Sometimes as business owners it feels as if we need a crystal ball to figure out what to do when challenges and opportunities come our way... but it doesn't have to be that way!
In fact, there are three straight-forward, but not necessarily simple, questions you can ask yourself when faced with business decisions that will add clarity and, hopefully, make the decision a bit easier for you.
The "trick", if there is one, is to put the effort in now, before the challenge or opportunity hits you. By taking the time now to formulate an answer to these three questions, you competition will begin to wonder what super-power you've been given... and you will be able to confidently grow your business and find the freedom you've been looking for! Let's get started!!
Does It Fit My Business Focus
Knowing the true focus of your business sounds simple, but truth be told, many business owners would have trouble stating the focus of their business in one sentence. What? You're having doubts about that? Fine, lets give it a try.
In one sentence, tell your best friend from high school what your business does.
If you didn't stumble over that answer, if it rolled right off your tongue, then you are in the minority! The vast majority of business owners don't have such clear focus and as a result, spend much of their business life reacting to what ever change, challenge, or obstacle comes along on a given day. Their approach to decision making seems disjointed and they are easily distracted by the latest "shiny thing."
Instead of reacting, just ask yourself, "Does doing [whatever] fit my business focus?" If the answer is yes, then you're ready to move on to question number two. If the answer is no, then ask yourself the follow-up, "Then why should I pursue this?" Don't proceed until you can answer this question with a confident, "YES!"
Joe is a plumber. He has built his business around maintenance and repairs for homeowners. Business is good and he really enjoys what he does. Lately he's been hearing about a lot of his competitors getting into under-slab leak detection. Adding this capability to his product list could generate more revenue, but very few of his customers have houses built on-grade. What should Joe do?
Ann is an accountant. Her business is comprised almost exclusively of small businesses that need her help throughout the year. She has a comfortable client base with very little churn. Her clients love the work she does for them and the personal attention she offers them. At a recent networking event Ann met the president of a local business. He told her that his business has been growing steadily and he needs to bring in an outside auditor to make sure the books are solid. This will be an almost full-time gig for the next three months and pays much more than she makes with her current clients. What should Ann do?
Does It Positively Impact My Finances
Ok, so you're decision has passed the first test and fits with your business' focus. Now it's time to ask what it does for your finances. Just as you should have a formal statement that describes the focus of your business, you must also have a formal financial plan for your business. BTW, checking your account from time to time and counting more money than last week as a win is not a plan!
In one sentence, what is your financial goal for this year?
A good financial plan for your business includes details of expenses AND revenue. Checking your actual expense and revenue numbers against these plans on a regular basis (at least monthly) will give you the necessary understanding of how your progressing toward your plan.
If a decision will decrease expense, or at least be charged to a planned expense, then you're good. If a decision will increase your revenue, and fits with your focus, then its almost always a good idea.
What About Joe and Ann?
Joe is continuing to consider adding under-slab leak detection to his product offering. It is true that adding this capability could add new revenue to Joe's business and he could always rent out the equipment to other plumbers when he's not using it. On the other hand, he hasn't planned for this expense. What should Joe do?
The auditing gig sounds really exciting to Ann, only one client and more money!?! What's not to like? And it will certainly be nice to have only one invoice to send each month. What should Ann do?
Does It Move Me Closer To My Freedom
Ahh, freedom! No more alarm clocks! No more bosses with stupid demands stealing your best work! Days off whenever you want! HEY, DUDE, WAKE UP!! If you've been in business for any time at all you recognize those dreams for what they are... dreams! But dreams can come true, if you plan for it, then work for it!
"So, why did you get into business for yourself?" See, no matter how you answer that question, even if you have to ask why 5 more times to get to it, the real reason anyone starts a business is to find their freedom. And the cool thing about your freedom is that is can be defined how YOU want it, not how anyone else on the planet wants it!
For me, freedom is making work optional and location irrelevant. To make work optional means I can work when I want to and still be comfortable financially when I don't want to work. And the location thing, well lets just say I don't want to be tied down to any one place! But those are my dreams, my definition of freedom. What is YOUR definition?
What is YOUR definition of freedom? What are your dreams?
If we name our freedom then use that definition of freedom to define our work, then we're far more likely to find that freedom... and that is precisely why you should ask, "Does this decision move me closer to my definition of freedom?"
An update from Joe and Ann...
One aspect of his business that Joe really enjoys is his ability to keep his schedule open in the late afternoon so he can enjoy some time with his kids when they get home from school. Of course emergencies happen, and with the slab-leak detection offering, they may become far more frequent. What should Joe do?
Ann loves talking with her clients and she's become a trusted advisor to many of them. They come to her on a regular basis for her opinion on many of their business needs. She will certainly miss those interactions. And then there's the prospect of finding more auditing gigs after this one is over. Three months will go by so quickly and she'll have to start marketing now in order to have new work lined up when this audit is complete. What should Ann do?
Now that you are armed with the three most important questions you'll ever ask in your business lifetime... now what? Well, that's a great question. Here are a couple of ideas...
First, find answers to the three key questions: What is your business focus? What is your financial goal? What is your definition of freedom?
If you don't know what your focus is, what your financial goals are, or how to describe the freedom you are seeking, you are guaranteed to lose focus, fall short of your goals, and remain trapped by a job that you own!
Next, make it a habit. Since this is new, you're going to need some practice to make it part of your every day business planning and operations process. I've found the easiest way to be reminded of something like this is to print it out, write it out, make a label... whatever it takes... and post it where you do your business planning. Whether that's on your laptop, in your office, or on the sun visor of your car, put it up so you can see it every day.
If you want different results, you have to do things differently!
Finally, invest in your future! Continue learning the skills that will grow your business and let you find the freedom you were looking for when you started your business. There are many great courses and materials available, but dollar for dollar you cannot beat Customers, Money & Time my FREE three video series.
In the series I break down how to use the three key questions as filters to maintain a well functioning business engine. How to use the engine to attract more customers, make more money and have the free time we all dream of!
If you would like more customers, more money, and more free time to spend with friends and family... don't miss out on Customers, Money, & Time! It is totally FREE so you have nothing to lose!
What Did Joe and Ann Do?
Joe decided to purchase the leak detection gear and add that skill set to his product offering. It fits with the focus of his business as it allows him to diagnose and find potential leaks faster. To offset the initial setup cost, Joe contracted with a local on-grade builder to inspect his new buildings for leaks before buttoning them up. And what about his freedom? With the leak detection gear he surmises he will be able to reduce emergency calls by offering "free inspections" to his current clients, finding leaks before they become an emergency.
Ann on the other hand has decided to turn down the auditing gig. While it is accounting work, it definitely falls outside the scope of her current focus. With no prior experience in that area it would make finding future work a bit more difficult. While it would help her finances in the short run, she has concluded that it will not allow her to make her financial goals for the year, and puts her ongoing revenue streams at risk. And freedom? It would almost be like starting over for her. She likes her current clientele and want's to keep it that way!
I hope this has article has given you some ideas about how to evaluate the challenges and opportunities that come with being a business owner.