A short while ago, a business owner named John came to my business coaching company with a difficult dilemma. His new teleconference company had just launched a few years prior and was on the verge of reaching profitability.
His current sales when he called covered about 70 percent of his total costs. He had an exciting opportunity to change the company’s business model for the better, yet had reached a crossroads and knew it. He wanted our input to help him make a key decision between shifting focus to this new venture or staying with his original business model.
Too many business owners make poor and costly decisions simply because they’re too close to their businesses and don’t have the perspective they need to see things accurately. That’s a huge benefit of having outside peers and advisors you can turn to in order to provide this perspective. That’s also why we think it’s difficult and dangerous to build your business in isolation.
First, we asked John objective questions so we could accurately view his situation and desired outcome, and then determine his realistic options. After going through our question sequence, three things became clear to John.
First, his new business model was unproven and hence a gamble, but also one with a big upside if successful. In fact, if it worked, he would be creating a brand new market that his business could dominate.
Second, his current business efforts were working; conservatively, at their current growth rate they were five months away from becoming profitable.
Third, once he reached profitability under his existing business plan, it would be fairly straightforward to maintain and incrementally grow their sales volume, which was a stable, monthly recurring revenue stream model.
Once these key data points were laid out, his decision became easy. John chose to aggressively focus on reaching profitability under his existing business plan. This would give him the financial strength and sustainability he needed to take a chance and refocus some of his best talent on establishing this new market while developing his new business model.
He realized that the risks of completely changing midstream were simply not worth the return, and that what his business needed him to do was different from what he as the entrepreneur pulled by the “bright, shiny object” of the new opportunity wanted to do.
When faced with a tough business decision that has serious consequences, we suggest getting structured, outside input to help clarify the current situation, your desired outcome, and your potential options. This is when you lean on your peers and advisors to help you think through your situation and the best choices. It’s too easy to get locked into a stunted perspective. Besides, building any business in isolation is expensive, painful, and inefficient. We all need peers and advisors in our lives—people we can turn to and trust with tough decisions.
Here are three concrete suggestions to help you do this:
- Build your own business owner mastermind group. A mastermind group is a group of two or more individuals who work together to help each of the members reach their respective top goals in a spirit of harmony and cooperation.I’ve been in mastermind group for a decade now where I meet with my mastermind partners bi-weekly via phone and once or twice a year in person. They have been an incredible sounding board of experienced business owners who know me, my company, and my goals, and yet have the emotional distance to challenge my thinking. (Here’s a link to a 14 minute video on exactly how to form your own mastermind group.)
- Participate in a structured business coaching program. You’ll both be able to use your coaches outside perspective to help you sharpen your thinking, and to leverage the structured strategic process of the business coaching program itself. For example, we meet with each of our business coaching clients quarterly to guide them through a proven strategic planning retreat.You need both the one-to-one interchange and dialogue with your coach and the program’s structured strategic process to make sure you intentionally and intelligently make your decisions about where to focus your company time, talent, attention, and money. For a comprehensive guide to quarterly planning, download our business action plan template today.
- Build a management team that sees the world differently from you. While it is a tough thing to find people who are willing to challenge the person who signs their paycheck, it is an essential ingredient if you truly want to scale your company. You need leaders who give fresh perspective and are willing to push you to rethink your underlying models and assumptions.As you build your management team, make this one of your key criteria of senior level hires—people who will speak their mind, ask the tough questions, and face the hard facts, but who are willing to fully get behind the decisions your company later makes on these tough calls.
Good luck facing your tough challenges and making your big decisions.
If you would like to access 21 free video trainings we created on how to strategically scale your company and get your life back, click here and access our free Scale Tool Kit. Enjoy.