6 questions—the answers may determine your success in 2015

It’s just a few days to the New Year will begin. There is nothing like the start of a new year to take stock and re–plan for a whole fresh year. Having worked closely with a number of business owners and entrepreneurs in the last 2 years here’s what I have seen again and again that makes the difference between wild success… and not quite so

6 simple questions that you need to ask yourself, not just NYE but every day when you get out of bed in 2015. Or even better get somebody else to ask you. Time and time again.

 

1. Passion

Many people express this as you have to love what you do. My view is that when you get to do what you love (the other way around!) a special kind of magic unfolds. The trick here is of course to find a passion that also makes a profit.

And once you find that passion you just never stop going. It’s that endless fuel that will set you apart from others. Going that extra 10%, working that extra hour, reinvesting that extra 10%, will, over the years, make a huge difference. And 2015 is going to be the same for that.

So check in, have you found the profit within your passion?

 

Alice Which Way to Go Quote2. Plan

Simon Sinek famously stated “Start With Why”. Whether you are pitching to capital investors or selling to a large new customer they all want to know… Why?

Once you know Why, it’s time to make a plan for how to get where you’re going. Without a plan you’ll be like Alice in Wonderland taking advice from the Cheshire cat.

What I see a lot of people forget is that the moment you have completed your plan you need to start monitoring it. Are you on the right track? If not, time to course correct. And the monitoring needs to be a lot more than the accountant’s P&L.

Remember that your revenue is a consequence of your business activities (not the other way around), so it’s often more useful to track the real activities (meetings, phone calls, etc) than just revenue.

Do yourself the favour and check in, is your plan in line with Your Why” or are you just walking the long road?

 

3. Leverage

Almost every business has three main leverage points; Systems, Team and Capital.

The sequence here is important. Once you’re up and running well, invest in systems before people. Or you may end up hiring people who drag you down because they don’t have proper structures within which to work. It’s not fair on them and it will set you back.

It’s also lot easier to convince the bank to give you money once you have a team and have great systems in place.

Take a look at your business as it is; are you using all the leverage you can?

 

4. Team

Yes, team is so important it requires its own mention. Because there are so many great choices. You can collaborate. Start a joint venture. Hire an off-shore contractor. Get an intern. Look for a co-founder (if you don’t already have one). Or simply hire a team.

Make sure that whatever you do, share your vision. Explain Your Why. Make it clear what is your passion. And select your future team member foremost on their passion, on their personality traits, on their background. Not on whether they fulfill a specific set of technical skills. Most people can quickly learn skills they’re weak in, but changing somebody’s personality can take a lifetime—or more.

There is no right or wrong in this regard, but sit back and take stock; are you clear on which are the best way(s) to grow your team?

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5. Revenue

While revenue may not be the first thing you need to measure it’s possibly the most important.

While you need to grow profitably and preferably only take on profitable revenue in some businesses you go through a phase of unprofitable revenue growth to get to a state of profit.

Should you totally focus on doing one thing really well? Yes! Should you put all your eggs in one basket? No!

The above are both common bits of advice from well-meaning people and even business experts. How do you balance that? At the early stages of a business you need to experiment, test 2 – 5 different revenue streams over a few months. See what takes off. Then cut what doesn’t seem to show much promise.

Focus on growing that one revenue stream so it becomes strong, self-sufficient to the point where it supports you, not the other way around.

Then it’s most often time to look for the next ‘big’ thing. You need to create another pillar of revenue, build that up while maintaining the first one; it’s often a much easier way to double the size of your business than to try and double the existing line of revenue.

And look for something recurring. Where you bill every client every month. Even if it means you simply change your sales model. If you sell something for $20,000 can you sell the same thing for $2,000 per month and give people a reason to continue year after year?

How does your business stack up?

 

6. Attraction

Business is like the dating game. You have to be attractive.

But when in business it’s the business, not just you, that needs to be attractive. Is the business easy to get along with? Does it hang with great people? Will it turn heads when it walks down the street? Is it a great conversationalist so it’s always invited to parties? Is it genuine and honest? Does it cook up something mouthwatering that people come and visit for?

Think of the qualities that attracts people to each other. Then think of how you can apply them to your business. You will achieve remarkable results.

In this game attraction certainly runs more than skin deep!

 

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Be Open to the Power of Funding

You’ve got a business up and running and are eagerly anticipating the moment in which the thrill of generating profit finally supersedes the money, effort and constant vigilance you have already pumped into setting it up.

Now is the moment to look around for external funding methods. Often when setting up a business we begin to think of it as our ‘baby’ – it requires constant care and attention, cannot be left alone, and most of all we are extremely vigilant of who gains access to control over it.

Key to accessing the right type of funding for your business firstly means not being afraid to get to know all the different types of financial backing that are available to any business owner. You might be pleasantly surprised to find that your ‘baby’ actually finds solace in a number of different potential ‘babysitters’.

Whether you are looking for $10,000 or $1m there are a number of different ways to go about securing it and ensuring that the funding fits the scope of your venture, directing you towards realistic growth and achievable success. The one–size–fits–all approach obviously cannot work for the myriad of diverse businesses that require external funding.

Acess Funding

Here’s a quick overview and the pro’s and con’s of each type of funding available to ensure you work with the one most suitable to your business.

  • Banks: the bank can help accelerate your growth with a loan. Loans can be suitable growth capital, and it’s especially a good way to go when there’s asset backing, i.e. leasing machinery, trucks or the like, or the business has a real estate component. The good news is you won’t have to give away a percentage of your company, however the loan may be tied to assets you already possess. In the absence of such assets some banks will still not be easy to work with and might reject the loan request.
  • Venture Capital: an investment from a VC can be an excellent way to raise capital at an early stage of the business. You won’t have to repay loans or interest and you and your new partner will share the risks together. Investors can bring new opportunities and skills to the business, but you must be prepared to let a large number of shares go; you will eventually own a smaller part of the company. Investments from Venture Capitalists can be expensive and extremely demanding, not to mention the abysmally low acceptance rate…you have less than a 3% chance!
  • Angel or Private Investors: it can prove extremely valuable to receive financial backing from individual private investors, seeing as this agreement often is accompanied by a wealth of expertise and valuable insight that the business owner can make use of. On the other side this partnership often amounts to quite a large part of the company being given away in equity to the investors, whom you can expect to have already formulated an advantageous exit plan for themselves. As a serious bonus when you engage with good investors is they’ll often help you grow the business trough advice and connections.
  • Crowd–funding: crowd–funding allows an unparalleled degree of freedom in raising fast capital, often without paying fees upfront. It provides an alternative option to traditional funding methods and can give your company positive online exposure and leverage. However, because the crowd-funding platforms were largely unregulated up until recent times there are risks associated with idea theft (copyright everything!) and returning the funds if the total goal is not met. The huge news is that for now all Australian crowd–funding is donation-based, so you’re not giving away ownership to the company.
  • Grants: accessing government grants can be a good way of securing financial control of your business: you won’t ever have to pay a grant back or interest on it. However, grants always come with a set of preconditions surrounding project topics (you must pick a suitable grant to match the project) and usually are tied to a long–winded and stressful application process. Governments do not usually release all the funding at once, they expect a report back from the business owner on pre-agreed terms and missing terms in your grants condition may well mean you don’t receive more funds.
  • Alternate funding: competitions and awards to apply for exist in bounty, try going for the ones that specifically suit your project. Other methods of funding such as peer to peer lending can be good for attracting quick funding and avoiding bank brokerage and high interest rates, however, the lack of bank-like scrutiny could eventually leave your business in a debt you can’t repay.

Remember, financial backers are always going to be asking themselves the question “what’s in it for me?” and the answer should already be visible in –you’ve guessed it– your business! What you already have and can bring to the table is just as important as what you promise to achieve. An investment is a whole package, not just a sum of money thrown at a good idea: they are investing in you, in your calculations and your research.

To find out exactly which type of investment will maximize your business’ growth potential, and to discover what real investors want to hear from you, please join us at our Grant Connector event.

 

Want to tackle crowd-funding but not sure where to start? You need to be at Funding Connector

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Accelerated Business Growth – the four stage model

As I have been explaining growth to a number of business owners lately it’s occurred to me that our way of accelerated business growth can been collapsed into a really simple model;

  1. Revenue growth. We have to start with revenue growth because, while profits are important, without revenue nothing much else can grow;
  2. Establishing a board of directors or an advisory board. It’s important this step is commenced much earlier than what most do, in order to build trust and credibility for later stages;
  3. Creating / adjusting the financial model and the business plan. So am I suggesting you start the business without a plan? For most businesses a rough sketch is far more powerful than a detailed plan when it comes to building revenue. What most founders  find is where they thought the gold was is not where it turns out to be, so after getting revenue under control, there is a new appreciation of the business, leading to an adjustment of targets, markets, methods and more.
  4. Raising growth funding. Whether you’re gunning for a big capital raise, money from the bank or cash flow funding from an alternate lender now is the time to strike. With a proven revenue model and business plan to match

Revenue Growth

From revenue you can pay the bills, yourself, your future business plan, your advisers and your long suffering spouse/partner, if you have one. Importantly, from revenue growth you rapidly learn if the business works – or not. Which I suspect is why many don’t embrace it; it reveals the truth.

And that’s why you need to start right here.

What I find with most clients is that while the definition of the customer is roughly right, we often need to start with

  • Change of messaging
  • Change of conversion tactics
  • Setting up with new joint venture relationships

And more… However, once revenue growth gets under way things can start going really fast.

Establishing a Board

A board is important not just for capital raise purposes. And they’re certainly not just for making your business look more bright and shiny. They, generally speaking, come In three shades:

  • Sounding Board (aka Bouncing Board; they’re great to bounce ideas off)
  • Advisory Board
  • Board of Directors

Within a week after starting Business Connector I started putting together a sounding board. And many of those people are still around to be a sounding board two years later. Don’t expect formal advice, but do ask for unfiltered opinion and insight; nobody gains from being ‘nice’

The more formal you make it, the more you’ll get out of it. It’s the same difference as getting a family member to help in the business, vs hiring a full time staff member.

Revenue Model / Business Plan

All the great cash flow and revenue models I have seen starts with the basics: How is every dollar made at the level of the individual transaction. From there it builds up, aggregates. Takes in expenses, shows the staff growth. But you have to start with the basics; how is every sales dollar transacted.

When you write the business plan focus on proving just two things:

  • Why everybody who is a potential core customer will absolutely love what you sell and therefore want to transact with you.
  • Why the investor money is safer with you and has a higher potential payback than anywhere else.

Don’t worry nearly as much about mission, vision and fluff, don’t pain over whether your illustrations are perfect. There will be no illustration more beautiful than the one showing your revenue growth over the last three months next to the list of great advisors or board members you have supporting and believing in the business.

 

Capital Raise

In this context I mean capital raise very broadly. Convertible note, equity, bank loan, crowd-fund; whatever floats, as long as it fills your coffers. The aim of the game is to fill up on cash, to build a war chest so that as you roll out your marketing machine you have lots of juice available to run that machine for as long as is required to win the battle.

If you’re going to the bank, expect it’s all done in two weeks. If you’re raising equity capital expect 6 – 8 weeks. But expect that it will really only work if you have it all prepared.