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Transcript
Are you creating a real business? Are you ever likely to? Do you even care?
If you do; I will let you into a secret technique that I use when I meet potential clients; to decide what type of business I am dealing with.
So you will be able to answer this question for yourself about yourself.
One of the big issues that face small business people and entrepreneurs is transitioning from one stage in their business to another.
In the beginning it is hard to know where you are going to be 6 months from now, let alone in a few years. People believe that they need to be at a certain stage in their business before they have to “get serious”.
Most commonly based on how much money they need to be making first, or how many customers they must have, whether they have an office or staff.
The trouble comes when no plan is in place before these things happen and when you are ready to make the transition you realise that you the way you have set up your business won’t support it.
Depending on how you have structured things; it can mean the difference between dealing with some upheaval in your business that you navigate through(growing pains I guess).
Through to deciding that the leap to the next level is too great; so you will carry on as you are indefinitely. To ultimately becoming so disillusioned that you call it a day.
Ironically the decision to close the door is all too often not the decision of the entrepreneur; but due to weaknesses in the business that have exposed them to risks and cash flow problems.
The tax office for example is great at giving you the little push you need to turn out the lights.
Earlier I called it a secret.
It isn’t a secret in that only I know it. I just don’t discuss it in meetings or these days, Skype conversations. I sum it up in my head so that I know what type of business I am dealing with and to some degree what type of personality; so that I can keep the conversation to things they really need to know rather than what I want to tell them.
Businesses come in many forms; but to keep things simple; I work on a basis that there are 3 types of businesses that I come across each and every day.
The first one is what I call a TVB.
A business of Tangible Value.
It is the one that is most likely to create the lifestyle you want. Its success is measured based on it currently being or having great potential to be:
- Profitable
- Grow
- Have enough cash to meet it’s needs & then some
In his book “Built to Sell” John Warrillow describes such a business as having products or services that are:
- Teachable
- Repeatable
- Valuable (to customers)
- Scalable
Now note this doesn’t have to be a traditional bricks & mortar business. There are many entrepreneurs working from home offices or even the beach; who have managed to create them successfully.
Alas however TVBs are in the minority.
I work with many and they still have their challenges; they are just better placed to handle them when they occur.
So if you fit into this category. Well done. You got this part figured out.
With the other 2 types of business one or other of the success measures are lacking or erratic, usually it is lack of available cash on an ongoing basis.
So if you are not a TVB what are you?
You are either a Hobo Business or a Boho Business
So what is a Hobo business?
You probably guessed it. It is a business that is really a hobby. Now the challenging thing when I deal with Hobo businesses is that the owner does not see it that way.
But certain characteristic point that way. Some examples are:
- Business is based on the skill or knowledge of the owner. If they don’t do the “thing” nobody gets paid.
- They do everything themselves – they value saving money over saving time. Cost is the overriding factor in decision making.
- Passion about what they do eclipses their desire to be profitable. They want to make money but rely on just working harder.
- Fast forward five years and odds are very little will have changed.
What is a Boho Business?
It’s like a teenager that is struggling to grow into adulthood. It has all the hallmarks of a TVB but insists on still doing many things like a Hobo business.
These businesses may still be based on the skill or knowledge of the owner but they outsource or use casual staff so everything is not so reliant on them. But only for just in time projects.
- Still lean towards doing most things themselves. Understand the value of leveraging their time but don’t really want to spend the money.
- They buy technology & software to avoid paying for outside help, but end up abandoning them because they are too busy to learn anything new; or use them consistently.
- They are passionate about what they do but see themselves as more than just a doer. Feel frustrated because they believe they are not able to fulfil their true potential.
- Too busy to be a Hobo but not enough available money to be a TVB.
Now while I deal with all 3 types, Boho businesses are the ones that I can add most value to, because they usually have the money making part figured out. It is knowing what is happening with the money when it comes in that is causing them stress.
They are often the ones that are getting to or hit six figures in revenue but are no better off than before.
So ask yourself the question
Am I a Hobo or Boho entrepreneur?
Do What is Right For You but Beware
Regardless of what business category you fit into. The most important thing is that you are true to yourself. Where you are headed is where you will be happy and fulfilled.
If for example you are a parent and you merely want a way to earn so you can be home for the school run; then that is what is right for you.
But if you want to step things up when the children get older; be careful that you are not sabotaging yourself from the outset.
If you can be on top of your money regularly from day one, when you get busier you will already be positioned to monitor your progress and not be panicking because all you have is an out of date spreadsheet.
I go into much greater depth on this subject in my book Firmer Figures Fess Up or Mess Up. Go to my site and grab a copy.
