Dear coach: As a business owner, I feel stuck.
9 May 2020
Over the years, I have developed a philosophy on how to run my companies. It’s a philosophy on how to maintain profitable and sustainable growth, while also maintaining a healthy mindset (a.k.a. not going insane). Because of the COVID-19 quarantine, I had an opportunity to start coaching a group of business owners. Through this experience, I have learned that my experience may in fact be beneficial to other business owners outside of the tech world.
Recently I was asked the following question:
“As a business owner, I feel stuck. I have a business, yes, but it feels more like a job than a business. How do I grow out of this point and allow my business to thrive?”
Some background before I start.
I believe in sustainable and profitable growth. I do not believe in taking external funding too early. I believe most startups can be funded through revenue. I believe startups that are funded through revenue are more resilient to change. Most importantly, I believe people are inherently good.
If my belief system does not turn you away, below are 6 points that I covered in answering that question that may be applicable to you as well.
6. Stop Trading Time for Money
It is very typical for a new business owner to trade time for money. Any consultancy and many service-based businesses operate this way. You charge for the time you spent on a project. It is easy to understand for you and your clients. The problem is that this model is not scalable. You can charge more for your time as you become more successful. However, this still means money stops flowing when you stop working.
You need to learn to charge by value instead of time. This is not easy as value is hard to define. I will not go into detail on value-based pricing as that topic warrants a master’s degree. All I will say is that you need to start exploring how to charge by value instead of time. Do a Google search for “stop charging by hours” and you will see numerous pieces of valuable advice.
Along the same line, you also should figure out how to “make money while you sleep.” The idea is to turn your service into repeatable products. Customers buying and using your products should not directly involve your time. The classic example is putting your knowledge into a book. Your book can be sold, and make money for you while you sleep. In today’s world, there are many ways to do this. You can create online courses, write articles, and create mobile apps. The goal is to allow your customers to use your services asynchronously.
5. No Monkey Work
I hold this rule very strongly in my companies. Monkey work is defined as tasks that are boring, tedious, repetitive, and require very little cognitive functions. Any monkey work must be removed or automated. No human being should do monkey work. This rule forces your organization to stay lean and efficient.
We have a tendency to get used to tedious work. Something that was boring and tedious, overtime, becomes tolerable. This rule is to make sure we do not tolerate such tedious work. Instead, we create processes and systems to eliminate it.
4. Scale with Systems, Not People
One big reason that business owners feel stuck is that they find themselves doing more monkey work than human work. Some people solve this by hiring people to do the monkey work. I strongly advise against this. We should not scale with people. We need to scale with systems.
If you hire someone to do some particular monkey work, that person soon gets used to the work. Once that happens, there is very little incentive to improve efficiency. What is worse is that any push to improve efficiency becomes viewed as headcount reduction.
The solution is to set the ‘no monkey work’ rule early. Never pay anybody to do monkey work. When monkey work arises, label it as monkey work. When somebody (you) is stuck with monkey work, the solution is to scale with systems. Never solve monkey work by hiring.
Hiring should NOT be the first solution to any problem.
Let’s say someone in your company handles appointments. When your company starts to grow, this person gets overwhelmed. The simple solution is to hire another person to handle the growth. My advice is not to hire if the result is a linear growth in productivity. If you hire one more person and you are now able to handle 2 times the number of appointments, that is not efficient. You should think about how to handle 5-10 times the original number of appointments and work toward that. 1+1 must be bigger than 2.
3. Profit Over Growth
Another way to get out of the daily grind of business is to create a sustainable, long-term growth engine. If you follow what I am talking about so far you know that I am advising capital efficiency. The two rules above lead you to become a capital-efficient company. Now, you want to create sustainable growth. You do that by ensuring you grow with profit. Profit gives you time. With profit, you have more freedom to grow the way you want. With profit, you have the freedom to get out of the daily grind.
2. Plan in Weeks and Years, Not Months
In the corporate world, we have monthly plans, quarterly plans, and annual plans. When you are running your own business, you are dealing with uncertainties. If you plan like a big corporation, you will create undue stress. To solve this, plan in weeks and years.
This is also called project and direction planning. You set a direction, in years. Once a direction is set, you look at the direction one-step at a time, with projects. Projects are counted in weeks. Your direction can be something like, “become the world’s best market-research agency.” Looking at this direction as a guide, what is your next project? You plan and execute your project in 4-6 week intervals. You give the project all the attention in the next 4-6 weeks. Once you finish the current project, you look at the direction again and plan your next project.
The beauty of the rule is that it affords you the flexibility to tune your strategy as you go from project to project. You also gain a sense of accomplishment as you complete each project.
1. Promote Yourself
Perhaps the most important rule of my coaching is to promote yourself. Yes, even as a business owner, you can and should, promote yourself. You are not literally promoting yourself. This is a methodology and mindset. Promoting yourself is, instead, a mindset of continuous improvement. In order to promote yourself, you master your skill set, systemize it, and pass it along. In order to promote yourself, you need to systematically allow others to do what you do. You do that by teaching, by documenting, and by automating. When you can pass the task along, you are promoted. Now you’re off to solve bigger problems.
An extension of this rule is to apply it to your entire company. When everybody grows, the company grows. You should encourage your team to constantly think about how to promote themself. Make promoting, or growing, part of your company’s DNA. When you do that, you will create constant upward momentum.
I apply all these rules to all the companies and teams that I manage. They are not easy, but they work. If you find this useful, please leave a comment. Let’s get in touch.
Let’s build sustainable and profitable companies.