I met with a new business advice client yesterday and, as usual, asked lots of nosy questions about his plans for the future and the way he saw his business going. One of the ways I work is to ask lots of questions, often very naive or “stupid” questions, and then formulate ideas as to how to take the business forward.
After all the questions, I’ve often got a shape of the business in mind, setting growth targets, getting clear the kinds of customers they’ll need, how much they’ll charge, what marketing collateral they’ll need, how to get in front of the people they want to sell to. My brain creates a collage of graphs, pictures, spreadsheets and words – so my next job is to communicate this to my client and make sure that my picture represents what they actually want to achieve.
The money bit
One of my questions is always “how much money do you want to earn?” It’s amazing how different the answers to this question are, ranging from 20k a year (I tell them it’s got to be more than double this) to the folk who want to sell for 6-10m in 3 years. In this case, my client wants to have 60k a year before tax in the next year. A reasonable target, given where he is at the moment.
But when I got to asking about what he wanted to be earning in 2-3 years, my guy didn’t have a clue. He thought that he wanted it to be more than the 60k he wants right now, but he wasn’t sure how much it should be. That’s fair enough, he’s paying me to ask him all these questions, and if he had all the answers he wouldn’t need to bother.
I’ll pivot later
But of course, I need to get an answer. Without knowing how much money he wants to generate later, I can’t get my picture of his business straight in my mind. In fact, I don’t have a clue. Are we working towards a single person business, maybe turning over 100k and giving a 60-80k profit? That’s one model, the single person (or one person plus admin support) business. It’s a nice model too, less hassle than employing people, lower overheads so you get to keep more of the money for yourself, probably more sustainable over difficult times. Or are we working towards a bigger business, generating a much larger turnover, and getting other people to look after clients. My client doesn’t know at the moment, so he says, “I’ll maybe pivot later”
What’s a pivot
Just in case I’m accused of using business jargon (which I am) a pivot is not an advanced yoga position, but instead is when you change your business model (or all parts of your business) in the light of experience.
Maybe your customers don’t like your yellow lollipops and don’t buy them even though you love them. So you change to red wine gums, or change to become a lolly making consultancy, or sell lolly making equipment for home lolly makers… you pivot to a different type of business.
The problem with planning to pivot
If your initial plan is to pivot, that means that you don’t trust your plan. You don’t really know what you’re doing past stages one and two. Maybe you’ve got so excited about what you’re doing in stage one that you forgot to think about where you’re actually going. I think the place for thinking about pivots is when you need to do it. That’s when you need the courage to think “eek, this isn’t working, I need to do something differently.” And of course to recognise that it’s perfectly ok to change course, change business model, or completely give up and do something else.
My next set of questions
My next job is to get my guy clear about what he really wants to do. To give him some options and lay out some clear pictures of where he might want to take the business in 2-3 years. Maybe none of these will be what happens in reality; in fact, I can guarantee that none of them will be, as life and business doesn’t work out that way. But while we’re working out what to do right now, we need to know at least where we want to go, otherwise, we’ll do things now which will rule out some of our options for later.
How I help
My work is all about helping people with small businesses to build and develop bigger, stronger companies. It’s all about helping people to make more money, and have more fun.
Here are some ways I can help you and your business:
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Photo credit – David Rickard, from Flickr on a creative commons licence