I am often approached with the business situation where the person cannot make some type of commitment to their business because they feel they cannot afford it.  Often times I find that it is more an issue of the person failing to recognize the difference between an investment vs. an expense.  Since this is a common problem, I thought I would take a few minutes to help distinguish between the two.  First, let me say that proper expense management is a key to both business and financial success.  As we all know, one of the key principles with money is that you have to live below your means.  That applies to individuals, businesses and governments (although I am not sure if governments really follow this principle these days).

 There is one distinguishing difference between an expense and an investment.  That difference is a “positive income result”.  In other words, if by spending money, you can generate more income or growth than the expense, then in essence your spending is not a waste of money but instead a means to increase revenues.  As I have noted in prior blogs, there are four very important areas of investment that must be a focus for any successful business:

1. Proven People
2. Proven systems, processes, products, etc.
3. Innovation
4. Personal Development

Follow this link to read more about these four areas: http://www.gordonhester.com/?p=433.

That being said, I wanted to add another important element to the investment vs. expense question.  That element has to do with “Perception of Value”.   If you have received a “positive income result” from spending, then you understand value because you have experienced it.  What do you do when you have a proven investment?  Feed it.  One of the key momentum principles is to feed what works and fix what is broken.  However, as for many investments, a “leap of faith” is often required when you do not have the experience of getting a result.  It is these times when you have to be able to trust that a spending decision will create a positive income result.  Often a great strategy is to examine others who have experienced results and learn from their decisions.  Experience is always the best teacher.  However, that doesn’t mean that it has to be your experience.

Price objections are generally value objections.  In order to change the thinking about the cost or expense, you have to be able to connect to the value.  This means getting clear about (1) the probability of a result, and (2) the benefits of investing back into your business when that type of spending often feeds income, business and personal growth.  Rest assured that if anyone is questioning the price of a product, service or other investment, what they are really questioning is the value of spending the money.  Simply put, they are not convinced that the results are worth the spending.  When this is the case, it is critical to be able to shift thinking and increase the “value proposition” of a spending decision.

In the end, one of the key factors in a successful business is the constant investment back into the business.  Too often small business owners fail to understand the value of re-investment back into their business.  Instead of re-investing capital and profits, they use them to elevate lifestyle.  Clearly people use business as a vehicle to enhance lifestyle, however, when lifestyle drains a business, the business will ultimately suffer.  Remember, there is a simple formula for investment:

Note that the formula points out some key lessons.  First, you have to track spending.  You will not know whether spending is an investment if you don’t track the results produced from the spending.  As the old adage goes, you have to inspect what you expect.  Second, the “result” is defined as consistently producing more income than the expense.  This turns an investment into a system.  Finally, if you have a system that works, then you feed it with more money, more time, and more resources.  That is how you make a business grow from investing (or re-investing) back into it.

For years I have had the pleasure of learning from Tony Robbins including being part of his Platinum Partners program.  In my 25+ years in business, I have grown to understand that one of the most important aspects of business is people.  Understanding human behavior is a key to understanding business.  In my travels, I have had the privilege to work with many great teachers and mentors.  However, Tony stands out from the crowd.  I have never met anyone who has a better understanding of human behavior.  Most important, Tony is an intervention expert.  In other words, he is not just about information.  He is about transformation.  Tony has earned his voice because of the RESULTS he produces in people.  I am currently in a program with Tony and one of his mentors, Cloe Madanes, which is designed to help people better understand human behavior and master the strategic intervention techniques used by experts around the world to transform behavior.  It has been one of the best learning initiatives that I have undertaken in my life.

Now for the important part of this blog…  Tony has a new show on NBC called Breakthrough.  The first show is tomorrow night, Tuesday July 27th at 8 pm EST/7 pm Central time.  You can get the details from your local TV listings.  Below I have attached a short 3 minute clip that Tony has just released about the show.  Knowing the power of what Tony can do, this show is a MUST watch.  I highly recommend that you sit down with your family and invest an hour in watching the powerful transformation of lives that have experienced challenges beyond the comprehension of most of us. 

http://www.youtube.com/watch?v=od0eTtJw7Ms&feature=youtu.be

I often use simple models to analyze and fix problems.  One of my favorites is designed to help simplify understanding why someone is unhappy in life (it can also be used to analyze why someone is unhappy at work).  The model is as follows:

In reality, there are two paths to resolving unhappiness.  The first is to change your Model (life, business, relationships, etc.).    Remember, our models are simply pictures in our mind of how we fulfill our needs and follow our beliefs.  The second is to change your reality.  When broken down, it is easy to see that there are only two sides of the formula – the model and reality.  You can change either one by the choices you make.  Consider these three options:

Given our choices, there is only one that fuels unhappiness – focusing on the aspects of life we cannot control.  Some common examples of issues we cannot control include the behavior of others and the economy.  If you fuel this process all you are fueling is a victim mentality which typically leads to frustration, anger and disappointment.  The story of how issues outside your control impact your ability to change becomes your story to the world.  It stops resourcefulness and has a profound impact on all areas of your life.  If this is the strategy you commonly use to solve problems, you might want to consider taking one of the other paths in life.  Let me give you some integration thoughts on how to use this information in order to find happiness.

Fixing the Model

I have found in my coaching that a common problem on this side of the formula is that people adopt models into their life vs. create one that works for them.  We all become products of our environment, so often we adopt a model from the environment.  For example, when I was growing up the work model that society taught was to go to school and then work for a company until you retire.  For many entrepreneurs, adopting this model only brought unhappiness.  I was one of those people.  When I recognized the model was wrong for me and created my own model of work, I found happiness immediately.  It is important to remember that we often adjust our models throughout the stages of our lives. 

Often our models are really pictures of how we fulfill our goals or purpose in life.  I see so many people struggle because they adopt the goals created by others.  Let me give you an example.  As you can see from the diagram below, there are several common themes in life:

Imagine if your model is one that puts relationships first (a common example would be a mom).  If you got involved in a business and the model created for you was to put family second or created unrealistic timelines on goals because the goals were built around a full-time focus, then you have set yourself up for unhappiness from the inception of the process.  

In the end, the right model is the one that (1) fulfills your needs, (2) is in alignment with your nature, and (3) encompasses your core beliefs and values.  If you build your models for life, business and relationships based on those three criteria, then you may find life to be much more fulfilling.

Fixing Reality

Often the model we have adopted is fine and instead we need to focus on changing our reality.  This drives the process known as “personal development.”  There is so much that can be discussed regarding fixing our reality, however the basic concept resolves around three simple areas of focus:

1.  Awareness.  Awareness is a thinking process.  It allows you to solve problems, make better decisions, and plan better for all aspects of life.  I have found that having the right thinking is a critical aspect of having the right reality.  Thinking should revolve around four simple questions.  Answering these questions will provide the awareness to create the necessary thinking needed in order to improve life (or your reality):

a. How do I grow more?
b. How do I contribute at a higher level?
c. How do I have more fun in life?
d. How do I find gratitude and appreciation in life?

2. Activity.  Activity is the path to results.  Awareness has little value if you don’t put thinking into action.  To change reality through activity, the focus needs to be about strategies and systems.  These two items create structure around activity.

3. Resolve.  I have found that discipline is a critical part of both success and happiness.  Our habits (good and bad) create our reality.  If we want to fix our reality it is important to be committed to change.  As the old adage goes, change is the only constant in life.  So many people allow life to control them vs. them controlling life.  It is critical to understand what drives discipline and for the importance of discipline to be part of your reality.  You cannot afford to be a weather vane that changes with the breeze if you want to create the reality that matches your model.

In the end, this is simply a model designed to analyze (1) why you don’t have happiness, and (2) how to fix that problem.  Of course there is much more involved in the process, however, this is a good starting place to ensure that your life’s journey will be characterized by happiness.

As a general rule, I do not make recommendations on my website.  However, I want to make an exception and introduce everyone to Darren Hardy.  Please note that I do NOT have any business interest or business dealings with Darren.  I am sharing this because I believe it could provide value to my readership, not because I am getting paid to share it.  Remember a key fundamental rule of all business – You grow before your business grows.  Often that means learning to grow inside your business AND outside your business.  My expertise is inside business.  Darren’s expertise is Personal Development.  Below is a little information about Darren, his new book, and how to join his Facebook page.

About Darren:

Darren Hardy is the visionary force behind SUCCESS magazine  as the Publisher and Editorial Director and the author of what is being called “the modern day Think and Grow Rich”, The Compound Effect—Multiplying Your Results. One Simple Step at a Time (www.TheCompoundEffect.com). More from Darren on his blog (http://DarrenHardy.SUCCESS.com), Facebook (DarrenHardyFan) or Twitter (@DarrenHardy)

About the book:  (description provided by Darren Hardy)

Finally, a book revealing the truth about the commitment, disciplines, habits and hard work necessary to earn success…

SUCCESS magazine Publisher Darren Hardy has taken the experience of his own journey of success and all that he has learned from interviewing the most successful achievers of our time and distilled it down to the core basics of what it really takes to earn success.

The result is the book, The Compound Effect: Multiplying Your Success. One Simple Step at a Time. I am excited to share this remarkable book with you.

We both know you are in the people business. This book delivers the philosophy and discipline essential for your people to be more successful in their efforts to grow your company—told by a credible third-party source from proven personal experience.

For the benefit of your organization this book teaches:

•              The success disciplines needed for lasting results
•              Staying motivated, even when you don’t feel like it
•              Developing daily routines that lead to momentum

Do you want success?  More success than you have now?
And even more success than you ever imagined possible for you before?

Finally, the truth. No gimmicks. No hyperbole. The real deal on what it takes to earn success. Made plain and simple.

In this book is the essence of what every achiever needs to know, practice and master to obtain anything more than ordinary success. Inside you will find strategies on:

•       How to win—every time! The number-one strategy to achieve any goal and triumph over any competitor, even if they are more talented, smarter and more experienced.

•       Eradicating the bad habits (some you might be unaware of!) constantly derailing your progress.

•       Painlessly installing the few key disciplines required for a major breakthrough.

•       How to get yourself to do things you don’t feel like doing. The real key to motivation. Getting it and keeping it.

•       The simple formula for increasing your income by 1,000% over the next 10 years.

•       Capturing the illusive but awesome force of momentum. Catch it and you will be unstoppable.

•       The acceleration secrets of super-achievers. Do they have an unfair advantage? Yes they do, now you can too…

If you are serious about being extraordinary and living an extraordinary life, this book will take you on a journey that will have a dramatic effect on your life… a COMPOUNDING Effect in fact. Get your hands on your copy now: www.TheCompoundEffect.com

There seems to be more and more people who are interested in owning their own business.  While that has always been a common piece of the American dream, I was reminded once again this weekend that the current economic realities are fueling this process.

This weekend I read an article in Market Watch entitled “Why You’re Not Making More Money than a Decade Ago”.  If you want to read the article click on this link http://finance.yahoo.com/career-work/article/110041/why-youre-not-making-more-money-than-a-decade-ago?mod=career-salary_negotiation.  There are a few parts of the article that I feel are worth noting.

1.  Median weekly income, adjusted for inflation, is lower in 2009 than it was in 2000 for both high school and college graduates.  (Economic Policy Institute).

2. Between 2002 and 2007, wages fell despite the country being in a period of economic expansion.

3. Planned salary increases for 2011 are at 3% for clerical, supervisory, middle management and executive positions.  That 3% gain is below the 4.5% to 5% increase seen at the beginning of the decade and the steady 4% from 2005-2008 (Hay Group, Global Management Consulting firm).

4. The last 3 years have seen the lowest salary increase that most employees have ever experienced.

For businesses, stagnant and decreasing wages can have a positive impact.  It allows them to lower costs and hire at lower rates.  It is important to remember that almost 50% of those unemployed have been unemployed for over 24months.  That means employers now have a large pool of potential workers from which to choose.  Also, the makeup of the unemployed has changed.  In the past a lot of the unemployed were people that simply didn’t want to work.  However, today that is not the case as more and more educated, experienced and hard workers are seeking employment.  I thought it was interesting that one of the attached articles to this article was titled “Lowball Salary Offers – Take it or Leave it?  In my opinion, it is simple macro economics.  If there are more and more people (demand) looking for less and less jobs (supply), then wages go down (price).

What about the “Expense Side of Life”?

To understand the complete economic effect, you have to look at both the income and expense side of the formula.  As noted above, the income side is stagnant and probably going to get worse.  However, if expenses followed the same path, then the net difference would be the same.  There in essence is the problem.  From 2000-2010, the Consumer Price Index (how we measure our cost of living) increased by 27%.  However, there were expenses that went up much more.  For example, the average price of a home went from $134,150 (2000) to $263,400 (May 2010).  That is an increase of 96% or almost 3.5 times more than the average cost of living expenses.  Another example is gas.  In 2000, the average price of gas was $1.26 per gallon.  As of July 2010, the average cost of gas is $2.73.  That is an increase of 116% over 10 years.  Keep in mind that gas was close to $4.00 per gallon not too long ago.

The Entire Economic Picture Going Forward

There are 4 components of the economic picture that impact all of us:

Incomes are likely to go down.  Deriving income is typically done from either (1) work, or (2) investments.  In challenging economic times, both areas find it harder to create income than in good economic times.  As for expenses, there are those we can control and those that are out of our control.  You can only budget so far.  It is the expenses we cannot control that will likely continue to increase (and at an alarming rate).  This would include taxes, fees and inflation on items that everyone needs (fuel, food, etc.).

I think the other challenging aspect of the economic winter will be how the de-leveraging of our society creates change.  I suspect we will continue to see decreasing values (deflation) with anything that requires debt for growth.  This would include cars, boats, homes, and businesses dependent on using debt to survive and grow.  Banks will likely drive revenue from fees vs. loan income (these are known as Zombie Banks).  In the end, as society changes, you have to change in order to survive and thrive. 

Taking Financial Control of the Future

Many new entrepreneurs are already taking steps to own their own business vs. depending on a job.  For many, the business model of choice is a “Plan B” business.  This allows them to work a full-time job while they build a part-time business.  For many, this is the only way they can have a business because (1) they don’t have the resources to work a full time business, or (2) they are not prepared to take the risk of starting a full time business and quitting work.  I would note that we are seeing a similar entrepreneurial movement around the world because the global economy is suffering from some of the same problems as the US.  In closing, there is a very critical message in all this data.  That message is that there has never been a time in our life where it is more important to take control of our financial future than right now.  Those who are proactive and play the game right will be the ones that prove a lesson seen in economic history – chaos and adversity are often a catalyst for opportunity.

For my entire life, I have been a person that puts huge value in data.  I have always been a believer that information is critical to making good decisions.  However, recently I have been doing a lot of reading related to how neuroscience impacts human behavior.  Over the last decade, there has been a lot of research on how the brain impacts behavior.  Some of this research has been applied to business especially in the area of leadership.

There is one part of this research that I believe can be very valuable to understand and apply to business.  That value piece is understanding how stories are a powerful and effective way to impact thinking and behavior.  In reality, new studies in both neuroscience and cognitive science show that “stories” are integral to how the human brain thinks and learns.  Author and consultant Charles S. Jacobs noted in his book Management Rewired that “most cognitive scientists now believe the mind works through stories.  So we’re going to be far more successful in influencing the way people think and then behave if we use stories as opposed to reason”.  This is a profound shift in thinking in the area of leadership because so much of traditional business models evolve around data and logic.

Part of the science behind these findings revolves around “Mirror Neurons”.  I won’t try to explain mirror neurons but it is important to understand what they do in the brain.  Mirror neurons mimic activities of other individuals.  More importantly, they also mimic the “intentions behind those activities”.  In essence, that means we are all hard-wired to empathize with people.  There are two key factors when it comes to telling stories (1) having the ability and (2) changing the way that people think.  Stories inspire others to mimic the actions and also the mindset of the story teller.  If a person believes that the story teller’s story is more attractive than their own, then they are more apt to “pick it up and go with it”.  The studies also support the importance of how well you tell the story and how “energy, enthusiasm and optimism” are necessary to maximize the value of the story. 

The Key Components of a Story

Clearly there is value in utilizing stories to impact behavior in others.  It helps create decisions and change thinking.  Below are some key points that I think are important in order to better utilize stories to impact others.

1.  Character Component.  Remember, character is a measurement of selfishness.  Therefore a good story can show that you are a person who is more focused on serving the needs of others than fulfilling your own needs.  Stories are delivered by people, so judging those delivering the story is a natural part of the process.  I have always believed that relationships are the foundation of all business.  Therefore, make sure your story leaves people with the conclusion that you are the type of relationship they want in their life.

2. Value Component.  If your goal is to spur people on to making decisions, it is useful to understand WHY people make decisions.  People make decisions in order to serve a need (finances, relationships, fun, love, contribution, growth, health, etc).  By better serving one’s needs, a decision can enhance pleasure or diminish pain.  Since value is the ability to fulfill the needs of another, your stories need to demonstrate that you can “better fulfill the needs of another”.  If the story does not indicate that you, your business, your product, your service, etc. can have some positive impact on someone’s life, then the story will lose its effectiveness.

3. Emotional Component.  One of the key concepts in personal development is that people will not care what you say unless they know you care first.  Caring is expressed more in HOW you deliver communication than WHAT is contained in the information.  Your story needs the fuel of optimism, excitement, enthusiasm, confidence and empathy in order to have a real impact.

4. The Curiosity Component.  The brain’s innate sense of curiosity plays a vital role in helping us make sense of our reality.  As George Loewerstein, a behavioral economist at Carnegie Mellon wrote, “we feel curiosity when we feel a gap between what we know and what we don’t know”.  If the story creates curiosity for “what they don’t know” then often that triggers an interest in finding out “what you have to teach them”.  The research on behavior clearly shows that we get the most out of people if we “ignite and feed their sense of curiosity.”

5. The Time Component.  One of the most precious assets to people and also one of the most tough to manage is time.  Knowing that fact points out an important aspect of utilizing stories – the ability to do it effectively.  Often, the longer the story the less effective it is on impacting behavior.  One of the basic sales principles is to tell less to more people.  To be effective, you have to be able to get your point across in a short period of time.

6. The Timing Component.  Often the impact of a story directly correlates to when you tell it.  What happens when you try to tell someone a story and their mind is occupied by something else?  What happens when you try to tell a story and someone is in a bad mental state?  What happens when you try to tell a story when someone is in a chaotic environment?  Remember, the timing of a story matters.  If you can determine WHEN and WHERE are the most effective places to tell a story, you will probably find the impact of the story is much greater.

In the end, there is certainly value in mastering the stories we use to influence behavior.  You will know you have mastered it when the story produces the results you are looking for.  Additionally, let’s not forget another important takeaway from the value of stories – the value of collecting stories.  Often it is not your story that impacts behavior but sharing the stories of others.

With that being said, if you are in a leadership role it is critical to understand the power that stories can play in impacting behavior, and to do your best to master the skills of (1) building a story and (2) communicating a story.

This week the OECD released a report on “healthcare spending”.  The OECD (Office for Economic Cooperation and Development) is a recognized global organization helping governments around the world tackle the economic, social and governance challenges of a globalized economy.

Following are 2 charts that I thought you might find interesting.  One graph is from their report.  The other is from the Economist.

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Here are some important points contained in these charts:

1. Without exception, healthcare costs are going up everywhere. Average spending by each country increased from 7.3% of GDP in the 90’s to 8.3% in the 2000’s.  This was attributed to (1) technology changes, (2) population expectations, and (3) an aging population.

2. Total spending on healthcare is going up faster than economic growth in ALL OECD nations (31 countries worldwide inclusive of all the major countries around the world).

3. The speed at which it is going up has increased over the last two decades.

4. As you can see from most of the nations included in this chart, “public spending” on healthcare is a major part of all healthcare spending.  That means that governments control much of the spending decisions.  This can be problematic as governments around the world struggle to manage huge debt and economic decline.  This is a big problem where “public health” is a right for citizens of a country. 

5. It shows that healthcare costs continue to be a major (and increasing) cost to GDP of all countries.  This means that healthcare has a major economic impact on societies around the world.  The healthcare spending as a percentage of GDP has increased from 12% in the early 90’s to over 16% in 2008 (a new record for healthcare spending as a percentage of GDP).

6. Between 2000-2008 healthcare spending by individuals increased by 4.2% a year on average.  That means that healthcare costs are increasing faster than inflation. 

7. In the US, the average person spent $7,538 on healthcare in 2008.  That is more than DOUBLE the $3,000 average of all OECD nations. 

What Does All This Mean To You?

In my opinion, this is just more data to support that we have a global economic and social problem related to broken healthcare systems.  While some are more broken than others, it doesn’t change the fact that governments around the world are going to make significant changes because the economics of healthcare will destroy the global economy.  Much of this change is focused in 2 directions – better management of healthcare spending and movement toward prevention.  While both of these areas will make a difference, it will not change the reality for all of us.  Systems will change and we will suffer the impact of those changes.  In the end, we will all pay more to fix this problem whether it is through paying more on healthcare spending, taxes, or fees.

This is an important time to take a more proactive posture in managing your healthcare spending and health decisions (eating better, exercising, etc.).  Equally, this is more support that the Prevention and Wellness industry will continue to be in a long-term uptrend because they are a critical part of what is necessary to correct healthcare around the world.  If you are looking for a good industry to be a part of in the future, Wellness and Prevention will continue to grow regardless of the economic trends.

I was in Chicago last weekend presenting to a group of distributors with Juice Plus about their business opportunity.  In particular, it was a business analysis focused on their company, their opportunity, the Wellness Industry, the Nutrition Industry, and their business model.  At the event, I told those in attendance that I would share my training, and therefore have provided the link below.  Please note that I am NOT a Juice Plus distributor.  Much of the Wellness and Nutritional data is generic in nature but clearly shows that companies in the Wellness/Prevention industry are in a good place.  These industries are being driven by real issues (broken healthcare systems and the realization of how Prevention and Wellness are necessary to fix that problem) that exist all over the world.  Not only is “Awareness” at an all time high but so is “change” toward Wellness and Prevention.

The topic of this training was “Is this Juice Plus Opportunity Right for You”.  I share with you the topic of the training because I want to make a key business distinction that might have value to my readership.  I have always believed that the best path in recruiting distributors into any MLM venture is to educate them.  In other words, give prospects the data so they can make a good decision.  There is no right opportunity for everyone.  I believe that a major change would occur in this industry if the way distributors recruited other distributors was done more with education and less with false and misleading promises.  Remember, the path to earning a great reputation is to under promise and over deliver.  I think a key part of that process is to start telling and stop selling.  Education and data allow people to make good decisions.  This is especially true in an economic environment where distrust has become the norm vs. the exception.

There is one other point I would like to make at this time.  Often people seemed very surprised on my position regarding sharing my research and presentations.  Given the amount of work that goes into this process, I think many feel I should be much more protective of my work or only make it accessible for a fee.  That thinking brings me to an important business lesson.  Your path to earning relationships is better served through adding value vs. controlling any aspect of the relationship process.  Control has value but often it leads to the wrong type of thinking.  Of course being paid for value is part of the process.  However, VALUE COMES BEFORE COMPENSATION.  If you learn to make decisions based on serving and providing value, then you will likely find the compensation part of the business process comes easier and lasts much longer.  Just some food for thought.

Link to PowerPoint Presentation from Chicago:   http://www.gordonhester.com/chicago.ppt

Click here for Overview of PowerPoint Presentation from Chicago

I thought this was a great question and one that is often misunderstood in small business.  There is no right or wrong answer to this question.  In my experience it all depends on a few factors.

Let me start with an important point that must be understood before we begin to discuss the topic question.  The difference between an “investment” and an “expense” is:  A Result.  Therefore it is critical to understand that the desired outcome of ANY investment in a business is to produce a result greater than the investment itself.  Keep in mind that not everything spent in business is an investment (expenses are a good example). 

Now let’s look at another critical distinction.  Often an investment decision has to be made from something that is NOT proven – a sales system, a new product, a new relationship, etc.  This is what is referred to in business as the “innovation stage”.  As you can see from the chart below, it is one of the 3 key areas of business.

Innovation is a CRITICAL part of any business.  However, it is also the stage where most businesses fail.  In other words, most businesses fail to ever determine how to sustain a profit.  If you are skeptical about this, note these business failure statistics:

Business Failure Rates (Pre-Recession):
1 year – 50%
5 years – 80%
10 years – 96%

Here is a simple rule to remember about investing in the innovation stage of a business – the less you invest and the shorter time it takes to find solutions that enable you to move toward the “marketing stage”, the greater your probability of success.  This follows a simple principle that says:   Invest carefully as you are “looking for an answer” but aggressively when you “have an answer”.

As I noted in a prior blog, I have found that there are 4 key components that must be invested into in any small business:

1. Proven People – the best way to judge a proven person is by answering 3 simple questions.  Can they do the job?  Will they do the job?  Are they the right fit?  If you can involve a proven person in your business or business culture AND you can answer “yes” to these three questions, then it is worth investing in these people.  Sometimes the bigger issue is how much to invest or how long to invest before you get a return.  There is more that goes into the analysis needed to answer those questions, but I can tell you without reservation that you need proven people in order to have success in business.  Equally, it is critical to understand that investing in someone that is not proven (see the 3 questions above) can damage your business as much as investing in the right people can make it successful.  Determining “Proven People” early in the relationship process is a great skill to have in business.

2. Proven Products, Systems, Processes, etc. – This is a simple concept to understand.  These items are typically a part of the “Innovation Stage of Business” that I described above.  Therefore, it is often easier to align with a business culture or opportunity that has solved these typical innovation strategies than to figure them out on your own.  If you can find such a culture, then your goal is to “learn” vs. “create”.  For many small business owners, this is a key factor in their success,  limitation of  investment in their business and the speed at which they can make a profit.  Why try to figure out all the unknowns of the “Innovation Stage” when you can get involved with an “Opportunity” or “Business Culture” that has already spent the time and money to figure it out?

3. Innovation – Now how confused are you after seeing that you have to invest in “Innovation”?  I just told you that Innovation is the most difficult stage of business and now here I am telling you to invest in it.  Here is my point.  The only constant in business (and life) is CHANGE.  Therefore, a long-term business learns to embrace and “proactively” manage change.  Often if you are involved in a large “business culture” vs. a small “mom and pop” business, this aspect of the business process is controlled by those that run the business culture.  If this team is “proven leadership”, this really can help you keep your business successful.  However, if leadership cannot manage change, I believe it is only a matter of time before everyone in the business culture suffers from that deficiency.

4. Personal Development – There is a principle that is important to embrace in business – You grow before your business grows.  Having a business is not like a job.  You have to learn many skills and wear many different hats.  You have to learn to get the best out of yourself, but also how to build and cultivate relationships that will have a major impact on your business success (and happiness).   I can tell you that EVERY long-term successful entrepreneur I have met preaches personal development as a key to success.  Those who have grown successful businesses know that their personal development was a major factor in their ability to succeed.  Even more important, their personal development growth paid dividends well outside their business (relationships, happiness, giving back to society, etc.).  In many businesses, the biggest factor that will determine your success or failure is YOU. 

So in closing, I think the fact that you want to invest back in your business is a GREAT SIGN that you understand the importance of this strategy.  The simple truth is that investing back in a business is mandatory for the business to grow and succeed.  I hope what I shared above will help you to “invest wisely”.  Experience has taught me that those who invest wisely tend to reap returns that are much greater than their investment.  Equally, I have seen many businesses fail because of “unwise investment decisions”.  Be smart with your decisions.  If you find something that works, feed it.  That is a key principle of all successful businesses.

(I have had a tremendous response from my “send me your questions” request, and will continue to answer your questions throughout the coming weeks.  If you have a question that you would like for me to address please feel free to email me at gordon@gordonhester.com.)

Leadership is a vital role in the business world.  Leaders tend to drive all business cultures which means their impact on the individuals in those business cultures is very significant.  We see everyday what happens when the wrong business leadership is followed.  Often the consequences are beyond the comprehension of those who were the victims of poor leadership.  Given the dire importance of effective leadership, I thought it might be useful to address this question – What makes a great leader?

The 4 Pillars of Great Leadership

Character– As I have noted in prior blogs, character is a measurement of selfishness.  To be a great leader, you have to put the service of others above your own needs.  I believe that the large majority of the issues in the world today are a symptom of a major problem in society – poor leadership.  In my study of economic history I have learned that the major economic cycles are a result of leadership decisions.  If you study timelines leading up to the big economic winters, leadership at all levels was defined by serving their own agendas vs. serving those who they lead.  Over time, this selfish behavior has created major consequences that lead to Economic Winters.  Sadly, correcting this cycle often takes many, many years.  Remember, it is certainly important that your needs are fulfilled in business, however, the path to fulfilling your needs MUST be secondary to fulfilling the needs of others.  It has been my experience that great leaders have the ability to  fulfill BOTH their needs and those of the people they lead.

Value – Value is your ability to fulfill the needs of another.  If you do not have the ability to fulfill the needs of those you lead, then you cannot succeed in leadership.  This is often why personal growth/development is viewed as one of the more critical aspects of life.  As the old adage goes – you have to grow before your business grows.  Remember, when it comes to value, be sure you can answer the 3 critical needs questions:

1.  What is the person’s need?
2.  How does that person measure how the need is fulfilled?
3.  What does that person expect from you?

If you can meet the needs of those you lead, then you can EARN your title as a leader.  If you do not have the ability to fulfill the needs of others, then those you lead will eventually seek other leaders.  One of my core beliefs in business is that long-term success requires long-term relationships.  That means as a leader you have to be able to do the job.  Remember, leadership is earned every day.  When entitlement takes the place of earning your way, it is only a matter of time before your value as a leader is compromised.

Commitment – I think one of the major distinctions for any leader is their ability to stay committed to being a great leader.  I find that many people lead for a period of time but when their needs are fulfilled, they seem to get away from the aspects of leadership that brought them success.  Instead of being the example in the present, they want their leadership to be defined by past results.  Instead of setting high standards, they want those they lead to have higher standards than them (i.e. work harder).  Leaders stay in the game.  They don’t lead from the sidelines.

Communication – Communication is an aspect of leadership that is seldom discussed.  Great leaders have very distinguishable communication patterns.  First, they communicate from a position of understanding vs. judgment.  They understand that you cannot build people by tearing them down.  They learned to ask a critical question of good leadership – what else can this mean?  Second, they communicate in a way that empowers people to be the best they can be in life.  They fuel resolve in others and judge their own success by how well others succeed.  I have a quote in one of my journals that best describes the ability to empower others.  It was from an interview given by someone who was fortunate enough to be a part of a business culture driven by a great leader.  This person said “when they touched my shoulder I could feel the warmth in my feet”.  In that quote is one of the key communication points – people won’t care about what you say unless they know that you care first.  In the end, that might be the most important communication point. 

Can You Be A Leader?

I believe anyone can be a leader.  It requires you to have a servant’s heart (character).  It requires you to gain the skills necessary to fulfill the needs of others (value).  It requires you to lead by example (commitment).  Finally, it requires you to empower others to be their best (communication).  These are mindsets and skills that anyone can obtain.  Finally, remember that what defines a leader is both achievement and contribution.  Achievement is how you gain a voice.  It is your path to credibility as a leader.  However, contribution is what defines your impact as a leader.  The more people you impact, the greater your leadership.

With that being said, I believe leadership starts with serving a few vs. serving masses of people.  A good example would be a parent or a teacher.  While their impact might not be on the masses, it does not change the fact that the skills to be a great parent or great teacher are the same skills it takes to lead a larger group.  What enables you to magnify the “contribution component” is simply leading in a bigger culture (i.e. business community, political district, etc.).  Therefore, the level of your contribution is simply a result of where you elect to serve as a leader.