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 Simple Steps to Choose your Business Mentor

I’m going to assume you have chosen to get a business mentor to help keep you accountable for success (smart move!) But what steps can you follow to choose the right person?

It’s not as easy as it might seem. After all, this person has to understand you but also hold you accountable.  They need to be friendly, but not your friend.  They need to help you effectively work on your business, but not work in your business.  

However, you might need a coach or a consultant rather than a mentor.  The difference can be subtle, but crucial. Check out my post for more info on the difference between a business mentor, a coach, or a consultant for more on this.

 

So here’s my 3 Simple Steps to choose your business mentor:

 

Step 1: Be Prepared

 

Preparation is not just for Boy Scouts – preparation in choosing your Business mentor is key.  

 

Understand why you want a mentor.

The first time you ask this question, the answer may seem obvious to you.  If so, great.  Now, ask yourself this same question a second time, and then a third.  This technique is an excellent way of understanding your true motives for needing a mentor.  In turn, this will help you get the best value out of your mentor.

As an example answer, the first time you answer this, you might say: ‘I want a mentor to help me make the best choices for my business’.

OK, a good start, but why and how?

Example answer, second time: “I want to grow my business but it’s hard to find good people to work with.  I’m not sure exactly where to start though.”

Getting better. 

Ask yourself one more time, why do I want a business mentor?: “I want a mentor to help me identify the key aspects of my business that I can delegate, then hold me accountable to my plan for doing this over the next six months.  My mentor will understand my business drivers but also empathize with the difficulties I face is letting go to a degree.” 

The better you can know and express your motives, the more time you can save in briefing your mentor.

 

Understand your working rhythm:  

Knowing what you want from your mentor is one thing.  Deciding how you would like to work together is another.  For example, will weekly sessions be right or too frequent?  Would monthly sessions be too far apart?  

Often I will have a ‘sprint’ at the start of an engagement where we do weekly sessions for the first two months, then monthly for the rest of the time.  

 

Decide on your budget:  

At least have a range of what you can afford in mind.  I get it, money is often tight, especially if you are in a start-up.  And sure, if your potential mentor offers a freebie at the start – take it!  However, trying to save money by getting a cheap mentor is a false economy.  Paying a fair price ensures you value the advice and make sure that the mentor delivers value too.

But given that, according to the Wall Street Journal, more than half of businesses fail within five years, having a mentor who can potentially help you avoid that fate is a smart insurance policy.  

A good rule of thumb:  expect to spend 5% of your turnover on professional services, which include mentors, book-keepers, lawyers.

Preparation is not just for the Boy Scouts. Preparation in choosing your Business Mentor is key.

Step 2: Do this when choosing a business mentor:

 

Decide what attributes they need to have.

Do you need someone with specific technical’ ability?  Or are you looking for overall business ‘savvy’?  

The issues that Business Mentors deal with are usually more strategic and so don’t require specific technical knowledge, but it can help.   Still, if a prospective Mentor has had a career in large corporations and you run a small business, there might be gaps in understanding. Make a list of the skills and experience your perfect mentor would have and use this as a checklist when making your selection.

 

Get a pool of three candidates

It’s a good idea in business to never choose from a selection pool of one.  Try and meet at least three potential mentors before you decide.  I recommend starting with searching online services – for example, Growth Mentor or ask on Reddit.  

Then, ask a few business-people who you admire who their mentor is.  This is often the best recommendation (I get 90% of my work through referral).

 

Ask about their business successes – and failures

There are a lot of so-called mentors out there that talk a good game.  But have they achieved anything themselves in the past?  The whole point of a mentor is to learn from their experiences.  No-one knows what winning is like except a winner.

Equally though, you can’t get your toes a little wet without making mistakes.  It’s pretty good to have a mentor who has made a lot of mistakes because it means there is more for you to learn from!  

 

Step 3: Don’t do these things when choosing a business mentor!

 

Pay by the hour

Yes, you can meet by the hour but don’t pay by the hour.  You want to have a relationship with your mentor.  Nothing stifles a relationship like the knowledge that the meter starts as soon as you call her for help on an issue.  Rather, see if you can negotiate a price per month.  This can include several formal meetings but also the ability for you to contact them for help at any time.

 

Don’t be vague:

Bottom line: you want to be the sort of a client a really good mentor would want to work with.  Define exactly what success looks like for you, as a result of having a mentor.  Decide how long you would like the initial period of engagement will be.  This means that you will get the best out of your mentor.

As a mentor, I promise you that we love it when a client says things like:

‘I’d like to work with you for three months to improve my cash-flow and make some tough decisions to increase my product margins.”

Or

“I have been working 50 hours a week, sales are up but I just don’t seem to see any improvement in my bank account. I can’t go on like this forever

But we silently groan inside when we hear:

“I think I need a mentor, would you mentor me?”

Life is too short to be vague.

 

Don’t ask a friend to mentor you

It might seem like the easy solution – but don’t.  Just don’t.  Sometimes, a mentor has to show some tough love in a way that a friend may not.  Combining the two roles is just asking for trouble.

 

A Business Mentor is an important choice

If you follow these 3 Simple Steps to choose a business mentor, then you are not only ahead of the completion, you will also enjoy the journey.

Choosing a business mentor is an important decision, but one which will help you maximize your success.  Want to know more?  Contact me today.

Choosing between a Business Mentor, a Coach or a Consultant – Advice for Start-Ups

Choosing between a Business Mentor a Coach or a Consultant

Advice for Start-Ups

When you are starting a business, you need all the help you can get.  You are consumed with the workload and trying to do a million things at once.  You are smart enough to see the value in getting some input from an external source.  Usually though, as a start-up  you only have money – and time – for one.  Choosing between a business mentor, a coach or a consultant is an important decision.  But what is the difference?

Everyone has their own definition and interpretation of what a mentor is, what a coach is, what a consultant is.  That’s cool, but let me explain how I see them.  My perspective is based on over 30 years building and running my own business.  I have engaged coaches and consultants galore.  Interestingly,  I could never find a real mentor that suited me, that could both understand me  as a person and also comprehend how my business worked.  Which is why I now serve as a business mentor myself.

 

What a Business Mentor is not

When making this choice, it’s imporant to understand that a business mentor is not a coach – although we do coach in the course of our work.  Tony Robbins is a pretty impressive guy.  He defines coaching as: A life coach encourages and counsels clients on a range of professional and personal issues. Life coaching is distinct from giving advice, consulting, counseling, mentoring and administering therapy.” 

In my experience, the starting perspective of a coach is that the coachee (that’s you) already has the answers they need to resolve any given situation.  The skill of the coach is to draw out that knowledge.  That way, the coachee themselves can come up with a plan to resolve or address a given situation.

This can be really useful, as I discovered when I engaged a coach.  You don’t need to be out of start-up mode to take advantage.  He had the best questioning technique that I had ever experienced.  His queries helped create a process through which I could select and prioritise all the options that I was facing.

The downside: he knew nothing about my business in particular, or business in general.  He didn’t know to get a legal review on an important contract or how to negotiate a pricing agreement.  There wasn’t an appreciation of the challenges of balancing stakeholder expectations whilst hitting growth targets in a highly regulated environment.  That wasn’t his fault – it was just outside his area of expertise.

I could never find a real mentor that suited me, that could both understand me as a person and also comprehend how my business worked.

A Business Mentor is not a Consultant

Equally, a business mentor is not a consultant, though they do provide specific and structured advice. 

I have had plenty of business consultants during my career.  They can quickly identify areas of business improvement and provide options for how to solve these problems.  They can be invaluable – in Australia, Business Health were instrumental in helping my business win the FPA Professional Practice of the Year award.    

However, it was outside the remit of any of these consultants to try to understand me as a person, except as that immediately impacted the business.  They looked at my situation purely from the metrics of the business.  Things like my profit margin, return on equity, client funds invested, etc.  

What they struggled to understand is the deep loyalty I had to clients who had been with us 20 or more years.  These clients weren’t profitable any more because they had drawn down their funds.  Sure, I might lose money on them, but my personal values wouldn’t let me cut them loose.  They still needed advice and there was a relationship of mutual trust that had been built up.  They  weren’t just clients – they were friends.

Consultants simply aren’t paid to consider business karma.

 

OK, so what is a Business Mentor?

A business mentor is someone who understands your goals and priorities.  This means what is important to you, not just in business, but in life.  They also place a huge importance on knowing your values, beliefs and morals.  As a start up, you will be pulled in all sorts of directions and it is easy to lose your compass.

A business mentor has proven experience in business.  They understand a P & L, a Balance Sheet, can spot a cash flow squeeze from a hundred metres away.  They know the principles of good corporate governance.  They have the wisdom to know when to be cautious and when to be bold.

Just as importantly, a good business mentor will understand the accounts of the heart.  These are the intangible aspects of business that mean while you build a business, you also build a character.  A business mentor will understand that success is more than a bank account balance or winning awards.  A business mentor possesses the skills to understand you well enough to ensure your actions are congruent with your best version of you.

If you want to read more, let me recommend this blog post from Growth Mentor.  Like me, they love working with start-ups (so if I am not your cup of tea head over there!) 

With that background, a business mentor will work with you to identify your clear business goals, with an agreed timeframe for achieving them.  We will also clearly define what success looks like.  From this, you will design a plan.

But it doesn’t end there – the key value from mentoring is having accountability for your action to someone who only has your best interests at heart.  

 

Choosing between a Business Mentor, a coach or a consultant.

What’s Next?

All three – a business mentor, a coach and a consultant – can play an important role in a life of a start-up.  You need to choose the best service for your particular circumstances.  If I may offer some unsolicited advice:  at least make a conscious choice and take action.

If you think you can benefit from my experience, I would love to hear from you.  

So, what’s next?  You tell me.  You can click on, or you can click here and start our conversation.

THE PRICE JUST WENT UP

“Winning has a price.  And Leadership has a price.”  Michael Jordan, The Last Dance

Like most of the Western world in lockdown, I’ve been watching ‘The Last Dance’ over the past few weeks.  It’s been a great trip down memory lane.  Who didn’t love the Chicago Bulls in the 90s?  Who didn’t love Michael Jordan, who didn’t want to be like Mike?

I remember taking my kids to Space Jam and enjoying it even more than they did.  Still in my 20s, nevertheless I would still try and do double-pump lay-ups (I’d already learned that I had a white-man’d jumping ability so forget the dunks), imitating MJ and Scottie Pippen in the weekly neighbourhood scratch matches.

But watching Michael Jordan – both then and now – reminds you of the utter focus and dedication it takes to be successful, a real winner, in this world.

The thing is, back in the day I only saw the highlights, the last-second-nothing-but-net game winning shots.  Now, I understand that all that glory doesn’t come for free.  Winning and succeeding has a big, big price, regardless of your field of endeavour.