Ends and Means

shirt If your number one objective is to seek wealth, it will probably mean that a business startup is the wrong way of going about achieving your goal. You would do better to learn about the stock market (in better times), the real estate business (in better times) or other ways to become wealthy, like

saving not spending;
living below your means;
avoiding taking credit;
making your money earn more than inflation.

Of course, you can make a fortune in business but most people do not, and those that do are almost certainly not driven by money, unless they are fraudsters. However, entrepreneurs tend to be significantly wealthier than those who work in paid employment. For example, Gentry and Hubbard (2004) find that entrepreneurs comprise just under 9% of households in the U.S., but they hold 38% of household assets and 39% of the total net worth.

This perhaps no surprise when you know that raising ginance for a startup is often constrained or facvilitated by the amount of personal colateral that the entrepreneur can furnish. For those without the net worth they need, then creative ways of financing the business are needed: bootstrapping the business is the only way to go.

Clearly you expect reward for the calculated risk that you take by starting a business. The reward in financial terms may indeed be high. Chances are, though that you are not the next Richard Branson or Sergey Brin and Larry Page. If you have done your planning, you probably will not lose your shirt either.

Whatever your purpose and goals, business is a process. It is a system by which you can meet your purpose and achieve your goals, and the process you use to get there must be aligned with them. Where you want to be is most likely to be affected by the way you are.

One of my grandfathers, William Pollok, was a entrepreneur, who made ship's ropes in the great days of transatlantic steamers in the early part of the twentieth century. Based in Lodge Lane, Liverpool in the UK, his firm, Hutchison & Pollok Ltd (1896-1980) was the premier supplier to the Cunard White Star Line, owners of the Queen Mary, the Queen Elizabeth and other liners, many of which transported immigrants to the US. His high quality products were made from natural fibres such as hemp and sisal.

Dedicated to quality, he took absolute responsibility for his product and personally guaranteed them to his clients. His commitment to product and client was so great that he was prepared to go out of business, rather than to see his customers move to steel wire ropes than began to appear in his day. I like to think, though, that he would have been adaptable enough to move to the synthetic polymer fibres of today.

Sticking to your purpose and values should always be your guide when you face any of the many sticky situations that you will confront as an entrepreneur. Trite as it is, asking yourself the question, "is this right?" will ensure you do make the right decision. And know that you will not be alone in doing well by doing good.

A 2009 poll by Time Magazine showed that nearly 40% of respondents said they purchased a product in 2009 because they liked the social or political values of the company that produced it, so itr certainly won't do you any harm and increasingly it will do your bottom line good. Socially Responsible Investment funds now manage approximately 11% of all the money invested in U.S. financial markets—an estimated $2.7 trillion. Corporate America has discovered that social responsibility attracts investment capital as well as customer loyalty, creating a virtuous circle.

Direction and Magnitude Both Matter

The successful startup concerns itself with the means as much as the ends. Hence before you start it is vital to be concerned about the kind of company you want yours to be. In the different functions, here are some of the reasons why it makes sense to have an PURPOSE larger than making money:

Finance: finance sources aligned
Marketing: brand meaning explicit
Human Resources: people inspired.

heart These three vectors need to be given complementary attention. Vectors have both direction and magnitude. Be sure you attend to both. In other words, not just the numbers.

Growth is not everything. Chip Conley, of the Joie de Vivre Hotels group of boutique hotels in the San Francisco Bay area, describes his business philosophy through the Joie de Vivre Heart and identifies entrepreneurship as a core part of the company's DNA. If you want to know more, see his book.

"Our goal is to create landmark destinations full of soul and personality," says Conley. "We're in the business of creating dreams."

Money and What Matters

Think about what really matters to you and you will soon discover that money is not your goal (if you didn't know that already). Whoever we are, we do use a lot of our time to make money, spend money, and then replace the money we've spent. It brings little joy of itself and you may want to have a look at what Alexander Green, the financial journalist and tipster has to say about the subject. His essays in The Secret of Shelter Island can be read in a couple of sittings and are well worth the investment—of time.

Identify the difference between phantom wealth and real wealth. Seeking social and economic equity are necessary partners. Some practical ways of approaching this difficult issue are described in Purpose and Goals. In the context of the current economic melt-down, consider

maximizing financial return versus maximizing beneficial return

and how best to account for each and to whom. In this particular context, there is another short book to help you decide. David Korten, the founder of Yes! magazine and Stanford MBA and PhD, among many other things, has written Agenda for a New Economy, a timely book that delineates the difference between Wall Street's driver to make money and Main Street's driver to create livelihoods. If you want to find ways for practical steps you can take in your own firm, visit Triplepundit.

Thinking about about maximizing beneficial return, we have to take a systems view, rather than a disaggregated piecemeal one. Hence the importance of alignment.

The Power of Alignment

The simple way to describe the way to keep your startup on track and keep true to your purpose and values is to dedicate yourself to alignment. Alignment links the five key elements of an organization—people, process, customers, business strategies, and, of course, leadership—to obtain breakthrough results, chief among them, sustained growth and profit, loyal customers, and a high-performing work force.

All too often you have experienced the results of a company out of alignment. It makes great claims of customer service, but you have found that it does not deliver on its promises. You end up having a negative attitude to the company, however good its products may be. You will be happy to tell anyone about your miserable experience of the whole company.

On the other hand you have interacted with companies that are aligned. They delight you and you tell all yours friends about how wonderful they are. Perhaps you have worked for such a company and been delighted yourself.

My friends and authors of a book about alignment, will tell you of the importance not only of vertical alignment—between ends and means, but also horizontal alignment—between all functions of the company.

Here is a way not to lose your shirt, have fun improving your vocabulary and help to feed the hungry. Visit Free Rice and play for a while, as you consider the issues on this page. For each right answer 10 grains of rice are donated. This is an interesting (social) business model. The site provides English vocabulary to everyone for free, while helping end world hunger by providing rice to hungry people for free, made possible by the sponsors who advertise (discreetly). Whether you are a budding entrepreneur, or a street child in a poor country, improving your vocabulary can improve your life. It is a great investment in yourself.