From the Ground Up

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According to Forbes, each month 500,000 new businesses are started, that's six million people a year that go through the hard work of getting a business started. Stephanie (not her real name) called me because her dream was on hold until she provided her prospective landlord a financial statement. Oh yes, the dreaded financial statement complete with arcane vocabulary and counterintuitive rules. It can stop entrepreneurs in their tracks, and it's why she called me for help.

This is a common problem. Elizabeth Wasserman provided an excellent overview of how to approach this in her Inc. article https://www.inc.com/guides/business-plan-financial-section.html. Ms. Wasserman recommends starting with revenues, and I agree. Sales are the holy grail for all businesses, and most business owners have a clear idea of how much business they will do.  Stephanie was no exception; she confidently told me her first-year revenue figure and waited for me to write it down. My experience made me hesitate to take that number at face value.  While Stephanie saw her landlord's requirement as a hurdle; I know it is a useful tool that encourages examination of business assumptions. I believe that a financial projection built from the ground up can prevent avoid costly mistakes.

The value of an Income Statement is not in the total numbers, but in the individual entries that sum up to the final figure. Stephanie had thought through a lot of those details but didn't know how to translate them into dollars and cents. Together we built her financials. I captured her monthly sales expectations for lashes, hair weaves, waxing, and other items, ultimately resulting in an annual revenue figure for all her major product and service categories. This was a slow process, but the end product allows exploration and experimentation. In the course of our work, Stephanie realized that she would need far more new customers to reach her sales target and she adjusted her marketing plans. Getting into the details allowed her to modify her sales plan to recognize slow Tuesdays and busier Saturdays and she changed her employees' schedules.

Entrepreneurs need big visions and bold concepts, but success lies in details. Grinding through spread sheets forces attention into the details that will make or break a new business. While Stephanie needed help to build her spread sheet and her financial statements, she dove into the gritty details to learn more about how her company would operate. I provided the help, she provided the vision, and her landlord was happy.

One Rabbit at a Time!

When I work with entrepreneurs, the first questions they ask are always about the details of running a business; how to prepare a budget; how to market their activities; and how to be more efficient.  The focus of the questions is on hows, and I appreciate that there is a lot to learn. But before entrepreneurs learn the hows, they first need to clearly and precisely define what problem the business solves.

WHAT PROBLEM ARE YOU SOLVING?  On the surface a simple question, but one that is surprisingly difficult for some entrepreneurs to identify. It is worth the time and agony to be clear about the problem and your solution because it is the bedrock of your new business. Your marketing decisions, your budget, your staffing plan, your inventory selection, all the ‘hows’ decisions you will make must help you solve your customer's problem. So first, define the problem, put all the energy and attention into providing a great solution, and that will determine your business plan and your future success.

I am currently working with a passionate, smart, persistent new business owner. His dream is to build a successful company that serves his customers with integrity and value. That was why he started his business. For a year he focused on an extensive list of hows; he found the perfect space, ordered high-tech equipment, bought supplies, and spent hours learning and becoming accomplished. The fun of working through the logistics consumed him while he happily experimented and ended up creating a wide variety of products. 

When he finally turned his attention to selling his products, his enthusiasm for starting a business was replaced by confusion and frustration. Despite a few sales on eBay and a random custom order from friends and families, sales were elusive. Like so many entrepreneurs he had allowed working through the hows of starting a business to distract him from clearly defining what he was in business to do. As a result, his marketing plan remained undefined, his product mix scattered and he was wasting time and money trying first one thing then another. His business venture was becoming an expensive hobby.  

I had been with him on this journey and watched as he chafed at suggestions to focus on providing just one solution. It felt too confining, it meant saying no to other options; but chasing too many rabbits, pursuing too many options was proving to be expensive. The breakthrough came when he acknowledged that did not have the time, the staff or the money to continue to play in all possible markets. He realized that he had to decide what customer problem he wanted to solve and put his energy and focus into providing that solution.  

He now has a clear, simple marketing plan, and is taking steps every day to put that plan into play. He will spend the Summer, and early Fall communicating his solution to targeted customers and he is moving forward with confidence and clarity. He has focused his time and his resources to solving one problem very well.

The old Indian proverb, “Chasing two rabbits means you lose both,” is true. Stay focused on defining the problem and your unique solution and make that your North Star. Broadcast that solution via a thoughtful marketing plan, build a budget to support this solution, and gather resources that solve this problem. A robust solution to a small problem is the foundation of every successful business.

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It Doesn't Hurt to Ask- Does it?

It's important to put that old saying "It doesn't hurt to ask" in context.

I recently spent two hours talking to a deeply saddened friend whose sister had, once again, asked for financial help. My friend can provide this help, but her sister has been sloppy about maintaining a personal relationship, and this request was another tear in their family fabric. She felt that it was inappropriate for her sister to ask for money because her sister had not kept in touch, had not shared details of her shaky marriage, and most importantly, had not nurtured a close personal relationship. There was a mismatch between the depth of the relationship and the request.

I saw the inverse of this as the Development Chair for a small nonprofit. We recently held our spring fundraiser, and each board member was asked to reach out to their friends and families via email or social media and request a small donation for the nonprofit.  The staff had content created and even offered training sessions to help our board work through any technical issues. Only half of the board took part in the fundraiser.

When I polled them, I learned that there was concern about the nonprofit's mission. What I now recognize is that some members simply weren't willing to risk damage to personal relationships by asking for donations.  They knew what my friend's sister did not, that "asks"  based on personal relationships act as a withdrawal of the relationship's goodwill. We do this all the time; it's fine to ask a neighbor to feed our cat because we have watered their plants, but asking to borrow the car for the week in exchange for watering their plants is inappropriate. The board members did not participate in the fundraiser because they were not prepared to withdraw some of the goodwill they had built up with friends by asking their support for our nonprofit.  

Professional relationships are different, because "asks" in a working relationship are transactional and depend on things like competence, skills, connections and ambition. In fact, the "ask" creates the working relationship. Asking for a job puts you in the position of an employee and the job grantor as the employer. In fact, the relationship wouldn't exist without the ask. 

I was recently chatting with an experienced woman executive, and she shared her aha moment, the time when she realized that the "ask" made at work was a business transaction. After her first major promotion, she found out she was making less than the men she managed. A lot less. At her review, she asked for a raise and was told to be patient, so she was, for about six months. She assumed because she had a good relationship with her boss, he would fight to get her a raise, but after waiting half a year, he offered her a 5% increase, leaving her salary far below her male subordinates.  

Instead of being mad, or disappointed she shifted her thinking. Her reliance on her good professional relationship with her boss had been a mistake; this request was a business exchange. She collected more salary data, she talked to her mentors, and received a job offer from a competitor. She requested another meeting, and this time she laid it all out, "You want me to manage this department, give me more money, lots more or I'm leaving and accepting this alternative job offer." Once she framed her request in transactional terms, she got what she wanted- a big bump in pay. 

Personal relationships develop over time and thrive when "asks" are made in balance. "I'll water your plants; you feed my cat." In contrast, professional relationships start at the first ask and all future requests should be accompanied by clear value propositions.  Expecting personal relationships to have currency at work is misplaced. At work, "It doesn't hurt to ask" as long as you have done your homework.

 

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Move Judgment to the Back Burner

judgment: the ability to make considered decisions or come to sensible conclusions

I am working on moving my natural tendency to judge to the back burner. This is a big step because for years I have been encouraged and rewarded on my "good" judgment.  I now believe this is an overrated skill. Judgment requires us to carefully evaluate a situation and make a solid decision based on all the facts. But, with age and cumulative life experiences I have found it’s surprisingly easy to take in just enough facts to reach a decision and get stuck there. In fact, studies show that once we form an opinion we begin to unconsciously filter out any new, contradictory information. This is known as confirmation bias and it causes us to only notice those things that confirm our conscious and unconscious expectations. We only see what we want to see. Once we form a judgment we begin to filter out any contradictory information.

Judging a person too quickly or assessing a new situation upon first inspection carries a very high risk of closing us off from new information. Our own desire to be right creates tunnel vision and blinds us. Growth, innovation, development, and progress only occur when we're open and inquiring. Being too quick to judge may make us feel confident, but that requires a filter that can eliminate new possibilities.

So what's the antidote? It’s simple, but not easy: stay curious. Become sensitive to the assumptions you use to fill in missing facts. Ask questions to gain more information, lean in to learn more about people and suspend initial impressions. Be willing to risk having your judgments unravel and relish forming fresh opinions when new information is presented. Try to avoid patting yourself on the back too much and instead open your arms to learn more. 

 

Father Mike and the Top of the World

The twenty of us filed into a small church and found a seat on the hard wooden pews. The church smelled faintly of mildew and was well worn. In front us stood Father Mike, a slightly stooped, gray haired man, wearing a worn, red jump suit, who was there to tell us his story of climbing Mt. Everest. The challenges of reaching the Top of the World have been documented in books and on film, so we were excited to meet someone who had tackled that challenge. But, what Father Mike shared was a more interesting story because it was about how resourcefulness can overcome limitations, that assumptions should be challenged and that clear goal setting critical to success.

 

In the spring of 1979, Father Mike was one of eight Kiwis who mounted an expedition to summit Mt. Everest. As he explained, back then, only one team a year was given permission by the Nepalese government to climb the mountain. A group from New Zealand had filed a request, but by the time it was granted, the original mountaineers were too old. So in October 1978, the New Zealand government asked the only New Zealand mountaineering club if they wanted the spot.

 

Mt. Everest is a very important mountain to New Zealanders. On May 29, 1953, Sir Edmund Hillary, a Kiwi, and Tenzing Norgay from Nepal were the first to reach the top of Mount Everest. Hilary was actually a part of an English expedition, and there had never been an attempt mounted by a team from New Zealand. If New Zealand passed on this chance, it might be years before a Kiwi team would have another opportunity.

 

Eight of the club members decided to grab this spot and quickly began to organize for the climb. As Father Mike explained, these kinds of expeditions are years in the planning, and back then budgets were usually well over $400,000. In contrast, this group had only had four months before they would leave for Kathmandu and needed to raise all the money is even less time. As Father Mike pointed out, they only had four months to buy and ship thousands of pounds of provisions and gear. In the end the group only raised $40,000 and they decided that they would find a way to launch an attack on the mountain with less than a tenth of the normal budget.

 

Finding a way to make it work on such a small budget required creativity and resourcefulness. Because the budget was so tight, they could only afford to buy one ladder. Now ladders are very important because they are the only way to bridge the ice chasms. Large sections of Everest is covered in a slow moving ice flow. As it slides and crashes, large, bottomless canyons appear. These crevasses are sometimes so wide that is necessary to string together multiple ladders to span the fissure. The Kiwis saved money by not buying new ladders, but instead counted on their ability to find and repair the many ladders left behind by more affluent teams. Their confidence in their ability to fix the scavenged ladders was brought to life when Father Mike showed a slide of a pack-ladened climber making his way across one of these bridges, comprised of salvaged and repaired ladders.

 

 

The group were trailblazers in other ways too. Up until their expedition, every team had two things, plenty ofsupplemental oxygen and Sherpas. Well, these Kiwi's didn't have either. Father Mike's group could only afford enough oxygen to cover medical emergencies and they didn't have the money to hire a single Sherpa. Without Sherpas the men hauled their own pounds and pounds of gear from camp, to camp, walking miles up and down the mountain therefore, the weeks spent moving tons of gear higher and higher conditioned these men to attempt to summit without oxygen. And the old jump suit that Father Mike was wearing, was the one and only suit he had to wear while on the mountain.

On the last day, Father Mike and another climber were near the summit. But after hours of exhausting climbing, they decided to turn back. It was 2pm and while they were within striking distance of the top, they had been above 26,000 feet, and in the "death zone" too long. Climbers in the "death zone" are oxygen deficient and soon begin to loose mental functioning, become clumsy and often make critical mistakes. Father Mike recognized that turning back would end their quest, but he remembered a bigger objective. Unlike many expeditions, these eight men had deep, long term relationships and one thing was of utmost importance;  that they would all return.

 

Thus, these Kiwis became the first team ever to return with all expedition members. Mortality is high on Mt. Everest, and from 1921 until 1979 the mountain had claimed on average one of every six climbers. In 1979 no one died trying to summit Mt. Everest. Eight Kiwis left New Zealand and eight Kiwis returned. 

This team traveled to Nepal with almost no time to plan and a microscopic budget . Instead of allowing these constraints to defeat them, they used them as launching pads to new, creative approaches, relying on their own resourcefulness and hard work. They became the first team to attempt a summit without oxygen, they were the first totally self-sufficient team, and they were the first team to not lose a single climber. They relied on hard work, smarts and unwavering commitment to their objective to find a way to success.

The "Guide" to Coaching

I like to travel and am lucky enough to occasionally make it overseas. I would sometimes splurge and stretch my budget by buying not one, but two guidebooks to help me plan our vacations. I have toured many cities with a book in hand, following recommended itineraries, reading historical descriptions and visiting cultural hot spots. I followed the same path as hundreds of other tourists, mouth agape, eyes wide in wonder, checking off all the must see sites, but connecting only superficially with these cities. 

Last fall we went to Italy and my Mother in Law recommended we make a stop in Ravenna. Ravenna is a little out of the way, and therefore not frequently visited by Americans. Despite trips to Borders, we couldn't find a guidebook, so, at my husband's urging, we decided to hire a guide for half a day.

Vivian, met us at our hotel with a car and driver. After the customary greetings, we climbed in the car and headed out of town. I must say that my first impression of Ravenna was not positive. In the centuries since it was founded, the town has sprawled from its historic center and much of it is slightly grimy, pocked with strip malls, pawn shops, tire stores and other detritus of a working class, down trodden town. I began to doubt my Mother In Law's recommendation as the driver continued to carry us out of town.  After driving nearly thirty minutes we finally stopped at a large, imposing medieval style church and this is where Vivian's skill as a guide began to show.

In the four hours we spent with her we visited Ravenna's eight World Heritage sites scattered throughout the town. Vivian brought Ravenna's famous mosaics to life for us; stunning pictures, made of millions of tile chips, that told stories in brilliant, mesmerizing color. She explained the symbols, and the meaning behind those scenes and we were transported to the time when  petty jealousies, love affairs, outrageous egos and the the perpetual tug of war between church and state shaped Ravenna. And while teaching, she was also learning about us. She  noticed our interests, elaborated on some topics to make the city 's history resonate for us. I know that without her, Ravenna's brilliant, beautiful, complicated past would have remained hidden. Of course we would have seen the mosaics; that's why my Mother in Law recommended the stop, but we would not have understood the stories the mosaics told. That happened because Vivian was an extraordinary guide. She had the gift of making history personal, by listening to our questions and noticing our interests. 

 

Hiring a guide did cost more. Would I do it again, unequivocally yes. Vivian added a depth of experience that transported us. The incremental cost was minimal and the value was immense. 

 

I think coaching is like hiring a guide. Sure you can buy books that will lay out what you should do and you can hire consultants who will tell you what your should do. These are great resources and they are relatively inexpensive. But hiring a person trained in coaching is like hiring a guide. A professional business coach will encourage you to explore, will insure you carve out time to reflect, will ask questions to uncover your deep  interests and support you as you chart a path that is unique for you. With a Coach, just like having a guide, you will go where you want to go, find what resonants with you and bring the adventure of owning a business to life. 

Now what? My business plan isn't working.

Photo by Poike/iStock / Getty Images
Photo by Poike/iStock / Getty Images

Some combination of passion, commitment, necessity and stubbornness got you started on the path to working for yourself, but maybe confidence and optimism has been displaced by confusion and uncertainty.  Has your business plan taken a detour and you're now working harder than you expected for a smaller return than you predicted? Where did it go wrong?

 

The answer can be found if you're willing to work through these three exercises:

 

 

  1. Revisit your Financial Assumptions. Rebuild your financial projections using real data. Even with good initial research,  business plans are often filled with erroneous assumptions. Now it might be time to start over, with real expenses and with real revenue streams. Be brutally honest. Then ask yourself if these new numbers will satisfy you.

 

  1. Look in the mirror. Take a self inventory. What are you good at, and what don't you do well? Whatimportant things aren't being done at all or are being done poorly because you're trying to do it all? Are you prepared to hire out the jobs that you don't do well or don't do at all? Is this reflected in your new financial projections.

 

  1. Revisit your Marketing Plan. Can you easily identify the problem your business solves?  Sales happen when problems are solved. If you aren't clear about what problem you solve, you'll have a hard time marketing your business.  So can you clearly state what problem you solve for whom? How does this impact your financial projections?

 

Its vitally important to work through all three of these steps because your future is dependent on knowing and acting on what is, not what you want it to be. You must know your true financial situation. What your strengths and weaknesses are and how that affects your company and what exactly are you selling?

 

You might decide that you don't want to move forward, but hopefully you can now design an effective business plan. A plan with clear, measurable goals, firm deadlines and scheduled meetings with an accountability partner. The plan is the first step in changing your business and yourself. It will take time, it will be slow and it you will face setbacks. Build a team to support you, to give you honest feedback and hold you accountable. You have done the hard work of honestly assessing where you are. Now you know what needs to be done, and confidence and optimism can replace confusion and doubt. You are on your way.

Looking Behind the Numbers

Photo by YelenaYemchuk/iStock / Getty Images
Photo by YelenaYemchuk/iStock / Getty Images

All business leaders work hard to avoid mistakes, but if a mistake is made, recovering is possible and can be enlightening.

I'd like to share a real life story involving Mary (not her real name), the owner of a small, specialty store in a small, southern town. Mary has owned her store for over 15 years. Last year she moved into a beautiful, bigger, building that she designed, built and owns. She loves her store because it reflects her open, embracing, encouraging personality and it offers her customers a more pleasant place to shop.

Mary built a larger store because she wants to sell more apparel; in fact, her goal was to double her apparel sales. Mary made this audacious goal with confidence because her store is beautiful, her customers love her, she has great taste and the new products would be wonderful. So in January Mary placed large apparel orders to fill the new store. Well as you might have guessed, sales over the summer were not as robust as Mary expected and now her winter orders have begun to arrive.

Mary had built her goal around some basic assumptions; she believed that her customers wanted more apparel selection, that they would respond to the new store by buying more apparel and that her merchandising would make her apparel irresistible. And her foundational goal was that her loyal customers would resist the new reality in retail and buy her apparel at full price. 

Because apparel sales had not increased in the new store, it was clear that Mary had made a big mistake. And this led Mary to question her fundamental assumptions and her basic business competence.  Maybe she overestimated how loyal her customers really were, maybe she doesn't know how to buy apparel, maybe she isn't merchandising her apparel well, and on and on. In fact, was this mistake tangible evidence that Mary didn't know what she was doing?Mary's confidence was so undermined that she had trouble seeing beyond the full shelves. Yes, she had overestimated her community's appetite for apparel, especially apparel selling at full price. But, by looking at the situation in another way, she saw a different outcome. Mary had created a beautiful store, full of inviting apparel and staffed by wonderful, helpful, knowledgeable employees. She showed that she was fully committed to offering the best to her community, that she wants to showcase great products in an inviting and exciting space, and that she was willing to place a big bet on herself. Her biggest mistake wasn't in buying too much inventory, it was in allowing that to become the measure of her business acumen.

Actually, her store is a perfect reflection of her personality; live the dream, invest in yourself, value beauty and wonderful things and live big. And while she did make a mistake, she can recover. Mary will convert her inventory into cash and she will continue to offer wonderful product, in a beautiful space to loyal happy customers (who like are lucky to buy great inventory on sale this year). Mary may have bought too much inventory, but she sent a strong message to her customers and her employees; live big, take a chance, keep on going and some mistakes can teach you a lot.

 

 

Photo by AnikaSalsera/iStock / Getty Images
Photo by AnikaSalsera/iStock / Getty Images

Make a Change

I had a boss early in my career that believed people didn't change. Actually, to be precise, he believed it took a near death event to change people. I bought into that too. People's behavior was pretty constant, the same folks arrived late to every meeting. The procrastinator's always got reports in late etc. and because most people do not suffer a near death experience, most therefore don't change.

 

But there is a huge industry built around the premise that change isn't that hard and in fact can be done by teaching new skills or training programs. In my early career, I worked for a large bank and I enjoyed countless training programs all designed to change employees.  I was taught new skills and techniques and I even lead some a few training programs, but looking back on all the hundreds of hours spent in training, I have to admit that I don't think any behaviors or attitudes were ever actually changed.

 

In fact there is overwhelming evidence that the effects of training programs is very short lived, yet we continue to believe change is possible if only we attend the right program or read the right book. Look at your bookshelf. How many books do you have that promised to teach you a new techniques that will change your life? I'm guilty, I have two full shelves of these books. But I still have the same ten pounds to lose and I still interrupt others during meetings. Change isn't about being told or being taught, its much harder than that.

 

Lasting change is tough to accomplish and I believe that integrating change requires at least three things to occur:

 

    1. The change has to be personally meaningful, deeply defined and             important.

    2. You need a safe place to experiment with the change. You have to             practice the change and see how it fits. Be confident that the             change really suits you.

    3. You need an accountability partner. This is someone who you will             report back to on how you are implementing the change. 

 

If you don't really believe you will be better off by changing, you won't spend the enormous energy change requires. So make sure your focused on something that is deeply meaningful, maybe not life or death, but certainly meaningful. 

 

You also need to explore how to manifest the change, what that changes really looks like. For example, if you decide you want to speak up more in meetings, what does that look like exactly?  Do you talk more, talk louder, summarize, interrupt? The details are important and you need a safe place to practice, to see if the change resonants and connects with you.

 

And finally, it takes practice and repetition to integrate new behaviors. That's why you need an accountability partner who will honor your desire to change by holding you to your commitments. Like the old joke, "How do you get to Carnegie Hall? Practice, Practice, Practice." Making a long lasting change means committing to incorporating a new behavior into your day. Therefore, If you really want to change you need a partner, a confidential comrade who will allow you space to explore, define the specifics of the change and practice. This is exactly what a Professional Coach provides and I hope you will find a trained, credentialed Coach to help you when you decide you really are going to change.