I have a friend who, like me, teaches time management. He says – and I agree - we can’t manage time. Managing means controlling and directing. Can I tell my watch to go slower or faster? Can I get more hours in a day? I wish I could! But, wish as I might, I have 24 hours each day, and some unknown number of days left before the body passes away.

So, my friend says – and I agree – we don’t manage time. We manage what we do with our time.

But how many of us have tried that and failed? Everyone! We all say, “I want to do this,” and then don’t follow through. Each year, 80% of people who make New Years resolutions give up by January 15th. And how few restart later in the year! And how few try again next year?

So – can we manage our work? Can we control, guide and direct what we do with our time? The answer is yes, we can. Obviously, people and companies do set goals and achieve them. And, at the same time, its incredibly hard. It always has been. The first person to name the problem was Aristotle, over 2,000 years ago. He said that “It is easy to know the good, but it is not easy to do the good.” And he called it the Problem of Will.

We’ve been struggling with that problem ever since. Effective people are people who handle the problem relatively well. And, as my wife pointed out before she ran off to work this morning, that is not just a practical matter. It is also spiritual. Acting with discipline to make our dreams real is empowering. Being creative and generous, we give our gifts to the world, making the world a better place.

Such a wonderful ideal! How do we do it?

We begin by realizing that managing our work is managing ourselves. And, to manage ourselves, we must pay attention to ourselves. I encourage us to spend less time being concerned with the economy, the weather, and political changes. Be informed. But don’t be distracted from our work. Our success – in any economy, political situation, or storm – is a result of our work – our preparation, our activity, and our follow through to realize our goals.

So, once we pay attention to ourselves, what do we do?

We face the biggest obstacle of all.

What’s that?

The stuff that goes on between our ears!

Bringing awareness – Observation without criticism – to what we are doing, we can see what actions are valuable, and which ones are distracting or pointless.

But this is hard work. I find it must be done daily, and, in fact, many times a day. Each morning, using affirmations – talking and even singing them aloud – I remind myself of what I really want to be doing. And I’m starting to use accountability checklists – giving myself gold stars for doing new habits daily, more or less.

This kind of self-management may seem wacky or weird. But I’ve been doing it intensely for two weeks now, and I’ve restarted daily blogging, reached out to over 100 prospective clients in a single day, and done a whole lot more, as well.

My wife and I are doing this together. We are spinning our wheels and chasing our tails a lot less. We are getting a lot more work done. We are doing creative work – including graphic arts and healthy cooking – together. We are reaching out to friends more. And we’re having a lot more fun!

I’ll keep you posted as the experiment continues!

Global climate change is one of our big problems – and it won’t go away soon.

A chaotic economy, especially for the US and Europe, is another big problem – and it won’t go away soon, either.

I first learned about global warming the same way Al Gore did – through a movie that circulated in the 1970s. I was a bit younger than he was - in junior high school – and I had the naivete to think that the government would jump on the issue and solve it. (Note: Governments do very well, sometimes. If they didn’t, we’d have a deadly hole in the ozone layer.)

But we missed the boat on this one. Even if we began a global effort to rein in climate change, it would take 50 to 100 years to fix the problem. And there is no one – no government or business – in a position to take effective action.

The same is true with the global economy. Like the weather, it is a huge, complex system, essentially chaotic in nature, that has gone out of balance. And no one is in a position to take effective action on the economy, either.

It’s like we’re all standing holding on to the end of a leaky garden hose with no nozzle. We’re getting soaked. And no one can get back to the faucet to turn off the flood.

Both the climate and the economic system have too much energy running through them. And when a big system has too much energy, it doesn’t just heat up, it goes chaotic, with extremes of hot and cold.

And that is not a good thing.

If the planet just got gently warmer, we could plant different crops and keep feeding ourselves. But as the weather goes chaotic, no crop can reliably survive. Deeper winter frosts, followed by flood, followed by drought are not an environment for easy farming. Nor do our cities cope well.

It’s the same with our economic system. Too much money produces a series of booms and busts, both of which are great opportunities for scams and profit-takers. And it is hard to grow a real business with real value.

So, where is the good news?

All over the place!

The good news is in being small. 70 million years ago, tThe dinosaurs did not survive the weather changes after the big meteor strike. And small mammals got to move up in the world.

Being a small, flexible, dynamic entrepreneur is the answer.

But, to be dynamic, we must focus on “doing what we can do,” as my coach Kim George would say. My marketing coach, Jeanna Pool, author of Marketing for Solos, recommends that we stop watching TV and news for a while, and focus on our own business.

A very good idea. Let’s rebuild our world, one business at a time.

This morning, I received an email from my executive assistant. It said, “I thought of that right after I sent the message.” In this case, she had suggested an idea that was not in line with our plans, and I said “no,” and told her why not. She ended her message with, “lesson learned: don’t send emails when I’m tired.”

That’s a good lesson. And we can take it deeper, because a lot of people send emails that aren’t on target (to put it politely) during the day, too. How about taking the old saw from builders, “measure twice, cut once,” and apply it to the Information Age: “Think twice, click once.”

I know of a number of horror stories – including some that did serious damage to careers and opened the door to lawsuits - that resulted from someone sending something out without thinking twice.

And its not just email or texting. What about our words? There’s an ancient Chinese maxim that I’ve turned into a practice. “Is it true? Is it kind? Is it necessary?” What if we listen to what we’re about to say before we open our mouths, and ask all three questions about what we’re thinking. We can revise our ideas or our choice of words, and then what we say will be much less distressing and much more effective.

And sometimes, checking twice isn’t enough. When human systems run out of control, we end up taking great risks unnecessarily. The destruction of the Space Shuttle Challenger and the BP Gulf Oil Spill are both examples of this. The rule in the design of the Space Shuttle was that three different things must fail before catastrophic damage will occur. And even so, we’ve lost two shuttles and their crews. In addition to triple-checking, we need to fix systems that are running out of control

To err is human. But, as humans, we can be aware, and catch our errors and correct them before they go too far. There’s a great movie, The Dish, that shows how everyone can make mistakes, but, as a team, still do amazing things – like go to the moon.

One way to be a leader is to accept and correct our own mistakes, and lead by example, giving others a chance to make mistakes, and also to correct them and contribute to success.

The essence of Stephen Covey’s 7 Habits of Highly Effective People is that, if each individual is independent (habits 1 through 3) and seeks interdependence (habits 4-6) and does good self-care (habit 7), then the whole is greater than the sum of its parts. And its not just a bit greater, it’s synergy (habit 6) which can lead to results 50 times more powerful than the same people working alone.

Here’s a simple example of synergy. Suppose we need to move 5 heavy blocks, each weighing 100 pounds. Suppose one worker can lift 50 pounds, and the other, 70. Working alone, no blocks can be lifted. Some extra cost – pushing, getting a forklift, whatever – is needed. But if the two work together, each picks up one end of the block, and the work is done in minutes.

The benefits of synergy are even greater when the two talents are different. Writers are often terrible editors, and vice-versa. In fact, writers and editors often don’t like each other. Creative people and precise people often don’t get along.

But when we can work well with people who don’t think the way we do, we get great results. (That’s also the essence of a great marriage: In 25 years I’ve learned that my wife and I can have a lot more fun if we quit trying to understand one another!)

The problem is that whenever a team – even just two people – don’t have positive synergy, they have negative synergy. Things don’t just plug along. Instead, they get 50 times worse!

That’s why I talk about vampires and werewolves.

These days, people often talk about emotional vampires – people who suck you dry. And there are more and more popular books and movies like Twilight and Moon Called, that are about vampires and werewholves living with us today.

The Vampire – the team member who is not independent

A strong team member is self-led and self-managed. People who aren’t create a management vacuum. They are not managing their own work well. This forces the team leader or business owner into a double-bind, a choice with no good answer. If we don’t manage the work, then the project fails or the business loses money. If we take over and manage, we undercut the employee’s independence, and lose synergy. Micromanagement is a co-dependent work relationship. The worker is not independent, and the leader is substituting for the worker, instead of doing his or her own job. In structure, this is the same problem that happens in a dysfunctional relationship where one adult partner is not mature and self-responsible, perhaps due to addiction or psychological issues.

In business, the only good solution is prevention – all employees should be trained in self-leadership and self-management, and those who don’t achieve both promptly should be let go by the end of a probationary period.

The Werewolf – the independent worker who isn’t a team player

Werewolves don’t suck you dry – they rip you apart.

Werewolves are independent. They lead themselves and manage themselves very well.

Unfortunately, they also think win-lose. They think, “I win by eating you. You win by eating me. Who wins, and who ends up as lunch?”

The worst examples look like this: An independent consultant you hire as a sub-contractor who steals your clients; or a worker in a big organization who makes his boss look bad to get him fired and take his job.

But there are milder versions. There are the werewolves who just keep doing things their own way. There are the ones who work well, but won’t help a new team member get up to speed. There are the ones who get the work done, but keep all the knowledge in their heads, instead of delivering it to the organization. They’re protecting their territory. They think they have job security. But they’re actually pulling the whole company down around their heads.

With werewolves, we can sometimes have a working relationship by setting a clear, distant relationship with a very strong contract. But that kind of relationship gives us little synergy.

How Rare it is to be Human

Our society idolizes and idealizes independence, and creates a lot of werewolves. Our educational system doesn’t teach emotional intelligence, and our economy doesn’t allow much time for good parenting, and that creates a lot of needy vampires. The result is that there are very few human beings around any more – if there ever were.

You will find some people who are human – independent and good on teams – in well-structured work environments when there isn’t too much pressure. Some of them will fall apart, though, if they face economic or family pressure. Others can do well in safe, predictable environments, but not as well in the more flexible environment of small business. The more creative the people, the higher level of self-leadership is needed. The more rapidly everything is changing, the more likely fear will bring out the werewolf in an otherwise reliable person.

The Dance of the Team

Picture a dance. The vampires are weak and hungry, and trying to get a grip on you and get to your neck. The werewolves are strong, but, if you get too close, they’ll rip you apart.

Not a nice picture, is it? But its more or less the dysfunctional workplace we have in America today.

Let’s change the picture. Imagine a dance where everyone is human. We all stand up ourselves. We are all comfortable being close to one another, and sometimes stepping out in front – or stepping aside – too. Some like it fast; others like it slow. Some like to tap. Some like to swirl. Some like to toss others in the air, and some like to be tossed.

That is the dance of true teamwork. That is the image of a business that nourishes – and requires – healthy self-leadership and self-management. Such a team does the best for everyone involved – not just win-win, but win-win-all-the-way-around.

This morning, I was reading Common Purpose: How Great Leaders Get Organizations to Achieve the Extraordinary. The author, Joel Kurtzman, quoted Ramit Varma, cofounder of Revolution Prep, a dymanic, successful education company, saying that, when dissent is the manifestation of a perpetually negative mind . . . “You must be brutal and quick. When someone doesn’t work out, you have to get rid of them. And you have to do it fast. If they don’t uphold your values and vision, if they don’t come around to your goals, they can do real damage.”

I am not comfortable with this.

And also, I see it is true, and essential.

It makes sense to accept the truth of it, and also to accept that it must always remain an uncomfortable truth.

On one hand, far too many companies and organizations and people in leadership positions in this country have become comfortable being brutal. This leads to fear in the workplace, which destroys the quality of our lives and quality of work and results. “Eliminate Fear in the Workplace” was #8 of Deming’s 14 points of Total Quality Management, and, in my view, the most important.

And on the other hand,  far too many organizations and people in leadership positions have ducked their heads and avoided necessary clarification and action. especially when that action means ending a business relationship. Most companies and organization live with perpetual discomfort, stress, and confusion. This perpetuates hassle and waste, another source of reduced quality of life, products, and services.

Act Decisively to Create and Maintain Synergy

It is simply true that success requires synergy. And synergy requires both parties acting with mutual respect and with common goals.

It is a leader’s responsibility to see with clarity.

It is a leader’s responsibility to stop damage to an organization, just as it is a surgeon’s responsibility to stop bleeding.

In a well-run organization, emergency surgery is rare. But, in any organization or organism, when emergency surgery is necessary, it should be done immediately, and done well. That’s basic and definitional. Emergency means immediate action is required. And surgery must always be done well; sloppy surgery leads to disease and death.

Symbolically, such actions are represented by the Sword. In society, it is Athena’s Sword of Justice. The Sword is the symbol of mind, clarity, and decisiveness. The Sword – or scalpel – cuts quickly and precisely.

Why must we act with swift precision at these times? To save lives and prevent illness and suffering.

That’s obvious in the medical emergency room. It is equally true in the business emergency. If a business is bleeding red ink or losing employees or morale or productivity because there is a conflict at the executive level, it must be resolved swiftly. If attempts to resolve it with the person do not work out quickly, then it may be best to let that person go. And, if so, the surgery is best done quickly and cleanly. And the same truth scales down all the way to the small shop and the individual worker.

And that is usually the best for everyone involved.

When win-win is not possible, no deal is the best option. Moving to it directly helps everyone.

Firing Should Happen Rarely

But let’s be clear. Firing should happen rarely. Why? For two reasons:

• Respectful dissent is essential to organizational success. We need eveyrone in the company coming up with better and better ideas all the time. We need people to promote their ideas, and challenge ours. Leaders destroy an organization by cultivatign fear and creating yes-men under them. If we fire people too quickly, we quash dissent.
• Good hiring prevents firing. If we make the decision to hire well at the beginning, then we rarely need to fire anyone. So, every time we let someone go – and when someone leaves as a result of a conflict in the business, it is important to perform a root cause analysis and learn how to prevent such events. In most cases, that will mean changing hiring practices or changing ourselves and our own fundamental attitudes. By and large, leaders create the conflicts and problems within their organizations.

Firing Should Be Done Well

If firing, done well, helps everyone, that means that, when a leader fires someone and does it well, the person he fires is better off. Or, at least, every effort is done to create the possibility that the person being fired is better off.

Firing might be compared to the complicated surgery of separating Siamese twins. The goal is two healthy children. But, sometimes, even doing our best, only one child can survive.

As leaders of organizations, our first responsibility is the health and success of the organization or company we lead.

But, higher than that, as human beings, our first responsibility is “First, do no harm.” So we also act with concern for the person who is leaving the organization.

I have been fired, and it was healthy for me.  I couldn’t grow in that organization. So it made sense that the leader of the organization insist that I be transplanted somewhere else.

In a garden, transplanting creates shock. But if the plant being moved survives the transition and moves to a better place – more sun, bigger pot, or the freedom of the yard with deep earth, then that plant is better off.

So, when firing, do not cast away weeds. People are not weeds. Transplant what does not work. Nourish the person who is leaving, and, when possible, encourage them to find a place that they can grow.

A friend asked me  how to make a leadership decision, a strategic decision.

Here’s how I do it.

First, I say to myself, “Today is the first day of the rest of my life. What I decide today and act on from here forward with commitment and conviction will create my future.”

Then I say, “I am a free human being. I am able to make this choice and act on it.”

Then I read my mission and vision aloud.

Then I state my choice aloud with clarity. For example, “Will I join this organization? Will I take this class?”

Then I ask, “Will doing this thing be the best way to achieve my vision and mission?” I can make a yes/no decision on one item, and I can also compare among alternatives.

I then look at this decision and ask, “Does doing this go against any of my values?” I read my values, and make sure that I can do this thing without violating my values.

If the thing I am choosing to do passes these tests, it is the best choice to make towards my visio and mission, within my values. Either I do it, or, if I don’t do it, it is what I give up. It is my opportunity cost.

Then I ask, “Can I do this?” If it seems impossible (too expensive, too much time, friends won’t like it), I pay attention to that. But I’m not limited by it. People do things that are called “impossible” all the time. Usually these pioneers leave a trail behind, and what was called “impossible” is now called “routine” by all the followers in the world. The world’s followers said that airplanes were impossible. The Wright Brothers and other leaders ignored that. Now, the world’s followers fly on airplance all over the world every day.

Most leadership decisions are risky. It is crucial to be realistic. It pays to be careful. But often, it does not pay to be cautious.

Caution is often fear in disguise. Leaders don’t let fear stay hidden. Leaders feel fear, and face it, and do what is truest to themselves and best for all.

A realistic decision does not bow to fear. But it does listen to fear.

For example, 95% of all new businesses fail in the first five years. If you’re launching a business, that’s a reason to be scared. But don’t run away. Instead, ask, “How can I make sure my business will be one of the 5% that succeeds?”

Even though 80% of new franchises succeed (or so I’ve heard), I’ve spoken to several franchise managers who tell me of important facts the franchiser did not tell them, facts that they wished they’d known before buying into the frachise. The solution: be bold – and do your homework. Take risks, and be responsible for preventing those pesky risks from blocking your path to success.

Then I ask, “How will doing this affect others in my life, and the balance of my life?” Again, it may throw my life off balance. That is not necessarily a reason not to do it. Rather it says, “This is a big decision. This decision is meant to change my life.” Most likely the best choice is to go for being great, and then pay attention to life balance.

When we choose what will take us most truly on the way to our vision and mission, and take care of our whole lives in balance, then we are truly leading our lives. Maslow calls such people self-actualized. We might think of self-actualized people as free, and also as masters of their lives. Traditional trades used to guide people through three levels of expertise: Apprentice (beginner); Journeyman (fully capable worker); and Master (Independent, creative craftersperson who can run his or her own business). Learning to be a leader is not just technical. Yes, we must be good at what we do to be a Master. But, more importantly, we are called  to master our fears and lead our lives.

Live Boldly – Live Realistically – Create Your Life!

Leadership calls for – and develops – freedom and clarity. 

I recommend that we all free ourselves and get clear every day. That way we can lead ourselves and lead stellar lives. We are ready to make a great decision when we can answer a yes to each of these questions:

• Do you have a VMV (vision, mission, and values statement)?
• If you own a business, do you have a VMV  for your business?
• Do you read your VMV aloud every day?
• Is it up to date?
• Do you feel in charge of your life?
• Do you feel free in each of your roles and relationships?
• Do you have a clear process for making decisions?
• Do you know how to feel fear, and do what you want to do and are called to do anyway?
• Do you have tools for thinking outside the box, and do you use them regularly?

If you can answer “yes” to all these questions, then you are ready to make leadership decisions. If you answer “no” to any of them, I encourage you to increase your freedom and capability – starting this week!
To learn how to discover your own vision and mission, and make it real, learn about Leadership Coaching and Contact me.

Driving to a meeting this morning, on a 2-lane road. I saw the sign “Left Lane Closed.”

And then the sign appeared, “Right Lane Ends.”

I started to laugh. I felt like I’d hit the end of the road.

Isn’t this what life is like for a lot of small business owners right now?

• We need help, but we can’t hire good people.
• We need to borrow cash to grow, and there’s no money to be found.
• We rely on an employee, and that employee becomes ineffective or unavailable.
• We need our computer to work, and it never does.
• We pay for top-notch service, and it doesn’t come through.

What do we do when we run out of options? What do we do when the left lane is closed and the right lane ends? What do we do when we’re running full speed ahead – into a brick wall?

Leaders return to essence, to what is essential.

That may mean:

• Rolling up our sleeves and doing it ourselves
• Really taking time to find the right person, product, or service
• Stopping, taking true, clear retreat time, and asking: What is really happening here? And: What do I really want to do and achieve?

Real retreat time doesn’t necessarily mean a vacation. It  may mean a few hours with the cell phone turned off, out for a walk, at a favorite cafe, or holed up in your office. I hire myself as a coach and take a walk and go talk to myself – aloud. Who cares if I look nuts? What matters is I know that that can solve a $10,000 problem.

We come back to what is essential. What does my business do? Why am I doing it? And, how can I do it right now?

We come back to essence: our current purpose and motivation, which we discover within.

We trust ourselves.

My laughter in the car was a sign of trust. And sure enough, the left lane was closed, the right lane ended, and there was a way to drive through on a median to the next intersection. At the intersection, I could go forward, or right, or left. I had plenty of options.

More great, lasting businesses were started during the Great Depression than any other time in US history. Challenging times call forth creativity and leadership. So, let’s squeeze through the narrow places. Let’s barrel through the brick walls. Let’s trust oruselves, and learn what we our truly made of.

Let’s trust our essence and keep going until we reach the crossroads.

How do limitations affect your life and leadership?

Most people live within their limitations. When hearing a new idea that excites them, the first thought is, “but I can’t do that, because” or “I can do that, but . . .”.

There are two types of limitations: internal and external. Internal limitations are about self-image and skills. A clear thinker and social commentator that I know writes about his views. But he holds back, thinking, “I’m only an economist.” He’s more than that: I learned a lot about social transformation from him. But he won’t let himself live to his full capacity. When people say, one way or another, “But I don’t know how to do that.” they live within their limitations.

Dropping Limitations

What if we drop these identities, and say, “I’m a person, and I can do what I want to do”?

What if we drop the projection of the past onto the future? Then “I don’t know how to do that” becomes “I don’t know how to do that yet!” And “I don’t do that” becomes, “Wow! I’ve never done that before!”

Then there are external limitations like, “I want to, but my wife/husband won’t agree,” or “my friends don’t do that.”

I’ve found that, when a person really commits to something, those who truly like and love him make room for it in their lives. Most often, when we commit, our friends and loved ones become enthusiastic supporters.

Leadership Challenge and Change

Leadership must include some degree of challenge and change – especially challenge and change to our limitations.

Most limitations are in our heads. But some are real. We won’t know the difference until we test them. And we can test them by picking a goal – something new and different – and working to make it happen. To reach a new, different goal, we must work in new, different ways. That means leaving some past limitations in the dust.

Leadership Style and Power

Your leadership style and power depends largely on your relationship to your limits.

• If you don’t test limits at all, you can’t lead.
• When we try only one small new thing, thinking that the way we’ve been in the past won’t change much, we’ll see incremental improvement – small steps – but not transformation. We’ll be leaders and appear courageous to those who are so afraid that they don’t change at all.
• When we take on new things regularly and often, we will see growth and change in our lives and inspire others around us. That is leadership within the limits of our self-image and life, testing and slowing outgrowing those limits.
• When we pick a big goal – something really new – and make time to make it work – and go at it with commitment, not just to do it, but to do whatever it takes and make it work - then we break through limitations quickly. We enter the world of transformation.
• When we consistenty take on new, big goals and different things, we stop identifying with our limitations, and begin to see that we are not our limitations, then we are doing consistent transformative work. Then we are transformational leaders, taking others in new directions.

Real and Illusory Limitations

Illusory limitations – the ones in our heads – are created by confusion and fear. They are based on past experience.

Real limitations are based on who we are. For example, I can’t flap my wings and fly.

If we don’t respect real limitations, we put ourselves in danger. A man who thinks he can flap his wings and fly might climb up on a roof and jump off and hurt himself. A more realistic example came in my life after I launched my first business: I thought I could help a friend launch hers. After all, I knew what I was doing! Well, that wasn’t enough. I didn’t have the focus, back then, to keep one business running and launch another. So both crashed and burned.

I climbed out of the wreck, learned, and grew.

In the past, my problem around transformation is that I so deeply believed in, and wanted, transformation that I didn’t respect real limitations. That’s a path to burnout. Maybe I read too much heroic science fiction as a kid.

On the other hand, I’d rather burn out that live inside my limitations, live inside what coach Kim George (www.CoachingIntoGreatness.com) calls a “satin-lined coffin.”

The problem is, of course, that we don’t know which limitation is real, and which limitation is an illusion, until we test it out. I bang my head against them. If I break through, it was an illusion. If I get a bad headache, it was real.   

Here are some tips for testing limitations without getting a headache:

• Try to change what you’re saying from, “I don’t do this” to “I’ve never done this until now.“
• See yourself as a person who has done certain things in the past, and can do different things now.
• Consider this: If another person can do it, then I can do it. Maybe not as well. I can’t race the Tour de France like Lance Armstrong. But I did start biking recently. And I could work my way up to going on a bike tour.
• Consider this: Transformation means accepting our humanity and limitations, and also accepting our power to choose and change. Gandhi truly believed that anyone could do what he did, and said so. He also said, “I practice non-violence because I am such an agry person.” When we acknowledge and embrace our limitations, we transform them.
• Consider this: If we dream it, we can do it. Maybe we can’t just flap our arms and fly, but we can invent the airplane. Many of the things I read about and saw in science fiction as a kid are reality now. We have cell phones and satellite phones. In 1967, those were only on Star Trek, and they were called “communicators.” We have hand-held biohazard detection devices. Star Trek called them “tricorders.” Imagination becomes reality; make your dreams real.

Recently, I said to one of my clients, “You are not your thoughts. You are not your feelings. You are not your words or actions.”

He asked, “If I’m none of those things, what the heck am I?”

I replied, “You are the person who is free to choose your thoughts, your feelings, your words, and your actions each moment.”

About ten years ago, I was involved in a legal dispute. An excellent New York attorney – a very ethical man and a good friend (yes, there are lawyers like that – the only thing I didn’t like about him was his hourly rate) – told me this: It is always unfortunate for a small business to be involved in a legal dispute. For any case with a value of under $50,000, both sides always lose – all that happens is that the lawyers make money.

He saw this as an unfortunate fact. In a just society, everyone would have an affordable way to seek justice. But, in the US today, that simply doesn’t exist. Court costs, attorneys fees, endless delays and long hassles – not to mention the stress – mean that the cost of any legal battle is greater than any possible benefit, no matter who “wins” the case. It’s lose-lose all the way around.

And that came from a lawyer who really knows his stuff.

In my experience, he’s right. Now, let’s consider affordable alternatives. How can a small business deal effectively with disputes?

1. Prevent lawsuits through good communications, clear agreements, and excellent customer service.
2. Create clear terms for payment.
3. Deliver small pieces of work, ensure customer delight, and get paid frequently.
4. Be willing to refund money and walk away in peace when the customer is not satisfied.
5. Use escrow where appropriate.
6. Perhaps small claims court can be worthwhile in some situations – its an area that – thank goodness – I haven’t explored.
7. Build agreements and contracts that keep us out of court.

Let’s be clear about a few things

I’m not challenging the great American right to a day in court. I’m not talking about personal injury, fraud, or the damages caused by criminal negligence. I’m talking about day-to-day failures of communication and work and business relationships.

I’m not saying you don’t have the right to sue. We all have the right to our day in court. But that is different than saying that it is right to go to court.

The question is: Does it ever make sense for a small business to go to court? And my answer, as a business consultant is: No.

Stay out of court. Why? Here’s the business case: The opportunity cost is too high.

The opportunity cost is too high

There are many ways to say this. A favorite one came from a friend, and my boss over 20 years ago, Steve Foley. Both of us were being treated very badly in a department we both worked for. Eventually, he was forced out and moved on to a great job, and I quit and went on to a great job. On the way, I asked him about his feelings, and he spoke of how unfair it was, and said that, whenever he thought about it, he reminded himself, “You can’t get ahead if you spend your time getting even.”

Steve was right. The opportunity cost of getting what we deserve from a party that injured us, in our society as it is, is just too high. We will succeed by moving on and moving towards what we want, by focusing on getting ahead, not on getting even.

This is what my attorney friend was saying: In any small business case with damages under $50,000, the opportunity cost is too high. And that’s even when you already have a great attorney on retainer and are insured against lawsuits!

How to stay out of court

So, how do we stay out of court? We can all choose not to sue someone. We can decide to look at opportunity cost, and then choose to go for what we want and get ahead, instead of trying to get even.

But we can’t choose not to be sued. I’ve even seen the courts used as a way of stealing intellectual property.

So we need to protect ourselves and our intellectual and physical property.

How do we do this? I would suggest: Write contracts that keep us out of court.

Here are some clauses that can do this:

• limitation of liability – agree on a maximum – such as the amount of payment due in a work for hire contract – that will be an absolute limit to liability. Then the vendor can walk away by returning the client’s money. And the client can walk away by paying double the fee. Both parties know this up front, and they can relax.
• required conflict resolution methods. I use three levels:
  • negotiation: both parties are required to sit down and talk to one another – and document the discussion – before going to court.
  • mediation: the parties will use a mediator who will suggest a resolution
  • binding arbitration: the parties will submit to binding arbitration, which is less expensive than a full court trial. (Unfortunately, binding arbitration has become a slow, cumbersome, and expensive process full of attorneys making money from their clients. Even it should be avoided. That’s why it is the third step.)

With the conflict resolution clause in the contract, if one party does decide to go to court, he will have to show a good faith effort to do all this before he does. Odds are that people will come to their senses before they go to court. And, if they do, the limitation of liability clause keeps cost as reasonable as they can be.

Get help from your lawyer

To my mind, a good attorney for a small business will help you stay out of court. They can choose the right type of agreement and help you write it in a way that ensures a win-win-or-no-deal result. When it doesn’t work, we each walk away from the other, and race ahead in our businesses and our lives.

How bad is it?

There was a case recently in my hometown between a homeowner and a homeowners association. The issue was a $325 fee related to removal of a tree that fell during a hurricane. The total legal fees ended up being over $800,000. The man lost his home and his marriage.

Need I say more?

Am I wrong?

I’m not a specialist in legal matters. In fact, as this article makes clear, I stay away from lawsuits as best I can. So my experience is limited.

If you know of a case where the damages were under $50,000, and someone in small business went into a full court case, and it was worth it, please let me know. I’d love to understand how that can happen.