It might sound fundamental, but as a business owner you need to review regularly your purpose or reason for being in business.
What might have started off as chasing the dream has probably changed over the years. If your business is starting to keep you awake at night and becoming an occasional nightmare, it is time to re-evaluate. You need to understand why you’re in business NOW, and also what you want out of your business in the future. Are you achieving all your dreams or are they becoming a distant memory.
Many business owners start their business for different reasons, but fundamentally the majority of them want to earn a much better income on their own terms, rather than working for somebody else. I frequently ask business owners to review and evaluate (both in their minds and with their families) whether they have been successful in achieving their original business goals. Are they getting the balance of income and lifestyle that they believed they would, by owning their own business? Or has the business started to take over their lives, to the extent that they spend most of their time working in or on the business to get the outcomes they desire? Many business owners spend their daylight hours working in their business and their out-of-business hours losing valuable leisure or family time by working on their business or worse thinking about the problems .
If you have managed to take a business beyond that difficult start-up phase and then through the growth phase and now have a business that is fundamentally sound and stable, are you able to take an extended period of leave without its performance sliding? If the answer is ‘no’, then what you have probably unwittingly created is a very large job (which becomes a headache); a business that relies on you to personally attend to it to achieve success. In saying that, you are also a very small step away from leveraging off the systems and structure that the business likely has in place to allow you to start looking beyond the current structure and size of the business.
On reflection, is the business generating personal and family wealth beyond your original expectations, or is it just allowing a modest (or just better than modest) level of income? Is this income level in proportion to the amount of time and effort you are putting into business? If, at your core, you still wish to grow the business to a much higher level of profit and generate the wealth you want for your family, then it is time to start to think outside the square and consider the opportunities that strategic growth via acquisitions will provide for you and your business.
I subscribe to the fundamental philosophy that anything that you want to achieve is achievable if you want it hard enough and keep on track with your core purpose. Too often business owners have a fundamental core belief and purpose as to why they went into business, but then the daily pressures of the business take over and before they know it their initial goal or objective is starting to fade or lose itself. Business owners can easily become disillusioned with the whole concept of what being in business is all about, and become increasingly cynical to ideas such as quick fixes and short cuts to success. They already know how difficult being in business can be and may not believe in ‘short cuts’, even though at their core they would love to get back on track and achieve their original goals of wealth creation quickly.
I also believe strongly in the belief that, when building something from scratch, why not learn from others who have already been there and achieved great results. In other words, why try to reinvent the wheel?
Be clear on your Personal Wealth and Lifestyle goal
So you now find yourself owning a business which should be providing you wealth, security and a great lifestyle. Unless you are more than 100% happy with your level of wealth and the security it offers then you have some more work to do before you can fully enjoy that lifestyle you deserve.
The majority of businesses owners typically have a number of reasons for being in business. They enjoy doing what they are good at and want to work for themselves, but they also have a core goal of creating their own income and wealth, which is substantially greater than if they worked for others. So, while they may say the main reason is not the money, money and wealth creation should be one of the core objectives that a business owner is trying to achieve.
Unless businesses are making strong and repeatable profits, they will eventually lose their ability to grow and be viable. Strong and growing profits are also a scoreboard of how well you, as a business owner, are actually running the business; and reviewing the profits gives you constant feedback on your level of success.
What I advise all business owners is to ensure they have a strong focus on growing profits and ensure it creates independent wealth. Do not view strong profit as a negative in any sense – the profit is what will fund the lifestyle you want to create for yourself and your family. This is not a matter of being greedy, but a matter of business necessity.
Being in business is risky, and the returns need to justify the risk. If a business owner is struggling to make a good living out of their business then I would ask, how are you going to turn it around quickly so the business starts to work for you and pay what you are worth, plus a return for your capital and expertise? In other words, if you aren’t getting a decent return for the investment of your time and effort, then why be in business?
To assist business owners develop clarity with their wealth aspirations, I ask them to consider what lifestyle they and their families would want ideally (trying to remove the constraints of the business from their thinking) then to work out how much income and base assets would be required to provide that lifestyle. This becomes the basis of a target to achieve as well as an inspiration to change.
In summary you should refocus on your goals and allow your business to create the wealth and lifestyle for you and your family that you know it should.
About the Author: Warren Otter
Warren Otter is both an investor and a specialist advisor to medium-size business owners. He is the author of ‘Crank It UP: The proven way to drive your business to greater wealth’ and has been a business owner in the manufacturing environment for over 20 years.
He grew his first business from $4.5m to $25.0m revenue back in 2005. In that year he won the Monash Business of the Year award, beating many larger and more well-known businesses.
At that stage Warren had just completed his third bolt on business acquisition and both the award and growth was largely due to the A grade management team he developed.
Also, have a look at the other articles on this site. Best of luck in running your business