The business journey
Most people start their own business for one of three reasons, although sometimes it’s a combination:
- moving away from something unpleasant like a toxic culture or boss,
- Moving towards something better/different like moving away from a city to a coastal town for a better lifestyle.
- Believe they can do it better than their current organisation or boss.
This leads to the following stages of business:
Stage 1 – start-up
- Characterised by optimism and enthusiasm.
- Everything is possible, exciting and just a little bit scary.
- Things can often start out well getting a few clients but this doesn’t last…
Stage 2 – isolation
- 1 – 3 people (sole trader or micro business)
- The business generates $100,000 revenue (or less) per person.
- The founder is the product or service. If the founder stops working, the business stops creating value and generating revenue.
- The founder wears all the hats and does all of the business activities.
- Characterised by: tired/exhausted/burnt out, frustrated, feeling trapped, bitter/resentful
Stage 3 – struggling
- 3 – 15 people
- Up to $200k revenue per person.
- Still feels like a lot of hard work and struggle.
- Key person risk remains a critical issue and limiting factor (revenue is still tied to the founder).
- Low financial stability
- Higher overheads / smaller profit margin due to more staff but a low revenue per person.
Stage 4 – lifestyle
- 3 – 30 people
- High revenue per person.
- Founder has freedom of time and location.
- High performance team, energetic culture.
- Stable business with lower overheads due to leveraging people, process and technology.
- Characterised by being a fun place to work!
A lifestyle business is the best place to be yet most businesses fail to get there. The first 3 stages make up the majority of businesses in most developed countries. Some reasons why these businesses don’t get to stage 4 are:
- Business by brute force approach – working harder/longer and/or unlikely to accept help.
- Lack of clarity of direction, vision or why they are in business.
- No point of difference or credibility so don’t stand out in their industry/niche.
- See people as the problem and solution (if only I had better staff…).
- Haven’t fixed operational issues so get stuck in a cycle of more work = more hours which keeps them stuck in a business by brute force approach.
- Limited profit to re-invest in the business so less likely to accept help.