Your business instinct is far stronger than you give it credit for.
However, if you are worn out and feeling frazzled (and hey, don’t we find ourselves at the end of our tethers most days right now!) it’s easy to find yourself fire-fighting your way through your business week.
I want to give you an opportunity to recalibrate and define clearly what it is you need from your business to enable you to grow. In my book, True Profit Business, I teach a model for growth that at its core has something I call The True Profit Compass.
A compass is an instrument used for navigation, but it doesn’t tell you which direction to go in. It aligns you to your magnetic north so you can orientate yourself before deciding where to do next.
The True Profit Compass works exactly like this. It aligns you to your magnetic north – your business instinct – and helps you make decisions to design and run your business to serve you, rather than burn you out.
There are three energies at play in this compass; money, impact and creativity. And it’s money that I want to focus on with you today. Although money may not be your core driving motivator for growing your business, there’s no doubt you have a need for money coming in.
I look at money being split into two sections: the time and income needed to help you flourish.
Your time is a limited resource, which often goes unchecked and undervalued. It’s important you consider what boundaries you want to set, and the systems and business model needed to give you the time that you want.
For income you may not need much income for day-to-day living. However, I don’t know many people who started their own business to just ‘get by’ so let’s get you clear on what you need, as well as the amount you want to fulfil your wealth goals and life plan. Plus if you plan to grow, you will absolutely need money for investment in your business growth and expansion (hiring people, putting in systems & marketing budget) so you have to consider how big a business you really want to have one day.
Let’s dive into each one and give you a framework in order to work out what time and income is best for you.
What hours are you prepared to work?
Very few clients that I’ve worked with over the years have stopped to think how their ideal week or month could look; they have often allowed their business week to be shaped by what their business gives them. If you could reset your work schedule for six months from now, how would it look; how would you spend your time, what hours would you work and which days would you take off?
What is your capacity and availability for taking on new clients or selling new programmes?
I often hear business owners asking for more clients, but they haven’t stopped to consider how many clients would give them a ‘full’ business. Think of your business like a hotel booking sheet. A hotel will have a finite number of rooms to sell for every day of the week. No matter what you sell, you will find there will be an optimum level of clients or products or programmes you can sell, whilst still maintaining the level of service you want to give.
If you choose to maximise your sales and compete on price, you are going to find this a tough marketing strategy; competition is going to be tight and you have to ensure you have the distribution channels or delivery systems in place to keep up with the demand. For most of you reading this, you will have better success in thinking in terms of optimising your sales and deciding how many clients or customers you can serve in any one week, month or programme.
By doing your sales numbers this way, you can work your charge rates and prices back from here once you’ve decided how much you want to earn.
What are you not prepared to sacrifice?
- Are your Fridays sacred?
- Do you have to pick up children every day at 3.30pm?
- Are you happy to work during the weekends but you want two days off during the week?
- Do you always want to have July and August off?
Decide what time you aren’t prepared to give away so you can set those boundaries in place now and avoid frustration or resentment at a later date.
What changes do you want to make in the future to the way you spend your time now?
For some of you, making changes to your current schedule may not be feasible. If you are booked up with work for the next few months, run a busy clinic or see clients in a regular time slot every week or month, then you may need to look at your diary for three or four months hence.
If you want to move your diary schedule around in the future, what will it look like and when do you want to do it? And I’d recommend blocking out this time now before you find yourself filling it with more client work!
I avoid asking my clients to decide how much money you think your business can or should make. When setting money goals, it’s often your ego that makes these decisions because of external influences; it’s important to be inspired but if all you see, read or hear is success defined by six or seven figures, then this will have an influence on when you believe your business will be successful. What I want you to do here is take a more inward approach to how much income you need and want to make from your business.
Let me share a story about a client I recently worked; she came to me with a financial target of £100,000. But once we worked out how much she needed to live on, how much she wanted to invest in her business and how many clients she actually wanted to work with at any one point, it turned out she didn’t need to stretch herself to find £100,000 in sales over the next year; her actual financial target was only £65,000.
This was her third year in business and, although she had achieved great things, she was exhausted by selling too many low-priced programmes and dealing with a 6,000 strong Facebook community. Once we had worked out her income streams, simplified her products and programmes to give her less to sell, and mapped out her marketing campaigns for the year ahead, she was visibly more relaxed; she had far less to do than she thought she’d end up with.
It turned out that the initial financial target of £100,000 came from the pressure she had been putting on herself to be seen as successful by her peer group, and if I’d been focused on helping her achieve her original six-figure target, she would have ended up burnt out and putting in the wrong growth strategy.
She still wanted to grow a six-figure business at some point, but her growth strategy for the next year was about simplifying and restructuring her business model so she had a stronger and more sustainable foundation from which to build on in the following two years.
This is why it’s important to know your financial needs right now, as well as what you want to achieve, and keep reviewing them as you grow. Don’t chase figures based on what you think is expected of you or your business.
How much income do you need right now?
If you haven’t done so already, you need to work this out. Not in your head; sit down with your bank statements, your bills and a calculator. If you are living with someone else, this may be a joint conversation. If you need to get a grip on your credit card debt or long-term savings plans, get help and speak to a financial advisor.
Too many business owners don’t know what they need to earn and are simply going about their sales on a wing and a prayer.
How much income do you want in the future?
Is there a savings pot you want to fill up? Have you got short- term savings you want to build for a holiday? Or perhaps longer-term savings for investing in a second property or pension? Again, get help from a financial advisor if you need to. Don’t wishfully think what you want; work out what that figure needs to be and over what time period you could work towards it.
What does your business need to sell to give you these income figures?
Once you’ve worked out your income figures, how does this translate into turnover figures? Remember, your income is different from profit (you have to pay tax), which is different from turnover (you have expenses). So once again, if you haven’t got these figures clear yet, work them out.
This money work is a big part of what we do in Momentum, our business growth programme. Yes, sales targets are set but without doing the work on what net/gross profit, business costs and forecasted income, you could be building a business on shifting sands; whatever growth in sales you get one quarter, disappear in the next because you haven’t got a solid money foundation in place.
What short-term ‘costs’ will give you long-term ‘gains’?
You may be in a period of growth in your business where your expenses are high because you are investing in new systems, processes or hiring team members. A lack of cashflow is what causes most businesses to fail, so rather than waiting to sell ‘enough’, do you need to seek external financing to fund your growth plan? If so, what options can you look at or how much do you need?
Working through this framework will help give you your magnetic north. You’ll find more about how to work through the energies of creativity and impact in my book, True Profit Business. But in terms of money, I hope that you can see how this can help stop you chasing pie-in-the-sky figures that are often fed to us by what we see on our social feeds, and now have realistic and sustainable figures to work towards, whilst still giving you opportunities to stretch.
Money pressures can break us.
And when we don’t give ourselves this opportunity of spending time to fuel our business instinct and working on our navigations from our True Profit Compass, we end up exhausting ourselves. Burn out is not a rite of passage to success … you can design your business to work FOR you and what it is you want out of life.
Until next time, do less, be more and play bigger.
About the author
Karen Skidmore is a business mentor & coach, specialising in growth strategies for consultants, service professionals & training providers, Business Books Awards finalist 2020, Menopause Champion & Ambassador for The Hunger Project.
To get the latest blog articles direct to your inbox, subscribe to The Skidmore Spark here.