Wednesday, 12 December 2012

Up Side Down Goal Setting

Jim is a typical small business owner. Here is how he approaches goal setting:

“Ok, it is January 1. I better set some targets for this year. Let’s see, I did $800,000 in sales last year and had a net profit of $120,000. That’s not too bad considering how new my business is! So let’s see, that was 20% more than the previous year. So really I should be able to grow by another 20% this year if things continue at this pace. Yup, that sounds like a good number. So that means, (insert sound of calculator clicking or brain churning here) $960,000 in sales and $144,000 net profit. Nice, mark it down, that is this years goal!”

On the surface that’s not a bad goal at all. It is specific (it has exact numbers and a time frame to reach them). It is attainable yet challenging (the goal is within the business owners reach but will require growth). That gives Jim a very defined target that he knows he will have to work hard and be effective to attain. Great!

What is the reward in this goal though? Sure, he may feel some satisfaction in knowing he grew his business and that is a great feeling. Where is the reward that will really get him fired up to do the work and meet the challenge of this goal though? He may be able to pay himself some more money through that year. Again, that is nice, but it is just money. What is the real reward that will inspire Jim to put in all the effort that will be necessary to feel like he attained his goal?

Here is what Jim’s goal setting process (and that of many entrepreneurs) looks like.

In this funnel a business owner focuses all of their attention on how big they want their business to be. They set a number as far as how much production they want in a certain time period. Then they determine by what method they will reach that number. For example, they may need to introduce new products or attract more customers. After that, they determine what the business needs (More staff? new resources?) to make that happen. Only once all of that is determined will they make a plan to reach the goal.

The worst part of this though, is that personal goals are left until the very end. If there is time and money, the business owner will give themselves a reward for reaching their business goals. When a dog performs a trick, it gets a treat from its master. It is similar here, when the entrepreneur gets the business to its goal, it will receive a treat from its master.

That is the road Jim is going down. He knows the growth he wants to see in his business and he will find ways to make it happen. But there is no specific reward for him if it happens. At the end of the year he may be able to cut himself a nice bonus check basically letting his business pat his head and say, “Who’s a good boy? Whoooooo’s a good boy? You are! Yes you are!” and toss a jerky treat his way.

Do not create a business to be your master!
You must be the master of your business!

When you started doing whatever it is you do, it probably wasn’t with the intention of becoming a slave to what you have built. You most likely did not envision yourself as a mere pawn of the business you have created who hopes for a reward at the end of each year.

You started your business or career with the intention of creating a good life for yourself. You created it seeing your business as a means to freedom, wealth or whatever it is you desire.

By setting goals that put the business first, you will eventually become just another employee with a fancy title. YOU DON’T WANT THAT! (Right? … You better not want that).

Set goals that put you as a human being first!

Flip that funnel over!

In order to feel truly fulfilled by your business, you must realize that you are a human being first and an entrepreneur second. If you want to feel fulfilled, you must make sure that all of your business plans stem from knowing what you want in your personal life. By identifying that first, you can then determine what your business needs to look like in order to provide that fulfillment.

Do you want a hyper active life full of Ferrari's, mansions and parties? Build your business in a way that can get that for you. 

Do you want a relaxed life doing what you love in a cabin near the mountains? Build your business that allows you to have that.  

  • Set your personal goals first. Then make a plan for how your business can provide that for you. Will it need to give you money? Time? Freedom? Whatever the case, plan your business around that goal. 
  • Next, determine what your business needs in order to execute that plan (More staff? Less hands on involvement by you?). 
  • After that, determine the method you will use to meet those needs. (Work with only select customers? Find a new niche market?) 
  • Only after all of this is decided should you set a business goal. It will be the sales your business needs to do in order to execute the plan that will provide your personal goals.

Remember, your business is nothing but a tool to provide what you want as a person. Make your personal goals the first step insetting your business goals. Then watch your business provide what you want for your life.

Here are some questions to help you define those goals

Saturday, 1 December 2012

11 Year Old Entrepreneurs

One of the greatest learning experiences I get to have is through my involvement with Junior Achievement. It is an organization that seeks to inspire and educate children all over the world to be strong leaders in their community.  My role is as an instructor for grade 6 students in a program called "A Business of Our Own". But I often find I do more learning than teaching.

In the "Business of Our Own" program, the students create and run a business over a 5 week period. They are responsible for everything from creating the business idea, drawing up a plan, finding start up capital, buying merchandise and equipment, running the business and deciding what to do with the profits. In the end they come out with a very good taste of what entrepreneurship is all about. 

The last group I had the pleasure of working with went through the process with amazing determination and created a healthy profit in the process. The main lesson I hope they learned is that business isn't just about money and profit, but that it is about how you can have an effect on your life and your community through operating a business.

As I mentioned before though, I often do more learning than the students. This class definitely gave me a lot to reflect on and even pass on to my clients. Here are 3 of the main things any entrepreneur could learn from these students.

1. Excitement is Essential
The smiles and energy that these students showed was contagious. It was obvious that they enjoyed what they were doing and that they had a true desire to succeed. It was such a powerful energy that I brought one of my clients (who was feeling a bit down about his business) to their sale just so he could feed off of their excitement. They put a huge smile on his face and his excitement for his own business returned in minutes.

If you are excited about what you do, it will flow out of you and stick to those around you. Do you want excited employees, customers and co-workers? Then be excited and let them grab onto that energy! (If you can't be excited about what you do, you need a change)

2. Eagerness Earns Opportunity
These kids were all so eager to be a part of the action that it was almost overwhelming. Many times when I was speaking  they would sense that I was about to ask a question and half the class would put their hands up before I had a chance to even ask it! They didn't even care what the question would be, they just wanted to be involved in answering it.

As an entrepreneur  you probably get that gut feeling when an opportunity is on the horizon. Don't wait to see if it all shapes up perfectly before dipping your toes in. Just raise your hand, get ready for it and be there when it arrives!

3. Communication is Key
The class was put into groups according to their responsibilities. Those groups often had to collaborate on tasks needed to run the business successfully. In the first few weeks, the communication just wasn't there and guess how much got done .. pretty much nothing. When they realized the need to work as a team and started talking productively with each other everything turned around. Ideas were shared, plans were made and everything started to rock and roll!

You have a vision and a plan for your company, if you don't communicate it clearly to those involved and to your potential customers you will have a tough time finding success. Know your message, know your methods and know how to communicate it to others. This will build the environment where things can operate smoothly because everyone's expectations and plans are on the same track.

The great thing about this program is handing the kids the tools and being there to advise but allowing them to discover the process and make decisions on their own. They experience in 5 weeks what many entrepreneurs go through in the first year of business. If you ever want to experience the excitement and dedication they bring to entrepreneurship, get involved with Junior Achievement and see how much you can learn from these future leaders.