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November 2021

An Employee vs An Entrepreneur Mindset

An Employee vs An Entrepreneur Mindset 150 150 Cypher

An Employee vs An Entrepreneur Mindset

At the start of the year, on the Mind Your Business Podcast we said that 2021 was the year of the entrepreneur; the ‘Entrepren-Year’ and we have seen that prediction play out over the last 10 months or so.

So many people have used furlough as the catalyst to start their business, but others, who might aspire to be business owners, are still held back, sometimes by circumstance, but often by their own limiting beliefs.

It begs the question as to whether there is such a thing as an entrepreneur mindset, or indeed an employee mindset and actually whether a barrier to prospective business owners is that they still think like an employee and what they really need is a switch.

My default position is there is absolutely a difference in mindset between an entrepreneur and an employee. It hit me, when in Cypher’s early days; I played golf on a Friday afternoon with a friend who’s an employee. While I love a game of golf as much as the next person, while he enjoying his freedom on the course that afternoon, all I was thinking was how much work I was going to have to do at the weekend because I’d chosen to be out of the office on Friday. Having time off is very different if it’s your business compared to when you were an employee.

Working for an unlimited company
One of the main differences between an entrepreneur and employee mindset is the concept of barriers. As an employee we are conditioned to respect certain defaults; for example, the role we do, the business we work in, the hours, the pay -effectively the overarching parameters within which a business generally works. There is usually a certain rhythm and routine and a monthly predictability to it. Subconsciously while you operate in a safe space, there is also an inherent creative limitation in the role.

As an entrepreneur, you can enjoy unlimited thinking, even unlimited possibility. Entrepreneurs by nature allow themselves to believe what is truly possible and then go all out to achieve it. An entrepreneur’s mindset allows for an extra bit of performance, an extra bit of drive and an extra bit of enthusiasm for what the possibilities are.

Dealing with payment pressure
Usually, employees get paid weekly or monthly. Generally, other than seasonal or performance related bonuses, they know what will be in the pay packet each month and have a regularity to their lifestyles that is supported by this sum. For entrepreneurs, it doesn’t need to be that way. As an entrepreneur, you could make £200,000 in a month and then nothing for a full year. And actually, if they did that, entrepreneurs would focus on the freedom and opportunities this model presented to create more in the time they have freed up.

That’s not to say entrepreneurs don’t suffer financial stress. The financial reality is that life is structured around monthly payments; your mortgage, your bills and as an employee-you would hope- your monthly wage covers this. But for new business owners, especially those that were recent employees, one of the biggest stresses is wondering whether the business can provide them with an income in three months’ time. The trick is to look past that because it will. The challenge is actually whether you can spend enough time building your brand and your culture and understand what you want to do to make it more successful.

More money, more problems
One of the big freedoms of being an entrepreneur is to be able to access more funds from your business. But once entrepreneurs get up and running they have a habit of just taking money as, and when they need it. Sometimes though, they don’t realize how much they’re taking or alternatively, they don’t take enough because they’re scared that the business will run out of cash. Our job as accountants is to do some basic tax and business protection planning to make sure they’re taking the right amount out of the business so they’re not leaving themselves or the business short or paying too much tax.

Some entrepreneurs need time to break down the monthly rhythm, while some need to build it back up.

The danger of not pivoting quickly from the employee to entrepreneur mindset is that you make very short term decisions. If you retain the employee mindset, which is largely dictated by your monthly pay, you base your business decisions on short-termism. Am I going to make the £3,000 I need this month? You take on bad clients, do the wrong type of work, and neglect the pipeline at the top of your funnel because you are focused on whoever can pay you today. It stops you making space for the real entrepreneurial thinking that you need for months 12 18 or 24.

Learn Unlearn Relearn
We did a whole podcast on having to learn, unlearn and relearn how to do business in 2021. Shifting from an employee to entrepreneur mindset is a perfect example of this because there’s a lot about being an employee you need to unlearn and then relearn in order really become a phenomenal entrepreneur. One of the important learnings for any would-be entrepreneur is that everything you do needs to have some profit in it, and if it doesn’t, you need to stop doing it. Whether that’s working with specific clients, offering certain services or selling certain products, if it doesn’t generate a bottom line you’re better off doing something different with your time. As an employee you probably don’t have to make these decisions.

Business owner v owning a business
It can become apparent that the wrong mindset can actually provide solid blockages to business growth. Without an entrepreneurial mindset, you may end up with a new business that’s worse job than you had before. It will have all the hallmarks of a job; you are a slave to the nine to five, it doesn’t earn any money if you’re not there, but because you’ve lost the benefits of being an employee you might actually get paid a lot less, for a lot more stress and a lot more hours.

To be able to create something that can grow, you need to be able to think past yourself as the only employee or as the only mechanism for making money. It’s important to make the step from employment to business ownership to make it something bigger than just you, the individual.

Shifting from Employee to Entrepreneur mindset
There is a fundamental shift available for all business owners to move from an employee to entrepreneur mindset. This distinction is often really helpful for people to see where they are in their journey. For example, I don’t consider myself an accountant anymore, I own an accountancy business. It might sound twee but it is fundamental to my mindset of what I do as my day job. I think what you tell people you do clarifies where you are on the spectrum between employee and entrepreneur; are you a plumber or do you run a plumbing business?

The more we realize is possible with entrepreneurship, the more we can harness the full power of this state of mind and realise all the opportunities it brings. A more entrepreneurial mindset, will enable you to think more long-term, make better decisions and be more at peace with yourself and where your businesses is.  But it’s not a failure if you don’t have a 100% entrepreneur mindset, even if you’re 10 years into your business, because it’s a skill you learn, it’s not a switch you can flick.

Find out more

New editions of the Mind Your Business Podcast appear every Friday. Subscribe on Apple Podcasts, Spotify, Google Podcasts or your choice of Pod provider to have it delivered straight to your device.

Business Plan Gold

Business Plan Gold 150 150 Cypher

Business Plan Gold

No matter how old your business is, it’s important to have a business plan. Lots of business owners have one; it gets done once, with just enough information to convince you there is a business opportunity there, but then it’s not looked at again. Some people have never done one; some business owners monitor and tweak it all the time.

There’s an old adage that no plan survives first contact with the enemy, which is why a business plan shouldn’t be seen as restrictive, fixed and inflexible. It should be an opportunity to get real clarity on what you want from your business, who you want to serve in terms of your customer base, along with some realistic numbers.

The most important part of a business plan
I love a good business plan! At the start of Cypher’s journey we needed some finance so I wrote my first business plan with two aims; one to convince my wife that it would work and secondly to convince the bank so they would give us the funds we needed. I included all the traditional bits; the unique opportunity we’d got, what our strengths were going to be, some SWOT analysis, our typical customer, who our competition was and how we would be different, then I did a three-year financial forecast. It became an 81-page PDF.

I would argue that the final document, all 81 pages of it, is not particularly useful anymore, but the time we spent thinking about each section was really powerful.

The most important element of business planning is the time and the headspace business owners give themselves to actually think about their business. Business owners need to understand who their competition are, understand their ideal client, understand the importance of cash flow for their business and how everything fits together.

When I showed a business coach the financial forecast, he immediately recognised that it was for my wife’s benefit.  Cypher was operating just above breakeven.  At the time I was acting out my business horror story and I needed help to see a brighter future. But that is another story.

The 1 page business plan
One of the best things we did with our 81 page business plan was to distil it into a one-pager; a pitch-deck of the key headlines. It has a summary of each section, plus some of the key numbers in the forecast. Now, whenever we log in to our client management system, the first thing everyone sees is our core values; what we stand for and why we’re trying to do things differently. All the stuff that came out of that business planning process is front and centre in our daily routine.

The importance of Cash Flow in Business planning.
The amount of business plans I see that have no mention of cash flow is phenomenal. A lot of new business owners are able to create a solid profit and loss account; they project the amount of sales they will make and estimate how much it will cost them to make those sales. Based on that, they break even in month six and are profitable by month eight. Well done them.

What they miss is the disconnect between profit and loss and cash flow. The amount of times I’ve had to sit with someone and say, this P and L is great, you’re making profit in month eight, but to get to that point, you’ve first had to buy £100k of assets, you’ve had to pay for everything up front because you’re brand new  but your customers have 90-day payment terms, so actually if you don’t make profit by month four, you’re going to run out of cash before month seven, so being profitable in month eight is a waste of time.

Forecasting is tough, but if you forecast profit and loss, you’re only doing half the job and you’re forgetting the most important part. A business can trundle along for a few months, breaking even if cash flow is ok, but no business can survive with no cash.

For example, its vital to understand the impact of payment terms; are customers paying 50% upfront and the balance on completion, or 100% on point of delivery or is payment due 30, 60 or 90 days after delivery. With this information, we can build the rules around when the business is receiving funds for work done.  By understanding the impact of each transaction a simple decision to shorten payment terms from 30 to 14 days for example, might give you another three or four months of trading at a very low income rate.

We then look at fixed costs, for example; is the rent paid quarterly in advance, or is it paid monthly?  What payment terms does a business have with its suppliers? We know things like if you’ve got staff that they get paid at the end of the month but that national insurance and PAYE is paid on the 19th of the next month to spread the risk.

Beware the cash black hole
Our aim, using all of this knowledge is to find the month, in the first 12 months where there is a potential cash pinch. Based on funds coming in and money going out we can see if there is a cash black hole somewhere down the line.

Business planning for established businesses
If you have a more established business then the business planning process either allows you to reconnect with your plans at the start, or if you are doing it for the first time, it re-engages you with your purpose.  Businesses and business owners shift overtime and a business plan reconnects you with what you are actually trying to do. Once you have done that and you have your longer term vision, the next step, is to plot what you are doing in the next 90 days to achieve part of that plan.

The Power of Review your Business Plan
Whether you make a business plan or not, the important thing is to understand that businesses change, owners change, markets, customers, competition all change and reviewing your situation at regular intervals provides great insights into a business and an opportunity to re-evaluate, or learn, unlearn and re-learn what a new framework for the business might be.

The best time to make a business plan
The good news is that typically new businesses outperform their initial forecast, but our job is to look at cash run rate based on a worst case scenario. The best time to do this is before a business model becomes a business. No cash has changed hand and the impact of decisions won’t be as critical. But however old a business is a business plan with SWOT, competitor analysis, customer research, P&L and cashflow forecasting brings huge amounts of clarity.

For me the best outcome for a good business plan is that it gives the business owners the comfort or belief that there is a business there; that they know it isn’t going to run out of cash in six months, they have thought about who their customers are and know there’s a market for their product or service, that their pricing is correct and their idea has legs.  Then distil it all down to one page and you have a plan.

Find out more

New editions of the Mind Your Business Podcast appear every Friday. Subscribe on Apple Podcasts, Spotify, Google Podcasts or your choice of Pod provider to have it delivered straight to your device.

The destructive power of Apathy

The destructive power of Apathy 150 150 Cypher

The destructive power of Apathy

Apathy is something that can haunt all entrepreneurs and business owners at various stages of their journey-sometimes quite drastically- such is its destructive power.

Now, everyone has ups and downs in their business, but have you considered that perhaps apathy plays a massive part?

Apathy is an emotion that by definition means you lack interest, enthusiasm, or concern; in other words you don’t feel anything, you don’t really care one way or another and that is the problem.

On the Mind Your Business Podcast, we have talked about the power of belief and the affect an entrepreneurial mindset can have and how motivation, inspiration and enthusiasm all provide really powerful energy that help entrepreneurs to act no matter what. It keeps them going forward when the path is blocked or times are hard and brings light and colour to their world. Apathy on the other hand is dullness and emptiness; I can’t be botheredness; a listlessness that can be really destructive when you are running a business.

Check your revs.
One way to view your levels of apathy at any given time is as the speedometer or rev counter in a car. On one end, let’s say near five, maybe six thousand revs, you get action and at the other end- under one thousand revs- you have apathy.

It’s a situational thing for sure; people aren’t generally apathetic about every aspect of their business- if they are then there’s a bigger problem- it’s usually only in certain circumstances that apathy causes our revs to drop. The problem here is that if we let our levels drop – even for one day –maybe as a culmination of events, it has the power to undo lots of good our work. Losing your mojo for a day, without realising that you are having that sort of a day can also have a very negative effect on your team.

Beware Dementors
Apathy is nothingness. It’s like the Dementors from Harry Potter that literally suck the life out of everything. Now that’s an extreme example, but  I think it describes the link between anxiety, which is a burner of energy, and apathy, which is the feeling of emptiness you are left with after you have completely burnt out quite well.

Apathy can also be common in people that have a very negative view of themselves. All of us have heard of impostor syndrome, but negative thoughts and self-doubt view both play into apathy.

Are Entrepreneurs at greater risk of apathy?
There are very few entrepreneurs that haven’t suffered from a healthy- or unhealthy- dose of anxiety. They deal with pressure situations all the time and not everything comes off. So there are bound to be times of doubt. I would say that this leaves them more at risk of this condition called apathy.

Apathy is self-sabotage
Business owners that are apathetic about their business have the potential to do a great deal of self-sabotage. Business owners get in a mindset of ‘what’s the point?’, ‘it’s not going to work’ and the situation becomes a self-fulfilling prophecy. As an example, a client pitched for a massive bit of business, but was sure they weren’t going to win it. Normally they would have followed up two or three times, this time they didn’t bother. Now, they may not have lost the business because they didn’t follow up after the meeting, but they definitely wouldn’t have won it that way either.

When team members are apathetic
There are, of course, super motivated business owners, who are always 100% motivated and driven but they have team members that fall into apathy. Everyone has seen the ability of one person to drag down the whole room. It’s not necessarily their default position but they are having a day where they just don’t care. As leaders we have to recognise apathy for what it is and maybe give that person the benefit of the doubt for one or two days; lots can be going on in the background. But if the apathy spreads it’s time to have a conversation. Be heavy on empathy, let the individual open up but also recognise the effect that apathy can have on your business – and them as individuals.  Remind them of the valuable contribution they make, how their actions can help everyone grow.

But remember, it isn’t their business. It’s not their fourth child, their baby. Yes they will enjoy working with you, enjoy the rewards it brings but it isn’t what keeps them up at night. Now that doesn’t mean business owners can’t have powerful conversations with workers, give more responsibility that can make them feel it is their business. You do have the power to inspire people to go well above and beyond what is in their contract.

Toxic workplaces
In a room of 10 people, you would hope seven or eight are flying and maybe one or two are feeling a little apathetic, that’s just life. In any culture or workplace you cant expect everyone to be on it all the time. If the majority of workers are having off days though then business owners have to dig deeper because there could be a million reasons for it as we talked about in our Toxic Workplace pod

Get moving
There is a clear link in many articles between apathy and a lack of exercise. So doing something that gets the heart rate up, the blood pumping is a great way to stop the funk. If you’re having a rubbish day, go for a walk, go for a run, do something.  The link between exercise and mood is massive!

Avoiding apathy
Apathy can manifest itself in the minds of business owners and their teams. It can be driven by anxiety and can lead to a lack of positivity but also a lack of productivity, which is key. We have talked a lot about the mindset that successful business owners have; they are positive, enthusiastic and driven. If you’re apathetic about your business then 100% it won’t do as well. No successful business owners are apathetic about their business. That’s not how you create a £1m organisation.

The first thing to do to avoid apathy taking hold is to be able to self-diagnose; to understand that it’s natural to have days when you just aren’t on it as much as other days, but once you have recognised that you’re feeling apathetic about your business, get some easy wins. Find some tasks which are ten, fifteen minute jobs that can just be done.  Post on LinkedIn, ring a customer or reply to an email; do something that can be ticked off of a list.

Secondly get active. Stop staring aimlessly at a screen and physically make yourself get up out of your seat.

Thirdly have someone, a coach, a business partner, a trusted advisor, someone that you can talk to who recognises that you’re self-sabotaging and is able to bring you back on track.

Times can be hard, clients leave, pitches are lost but there is never a good time to take your hands off the wheel.

As business owners we have spoken a lot about a positive, healthy mindset; how clarity can prevent a horror story being scripted that doesn’t need to play out. If we recognise our revs are low meaning our apathy levels are high, then we can shift the needle through to action and the power this can generate for a business is huge.

Find out more

New editions of the Mind Your Business Podcast appear every Friday. Subscribe on Apple Podcasts, Spotify, Google Podcasts or your choice of Pod provider to have it delivered straight to your device.