10,000 hours of deliberate practice is required to become an expert in any particular field – this was the notion highlighted in Malcolm Gladwell’s Outliers, where he cites the 1993 paper by K. Anders Ericsson.
However, further studies and neurological analysis reveals that real learning comes from increasing the efficiency of practice – the “right” hours, not just “more” hours.
So what is it that business owners need to do in order to become masters of their industry, without having to spend 10,000 hours running their business?
The critical first step is “Mastery”; identify what it is that you need to master so that you can deliver your service/product profitably, productively and with enough information to make the best decisions. Mastery is how you gain real and lasting control over your business.
There are four main areas of mastery:
- Direction & Goal Mastery
- Money Mastery
- Delivery Mastery
- Time Mastery
- Direction & goal mastery
- What direction is your business headed, what are the milestones you plan to achieve?
- Have you documented your company’s vision and culture statements?
- Do you have a 90-day plan to keep track of your progress over the next quarter?
- Do you have a milestones and a plan for yourself?
- Do you have a life plan with your personal goals?
Once you have an overarching plan for your business, it’s astounding how clear the path to success becomes.
- Money mastery
a) Break even
These are the most basic things that you need in order to create a financially stable business:
- Your overhead costs.
- How much on average you make per sale.
- How many sales/customers you need per day/week/month to break even.
- Your cash flow budget and your cash gap – and the strategies required to move it to positive.
- How to create a break-even forecast.
b) Profit margin
Profit margin mastery is about:
- Having a profit and loss budget for the business
- Planning for profit through setting profit goals
- Understanding why discounting is not the way to achieving greater profit (and why you should increase your prices)
- Knowing what your gross profit is and having strategies in place to increase it
- Knowing what a margin actually is, with goals and strategies for minimum margin and increasing margins
- Shifting the end-goal of all your business activity to be selling your higher margin products.
- Identifying ideal clients and de-prioritising your C’s and D’s (click here to understand how to segment your clients)
- Having full control over your accounts – payable and receivable.
Reporting is critical if you want not only to know for sure that you actually are doing better, but also to know when you are veering off course so you can correct that course early.
- Measuring the 5 levers in your business (click for a one-page explainer document on the 5 levers) and using these to create a business dashboard.
- Regularly reviewing the figures in your dashboard and analysing why they have shifted in whatever direction they have shifted.
- Using these figures to inform your decisions in the future
- Regularly reviewing your cash flow and profit and loss positions, and being able to predict your future cash flow and profits.
Finances are not the only thing you need to master if you are looking to truly create growth in your business, however, when it comes to building a medium-sized business into a big business, money mastery is usually the best and most effective place for business owners to begin.
By Shweta Jhajharia, Principal Coach and founder of The London Coaching Group