Franchise Rage: Keeping it too simple

I get to meet with Texas business owners trying to decide if they should grow or sell their business. The answer generally lies in knowing how to value the business and deciding if that's sufficient for future plans or not.

If growth through franchising appears to be attractive, we then get to work preparing the business for it. This involves defining and documenting their proven and successful business model. We also represent the most successful franchise operations, so in time we are able to bring qualified operators to the business and the operation grows territory by territory.

It would seem to be a simple thing, just follow the proven plan and success will be yours. This should be a KISS, Keep It Simple Stupid, approach to making money; however, life proves success is never that simple. The danger in a franchise strategy for growing a company is the potential for an adverse relationship to develop between the  franchisor and the franchisees. Here is how it can happen.

A franchisee's operation is struggling and the franchisor recognizes that they are trying to operate  outside the proven plan. Warnings about this issue are repeatedly given; however, the operating problems persist and eventually the new franchisee begins to attribute the problems to the franchisor's inability to help them. The two sides continue to blame each other creating a vicious cycle of further bad business. What we have is an example of a sound system being destroyed as a result of the fundamental attribute error.

This everyday error occurs whenever we think an action is being caused by the actor instead of the stage. In traffic a car suddenly cuts in front of us. Our reaction is to think that happened because there is a bad (or rude) driver in front, when in fact that driver could be skilled and polite and narrowly averted an accident by quickly changing lanes to clear a road hazard. As long as all the driving incidents are the cause of other bad drivers, better driving skills that anticipate road hazards are never developed. Instead, we develop road rage.

Blaming problems on fundamental personal attributes of either the franchisor or franchisee is not a simple answer, it's a simplistic answer. Oliver Wendell Holmes said "I would not give a fig for the simplicity this side of complexity, but I would give my life for the simplicity on the other side of complexity." It is the difficult responsibility of both sides to go one step deeper into the situation and ask "Why is the proven method being altered?" What if the issue is not personal character but is the situation? It means a willingness to suspend judgment and get deeper into the complexities of the specific situation and how the model applies to it. Only after passing through this complexity it is reasonable to get back to keeping it simple.

In our process of guiding Active Investors into purchasing a new franchise, we have them contact other franchise owners to learn about their experiences. The alert Active Investor is going to ask how they handle difficulties that might make them question the plan. Is there any evidence of franchise rage?

If you are considering franchises, you want a successful system; but you also want a happy family.

Photo credit: star5112

A Puzzle or a Mystery?

Malcom Gladwell's What the Dog Saw is the source for this post, although anything by him can be equally inspiring. Malcom asserts there is a difference between a puzzle and a mystery. And what a difference that makes to the Active Investor!

I love Sudokus, especially when trying to relax. They are classic puzzles. As you work with them, more knowledge is developed which leads to the solution. That's how all puzzles work. You keep developing more information until the solution emerges. A mystery is the opposite. You may have all the information up front. You're unable to solve it because of the way you are looking at it. More data only further obscures the answer because there is now more being incorrectly viewed. A mystery is only solved by finding the correct way to look at the existing situation.

Our western educational systems present the world as a big puzzle and they offer the promise that if we just get enough education we would be able to solve our  problems with the data we would now be smart enough to collect. There is no doubt to the value of an education; however, it's not this simple. Life is a mystery not a puzzle.

Sherlock Holmes solved mysteries. It wasn't only that he collected more data (which he did). In the Sherlock Holmes stories, he connected all his observations to solve the mystery. These connections catch most readers by surprise because we are still collecting more data in our minds when Sherlock has been eliminating dead ends and arriving at the unseen answer. Perhaps the single Sherlock quote that best sums up all of these time-honored tales is his comment to Watson, "When you have eliminated the impossible, whatever remains, however improbable, must be the truth."

In a mystery, we quickly get to a point where more data only causes more confusion.  A solution only begins to evolve when we disregard our training to collect more information and begin to realize the problem is that we are looking at it the wrong way. When we change the way we look at things, the things we look at change.

Business is also not a puzzle and more analysis often leads to more frustration. Like life, business is a mystery. The successful business owner or professional doesn't need more information than the competition. The successful Active Investor needs insight. The key to the information age isn't more information. It's developing better ways to connect what we may already know.

As an example, we still hear of business people viewing sales and marketing as a numbers games. There is goal setting that encourages mindless activities repeating a minimum number of daily "fishing" activities. The idea is that if any number of data points get high enough, success will be forced to happen. Success can never be forced. Look at what's already going on. Eliminate the impossible and whatever remains, however improbable, must be your truth. That is, the truth of what you are about, where you need to take your enterprise. Actively invest in those things. Success evolves from those activities that are working and that you believe in.

How can you determine if you are seeing a possible solution to your mystery? One clue is if the resulting activities are in harmony with the Active Investor blog theme: growth follows activities that are repetitive, powerful, and gentle. If they are, you may have your insight.

Developing business insight is the mystery. There is no puzzle.

image credit: Egan Snow

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A Disease of Choice

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If we focus enough on the potential of contracting a certain disease, we will increase our chances of actually getting it to the point where we are actually sick. What if that were a good thing?

House M.D. is a television show about an obnoxious doctor who ingeniously cures patients with exotic conditions in spite of his offensive manners. In one episode his staff was impressed with the positive attitude of one of their patients, who in spite of having a condition they couldn't cure was always kind and caring. This was a personal challenge to House who begins his relationship with the patient by trying to make the patient react badly. That never happens and a frustrated House suddenly considers the possibility that maybe this patient isn't upbeat and positive in spite of his disease, maybe he's that way because of the disease. This insight leads to a diagnosis and cure. The episode ends with the cured patient still being kind and caring, which was something of an annoyance to the lead character.

We believe many of our short-comings may be the result of medical conditions. For example, Attention Deficit Disorder (ADD) makes it difficult (perhaps impossible) for sufferers to focus and therefore succeed in areas that require study. This is  serious condition that should be treated and not ignored.

Now if something exists, then it's possible that its opposite also exits. What would a life be like if we could also suffer from an opposite brain condition, Inattention Deficit Disorder, IDD? The symptoms would be an inability to be thoughtless and distracted which would require the sufferer to live a life of complete awareness. That would be a great disease! If we were obsessively worried about contracting it, we might actually get it! To obsessively worry, one would continually imagine what life would be like with a medical inability to suffer from your perceived short-comings.

Every personal investment has its elements of self-doubt and reservation. These can control and derail us from our purpose in life. What if we had a medical condition that made it impossible for this to happen to us? What if we had the insights, confidence, and courage we need because of a medical condition that just made us that way? If we have a purpose in life, isn't it reasonable to be able to contract it?

While suffering appears to be an unavoidable consequence of living, there is both productive and unproductive suffering. Why not choose the former?

The Tao of Active Investing

The principles of building lasting value are timeless and universal. Chwan Tzu, an ancient Chinese philosopher, wrote the following centuries ago. It illustrates the impact of a repetitive, powerful, and gentle lifestyle as described in the Tao, the Chinese book about understanding and joining with natural forces. The story starts when Prince Hui complements his cook on his skills with a cleaver.

"Well done!" cried the Prince; "yours is skill indeed."
"Sire," replied the cook, "I have always devoted myself to Tao. It is better than skill. When I first began to cut up bullocks, I saw before me simply whole bullocks. After three years' practice I saw no more whole animals. And now I work with my mind and not with my eye. When my senses bid me stop, but my mind urges me on, I fall back upon eternal principles. I follow such openings or cavities as there may be, according to the natural constitution of the animal. I do not attempt to cut through joints: still less through large bones.
"A good cook changes his chopper once a year -- because he cuts. An ordinary cook, once a month -- because he hacks. But I have had this chopper nineteen years, and although I have cut up many thousand bullocks, its edge is as if fresh from the whetstone. For at the joints there are always interstices, and the edge of a chopper being without thickness, it remains only to insert that which is without thickness into such an interstice. By these means the interstice will be enlarged, and the blade will find plenty of room. It is thus that I have kept my chopper for nineteen years as though fresh from the whetstone.
"Nevertheless, when I come upon a hard part where the blade meets with a difficulty, I am all caution. I fix my eye on it. I stay my hand, and gently apply my blade, until with a whach the part yields like earth crumbling to the ground. Then I take out my chopper, and stand up, and look around, and pause, until with an air of triumph I wipe my chopper and put it carefully away."
"Bravo!" cried the Prince. "From the words of this cook I have learned about the way of life."

A new active investing venture will always go through these 3 stages:
1) Seeing the whole and being confused by all its parts (Learning)
2) Understand the details and complexities (Managing)
3) Knowing exactly what to do from experience (Mastery)

Its comforting to know where we are at any given time and to be prepared to be happy there until we grow into the next stage.

Image credit: silentius

Crystallization - Beauty Built On Imperfection

Things are never right. That's what ultimately creates order and beauty with a system. The story of crystallization is a remarkably accurate metaphor for how that happens in a natural system that an Active Investor can readily apply to understanding social systems such as their business.

The orderliness of a crystal begins with the random movements found in liquids. Crystals are created when molecules of a substance, normally solid at room temperature, are dissolved in a solution. These molecules will sometimes be attracted to each other for short periods, only to become attracted away by other molecules over time. Everything remains chaotic and fluid until a "seed", a point of imperfection, is introduced into the solution. The seed has a slightly higher attraction to nearby molecules, so they are drawn to it. If this initial attraction is strong enough, the group grows until its size is such that the group becomes consistently more attractive to other molecules than the surrounding solution. This is the "critical size" and when reached the protocrystal is now "in business" and continues to grow.

All of this is similar to a business during its start-up phase. For a business, the solution is not a liquid, it's the answer to a market need. A good business solution can be replicated and the company providing it begins to experience some repetition of sales. Orders will be slow and random at first; but they will grow with greater consistency over time.

This is not the end of the story. There is another step in the crystallization process. The protocrystal continues to grow ; but eventually it gets to a point it can no longer remain "dissolved" and it falls out of solution. Now the original imperfection appears to have been transformed into the beauty, order, and attractiveness of a visible crystal. The visible crystal continues to grow, gaining more molecules from the solution, until it reaches an equilibrium with its environment.

A growing business will face a second step as well. Meeting more market needs will begin to overwhelm the founding staff and another decision, as difficult as the one to initially start, has to be made. An investment must be made in building internal systems and structures if continued growth is to be nurtured. This is hard for the financially struggling team who have sacrificed for the sake of building their solutions; but out of the internal systems and structures come the power to sustain long term growth.

It's now a different business, one that is building lasting values.  Those values will allow it to reach far beyond its initial products and services that brought it to life. A visible legacy drops out of solution.

Image credit: wlodi

Did I just screw-up?

Anyone who has never felt this way is a poster child for the unfulfilled life. Remorse is a negative feedback with destructive potential if ignored. It's also the catalyst for developing our potential if accepted and appreciated.

There is a story about a successful Active Investor, a business owner or professional,  who was being interviewed. She was asked to revel the secret of her success (a great question networking question by the way). Her answer was that success was the result of not making mistakes. This lead to a question on how to avoid mistakes. Her response was that experience would teach you how to avoid them. The obvious follow-up question was about the best way to get that experience. Her concluding wisdom was that the best way to obtain experience was to make mistakes.

The difference between an accomplished athlete and an amateur is not just natural ability. It's the experience gained from extensive training under the watchful eye of a great coach. Even small mistakes are honed away in hours of work on the practice fields. This repetition of action and corrective feedback gently and powerfully develops the the successful athlete's abilities on the playing field we all admire.

Life doesn't give Active Investors a practice field; but the coaches are very present. Everyone benefits from mentoring. This can be from those who invested themselves in us during our past. It can also be from a current network of professional advisers we can develop. It's feedback necessary for grwoth. Being able to get good coaching is critical; however, these are only our external coaches.

There are also our internal coaches that watch our play and seek to guide us. Remorse is such a coach when we appreciate that it moves us towards better ways to achieve our goals. The feeling, although negative, is there as a driver for improvements that inevitably increase lasting values. The feelings are designed to make us stop. Not for self-pity; but to take a moment to learn from what just happened and to guide change.

Our actions may now forever limit us in the future. Limitations in one area creates opportunities for specialization and excellence in what's remaining. They may be cause for an apology. This starts the miraculous process of healing. But, most of all, they are a basis for us to rise above our past performance levels and become who we feel we should become. We get there by thinking about alternatives to our present situation that will make us feel better. It may happen in a single insightful step. Recovery may also be from one slightly better emotional state to another as we recover over time. However, there is always some better feeling way to think about a remorseful situation and our job is to find and follow it.

Although mentioned in a previous blog posting this bears repeating. The Active Investor's emotional strategy when experiencing negative feedback of any kind should be to move from a position of judgment to a position of curiosity.These negative feelings are our sensors and guides, not our enemies.

image credit: TheeErin

Creating Products from Services

An objective of The Active Investor blog is to inspire the thinking of small business owners and professionals to create greater lasting value in their business. There is perhaps no better way to do this than to find ways to create products from services.

A product without services eventually becomes a commodity with business going to the lowest cost provider. Selling only services is a bit like selling air. You can't really sell time. You can only rent your expertise for some time. Expertise is intangible and difficult to either prove or differentiate and in the end the amount that can be sold is always capped by a time limitation. If you want to sell the enterprise, because it's your expertise and you're leaving, the residual value is relatively small. However, when the business offers a deliverable solution that can be named plus is easy to understand and refer, you have hit a "value-added" sweet spot. Here is a personal example.

Names are important. They give the offering tangibility. As a Texas business broker, I create marketing plans for my clients, as do many other business brokers. Since most small business buyers come from the internet, this plan includes multiple internet directory listings, which again, other brokers do. So far, we're still at the services level. I've then created a unique product offering on top of these services named Business Opportunities Bulletins (BOBs). With some creativity and technology, each client listing can appear on the first Goggle results page of significant search terms used by potential buyers. If a client wants to be found by potential business buyers, here is a product, a BOB, that does exactly that.

A BOB is easy to understand. The art of selling your business is to be presented to interested parties and still keep the sale confidential. Prospective clients can see how this is already working for existing clients. They "get it" immediately.

In this example, the product's name is a take-off of my own name. If a need for my business broker services gets touched upon by someone in my network, it's easy for them to explain and refer my product (my service).

Building BOBs takes time,  expertise, and technology but their existence adds critical value both to immediate marketability and to the ultimate value of the brokerage practice. A product has been created out of services common to the industry. How many products can be developed from your services? Something with a name that is easy to understand and refer. I can't image anyone who can't develop at least one more.

Image credit: EraPhernalia Vintage (catching up)

A Farewell to Time Management

For decades there was a focus on Time Management. It was a belief that we could become more productive, and therefore happier, if we could only optimize the use of our limited time. Initial efforts were centered on the process of scheduling. The problem with scheduling people's time (as opposed to a machine's time) is that while it may keep you busy, it doesn't necessarily make you effective.

Personal scheduling gave way to Prioritization in the schools of Time Management. Doing the most important things turns-out to be much more effective than doing the greatest number of things. Thus Prioritization soon lead the way to Goal Setting, Mission Statements, Core Competencies, etc.

It was very effective, very profitable, and fun for a while. After the innovation wore off, 20th century productivity went back to feeling like the same old grind, just a bit more productive - but not enough to take us to the levels we had hoped to achieve.

The question has now become, how can we preserve that "innovation" stage where our efforts were effective, profitable, and fun? It's most easily recognized by feelings associated with Energy. When we're in that kind of state things happen in a tireless and joyful fashion. The issue now facing the 21st Century Active Investor is how can we manage to keep our personal Energy at those levels?

I have been enriched by the opportunity to drive to Snyder for a client. After passing the city of Sweetwater you enter Texas oil country. Here Texans have lived to bring us the Energy from fossil fuels underground that have driven our economy. But on this drive, you won't give oil a thought. What you see is miles and miles of windmills harvesting Energy from the air. If we told our ancestors we could get Energy from just the air they would have considered us mentally unstable; but today it's everywhere on the road to Snyder.

This is a metaphor for 21st Century Personal Energy Management. We don't have to go to great lengths underground to get a limited supply of Energy; it's abundantly available in our environment. The challenge is to harvest it. Windmills reach out their arms to be driven by the air moving in their environment. In a similar fashion we have to create processes that enable us to reach out and catch the Energy moving in our environment.The place to start is to acknowledge what causes our feelings to be high or low. Typically positive or negative perceptions of our environment create high and low feelings of Energy respectively; however each of us have our own Energy attractors.

With this internal guidance system in place, Active Investors can began to recognize those activities, people, and places that either drain or renew their Energy. Our personal Energy supply is both apparent (from our feelings - our internal guidance system) and abundant (from our environment - if we can recognize it). Our 21st Century challenge is now to manage our Energy by knowing how to continually reach out for more.

Image credit: goosegrease

Shaping the future

In President Obama's address to Congress on Healthcare this month, he reminded them that they came to Washington not to fear the future but to shape it. What an inspirational remark and what a great definition for an Active Investor. Active Investors are more than just business owners and professionals; they are the individuals who have made a decision not to fear their future but to take responsibility to shape it.

Once we get beyond the inspirational feelings of that remark, we're left with the reality of exactly how does one go about shaping their own future? For Congress and Healthcare, it involves agreeing to passing enabling legislation. What's involved for us as individuals?

We cannot know the future; however we can understand it through System Dynamics. Our core principle is structure will determine behavior. The future will play-out according to the structures at that time. Our nation will have better Healthcare if a better Healthcare system is in place. An Active Investor will have a more successful business if better business structures are in place.

Each day is a new opportunity to:
1) Faithfully respond to the needs currently presented to us, and
2) Imagine how we can build structures to be even better in the future.

This is a big step beyond "making money." This is building lasting value. The profits earned at any given time will be consumed; but the structures are a lasting value. We see this in business brokerage all the time. Business owners who have created structures cash out handsomely. Those that have just made money get by.

Shaping our future is building our structures. What marketing, sales, management, HR, compliance, fulfillment, etc. resources need to be in place for our complete success? This question is never conclusively answered in our expanding universe. The mere passage of time is enough to continually create new opportunities for everyone. New structures will first form in our minds and later find their way into our reality - shaping our future.

As for politics, our President's speech did affect me. I've decided to believe there is a viable solution to the nation's Healthcare problem. Congress only has to imagine it.

Image credit: dmitryku

On The Edge of Space and Time

Using the image on the left as a guide, image a metal plate with a hole in the center that is being heated. We know that heating metal causes it to expand , so the arrows indicate how the plate will expand. The question is what will happen to the hole? Will the forces applied cause it to get bigger or smaller?

Please take a moment to to quickly decide on one of the following positions before reading further:

1) The hole will get bigger
2) The hole will get smaller
3) I'm just not sure

Let's ask the same question in a different manner. Suppose there is a bolt stuck in a metal hole. If the metal is heated, will that loosen the bolt and make it easier to remove? Yes or No?

Generally, looking at the arrows in the diagram causes confusion. They all appear to be pushing against the diameter of the hole in a way that should make it smaller. Yet that just doesn't feel like a right answer and Position 3, being not sure, is a typical first reaction. Asking essentially the same question without the "helpful" diagram is much easier to answer. Even the mechanically challenged, like myself, imagine the bolt getting looser as the metal heats. The correct answer, which we all intuitively know, is heating the metal plate will cause all dimensions to increase, including the hole's.

Why is it difficult for most of us to quickly see what we know as obvious in that problem? This is really an illustration of two principles. The first is we tend to make decisions using an "Anchor and Adjust" strategy. In this case, the misleading illustration was put first to set it as a mental "Anchor". Then when we try to answer by Adjusting from that image, we run into difficulty because of the apparent shrinking effect of the arrows. Anchor and Adjust is very powerful and will be described further in future postings. The other principle is that even though we know this is an expanding universe, we are easily suckered into acting as if it were shrinkable.

The general acceptance of Hubble's Law and The Big Bang Theory has spread the knowledge that the universe must continue to expand; however, we tend to think of that as something only related to astronomy. Each of us are on the very edge of the space-time continuum and each passing moment of our lives moves our edge further outward. A popular metaphor is to imagine an ant on a balloon. Our ant's "space" (along with all the other ants) in space-time must expand as the balloon of the universe inflates (expands). We are all always in a place of expansion. The universe has no other way of acting. No matter how it appears, it's just not shrinkable.

The Active Investor, a business owner or professional, initially believes in an expanding universe. Time and circumstances wear on us all and we all eventually face "arrows" that indicate we were wrong about the universe. If that conclusion just doesn't feel right, there is every good reason to believe it's just so much junk science obscuring the truth. A suitable path out of the circumstance is to take gentle yet powerful actions that do feel right and to repeat them until feelings coincide with situation.

This blog is written to inspire good feeling thoughts that lead to actions. They will manifest themselves if we seek them. They have to. It's our part in the expansion of our edge of the universe.

Powerful Symbols of Structure

Today's performance is the result of the strategic resources we had available when we woke-up this morning. Toyota will build many more cars today than I will because they have the resources and intent to do so and I don't. On the other hand, Toyota's contribution to this posting will be a mere mention of their name. My contribution will be its creation because I have access to these resources.

Structure determines behavior. In our past we have intended certain results which has caused the accumulation of necessary resources to accomplish them. These resources for an Active Investor might include things like cash, reputation, customer base, staff, inventory, equipment, technology, supplier relationships, and so forth. What happens in the present is the unfolding result of the levels and structures of our current resources. This is why accounting and business valuations work in the present. We can accurately know our resources as they exist now. Forecasting future performance is another matter.

Financial methodologies are scalable to almost any level of detail complexity; however, they are often not well suited to deal with dynamic complexity. As we move out of the known present and into an unknowable future, resource levels will be dynamically affected. Things will generally not happen in a linear fashion like we tend to imagine. Understanding the dynamics of how we arrived at the present is far more valuable in forecasting than understanding the details. Unfortunately, the study of system dynamics is somewhat challenging (although if it's possible, an Active Investor will greatly benefit from taking a formal system dynamics course).

The rest of us take an intuitive shortcut. We look for symbols that indicate the underlying structure and use that to get clues about dynamics.

Experience in audit and business brokering have helped me develop a sense of symbols. Walking into a business the cars in the parking lot may be symbols that the owner (and therefore the business) is doing well. The maintenance is a symbol of their attention to detail. The decor may become symbolic of their perceived customer preferences.

For all the time and effort spent on marketing assets, it's often our symbols that communicate the most about us to others. They are most powerful communicators that indicate our structure and will be used by others to predict our future behaviors.

Our symbols are both advantageous and dangerous because they communicate instantly. And yet, we frequently are not even aware of what symbols we currently display. The Active Investor benefits from paying attention to them. It takes an examination of our structures to best see our symbols. By being alert to symbols in our markets, we learn both about others and how to better present ourselves.

Image credit: avixyz

Entrainment - Power in Prayer and Meditation

An emerging theme in this blog is identifying key drivers of value by recognizing 3 necessary characteristics. Value Drivers of lasting consequence can be recognized because they are always Repetitive, Powerful, and Gentle (RPG). Certainly prayer and meditation are candidates. They are Repetitive and Gentle; but what about Powerful? A part of their Power may lie within an effect scientists have called entrainment.

Entrainment is the stuff of scientific legend. That legend goes back to 1666. The noted Dutch physicist, Christiaan Huygens, had to adjust the clock in his study each day because it ran about a minute slower than the one in his living room. Both were governed by swinging pendulums. One day he moved them side-by-side. With no other adjustments, the clocks began to keep synchronized time. Any discrepancies disappeared. This observation lead Huygens to the discovery or labeling of entrainment, which is the tendency for adjacent oscillating systems to synchronize.

Where ever there are cycles (Repetitions) there is the potential for the effects of entrainment. The clocks are an example of entrainment in a mechanical system. A striking example in natural systems is the synchronization of menstrual cycles among women who live or work together.

Entrainment is a Powerful effect. Can that power be accessed by prayer and mediation? For one oscillator to affect another, the entrainment has to operate through some medium. Call it the universe, God, or the Zero Point Field, we all must be connected for this scientific effect to occur.

Now consider the processes of prayer and mediation to be bringing yourself side-by-side with God. As you repeat these processes entrainment begins it's subtle work which ultimately results in the changes we call answered prayer. Was the change in the universe, or was it inside of us? Entrainment leads us to the possibility it could be either or both.

Jesus instructed the we should ask to receive (Matt 7:7). His half-brother James later wrote that we can ask but not receive because of our motives (James 4:2). Apparently asking works, but only when a level of entrainment with God has synchronized our motives.

Active Investors have very busy schedules. Repetitive prayer and mediation takes away available time; but if ignored, what will our lives synchronize toward?

Image credit: theilr

Intention and the Cooperative Universe

A new discipline has emerged this century, the study of Intention. It's often discussed as the Attraction Principle which asserts we attract into our lives those things we dwell on. Examples include if our thoughts are about physical ailments, or poor finances, or an unsatisfactory performance, we will attract poor health, lack of funds, and below standard performances. Alternatively if we genuinely intend good health, abundant finances, and superior performance, these will be what is attracted to us. By itself, the Attraction Principle might be just a sophisticated form of self-delusion; however, in literature such as The Field by Lynne McTaggart evidence is being assembled from advances in quantum physics that provide a scientific basis for its validity.

There is a strange outcome to the Heisenberg Uncertainty measurement problem that results in energy remaining after temperatures reach absolute zero. I was taught absolute zero meant no atomic motion and therefore no energy and scientists of the last century "normalized" their calculations by simply subtracting this away as "background noise". This may have been an over-simplification. When some physicists keep this energy, now called the Zero Point Field (ZPF), in their equations, it appears the discrepancies between classic and quantum physics are resolved. After further study, it appears the ZPF may be a source of abundant, ever-present energy our advancing civilization will surely require. One estimate is that the ZPF energy in one cubic meter of "empty" space would be sufficient to boil all the oceans on our planet. For Stargate Atlantis fans, this is the energy source behind their Zero Point Modules (ZPMs).

This ever-present field appears to be influenced by everything within it and in turns is an influence on everything in the universe. Scientists are now trying to study how one or more individual's Intentions can be "transmitted" through the ZPF. In many of these studies, the universe responds to the changes in the ZPF and appears to cooperate with the Intention.

The science of Intention does not fit well with mainstream paradigms and is currently relegated to the fringes of the scientific community. Yet the research continues and evidence that the universe cooperates with deeply held Intentions continues to accumulate. The research itself has been attractive to physicists, theologians, philosophers, healers, the military, and many others. It ought to be of interest to the Active Investor as well.

The forces around us shape our destinies, yet from this research we learn that we also shape those very forces. Since we see Intention also has all the characteristics of a force to build lasting value, it's repetitive, powerful, and gentle. The Active Investor should be a student in learning to harnessing its potential.

Photo Credit: EraPhernalia Vintage

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Our Invitations

Invitations take many forms, from the formal printed style seen here to the subtle courting signals every society develops. They are powerful tools that open the doors of significant relationships and because of that we handle them with great respect.

Every piece of marketing material should be considered an invitation. We invite the market to experience our product or service; however it's often done in a strange manner. We use a cost benefit analysis approach. There is no doubt that before an invitation to do business is accepted, a prospect will consider costs and benefits; but to base the invitation on this design dehumanizes the prospect and commoditizes the business.

Imagine being an Event Planner rather than an Active Investor developing a marketing strategy. Successful events always have a feeling that is forever kept in the attendees memories. We often forget the details about exactly what happened at an event; but we will continue to remember how it made us feel. Business transactions are similar social events, especially those of an introductory nature. As we are invited to potential business opportunities feelings are remembered as much as any transactional benefits.

Since advertising and networking have become facts of life in American business, we're all continually exposed to them. They are forms of invitations. What will be remembered is how they make us feel. No matter how timely or creative it might be, unsolicited email feels like spam - disrespect and nothing else. On the other hand, even the coldest of calls that includes a sincere request for advise feels like appreciation. Invitations invoke our feelings.

In response to our rhetorical question, "Do you need a written invitation?" the answer is generally "It certainly wouldn't hurt."

Image Credit: Matt Biddulph

Risk and Reward

Every investor, active or passive, has in mind a financial risk/reward relationship. They have to decide exactly what degree of risk they are willing to accept in exchange for higher rewards. Passive investors generally see single digit returns these days which is one reason why there is so much interest in the much higher returns of your own business.

So why doesn't everyone want to jump on higher returns? Passive investors (people who invest in someone else's business) only concern themselves with financial risk. Running your own business also creates another form of risk, personal risk. When you're in charge, not every effort is going to work the way you planned. You can be rejected (or more accurately, you will be rejected). You are subject to frustration and self-doubts. These are just some of the personal risks each Active Investor much face.

Is it worth it for just the financial rewards? That will depend on the circumstances. What is always true is that overcoming personal risk produces personal gains of enormous benefits. In countless biographical examples, people with great satisfaction from their lives have all overcome personal challenges. Active Investors assume a double risk and receive a double reward. Both their financial and personal net worth evolve.

So what can we do about Risk Management when the topic is Personal Risk as opposed to Financial? As I was writing this posting (talk about JIT) I meet with Jeff Weaver, a Texas serial entrepreneur who spends a great deal of his time coaching and mentoring others in addition to developing his own businesses. His strategy is to move out of judgment and move into curiosity.

We worry about that last phone call or meeting. Did we say the right thing? Were we weak, or were we offensively pushy? Are these the right people? Are we doing the right thing? Every one of these internal questions comes with an implicit self-critical negative answer. That's our humanity (Ego) at work. It's what Jeff means by judgment. What if that changed to personal curiosity? We can be equally curious about that last encounter. We can review it with a sense of wonder about what will happen next. Who will we meet as a result? What will they tell us now? What new opportunities have started to emerge?

When we learn to think this way instinctively, Personal Risk converts to Personal Adventure. That's a good thing.

(For those with an interest in how this works out on a theological level, try applying it to the Kingdom Parable in Matthew 18:23 -35. An attitude of curiosity encourages a spirit of forgiveness.)

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Choice of Entity

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Anyone wanting to become an Active Investor, that is invest in their own enterprise, has to choose a legal form for the business. Making the best choice will require discussions with a lawyer on liability issues and a tax professional on tax exposure. In spite of all this advice, the Active Investor needs to make some personal decisions before consulting either.

A lawyer will seek to aggressively protect their client, including recommending a business form that will provide the best shielding for personal assets. While this is prudent, you should never fall into the illusion that a chosen entity type adequately protects you from potential legal actions. Many attorneys have been successful in proving an entity has not been maintained according to state law and this has exposed the owners personal assets to their complaint. Be aware of the liability protection a business entity can provide; but never depend solely on that. There are two things every business should maintain to protect the owner from liability - a passion for excellence (quality) and insurance. If these are not both built into the heart of any business plan, then there is an argument that the best choice of entity is employee.

Before discussing tax ramifications, there is also an issue the potential Active Investor should consider. It's been said 85% of the workforce are employees, 14% are self-employed, and 1% are business owners. Are you changing from employee to being self-employed or to being an owner? If the goal is to build and own an organization, tax considerations are somewhat different from trying to minimize a self-employed professional's tax exposure. Working out of a normal (C) corporation can create double taxation for the self-employed, which is very undesirable. Some type of "flow through" entity is often recommended. However, if the objective is to build an organization, the funds to grow the business need to come from future company profits. The C corporation has a low (15%) tax rate for it's first tier. This allows the small business to retain some earnings at that low tax rate for growth. If the profits would "flow through" to the owner to avoid double taxation, those funds for growth are effectively taxed at the owner's tax rate. Different intentions create very different tax strategies.

There are many more considerations that need to be considered with an attorney and tax professional. Successful business people often attribute much of their success to having a winning team of trusted advisers who have guided them through these and other issues. However, the secret of the adviser's success is having a client who has thought through what they really want and can give those advisers clear directions.

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Market Trust

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Many believe a marketing program is successful if it raises the public's awareness of your product or service. Coach Roland in a May 31,2009 blog posting points out that we all have become saturated with messages trying to raise our awareness. Awareness alone won't lead to sales. He asserts our messages need to communicate what we intend to do to earn the market's trust. We have to do more to really get their attention.

Mature successful firms get most of their business from repeat customers or referrals from satisfied clients. Trust has been earned in prior dealings. Here the driver of continued success is the customer service staff. They are the guardians of market trust and need to be in close contact with the marketing staff. Social networking is providing marketing with a new generation of tools to measure customer service effectiveness and satisfaction. These departments work together to preserve existing trust.

Newer and smaller firms, more likely to be run by an Active Investor, may not have this kind of staff and or large base of past customers. Trust needs to be developed. How can a business reach out to the market in such a way that both trust and awareness are developed? A system dynamics approach is to look at trust as a resource, that is a stock of something that has a level that can go up and down, and then consider what are the drivers that will increase its level. Some rather universal drivers of trust are:

- Credentials: Are there authoritative "seals of approval" we can display to verify quality or competence?
- Appearance: Is our offering presented in such a way it creates an assumption of worth, or do we look mediocre?
- Recommendations: Do we understand and develop a history with those who may not purchase but still be in a position to recommend us?
- Concern: While Active Investors are typically always concerned for their customers, is this expressed in a way they can appreciate it? Do they feel we have really listened?
- Familiarity: Can we be remembered? Familiarity breeds business.
- Integrity: Is trust built into our business and personal decision making? Nothing develops trust more surely than personally being trustworthy.
- Assurances: Is there historical data or performance guarantees to factually support any measure of trust a prospect is considering granting us?

Each business is unique with its own ways to build trust. They are to be found at decision points where there is an opportunity to do the right thing or to be expedient. When you have first convinced yourself you'll always be doing what's best for your customer, you'll know what to do to further develop market trust.

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Properties of Value - Powerful, Gentle, and Repetitive

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The forces that create commercial value in a business have the same properties as those that create natural wonders. We find them to be Powerful, Gentle, and Repetitive. Erosion from the Colorado river is is neither loud nor threatening, yet it created the Grand Canyon.

There is no doubt that Bonnie and Clyde created cash flow with their business; however, it was cash flow without any Value for others. Contrast that to to their contemporary, Henry Ford. He neither invented the automobile nor forced the public to buy them. His genius was understanding how industrial-age forces could make them affordable. Year-by-year, model-by-model, plant-by-plant he built an organization that produced at lower and lower unit cost. It was powerful, gentle, and repetitive. Today this organization may become the last solvent US automotive manufacturer.

This is the kind of Value every Active Investor seeks in their business or profession. It starts with a sense of something that is Powerful. The Value to others (which translates as the real value of ownership) is directly related to where this sense of Power is located. Personal power produces cash, but not lasting (or salable) Value. Process or Organizational power produces both. Real power that addresses real needs doesn't require Force to permeate a market. It can be Gentle, as long as it's Repetitive.

Consider the activity of closing a sale. Is your product or service Powerful, that is does it use a proven process that will surely address a prospect's core need? If it does, getting to a close is a matter of communicating that value. This may take some repetition. It's not forceful; but its probably going to take several "messages". Here are the properties of value forming a powerful, gentle, repetitive closing process. Every really valuable business process will be similar in nature.

Our job, as Active Investors, is to be continually aligning with these powerful, gentle, and repetitive forces as they apply to our situation. The degree of our ultimate success is based on it.

Constellations are our Motivations

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There is always a special moment when my younger daughter and I look up into the night sky together and see the bright cluster of 3 stars that form Orion's belt. I first showed her Orion over a decade ago and each time we see it a part of that father-daughter moment returns. It's what being alive is all about.

But in reality, there really is no Orion. These are unrelated stars light years apart that happen to form a pattern only when viewed from our planet.

Any social enterprise, like a business, can be understood as a constellation. It first takes an Active Investor, a business owner or owner-to-be, to see a new pattern that can meet people's needs. Previously unrelated resources flowing together in new ways.

Orion has a story. In mythology Orion, the Hunter, was in love with Merope, one of the Seven Sisters who form the Pleiades stars. She would not return his love and his already tragic life was ended when he stepped on a scorpion. Feeling sorry for him, the gods placed him in the sky near his faithful dogs, adjacent constellations, and on the opposite side of the sky from the deadly scorpion.

Each business has a similar story. Something that inspired the founder to start. Often a picture that could only be seen from their perspective. To everyone else, it was just a group of unrelated elements.

It's sad when this constellation story gets reduced to a just "mission statement". The inspiration of the story gets objectified as financial statements and business plans. When trying to value a business we deal in these valuable instruments; however, they only represent the passive side of any business investment. What makes the organization successful is the power of its invisible but very real story.

Being a part of a powerful story is also a part of what being alive is all about.

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Forces around us

In a Lewin Force Field Diagram, like this one, an organization is pictured to be at a certain level because that is where the Driving and Restraining forces acting on it come into balance. This diagraming technique helped the US Government during World War II to more effectively mobilize the civilian population in supporting the war effort.

 As an analytical tool it often gives an insight into understanding our current situation. We are often guilty in making the fundamental attribute error where we believe things are a certain way because of the personalities of the people involved. While success in anything requires personal dedication and effort, when that is coupled with positive circumstances, things happen.

American is a land of opportunity for every individual. That makes us quick to make our circumstances about the individuals rather than the forces involved. Look at how we become more obsessed during elections with politicians personal characteristics rather than their understanding of the nation's problems.

Leigh Hilton, a Texas attorney specializing in asset protection, brought this national disposition to light recently when she told me she asked clients to think about what they wanted to happen "if" they should die. They had too much trouble thinking of what to tell her if she asked them to think about "when" they die. Our Egos just have enormous difficulty imagining life not centered on us personally.

An advantage of being in corporate America is that our responsibilities are generally on things we don't personally own. In those circumstances it's much easier to be process oriented and systematic. Our thinking frequently changes when we choose to own our own business. 

More than most, Active Investors need to get over their American Ego dominance. We need to understand and believe in the dynamics of the vast forces around us. Try a Lewin diagram next time you're about to assign blame to yourself (or anyone else) for what is happening. Forces can be family, health, the market, competition, industry, legal, the economy, spiritual or from any number of sources that constantly affect us.  Are there any that are being ignored?