheduled check-ins provide the opportunity to identify changes more quickly than those “floating” through the year.
Contingencies allow you to react in a measured way, providing unemotional steps planned before the heat of battle.
On top of a plan, developing a clear strategy for addressing risks and deciding whether to avoid, mitigate, transfer, or accept them is key to making the best decisions in the most uncertain times.
Understand your cash flow
82% of failed businesses say that poor cash flow management was a factor in their failure.
To understand our cash flow, we need to:
- Understand how to read our financials
- Monitor cash regularly (at minimum weekly)
- Forecast future cash flows
- Manage our cash conversion cycle (inventory, receivables, and payables)
I wrote about managing cash here, if you want to go deeper. I also provide examples in these posts:
On top of the 4 above, building cash reserves when uncertainty seems to be ahead is big in allowing you to pause before reacting to bad news.
That 6 to 12 months of cash gives you the ability to create a plan over a matter of weeks, instead of days, when you only have a month or two cash.
That ability to pause and create a truly plan provides clarity that is unavailable in the moments after you get bad news.
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Business owners are a different breed, which means you likely do well during adversity.
It’s really easy to get caught up in all the problems and things that pop up day to day and forget the big picture.
And when you do zoom out, you see the best strategy you can lay out for yourself is to survive and advance.
It’s not sexy. It’s not sophisticated. But it can be hard.
Buckle up, put your head down, and do whatever it takes to survive so you can see the next fight. Good luck out there.
