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The Psychology of Growing Your Business

Updated: Jun 28, 2023


There are a lot of want-to-be entrepreneurs who struggle to move from all-star employee to successful business owner.


The Bootstrap Business Startup

The bootstrap business process goes like this…


You are working somewhere, anywhere, and you are paid well, but you believe that there is an opportunity to do even better on your own.


You get a few projects lined up, and you give your employer your notice that you will be doing your own thing.


You’re excited about your new venture as you create your website, get new business cards, create your logo, your business tag line, and buy the stuff you need for your home office.


You get busy on your first few projects… and then it happens. Worry enters the picture. How long will your current work last? When will you get new customers? How will you get new customers while you’re working for your current customer? Will you need more people? How will you get the money to hire more people? Where will the new people work? How can you do invoicing, administrative work, pay taxes, write contracts, and do the work people pay you to do?


The worry subsides as somehow you manage to get a few more customers. Now, the busyness takes over. You’re buried with work during the day serving your customers. You are buried with work at night catching up on paperwork and trying to plan your way out of your busyness.


You hire your first helper employee to do the paperwork. They are a God-send. They do your invoicing, they take care of phone calls from vendors, and they help with random administrative duties that free up your time. It’s still not enough. You need to hire more skilled people. Where will they come from? How much can you pay them? How will you manage their work? What if they don’t work out? Do you have time to manage other people?


You hire a few skilled workers, and they do okay, but they are not you. They come to work late, and leave early, and care only about themselves. They act as if your business doesn’t matter. You find that some workers are better than others. You constantly question if you should fire the bad workers, or gently encourage them to do better. While you have more people, you are getting busier and busier.


You get the picture. Each transition step of growing your bootstrap business brings with it new revelations about your business and about yourself. You left your work as an employee because you wanted more freedom, increased income, and an independent business direction that you couldn’t get as an employee. What you seem to have gotten is more working hours, more stress, more worry, and financial uncertainty.


You doubt your ability to lead other people in a business. Maybe you can go back to being your only employee. Maybe you can limit your work so that you can stick with a virtual assistant without the headache of other employees. Somehow all of the options to reduce your busyness seem like admitting failure.


What Can You Do?

I know what you’re going through. I’ve gone through it; and many of my business coaching clients are going through it.


First… take a deep breath. You’re doing fine. In fact, you’re doing well.


Second… take a step back and plan.


Many business coaches use the analogy of a trip across the country for business planning. They say something like, “You wouldn’t drive from Los Angeles to New York City without planning. How can you grow your business without a plan?”


I get the analogy, but businesses are not a static network of highways that can be navigated by simply reading a road map. Or in today’s vernacular, following Google Maps. Businesses are dynamic things that act and react to the economy, the market, employees, leadership, organization, and a hundred other factors that can and do change.


A better analogy is a growth plan. Like the road map analogy, you must know where you want to go. But “knowing where you want to go”, I’m not referring to your business, I’m referring to your life.


Do you want to have kids? When? How many? How much time do you want for your family? What activities do you want to do? How much will they cost? Do you want to travel the world? Where? When? What’s on your bucket list? Where do you want to live? Do you want to stay in the same place or be able to go wherever you want when you want?


3-Step Life Planning

I follow a three-step life planning process with my clients. It goes like this…


The Life Wheel

The first step is the life wheel. The life wheel is a pie chart divided into eight slices of pie: 1) relationships; 2) family; 3) finance; 4) career/business; 5) health & wellness; 6) spiritual awareness; 7) fun & entertainment; and 8) personal growth. My clients rank themselves on a scale of 1-10 on how well they believe they are fulfilling each one of these pie slices. Lower rankings indicate that this is an opportunity for personal growth.


Personal Financial Plan

This may surprise you, but the thing most people worry about; and the thing they don’t want to talk about is “money”. The finance slice of the Life Wheel pie is 1/8th of the pie. However, this 1/8th slice seems to be attached to the other slices. It is attached to those slices because money is attached to time. And busy entrepreneurs seem to have “no time”.


  • Why do you not spend enough time with your family? I have to work and am worn out when I get home? Why do you work? To earn enough money to support my family?

  • Why do you avoid taking a 2-week vacation and travel around Europe? I don’t have the time or the money?

  • What is preventing you from being successful in your business? I don’t have enough money to hire enough of the right kinds of employees.

  • Why is your health suffering? I don’t have time to work out or cook healthy meals.

  • The personal financial plan quantifies the amount of money required to live the life my clients say they want to live. Money is not something that drops into your lap overnight. However, money is the byproduct of a successful business and career.

The timing of earning money must correlate to the time in your life that you need to spend the money. Most busy business owners keep working hard thinking that someday, they’ll sell their business or have all this cash… and then they will start living life. If it takes until they are 60-years old; most of life has passed them buy while they were working away. The personal financial plan establishes how much money must come in and when it must be available to spend to live life now.


Business Financial Plan

Once life priorities and the personal financial plan are complete, business planning is simple. The quickest way to do business planning is to start at the end.

How big will the business be? How many employees? What will its revenue be? What about profitability? Will you try to sell your business in the end? Why will a buyer buy it? What will you need to earn from the sale to fund your retirement? How many hours will you be working when your business has reached its goal size?

This end vision is important. It will paint a realistic picture of where your business will need to end up. Like the road map analogy, it is a clear picture of your destination.


The rest of the financial plan is building up to your final business vision. Let’s say that you are building a $10 million per year business. You should have an image of your business at each stage of its growth. Describe the staff, the management team, the facilities, the locations served, the online mechanisms that are in place at each stage of your business growth.


Now that you’ve set up all your future visions, you will arrive at your current situation in your plan. Answer the question, “What do I need to do to get to the next step in my growth plan?” The answers to this question become your immediate task list.


Handling the Unexpected

It’s important to know that due to all the factors that affect businesses, your business will not grow as planned. That’s not why you did the plan. The reason that you plan is that you have a vision for what you must do if your business grows to a specific level. Let’s say that you plan to grow your business to $5 Million by its fifth year. But your business is at $1M in its fifth year. You simply staff and follow the $1M plan… not the $5 million plan. Again, you ask, “What do I need to do to get to the next step in my growth plan?”.


Money & Time Conflicts

Your income will not match your need for money. The reason that I have my clients complete a personal financial plan and a business financial plan is so that they clearly see how their business income timeline doesn’t match their personal financial need timeline. In business, you will sacrifice time and finances at first to get started. There is simply no way around this. However, through debt and investment, it is possible to balance time and money in your business to match your personal financial plan.


You must be deliberate in your business plan to accomplish this goal. Otherwise, you will work yourself to death; and have little time for family, friends, or life…. until your life is almost over.


Here are some tactics you can use to match the cash income from your business to the cash need in your life:


  1. Debt – Borrow money to purchase assets in your business. Banks will loan you money to buy vehicles, buildings, office equipment, and hard assets. Most financially responsible people think that debt is bad. The fact is that there is good debt and bad debt. Leveraging capital in these hard assets is good debt. If you get ahead with your cash balance, you can always pay down this debt.

  2. Investment – Investors want to invest in profitable business that have a money-making story. If your business plan is ingenious, but you have a $1 Million cash shortfall, there are people who will give you the money to make your dream and their dream a reality. Your story must be convincing; and the upside must be at least double the short fall. The downside of bringing on investors is giving up control. This is something that gives most entrepreneurial-minded people pause. Afterall, they left the employee world to gain self-control.

  3. Pricing – An established business must make 10% net profit with 50% gross profit as a minimum. Most starting business owners underprice their services because they mistakenly think the are starting a job, and not a business. Without sufficient margin, new business owners have no ability to hire people, complete administrative tasks, pay for facilities, cars, or debt service. The right price will be clear in the business financial planning process.

  4. Delayed reward – Small businesses struggle to attract the best talent because they are worried about cashflow. The best way to pay your people well, and preserve your cash is to pay your people in bonuses that are earned based on performance. Most employees will evaluate the bonus amount and count it in their salary if they believe the bonus can easily be achieved. The business owner can better match cash outlays with cash income by paying bonuses.

  5. Employee equity – A typical financial plan for a small business that will be sold includes a big payout when the business is sold to a larger business. While this is a great payday for a small business owner, it is one more cashflow anomaly that may not match your personal cash need. Instead of getting a big payday 10-years from now, it may make sense to substitute equity share to employees in exchange for cash to you now. This exchange cannot be a gift, it must be a trade. You must experience the increase in personal cash. Otherwise, there is no point to making this trade as the business owner.

  6. Advanced customer payments -The other way to increase cashflow is to request advance payment from customers; and penalties for slow payment.

All these tactics should be spelled out in the business financial plan to attempt to match personal financial needs with business income.


Feeling Relief from Business Stress

Stress is caused by worry. Worry is caused by ugly stories we tell ourselves when we are unsure. Uncertainty is caused by poor planning. When you feel unsure about where you are headed in your business. Can you afford to hire a new person? Can you afford to fire a bad employee? Can you start a new branch in a new state? The answers to all these questions can come quickly from a good business plan.


Once upon a time I developed technical trading systems for commodity traders. We tested the systems and found they worked well in historic trading. However, when it came to using these systems in the real world, commodity traders got nervous when they saw commodity prices moving in an unfavorable direction. We kept telling these traders to “trust the system”. They did make money following our systems, but their stress level was so high watching their savings disappear in the dips that they decided they were not cut out to trade commodities.


This same stress is present in your business. When you’re doing your business day-to-day, you will react to a lost sale; or a valued employee who quits; a lazy employee who isn’t working out; or a down economy. Revisit your plan. You'll see that you're right where you ought to be. You will feel relief; and live the life you’ve planned without worry.

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