top of page
Writer's pictureSean Lewis

Balance the Value of What You Have with What You Need to Give Up



Businesses are much like plants. They need frequent pruning if they are to remain healthy as they grow and stay beautiful throughout their lifespan.


For many entrepreneurs and their businesses, bigger is not necessarily better. While the reasons we embark on that journey are many, we should be determining both the professional and personal goals for our being in business. If the goals are grand in purpose, then the business model will likely need to be grand in stature. But if the goals are self-sufficiency along with serving our personal choices regarding time, commitments, or philosophy, then the business can be modest in both its growth efforts and revenue expectations. By definition, grand in stature will require a business model with scalability governing all decisions –a growth business. This often requires wild levels of commitment, greater financial risks by way of internal investments required to pass through the various growth-stages, as well as increased personal risk by way of the number of people required to power the business forward. A lifestyle business by default will be far less complex or growth oriented, where personal-oriented decisions are frequently prioritized over monetary ones. However, a lifestyle business may actually throw off more disposable income for you over long periods of comparison with a growth business.


What success looks in either model should reverse engineer to what the value of what you already have accumulated toward the goal(s), and also to what you have accumulated that is either a distraction from reaching that goal or is far less efficient in reaching it.


When a plant pierces the soil, it throws off leaves in all directions in the hopes of capturing all the possible amounts of energy it needs to move from seedling to stem. As the plant progresses, many of those leaves wind up drawing energy for keeping themselves around, but that could be better used to foster the growth of the plant. At startup, the majority of us do the same with our customers, time, need for control, product offerings, marketing messages, and so on. Part of it is the experimentation of throwing as much as possible into the wind and seeing what stays aloft, and part of it is simply the need to generate income from as many sources as possible.


When finally realizing our first profits, the short-term value of our total customer load and product mix is high, and we become excited to immediately level-up (bigger paychecks, more staff, outside office, and so on). However, after the initial honeymoon period is over, we begin to be worn down by the attention to managing the business or the cash needed to support the level of burn-rate we’ve created. We’re either burning ourselves out as proprietors or burning out our staff and creating a secondary cycle of turnover, affecting both our legacy employees and our balance sheets.


Most often, this is the point where a business first starts to lose its balance, beginning with the loss of visibility into our numbers (gut checks don’t work anymore) and keeping our levels of spending in-check as the growth happens (elevating lifestyle choices or adding complexities to the business model that increase burn rates).


Once the imbalance has become apparent, pruning is warranted and is begun through a series of assessments (or audits) of your customers, products, org. chart/systems, and time. There are tried and true accounting methods including job costing, break even analysis, and more that directly address the financial balance sheet. More nuanced are the time and frustration analyses for your responsibilities as proprietor and/or your employees. These are certainly more delicate and judgment-based calculations, but when rooted down to time and task against the revenue/profit they generate, the answers frequently reveal themselves.


Ultimately, when committing to a Balance Driven Business, we are committing to an acknowledgement that there are always two sides to any business “transaction.” To properly prune our customer base, product offerings, redundancies in our workforce, or the responsibilities we hold as proprietors, the value of what we have and what we need to give up is found through the balancing entry of an adjustment to our expectations.

____________________________

As the saying goes, two heads are better than one, and committing to a Balance Driven Business keeps you at pace in this new world of business— the ever-increasing speed in which business adaptations need to occur to realign people, product, and profit. Col. Sudip Mukerjee of Reserv3 Consulting and Sean Lewis of SLC Advisory Group combine their specialties for the deep dive needed to bring your business up-to-date with the finance and people challenges of the New World, and to lay the groundwork for staying competitive well into the future.


Comments


bottom of page