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The logic of Risk Taking

All business owners take risks.

You had to take a risk to start a business, and as you know; the opportunity to take risks is always present and often doesn’t get any easier.

The reality is, to move your business forward you will ALWAYS need to take risks. Right now it may be that one risk that turns into your biggest opportunity.

It’s easy to sit back and look at someone else’s situation and easily see a certain risk that makes sense to take. It’s a different story when you’re the one who has to bear the risk. Emotion; particularly the emotion of fear, becomes involved in the decision.

Looking back in my life, it is the biggest risks that I’ve taken that have provided the most reward emotionally, mentally and financially. And I’m sure it’s the same for many of you. To help you move forward and approach risks with some element of logic, I’ve outlined the key stages you’ll find yourself going through. I certainly find that when you can be objective about your emotion it helps to offset some of the fear. Fear is rarely rational. That certainly doesn’t mean we should ignore it. It is a very helpful emotion. Sometimes we just need to put it in perspective.

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The Big Questions

For a while I’ve been using the questions below to help clients form a vision of what they want, in a way that expands their thinking and tries to remove some of the restrictive beliefs we all have. The challenge with beliefs is they can severely limit the way we think and the results we achieve.

In recently talking with a friend who is doing a bit of soul searching, he gave me the idea of posting these for public reference. If you stumble upon this blog and it helps you out, let me know. I’d love to hear the outcomes.

Spend some reflective time in a quiet place to ponder these. Take notes and see what comes out. After committing some time to this, park it and let it simmer with you. A few days later revisit and see what your brain pops out. Remember …. there are not rules on what is right and what is not.

The Big Questions … 

  • What am I really good at?
  • What am I passionate about?
  • What do I enjoy doing the most?
  • If money and time were not limited, what would I do?
  • If success was guaranteed, what would I do?
  • How can I create the most value for people doing what I enjoy the most and are the best at?
  • How much impact can I have on the world? How would I do it?
  • What does a legacy look like by my definition?
  • What would I have to do to create a legacy?
  • If there was one global problem I would like to solve, what would it be?
  • If my mission was to impact a billion people, how would I do it?

It’s all about Revenue!

If you are a small business particularly just starting out, it is all about revenue. Your accountant will tell you (very wisely) to focus on profit and I’d agree. However when you are trying to grow and get some mass, revenue can be just as important. I’m not saying you should do business for a loss or just for the sake of getting revenue, but I am saying that growing your customer base and getting cash flow going is key.

Of course it also depends what the vision of your business is. If you plan to stay small then the importance of profit goes up. If you want to have a team and enjoy some leverage then the focus of your efforts should be on growth and acquiring revenue.

I make this point because I see many small business owners getting caught up in the day-to-day operations and not spending enough time and effort on sales and marketing.

Think of it this way, if you had enough revenue to hire people to do your operations, then you could spend your time in other areas. And this is the catch 22 for small business. How do you spend time on revenue generation when you also need to spend time on operations? This is not a simple answer and will depend greatly on the business and the owner’s skillsets. The short answer is to get the low skill activities off your plate and free up at least 30% of your time to invest in sales and marketing. Even if you take a short term hit in profits due to the extra expense of an admin person, the time gained will quickly generate far larger profits.

Does Diet affect Postive Mindset?

We hear so much about healthy eating and good food diet … how about our other diets? Like Mental and Spiritual. These are vital human systems that also need feeding. The problem is, most of the time we feed them by default. I.e. they just get whatever life throws at them.

I say be as intentional with your Mental and Spiritual Diets as you are with your Physical Diet. Here’s my shortlist of favourites for my Mental Diet. I’d love to hear yours.

  • The Art of Exceptional Living – Jim Rohn
  • Think and Grow Rich – Napolean Hill
  • How to be a Winner – Zig Ziglar
  • The Power of Positive Thinking – Normal Vincent Peal
  • YES Attitude – Jeffrey Gitomer
  • Success Principles – Jack Canfield
  • How to Win Friends and Influence People – Dale Carnegie

And my Spiritual Diet consists of:

  • clarity on my purpose
  • Making sure my activities are aligned with my purpose
  • Engaging regularly in activities I enjoy.
  • Meditation

What else do you do here?

The Top 5 requirements for Success

Necessary Elements for Business Growth

Reflecting on the past 10 years of coaching, if I had to pick my top 5 requirements to achieve success, here’s my list:

1. Time

Your ability to plan, prioritize, know your 80/20 (which 20% of your actions give you 80% of your results) and delegate will be key to your success. Only time spent doing valuable activities counts towards success. No-one achieved their goals by focusing on filing and bookkeeping (unless you are a bookkeeper 🙂 )

2. Energy

Physical, mental, emotional, spiritual. Hours worked is not the measure. It is the effectiveness of those hours. Are you alert, motivated, passionate and physically energized? Knowing your limits, how and when to recharge is a personal recipe. Know yours for best results from your hours invested.

3. Knowledge

You can only do what you know. And often what we ‘know’ is not always the right thing. Sometimes unlearning is the right first step. Keeping an open mind is crucial and avoid falling into the trap of thinking you know. You are more likely to do this the more successful you become. Continually invest time and money in growing your knowledge base. It is said that knowledge is power. Not quite. Knowledge is potential power. Maximize your potential power by growing your knowledge.

4. Confidence

To be gained through continuous small wins. Growing your knowledge; being very intentional in your self-talk; being selective who you hang around; these are all ways to grow your confidence. Growing confidence is a gradual process. Be consistent and intentional. The payoff – an increase in confidence has an exponential effect on your results.

5. Taking Action

You could excel in the first 4 points but if you don’t do anything then the results are zero. If you apply yourself in the base 4 then take massive action … results are guaranteed. Not always at first, but over the long run your path will be in the right direction. Remember the line to success is not straight. When things appear to be going sideways despite your work on all 5 points, remember to have faith in the principles shared here. They ALWAYS work in the long run.

What is your top 5?

Nature vs Nuture

Biology of Belief by Bruce Lipton

The age old question of which has the greater influence – nature (genetics) or nurture (how we are raised). It is common belief that while the nurture part of us is certainly real, you cannot argue that genetics “is what it is”. That is – your DNA determines what you are.

Well if your open to some new ideas (and concrete science) check out this video by Bruce Lipton. Bruce used to be a stem cell research scientist until he learned what really makes us tick. The video is an hour long and will leave you with a renewed belief in your ability to create your own outcomes … despite your genetic coding. Enjoy.

How do I bonus my team at year end?

Some Insights on an Effective Bonus System

It’s that time of year when business owners are thinking about ‘how do I reward my team’ or ‘they are expecting a bonus … what do I do?’

I am a believer in sharing the financial rewards with your team. AND I believe it is important that there is some structure and education in place or else it can and usually does lead to entitlement or a misunderstanding what the ‘bonus’ is for.

Here are the key points to ‘Bonusing’

  • Profit Share vs Bonus. Profit sharing should be based on how the company does financially. Bonusing can be more subjective and less effective. Lots of profit, lots of sharing. No profit, no sharing. We are all in this together.
  • Be sure people understand what has to happen in order for the company to have lots of profits. Education is key. And make it transparent so they have the power to impact the result.
  • Keep your formula simple. I like x% over a certain amount of profit (remember to keep enough profit in the company to finance growth and reward shareholders) goes into a pool. That pool is then divided up equally or divided up based on salary levels.

It may be too late this year to put a structured system in place and do the education necessary. If that is the case for you then certainly bonus but make sure you position that moving forward you will be developing a system so everyone can have an effect on how much they get at the end of next year. Managing expectations is very important.

The points I’ve outlined above really are just the high level things to consider. For a details understanding of what I believe to be the best, simplest and most effect system read Brad Hams “Ownership Thinking”

The simplest form of leverage

Focus on What’s Important For Your Business

When Clive wanted more time to be able to work on growing his business what he was really looking for was better leverage. That is ‘get more growth with less of his time invested’. He was currently under leveraged from a time perspective. I asked him this one question …

“What activities do you do now that take up more than 10% of your time that could be done by someone else?”

It took him less than 5 seconds to say “scheduling”. Next question …

“What would have to happen to get scheduling off your plate?”

In the 5 minutes following that question Clive had laid out a 5 step plan that was going to free up approximately 15hrs per week. In reality it took about 6 weeks to get 80% of the bugs ironed out of the delegation process and get others up to speed with training. The payoff – aside from the extra initial 15hrs – is a new mode of thinking that has allowed Clive to free up even more time by asking himself similar pattern breaking questions in other areas of the business.

And so it goes; the well-known, and largely underutilized, principle called the 80/20 rule or Pareto’s Principle is one most of us probably should revisit. In this context the rule states:

80% of your results come from 20% of your activities.

The question is “how much of our time is spent on those 80% activities”. From what I’ve seen with most business owners, it is usually not enough. Despite my awareness of this I still catch myself doing things someone else can be doing at the expense of time invested in higher value activities.

To implement 80/20 thinking relative to your own time ask yourself this question …

“If I could only spend 20hrs per week working and my business had to achieve the goals I have in place, how would I do it?”

This question forces you into a new mode of thinking. Don’t expect the heavens to open on the first attempt at answering this question. If you stick with this question for 90-days and each day write down the answers that come to your mind, you’ll be amazed at the options available to you.

Achieving bigger goals requires bigger thinking …

The Business Hostage – How did it happen??

Is it possible to have a hostage situation in business. Probably. It might be a big really important customer that makes you feel that way or the government or your own business.

The hostage situation I’m talking about is when you as the owner feel hostage to a member of your team. This is the situation where you have an employee that brings a lot of value to the business (usually through skill set or tenure) but has a hidden agenda, or does not fit in with the rest of the team, or perhaps who behavior makes your skin crawl. Yet you don’t feel you can do anything about them because they would leave a gaping hole in your business. There is always the fear around loss of revenue or profitability if you ‘rock the boat’.

How do you fix it?

Step one is to realize that the only person that can make you feel like a hostage is you. This situation is all about perspective. As soon as you feel like anyone has power of you they do. You always have options in every situation and this one is no different. The truth is, when this situation is rectified you will see your business grow in both efficiency and profitability

Have you ever tried to change someone’s attitude? After trying this several times myself I’ve decided eating sand is more fun. Changing someone’s attitude is one of the toughest things to do because it is outside of your control. Simply said, if they don’t want it to change then guess what … it won’t change. Trying to do so is also a huge drain on your energy … energy that could be more valuable used elsewhere.

OK, so you’ve got this employee whose attitude sucks and it’s affecting the rest of your team, so what do you do? There are 2 options:

  • Give them a good reason for it to change or
  • Help them to realize your business and them are not a good fit

While those 2 options might seem logical, they can be quite challenging to execute on. There are emotions and fears involved that prevent most owners from taking the necessary steps. I’d say this situation can be one of the bigger leadership challenges for small business owners.

Here the way I coach my clients through it:

  • Firstly you have to have a clear idea of the desired behavior. I coach my clients to document the ‘Rules of the Game’ (ROTG). What are the core values that you as a team choose to uphold and are willing to be held accountable to. If the expectations are not clear then it is very hard for someone to know if they are on track or not. It is a good idea to get your key players involved in this process to create buy in.
  • There must be agreement for accountability on the ROTG. So the ‘trouble person’ needs to agree this is the standard. If they don’t want to agree to that then it is time to take some more drastic action. Before making any rush moves here make sure you are aware on the labour laws in your country and always act within them. Long and the short is this person needs to go.
  • When the individual’s behavior is outside the ROTG, it must be addressed immediately. The conversation must be assertive and delivered from a point of respect. Your mindset needs to be “I’m helping this person to be a good fit for our company and their role. If they can come into line then they will excel in their position”
  • Keep this kind of pressure on. The driving force of the conversations is alignment with the culture of the business. The conversations may start to take the tone of “I’m not willing to compromise on the ROTG. You need to make a choice if this place is for you”.
  • The outcome of the process will be either a behavior shift or they will leave. The key is to keep the pressure on. And this process should not be a drawn out one. The degree of non compliant behavior will dictate the degree of pressure asserted.

Human behavior will only change when there is pressure. If the person receiving the pressure does not want to change they will find an environment that does not have pressure.

This process is not the most enjoyable part of leadership but can be the most rewarding. A huge part of leadership is to expect more from your people and continually be ‘raising the bar’, keeping positive pressure on them to improve. The process described above is simply an intense version of that positive pressure.

When you have a team of people who all share in the same core values and work to uphold them, you’ll start to see that small problems disappear and are replaced by pro-activity. Profitability will improve, sick days go down, customer satisfaction goes up, turnover is reduced and numerous other measure will all improve.

At the end of the day your business is your people. If you don’t have the people you want then you don’t have the business you want. And your customers are not getting the experience they deserve with drives down the value of your business.

So take control and have some fun!