Monthly Archives: April 2011

Business Mentoring workshop – Leaders get above the line!

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I love it when I go to teach and discover something I can use in my own life or business.  This happens to me all the time when I’m mentoring, speaking, or holding a workshop as I did in Palmerston North last Wednesday.  It was a half day workshop on preparing an effective annual business plan.  As always I start by getting business owners to write down their end goal… using my favourite analogy of approaching the building of your business as you’d approach building a shed (over simplified of course, but hugely effective when planning a vision for your business…see blog post Your Business is like a shed…)

Anyway, back to what I learned… prior to my workshop commencing we heard from Brent Dickins at Coombes Smith Accountancy firm in Palmerston North.  Clearly a practice which focuses on much more than the profit and loss statements, Brent showed us a leadership chart which demonstrates an above and below the line position for team members.  Someone above the line focuses on success and uses success related language.  Decision x Action = Results.  They talk of ‘must’ doing something and ‘I will’ get it done.

You can recognise someone operating below the line ‘victim’ position by their language too.. these are the “I’ll try” and “I should” people versus the leaders who just get on with the job.  For those of us who  have built high performance teams, you know how toxic someone operating below the line can be for team morale.  No one likes a victim… or a leader who tolerates a victim mentality in their business.  The great thing about using a chart like this is you can talk to your team about it and create an understanding of the sort of attitude and language that winners have and use.  Put the chart on the wall where everyone can see it.  You’ll be amazed how your own staff will start to question the language and behaviour of someone who is not coming from the leader position.

Business Mentoring in the Cloud? A discussion on protecting your business in face of disaster…

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Had another great Q&A session on Skype with some members from my online liber8yourbusiness programme yesterday.  I love these sessions.  Participants all email me a question beforehand and then the group provides thoughts to the business owner on their issue/question.  I am really the facilitator of the session but of course I throw my 10 cents worth in too!

One of the questions this time was from a client who has a business based at her home in Christchurch.  Her question was this:  “I’d like to discuss resilience strategies for small businesses.  The recent earthquakes have really highlighted to me how much will fall through the gaps with even comprehensive insurance, so I want to discuss ways how I (or others) might set things up to be better able to survive events like these in the future”.

As you can imagine, some pretty robust discussion poured forth.  We are all now acutely aware of how real an impending disaster could be for any of us.  Seeing the devastation in Christchurch, right on our doorstep, has brought this threat even closer to home for us.  Many businesses have gone under because they just could not reach their premises, access their stock, sell their wares or find their IP/data/critical information.  Could be us next right?

So great question.  What should we be doing?  The small group on Skype all got stuck in with ideas.  Not least of which was that someone should start a business called ‘What if?” and start working with small businesses all over the world on their business protection strategies.  We talked about having your valuable IP, information and working systems based in the internet Cloud rather than (or as well as) on local servers or hardware.  Which of course led on to a quick meander around the likelihood of a worldwide internet crash, or perhaps government regulation on internet access that could threaten businesses in this information age.  We talked about insurance and how policies will be changing now after Christchurch earthquakes.   It seems insurance agencies are talking about making home-based business related equipment insurable under separate cover, so people who can currently claim for loss of stock, computers/laptops, filing cabinets etc under a normal household contents policy may not be able to in future.   Careful analysis of what might be buried in the fine print of all new documents will be needed to ensure we’re all covered under the right policies. If you actually do have to fall off a cliff, its helpful if there IS an ambulance at the bottom…

As I said it was a robust discussion with the main agreement being that all of us need to ask the ‘What if’ questions around every aspect of our business risk in the face of disaster.  Look at every thing your business does to make money and how it would be impacted if there were an earthquake, tsunami, nuclear reactor melt down, mass evacuation… whatever you think relevant to you.  Identify risks and make changes to protect.  Would love to hear any other thoughts on this one.

May the force of your budget be with you – news from my online mentoring programme

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Just finished loading Session 11 in my 12 month online mentoring programme and given we are at the start of the financial year, I just have to share the key tips.  I did the seminar with Angela Meads, who used to be my General Manager in my advertising agency, Red Rocks.  Angela pretty much ran the business and is one of the key factors behind my ultimately successful exit.  You may remember in past blogs I’ve said one of the keys to success in business is hiring people who are better than you…. well Angela is a qualified accountant, who is brilliant with HR, all things legal, managing clients, managing staff and can also turn her hand with style to business strategy.  So I’m delighted to report that 1. Angela is joining me as partner in my liber8yourbusiness business and 2. She has helped me put together a seminar on budgeting as without her I would have struggled.

So from Angela, here are the key tips to creating a budget that drives your business:

1.  Start with your cumulative profit figure.  This assumes that you are building a business ultimately to sell (my online mentoring programme teaches you how to do this) and that your sale price will be based on a multiple of a cumulative profit over a number of years.  You will be building your profit figure towards this target.

2. Now look at the profit you think you need this year on your way to that cumulative profit figure.

3. Then look at your costs for the year… what will be your fixed expenses for the year, the known expenses you always have? (eg. rent).

4. The profit goal and expenses numbers will tell you how much income you need to generate to achieve target.  Now divide your income target into a) known income, the income you are confident you will get from existing clients and b) new business… the difference between your known income and the income required to meet profit.

5. Spread your income, costs and profit targets across 12 months, taking into account any seasonality highs and lows you know of from past years (eg. with Pet Angels, we know we always peak around school holiday times so we allow for increased income and associated costs around these periods).

6. Write down your assumptions for the key figures

7.  Review your budget to be sure you believe your balancing figure is achievable.  Can you really achieve those sales targets?  DON’T LIE TO YOURSELF!  Can you really achieve your cumulative profit in the timeframe set for your long term goal?  If not, maybe you need to review the timeframe for your exit and take a bit longer to get there.

8. Your budget is a living document.  Each month you need to put your actuals next to your budgeting amounts – for sales, costs and profit.  This will tell you how you are tracking month on month.  If you are over achieving you can re-set your annual results upwards.  If you are underachieving, what can you go to get on track?

Using a budget as your primary planning tool is the most powerful way to run a truly successful business.  If you’d like me to email you Angela’s template, flick me a note at laura@liber8yourbusiness.com

“It’s rare to bat one out of the park first time”

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I’m quoting an interview I did with Rod Drury when I write this headline… he was referring to the most famous and fabulous stories of mind blowing business success we know so well.  Sam Morgan – from student looking for heater to warm his drafty Wellington flat to $700 million sale of Trademe.  Mark Zuckerberg – from (apparently stolen) great idea and geeky computer skills at Harvard to the world’s youngest billionaire as Facebook currently values at US$41 billion.  Geoff Ross – advertising executive extraordinare, from experimenting with vodka formulas in his cold Oriental Parade garage to sale of 42 Below to Bacardi for $130 million.

These are the big stories. And boy do they inspire us… as well as make us feel small and somewhat insignificant by comparison.  Which is why I loved Rod’s perspective so much.  These stories are the rare ones.  Most successful entrepreneurs build their success and grow from one business success (or failure) to another.  As Rod says, don’t be greedy with your first business.  If someone offers to buy it, get a good price and sell.  Build your wealth, build your reputation, build your confidence.

Your second business is so much easier when you enter it with confidence, experience and some cold hard cash to invest in it.  Rod should know.  Now co-founder and CEO of Xero, he already has two successful exits under his belt.  He’s on his way to batting his third business way out of the park and becoming one of the legends to humble us all.

Wise words eh?