, ,

Why 96 Percent of Businesses Fail Within 10 Years

While there may be many contributing factors, there is only one reason businesses fail. Here’s what you can do to prevent your business from closing its doors.

I can remember the first time I heard that 96% of businesses fail in ten years. I was shocked and upset. How can this be? Most people are smart and if they have taken the risk to go out on their own and start their own company, they are willing to take calculated risks. Small businesses are part of the American Dream — it’s how entrepreneurs control their own destiny and make the world a better place.

But what’s happening if only 4 out of 100 businesses survive past the 10 year mark? If your company is a decade or more old, then congratulations, you’re one of the 4%! If your business is less than 10 years old, then I would like to share one of the most important lessons I learned from Keith Cunningham (otherwise known as “Rich Dad” from Robert Kiyosaki’s book “Rich Dad, Poor Dad”) at the Tony Robbins Business Mastery event. It could be the defining difference between going out of business or accomplishing the very goals you set out to achieve.

Profit is a Theory. Cash is a Fact.
Why do most businesses fail? Because they can’t pay their bills. Most entrepreneurs either are (or start out as) financially illiterate. Unless you are into financial services or accounting, most entrepreneurs don’t go into business because they love numbers. Most entrepreneurs saw an opportunity to make the world better in some way and built a company around that idea. So what do they do? They hire accountants and controllers to manage their books.

The way Profit & Loss and Income Statements are constructed, most CEOs are trained to focus on the profits or EBITA of their businesses. After all, it’s what you are taxed on and how your business is evaluated. But profits are simply a snapshot in time. They are a theory because a number of factors determine if you can actually pull the cash out of the business.

This is where the “Cash is a Fact” comes into play. Why do most businesses fail? Because they can’t pay their bills. When you run out of cash, it’s game over. None of your vendors / creditors care in the least how much profit you’re showing on your books if you can’t pay your bills. Companies don’t go out of business because they lack profits on their financial documents, they go out of business because they don’t manage their cash and can’t pay their bills.

You Are Financing Your Clients (And Your Vendors)
Ever notice why massive companies tend not to pay faster than 45 to as much as 120 days? They are using their size and position in the industry to set their cash management terms. Unfortunately for many small and medium sized businesses, entrepreneurs end up financing their clients who are ten times their size.

The problem gets worse because in order to attract the vendors you need to deliver your product and you usually end up paying fast (as in less than 30 days). It makes logical sense as your ability to pay quickly puts your requests at the top of most of the vendors you have engaged. The problem comes when you get squeezed between attempting to be a good corporate citizen to your vendors, and being raked over the coals by your slow paying clients.

Controlling Your Cash Can Also Help Increase Your Profits!
If you’re not tightly managing your cash, then you will eventually be blindsided one day. Conversely, tighter cash controls will actually improve your profits. How? By having higher visibility around your expenses when you are focused on managing your cash. For example, did you know that by cutting your expenses by 10% you can increase your bottom line profit by as much as 50%? This is because as businesses grow, most entrepreneurs are focused on the big picture such as top-line revenue growth and their expenses begin to grow. Many of these expenses can easily be cut as they are not critical to servicing your clients or growing your business.

If you want to cut your expenses by as much as 10% in the next 90 days, sign every check. This is how most entrepreneurs started in the first place. Once you hire your financial support team, you stop being so diligent about the expenses of the business. Consider this a “check up.” You don’t have to do it all the time, just pick a quarter in which you see every penny moving through your company. Right away, you’ll see expenses that are either too high or simply not needed in your business. Cutting these costs will drop money to your bottom line and increase the amount of cash you can keep.

Taking Control of Your Business and Financial Future
If you’re tracking with me thus far, you are probably asking yourself how else you can you ensure your long-term financial health. In Keith Cunningham’s view, the number one problem CEO’s have is that they are not clear on what they are looking at when they read the financial documents that are prepared for them (usually by their accountant or CFO). After many years consulting on this problem, Keith created a tool called The CFO Scoreboard. The premise being that if you have a better idea of what you should be looking at, you are likely to manage the most important areas of your business.

I have been using this tool for the last couple of months and I highly recommend it. At its most basic level, it’s a financial dashboard that pulls important information from your financial documents and illustrates key issues in simple graphs and color coded positive (green) and negative (red) impacts on your business. The tools automates the red flags that show up when your financial data seems out of whack. In essence, it gives you a very clear picture of what’s working and not working in your business financially.

That alone would be worth it, but what you’ll really appreciate is the “What If” tab that allows you to project out and see in real-time what small 1 to 3% changes in your operations will do for your bottom line. Without seeing these impacts illustrated, it’s really difficult to internalize just how much of an impact a 3% change in your costs of goods sold has on your bottom line. By playing with the built-in financial models, you quickly discover just where you need to focus in order to take control of your business and financial future. I highly recommend setting up a demo of The CFO Scoreboard and seeing it for yourself. You’ll never look at your financial statements the same way again.

/by
, ,

Tony Robbins Shares 5 Words That Change Everything

In your business, relationships, or family life, pain is inevitable, but suffering is not. It turns out as few as five words can change everything from turning around a company to saving a life.

This week, I have been completely blown away (once again!) by Tony Robbins at hisDate With Destiny experience. By his own account, this event is his personal favorite, and three days into it I can see why. Tonight, I witnessed 12 people (out of over 2,500) stand up and self identify as suicidal. The first man was what any entrepreneur would consider “successful” when measuring from a business metric. But just like Robin Williams, who had economic and career success beyond what most people even dream of, this man was ready to end his life. “Success without fulfillment is the ultimate failure,” says Tony Robbins.

I have never witnessed anything more powerful in my life. From the incredible courage to stand up in front of thousands and admit that you are ready to end your life to the complete and utter transformation that resulted in thousands of people, myself included, crying tears of joy right along with this man who chose to end his own suffering, not through suicide, but through love and gratitude.

“I love you. Thank you.”
After going through a process of clearly understanding his own value systems (i.e., what gave him pleasure and what caused him pain), this man was transformed by five words repeated over and over again: “I love you. Thank you.” This was a shortened version of an ancient Hawaiian practice of reconciliation and forgiveness known as Ho’oponopono. The original is, “I’m sorry. I love you. Please forgive me. Thank you.”

While it would be an oversimplification to say that these five words alone ended this man’s suffering and turned around his suicidal thoughts, they were the very words that ultimately led to the breakthrough he had. I was compelled to share this profound experience because far too many of my fellow entrepreneurs suffer needlessly. While pain is inevitable, suffering is not. And if the approach Tony Robbins shared can help a dozen people who were suicidal, I am certain that it can help the millions of entrepreneurs who struggle to grow and/or turn around their companies. But more importantly, by choosing to end suffering, this approach will also lead to fulfillment, which is the ultimate success.

The Three Ways We Suffer in Business
“When you get in your head, you’re dead,” says Tony Robbins. In business, it’s our story of limiting belief that causes us and our businesses to suffer. This story usually comes in one of three flavors: 1) Loss, 2) Less, or 3) Never.

The story often begins with a significant loss. This could be a major client, for example, who decides to take her business elsewhere. In business, we win and we lose, but it’s the meaning we give the event that causes positive or negative feelings about it. Feelings of failure and rejection are normal, but when we begin to obsess about ourselves, we move from the pain of the loss to the suffering around it. A question such as, “Why did this happen to me?” can be healthy if the purpose is to make the company better. But if this leads to a process of self-doubt, judgment, and continued negative feelings, it stops being about improvement and begins to chip away at your generally positive outlook.

Getting less of something can also cause additional suffering. When you expect one revenue target and end up with something less, this can trigger the same negative feelings. While it’s fantastic to hold yourself and your company to a high standard, it’s important to understand when that standard has become an unrealistic ideal that you can never meet. While a standard is something you grow towards, an ideal tends to be a vision of perfection that is not realistic. When you are less than the ideal you’ve set for yourself or your company, you will feel like a failure and needlessly suffer.

“Loss” and “Less” usually lead to the third feeling that “The business will never be ______ enough,” and this begins the downward cycle we’d prefer to stamp out.

The Three Ways to End Suffering
The good news is that it’s relatively easy to destroy your story of limiting belief. You can:

Appreciate and Enjoy
Learn and Grow
Love, Give, and Be Grateful

This is why the Ho’oponopono is so powerful. The statements, “I’m sorry. I love you. Please forgive me. Thank you,” lead to all three ways to end suffering. The core idea being a belief that everything happens for a reason, and that even the most terrible events usually offer an opportunity. Rather than focusing on our own suffering, we have an opportunity to learn from what just happened and grow because of it. The love, gratitude, and appreciation all reinforce the positive feelings we want to maintain, even when faced with incredibly difficult challenges.

The next time you feel yourself getting stressed out or frustrated with a co-worker, take a deep breath and say “I love you. Thank you.” You don’t even have to say it out loud or to the other person, as long as you mean it when you say it. Know that the frustration you’re feeling is usually an opportunity to learn and grow. That’s why you’re thanking the very person you are frustrated with.

Date With Destiny and Business Mastery
I am in no way doing justice to the first 40 hours of the Date With Destiny experience I’ve just had. But when I experience something incredible, I want to share it with as many people as I can. If you’re struggling with your business or sense of purpose in life, then I strongly urge you to check out Tony Robbins’s Date with Destiny (for personal growth) and Business Mastery (for corporate growth).

Maybe when The Beatles wrote, “Love is all you need,” they were right in its application to business as well.

 

/by
,

The One Thing Preventing You From Getting Everything You Ever Wanted

You have an obligation to be famous. Be it for 15 minutes or for the next 15 years, you owe it to yourself and your company to be front and center. The only thing standing between you and fame is the fear that holds you back.

How do I know this? Because I spent some quality time with Hank Norman, who helped pilot and produce The View with Barbara Walters. He also helped launch theOxygen network, where he was an on-air “cross media” correspondent reporting what was going on across all of Oxygen’s online properties. He’s worked as a development executive at ABC Disney and has written and produced films.

Fame Marketing Cartoon

Here’s some of Hank’s broadcast television personality wisdom that I found interesting and inspiring:

Standing out is more important than being liked. Let’s face it–you can’t please everyone. Most people hold themselves back because of their desire to be liked. Even famous people fall into that trap. “Howard Stern was the worst judge on America’s Got Talent,” Hank mused, “because he wasn’t honest. And I’m a huge Howard Stern fan. But I’m glad they fired him. He’s lost his edge as he’s become more famous, because he cares more about what people think of him.” If you are a long-time listener to Stern, you’ve probably noticed a change from when he was just starting out and had something to prove. The more amiable you try to be and the more people you try to please, the more vanilla your personal brand becomes.

Love (and convert) your haters. “I’m in love with my haters,” says Hank. “That’s because they use the very formula I teach. They take a controversial position, stand out, and are extremely vocal. I simply give them the attention they deserve, and suddenly I convert them … or at least most of them.” It’s so true. Your haters have tons of passion. You average fan is boring by comparison. So what if they consumed your content. If it dies there, then they really aren’t helping your boost your audience. But haters have fire in their bellies and that passion helps fuel conversation around your position. So what if they disagree–at least they’re talking!

Face your fear and be heard. One of the greatest things about that iPhone in your pocket is that it’s the only thing you need to become famous. “You have everything you need to be famous and wildly successful in your pocket,” says Hank. “With today’s smart phone, all you need to do is put yourself out there and you’re going to get more business; you’re just scared.” Scared of what? Most people fear just how powerful they truly are and what it means to be out in front. It’s a primal instinct. Our survival instinct is to stay toward the middle of the pack and blend in–it’s what got our ancestors to today. But it no longer serves us. Standing out is what it’s all about–your personal brand matters so much more than you realize. Have you Googled yourself lately? (See “10 Ways You Build (or Damage) Your Reputation Online.“)

Train to be extraordinary. “People will hate you, so build up your callus,” says Hank. “Get uncomfortable. That’s the starting line. How does this translate into the marketplace? Figure out what to do to be outrageous with your audience. I’m asking you to be honest.” And that’s the thing. Most people get in front of a mic or video camera and immediately try to be something they are not in a desire to be liked. To be extraordinary, you need to be willing to be passionate, determined, adventurous, creative, and a little weird. Just ask the employees of Zappos–it’s in their core values. And that’s what we all want to see. Normal is boring as hell. Seth Godin, in his bookPurple Cow, said it best: “Being risky is safe. Being safe is risky.” Sounds like a paradox, but it’s actually a dialectic. Taking big bold risks is interesting and gets the attention of everyone around you. Even when you land flat on your face, you have a lot more respect for being brave enough to try in the first place.

Above all, keep it real! Look at Donald Trump. He’s a guy who fully took the gloves off and spoke his mind. You can disagree with him. You may even think he’s an idiot. But you simply can’t ignore him. A friend of mine referred to the Donald as the Republican id–that is, Donald Trump says out loud what many Republicans think, but don’t have the courage to say. So is it any wonder that he’s taken the spot light and has no intention of giving it back? He’s spent the least amount of paid advertising and has the highest brand recognition in the Republican party. Is it a circus? Absolutely. But we’re all so exhausted by the double-speak nonsense that wastes our time that it’s actually refreshing to hear a politician take a stand and not look to public opinion polls to know what should be said (and not said) to please most registered voters.

Fame is an obligation. You owe it to yourself and your company to be yourself and to stop trying to be someone else. Play full out. Yes, you will attract haters, but that lets you know you’re saying things that are important. Would you rather hear crickets when you speak or loud contrarian feedback? Energy trumps the silence treatment every time. So go on, be bold and take a stand. If you need help, engage a company like Hank Norman’s 2 Market Media and it will help you get outside your comfort zone.

If you think this article is a joke, then have the courage to say so. If you are moved by the insights of a true master of fame, then tell Hank Norman what you enjoyed about his insights, find your voice, and stand tall. After all, you only live once. Find your voice and be loud and proud. Your brilliance is needed in this world. Speak up!

/by