Learning To Catch The Wind
Last week I ate breakfast at a favorite bakery in Woods Hole (Massachusetts) called ‘Pie In The Sky’. While sitting at one of the big tables I started a conversation with a consultant who worked in ‘Revenue Recognition’ helping companies keep track of their incoming cash.
You might think it’s easy to keep track of how much money your business is making, but it turns out it’s not. For example, if you run on the ‘subscription’ revenue model but have clients pay for 6 months up front, you can only count 1/6th of the money as ‘revenue’ each month, even if it was all paid up front.
Counting all the money as revenue in month 1 makes your company look exceptionally profitable, and this has been done to ‘trick’ investors into giving money to not-so-profitable companies. Even if it wasn’t intentional, recognizing your revenue at the incorrect time can lead to big fines from the SEC.
The bottom line is that companies have a difficult time judging their own progress.
New Entrepreneurs Also Have Difficulty ‘Recognizing’ Their Progress
Just like for big companies, it’s difficult for new entrepreneurs to ‘recognize’ their results. The difference is that big companies often recognize results too early, while new entrepreneurs recognize them too late.
That’s because when you’re just getting started, your progress may not be the easily-calculated-on-a-spreadsheet revenue or profit numbers. This progress is invisible and often, it’s not clear that any progress is being made.
Here are a few areas where you'll need to make progress but where it will be difficult to accurately assess how far you've come.
Improved Mindset – Learning to hit setbacks without giving up or getting stressed. Not grumbling about extra unexpected work. Staying positive after someone rejects your sales pitch.
Increased Knowledge – You need to know your specific industry well. General knowledge of marketing, finance, legal issues, and more are also important.
Expanded Networks – You can’t do it on your own. Spending time to get to know the right people doesn’t pay off right away, but it’s necessary in the long-term.
New Skills – Selling, delegating, negotiating, and being an effective leader. These are all incredibly important skills that most of us are very bad at initially.
It can take months or years to become proficient in all these skills. This is the time when you’re hustling to get results but aren’t seeing any material improvement. Some entrepreneurs call it ‘The Grind’ or 'The Dip'. You’re working hard and not getting anywhere.
Want More Visible Progress? Use A Proven System
It’s clear that a doctor, spending 4 years in undergrad, a year in residency, and 7+ years in medical school is making progress. They’re closer to graduation each semester and every passed test is proof that they’re moving ahead even though they haven’t started working yet.
An engineer also goes through school and it's clear that they’re mastering one subject at a time.
Plumbers go to trade school, pass tests, and are finally awarded with a certificate that allows them to legally fix the pipes in your house.
Your 'business education' may take 4 years like an undergraduate degree or 10+ years like medical school. That's a long time, and there are rarely any tests to pass or certificates to receive confirming that you're headed in the right direction.
If you’re used to the regular feedback you get in school it can feel like you’re flying blind. It may take years before you know if you received an ‘A’ or an ‘F’.
The Best Way To Reach An Island
I’m on Cape Cod this week in a town full of boat lovers. Big boats, small boats, row boats, kayaks, and sailboats.
If you want to get into the water quickly and start moving, the easiest thing to do is to jump in a kayak. All you need is a simple paddle and a plastic hull and you’re off in seconds.
But what if you want to go far offshore to a distant island? That’s when you’d best take a sailboat. Paddling all the way would leave you exhausted.
The initial setup of the sailboat takes much longer. You need to set the mast, raise the sail, tie off all the lines, attach the rudder, and slide in the centerboard. Getting off the beach can be a challenge as the on-shore breeze blows your boat back onto the sand.
If you're new to sailing, this setup process might look a little messy, perhaps like you’re just tangling yourself up in a mess of rope.
Learning To Catch The Wind
You may be struggling to raise your business's sails (sales) right now. You might be brainstorming an improved product design, managing a disorganized team, tweaking a failing marketing campaign, or coding new software that isn't performing as you'd like.
It may look like a mess, but you will figure out how to get that boat rigged correctly. You're making progress even if you're still on the beach.
Don’t worry too much if the kayakers don’t see your progress. They're far away and busy paddling. Don’t get tempted to ditch the sailboat and start paddling just because you see them ahead of you.
Soon your boat will be rigged correctly and once you're skimming over the waves the exhausting set-up will be forgotten.
The wind will carry you further than any amount of paddling ever could. You just need to learn how to catch it.
Want to go 'sailing' with me? Send me a message via my contact form and let's work together to get your boat in the water.