Think yourself successful
There are a lot of things that come down to luck — the weather, winning the lottery, even our own genetics. But there is one area where we might have a little sway — our financial and commercial success in life.
Surprisingly, psychology likely plays a huge part in determining our financial outlook, success and goals, say behavioural psychologists. Increasingly, executives in the business world and even investors are paying attention to their advice.
James Layfield, who has run businesses from egg delivery services to airport lounges in New York, is a prime example of someone who puts psychology — namely his unshakeable self-belief and determination — at the heart of his success.
“My first business was when, at the age of 10, I ran an egg delivery service,” he said. Layfield not only sold eggs but also provided fresh bread and hired people to deliver them.
It was all going rather well until Edwina Currie, a former British MP, warned about salmonella in British eggs in 1988. Soon, Layfield’s first business success turned into his first business failure. However, it did nothing to deter him or to dampen his zeal.
“I have started a lot of businesses,” he explained. “I’ve tried doing 13 and made five of them profitable. My motto is Stop Talking, Start Doing.”
He believes that the lessons you take away from your failures can be as valuable as those you learn from your successes.
Like many successful business owners, Layfield is not afraid to take risks or to learn new skills. This is essential for investors, too.
Layfield turned an airport lounge at New York’s John F Kennedy International Airport into a profitable business, achieving a 30% margin in six months. “I wanted to make it the kind of lounge that I myself would pay to use,” he explained. The makeover included improving the food and the layout of the lounge to appeal to business travellers.
Like many good business ideas, his inspiration came in an unexpected place.
“The JFK project came about when I met a man at a party who wanted to start an airline,” he recalled. “I persuaded him that what he actually should do is manage an airport lounge. He used his contacts and we started a 50-50 joint venture at JFK airport.”
Some might have suggested that Layfield had neither the experience nor the track record to run this venture. But like many successful people, he was driven by a passion to make things better — in this case, it was the experience of the business traveller.
Confidence and self-belief are vital for business owners. These characteristics help them to persevere when challenges and obstacles arise, and drive them forward when others might give up. For investors, having confidence in investment decisions, and being prepared to follow through with ideas and strategies is essential, especially when stock markets decline or are volatile.
It also helps to have an appetite for risk. Without taking some form of risk, returns are likely to be limited.
Roll with the punches
Every investor can recall a time when they made one — or many — unfortunate investment decisions. Being ready to respond to developments, while also maintaining a clear vision of your direction and goals, can keep you on track even in challenging times.
For Debbie Wosskow, chief executive officer and founder of Love Home Swap, a home exchange club, one of the key requirements for running a successful business is turning adversity to your advantage. “When you run your own business you are always two decisions away from greatness or disaster,” she said.
“People will always tell you that you are rubbish and your idea is no good,” she admitted. “You have got to get out of bed every day and believe in yourself. You need to be confident, tough, and roll with the punches.”
But what if you are not already brimming with confidence and self-belief? Wosskow says it’s all about growing a thick skin and persevering. “No one is going to sell your vision better than you,” she said. “You have got to be very confident and you have got to be tough.”
There’s always a temptation to see problems and challenges as an indication of personal failure. By contrast, successful business owners and investors try to avoid having an emotional response to business challenges. They realise that there will always be ups and downs and, in the case of investors, volatility is a normal part of stock market behaviour.
Look on the bright side
For Modwenna Rees-Mogg, founder of AngelNews, a news service for the investment market, a low fear of failure is key to self-belief and resilience. “I’m naturally optimistic and persistent. Rather than worry about the future, it is best just to get on with it,” she said.
Rees-Mogg set up AngelNews, as a hobby in 2003 from £1,000 of start-up capital, working out of her front room. She now has a team of six, a revenue just shy of £1 million, and has 20,000 subscribers.
“I am not saying that there are no problems,” she said. “But when you wake up the next day, you see it as another day and another opportunity.”
Uncertainty is a regular part of the business and the investment world. Rees-Mogg admits to having had sleepless nights in the early days of setting up her own business. “Bad sleep is a killer of business,” she said. “I realised that lying awake was not helping me at all and that I would be much fresher to face the challenges of the day if I got some good sleep at night. So I decided to stop worrying about it at night, and do something about it in the day instead.”
And constantly evaluating your business or financial strategy means that you won’t become complacent, she explains. “You can’t iron out every problem, but you can keep your sense of humour,” says Rees-Mogg. “Stay curious. If you are doing the best you can every day, then you will come out with a positive result at the end.”
Peter Brooks, head of behavioural finance at Barclays, believes that perseverance is key to the success of business owners.
The most successful business owners and investors “rarely hit it big with their first venture,” said Brooks. “They spot a gap in a market or an everyday problem they can solve. They experiment and find creative solutions by constant modification of their products and business. Additionally, many seem to embrace failure as an opportunity to learn rather than feeling it should be something to be ashamed of. Ask yourself, what would you regret more: trying something new that is uncertain of success and failing; or not trying that think and watching someone else succeed in your place? An entrepreneur’s answer is clear.”