was successfully added to your cart.

Tag

Signposts and Directions Archives - Finance-Ability®

Planning your freedom

By | Blog, Building Value, Me, Myself and I | No Comments

The end of the year is always a tough time for business owners. Not only are you feeling squeezed between wanting to take time off to enjoy the holidays and keeping the (higher) bills paid, but you’re hearing the same song over and over again. And it’s not Rudolph the Red Nosed Reindeer…

Yes, year end is a time when everyone starts talking about the dreaded PLAN. Get a jump on next year, build your plan today. Can’t start next year without a plan. You know the drill.

So this year, let’s agree to stop the madness.

Instead of stressing about making a new plan, worrying that you won’t hit the plan you created last year, and generally making yourself miserable, let’s try something new.

Plan your freedom

After all, freedom is why you got into business in the first place. Being your own boss, the opportunity to choose your own path and do things your own way. When you’re just starting out, it’s an adventure.

But once you’ve owned your business for a while, you know that the adventure can consume you if you let it.

We lose sight of the fun and excitement. We see it more like drudgery. Become an employee (or worse, a slave) to our own business.

We need to remember that, regardless of industry or experience, most of us are in business to make enough money and have enough time to live out our dreams – to be free.

A PLAN can do that?

Our experience with “plans” hasn’t been rosy. Plans lock us down. Tell us what to do (or not do). Basically, they take all the fun out of the adventure of owning a business.

But what if you could create a plan that respected your way of doing things? That fit who you are and where you want to take your business?

That kind of a plan is a road map to freedom. But it’s still a plan.

Imagine that you wanted sail around the world, or climb Mount Everest, or take a sabbatical in a foreign country. Those are all incredibly freeing experiences, but you wouldn’t set off to do any of them without a plan.

Your business is one of those once in a lifetime adventures.

It isn’t a two-week vacation that you can tough out if it the hotel doesn’t have hot water. It’s a huge investment of time and money, and often, it’s also the main source of income for your family. So you need to treat it with the attention it deserves.

Otherwise, you could end up with the business equivalent of the Holiday Inn instead of the Ritz Carlton….and I bet that I know where we’d all rather be 😉

Choose a direction…and you’ve got a plan

There’s nothing magical about planning, but it has to be done. Otherwise, you’re not free, you’re on the road to nowhere…lost in space…you get the picture.

It doesn’t have to be complicated. Decide what direction you want to go, and make sure you’ve got what you need to get there – and that’s a plan. Sure there’s plenty to think about as you flesh out your plan, but for now, start with the big picture.

Take the time to define (or remind yourself):

How much money you want (need?) to make from your business

What personal goals your business will help you achieve

How much time you want (need?) to spend working

Think about what you want your business to do for you, not what you have to do for it.

So what’s the bottom line?

Over the next two weeks, commit to finding 20 minutes to dream about your business. Set a date with yourself. And actually do it.

Write down (or voice record) whatever comes to mind about why you wanted to start your business. Or if you’d rather use pictures, make a vision board or a scrapbook that will remind you.

Remember how it felt when you were dreaming about being an owner, all of the ways that your business would help you live the life you want. And capture it so you can use it to inspire you along the road.

  Feeling brave? Share this post with a friend and tell them what freedom means to you

Owning a Business is Like an Exotic Vacation – Part 2

By | Blog, Building Value | No Comments
Recently, I talked about getting some perspective and looking at building your business in a very different light.

I mentioned that it’s crucial to realize that things won’t always go to plan, and that this is part of what makes owning your business exciting (and scary at times). I even compared building a business to an exotic vacation. Sounds pretty far-fetched, right?

There are more similarities than you might think, and I believe that with the right mindset, either endeavor can be rewarding and bring you joy. You just need to get yourself in a frame of mind that allows you to see what the situation is trying to teach you.

FinanceAbilityVaca2

 

Using the examples from my last post, let’s compare the two (vacation and business):

  • Every vacation requires research, planning and budgeting – you can’t wait until you get there to reserve hotels, get train tickets, and ensure that you’ve got enough local currency. In business, you also have to choose a destination, decide which path you want to pursue to get to it, and understand how much it will cost. These processes are ongoing, so don’t think that once you’ve “arrived” at your destination, the journey is over!
  • You won’t have time to do everything, so you’ll need to choose your opportunities wisely – is it better to stand in line for 5 hours waiting to see the Mona Lisa, or could you see the entire Louvre in that time?In business, you’ll always have more things to accomplish than time to do so. It’s crucial to establish priorities based on what will help your business the most – even when you might really want to do something else.
  • The locals won’t necessarily speak your language, so you’ll have to find a way to communicate with them in order to survive.In business, you’ll have to change the way you think about “them” and “us” – no business can survive without relationships, and to build relationships, you have to find common ground. This will require you to step outside of your comfort zone (often!), to learn new things, and to try someone else’s perspective instead of your own. But when you’re able to create a connection (with clients, vendors, employees, and others), the benefit to your business will be amazing!
  • Fellow travelers can be both a blessing and a curse – it’s nice to see someone “like you”, but generally they’re all going to the same place!In business, it’s nice to be part of a known market (it usually means that there are lots of buyers), but it’s difficult to stand out in the crowd. Work hard to identify what YOUR business provides that is uniquely valuable to your clients, and then ensure that you maintain the highest quality on that. Even better, strike out on your own, and see if your unique value proposition can’t create its own market!
  • You have to keep a close eye on everything (bus schedules, your bags, your $$, locals and other tourists) once you get started.In business, establishing expectations (also called targets, metrics, KPIs, etc.) is critical to success. If you don’t have a clear goal and a plan for getting there, how do you know when it’s time adjust your course and what adjustments to make? Set realistic expectations, but get information about WHERE you are relative to those expectations often.
  • There’s a tendency to have high expectations at the beginning, but constant change can be wearying – you’ll have to remind yourself what your initial vision was from time to time.In business, a long-term vision can pull you through the toughest times. Be sure that you have the long-term in mind, and are able to visualize what you’re doing all the hard work for when things go pear-shaped.
  • Ultimately, it’s up to you to make the most of it – you get out what you put in!In business, hard work and dedication are expected. But remembering why you are working hard can help – so be sure that your vision will inspire you on those days when all you really want to do is sleep in!
  • My ideal vacation is nothing like your ideal vacation…The only way to really enjoy a vacation is to make sure that it fits the person traveling, regardless of where other people are going (or have been).Every business is unique, just like every person is unique. So what works for your business may or may not work for mine. Likewise, just because it didn’t work for someone else doesn’t mean it won’t work for me. Look at other people’s experiences as research, and then trust your gut when it comes to yours.
  • Lastly, if you stay open to new experiences, you meet some of the nicest people along the way, and discover that the detours could be the best part of the trip.In business, things will never go exactly the way you planned – so realize that unexpected doesn’t mean unwelcome. The major setback on a project could be the catalyst for a whole new line of products. Stay focused on your vision, and you’ll be better able to enjoy the twists and turns along the way.

So the next time that you’re facing a huge challenge, try reframing your frustration by comparing your situation to an exotic vacation. Imagine yourself stuck in a taxi on the way to a beautiful white-sand beach, or ordering what you thought was the vegetarian plate, and being served a fish with the head still on.

Yes, those are frustrating moments, but they’re also experiences that teach you not to take yourself so seriously, that help you refine your sense of when to stick with the plan and when to wing it. These experiences help you understand that true joy can be found in the small things, and that the most rewarding part of building a business (just like an exotic vacation) isn’t getting there, it’s enjoying the trip.

Owning a Business is Like an Exotic Vacation – Part 1

By | Blog, Building Value | 2 Comments
This week, I’ve done some things that I never imagined I would have. I’ve been involved in some live videos (called HOAs) on Google +, and I’ve been challenged to think about what I’m really trying to build in my business and why. And while I don’t have the answers to all these questions yet, I’m feeling pretty good about how this week has gone.

But the awesome things that I’ve experienced this week wouldn’t have been possible if I had followed my initial plan, if I had been so focused on the way I thought I should do things that I missed the forest for the trees.

Current wisdom seems to be that building a business has to be painful, difficult, all struggle until you finally reach that “pot of gold” at the end of your rainbow. That if you do everything “right”, success will follow.

But more and more, I see building my business as a process that can be challenging but enjoyable, exhausting but exhilarating at the same time…kind of like an exotic vacation!

Business ownership like a vacation? How is that possible?

Imagine that you’re planning to visit somewhere that you’ve always dreamed of going…to get there, you need to remember:

  • Every vacation requires research, planning and budgeting – you can’t wait until you get there to reserve hotels, get train tickets, and ensure that you’ve got enough local currency.
  • You won’t have time to do everything, so you’ll need to choose your opportunities wisely – is it better to stand in line for 5 hours waiting to see the Mona Lisa, or could you see the entire Louvre in that time?
  • The locals won’t necessarily speak your language, so you’ll have to find a way to communicate with them in order to survive.
  • Fellow travelers can be both a blessing and a curse – it’s nice to see someone “like you”, but generally they’re all going to the same place!
  • You have to keep a close eye on everything (bus schedules, your bags, your $$, locals and other tourists) once you get started.
  • There’s a tendency to have high expectations at the beginning, but constant change can be wearying – you’ll have to remind yourself what your initial vision was from time to time.
  • Ultimately, it’s up to you to make the most of it – you get out what you put in!
  • My ideal vacation is nothing like your ideal vacation…The only way to really enjoy a vacation is to make sure that it fits the person traveling, regardless of where other people are going (or have been).
  • Lastly, if you stay open to new experiences, you meet some of the nicest people along the way, and discover that the detours could be the best part of the trip.

Not clear about to how these things apply to your business? We’ll revisit that next week!

A huge thank you to Chris, Meagan and Tracy (and Roy, too!) – I really appreciate you all making this week a period of amazing growth for me ;-)

Your Budget is Meaningless – –

By | Blog, Building Value | No Comments

Unless you understand where the numbers come from.

I’m betting this means that many of you either don’t have a budget, or have a budget created by someone else that you only look at when you absolutely have to – meaning when some finance person (accountant, banker, etc.) tells you to. Since we are approaching the beginning of the year, there’s probably someone telling you that “it’s that time again!”

It’s no secret that many business owners (small and large) dislike finance and finance people. They’ve got no sense of humor, they dress funny, and they speak a different language. Even when they work for you – raise your hand if I just described your accountant.

And it’s true that some finance people don’t have a clue about how finance relates to your business – they just follow the rules/formula/one-size-fits-all approach and it either works or it doesn’t.

So you might be tempted to just leave the budgeting to the finance people and wash your hands of the whole thing. After all, who needs a budget and regular reporting anyway? Banks, maybe. Eventually investors, but once you get that big, you won’t have to worry about it at all, right?

WRONG.

Creating and reviewing your budget regularly are one of the most beneficial things you can do for your business. And you, the owner, are the ONLY one to do it – although it’s perfectly okay to include others (like sales and production managers, and your internal finance staff once you have them) in the fun.

Why? Because in order to really understand what’s happening in your company and how you can create value (for yourself, your employees, and any investors you might eventually take on), you have to fully comprehend where the money comes from – aka sales – and how much it costs to get in the door – aka expenses.

Creating your budget requires you to understand how your product gets made, how it gets sent to customers, and how/when/where/why those customers buy it. It helps you rate the importance of any one element, like a particular customer or a supplier. And, it helps you understand the most likely place that things can go wrong (hint – it’s usually where you have trouble getting a good estimate of cost, or units sold, or something similar). And reviewing your budget regularly shows you whether things are working the way you expected them to.

Not surprisingly, all of this is very important knowledge for an owner – whether it’s related to finance or not. In fact, I think that the least important result of any budgeting process is the budget itself. That’s why your budget is meaningless – if it’s just numbers.

For example, if you budget $1,000 in sales in January, but you’re not sure exactly how those sales will come about, what actions can you take if you only sell $900? If your sales budget is based on having 5 clients that each buy $200 worth of product ($1,000), and you only have 4 clients who purchased $225 each ($900), you have learned something important about your customers – each one spends more than you thought. So missing the budget is actually a good thing, because it helps you understand your clients, and perhaps take advantage of an opportunity in the market.

Now wouldn’t you have felt silly if you’d chewed out your sales reps for missing their target?

Likewise, if you expected to sell $1,000 to 5 clients, but instead you sold $1,100 to a single client, is this cause for rejoicing or bad news? It’s a great month, but it is a risky way to run your business. You’d better be looking for additional clients, pronto, otherwise if/when this one disappears, so does ALL your business. Be kind of silly to buy that sales rep a beer and tell him to quit looking for new clients, right?

Ultimately, a budget without a process behind it is just a set of numbers. The value of your budget comes from the education you get each time you create it and the feedback you get each time you review it.

Big companies pay big money to set up intricate management systems with all sorts of bells and whistles that tell them how they’re performing (these are often called KPIs or Key Performance Indicators). You can do the same without all the expense – all you need is to make your budget work for you!

Do you use a budget? Does it work for you? Tell me why or why not in the comments!