Discipline makes Daring possible.

Dozing

Dozing

One of my favourite times of day, is that part where you’re not asleep any more (or not yet), but … Read More “Dozing”

Performance

Performance

Performance = Potential – Interference. Sometimes. for example in sportspeople, which is where this formula comes from, the interference is … Read More “Performance”

Two heads are better than one

Two heads are better than one

If you’re lucky, you start your business with someone else, or maybe even as a trio.

Two heads, three heads are better than one.

Being a co-Boss helps you share the hard work of getting going, gives you a sounding board for ideas, and brings additional valuable resources to the business – whether that’s talents, time or even money.

But good things do come to an end, often perfectly amicably.  People grow, their circumstances change, their talents call them to new things.

That’s fine, if people need to move on, they need to move on.

The problem lies with what they take with them, locked inside their heads, no longer accessible to the business they’ve left.

Perhaps they were the operations person, who just made everything work.  Perhaps they were the sales wizard, effortlessly charming clients aboard.  Or the finance pilot, keeping a firm hand on the money tiller. Or perhaps they were the ideas person, driving the forward movement of the business.

Obviously, if you’d known this was going to happen, you’d have found a way to pull all that accumulated know-how out of their heads before they went.  But if not, how do you reconstruct that missing part?

 

The good news is that although what your co-Boss knew is still inside their head, it’s actually also inside the heads of everyone else in the business, and, crucially, inside the heads of your clients.

It may not be written down, but it is there, and can be re-constructed into an explicit Promise of Value, along with the Customer Experience Score that follows from that, turning buried knowledge into a practical, usable, evolvable asset.

Only, once you’ve dug it up, don’t keep it to yourself.  Share it with everyone in the business.  Then share the work of living it so everyone can become your co-Boss.

Because many heads are always better than one.

Discipline makes Daring possible.

Even if a Boss has already disappeared.

 

Ask me how.

 

 

Daring

Daring

 

“10 times is easier than 2 times” by Dan Sullivan and Dr Benjamin Hardy is by no means a how-to book, but it is a very useful book.

I’ve heard of the basic premise before – that radical change is paradoxically easier than incremental change, because it makes you think completely outside the box about how you might get there.   For me, that intersects nicely with Category Pirates thinking, where you stop competing with everyone else in a particular category, and create a completely new one for yourself.

What was new for me was the idea of applying this thinking repeatedly in your life and in your business.  And not just you.  Your team too.   Which reminded me of Derek Sivers’ story of recruiting his own replacement for a job, before he announced his intention to leave.

This might seem a long way from my idea of a Customer Experience Score.  A well-documented and well-rehearsed ‘what we do round here’.

It isn’t.

Creating the Customer Experience Score for your business unlocks the first 10x, because it reminds you what your business is here to do; it forces you to think about Roles (which goes even further than ‘who not how’), and it makes you think completely differently about how you manage it.

It enables you to Disappear as a Boss.  It makes you create a self-managing business.

Once you’ve done that,  it’s easier to 10x through rapid growth (say 40%) per year, or by creating 10 instances of the business (by franchising, for example).

And now you have a Customer Experience Score written down it becomes easier to 10x again.

All you have to do, is ask at every Group Practice: ‘How do we make this 10x better?

The Score will show you what to change and how.  Which makes doing the change even easier.

 

Discipline really does make Daring possible.

The hard part is daring in the first place.

 

Unusual perspectives

Unusual perspectives

Today, I’m recommending Jason Fried’s blog.

As I’m sure you know, Jason wrote “It doesn’t have to be crazy at work“, a book well worth reading if you haven’t already.

Jason writes from the perspective of a business that is ‘big enough’, doesn’t need to be bigger, and is primarily a vehicle for improving the lives of its customers and employees.

Nowadays that’s quite the radical view, and it gives him a very different perspective on all the things businesses do, or are told they should do which is really refreshing and always makes me think.

If you’d like an even more radical perspective on what business could be, I also recommend Ari’s Top 5 by Ari Weinzweig, co-founder of the Zingerman’s Community of Businesses.

And if you’d like to create your own, more rounded perspective on business and it’s place in the world, I recommend the Wolf Tool from Bev Costoya.

Discipline makes Daring possible.

 

Bake the profit in

Bake the profit in

I loved this reminder from @Jason Fried this morning, that your main ‘competitor’ is your own profitability.

And that put me in mind of the kind of tragedy I see played out over and over again with amazing small businesses.   Tragedy that could be avoided with the right kind of attention to detail at the beginning.

As Fried says, as long as you are profitable, you are winning.

For me, the best way to be sure you are profitable, is to know that every single thing you sell is profitable in it’s own right, every time you sell it.

And I mean truly profitable, net profitable, after all costs have been accounted for.

Here’s how to work that out:

Let’s say I make beautiful sourdough bread, 20 loaves a day for 20 lucky subscribers who pick up daily.

First there’s the obvious costs of ingredients:

I buy these in different quantities, so I split each quantity into the number of loaves I will get from it:

  • 10kg of heritage wholewheat flour at £27 (including postage) gives me 20 loaves at a cost of £1.35 per loaf
  • 25kg of sea salt  at £20.95 will season 1923 loaves, at a cost of 1p per loaf
  • 10l of water at 14p per litre, will make 20 loaves at 7p per loaf.

I use 100g of sourdough starter for each loaf, made up of 50g rye flour and 50ml water.

  • 25kg of rye flour at £34 (including postage) will start 500 loaves at 6.8p per loaf.
  • A litre of water at 14p will start my 20 loaves at 0.7p per loaf.

So far then, the ingredients for my sourdough loaf cost me 1.35+ 0.01 + 0.068 + 0.077  = £1.51

But I haven’t allocated all my costs yet:

  • Wastewater – for every litre I use baking, I use about 900ml in washing up.  At 90p per litre this means 81p in total, or 4p per loaf.
  • There’s a fixed charge for water and wastewater of 6p and 18p per day respectively, so 24p per day, or 1.2p per loaf.
  • Obviously I cook my loaves, so there will be fuel costs.  I use an electric fan oven, and cook my bread for an hour, so that comes to about 45p per batch of 4 loaves, or 12p per loaf.

That takes us up to 1.51 + 0.04 + 0.012 + 12 = £1.69 per loaf.

And I still haven’t allocated all my costs:

I bake my loaves on trays lined with parchment paper, 2 loaves per tray

  • 10m of parchment paper at £1.45 will do 28 trays, or 56 loaves, so comes to 3p per loaf.
  • My 2 aluminium baking trays cost me  £13.50 each, and will last me at least 5 years. At 200 baking days a year, with 20 loaves per day, that comes to 20,000 loaves, or 0.135p per loaf.
  • The 8 bannetons I prove my bread in cost me £11.39 each and likewise should last me 5 years.  That adds about 0.5p per loaf.
  • I mix my dough in a couple of 12l stainless steel bowls, at £21.99 each.  That adds another 0.22p per loaf.
  • My dough scraper cost £1.20 and should last me 2 years, which adds 0.15p per loaf.
  • I invested in 2 heat-resistant oven gloves with fingers at £13.99 each. That adds another 0.014p per loaf.

These are tiny amounts, but together, add another 4.2p per loaf.

We’re now up to £1.73 per loaf.

And I still have to add costs for maintaining my sourdough starter (feeding it, keeping it somewhere where it can grow); cleaning up (washing up liquid, wipes etc.); wrapping the loaves (paper or paper bags); selling the loaves (point of sale system subscription or commission, website, marketing (even something as simple as an A board costs money, uses chalks and wears out); heating and/or lighting my kitchen; wear and tear on my worksurfaces etc., etc.

Let’s say that adds another 5p per loaf.

And finally my time.  Which I work out by looking at how much I would have to pay someone else to do it – this is pretty much the minimum wage at the moment, so I decide to pay myself the same for now £10.18 per hour. My 20 loaves a day takes a total of 4 hours to make, bake, and wrap. So that’s £2.04 a loaf.

So now we’re up to £3.82 per loaf.

I do this in my own kitchen at the moment, so there’s no rent. But it’s worth pretending that there is rent to pay right from the off. So I look up how much it would cost to hire a dark kitchen. I can find a 170 sq ft one on Bermondsey for £2,600 per month ex VAT. My own kitchen is half that size, so I halve that figure. I only use it for half a day too, so I halve that again, to get a notional rent of £650 per month.

Divided among my 430 loaves a month, that adds £1.51 per loaf.

So my final total cost per loaf is £5.33

Now I need to add a profit to that.

I know I’ve covered all my costs per loaf, so I can experiment with this, to see what my market will bear.

Whether it’s 30p or 70p or £1.70 per loaf, what matters is that I know it’s all profit.

And that profit margin will only increase as I increase production, buy in more bulk, and spread my fixed costs across more loaves – until I have to rent a bigger kitchen, when it would pay to go through this exercise again.

Doing this exercise in such excruciateing detail is undoubtedly a faff.

But it pays off.

Because by the end of it you have a complete and intimate understanding of what it actually costs you to make the thing you make (whether that’s a product or a service), and that means you can charge the right profitable price for it from the very beginning.

If you don’t – and I’ve seen too many small businesses do this – growth turns into tragedy, because all you’re doing is losing money faster.  Chasing sales, when what matters is profit.

Bake profit into each and every item you sell and you can relax, knowing that your profitability gets better as you grow.

That way you can be sure of being around to keep the promises you make to the people you seek to serve for as long as they want you.

Discipline makes Daring possible.

Rigidity is the wrong tool for dealing with uncertainty

Rigidity is the wrong tool for dealing with uncertainty

When  your business is faced with uncertainty, rigidity is the wrong tool to use.   That’s why big corporations fail in the face of change.

The challenge for a purpose-driven, legacy-focused, customer-centred small business is to be open to unknown futures without losing its identity.   To keep their edges fluid and their core firm.

Fortunately, that’s relatively easy to do, because human beings are very good at dealing with uncertainty – especially the uncertainty that comes from dealing with other human beings.

All you need to do is to build the firm core:

First you define a high-level, comprehensive Promise of Value that is specific and distinctive, yet open-ended:

  • Define the people you serve in terms of psychographics, not demographics.
  • Define how you serve them in terms of their deeper needs, not passing wants.
  • Define how you achieve that in terms of values and behaviours, not external measures.

Package that Promise of Value into concrete products and services:

  • Identify the demographic(s) most likely to contain enough people of the right psychographic.
  • Understand what matters to them right now.
  • Identify what dis-ables the motivated.
  • Design a package that addresses what these people need right now.

Use that Promise of Value to drive the design of a Customer Experience Score for sharing and delivering on your Promise that:

  • Embodies your distinctive values and behaviours.
  • Can be played by any competent musician.
  • Enables each musician to bring their own experience and personality to their performance.
  • Allows them to create a new interpretation of your Promise when they encounter the new and unexpected.

Make sure you gather feedback:

  • From the Score as it is being played.
  • From the people you seek to serve and the people who work with you.
  • From your regulator if you have one, and your industry.
  • From the impact you makes on the people and planet around you.

Enable every player in your team to discover the combination of roles that ensures their best performances:

  • Make sure everyone can play the whole Score.
  • Give them regular R&D time, in the company of fellow players, to tweak or re-design the Score, in response to feedback, learning each other’s strengths as they go.

Once you have this in place, you can safely trust your people (and the people to come) to dance with uncertainty.  You can make every one of them a Boss, and leave the future of your business safe in their hands.

Discipline makes Daring possible

Ask me how.

Schismogenesis

Schismogenesis

Throughout our time on earth, far more often than we realise, people have self-consciously created societies defined not according to some positive criteria, but by negatives.  Not who they wanted to be, but who they didn’t.

Protestants defined themselves by the beliefs they rejected.

Pirates organised their own ships in direct contradiction to the way things worked in the navy.

My friend Carl French created The Endless Bookcase to be everything a traditional publisher isn’t.

Sometimes it’s easier to describe what you’re not than what you are.

It has the added advantage that it allows you to envisage possibilities that are truly new.

Discipline makes Daring possible.

What are you not?