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The Hard Part of the Small Business Climb Is Knowing Which Way To Take
A few years back, and weeks after most people had swapped out their winter tires, I went in to change mine. Everyone has their quirks. My quirk is remembering that one year it snowed in June and believing ever since that, you never know, it just might snow in June.
I’ve been going to the same place, off and on, for over two decades. The two owners started from a small leased location and grew their tire and mechanical shop into a bustling business. They operate out of a large commercial building now, and with tenants of their own.
The owners brought their sons into the business many years back. And though these young men have taken over most of the day-to-day, I’m still more likely than not to see one or the other (or both) of the owners behind the counter whenever I take my car in for service.
I went back a few days after that tire change to get my tires torqued. One of the owners came out and, as I stood talking with his son, he took the torque wrench from his son’s hands, walked around the car and tightened all the lug nuts.
We shook hands when he was done. I asked about retirement. He laughed and said not for him. He loves coming into his store, loves working with his customers and his staff, loves the business. Why would he leave?
He angled his hand upward and said the hard part was done. The store runs smoothly now. It’s there to enjoy. He thanked me for my business and went back in to help the next customer.
By anyone’s entrepreneurial standard, this has to be success. Financial independence. A valuable asset to be sold or handed down to the next generation. Still involved in the business you created because you still love it, not because it still needs you (or you have no choice).
Sure, there are other versions of success: some people prefer to build up a business, sell it and move on to the next thing; other people want (need?) massive wealth. But it’s hard to wave aside owning a business that runs itself and generates lots of cash. That’s a solid motive and end result for starting a business in the first place.
I misread the owner’s upward hand gesture. I thought he was referring to growth, that finding a way to grow was the hard part of business success. I realize now that what he meant was that he had to climb to get where he wanted to go. And that climb—his personal journey, which includes everything he had to learn and do and go through to get to what he wanted—was the hard part.
That journey is uphill, he was telling me. Difficult, needing effort and endurance. But it’s also the uncertainty. You figure things out on your own as you experience real world business challenges for the first time. There’s no map telling you how to get to the top of your hill. There’s no manual that explains how to assemble a successful small business.
When we were talking about this, my business partner, Darren, pointed out that a large majority of undergraduate students who enroll at Canadian universities ultimately receive a degree. They graduate, which means, in the university context, they succeed.
At the same time, a large majority of small businesses fail outright or fail to live up to their owners’ expectations. They don’t succeed. Why is that? What aspects of these different contexts contribute to such different outcomes for their participants?
Well, for one thing, school is on rails. Once a student chooses a program, the path to success (graduation) is clearly laid out. There’s a map at all times, with a clearly marked path from where the student is to where the student needs to go. The hazards are also marked. Stay on the clearly marked path and you reach your goal.
Students hate uncertainty. They try to pin their professors down on what’s going to be on the test, pleading with them to narrow the possibilities down as much as possible. Professors who respond by saying any of the materials and any of the concepts they’ve covered from the beginning of the year to now are the most hated professors and their exams, the most dreaded.
As an entrepreneur, you’re writing a different kind of exam, one with even more uncertainty. Not only do you not know the questions you’re going to be asked, you’re not even fully aware of the concepts you need to study to prepare for the test. Uncertainty is baked into the entrepreneurial experience. You can’t get rid of it (but you can reduce it).
A second aspect of school being on rails is the structure. There’s a course syllabus, course schedule, assignments, due dates, midterms, final exam. All of these function to hold students accountable and on track with their own learning.
There’s still the question of time management and the dangers of procrastination, but a sufficiently motivated student will be well aware of the next thing they have to do to navigate their course load from day to day. The system is always cracking the whip.
Knowing the next thing to do is, in my experience, one of the hardest things a small business owner has to think about and get right. In the early stages, the launch and survival period, it’s not so bad. I mean, when you've invited 20 people over for dinner, you can’t wake up in the morning wondering what you’re going to make. You have a plan. You work the plan.
It’s after this initial stage, when your business has some breathing room, that you come to a kind of misty and confusing area of your uphill climb. The path disappears a few feet in front of you. There’s no map. There’s no one to ask for directions. There’s no one to tell you which path to follow or to keep you on that path. A few wrong steps and you could go over an edge. You’re alone. What do you do next?
This, to me, is the hard part of your upward journey, the part that makes the difference between getting to the top, getting lost, and free falling. Climbing all the way to the top takes endurance. It also requires knowing which way to climb. I think that entrepreneurs in this situation can benefit from creating the same conditions that help students succeed in post-secondary education: less uncertainty and more structure.
The biggest thing an entrepreneur can do to improve their decision making in their business is to develop a clearer understanding of their financial statements. The financial statements are part map (they tell you where you’ve been) and part story (they suggest other places where you could go).
Start by asking simple questions. Am I making or losing money? How much? Why are sales up but profit down? What level of sales do I need to cover my fixed costs? What level of sales do I need to pay myself a higher salary? Do I need to raise prices? Why don’t I have more cash in the business bank account? Do I need more financing? How much? By when?
The financial statements are the small business equivalent of student transcripts. They both keep score. Every possible next action that you, as an entrepreneur, can take should have some measurable and predictable effect on the financial results: “We’re taking action X in order to improve financial result Y.”Entrepreneurs, unlike students, don’t have a calendar that tells them they have a class at 9:30, an assignment due on Thursday, an exam next week. They don’t have friends, also going through it, to remind them of these things. Like students, they know they need to get better at something, but it’s more open-ended what that something is.
Entrepreneurs can choose what they do: a blessing and a curse. They can make plans one day, make new plans the next. They can not quite finish one project, move on to not quite finish another project. This is management by improvisation, with nothing adding up, no results or improved financials. The entrepreneur is often the worker and the boss in their projects, meaning there’s no accountability. A failing grade they give themselves in something no one else knows about or tracks is, at best, an unofficial grade.
The option I can recommend for entrepreneurs is to involve someone else in their running up their hill, someone to keep them narrowly focused on reaching their chosen summit. This is why we created the Origami Advisory service.I procrastinate and get distracted with the best of them. Working steadily toward goals is a goal I should work more steadily toward. I told Darren I was going to post here every week. He said he would hold me to it. It’s been seven weeks and I’ve managed seven posts. So here we are.