How to sleep at night
How do you sleep at night with all the responsibilities of a business is a question you may well be asking.
There will be times, of course, when you feel under pressure. You are dependent on the success of your business, for your own livelihood and if you take on employees you are responsible for theirs too. Many of the suggestions we have made throughout the book should give you confidence that you can manage the pressures, both financial and otherwise.
1 Manage your personal pressure
Way back in Part 1, we discussed the value of having a fall-back plan for your personal finances, managing the risk and thereby knowing you can find a way through it as far as your family finances are concerned. We have also suggested that you should make sure you manage and limit your exposure to personal guarantees. If you have built a business of substance with employees, you will almost certainly be structured as a limited company, which in itself helps limit your personal financial exposure.
2 Take a long-term view
The feast and famine parables hold good in business and if you use the good years to help bolster the financial strength of your business then you can often survive the bad ones.
At Ubevco we had grown our business to a turnover of £105m just four years after starting up, only to find one July day that we would be losing £90m of that turnover in a few months. We are probably prouder of our achievement in surviving that loss than we were of getting to £105m in the first place. We have used this example elsewhere to illustrate how to manage change, risk and the benefits of outsourcing but all of these relate to the same key point. We managed the business with one eye on the downsides. Consequently, the night after we got the news, we slept soundly.
3 Focus on cash flow
Probably the biggest single factor that causes stress for a business owner is where you cannot pay your bills. The root cause of this can often be much broader and is a consequence of your business running unprofitably. The remedial action in these cases lies in reassessing your business plan and making the changes you need to steer the business back on course to profitability.
Just as often though the cause of cash flow problems can lie not in the underlying performance of the business but simply in poor management of your finances. No matter how long you have been in business, you should always focus a lot of attention on efficient cash management. Typically, this is making sure your customers pay you on time, and if your business holds stocks of product, making sure you don’t tie up too much money in excess inventory. We have illustrated how debtor collections can sometimes be best managed by outsourcing (maybe factoring) but however you choose to deal with this issue, it should always be one of your very top priorities.
This will then enable you to pay your creditors on time, which will in the long term have a positive effect on the reputation of your business and strengthen your negotiating position.
In my early corporate career there seemed a general acceptance that smart financial management involved holding onto your company’s cash as long as possible by paying people as late as you could. It almost seemed that this was how you earned respect as a financial officer and too much focus was on slowing creditor payments rather than on getting your debts collected quickly. It’s hard to understand now why that was the case, and I am convinced that being able to pay your suppliers promptly is the best sign that you are running an efficient business. Fortunately, most (but certainly not all!) bigger corporations are beginning to take this view too and it has become less acceptable to deliberately not pay to terms.
Chris
4 Setting your goals
It is all too easy to just focus on financial performance and pressures. These were not necessarily the primary goals you identified when you were considering leaving employment in the first place. We have discussed the benefit of setting realistic goals for you as you start up in business. As time goes by it can be easy to forget these, especially when the business has changed with circumstances and has maybe moved in a different direction or to a different scale than you first envisaged.
There is of course nothing wrong with re-assessing and amending your goals over time, especially when you have already achieved your initial aims. Quite often you may feel pressurised about achieving some current target or solving some problem within your business, but forget to look back at the reasons you started it in the first place. When you do, you will hopefully realise that these current pressures are still preferable to your old working life.
5 Staying true to your values
Whether you formalised these or not at the start of your business, you will have a set of underlying values that you sought to bring into your new venture. These may have been a response to some of the frustrations you had with the way things were done in your life as an employee or just an inherent part of your character. Either way, one of the greatest satisfactions you will get from running your own operation will be from knowing that you have stayed true to these values.
This might be exemplified by the way you treat your employees, or customers and suppliers. The goals that you set for your business are usually definable targets, and the achievement of them is a major source of pride. Knowing that you have met these goals by running the business in the manner and style that you set out to employ is arguably just as rewarding.
Winning is fun, and in business achieving your goals is winning, but not at any cost. The enjoyment you get from business ownership will equally come from staying true to your own values – whatever they might be for you and any business partners.
6 Achieving the right work/life relationship
As you call the shots in your business you will hopefully have found that you can better accommodate some of your personal life aspirations. Being able to choose your own location and work hours can have a hugely beneficial effect on your personal life. Tailoring your work hours to suit your own purposes is a further massive benefit from being the boss. There are other less tangible aspects that can positively influence your piece of mind. You do not need to be an egotist to feel an extra sense of worth and pride in being the owner of business. People will tend to perceive you with added respect and you may have the opportunity to further enhance your reputation in the local community.
If you are better able to manage the home/work balance, you will hopefully have a sense of making a stronger commitment to your family and friends. Often a long and stressful career in the corporate world can lead to alienation from home.
Running your own business gives you two opportunities that should help you sleep at night. Firstly, a sense of being able to make a greater contribution at home and reconnecting with your family. Secondly, you may also have a business, which will begin to feel like a family too, irrespective of whether your family are actually involved, or not.
Ubevco soon came to feel like a family. Some of our employees were with us for the duration of the company. We got to know many of them very well and over time often their families too.
The family atmosphere was boosted from time to time as one or other of our families were called upon to help.
Pete, Catherine’s brother-in-law, gave us a lot of help in the early days, enabling us to have exhibition stands and conference staging which was greater than our purse strings would allow at the time.
Stephen, Chris’s son, spent a few months working in the logistics team for some work experience and gaining great insight into working in a female-only team along the way.
And, Karen, Chris’s very patient wife, helped us out on many occasions, especially looking after the office whilst the rest of the company escaped on a company conference. And it is very doubtful that she ever received any recompense for her trouble!
7 Start planning your exit
As you and your business mature, you can begin to think about your exit from the business. This probably won’t mean a return to being an employee if you have come this far, but rather a well earned retirement or perhaps even to a new and different start-up. Many owners favour a gradual retreat whereby they reduce their working commitment over time as family members or existing colleagues take over the management of the business. This often means you can retain some of the ownership and thereby earn some income. Alternatively, a complete exit can be achieved in a number of ways:
- passing on the ownership or management to family or colleagues
- outright sale or merger with a third party
- winding up the operation.
As our primary purpose in this book is to encourage employees to become entrepreneurs, we will not focus on exit strategies other than to say that as things have settled down, having some exit options in your mind and beginning to plan for them will be sensible. We know from our own experiences that it may not always be possible to achieve your first choice option – the multimillion pound sale may appeal to you but not to any buyers – so in many instances it is likely that you will need to consider more than one way of effecting your exit.
Either way, planning for your exit will at some stage need to come into your thinking and often will be another cause for satisfaction that you can see the whole project through.
In summary
So in conclusion, provided you don’t drink too much Red Bull in the evenings, we see every reason why you should sleep contentedly and soundly at night throughout your time as a business owner. As you stay true to your values, the satisfaction that most people feel from running their own operation far outweighs some of the extra pressures, and the majority do not return to the life of an employee. You will be able to cope with the occasional stresses and pressures that any business encounters provided you: