How to Compass
I will admit, I love a good analysis. I also admit that I hate doing them, and I find them too complex. Don’t you need to be an analyst to do an analysis?! I don’t know, maybe. However, sometimes, we can do them because they’re easy. This analysis is in pursuit of our internal compass- analyzing the direction we want to take ourselves and our business. Our compass is critical. It is the easiest and truest way to guide our business, our decisions, and what we do with ourselves everyday. Here is the link to an exercise I created. It’s easy. Two parts, that’s it. I will explain.
My thoughts on this topic are fairly simple - we need our compass to guide us. But, what happens when we are so busy that our compass fails to show up? We get lost, but we don’t know it. We stop filtering our everyday actions and decisions through a bigger picture. We end up doing a lot of things without aligning that to a “why”.
This may sound a lot of like self-help, rather than a business practice. It is and it isn’t. Re-activating our compass does help our self. But, it is also the way we develop our business. It is the way we create a strategy. Why does a strategy matter? Hmph. I bristle. It matters more than anything. Our strategy is the ultimate roadmap. It’s what allows us to see both the forest and the trees. It lays out where we are now, in practical, operational, and philosophical terms, as well as, where we want to go. The key to a strategy is the delta between those two things - where we are now and where we want to go. That delta holds all the answers. How we bridge the gap between now and years from now will be filled with incremental actions that align to our greater objectives. These greater objectives are part of the compass - so if we haven’t defined them, we should.
Here’s how it might look - a business owner has a goal to function like a “founder” not a “do-er”. In the future, they want to run the business from the strategic level and have less to do with the day to day. Today, however, the owner is the primary “do-er”. They are running the business, administrating the business, and acting as the one employee doing everything from end to end. They are tired and they’re not able to grow as much as they envision because they have limited capacity as it is now. What’s the delta here? It’s how they get from doing it all to overseeing it all. What fills in that delta is how they get there. They put together their strategy starting with their objective. Let’s say it’s - grow to $20K revenue a month in 3 years. Now, let’s define their “why”. Hint - the why is not that they want to act as a founder not as a “do-er”. It’s also not to make $20K month. (These are the objectives, remember). The “why” is something more like - they want to build a self sustaining business that supports them in retirement. They want to stop working as much within 5 years so they can reap the benefits and relax. Given that, their strategy needs to be built so that it takes them out of the equation except on the highest level. How? They need their compass now. Is it to set the business up to be sold? Is it to retain ownership but have a high functioning Manager and Staff running day to day? The compass will answer here. The next step, after this has been decided, is detailing the how. Let’s say it’s hire a staff to run things. Owner knows this will take a while and the first step is to secure a consistent revenue of $10K month so they know they can pay a staff. How? Look at what is near term and go from there. Near term example could be - in 3 months, inventory costs and decide what can be lowered. Within 6 months, look at all sales channels and product sales numbers. What can be built out more? What is not yielding enough revenue to justify the work? Maybe they cut this one to focus more specifically on the channel that is working well. They make a plan for doing these things. They look at what can happen, realistically, this year (near term), and what builds into next year and beyond (longer term). They know this will take a period of years to achieve. That’s ok. Their compass will show them why they need to do this. They keep this strategy close, using it to filter what they’re doing and why. They use it to keep themselves going in the right direction.
I want to make something very very clear - our strategy does not need to be big. Is our goal is to keep it small? GREAT! We still need a strategy to figure out what “keeping it small” means to us. I point this out because a lot of people with small businesses hear the word “strategy” and they think it only applies to huge corporations. It doesn’t. Big or small, strategy is a necessary tool.
YOUR COMPASS. If you start to ask yourself some fundamental questions and work through where those take you, the now and the future now become a lot easier to map out. Plus, they keep you on track. Plus, they give you a very simple mechanism for prioritizing and making decisions. The compass leads to the strategy and the strategy will lead you where you want to go.
Download the exercise I have created to start working through this. It’s in the new Self-Guided section of the website (under Services). More on the self-guided branch in the future! But for now, this self-guided exercise will prompt you to think about two specific things:
What stage is your business in now? This is not something I created - stages of business, or the lifecycle of a business, are common. I chose the one that resonates with me and added some key questions for you to work through. In this part, you will look honestly at where your business is now - and you will like it or not like it. You may not be as far along as you wish. That’s ok, and now you can start realizing what you need to do to move it along. You may be further than you thought were! Good for you, and now you can start planning where to go next. Here’s a tip and spoiler - it all comes down to consistency, in all aspects. Consistent revenue, consistent offerings, consistent client base, consistent delivery…
What is your big picture and end game? Here I am asking you to talk to yourself about why you’re doing this. What is your motivation? There are no ethical or unethical answers here. Are you doing it because you want to be rich and retire in 5 years? Fine! And that motivation leads you to commit and plan in a different way than if you’re doing this to prove to yourself that you can build something a self-sustaining and flexible lifestyle. I realize motivations may overlap and you may have a few, not just one. That will be true but…there will be one motivation above all. This is the motivation that can lead you towards building a strategy that gets you there. Be honest with yourself, otherwise you’re not truly using your compass.
A note. This one exercise will not build a whole strategy. There’s a lot more to do. But, what it will do is start you down the path of clearing the noise so you can build the right strategy ultimately, and it will offer you insight around how to start filtering what you do with your own personal rationale for making decisions.
