Life! The Soap Opera - Episode 3

There are times when I seriously wonder if I'm borderline insane. We live in a society where striving to be your best is no longer acknowledged, let alone rewarded, yet I still try to push my way forward out of my comfort zone through self-development and personal challenges.

In the past few weeks, my retail activity has slowed and my recruitment activity needs serious TLC. There's a number of factors involved:

1. Due to rising fuel costs, I'm now car-sharing. Unfortunately, it's adding 6 miles and another 15 minutes to my existing 90 minute round trip each day, and I doubt if either of us would pick each other as anything more than a work-based colleague. Despite a number of efforts on my part, it's very difficult to prolong an in-car conversation past the "do anything last night?" stage. Obviously, my conversational skills need some work.
2. Office politics is alive and well, which means that I'm getting sucked into various disputes no matter how hard I try to stay neutral. Only those who've worked in this sort of atmosphere for any length of time know how enervating that can be. If I didn't have my Kleeneze business to focus on, I'd be heading for a long stress-induced break from work.
3. I'm working for a company that has an intriguing approach to personnel matters. My personal development plan, for example, states that I will be rated on, amongst other things, identifying and attending certain training courses. Despite identifying 6 separate courses, and trying to sort out the details for two of them directly when it became obvious that my line manager had no intention of doing anything, I have not received any training and am extremely unlikely to do so before my next review. Plus, despite asking for feedback regarding the team leader position I was unsuccessful in applying for, I have received none. I don't enjoy being set up to fail - it's one of the reasons I want to run my own business.
4. The workload in the office is so great that our team resource is spread too thinly, leaving all of us trying to fit 80 hours work into every week. Unsurprisingly, this doesn't provide good service, nor does it motivate the team. What it does do is ensure I have very little time during the day to field Kleeneze calls.
5. My family is going through one of those phases that drains you of both time and vitality. I have a mother whose health is deteriorating rapidly, one son who is trying to avoid school due to various issues (bullying, poor teaching, etc.) and my eldest son and my partner are trying to re-enact elements of a David Attenborough programme on male lions' territorial displays. Again, I'm finding more and more time is taken up in dealing with all of this.

I need to act decisively and I need to act fast, or my initial momentum will be derailed completely.

I'm taking the time out this evening to revise my plans (see my blog post http://itsnotanattitude.blogspot.com/2011/01/network-marketing-for-beginners-3-rs.html for more details), after which it will be full steam ahead on building a large enough team to allow me to quit the commuter life for good. Of my current salary, I spend 20% on petrol, so I only need to match 80% of my current salary consistently to provide an equivalent standard of living.

Tomorrow will mark the start of a whole new 90 day plan. I intend to stop commuting no later than 1 March 2012. Time to make that happen.

Networking Mastery - Don't Poison The Well

It never ceases to amaze me. People join a network marketing organisation and then completely ignore the definitions of both network and marketing.

Network - an association of individuals having a common interest, formed to provide mutual assistance, helpful information, etc.

Marketing - the total of activities involved in the transfer of goods from the producer or seller to the consumer or buyer, including advertising, shipping, storing, and selling.


What's often forgotten is the hidden network within network marketing - the network of your customers, prospects and prospective customers.
 
We are all interconnected. John Donne wrote, "No man is an island, entire of itself;" and "all mankind is of one author, and is one volume;". Thich Nhat Hanh coined the term interbeing to indicate the same concept. What we do affects others.
 
This week and last week, my retail results were poor. Part of this was due to my needing to devote a little extra time to Life! (family issues, broken boiler, ill-health, heavy workload in the day-job, etc.). That's not a concern; occasionally we all need to prioritise something other than our business goals.
 
What is a concern is the conversation I had with a lovely lady who has never ordered from me, and is unlikely to ever order from Kleeneze, Betterware, Avon or any other network marketing company.
 
The reason? In the 8 weeks before Christmas, she placed 3 orders with Kleeneze distributors (not me!) and 1 order with Betterware. Nobody contacted her to let her know there were delays with the goods; nobody delivered them either. That abysmal customer service has guaranteed that others who would have provided better service are now prevented from doing so - she never wants to see another catalogue through her door. There is nothing anybody can do at the moment to persuade her otherwise.
 
If I learn nothing else from that conversation, I know this:
 
Don't poison the well for those who come after you.
 
If you don't provide good customer service, you destroy a potential customer network, not only for yourself, but for others. That's not a good way to live our lives, personally or professionally.

Ten Tips to Survive MLM Partnership Problems

Many who get involved in network marketing start up on their own, with their partner/spouse/significant other on the outside looking in. There's a number of reasons for this, the most common being the partner's resistance to the concept or experience of either self-employment or network marketing.

So how do you cope when your formerly-resistant other half decides that it's a good idea to formalise the odd bit of help they give you by signing up as either a joint distributor or as your downline (depending on your corporate model)?

How do you cope when they insist on doing things their way, due to their superior managerial skills, their brilliant sales pitches or their wonderful networking talent?

How do you cope when their idea of support is to order you about, sidestep your suggestions and ignore all the hard work you've done/are doing to build your business so far?

How do you persuade them to work with you towards a brighter future, yet stop them translating your concerns into "Get the heck out of my life, you control-freak"?

Not easy, is it?

There's probably a need for a "Male network marketers are from Mars...." book. Until I write it (!), all I can do is offer the following tips from my experience:

1. Ignore the tone of voice, if you are the sort of person who reacts to aural cues. It's highly unlikely your newly-enthused partner realises how they are coming across.
2. Identify one point of conflict that you want to address. Don't ever consider sorting out more than one issue at a time.
3. Smile! (It's very difficult to sound angry and bitter with a genuine smile on your face; if you can't conjure up a genuine smile first time, think of something good that the two of you have experienced and then smile).
4. Acknowledge their passion for the business and let them know how much you appreciate their support.
5. Explain that you have been working on building the business for x months/years prior to teaming up and that you are accustomed to doing things in a certain way.
6. Thank them for the flurry of new ideas that they've put forward and accept that there are other ways of working within the business.
7. Explain that you would like to work together as a team of equals on one small area of the business, so that you can both get used to the other's working style.
8. Negotiate which area of the business you will work together on first.
9. Set specific, measureable, achievable, result-oriented and targetted (SMART) goals, such as "We will work together to contact 20 prospects, using the same checklist, script and tracking sheet, with the aim of signing up 1 person each by 1st March 2011. We will review our progress together 48 hours from now and we will continue to review on a weekly basis."
10. Reward yourselves for working together.

How do you manage these occasional conflicts?

Einstein's Insanity Definition vs Duplication

A much touted Einstein quote is:

The definition of insanity is doing the same thing over and over again, and expecting different results.

In Network Marketing/MLM, we get told to make sure that our systems and processes are duplicatable. Millions of internet pages, thousands of magazine articles, hundreds of thousands of books - all telling us to allow our downlines to duplicate our behaviour.

We need a sanity check here, not to mention a reality check.

Duplicating your upline's behaviour only works if that behaviour breed success. Otherwise, you're just duplicating failure and that's insane.

Expecting your downline to duplicate your behaviour and systems only works if you yourself stick to the following mantra:

Focused, persistent and consistent action generates success

Focused - because splitting your attention between a portfolio of businesses rarely works and is never duplicatable. Without targetted goals and a plan to achieve them, you will fail.

Persistent - because nothing worthwhile is ever achieved if you only work at it sporadically. You don't become a champion swimmer by occasionally dipping your toe in the jacuzzi.

Consistent - because you only build trust in others if your behaviour or systems are known and understood. Being unusual, unpredicatable or just plain unreliable is no use in business. It's not that much use in creative matters either, despite the claims of many.

Action - because having the greatest attitude, plans and mindset in the universe is no use at all if you do nothing to advance towards your goals.

Nike got it right with their "Just Do It" campaign. When all is said and done, you only succeed by just doing the work, regardless of weather, personal issues and negative comments from well-meaning friends.

Network Marketing for Beginners - The 3 Rs

You may have heard about the 3 Rs of Education - Reading, 'Riting and 'Rithmetic.

There are 3 Rs in network marketing too, and this time, you don't need to mis-spell to make the mnemonic fit.

The 3 Rs are Reflect, Revise and Refocus.

Reflect

This should be done at the beginning of every action plan, whether you plan out 7, 28 or 90 days of activity at a time. It should also be done if your tracking shows that you're in danger of missing your targets.

Is what I'm doing effective? - Am I getting in touch with enough prospects? Is my retail turnover sufficient to support my goals? Is my customer service excellent? How many hours am I spending to achieve my results? Are my family threatening to change the locks if I don't spend more time with them? Whose advice should I follow?

Could I be doing it better, or differently? - What can I do to improve the situation? Would more customers help? How can I generate more leads? Where are my constraints - money, time, or both? What can I set aside in my life to help with building my business?

What are my options? - List the options available for the situation you wish to reflect on. This is the time to brainstorm, regardless of whether you choose any of the options or not. Options can include time management techniques, asking for referrals from customers or prospects, rearranging your personal or business budget, etc.

Revise

Go over your existing plans, tracker sheets and targets. If you haven't got any, create them! Ask yourself the following questions to identify the changes you need to implement:

What do I need to change to improve my results?
How will I implement the changes?
Over what timescale?

Produce new plans, tracking and targets to enable you to take action.

Refocus

Now that you've taken time out of your busy schedule to improve how you operate your business, ask yourself the following:

Why am I doing this?
What are my goals?
What are my targets?

Write the answers down and keep them somewhere where you can refer to them regularly. Better still, commit the answers to memory.

Once you've done this exercise, put it into practice straight away and track your new results. Never rest on your laurels - you should aim to improve with every iteration of your plan.

The Art of Thinking Big - Universe Fly-Through

I am in awe of the minds who came up with this wonderful concept:




Dream big for 2011.

Never Let Action Become Inertia

I'm as guilty of this as the next person - it's the Holiday Season, so I deserve a holiday. I take a few days off, so what happens to my business?

That really depends on whether you're an Apprentice, a Journeyman or a Master.

Apprentice - "It's only a few days, I'll start up again after the break." The danger here is that the break stretches into a few weeks, a few months, and before you know it, the Apprentice has left the business completely.

Journeyman - "It's only a few days, I'll contact my customers in the week beforehand, let them know I'll get back to them in a couple of weeks." Much better, the Journeyman has communicated the action plan to the customers, and now has a psychological imperative for when he needs to get back to work.

Master - "It's only a few days. My customers know exactly which day I'll be seeing them next, and my automated lead generation tools are prompting me with a steady trickle of interested prospects. I'll talk to those as their details arrive in my inbox".

None of these phases is completely set in stone; Masters can act like Journeymen sometimes, but so can Apprentices. The key factor, as always, is consistent action aimed at SMART goals.

If you're a team leader with a number of apprentices in your team, how do you deal with them? Do you let them forget their focus, or do you manage them until they've learnt how to manage themselves?

Seasonal Flu - How to Win with Network Marketing

For the past 3 weeks, I've struggled to keep going. I admit it. No matter how buoyant a distributor's personality, there are times when you have to run as fast as you can just to stay still.

In my case, as with many others at this time of the year, my family got knobbled by the seasonal flu that's doing the rounds. So I spent 2 weeks trying to cope with a full time job, a 90 minute round-trip commute and my Kleeneze retail targets, as well as ensuring that my sons were being looked after to the best of my abilities. Building a team was not on my list of priorities. Surviving each day was.

Just as they started getting better (this year's flu seems to hit people with a week of the usual symptoms followed by two weeks of bronchial problems), I got the darned bug myself. For four days, I struggled in to the day job, dreading every minute of that 45 minute each way trip. On the first day, my youngest son got clipped by a car on his bike ride back from school. He was extremely lucky and got away with scrapes and bruises; he walked his bike home before the shock set in. I took a day's holiday to keep an eye on him; I'm not sure who ached the most. By day 5, I'd got to the point where I crawled out of bed, phoned in sick and crawled right back again. It's now day 9 and I still feel like death warmed up, but I'm back at work with the bronchial phase warming up for Christmas.

So what has this to do with winning in network marketing?

Simply this: both I and my youngest son followed the same basic principles - to only commit to what we knew we could deliver, to do what we said we'd do when we said we'd do it, and to revise our planned activity to suit the new circumstances.

I delivered ordered goods, put out far fewer catalogues than normal, but ensured I got my 10% bonus volume by week 3 of the period, as per my goals.

My youngest son, despite the flu and his injuries, turned up to do his paper round every morning, regardless of how ill he felt, because he knew the newsagent was short-staffed. I'm so very, very proud of him.

The great thing about a good network marketing company is that, if you are diligent and consistent, results happen when you least expect it. I currently have a dozen people to contact with more information about building their own Kleeneze business, many of whom came in directly via my Kleeneze website, all due to the effort I put in before the seasonal flu took hold. I'll be talking to them over the next few days, sending further information and discussing their joining my team. 2010 was good - 2011 is going to be even better.

When Life Gets In The Way - Live It!

You've read your favourite self-development books, listened to the CDs/MP3s/podcasts, watched the DVDs, subscribed to the best blogs. All of them say something similar:

Consistent effort breeds long-term success.

I have two book/CD sets on the go at the moment - Jeff Olson's Slight Edge and Darren Hardy's Compound Effect. Both excellent and, if you live in the UK and haven't got them, you should be ordering them from Knowledge is King. I tend to go for book and audio packages where possible as I find I learn more that way.

But what happens when Life happens? You know what I mean - the cat's sick, your child starts a new life elsewhere, you get divorced, a parent's health deteriorates dramatically, you move to another area. The issues that turn day-to-day life into Life!, the soap opera you didn't want to star in.

Simple. You revisit your plans and your tracking and you look at your life realistically. Then you revise those plans to take Life into account. If you can only manage to spend 30 minutes per day on your business, instead of 8 hours, then plan accordingly. Communicate your new plans with whoever needs to know and then stick to them. As always, always underestimate your committment and then do more than you've promised. Set a timescale to review your plans by a given date, depending on what Life has thrown at you, and give yourself permission to deal with the immediate necessities.

Don't forget, there are different ways of approaching bad news, as the following story proves:

A business woman was working away from home when her son phoned her.

"Mum, the cat's dead!"

After a brief moment of shock, the mum mode took over. "Darling, next time you have bad news like that, especially if you feel it might upset others the way you are upset right now, try to soften the blow by gently leading up to it. For instance, you could have started by saying something like - You know how the cat loves climbing the roof, well it's fallen off and it's badly hurt. We don't think it's going to survive. Then you could have called back a little later and told me that the cat was dead. OK?"

Her son agreed to try that the next time he had bad news to tell.

Two days later he phoned again, just as she was packing to come home.

"Mum, you know how Granny loves climbing the roof?"

Network Marketing - 3 Simple Steps to Help Beginners Succeed

I've just had my first article approved on Ezine Articles - 3 Simple Steps to Help Beginners Succeed. More will follow. I have a firm belief that business building should be based on simple, but solid, foundations. Why not have a read and let me know what you think?

Building an Ethical Network Marketing Business

Did the title get your attention? Good.

Firstly, let's get a few NOTs out of the way.

This is NOT a criticism of the network marketing industry as a whole, nor should it be seen as an opportunity to take pot-shots at individual companies.

What I am concerned with is the ethical perspective of some network marketing "experts". As an example, the advocation by some of lead generation activity that verges on spamming. The sort of advice that recommends creating 100 webmail accounts of the getinfo01 - 99 @ webmail.com variety, so that you can bypass the submission terms and conditions of free advertising sites by simultaneously using all 100 email accounts to produce your leads. You can predict the resentment that this behaviour causes amongst both website admins and other users.

I know of one "expert" whose idea of lead generation is to effectively steamroller over the "opposition" by inundating an area with lead generation aimed at his website. He gets his accounts revoked on a regular basis, but he doesn't care because he's got his leads. His behaviour has a negative effect on both his downline, who can't emulate him, and the other poor network marketers whose adverts look similar to his and who can't work out why they've been booted off a particular site with their first and only advert.

What these "experts" fail to remember is the networking part of network marketing. Networking involves building relationships with others and that includes the moderators of the sites where you are promoting your own business. Spamming sites with cut-and-paste advertising clones is just one of the reasons why MLM is held in such low regard by others, to the point where you can't promote yourself as a network marketing representative on many free sites.

Now, I'm not saying that you shouldn't have a couple of backup email addresses, in case you accidentally fall foul of the submission guidelines on a given site. Nor am I saying that you shouldn't place a variety of adverts on the same site, if the guidelines permit that. But you need to be clear in your mind as to what you are trying to achieve - is it long-term sustainability or short-term profit?

To be a leader in network marketing, you need a strong set of values as a foundation for how you do business with others. If you behave like a flim-flam artist, you will drive away honest hard-working distributors who have been told to duplicate their upline's systems, but cannot bring themselves to use your methods.

These aren't precepts, but they are common-sense guidelines for building an ethical business:

1. Treat everybody you 'meet', whether online administrators, customers or potential representatives with respect.
2. Keep in contact with everybody you 'meet'. You never know who may join your business - it may be the friend of the person you were nice to 2 years ago.
3. Ask yourself, how do others view me/my behaviour/my business activities. Then ask your best friend for an honest appraisal. If you don't know how you come across, you can't improve.
4. List 5 qualities that you want to make part of your personal brand. Mine are honesty, loyalty, hard-working, nurturing, coaching. Write them down and put them somewhere prominent. Remind yourself to be your brand every day.
5. List 3 core values you intend to adhere to. Simple is better - think of the French motto, "Liberté, égalité, fraternité" - both catchy and pithy. Add those to your brand statement.
6. Commit to a kaizen mindset.

Nightingale Conant's UK website has a good mission statement generator. Why not try it out and see what your mission statement looks like when you slot in your core values and qualities?

Gratitude Journals and a 90 day plan

I stumbled across the 30 days of gratitude site today, whilst looking for a motivational quote. I'm very glad I did (no sarcasm intended).

It turns out there's been a lot of research done on the positive effects of gratitude on both physical and psychological wellbeing. Increased optimism and enthusiasm, better sleep quality and lower levels of depression or stress were all noted. Active gratefulness appears to help people achieve their goals as well.

To be actively grateful, you need to document that gratitude. There are a lot of lovely suggestions on various gratitude sites about investing in a special book, but, let's face it, not everybody has the time or money to nip down to Journals 'R Us for the superb £50 pressed flower covered notebook and scented pen. Not only that, but the emphasis on the tools detracts from the core message.

Don't bother with the leather-bound journal, the fountain pen and the dedicated timeslot. If you focus on that, your gratitude journal will last as long as that teenage "Dear Diary" Christmas gift - and be as unsullied.

Open up your office software, create a new document or spreadsheet and go for it. Follow these instructions on how to write powerful "gratitudes" and set yourself a target of 6 gratitudes per day. If you've got a smartphone/iPhone/Android, you could use that instead.

Finally, here's a suggestion. Why not keep a 90 day gratitude journal alongside your 90 day plan? By actively focussing on your psychological development, you can help support the development of your business at the same time. Not only that, you have a permanent record of the improvements in your life to refer to in the future. 

Tithing for Profit

I've just posted on The Kleeneze Lady about tithing for profit. It's worth repeating one of the points here:

When you're building your business, you should be tithing for profit.


Invest your retail profits in your business, invest your bonuses in your lifestyle. That way, you have two stories to tell, rather than one.

Hop over to the original post to understand how and why.

Kleeneze, Small Businesses and Network Marketing in General

I've decided this blog is deviating slightly from its original purpose, which was to be a general commentary and advice blog on all forms of small business and network marketing, including low-cost franchises such as Kleeneze.

My more Kleeneze-specific posts will be put on The Kleeneze Lady - feel free to hop over for a visit.

I Love My Kleeneze Business!

I know I've said this before, but the day job is not what it could be. There is a fundamental lack of understanding about what some of our team is capable of - we are, after all, all multi-faceted individuals with our own interests, talents and motivations. To see that enthusiasm belittled, that passion for change warped into apathy, that expertise ignored - to me, that is the antithesis of proper management, let alone true leadership.

It just goes to show, all the Dale Carnegie Group leadership courses in the world can't change a person if they don't see the need to change...

So, today went much as expected. Managers held meetings and sidestepped the expertise within the team, yet again. I watched an entire team go through the motions, all giving no more than 50% of their effort to their day job, letting the minutes tick by, not bothering to learn new skills or polish old ones. After all, why bother when your managers "know" what you're capable of and won't let you out of your pigeon-hole?

Not me, though. I'm in early, out on time and working as effectively as possible during my day job hours. Why? Because it makes sense. I can catch up on EzeReach messages first thing, while nobody else is in. I can check emails, tweak online adverts and tune plans during my lunch break. If my workload is being completed on or ahead of schedule, nobody can complain if I take the odd 5 minute break to talk to a prospect, or network with others in the company.

Then, when I get home, I'm energised to do the nightly delivery and collection of catalogues; the delivery of orders and the processing of new orders. I'm fired up by the thought that my adverts are being looked at and generating enquiries, that the retail business is building momentum. I'm focussed on what's important.

Four months ago, I was stressed, hated the monotony of the day job and despaired of ever having savings, let alone a decent pension pot.

Now, after being a Kleeneze distributor for 3 and a half months, I have my own business, I'm saving money for the first time since I became a parent and potential team members are contacting me.

Life is great and I love my Kleeneze business! Know anybody who would be interested in earning an extra income? Send them my way, I promise to look after them.

Kleeneze on ITV Meridian

Kleeneze Success - The Confidence Builder

I work at my Kleeneze business part-time, as do almost all new distributors. I fit it around a busy life which includes a 45 minute each-way commute and a full-time IT job in a corporate head office.

Anybody who has ever worked in a corporate head office department will have experienced that wonderful mix of office politics that flourishes in environments endowed with rigid rule-following, ever-tightening budgets and complacent staff waiting for their final-salary pension pots.

I hate office politics. Traditionally, I'm the sort of character that takes the kicking from people both clambering up and sliding down the greasy pole. I can't cope well with a passive, pessimistic reaction to office politics; it actually makes me physically ill, with psychosomatic symptoms ranging from mild hair loss to eczema and other allergic reactions. But, as anybody who has ever tried it will tell you, standing up for yourself against master office politicians will scar you even more permanently.

Prior to joining Kleeneze, I'd experienced enough office politics in both this company and my two previous jobs to convince me that I just wasn't cut out for a 9 - 5 corporate life. Unfortunately, I still had to deal with the playground tactics around me and it wasn't going well.

Today, I got side-swiped, yet again, by masters of the craft. Normally, that would be enough for the allergic reactions to start showing up over the weekend. Not this time.

With the confidence built up over the past few weeks with Kleeneze, I took a different approach. I side-stepped the potential political quagmire, politely drawing a line at the edge of the quicksand, and walked away from the fray.

You know what? It feels wonderful. I'll be at home at 6pm tonight and my real job starts then - collecting catalogues, bagging up orders and filling in my tracking sheets. I already have enough orders collected in this week to know I've achieved my 10% bonus for the second period running.

The day job just gave me a reminder about why I'm doing Kleeneze and I'm so grateful to the political idiots in my department for doing so! Who says negatives can't inspire you?

Little Successes Pave The Way

"If you have a plan, anything can happen" - Michael Khatkar.

Last night, I drove round my Kleeneze round, delivering orders.

Today, I looked at my Kleeneze account. Because I pay in ALL the money I receive for orders in the early weeks of each period, as I receive it, I'm now in the wonderful position where this week's orders are pure retail profit. My sales aids are the only things that I need to pay for; my account is in credit and this week's orders will be paid for when last week's retail is put into the Kleeneze account.

Now, this method of operation won't work for everybody. For people like me, paid monthly, where the month's pay tends to run out in the third week, it's wonderful to know that I have the ability to rely on my retail profit if and when I need it.

Best of all, it means I have the money available to focus on lead generation so that I can build my team.

I promised myself that I would use my retail profits to build my business. My Kleeneze bonuses will go towards building a better lifestyle. Today, I have the evidence that building my business is sustainable from my retail efforts and I'm delighted.

Building a Business One Day at a Time

Sometimes, life expands to fill every single moment. Parenting, work, relationships, traffic jams; they all conspire to reduce the time you have to focus on your own business.

Happens to me all the time. It happened again today.

Plans go out of the window, you drift off the subject of building your customer base or your team. What happens next is up to you.

Today I was proud of myself. Despite all the temptations to just put my feet up and take a well-earned break after 13 hours of parenting, commuting, paid employment and shopping for essentials, I got changed into Kleeneze polo shirt and jeans, put on the woolly hat and waterproof coat, and delivered catalogues for 90 minutes.

You can only lead by example. "Do what I say, not what I do" is not an option in an army of volunteers looking for generals.

When my team says to me, "I can't do this, I'm too tired." I can help them go that extra mile. Literally. As Lao Tzu says, "A journey of a thousand miles begins with a single step." Kleeneze distributors are proving that each and every day. Well done, all of you.

Reasons for Business Failure Part 2: Cashflow

We're all aware that the Credit Crunch drastically limited the sources of finance for small businesses. The media is full of stories about how SMEs (small/medium sized enterprises) are not getting access to loans to help their cashflow or to fund further growth. Accountancy organisations such as the UK's ICAEW give firm advice about small businesses having to provide good reasons for needing capital injections.

That's just one more reason why business owners need to be realistic about their survival costs before they start a business. All businesses need startup capital, to cover the initial outlay on property rental, vehicles, tools, overheads, stock, office equipment and stationery, fuel costs, etc. The new business owner also needs to ensure that their personal overheads, such as mortgage/rent/loans, household expenses, personal vehicle & fuel costs, are also covered.

Traditionally, business advisers suggest that most small businesses take up to three years before they are fully profitable. That's three years where, every time you take money out of the business for personal use, you delay the point where your business "breaks even" and moves towards profitability. The more net profit you can invest in your business in the early years, the earlier your business will break even.

If you need an income of £2000 ($3000 or 3000 euros) per month to survive on before you start your own business, ask yourself how you will fund that income in the first 3 years of running your own business. If you can't fund that income out of savings, where is the £72000 coming from? From redundancy payments? From family? From another income in the household?

Or would it be better for you to build your business part-time, in parallel with an existing job? Can you do that with your current skill set? If you can, how will you get customers? How will they pay you? Will you need to take time off your existing job to visit prospective customers, or can you sustain business growth outside of your existing workday?

All of these questions need answers before you build up your own business. It's part of making sure you're not a business failure statistic in 6 - 18 months time.