What’s the reason for running your own business ?

Why do you want to run your own business? Many owners could probably give many different answers but I think the answer is simple. PROFIT.

The trick here is to define what PROFIT is. I like to think of PROFIT beyond simply the money left over after you have taken out all your expenses. PROFIT for some people may be having more time to be with their family, for others it may mean being in control and able to make their own decisions and for some it maybe to make money. I think the trick to realise is that the PROFIT owners derive from their businesses doesn’t have to just monetary.

On the other hand you need to make sure that a business is making a PROFIT ( be whatever you consider that to be ). If money is your definition of PROFIT then it doesn’t make sense to be running your business constantly at break even or with minute returns. If control is your definition of PROFIT then it doesn’t make sense then it doesn’t make sense to let yourself be at the mercy of customers or suppliers. As any business owner will tell you, you have to take a hard look at your business and ensure that it is making a PROFIT.

If the business isn’t profitable then you normally have two courses of action. You either need to determine why your business isn’t profitable and make it work or you need to get out. Owning and operating a small business is not a bed of roses, there are going to be tough times, again and again. They will test your resolve to remain in business. However if you know what sort of PROFIT you are after then at least you know the direction in which you should be travelling.

You can’t hope to get to your destination if you don’t know where it is! Firstly, define what PROFIT you want from your business ( money, control, world domination, whatever ), then make sure you are working towards that every day.

What I wish someone had told me starting out

Probably the one thing that I wish someone had said to me before I had started my own business was “… yeah, that’s all great but how are you going to get OUT of the business ?”. In simply terms, what is your exit strategy ? My exit strategy ? You must be joking, I would have said, I want to do this for the rest of my life. Hmmm…that is all well and good but working in your own business for the rest of your life is only one possible scenario. So many OTHER things things could happen along the way that may cause this to change.

Don’t get me wrong, I still want to work in my business for the rest of my life BUT what happens if I don’t ? What happens if my circumstances change and I need to get out ? What’s is my strategy ? If I try and sell my business would I get the value that I have invested in it ? Probably not. A great book that deals with this issue is the E-myth by Michael Gerber. He basically says, what do you have if you can’t take holidays when you like, when you can’t afford to have a day sick and you are always behind on your work ? You don’t have a business you have a job! Which is exactly the thing that most people who start a business are trying to get away from !

It wasn’t until I read Gerber’s book that I realized that I didn’t have an exit strategy. Again, not because I needed one but because it provided me with options. When I started to look closely at my business, through a buyers eyes, I realized that the business didn’t have nearly as much value assocaited with as I thought. A good example of this was my accounts. I had done all my accounts in a spreadsheet that I designed myself. I worked really well, was flexible and I knew the in’s and out’s but if someone from the outside looked at it they would say it wasn’t standard and they would want something like Quicken. D’Oh how stupid of me. I’d made that part of my business unattractive to a potential buyer and therefore destroyed value.

When I started looking at the business as a whole through a buyer’s eye I realised that my accounts weren’t the only place where I’d been destroying value. Every where I looked I had custom one off systems, lacking documentation and procedure. It wasn’t that the business didn’t function successfully, the problem was all the best bits where in my head. That is all well and good until you try and exit the business. You can’t simply dump your brain into the new owner’s and move on.

Now I had to start the long ( and still on going ) process of getting everything out of my head and down on paper. I am now constantly working to add value to my business for a potential buyer. I can tell you that it is a right pain in the butt and I wish that someone had made me think about my exit strategy before I got into my own business. So take heed from me. If you are planning to go into business for yourself, plan an exit strategy first, even if you never need it, it is always reassuring to have.

The one thing

Have you seen the movie City Slickers ? After having a mid life crisis, Mitch has joined his buddies on a cattle muster through the mid-west of America. While riding along they start talking about the ‘one thing’ that is important to them. Throughout the rest of the movie they talk about the ‘one-thing’ and in the end this ‘one-thing’ is different for different people.

It got me to thinking about what the ‘one-thing’ would be to a business. What ‘one-thing’ do you need to have in business ( or life ) to succeed. Could it be defined ? Could it be made simple ? Could it be made generic ? All interesting questions but I think I have come up with an answer. What is it ? Well, I reckon the ‘one-thing’ is BALANCE.

Business ( and life in general ) is all about maintaining balance. You need to balance the needs of the customer with those of your staff. You need to balance the cash needs of the business against investing enough for future growth and development. The whole thing is about balance the more I think about it. When the business is having problems if you stop and look at it, then you’ll probably find there is an imbalance. Maybe, there’s been too much time dedicated to something or too much money has been spend somewhere. Just take a look and you’ll probably find an imbalance.

You will also probably have to balance your work and private life so I think a simple thing like balance extends a long way into our lives. Think about it, when were you most happy in your life ? Probably when everything was in sync and balanced. Think again, when were you most ill at ease in your life ? Probably when something was weighing you down. When did that feeling disappear ? Probably when you got your life back in balance.

It seems today that so many people are trying to find something that is missing in their lives. Have you ever seen the Ying and Yang Symbol ?

This symbol represents a perfect balance between two opposing sides ( black and white ). Where black is most dominate at the top white is weakest, however the opposite is true at the bottom of the picture. Also, totally enclosed in, where each side is strongest, is an island of the opposite colour. A very profound symbol if you take the time to study it.

Over the years, grasping to understand balance, I have have come to understand that it is not possible to totally eliminate one side. Thus, in the above symbol to totally remove one colour would remove balalnce. Thus, the world in which we live will always be filled with opposites. It is also a world where we can never totally eliminate one side. The truly wise man understands that many forces come to bear in their lives and they don’t try and eliminate what they don’t like or ignore what they can’t handle, they learn to balance the forces to achieve harmony.

Deep eh ? But how does one achieve this balance ? Well, that will be the subject of my next post grasshopper. The path to balance comes from control.

It’s all about control

Last time I was talking about how balance is probably the thing that we are all looking for, in business and personally. The question is how do you find it ? Balance, as you know is a very hard thing to not only achieve but also maintain. If you stand on a see-saw and try to keep it balanced you will have to make adjustments from side to side. Also, if you stand on one foot you’ll spend all your time shifting you weight to maintain your balance. So what allows balance ? CONTROL.

A wise person once said “those who are not in control of themselves are destined to be controlled by other” and not a truer word was spoken. Take a look around today and see how out of control most people are. Everyone is trying to be something they are not. They want to be like this Hollywood star, they want a house as big as their neighbours, they want a salary as big as the bosses and so. The problem is that this lack of control is making millions for businesses selling these dreams. If you are in control of your life, it doesn’t matter what any one else does you are not influenced. It is stressful enough to try and live one life, why try living someone else’s as well as yoru own ? If you are in control you can look objectively at what is on offer and decide whether it is right for you. If it is great, if not then at least you know that it is not.

One of the biggest industries today no doubt is weight loss and dieting. The problem is nearly everyone now knows that to lose weight is simple, eat less, exercise more and get enough sleep. Problem is that everyone wants the short cut. Everyone is looking for that “miracle” diet that will shed pounds in minutes. Guess what ? It doesn’t exist ! Never has never will. Why are people looking for a “miracle” ? Because they don’t have any control. They couldn’t be bothered putting in the time to take control of their lives and thus are destined to be controlled by others and fad “miracle diets“. Sure, most people lose weight on these diets but do they keep it off ? No. Sooner or later they regress to their old out of control self and put the weight back on ( plus a few extra kilos normally ). Then the whole pattern is repeated. Again, they do not have control of themselves.

When you drive a car you are in control of a very dangerous piece of machinery. I read somewhere that cars kill more people every year that people that have been killed in all wars in history combined. Now, I don’t know if that is true but when we go out on the road we trust that the other drivers out there are in control. Why is it not the same with life ? Too many people today are not willing to take control of their lives to make a difference. Why ? Because it requires work, perserverance and commitment. But guess what ? Every day requires more work, perserverance and commitment to achieve your goals. As some other wise person once said, “to achieve anything worthwhile requires sacrifice” and this can’t be achieved without control.

The same applies in business. As Michael Gerber says in the E-Myth, if you are working in a business where you can’t take holidays when you like, can’t afford a sick day and are working long hours, you don’t have a business you have a job. In short, you are controlled by your business. Most people start a business to get away from this but in fact they end up getting trapped in it. Again, it is a hard step to take but to achieve the business you desire you need to have control. You need to have a good look at your business and ask the hard questions like ” would I be better off just working for someone else”. Someone who is in control can not only ask that question but answer it truthfully.

I am no expert but I believe that the key to life is balance and the way to achieve balance is through control. The question now is how does one achieve control ? You’ll never guess what, I have a theory on that as well, but I’ll save that for next time.

Know thyself

Last time I spoke about discipline but I also mentioned that everyone’s level of discipline is different. Why ? Simply because everyone is a unique individual ( thank goodness ). So if you want to improve your discipline the first step that you probably need to accomplish to learn about yourself. A more apt term is probably to listen to yourself or face the reality of being you. Why do I say that ? Well most people today seem to be trying to lead not only their own lives but someone else’s as well. They are so busy trying to be like this person, or be like that person, that they forget to be themselves.

The first step on any path of self improvement is knowing where you are and more importantly who you are. The first big reality check you need to make most likely is to come to terms with the fact that you are good at some stuff and bad at other stuff. Champions in any field don’t practice the stuff they are good at they work on the stuff they are bad at. Here in lies the challenge. As human beings we naturally don’t like doing stuff we stink at, but hey as I said before if it this was easy then everyone would be doing it. The key to attaining disclipine is to determine what needs work and then keep working at it. You’ll probably be pleasantly surprised that sooner than you think it’ll turn out to be easier that you expected. I can also promise you that the more you work at it the easier it will become.

However, keep in mind that you need to be yoruself. For example, if you want to lose weight and you are not a morning person then it doesn’t make much sense to get up at the crack of dawn and attempt to run a marathon. If you know yourself, you will realise that this course of action is going to make it much more difficult than say going for a brisk walk after dinner each night. The secret to attaining what you want is to keep at it and you have a much better chance at achieving this if you give yourself every chance and don’t swim against the current.

Here’s another test I want you to take. Try brushing your teeth with your unnatural hand. A real challenge eh ? Why ? Aren’t your hands basically the same ? Aren’t they connected to the same brain ? When your brain tells your limbs to do something why doesn’t it do it ? See how poor your unnatural hand has become because you fail to use it regularly ? How many other natural assets do you have that you aren’t using to their fullest potential ? Why go looking for something else when by improving the quality of yourself you can gain much greater returns. Why start looking for solutions beyond yourself when you still don’t “know” yourself ?

Wanna know the best bit about “knowing” yourself ? It doesn’t cost you a cent. So spend sometime getting the know the person that you have been ignoring all this time. Starting working with yourself instead of against yourself. If you are both moving in the same direction then there is nothing that you can’t achieve.

Discipline

If we are all looking for balance in our business and personal lives, which we can achieve through control, the question now is how do we obtain control ? Unfortunately, as far as I am aware the only way that one can gain control is through hard work and dedication, otherwise known as discipline.

Another unfortunate fact of life is that people are born with different levels of discipline. Again, unfortunately, the environment in which we grow up also has a significant bearing on how disciplined we are. I once heard a wise person say that hard work compensates for any natural ability. Translated, this means that you can achieve whatever you want if you are prepared to work at it. What’s the hidden secret of all these self help guru’s ? Basically, you need more discipline. Pay me buckets of money and I’ll show you how to get it easy. Well I’m sorry to tell you that discipline is all about hard work and sacrifice.

Another wise person once said that to achieve anything worthwhile you will have to sacrific something. If you want to get better grades at school you are going to have to sacrific your time and study, if you want to get thin then you are going to have to work out and burn calories, if you want to get rich then you need to save. All simple, all obvious but it is surprising how many people seem to ignore this. If I told you that I could guarantee a way that you’d be independently rich in your retirement would you believe me ? It isn’t rocket science, it is something called compound interest. Basically, if you invest a small amount of money over a long period of time ( that accumulates interest ) then you’ll be rich beyond your wildest dreams. If it is that obvious why doesn’t everyone do it ? Simply because you need to make a regular sacrific ( admittedly a small one ) on a regular basis. Very few people have the discipline to do this. It far easier to blow the money on the here and now. End result ? Little if any retirement savings because they just don’t want to endure the sacrific of time. Most people are impatient, they want the money NOW.

The problem with discipline is that you need to keep at it, every day. That to most people makes it untenable. The problem is that rather trying to achieve small improvements in discipline they attempt try and achieve the impossible. Let me ask you, if you are going to climb a ladder do you take running jump at it and try and land on the highest rung you can ? No, probably not. Why ? Because if you fail then chances are you’ll fall all the way down to the ground and probably do yourself an injury. Most rational people will tackle a ladder one rung at a time. When they try to achieve ( or climb ), other goals why do they go back to attempting to skip the start and jump as far ahead as they can ? Again, impatience.

To achieve discipline takes work and time, unfortunately I can give you no easy solution – because there isn’t one. If you want to be more organized with you time start simple and get a date book. Don’t give it away after a week because it is too hard, you need to keep at it. After a while, if you find that that tool doesn’t help go and find another one but keep at it. Like toning muscles by going to the gym, the only way that you can improve your discipline is to keep at it. The more that you keep it and practice the better you’ll become, the easier new challenges will be but it won’t happen after one night. If you have ever seen the return curve for compound interest you will note that the pay off period ( were the curve starts growing exponentially ) only happens right at the end. However, to get the returns you gotta put in the time beforehand. Sorry, no shortcuts here.

Everyone has discipline, unfortunately everyone has different degrees of discipline. The good news is that you can improve your discipline by doing something simply – JUST STICKING with it. The other good news is that the more you stick at the better you’ll get. As another wise person once said “ the jouney of one thousand miles starts with the first step”. So what are you waiting for – get started NOW and KEEP GOING !

Your greatest strength is also your greatest weakness

For many people and businesses the first place to start examining themselves is to perform a S.W.O.T analysis. The write down their strengths, weaknesses, opportunities and threats. This then helps identify what needs improvement and what can be taken advantage of.

What many probably don’t realize is that some of your greatest strengths can also be your greatest weaknesses. Sound strange well consider this. A person who is determined and disciplined to overcome challenges and adversity may also be accused of being stubborn and pigheaded. It is very likely that people with these qualities can find themselves missing opportunities because they aren’t open to change or new ideas. Probably for most strengths that you could name about yourself or your business, if you thought hard and long enough about them I’m sure you could identify where they may also contribute to weaknesses.

For example one of the great strengths of a business like IBM was its size. It had a huge market share and a massive salesforce but in the end its size turned out to be its undoing. It wasn’t fast enough to see the revolution that happened in personal computers. It allowed a more nimble upstart, like Compaq, to jump into the void and take market share and opportunity away from it. Another example would be Lotus or Wordperfect. Effectively these companies had a 100% market share of the spreadsheet and word processing market. Where are they today ? Confined to being also rans with market share in single digits and falling. How could any business with 100% market share allow this to happen ? They sat back, relying on their strengths to carry them through, they didn’t continue to work and improve, they became arrogant. The reasons are many and varied, however it is clear that their greatest strength also became their greatest weakness.

So does this mean that we only have weaknesses ? No, because the strengths are there they just need one important factor to ensure they don’t turn into weaknesses. What is this ? Well, it is no secret, we have talked about it before. It is BALANCE. If you lose the balance of your strengths then they run risk of becoming weaknesses. You should now see that we are almost back where we started this discussion. We are back talking about BALANCE and from there we move onlto CONTROL and so on.

As I have said, it isn’t anything mystic or hidden. As they say it is just the “circle of life”. They key to improvement is to keep working on it, when it comes around again ( and it will ) take some time and continue to improve it. There is very little chance that you’ll get something right the first time, the secret is probably to do the best you can, put it aside and work on the next thing. When the challenge arises again it should now be a bit easier and you have learnt more that can help improve it this time. So you work at it a little more, put it away and so. I like to think of it as working on a great sculpture. You know the final result is in the block of granite, it is just hidden. The challenge is to chip away and reveal the result that only you know is there.

This is how it progresses. It doesn’t make sense to fight it, although many people do. Like it or hate it, that’s life.

One thing that you can’t control

The one thing that most people don’t have enough of these days is time. Why is that ? Is there that much more that needs doing ? Are we so pressed that we need to clone ourselves to get all the work done ? Somehow I don’t really think so. I agree that there are plenty more demands on our time these days but it all comes down to how we choose to manage it and where we choose to send it.

The one constant thing about time is that it marches relentlessly on. If we waste a second then it is gone for eternity, never to return. Clearly, time is one of our most precious resources and something that we have little control over. Also, clearly, it is impossible to achieve everything that we want to in the time we have, once you take out the essentials like eat, sleeping and toilet breaks. One of the major differences between highly successful people and those merely successful is their management of time. These people recognized a long time ago that they couldn’t control time, the best they could aim for is to be as efficient as possible as they can with time.

A very interesting experiment is to keep track of exactly what you spend your time on during a day. If you want to become more efficient in your business keep track of exactly what you spend you time on for at least a week. After you have recorded all this information go through the list and allocate each activity into high, medium and low value activities. Have a look at how much time you probably spend on low leve activities, such as reading and responding to emails, browsing the web, chatting and so on. To become more efficent you are going to have to eliminate these low value activities to make room for the high value ones.

Note, I didn’t say add more items, I said eliminate items. Why ? Well most business owners probably already have their dance card full. Instead of looking at the value of the tasks they perform they simply add “one more” item, then “one more” item and so on. Not only does each new item affect the outcome of all the items the person is already balancing it generally overloads them. It may sound strange but the secret to becoming more efficient for most business people is to actually do less.

In business, especially self-employed business, we need to be ruthless with our time and focus on the items that are going to earn us the most return. Unfortunately, too many people spend too much of their time in low value tasks that should be eliminated or at best delegated to someone else. The problem for the business person is letting go. Most become so addicted to teh feeling of having the whole business depending on them and having the power of being in total control that they can’t for a moment release control. The problem here is that in fact these people are not in control, they are out of control. If they were to get sick or stop doing the work for any reason, then the business would stop. when you look at it that way, who is control ? As Michael Gerber says, if you are like this then you don’t have a business you have a glorified job.

As with most things the secret to being efficient with your time is not some expensive time management system that only helps you crowd more onto your dance card, it is a discipline of continually working to do high value activities while eliminiating or minimizing the lower value ones. The first step in the process is to actually sit down and record exactly what you are spending your time on. If you never take the time to look at your self and improve you never will. It is as simple as that.