A good coach will make his players see what they can be rather than what they are.

Ara Parseghian, Notre Dame Football Coach

In many ways, business coaching is at the heart of what we do at E-Myth Worldwide. But the question often arises as to why a business owner would need a coaching relationship and how to make the most of it. It is important to realize that coaching works best for people who are successful at what they do and are ready to go to the next level in their business. And, much like a sports coach, a business coach works with you to develop the skills and abilities that are already within you.

Why Have a Coach?

Coaching involves a number of different qualities that are not always employed with consulting. For example, in sports, a coach will help you understand not only how to do something, but why it is important or necessary. A coach will guide you, provide feedback and insight, while holding you accountable to the goals and objectives you have agreed to accomplish. A coach will facilitate your progress and work alongside you to help you achieve your vision.

Consultants, on the other hand, typically engage in an analysis of a particular problem, issue, or project while providing recommendations and suggested courses of action. While their role is usually advisory in nature, they will often perform specific work for a client. Their focus is generally on what needs to be done and not the why and how of the processes involved. Although some may disagree, it can be said generally that a consultant offers a fish, while a coach helps teach one to fish for themselves.

There are also significant and instrumental roles to be played by family, friends, and mentors in the life of a small business owner. Motivational materials, books, and seminars are useful as well. But as critical as these individuals and resources may be in the success of the business owner, none of them can fill the role that a coach can have in helping that business owner achieve his or her vision.

A Vision, a Journey, and a Guide Along the Way

Here’s a real-life tale of one our clients: Rick's dad was a plumber, and Rick grew up working in his dad's business. Then one day Rick decided that, since he's a plumber and has lived in and observed the plumbing business all of his life, it was only reasonable that he establish a business of his own. And so he did.

Rick is a terrific plumber, but he found that while he could clear clogged pipes and repair broken toilets, he did not know very much about such things as how to hire and manage employees, use an income statement or financial balance sheet, or even develop marketing strategies to attract new customers. His dad had some good advice to give, and Rick’s wife tried to help with the books, but as his business grew he began to find himself working more and more hours and yet never getting a handle on the “business” of running the business!

A day came when he realized that, just as he invested his time and energy in learning his trade, he also needed to learn how to run a business. He knew that he needed to develop skills and acquire new skills to be an effective business owner, but he was reluctant to seek help. Fortunately, Rick had a friend—the owner of a successful hardware store—who offered some insightful advice and directed him to E-Myth Worldwide.

Armed with a clear vision of where he wanted to go with his business, and assured that he could indeed develop the skills he needed to successfully lead and build his business, Rick soon found that his business coach became an essential guide for navigating the path to business success and achieving his objectives. Along the way he also discovered that his relationship with his coach enabled him to see himself in ways he hadn’t before, and to find his proper role as a business leader and entrepreneur. Rick the plumber with a plumbing business became Rick the business owner who also happened to be a terrific plumber!

Dual-Vision and the Gift of Objectivity

What Rick and others like him have discovered through the coaching relationship is the need for what we call “dual-vision” and the value of a coach’s objective viewpoint and feedback. This dual-vision involves the art of keeping focused on the present and the needs of today, while always keeping the goal lying ahead clearly in view. The overriding value of the business coach is his or her ability to provide the critical objectivity to the business owner. This objectivity is supported with feedback and input to assist in that business owner’s progress.

Another aspect of the coach/business owner relationship that cannot be overlooked is the accountability that is provided. There is tremendous value in sharing one’s goals and objectives with another and then striving to accomplish them. In a very real way it becomes a partnership wherein the business owner is accountable to himself and his coach to fulfill his obligations, and the coach is accountable for facilitating the business owner’s experience along the way.

No one person has all the answers to the challenges faced in life or in business. But everyone can benefit from the insights, knowledge, and perspective of another. This is especially true for business owners who want to move beyond the place they find themselves today. Having a vision for your business is essential and getting the help you need to achieve that vision is priceless. Or, in the words of Tom Landry:

Setting a goal is not the main thing. It is deciding how you will go about achieving it.

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How has you and your business benefited from having a business coach? What is it about having a coach that is valuable for you?

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Learn to lead your business in a way that supports your life objectives and create a business that works for you without your constant involvement in the daily operations. We can show you how. Business owners, contact us today for a complimentary business consultation to learn more.

Flickr photo credit: Markfive

In just a few days, over 1,000 Freelancers Union members will have the opportunity to share their vision for New York by voting for their representatives in Albany.

There are four special elections taking place on February 9 to replace state Assembly members in Nassau, Suffolk, Queens, and Westchester counties.

These are typically very low turnout elections, [...]

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In his State of the Union address, President Obama did a bit of Wall Street bashing (although less than I would have expected). I don't really have a problem with Wall Street bashing. The financial sector came to represent an abnormally large share of the U.S. economy over the past decade. It needs to shrink. And bashing makes things smaller, right?

Still, it's usually more interesting (and definitely more HBRish) to think about reinventing rather than tearing down. My colleague David Champion recently offered up a list of several wonkily interesting financial-system reforms we ought to focus on. They included a Capital Markets Safety Board, central clearing and margin collateral for derivatives markets, and more (not less, as the banks want and have so far gotten) mark-to-market accounting. Well, here's another idea that's been making the rounds among economists and finance profs but doesn't seem to have gotten much traction in the wider world: the reinvention of debt.

The first hint I got of this came in reading Yale economist Robert Shiller's book The Subprime Solution, which was published just before the "subprime crisis" turned into the Panic of '08. Shiller had a bunch of wonderfully Shillerian ideas for making the financial world better, but my favorite was what he dubbed the "continuous workout mortgage." Here's Shiller's description:

Such mortgage contracts, when originally signed, would specify a program for steady adjustment of the balance and payment schedule over the life of the mortgage, enabling most homeowners to continue to afford to make payments and maintain some home equity, even in harsh economic circumstances. These contracts might become the standard, with automatic adjustments based on shifts in national housing-cost indexes and futures markets (I've been involved in creating both), as well as economic indexes like the unemployment rate.

The idea here was to make the financial system less fragile by making risk-sharing arrangements in advance of a crisis. I filed that away somewhere in my head and promptly forgot it as the financial world started to collapse. But a few months into last year I began hearing things that reminded me of Shiller's funky mortgage plan. My friend Felix Salmon pontificated about the need to "move in general from a world of debt finance to a world of equity finance." Philosopher/provocateur/frequent-bather Nassim Nicholas Taleb made similar noises. And then, at a conference this fall, I heard Myron Scholes (whose financial innovations have been pointed to as a possible cause of the financial crisis) make the case that maybe the inflexibility of debt contracts was the main cause of the financial crisis. Ah, the Scholes-Taleb Theory, I thought. (The two really don't get along.)

It hasn't stopped there. Lately, a group of finance scholars calling itself the Squam Lake Group has been talking up a kindred proposal for "regulatory hybrid securities":

The idea is simple: banks should be pressured to issue a new kind of debt that automatically converts into equity if the regulators determine that there is a systemic national financial crisis, and if the bank is simultaneously in violation of capital-adequacy covenants in the hybrid-security contract.

When economist Joe Stiglitz stopped by HBR on my first day on the job (Jan. 25) to promote his new book, Freefall, I couldn't resist asking him about this whole reinvention-of-debt meme. His response: "Bruce Greenwald and I have been writing about that for a long time." Stiglitz always says something like that when you ask him an economics question. And he usually has a point. Agree with his policy prescriptions or not, you can't deny that the man has played at least a cameo role in most of the interesting economic-theory discussions of the past 40 years.

"The reason people like debt contracts is that they're simple," Stiglitz went on. "With equity you get a fraction of the profits, but you don't know what the profits are. Equity is better in risk-sharing, but equity has more problems in enforcement and asymmetric information." That is, when you lend somebody money, they have to pay it back or there will be trouble. When you put equity into a venture, the people who are hired to run it (the agents) might decide to funnel an inordinate share of the profits to themselves. Or spend it on campaign donations.

So that's the attraction of hybrids like continuous workout mortgages or regulatory hybrid securities. During normal times they look like debt, with all the disciplining effects thereof. But when the financial world goes haywire, they automatically turn into something more like equity, so risks are better shared. What's not to like about that? (I don't mean that as a rhetorical question; I'm really interested in hearing about the holes in this approach.)

A short but prominent section of President Obama's State of the Union focused on helping small businesses to create jobs. Here's a look at what he said and what it means. From the speech:

Now, the true engine of job creation in this country will always be America's businesses. But government can create the conditions necessary for businesses to expand and hire more workers.

We should start where most new jobs do –- in small businesses, companies that begin when -- companies that begin when an entrepreneur -- when an entrepreneur takes a chance on a dream, or a worker decides it's time she became her own boss. Through sheer grit and determination, these companies have weathered the recession and they're ready to grow. But when you talk to small businessowners in places like Allentown, Pennsylvania, or Elyria, Ohio, you find out that even though banks on Wall Street are lending again, they're mostly lending to bigger companies. Financing remains difficult for small businessowners across the country, even those that are making a profit.

Obama acknowledges that even though the credit crunch has eased for large companies that can borrow in the capital markets, bank lending to small businesses is still hampered. This picture became clear last fall, and the White House has hosted two summits with bankers where Obama urged them to increase lending. Banks remain under pressure from regulators to reduce risk on their books.

So tonight, I'm proposing that we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small businesses the credit they need to stay afloat.

The White House actually announced this proposal at a meeting with community bankers in December. Details remain sketchy, but the WSJ reports that the plan may let small banks borrow from leftover TARP funds at low rates if they increase their small business lending, without the same restrictions on compensation that applied to earlier TARP recipients. This change likely needs approval from Congress.

I'm also proposing a new small business tax credit -– one that will go to over one million small businesses who hire new workers or raise wages.

Congress is kicking around some proposals for a hiring tax credit. One plan by Sen. Bob Casey (D-Pa.) would give small businesses a one-year tax credit that hire new workers and increase their payroll. Companies with under 100 employees could write off 20% of the amount their payroll increased from the previous year. Larger firms could write off 15%. More from Dow Jones here. Obama himself has proposed flat $3,000 tax credits for new hires in the past.

While we're at it, let's also eliminate all capital gains taxes on small business investment...

The administration talked about this late last year. Currently, 75% of capital gains from selling stock in small private companies is exempt, but that expires for investments made after 2010. Obama's plan would exempt 100% of those gains.

It's an incentive designed to get more money into small businesses by making the investments more attractive, especially since tax rates on other capital gains -- like the sale of stock in large companies -- are expected to rise from 15% to 20%, says Lewis Taub, tax director at business consultant RSM McGladrey in New York. Angel investors or business owners who want to put more of their personal wealth into their companies would benefit when they sell their equity stakes. Eliminating capital gains on small business stock, combined with raising the rates on other types of capital gains, makes small businesses a more attractive asset class to invest in, Taub says. (To qualify, the company "may not have gross assets exceeding $50 million [including the proceeds of the newly issued stock] and may not be an S corporation," Taub says.)

...and provide a tax incentive for all large businesses and all small businesses to invest in new plants and equipment.

Also previously announced, this refers to extending immediate deductions for capital investments that would normally have to be depreciated over several years. The incentives take two forms: Section 179, which allows total deduction of a capital expenditure up to a certain dollar amount, and bonus depreciation, which allows for an immediate deduction of 50% of the expenditure with no limit.

These provisions were set to expire at the of 2009. Taub says extending them would further encourage businesses to invest in expansion, which is tied to jobs. "If I invest in property, I’m expanding my plant, I’m expanding my operations, I have to hire people," he says.

Another interesting bit: Obama set a goal to double US exports in the next five years, a priority the US Chamber of Commerce has pushed for.

To help meet this goal, we're launching a National Export Initiative that will help farmers and small businesses increase their exports, and reform export controls consistent with national security.

More details to come.

The big wildcard for small business owners remains health care. Obama said he was still committed to passing reform. But since Democrats lost the crucial 60th Senate vote, the future of the biggest domestic policy priority of the president's first year remains in doubt.

Staring down a 10 percent national unemployment rate and his own plummeting approval ratings, President Barack Obama made big promises to small businesses during his first State of the Union address last night.

The president devoted a full two-thirds of his 71-minute speech to the economy, pledging to sign a new jobs bill and to create a new lending facility, funded with $30 billion, that will get community banks extending credit to small businesses again. (Where's the money coming from? Wall Street's repayment of what it borrowed to the Troubled Asset Relief Program.) All good news for entrepreneurs -- if, of course, the White House can corral a skittish Congress into delivering.

Addressing an audience that included First Lady Michelle Obama, members of both houses of Congress, diplomats, the Joint Chiefs of Staff, and the Supreme Court, Obama called for tax incentives for small business owners -- who do 60 percent of the hiring in America -- to bring on new employees and give raises to those they already employ.

"Now, the true engine of job creation in this country will always be America’s businesses. But government can create the conditions necessary for businesses to expand and hire more workers," Obama said. "We should start where most new jobs do -- in small businesses, companies that begin when an entrepreneur takes a chance on a dream, or a worker decides its time she became her own boss."

To jump-start entrepreneurship, he proposed the elimination of capital gains taxes on small business investment. He also reiterated his plans to invest more in clean energy, which could juice funding -- and innovation -- in that sector. Thanks to last year's Recovery Act provisions, the solar industry grew by almost 40 percent in 2009, creating 18,000 jobs, the Environment News Service reported.

"We need to encourage American innovation," Obama said. "Last year we made the largest investment in basic research funding history -- an investment that could lead to the world's cheapest solar cells or treatment that kills cancer cells but leaves healthy ones untouched. And no area is more ripe for such innovation than energy." (When they enshrined a State of the Union in the Constitution, we can't imagine the Founding Fathers envisioned an audience at its feet, giving perhaps the biggest cheer of the night to the president's call for construction of more nuclear power plants.)

Obama also set a goal of doubling American exports over the next five years, which would support two million jobs. It could also help companies looking to tap new overseas markets.

The Republicans' post-address response focused on jobs, too.

Said Bob McDonnell, Virginia's newly-elected governor: "We must enact policies that promote entrepreneurship and innovation so America can better compete with the world. What government should not do is pile on more taxation, regulation, and litigation that kill jobs and hurt the middle class."