Building a business is tough. It requires great determination and self-confidence. But there are unseen dangers lurking within both of those necessary ingredients.

Pride, arrogance, and stubbornness often become the siblings of determination and self-confidence.

In 1999 one of the founders of Webvan confidently faced reporters, answering questions about the company’s sweeping vision of home grocery delivery. The company had recently raised a staggering $375 million in an IPO and was valued at over $1 billion. He explained how they would continue to assemble a gigantic infrastructure spanning the U.S.

When reporters began to question “profitability” and “proof of concept”, asking pointed questions about exactly how they planned to ensure that the business would be a success, the founder chastised, “…what you have to understand, is that we are very, very smart…” This was a supreme example of pride, arrogance and stubbornness.

Webvan expanded from the San Francisco Bay area to eight U.S. cities and initiated a $1 billion network of high-tech warehouses. But considering the super-thin margins of the grocery industry, a lack of user adoption or demand, and rabid spending, the company failed to complete it’s proposed 26 city expansion. It closed in 2001, wasting hundreds of millions of dollars, putting over 2,000 people out of work and dashing the hopes of thousands of shareholders.

As an entrepreneur, it is vital that you learn to balance determination and self-confidence with a healthy dose of humility and openness. Some of the best direction insight, you will uncover along the way will be the unexpected advice and feedback that will be provided from potential customers, investors, employees, vendors, or friends. Sometimes these are tough facts to face. It’s this advice that might force a change of plan or a painful course correction. But it’s that sort of insight that ultimately makes your business thrive.

Peter Drucker put it this way, “The greatest danger for the new venture is to “know better” than the customer what the product or service is or should be, how it should be bought, and what it should be used for…the new venture needs to be willing to see the unexpected as an opportunity rather than an affront to its expertise.”

Check out this great post for more information about this topic:

Success Starts With Humility

Have you visited Squidoo yet?

If not, you should.

Are you interested in finding a place where you can promote your business, your interest, your passion to a group of people who really want what you’ve got?

Then you’ve got to Squidoo.

By creating a “lens” on Squidoo you can cut through the confusion of search engines and bring interested users to your lens, and leverage the power of referrals and recommendations.

Squidoo replicates the word of mouth phenomenon that works so well in the real world.

So, if you think you’ve got something worth saying. Something that people will want to tell others about…then you need to create your own lens on Squidoo.

It takes about 5 minutes, it’s free, and it’s fun to put together. You’ll increase your profile, traffic, and generate income.

Here’s mine: www.squidoo.com/northstarthinktank/

If you’re serious about creating targeted traffic, this is something you need to do.

Check out these great posts for more information about this topic:

Seth Godin’s Squidoo vs. Google’s Knol: Information Platform Battle 2008
Squidoo Launches SquidBid for Ebay Addicts

Sometimes, I’ve been afraid to face the real results of a product, service or campaign.

What do the consumers really think of it?

What is the satisfaction rate of the users?

Are they getting the intended result?

Sometimes, the truth hurts. Sometimes, you’ll find out that things aren’t going as well as you’d hoped.

Let me share a personal example.

We have three children in our family. Now, we spend quite some time as parents attempting to teach valuable principles. We’re trying to teach our kids to focus on what’s really important in life.

Today we got a wake-up call when we read through Luke’s school journal we came upon this entry:

So, we’ll need to take a look at how we can set his sights a little higher…

In business, it’s critical that you take the time to find out if your internal perception of “how you’re doing” is in line with the perception of real users in the marketplace.

Because what you Think is happening out there isn’t what matters. What’s Actually happening out there is what matters.

And you can only find out by seeking straight-forward feedback.

DELL recently did that. They found out that their customers thought their customer service reeked. They accepted the feedback, made several important adjustments, and realized a huge change in consumer perception.

It’s worth doing, if you’re willing to face the truth. If you’re willing to do that, you can make important adjustments and realize huge improvements.

Check out these great posts for more information about this topic:

Perception versus Reality is Killing Your Referrals

Customer Engagement: The Agency/Client Perception Gap

Everyday we receive hundreds of applications from entrepreneurs seeking guidance for their startup.

Here’s a summary of an application that recently came through:

Current Occupation: School Teacher

Current Income: $37,000 per year

Business Experience: None

Business Idea: I want to sell something online

Financial Goals: I want to make $500,000 in the next year

I guess with all of the infomercial and sales letter hype that’s out there promising immediate financial rewards, it’s hard to blame him for his unrealistic expectations.

Look, the great thing about entrepreneurship is that, in fact, a school teacher making $37,000 a year can go out there and start their own company and make $500,000 a year. It absolutely can happen. It happens all the time, actually.

But it won’t happen in a few months. It will probably take many years. And that’s ok, because the journey can and should be invigorating and enjoyable.

In regard to the time required for success, John Jantsch of Duct Tape Marketing summed this up recently. He said, “I know you need the quick fix, you want the result now, you need the hot new thing. Ask yourself this question–How long do you plan to be in business? If it’s more than a year…start planting seeds for your long-term growth by investing in foundational marketing practices that may take time to bare fruit, but ultimately produce the greatest returns.”

(He then explains the Foundation 3C’s of Marketing that require a long-term commitment, but lay the foundation of long-term business success.)

I think you should definitely go for those big, daring goals that excite you. But if those goals include making large amounts of money and being in business for the long-term; then expect a 3 to 5 year investment of sweat and discovery.

Just decide in the beginning to enjoy every day of the journey. It’s well worth it.

Check out these great posts for more information about this topic:

Anxieties of Waiting to be Successful

An Overnight Success

Setting Realistic Goals for Your Online Business

Success and Setting Goals

This week I decided to purchase a Panasonic DVX 100 camera.

I found it online for $899 through shopcartusa.com.

After the purchase was made, we received a notice that we need to purchase some additional “required accessories.” A call was made to their customer service line and we learned that batteries, cables, and other necessary items were not included in the original purchase.

Final sales price? $2,350.00. I canceled the order and bought it somewhere else.

This is an all-too-common marketing scheme that says, “We’re sacrificing the foundation of trust for the gratification of quick sales.” And that’s a really bad strategy.

In 2005, Stephen Covey was interviewed by Jay Abraham and they discussed what it really means to build a foundation of trust in every aspect of your business.

In regard to various benefits of building trust, Covey commented:

“…trust is the key accelerator, the key facilitator of all that is accomplished for good…”

“…the lack of trust is the key deterrent, the key frustrator, the key compromiser…”

“…the faster you gain trust the quicker the sale is closed, the faster the purchase is made, the more the size of the purchase, the more items are purchased, the more frequency the purchase, the more people they’ll refer to you…”

“…the faster your team gets this, the faster, the clearer, the more completely everyone will execute. Everyone will accomplish more…”

Covey illustrated the principle clearly with the following examples:

STEPHEN: When you as an entrepreneur and an influencer, when you build trust in your relationships, when you establish it — suddenly you’re able to move with incredible speed.  I like to say that there’s nothing as fast as the speed of trust — for that matter, or as profitable…high trust organizations out-performed low-trust organizations by 286%. That’s nearly three times higher, in total return.

STEPHEN: Here’s what I mean by “the speed of trust.”  I’m going to describe a deal that took place.  And as entrepreneurs, we’re always involved with making deals of some sort, with investors, customers… That’s part of our modus operandi.  Well, here’s a big deal of two large public companies, but it’s really all about making a deal.

Warren Buffett is the CEO of Berkshire Hathaway, one of the most respected leaders in the world and his company wants to acquire another company from Wal-Mart.  The company that they’re buying is called McLean Distribution.  They’re a $23 billion enterprise, so this is a big deal — a $23 billion acquisition by two large companies.

Now, Warren Buffett, he is very trusted, and he’s very credible.  And he has trust and confidence in his counterparts that he’s dealing with at Wal-Mart.  And here’s how Buffett described how he was able to do this deal, this $23 billion acquisition.

He wrote the following in his annual report:  “To make the McLean deal, we had a single meeting of about two hours.  We then shook hands.  Twenty-nine days later, Wal-Mart had their money.  We did no due diligence.  We knew everything would be exactly the way Wal-Mart said it would be, and it was.”

So here’s a big, $23 billion merger done in 29 days with no due diligence.  I used to work on Wall Street as an investment banker for a short period.  I was involved with big deals.  Deals of this size would normally take a year to close, because you’ve got to go through so many hoops and hurdles to jump over.  And also, you would spend tens of millions of dollars doing due diligence with accountants, attorneys, auditors, verifying, validating that everything’s right.  But because they had trust in this relationship, they were able to move with incredible speed — 29 days instead of a year — and with low cost… no due diligence versus tens of millions of dollars.  And that’s what I mean by “operating at the speed of trust.”

STEPHEN: Here’s the implication:  In the same way Buffett can do this, you can do it as an entrepreneur as well in your relationships with your customers, with your investors.  By establishing trust, by getting good at this… Getting good at building trust and establishing it with everybody you’re working with — that will enable you to move with incredible speed and low cost.

In fact, I’ll give you an entrepreneur example, Jay.

JAY:  Please.

STEPHEN:  Here’s a donut and coffee vendor in New York City.  This is a one-person shop.  He has a cart on wheels, and he carts his little stand on wheels.  He sets up shop right outside of an office building in Manhattan, New York City’s Manhattan.  And people come by to go into work, and they buy a donut and coffee from him.  And he noticed that there were these long lines forming, and then some people would get out of line because it was too long.  And he realized that what was taking him so much time was making change for his customers.

So he decided, “I’m just going to put a little basket on top of my cart here with dollar bills, nickels, dimes and quarters, and I’m going to just serve the customers donuts and coffee, and they’re going to make their own change.”

JAY:  So you put the onus on them.

STEPHEN:  Yup.  He put the onus on them.  “Make your own change.  I can serve you the donuts and coffee.  I can move faster.”  And what happened was he went through customers twice as fast.  He doubled his customers. He was able to process all these people.  He added no new cost, twice the speed, twice the customers, and guess what?  They were honest with him.  They didn’t rip him off.  I mean, he had some risk in this, of course.  Maybe someone takes some extra nickels or quarters.

I remember listening to this interview back in 2005…it’s an insightful discussion that EVERY entrepreneur should study. I’ve included the entire transcript for you. Jay and Stephen really torque it down to relevant, day-to-day implications that any entrepreneur, any business owner, start up, or professional will “get”–instantly.

From the interview, here are 13 steps you can take right now to establish a foundation of trust:

1. Talk Straight: Telling the truth, and using clear, simple language.

2. Demonstrate Concern: That’s basically saying, tell people you care.

3. Create Transparency: Be open. Be real. Be genuine. Transparency means openess.

4. Right Wrongs: Just make things right when you’re wrong. Apologize quickly. Recover.

5. Show Loyalty: Be loyal to people.

6. Deliver Results: Nothing establishes trust faster with a prospect of customer.

7. Get Better: Continuously improve. Increase capabilities. Be a constant learner.

8. Clarify Expectations: Have common expectations with everyone you’re working with.

9. Practice Accountability: Take responsibility for results.

10. Confront Reality: Take issues head on, even the tough issues.

11. Keep Commitments: Do what you say you’re going to do.

12. Listen First: Really understand what’s important to people.

13. Extend Trust: Demonstrate a propensity to trust people until they prove otherwise.

Check out these great posts for more information about this topic:

Trust Matters

Quick Fix #7: Honesty Sells

Do Your Customers Trust You?

The Trust Factor by Kelly Robertson