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Everything You Need to Know About Business, I Learned in Nairobi.

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The Cycle of Poverty is a Mindset, not a Condition.

We drove out of the airport at 9pm into the deep Kenyan night, so much blacker this near the equator. The driver did 5-20mph because anything more would have broken the suspension on the Land Rover. To the left of the airport entrance bonfires blazed 50 feet into air as tires were burned away for the metal chords in them. It was my first encounter of the close kind with the Cycle of Poverty.

After 10 days living on the poor side of Nairobi and spending every day in the slums working with business owners, I was numb from the experience of so much poverty, so many people, and such great attitudes in the midst of this unending uphill climb.

It wasn’t until I was home and the numbness had worn off that I finally realized the Cycle of Poverty isn’t a physical condition, but a mindset; that it is everywhere, and that most rich Americans suffer from it even more than my new friends in Nairobi, Kenya.

My new friends in Nairobi don’t plan for tomorrow because they’re too busy surviving today. So they make just enough money to get through the month, then they go out and do it again – an endless cycle of just trying to make ends meet. They can’t plan for tomorrow because they are truly in basic survival mode.

In the rich west we have exactly the same problem – except we choose it and they don’t. We regularly PUT OURSELVES in survival mode by simply filling our day with things that will make us money today, with no regard for tomorrow.

We’re so busy making money today just to make ends meet that we don’t have time to plan to build a business that will make money when we’re not around. And we’ve done it so long that we actually think there is some outside force that is making us live this way – I don’t have any choice but to focus solely on paying this month’s bills. Really?

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

Wouldn’t it be nice if we had more time to smell the roses or help someone else be successful? Wouldn’t it be great if we had money to help fix some problems in the world around us? But we don’t have either time or money, not because we can’t get it, but because we don’t actually intend to. We intend to work hard and make some money, and so we get what we intend – HARD work and SOME money – just enough to keep us on the treadmill – The Cycle of Poverty.

A sad irony – there is no question that the average indebtedness of the American business owner is exponentially higher than the business owner in the slums of Kibera in Nairobi. The Cycle of Poverty has had a bigger effect on us than on them, except that we choose to live this way and they don’t. We got exactly what we intended, a treadmill.

Reflecting again this week on my experience in Kenya, I see more and more everyday the title of my book is confirmed – Making Money Is Killing Your Business. It really should have been titled “Making Money Is Killing Your Future”, but I wanted business owners to see that it was written to help them get off the treadmill and get out of their self-imposed Cycle of Poverty.

Change your intention, decide that your Lifetime Goals and Ideal Lifestyle are the reason you are in business and intend to build a Mature Business in support of those Lifetime Goals. Anybody can do it; we just need to intend to do so.

I would love to hear below how you are working your way out of the Cycle of Poverty. Let’s do it together!

Do you have balance across the Seven Elements of a Business?

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Business divides pretty neatly into seven categories or “elements” that all businesses must pay attention to in order to be successful. They exist whether we pay attention to them or not. If we pay attention, we are successful, if we don’t, we are not.

Most businesses reflect the strength of their owner/founder, who are really good at one, two, or maybe even three of the seven. The successful business makes sure they get the people and systems in place to have all seven humming.

Get a handle on these seven elements, and get off the treadmill. All great business owners do.

The Seven Elements of a Business are:

  1. Vision & Leadership (mission, vision, principles)
  2. Business Development (sales, marketing, research)
  3. Operations & Delivery (get a process that delivers a consistent experience)
  4. Financial Management (improve cashflow and profit just by paying attention)
  5. Customer Satisfaction (almost no one has a process for this critical Element)
  6. Employee Satisfaction (treat them like they are #1 and they will do the same for your clients)
  7. Community, Family, Self (how is your business impacting the world around you?)

STAY IN YOUR ELEMENT

The key is to know which Elements you are really good at, and how to get others to bring the others up to speed. Sometimes early on, we have to cover them ourselves, but knowing which ones you’re great at and which ones you want to off load puts you in a better position to get off the treadmill faster and get others doing the things that aren’t your cup of tea.

KEEP IT SIMPLE IS STILL THE RULE.

If you can’t stand in the middle of the room and share your system for each of the Seven Elements in 30-120 seconds, it’s likely you’ll never use it. Systems are not 3″ binders that sit on desks. They are a remarkably simple set of lean, efficient, time-tested set of steps that everyone knows and everyone uses in the every day of doing business. For most businesses, your entire Systems Manual with all Seven Elements shouldn’t be more than a few pages long. If you can’t share it from memory without memorizing it, you won’t use it.

FIGURE OUT WHAT YOU’RE DOING AND GET IT OUT OF YOUR HEAD.

For each of the Seven Elements, ask yourself:

  1. What is the process I do now for each Element? (You’ve got one, whether it’s well thought out or ad hoc.) Write it down.
  2. What part of that process is working? What isn’t? Keep what is, and take your best guess at what would work to change what isn’t. Don’t spend hours or days thinking about it. Just change it. The only way you’ll know if it works is if you try it. If it doesn’t, change it again until you find the right process. If it’s broken, those quick “experiements” won’t be an worse than what you’re doing and will lead you to the best process.
  3. Get others involved. Create ownership by having others take a stab at the processes that will effect their work the most. They’ll likely to know more than you do about it anyway.
  4. Keep it to one page or less per Element. Resist the temptation to write an Operations Manual. It will sit on a shelf and you’ll never use it. Some of the processes you write down should be less than half a page; maybe one of the Seven might take a full page, but see if you can’t keep them to less seven steps or less per process. Again, if you can’t stand up and share the whole process quickly, you won’t use it.
  5. Prioritize the ones that create the most challenge for you. Get outside help if at all possible. Otherwise you’re going to have to gut it out yourself and get them working in balance with the Elements you love doing. Until you do, you will be owned by your business. After you get all Seven humming, you’ll be on the path to actually owning your business and getting off the treadmill.

Get all Seven Elements of a Business working for you and you’ll be on the path back to the passion that brought you into business in the first place. Get all Seven Elements in place and get off the treadmill. You’ll make more money in less time.

How to Get Your Business to Grow Up and Run Itself

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Ray Kroc, the founder of McDonald’s, understood that to have his business grow up and run itself, he would need to pay attention to all of the Seven Elements of a Business – so he did.

Kids need to grow up and stand on their own two feet without leaning on you – that is maturity. Your company should do the same thing.

We assume we should wait until we’re big enough before we figure out how to make the business run itself, but – where we start is where we end up. No matter what size your business is, you should be manically focused on getting yourself out from behind the steering wheel from the gitgo. Pay attention to all Seven Elements of a Business, like Kroc did, and watch your business grow up.

Element 1: Vision and Leadership

“I was 52 years old,” recalled Kroc. “I had diabetes and incipient arthritis. I had lost my gall bladder and most of my thyroid gland in earlier campaigns, but I was convinced that the best was ahead of me.” And when he first saw the McDonald’s brothers’ restaurant, he saw what they didn’t, an opportunity to create an international business, not just a restaurant.

“If you’re not a risk taker, you should get the hell out of business,” said Kroc. What risk is holding you back? Get clarity on your vision to take more risk.

Element 2: Business Development

Kroc had to create the need for his product! Fast food was not an existing market – tough job! He clearly knew his niche, learned how to communicate that niche, and stuck to his knitting – he didn’t get sidetracked trying to make great food. And he didn’t let ego get in the way of making money – a very common disease.

Element 3: Operations/Delivery

Work from the result desired. “I didn’t invent the hamburger,” said Kroc. “I just took it more seriously than anyone else…We take the hamburger business more seriously than anyone else.” He built a small business into an international empire by focusing on the operational details and the desired result.

Element 4: Financial Management

When Kroc was asked “What’s the #1 priority for McDonald’s?”, he responded, “The bottom line!” To Kroc, efficient meant most profitable. He didn’t want the best hamburger in the world, he wanted the one that would make him the most profit per fat molecule.

Element 5: Customer Satisfaction

CONSISTENCY of EXPERIENCE was key, not QUALITY of EXPERIENCE. He didn’t need the best food, just the most consistent presentation of it. And if there was trash in the parking lot, that was “a gross affront to me.” A great customer experience was everything.

Element 6: Employee Satisfaction

“None of us is as good as all of us,” Kroc said. A strong believer in teamwork, Kroc knew his growing company could only grow if he had dedicated people. Kroc treated everyone with respect. Every new employee got a badge with the title “Management Trainee” to let them know they all needed to participate in making McDonalds great. His Suggestion Box was legendary.

Element 7: Community/Family/Self

Kroc was an astute businessman who understood that community involvement was a key part of an effective marketing strategy. This tradition of giving back that Kroc initiated so many years ago remains an integral part of the McDonald’s corporate philosophy. Through community contributions, Kroc also established a corporate tradition of creating a positive presence in society.

What did McDonald’s have going for it? Kroc paid attention to all Seven Elements from the gitgo. As small business owners, we’re usually good at a few of the above, and have big holes in a few. Which are you really good at? Whatever you answered, you’re business probably needs help in the opposite ones.

Your business may not be running itself yet. That’s not the question. Are you setting it up to be able to do that at the earliest possible opportunity? If not, you’ll be babysitting it for years to come, and won’t know why every time you come home, your business is there waiting for you!

Let’s learn how to wean our businesses – pay attention to all Seven Elements of a Business. We deserve an empty nest at some point, with a business that can run itself.

How we got on the business treadmill and why we can’t get off.

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Our business trains us to focus on the wrong thing. And we buy into the lie.

There are Seven Stages in the Maturity of a business. Today we’ll focus on the first four, because they tell us what happened that screwed up our understanding of how to grow a business and why we can’t get off the treadmill.

In Stage 1 (Concept and Startup), we need money. To get money, we need clients. So a Stage 1 business teaches us that it’s all about making money via Sales.

In Stage 2 (Survival), we’ve been mucking along for a while and the outside funding is beginning to dry up. We need money even worse. To get money, we need clients. So a Stage 2 business confirms to us that it’s even more important to focus on making money via Sales.

In Stage 3 (Subsistence) we finally have done enough sales to get enough clients to break even. But we have to produce for these clients, because if we don’t produce, we don’t get paid, and we need money. So a Stage 3 business teaches us that we have to focus on making money via production, or our Craft.

And finally, a Stage 4 business (Stability by Hands-On, focused on the producing the “Craft”)) allows us to buy a hot tub and go on vacation a couple weeks a year, confirming to us that the owner’s purpose is to make money.

But what our business taught us in these first four stages is exactly what keeps us on the treadmill for 30 years and never lets us off. Our business taught us that we should make money, and it is that misconception that keeps us from building a business that makes money when we’re on vacation. We’re on the treadmill of making money.

Unfortunately our bias toward the treadmill of making money is confirmed as we look around and see most other businesses stuck in Stage 4 as well. So quiet desperation sets in – this must be all there is. And to add insult to injury, at some point we realize that if we had stayed at IBM, we could still have bought a hot tub and gone on vacation a couple times a year, except in that case we would not have lost money while on vacation or had to wake up nights wondering how we’ll pay off the debt we incurred in Stages 1 and 2.

Why did we do this? How was it worth the trouble and the responsibility we’ve taken on? Why did we decide to buy a job and become employees of ourselves?

We did it because 1) our business taught us to make money, and 2) we see that most other small businesses have gotten stuck on Stage 3 or 4, confirming that this is actually normal.

Stage 3 and 4 are not normal at all, they are merely average. Most businesses have stalled there, but the normal business will break through to Stages 5-7 and make money for the owner when the owner is not there.

Stop being an employee of yourself, get off the treadmill, and get back to the passionate that brought you into business in the first place. Next week we’ll talk about the clear simple actions that will allow us to do just that.

So you think you’re in charge? Let’s see.

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Your Guiding Principles are more important to your business than anything you sell.

As my great Irish friend John Heenan says: “If you don’t have a vision for your own life, you become part of someone else’s vision for theirs.” Without clarity of purpose, we don’t own our business, it owns us – we’re employees of ourselves.

Everything we do comes from a belief system, whether intentionally or subconsciously. Do you guide your biz or does it rule you? Who’s really in charge?

Some see this as the soft side of business, the part you can ignore because you can’t track how much money you make directly back to it. “Stop playing office and start making the donuts,” would be a typical response. But that response would only come from someone who is willing to become part of someone else’s vision for their life, and doesn’t want to make more money in less time.

Making money is not an empowering vision. Want to make more money? Get a reason to do it, then have some principles on which you run your business. We talked about they “Why?” (vision) in business a couple weeks ago. This is more about the values that lead us to “How” we run our business.

Like rails that guide a train, your business principles are the core strategy to having a business that knows where it is going and how it is going to get there. If you think you can just make donuts and not know why or what your business stands for in the process, you’re going to miss out on building a business that you own vs. a business that owns you.

Here’s our guiding principles:

The 7 Guiding Principles of TeamNimbusWest:

  1. Make more money in less time
    (don’t work harder, not really even smarter, just more effectively)
  2. Focus on our lifetime goals, not just on growing our business
    (a BHAG will keep us going, but “grow the business” is a lifeless idea. So is retirement.)
  3. Work ON your business, not just IN it.
    (The key to growth – perfecting as we go by strategic planning, not just production.)
  4. Get off the treadmill, own the business instead of the business owning us.
    (The purpose of our business is to create a lifestyle for ourselves and our family.)
  5. Highest and best use of your time.
    (Yield per Hour – stop doing things others could do; do what only I can do.)
  6. Make decisions on where you want to be, not where you are.
    (Clarity of Purpose leads to Hope which leads to Risk. Take good risks to grow.)
  7. Bad plans carried out violently many times yield good results. Do something.
    (Stop planning. Implement now and perfect as you go. Speed of Execution rules.)

What are the guiding principles of your business?

You’ve got values and beliefs that are the foundation of everything you do and those values and beliefs are running the show. You might as well write them down and see if you agree with who/what is actually in charge. If not, change them and take control of your vision…

…so you can make more money in less time, get off the treadmill, and get back to the passion that brought you into business in the first place, in order to build a mature business in support of your lifetime goals. (Just had to get my guiding principles in there one more time). ?