How to build a profitable business

In this session, you will learn about failure, why businesses tend to fail and ways you can start building mechanisms into your business to bridge over the potholes that lead to failure. ​
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Tasks
  • Create your own outcome formula (your money + your time = your reasonable outcome expectation)
  • Write 3 versions of your mission statement
  • Write a couple of paragraphs about the impact you want your business to have in the world. If your business started 10 years ago and grew as big as Facebook, Apple and Microsoft combined, what effect would it have on the world?
Downloadable resources Feedback Further reading Tools to adopt

Webinar Notes

90% of businesses fail. This isn't something to get discouraged about though.
When we talk about how many businesses fail and how often they fail, we are pulling from government data about those businesses. It is basically saying that of the millions of businesses that get registered with the government each year, within 3 years 90% of them will have officially declared that they have stopped trading. 

When you start thinking about it, there are many ways to contextualise the information about the rate of business failure around the world. The first thing to think about is who registers their business? and what are the consequences of registering your business? The assumption is that people that register their business are typically people that are working on their businesses full-time and are seeking to grow it into a massive corporation. That isn’t necessarily true. You might register a short term project as a business, like property investment, a short -term project with some friends and a short term contract with an organisation could require you to have a company registration. You might also register your business for tax purposes so that you are paying a lower rate in taxes overall, depending on your income bracket. Patricia Bright’s youtube channel The Break Platform actually has a useful explanation of the way she uses her company registration to lower her taxes. 

In the UK particularly, it is so easy to register your business and costs about £13.00 to do so that many people register their businesses without really thinking about the responsibility that comes with it. For example, hiring an accountant and filing your tax returns with Companies House. Again, depending on your tax bracket, you could be eligible to pay VAT and have to deal with the extra document filings that comes with that. The alternative is being a sole trader. As a sole trader, which gives you the opportunity to earn money, represent your self as a business person and means you don’t have as many of the filing responsibilities you would have as a business owner officially registered. In the UK it is particularly easy to access similar services as a sole trader as you would a registered business owner because it is so common to get overwhelmed by the bureaucracy that you end up switching to sole trader status. Our UK partners, Tide Business Banking also offer sole-trader accounts with free transactions for a year to people in our network. 

With that said, don’t get too focused on that 90% failure rate. It has no context. Your context is very different from anyone else’s. I like to think everyone goes into business with a 50/50 rate of failure. You either fail, or you don’t. 

What does failure mean to you? 
Everyone has a different threshold for failure. There is no one size fits all. You may have heard some of the sayings that typically come of out the startup ecosystem, like, “fail fast”, “move fast and break things” or “pivot before you crash”. The framework we ascribe to is, “failure is the definition of quitting”. We believe that you can only really fail in your business if you decide to quit your business. If you are tired, bored, stressed and overwhelmed and you think it is time to hang it up, then you have failed, technically. We also believe that the skills you learn and the person you become through the hardship of building, growing and running and business will make you more successful in any other thing you choose to do in the future, so from that lens, your business endeavour is going to be a success no matter what it looks like at the end. 

To help you navigate failure and recognise what it looks like in your own context, you should spend a few minutes thinking about what you’re risking by starting this business. Think about the time commitment required, the financial investment it will entail and the stress that you are inviting into your life. Then consider how much time, money and stress you’re willing to take on to hit a return that you would consider successful. Its a formula at the end of the day; how much money are you willing to spend multiplied by the amount of time you can set aside for your business should reflect the minimum you want to get out of the business. If things start going wrong you can pivot and find a new way to work out the problem, or you can quit. The choice is quite rightly, yours. But if you don’t have a strong emotional tie to the business, it is going to be a lot easier to walk away than if you do. 

​Why now, why this business? 
Whenever I ask this question, I  instantly remember the clip from Legally Blonde in which Resse Witherspoon, as Elle Woods, defends the rights of a parent against the claims of a sperm donor by asking, “why now, why this sperm?”. The entire argument actually sums up a lot of the theory around idea development and what the startup world calls “grit”. 

The questions you have to consider are, why do you suddenly want to be responsible for this idea and not the hundreds or thousands of other ideas that you’ve had over your lifetime? and what makes this one so special? It is an unpopular opinion, but ideas aren’t usually worth the paper they’re written on. Ideas are only powerful when they’re put to work, when they’re tested, moulded and significantly invested in. 

What’s your ideal outcome?
It can be scary to have expectations for your business because there’s very little you can do to control the outcome of your business. There is no such thing as “do good, get good” in life or in business. Of course, like in life, doing certain things will raise your ability to gain certain outcomes, but there are always things that appear out of nowhere to throw you off course. 

So when you’re thinking of your ideal outcome, think about the formula we talked about earlier. What is the most reasonable outcome that would help you determine that you have not wasted your time or money and when do you think is reasonable to achieve this by?

​Are you challenging the status quo?
One of my favourite business talk out there is the one by Simon Sinek that led to his bestseller, “Start with Why”. In the 18 minute TEDx talk, Sinek explains how Apple changed the game for everyone by redefining the way people generally think about computer companies. 

Another great example is the Starbucks company who completely innovated on the traditional coffee broker model to create a coffee shop culture by developing a new methodology that brought the community into the coffee. I don’t know if you’re familiar with the TV show, Cheers, but it was once the most popular TV show in America and started airing in 1982 with the theme and tagline, “where everybody knows your name”. Starbucks was founded in 1971 as a coffee brokerage first selling coffee to bars and restaurants in the US. 

In 1982 they introduced Howard Schultz to the company, as the new head of retail. In 1983 he went to Milan on a business trip and found that unlike in America, coffee shops were a big thing in Italy. We’re not going to deep-dive into the entire history of Starbucks, but it is interesting to note that when Schultz started thinking of how to introduce a popular concept in another part of the world to an American audience, he took reference from the top TV show at the time, Cheers, to bring a little American flair to coffee. Starbucks quickly became the coffee shop where everyone knew your name. While today you have to tell your Starbucks Barista your name for practical reasons like not getting your order mixed up with everyone else’s, back then, Americans felt alone and lost in the world. Shows like Cheers and places like Starbucks reminded them that they were part of a community. Til this day, every Starbucks has a “community board” up in their shops so that people in the local area can post community notices that are intended to bring people together. They aren’t that well utilised anymore, but the thought is still there.

There are many other examples of one thing inspiring another, like Living Single turning into FRIENDS, or Sex and the City turning into Girlfriends. They aren’t the same, but the willingness to borrow, shift, reorder and reapply to suit the interests of your own community or target audience is valid. 

Here's to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes... the ones who see things differently… Steve Jobs
Say whatever you like about good ole Steve, his work ethics, his personality, his belief systems, I’m sure there are places to agree and disagree vehemently in all of it, but one thing he did well, was see the future. He could tell where the world was going before the world knew it was ready to get there. He designed and planned for a future that no one else knew was coming. This is called thinking with “integrated complexity” and its something all the extremely successful entrepreneurial innovators of our day have in common; Elon Musk, Bill Gates etc. To be successful, you need to become an integrative thinker. The good news is that you’re probably halfway there. 

To have a business idea, you must have seen an opportunity or gap in the market that you think you can effectively exploit. There are potentially millions, if not billions of people that come across that exact situation or circumstance every day and have not come up with the same, or a similar solution. You see things differently. To succeed in business, you have to keep seeing things differently. 

Save time and brain cells for what actually matters.
It’s very easy to get distracted by “doing” when you’re working on your business, but what if what you’re doing is actually stopping you from growing. Of the thousands of entrepreneurs that we’ve worked with so many choose to focus their attention on the feel-good factors of their business, the parts that make people on the outside think you\re successful, but don’t necessarily bring in any money. 

I remember, a couple of years into running Do it Now Now, I was roped into providing free coaching sessions to some founders running a cafe that they were hoping to turn into a franchise in the future. Once I helped them build out their vision and mission as an organisation, we started talking about how they were going to achieve those goals. 

For something like that, you need eyeballs, you need people to fall in love with you. The most effective way to do that, when you have a clear goal in mind that demands it, is social media and building an authentic community through events. They needed social proof that people wanted access to their cafe even if they couldn’t physically get it AKA “social proof”. Naturally, I started talking to them about their social media strategy and trying to help them understand what they were doing well and could be doing better. In the middle of the session, which was spent with me sharing a lot of home truths with the founders, they suddenly asked to see Do it Now Now’s Instagram page as that was the platform all my advice had focused on up to that point. I shared it with them. We didn’t have many followers, so as soon as they saw the number, they expressed that I had no merit and my suggestions were invalid. They rushed me off the call and then cancelled the 3 other sessions we had booked in. What they didn’t understand is that we invest our time and resources based on our goals. At the time our entire business model was dependant on corporations and government departments who were making decisions about who to partner with and who to pay based on written proposals, in-person meetings and networking connections not Instagram followers. I once got on a plane for a one-hour meeting. If my customers (the people paying our bills) were finding us on Instagram, I would’ve been investing much more of our time and resources there!

If it doesn’t add to your bottom line whether in terms of customer loyalty or revenue, put it on the back burner or throw it out. This is part of the “move fast and break things” startup methodology. You can think of it as Marie Kondo-ing your business. If it doesn’t serve you, let it go. 

​The goal is to do the best that you can do in the time that you have available to you. As a small business owner, a one-person-band or a small but mighty team, there will always be things that you want to achieve that can be accomplished through automation. From graphic design to social media posting and more. Consider everything you have to do and then look into ways you can make that easier on yourself by employing some sort of software-based technology that allows you to bypass the monotony of administration. 

Many business services have these things built-in. For example, Tide Business Banking allows you to categorise your spending and bills in the app, as you make and collect payments, so you don’t have to spend hours tidying up your excel spreadsheets for your accountant (that was a gamechanger for me early on). Canva is another well-known platform you should be utilising to get your message out there. Rather than spending hours learning graphic design or starting from scratch based on Pinterest inspiration, you can use any one of the thousands of templates they’ve already got on their platform for FREE. Do you need to be in the know, but you don’t always have time to read everything that comes your way, Pocket it instead. This is a great way to save the articles you want to read for a time you are better situated and able to read it. Similarly, if you want to be in the know and gain inspiration for your own business, or you just want to find out what the best tools are out there for you to start adopting, you can sign up to Product Hunt where lots of tech startups post their newest creations that are typically aimed at other business people. That’s how I found out about Buy me a Coffee and Join Stream, two game-changing platforms to help you make some money by basically doing nothing out of the ordinary. 

Do you have efficient systems in place? 
I’m sure you’ve heard the popular saying, “we all have the same 24hours as Beyonce” well the musical documentary Homecoming made it abundantly clear that we don’t, in fact, have the same 24 hours as Beyonce. In one clip of the film documenting the making of her iconic Coachella performance in 2018, Beyonce calls all of her department heads into one room for a catch-up meeting; she is speaking to over 50 people. That’s 50 people representing teams of their own that are all responsible for a specific aspect of the 2-hour performance we see in the movie. We definitely don’t all have the same 24 hours as Beyonce because she has at least 100 other people’s 24 hours to borrow to make her vision a reality. 

I’m a very big fan of process-based thinking. It means that I like thinking through all the steps that it will take to get from one place to another successfully. I know that what I think through will have to change when my plans meet reality, but I suppose one of my own key failure avoiding methodologies is to keep aware of what the different scenarios are at all times. You have to start thinking about slow growth and quick growth. This is what is referred to as building for scale. That essentially means the solution you’re building should be able to serve 20, 200 and 20,000 people. I’m not advocating for you buying the highest level of pricing on every software subscription service, but I am asking you to think about how the things you’re doing today will work if you had to do the same thing 200 times or 20,000 times in the same timeframe. Is it possible? If not, why not. Those numbers won’t make sense in every business reality, so choose numbers that make sense for you. If 20 is a reasonable, first month of sales, then 200 is probably a monthly sales target that would feel like you’re doing well as a business owner. In that case, 20,000 is your business going gang-busters. It’s difficult to implement things at the start of your business that would help you support 20,000 people, but it is worth thinking about early on. 

Are you upskilling yourself and your team regularly? 
Once you hit your stride as a business owner it can start to feel comfortable, fight against that feeling. Comfortability is the enemy of long-term success. If you’re not growing the world will grow without you and then pass you by.

If you see anything that you don’t know don’t ignore it, find out about it and try to master it if you can. An easy example is the advent of artificial intelligence (Ai). We all know by now that Ai is taking over the way everything is done n the world with so much of what we had previously considered good stable jobs being automated. Everything from therapists to lawyers and accountants are having to reckon with the developments of Ai to solve expertise-driven or administration driven problems. If you know that to be the case, and you are practising integrative thinking, your next step should be to find out what you can about Ai and hopefully as you read and learn, you’ll find ways to use Ai for your benefit rather than becoming negatively impacted by it. 

If you notice a gap in your knowledge, seek the first opportunity to fill it. Importantly, seek to notice and support your team members to fill the gaps in their knowledge as well. There is no easy way to succeed in business, you need people and very good people at that! As a small business owner, you may not have access to the best people, but you will have access to people that are willing to become better. Make it your business to help them become better. 

Who are you surrounded by? Innovators or managers?
There’s an old saying, “too many cooks in the kitchen” that speaks to the idea that too many people leading will lead to disaster. When you surround yourself with innovators, your innovation is going to get innovated on. Be prepared to be tested and challenged, to defend yourself and your processes. If you’re not getting that level of scrutiny internally, you’ll get it externally and then you’ll be surpassed by an organisation that is willing to put in the work behind the scenes. 

Don’t get me wrong, there is nothing wrong with being a manager, all businesses need managers, but small businesses really need innovators. Innovators are all-rounders with a specialist skill that you can’t do without. Innovators are trying to lead in their field and they’re driven to be the best just as much as you are. They are flexible and practical with a visionary flair. Innovators draw you towards the future and managers focus on stabilising the status quo. You need both to succeed, but the managers should come in when there’s something to manage (customers, product, revenue - AKA post-launch).

The future is happening right now. Are you ready? 
It can take a person up to 4 years between knowing they have a great business idea and actually deciding to start that business. You may fall into the category of people that have taken a number of years to organise your time, your finances and your responsibilities to be conducive to the risk that comes with starting a business. I get that. Everyone has their own circumstances to deal with. The thing you have to be aware of though is that your idea could be outdated by the time you decide to start it. I don’t say that to scare you into starting today, I am saying that if you have been working on a set of rules or assumptions about your business you should give yourself a reality check every once in a while to make sure those assumptions and rules remain true. 

In 2015 if you had an idea for a Facebook dependant solution for young people or an in-person solution for anyone in 2020, your assumptions and rules are no longer relevant. Millennials and younger generations are abandoning Facebook and the idea of doing anything in-person in 2020 should be revised. We do a reality check every September and that’s when we start planning the following year’s activities. It has significantly shifted our work at times and has meant that we were well prepared for circumstances other organisations in our space were not expecting. 

Analytical thinking. 
  • What are the challenges facing business owners in your industry?
  • How are other movers overcoming those challenges?
  • What are they doing well and what are they doing badly?
  • Is there government regulation that could affect the growth of your business?
  • What is your contingency plan in the event that your primary revenue stream has to get closed down?
When I first started my business, I disliked “snooping” as I would call it because I thought it was dishonest to evaluate another person’s business for my own practical benefit and to be honest I still feel kinda uncomfortable about it (especially when I know the founder). But knowing what other people are doing and how it is working or not working is a really easy way to save yourself some time and money. If it failed for someone else, should you be doing it? If you are going to do it what will you do differently? 
Understanding the left-field things like the effect of government regulation on your business, the environment, trade deals, pandemics etc on your business is important. Being aware that you are risking your entire supply chain by having everything you sell is manufactured in China is important. This awareness exercise will help you build contingency plans that you can rely on if the world flips on its head in a matter of days. 

​Decision making.
Would you call yourself a long-term thinker or a short-term thinker? Long-term thinking is about seeing the effect of your choices today in the outcomes that will come to fruition years from now. Long-term thinking stems from a place of understanding that you and your business will be here and will survive through today into the future, whatever that looks like. Long-term thinking stops you from doing thinkings like making things FREE that you can’t always have available for free. It makes you consider what the consequences of your choices are if you have to go back on them, essentially long-term thinking makes you more cautious. 

To suggest that you become a long-term thinker may sound like it goes against some of the “move fast and break things” startup methodology, but it doesn’t because you only break the things you know won’t serve you in the long-term. If you aren’t a long-term thinker you won’t be able to build the grit you need to stick with your business when failure seems imminent in the short-term. 

Your network is your net-worth. How strong is your networking game?
It is impossible to overstate how important your network is to you and the growth of your business. That’s why we do so much work to ensure that the Community element of all our programming is strong. We want to ensure that during the programs you’re building a network of business owners that you can rely on for support. 

Having a strong network is like having an all-access pass into rooms you may never have been invited into. If you can get the right people to champion you and your business, you’ll find yourself being flown to different parts of the world to talk about what you do or demonstrate your product for others to learn from (true story). It all starts with having the right network. 

The challenge is to connect with three new people a month. You need to form real connections, by having actual conversations with three people every month that have the industry knowledge and access that you need to become successful, whatever that means to you. 

You're on your way to success if you learn how to embrace change and use the information you have collected to pivot effectively.
This webinar was presented by:
Bayo Adelaja, Chief Do-er at Do it Now Now
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