Wikipedia defines a lifestyle business as: “a business that is set up and run by it’s founders primarily with the aim of sustaining a particular level of income and no more, or to provide a foundation from which to enjoy a particular lifestyle”

That doesn’t sound too bad to me, especially if it’ s a particularly nice lifestyle or comfortable income! I think the challenge may come when the founders can no longer run the business due to some unfortunate circumstance. It is safe to assume it would be difficult to sell a lifestyle business, pay the income tax and use the proceeds to invest and provide the same level of income to the founders after they sold it. The founders need to plan and fund their retirement from a percentage of the income they earn each year. If they start young and invest wisely they might be able to continue the same lifestyle and income into their retirement. The probability of their lifestyle business continuing after their retirement is fairly low.

Wikipedia doesn’t define ‘scalable business‘ but it is a great example of one. It does however define ‘scalability’: scalability is the ability of a system, network, or process, to handle growing amount of work in a capable manner or its ability to be enlarged to accommodate that growth.

The approach necessary to build a scalable business is different than a lifestyle business. The challenge is first to remove the founders time contributions from the business model. As a simple example, if the founders develop a piece of computer software, it is the first copy that costs all the time and money, to copy and sell the next thousand copies is minimal. The development of some type of protectable intellectual property is key. This is why a scalable business definition includes the requirement that the cost of sales percentage actually goes down as the revenues go up.

The other challenge with handling the growth of any business is cash flow. Fast growth can cause real cash flow problems when the large number of new customers take time to pay while the growing business expenses need to be paid right away. Therefore another attribute of a scalable business is a cash business – the customers pay in full at the time of the sale.

If you can build a scalable business, your lifestyle may be sacrificed while you build it, but the reward comes when you sell it. There is a large pool of cash at venture capital firms looking for scalable businesses with proven profits. However, it is a very small minority of businesses that can build a scalable business and obtain the growth as well.

Maybe there is a hybrid choice. What if you took your lifestyle business and tried to build in some scalability? Shortening the cash flow cycle couldn’t hurt. Developing intellectual property that could be licenced or sold over and over sounds like fun. Working to remove yourself from some of the parts of the business couldn’t be that bad either.

In summary, a business model that considers scalability can provide you a better lifestyle.

Please, just make a decision!

Has this ever happened to you? You’re driving down the road and your passenger is the one who knows how to get to your destination. As you approach a fork in the road the conversation goes something like this:

You: What do we do when we get to the fork?

Passenger: You can go either way, it doesn’t matter.

You: Well which way should we go then?

Passenger: It’s six of one and half a dozen of the other.

You: Will you please just make a decision!

Indecision can be paralyzing and frustrating to your business as well as your personal life. I believe it is the actions you take to implement a decision that are more important than which option you choose. But if you can’t decide – then no action happens. If you are stuck between option A and option B, isn’t it better just to pick one and then make the best implementation actions?

Here are a couple decision making tips I’ve developed as an advisor to business owners as well as a decision maker:

1)      When I have a client struggling with a big decision I ask them the following question:

If you had to decide in the next 10 seconds – What would your decision be?

This questions helps a the business owner find out what their ‘gut feeling’ is on the decision.

2)      I hear from some business owners, that some business advisors won’t share their opinion on a decision with a client as a result of fear or irresponsibility. I think this is a huge disservice to clients and a source of major frustration when looking for assistance. I don’t mind sharing my opinion but I just make sure it is only my opinion. I would typically say, “Well if it was me making this decision and based on my understanding of the facts, then I would make the following decision…” If your advisor can’t give you their advice why did you hire them?

Maybe the problem is bad advisors?

It brings to the question:

“If you had to decide in the next 10 seconds whether to fire your current business advisor or not, what would you do?”

Have you ever heard the saying, ‘you need a quarter to make a dollar’?

What if your business has the opportunity to purchase $100,000 worth of new product that can be resold at a 35-40% mark-up? Why wouldn’t you buy it? 

One reason you might not make the purchase is you don’t have an extra $100,000. Even if you have credit available, some business owners are reluctant to go into debt. Here is a suggestion:

Just rent the money from the bank for a short time period. Money is cheap to rent these days. You can probably get a credit line set up for 4 percent per year (prime plus 1). This means you can rent $100,000 for a whole year for $4,000.

If you are good with your inventory selections and you put a little effort into selling it, you could probably sell it all in about 3 months. A good target for an ‘inventory turnover’ ratio is 4 times. This means you are able to sell the entire inventory, (or turn it over) on average every 3 months.

Let’s be conservative and assume in your business, the inventory only turns over twice a year. Let’s also assume you can markup your inventory by 30%:

The $100,000 of inventory will become $130,000 in six months. If you buy $100,000 more and sell that for $130,000 over the next six months, you will have an extra $60,000 at the end of one year.

If it only costs $4,000 to rent that money from the bank to make $60,000, why not go for it?

I guess you actually do need a quarter to make a dollar, but if you can rent the quarter to make the dollar then give the quarter back – it’s even better!

The teams at The Business Therapist® are excited to confirm our entry into the U.K. marketplace! Although we have performed services for U.K. business owners as early as October, 2003, we are currently marketing our services to this market once again.

We are currently developing an exciting new product for all our markets. It has become obvious to us at The Business Therapist® that the large majority of business owners would prefer to watch a video than read educational material. We also strongly believe that clarity of your business vision and alignment of your vision with your personal goals is an important component of success. We will be providing business and financial advisory services, education and training for business owners and business mediation services.

We will have a prototype available for testing in a couple weeks and we are looking for clients interested in trying out our Visioning Self Study Program. It combines a workbook for you to complete as you watch the video for advice and real life examples. If you are interested in ‘kicking the tires’ on this new program please let us know.

We are always interested to know what needs and frustrations you may be having as you go about your business day. We are here to help so please reach out with your suggestions.

Thanks for listening.

If you are unsure of your personal goals, with what do you align your business future?

As part of our visioning work at The Business Therapist®,  we check for alignment between the business owner’s personal goals and their business goals.

Personal goals to consider:

Personal income and equity goals – What income would you like to be making in 3 to 5 years? Do you have a target date to be mortgage free?

Type of work – Do you want to work outside or inside? Physical work or use your creative mind? Would you prefer to be the ‘minder’, the ‘grinder’ or the ‘finder’? (translation: management, technician or sales?) Can you do this type of work until you retire?

Retirement planning – Are you looking to make your business saleable to either keep it or sell it? Do you plan to semi-retire at a specific age?

Work – life balance – Do you want to work less and spend more time with family or are you focused and driven to achieve maximum growth?

In order to see the value of your business plan being aligned with your personal goals, it is easiest to explore the opposite situation of non-alignment. For instance, if you are clear on your personal goals but your current business plan doesn’t support and serve the pursuit of your goals, it is no wonder you hate your job!

If you are ‘pretending’ to be passionate and motivated pursuing the business goals, how can you be aligned with your personal goals! Passion and energy come from within you – when your heart is in it! Are you passionate and full of energy or do you dread your day?

Find a job you love and you never have to “work” another day in your life! When alignment exists it is so much easier to understand all your goals!

Take a look around you at the successful business owners you know. I suspect you will find they have grown their business in alignment with their personal goals. Alternatively, take a look at the ones that are struggling.

If you happen to have a mirror, you could look there too!

Email has certainly become the most time effective manner of communication in business today – between businesses and among employees and business owners.

Email has become such an easy, immediate form of communication that we may be overlooking some important etiquette.

Here are a few email etiquette reminders:

Create a concise and to the point subject line – if a task needs immediate action, then the task and its immediacy should be stated in the subject line.

Do not over-use the ‘mark as important’ function – the fact that Karen’s birthday celebration is at noon in the lunchroom probably shouldn’t be marked as important, so don’t ‘cry wolf’!

Watch your punctuation, grammar and spelling – this may sound rudimentary, but it is an essential part of business communications. When you are not seeing the person face to face, they will judge you on your writing ability. Also, save the short forms for texting with friends.

Be courteous – greet the person (or persons) in your email appropriately. Be careful that your language does not sound like a drill Sargent giving orders. Always say please and thank you when making any request. A little courtesy can go a long way!

To reply all, or not to reply all – be aware that ‘replying to all’ involves all the recipients in the entire email string. Long, unnecessary strings of emails can clog up inboxes, create confusion and reduce productivity.

Use neutral language – sarcasm is difficult to read, and really has no place in a business environment.

Make your point(s) – if several issues need to be addressed within one email, then first note the number of issues, then list them in a clear manner including a timeframe.

Please respond – when asked a question via email, respond immediately letting the sender know when the question will be answered. By providing a timeframe frustrations will be alleviated.

Say thank you, again – if someone completes a task, responds quickly, or simply ‘does their job’, a nice friendly thank-you email can go a long way for employee happy-tude. 

These may seem like small things, but good email etiquette can improve communications, clarify tasks, increase productivity and make everyone feel valuable. 

“To activate others, to make them enthusiastic, you must first be enthusiastic yourself.”

I totally agree. Dr. Schwartz provides 3 ways to get motivated or activated:

1)      Grow the ‘I’m activated’ attitude

a)      Dig into it deeper – Whatever you are unmotivated with, just learn more about the subject – dig deeper and learn more about it, and your enthusiasm will grow.

b)      Life it up – Act alive with your walk and your talk starting with your smile.

c)      Share the good news of the day – Forget the bad news. 

2)      Develop the ‘you are important’ attitude

Try to make everyone around you feel important – everyone likes to feel important. Show your appreciation. Even just stated someone’s name when you greet them instead of just ‘hello’ proves this point.

3)      Grow the ‘put service first’ attitude

If your focus is to make money first, it is hard to make money. If you put service first, the money comes more easily. Always try to give a little for than someone expects.

The three ideas are probably not new to you. However, they are nice reminders of how much we affect the world around us by our attitudes – good or bad. If you think about some of the more successful people you know – the motivated and ‘activated’ people – Do they practice the above?

I have just completed reading Successful Intelligence by Dr. Robert Sternberg. Besides pointing out some of the shortcomings of various IQ tests, he makes a good case for reducing the reliance on things like SAT scores in order get accepted into a College or University.

Dr. Sternberg expands the definition of ‘successful intelligence’ to be made up of three types of intelligence:

Analytical Intelligence – IQ type tests tend to give high scores to those who can memorize knowledge and also reward those who can think quickly due to the timed nature of the tests. Dr. Sternberg’s definition of analytical intelligence also includes the ability to think. This thinking ability is not based on speed of problem resolution but more on better solutions that often come after taking a little more time.

Creative Intelligence – As an advisor to business owners, I observe this type of intelligence in successful business owners fairly often. When confronted with a problem that has no obvious solution they stick with it until they figure one out – they create a solution. Innovations evolve from ‘creative intelligence’. I like to say the creativity is interactive. Creatively intelligent people look outside themselves and the current view for ideas. It’s the ‘openness’ of their mind that allows more creativity in.

Practical Intelligence – This is the same thing as ‘street smarts’. I would also consider this intelligence part of being ‘good with people’. If you have respectful and productive communications with customers and employees, your success rate will be higher. This type of intelligence is easier to recognize when it is low! Examples can be found of very high IQ individuals who have real trouble adapting to the world around them.

Although the book Successful Intelligence is not specifically focused on small business owners, it provides encouragement to those business owners that didn’t score high on IQ tests in school – it makes very little difference to success in business.

‘Creative intelligence’ is something everyone has when they are age 4 and the longer you stay in the education system the higher the risk of losing creativity exists. The scholastic reward tends to be for conformity as opposed to creativity.

‘Practical intelligence’ is intelligence that can be learned and improved over your adult life. The author provides research that ‘practical intelligence’ increases on average until the age of 50 and sometimes can increase up until the age of 70!

In summary, if your teacher or a test score ever told you that you weren’t smart enough, it was reporting on the wrong smarts! Everyone has some degree of creativity in them and using ‘practical intelligence’ you learn from your mistakes.

I guess there is no excuse not to be successful then, is there?

For some reason, the typical way to motivate you to set up a systematic,automatic backup routine is to first lose some important information as a result of a hardware issue.

But it doesn’t have to be that way! I have designed this blog to be sufficiently short that you can take the rest of the time allocated to reading it to proactively checking on your backup routine!

If backups are tape, disk or data traveler – don’t forget to take them offsite. It is also prudent to alternate between two backups in case one fails during the backup process.

There are lots of cloud based (over the internet) backup programs available too.

Even if your backup routine is working like clockwork for you, it might be a good idea to test to see if you can recover data from the backup just to make sure it is working properly.

And if you’re feeling like being a nice person, why not send this blog post as a little reminder out to your friends to remember to do their backups – including smart phones and tablets too.

Luck favours the proactive!

I like to try out different car models when I rent. Last year, I booked a Dodge Charger for a two week tour of Arizona and California. When I got there they didn’t have any Chargers left. I understand they qualify the rental reservation by stating they guarantee a ‘Dodge Charger or similar’. Well they didn’t have any ‘or similar’ either! It was late, I was tired, so I took a Ford Escape. It was underpowered and the sound system had only one speaker on only one side of the car. Similar?  Are you kidding me?

This year’s trip to Arizona was very different. I had a good experience with Hertz last summer so they were my first choice this trip. I have this crazy idea that somewhere in the universe you should be able to agree to rent a particular car and actually get it when you arrive!

Hertz was totally awesome. Here’s why:

1)      I made a reservation for a Malibu – A Malibu was available.

2)      Quick and easy – Have you ever watched the rental car guy type forever in his keyboard to prepare your rental documents? Not Hertz – the contract was done quick and easy.

3)      No confusing insurance questions – Do you ever get the guilt trip pitch about the insurance coverage? Does your credit card cover it? Are the rates ridiculous?  Not this time – no insurance questions.

4)      How easy was that? – Sign in one place and bring the car back with a full tank of gas, OK?

OK!

There was one other thing. I mentioned to the representative that I was looking to form a long term relationship with a car rental agency. He asked me if I really wanted the Malibu or should he look for something better for me?

How about a Camaro convertible at the same low price?

Thanks Hertz, your operation is easy and impressive – I guess that’s why the car I rented was one of almost 2,000 rentals rented in a single day at that single location!

Check it out: