Resolve to Never Make a New Year’s Resolution

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I hereby resolve…blah…blah…blah

The best resolution you could make in January is to not make a New Year’s Resolution. They rarely work, and tying them to the New Year nearly ensures they never will.

Last year I reported that 97% of people who make New Year’s Resolutions to lose weight actually weigh more 12 months later. New Year’s Resolutions enrich companies selling diets and ab-duction machines, but they don’t effect real change.

Later, Dude…
A New Year’s Resolution is almost always focused more on celebrating the decision than on resolving to be different. There isn’t a wit of difference between Mardi Gras and New Year’s Resolutions. Both of these “decision” mechanisms are built on putting things off until a special date where you can then celebrate the decision to start losing weight, working out, spending time with family, or giving up smoking.

Until then, you can go on pigging out, being mean, ignoring family and smoking like a chimney. Now that you’ve announced you will quit on some future date, your self-destructive behavior is actually permissible to “get it out of your system”. Mardi Gras and New Years makes your actions downright celebrated – get your glutton on, because soon you’ll be in a forsaken and tortured desert of good living.

Getting Ready to Get Ready to…
Here’s a clue – the more you need to point to January 1 as the day “I will absolutely start doing or stop doing x”, the less you probably mean it. If it’s important, change now. If you have to walk on coals or chant at your vision board to prepare for the big day, you can save yourself some self-imposed guilt and just keep going with what’s not working.

My mother passed away a few weeks ago. She used to tell me, “Chuck, there’s no such thing as excuses, there’s not even reasons, there are just priorities.” She lived that out well, making no excuses and simply doing the things she found important. She didn’t live to make decisions on special days; she just DID what she VALUED.

How to Change Something
We do what is a priority, not what we SAY is a priority. Last year I gave you three few practical suggestions on how to DO our priorities. I added a fourth this year:
1) Don’t “get motivated” Most of this walk-on-coals stuff is emotion-based and has no lasting power. You’re either committed or you aren’t. I don’t get motivated to brush my teeth. I either do it or I don’t.
2) Run toward something, not away from something. People who want to lose weight rarely lose any. “I want to stop being fat,” is running away from being fat. “I see myself living a great lifestyle,” is running toward something. Run toward a great life, not away from being fat. Read, Get a Second Planet.
3) Make decisions through a new lens. See yourself and/or your business AS IF YOU WERE ALREADY THERE. Read last years New Year’s Resolution post on how Peter Arnell went from 406 lbs to 150 lbs and stayed there. If you can’t already CLEARLY envision yourself exercising three times a week, don’t even start.
4) Diligence, not Discipline – Anybody can have the DISCIPLINE to do something for 30 days. But few people will have the DILIGENCE to continue for the rest of the year. Diligence is a drip system. Do the right thing a little bit every day – it will add up to something big down the road. Diligent rules; discipline drools.

The above four steps are all about intentionality vs. hope. Intention is the key because:

You get what you intend, not what you hope for.

New Year’s Resolutions are full of emotion-based “hope”. Real decisions are full of intention and don’t need a special day or audience to be walked out into the open.

Don’t get there. Be there.
Don’t gin up the motivation to do something on a special day. Just start living the way you know will make you more successful. Today. It’s OK to cheat on your New Year’s Resolution and start it a few days before January 1. Especially if you actually want to change.

Where do you want to be in 2013? Tell the world here, be there inside today, and then let’s go do it on the outside for the whole year. Carpe Diem – seize TODAY and enjoy doing changing something that will make your life, and maybe even your checking account, richer.

The Short Straw of Failure

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One Simple Thing

For years I’ve been hunting down reasons why people are successful, or why they aren’t. In the last few weeks an over-arching single reason seems to be forming for me.

The Long List of Success Attributes
If you break it down to the smaller reasons, there are so many why people succeed – clarity of vision, solid values/beliefs/principles, speed of execution, commitment (never giving up), discipline, getting back up/bouncing back, taking good risks vs bad risks (& knowing the difference), being organized, optimistic, being flexible, embracing challenge, seeing the big picture, rising above offense, seeing yourself as successful, being willing to be wrong often…

…and so many more.

The One Big Success Attribute
But as I look at the long list of things that make people successful or keep them stuck, they almost all seem to roll up under one simple, over-arching reason. I’ve been testing it against all the other reasons for weeks, and can’t find one that doesn’t fit under the one big one.

The reason we get where we want to go or don’t is simply this:

Short-term vs. long-term decision-making.

Not very glamorous, but absolutely transformative if you embrace it.

People who make their decisions based on what will help in the short-term are almost never successful. People who make decisions based on what will be best in the long run are almost always successful. Is it that simple? Let’s test it and see.

Testing It Out
Take a look at the list of success attributes above (or any of the dozens I haven’t mentioned) and ask yourself which ones are based on short-term gain and which ones are based on the long-term gain. Success attributes are all about the long-term.

In stark contrast, the following reasons for failure all help us address short-term symptoms, but keep us right where we are:
– survival: I have payroll to make
– feelings: I don’t feel like doing that right now
– fear: I’m afraid they won’t like me, or I might fail
– lack of discipline: shiny object syndrome – oooh! – let’s do that, TOO!
– being tired: the #1 reason businesses fail
– lack of learning: we’re too busy DOING to be learning
– inflexibility: change is messy, we’ll just row over the falls
– lack of vision: I’m too busy making chairs for that woo-woo crap

…and on and on. We do them all for one very simple reason. We are short-sighted and not thinking about how we will ever get to where we want to be.

Ask yourself two long-term questions:

1) What would I be doing right now if I weren’t (in survival, afraid, undisciplined, tired, etc – put your own short-term problem here)?
2) Am I making decisions based on where I am, or where I want to be?

Decisions based on what helps me now, create long-term failure. Long-term success is based on a life pattern of making many small, daily decisions, one after another, that stack up to success down the road.

Our VALUES determine our thoughts
Our thoughts determine our actions
Our actions determine our habits
Our habits determine our character
Our character determines our DESTINY.

Do you value being on the treadmill the rest of your life, making decisions that address short-term symptoms but never solve the long-term problems? Or do you value getting off the treadmill and living a life of success and significance?

You Are Not a Victim of the Short Straw
In business and in life, the short straw is not a guessing game. Nobody’s fist is hiding it. The long straw and the short straw are both laying on the table right in front of us. If we want to be successful we will see clearly that short-term decision-making is just willingly picking the short straw instead of the long one.

Make one decision today that will make you more successful later. It likely won’t make you any money or save you any time TODAY (short-term). But it just might change your life down the road.

Choose the long straw.

The Long Pole of Success

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Truth & Consequences.

A few years ago I spent a day finishing my first book, because I wanted to go to New Zealand 21 months later. If I didn’t do it that day, the trip was in jeopardy. Why? Because the Long Pole of Success is very predictable.

Imagine a mile long pole you’re holding against your stomach, and someone else is holding the other end against their stomach, and the goal is to shake hands without them having to move.

What happens if you take one step toward them? If you both keep the pole against your stomachs, a mile away they will have to take a step back. You’ll never shake hands that way. If the game is to keep the pole directly in front of you, the only way to get there is to start cutting off lengths of the pole. Cut off enough and you eventually end up where they are without them having to move.

I’ll just do it tomorrow
The Long Pole of Success illustrates why today is so important to getting to your objective months or years from now. Too often, “the future” looks far enough off that we feel we can ignore it for now and just pay attention to it later.

To finish my book I needed one solid eight hour day. On Tuesday, June 2 a few years ago, I looked at my 2-Page Strategic Plan and saw that I was supposed to be done with the chapter by May 31. The next day, Wednesday, June 3, was supposed to be a gorgeous 80 degree day and I had no appointments. Memorial Day weekend’s weather blew chunks so I was going to make up for it with golf and a bike ride on Wednesday. But now I had a choice to make – finish the book or enjoy the day.

My Business Maturity Date, with a 3 1/2 week celebration trip to New Zealand, was 21 months off. The book was one of a number of strategic things I needed to accomplish to make it to my BMD, which included taking Fridays and the last week of every month off after I hit that date.

I looked at my schedule and realized that it would be at least six weeks before I had another full day to finish the chapter. Doing it in 1-2 hour pieces just didn’t work for me – I needed to be able to focus and get it all knocked out at once or it likely wouldn’t flow well.

Cutting off a chunk of the pole
I had a Long Pole of Success decision to make. Since finishing the book was one of many strategic keys to hitting my BMD, putting off the completion of this chapter for six weeks would push back the publishing date of the book by six weeks, and potentially push back my BMD 21 months later, by that same six weeks.

To keep the BMD from moving, I had to cut off a length of the Long Pole on Wednesday and get the book done. I finished the book and the other strategic things we needed to do in order to build a business that would run while we’re on vacation (hiring people, putting processes in place, etc.). 21 months later we left for New Zealand to celebrate our BMD, on the exact day we hat targeted almost four years earlier.

Today Matters
When things seem a long way off, we don’t see much issue with putting off doing something that might just impact that seemingly far off goal. But the fact is that every time we turn today into tomorrow without completing the strategic things that will build our business, we automatically push back success by one day.

And it’s really hard to make it up later. With the pole tucked into your stomach, you can’t reach 50 yards in front of you and cut off a big chunk all at once a few months from now. The only way to do it without delaying success down the road, is to cut off small pieces regularly every week.

Success is quite predictable
The Long Pole of Success is unforgiving. Either regularly cut it off in small pieces or expect to push off success by each day that you don’t do the small and simple things that will eventually get you there. But success is actually quite predictable, if you’re doing the right thing. Chipping away at the Long Pole will very predictably get you to your goal.

Next year, will you end up where you are?
Are you making decisions based on where you are, or where you want to be? Think about the Long Pole of Success the next time you say, “I’ve got a whole year. I can do that strategic thing tomorrow.”

A Strategy is Not an Objective

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Know the Difference – Grow Your Business

There is a lot of Business Buzzword Bingo out there around these two words, but they are too important to your success to get them confused.

Strategies answer “How”
Specifically two “how” questions; “How do we make money?” and “How do we lead?” Your strategies cover how you think you’ll make money over the next one to three years.

Direct Revenue – Each way you make money should be described as a separate Direct Revenue: strategy, as long as you market and invoice for it differently. If you market furniture differently than floors or to a different audience, list these as separate Strategies for how you make money. If you invoice differently for restoration then for new construction, or to a different audience, they are separate Strategies. Sofas and chairs with different prices but that are marketed to the same audience are one Direct Revenue stream – furniture.

We have multiple Direct Revenue streams – 3to5 Clubs for business owners worldwide, books, workshops, keynotes, one2one consulting and online apps. Since your Strategies should list how you will make money for the next one to three years, we also list some things we aren’t doing yet but plan to add to our quiver over the next three years. Some businesses will have just one or two Strategies – like 1) plumbing repair and 2) new construction plumbing. Or even just one – mortgages.

Indirect Revenue – A second type of Strategy. For small and local businesses, we should largely replace the word Marketing, with the phrase Indirect Revenue. Big business spends a lot of marketing money on things like “brand recognition”. For most of us, we need to think of marketing more as Indirect Revenue. If you can’t track revenue clearly back to your marketing, think twice about doing it. You can’t afford brand recognition; your marketing should cause people to buy stuff.

How We Lead – The last kind of Strategy you need to articulate – a simple 1-2 sentences or a short list of words how you intend to lead your business. It’s very important to have a simple leadership Strategy that guides the way you make decisions.

All of this should take no more than two-thirds of a page. If you get wordy, you’ll never apply this. Complexity breeds confusion.

Objectives answer “Who”, “What” and “When”
Objectives are radically different than Strategies. Once you know how you make money and how you lead, your Objectives will put rubber on the road. Strategies are not measurable and don’t assign responsibility or concrete timelines. But Objectives should ALWAYS be measurable, assign responsibility and define exactly when they should be accomplished. Your Strategy says How you make money; your Objectives make it real.

Take each of your Strategies and attach Objectives for who owns them, what exact amounts or numbers will define success, and when you will have them done. A Strategy would say, “we make furniture”, but the corresponding Objective would be “We made 2,000 chairs in 2012 and will increase that by 50% in 2013, to 3,000 chairs. John is responsible for the marketing, Fred for the production, Sally for the etc., and we intend first to increase by 250 extra chairs produced by March 30, 2013.”

If you can’t measure it, know who owns it, and say when it will be done, it’s not an Objective. If you can, and you run your business with the intent of completing each Objective attached to each Strategy, you’re likely to be successful. Make sure you have at least one annual Objective to get you off the treadmill – “I worked xx hours a week last year, and intend to work xx hours (less) this year. I’ll be 20% of the way there in the first three months.”

A Little Bit Every Week
If I could just get business owners to set aside a couple hours a week to push their intentional Objectives forward, instead of following the Random Hope “we gotta make some money this week” plan, we would have a lot more successful businesses out there.

Your Mission is Not Your Vision

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Why you need both.

Vision and Mission are two very different things. And the smaller your business, the more you need them both. Those who have both and live by them always make more money.

Whether you think you do or not, we all run our businesses based on deeply held beliefs. The problem is we don’t do it consistently, but only when it’s convenient. The rest of the time we’re taking on clients, employees, vendors and partners based on the immediate benefit, without regard to whether there is a culture and values match or not. Six months or a year later we’re butting heads with the new staff, avoiding that troubling client, or looking for a new vendor.

Why? Because if you don’t have a clear vision for your own life or business, you’ll become part of someone else’s vision for theirs. Take on a a partner, employee or staff member with a strong direction, and it will overwhelm the weak hold you have on why you exist, where you are going and how you intend to get there. Meandering and random hope are not good business strategies. Get a grip on your vision and your mission, or expect to be pulled in every direction.

Vision = Values
Your Vision statement is for YOU, not for your customers. It is much bigger than your business, reflects your personal beliefs and values and is what would get you out of bed every morning no matter what business you were in. Your beliefs, values and principles don’t change based on your business. Your Vision statement should be the core driver behind who you hire, who you want as clients, and how you will relate your business to the world around you. In most cases, a Vision statement doesn’t tell anybody what you do, only what you believe and value as a business.

This should always be a values-based statement. It’s about your beliefs. Our vision statement for Crankset Group and 3to5 Club is “Live well by doing good.” We could be grocers and say the same thing, because it’s what gets us out of bed every morning. We can unpack that for you for three to four Guinnesses, as to how it impacts every aspect of our business.

Your vision is all about you, and what you believe. It drives you, your staff and all of your relationships forward. You may or may not share it publicly. It doesn’t matter – it’s not for your customer, but for you. Every decision, big and small, should be based on your Vision statement. Every one.

Mission = Marching Orders
Your Mission statement is radically different. It’s not about you in any way – leave yourself out of it. It’s all about your customer and the OUTCOME you expect to give them. Here’s a lousy Mission statement: “We will be the #1 pencil manufacturer with the best quality, highest profitability and the fastest growth.” NOBODY cares.

When people ask “What do you do?” they never mean it. They mean, “What can you do for ME?” When someone reads your Mission statement, they should know exactly what OUTCOME you are going to get them, not what you do.

Our Mission statement, “We provide tools for business owners to make more money in less time, get off the treadmill, and get back to the passion that brought them into business in the first place.” From that, you would never know that we build 3to5 Clubs around the world, have cloud apps, sell books, do workshops and keynote talks and have a sales development series called FasTrak. That’s because nobody cares what we do until they find out what we can do for them.

An OUTCOME is a RESULT expressed EMOTIONALLY. Your Mission statement should give some quick info about what industry you are in, but 95% of it should be about what you will do for me. If I like that potential result, I’ll ask you how you will do it. That’s your cue to talk about your capabilities, quality, growth, etc.

Do you have clients, staff or vendors you’re not happy about? Are you changing courses often? Having trouble finding that one product or service that drives your revenue and growth? It’s almost certainly because you don’t have a clear Vision or Mission statement.

Winging it has it’s consequences. Figure out what drives you (Vision) and what outcome you’re delivering (Mission) and watch your business grow.

To make more money, do as little as possible.

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April’s story of success

Small and local business owners need to choose a very narrow market. When they do, we assure them they will make more money. Here’s a voice mail I got yesterday from one company who went narrow. It’s much more powerful than any theory.

April used to be a solo practitioner. Now she owns a company with a growing number of employees and a business that is exploding. She did it by dropping 99.9% of her potential market and focusing extremely narrowly on only one tiny facet of her market. It happens all the time when we convince companies to focus narrowly. April’s is just one of innumerable stories we hear all the time as we challenge small and local companies to go narrow, not wide.

April used to be a Virtual Assistant, just like thousands of others. And just like thousands of others, all she could say is that she is better than the other thousands, which is what they other thousands would say, too. They all sounded like Charlie Brown’s teacher. Then April decided to stop being a Virtual Assistant to the world like all the other thousands, and started focusing solely on real estate agents.

Narrow and Deep, not Broad and Shallow
But she went even narrower. She took the leap to focus not just on real estate agents, but solely on helping them manage their online services – not the standard SEO or online marketing that thousands do – she doesn’t do that; but just helping them manage their online writing, data and pictures – posting new properties, blogs, data, customer records, potential leads, etc. This is an extremely narrow niche, not just with real estate agents, and not just online, but only a very specific part of the online presence.

This was scary to do, because, as with any really good narrowing down of a business, she was leaving behind 99.9% of the potential customers available to all the other thousands of Virtual Assistants like what she used to be. But as soon as she made the switch last year, she stopped sounding like Charlie Brown’s teacher, started making more money and started bringing on real estate agents.

Results Speak Louder Than Words
Soon she had one entire office of 60 real estate agents using her company to administrate their online services, and was bringing on smaller offices as well. She started taking on employees from the thousands of Virtual Assistants out there who had not narrowed their services and were now looking for jobs, and her business has been growing ever since. I got this voice mail from her yesterday:

“I just wanted to let you know how 3to5 Club training is just continuing to change my life. I just decided to meet up with a potential major strategic partner connected to the 60-person real estate office, with much bigger real estate connections. When I explained to him what I’m doing and how I’ve narrowed my business down to only managing online real estate company services, getting that specific – he was so excited he almost did cartwheels. He said, “I don’ t know anyone else doing this. We have to package this for the other offices.

Long story short – he is introducing me to seven other company offices in the next three months. So we will go from having 60 agents to all 560 agents. It’s so great. Honestly, I would not be where I’m at without your wisdom and advice and 3to5 Club’s encouragement and belief in me all this time. It turns out that what we are doing is so specific that it is cutting edge for real estate marketing.

Just wanted to say thank you so much and I hope you have a great weekend.”

Focus, Focus, Focus…
I have NEVER seen a small or local company go narrow and lose money doing it. Never. They always make more money if they stick with it. But I’ve seen more than I can count go out of business by trying to be all things to all people. They rarely make more money. At best they grow their revenue along with their expenses and end up a lot busier, more stuck on the treadmill, with higher revenue but with no more profit. But usually their revenue goes down along with their profit.

Want to make more money? Stop doing everything, and just do one thing. You can do “everything” later, after you build a successful company around one thing.

Stop taking advice from Giant Corporation, Inc.’s story. Take it from April. Do one thing, very narrowly. The more narrow your niche, the more likely you are to make money.

Knowing vs. Knowing

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They’re vastly different things.

The ancient Greeks had two distinctly different words for knowledge. One of them is good for business owners, the other one, not so much.

A Tale of Two Words
Gnosis is the ancient Greek word for “knowledge of the head” – 2+2=4. The sky is blue. Gravity sucks. Plants need water. All good stuff to know, but not nearly as powerful as the other kind of knowledge.

Epignosis is the ancient Greek word for “knowledge of the heart/life”. This is voodoo of a different kind and is much more valuable to the business owner. Epignosis is not something you know to be a fact, that can sit in your head unused for decades. Epignosis is applied knowledge. It’s knowledge that directly affects the way you live and act every day. You don’t know it, you do it.

As a business owner we know things with our head that are interesting, fascinating, boring, essential (profit is good, loss is bad), and some of it very complex. We love complex knowledge – understanding markets, watching trends, researching possible products and services – because it all takes a lot of time to learn and makes us feel smart. Even other people are impressed when we talk from our head knowledge about these things.

Get Real
But Epignosis, knowledge of the life, is a special thing and should be cherished by business owners. It is that knowledge on which we act and build a business. Things like calling people because we “know” if we do, some will buy. Or building connections with strategic alliance partners because we “know” they can rain on us for decades with clients. Or getting out of our office and serving our clients or other business owners because we “know” that helping others get to their goals ensures our own success.

We know that we have Epignosis about something because it affects the way we do things. Gnosis is only about what we know in our heads, but Epignosis goes to the very heart of what we BELIEVE (more on that next week), and it is our beliefs that determine our actions. If I believe bicycling will make me fit, I will do it regularly, not think about it. It’s true Epignosis.

I Say Tom-ay-to, You Say Tom-ah-to
The problem is that we get the two confused all the time. We think that knowing something with our heads (I will be successful if I make those phone calls) is somehow valuable. But knowledge of the head is only valuable when it comes out our hands as knowledge of the life.

Successful business owners have a special relationship with life-knowledge, Epignosis. They go looking for the kind of knowledge that can be immediately translated into action that builds their business. Those that struggle are much more inclined to research, think, strategize, analyze, postulate and theorize. That kind of Gnosis may be very satisfying and impressive, but it will leave you poor. When it comes to Gnosis, the old adage, “Knowledge is power”, is wrong. If knowledge (Gnosis) were power, librarians would rule the world.

In Your Head, Out Your Hands
Life-knowledge makes us do something, not think something. It is at the core of Conation – Committed Movement in a Purposeful Direction (CMPD). Conation is the most important business word you’ve never heard because we live in a world ruled by Cognitives, Thinkers – Gnostics who loving knowing but not doing.

Want to be successful? Fall in love with Epignosis. Every time something goes in your head, figure out how it can come out your hands to help you build a better business. Translate Gnosis into Epignosis – it’s a great way to build a business. Stop thinking. Get moving.

Trapeze Moments in Business

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Leap!

One of the most common drivers of success is how we handle Trapeze Moments in business. All too often the most sensible response is the wrong one.

A couple years ago we were looking to publish Making Money Is Killing Your Business, our first book. It was in the hands of the largest business book publisher in the world. As I learned what the contract would look like, I discovered what a lousy deal every author gets with giant publishers. We would lose ownership of the book to the publisher, get paid a tiny fraction of the revenue, and not see any of it for up to 18 months.

But the alternative was equally uninviting. If we didn’t let the giant publisher own the book, we would have to start our own publishing company with no knowledge of the industry, give up on distribution through all traditional bookstores and spend at least $25,000 on design, layout, websites, printing, and fulfillment.

Two years ago publishing a book yourself was an even scarier option than today – it was a generally new way of doing things. Doing a deal with a giant would save us the $25,000 we didn’t have, and get the book into all major brick and mortar and internet book channels immediately.

We had a decision to make. We believed in our book and that it would have a major impact for small and local business owners worldwide for decades to come, long after a giant publisher would have lost interest in it. But we had no clue how to publish a high-end hard back book and get it out to the world around us. And we didn’t have $25,000 to risk on printing thousands of copies of something that might sell less than 100 copies.

Decisions Based on Where You Want to Be
This was a Trapeze Moment for us. A Trapeze Moment is one of those times in a business where the only way to get to the next place in your business is to let go of something you’re hanging on to for dear life. We had been profitable for a couple years and were “hanging on” to that with a death grip. The last thing we wanted to do was go backwards again and throw another $25,000 at this business.

But businesses don’t grow by hanging on to what they’ve got. They grow by making decisions based on where they want to be, not on where they are. If we make decisions based on where we are, where do we think we’ll be next year? The same place – on the treadmill.

So we dove in once again, let go of profitability, borrowed $25,000, started a publishing company from scratch with no knowledge of the industry, and printed thousands of copies of our book. A year later Making Money Is Killing Your Business was rated #1 Business Book of the Year by NFIB, not because it sold a million copies, but because they believe it was the book that had the greatest impact that year. That was what we were shooting for – a book that transformed businesses, not just an interesting read.

Risks Create Rewards
Two years later we’re into our second printing and book sales are increasing every month, something the giant publishers said could never happen after the first year. The book has been translated to Chinese and is selling well in China. Other translations are on the horizon. Because the revenue deal is so bad with giant publishers, we would have to sell 100,000+ books through them to equal the profit we have realized from the first printing. And we would still not own the book.

As the book gains momentum, we are glad we made the decision to start our own publishing company. Others are now coming to us to publish their books and we have three more of our own already in the works. And publishing isn’t even our core business, just something we did because we had to in order to keep control of a book that is central to driving 3to5 Clubs forward throughout the world.

Leap Forward
Every business has Trapeze Moments. It’s scary to let go of the one we’re hanging on to, do a backflip and trust that as we reach out the next trapeze will be there. But it’s what business owners do. They make decisions, not based on where they are, but where they want to be.

What Trapeze Moment are you facing right now? Make the decision based on where you want to be, otherwise you’ll end up where you are again next year – on the treadmill.

Make the leap!

We don’t know HOW to get where we’re going.

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Neither do you.

A few years ago the Fortune 500 CEOs were all surveyed and ask this question:

“What is your greatest fear?”

The #1 answer – “I’m afraid I will be found out to not know what I’m doing.”

I’ve started seven businesses. None of them have crashed and burned (yet), but I got out of a few because they were bad ideas that weren’t going anywhere, and in some cases barely breaking even. A couple made decent money and grew well, and we sold one to the largest company in that particular industry. Right now we have two businesses growing internationally, one of them on four continents that has the potential of changing the game for small and local business owners worldwide. It grew 392% in the last four years.

But…
So it’s nice to be able to claim a decent track record: to date – so far. And yet I have to be honest and say that when it comes to getting where we want to end up, I have no idea what I’m doing. But I’m pretty comfortable with that, because I’m just as sure you don’t, either.

Utter Clarity by Groping Our Way to the Light
I do have a pretty sane assessment of where we are (most business owners don’t), and I know with Utter Clarity where we want to end up, but I have no grand plan to get from where we are to where we want to end up a few years from now. The journey is not mapped out and the path ahead is full of Intuitive Guesses yet to be made. It’s not going to be easy, and there is no such thing as going on auto-pilot and watching this business fly itself.

Just like the Fortune 500 CEOs, I’m making this up as I go along. But since I don’t have nervous investors, unlike them, I don’t have to pretend I know what I’m doing. I can say, “I don’t know” out loud.

It’s okay to not know how we’re going to get all the way from where we are to where we want to be. In the real world, business owners don’t become successful by a grand vision, a genius scheme, a fail-safe product, or a five-year business plan (also known as voodoo & fortune telling). As Bill Hewlett of HP said, they had no business plan in the early days when they got moving, they were just being opportunistic and doing whatever they could to grope their way to the light.

As We Go, Not Before – The Intuitive Guess
We will grow this business not by having it figured out, but by figuring it out as we go. We will not get to Utter Clarity by digging a canal, lining it with concrete and floating to our reward, but by a thousand changes in a thousand directions, relentlessly doing whatever we have to, adapting however we must in order to get to our ocean.

All we get to know along the way is where we are, where we want to end up (Utter Clarity), and an Intuitive Guess at what we should do next to get there. And we’ll be “wrong” a lot (we already have been)– that’s how we’ll find out what we should really be doing. We’ll get our maps when we’re done, just like any explorer.

You’re going to do it the same way. Welcome to building a business. Stop trying to figure out HOW to get all the way from where you are to where you want to be. Know exactly where you are, and get Utter Clarity about where you intend to end up, then make one short-range decision that you think might help you get to the end game. Take the feedback the world will give you from making that decision, and do it all over again.

A Thousand Little Hows, Not One Big How
Don’t waste time trying to figure out how you’ll get all the way from where you are to where you want to be – as if there is one big “how” that would answer that. Get Utter Clarity about where you want to go, then be comfortable asking a thousand little “hows” along the way to get there. You don’t have to know what you’re doing. You just have to know where you’re going. That’s enough. Anything more would spoil the adventure anyway.

Three magic words: “I don’t know”.
Use them often. They will guide you to the next little “how”, and all the way to where you want to be.

Why we’re excited to make less money right now.

/in /by

Less Can Be More!

In 2006, we worked hard to become profitable within the first 18 months of building Crankset Group. And the profits went up each year until 2010. Then they started going down and that’s when we got excited. It was a very good sign.

In every business there are cycles of numbers that we should focus on. It’s never neat and tidy, but in general, we followed different numbers at different stages in our business.

The Cycle of Numbers:

Startup? Watch Revenue most.
Don’t bother going through a lot of profitability scenarios until you find out if you can actually sell your widget. Nothing else matters at startup except revenue. Everything else is voodoo and fortune telling. Go sell something. If it doesn’t sell, forget all the rest of the numbers. Our services started selling regularly, so we moved to a new focus:

Early Stage Business? Watch Profitability most.
As soon as you figure out you can sell something, figure out if you can actually be profitable selling it at that price. The polish sausage vendor buys them for $1.00 and sells them for $.95, but thinks he’ll make it up in volume. He’ll just lose more money. Get a good accountant at this stage who can tell you how many widgets you will have to sell per month to be profitable. Then focus on getting there.

Finding Break Even? Focus on Profit
Profitability is theoretical. You’re just making sure you aren’t wasting your time building a business that won’t make it. But Profit is “real”. Figure out your profitability, then focus on nothing but getting to real profit. A good accountant should be able to tell you how long it will take based on selling x widgets/mth at $x per month. Once you break even and start making a profit, the fun begins.

Growing a real business? Focus on Cashflow.
When you finally start making a regular profit, that is a very dangerous stage. Why? Because it is the first time you have something to protect – profit – and you will tend to hunker down and protect it.

Don’t.

If you stop at simple profit based on your own production, you will never grow a real business. Instead of siphoning off the profits and buying a hot tub, it’s time to reinvest them in growing the business to where it can make money while you’re regularly on vacation, or bigger if that is your preference. The problem is that when you decide to grow your business, the profits you worked so hard to realize, will go down or even disappear for a time.

Growth will kill your profit – for a short time
Even though our business has grown 392% in the last four years, our personal income has gone down every year for the last three years. But rather than be concerned, we’re very excited because we understand the principle of growth: growth decreases profit and cash flow. The faster you grow, the less profit you will have right now, but a lot more later.

If you are making less profit because your revenues are bad or your margins are too low, that’s a big problem. But if your profits are low because you are growing quickly, get happy about it. Just watch your cash flow – fast growth can put you out of business if you don’t have enough cash on hand to pay your bills.

Growth slowing down? Watch your expenses
The final cycle – If you decide to stop growing (we plan to keep growing internationally), your profit and your cash flow will return, and if you’ve done it right, you’ll have a lot more of both than when you first starting seeing profit. At this stage, tweaking your expenses will only make you more money.

Make decisions based on where you want to be, not on where you are
Too many business owners focus on expenses early in their business and say this to themselves, “I can’t afford to hire that sales person, buy that truck, install that software, etc.” The problem is that you are looking at an investment (money that comes back in spades) vs. an expense (money that never comes back). When you make decisions based on where you are, you shouldn’t be surprised that you’ll be there again next year.

One final thought – watch cash flow during every number cycle – it can put you out of business at any time.

So don’t be afraid of the growth stage! Give up the profit for a time and grow. You’ll have a lot more of it later.