Wonder Woman and Superman are superheroes not just because of the amazing things they do — halt a speeding express train or leap across tall buildings in a single stride. They both have 2 jobs. Wonder Woman is Diana Prince, originally a military secretary. Superman is Clark Kent, a reporter.
They are not the only superheroes with 2 jobs. I have been coaching others.
It is amazingly easy to set yourself up in business in the UK. You can even learn how to do it with no cost: funded training is available.
This month, and through June, I am privileged to be working with Rob Harrison from Glued in delivering webinars and coaching to start up and small businesses in Worcestershire.
While fantasically enjoyable, and helping others to learn, I also learn things myself. Having been running my business for 20 years, it takes a long look back to what I did not know when I started out. The people I am working with now get that benefit. The webinars feature use of the Business Model Canvas, Marketing (with Rob), plus finance and business planning with me. The coaching sessions are especially itertsing, when as coach I get to understand what drives a wide range of sbuieses and those new to self-employment.
Most of those I have worked with so far have just started, having previously been employed. I have found myself consistently coaching 3 themes:
1) When self employed you have 2 jobs. The first is to find you customers, the second is to deliver your product or service. You have to do these jobs in that order. This echoes some of Peter Drucker’s teaching from decades ago, about the functions of business. But when in employment, you often have just one job, which generally speaking is either finding the customers or serving them.
2) Vision is a tool to help your decision making. You are more effective if you have a vision of what you want your business to become. You do not need a phrase worthy of Shakespeare and carve it into your wall, or even hang it with a motivational poster over your computer. It is there to give you a sense of direction and help you decide, every day “will this action take me towards my vision”?
3) The Cashflow forecast is the number 1 survival tool. Have a budget, yes. But the big change when self employed is the irregularity of income, which in early days may also mix with a reduced level. You need your CFF so you have an idea of what will be in your bank account in 6 months’ time — and in 5,4,3,2 and 1 months’ time too. This gives you the opportunity to see problems coming, rather than waiting for them to arrive then reacting. It also helps you sleep at night — important to have your energy for your business when you are awake.
The third point reminds me of one piece of advice I was given when I started out: steal a pencil. I wondered what this meant, but repetition meant I remembered the phrase and it took a while for the meaning to emerge, which is twofold. Firstly, while appreciating I was not being encouraged to commit crime, stealing is a metaphor for using whatever you can lay your hands on, rather than buying stuff, thereby incurring cost and expenditure on your Cash Flow forecast. Secondly, a pencil: the cheapest, easiest and most basic instrument. You do not need the best of everything: you need something which will do the job with certainty. You can also change what you have written when you make a mistake -and in moving to self-employment, you will make mistakes.(There are free pencils in most conference centres & hotels, which doesn’t seem like stealing).
It is not the case that employment is better than self-employment — or the other way round. Super heroism is not limited to the self-employed either. You go with what works best for you. UK trends, at least until 2020, were towards a rise in self-employment. I recall the statistic (and sadly not the source) that 40% of UK job changers aged over 40 were going self-employed. The age profile of the people I am working with in Worcestershire backs that up.
Wherever you work, whether employed or running things yourself, I am sure you will find yourself very busy. But then everyone has two jobs.
Not just Wonder Woman and Superman — it could be you.
Buzzwords of the Week — Discount Rate
Definition — The rate used in discounted cash flow (see below) analysis. If a project needs a certain investment now and predictions about the future returns, then — using the discount rate — it is possible to calculate the current value of all such cash flows.
In this context of DCF analysis, the discount rate refers to the interest rate used to determine the present value.
Also: the interest rate charged to US commercial banks and institutions for loans taken from the Federal Reserve Bank through the discount window loan process — similar to Bank of England Base Rate.
Alternate View — Read the below section on DCF. Discount Rate is the critical component. This will be based on your cost of capital, but the choice is a totally human one: beware the spreadsheet where you cannot change it (I have seen these!). Rember the principle: the higher the discount rate, the lower the Net present Value — and vice versa. You think long term interest rates will rise? Then build in such movement to your calculations — you do not have to pick one rate and stick with it.
