Entrepreneurship Industry News

The Entrepreneur’s Road to the Diamond Mine

  1. Optimists, check.
  2. Risk-takers, check.
  3. Make gut decisions based on their intuition, check.

Entrepreneurial leaders are indeed risk-taking optimists prone to making decisions solely on their gut feelings. And it works, right? Well, maybe, maybe not. The facts speak loudly when it comes to entrepreneurial success: 50 percent of businesses fail within their first five years, and 70 percent fail within the first 10 years. And for those who don’t fail, way too many underperform. The success or failure of these businesses ultimately boils down to decision making.

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When it comes to making decisions, the goal for all entrepreneurial leaders should be to utilize a healthy dose of both intuition and well-developed metrics. Use the Four Entrepreneurial Leader Decision Quadrants to self-assess where you currently operate and where you would like to be in the next 12 months. Then, develop a plan to improve, taking into account that the growth of a company is limited by the growth of its leaders!

Quadrant #1 – Fool’s Gold Level – Low intuition with very little metric development

Entrepreneurial leaders who operate here don’t track their numbers well, have very little metric development in their business, and quite frankly, don’t have a good gut feeling as to how their business actually operates. Fool’s gold is mistaken for real gold, and “wannabe entrepreneurs” hope for the best in quadrant # 1. The best is rarely the result.

Next steps – Acknowledge your situation, and then get help to make progress, quickly.

Quadrant # 2 – Gold Level – Significant metric development with very little intuition

Numbers don’t lie. Annual reports are filled with them. CFOs, Controllers and every CPA firm on the planet makes a living from them. CEOs get hired and fired because of them.

When numbers are tracked for multiple years, and placed side by side for comparison on an apples-to-apples basis, a story appears. Trends are seen clearly. The bad numbers jump out and the great numbers do, too. Entrepreneurs can make some highly productive conclusions from these numbers without having a ton of intuition as to how the business actually operates. Yes, there is pure gold to be mined in an organization’s raw numbers; no gut needed.

Next steps – Blend in brainstorming time with your most intuitive people to make even better decisions on your well-developed financials.

Quadrant # 3 – Diamond Level – Full metric development and great intuition

Diamonds are indeed a precious stone, and for an organization, the diamond level is the goal for all to achieve. History shows that the powerful combination of metrics and intuition can and will yield great prosperity for the organization.

Next steps – Continue to refine your processes and metrics to achieve even greater heights in your organization!

Quadrant # 4 – Cubic Zirconia Level – Strong intuition but very little metric development

This is known as the “entrepreneur’s financial quadrant” because a high number of entrepreneurial leaders operate here. Entrepreneurs are indeed risk-taking optimists prone to making decisions solely on their gut feelings. The problem? The lack of metric development means that most significant decisions are made in the dark, on gut alone. What may appear to be a great solution, in a “glass is 98 percent full” view of the world can in reality be a house of mirrors made up of cubic zirconia instead of the real precious stone.

Next steps – Get committed to metric development; it is critical to making better decisions!

In the end, all entrepreneurial roads should lead to the diamond mines. Fool’s gold becomes real gold with the addition of metrics, and gold evolves into diamonds with the addition of intuition. Even cubic zirconia—popular, but cheap—can transform into diamonds with a dedication to metric development. The facts speak loudly. Being a risk-taking optimist is how you become an entrepreneurial leader. Improving your decision-making is how you remain an entrepreneurial leader.

Read More: www.forbes.com