Written by: Christine Nicholson, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
Let’s use the analogy of a leaky tap.
If 100 homes all had a dripping tap, there will be:
A small percentage of homeowners who would be confident about either fixing the problem or spending the time learning the knowledge and skills to get the job done (you can find anything on the internet these days if you spend the time!)
Equally there will be a small number of homeowners who would simply call out the plumber who will charge a call out fee and a fix-it-fee – the tap will be fixed within 15 minutes (assuming it’s a worn washer!). They know that doing it themselves or waiting is a false economy. These homeowners recognise that their time is valuable and to fix the tap it’s worth getting in the expertise AND fixing it soon rather than later generally works out cheaper and more convenient.
And in the middle with be the group who try and do it themselves and don’t actually fix it, maybe making it worse. They know that paying to get an expert in would be wise, but they want to give it a go first just in case they can save the money. They just don’t value the knowledge and expertise and see it as a cost they may be able to avoid. and;
Finally there will be those who do nothing about it until it becomes a full-on leak with a constant flow of water by which time the whole tap needs replacing, as well as a lot of additional repairs, possibly lost equipment or furniture. They know the value of fixing it but choose to delay just in case it fixes itself – they stick their heads in the sand and pretend the problems are not as bad as they appear to be.
Business owners fall into 4 similar groups. Those who:
Have recognised what expertise they need so hire the best people to take those job on knowing that it’s an investment in their business growth (i.e. get a plumber);
Don’t really know how to get expertise but recognise the value and understand the importance of employing skills and actively engage with the talent they need in their team when they know they have exceeded their own skillset (i.e. try fixing it themselves, then call a plumber);
Have recognised what expertise they need but avoid hiring because it’s too expensive until they absolutely have to and don’t know that they could be achieving so much more with the right talent. They are doing everything themselves because they can’t imagine anyone else being able to understand their business (i.e. fix it themselves); and;
Have no idea that by hiring expertise their business could be achieving much more than it currently is. They are unlikely to hire a role that they cannot fully understand the value of. They consider staff as a cost and hinderance rather than an investment (i.e. they ignore it!)
If you are reading this article then you are already “thinking” like someone who is not “ignoring” the challenges and problems in your business – but thinking is not enough.
It takes ACTION!
Successful people do what they have to, whether they feel like it or not.
“Success seems to be connected to ACTION. Successful people keep moving. They make mistakes but they don’t QUIT” ‒ Conran Hilton
Successful people:
Start before they feel ready;
Measure and track progress;
Are productive not busy;
Avoid trying to make everything perfect;
Make logical informed decisions;
Think positive and learn from mistakes;
Make small continuous improvements;
Keep things simple;
Take decisive and timely actions;
Create and pursue clear goals.
“Life is 10% what happens to you and 90% how you react to it” ‒ Charles Swindoll
What is “Your Profit Score”?
With over ¼ of a century of running and building businesses, I have asked the same 7 questions of pretty much every business owner I’ve been involved with:
Do you have a strategic plan for your business?
Do you have management information for decision making?
Do your systems support customers getting excellent service?
Do you have the right people in your business to achieve its full potential?
Do you have monthly cash flow statements and forecasts?
What is your relationship with your business?
What impact does it have on your family / personal life?
Each of these questions, when fully thought about, gives insight into where the business is now and where the owners or leaders want it to be – and WHY!
And it doesn’t matter what industry you are in, how big your business is, how old your business is (or you are for that matter), or even how many people you employ.
It relates to YOUR measures of success, not anyone else’s.
Why these 7 questions?
Each question highlights an area of your business that, if not working well, will have a negative effect on the business performance, the future growth and your own mindset and emotional energy. The answer to the questions quickly and effectively identifies where the strengths and weaknesses in your business lay – where help and intervention can be focused and where the biggest impact can be achieved, not only to your business but to your life.
Why are these areas important?
Big things happen when you get the little things right. You just need to know what the little things are first. This means taking a look at 6 essential areas of your business that are the solid platform to build success on.
These are:
Planning
A business without goals or targets will rarely achieve anywhere near the success that one with a clear action plan will. If they are in writing, then the chances of success significantly increase. It sounds complicated but as you will see in the Planning chapter of this book, it can be made simpler and much quicker than you might have imagined. Simplicity is the key to getting started.
Knowing Your Numbers
Without insight and information on how the business is performing, the effectiveness of decision-making is diminished. A business may fail or fly based on the adequacy of the decisions made by the senior management team (even if that team is one person – you, the business owner!) Having some basic management accounts and key performance indicators on a regular and consistent basis will help you fly your business in the right direction rather than as if you were blind. You might already have the information but it’s not regularly produced.
You may need to build some reports from scratch – but it does not have to be complicated. Keeping it simple is the only way you can keep on top of it. Many accountants produce sheets of numbers that make no sense to the leadership team in a business, which makes the whole activity an expensive waste of time.
The chapter on Knowing Your Numbers shows you how to ask the right questions and get the right reports from your finance professional. It also shows you how to get good financial support if you need it.
Systems
As you start to grow and bring in new team members, having systems creates consistency which avoids compromising your standards of service delivery. Everyone knowing their role in the organisation is one of the most commonly missed parts of the system. And systems don’t mean technology – apps and software are simply the tools of a system.
It’s processes and procedures that are critical to a scalable business. Simplicity is key.
People
Having the right skills and attitudes to allow expansion of the business and liberate YOU from working in the business to working ON it is a critical factor for scaling-up. Many business owners do not see the value of bringing people into their organisations with the skills and attitudes that allow them to be released from some tasks to achieve more – and generally that translates into earning more.
Seeing people only as a cost is a sure-fire way of keeping your business smaller than it needs to be. Building a team is not easy and looking after staff, if you don’t get the right ones on board, can be debilitating and demotivating. Some of the essentials of getting the right people are laid out in the People chapter.
Cash
Having a pathological attitude towards cash management and monitoring allows the life blood of the business to flow. Without a flow of cash, the business will quickly seize up.
Running out of cash is one of the most common problems in business failure.
Understanding the difference between cash and profit is essential to every business owner. Getting this wrong will kill your business.
Your Relationship with Your Business
Your business is not a job, though it can often feel like the worst job in the world! The most successful business owners are driven by a bigger purpose than having an income that covers their survival needs.
They have a passion and drive that exceeds the average employee. They are willing to take risks to achieve a bigger life and may seem to be driven by wealth.
More commonly it’s not wholly about money at all – it’s about the things that financial freedom can buy. If you don’t have the energy and conviction for your business how can you inspire others to feel that way too?
This is a key indicator that you should think about getting your business ready for your exit – either by selling or by building a management team to get you out of the day-to-day activity.
Impact on Your Family
Divorce rates amongst entrepreneurs is high! A sad statistic is that only 30% of business owners are happily married or in a successful long-term relationship – and some high profile entrepreneurs testify to having the right partners, for example:
Bill and Melinda Gates (married over 25 years),
Richard Branson (married to 2nd wife for nearly 30 years), and
Steve Jobs (married 20 years till his death in 2011).
I have come across business owners who love their businesses and struggle to maintain a positive relationship with their family / spouse / partner. Sometimes it’s a lack of understanding by family and friends as to why the business takes up so much time and energy. Sometimes it’s because they just don’t want to understand.
Entrepreneurs are abnormal people and it can be a challenge to make others understand why you put yourself through some of the challenges.
Changing the business from a negative impact on the family into something more positive can have a transformational effect of the business, on you as the owner and your loved ones.
“The Most important thing in life is family. People right here, right now” ‒ Vin Diesel
The whole diagnosis of your business can be shown in a few easy steps – answer the 7 questions and get a copy of Your Profit Scoretm report – the easy and quick diagnostic tool for your business and by extension, your life. It takes less than 6 minutes and all it needs is for you to be completely honest with yourself! Find Your Profit Score here.
“A correct diagnosis is three fourths the remedy” ‒ Mahatma Ghandi
Christine Nicholson, Executive Contributor Brainz Magazine
I am Christine Nicholson, an author, speaker and award-winning Professional Business Mentor who works with multi-million turnover business owners of technology, engineering or product/services businesses.
I'm UK Business Mentor of the Year 2021 and a Global Top 50 Woman in Accounting. I've appeared on BBC talking about business!
0333 567 8011
