Return on Assets

In business, we use return on assets (ROA) to measure how effective a company has deployed its assets to generate a return for investors.

In life, our most valuable assets are often intangible:

• Knowledge gained through education and experience
• Close relationships with friends and family
• Personal beliefs and moral conviction

Similarly, our most desired returns are often intangible.

What kind of life returns are you seeking from your intangible assets? Financial? Political? Intellectual? Emotional? Only once we’re clear on what will bring us fulfillment can we begin the work of maximizing “return on assets” in our lives.

They say: “those who cannot remember the past are condemned to repeat it.”

They say: “stop and smell the roses.”

They say: “failing to plan is planning to fail.”

Is it more important to reflect on the past, live in the moment, or plan for the future?

What will tomorrow look like if you fail to reflect on the future?

Today’s present is tomorrow’s past. If we fail to capitalize on today’s opportunities, will tomorrow be filled with regret?

After all, the past is written, the future uncertain, but the present is alive and full of possibility.

Most high achievers I’ve known don’t succeed due to exceptionally high intelligence, experience, talent, or skill. It’s their inner game, above all else, that drives their success.

A strong inner game allows them to see opportunity where others see only obstacles, to be calm and resilient in the face of adversity, and envision an unimaginable future.

Entrepreneurs wrangle an array of external factors. The economy shifts, employees mess up, and competitors adapt leaving the entrepreneur to correct course constantly. Through it all, it’s the inner game- that voice deep inside the soul- that pulls out the win.

Before starting to do anything (worth planning for), ask yourself:

1. What do I want to happen? By when? How will I know if I’m successful?
2. Have others accomplished this? If so, then how? If not, then why not?
3. What is most likely to go wrong? How can I prepare for or prevent this?
4. How can I maximize the use of my resources? (people, organizations, belongings)
5. What medium sized and baby steps need to happen?
6. If needed, could I teach somebody else to execute this plan for me? If no, return to step 1 and repeat.

You’re opening a new laundromat that will face competition from four local establishments that roughly resemble one another on the surface: brightly lit, efficient machines, not too crowded.

Imagine you open a bar-slash-laundromat that serves up drinks to its patrons while they wait. It’s a dark, steamy joint that’s noisy and crowded. A quarter of the dryers are regularly out of service.

The majority of the townspeople outright reject your bar-slash-laundromat, but no matter. For those fiercely loyal customers who share your vision, you’re the only game in town.

Better is subjective. Different is obvious.

“Company X is seeking a motivated, driven, self-starter to join our fast-growing team…”

Anyone (yes, even you- the driven, self-starting entrepreneur) will be motivated in some circumstances and apathetic in others.

Motivation springs from a variety of factors- both internal and external. It happens by chance, but can also be orchestrated by a skilled leader.

As leader, you can either take the stance that it’s the employee’s job to be motivated, or else believe that it’s your job as leader to motivate them. The former is rolling the dice, the latter puts you in the driver’s seat.

Ideas are cheap and plentiful. Walk up to anybody on the street and they’ll give you a viable business idea. With 7.5 billion people in the world, there’s bound to be at least 1,000 true fans who agree.

Execution, on the other hand, is valuable and scarce: finding and connecting with true fans, taking risks, selectively ignoring praise and criticism, staying true to your mission, inspiring others, and above all else, being persistent.

Flawless execution can save a flawed idea. The are few, if any, flawless ideas that will succeed in spite of poor execution.

There are reasons to run a business:

1. To be your own boss
2. To lead a team
3. To garner attention and accolades

…and reasons to own a business:

1. To create value for others
2. To take bold risks
3. To build wealth and financial freedom

You can own a business without running it, and you can run a business without owning it. Most new entrepreneurs do both at the beginning. Problems can arise when we get the two confused. So which is it you want, exactly? Run, own, or both? (or neither?)

There have been many times when I had the right answer but still ended up at the wrong outcome:

The time when I educated a customer on what they ought to be concerned about instead of addressing their actual concerns.

The times I obsessed over the minutiae of how employees went about their work instead of focusing on key performance indicators.

The times when I listened only to my analytical brain and ignored my primal “gut” brain.

Note to self: Instead of being right, focus on achieving the right outcome.

(Titular reference)

I recently sold a healthy business that offered me a secure income and the freedom to work when and how I please.

Still, there were many reasons I felt the time was right.

Important reasons I sold:

1. To commit fully to new passions
2. To disrupt my comfort zone
3. To give employees new opportunities to grow

Unimportant reasons I sold:

1. The valuation was fair
2. To put points on the board
3. Fear of future mediocrity

The financial story of selling the company is already written; the personal story is the more interesting, important, and still unfolding story.