3 Business Lessons I wish I could tell 30-year-old Me

The coolest thing about being 55 years old is you really start to get perspective on life.  Your narrative arc even begins to become a little less murky.  The downside of this is it makes you realise how you could have done things easier.  Avoided the ‘d’oh!’ moments.   

A few years ago, I read some research that showed that peak unhappiness for men occurs at about age 52.  Later versions pin-point the nadir at age 48, but what’re a few years here and there?  

Frankly, I can’t argue with this.  At that age, a lot of things were going right for me, but I was pretty unhappy.  Like many others that have had the privilege of living long enough to confirm the accuracy of this research, I decided to do something about it.

The starting point for any change is to assess what has already come before, what worked, what should be altered.  Several years ago I was a panel member at a financial services conference when someone in the audience asked a great question: 

‘What advice would you give the 30-year-old Patrick?’

Good question!  To answer it, I’ve put together the 3 business lessons I wish I could tell 30-year-old me.

 

3 Business Lessons I wish I could tell 30-year-old Me

In the process of deciding the 3 business lessons I wish I could tell the 30-year-old me, I admit to a few regrets – but no remorse.

The late Christopher Hitchens described the difference:  remorse is sorrow for what one did do whereas regret is misery for what one did not do.  OK, misery may be too strong a term here, but you see my point.

Happily, there is little remorse in my life, especially in business.

If I am honest though, there are, in my business career, a few regrets.  If I had my time again, yes I would do things a little differently.

In business mentoring and financial advising, often my clients are younger than me.  The advantage here is that hopefully, they can learn from my mistakes.  That way, they are free to make original ones of their own!  

Seriously, though, any review needs to be more useful than just a trip down memory road.  Rather, I want to approach this and then apply my conclusions in the scenario where an 80- year-old Patrick is advising me as a 55-year-old.  

That way, both you and I move away from any lingering on regrets and transform the lessons into hope, enthusiasm and opportunity.  The best is yet to come!

 

Lesson 1: Be Bold

I regret that I wasn’t bolder in business.  What do I mean by that?  Well, my main gig was in financial planning – which in Australia is a very highly regulated profession.

I think I allowed my thinking to be too restrained within the parameters of this regulation.  I am not against regulation.  It is a very positive thing as it provides a framework for consumer certainty.  After all, financial planners are entrusted with their client’s life savings!  

Too often though, I allowed my thinking and business ambition to be anchored and framed by compliance and orthodoxy.  I allowed the regulatory environment to stifle my innovative tendencies.

On the other hand, perhaps I am being too hard on myself.  Back in the late 90s my business partner and I spent a day with Rodney Adler and his team.  This was just after HIH Insurance had bought Adler’s business FAI, and – as would later be shown – right in the middle of some very dodgy business dealing by Adler.  Adler was also expanding into financial planning services and we were there to start discussions on a potential sale.

Those discussions didn’t amount to anything, but later on, after the HIH situation became Australia’s largest corporate collapse and Adler and co were sentenced to jail, we reflected on our experience.

We might not have hit the heights, or made as much money – but we had our reputations intact.  There is no shame in paying your bills on time, meeting your payroll obligations every fortnight, and obeying the law!

 

Move away from any lingering on regrets and transform the lessons into hope, enthusiasm and opportunity. The best is yet to come!

Lesson 2: Results don’t always speak for themselves.  

At 28, I thought I had the world at my feet.  I was the youngest (by at least 10 years!) of 14 Sales Managers in the state, led the second-largest team and had the best KPI results across all of my peers.  I was looking forward to qualifying for my first conference at a swanky resort and making good money. 

So, I wasn’t too worried when the news came through that the number of divisions was being reduced from 14 down to 2.  After all, I was getting the results that the boss was after, right?

Wrong.  Sure, I was getting the results, but I hadn’t built the sort of relationship that reminded him of what I was doing.  The team’s success ended up just being a column on a page. 

That meant I ended up being one of the 12 that was without a job. 

I don’t mean it to be cynical, but not only do you need to deliver results, but you also need to make sure the people that need to know, do know.  You need to keep telling your story, keep telling your market what your value proposition is.

Truthfully, even with the best of intentions and interest, your customers need to be continually reminded of both your promise and your accomplishments.  People forget, or they don’t have the time to research – so tell them (hopefully without the ‘humblebragging’ element, but that’s another blog).

A great way of achieving this is by building networks and being more collaborative.  The problem I had at 28 was that I thought I had to do everything myself, as a way of demonstrating my competence. 

My advice is to do more networking more collaboration with other like-minded professionals.  You can’t be the expert at everything and just expect that your market will realise and recognise this.

 

Lesson 3: Stretch!

No really – stretch!  I’m not talking about stretch goals, I am talking about physically stretching.  At 30, I was pretty fit and strong, but completely inflexible.  Like a lot of young men, I was all about the muscles and less about the stretching. Too much time sitting at that damn desk!  

I should have had more walking meetings.  A smart move would have been to invest sooner in upright desks and better chairs.  Instead of waiting till I was 44, I should have taken up Bikram Yoga at 30.

What’s stretching and flexibility got to do with business regrets?  Everything!  Understand this:  when you are 30, you are not only exercising for the 30-year-old you – you are also exercising for the sort of body you want to have when you are 55.  Now that I am 55, I am also exercising for 80-year-old Patrick as well.

There are obvious business benefits to being physically flexible. And, the healthier you are, the better you can focus and achieve in your business.  The less obvious benefits are in your longevity.  

As a financial adviser, I was privileged to work with clients over many years.  These longitudinal relationships with people older than me also gave me an insight into the long-term impacts of health and diet.  Through this, I got an insight into the future.  Frankly, the people who ate well and exercised tended to live longer and have more active lives in their retirement.

I decided to adopt an ‘exercise for future self’ attitude to physical activity.  This has held me in good stead – but boy do I wish I had stretched more when I was younger!

 

Time Machine

Alas, I don’t have the time machine that would enable me to implement my 55-year-old advice to my 30-year-old self.

As a business mentor, I aim to apply these lessons for my client’s benefit, within the context of their goals, ambitions and capabilities.

If you would like to see some practical examples, you can read Julie’s case study in buying a business or how I worked with Carl to make his consultancy more sustainable and profitable.

More than that – I’m interested in your story!  Contact me today – I can’t wait to hear your story!

Take the Creep out of Creeping: Check your Business Assumptions!

Every one of my business clients seeks to provide a customer experience that is consistent, dependable, and reliable.  These qualities are staples to produce a great experience and secure repeat business.

One reliable way to achieve this outcome is to ensure that your business has robust and detailed processes.  Processes document the steps that are taken and the decisions that need to be made.  These occur all along the journey from an enquiry to a sale.  From one perspective, a business can be viewed as a series of processes that are designed to satisfy a customer’s needs.

Processes themselves through are constructed, like all decisions, on assumptions.  But how do you manage assumptions in business decisions?

Assumptions are necessary.  An assumption is a conclusion about an input that we either accept as obvious, relatively unchanging or not easy to measure.

The dangerous part about assumptions is that they can be invisible.  By their very nature, we forget them.  

 

Changing Facts, Changing Assumptions

But what happens when we get assumptions wrong?  Or your conclusions change?

When looking at a person’s character, we often admire those who are constant and reliable.  But let’s not get character mixed up with conclusions.  John Maynard Keynes famously said:

“When the facts change,  I change my mind.”

The truth in business is, you can ask yourself the same question, 6 months apart, and get a different answer.  Yet both answers can be correct.  Every time the facts change, we need to change our assumptions or reap the consequences.

This isn’t a sign of inconsistency.  It’s a sign of evolution.

The wrong assumption, in changing circumstances, can be devastating for a business.  That is because the consequences can be either material on the size or can change very quickly.  Either way, it can leave your business high and dry.

Assumptions can also change in their nature.  Assumptions that were inconsequential suddenly can be material.

Look at all the non-material assumptions that were made pre-pandemic, that suddenly are material.  

Let’s use international air travel as an example.  The material assumptions almost everyone made on a daily basis were that flights would be available at a convenient time.  That there would be a competitive market between different airlines, that weather would allow travel.  Pre-pandemic, these were the assumptions that really mattered.

Non-material assumptions were that borders would be open and governments would permit travel.  I mean, really?  When was the last time a major Western government closed their borders to travellers?  Sure, you might need to apply for a visa, but unless you were headed for North Korea, you could probably get where you wanted to go.

Suddenly, with the pandemic, the non-material assumptions become VERY material.  If your business depended on regular air travel – whether you were the traveller or the travellers were your customers –  then you were in trouble.

 

Assumptions can change over time as new data appears

One of my favourite authors is Kurt Vonnegut.  I was re-reading his masterpiece Slaughterhouse Five where he stated (in 1969) that the bombing of Dresden in World War 2 killed over 135,000 people. His statement was based on research by David Irving. The same David Irving that was later discredited as a Holocaust denier. 

It was later uncovered that a better estimate of this tragedy was that 25,000 (I am not going to use the word ‘only’ for something of this magnitude) died.

Without taking away from the seriousness of the event, from a simple numerical perspective this is a pretty big factual error.

In an irony that Kurt may have appreciated, his figure, in a work of fiction based on inaccurate research, has become the better-known number.  Simply because of the popularity of his work and the lack of a retraction in any later editions. 

He assumed that Irving’s research was accurate.  Yet, over time, without reviewing that assumption, dear Kurt was quite wrong.

So what has this all got to do with business?

A lot.  While Slaughterhouse Five will remain in print, despite the changing data, your business can quickly be adversely affected if you make the wrong assumptions or rely on bad data.  I talk more about this here in Business Decision Making for Entrepreneurs.

The solution is to regularly identify, challenge and review the assumptions you have made.

Simply being aware of the assumptions in your processes and decision-making will improve the robustness of your business.

How do you manage Assumptions in Business Decisions?

In business, if you have a problem, make it a procedure.  Then you won’t have a problem any more.  Depending on the size of your business, you can take a few different approaches.

Many larger companies will adopt a Risk Management Matrix to identify and then track the assumptions – the risks – that are inherent in their business.  This process has the advantage of not only identifying the risks, but working out how material they are.  It includes instructions on what to do about them.

Here’s a screenshot of an example I have done, based on some of the companies I have worked with.  You can download your own free copy of the  Risk Management Matrix here.

How do you manage assumptions in business decisions

Tweak this to suit your own business. Then, identify all the potential risks and assumptions you have made in your business, and assign an Index Value to them.  Review this at each board or management meeting.

Your small business or start-up may not have the size to require this level of detail yet.  That’s ok.  Start by making a list of the assumptions and risks that are in your business, and set a diary date to review this.  Make it a part of your business plan.

Simply being aware of the assumptions in your processes and decision-making will improve the robustness of your business.

 

Take the Creep out of Creeping

The clarity this brings is a reward in and of itself.  Recently in Australia, we saw the devastating consequences of a lack of clarity in the Victorian government.  They needed a whole judicial enquiry just to work out who had made the decision to hire security guards to monitor hotel quarantine.  The decision-making process seems to have involved a number of people and over a short period of time, some ‘creeping assumptions’ were made.

On the Risk Management Matrix, this outcome might have been rated an ‘E – Improbable’ rating.  After all, a number of senior public servants, Government Ministers and lawyers were involved.

Unfortunately for Victoria,  the Risk Category was ‘1 – Catastrophic’.  As a result of this creeping assumption, the hotel quarantine program was compromised and the entire state locked down for months. Thousands of people fell ill and hundreds died.

Hopefully, your business doesn’t face consequences as dire as this – but it highlights just how easy it is for assumptions to cause problems.

 

Role of the Business Mentor

One of the important tasks of a business mentor is to be a pair of fresh eyes into your business.  A business mentor has the experience and qualifications to look afresh at your decisions.  Their job is to identify and challenge your assumptions.

Gordon Livingstone tells the story of the army officer who, upon arriving in Vietnam, decries that there is a mountain where his map says there should be a valley! This had little effect on either the mountain or the reality of their situation.  As Gordon said:

‘If the map doesn’t agree with the ground, the map is wrong’.

A business mentor will look at your map and compare it to the ground, and call out any conflicts.  They will spot your invisible assumptions so that these can be checked and changed if needed.

Would you like to know more about how I work as a Business Mentor to help my clients achieve their goals?  Contact me today – I can’t wait to hear your story!

How to Diversify Your Small Business

One of the biggest questions facing entrepreneurs is how to diversify your small business.

This is especially the face if you are the proverbial ‘one-man-band’.  I’ve seen many of these start-ups over the past year, as changing economic circumstances and technological improvements have provided the environment for many to try it on their own.

In my former life as a financial adviser, the overarching imperative for any investment portfolio was ‘diversify’.  It’s been proved time and again that diversification is the only free-lunch the market gives you.  That is, it costs nothing extra to diversify your investments, yet it provides additional returns and reduced volatility.

This is nothing new.  3000 years ago, King Solomon was exhorting us to ‘invest in seven ventures, yes in eight, for you do not know what disaster may come upon the land…for you do not know which will succeed, whether this or that or each will do equally well’.

What holds true in investing, holds true for our businesses.  A business that relies on one product or service, or one income stream, or even one type of customer, is a business that needs to diversify.

It’s easier to see this in others than assess it in ourselves. So let’s look at a great case-study to illustrate how to diversify your small business.

 

How to diversify your small business – Case Study

Gillian Walter operates her Coaching Practice Inside-Out Coaching from Zurich Switzerland.

I first met Gillian at a training retreat in mid-2017.  She has a great energy about her, but honestly, I first got to know her as she was one of the few native English speakers in the group!  Gillian has been coaching for over six years.

Gillian is a fully qualified Professional Coach, providing both personal and group coaching.  Most importantly, it is super impressive how she has worked to diversify her services, revenue streams, and client base to build a more robust sustainable business.  

In turn, this has allowed her to spend more time in her professional community (where she is very active in the International Coaching Federation) and with her family.

 

Business Model Challenges

From a business model perspective, a coaching practice has many of the challenges that face professional service providers.

Challenge 1: It is principal dependent, which means there is often a key personal reliance.  This means that if the principal is unable to work, revenue ceases.

Challenge 2: Services are typically delivered personally and are time time-based.   Earnings happen when the coach is face to face with a client.  That’s the only time revenue is being generated. This means that it is difficult to find revenue leverage. 

Challenge 3: The goodwill, or brand value, of the business, is strongly correlated to the individual coach.  Clients love their coach!  The downside of this otherwise positive aspect is that it makes it hard to transfer this trust in a specific coach into trust for a coaching brand.  Coaches themselves have a limited number of clients they can see, which means that there is an upper cap on the value of the business.  If the coach leaves (or closes the business) the goodwill disappears.  It makes it very hard to corporatise or develop a brand value that transcends this individual relationship.

Now, these are only problems if you decide they are.  There is nothing wrong with this, if, like thousands of business owners, it brings you a good lifestyle and a gratifying professional life.

However, If you have grander plans, or even simply if you desire a journey of self-actualisation, then it brings challenges.  There is no one magic solution.  The starting point is understanding what your clients are looking for and what you enjoy doing.

It's a pyrrhic victory to succeed in business if you don't suceed in life. Put it another way - unless you succeeed in life, you will never truly succeed in business.

Diversifying Target Markets

Gillian’s desire to grow and develop her business was driven from the best motives.  It came from a desire to meet the needs of her clients and the market.  Uppermost in her mind was helping her clients, not evolving a business model. 

What is impressive is how Gillian has analysed the needs of the market and the challenges of her business model.  Most importantly, she has done so in a way that allows her to lead a balanced and diversified lifestyle, allowing time for herself and family, and for playing a role in her broader community.

They are very relevant for all small businesses in these current pandemic times.

Firstly, she has expanded her range of services.   In addition to individual coaching, she developed and marketed expertise in group coaching.  Now, entire companies can use her services, and group exposure means she has a ready pool of potential individual clients for follow-up coaching.

Gillian took this a step further when she saw that there were some very specific coaching needs that weren’t being met by her competitors.  For example, using her own experiences as a base, she has developed a program on Transition Coaching.  This is specifically aimed at people experiencing a life transition such as expatriation or study programs.

Finally, her own experience as a coach made her aware of the significant needs that coaches themselves have.  In her words ‘Coaching is a lonely old game’.  In response, Gillian obtained her supervision accreditation and started offering Coaching Supervision services.

This has been so successful that now, the majority of her work is as a supervisor of coaches.  You see, coaches need coaches too!  They need somewhere to gather themselves. And Gillian has created a service that provides a nurturing space for them to do this.

From a business model perspective, Gillian has turned her former competitors (coaches) into a new target market of prospective clients (for her Coaching supervision services).

The outcome of these three additional areas of services was that Gillian successfully diversified her target markets and client base.  Instead of just relying on a particular client profile, she has services that attract individuals, companies, and the coaches themselves.  Three separate but closely related target markets instead of one.

Still, all of this remained dependent upon Gillian’s personal, real-time involvement.  And, while it diversified her services and target markets, it didn’t diversify her revenue.

 

Diversifying Revenue and Leveraging Time

Enter the Inside-Out Academy!

Gillian’s motivation was to provide a coaching service to her previous clients that missed the interaction but for whatever reason couldn’t schedule a personal session.  Equally, she saw that there was a huge group of people that either couldn’t afford personal coaching or weren’t ready to commit – but who were in real need of the help that a coach can bring.

Gillian has designed a complete 24 part online coaching program – that’s two full years of online coaching that is available.  

This is provided under a subscription model.  For the clients, they have 24/7 access to coaching tools and videos that guide them through identifying and achieving their goals.

From a business perspective, this service provides diversification of revenue as well as leveraging Gillian’s talents – the service earns revenue without requiring her real-time presence.

This Intellectual Property (IP) collateral can be taken a step further by repackaging it and placing it on other subscription channels.

Importantly, none of these actions dilutes the quality nor value of the service the client receives.  And, it all provides additional exposure for other Inside-Out Coaching services.

 

Reducing Principal Dependence

Like many small businesses, Gillian sub-lets a space in which she conducts her coaching work.  This rent is a fixed cost to her business.

Recently, the opportunity came for her to take on the master lease.  This would allow her to renovate the property and convert the remaining space into specialist coaching spaces which she, in turn, can sublet to other coaches.

This means taking on additional risk in the form of a higher lease – but it also means turning fixed costs into an additional revenue stream.  It also means that she creates a new local coaching community centre that will raise the profile of the entire group.

This decision is not one to be taken lightly, but only after extensive modelling and business planning.  This showed that her break-even occupancy rate for the new coaching spaces was within her risk tolerance.

Importantly this also means that her business has an additional revenue stream that is completely independent of her coaching time.

 

The role of the Business Mentor

Most people think that the role of a business mentor is to help entrepreneurs thrive in their businesses.  That’s partly true.  Business mentors look not only at your business in isolation, but in the context of your life, your priorities, your values.

In my experience, it’s a pyrrhic victory to succeed in business if you don’t succeed in life.  

Put it another way – unless you succeed in life, you will never truly succeed in business.

A person who lives a diverse life will not only have a greater sense of happiness and satisfaction – they will also be the sort of person that people will want to do business with!  It becomes a virtual circle.

It’s the role of a Business Mentor to counsel you within this context.

Of course, we also have specialist skills devoted to business excellence.  For example, this case study shows some of the actions we took with a start-up, while you can read here about the 4 Ultimate Guiding Principles for buying a business.

Better yet, contact me today and let’s start your own, personal case study!

Insider’s Guide to Business Mentors

Taking on a business mentor can be a big decision.  A business mentor doesn’t just hold you accountable for achieving your business goals.  Ideally, through their input and modelling, they will also have a big influence on your behaviour.  

After all, the word mentor comes from the name of an ancient fictional guide whose narrative purpose was to impart wisdom and share knowledge with the hero’s son.

By definition, the right mentor for you is someone who has skills or experience that you don’t have.  The odds are though, that you haven’t worked with a professional business mentor before.

 

Insider’s Guide to Business Mentors

So what should you expect?  My Insider’s Guide to Business Mentors will give you a critical insight into what your business mentor is thinking.

Here’s the inside gossip on what you should know about your mentor.  Hopefully, it will destroy a few myths, help you understand how mentors feel – and most importantly, spur you on to getting the right mentor for you!

 

Mentors are not only for the young

Over 40?  Think you know it all?  Think again.  Sure, the younger you are, the more likely it is that you can benefit from a mentor, simply because they will have more experience than you.  But unless you decide to stop learning, you can benefit from a mentor at any age.

There is plenty of anecdotal evidence to support this.  What the research shows is that, rather than increasing mentee age excluding mentorship, it changes the nature of the mentoring and the subject matter.  Younger mentees tend to have longer mentor engagements that focus on broader life and career issues compared to older mentees.   

Older mentees – say over age 40 – tend to get better value from mentoring that is based on a particular skill or issue (for example, improving business profitability).

The corollary of this is that your mentor does not have to be older than you.  More important than age is the purpose of having a mentor (see below). If you are after expertise from your mentor, then their age is almost irrelevant.  It matters more that they can communicate and relate to you, not their age.

As a, ahem, slightly older person myself, I am super excited about all the young talent that is coming through our universities and who get on Youtube and other channels to share their knowledge.  I have learned more this year from people under the age of 30 than I have over.

Bottom line:  keep your mind open to the benefits of a mentor, whatever your age.

 

A mentor is not your parent

Too often, mentees expect that their mentor will come in simply whisk away their problems, or provide a silver bullet that will fix everything.  At times when I hear what people’s expectations of their mentors are, especially from younger people, it seems that they actually need a parent, not a mentor. 

Which is to say, your business mentor – unlike a parent – cannot take your responsibility away from you.

It’s totally ok and natural if you, as a mentee, want to project parent-like attributes on us.  It’s to be expected, especially if there is a reasonable age difference.  

Never forget that ultimately, the responsibility for outcomes is yours.  You can’t abrogate these to ‘Mom’ or ‘Dad’. 

That said – I know personally that I will seek to build a close enough relationship with my mentees so that I can, without any loss of respect, nag, cajole and berate where this is needed!  So, if you are my mentee, I might sound like a father sometimes, but I promise I will never tell you to go clean your room!

 

Mentors love being challenged

It is inherent that a business mentor will challenge you.  That’s what we get paid for.

An important Insider’s Guide tip though: there are few things that mentors like better than to have their mentee challenge them.

We love it when a protege presents us with a problem that we don’t have a ready answer to.

Why?  No mentor will have all the answers.  

So when we are challenged, it gives us an opportunity to model the behaviour required to resolve the challenge.  It allows us to work constructively with you to demonstrate the process by which you can uncover the answer.  

This doesn’t mean simply googling it.  It means developing a problem-solving process for the enquiry that is congruent with your business goals and personal values.

It is inherent that a business mentor will challenge you. That is what we get paid for. An important Insider's Guide tip: there are few things that mentors like better than to have their mentee challenge them.

Pay your mentor

I remember once going to see my doctor.  She diagnosed my problem, gave me a prescription, it was everything I expected.  But then I said ‘ look, I’m just starting in business, we are operating at a loss. Would it be ok if I didn’t pay you?’

Of course, that is fictional, but it illustrates my point.  The right business mentor for you will be worth their weight in gold, so they should be paid.  After all, what did it cost them to get the expertise and wisdom such that they become valuable to you?

That there is even an expectation that business mentoring can be free stems from the essence of altruism inherent in mentoring.  In my experience, in business, you get what you pay for.  Free mentoring is probably no exception for this rule.

There are times and places for free mentoring, I get that.  In business though, you will value what you pay for.  There are many other compelling arguments for paying for your mentor if you need further convincing.

Still, like many other professions, many mentors do have a pro bono program or will agree to at least a free session if you make a good case.  I know I do – if you are reading this, and can’t afford a mentor, contact me and let’s talk.

 

Decide what sort of a mentor you need

Just because someone is a good mentor, doesn’t mean that they are the right mentor for you.

That might seem obvious, yet it amazes me the number of people that simply ‘want a mentor’ without knowing exactly what they need a mentor for.  You need to be specific.

As a business mentor, I promise you, we love it when people know why they need a mentor, and what attributes they have.  I’d rather decline a job that I wasn’t suited for than get hired and discover I’m the wrong fit.  And any mentor worth their salt would feel the same.

Plus, most mentors know other mentors.  If we aren’t the right person to mentor you, we may know who is.  We like referring people to the right mentor because we see that as part of our professional obligation.  We want you to have a positive mentoring experience, even if it isn’t with us.

 

Mentors have a lifespan

A mentor relationship is one where you should know when it finishes before it begins.

As a business mentor, I want to be sure that I am continuing to add value for as long as I work with my mentee.  If I do my job right, I should put myself out of a job.

A business mentor should work exactly like other service providers – you have a job to do and a timeframe within which to do it.  Just as a mentor holds you accountable for your actions, so a fixed term engagement holds a mentor accountable to deliver value.

The last thing I want is an open-ended engagement.  I want to add value, not get a sinecure.

In my experience, you should set a timeframe for the business mentoring engagement of between three to twelve months.

Of course, a lot of people will disagree with me on this.  Fair enough.

My belief isn’t as cold-blooded as it may sound, nor does it mean you can’t develop a strong relationship.  There is nothing to stop both of you re-assessing at the end and even renewing.  This happens after.  Equally, it is sometimes a good idea to take a break before reuniting to take on the next challenge.

My point is this – if your mentor doesn’t offer this, don’t be afraid to put a timeframe on the engagement.

 

Taking Action

OK – so now you have the Insider’s Gude to business mentors.  My secrets are laid bare. 

I’d love to hear your thoughts on this – agree or disagree? 

Want to know more about how I work with my clients?  You can check out a case study here and learn more about what makes a great mentee here.

You can contact me here – I can’t wait to hear your story!

How to be a Great Business Mentee

As a professional business mentor, I often explain how to be a great business mentee.

This is because prospective mentees usually ask something like ‘Gee I would really like a mentor.  Will you mentor me?’

That’s nice.  It’s flattering, even.  

But when you say that, what I really hear is this:

I am vaguely dissatisfied with where I am in business, but not so much that I can be bothered expressing it succinctly.  Will you waste some time with me while I work myself out?’ 

Harsh but true. When engaging a business mentor, it’s natural to start thinking about the sort of person who would be the best mentor for you.

The real secret is to start by learning how to be a great business mentee.

Life is short, and as a business mentor, I only have limited capacity. I want to spend that precious time with mentees who are organised, motivated and inspirational.  They are the sort of mentees that inspire me to be the best mentor I can be.

It’s a well-known aphorism that you attract like-minded people. The best way to find your perfect business mentor is by being a great mentee.  So, start with thinking about how you can be the sort of mentee that the best mentors would want to work with.

 

Know thyself

Who are you, and why should a mentor want to help?  An advanced level of self-awareness is very important in a mentee.  What are your strengths?  More importantly, where are your ‘gaps’ or areas of development, that you need help with?

This is important to prepare you for being a great mentee.  The only way you can find something is if you know what you are looking for.

It’s not always easy to see what you lack – to know what you don’t know.  The price of discovering this usually less than the cost of getting the wrong mentor.  Talk to some colleagues or peers and be brave enough to ask them where they think you can improve.

 

Know where you need help

Mentees usually need a mentor with at least one of three specifics attributes:

  1. Technical prowess
  2. Detailed understanding of an industry or process
  3. Wisdom and counselling skills

Technical Prowess

I recently had a conversation with an entrepreneur in medical technology.  He was just about to leverage his product invention to a global scale, which would require mass production and then distribution on several continents.  

It was a super impressive situation but still, with all of this, there was a need for their key people to be mentored.  I had to make it clear to him that if they needed a mentor that understood supply chain logistics, I probably was not their guy.  I know nothing about it!  

However, if they needed a sounding board to sanity check their business model thinking and assist them personally in staying focussed, then I potentially I could add value.

Industry Experience

Do you need someone with past practical experience in your field?  Do they need to understand the industry players and dynamics to help you achieve your goals?  It’s easy for a mentee, involved in their daily grind, to forget how labyrinthine their industry can be to an outsider.

Another example:  My background is in financial services specifically and international finance more broadly. I understand how finances and financial services markets work, who the players are, some of the politics involved.  Some of my clients have sought me out for this particular reason.  But ask me for a similar depth of appreciation in, say, Education, then I can’t help.

Life is short...I want to spend my time with mentees who are organised, motivated and inspirational. They are the sort of mentees that inspire me to be the best mentor I can be.

Wisdom and Counselling

Finally, if you need more of a wise head with a few grey hairs, then seek out an expert who can get you talking.  Get a mentor with great counselling and questioning skills, who can show you a helicopter perspective on your issues.  Someone who can return you to your guiding principles in order to arrive at innovative solutions.  In these cases, it is the life experience that counts rather than, say, being a hot-shot python programmer.

With business mentoring, this manifests as an understanding of business models and drivers.  It shows in a mentor with negotiating skills and a broad background working in different businesses.  Often, it’s a great idea to find a mentor that has worked in a similar scale business to yours.  

 

Set the Agenda

As a mentor, my priorities are ensuring that we focus on the key areas that need change, and that we meet frequently enough to keep momentum.  That’s it.

If you say that X is your priority, ok.  I might challenge you later on if I see a deeper need, but my job isn’t to prove you wrong.

If you decide you would rather meet weekly than monthly – OK again.  You’re the boss.

An important part of being a great mentee is understanding your rhythm and finding a mentor that will work within that.  They should challenge assumptions, sure.  But you are the client, so have a definitive opinion on what works well for you.

 

A Fantastic Example 

Here’s an example of a fantastic mentee statement, you can check out the original here on Reddit;

I’m an aspiring Entrepreneur working on building my business from the ground up. I have over 15 years in banking operations, people management, process optimization, compliance, and quality in the Financial, Pharmaceutical and Medical Devices industries. While I excelled in what I did, that nagging entrepreneur in me always had a louder voice, which is why I made the decision to start my own business. While making money is essential for any business, the bottom line isn’t my fuel and rather creating an impact through my products is. I know what values are critical to me personally and in the business I’d like to build and grow someday, I am confident in my skills, I’m relentless in my pursuit to making my vision come to life, and did I mention I absorb info like a sponge?

I would love to work with a mentor experienced in manufacturing physical products (specially in areas such as formulation, sourcing and manufacturing process as a whole). The closest industries would be cosmetics, cleaning products, skincare, consumer or industrial products but I’m open to learning the from different industries. I identified my weaknesses, I am focused on my own growth, working on my mindset, building my network and gathering intel on consumer needs & behavior daily.

Now, let me be crystal clear, I understand time is precious and I do not take yours nor mine for granted. I also understand the experience and network you have honed over years of trial and error is a treasure and I do not take that for granted either. My hunger for building and learning is a 2-way street, and I’d like to give back as well. So tell me how can I add value to you and your business? What needs can I help you bridge or contribute to its growth?

Honestly, when I read this, I wished I did have the specific experience they were looking for, as this is a person I would love to mentor!

 

A Not-So-Fantastic example

I am looking for a mentor to help me with getting started for my seo agency. I can build a good landing page setup social media accounts for growth and know b2b marketing knowledge. But I want an experienced mentor to point me in the right direction

Do you see the difference between the two?  Our second mentee has a vague idea but that’s about it. No serious mentor wants to spend the first 15 minutes working out what ‘the right direction’ is.  

 

How to be a Great Business Mentee

Finding the right business mentor for you starts with being a great business mentee.  Be the sort of business mentee that will attract the best business mentor for you.

The good news is that this is totally within your control.  

Need a hand in working through this?  Want to see if I am the right business mentor for you?  Contact me today to get started.

Measuring your Business Mentor Return on Investment

A good business mentor can make a real difference in improving your business.  Especially if you are on your own as an entrepreneur in a start-up or small business. So let’s analyse how you go about measuring your business mentor return on investment. 

Let’s get real, too:  a good mentor is not a cheap investment, in either time or money.  It’s nice to feel good, have company, be challenged.  But you need to make every second count.  

A fundamental premise of good business practice is having a framework to assess a project, and mentoring is no different.  It’s worth determining whether and how much value you get from your business mentor.

Your business mentor needs to demonstrate that, financially (the scorecard of business) they represent a great return on investment.

Mathematically, working our your Return On Investment (ROI) is not that difficult.  Methodologically though, there are a few twists you want to take into account.  

 

What does a business mentor cost?

There are several elements to account for when totalling up the amount you will invest in engaging with a mentor.

The first and most obvious one is their fee.  It’s important that, before you start, you are clear on both what and how they charge.  Are you paying by the hour or a fixed cost for the engagement?  

No matter how you structure it, any mentor worth their salt will be able to give you a clear price, in advance, for your financial investment.

Second, you will be investing your time.  Every hour you spend with your mentor is time you can’t invest with a customer or in your business.  So, make sure that you include your invest your time, which has an economic cost.

Finally, there is an opportunity cost.  This is similar to the cost of your own time, but it’s more subtle.  It’s the fact when you are working with Mentor X, you aren’t working with Mentor Y.  Time spent with this mentor, could be spent another mentor who may be better equipped.  Now – you may think this is a little esoteric.  And it certainly is difficult to put a price tag on this.  

I include this factor though, to impress upon you the importance of clarity of purpose when choosing your mentor.

 

Measuring your Business Mentor Return on Investment

Measuring the cost of engaging a mentor is the input.  What about the output?  How do you track and assess the results of a business mentoring relationship?

Well, if you are a big company, you set up surveys, measure tangible and intangible attitudes, start recording multi-year responses and perhaps after 5 years you can derive a figure.  There is nothing wrong with this and makes a lot of sense if you are doing mentoring on a grand scale.

If you are an entrepreneur or small business owner – you probably don’t have that luxury. Yes, you can get some great ideas from large scale studies like this one.  In the meantime though, you need something straightforward, lean and mean… and useful.

It doesn’t have to be complex to be effective.  

You need something straightforward, lean and mean....and useful. It doesn't have to be complex.

Business Metrics

First, look at tangible measures that are useful and easy to track.  This could be volume measures like sales, recruitment costs, number of leads.  Or it could be ratio measures like profitability, lead conversions or return on equity.

The important aspect with these is to ensure that they are items that will be affected directly by the work you are doing with your business mentor.  It’s not relevant to assess your Return on Investment using a reduction in expenses if your business mentor is helping you specifically with marketing!

 

What about soft skills?

Second, consider how you are going to assess the intangible aspects of your work together.   These are very real but they require some discipline to measure.  Much of the value of a mentor comes from the intangible aspects.  

It’s lonely being an entrepreneur!  A business mentor provides a trusted and wise ear to listen and advise you in your decision making.  This value needs to be taken into account in measuring your business mentor return on investment. 

To measure this intangible benefit, define it.  Give it a name and description, to ensure consistency. Then regularly grade it on a scale from 1 to 10.  

For example, it might be your Confidence level.  Before mentoring, you may be at a, say, 6 out of 10 on your Confidence scale.  Reassess this at regular intervals during your Mentoring journey.  Come to a final number – hopefully, higher! – at the end of the time spent with your business mentor.

Whatever metrics you decide, make them measurable.  Naturally, it makes sense to get an agreement with your business mentor – or at the very least share – these metrics.  That helps your business mentor stay focussed on those things that you value.

But be fair.  After all, it isn’t your mentor who will be making the sale calls or closing the deals.

 

Doing the Maths

At the end of the business mentoring engagement, you can do some straightforward maths to work out what your Return on Investment is.

With the tangible measures, simply look at the change in the financial measure less the cost of the business mentor, and express this as a percentage.

With intangible measures, look at the change in scale as a percentage of your starting point.

It’s not uncommon for this to be a quite high number.  Why?  Well, business mentoring does make a material difference!  

But, just like the business mentor can’t get all the responsibility, they can’t get all the credit either.  The whole point of the mentoring process is the incremental and radiating improvements that flow from your work.  These get reflected in other areas of your business that may not be directly related to your mentor program, but which have material benefits nonetheless.

 

What are the Next Steps?

Forget the external environment and the bad news that exists every time you open a browser or a newspaper.  The current business environment is one of the most promising I have ever seen, as years of societal changes are being compressed into a few months due to our global pandemic.  Follow the examples of millions of others that are branching out on their own. Be clinical and ruthless though, in determining where you spend your capital.  

Getting a business mentor is a fantastic idea that almost every successful person has embraced.  A fantastic idea though doesn’t always mean you achieve your business goals.

Make sure you keep measuring your business mentor return on investment as a part of this.

Want to share your story with me, and see if I am the right mentor for you?  You can contact me here and tell me your story.  Let’s see if we are the right fit! 

Business Decision Making for Entrepreneurs

It can be lonely running a business.  Customers, team member, shareholders, regulators – all looking to you to deliver to their expectations. Business decision making for entrepreneurs is a big part of the job.

Expectations mean decisions.  And decisions aren’t always easy or the right answer obvious.  But decisions have to be made.  

So how can a business mentor help? One of the reasons I became a business mentor was simply that I wanted to provide a service that I was never able to find myself.  

As such, part of what I do is help my clients break down decisions, and have a process that ensures that these decisions are made in a manner congruent with my client’s values.  

 

Business decision making for entrepreneurs

Decisions involve two important criteria which can be hard to measure and even harder to assess. 

Whatever the decision, you need as much objective data as you can. 

A famous example of this is back in the 1970s when then US Secretary of Defense Robert MacNamara demanded everything about the war be measured.  He was obsessed with statistics and data to make the right strategic decisions. And, it is true ‘what gets measured, gets done.’ 

In business, it can sometimes be a challenge to measure or obtain all the data you need.  In my experience though, too many entrepreneurs rely on ‘gut’ instinct (more on that later) rather than objectifying the issue facing them through good data.

Business Decision Making for Entrepreneurs

 

Data is only half the equation

Except some decisions have input that can’t be quantified.  McNamara was reminded of this when a colleague told him some data was missing.  ‘The feelings of the Vietnamese people.  You can’t reduce that to a statistic.’

Data is only half the equation. 

You need to estimate the probability of a given outcome, and the impact this has.  And the probability is hard to estimate, let alone intuit. We are simply not hard-wired to be good at estimating probability. 

We evolved in the savannahs to determine life or death decisions.  There is a lion.  If I run, I live.  If I stay, I die.  Binary choices with 100% probability.

It’s not easy putting effort into something you are only 70% sure about (let alone being able to even say you are 70% sure!)  It is easier to work on something that you think has a 100% chance of success.  Unfortunately, this cavalier attitude towards risk leads to overconfidence, stubbornness and ignoring warning signs until it is too late. This can be a real trap when making business decisions.

I was determined to find another way to achieve my dreams and I knew there had to be a third way, which would allow me to be happy and to earn a very good living to provide for all my dreams and desires.

Decisions don’t always involve change

In business decisions making for entrepreneurs, sometimes we are our own worse enemy.  It’s especially true for business owners – we have a bias for action.  

It is a sign of maturity to be able to make conscious decisions to do nothing. Not out of laziness, or lack of care, but because after you have gathered the data and assessed the probabilities – you decide to take no action.

I saw this most vividly as a financial adviser when much of our advice to our clients – especially in times of high turmoil -was to do nothing.  Don’t try and trade, or time the market.  In fact, in investing, there is a very strong negative correlation between the frequency of trading and the returns investors get.  Yep, the more the traded, the worse their return was.

The data tells the story.   In the US, over the past ten years, the average equity investor earned 4.88%.  

Not bad?  

Well, the S&P 500 averaged nearly double this rate at 8.5% pa over the same time!  In other words, all that effort only resulted in losing money compared to doing nothing but staying the course.

There are several reasons for this, but mostly they boil down to investors trying to outsmart, or ‘time’ the market.  And people are pretty crap at this because they make decisions based on gut feel, emotions and lack of data.

That doesn’t mean emotions are not important.  In fact, in decision making, they are critical, as long as you can link your emotions back to your values.

Personal values provide an essential framework on which to align the decisions you will need to make. Is the likely outcome of a decision fall within this framework?

 

Using your Values as a Decision Framework

Using your values as a decision framework allows you to reject ‘either/or’ or ‘both/ and’ as a paradigm for assessing decisions.  Is there a high probability that the outcome of a decision will one congruent with your values, or give you more of what you seek? 

For example, my financial planning business had a motto ‘Because life is for living.’ This guided all of us in everything we did.

This seemingly innocuous statement contained a lot of power.  It stopped us from seeing money only as a measure of financial wealth.  Instead, it reminded us that it existed as an enabler for our clients to live the life they dreamed of.

When I was in my teens, I pledged myself that I was never going to spend a huge proportion of my life doing something I hated just to get money.  I would rather be poor and happy than rich and miserable.

A couple of years later I was unemployed and arguing with my future father-in-law about this very thing. Naturally enough, he was concerned that his daughter was set to marry an unemployed bum. He thought I was naïve, and he was right, but so was I. 

I was determined to find another way to achieve my dreams and I knew there had to be a third way, which would allow me to be happy and to earn a very good living to provide for all my dreams and desires. Punching the clock to grind out a living was not for me.

What I know now is there is always a third way, no matter what the situation. It’s a matter of imagination and hard work to discover this.

Much of the business success I have enjoyed is because, instead of accepting a paradigm of ‘either/or’, I’ve sought to embrace a ‘both/and’ and used this to try and find a third way.

Are your margins are being squeezed?  The ‘either/or approach would say you need to cut costs or raise prices.  ‘Both/and’ of course says to do the two things at once!  But the ‘third way’ uses this problem as an opportunity. 

The third way discovers how the business experiencing margin squeeze can re-align its services for what the clients want, still cut prices and improve our margin  – all at the same time. 

 

How can a mentor help with these business decisions?

As we have seen, most of the challenges with business decisions come from

  • Having the right data
  • Assessing the probabilities for an outcome
  • Protecting against your own unconscious biases
  • Finding a ‘third way’ that aligns with your values.

The role of your business mentor is to both guide and critique you through these steps.  Just the mere presence of someone you are accountable to improves your success. 

You can see some practical examples in my case-studies here and also here.

Working with a business mentor helps avoid over-confidence and under-estimating risk.  It’s critical support for the lonely entrepreneur!  

So – talk to me today!  I can’t wait to hear your story.

4 Ultimate Guiding Principles for Buying a Business

Growing your small business through making an acquisition can be an excellent way to turbo-charge your plans.  Every business needs organic growth through the usual marketing.  Buying another business though can, almost overnight, take your business to the next level. In my career, I have been involved on both sides of many transactions.  Through this, I developed my 4 ultimate guiding principles for buying a business. 

These apply whether you are buying a new business or making an acquisition.

There are obviously pros and cons to this strategy.  As a business mentor, my role is to help my clients assess these. Assuming the decision is made to proceed, I then support and guide through the process.

Remember my 4 ultimate guiding principles for buying a business and you will greatly reduce your chances of taking a false step.

 

4 Ultimate Guiding Principles for Buying a Business

Julie was the CEO, founder and main shareholder in a professional services business.  She had been running this for around ten years, with no small degree of success.  She had built revenue to around $3m per annum and was making a reasonable profit margin.

Several years back, Julia had moved to new offices to accommodate organic growth.  She took on additional space and staffed up in anticipation of organic growth.  This came, but not at the rate she expected.  This means that she had under-utilised resources in the business, and she wanted to change that quicker than she could through normal sales and marketing.

She decided to start looking for a similar, but smaller business to acquire – something with around $1 to $1.5m of revenue and three to four staffers.

 

Principal 1: Kill the Deal Quickly

There are many ways to locate potential acquisitions.  In my experience, especially when it comes to services firms is to either

  • Network and then approach through industry associations or
  • Engage an agent to represent you.

There is a little bit of reverse psychology at play here.  You probably don’t want to buy a business that someone is trying hard to sell!  Rather, it’s ideal to locate a business that could benefit from a bigger partner and lacks the immediate resources to grow on their own.  

From this activity, we put together a shortlist of five prospects.  One in particular seemed very promising.  It had all the qualities we were looking for.  Good staff, great client list – but the business was in a poor location and the profit margin wasn’t all that great.  The owner was an excellent professional, but not a fantastic business person.

Negotiations went very well.  But then, suddenly, they didn’t.  Items that we thought had been agreed for our Terms Sheet were brought up for re-negotiation.  Issues like the outstanding lease on his premises were a bit different from how they had been represented.  He tried to change the timing of purchase-price instalments.

We tried to accommodate the new demands and adjust to the new information that our Due Diligence process uncovered.  But for every new demand that was met, another appeared.

Ultimately, we couldn’t reach an agreement.    But we spent a lot of time – time that ended up being wasted – trying.

Truthfully, Julie got sucked into this rabbit hole, because the deal had such great potential

We took too long to kill the deal.  We fell for the myth that there is a perfect deal or a scarcity of opportunities.  

My experience in business acquisitions tells me, if an agreement on the broad terms and purchase price can’t be reached within a couple of meetings, then it never will be.  When this happens, just walk away.

Reduce your opportunity cost.

Kill the deal quickly.

 

Principle 2: Succession not Acquisition

Why is a business worth anything anyway?  OK, you have the tangible assets that could fetch a few dollars in a fire sale.  Mostly though, the value of a business comes through its goodwill (especially in service firms).  This Goodwill is an intangible asset that reflects the customers of the business like these services enough to keep coming back for more.

For example, an accounting practice.  If they do a good job, customers will keep coming back year after year, with a high degree of regularity.  They have established a relationship with the people, and that is hard to replicate or to break.

And an important part of buying a business is to do it in a way that preserves the goodwill.

Think about it from the perspective of a loyal customer of the seller.  They hear that the business is being sold.  It’s moving to a new location.  The name is changing. 

Typically, the average customer is now thinking about maybe finding an alternative solution.

Then they read that, actually, the owner – and the other staff – are staying on.  There aren’t any redundancies.  The key people – the ones with customer relationships – are continuing.  This is good news for the customers, and you.  It means that most will keep bringing their business.

In designing a transaction, we kept in mind that we wanted most of not all staff to come across.  Remember, the profit lay in making better use of Julie’s existing resources, than for necessarily reducing the target’s costs.  That would happen anyway because we retained most of the revenue whilst losing the target’s rental costs.

The lesson is to stop thinking of an acquisition as a purchase and start understanding it as a succession plan for the existing owners.  Tie that in with a smart transaction design, namely, an upfront payment, followed by an earn-out, all linked to an employment contract.

Instead of buying someone’s business from the owner, you are assisting them to have a plan to gracefully exit over (say) several years.  Whilst this happens, they continue providing great service to their customers long after he or she has left the business.

But what about vendors that just want to get out?  Well, you won’t be buying businesses like that, because you always keep in mind Principle 3….

Stop thinking of an acquisition as a purchase and start understanding it as a succession plan for the existing owners.

Principle 3: Culture and Client Value Proposition

Wait.  Are you buying a business to add on to your existing operation, gaining synergies and increased profit margin through scale – or are you just buying a new silo in a conglomerate?

If it is the former, then you need to dig deep in the due diligence to make sure you have a culture and a Client Value Proposition that is a close match to yours.  Or be prepared to invest a lot of time and money to mould the business to fit your model.

My friends at Business Health used to say, are you buying a hamburger stand or a fine-dining experience?  Both of them cook you dinner, but they deal in very different markets with a very different culture. Try and combine the two as they are, and both will suffer.

Julie spent a lot of time getting to understand all about her target’s ideal client, their value proposition – even how they packaged and charged their fees.  This also fed into the culture of the organisation.  She realised that the new combined company would have to make its own new culture and it was critical to start with two great cultures.

This aspect is often overlooked, as much of the focus is on the financial models.  However, if you are going to be working together for several years, you want to enjoy it, right?  Equally, you want your new customers to feel at home, and your existing customers to not feel like you are ‘losing your way’.  

These intangible or market aspects are very important.  Combined with a killer financial model you can not only achieve fantastic growth, you can create an amazing business and have a lot of fun along the way.  

Culture and client value proposition always make a HUGE difference in ensuring the final principle:

 

Principle 4: For the Right Deal, Money will always be Available

The financial engineering of any acquisition is important.  For the purchaser, before you go shopping, you need to know what your limits are and how this can be financed.  Will it be through borrowing, or having your shareholders contribute, using the company’s funds or a combination of all three?

In Julie’s case, it was a combination.  She negotiated to pay 65% of the anticipated purchase price upfront, with the balance paid in two instalments, at the first and second anniversaries (the exact amount of these latter payments were based also on financial performance post-sale).

She had some retained earnings in her company, plus some additional borrowings, to cover the first instalment.  We projected that the increased cash flow of the combined business would allow the second and third instalments to be paid from the company.  In other words, it would become self-funding.

The lesson though was that this was such a compelling transaction, the bank would have happily funded it completely.  Alternatively, Julie and her other two partners had the resources to put their funds in if it was required.

It’s tempting to hold off making acquisitions especially if money is tight.  In my experience as a businessperson and as a business mentor, I can promise you that for the right deal, there is never any shortage of money.

 

The role of the Business Mentor

Through this whole process, the role of the business mentor is an important one.  In any deal, everyone has an angle.  The vendor wants more money.  The bank wants you to borrow it.  The lawyers want to make the negotiation complex and expensive.

Everyone is looking after themselves.

Except for your Business Mentor.  Your business mentor looks after YOUR interests.

Want to more or have questions about the detail of this case study?  Go here to see how a business mentor can help your cash flow.

You can contact me TODAY, right here.  I can’t wait to hear your story!

What Can Start-Ups and Small Businesses Learn from Billionaires?

Who wants to be a billionaire?

I do!  

I do?  Well, why not.  After all, as an avid fan of Succession, billionaires seem to have a lot of really nice toys to play with (especially that superyacht).

Actually, who cares about being a billionaire – as a business mentor, I care about answering the question of what can start-ups and small businesses learn from billionaires?  My passion is to help entrepreneurs achieve their business goals.  So, studying how extraordinarily successful people have done that is a natural place to get some good lessons.

Billionaires are great to study as they have many of the same issues that small businesses have – but they have greater resources to solve them.

Think of billionaires though, as the ultimate manifestation of capitalism.  They are the Mount Everest (or maybe the Mariana Trench?) of manifesting creative energy into economic wealth.  In that sense, there is a lot we can learn from what billionaires  – as business people – are and do. 

 

What can start-ups and small businesses learn from billionaires?

There is a lot of fascinating research on billionaires available.  The lessons that it reveals are very useful for small businesses and entrepreneurs.  

And there is a lot to learn:  For example – despite Covid-19 – there are more billionaires than ever before.  Just take 2019 – in that year, there were more than 18 new billionaires created every month. There are a lot of people making a lot of money today.

Forget the impression that all the super-rich simply inherited their wealth.  Nearly 60% are self-made and nearly 90% are self-made in combination with an inheritance.  Most weren’t born billionaires, they created this wealth themselves, in this lifetime.

what can start-ups and small businesses learn from billionaires

Of all the great information in these studies, when I ask myself ‘what can start-ups and small businesses learn from billionaires?’ I come up with three key lessons.

 

Lesson one: Opportunities are Endless

Most of the recent billionaire wealth came from industries that didn’t even exist 20 years ago.  Tech and healthcare are by far the biggest growth areas. From 2018 to mid-2020, tech wealth amongst billionaires increased by 42.5% and healthcare by 50.3%.

What I take from this, is that we need to look at societal trends and spot the business opportunities that come from them.  These trends are ever-changing and so they continually create opportunities for entrepreneurs.  

This isn’t always easy to do.  I come from Australia, where it seems that unless you own media or dig up stuff from the ground (that is, two hugely capital-intensive industries) you can’t get super-wealthy.

While many businesses have suffered terribly from the effects of the Covid pandemic, others have thrived on the changes.  Physical distancing, and working from home accelerated the ascendance of digital businesses, compressing several years’ evolution into a few months.

Aging, longer-living and increasingly affluent populations mean that spending on health care is only going to go one way: up.

What excites me about tech, is that, unlike many other businesses, the barriers to entry are relatively low.  You don’t need millions of dollars of capital or huge laboratories to start your business today.  Many businesses I know have reduced their costs by lowering fixed overheads.  They’ve embraced tech to improve their client experience.  

And the opportunities for a bright entrepreneur don’t just happen at the big end of town.  The pandemic has created a whole new generation of entrepreneurs that are realising that there is no finite limit on the available opportunities.

In 2019, on average there were over 18 new billionaires each month...and most of the recent billionaire wealth came from industries that didn't even exist 20 years ago.

Lesson 2: Be Prepared to Pivot

You may be a market-leader right now.  But that guarantees nothing in the years to come.  In fact, the more successful you are, the more likely you are a target for one of your competitors.  

Billionaires don’t mind pivoting away from what worked in the past to what worked in the future.  Even billionaires must keep reinventing their businesses, reinvesting their gains into new ventures.

It’s telling that over the past 12 months, over 22% of billionaires have made a change to their business strategy.  The big news though, as that over 52% plan to do so in the next year.

I love examples like the teachers and other professionals in the USA that have seen the opportunity to change careers and get into vending machines.  

Billionaires, teachers – even Yours Truly, a former financial planner – aren’t resting on their laurels.  Be prepared to pivot to take advantage.  Because if you don’t you may be a victim of Lesson Number 3….

 

Lesson 3: Diversify your business

Even billionaires can get it wrong.  Over the past ten years, over 150 people dropped out of the billionaire club.  The main reason for this was a lack of diversification in their business interests.

Every small business knows the joy of winning a big account.  And you should celebrate.  It’s a double-edged sword though – suddenly a large percentage of your business can come from one client.

Equally, most of your revenue may come from one type of good or service. The lesson from the billionaires is – diversify before the market makes you redundant.

One of my clients owns an elevator-installation business.  Historically, his main revenue stream came from installing them.  This meant his business, although profitable, had very ‘lumpy’ cash flow, and his success was closely tied to the overall building industry.

Plus, if he missed out on just one job he could take a 15 – 20% hit on his income.  That’s a big variation when you are trying to grow and have a payroll to meet.

What he noticed was, after installing the elevators, somebody else was making money from serving them.  Yes, he got the risky once-off big fee for the installation.  But a someone else was getting the regular income stream for providing service over the 30-year life of his elevators! 

So, he made a plan to build up his service department.  It was a natural decision for someone buying an elevator from him to also get him to service it as well.

After five years, the service division was bringing in over 80% of the increased business revenue – and with a much greater degree of certainty.

What extra revenue streams can you develop in your business.  What other services do your customers need that they are getting somewhere else? 

 

How can a Business Mentor help?

Striving to be a billionaire or even a millionaire isn’t the point.  It’s that each of us has more opportunity today than ever before to realise our dream in business.

Think about it:

  • Most billionaires are self-made
  • They have most of their money in their own business
  • Most made their money in the last 20 years

Does that tell you something about how wealth is created? It’s people backing themselves with their business ideas and having a go – and often against the odds. 

They have faith in themselves and believe that they have innovative solutions to customers’ problems, then they work their butts off to make their vision come true.  

And, like billionaires, they get a team to support them all the way through.

If you would like to know more about how I work with people to help them achieve their goals, have a look at this case study

Contact me and tell me your story – I would love to know more about you and see how I can help you achieve your potential.

3 Critical Success Factors for Business

What do you bring to the table? 

In my work as a business mentor, I am lucky to meet a lot of people who are desperate to be their own boss  – but don’t know where to start.  They are usually very hard-working, have some good ideas, but don’t know if they have what it takes to be successful.

That’s cool – it’s pretty scary to start a business. Many, many factors go into creating a successful business.  They can seem endless.  

First, you have tangible items.  Finance, products, goods, premises, website.  Then, there are the intangible items.  Persistence, dedication, education, wisdom.  The list goes on.

Both are important.  It’s also true that many people measure their success  – especially in running a small business – in non-financial ways.  Many business owners tell me that it was things such as lifestyle, the freedom to be their own boss and flexibility that led them to start their own business.

The bottom line: unless the income is more than the outgo, you won’t be in business very long.  Therefore, we need to boil all this down and secure the 3 critical success factors for business that you need.

I know, because I have learned the hard way.

 

3 Critical Success Factors for Business

It was back in 1999 right at the height of the dot-com boom. Even in Australia people got a little carried away. 

I was working hard at my job as a financial planner – at this stage, I had zero equity in the business.  One of our clients, Will, had come up with a great idea. He had a background in insurance and had listed an online insurance sales website business on the Australian Stock Exchange. 

He’d issued a prospectus, raised some capital, come up with a fancy ‘dot.com’ in the title (this was virtually compulsory for a tech company in the early 2000s) and was sitting back watching the shares skyrocket. And skyrocket they did, along with everything else that had the word ‘tech’ in it and didn’t earn any revenue.

There was a huge buzz around their project and because Will was a client he made sure even little old me got into the initial public offering. I managed to scrape together the minimum amount of $2,000 and held my breath for when they went public.

 

Deal me in!

All of this was tremendously exciting to observe – the innovation, the hype, the possibility of changing the face of Australian insurance distribution. It wasn’t just this project either; every day new ideas were being put forward and new businesses launched. It seemed as long as you put the letter ‘e’ in front of the name, or it ended with ‘.com’, you were on a winner. 

How could I get involved in a project like this? I loved my job but it seemed staid and boring: there was ‘gold in them thar hills’!

I got some time to talk to Will so I asked him what he thought. I will never forget his question to me: ‘Patrick, you are a nice guy.  But, what do you bring to the table?’ 

In other words, why should anyone want to get involved in business with me? Sure, I was a nice guy but so what? 

3 critical success factors for business

It was time to face reality and realise that actually, I brought very little to the table in terms of adding value to a business enterprise.

 

Business is also all about who you know, and how you can connect those relatinship networks to create economic value.

Critical Success Factor 1: Money

Yep.  You can’t escape the fact that money is the lifeblood of business

Back then, I had to face the facts. I didn’t have any money and, while I wasn’t broke, it was only a few years back that I’d been cleaned out in my divorce. All in all, I was in a rebuilding phase. I’d just bought another house so I was loaded up with debt, not equity. 

I was struggling with this critical success factor. Short of an unknown inheritance or winning the lottery (spoiler alert: neither happened), it was going to be a long haul to get enough money to create a business. 

Importantly, I was taking all the small steps that would add up over time:  

  • I was spending less than I earned.  
  • Every pay, I was saving extra into super, 
  • My home loan repayments were ahead of schedule and
  • I had a small amount invested in the stock market. 

Yes, this was going to be way slower than I would have liked, but all I could do was simply persist in that area, and let compound interest take care of the rest. 

The counter-intuitive realization is that there is more money available than ever before.  For the right business idea, there will never be a shortage of dollars.  

Your challenge with this critical success factor is to find the smartest place to get the money you need, at the lowest price.

 

Critical Success Factor 2: Networks

People do business with people they know and like.  Yes. Even in the internet age.  

For example, an overarching strategy in this business mentor blog is to give you the reader, an insight into who I am as a person, to accelerate the development of trust in me.  How’s that working so far?

Business is also all about who you know, and how you can connect those relationship networks to create economic value.  

If money is the blood, relationships are the veins and arteries that make it flow. When you can connect people and introduce others, that can add value to an enterprise and in turn, you also become valuable to that business.

Again, back then in my situation, the reality was I also was lacking in this critical success factor.  I had no network.  However, I could build relationships, starting today. I was always hearing about networking groups and clubs so it was simply a matter of getting off my butt and doing something about it.  This plan is still yielding results today in my work as a business mentor.

Your challenge with this critical success factor is to have a process in place that allows you to build relationships with others so that you can add value to them and your business.  

 

Critical Success Factor 3: Skills

Also known as Intellectual Property (IP). If you have rare talents or you are acknowledged as a maestro in your field, you will be welcome in any enterprise that requires those talents.

What about my skills back in 2001? Well, I knew how a small financial planning practice worked practically but I had no formal qualifications in management. I had a Diploma in Financial Planning and was a Certified Financial Planner.  

To be honest, although I was a Certified Financial Planner, I hadn’t achieved anywhere near my potential academically.  I was about a 3/10 for this critical success factor.

There was no way I had come close to achieving what, I knew deep down, I was capable of achieving. But deciding what and how to study, as well as paying for it, was going to take some time to plan. 

It was time to stop procrastinating on this and start shaping the development of my future skills. I started to plan for going back to study and this eventually manifested in (among other things) my master’s degree.  

Academic qualifications don’t necessarily guarantee success, but my experience as a business mentor tells me they don’t hurt, either. 

Your challenge is to identify the specific skills and talents that your business will need to thrive and grow to the next level.  

 

So how do I improve these 3 Critical Success Factors?

It’s simple, but it’s not easy.  

Whether you are already in business or wanting to start, you need to be honest in assessing where you are right now with each of these 3 critical success factors.  Then, you need to plan to bridge the gap.

How you do this will vary for each of the 3 critical success factors.

If it is money you need, this can be raised through savings, or debt (borrowing) or equity (bring in partners).  The starting point is to ask two questions:

  1. What money do I need to buy assets right now?
  2. How much will I need to pay running costs over the next 12 months?

Building networks starts with meeting and then helping others.  The best question to ask yourself is ‘who can I send a referral to today’?

There are now so many places where you can learn the knowledge and skills you might need. As well as the universities, there are amazing sites like Skillshare and Brilliant.  

The good news is though, with a plan and with accountability that you can design with your business mentor, you can overcome. 

Some people do this on their own or with their team. 

Others prefer to work with a business mentor like me, to inspire, encourage and hold them accountable to their actions.

Like to know more about how I work with my business mentor clients to achieve their goals?  Contact me and tell me your story!