The following feature by Waceke Nduati Omanga was first published in the Saturday Magazine.
Do you run a business and feel you are stuck at the same level you were a year or two ago?
Last week I engaged a focus group of people at different stages of business and the conversation brought out some points that will help those in business as well as those aspiring to run one.
Everyone wants his or her enterprise to be successful. However, wanting and actually doing the things that lead to that are two different things. Here are some of the points that came out on why many businesses don’t go to the next level.
- Your ego is bigger than your business. You go for meetings alone. You serve clients or the people you deem to be important clients all by yourself because you don’t think anyone else can handle it.
You can’t take a week off because things will fall apart. Your business is totally dependent on you being there for things to function.
As much as you may complain about inability to find the right people, part of the problem is that you want to feel important. You want to be needed.
You have simply created a job in a business that you own – a job where you don’t promote yourself. You don’t grow because you have limited the growth of the business to what you can personally do and you only have 24 hours a day.
You may be losing good people who can help you grow because you have not created room for them to progress. A business is truly an asset when it can run without you.
- You do not pay yourself.
You pay employees, suppliers and even the tax man, but you do not pay yourself. You do not value yourself enough to put ‘you’ as a cost to the business.
Therefore in your mind you strive to meet expenses that are actually much lower than the true picture.
Because you are not paying yourself in structured manner you are taking money from the company in a disorganised way, which may cause cash flow problems.
Always separate your business expenses from your personal expenses. Create the discipline of paying yourself.
Don’t go overboard, but put a cost to your time. You can start off with even Sh5, 000 and then increase it as the business grows. You will even find you have more incentive to look for ways of growing the business. There is no honour in not paying yourself.
- You don’t understand the difference between cash flow and profit. As a business owner, cash flow is what you should be concerned about.
This is one of the reasons a lot of businesses do not survive. Plan for how and when cash is actually moving in and out of your business.
As long as you invoice a client, that amount may show up as revenue and be part of what constitutes your profit for that month. Your client may not pay you immediately; they may pay you a month later but in the meantime, you have bills to pay. So when that invoice is actually paid, it is not for you to go on holiday with. It is for you to meet your expenses before the next invoice is paid.
Your business is sustainable and can grow because it generates cash, not just because it is profitable.
- You have not communicated to the people you work with what you are trying to achieve and how they fit in.
They have no idea what is expected of them and how they will grow. You think they should just know what to do because that is how you would have done it.
You have set targets on a spreadsheet in your computer that you have not shared with anyone. Share your vision. Train and empower people to see the vision through. You don’t have to wait until you have 10 employees. Start with the one you have. Even if you have none, sit down and figure out what you want this business to become. What are the structures needed?
Who are the people that will be required? You might realise the benefit of hiring someone now far exceeds the opportunity cost of using your time on the wrong activities.
- You are spending time and resources on areas that are not your core business. Let’s say you start a school. You realise that your students need school transport.
You then buy a bus and hire a driver. Suddenly someone has to be responsible for the logistics and management of this transportation. Those same resources could have been used to train your teachers or for marketing to get students in. Transport is not your core business. Outsource it. Identify what your core business is and grow that until spending in these core areas becomes a justifiable expense.
- You don’t think well of your business. You use words like ‘hustle’ or ‘side hustle’ when referring to it. I’m not against the side hustle if you are clear you are just doing it for the benefit of short-term income.
But many people will not give you the kind of opportunities to take your business to the next level if it is a ‘hustle’.
When you think of it as hustle, you talk about it and portray it like that. We have many ‘hustlers’ but few entrepreneurs. You want to grow your business; change how you think about it.