I am a huge fan of the German approach to business. The mittlestand, family businesses that are homegrown, anchored in the locality, with a long term multi-generational perspective, focused on creating wealth. Particularly “Hidden champions” opened my eyes. So I was very taken with “Making money is killing your business”.
Time to grow up
It is time for a lot of business owners to grow up. It is time for businesses to grow up. Chuck Blakeman has an interesting perspective on start ups and small business. Too many do not grow up and you have created your own job, not your own business.
The tyranny of the urgent
He refers to it as the tyranny of the urgent versus the priority of the important.
Urgent is reactive, short term and defensive and is the treadmill of making money. Important is proactive and long term. It is about making money versus building a business.
It comes down to the definition of wealth, which is the ability to choose what to do with your time and your money. Can you?
- Are you the main producer/deliverer by choice or necessity?
- Does the business make money when you are somewhere else?
- Are you making decisions based on where you are, or where you want to be?
Chuck blames the focus on exit and selling your business. In his view, that is similar to selling your children. Why would you invest all that love, time and passion to sell it off, instead of creating an ongoing stream of long term wealth?
Time and money are at a premium
Gallup research tells that the average business owners work 52 hours a week (those are the lazy or lucky ones). They work 6 days a week, some have zero vacation and when they do over 50% still answer work-related e-mails and calls. Only 3% of business owners create 86% of the revenue in the USA. So time and money are at a premium.
Are you on the treadmill?
According to Blakeman, there are seven stages of business
Stage 1 Concept and startup; the trick here is to move as quickly as possible from dreaming to doing. Dreaming includes thinking, researching and planning. The number one indicator of success is the speed of execution.
Stage 2 Survival; you have burned a lot of fuel, time is grinding, sales are difficult and you are focused on making money. You are now on a treadmill of urgent.
Stage 3 Subsistence; you can pay your bills and are making money. There is little time to relax and your focus is on keeping it going. If you don’t watch it you are back in stage 2.
Stage 4 Stability; you are making a net profit and you have freedom money to spend. You can choose what you can do with your money. Time is still a big issue. You have created yourself a well-paid job. You are an employee of yourself. A hostage to your own business.
Stage 1 to 4 are treadmills. You focused on the wrong question, which is “How do I make money”. Making money is NOT an empowering vision.
You need to get off the business treadmill!
The basics of a mature business are that you are not the main producer and it makes money when you are not there. Which moves us to stage 5 to 7.
Stage 5 Success; you have shifted your mindset to building a business versus building a job. You are moving from production to process. This is where Chuck introduces “freedom mapping”, which is a version of process mapping that brings clarity to what people are supposed to do and how it fits into the overall customer delivery process. It makes things consistent, repeatable and replicable.
Stage 6 Significance; your role has shifted to becoming a leader and you are less and less involved in direct delivery and production. Your business is starting to make an impact. You are free. However, leadership is in place, leadership is not in charge. It is vision and guidance, which means you still need to keep an eye on the business and guide management.
Which brings you to the last stage. Stage 7 Succession. This is where leadership is in charge and you have ingrained a culture that embraces your vision. Only vision. You are truly free.
The key question
What is stopping you to get to stage 7? Chuck thinks it is only one reason. You are not asking the right question. How do you build a mature business and when do I want to get there?
What do you need to do?
It is very simple. Intentionality. Make the decision, put a date on it and go public. Going public changes everything (the Hawthorne effect (also referred to as the observer effect) is a type of reactivity in which individuals modify or improve an aspect of their behaviour in response to their awareness of being observed).
Pick a date
As a business owner, you owe to yourself to try. Why would you not? How could you not? Particularly if you know that retirement as we know it now is bankrupt. Create your own retirement on your own terms. Pick a date. You now have a clock ticking in your head. Define what does your business look like at maturity. Consider your lifetime goals (why, why, why, what is the transformative purpose). Consider the time and money required to create your ideal lifestyle.
More money, less time
Now back to basics I. More money in less time. How to increase revenue and continually reduce time to bring in that revenue.
The freedom questions
Is this (whatever you are doing right now), the best use of your time? If this is not the highest and best use of your time, how do you ensure you do it for the last time? Those two questions need to be asked constantly in all parts of the business. Parts such as leadership, business development, operation and delivery, financial management, customer and employee satisfaction and to community and family impact.
Systems and processes are the keys. What is your yield per hour now? What should it be? Do the activities you are involved with now, warrant the yield per hour you want?
Back to basics II
- Back to the big why. Why are doing this? Why do you matter? Why does your business matter? Why is it significant? What do you want to be remembered by? Purpose and passion. Using time, money and energy to create significance. Every book on strategy we covered on Bookbuzz always boils down to that question.
- You then need a strategic plan. You don’t need a business plan. Chuck is not a fan of business plans. Planning does not create, movement does. And the size of commitment to the intent. Develop a two-page strategic plan with key milestones and with an action plan attached. You review that strategic plan every day. You need to be able to recite that plan verbatim any time, any place within a maximum of 3 minutes. In the meantime, the business maturity date is ticking in the background……
- You need then set of outside eyes. A group of mentors. An advisory board. Make sure you are not alone.
In the book, Chuck Blakeman gives a wide range of toolsets to figure out your lifetime goals, strategic plan, your leadership profile, etc. But the most important tool is the freedom mapping. Your franchise handbook. Your process descriptions. If you do one thing, do that. Map your overall business process and then break it down.
Stop playing office
Build a business engine. Create wealth, not money. Become a master of your own destiny. Become intentional, set the date, tell the world and move.