About half of all U.S. small businesses will fail in their first five years, according to the Small Business Association. There are many reasons why, but Nicole Fende — investment banker, actuary and founder of her own financial consulting service aptly named The Numbers Whisperer — argues the biggest reason is because SMB leaders don't understand their finances.
Combining her two passions, science fiction and numbers, into a memorable business finance podcast called "The Prosperity Dimension."
"If you look at mainstream pop culture, there are a lot of people who enjoy 'Star Wars,' 'Star Trek,' 'Doctor Who,'" says Fende. "These franchises have been running for 30 to 50 years. Clearly, they have touched a chord."
Giving people a unique context to learn the basics about financial management helps her audience understand the lessons — and retain them for later, Fende says. "There's lots of research that shows experiential learning, which is learning through story, is an incredibly effective way of retaining and internalizing knowledge," she says.Here are three lessons from the podcast that will help SMB leaders improve their financial operations:
1. Follow Han Solo's Negotiation Lead
In a recent podcast episode with Jackie Huba, an IBM veteran and a bestselling customer service author, the pair discussed why many business owners (often, but not always, women) don't ask for the price they deserve. "They know in their head what they need to charge, but then their gut and self-doubt kick in," Fende says.
Fende suggests her audience role play their way to a better negotiation, thinking about how popular characters would approach the situation. "In Star Wars, they're great at negotiation," says Fende, citing characters such as Han Solo and Boba Fett.
2. Like Neo, Resist Complacency
In a podcast episode featuring Jennifer Lee of Right Brain Business Plan, the discussion focused on knowing when to pivot.
Fende and Lee discussed the late-'90s classic "The Matrix," in which Keanu Reeves' character, Neo, faces a choice between two pills: The blue pill will keep him in the Matrix; the red will take him into unpleasant reality. That's his pivot point, says Fende. "He chose to know what was really happening, and then he reacted to that."
Fende says that when business is good, many people don't look at what's next. "Look at Blackberry. Blackberry was once ubiquitous. Now it's on life support."
It's important for SMBs to know their timeframe for profitability — and to have a plan for when and how to change direction, Fende says. Waiting too long without a clear plan will cause your income to fall.
3. Separate Fact from Fiction
One recurring theme throughout the podcasts is figuring out where and when to invest in your business. This topic came up during a recent episode as Fende spoke with Joe Stech, the founder of a startup magazine. "At times you're so focused on keeping expenses down that you're not investing in what you need to invest in" Fende says.
Early on, Stech faced a financial dilemma: prioritize quality or minimize costs? Ultimately, he decided to pay the same rates as established magazines in order to attract talented writers. "At the beginning, it cost him because he was doing it out of pocket, but he would never establish himself as a credible magazine if the writing wasn't any good," Fende says.
When striking that balance, Fende says business owners can take inspiration from early science fiction writers, such as Isaac Asimov and Robert Heinlein, who were scientists before they turned to science fiction. "They looked at what might happen and determined, 'Is this actually possible, or is it just a fairy tale?'"
Sharon Hurley Hall is a professional freelance writer and blogger. Her career has spanned more than 20 years, including stints as a journalist, academic writer, university lecturer and ghost writer. Connect with Sharon on her website and Twitter.