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 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.

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!

How a Business Mentor can help cash flow

They say that  Cash is king. No wait … change that … cash flow is king. No matter what your situation, your place in life and no matter what financial obstacles you may face – if you have cash flow, you have hope. And regardless, asking how a business mentor can help cash flow is an important question.

And, if you have hope you then have a future. But I’m getting a little ahead of myself here. Most people don’t ever even think of cash flow. 

People who are in business have extra challenges with cash flow. In my experience, many businesses go broke, not because they don’t have enough customers but because they mismanage their inflows with their outflows. 

Research backs up my observations: managing the businesses finances is a key reason for bankruptcy.

And that’s not surprising, especially if you are new to being in business.  Your focus is on satisfying your customers, handling logistics, or any of a hundred other things.  As an experienced business mentor, let me tell you now – you need to be thinking day and night about cash flow.


How a business mentor can help cash flow

The advantage of having an experienced business mentor is that they have faced these problems before.  Here are the steps that I follow with my clients.



Think of your business as being like a human body. Cash flow is the lifeblood of your business.

Your business bones are how you own and structure your business.  For example, is it a partnership, or a company whose shares are owned by yourself and other investors?  This ownership structure provides the skeleton for you to build your firm. 

The assets of your business are your muscles (aka the Balance Sheet).  These can be tangible items, like computers and desks.  Or they can be intangible, like Intellectual Property or a Patent on something special. The more you work on these, the bigger and stronger they get. And the stronger you are, the more you can achieve. 

But your cash-flow is your business blood. Your cash-flow brings nutrients to both your structure and your muscles. But it’s not enough to just have blood – it has to be moving for it to have any value. (And we have reached the limits of my medical knowledge!)

A business mentor, through looking at your financial records, can diagnose any potential problems.  There could be many reasons.  The most common ones I see are:

  • Generous payment terms
  • Profit margins that are too low
  • Poor planning  

Think of your business as being like a human body. Cash flow is the lifeblood of your business.


Let’s assume that the problem is one of planning. The business has got a strong product and good marketing.  There are plenty of clients and prospects.  It is growing rapidly.  But there is never any money left in the bank.

There is a mismatch between income and expenses that is causing cash flow circulation problems.  A little like putting a tourniquet on your arm  – the pinching stops the blood from flowing.

As a business grows, cash flow timing becomes a very important issue. That is, simply having money available when you need it.  Matching the inflows from sales with the outflows to suppliers, employees and other costs. 

Over a year, a business might have an accounting profit – but during the year the bank account can run dry simply through lack of good cash flow management.

How does this happen?  It’s easier than you might think. 

Here’s one example: Your business makes a lot of sales and gets the money in (great so far!)  You pay some bills, buy some more stock… but don’t set aside anything for your sales tax (GST in Australia, TVA in Switzerland) or company tax.

The problem comes when the taxman shows up and there is no money in the bank. 

Expand your horizons beyond the next week and month and start to take in a time horizon of the next five years. This is exactly what businesses do when they look at cash flow for expanding their operations. 

Managing the timing of cash flow was one of the problems that my client Carl faced.  To help him address this, I developed a cash flow planner.

How a business mentor can improve cash flow

You can download your own copy (Google Sheet) by clicking here.

Of course, this is just one example. Every small business or start-up is different.  The advantage of having your business mentor to help you manage your cash flow is that you get a personalised diagnosis and prescription.



OK great.  You know the problem, you know what to do to fix it.  But how do you implement?

As with most small business issues, doing something is the most critical step.  Let’s take the example above.  After completing the full cash flow budget forecast, we decided that we needed to do this:

  • Change payment terms from 30 days to 14 days with an upfront 50% deposit
  • Bring in a part-time assistant so that the owner could focus more on marketing
  • Reworked his pricing model to increase margins

Together we mapped out a plan for each of these steps and I held him accountable to that timeframe.  The result:  cash flow problems were solved, and the business was stronger and more robust.


Hiring a Business mentor

As you can see, a business mentor can improve cash flow.  Is it time for your business to have one?

If you want to know more about what a business mentor is and how they can work with you, you find a lot of information right here.  

I would love to hear your own story  -what cash flow challenges do you face in your small business?  Would you like to see if I can help you?  You can drop me a line here.