The Five Pitfalls of Business Failure

Joachim De Posada

By Joachim De Posada

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The Five pitfalls of business failure and what to do about it.

 

I had the privilege of speaking to about 300 entrepreneurs that signed up for the “Desarrollo para el Pueblo” Government program for entrepreneurs at the Puerto Rico Convention Center.

 

It never seizes to amaze me the talent and the creativity of so many people that decide to open a small new business in order to provide services to clients, make money and live a better live.

 

I was also interviewed by my dear friend, Carmen Jovet who I have been told has attended all 48 previous activities this program has held all throughout Puerto Rico. Yesterday was the celebration of 500 businesses created in the last two years and she was present.

 

This is why I am dedicating today’s column to all entrepreneurs and business owners. They are a key factor in our future.

 

Some years ago I did some work for Kent State University out of Detroit and the figures they were publishing were that 50% of new start- ups fail within the first two years and over 90% within five years. I think the odds are better now a days but it is still a very risky proposition for these men and women who sometimes risk everything in order to open their small business.

 

If someone opens a new business it is because they strongly believe that it is going to be successful. If that is the case, why the high failure rate?

 

There are many reasons but in today’s article, let’s concentrate in five.

 

1.     People sometimes start new businesses for the wrong reasons. It is very common for you to ask someone why he or she started the business and the answer might be “to make a lot of money”. Other reasons given are to be independent, to not have a boss, to do what you want to do, etc. These are not good reasons to start a business. How about if you start a business because you have a passion for what you will be doing? You have identified a real need in the marketplace that you can meet and meet it well. You are persistent and have a lot of discipline, two essential characteristics that if you lack, it is impossible to succeed.

2.     Poor management: This might be the most important reason most businesses fail. New business owners usually know how to do the task or perform the service they will be doing in their business.  They are good hair stylists, good cooks, or good salespeople but they lack essential business and management expertise in areas such as finance, inventory control, production, purchasing, managing people and hiring. If you don’t have expertise in these areas, you either have to acquire it before you open the business or you have to hire the right people to help you. And they better be the right people or you are going down the tube. You need a good business and marketing plan and precisely, this government program does exactly that plus funding for your business and periodic follow up by a professional consultant to guide you in the new business. This is why they have such a positive record of businesses that are doing very well. Let’s face it, if you need to borrow money, no banker or financier will give you the money unless you have a good business plan that will convince them that they will be repaid.

3.     Not enough capital. This is often a fatal mistake. Business owners often underestimate how much money they will need in order to be successful in the business. This program I am describing will give loans up to $20,000 and if there is need for more, they will help you find financing.

4.     Location, location, location. In the case of restaurants, retail stores, businesses that need to be found by clients, location is very important. If your business can be done electronically or through the internet, location then is not a factor.

5. Not having a website, having a lousy website or having a website that no one can find. If you have a business today, you need a good website that can be found by your prospects wherever they are. And make sure that it can be accessed from a mobile device. That site requires different technology than a regular website. I am convinced that every business should be able to sell something through its website. People must be able to find your site, navigate through it easily and then be able to make a purchase either through PayPal or a merchant account. There is now a fabulous new service called squareup.com where you can accept a payment in your IPhone, I pad or android that is fantastic. Check it out.

 

Let me end this article with one important question: What is the most important factor for a business to be successful? Now that I think about it, I should have asked the question in my speech yesterday but I didn’t and it could have been a great question for people to think about.

I rarely get the correct answer.

Most people answer: A great idea, a good location, a good product or service, good employees, a good marketing campaign, a good advertising campaign, good prices, etc. etc. etc. Although these are important factors, almost no one mentions the most important which is:

Clients. The most important factor for a business to succeed is to find clients, sell them and keep them. You do that and you will be successful.

 

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Does Honesty Pay? Why are so many people dishonest?

Joachim De Posada

By Joachim De Posada

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Does honesty pay? Why are so many people dishonest?

There is a very funny story going around about the honesty of a kid in an incident with a teacher.

This is how it is told:

My Favorite Animal

Our teacher asked what my favorite animal was, and I said, "Fried chicken."
She said I wasn't funny, but she couldn't have been right, because everyone else laughed.
My parents told me to always tell the truth. I did. Fried chicken is my favorite animal.

I told my dad what happened, and he said my teacher was probably a member of PETA.
He said they love animals very much.
I do, too. Especially chicken, pork and beef. Anyway, my teacher sent me to the principal's office.

I told him what happened, and he laughed, too. Then he told me not to do it again.

The next day in class my teacher asked me what my favorite live animal was.
I told her it was chicken. She asked me why, so I told her it was because you could make them into fried chicken.

She sent me back to the principal's office. He laughed, and told me not to do it again.

I don't understand. My parents taught me to be honest, but my teacher doesn't like it when I am.

Today, my teacher asked me to tell her what famous person I admired most.

I told her, "Colonel Sanders." Guess where I am now...

 Even though this is a very funny story, I think there is a strong message behind it.

 The fact of the matter is that sometimes people get in trouble for being honest.

 In fact, being totally honest could be detrimental to your personal and professional life.

Honesty, you always hear, is the best policy. Even so, it will not catch you by surprise that in reality dishonesty probably rules your life.

 Salespeople lie about their products or services just to make a sale. They rationalize that what is important is to make the sale because that way you will be able to feed your family and if you told the whole truth about the product or service, you might not sell it.

 Husbands and wives (depending who cooks) lie about whether they loved dinner even though it really wasn’t that good. But why fight over it, what will you gain if you do? Maybe he or she won’t want to cook again for you.

 Employees lie about the reason a task assigned is not yet completed or how many calls were received on account of the advertisement they placed on the local newspaper.

 Customer service people lie about warranties, extended warranties, reliability of the product and anything else related to it.

 What about politicians? How can both be telling the truth when what they are saying is exactly the opposite? One of them must be lying or maybe even both.

 In survey after survey about leadership, honesty comes out on top or close to the top on qualities that a leader should possess.

 et, leaders, managers, supervisors and employees lie all the time. We all believe that “a little white lie” is not so bad and makes life easier to cope with.

 Why have fights with your spouse over a dress when it is so much easier to just say “darling, you look wonderful”?

 Why make your neighbor feel horrible over their new car purchase when you tell him how badly that car scored in Consumer Report magazine evaluations of cars?

 My dear readers, it is hard to be totally honest.  And yet, we must all consider if we let ourselves get used to saying things that are “socially accepted” or convenient rather than true that we lose sight of the truth in important areas of our lives.

 I wonder if we are also losing a little bit of our integrity, our values and who we really are.

 What is honesty anyway?

 When you describe honesty, it is fairly simple: truthfulness, sincerity or frankness. Freedom from deceit or fraud. Basically it is what you believe from your own individual perspective.

 This is easy enough to understand when you are stating facts: “the moon is smaller than the earth” is either true or false. Honesty means saying the true thing. It gets more complicated when you are expressing an opinion: chocolate is delicious is not true or false in an absolute sense; it is only true in relation to the taste of the person saying it.

In this case, honesty means declaring your opinion even though for someone else, it is completely false.

 Beyond the dictionary meaning of what the word itself means, there is a way that you can act out honesty in the real world. Honesty is in reality, a characteristic of an act, behavior or personality.  It is the difference between making an honest living or not. A gang member might not tell a single lie in 24 hours but we wouldn’t think that he or she is an “honest” person.

 The bottom line is that honesty is about trust. With your behavior and example, convincing others that you are to be trusted, that your word means something, that others are able to deal with the truth as you tell it.

 There are situations that might lead us to be dishonest although not necessarily:

 We are afraid of being punished for something we did.

We are afraid of hurting another person’s feelings.

We don’t want someone we love to think badly of us.

We are protecting another person

We don’t want someone to do better than us.

We need to need to protect ourselves.

We are protecting another person’s image of ourselves.

We dislike another person.

 These reasons are vague, I know, and they may possibly overlap depending on the situation but my point is to demonstrate that more often than not, dishonesty is provoked by fear or danger.

 So, the salesman lies because he will lose a sale or make a smaller sale. The spouse lies because she is afraid of hurting his partner’s feelings, losing the partner himself or losing some of the benefits of the relationship.

The employee lies because she is afraid of losing her job or being demoted.

The student lies because he is afraid of failing the class.

The gang member lies because he is afraid of being sent to prison or provoking other gang members from other gangs or his own gang to get revenge.

The Doctor lies because he is afraid of being sued or even losing his license to practice medicine.

The politician lies because he wants to make sure he is elected. He will make promises he knows he can’t possible keep. (The sad thing is that even so people vote for him. They just want to hear the promise)

 Think of all the times you might not have told the truth, or the whole truth.

 Think of all the times you have told “white lies”.

 What were you afraid of?

 How does it feel to live in fear? How does it feel to give in to it?

 This is a difficult subject, only you can decide how best to handle it. I can say that honest people establish a reputation and good things happen to them.

 

 

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One of the worst things that can happen to a human being

Joachim De Posada

By Joachim De Posada

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One of the worst things that can happen to a human being.

I was part of a panel on Arrebatados, a television show carried by America TeVe channel 41 in Miami and 24 in Puerto Rico.

The theme of the program related to what kind of punishment should a parent who forgets a baby in the car and dies should be given.

I knew and expected the panel to be in disagreement in regards to what should be done but the intensity and emotionality of the argument really surprised me.

The case I discussed during the program was about a Peruvian non US citizen living in Florida, named Antonio  Balta who got a 20 year prison term for forgetting his 9 month old daughter, Veronika, in his car and she died.

Some background so that you can better understand the situation.

One horrible morning, Antonio dropped off his girlfriend, Michelle, at the Gulfstream Park Racetrack in Hallandale Beach, Florida, where she worked as a waitress and a horse groomer.  The couple planned to drive north as soon as she finished her shift. Antonio, her 28 year old boyfriend, told Michelle not to worry; he would take care of all the last minute errands. AS she got out of his car, she kissed him and her 9 month old daughter Veronika goodbye.

Once alone with Veronika, Antonio checked off his pre travel chores such as having the car washed, saying good bye to his landlord, loading their belongings in the car and going to a gas station to fill the tank and buy a bag of Fritos and a Starbucks cup of coffee.

When he returned to the Gulfstream parking lot around 1pm, March 13, 2004 to be exact, it was 65 degrees, cool enough for some Gulf stream’s customers to wear light jackets.

He checked with Michelle and told her that everything was ready and that when she got out of work they would head north.

She asked him what he planned to do until then and he said he had to talk to his boss for a minute to make sure that his transfer to Saratoga Race Track up north would go smoothly.

Here is an interesting piece of information: She warned him not to leave the baby in the car alone.

Antonio had taken his daughter inside the track a couple times before and the loud, flashing slot machines and the bunch of people gathered there had made her cry.

So, mistake number one, he cracked the front window a little to give the baby some air and didn’t roll down the window too much because he didn’t want someone to kidnap the baby. He left the child alone and went inside the race track to look for his boss.

Bad luck I guess, because that was the day of the Florida Derby, the track’s busiest day of the year and his boss, a horse trainer didn’t have the time to see him.

Now, an important thing he did: He went back to the car to check on the little baby. He looked through the window and saw her playing happily with her favorite toy, a pink bunny with the words I love you across the chest. My dear readers, even as I write this, my eyes get watery for just thinking and writing about this. But I must continue to make the point in this article. Obviously, this proves that there was no intent on his part to harm the child.

He then made a mistake, he went back inside the track and this time he ran into some friends. As he told them that he was moving north, he placed a few bets, all under 10 bucks, all on long shot horses he had taken care of in the stables and thought they were good enough to win although few people thought so. He wanted to win some extra cash for the trip.

When the races were over, Antonio said good bye to his friends but they pleaded with him to hang out just a while longer. This was his biggest mistake. Surveillance tapes would later show he stayed there for around two hours.

When he stepped out, he felt warmer, rightly so, since the temperature had risen to 80 degrees. I imagine that at that precise moment a dreadful thought most have entered his mind because he ran to his car and found his little girl with her eyes closed, he thought sleeping but no, not sleeping, dead.

He has spent the last six years in a prison cell decorated with pictures of his little girl. Even though he knows he was guilty, he expected a lenient sentence when on the advice of his attorney, he pleaded guilty to aggravated manslaughter of a child. Instead he got 20 years, one of the longest, if not longest sentences in the whole country.

This horrible situation happens somewhere once a week from spring through fall. Children die this way more than 30 times a year. In more than 50% of cases, it is the parent who forgets the child in the car.

According to kidsandcars.org a Kansas based safety advocacy group, more than 450 children have died from hyperthermia in cars since the mid 1990’s when safety experts told parents to move car seats to the back, to avoid the dangers of an accident or the passenger side airbag harming the child.

I agree that Antonio has to be punished. But his worst punishment, one that I can’t even begin to comprehend is having killed your own child.

Sending him to prison 20 years, has taken him away from his other two children, I don’t know how close he was to them, but now he definitely is not close to them because he is locked up. And to keep him there, it will cost one million dollars to society, paid for tax payers. 

What has been gained with that punishment? Nothing. Just the punishment in itself.

How about if he was given maybe a couple of years in prison if at all, and ten years or even 20 years of probation where he reports once a week to a parole officer and he is given 1,000 hours of community work doing something to help other parents be more careful with their kids. Isn’t this a much more productive approach?

In Puerto Rico, I believe the maximum penalty for this crime is three years.  In Florida, after Antonio’s conviction, it was reviewed and is now 5 years. Antonio can’t appeal because he plead guilty to the charge.

Dr. Cynthia Galinaltis who left her 21 month old child in the car and died, was convicted recently on a charge of negligent homicide in Puerto Rico.

Arecibo Superior Judge Marta Maria Rosario sentenced her to serve one year and nine months on probation. She of course, could have faced three years in prison.

I agree with the sentence except for one thing. I believe that besides probation, she should have received 200 or 300 or 500 hundred hours of community service. A medical doctor by training, I am sure she could have prepared a lecture or a training program to help parents avoid this situation or at least create awareness in the public’s mind about how to avoid this horrible situation.

I was shocked how some people told me that a parent that does this should be electrocuted, sentenced to life in prison and some extremists even told me that the parent should be left inside the car, windows rolled up for the same time the child stayed in the car.

Even in the panel that participated in the television program, some thought he should get life in prison.

I hope that with this article, I raise some awareness on this situation and somehow help parents think about how important it is to take measures so that this can’t happen.

For example, buying a sensor that warns you if you leave the child inside the car, just like the sound that you hear when you leave your lights on by mistake.

Placing your briefcase or purse next to the child, talking to the child so that he or she doesn’t fall sleep or doing something that will help you remember that you have your child with you in the car.

You can do a lot to prevent this from happening. Please, do so.

 

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Reach out, uplift and help someone else

Joachim De Posada

By Joachim De Posada

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Reach out, uplift and help someone else and you will help yourself

 

Years ago, a gentleman named Kevin Hall used to work for Franklin Quest, a company that later acquired Covey Leadership Centers and became Franklin Covey. I was a consultant to them for about ten years and still hold stock in the company.  Working there, I  got to know Stephen Covey who recently passed away, Kevin, many  great speakers and even some famous personalities such as Mikhail Sergeyevich Gorbachev and many others.  In Puerto Rico the operation was in charge of my dear friend Walter Santaliz and Tomas Morell who has recently retired and lives close to Orlando, Florida.

Those were good old days because we travelled to many countries teaching  seminars about subjects very dear to my heart such as leadership principles, techniques, goal setting, time management, and of course the famous seven habits of highly effective people.

Kevin used to tell a story that I just remembered when I sat with a group of speakers a few weeks ago about a trip he took to Vienna, Austria years ago.

He went into a store and the middle aged owner welcomed him with great energy and wonderful enthusiasm.  He had an Indian name, none of us remembered it, and introduced himself.

The gentleman then noticed a pin that Kevin wore of two hands clasped and commented on it. Kevin took it off and gave it to him so that he could take a closer look.

The shop owner asked what the two hands clasped together meant. He told him that it symbolized people’s responsibility to reach out, uplift one another, and lighten one another’s burdens.  He then rotated the hands and said that the hands looked equally positioned to help someone or to be helped.

Kevin mentioned that Emerson once said the symbolism of the two hands represented one of the marvelous compensations that life offers, because you can’t honestly try to help another human being without helping yourself.

The owner of the store gave him a big smile and said that people often receive what they desire for others.

Both of those interpretations are rather profound.

People helping each other and having thoughts about others and receiving what they wish for someone else.   

So, in essence, if you have negative thoughts about other people, those thoughts will invade your being and you will attract what you are wishing someone else to yourself,  becoming the victim of your own thoughts.  Interesting!

I know of so many people that are constantly complaining and wishing someone else all the harm and evil in the world and when you look at those people you realize how unhappy they are, how unfulfilled they seem to be.  They can’t let go of the past. They carry that hate within them and it eats their inner self.

I believe that constantly having bad or negative thoughts will come back to haunt you.

The character ethic is the real foundation of success, and it teaches that there are basic principles of effective or happy living and that people can only experience true success and long lasting happiness when they learn to integrate these principles into their basic character. In other words, the principles become part of the person; they are one and the same. You see the person and you immediately have a positive thought. If you are with someone you might say “John looks so good” or “he is such a great guy”, or” Mary is such a nice lady, she is always helping someone out”.

It is very important for our wellbeing to help ourselves and flush out those constant negative thoughts from our minds.

A sincere and constant effort has to be made to do this because it isn’t easy.  It might be a good exercise to do what I used to assign my students in my psychology class when I taught the course years ago.

I would tell them that during the weekend and until Tuesday when they had to return to class, they had to keep a diary and I wanted them to write down every negative thought that came to their minds. It didn’t matter if it was a negative thought about another person, about a loved one, about the world, their boss, and their companies or even against themselves. Anything negative had to be written down.

In order to insure compliance, I told them that the assignment was equivalent to a quiz and that it would count towards the final grade in the class.

When they came back on Tuesday most of them had pages of negative thoughts written down. They simply couldn’t believe that their minds were so cluttered with unproductive negative thoughts.

In fact this exercise was so powerful and it made such an impact on some of those students that several times I have ran into my students in airports, restaurants or even in a shopping center and they have told me that the exercise had totally changed their lives.

So, maybe it is time for you to keep track of your thoughts for a day or two and see how you are using that powerful brain of yours that if properly used could bring you everything you want in life or if not used correctly can bring you all the unhappiness and negativity that life can offer. 

The good thing is that we do have a choice.

 

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