The reality is that most small business owners operate in a constant state of overwhelm and stress. We feel that, at some level, our skills don’t cut the mustard, and we often have no idea where to focus our (very) limited time when faced with seemingly endless priorities.
Sound familiar? This is why “Fun in Business” matters. If your business is fun, you won’t be overwhelmed. If your business is fun, everything is working: you’ve got time to do the things you enjoy, your staff are happy, you’re making money. Need I say more to entice?
Let me show you why Fun is an incredibly powerful business management tool that helps you build a business that lasts, sustainably.
Fun Is the Way Out of Overwhelm
Fun may seem like a very strange and whimsical concept to focus on when we’re talking about growing a business. After all, isn’t fun reserved for time spent socialising at the pub or lazing about on tropical islands? Events that happen outside of business hours. Experiences that are paid for by your business, but otherwise entirely unrelated.
Perhaps not. In fact, I believe that Fun in Business is actually a hard-nosed business management principle. It is that deep sense of reward and satisfaction you get to feel as a result of building a business that hums along like a well-oiled machine.
Anyone else tired of focusing on all the serious stuff? The things that get drummed into us by patronising business management books and gurus? IT systems, contracts, staff management, sales and cashflow are all very important things, of course, but – in my humble opinion – they’re not where we must start.
We must start with fun. Why? Because if your business is fun, it means you
are making money
have enough time to do what you need to do
are proud of the stuff your business makes or delivers
know exactly where you’re going and why
have happy customers
have engaged staff
have balance in your life.
In the beginning, when we are first getting started in our business, there is usually a high level of that kind of fun around. Everything is new, exciting, adventurous and challenging. However, after a while, the real world comes rudely a-knocking and we suddenly find that
we aren’t making as much money as we thought we were going to
we haven’t been able to take our daughter to soccer training
our clients haven’t all become our greatest fans
our staff aren’t the perfectly aligned human beings that we expect them to be.
When this realisation sets in, we start to feel like we have become a slave to the business. We get worried that the light at the end of the tunnel may not be sunshine.
We try telling ourselves that “Rome wasn’t built in a day” and we “have to take the rough with the smooth” because, like Churchill said, “Never, ever give up!”. We push harder and longer, holding onto the hope that good times will surely follow.
This is Business Hell, and it’s where most of us spend our time: Chasing our tails. Managing crises. Operating as a “Jack of all trades, master of none”. Living in a constant state of overwhelm.
After 30+ years in business (and working with lots and lots of business owners), I have come to believe that the only way out of this overwhelm is to ensure that business itself is fun. Deep and meaningful fun.
One of the greatest challenges for businesses, especially small ones, is that there are so many priorities competing for your attention on a daily basis. It feels almost impossible to decide where to focus next.
Many business owners also lack confidence in their aptitude for certain business development tasks. After all, you started this endeavour on the back of your skills as a carpenter, accountant or architect; not your background in sales, marketing, staff management, etc. Nobody taught you how to write an operations manual or create a cashflow forecasting spreadsheet, did they?
The result? Most of us revert back to “picking up the hammer” (because that is the one skill we know like the back of our hand), managing crises and being reactive to whatever is thrown at us. Like I said, Business Hell.
A New Tool for Your Toolkit
The concept of Fun in Business is an incredibly powerful tool, designed to keep you out of reactive crisis management mode so that you can focus on what is most important for today, tomorrow, next week, next month, next year and beyond.
Here’s how to use it in practice.
Think of a scale from 0 to 10. Let’s call it the Fun in Business scale.
10 on the scale? This past week in business has been so much fun that you can’t wait to get up and go to work. You’ve gone home every day with a big smile on your face. You’ve achieved great things. You had a wonderful time with your co-workers. Everything at work (or in business) has been just brilliant.
0 on the scale? Entirely the opposite. Your week at work has been simply awful on every single level. Pass the vino now.
Now ask yourself the following questions:
What number on the Fun in Business scale would you give your last week at work (or in business)? Let’s say 4.6.
Thinking ahead, what number on the scale would you like next week to be? Perhaps a 5.
What one, two or three actions can you (or we, as a team) take to progress from 6 to 5 on the Fun in Business scale, next week?
These questions, asked consistently, will cut through all of the crises and competing priorities, leaving you relentlessly focused on the next most important thing that must be done in your business.
These questions, answered individually or within a team (anonymously and with the results averaged), will set you up for having hugely productive conversations about how to make tomorrow just a little more fun than yesterday.
I promise, when you commit to building a Fun Business by regularly asking yourself these pivotal questions, you will have taken the first step to building a business that sustains you for years to come.
Remember, a business that isn’t fun won’t be around for long!
Your Homework (The Fun Kind)
Now, I’ve got a hunch that you’re a hands-on kinda person, so here are some actions for you to take that will help make your business more fun. Answer the following questions and start thinking about how you can make intentional changes. The results will be more illuminating than you might think!
Make a list of the 20 most fun experiences or most exciting times you’ve had in your business.
Write down the 3 things you like most about your business.
Write down the 3 things you like least about your business.
The Three Secrets to Building a Beautiful Business and Life
Have you ever felt overwhelmed, frustrated or stuck in your business? My guess is that most of us have, and, if you haven’t, then you’re either knee-deep in denial or some kind of entrepreneurial unicorn. (If you fit into the latter category, feel free to move smugly on to another blog post… but not before you send me your secrets!)
When we first start out on our entrepreneurial journey, we’re told that success is all about the sensible, hardnosed principles and business buzzwords that you’ve likely heard a bazillion times: visioning, leadership, delegation, systems, planning, KPIs, and more. Of course, all of these things are crucially important, but there are three key principles that matter even more.
Three Unrecognised Factors for Success
I believe there are three undervalued and almost unrecognised factors for business success that are far more important than all those clichéd examples put together. These are the secrets to getting unstuck, stepping out of overwhelm and finally building the beautiful business and life that you deserve.
So, what must you learn?
Your time is your business’ most valuable asset.
It’s okay to say “no”, often.
Be kind to yourself.
And that, my friends, is it.
Simple, right? Too simple for some of your sceptical minds, I’m sure. In fact, I can feel the eye rolls and smirks burning through the screen, but don’t write my theory off just yet! Your beautiful business (and life) is on the other side of listening to, and applying, what I’m about to share.
Maximising Time: Your Most Valuable Asset
In my experience, most business owners believe their most valuable asset is their staff, customers, intellectual property, stock, equipment or buildings. All of these things (or people) are incredibly valuable, for sure, but time is the only asset that is truly limited. You can never get more time – no matter how much you try to beg, borrow, hire, buy or steal.
Your time – spent fully focused on the stuff that really matters – is an asset almost as rare as rocking horse droppings.
In order to build a beautiful business and life, you must learn to become greedy with your time. You need to repeatedly check in and ask yourself questions like:
Is this thing the best use of my time right now?
What would happen if I didn’t do this thing?
Is there someone else who could be doing this thing instead of me?
What would happen if I did this thing later?
If I do this thing now, what am I sacrificing?
Trust me: it pays to train yourself to ask these questions, often. Make it a habit. You will always have a “to do” list longer than your arm. You will always have more demands on your time than you can physically fit into a good day’s work. That is, of course, if you aren’t an aforementioned entrepreneurial unicorn (in which case, why are you still reading?!).
In short: learn to do only the stuff that matters most.
Saying “Yes” to Saying No
There is no more important skill for a business owner than knowing how and when to say “no”. Why? For starters, it will help you out immensely with achieving point 1 (maximising your time), but it will also pave the way for making your business stand out from the crowd.
Marketing 101 says that every business needs a unique selling point (USP). That’s why it pays to know your fortes and play to them by turning other opportunities down. After all, “a jack of all trades is the master of none”. Focus on your fortes and you’ll reap the rewards of presenting a highly differentiated brand.
Here’s some homework to get you started. Practice saying “no” in front of the mirror and then make a pact with yourself to say it for real at least once this week – or better yet, today! Remember, it is possible to say “no” respectfully, clearly, calmly and without feeling guilty. This brings me to my next point…
Less Guilt, More Kindness
Do you frequently beat yourself up for procrastinating? Believe you’re inherently disorganised, forgetful and lazy? Think your time management SUCKS? Does a cruel voice in your head frequently tell you that you’re not good enough?
You’re not alone. Absolutely everybody (except psychopaths!) has that critical inner voice. Everyone lets their worries, anxieties and irrational feelings of guilt get the best of them sometimes. However, us business owners are particularly hard on ourselves. In fact, I often jokingly say that small business owners are the most guilt-ridden people on the planet because I hear these kinds of self-deprecating words so often in my coaching practice.
That’s why I saved this particular pearl of wisdom for last, hoping you would remember and digest it well. In my humble opinion, being kind to yourself is not only the most powerful antidote to self-sabotage, but your fastest path back to JOY.
Being kind to yourself is not just the most effective way out of feeling stuck or overwhelmed in your business and your life – it’s the only way.
When we allow negativity and feelings of guilt to take hold, we give ourselves ever bigger burdens to carry. We set the bar impossibly high and then we punish ourselves when we don’t hit the mark. We lead ourselves to the paralysing place of overwhelm with too many tasks to complete in too little time and no plausible end in sight.
An overwhelmed brain is not pretty. It’s extremely inefficient, scientifically proven to underperform at every level and an enormous waste of your incredibly valuable time. And while the devil on your shoulder is, in fact, a protective mechanism designed to keep you safe, that doesn’t mean it ain’t a giant pain in the arse. So, how do we overcome it?
The good news is that you are completely capable of dialling down the negative voice and freeing yourself of imposter syndrome (feeling inadequate despite your success). Our brains are surprisingly malleable, and it IS possible to break the habit of a lifetime. Begin by noticing it and catching yourself in the act. Be inquisitive about where the self-doubt could be coming from. Remain compassionate, judgement-free and patient with your perfectly imperfect self while you reframe those pesky misperceptions and then continue on your merry way feeling 10 stone lighter!
I promise you; this soft, cuddly kindness stuff is the most crucial and hard-hitting work of all. Silencing (or at least muting because it’s a work in progress for all of us, including me!) that inner critic provides the space for creativity to flourish and a new level of clarity and productivity to arise. Plus, as soppy as it sounds, you have every right and reason to give yourself a pat on the pack. You’ve made it this far. You’re alive. You’re learning. You’re growing.
Your Permission Slip
So, here’s your permission slip to stop, give yourself a break and smell the roses. Look at what you’ve already achieved. Tell that little voice in your head to kindly move along because you’ve got this, and you ARE good enough. Now, make a note of my TLDR summary below and then TAKE ACTION on the good stuff today.
If you’re feeling overwhelmed, frustrated or stuck and you want to build a beautiful business and life, you must learn to:
Accept that your time is your business’ most valuable asset – and act accordingly.
Say “no” regularly, calmly, respectfully and clearly.
Be kind to yourself, above all else.
This shit works. I promise you.
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Bang crash! Watch out! Duck! Hang on! Oh no! Here we go again!
My life as a business owner feels like a roller coaster ride, I’m hanging on for dear life half the time… How can I slow it all down a bit and take control of my business and my life?
Running your own business can feel like a constant juggling act and most of the time, all you do is hold on for the ride and try to make sure you duck at the right time.
But it doesn’t have to be like that. Running your own business is never something you should because you want to have an easy life, because it’s never going to be easy. But you can make sure the business works for you rather than the other way round.
The Big Question of Small Business
It all starts with this question, The Big Question of Small Business:
Why does your business exist and why would anybody care?
Most business owners can’t answer that question clearly, in a single power sentence. And if you can’t answer that question, there is one really important thing you can never do, with confidence and clarity, and that is to say NO.
Saying NO is probably the one, most important thing that you have to learn to be able to do well in your business in order to to get off the roller coaster and to take control.
I’ll give you an example from my own experience that happened to me only last week.
That question, the Big Question I talk about above: Why does your business exist? My answer to it is this:
I help small business owners feel great about themselves and about their business, by helping them discover and build their own unique Beautiful Business and Life
That’s what I get up to do, each and every morning.
So last week I received an email from the health and wellbeing officer of one of the Big Four Banks here in Sydney. This person is running a personal wellness program for the entire staff of the bank in Sydney and she was looking for a coach to be involved with the program. The opportunity was enormous. This bank employs thousands, if not tens of thousands of people in Sydney alone and being offered a sponsored opportunity to get in front of all those employees is incredible… For the right person.
I wasn’t the right person for the job
And there’s the rub. I’m not the right person for the an opportunity. I work with small business owners, not with employees in the corporate world. Now I’m sure I could have done something for this wellbeing officer and made it work and I would have done a good job, I have no doubt about that, but I actually know someone who is much better equiped to take on this project. She specialises in working with employees in the corporate world to help them feel better about themselves and advance in their careers. So I thanked the Wellbeing officer and I introduced her to my friend and two days later, my friend had signed up the gig. There’s a good chance that this is the best gig my friend has landed in years and I am absolutely sure she’ll lay them in the isles… She’s brilliant at this kind of thing.
I didn’t get the gig, I won’t make any money from the gig, but I also didn’t get the stress from doing something that wasn’t absolutely in my area of expertise. I’ve learnt over the years, that I’m really good at some things and not others, and I need to stick with those. My friend is really excited and will have a lot of fun with the project, probably make a lot of money and do really well. What’s more, she’s super motivated to return the favour and I have no doubt something will come my way at some stage that’s right up my alley.
Learning what to say No to, and do it in such a way that means everybody is happy is absolutely a core skill if want to get off the roller coaster and take control of your business.
So: Why does your business exist, and Why would anybody care about that?
A great business-vehicle with a great driver and lots of fuel in the tank allows you to create more great work.
In the past 15 years as a Business-Life Coach I’ve worked with many architects and designers of all types. Design practices and studios are a special kind of business with special challenges around making money and growing. I’m not entirely sure why that is, but I think it has something to do with the design side of things.
Architects have a profession and a set of skills and their business is often built around that set of skills. In that, they are no different than plumbers, mechanics, bookkeepers and lawyers. Their businesses also rest on a set of specific skills and both sell their expertise to their clients. But architects (and designers) often have a passion for their profession that goes deeper. For many architects, architecture is a calling for them. Architects and designers often want to leave their mark on the world with their work. They live for their art as it were and the commercial demands of business can sometimes feel like they are at odds with their art. Making money as an architect is often considered suspect.
Vincent and Pablo
But it doesn’t have to be that way. Of course, we all know the examples of artists who died in poverty and obscurity only to achieve fame and fortune after their death (Vincent van Gogh for example). But equally there are many examples of artists who created great art, left a mark and were commercially successful in their lifetime (Think of the greats of the Italian renaissance or Pablo Picasso in more recent times). Great art doesn’t have to be created in poverty, and nor does great architecture and design.
I like to remind my clients that making money is never the point of business, whether the business is a plumbing business or an architect practice. A business must make money, and generate good cash flow, otherwise it’s a hobby. But the reason it must make money is so that it can achieve it’s Mission… So that it can make good on it’s Purpose in this world.
I recently worked with a client who is an architect. He employs 4 staff who are all architects or interior designers. The business has only just scraped by for a few years now. The practice creates great work and my client is excited about the potential for making his mark on the world of architecture in the future. But he has only just been making ends meet for the past few years. As a consequence he pays himself very little, less than his staff even, and worse, he may well lose some of the staff he loves so dearly in the future, because there is not enough opportunity in the practice for them to develop and grow professionally. My client feels caught in a dilemma. Focusing on making money and growing the business, he believes, means the work will suffer, and he can’t allow that to happen. Hence the needs of the business come second.
I told my client to think of business as a vehicle. The point of a vehicle is to take us from A to B. But the vehicle can only perform that function, if it’s in good state of repair, if it’s filled up with fuel and if the driver knows how to operate the vehicle safely.
Fuel in the tank
Business is just like that. The point of my client’s business-vehicle is to allow him to deliver great architecture for his clients and to make his mark on the world of architecture in general. In order for his vehicle to be able to do so effectively, it needs to be healthy, in a good state of repair, he needs to be a good driver and it needs fuel in the tank. Money is the fuel of business and my client needs to learn what it takes to be a good driver, a good business owner in other words.
The demands of business do not have to be in conflict with what you’re passionate about at all. It is perfectly possible to create great architecture, and beautiful design, while making making great profits and building a healthy growing sustainable business at the same time. As a matter of fact, a healthy profitable business allows you to create great art, if you let it… I promise you.
Growing your building business is not as hard as you might think.
Some of you will know that I used to have a building company. It’s been a while now, I founded the company in 1983 and I sold the company to my junior partner in 2003, but I have many fond memories of my building days (and some not so fond).
Because of my background I am often asked how to grow a building business, while keeping margins up. In my experience, business growth in the building industry comes down to implementing Five Golden Rules:
Under-promise and over-deliver
Probably not the Rules you were expecting, so let me explain:
Muddy boots and cream carpets
The building industry in Australia is a strange beast. On the one hand, because of it’s widespread system of contractors and sub contractors, I believe it’s probably one of the most efficient building industries in the world, but on the other hand I also believe it is one of the unruliest building industries in the world. Most of us know one or more horror stories of builders going bankrupt, subbies walking off site, costs spiralling out of control, tradies walking muddy boots through cream carpets, leaking bathrooms, disputes before tribunals and indecipherable quotes on the back of enveloppes.
I’ve certainly have my fair share of war stories from my 20 years in the building industry in Sydney. And to be honest, I’ll even admit that I and my company might even have been at the root-cause of a couple of those stories.
It’s not easy running a building or building-trades company in Australia. But there’s two sides to that coin. There’s great opportunity in the building industry to grow your business and make good money, because there are so many drongos out there and customers are desperate to find professional reliable businesses to deal with.
Laying out the red carpet
It was that way in my days as a builder. The good, professional, reliable, tilers, bricklayers, carpenters, painters, plumbers, electricians, concreters, renderers and roofers were always busy. I would have to book them in 6 weeks in advance, I’d have to pay them well and lay out the red carpet for them, or they’d go somewhere else. And I learnt that I’d better do all of that, and then some, because getting the cheaper, available tradies always led to disasters of one kind or another and most importantly, unhappy customers.
The Golden Rules:
Hence my Five Golden Rules for Growing your Building Company above, because this is what I learned about developing a growing Beautiful Building Business (and Life):
Be empathic: Building contracts are big things, in dollar terms as well as scope. Customers enter into building contracts with great trepidation, because it’s usually the biggest contract of any type they’ve ever signed and they can’t even see what they’re buying yet. You need to be sensitive to that anxiety, that all customers experience at some stage in the journey. You deal with big contracts and big turnover every day. For your customers it’s a great source of stress. Stress makes people behave irrationally… Make allowances for that.
Be predictable: People are happy to pay your price if they feel confident they’ll get what they are expecting. If they don’t have that confidence, they’ll shop on price because that’s the only thing they can control.
Under-promise and over-deliver: If you say you’ll be ready with something by Friday, surprise them and finish by lunchtime on Friday and then take some time to really clean up, dot the I’s and cross the T’s. Don’t ever tell the customer you’ll be all finished by Friday and then when they come home from work on Friday it’s still unfinished and a mess… That’s just asking for trouble.
Say No: Don’t take on work you don’t feel confident you can deliver, fully, properly, on time, profitably and with a smile. Say yes, only when you are 100% confident you can do it how it’s meant to be done.
Communicate: The three C’s: Communicate, Communicate, Communicate. If you come to the conclusion on Wednesday that you can’t complete the job on Friday as you promised… Tell them… on Wednesday… By email, by letter, by carrier pidgeon, by SMS, or by Whatsapp or Twitter… But for Pete’s sake, tell them. They won’t know, they expect to have a Barbeque on the new deck on Friday evening and they’ve invited their friends to celebrate. Similarly… If you strike something unexpected, you hit rock where you didn’t expect it, asbestos in the roof, an aboriginal artifact in the footings, a conflict on the drawings, you find out you’ve made a mistake in your calculations, ordered the kitchen benchtop 100 mm too short, or forgotten to order it at all… TELL THEM. Seriously. They’ll understand. They’ve made mistakes in their life as well.
And if you do all of that… If you live and breathe those rules, every day, and you hammer those rules into the heads of your employees and subbies, your business will grow and grow and grow, because your customers will be your Raving Fans and they’ll do your marketing for you. They’ll tell their friends all about how you finished the deck early on Friday, cleaned and tidied up and left a bottle of wine to have with the barbie on the deck when you came home from work. They’ll talk about you to their work-mates and convince their neighbours to have their own decks built by you as well, even though they’ve had cheaper quotes.
The alternative means you’ll have to endlessly compete on price and competing on price is a dog’s game… trust me on that.
Why it matters what you pay yourself as the business owner.
Business owners often don’t pay themselves at all, but just draw money out of the business account when they need it. At the end of the year, the accountant adds up all the “draws” and books it to something appropriate in the balance sheet to make the Tax Department happy and it’s all good. Sp why does it matter how much you pay yourself, why should you pay yourself at all and how much should you get paid?
Clearly, a big factor in how much profit your business makes and whether or not the business has the cash to pay it’s bills is how much money you draw out of the business at any one time. If your business turns over half a million dollars and you have 4 employees and an office and you pull out $200K yourself every year there may not be enough money left to pay for Cost of Sales, staff wages and overheads (or tax, for that matter), and if you pull out nothing at all, it might look like your business is enormously profitable. Your wages, drawings or dividends are a significant factor influencing the health of the company.
So wat’s wrong with letting your drawings depend on whether there’s enough money in the bank to pull some out?
If your business doesn’t make profit, it’s a hobby.
A healthy small business ought to make somewhere north of 5% net profit before tax, every year. I generally advise my clients to aim around 10% as a guideline. (10% of revenue… so for every $100 in sales, the business ends up with $10 of net profit). There is no golden rule about this number, but it’s a useful guideline in most cases.
Net profit is the money that’s left after all costs of the business have been paid, and you, the owner of the business are absolutely one of the business’ costs, a major one at that. And you rightly should be a cost to the business, just like the electricity and the rent and the mobile phone bills and the staff. Without you the business can’t function. You are the CEO and general manager, the head sales person, the chief cook as well as the bottle washer. In any other business, all those people would need to be paid and probably quite highly, and so should you. If you do not pay yourself a proper wage, you’re not professional and nor is your business.
Dribs and Drabs for the boss
I recently started working with a client in an architecture business. The client has 4 staff plus himself and he pays his staff and all his other costs, but he only gets paid in dribs and drabs when there’s money available. He showed me his P&L and proudly pointed to the net profit his business made last year. But when I asked him how much the business was paying him, it turned out that he just drew out some money every now and then and that his drawings didn’t show up in the P&L. In effect, if he were to pay himself as much as his lowest paid staff member, he would have made a loss last year. In other words:
My client wasn’t running a business at all, he was running a hobby.
My client has now implemented a weekly minimal wage for himself, run through the books as a wage, showing as a wage in the overheads and we’ve updated his business targets to be in line with the new reality. The business is not out of the woods yet, but there is a new air of professionality in the practice and my clients is learning to think like a business owner rather than a hobbyist.
How much then?
The second question therefore is: How much should I pay myself?
Again, it may seem that there is a certain arbitrariness to this question. But the answer is actually quite straightforward:
You should pay yourself as much as it would cost you to pay someone else to take over from you.
Assume you want to go on sabbatical for a year and bring in a CEO to run the business for you… Doing everything you do for the business now… What would that cost? $80K, $100K, $120K? Whatever the answer to that question is, that’s what you ought to pay yourself.
This may well be unachievable right now, (it is for my client… He can only manage about $60K right now), but it’s certainly something you should work towards over the next year or so. It will put the business on an entirely different footing and every time I introduce this discipline with my clients, the business starts to change completely… guaranteed.
Making money in your business isn’t rocket science, it’s all about the basics
Making more money in your business isn’t rocket science. If you spend less than you earn, you’ll end up with more money in your bank account. Even Donald Trump knows that (although…).
I know I know I know… Business finance doesn’t operate like a simple household budget, you may need to borrow investment funds, finance your cashflow, obtain working capital, factor your invoices… Banks and investors exist for a reason, but even so, in the end, to make more money in your small business, you need to generate more profit (margin) and spend less cash than you pull in.
So here are the Ten Key Strategies to Make More Money in your small business. Look at each of the strategies in turn, and set aside time in your diary over the next months to implement the actions I suggest for each one and I absolutely guarantee you’ll make a lot more money this year than you did last year.
I’ve also written in great detail about making money in your business here
Someone showed me this strategy early in my years as a business coach, and I still wish now that I’d come across it in the early days of my life as a business owner. Have a look at the PDF you can download with this link here. It shows that if you make an overal improvement of only 5% across your business, your actual profits will double. It seems like a magic trick, but it isn’t. It works, always. If you make a 5% improvement in revenue, a 5% reduction in Cost Of Sales and a 5% reduction in your overheads, your profits will double. Try it out, stick your own numbers in the little table and see what happens… Try 2% or 1% and see what enormous impact even such small improvements have.
Go ahead and do this today:
Pull out your P&L for the past 6 months or a year and work your way through it from top to bottom… How can you make a really small improvement across the board in your business in the coming year?
2) Someone has to be the most expensive, it might as well be you
Recently I worked with an artist, a sculptor. She was getting ready for a group exhibition at a prestigious gallery where she was showing 4 pieces of her work. At a group exhibition like that, there’s a lot of art vying for attention and it can be hard to be noticed. We talked about how to stand out from the other 8 exhibitors and I suggested to her to double her prices, or rather, to aim to have the most expensive pieces of work in the room. If your pieces are the most expensive in the room, you can be sure that people are going to take note. Anybody who has ever opened an exhibition catalogue, has quickly run their eye past the prices, at the cheapest and especially at the most expensive pieces, and they’ve gone and had a look at the expensive ones, guaranteed. And a journalist who comes to covers the exhibition opening for the newspaper does so too. Being the most expensive sends all kinds of marketing signals about quality and specialness.
My client swallowed, took a deep breath, and doubled her prices. She did turn out to be the most expensive “in show”… And she did sell one of her pieces… For twice as much money as she’s ever made before… Nice one.
Go ahead and do this today:
Have a look at your prices… Why couldn’t you be the most expensive? Is there actually a good reason to be cheaper than the competition? Is your stuff worth less? No, I didn’t think so… So let’s get your prices up… Starting next week.
3) Collect Collect Collect
It doesn’t matter how much profit you make, if the cash doesn’t end up in your bank account. Money that’s not accessible to you is worthless. Many business owners make the mistakes of invoicing late, not setting payment terms, or setting lax ones and not enforcing whatever payment terms they do have. A very large percentage of businesses that struggle or go broke, do so, not because they’re unprofitable, but because they don’t collect their cash in time and run out of money. Cash flow stress is especially problematic in growing service based businesses. I’ve written in much more detail about cash flow and collecting here. I often tell my clients that if they allow their customers to pay late, they’ve suddenly become a bank and as bankers, they suck. As with so many things in business, the first thing to do is to design a system, a collections system, and then, enforce it, religiously.
Go ahead and do this today:
Run a report in your bookkeeping system called the Aged Debtors report and have a look at who owes you outside of your trading terms. Starting with the low hanging fruit, pick up the phone and simply ask this question: “Hi there mr customer, I just noticed that you owe us $12,536.24 and that this amount is overdue. Could you let me know by what day we can expect payment? Next week Wednesday? Thank you, that would be great, have nice week.”
Whatever date the customer promises to pay his bill, make a note on the following date in your diary. On this date, check if the payment has been made and if not, remind yourself that the customer has now proven himself to be a lier and hence, immediately fire off a stern email. Refer the customer to your conversation and remind him of his promise, and give this client 48 hours to pay up… or else. In 48 hrs, commence final warnings and be prepared to forward the debt to a collections agent. Run this simple procedure next week, with each and every one of your overdue debtors and I guarantee you, you’ll halve your outstanding debts in a matter of weeks at most.
4) Discounting is for dogs
Nothing good ever came of trying to make more money by discounting. IT . DOES . NOT . WORK . EVER
I know I know I know… It seems to work for Woolies and Coles, right?… Well that’s arguable, but more importantly, you aren’t Coles. You don’t sell 15,000 different convenience products in 2500 stores all round the country (and you’re not competing against Aldi)… You’re probably not even in retail. So if this article was written for the CEO of Woolworths, I might have to tone down my language. But it’s not, it’s written for you, and if you think you can make more money in your business by offering discounts, you’re sadly mistaken. You’ll increase your problems, decrease your margins and heighten your stress and truly no-one ends up happier. Just don’t… Trust me on that.
Go ahead and do this today:
Get an A3 Piece of paper and a thick black texta and write in capital letters across the whole page: I SHALL NOT DISCOUNT and hang it up above your desk.
5) Delegate Delegate Delegate
Your time, your braincells and your health are the most valuable resources in your business. Everything else you can buy, borrow or steal more of (more here). If you want to make more money in your business, you need to learn to maximise your own time. You should always be asking yourself: Is this thing I’m about to spend my time doing, the most valuable use of my time, right now, or is there something else more valuable I could be doing. If there is, then look for the best way to give this thing you are about to do, to someone else. Delegating the lower value tasks to others is one of the sure fire ways to start making more money in your business.
Go ahead and do this today:
In the process of deciding how to use your time, there is a simple tool called the 4 Quadrants of Time Management. Originally designed by general Eisenhower and made famous by Steven Covey in his book “The seven habits of highly effective people”. You can read more about getting the right things done here. Read the article and have a look at your week ahead. What can you delegate next week?
6) It’s Gross
There is one key number you have to focus on every week and every month if you want to start to make more money in your business and that is Gross Margin or Gross Profit (more here). I often refer to Gross Profit (GP) as the King of Numbers. If you only focus on one number in your business, make it Gross Profit. Revenue is meaningless, Net profit is confusing and you have little direct control over it and many of the other numbers in your business will give you a partial insight as best. Gross Profit or Gross Margin (expressed in dollars and as a percentage) can actually tell you just about everything you must know on a weekly and monthly basis about the health of your business. It’s got to be your target: “Every week we must make $xx in gross profit at xx% of revenue.
Go ahead and do this today:
Run a P&L report for the last 6 months or the past year. How much Gross Margin did you make? At what percentage of sales? Was it enough to cover your overheads and expenses and did you end up with a percentage of net profit left over? If not, how much Gross Profit should you make every month to pay for the overheads and have something left over? Now, once you have decided on that number… Stick it on the wall, (next to the note about discounting) and ask yourself: How can I make sure we hit that number every month this year?
7) Specialise Specialise Specialise
If you sell what everyone else sells, all you can do is compete on price and you know what I think about that, right? (have a look at the wall in front of you, with the A3 note about discounting). A key strategy for making more money in your business is to niche your business, to become the expert in a small section of the market. Make your expertise an inch wide and a mile deep. I read a famous book a while ago “Blue Ocean Strategy, how to make the competition irrelevant” (I wrote about it here), and it’s become increasingly clear to me that the most effective effective strategy for making more money in your business is to become a recognised expert in a small niche. It gives you a perfect opportunity to become “The most expensive in the room” (see above) (More about finding your niche here)
Go ahead and do this today:
So, get yourself a note book and brainstorm, what are you really really good at? What specific problem do you solve better for clients than anyone else? What are you passionate about, really passionate about? What do you get out of bed for in the morning? Remember, customers do not buy what you do, they buy the solution of a problem they have.
8) Vilfredo Pareto
Vilfredo Pareto was an Italian engineer at the end of the 19th century. I don’t believe mr Pareto was especially good at making money but he made some very clever observations on matters of commerce. Pareto is known especially for the 80/20 principle. The 80/20 principle is about the observation that inside economic systems most things are unevenly distributed. (for example, Pareto observed that 80% of the wealth of Italy was held by 20% of the population, in his time). This is how that’s relevant in your business. I am willing to bet that in your business, 80% of your profits come from 20% of your clients and worse, 80% of your losses also come from 20% of your clients. If you want to make more money in your business… That last sentence is where the low hanging fruit is to be found.
Go ahead and do this today:
Ideally of course you’d have a business management system or business intelligence system that could run a report for you with the answer. It’s certainly something to be aiming for in the long term to install such a system. But I’m guessing you don’t have such a system yet or it’s not fully operating yet. So it’s going to have to be a manual exercise, probably a spreadsheet or a simple notebook. Set some time aside and do the number crunching. Where do you lose your money? It might be to do with certain categories of customers, or with specific customers, or instead it might be certain products or services you sell that always cost too much. Whatever it is, find it. And then… once you found it… Stop doing it… STOP IT… AS SOON AS POSSIBLE.
9) Systemise Systemise Systemise
Systemise, automate, productise. It’s what made McDonald’s heaps of money. Far be it from me to suggest your business should be another McDonald’s (read about my problems with McDonald’s here), but it’s certainly the case that systemising parts of your business is a great strategy for making more money. Anything you do in your business that can be standardised should be considered for systemising. When you systemise something it means you can start to get more efficient and employ lower cost staff to carry out that part of your operation.
Go ahead and do this today:
Set aside an hour to look at all the operations in your business and select three to develop a system for. I’m not necessarily talking about very complicated systems. small things such as how we answer the telephone, or how we go about ensuring we have supplies of printer ink, or how we respond to quote requests. Write out the system for each of the three things and roll them out throughout your business.
10) Do you want fries with that?
As we were talking about McDonald’s already, this is another strategy they’re famous for. It’s actually a system in itself of course. The up-sell. Effectively, the up-sell is the only discount you’ll ever make money on. The principle behind the “Do you want fries with that” question is that for a small amount of extra money, the client gets a bunch more value. Normally fries cost $2 but in an up-sell situation the customer gets to buy a portion of fries for only an extra dollar. This may seem like a discount and therefore to be avoided at all cost. But it isn’t. The fries in question cost McDonald’s virtually nothing, probably as little as 10 cents, when added to the larger transaction, so they make an extra 90 cents profit from each customer that accepts the up-sell.
A client of mine, an electrician, has trained his employees to ask customers they do repair works for, whether they’d like their smoke alarms tested while they’re at it. In nearly all cases the batteries need replacing and the electrician charges a small fee for replacing the batteries. The customers are very happy (and safe) and my client makes an extra $25 profit per job on average. Everybody wins. Judiciously practicing up-selling is a great strategy for making more money in your business.
Go ahead and do this today:
What can you offer your customers as an up-sell? Think about it… The trick is to find something useful/valuable for the customer that costs you very little to add to whatever you’re doing or delivering for the customer already. I have come across hundreds of different examples in my years, feel free to email contact me to brainstorm if you like.
Bonus: Profit first
I’m sure you agree with me that profit is important. You might have heard me say before that if your business doesn’t make profit and generate cash, it’s a hobby. So let’s just leave it at that, we want to make profit in our business. But if we all agree it’s so important, why do we leave the whole profit thing to last? After everything else is paid for we cast a hopeful look in the bottom of the bucket to see if there’s any profit left over. Let’s turn that around. Let’s take the profit out of the bucket first and set it aside in another bucket. The profit first principle is a really useful way to help you focus on the importance of making profit. More about profit first here
Go ahead and do this today:
So this is what I suggest you do, next week. Go and open a special bank account. A bank account that it’s easy to transfer money into but a bit more challenging to take money out of again. Then, decide how much you think you can take out for profit out of every invoice you send off. (5%? 10%?). And then from every payment that hits your bank account, automatically transfer that percentage into your profit account. If you do this religiously, better yet, if you delegate this job to your bookkeeper or accounts person, you’ll start to build amazing value and wealth in your business… trust me on that.
Focusing on making more money in your business is a great discipline. It will lead to stability and sustainability in your business and your life. There are many other strategies to make more money in your business of course. but if you focus your energies on these ten in the coming year, I guarantee that your business and your life will start to look entirely different.
I’d love to hear how you go, so drop me a line some time.
Do these 5 things right every time and your business will never stop growing
I’m often asked by clients to help them grow their service business. I nearly always tell them that growth is easy in a business based on services, anyone can grow a small business.
All you need to do is this:
Deliver what you promise
At the time you promise it
For the price you promise it
For a profit and
With a smile.
That’s all… Honestly
If you do those 5 things, every day, customers will break down your doors, because so few small businesses do.
Most small businesses fail doing those 5 things consistently and stunt their growth, because of the classic problem of small business growth:
It’s easy when you’re small
You see, when your business is small, you and a couple of people delivering all the services, be it plumbing, washing machine repairs, fixing cars, bookkeeping, designing websites or building houses, then it’s easy to manage and be in control of everything. You can make sure things happen the way you want them to happen.
Once you start to grow with 5, 10 or more employees, and you have a number of teams, or vans on the road, suddenly you’re not in touch with everything that goes on anymore. You don’t even get to meet all the customers and you won’t personally see all the services that get delivered. You have to rely on others, and hope they do things the way you want them done. That they communicate with customers they way you expect them to and that they take their dirty boots off before they traipse in through the house.
Managing by keeping your fingers crossed.
And guess what? It doesn’t work. Your customers start being less than happy, they start looking elsewhere, you’ll believe you need to lower your prices to keep them and it all becomes a dog’s game.
So here’s the biggest secret of all to growing your business:
Learn to say no.
Learn to say no, until you can handle the growth. Never taken on any work, any new business, unless you are confident you can deliver it to those 5 standards above.
If you do that, you’ll be in control of your business, you won’t have to compromise on price and you will build a Beautiful Business and Life. And the customers? They’ll keep coming. There is never a shortage of customers for businesses who deliver on all of their promises, with a smile… I promise you.
Tips: The Weekly One-Minute-Business-Tips. Every week a tip in your inbox that will take no more than a minute to read or 10 minutes to implement. Just do this one little thing, every week and you’ll look back in 6 months and simply don’t believe how different the world looks.
Small Business Masterminds Webinars
Webinars: Over the years I have created a series of 1 hr webinars in the Small Business Masterminds Series. The Masterminds cover some of the most important aspects of business that all business owners face from time to time. All of the Mastermind webinars are free to download and listen to, and they are full of practical tips to implement straight away.