Rule # 21 – Quit with the sugarcoating.

If you learn one thing in business, it will be this:  nothing ever goes the way you planned.   As I have addressed before, you will encounter problems and opportunities on a regular basis that you did not imagine and have not planned for.  When you are doing this, it is best if you employee a style of communication – with co-founders, employees, investors – that is professional, polite, constructive, and brutally honest.

Investors:  There is a natural fear in company founders when it comes to dealing with investors.  A nervousness about getting the right message out and crafting it in a way that communicates things correctly.  Investors are your friends and partners, but it’s natural to want to shine a bright light on the good news and casually toss in the bad news as everyone has one foot out the door.  I assure you that if you employee this strategy, it will come to bite you in the ass when the chickens come home to roost.  At all costs, you need to be open with your investors.  You may tell them things that they don’t want to hear, but you’ll never get drug in to a courtroom over hurt feelings.  As an added bonus, you’ll probably be pleasantly surprised when one of them chimes in from the back of the room with a solution to the problem that you were not fully disclosing.

Employees: With regard to employees, you shouldn’t give them the idea that business is great if it’s not.  I know all about creating a workplace “culture” and attitude that is positive and optimistic.  But when things are bad, you owe it to your employees to let them know things are bad.  Why?  Because they’re the ones who will be bailing water out of the boat and getting you on the right track through hard work.  If everyone thinks things are progressing in the right direction when they aren’t, it will be much too late for them to do anything to help when the bad news becomes obvious to everyone.

Co-Founders: The most important place to dismiss your happy-face is also the most critical to your early success.  It’s also the place where relationships are most fragile.  Communicating with your co-founders.  I’ll offer two examples…

In one just launched startup I know of, the 4 co-founders set out to build a web based application based on ratings and reviews.  After much discussion and fundraising, they began building the application.  2 weeks in, the founder who was the “database expert” declared that he was in over his head and the project did not have much chance of success if he were left in charge of the database.  By being honest with his 3 partners, he increased all of their chances of success by admitting his short-comings and getting out of the way.  He is still a co-founder and handles another aspect of the development.   Their site is up and running and while there is a lot of work left to do, they are headed in the right direction.

A second startup with which I am familiar is dying a slow death because one of the partners is incapable of doing his part and none of the other parties involved can find the stomach to say, “you aren’t doing your part….you need to step aside.”  Maybe there are worries about hurt feelings or concerns about the person’s expected response.  What they should be doing is worrying about what’s best for the company and challenging themselves to find a solution.  No, it isn’t ideal, but it can be constructive and honest.  But instead of having a difficult and necessary conversation, they just sit there, waiting on good news that will never come.  All because no one has the ability to communicate honestly with one another.

Be honest.  Be polite.  Be constructive and offer solutions.  But don’t patronize people, don’t massage the truth to your liking, and don’t leave the bad news for another time.

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