Do you feel the pull to start your own business?
Tired of working for others and dealing with office politics, eager for control and more money, Ed “Skip” McLaughlin certainly felt it. When he left his high-level corporate position to start not one but two new businesses, his colleagues’ reaction was disbelief:
People told me I was crazy. “You are going to fail!”
One of his businesses did fail, but the other thrived. Ed bootstrapped it into an Inc. 500 company and later sold it to a Fortune 100 company. Now, you can learn from his experience—what to do and what not to do—to create your own successful startup. The Purpose Is Profit eliminates the mystery of becoming an entrepreneur. You will learn—
- why distinctive competence trumps passion
- where and when to get funding without losing control
- how to build an entrepreneurial brand that lasts
- why profit should be factored into every business decision
- how ethical behavior breeds trust and unlocks profit
As a bonus, The Purpose Is Profit includes two manuals: The Startup Roadmap details the 21 steps you should take to build a profitable business. The Startup Funding Guide delivers the tools you need to fund your business.
|Publisher:||Blue Sunsets LLC|
|Product dimensions:||5.50(w) x 8.50(h) x 0.74(d)|
About the Author
Wyn is the founder of Upstart Business Planning, where she works with entrepreneurs to develop plans that answer the questions investors ask most often. Previously, she was Managing Director of Business Plans International in New York and Co-Director of the Small Business Resource Center at Norwalk Community College. Wyn has an MBA in finance and marketing from the Wharton School of the University of Pennsylvania and a BA in economics from the University of California at Santa Barbara. She serves on the board of a local nonprofit she helped found, At Home In Darien. She lives in Connecticut with her husband and has two adult children.
Paul is an associate with Deloitte in the Financial Advisory Services Group in the Real Estate Consulting Practice. Previously, Paul served as vice president of Blue Sunsets LLC, where he was responsible for real estate projects and specific angel investments. He has a BA in mathematics from the College of the Holy Cross and an MBA from Georgetown's McDonough School of Business.
Read an Excerpt
The Purpose is Profit
The Truth about Starting and Building Your Own Business
By Ed "Skip" McLaughlin, Wyn Lydecker, Paul McLaughlin
Greenleaf Book Group PressCopyright © 2016 Blue Sunsets LLC
All rights reserved.
THE PULL AND THE PUSH
People normally say "push and pull," but every entrepreneur I've known has first faced the pull, and then the push.
The pull is the overwhelming desire to realize your own business vision. It is a mind-set, a fire burning within you, and a relentless force like gravity. It is the knowledge deep within your soul that you will never be satisfied, and life will never feel complete, unless you start your own business.
The push is the crystallizing moment when your need to start your business becomes greater than the fear of venturing out on your own. It is the realization that you cannot work another day for someone else. Often, the push comes from an outside force that can literally shove you into becoming an entrepreneur.
For me, the final push was a long time coming.
I first felt the pull of entrepreneurship in 1976, the summer our nation celebrated its bicentennial. I was a teenage lifeguard on the Jersey Shore. My days consisted of long spells sitting in the lifeguard chair watching people diving through the surf, playing on the sand, or swimming beyond the breakers.
While the public's safety was my main concern, sometimes, to keep my mind active, I thought up new business ideas.
Scientists had just begun to issue research reports warning that too much sun exposure caused aging, wrinkles, and skin cancer. Repeated deep sunburns were particularly dangerous. With zinc oxide streaked across my nose, I listened to these reports, and it hit me: Why not market a product to protect the skin from the sun's damaging rays? "Sunguard. From the People Who Know the Sun!"
My friend and fellow guard, Don Froude, and I got together every day after our shift and worked on the idea. When I told my father, he thought our concept was so good that he sent us to see his lawyer to get advice on how to proceed. My father made it clear that we had to pay the legal fees ourselves. That was okay with us.
It felt great to be taken seriously. We couldn't believe that we were meeting with a bona fide attorney. The lawyer set us up with a patent attorney who gave us an education about producing a skin lotion.
"You know, any time you develop a product that is going to go on your skin, you need to deal with the FDA. You need to test it to make sure it's safe. And you'll need to patent your formulation," the attorney said.
But somehow, we were not dismayed or overwhelmed. Don and I spent hours coming up with advertising ideas and even looking for a chemist until we headed off to college at summer's end. Although we never did start the business, our investment in Sunguard was time and money well spent. It educated us and lit the entrepreneurial fire, which was now burning within me, exerting its inexorable pull toward a goal of starting my own business.
THE PULL CONTINUES
My college years at Holy Cross in Worcester, Massachusetts, reinforced the lessons of ethics and integrity my family had taught me. The breadth of a liberal arts education, combined with a sense of accountability and debate, challenged me to consider the ramifications of my decisions. While Holy Cross lacked a professional business program, it provided a framework for sound judgment and sensitivity to the needs of others that has stayed with me.
Without a business education, I tried to figure out how to launch my career. Every adult I asked, including some professors, advised me to get my MBA or go to work for a top corporation with a formal training program to learn about business.
I didn't waste any time. Even before graduation, I had lined up a job with IBM. In the late 1970s, IBM had the best training program of any company in the country. I was certain that IBM would provide me with the experience and knowledge I needed.
Two years at IBM not only taught me how to sell, but also about life in a huge corporation. Looking back, I now appreciate how fortunate I was to be introduced to the IBM Way. I learned how to develop a comprehensive value proposition and how to sell it to customers. In fact, IBM's sales techniques, discussed in detail in chapter 8, still serve me today.
But I also learned that I was not going to be happy in an environment that controlled almost everything about my life: how to dress, how your pay grade affects your status, which country club to join. I decided to leave for another technology firm, Hewlett-Packard (HP), because they had a more entrepreneurial reputation. HP, after all, had famously started in a Silicon Valley garage. And although the pull had a hold of me, I still felt the need to learn more about the world of business before starting my own venture.
The HP sales operation that hired me was located just outside Dallas, Texas, in a warehouse-like building, sitting out on the plains. HP was run by engineers more concerned about investing in new product innovation than spending money on a fancy office environment.
HP's business culture particularly appealed to me because it gave people enough rope to be innovative in their jobs. "Just don't hang yourself," my manager warned. Here was an environment where I could fit in and flourish.
My personal life also improved. Before long, I met and married Barbara Boyd. Barbara had recently graduated from Baylor Dental School in Dallas and started her own dental practice. Sure enough, she was living my dream, running her own business. Every night we discussed her business challenges and growth opportunities. Attracting new patients was the lifeblood of a new dental practice. We spent hours talking about marketing programs that would rapidly build a clientele.
Finally, the idea struck: Gentle Dentistry would become the theme for her marketing program (although this mantra is more common today, it was a breakthrough concept in the early 1980s). Barbara created a successful Gentle Dentistry direct-mail marketing campaign. Soon her practice was booming — until she received a cease and desist letter from the state dental board. You see, they didn't like the implication that Barbara's dentistry was gentle, while other dentists' were painful. Oh well, at least Barbara got the benefit of the Gentle Dentistry campaign while it lasted.
Although Barbara was open to my ideas and input, she started to realize that I was trying to relieve my new-business frustrations through her dental practice. Everything came to a head on our monthly drive to Arkansas to visit her folks. Can you imagine getting an earful of business development strategy for seven straight hours while trapped in a car? As soon as we left Dallas, I'd start in on all the ways she could improve her business, from back-office management to marketing to bringing in more patients.
Finally, on one of those long drives, Barbara turned to me and said, "You know, Ed, you really ought to start your own business." With a bit of sarcasm, she added, "You can take all that energy you have and put it into something of your own."
She was right. Instead of having the guts to start my own business, I was acting the part of an entrepreneur vicariously through her business. I'd wake up in the middle of the night thinking about how much I wanted to run my own show, to make my own decisions, and to live or die by them. I spent hours tossing around new business ideas — so much so that I became frustrated, anxious, and impatient. I was passionate about starting something, and Barbara was giving me the first of several small pushes. Yet I still lacked the confidence, the competence, and the big idea I knew were crucial for launching a successful business.
Then one day when I was feeling particularly frustrated about my career, I had lunch with a trusted friend and respected advisor. Her name was Annette Field. Our conversation turned to my job and the plans I had for my future. Over the years, I had consulted with Annette on everything from my personal goals to purchasing Barbara's engagement ring.
She looked me straight in the eye. "Are you happy, Ed?" Annette asked. "Where do you want to go with your career? What are you doing about it?"
When I shared my desire to start my own business, Annette told me that one of her sons, who was my age, had left a big accounting firm to start his own practice. "He is very successful and truly happy — far happier than he ever was working for someone else."
The discussion hit a nerve. When we got back to her office, I asked Annette for a piece of paper, took out a pen, and wrote down a promise to myself that I would start a business within the next five years. Then I signed it and asked Annette to add her signature as my witness.
Once I had that paper in my wallet, I was finally able to sleep at night.
If you're feeling the pull toward the entrepreneurial life, sit down and craft a covenant. Document your goal to start up a business and sign it in front of a trusted friend. It can make all the difference. Although I did not formally launch my business until 1991, documenting my startup commitment resolved my internal conflict and memorialized my plans for startup.
My promise was in my pocket when I went into work at HP one Saturday. Coming out of the Texas heat, I entered our air-conditioned building and walked into our cavernous sales arena. As I looked across the sea of empty desks, a senior HP sales executive and mentor spotted me and came over.
"Ed, if you're going to work this hard," he said, "then you should be working for your own account. You'll only realize the real benefit of all your efforts that way."
I distinctly remember my response, "I'm dying to start my own business. I just don't know what kind of business it should be."
"You can make so much more money, have so much more control, and have so much more freedom in the long run," my mentor said.
Here, a man I respected had just validated my burning desire and given me yet another push. What was holding me back?
THE PULL LEADS TO A NEW DIRECTION
As I wondered what sort of business I should start, I saw people in Texas reshaping the suburban landscape. Many of them were my peers. Previously, most large office buildings had been in central business districts, with the majority in downtowns. Now, office space was sprouting up all over, even in rural areas. I realized that I wanted to be part of that growing industry — commercial real estate.
An old friend, former HP colleague, and recent Harvard Business School graduate, Henry Johnson, had just joined Trammell Crow Company, the nation's largest real estate developer at that time. Trammell Crow had hired Henry in their Dallas headquarters to help start a new division called Trammell Crow National Marketing (TCNM). The division would sell and lease TCC's real estate directly to 30 designated accounts within the Fortune 500.
Traditionally, real estate firms were organized in local markets, waiting for corporations to come to them when they had a real estate need. Transactions happened only at the local level. But this new division would go out and ask for the order from the source at national headquarters.
Henry called me up and said, "You need to be part of this." He told me I could be a significant contributor in this new startup group.
The offer was irresistible. I said to myself, I'm going for it!
Now, I would be part of something small, new, and growing that would partly satisfy the entrepreneurial pull. As a sales executive with TCNM, I traveled to my assigned accounts in the Midwest to cultivate relationships with their corporate real estate departments. We set out to become the corporation's single point of contact for commercial real estate.
Trammell Crow National Marketing was highly competitive and focused on results. Their aggressive reward system fed these goals.
This entrepreneurial environment within a larger enterprise began to satisfy my hunger to create genuine value. Our small real estate services division started to add meaningful revenue and profit to Trammell Crow's bottom line. As we grew the business, we expanded into the lucrative Northeast Corridor, crowded with the headquarters of the majority of the Fortune 100 companies.
I relocated from Dallas to Stamford, Connecticut, and worked my way up and became the top rainmaker. After two years of dedicated work, I brought in the single largest real estate services deal ever completed. The contract comprised the complete and exclusive reengineering of Baxter Healthcare's distribution centers. That experience was exhilarating and kept my entrepreneurial fires stoked.
I had worked hand in hand with my customer, Bill Agnello, who was Baxter's Vice President of Real Estate, to develop a system that could manage the consolidation of all Baxter's distribution centers after the firm acquired American Hospital Supply. At that point, no other health-care supply company had more distribution space. We had to find a way to eliminate redundancies while expanding Baxter's distribution network.
To accomplish these goals, we utilized Baxter's business framework, which they labeled Value-Managed Relationships. This relationship structure connected Baxter and TCC around a common management system responsible for delivering hard savings, increased flexibility, consistent quality, and access to specialized resources with superior execution. Essentially, we reinvented the entire real estate delivery system for Baxter, which grew to include the comprehensive outsourcing of all real estate projects and personnel to Trammell Crow. As a result of the Baxter outsourcing contract, TCNM was rebranded Trammell Crow Corporate Services, and the division transitioned from being a marketing arm to a full-fledged profit center.
The Baxter deal woke me up. It clearly showed me that I could create a new way of doing business and deliver genuine value to corporations by serving their real estate and facilities management needs. This newfound knowledge made me realize that I had a distinctive competence that I could bank on to start my own business. As you will read in chapter 2, distinctive competence is a combination of unique skills, experience, and knowledge you have acquired over time.
This feeling of having a distinctive competence was exactly what I had been seeking. It made me realize that becoming an entrepreneur was now an achievable goal.
As a result of what we had accomplished with Baxter, Trammell Crow Corporate Services was no longer something small and entrepreneurial. Our division was delivering significant profits to the company's bottom line. The political pressure around compensation and control became a big issue and began to wear on me.
Concurrent with the explosive growth in corporate services, the real estate development business was in free fall. The incredible expansion in development that had initially excited me was turning into a massive oversupply. The nation's economy — and commercial real estate in particular — were in a downward spiral. These factors made the environment at Trammell Crow turn darker.
At the office, I sensed the need to keep looking over my shoulder, watching what I said, and feeling as though I needed to kowtow to the people above me. My productivity suffered because I felt I could not trust the system, and my heart was not in my work.
In the midst of all this, it became clear that our division's success had become the envy of the faltering development side. The services division had been subordinate to the larger, more profitable development business. Suddenly the roles were reversed. The service business was positioned to become the future of the company, which rankled the interests of some of the leadership. This shift in power created tremendous pressure within our group.
The tensions around compensation and control continued to mount. Even though Trammell Crow made me a partner, the promotion came at the cost of being forced to accept a reduction to my compensation. A few months later, when I found the spreadsheet in the copy room that showed scenarios cutting me from staff, it became clear that my efforts and approach were not valued by everyone in the hierarchy.
I was stunned. How could a newly minted partner, who had just landed the largest real estate outsourcing deal in history, be targeted for elimination? I felt blindsided and completely disillusioned. The whole incident stabbed at the heart of my loyalty. There was no turning back. This was the final big push.
My time had come. I was going to take control and start up. I was going to build a business where integrity, hard work, and creating value were rewarded more than playing politics. At the same time, I recognized my distinctive competence would enable me to be the architect of a new business model; figure out how all the pieces fit together; and create value for corporate clients. If the outsourcing value proposition had worked for Baxter, there was no reason that it would not work for many other corporations.
Excerpted from The Purpose is Profit by Ed "Skip" McLaughlin, Wyn Lydecker, Paul McLaughlin. Copyright © 2016 Blue Sunsets LLC. Excerpted by permission of Greenleaf Book Group Press.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Table of ContentsSection One: Prelaunch
Chapter 1: The Pull and the Push
The pull is the overwhelming desire to realize your own business vision, to be in charge of your own destiny. Whereas, the push is the crystallizing moment when your need to start your business becomes greater than the fear of venturing out on your own.
Chapter 2: Distinctive Competence
You will substantially increase your probability of startup success if you build a business in which you have distinctive competence. What special knowledge, exceptional talent, or unique skill can you bring to your business?
Chapter 3: Dynamic Planning
When starting a business you need to organize your thoughts, goals, strategies, and plans so that you can realize your business vision-all while dealing with the nonstop challenges of preparing to launch. I call this active process dynamic planning.
Section Two: Launch and Early Stage
Chapter 4: Entrepreneurial Branding
The difference between traditional corporate branding and entrepreneurial branding is twofold: first, the brand is a highly personal reflection of you and your vision, and second, you must take full responsibility for all facets of the branding process.
Chapter 5: Capital, Cost, and Control
Every business needs capital to start, operate, and grow. You need to determine how much money you need and where you are going to get it. After exploring and considering the cost and control issues, I came to the conclusion that bootstrapping was best.
Chapter 6: Do It! Do It! Do It!
Put your plans into action. "Do it! Do it! Do it! You can build more wealth and have more fun than a lifetime spent in the corporate world." It's time to turn your preorders into contracts, hire superior talent, and invest in growth catalysts.
Chapter 7: A Hard Lesson
Blinded by passion and without a shred of proven competence, I launched a national magazine within 12 months of my first startup. The publication bled red ink for more than three years before we shut it down. This venture demonstrates that passion is not enough; you really need distinctive competence to create a successful business.
Section Three: Growth Stage
Chapter 8: Sales Is a Contact Sport
Like high-performance athletes, we developed a mind-set that we deserved to win every contest. We described our competitive drive by coining the phrase: Sales is a Contact Sport. You can start a business, produce a great product, and offer a superior value proposition, but you need to invest in a professional sales force to ensure your success.
Chapter 9: The Ten Commandments of Startup Profit
From the beginning, we were organized around 10 core profit principles. We factored profit into every business decision that we made. These 10 profit principles get at the nub of how my company, USI, made consistent profits and how they can help you produce sustainable profits as well.
Section Four: Exit
Chapter 10: Realizing Value
With competitive pressure looming on the horizon, we decided it was time to sell the company. As we reviewed the proposals, I began to realize that my small startup had grown into a very valuable business. We could monetize our equity at peak value, and the entire firm could be vaulted into a new, more powerful position. You can take a seat at the negotiating table with a Fortune 100 company and gain the insider's perspective on how we maximized our valuation.
Chapter 11: Preserving the Secret Sauce
Even though the company that bought us wanted to preserve the secret sauce, I soon realized it was on their terms and under their direction. Selling your business can create a substantial windfall, but it will come at the price of control. You need to think beyond the obvious strategic benefits and visualize the operating realities of your life after the sale.
Epilogue: To Thine Own Self Be True
Appendix A: The Startup Roadmap: 21 Steps to Profitability
Appendix B: The Startup Funding Guide