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James Bennett

The Real Leadership Lessons of Steve Jobs

The Real Leadership Lessons of Steve Jobs 150 150 Cypher

The Real Leadership Lessons of Steve Jobs

Six months after his death, the author of Steve Jobs’ biography, Walter Isaacson, wrote an article for the Harvard Business Review magazine. It first appeared in April 2012 called the Real Leadership Lessons of Steve Jobs.

In it Isaacson was trying to use some of Jobs’ most heralded traits as lessons every would-be successful CEO can try to adopt. There are 14 lessons in all. I haven’t critiqued them all, but Alan and I discussed a few on the Mind Your Business Podcast.

Push for Perfection
Isaacson writes that during the development of almost every product he ever created, at a certain point Jobs “hit the pause button” and went back to the drawing board because he felt it wasn’t perfect. He stopped production and rewrote the Toy Story Movie along with director John Lasseter to make it friendlier, he decided to delay the opening of Apple stores so layouts could be reorganised around activities and not just product categories and famously he did the same with the initial I-Phone design because the prototype came with an aluminium case that Jobs felt competed with the display too much, making it too masculine, task-driven and efficient, so he asked the team – after nine months of designing – to change it.

Disconcertingly, this advice flies in the face of what I tell a lot of my clients.  In my experience, when business owners are launching something new, they often get crippled by searching for perfection and we have a mantra at Cypher that ‘version one’ is better than ‘version none’. My view, which is shared by Agile developers the world over, is that getting something out there and then refining it, ideally with the customer in mind is the best way for SMEs to go.

Now of course when Steve Jobs first introduced us to the I-phone, which was an I-pod, a computer and a phone all in one and all in your hand, many considered it was perfection. He was famous for setting new standards- it gave Apple its blue-sky space ahead of the competition and while it has been improved on 15 times since its launch, every other smart phone in history owes its existence to Jobs and his strive for perfection.

But I think the reality for smaller business owners, who don’t have the R&D budget that Apple enjoys, is that ‘good enough’ is often good enough. So aim high, perfect what you can but don’t lose out to procrastination.

This is a rather awkward word that essentially means judging a book by its cover. Jobs was obsessed with how the packaging looked and felt as he thought this had a large impact on how the product – and by association the brand-was perceived. Jobs believed that unboxing an iPhone or iPad should be ritual-like theatre and herald the glory of the product inside. He wanted to set the tone for the tactile experience the product offered.

There feels like some synergy here between pushing for perfection and the ‘Impute’ ethos of making the packaging for whatever you are selling look and feel as good- if not better- than the actual product itself.

One of the banks we use is Tide, I got my credit card through from them the other day and it was a completely different experience. The box has a ribbon on it and as you pull the ribbon the box unfolds and the card pops up. It’s a wow moment for what is a very simple product. Tide is a challenger brand, they are modern, they are funky and they have thought about every touchpoint along the customer journey.

We aim for something similar at Cypher; from the first meeting to the proposal to being on-boarded we have tried to create a seamless journey. There is no point in the journey where the standard drops and we deliver something that’s fundamentally different quality from the first thing that we deliver. There is nothing worse than contacting a plumbing business that differentiates itself by offering a 24-hour call out service and getting the answer phone at 3AM telling you to call back at 8AM.

Never underestimate the power of perception of how you do one thing is how you do everything.

Isaacson highlights that Steve Jobs could adopt a Zen-like focus at any given moment, which was accompanied by an unerring ability to simplify things by zeroing in on their essence and eliminating unnecessary components. It came, according to Isaacson, from his time working the night shift at Atari as a college dropout. Atari’s games came with no manual and needed to be uncomplicated enough that even a stoned freshman could figure them out.

Jobs aimed for the simplicity that comes from conquering, rather than merely ignoring, complexity.

Now before Christmas, I was on the lookout for a new car. I spent time with many brands, some that have dealership networks and some that don’t and I landed on a Tesla. You can read my thoughts on why an electric car is the way to go.  The car came with few options; how big do you want the battery to be, what colour do you want and what colour do you want the seats to be? That’s it.

In contrast, my dad wanted an electric VW and that had some 37 different base models before even considering colours and additions. Now he wasn’t even bothered about the majority of the things VW were trying to sell him and in the end he got so fed up with all the questions that he went for a Tesla too.

There’s a simplicity to the buying process that brands like Polestar and Tesla have reimagined and often a simplicity to a product that is easy to define and that is key to any business.

Engage face to face.
Despite being a denizen of the digital world, or maybe because he knew all too well its potential to be isolating, Jobs was a strong believer in face-to-face meetings. He believed that creativity comes from spontaneous meetings, from random discussions. He even had the Pixar building designed to promote unplanned encounters and collaborations.

At its heart is a central atrium. The front doors, the main stairs and corridors all led to the atrium; the café and the mailboxes were there; the conference rooms had windows that looked out onto it and the 600-seat theatre and two smaller screening rooms all spilled into it.

We are in the situation, like so many businesses, where we operate a hybrid working pattern. Some days we are in the office, some days we’re at home. We have tried to keep everyone together through daily Zoom calls but even then that can be done in isolation and the knowledge from them is never shared.

Just think of the information we pick up consciously or sub consciously from hearing a colleague on the phone. How much do we absorb, just be listening to other people’s conversations with the customers. How much have we missed over the last two years just by not being able to listen to other people’s conversations with the customers? If it’s not written down, it’s not put into a system it won’t be known to others.

This article was written almost 10 years ago, the world has since shifted on its axis and we have all had to learn to work differently, but I think Isaacson’s synopsis of some of the great Steve Jobs’ idiosyncrasies and quirks are a very good reminder from beyond the grave about the effectiveness of his approach.

The Real Leadership Lessons of Steve Jobs
Take Responsibility End to End
When Behind, Leapfrog
Put Products Before Profits
Don’t Be a Slave To Focus Groups
Bend Reality
Push for Perfection
Tolerate Only “A” Players
Engage Face-to-Face
Know Both the Big Picture and the Details
Combine the Humanities with the Sciences
Stay Hungry, Stay Foolish

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Get in touch if you you have any questions.

Leadership Styles

Leadership Styles 150 150 Cypher

Leadership Styles

The leadership style we choose can be so effective but also so limiting. We reinforce a view of our own style by using personality tests like Myers-Briggs or DISC profiling but the danger here is that these tools present us with a style or a type we feel stuck with. We are pigeon-holed. We view the world – and our leadership style- from the box we are put in.

There is a common view that like our personality type, our leadership style is fixed. Using the popular Six Leadership Styles, highlighted by Daniel Goleman as a framework for this argument, it means that we are either a commander, or a visionary; a democrat or a coach, a pace-setter or we use a more affiliative approach to maintain harmony and keep the peace.

But what if our leadership style – and our personality type- weren’t fixed and we could access all of the options Goleman has highlighted? What if we could pick and choose a style that provided the best results from any given scenario?

The thing is we can!

Thinking outside the leadership box
The Myers-Briggs test was created in the 1940s by Carl Jung. He suggested that based on 93 questions it could group us all into 16 different discrete “types” — and in doing so, serve as “a powerful framework for building better relationships, driving positive change, harnessing innovation, and achieving excellence.” But the test was developed based on completely untested theories and is now widely discredited by the psychology community.

As such, this isn’t a ‘one-size-fits-all’ approach but rather a ‘we-only-have-one-size’ approach. This means that trying to lead in one way, given any situation, based on the results of the Myers-Briggs test, is always going to be suboptimal. The other, better, way surely is to get really clear on what you want to create; the performance you’re looking for, the results you require, what success means in a specific situation and adapt your style, your language and your actions accordingly.

Maybe a spot of micro-management or close direction is required for one situation, in a crisis perhaps, but actually it’s completely inappropriate for the next situation. If we can understand this, free ourselves from the shackles of our personality type, we can develop faster, be more effective in different situations and think outside of the box.

Same people, different style
Cypher has experienced some growth in the team recently and the one thing I’ve learned is that I need to be a different leader for each one of the individuals. We are up to nine now and on paper, at least, they are all very similar people; they do similar jobs, have similar backgrounds, are at similar levels as we have a relatively flat hierarchy, but despite this they all need different things from me to perform at their best.

I maybe take this for granted, and some people do struggle with this idea. But it’s not just your people that look for a different style, your customers will as well. Cypher’s customer base includes  pub landlords, Estate Agents, builders, professors, to engineers. I can walk on a building site and I sound like a builder within about five minutes, because that’s how I work, but of course other clients might want something different from me- and you.

Choose how you show up
Interestingly, for the purposes of fair research, I added my details into the 16 personality types. If you are interested I’m 74% extrovert, 66% observant, 63% feeling, 57% expecting and 71% assertive. I am not sure what this means or how it helps me in a prospect meeting. Personally, I like to choose how I will show up, ‘who’ I will be, based on the context of the meeting and the traits of the client. If they are a numbers person, I can get into the detail. If they need some reassurance that their idea or company is sound then our business planning and cash flow forecasts will give them the confidence to push forward. Understanding what the audience needs means and adapting to it can create a more optimal outcome for everybody.

Align your leadership style to match your goals
Another way to determine what leadership style to adopt is rooted in the goals we set ourselves and our business. We can’t decide that a business strategy is unachievable because we have a certain personality type. We work with some high-end, precision engineering clients. The quality of their product and service is reflected across their business; the way their finance function is set up, how the receptionist answers the phone, how their admin is done; it all mirrors that business ethos. I also used to work with a scrap metal business. The owner was a scrap merchant by trade and fell into being a business owner and his leadership style didn’t change. I used to collect bags of cash, the paperwork was a bit of a mess but that reflected the business. It was very successful but it demonstrates how the two are so closely linked.

Understanding what your leadership style needs to be in order to achieve your goals is a hundred times more important than understanding where you sit on a personality test.

To be a truly effective leader, work out what you want to create; what your goals or your desired results are, personally or professionally and then adapt your style and your performance as a leader to get there. In doing so, you should access whatever leadership style you want at any time.

Dial up the clarity
We did a podcast on craving clarity not certainty, which was an approach we encourage business owners to take when planning or reviewing their business. But it also applies to a strong leadership approach too. Myers-Briggs, or DISC profiling gives us a level of certainty about who we are and how we should act in any situation. Better to bring a level of clarity to any leadership or management conversation to ensure all parties understand their expected roles and the desired outcomes. Help them make a choice to either stop performing in a way that doesn’t help the business or understand what may happen if they don’t.

Keep your friends close…
In my previous business, I was told that as a leader – a partner in fact- that I wasn’t allowed to be friends with anyone else in the building. This didn’t just include colleagues but partners too. I have a client that had to deal with a friend of his who wasn’t performing in the business and we had to discuss a way to deal with the situation that reflected their friendship but also his status as MD of the business.  My old firm’s leadership style was to have a completely separate life and separate group of friends away from business. It was completely alien to me. As a leader, in what world is it a good thing to not be friends with the people you’re in business with?

Choose your goals, choose your style
To review Goleman’s Six leadership Styles, whether you are an authoritarian, commander style leader, a democratic one, a coach or have an affiliative approach, that is not the issue. The key is whether you can recognise your style and adapt it when faced with a given setting.

Some business leaders are so entrenched in ‘this is my style’ that they don’t see that actually by changing or adapting in certain situations, they’ll create a different- possibly better- output for themselves.

If you have one style and apply it uniformly, across every given situation, there’s absolutely no way you will create the optimal level of performance across your whole team. Business performance is based on delighting clients and when your team performs at its best, that will rub off and everyone will be happy. But different team members respond differently to different styles at different times and by operating with a deal of flexibility you will get a better level of performance from your team.

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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 Power of Language

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The Power of Language

Speaking, writing and reading are integral to everyday life, where language is the primary tool for expression and communication. Studying how people use language – what words and phrases they consciously and unconsciously choose and combine – can help us better understand ourselves and why we behave the way we do.

Language as a lens into behaviour
Linguists analyse how certain speech patterns correspond to particular behaviours, including how language can impact people’s buying decisions or influence their social media use.

In business and in life, perception is everything and our perception is based on language; what is said and what we hear. When it comes to how we behave, how we respond, the boldness of our actions, it is driven by our perception of the situation.  It’s important to know that there is also a definite correlation between our perception and our performance; the bolder we feel, often the greater our performance.

The impact of language is demonstrated by tweaking some of the smallest words we use. For example, if you ask someone how they are, do they answer that they are ‘not bad’ (double negative), or ‘very well’ (double positive). The two phrases might mean the same thing but the emotional response elicited -in both parties- by the different language used is massive.

Your inner monologue
The language you use internally, the way you tell yourself something will be, manifests powerfully in how you approach situations in the real world. How you create your perception of a situation has a massive impact on how you show up, how you behave, what you say and how you say it.

An example is difficult meetings – we all have them- but if you tell yourself that it is going to be difficult before the meeting even starts then it completely changes your focus and the language you use. You take up more defensive positions, you act differently and the chance of a positive outcome is almost 100% less likely.

What if you changed the description of the meeting in your head from ‘difficult’ to ‘a challenge’ or a ‘realignment meeting’ or even better a ‘growth meeting’. That change in language suggests a totally different set of possibilities for the meeting.

The power of polite language
How many times have you had a conversation that has become an argument that has spiralled out of control very quickly because people were speaking in haste and not taking the time to consider the impact of their words? Take a second, pause before speaking and you can change the direction of the conversation quickly to get it back on track.

Choosing your words carefully is important, but sticking to your guns and being clear on your point is just as important. Often you need to get past the fact that it might be difficult to say or hear and make sure that you are able to make a point, without any emotion attached to it and be sure it was heard loud and clear by the subject.

Body language
A fundamental change since we have adopted video meetings is now you don’t see people’s bodies as much, which means it is harder to pick up on those subtle hints and clues that a person’s body language can give. The key to body language is that it is largely unconscious; you can take time to pick your words but body language happens more naturally.

Communication starts with body language, then the words we use, then the way we deliver them.

So, even on a Zoom or Teams meeting, think about how your audience will perceive your engagement or interest in a meeting. Sit up, or stand up, lean in, be visible.

Never say can’t or unfortunately
Two words, you should never use, as a leader, ‘can’t’, and ‘unfortunately’, which is the ultimate sentence killer; no-one ever reads past, unfortunately in an email. ‘Thanks for your recent proposal but unfortunately…’no, we didn’t get it, move on. These words are perceived in a certain way; they are very disempowering and negative. Try to substitute them.

A big issue in accountancy- and probably across professional services- is the concept of scope creep, where you basically do extra stuff for your clients, but you don’t bill them for it. Scope creep starts when a client rings you and asks if you can deliver a new course on a given day, often the conversation starts ‘could you just…’.

Whether or not you are able to accommodate this new request, the biggest difference in the language you use in your response when you agree to this additional work, is whether you say it will come with additional budget or not.  If you are clear that doing ‘X’ will add ‘Y’ to the fee, then that prevents the need for an uncomfortable conversation down the line, because your client thought the work was included and it wasn’t.

Jargon Busting
We get told by a lot of clients that they value our ability to talk about something that’s fairly complex in a way makes it a lot simpler to understand. As you can appreciate, the tax laws and implications for many businesses can be tricky to navigate. One thing we don’t do is use industry jargon, and we certainly don’t try to demonstrate our ability or knowledge of a subject by baffling a client with abbreviations.

The language of Performance
Performance is a word that is used a lot throughout business and it carries a huge amount of power because if you can clarify, through the use of language, what performance means to you, and what improving performance would mean to your business then by strengthening every aspect of it, the impact could be massive.

There are three dictionary definitions; The activity of presenting a plea concert or other form of entertainment to entertain an audience, the action or process of performing a task or function, within the context of business related to your business and your role and finally when specifically used for define business performance, it is your progress against goals, finances and customer care.

If your perception of performance is just related to business goals, then that will be the focus, but the language used to define it is much more powerful than that. Think about how you show up as a business leader; what sort of performance do you give – are you entertaining and clear? When performing  a task do you create the optimal conditions for success?

The pen is mightier than the sword
The adage created by English author Edward Bulwer-Lytton, indicated that the written word is more effective than violence as a tool for communicating a point. I read an article recently about a person that came back from holiday to about 14,000 emails. My first thought was why this bottle neck was allowed to happen but interestingly the guy’s approach to clearing his inbox was to type as few words as possible in his responses.

By cutting out all the pleasantries, his emails were a simple ‘yes’, ‘no’, ‘okay’ and ‘get it done’. If it was more complex than a binary yes or no, he would write ‘this sounds like a conversation’. And if he got a call subsequently, then he would deal with it and if he didn’t get a call then obviously it wasn’t important and he cleared his inbox.

But the feedback he got, mainly from his team was along the lines of what have we done wrong, why are you being so short with us? We all agonise and rightly so about how an email will sound to the recipient. I have taken to responding to WhatsApps via voice message. When they are read out by Siri in a monotone, emotionless voice with different punctuation it’s amazing how it changes the message and how people perceive the message.

Words are incredibly powerful. People perceive us in a certain way based on our language. Our products and services are differentiated based on our language, even our brand is language. There are opportunities to strengthen the language we use everywhere and as entrepreneurs; if we can master the use of language in different situations it is going to give us a great advantage.

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If your business could use the Cypher touch, please contact us and we will be happy to discuss your options.

Vampire Clients

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Vampire Clients

As we all know, every business, at one time or another will have clients that don’t go so well – and consistently don’t go well. You will recognise them; Vampire clients are so called because they suck out all of your time, they suck all of the joy out of the room, they suck profit out of your business and they suck the energy out of your day. So what do we do about these Vampire Clients?

The problem is that business owners are fundamentally scared to say no. Moreover, they have a deep seated, pathological fear of firing a client, but if you have a client that is not working and is never going to work then please, get rid. Passing them on to someone else is the best decision you can make.

Don’t invite a Vampire into your house.
The first rule about vampires is they have to be invited in to your home.

Typically, when you start a new business, you pretty much take any client available- anyone with a pulse and a chequebook. But, once you have passed the first six months or so of trading you should start to look for red flags – they will appear as early as the prospecting meeting.

We know we aren’t the cheapest accountant out there; we offer a fixed price monthly fee and wrap all of our services into a bespoke package we think will suit a client. If the prospect is fixated on price, wants to get it five pounds cheaper or continues to question why we charge for this or that or says ‘my old accountant didn’t do that’, then these are red flags. If it doesn’t feel right on day one, chances are it won’t get any better. Avoid this type of client by not engaging with them in the first place.

Vampire Hunting
Before you can get rid of a Vampire, first you have to identify them.

Vampires – and Vampire Clients- are experts at hiding in plain sight. They can live among us mortal humans quite easily and apart from a few unsavoury proclivities around meal times, we could all get on very well. But before you can do something about a Vampire client, first you have to find them.

I know a lot of businesses have a grading system for clients. They segment their customer base and then rank it against their ideal client criteria. Using A’s, B’s, C’s and D’s or ones, twos, threes, etc, the objective is to see how many clients fit into your ideal client base and importantly which don’t.

Grading criteria could include customers paying the right price for your service, paying on time or buying more than one service. As well as quantifiable rules you can also add in some qualitative ones; do they get on with the team? Are they nice human beings? Do they return your calls promptly if you have a question?

Hopefully the vast majority are going to be in your top categories. But when you identify clients that aren’t, don’t fire them straight away, first try and understand what the issue is and see if you can fix it. Like in the movies, they may not even know they are Vampires yet!

Many clients don’t know they are doing anything wrong, especially if you haven’t told them. We found that a lot of the reasons our clients weren’t grade ‘A’ was in fact largely our fault. Ask yourself, were you clear at the start about your fees, what you charge for and ways of working? Are you doing lots of work that you aren’t getting paid for, or because you are so focused on client astonishment, are you bending over backwards to serve a client which is causing the friction.

Whatever the issue you’ve got three options; either re-write the rules of the game, fix the issue or fire the client – stakes are optional.

Vampires eat you from the inside out.
A Vampire Client can become cancerous. While they are sucking the time and profit out of your business, think of the damage they can do to your team. A Vampire Client can suck the energy out of a team member meaning they fall over, they go off sick and so your service levels to other clients drops and you start to lose those clients too. The situation becomes really imbalanced and if good clients leave you are even more at the mercy of your Vampire friends.

Have your team around you.
One of the most powerful things we did when grading our clients was to involve the whole team. We wanted them all on-board so it was a collaborative decision. It demonstrated to me that clients can act differently with different members of the team. Where I might get some great emails from clients or none at all because I generally speak to them on the phone, members of the team identified some awful correspondence they had received. And if I am not in the office, certain clients were known to just bring the mood down and suck the life out of the team. It’s a massive thing, but you need to back your team, let the clients go and destroy someone else’s work force.

Killing off the Vampires is like a stake through the heart
Once you identify your Vampire Clients, one of the hardest things to do is kill them off. Van Helsing doesn’t ride into town to do the dirty work, as the business owner the job is yours.  When the time comes, the shift in mindset you need is to stop thinking about this as a loss of revenue – the money, like the person they were before they became a vampire, is gone – instead think about the time you have saved, the energy you can put back into your other clients.

When it is time to let them go, firstly, be open, honest and transparent. Ideally, you should do it in person and explain that the relationship isn’t working – for either party- and that other firms would be better placed to offer what they need. You might find they are thinking the same thing and it can be perfectly straightforward and honest.

Remember no one has the right to buy from you. This is your business, your rules. And so, for any reason you want, you can say it’s not working. You can’t leave customers in the lurch, but you can terminate relationships, move on and let them be a Vampire to someone else.

Avoiding Vampires.
The benefits of avoiding Vampire Clients are enormous; you are free of negative energy and the time they take up, which allows you to focus more on clients that love what you do. It takes courage and it takes belief in your business, but you’re not losing the revenue, because you never had it in the first place. What you are losing or rather saving is the time and hassle that would come with this client.

Whether it’s your smallest or biggest client all a lot of business owners are going to see is the lost revenue as a result of firing them but if you put the new-found time and energy back into delighting clients the referrals can easily fill that void. We had to do it once but we filled the gap in six weeks.

Whether you diagnose that you have one or a colony of Vampire Clients, the key is to act fast to either turn them around or turn them out. This starts with understanding what makes a good client for your business and what doesn’t. Once you have categorised your clients you can identify the ones that are more Vampirish and deal with them in a way that makes them good ones – think Robert Pattinson’s character in Twilight. Once you understand all of this, you can take this knowledge, this power into every prospect meeting and once you see potential Vampire Client bare their fangs close the door and don’t invite them in.

Find out more

If your business could use the Cypher touch, please contact us and we will be happy to discuss your options.

Strengthen or Grow

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Strengthen or Grow

Have you ever considered that strengthening your business is even more important than growing your business?

If the point of a business is to generate wealth for the business owners, then business growth is generally defined as an increase in sales or revenue either month on month, or year on year. We focus on the top line, because that’s how we’re taught to read a set of accounts. So unless revenue and sales have gone up, the business hasn’t grown and in fact it may be considered to be in decline.

We may tweak other elements, so even if revenues are flat, maybe costs have decreased so bottom line growth still occurs, profits are still up and business owners can still take more money out at the end of the financial year.

Whichever way you look at it, wealth plays a huge part in top or bottom line growth.  But, this need to grow, this need for more clients, to grow the pipeline in order to be more successful creates a lot of inherent pressure for business owners, whereas the concept of strengthening a business comes with a lot less anxiety.

Strength equals power
The concept of strengthening a business is far more empowering. It is a more internal focus that ultimately still leads to growth. For example, we talk about cash flow a lot on the podcast; making huge profits in month eight of a financial year is entirely useless if you don’t have cash in the bank in month four to pay suppliers, staff, or rent. So strengthening systems around cash flow; for example payment terms and conditions can sometimes be more important than sales.

And that is just one aspect worth strengthening. Business owners can focus on strengthening customer communications, they can strengthen service quality, strengthen their leadership or people development through training and knowledge share. Having a stronger, better version of any business is more attractive to customers, which will, in turn, lead to sustainable, organic growth, without all of the top line pressure.

Grow or Die
There is a school of thought, prevalent amongst many business coaches, that if a business isn’t growing, it’s dying. But I suggest that focusing on strengthening your business will still bring the growth and in fact just growing – for growth’s sake- can cause a business to die.

During a period of growth, lots of noise will appear in the business because as the business owner you haven’t had the time to do anything other than deal with the increased demand. You are building or delivering your product, on-boarding new customers, buying space, software or other tools to support your delivery which means you don’t get time to take stock because everything’s coming at you at a hundred miles an hour.

Now, we may be just splitting semantics here; I say strengthening, you say consolidating, but I think every business should, after a period of sustained growth, take their foot off the gas and strengthen (or consolidate) their position including their systems, their people and their operations.  You can still grow everything other than your top line through this process.

If you’re growing consistently for say six months, then in the following three months- or 50% of the growth period- I would argue that you need time to actually review your new systems and your new people to make sure they’re all bedded in, make sure you aren’t spending money on things you don’t need to. You have grown the top line; now focus on the bottom line.

This is the time to look at your margins, make sure you aren’t still offering discounted rates to attract customers, review your pricing strategy check you aren’t loss-leading throughout a client’s lifecycle. You may have taken on a new overhead – at pace- to deal with the growth; now is a time to look at the way you financed it or are using it. I’ve seen lots of businesses who just grow, grow, grow, thinking everything’s rosy and then bang, they run out of cash!

I always encourage clients to create the business they aspire to, not the one they have, so getting the right operations, the systems, the people, the brand, the marketing, the leadership in place for where you want to be in two-to-five years’ time. Spend time strengthening your ability, your attitudes and your behaviours to be better at what you do. Delight your clients and growth will come.

Death by growth
A client from a previous business was increasing his revenue by about sixty to seventy grand annually. He was approaching a million pound business but his margin –the amount he made per pound that he sold- was dropping every year by about five or six percent. His problem was that while he was taking on more and more work, he didn’t have the capacity or the machines  in house to deliver it so was subbing it all out and having filled up his regular sub-contractors, he was going further and further afield, using more and more expensive services to get the work done. All the new revenue was costing him more and bringing more stress.

We sat down and instead of focusing on growing, we asked him to think about strengthening. We said, ‘if we take out this £300,000 of extra sales you’ve made over the last three and a half years and start saying, no, what can this do for the business and importantly for you’? There were two outcomes; he jettisoned the more stressful work being outsourced to more expensive and less skilled contractors and raised the prices for the work he could deliver in house using his two best sub-contractors. The result was that yes we knocked £300,000 off his total revenue, but we gave him back about a day a week out of the office and actually created about 35,000 additional net profit.

The growth wasn’t making the business stronger, because it was becoming more and more dependent on an ever increasing pool of sub-standard, sub-contractors who were getting further away from delighting customers. In this example, growing was actually causing the business to die.

Growth by social media
Now, of course if you are a business owner that uses social media a lot, particularly to build your personal brand – showing how you are smashing it daily- you may not want to change your focus from telling people how well you are growing. Posting less can lead to a perception you aren’t doing well, but I think that in this scenario, transparency and honestly builds trust – and strength.

Change the rhetoric slightly, stop posting about how delighted you are to on-board a new client and maybe talk about how well you are serving those clients – or better still get them to do it for you.

Strong Service Brings Growth
If your business continually delivers the highest quality of service, you’re always going to have a business and arguably, one at the top end of your industry in terms of performance. To continually create a wonderful client experience your business needs to be strong. As soon as the client service delivery drops your business is becoming weaker. It may be because of rapid growth and there’s too much demand for the resource that you’ve got but it isn’t sustainable to not deliver good service.

My final point is this; take the time to review your business, look at all aspects and then ask yourself three questions:

Does this help grow my revenue?
Does it strengthen my bottom line?
Does it strengthen my personal wellbeing?

Looking at things through these lenses is a good starting point to strengthen the financial side of your business as well as the health of the person running it. If you answer no too many times, jettison that work or activity. You will be stronger – and grow better- for doing it.

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.

Creating Innovation 2

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Creating Innovation 2

Mention an innovative business and most people will point to a tech business; a platform, a SAAS product or a hardware producer like Apple or Dell. But for me innovation doesn’t just mean being the next Microsoft, there are a number of ways completely non-technical businesses can innovate.

The word ‘Innovation’ comes from the Latin root word innovare, which means ‘to renew or change’ and not, as is commonly assumed, the introduction of something new.

My innovation story is about buying a new car. I traded mine in during the summer because the price for my second hand car was phenomenal, largely caused by a lack of super conductor chips that were all destroyed in a factory fire in Germany. All the top brands were affected; BMW, Mercedes, Jaguar and Landover and it created a waiting list of around half a year for a new car

Buying an electric car
As any good accountant will tell you – now is the time to buy an electric car, so my wife and I wanted to look at a Polestar, which is a Swedish electric car manufacturer. The sales of electric and hybrid cars have never been greater, but have you ever seen a Polestar dealership? No, because they don’t have them. These guys have come from nowhere, engineered a car from scratch and as well as the innovative technology they use under the bonnet, the way they sell those cars is also completely different.

We arranged to see a vehicle at our local ‘centre’ – not a dealership, more like an art gallery- we booked in and were given a car and a route to follow via GPS and off we went, just the two of us. They made us aware that we wouldn’t be able to buy the car on the day, because they don’t employ sales people at the ‘centre’.

During your tour and test drive Polestar don’t talk price and they don’t talk finance deals; you can ask as many question as you want but there is no haggling. The next day you get a text which basically says if you are interested press 1, and if not thanks all the same.

The cars are a very impressive in their own right, but my point is they’ve innovated the whole sales process; my wife who does not like car dealerships, because she doesn’t like being sold to, could spend the whole morning touching all the fabric, getting in and out of the cars, all with no pressure, it’s a completely different way and that was the perfect buying experience from us.

I think there is a scale that innovation can be measured on from incremental right up to disruptive where a process – or in my example a customer journey has been turned on its head.

They are also innovative in their approach to the competition – I did a blog about Competing v Completing earlier in the year and as far as Polestar are concerned as long as the consumer chooses an electric car versus a petrol and diesel one, whether it is theirs or a Tesla or another brand, they don’t care. They want to grow the electric brand as a whole, they’re conscious that they’re innovating alongside Tesla or more traditional car manufacturers but as long as you’re in one of their ecosystems, long-term, that’s still a result for their business.

Top 10 most innovative companies in the UK
To help my discussion with , I Googled the top 10 most innovative companies in the UK. Some of the results might surprise you.

  1. Dyson – no great surprise with an investment of around $2m a week in R&D activities
  2. Shazam –an app that can identify music, movies, ads and TV shows, based on a short sample heard by your smart device
  3. Mind Candy-created an online game for children called Moshi Monster which is like a virtual Tamagotchi for the digital age. Your kids will be all over it.
  4. Arm Holdings, – who create semiconductors and chips, for smartphones and devices
  5. Spotify- the world’s largest music streaming service provider
  6. Burberry- the retail giant founded in the mid-19th Century has taken onmichannel retail to a new level. In their flagship Regent St store you can have a coat tailored to your fit and in real time see what it would look like if you took the hem up three inches or shortened the sleeves. They have brought the buying experience into the modern age.
  7. Heatherwick studio. Is a collection of designers and architects who in their own words are ‘dedicated to making the physical world around us better for everyone’.
  8. Raspberry PI has created a credit card-sized computer which you buy and then they challenge you to turn it into something else. I have one that is emulating an old Nintendo gaming system. You can turn them into security cameras, servers, phones, whatever. It’s an amazing bit of kit but in addition for every one bought they give one to the schools for kids to learn to code and build computers.
  9. Berg, were a creative design consultancy that wrapped up a few years ago.
  10. Marks and Spencer – who make the list because of their drive to make their stores greener. They’ve reduced CO2 by 23% in the last 15 years; they now operate at zero waste and have embraced eComm which has resulted in web and mobile sales going up 17% on.

Some of the businesses on this list are very new, some like Burberry and Marks and Spencer’s are very old, which proves that innovation is not just a young businesses game. But for me, while market disruption can come from start-ups and new businesses, for an entire industry to shift to something new, it needs one of the big players, the established brands to pivot to show the world what’s possible.

We have seen the way that streaming services like Netflix and Amazon have come along and stolen market share from traditional TV services and cinema to some extent, but now Disney – probably one of the oldest media companies in the world has launched Disney+ into the mix, now everyone is jumping on this streaming bandwagon. HBO are now doing it, Sky has a streaming service too.

If Mark’s and Spencer’s get their e-commerce site absolutely nailed and working, there’s no excuse for the other established high street retailers not to be able to move along with those times. Like Polestar, M&S has re-engineered the customer experience.

The remarkable tablet
I wanted to finish this blog talking about one of the best named products on the market. It has no internet, doesn’t send or receive text messages; it is basically a tool to write notes on. For me it’s replaced a thousand Xero branded notebooks and has reinvented writing on paper- which, incidentally is one of their core marketing messages. It allows me to complete a simple process of writing notes and then, once I have finished, by pushing a button it turns my notes into text and emails them to our systems so that everyone in the team has got a record of my notes.

It means that  whenever I meet a client or pick up the phone to someone, I push a button and I’ve got their notes in front of me; I don’t have to go hunting through the last book to find the last time I spoke to them and that is a complete game changer in my world.

By the time I’d had it six months –despite feeling it was a finished product- it had moved on three or four times. Now whatever you write can appear on a second unit in real time, which is mind-boggling. The point is though, they could have waited to release it when it was perfect, which might have delayed its launch but instead they put it out there and continued to innovate.

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 Strategy

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Business Strategy

As we approach the end of 2021 – yes it has, hasn’t it – lots of business owners will be thinking about their plans for 2022.

I did a blog on business planning previously and for me, you can’t really write a business plan unless you’ve got some kind of strategy that underpins it. If a business strategy isn’t written down and no-one knows about it, is it really a strategy?

A definition of strategy
The term strategy throws up different connotations. Google says strategy is ‘a plan of action, designed to achieve a long term or overall aim,’ or the ‘art of planning and directing overall military operations’, so strategy in a specific context. Both definitions have a long-term feel about them and I think that’s where some of the tension comes, as more and more businesses look to become more agile, reactive and focus more on the short-term.

Mind you, if someone asked me about the Cypher strategy, I am not sure I have a coherent answer. We knew what we wanted the firm to be; we knew we wanted to be different because we saw an opportunity to do so and now a lot of the industry is moving into the space that we’re in and we are working hard to keep that first mover advantage.

In his capacity as a business coach Alan suggested that our vision is to stay two steps ahead of the mainstream in our industry; that is our strategic intent and the set of actions that underpin this will become our strategy.

If the first definitions of a strategy lend themselves to a big old plan that achieves something spectacular in the long run, then perhaps a more useful way for businesses today to consider a strategy is to think about, for example, how to create the best customer care on the high street, or how to gain 200 clients within six months and to then create a set of actions to achieve these goals. This feels like more nimble, agile and quite frankly more doable. Being achievable is surely a key element of any strategy after all!

Another definition of a strategy then is ‘a set of actions that win’. So think of two or three spaces you want to win in and create a set of actions to get there. In this regard, I am comfortable considering a strategy as the culmination of four 90-day plans.

90 – Day planning
Looking too far ahead loses helpfulness. The reason we are all told to create 90-day plans is that the human brain is simply not wired to fixate on a goal five years out. You need to be succinct in your strategy so that it’s easier for you as the business owner or the senior managers or whomever to digest and action it.

When a strategy is broken down into smaller chunks, it also offers you more opportunities to see wins, to see progress towards bigger goals. You tick a box; get a pat on the back and then move on to the next  90-day chunk.

If you are ready to take control of 2022, come to a Growth Club event on Wednesday 12th January. In conjunction with action Coach Newbury, we will look at alignment for the whole year and you will leave with clear goals and a 90 day plan in place.

Apple’s Agenda for 2011
Earlier this year Apple were engaged in a major legal battle with Epic Games, about the distribution of funds from games sold through the app store. During the trial, internal emails from Apple’s late CEO, Steve Jobs were released including an agenda for a 2010 meeting of the 100 most influential Apple employees. At the time Apple were in the middle of a massive pivot; the I-phone and I-pad were in their infancy, Apple was engaged in another war with Google and preparing the ground work for their new headquarters in California. There were six points on this agenda.

The first two points were internal facing questions; who are we and what do we do? His point was that the business then was not what it was about to be and that in five years’ time it would become something else again.

Next was a point about the products and positioning and moving into the post PC era, stealing a great chunk of market share from laptops by encouraging consumers to do IT things in the palm of their hands. The fourth bullet was about competitors called ‘the holy war with Google’, who themselves were growing an empire away from the search engine into hardware and had started to overlap with Apple products.

The fifth point was around the wider tech landscape, suggesting that 2011 would be the year of the cloud as businesses and individuals learned to operate within the cloud environment that is now standard. The sixth and final point was to focus on Apple’s subsequent move to a $5bn, 176 acre site as its new headquarters.

In the five years after this agenda, Apple was probably the most successful business on the planet, but you could take this agenda and apply it almost any business and it would create a very decent strategic set of action points.

Multiple strategies
Let’s be honest, how many businesses or business owners create a marketing strategy and a recruitment strategy and a procurement strategy and a technology strategy? How many can compartmentalise these distinct functions and how many of us let them merge into one? Given the impact optimising any one of these functions can have on a business overall, there’s definitely value in picking them apart and then bringing them back together under one overarching strategy.

Getting clarity and identifying spaces you want your business to win in – and what winning looks like – whether that be attracting the best people or offering the client experience, creating a healthier cash flow; the big rocks that Stephen Covey would say make the biggest positive impact on your company- identify those and create the set of actions that will drive those outcomes.

What do you want to achieve
Lastly, as a business owner, before you build your strategy, it’s important that you ask yourself what you want to achieve. If you build a strategy around confusion, you’re going to create more confusion, if you build a strategy around clarity, you’re going to get clarity. And achievement – or winning – isn’t the same for everyone.

Strategy is about setting objectives to be achieved over a set of 90-day periods that lead to wider goals. Strategies can only help you win if you know what winning looks like to you.

New Year, new idea
There is never a bad time, but the next few weeks might provide the time and space for business owners to become galvanized and enthused about the word strategy again. Space to think about will lead to strategic intent; your vision or mission, which gives you a purpose. Clarity of purpose, using Steve Jobs’ six agenda items, answers the big questions –the big rocks – which will create a strategic set of actions.

Identifying who you are and what you do, who the big competitor is – as well as recognising that it may not be the obvious choice, but someone that offers your customer the same result but with a completely different product or service- is another big piece of the puzzle along with the landscape of your industry and big plans you may have on the horizon.

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.

Technology in Business

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Technology in Business

I was listening to Jack FM – a number of our clients advertise with the station – and an advert came on for the Oxford Institute for Ethical AI. Firstly, I’m really pleased that there is an Institute for ethical AI, because that feels like it’s going to keep the terminators at bay, but secondly, why are they advertising? Is there so much AI around now that people need to know there is a body like this to keep the ethics of the industry in check?

As usual, it got Alan and I talking!

Covid-19 has become the accelerator for one of the greatest workplace transformations in generations. How we work, exercise, shop, learn and communicate has changed, possibly forever.  But one of the constants of the last two years is the role that digital technology- and the wider tech sector-has played for businesses. From enabling the transition to remote working, to helping small businesses pivot and reach new customers, technology has become integral to almost every business on the planet. It certainly is for mine.

The acceleration over the last two years have been massive but go back even just 10 years and pick any business in any industry and look at what software, systems and technology they were using and see just how much it has changed. It’s mad to think that we now have more power in our pocket on an iPhone than they had when they put men on the moon in the sixties.

Technology as a disrupter
We support a number of Estate Agents and the disruption in the property market caused by the launch of on-line estate agencies like Purple Bricks or Sarah Beeny’s Tepilo has been massive. They have completely flattened the market. From traditional questions about how a property would be marketed; would there be a leaflet drop, would there be a photo in the centre of the shop window; where was the shop window and did it have high footfall? Nowadays it’s far more straightforward; everyone uses Right Move or Zoopla and – as long as they are prepared to pay the prices -90% of Estate Agents use these same tech platforms and even post almost exactly the same listing details. It means it’s much harder to stand out.

What’s interesting though is that the on-line agency hasn’t completely removed the need for humans – far from it. People want to see the listing on Right Move, for sure, but, for what is usually the largest purchase in someone’s life, they want the comfort blanket of dealing with a person.

Integrated Systems
When we set up Cypher, we knew that we wanted to base the business around Xero so we tested different software systems that support the product that we deliver; the accounts, the tax, the VAT returns and this is now all driven by Xero directly or via systems that integrate to Xero.

Our mantra is that we never enter data more than once and having chosen Xero we then spent time understanding what we could do to speed up the non-product side of our business.  We now have four distinct platforms; a CRM system, a bookkeeping system, a proposal system and a direct debit system that all talk to each other, which means that when a new client signs a proposal it creates jobs in our CRM system, which creates tasks in our diaries, clients are invited into our portal with a nice email that also requests anti money laundering information and then triggers the direct debit mandate.

The key to all of this is integration. Systems working in isolation will – at some point- hold you back.

The Rise of Big Data
In a world of big data it’s quite scary how much information is available on every individual and business in the public domain if you know where to look. We work with a company that scrapes about 300 bits of data from prospects, while they are filling in a contact form, to determine whether they are a good match for their product or not. They only want to work with businesses of a certain size, with a certain amount of web traffic, that have a top brand position and operate in certain countries. If a prospect answers yes to these criteria they throw the kitchen sink at you – if you’re a no for whatever reason they put you down a different path.

Businesses that can leverage data about their customers or potential clients will be part of the next big advance.

Instant reporting
We work with a chain of cafes and via an I-phone the business owner has instant access to up-to-the-minute daily sales information. They know who’s in their shop and what the spend is across sites. They can be anywhere in the world and as long as they’ve got internet connection they’ve got that visibility. Technology has flattened the playing surface to some extent and now a small independent can compete with a global retailer.

Risk v Reward
Of course, a reliance on tech can cause greater risks – ones we didn’t see 10 years ago. If say Boots had an issue with a server, it could potentially knock out a number of connected sites in a way that years ago wouldn’t have been possible. When I was at Halfords in my youth, if the card machines went down, no one batted an eye lid because customers carried cash and kept on spending. Nowadays, I don’t even take my wallet out; generally I take my phone and use Apple pay; that is how much the world has fundamentally shifted. But it means if your till system, or your card machines go down, you are in trouble.

Tech as a threat or opportunity
As business owners or entrepreneurs there is no doubt we need to get more tech savvy. Do we see advances in technology as a threat or an opportunity? What elements of any business could be improved significantly by technology? Technology has been a great leveller for business; anyone with a laptop and a Wi-Fi connection can now compete with huge multi-national businesses. Platforms like Amazon, E-bay, Etsy and Not on the High Street have offered every type of business, from garden fencing to a side hustle an opportunity to go global. Technology is growing – humans need to understand it and take advantage of it.

The Human Element
The genie is definitely out of the bottle; technology gives new businesses with new offerings a  fresh opportunity to consider which technology platform and what technology advantages they want to bring in with their new ideas.

Tech has enabled a shift; it’s enabled wider choice, it’s opened the curtains on the windows to many business models, but so much is still driven by the human element and it will continue to be driven by the human element because so many consumers are not ready for that next step.

Advances in technology have meant that every business in every industry is fundamentally different to what it was 15 years ago. However, if I ran a business 15 years ago, I would say nine out of 10 of the conversations that I still have with clients today would be the same.

Whatever the business, the issues business owners face; not having enough time, not having enough cash flow, stress with people, none of that has changed.  Businesses maybe more complex but every business owner is still wants more time back, still wants to make more money. So the human element in business is still as important as it ever was.

Find out more

If your business could use the Cypher touch, please contact us and we will be happy to discuss your options.

An Employee vs An Entrepreneur Mindset

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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

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