Money: Understanding the role of money took me several years to grasp. I've gone over this before, but I came from the Information Technology field, where we liked to spend a lot of money, often at the behest of others who had done some sort of cost-benefit analysis about how tech could make or save them money, usually without IT providing any input. Rarely were we asked to add value to the business itself, which to finance people would be like giving the hen house keys to the fox. Did these clever overseers know what they were doing? 50% of the companies I worked for failed, so you tell me. Sometimes I think they decided what to do by throwing darts at a board full of ideas.
The bottom line is when you work for someone else, you're spending their money. When you run your own business, you're spending you're money. Mentally, this is really hard to grasp. When the expenses go up, or the government foists a new tax on you, they're taking your money, their hand is in your pocket. It's the same pocket you use to feed your family. This "your money thing" took me quite a while to grasp, along with adjusting the metrics in spending my money. In the corporate world, money is more strategic. There is cost-benefit analysis, justification for spending large sums. In a small retail business, margins are razor thin. Your patron saint of economics is Ben Franklin rather than Ben Bernanke. A penny saved is a penny earned is your mantra.
In a nutshell, running a store is a process of constantly beating down expenses with your fists while simultaneously raising your sales, your hands high above your head in retail hallelujah. Try the motions a few times. I call it retail aerobics. This has been mentally challenging for me. Some will tell you not to take it personally, it's only business. I've learned that attitude is either from a nine to fiver employee or an enlightened business owner. Indeed, not taking it personally is step three in the stages of owning your money: not understanding it's your money is step one, followed by understanding it's yours and making it personal, and finally, stepping back and not taking it personally. I'm working on step three. I'm at the stage where I get enraged when I'm swindled, rather than a more relaxed detachment that I need to cultivate. Stage three looks a lot like stage one, but with some wisdom and mindfulness of what's really going on.
Time: We've all been taught that working harder will give you more reward. In the work world, at lower levels it usually means direct compensation for your time. In the corporate world, some bosses will judge their staff on hours worked, rather than accomplishments. Those really good at their jobs are often bored with the work day time constraints, or worse, they see the structure of their compensation re-adjusted to make up for their excellence, a common occurrence with sales people.
In reality, most people can't focus for more than about 5-6 hours on a project before they're shot, and a lot of the cube-based work world is spent screwing around. Business owners are painfully aware of this, both with their employees and their own time. When their businesses begin to falter, they are often told to just put more time into their business, work an extra ten hours a week. That really doesn't work. The key, as many will tell you, is to work smarter, not harder.
Working smarter means working on process, fixing the dozens of little things that will make your small business better. The mental transition from working in your business to working on your business is what I grapple with. The thought exercise I've used lately is the business development day. What if I could take one day off a week and use it away from my business, in business development. What would that look like?
Much of what I do running a small business seems passive. What could I accomplish with some dedicated, active engagement and self promotion? What would I even do with one day off a week? The cost-benefit, again, a dangerous, non Franklinian concept, would require me to increase my sales beyond what it would cost to hire an employee to work that one day a week. Calling it $10/hour, could I spend four days a month to offset that cost and build the business? Do I even know how to calculate that? We're not talking $240/month in gross sales to offset that employee, we're talking about profit. With a 5% profit margin, that's more like $4,800. Re-stating the question, if I took one day off a week, could I generate $4,800 in sales each month?
The answer? I don't know, because I don't know how. Some of this is clearly marketing. It might mean some direct marketing, perhaps working with other small business by exchanging flyers. It might be more innovative, like meeting with schools or parent groups to organize and run a game night. It might be more abstract, like meeting with various small business groups that day to network and trade tips or possibly taking a class on accounting or marketing at my local community college. I might visit other stores to see what they're doing and build relationships, something I never do.
The bottom line is nobody teaches you how to run a small business and there's no magical degree program with that in mind. We are taught to define our time in 8-hour blocks, with 30 and 15 minute breaks. Breaking out of that time mold is dangerous. When I think about my business development day, what do I do? I put it back into 9-5 context, because that's what I'm familiar with. A penny saved is a penny earned, says the little Ben Franklin on my right shoulder, whispering in my ear that such a day away is a bad idea. Then the devil on my left shoulder, ghost of corporate experience, whispers that penny wise is pound foolish. Do a proper cost benefit analysis. Throw some darts! My business processes are strong enough to step away from my business, but to do what? That's my dilemma in year seven.
