Category: Efficiency

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Myths about setting up your own business

There are lots of myths about setting up your own small business so I thought I’d address some of them here.

  1. You can work shorter hours – I run my businesses on 25 hours per week and always have but that takes a huge amount of focus on efficiency. Most business owners work far longer than they did in employment, especially in the first three years
  2. You have more flexibility – true but this also means that you have the flexibility to work evenings and weekends.
  3. You can make more money – this may be true for a minority but most will be financially better of in employment. Combined with the long hours this means that most small business owners have an hourly wage below the minimum wage
  4. You have freedom to make your own decisions – true because the buck will always stop with you. There is nobody else to clear up if you make the wrong decision. You can buy in expertise and business coaches but ultimately you are driving the roller coaster
  5. Build it and they will come – have current business owners stopped laughing yet? Marketing exists for a reason. Every business needs a good idea, marketing/sales, and sound financial management. We cover the last bit in our Finance for Business Owners course.

When people approach me wanting to set up their own business I always ask “Why?” as many would be better off just finding an employer who offers better working conditions. But I also believe that we regret things that we haven’t done more often than things that we have done so, provided that they understand the risks and alternatives, we will always try to help them.

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Things to think about when pricing

Whilst I would encourage people to value price where possible it is often more practical to quote fixed prices.

Here are some of the things to consider when setting your prices for services:

  • How long will it take?
  • How complex is it?
  • Does it need any particular expertise? And do you need to pay extra for this?
  • How much does it cost in terms of hourly salaries?
  • Can you use software to speed up the work?
  • Are there other costs?
  • How easy is the client is to work with? eg clear specification, providing information promptly, approving promptly and paying on time
  • What is the acquisition cost? (Time and money spent on marketing)
  • What proportion of overheads should be included in the fee?

With  new clients there maybe a lot of unknowns and they may also take time to set up contracts, software, direct debits etc as well as more general familiarisation. These set up costs need to be covered too.

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What if I had never got back in the water?

When I was seven I nearly drowned!

I was a strong swimmer so I was doing a personal survival lesson in oversized pyjamas as I was the smallest, skinniest kid in the class of older children. It didn’t take long before I was struggling to keep my head above water and fortunately one of the boys, two years older than me, noticed and held me up while the swimming teacher leapt in to rescue me.

My mother was teaching a different class in the pool so she sat with me for a few minutes to check that I was okay and then … SHE MADE ME GET BACK IN THE POOL. Minus pyjamas. (She wasn’t that cruel.)

I am eternally grateful that she did as water is where I am happiest; either in it or beside it.

In later years I went on to qualify as a swimming teacher and lifeguard myself and, if I haven’t bored you with my ironman triathlon exploits then you’re very lucky. But how different would my life have been if she hadn’t helped me to rebound from that experience.

Of course there’s a business analogy. How do you bounce back from disasters? Are there things that you’re too scared to try because of a bad experience?

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How much should I save?

How much cash should you leave in your business and how much should you take out?

The generally accepted wisdom is three month’s worth of costs. I don’t know the source of this figure, but this seems about right. If all your income stopped overnight, you would have three months to make plans.

In reality, unless there is a global pandemic, it’s unlikely that your income would all stop at the same time, so you’d probably have longer to find funding, start a new income source, or to ride out a temporary blip. Most income protection insurances take 3-6 months to kick in.

We should also have a similar amount easily accessible to cover our household bills.

The last eighteen months have been tough, but we need to rebuild our reserves ready for the future.

How long would your reserves last you?

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What’s the worst that can happen?

I did it! I completed my first triathlon in over four years!

Not only did I complete it but I managed to do it in similar times to fours years ago when I was much fitter.

It wasn’t fast and it certainly wasn’t pretty (everybody’s bum looks big in a wetsuit!) but a large proportion of the entrants were DNF (did not finish) and others were DNS (did not start).

And it’s the same in business. Too many people miss opportunities because they never get started.

I’m a great supporter of Bryony Thomas’ principle of overcoming perfectionism by releasing things which are “functional but not too embarrassing” then coming back and improving them at a later date. I write my books quickly to capture my thoughts, and then edit slowly to make sure that my readers will be able to follow those thoughts.

I also use a business coach (as well as being a coach myself) because, although we often know what to do, we never get around to it without somebody to hold us accountable.

So this week why don’t you JFDI (Just F Do It) and perhaps even join one of our September cohorts to help you to do it faster?

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Myth busting: build it and they will come?

I’ve seen lots of startups think that, just by buying stock or building a website, they will automatically generate business but, as you experienced people know, it’s a lot harder than that.

How many things do we think will happen automatically?

I buy more books than I have time to read so I’ve had to replace my bedside table with a book shelf, not to mention my Kindle.

I buy new sports kit in the hope that it will get me one step closer to the gym. And don’t get me started on all those people who crowd into the gym in January but are nowhere to be seen by February/March.

I read business books or listen to talks and don’t implement the actions. These days I do make sure that they at least get written onto a to do list on Trello. I get some lovely comments about my books but I wonder if my readers are as bad about implementing as I am?

In an attempt to provide better value for money I set up online coaching programmes to work through the books and more. Each webinar is accompanied by an action list and we have three cohorts a year to work through these together. It may cost more than £14.99 for the book but, if you’re anything like me, it provides much better value because things actually get done.

What do you have to do to improve your business and make it work for you?

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Efficiency: conserve your strength for the long haul

Lots of triathlon and sports metaphors to come. Triathlons, like running a business, are an endurance event. We’ve seen the Brownlee brothers and others helped across the finish line (there’s another message there about needing support, even in individual sports). Speed alone is no good if you can’t make it to the final goal.

Working long hours just won’t crack it as many folk are finding out after working through stressful lockdowns without a break.

Personally I like my 25 hours working week spread over 5 days. I can feel my brain slowing down throughout the day so better to go and do something nice with family or friends, or a bit of alone time rather than push on through (unless there’s an exceptional deadline).

Whatever hours you choose to work you want every one of them to count and that’s why we focus so much on efficiency on the online courses and couching sessions.

Look for one thing you can do more efficiently this week; perhaps by automating or delegating it or just improving the system.

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What’s so special about 30 days?

What are your payment terms? Do you even have stated payment terms?

Most businesses seem to opt for 30 days from the end of the month of invoice which means that the wait an average of 45 days to be paid.

But accounting systems are far faster now than when I joined the workplace 30 years ago so surely it’s easier to register, approve and pay invoices much faster now than all that time ago? Personally, as a small business, I find it easier to pay invoices as they arrive to minimise admin time. But not everybody is in such a strong cash position.

My standard payment terms are 7 days from invoice so an average of, well, 7 days. And most of my clients pay me by direct debit which costs a few pennies but the integration between Gocardless and Xero means that it does all the bookkeeping entries to so saving me precious time.

When speaking at conferences I’m always paid the full amount before I travel to the event as organisers like to take a few days off afterwards rather than fuss over invoices.

Is it time to review your payment terms to improve your cash position and, in turn, to pay your suppliers faster?

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Are you making progress?

I was talking to a client today who felt that she hadn’t made progress because she hadn’t actually achieved any of the goals that she had set herself.

Sometimes business feels like this. It’s a bit like running on the flat ground between hurdles. There is still forward motion even though you haven’t increased your hurdle count.

We might set arbitrary deadlines of month end cash collection targets. If a large cash sum arrives the day after month end then, in harsh terms, you’ve missed the target but, in reality, it’s only a day behind and may still be a new record.

I like to break projects into lots of smaller hurdles but please don’t forget that you are making progress when running between them on the flat too.

Please do set yourself nice stretch goals but applaud yourself for the bits in between too.

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How do you want to spend your day?

When I first set up my business I had a vision of how I wanted to spend my days and you probably did too.

I wrote mine down but you may have a vision board or another means of capturing what you, personally, wanted out of your business. (If not then you should consider doing this now)

How does your typical day compare to this ideal?

Over the last 16 months many of us have drifted away from this but we now have time to catch our breath and make improvements. I could tell of the benefits of a decent business coach to make things happen in your business but you can still do things for yourself.

What ONE thing can you do today to move your business closer to the business you originally dreamt of? Now do it. TODAY.

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