By Ed McLaughlin and Wyn Lydecker
Every startup needs a handle on its money, but the deliberate handling of your emotional budget is important, too, and is often overlooked.
In previous blogs, we’ve talked about basic competency in money as a staple of every entrepreneur’s repertoire. Budgeting is a practice that really only works if the abstractions of your needs map onto your actual needs – you have to be realistic. While budgeting your cash is essential, you also have to budget other kinds of capital, such as social and emotional capital. To be as successful as possible, you need to be savvy about all of them, and spend your capital where it will do the most good.
The key to avoid overspending in all these forms of capital is to know how much you have. With currency, your financial statements, the bank, and the bookkeeper tell you. So it’s easy. Modern apps let you know at the push of a button how much cash you have to work with. Social and emotional capital, on the other hand, can be tougher to assess. It can take time and effort to master, but it’s worth it.
We’ve written before about the social and people skills it behooves a small business owner to have. Of course, there’s the promotion all business owners need to do: you need to be able to speak to people outside your company to communicate your value proposition. Additionally, becoming a small business owner entails – if you are anything bigger than a one-person show – becoming a manager.
Once you’ve started up, other people are going to become part of your picture. You need to be able to assess newcomers to your business to see if they will fit in, will work as hard as you need them to, and will bring something of value to your fledgling company. In these cases, you are at the top of a hierarchy from which you preside over your startup unquestioned. Everyone needs to listen to you, because you’re the expert. You are the boss. But being a boss is not the same thing as being a good manager.
Without some management of our emotional resources, we can alienate the very people we most need on our side. In a situation where we might have been perfectly patient and wonderful, if we are at the end of our ropes, we may not be. Accordingly, we have to know how much emotional capital we have on hand to determine what to do when someone comes to us with a problem or even crisis – because it will happen! There are two skills to master for the best return on your emotional and mental investment: deferral and delegation.
Know when you can handle yet another item on your plate, and when you need to defer or delegate. Saying, “no,” or “not right now,” is not a sign of weakness, it’s a judgment, and your responsibility as a boss is to make the best judgments for your company. If you’re the one who needs to make the decision, and you know you can’t think straight or deal well with someone whose best work you will continue to want tomorrow and the next day, learn to defer. It doesn’t have to be a long time, and you can keep working on the myriad other things you need to plow through. But for big decisions or where people’s feelings weigh heavily, assess yourself carefully to know if you will make them at your best.
As your company grows, you will need to learn how to delegate, too. We get used to wearing lots of hats in our startup phase. As we grow, though, and add experts to our team roster, we need to know when to hand off a project to someone who will best handle it. When someone comes to us (because we’re the boss!) with an urgent billing issue, it can be tempting to put on our billing hat and try to address it ourselves. Unless you’re the only billing guy in your company, though, that’s not the right choice when you have the leadership duties of your company to perform. Save your energy and your sanity by delegating to the right department and person.
Basically, after saying, “yes, yes, yes!” to every job in the startup phase, being successful as a business owner and manager involves knowing when to say, “no.” It will help keep you at your best for the moments that demand your agency and show your team you value their gifts. Master your emotional budget as well as your cash budget, and you’ll stay in business!
Got tips for how to assess yourself for decision-making, or management strategies for small (but growing) businesses? Email us at email@example.com, and let us know!
If you missed the free download of “The Ten Commandments of Startup Profit!” at www.thepurposeisprofit.com (available until November 6, 2014), email a request (firstname.lastname@example.org), and we will send it to you.
Ed McLaughlin is currently co-writing the book “The Purpose Is Profit: Secrets of a Successful Entrepreneur from Startup to Exit” with Wyn Lydecker and Paul McLaughlin.
Copyright © 2014 by Ed McLaughlin All rights reserved.