If you chart an entrepreneur’s journey from birth to sale, there are just 5 stages to every business:
As you can see from the chart, you move from idea to product, to the local market, then the global market and then retire. If you choose to stay local, then you only have 3 steps – IDEA. START. SELL. The process is simple enough. Or so you thought.
So many start their entrepreneur’s journey expecting this to be just a happy ride. You’ve spent a lot of time planning this. You’ve covered every eventuality you can think of in your business plan which you had spent hours working on (either by yourself or with your accountant). You’re optimistic and the world is at your feet.
Then reality hits!
You rapidly go from being excited about what is happening to a time of struggle when you never seem to have enough money, you definitely have no time, you’re stressed out and you’re on the verge of burn out. Often its 1 step forwards and 2 steps back. And sometimes all that happens in just a day!! Just as you start to feel good about your wins, something happens and you down in the valleys again! This is known as the struggle zone or the wilderness – I prefer to just call it reality. Because that is exactly what it is.
Before you get depressed about this, remember one thing – businesses at similar stage struggle with similar problems. Therefore, there is a solution! It’s not all doom and gloom.
CHARACTERISTICS OF THE ENTREPRENEURS JOURNEY
Let’s look at the entrepreneur’s journey from a different perspective and break this down. I believe that awareness is half the battle.
Typically, your journey is one that starts with optimism, then you rapidly move into reality before achieving the dream lifestyle. Then your entrepreneurial spirit steps in and you start preparing to conquer the next challenge and so you can get your hands on the ultimate prize of going public with your business. The problems you can expect to encounter at each stage are largely predictable. And that makes the solutions more predictable too. Therefore, you only have to understand what stage you’re at so you can accelerate the progress while reducing the risk on the journey and minimise the time that you get to spend in the reality zone.
Stage 1 – The Optimism Stage
You’re passionate about what you’re doing. You’re likely working by yourself with nothing more than your skill sets. You’re doing EVERYTHING. The chances are you’re self-funded – either from your own savings or from “donations” from family and friends. You’re working all hours of day and night to start this business. Optimism and enthusiasm will be your main driver. It’s hard work but you know it’s worth it. This is what will get you to the next stage.
Stage 2 – The Reality Zone
70-80% of all businesses are in here and many never leave here.
You’re likely still working by yourself or at least with a partner (likely your spouse). You’re busier than ever because the business has grown. BUT there isn’t enough profit in the business to pay for staff. You don’t have a choice – you’re the marketer, the sales person, the networker, the bookkeeper, the customer support, the product deliverer and the administrator. The worst thing is that if you stop working, the money stops flowing. The feast and famine cycle is a very real problem at this stage.
You definitely do not use advisers except to do your end of year tax returns and if you need advice, you seek it on public forums and from your friends. You feel you don’t have a choice because you cannot afford the ridiculous fees charged by advisers.
You’ve grown the business and you can now afford to employ some staff. You thought that you would be making more money now but you’re not. It still feels like such hard work. It is probable that your business is still fairly localised. The financial stability is still not there. Sometimes, there’s no money to pay you after you’ve paid your staff and all the bills.
You have a reasonable lifestyle but far more stress than you like. Burnout is around the corner. You still can’t take a long holiday, or the business would suffer. You’re likely still the only good marketer, salesperson and the networker that your business has. You likely have some systems in place but no where near what you should have. You seem to be spending all your time managing your staff and putting out fires. If you stop, the new customers stop. The extra risk you’re taking for your business does not seem to be generating the extra reward.
You will likely turn to your tax adviser and accountant for advice because you now understand some advice should not be sought on public forums. You probably do not have the time or spare money to spend on personal development or coaching as all your resources are needed to run your business.
This is not the entrepreneurs journey you want! You didn’t start your entrepreneur’s journey to do this!
Stage 3 – The Lifestyle Stage
This is where you want to be. This is the reason why you started your entrepreneur’s journey. This is the stage where you have an abundance of both time and money with an equivalent reduction in the levels of stress.
This is the stage where many entrepreneurs actually feel that NOW they have the luxury of affording a mentor and coach for themselves. NOW they feel they can spend money on personal development. Many choose to stay here till they sell the business. However, there are some who will, after a while, get restless and want to move on and climb Mt Everest!
Stage 4 & 5 – Climbing Mt Everest and claiming The Big Prize
This is where you choose to grow really big. This part of the entrepreneur’s journey can be really tough. You will hit a stage when you’re too big to be small enough to enjoy the lifestyle stage. You are going to need some serious capital and will likely have to deal with Angel Investors (also known as sharks!) and Venture Capitalists (more sharks!). Be prepared to accept that if you go down this path, you will likely lose a big chunk of your business. I have been in enough capital raising to know how much you will lose if you do. These people are not in it to be your friend. They are in it to make money – lots of it. The rule is to make sure that you can make just as much money as they will make out of you!
STRATEGIES FOR THE VALLEY
So how do you cope when your entreprenuer’s journey gets tough? It’s not a case of IF but WHEN. I’ve been in business all my life. And even with all that business experience, I still head into the valley. Experience does not preclude you from entering the reality stage. It just makes it shorter.
We all have our own ways of coping. Which is why one of the keys to success is to KNOW YOURSELF. You need to know how you tick. How you’re wired. So that you know what to do when the problems come and you’re feeling stress. Let me tell you about the strategies I’ve implemented in my different businesses:
1. Taking the day off
I would “do nothing” but relax so I could re-energise. As a person of faith, I would be praying like crazy too. Somehow, the answers always seem to come when I’m re-freshed. What seems over whelming yesterday, doesn’t seem so bad today. Every entrepreneur’s journey should include a pit stop to re-calibrate and re-energise.
2. Reminding myself WHY I started this business in the first place
When you’re new to business, and if you don’t have a strong enough WHY, you have a greater chance that you will give up the first time you have a problem. Your well-meaning family and friends remind you that they told you that you would never succeed and you should go back and get a job. This always sound very tempting when you are down in the valley and you cannot see any rays of sunshine. But you’ve only lost if you give up. Have you read the story of 3 Feet from Gold? Darby gave up when he was THAT close. Patience, persistence and perspiration makes an unbeatable team.
3. Celebrating my wins!
I can remember when I was doing the start up for the Medical Tourism business, we would celebrate every time we got a new lead or a new business contact. That reminded us how far we had got when we had a week with no new business. It doesnt have to be a big win. Learn to celebrate even the small stuff.
4. Practicing gratitude.
It’s very difficult to sit back and moan about your current misfortunes when you are grateful. A grateful heart does not have a victim mentality. At the end of the day, life and business will deal you a certain hand in the game. Stuff happens and you’re not to blame. But it’s not about the lousy hand you got dealt with, its about how you deal with it that matters. Your opportunity will often come dressed up in the form of “bad luck” or “defeat” – and defeat is only temporary unless YOU make it permanent by accepting the defeat.
5. Learning from my losses.
Any setback can be turned into a step forward when you possess the right tools and mindset to turn a loss into a gain. Napoleon Hill said, “Every adversity, every failure, every heartache carries with it the seed of an equal or greater benefit.” He said EVERY, not SOME. Everyone faces defeat or failure at some point. That defeat can either become your stepping-stone or your stumbling block in your entrepreneur’s journey – take your pick. You choose.
The Lesson I Learnt
With help, you can reduce the amount of time you spend in the reality zone. Unless you’re one of those who likes to suffer. As my daughter once told me, “Let me make my own mistakes”. If that is your preference, I won’t stop you!
It has taken me a long time to learn that getting help is a lot quicker than trying to do it all by myself. Sure, I saved some money by doing it myself but then, how much did I lose by spending far more time in the reality zone, making mistakes that others have made before me? There’s an old English saying – Pride comes before a fall.
HOW TO FAST TRACK THROUGH THE REALITY ZONE
If we understand the characteristics of the entrepreneur’s journey, when then do so many fail? Why do so many never get to “the other side”. 50% of businesses do not survive past 5 years. Only one-third make it to their 10th anniversary.
The problems are predictable. There are proven strategies for this reality stage. It’s all about growing the business and understanding the principles.
One of the biggest reasons why entrepreneurs do not seek help when they need it the most (when they hit the reality zone) is because this is also the time when they feel that they can least afford it. Yet, this is precisely the very time when they should choose to afford it. You can cut your entrepreneur’s journey time in the reality zone drastically by doing so.
There are strategies that can be implemented to fast track you through the reality zone.
Implement Growth Strategies
If you want to move through the reality zone quickly, you must implement growth strategies. Get over that hump in the road. There are ONLY 4 ways to grow any business in your entrepreneur’s journey. And I mean ANY business!
- You have to increase the number of customers you have. So you try and get, say, another 100 people to become your customers. This requires marketing.
- You can increase the number of times your customers buy from you. So your hairdresser who gets you to return for a regular hair cut every 6 weeks instead of every 8 weeks is doing just that.
- You can increase the average value of each sale. Instead of charging $10, you charge $11. But bear in mind, there is a relationship between price and the number of sales you can expect to make.
- You can increase the effectiveness of each process in your business. The main consideration here is look at which 20% of processes in your business takes up 80% of your energy. Work on those.
Your business might need one or all 4 of the growth strategies. Strategies are different for each one – that is a topic for another blog.
Understand there are only 4 ways to make money
Just as there are only 4 ways to grow your business, there are only 4 ways to make money (not counting inheritance because that doesn’t really count J). Money isn’t everything. It never is and never will be. However, you do need money if you are to have financial security on your entrepreneur’s journey. Money also gives you options – a lot of options!
Basically, it’s all about leveraging on money, time, people and products in your entrepreneur’s journey to grow your business.
1. It takes money to make money
It sure does! I can borrow from, say a bank at 5% and lend it to someone else at, say, 10%. Or if I inherited a lot of money, I could simply act as a lender and charge interest. This one is a no-brainer if you have lots of money. Its relatively risk free as long as you do your homework properly and you can take security over the loan.
2. You can make money on time.
No matter how hard you work, you only have 24 hours a day. To make money on time, you will also need to leverage off another person’s time. This is your dollars per hour industry e.g. your accountants, lawyers, engineers, constructions workers and cleaners. You can employ someone and pay them, say $30 an hour, then sell their time and expertise at, say $90 an hour. It is actually very difficult to make BIG money selling dollars per hour. The only way you can make more is to employ more people. This in turn causes more overheads and more headaches.
3. You can make money off other people’s skills and talents.
The best example of this is your talent scout who takes a percentage cut on all bookings for the artists he manages.
4. Buy for less, sell for more.
This is your typical wholesale or retail business. You buy the product from, say China, for $1. You package it all up and sell it for $25. Theoretically it is much easier to leverage products than people or time. Products don’t make demands. But there can be wastage. And if you mis-judge it and your customers do not want what you’re selling, then its not worth anything to you. So, easy in theory.
Understand the reality
Reality says that in any entrepreneur’s journey, we soon discover that:
1. Doing business is hard work
When you think about business is really about you providing the solution to someone else’s problems. You are giving them something that they either cannot or do not want to do themselves. Worse thing is often they don’t even really know what that problem is! So now, not only are you the salesman, service provider, bookkeeper and everything else, you have to understand human behaviour!
2. The type of people you want to work for you don’t want to work for you
When you’re looking to hire, you want someone who’s hardworking, has an entrepreneurial mindset, has communication and problem-solving skills, initiative and a high EQ. The reality is those people don’t want to work for you. They probably already started their own entrepreneur’s journey and are competing against you for the same business. And if you’re lucky enough to score one of those highly motivated people for your team, that person will generally want an arm and a leg to work for you. The people challenge is an on-going frustration for most businesses.
3. There’s no sugar daddy coming to drop cash into your business
Banks don’t hand over money unless you have security to cover their loan and you can prove that your cashflow will more than cover the loan terms. In fact, banks will generally only want to lend you money when you don’t need to borrow. They are looking for safe bets! Investors want their pound of flesh to invest in your business and you will likely lose control of your own business.
4. The big win is all fantasy
In all my years as an advisor, mentor, coach and as a business operator, I have only ever seen what many would class as a big overnight win. Covid-19 arrived and the share price for Zoom went through the roof. However, in reality this overnight sensation did not happen overnight. Zoom itself was founded in 2011 and did not become profitable until 2019. Zoom therefore spent 8 years in the reality zone before it became an “overnight success”. It’s all about little baby steps along the way. Once you stop expecting a big pay-off to happen, you can then start focusing on the incremental steps you must take to grow your business.
5. Build it and they will come only happen in the movies
Even if you have the best product in the world you will go broke if you can’t sell it. You have to be able to compete against others AND win the business. Selling and winning business is a numbers game. Therefore, you have to overcome your “I’m not a salesman” mentality and learn to get out and sell. Some of the process can be put on auto-pilot. However, right at the end, in that last face-to-face meeting, you still have to be able to sell. You must have a sales and marketing plan in place.
6. You must keep improving your products and service
One of Henry Ford’s famous quotes about the Model T was, “Any customer can have a car painted any colour that he wants, so long as it is black.” We all know that any car company that pursues this train of thought will not survive in business today. You need to be continuously pre-empting what your customers want or they will very quickly dessert you for the next best offer.
7. Nobody cares how much it cost you
Nobody cares if it cost you thousands of dollars and hours and hours of your time to manufacture your product. All your customers care about is whether you’re delivering good value for them. The WIIFM (what’s in it for me) radio station is alive and kicking. In reality, you do not get rewarded for your passion – you get rewarded for the results you give to your customers.
AN ENTREPRENEUR’S JOURNEY TO SUCCESS
Every medical student learns, at some stage in their quest to qualify as a doctor, that the mind can affect the body. They learn that some people do get better when they believe that they are getting medication. They get better after taking a sugar pill simply because they believed. Medicine defines it as the placebo effect. Rob Williams, founder of PSYCH-K, an energy-based psychological treatment system, refers to it as the perception effect. Bruce Lipton, in The Biology of Belief called it the belief effect.
In exactly the same way, business is all about having the right beliefs. Business is simple (as long as you stick with the rules) but it’s not easy. The rewards can be amazing but they do come with risks. Business will throw challenges at you incessantly. So business is about having a mindset that says “I can do this!” when you feel like throwing in the towel because it’s just too hard. It’s about pushing on and pushing through when everything is going against you. It’s about doing what you know is right when you have to compete against some of the unfair unscrupulous competitors and you’re tempted by the “if you can’t beat them, join them” mentality. It’s about having the mindset to persist when the naysayers tell you to “give up and go get a real job”.
Emerson said “There is no defeat except from within. There is really no insurmountable barrier save your own inherent weakness of purpose.” Henry Ford said, “Whether you think you can, or you think you can’t– you’re right,”. It’s about how your attitude determines the success or failure of your entrepreneur’s journey.
It all comes down to belief. Although there are people who blame their genes for their current situation, it really is not our genes that control our lives but our beliefs. If it was genetic, we would not have seen the meteoric rise to fame of Oprah Winfrey, Les Brown and Brendon Burchard, just to name a few. They overcame their “genes” and their environment to become who they are today. Napoleon Hill said, “Whatever the mind can conceive and believe, the mind can achieve.”
The placebo effect is very real even in business. The dictionary defines the placebo effect as “a beneficial effect produced by a placebo drug or treatment, which cannot be attributed to the properties of the placebo itself and must therefore be due to the patient’s belief in that treatment.”.
Have you ever heard someone say that a salesman’s first sale should be to himself. If you cannot first convince yourself of the merits of your product, you will not be able to convince others. Therefore, if you want your business to succeed, you must first believe it will. You must have the belief in yourself that you can do this.
Do you believe?
About the Author:
Patsy Lim’s business and financial background (having qualified as a Chartered Accountant in 1980), together with her entrepreneurial spirit enables her to apply a potent blend of strong financial and accounting expertise, deep practical business experience, and entrepreneurial flair and creativity to complex business problems. As an entrepreneur, she understands the issues that an entrepreneur faces. So, unlike some accountants who only know the theory of business, Patsy has had hands-on experience of what it means to be IN business, to start a business, to grow a business, and most of all, to manage a business when times inevitably get tough!