Category: Ethics and Values

Virtuous Entrepreneurship

Image Source: Jeff Cornwall

Full disclosure: I am an Adam Smith nerd. The picture above was the result of a long search that Mrs. C. and I went on when we were in Edinburgh, Scotland a few years ago to find the grave site of the Father of Free Market Economics.

First we had to find the correct cemetery.  That part was not too hard, as it was well-marked and had a large memorial to Adam Smith at the entrance. But, then the search for his actual gravesite began. We searched through the various headstones, row after row after row after row. We knew it was in there, but could not find it.  Finally, when I was about ready to give up, Mrs. C. said, “Here it is!”  It was not the large, noble headstone I had imagined such an important icon would have.  Instead, it was a grave marker no larger than the sole of a shoe.

Anyway, to understand why I am so fascinated by Adam Smith, I need to explain the two faces of Adam Smith.

The Adam Smith We All Know: The Invisible Hand

The first, and most famous face of Adam Smith is that of the economist who first helped us understand the power of free markets in his book, The Wealth of Nations. In this work, Smith explains how the power of the “invisible hand” of the free market builds economies.

Smith explains that individuals within free markets act by following what he calls commercial virtues. The first of these virtues is self-interest. By pursuing self -interest, individual entrepreneurs unknowingly benefit both the economy and society. However, this only works if the entrepreneur acts with the commercial virtues of prudence, justice, industriousness, and frugality.

The Adam Smith Most Don’t Know: The Importance of Virtue

Adam Smith was not only an economist, however.  He was also a moral philosopher.  His book, The Theory of Moral Sentiments, helps us understand the second face of Adam Smith. Smith recognized that the collective acts of self-interest by entrepreneurs in an economy must be moderated by nobler virtues, or the whole system will run amuck. Individuals must overcome the purely selfish impulses of the commercial realm, as there is more to life than economics.

The nobler virtues necessary for the free market to be sustainable, according to Smith, are benevolence, generosity, gratitude, compassion, kindness, pity, friendship, and love.  These are not virtues commonly associated with free market capitalism, and yet without them, the individual selfishness leads to the eventual downfall of both the economy and society.

Bringing The Two Faces of Smith to Life

So why bring up the two faces of Adam Smith while we are in the middle of a pandemic and economic crisis?

Because even in the face of closed businesses and an economic free fall, we can see Adam Smith’s virtuous capitalism at work. And through the acts of entrepreneurs who bring the two faces of Adam Smith to life, we see hope for the future.

Kindness and Compassion

C19 Liberator is a charitable organization set up this past month to harness existing 3D printers to meet the demand for protective face shields to protect those on the front line of fighting the coronavirus here in Tennessee.  One medical facility alone, needed 400 face shields, and needed them quickly.  C19 Liberator has found small businesses and individuals who own 3D printers. They asked them to step up and meet the challenge of using 3D printers to make hundreds of face shields. They are donating them for use by medical personnel and first responders.

Generosity and Pity

One of the types of businesses that has been deemed essential and is able to remain open is liquor stores.  One local liquor store, Cools Springs Wines & Spirits, has donated $25,000 to to Tennessee Action for Hospitality to help support other businesses that have been unable to operate during the current crises due to government mandates.

In an interview in Williamson Home Page, Cool Springs Wines & Spirits CEO Bret Moore says:

“We feel fortunate our store is open for business. In addition to taking extraordinary measures to create a safe environment for our employees and customers, we wanted to give back to those in our industry who are profoundly affected by this pandemic.”

Benevolence and Gratitude

Gravity Payments is a Seattle-based company that helps small businesses process payments. When the current pandemic and economic crisis hit, the impact on Gravity’s financial health was immediate. The company saw a 55 percent drop in revenues in one month.  To survive, it first appeared that CEO Dan Price would either have to layoff 20 percent of his workforce, or face certain failure.  Like many entrepreneurs, Price decided that neither option was viable and needed to find a creative “Plan C”. Price went to his employees and asked them to help him come up with a third alternative.

Each employee filled out a form that only the leadership team would see, in which they stated how much they could sacrifice in earnings to help avoid either a massive layoff or company failure.  The plan worked, and everyone has been able to keep their jobs.

An Army of Virtuous Entrepreneurs

We are facing more than just the survival of individual businesses. Many experts are suggesting our economic system is in jeopardy.  Let’s all remember the lessons of Adam Smith and create an army of entrepreneurs who not only can revitalize our economy, but ensure the preservation of free markets through benevolence, generosity, gratitude, compassion, kindness, pity, friendship, and love.

Five Steps to Secure Social Capital During a Pandemic

Image by skeeze from Pixabay

A myth about entrepreneurs is that we are just a bunch of “lone rangers.” (The Lone Ranger was a fictional former Texas Ranger who went off on his own to fight bad guys). According to the lone ranger myth, the reason we start our own businesses is that we can’t get along with others.  We can’t function in an organizational structure. So we ride off into the wilderness by ourselves to chase down our next deal.

Every myth is based on a bit of truth. Entrepreneurs do tend to have a higher need for independence. There are decades of studies of entrepreneurs that suggest we have a stronger urge to be independent than the average person.  In simple terms, psychologists define the personality trait of independence as preferring to act on one’s own thoughts rather than follow others.

Just because we have the urge to follow our own ideas does not mean we have poor social skills. To the contrary, independent thinking is recognized as an important part of healthy social skills by most psychologists.

In fact, there is a growing body of research suggesting that what is called social capital,  having a strong network of people with knowledge, experience, and wisdom to draw from, is an important determinant of entrepreneurial success.  It can be even more important for many entrepreneurs as the financial capital they need to succeed in business.

Important Sources of Social Capital

What are the sources of social capital for entrepreneurs?

It starts with their family and friends. At first glance it might seem that the social isolation we are all practicing should facilitate a stronger flow of social capital to entrepreneurs.  After all, we are quarantined 24/7 with our family. However, being forced into togetherness is challenging us to find new ways to interact as a family.  Those who have retired often talk about the initial challenges of finding a new rhythm for family life once the retiree is so much more time at home. During our adjustment to everyone being at home, it can become difficult if not impossible for family members to provide the social capital the entrepreneur needs from them.

Another critical source of social capital for entrepreneurs are their mentors, coaches, and advisors. These are the people who help keep entrepreneurs moving ahead and staying “between the rails.”  At this point in my career, one of my greatest joys is serving as a mentor for countless student and alumni entrepreneurs.  I know how important my mentors and advisors were for me when I was a full-time entrepreneur, and hope that I can pay it forward to today’s young entrepreneurs.

Entrepreneurs also receive vital social capital from their peers, that is, from other entrepreneurs.  This includes industry peers, which is why we are drawn to meet-up groups, trade shows, and industry associations.  These peers help us with the content of our businesses.  It also includes entrepreneurs outside of their industry.  The social capital we get from these entrepreneurs is more about the journey of entrepreneurship and about the challenges of being an entrepreneur, rather than the more technical aspects of building the business.

Staying Connected with Social Capital

Just as raising financial capital for a business takes time and effort, so too does securing the social capital we need.  Here are five steps to ensure that entrepreneurs get the social capital they need to keep their businesses moving ahead during these challenging times:

  1. Intentionality in working from home.  There is an old adage in family business: keep family time for family, and work time for work.  As we adjust to a work-from-home economy, we need to take this advice to heart.  There are many great articles available on how to effectively work from home.  I posted one at this site.
  2. Family support needs structure. It is imperative to create a structure that ensures you can tap into the family support you need for your business. I find that our daily neighborhood walks is when I get the advice and support from Mrs. C. that I so desperately need for my work as a professor and as an entrepreneur.
  3. Mentors reach out regularly. Those of us who have the privilege of being mentors to entrepreneurs need to be intentional about reaching out regularly to touch bases.  Even a quick text or email can go a long way to ensure the entrepreneurs we work with have a life line to us when they need it.  Many of the entrepreneurs I talk with express feeling alone in their struggle to keep their businesses alive.  Remind them that they are not alone.
  4. Set up weekly/monthly Zoom coffee or beers. I have various people who I meet with regularly over a cup of coffee or a beer.  Some are my mentors, some are peers, and others are those who I mentor.  Don’t let these important meetings stop because of the coronavirus.  Create a regular schedule of zoom coffees and/or zoom beers to keep these vital conversations alive.
  5. Peer-based Zoom meetings. We have an amazing group of alumni entrepreneurs who all meet once a month to talk about their entrepreneurial journeys. Until we can safely meeting as a group, we are moving ahead, same time as always, on Zoom. Is it as good as meeting face-to-face?  No, but it is better than losing this source of social capital.

Even as we seek to stay safe through social isolation, it does not mean that entrepreneurs must become isolated from their critical sources of social capital.

Humility, Not Guilt

Image by Bluehouse Skis from Pixabay

Over the past few days, I have talked to many business owners whose business is either stable, or even growing.  Many express a sense of guilt over their current success. I get it. The news is full of small businesses failing, and yet they are lucky enough to have a business that is doing okay.

A Sense of Guilt

The coronavirus has not impacted all small businesses in the same way.  Certainly many have been decimated by the sudden shock of the virus to our daily lives.  Here in Franklin, TN, where Mrs. C and I call home, restaurants, coffee shops, retail stores, and other “non-essential” businesses have been ordered to close their doors. The owners of these businesses struggle to make it through by offering carryout, delivery, and/or going online.  Anything to keep the lifeblood, that is cash, flowing into their businesses.

On the other hand, some small businesses are holding their own. For various reasons, their business models help insulate them from the ravages of the current economic chaos.  

I would urge these business owners to save their feelings of guilt for things that they have consciously done that are wrong. You did not cause these crises.  You have done nothing wrong.  We need your businesses to succeed. Your businesses will be the foundation of economic growth once we get through the immediate crisis.  Your businesses will help reignite the economy, helping to create jobs and spawn entrepreneurs to create new businesses out of the ashes of this economic disaster.

Be Humble

A good way to frame this is to think of the impact of a tornado. One house can be completely wiped out by the storm, and yet the house next door is completely intact.  Is it because the one whose home was spared had some great foresight to pick their lot over the one next to theirs? Of course not! It is a result of the randomness that is a part of our lives.

So what should these business owners be feeling right now? How should they psychologically process the seemingly randomness of their good fortune while seeing others fail?

I would urge business owners whose businesses are still operational to turn any guilt they have into humility.

Feel humble that out of events that no one could have predicted, you are fortunate enough to have a business model that allows your business to continue.

Remember those entrepreneurs less fortunate than you.  Be humble, feel grateful, and keep moving forward. We need you!

Managing the Message in a Crisis

Image by StartupStockPhotos from Pixabay

Managing the message has never more critical than the times we are now facing.

In this interview, Raminta Lilaitė, co-founder of Blue Oceans PR, offers her insights on managing the message as it relates to the current crises both internally to your staff, and externally to your customers and other stakeholders.  Blue Oceans PR is a firm that offers support in global PR, Digital Marketing and Communications, with specific expertise in crisis management.

EM:  How much information should business owners share with their staff?  Is now a time to be guarded or transparent?

RL:  When a crisis begins, employees need to understand how it will affect their work and the company itself, so it’s the time to be as open as possible. It is important to appoint a person or a team which will be responsible for sharing the information with employees. Staff should receive all mandatory information regarding the critical points and risks of a crisis, how to ensure a safe and responsible environment and how the work will look like from this point.

EM: What are the key steps to communicate with customers in a way that will ensure they stay with you when we all make to the other side of this crisis?

RL: Do not stop fostering relationships with clients, partners and investors. Use various communication channels, such as social networks, just to chat and show that you are responding to the situation. Clients need to understand that in spite of temporary troubles, the company is still in business and you are ready to help and answer any questions. The communication should take place regularly and be available at all times. It is important to stay open about the challenges ahead and how you are prepared to deal with them. Crisis can be a great time to re-communicate your company’s core values.

EM: Most small business owners have never been through anything even close to this crisis.  What are the key mistakes to avoid when communicating with employees, investors, customers and the general public?

RL: Do not ignore the problem. A pandemic will inevitably affect your company and employees, thus talking about security and any foreseen plans during quarantine with clients, employees and partners should be a priority. Everybody needs to know clearly what your business plans are, whether the team will now work remotely or you will temporarily be out of business, how you can be contacted and how you are willing to help the others. This will allow the company to maintain seamless communication and provide clarity in shaping future communications.

Offer your expert advice to the press. While the first instinct in a crisis is to get away from it all, long-built communication efforts should not be suddenly dropped. Do not push the press away – continue talking about your company by fine-tuning your tone, as people need empathy and sensitivity at this moment. A good way to help is by actively offering your comments and company expertise. For example, if you are a virtual educator, offer tips on what to do with children at home, and if you are a private clinic, share insights on health care, etc.

EM: Any other advice?

RL: Give back to your community. There probably are people around you who need help – take a chance to find ways to contribute safely. Perhaps you can provide food aid to those who have returned from abroad and are in compulsory two-week self-isolation, or assist elderly people struggling to get the essentials – there are many safe opportunities to contribute to the community. Do good deeds and communicate about them, and it will encourage others to join in as much as they can.

 

Making it to the Other Side

(Photo source: Image by Ralf Unstet from Pixabay)

When our world was turned upside down by the coronavirus, my mind quickly began racing through my mental rolodex, wondering how everyone is doing.  Certainly my immediate concerns were for family and friends, especially those with health concerns.  Soon my web of worries shifted to all of the entrepreneurs I know — students, alumni, and friends.  I began a steady campaign of reaching out.  First to friends and family.  Next to my alumni entrepreneurs.

What I heard from my alumni entrepreneurs was particularly heartwarming and encouraging.

Entrepreneur’s Response

First, those with employees expressed how important it is to find ways to help their staff.  We are seeing story after story of business owners doing what they can to lessen the blow to their employees. Locally, we are seeing country stars do what they can to help the employees of their bars and restaurants on Lower Broadway in downtown Nashville.  Dierks Bentley and Florida Georgia Line both committed to give each of their employees $1,000 to help them make it through the time while his Nashville bar.  Between the two establishments, this is over 200 employees.  John Rich has committed to keep paying his bar workers during the shutdown.  I am hearing the same commitment from several of my alumni entrepreneurs.

Second, I heard a consistent message of doing what it takes to “make it to the other side” of this crisis.  Reports from places like South Korea, which is several weeks ahead of the US in its outbreak, talk about a slow return to business.  This is encouraging, and supports those who predict we might see the beginning of a turnaround by early to mid summer.  The entrepreneurs I talk to are shoring up cash flow and making cash budgets that can see them through to June or July, even with little or no revenues.  These are often tough and austere plans, but they are doing what they must to keep their businesses alive.

Finally, I am hearing the indomitable entrepreneurial spirit in their responses.  They are worried, and even scared, but they are also showing hope and resiliency.  They inspired me.  Facing much more dire circumstances than I am right now, their optimism and courage reminds me that it will be our entrepreneurs who lead us out of this.  It may seem like a long, dark tunnel, but there is a light at the other side where things will improve.

The Other Side

I do want to offer a note of caution, however.  When we do get to the other side, and we will, it will look very different than the side we left.  Entrepreneurs will be tested to adapt to a new reality.  A shock to our economy, to our society, and to our culture as we are now experiencing right now will fundamentally change many aspects of our lives.  Entrepreneurs will need to be ready not only to survive during this short-term period, but to adapt over the long-term, probably like never before.  The other side will present a myriad of both amazing opportunities and significant threats.

Be ready to be more entrepreneurial than you ever have been before, and you will be alright when we get to the other side of this crisis.

Culture is a Key Means to Reaching Your Goals

As someone who has written quite a bit about small business ethics, there is a trend that I find to be quite encouraging.  Entrepreneurs are paying a lot more attention to the cultures they create in their businesses.

The culture of a business defines and shapes how a company’s owners and employees act, think, and feel as they go about their work.  Culture sets the behavioral expectations and ethical standards in a company.  It guides how employees are expected to interact with each other, with customers, with suppliers, and so forth.

Businesses with well-developed cultures tend to have a stronger sense of ethical awareness among their employees.  All things being equal, these companies are also are more successful than those that do not intentionally build a strong culture.

So how should an entrepreneur go about building a strong culture in a business? Continue reading Culture is a Key Means to Reaching Your Goals

Making Strong Partnerships

When starting a new business together, business partners are brimming with excitement about the possibilities that the new venture may bring.  There is a collective air of anticipation like a team in the locker room getting ready to head out for the “big game.”  The last thing new business partners think about as they launch their new venture is what will happen when the day comes when the partnership ends.

But the truth is that eventually every business partnership will come to an end.  It may come earlier than the partners expect, due to fundamental and irreconcilable business disagreements.  Or maybe because one of the partners simply has lost a passion for the business and decides it is time to pursue a new career direction.

Continue reading Making Strong Partnerships

Intestinal Entrepreneurial Fortitude

Not everyone is prepared to be a successful entrepreneur.

In the new book Heart, Smarts, Guts and Luck, two successful venture capitalists and a management consultant surveyed a large number of successful entrepreneurs to uncover what traits they have in common.  One of the traits — guts — particularly hit home with my experience as an entrepreneur and as a teacher of entrepreneurs.

The authors argue, and I agree, that guts is not a trait that you are either born with or not.  Having the guts to be an entrepreneur is something that can be nurtured and developed.  They identify three key elements to developing and nurturing guts in entrepreneurs.

Eighty percent of the successful entrepreneurs in this study said that their entrepreneurial guts were developed through experiences early in their lives.

I can cite several experiences from working in our family businesses that helped to toughen my skin.  One in particular stands out.  When I was in grade school my father partnered in a cleaning products distributorship.

Although I was only eleven, I was eager to become a part of this new venture.  So I decided to sell the product door to door.  My first sales call was to our next door neighbor, who was a good friend of our family.

Rather than pat me on the head and buy some product to be nice, she looked me in the eyes and said, “Tell me why I should spend our hard earned money on this stuff?”

I did not make the sale.  I was left speechless and devastated.  It was a hard lesson that I have carried with me the rest of my life.  Nobody owes you anything in business – it is up to you to earn it.

The second key element for developing guts is training and education that prepares entrepreneurs how to make decisions in complex situations.  We urge every student who comes into our program to start a business while they are in school because this kind of training is so important.  It helps them to gain experience, confidence and learn from their mistakes in a safe environment.  However, I am not one who thinks we should require every student to start a business as many schools are moving toward.  I think that making starting a business an assignment misses a key aspect of developing true entrepreneurial guts – the courage to make the choice and cross the threshold to start a venture.

The final element of developing and nurturing guts is becoming part of a community of entrepreneurs.  By joining an ecosystem of fellow entrepreneurs you gain peer support, wise counsel, and a group who can hold you accountable.  We need to have our entrepreneurial guts reinforced, nurtured, and checked throughout our career.

Having guts to be an entrepreneur does not imply that you take careless risks – quite the contrary.  Having guts to be an entrepreneur means that you are ready through experience to carefully and prudently manage and mitigate the risks that lie ahead.