Running Your Own Business - Crossing the 3 Business Chasms

I like to work with owner managed businesses where trust, professionalism, service excellence and a high and repeat loyal customer base are must haves.

In the 15 years or so that I’ve been doing this work I’ve found that there are three chasms that businesses have to cross.

Let’s explore the challenges, the do's and the don’ts that are associated with these chasms.

Chasm 1 - Moving from Corporate Life to Running Your Own Business.

The first chasm is when you move from corporate life to being self-employed and let me tell you this is sizeable change.

Challenge 1: If you’ve got an idea for a service or a product, try and get somebody to pay for your product as soon as possible because that way you will begin to understand what it is that people buy, what they value and where there’s likely to be a market for what you have.

Don’t imagine that having made the sale that the money is miraculously going to turn up in your bank account like your corporate salary on the 29th of every month. You’re going to have to chase the money in all probability so you need to be really, really focused on managing your cash flow.

Challenge 2: The second challenge is understanding how to use your time well. A lot of people tell me that they didn’t realise how much has to be done and how little time there is when they start to run their own business.

So keep a diary and understand how you are spending your time and make sure it has a direct relationship between the performance and success of your business. Don’t waste time, make time doing the right things well. Being busy is not enough; you need to be doing things that contribute to the overall success of your business.

Challenge 3: The third challenge is getting a network of support around you. Actually running your own business is quite a lonely enterprise so you’ll need to rely on family, friends and a professional network, people like myself who coaches and mentors to give you that support.

Don’t imagine you’ll know everything you won’t, so don’t be too proud to reach out and get support, there’s plenty out there and people are more than willing to give it.

If you have time do have a look at Steven Covey's book on The 7 Habits of Highly Effective People.

Chasm 2 - Growing Your Business Quickly and Profitably

So now for the second challenge, you’ve established your business, you’ve been going say for two or three years and let me tell you that you’ve done really well because two out of three businesses fail within the first two to three years.

Challenge 1: So you now want to generate profitable growth and a lot of companies find as they grow their turnover the profit actually goes down and that’s because they are probably carrying a lot of customers in their customer base where the returns one way or another are not worth having.

So as you build your turnover make sure you do it profitably and have a look at delisting some of those customers who destroys the value. There is a saying that turnover is vanity profit is sanity.

Challenge 2: Building your team you’ll want to get now and the people around you that will help you grow the business and become a more properly structured business.

Recruiting, you’ve probably had some experience of this, is quite a tiresome process and fraught with danger so do take time, be clear about what you want people to do for you and slot them in, look at flexible employment contracts so that you can let them go or they can go at their own accord if there’s not a good fit. Remember that a badly recruited employee can have a really toxic effect on your business.

Challenge 3: Up until now you’ve been a business and the business has been you but you’re going to let things go, you’re going to have to delegate and be more hands out than hands in., you’re going to have to invest in processes and you’re going to need to build a team around you who can contribute to the growth of the business as well.

If you don’t know how to do that you’ll become pot bound. So do keep an eye on key performance indicators but do give people space in which to do their own thing.

Chasm 3 - Exiting Your Business

You’re thinking now about exiting the business, you’ve achieved your goals, you’ve achieved your dream, you want a better work/life balance, you want to perhaps do something different people who run businesses do get bored and like a change of scenery.

Challenge 1: The first challenge you’re going to have is finding out what the value of your business is and, if as we spoke about earlier, you started with the end in mind then you’ll have been investing in things that have value like brand, like a good customer base, like a niche market, like a good range of products themselves, process and intellectual property. Don’t take the first offer think about what you want from the business but don’t be stubborn either about what the value is.

Challenge 2: The second challenge is to find some good advisors. It really helps if you like them because they’re going to be around for some time so find some people you trust and you can get on well with.

They’ll be wearing different glasses of course, so they’ll have a different perception about the value of your business than you do but don’t procrastinate, get to a good conclusion and when the time is right make sure you’ve got some choices and options and don’t let people hold a gun to your head.

Challenge 3: The third challenge will be an emotional one, losing your baby. You built this business, you’ve taken time, you’ve put a lot of sweat into it I guess and now you’re letting it go. Take time to reflect, think about what’s gone well, what hasn’t gone so well, what part of it you’ve really enjoyed because you might want to take that forward into your next chapter. Talk to your friends and family they’re usually good observers of what makes you happy, what makes you tick. It’s a time of change yes but change is good because it presents challenge and challenges keep us all going.

I’d be very interested for research purposes in hearing what your experience has been

#PyrotechnicBusinesses - Are You Bungee Jumping or Leaping Chasms?

 Being up close and personal with some bungee jumpers in Queenstown, New Zealand a couple of years ago only confirmed that I couldn't bungee jump to save my life. Flinging myself into the great unknown was not on.

Working in the business owner/manager space for a number of years, I've come across metaphorical 'bungee' jumpers - those leaping into space with a huge act of faith that the elastic lifeline will save them. But 80% of start-up businesses fail. Snap!

So, I prefer to think of the business journey as one of 'Leaping Chasms' - three to be precise - each with its own set of 'Do's' and 'Don'ts'.

Chasm 1 - Corporate to Start Up

The transition from corporate life to starting your own business is pretty traumatic. Nothing in your diary unless you put it there, no status inferred by your company or corporate job title and no regular income.

Do

• Get somebody to pay for what you're selling - even if it's just a promise

• Understand how to make the best of your time

• Build a supportive network

Don't  

• Wait for the money to come through like your salary

• Believe that being busy is enough

• Be too proud to ask for help

Chasm 2 - Accelerating Growth

OK, so you've survived. But up to now you've been the business and the business has been you. So, if you don't want to be 'pot bound' you're going to have to loosen up. And many businesses find more turnover doesn't automatically generate more profit!

Do

• Focus on 'profitable' growth

• Build a team

• Work out how to 'let go'

Don't

• Just chase turnover

• Rush into'toxic' hires

• Lose sight of the key metrics

Chasm 3 - Shipping Out

It's ok to get bored with what you're doing and want a change - many entrepreneurs do. But don't throw the baby out with the bathwater - make sure you get value for what you've built. Be prepared for the emotional 'let down' - after all you're selling 'your baby'!

Do

• Understand the real value of your business

• Find good advisors
  
• Value what you've achieved

Don't

• Take the first offer because life is too short

• Procrastinate

• Assume complete happiness will follow

Technology willing, I'm hoping to share this with you on YouTube in the not too distant future.

Keep lighting those fires!

Chris Farrance
Business Consultant, Coach & Mentor
e: chrisfarrance@btclick.com
w: www.chrisfarrance.co.uk

http://xeeme.com/ChrisFarrance

You don’t have to be a ‘hairy assed entrepreneur’ if you don’t want to

Starting up a business is not the same as being an entrepreneur – there are broader benefits which are particularly relevant in the current economic environment.

Don’t be put off by some of the stereotypical entrepreneurial behemoths that feature regularly on our television screens. For every one of them, there are literally thousands of people running their own businesses in a much less high profile way.

I take a more relaxed view of what you need to do to run a profitable business – not to get so overwhelmed with the sellotape of rules and regulations - to such an extent that you forget that you are there to enjoy yourself.

Are there some words or thoughts that really give you the ‘whirling pits’ like risk, leadership, creativity, the customers always right, nothing in my diary, selling, ambiguity, no monthly salary?

Hi there! Join the club!

So, there are risks? Yes, of course there are.

So, do you have to be a rabid risk taker, Wallace type innovator (of Wallace and Gromit fame) Alpha male or female to succeed? The statistics suggest not. Many business owners have worked out for themselves what a good business looks and feels like for them.

The important thing is to remember that you’re never alone – support is there whenever and wherever you choose to look for it.

Building a Pyrotechnic Business - 7 x 7 ‘Sure Fire’ Accelerants for Entrepreneurs

Accelerant 6: Paraffin Marketing

1. Embrace Social Media

This is probably a marmite test (you either like it or you hate it). You can either ignore Social Media and let it pass you by or get engaged. What’s so attractive about social media is that it offers a low cost way of promoting your personal brand, your business and its reach. Bear in mind, though, it might be low cost financially but there can be a significant time cost until you work out the best mix for your business. The favourite have fairly distinctive roles but they are becoming increasingly blurred. Linked In tends to be a professional network, Facebook more friends and family. Twitter is more about immediacy and spontaneity – the limit of 140 characters certainly focuses the mind. 

If you haven’t done so get on an introductory workshop – there are plenty about. At some stage unless it’s something you enjoy you’ll have to talk to and pay for a ‘geek’.

2. Know your cost of acquisition

There’s a famous quote – attributed to many of the marketing gurus – that 50% of your marketing budget is wasted – but you don’t know which 50%. This was in an age when advertising was mainly in television, newspapers and magazines – this was called ‘broadcast’ - as in paint thrown at the wall. Later direct mail came along and it was then possible to measure response rates more precisely. 

These days both the targeting of customers and the response analytics are much more focused. It’s surprising, however, that not many businesses sufficiently understand the actual business they get back per £ of marketing spend. This spend is not just the direct costs but also the time costs if you’re providing a service, say, travel or estate agents.

What you spend to get business has to be related to what you get. Make sure you understand what this relationship is – collect the data so your decisions are evidence based.

3. Go wide

In the early stages it pays not to be too narrow minded about how you promote your business. Cost is inevitably the major inhibitor here. But see if you can find some cheeky low cost ways – which should be ethical of course - to get your message out. Plug and play to see what works and what doesn’t work. Remember just because it didn’t work once doesn’t mean it won’t work for ever - in many cases timing is everything.

4. Blitz local

Quite often when you start out there’s an urge to chase business all over the place because, perhaps, of some sort of assumption that locally there’s no understanding or need. Or, it may be just to do with being busy which, when you start your own business, can be a bit of an aphrodisiac. 

It might come, too, from a personal sense of reticence or self-consciousness. Go large as well as wide. If you can’t sell it locally then it’s unlikely you can sell it nationally. Stay close to home - it’s cheaper and easier to service and you can go and find out face to face why you’re not getting the sales.

Join local networking groups – many offer free trial membership so you can see if it works for you – to promote your business and build potential local collaborative partnerships.

5. Copy – but do it Better

There’s a sufficient body of evidence that suggests that those who are first with an innovative business idea don’t profit the most from it. There are a number of reasons for this (such as a focus on technological features rather than buyer needs) but pragmatically a potential benefit for you is that they may have ‘softened up’ the market.  

So, if you’re idea is already out there, don’t worry, look and learn and motor on from their experience! This applies not just to product innovation but also to the whole suite of marketing and sales activity. Where is the best practice? 

Find out and copy? Yes, but do it in a thoughtful and forensic way that adds demonstrable value to your own business.

6. Drive referrals

Often business owners will say referrals are where there new business opportunities mostly come from. This is the ‘virtuous’ circle, but typically though, these are ‘passive’ referrals, relying on good nature and goodwill. You can’t afford to wait for something that may or may not happen – this is the ‘vicious’ circle.

There may well be some cultural dynamics at work here – because we don’t like asking for feedback or like seeming to be ‘pushy’. But, get over it, if you’re running your own business it’s perfectly legitimate to ask satisfied customers to make specific referrals for you.

Ask them:

·         Who should I speak to?

·         Will you introduce me?

·         What do I need to know about them?

·         Will you come with me to the meeting?

You might want to put some reward mechanisms in place but don’t don’t do this unless it’s asked for and then be very careful about the longer term implications of what you agree.

7. Who is Buying Right Now?

When you start out, you’ll have developed a thoughtful considered view about who will buy your product – and that’s good practice - target marketing as they say. The reality, of course, is understanding who is actually buying your product now it’s on the market. 

And, more importantly, what their motives are. Where is the money coming from?

And you may be surprised – but be not judgemental! If the buyers aren’t who you thought they’d be are you going to give them their money back? 

No, of course not. So the message here is be curious. Set up tracking systems – for example online/offline satisfaction surveys - that give you permission to talk to these customers and find out why they bought. And then build this into your on-going marketing and sales activity.

chrisfarrance@btclick.com

@chrisfarrance

www,chrisfarrance.co.uk

Building a Pyrotechnic Business - 7 x 7 ‘Sure Fire’ Accelerants for Entrepreneurs Accelerant 5.- Dousing the Home Fires

Prelude I’m writing this blog listening to ‘Sounds of the 80’s’. As far as I am aware there is no correlation between the music and the blog content. But it could be sublimal!

1. It’s My Business!
   
   

Survivor - ‘Don’t lose your grip’

Pride of ownership is understandable. The strength, focus, direction and probably the money that you provide are essential. That’s what makes you want to run your own business - an entrepreneur if you like. But it can’t be a totalitarian state because life’s not like that anymore.  So, loosen up! Listen to the people around you – particularly those you’re not likely to agree with. Listen to learn not to argue. Be open!

2. I have to Know Everything
   
   

Africa: Toto

Oh no you don’t – more loosening up! Because this mindset is a recipe for disaster.  If you’ve come out of corporate life you will be imbued with a number of assumptions. Knowledge is power, seniority is what counts. But there’s no way you can know everything you need to know about your business. Learn humility and again a willingness to listen. Build a network around you of knowledgeable, challenging and supportive people. Look for opposites to challenge the way you think.

3. Urgent v Important

Love Resurrection: Alison Moyet

You’ll never run out of things to do. Running your own business will most likely consume all your energy and all your time. Let’s deal with the time issue here. There’s a functional element true - like getting to meetings on time and handling a piece of paper just once.

There’s a decision making element – a big ‘P’ word to avoid here – ‘Procrastination’ – not all decision making issues improve with time. 

But the killer challenge is identifying those critical few things that make a real difference to your business. They’re going to be things like staying close to your best customers, managing your cashflow and making sure your staff aren’t the terrorists in your business. Do you know what your critical few are?

4. Focus on next week

Dancing in the Dark: Bruce Springsteen

Most people are not energised by the past – the future in all its uncertainty is much more stimulating and potentially exciting. So, don’t spend too much time looking in the rear view mirror - often this just causes post mortems - something to be learnt maybe but too often just a big bagload of recriminations. Be upbeat:

·         What have we learnt about what our customers want?

·         What’s getting in the way?

·         Most importantly. What should I be doing differently? 

This is a killer question! Don’t be afraid to ask it of yourself and others.

Make sure you step up and be prepared to acknowledge that you may be part of the problem. Yes – it’s a great team building offer and you could learn a lot about yourself.

5. Dealing with your competitor’s  ‘Killer’ offers
   
   

99 Red Balloons: Nena

It won’t be unusual – given all the things you have to deal with – if your customers and your staff in particular know who’s doing the best deal at the moment. For your staff this will be potentially demoralising if you don’t deal with it.

The knee jerk reaction, once you’ve found out, is to want to match the offer.

Don’t – take some time to consider the ‘whys’ and ‘wherefores’.  Competing on price is a zero sum game. Stick to the principles of your pricing strategy. Sorry, there’s a huge assumption here - that your pricing strategy is well founded. 

But essentially this is the trade-off between volume and margin – high volume v low margin and lower volume v higher margin. The issue is what profit do you make at the end of the day?

Make sure your people know the story too.

6. The ‘To Do’ list

Down Under: Men At Work

Writing lists is good practice – it really does free up space in your head and helps you to stop talking to yourself. So you have a list - check it against the ‘Urgent v Important’. Check it against ‘Now/not now’. What’s on there that only you can do – think about what you can delegate.  So, if you’re not selling something people will buy you don’t have a business. If your supply chain isn’t working properly then you don’t have product. Think about what you can safely ignore. Test and trial. Sharpen your decision making skills!

7. The Money Thing

Ghostbusters: Ray Parker Junior ‘I ain’t afraid of no ghosts’

.

If only we could do without it!  Of course we’re all afraid of the ’ghost’ of money. Not many people will say they have enough but a lot will recognise that money doesn’t buy them happiness. Moving from the relative certainty of being salaried to the total ambiguity of self-employment is very very frightening. But a good friend told me that if you get uptight about money or more particularly the lack of it – then it will radiate through in sales interactions.

So, put the money ‘ghost in its place – in a dark dark cupboard and leave it there!

Building a Pyrotechnic Business - 7 x 7 ‘Sure Fire’ Accelerants for Entrepreneurs

Accelerant 4. Lighting the Customer's Fire

1. Easy buying
You'll have your own personal experiences of companies who you really thought didn't want to do business with you because it was so so difficult to get anything done. This might include out of stock products, poor in-store signage, indifferent staff, incommunicado call centres, failure to call back and so on. Life's too short for all this hassle! Buying your product or service should be effortless and painless for your customers - test drive it for yourself. Remember there's a strong emotional element to this too. Where you can, walk your customers through the process to give them confidence - let them 'plug and play' for themselves.

2. A transparent offer
How often when you're buying something - particularly a service - do you find that you're not really sure what you're getting? If it says what it does on the tin then that's a bonus but too often the offer is opaque, the policy document too long, and the conditions unreal. Jargon! Jargon! Jargon! Make it clear if something else is needed - like batteries or a supporting software package. Think about what you would want as a customer, resist the temptation to be a lawyer, let your values shine through.

3. The Wow! Factor
Where you can, generate some excitement for the customer. Better still exceed their expectations. It doesn't have to be expensive. Remembering customer's names, how they like their coffee, picking up on family news they shared with you when they were last in, all create a positive impact. Research says we all want more attention so give your customer your full attention - don't look over their shoulder or precipitately start a conversation with someone else. Another neat move is to offer the customer more choice than they thought they had and act as an impartial expert. Recommend competitors if you don't feel you really have what the customer wants. Finally, make sure you send them away with a smile!

4. Value
Understand what the actual value is that you're providing to your customer. This may not be what you think - avoid falling in to the trap of confusing features with benefits. Get your customers to tell you in their own words exactly why they bought the product - what satisfaction they are getting from it. These may not be the same as you imagined when you put your proposition together. This helps in a number of ways - in your advertising, yes, but more importantly for your pricing. If you understand the customer's perception of value then you can break free from arithmetic pricing like cost plus pricing or percentage mark ups.

5. Keeping promises
Research suggests that people's perceptions of brands are rarely matched by the reality of experiencing them - there's usually an initial fall in satisfaction. So, it's doubly important that when the customer engages with you, you do all you can to deliver on your promises - whatever they might be. There's the issue too of buyer's remorse - the anxiety associated with buying a product. Is it too expensive? How can I justify it? How am I really going to pay for it? Your promise here is that what you are selling will really deliver the stated benefits. Do you ring back when you say you'll ring back?

6. Guarantees
Think very carefully about what sort of guarantees you might be able to offer - these will help minimise the perception of risk in the eyes of the customer. They will also demonstrate your confidence in your product too. Guarantees can span all of the steps in your buying process - time to answer the phone or be served, delivery time, returns polices and after sales. Give generously if there is any doubt - use it as market research to uncover and correct poor processes. Here, too, we could include making it easy for customers to complain - another source of rich information - research suggests complaining customers who are dealt with well have higher levels of satisfaction.

7. Fanning the flames
The message here is 'think communities'. Encourage your customers to share their positive stories with their networks. Get testimonials and be sure to share good news stories with staff as well. Social media has a huge part to play here and as we know it's cheap and easy now to take and post customer videos. Set up a loyalty scheme as well as rewarding existing customers for introducing new customers. Many companies find a family focus works where your product/service meets common needs. Think, too, about engaging with your local community through sponsorship or links with a local charity.

And finally, if you're so inclined score yourself on a scale
of 1 (low) to 10 (high) against these Accelerants.