Chapter 41: Throw Hijackers to the Curb! - The Millionaire Fastlane

CHAPTER 41: THROW HIJACKERS TO THE CURB!

People are definitely a company's greatest asset. It doesn't make any difference whether the product is cars or cosmetics. A company is only as good as the people it keeps.
~ Mary Kay Ash

Your Castle Is Mismanaged

Your castle is your business. If you put crooks in the castle, expect trouble. Returning to our chess analogy, the rook-or the castle-represents the people you put in your business. This includes employees, partners and investors, and advisers.

The Business Marriage: Partners

A business partner is like being married. It either works fabulously or it ends in fiery divorce.

Three years ago, Jim and Mike were drinking beer at a bar and a legendary idea was born that compelled them to start a business together. Their only consideration for the union was their excitement. They agreed to do a 50/50 profit split and zealously began.

Mike finds their first client, while Jim finds the second. Within a few months, their client base expands to 28, enough for both of them to draw a profit and quit their daytime jobs. After two years, Jim's time on the job and quality of work starts to suffer. Not that Mike knows what Jim is doing every minute of the day, but he notices something that concerns him. For every four clients Mike brings to the company, Jim brings one, and sometimes, none. He later learns that Jim read a book that advocates working four hours a week. And to make matters worse, Jim's clients are not supported well and Mike has to take up the slack; yet every Friday, like clockwork, Jim is there to get his 50/50 cut.

When Mike brings this to Jim's attention, Jim gets defensive, and tensions mount. This confrontation only decreases Jim's productivity to where he sometimes doesn't have new clients for months. Mike tries to dissolve the partnership, and Jim resists. Why shouldn't he? He's collecting 50% profits off of Mike's efforts. Mike ultimately has to hire a lawyer and seek a legal remedy. A few years later, the partnership is dissolved and, along with it, Mike and Jim's friendship.

Partnerships are marriages. After the love affair and the lust wears off, they must survive on character, synergy, and complementary attributes. My early entrepreneurial ventures were all partnerships, and all miserable failures. Not that my partners were bad people, but our work ethics, values, and visions were not compatible. I remember one partner had a normal 9-5 job and was active in intramural sports; the business was number four or five on his priority list. The other partner was out working four other businesses, including ours. That left my business and me, which was priority numero uno. Do you see an issue here?

Search the Fastlane Forum for “partnership” and you'll find a garden of complaints about partnerships gone bad. One partner wants to expand, the other wants to brand. One partner wants to advertise, the other wants to develop. One partner wants the expensive cars and the money yet arrives at the office late and leaves early. Partnerships are like marriage-half the time they will fail because the partners just aren't compatible.

“They” say you should partner with people who have complementary skills to you. If I'm a marketing guy, I should partner with a technical guy. If you're a sales-and-people guy, you should partner with an analytical guy. While this is a great starting point to find a partner, it's like marrying the first person you date simply because they have big boobs or look like Brad Pitt. Many other personality characteristics will make or break a partnership.

• Do you have the same work ethic? Will your partner skate while you burn the midnight oil?
• Do you have the same vision? Or will they compete with each other?
• Do you want to grow slowly while your partner wants to own the world and do it fast?
• Do you want to sell franchises while your partner just wants one unit that pays the bills?
• Do you trust this person with your life?
• Do you have the same personality type?

The fact is people engage in partnerships for the wrong reasons. Like people start businesses under false premises (not need-oriented), they also form partnerships under a similar false premise: Diversification. The partners don't seek synergy; they seek diversification of risk, expense, and workload. Often, each partner looks to the other for the burden to bear, and when one bears more, resentment builds. Partnerships can work, just like a lot of marriages work. Just make sure you know whom you're engaged to. A two-week honeymoon with your college roommate might not be enough courtship to determine compatibility. Would you marry someone after two weeks of dating?

Get A+ A's

I've had many verbal negotiations with investors, and when the 90-page legalese document arrived on my desk, what was said and what was written were two different things. We discussed an amortized note at 10% over 5 years, so why does it say 5% over 10? Who exposed the incongruity buried in an avalanche of legal jargon? Not me. It was my attorney.

Then there was the time when a simple omission of a business expense can cost you thousands of dollars in taxes. Who knows that $38,000 interactive voice response system is depreciable when you think its just some overpriced telephone system? An accountant.

If I didn't have good team of A's-accountants and attorneys-I'd be poorer. And yes, these people aren't easy to find because they're like partners under contract, another group of individuals who have the keys to your castle.

Don't be an idiot like me. Still green, I remember my first accountant, found right out of the Yellow Pages-not from referral, but blind hope. It didn't take long to see that she wasn't concerned with tax planning. No questions about my business or my concerns, just zeal to complete the forms and get it done. Additionally, most of her clients were Slowlaners who dabbled with W-2s and 401(k)s rather than corporations. Great pick, MJ. I needed someone with a Fastlane business mindset, and I committed to finding one. After interviewing and investigating a half-dozen accountants, I found one whose clients were primarily business owners.

Be very careful with whom you trust with the keys to your castle because they can drive you to financial ruin. Remember Nicolas Cage; his manager allegedly drove him to the precipice of financial ruin. Investigate and interview. Get referrals from successful, established entrepreneurs. Treat your two A's like you would any partner, because they have unfettered access to your castle, and those with the keys have the potential to steer you wrong.

Would You Like A Chainsaw With Your Beer?

When you blindly trust others to anything-business, financial investments, security-you're vulnerable to being conned.

There's an old beer commercial in which a couple is driving down a dark country road and they spot a hitchhiker with a case of beer and a live chainsaw. The driver wants to pick up the hitchhiker because he advertises something he wants-the beer-but is blind to the chainsaw. Blind trust can be like picking up a hitchhiker on a dark deserted road hoping to tap into his case of beer, but not seeing the torture device behind his back.

You must make your trust an asset to be earned by others. Let actions speak louder than words. When you allow words to disarm your trust or BS meter, you become vulnerable to attack. When you pick up hitchhikers and salivate at their case of beer, you might be blinded to their chainsaw.

One of the worst employees I ever hired was a pathological liar who stole from me. Why on earth did I hire her? She disarmed me with words. During the interview process she told me that she sang in the church choir and was a religious woman. While I didn't ask anything pertaining to religion, she assumed that I assigned honesty to religion. She was right, and it dismantled my defenses. I hired her without verification and it took me several years to uncover the truth.

Verify First, Trust Later

Former president Ronald Reagan once said, “Trust, but verify.” When I hired the liar, I trusted but didn't verify. It took several robberies, video cameras, and public record searches to uncover the truth. I verified too late and it cost me.

The most egregious cases of trust are our financial system. Bernard Madoff perpetrated the largest Ponzi scheme ever, and billions of dollars were lost. How does one man siphon billions from millions? Unverified trust. Thousands trusted Madoff and thousands failed to verify. Those who did verify didn't invest and some even blew the whistle. We are a trusting people and we want to believe the best. We want to believe in fairy tales and happily ever after. We want to believe that for two easy payments of $39.95, we can make millions investing in no-money down real estate.

When I started my entrepreneurial career fresh out of college, I trusted everyone. I bought all kinds of crazy schemes that promised me a road to wealth. What happens when you trust everyone? You get burned. You get lazy. You hire criminals.

When you trust everyone, you engage in business opportunities that violate the Commandment of Control. You allow others to dictate your financial road trip. And when that happens, you crash and burn. There is only one person you can blindly trust in this world, and that is YOU.

Why so cynical? If you don't understand now, you will later. When you serve millions, you come in contact with millions. Only then will you understand the essence of the consumer/producer equation. Your eyes will be opened to how many people will go the extra mile to try to screw you. There is no place safe from liars, con artists, thieves, and crooks. These people commiserate in the least likely of places: your community church, that harmonic dating Web site, and at your posh country club.

If I lose $10,000 on an investment that I meticulously investigated, I can deal with it. Easy come, easy go. Yet, if I have $10,000 stolen from me because I blindly trusted someone who I let into my vehicle, it's different. Today I trust no one but give everyone the opportunity to prove trust. There are a lot of good people in this world, and they do outnumber the bad by a wide margin. It just takes a mild effort to find them and keep them in your life. Just be careful who you pick up on the side of the road. Don't be tempted by a cold brew but be blinded to the chainsaw.

Fire Reckless Chauffeurs

Are inmates running the asylum? When you're not home, who runs your castle? Who chauffeurs your business?

Providing great customer service is one thing; getting employees to deliver it is another. When you shift your focus to the bottom line, often the frontline is sacrificed. How much is that untrained $8/hr. front desk person with a bad attitude really costing you? To make customers disciples of your business, employees have to share your customer service philosophy. You can't let any employee ruin a multimillion dollar investment. All the intangibles in the world can't change a poor customer service experience.

After a nine-day stay in Las Vegas I learned how robotic service is the ultimate of business liabilities, regardless of poshness. Most people vacation in Vegas to escape from coworkers, incompetent employees, dirty houses, traffic, and your typical menagerie of life's dramas. Vegas is supposed to be an escape. Compliments of my friend's company, which was participating in a convention, my Vegas stay started at the Rio Hotel. I had never stayed at the Rio and normally wouldn't consider this hotel. The hotel was somewhat hoary and dated; the bed was stiff and the accommodations worn. Nonetheless, I found the staff very nice. The dealers were friendly and the casino staff was accommodating to our minor requests. I enjoyed my stay.

After three days at the Rio, my hotel stay transferred over to the Venetian Hotel, a hotel that my American Express concierge arranged. For those unfamiliar with the Venetian, it is a new hotel with opulent architecture: ornate columns and corbels, lavish chandeliers, and other affluent appointments that would make anyone feel like royalty. My stay at the Venetian was for six days. Unfortunately, after six days, I will never return.

Loved the fancy Italian architecture, but their people suck. Our nightmare started on day one and continued every single day, marred by poor human experiences: unresponsive housekeeping, unacceptable hold times to hotel services, failure to deliver promises, mechanized staff, overcharging, and, overall, a failure to provide an escape. There are two critical lessons in this experience:

1. A SUCS customer service philosophy must be delivered by your employees.
2. Spectacular product features can't overcome poor service.

First, employees must deliver your customer service philosophy. Your people are ambassadors of your business and they communicate your vision. They're business chauffeurs, and if they're reckless, your vision is destroyed. Your employees drive the public's perception of your company.

Was it the Venetian's policy to treat me with such disrespect and disinterest? Doubtful. The failure was in the communication lines from management to employee. Not just one employee, but several. You can't be driving the ship all day. Your employees carry the water buckets, and if they aren't ordained in service, they hijack business and create liabilities. Customer service philosophy is irrelevant if employees don't translate that philosophy into frontline action.

The second lesson is this: No amount of spectacular product features, such as great technology (snazzy Web sites) or great architecture (lavishly appointed hotels) can compensate for poor customer service. Despite the Venetian's billion-dollar appearance, the marble floors and the ornate columns, their customer service sucked. Yet, at the Rio Hotel, customer service was excellent, which translated into a great experience, despite the hotel's dated building.

This incongruity represents a one-way street: Fanatical customer service-service that SUCS-can help compensate for shortcomings, but fanatical features cannot compensate for poor customer service, or poor human interaction. The Venetian's floor could have been made of solid gold. It wouldn't have mattered. Nothing overcomes poor human experiences!

You could own the best hotel in the world located on the best beach in California, but if customers are treated like inconveniences and requests go unfulfilled, they won't return. Exponential business growth is fueled by fanatical customer service, and your frontline employees must share your vision. It doesn't come from boastful mission statements plastered on the CEO's office wall.

Chapter Summary: Fastlane Distinctions

• A business partnership is as important as a marriage.
• A good accountant and attorney will save you thousands, perhaps millions.
• Accountants and attorneys have the keys to your castle; make sure you trust them fully because they have the power to right or wrong you.
• Unmitigated trust exposes you to unmitigated risk.
• Unverified trust can lead to uncontrollable consequences.
• Your employees communicate the public's perception of your company.
• Fanatical customer service can overcome shortcomings, but fanatical features can't overcome poor customer service.
• Customer service philosophy is delivered from human interactions-not ambitious mission statements on a wall plaque in the CEO's office.