Failure is also a good teacher

06/30/02
Brigham Young University
By By Stephen W. Gibson Printed in the Deseret News
      Management guru Stephen R. Covey has made the two words, "Seven Habits," almost a brand name with the success of his best-selling book, "The Seven Habits of Highly Effective People."
      But what of the unsuccessful, those who launch businesses only to have their dreams crash and burn? What are their recurring habits that lead to self-destruction and business failure?
      I believe knowing the habits of the highly unsuccessful can be just as practical as learning the habits of those who are successful. At least one would know what to avoid.
      In that spirit, here is my list of the Seven Habits of the Highly Unsuccessful.

      1. Get an office in the high-rent district. Many start-up owners feel the need to put forth a great image. They get a good address and fill their prestigious office with furniture to match. I've seen better results from those who bootstrap their way into business. They work off the kitchen table, then move to the dining room table, then to the garage. Not only does it save money, but it makes for a better story for the grandchildren.

      2. Hire lots of employees. A big-time executive can't ever be caught answering his own phone, can he? And someone has to do the detail work so he or she will have time for the big deals, like golf tournaments and benefit dinners. Some of the really unsuccessful take on huge overhead commitments for research and development of new products. I say, learn the term "outsource" and practice it to a fault, if that is possible.

      3. Talk only in terms of marketing. Sales is a dirty word. Many have everything figured out except how they are going to sell the product and to whom. Some of the biggest business flops never get around to selling any of their yet-to-be-developed products. My friends in sales have convinced me that very little happens in a company until somebody sells something.

      4. Concentrate on raising money. Having outside money gives a feeling of false security, which leads to high overhead, which can lead to an early business death. I consider it a blessing when people are turned down early by venture capitalists. There is a time for raising outside money to grow; however, I believe it should be after the product launch, whenever possible.

      5. Maintain a broad focus. Fill up your plate until it's overflowing. Don't worry about focusing on what business you are in, who your customers are and where the market is going. Staying focused is, after all, only for those who are interested in becoming highly successful.

      6. Surround yourself with people just like you. This will lead to a fun, happy environment where everyone gets along all the time. Unfortunately, it also leads to narrow thinking and a limited perspective. Teams are great, but there needs to be variety in the skill set of team members. We can't all be pitchers; we also need catchers, outfielders and infielders. Too much similarity leads to internal thinking rather than paying attention to what the market is saying.

      7. Don't worry about cash. If you have it, spend it. There's always more where that came from, isn't there? Meanwhile, the highly successful know that cash is king, and they treat it like royalty. They get daily reports on cash balances, especially during start-up, and they don't rush to spend, they rush to collect, deposit and retain.

      One of my entrepreneurial buddies says it best: "There are only two kinds of businesses: the profitable and the unprofitable, and I don't have any time for the latter." If you want to move toward profitability, avoid these Seven Habits of the Highly Unsuccessful like the plague.

author1 is associated with the BYU Center for Entrepreneurship. He can be reached via e-mail at Mr. Williams is associated with the BYU Center for Entrepreneurship. He can be reached via e-mail at cfe@byu.edu. .