So why are you doing what you’re doing is, I think, critical to any sustainable business model. We’re talking about sustainable, I mean, all around long term, which is really, really hard to do.

This podcast is brought to you by Fast Slow Motion, a team of expert consultants that have helped hundreds of growing businesses build scalable systems on the HubSpot and Salesforce platforms. To learn more, visit fastslowmotion.com. Welcome back to part two of our discussion on how to turn an idea into a business. We’ve already talked about choosing which idea to go after and how to execute on it.

So let’s dive back in. So, John, can you tell us what your approach is to developing a successful business model? A really sound business model is going to have very good input metrics. They know what goes in the recipe to produce the outcome that tastes good. Well, first and foremost, I think it’s it’s built on a higher purpose.

It’s built on a bigger why than just whatever you’re practically doing. Because you need to kind of rise above this situation, because at the end of the day, you’re if you kind of break down every business, you’re doing something fundamentally that somebody could copy or somebody could do different. And it’s got to be a bigger mission. So why are you doing what you’re doing is, I think, critical to any sustainable business model.

We’re talking about sustainable, I mean, around long term, which is really, really hard to do. The other thing is, is built on repeatable systems and processes. The business can’t depend on you or any key individual, or it won’t scale and honestly, you haven’t created a real business if you haven’t put those repeatable systems and processes in place.

You have to prove the model that it’s going to produce consistent profits over the long term. If you’re not generating profit, something is wrong with your business and you will go out of business because you have to generate cash to be able to sustain the business. And if your costs are higher than you can take in from a revenue perspective, you’re not going to make it.

And if you’re not able to to add value to the marketplace where you’re going to generate enough net revenue, you’re not going to make it. Another thing I would say is, is you got to be really flexible and adaptive over time, so you don’t jerk the steering wheel when things happen. You try to be as intentional and focused as possible, but you also have to remain flexible because your business is going to evolve over time, because your market’s evolving, your people and your systems, and the things that you’re doing are going to evolve.

And you have to constantly kind of reinvent yourself along the way. So otherwise you’re going to get replaced and it’s not going to be a sustainable business model. A couple other things I would say is I would ensure your decisions are based on data and not emotions. I think we’re emotional beings and there’s nothing wrong with our emotions, but we shouldn’t shouldn’t let our feelings dictate a lot of our decisions.

You have to use data in combination with your gut to make the right decision. And and when you’re highly emotional or something’s happening to you, your circumstances are not ideal. That is not the time to be making decisions. So that’s where a good team is, is helpful because you can help balance each other there. But always look at the data and then listen to what you’re hearing.

But use both of those together and not just react to what’s happening. From a circumstantial, perspective, I highly recommend you focus on input metrics, not output metrics. So your outcomes are the result of what you’re doing. And those are really hard to control. But what you can do is control what you are doing to produce those outputs.

And so really a really sound business model is going to have very good input metrics. And that is very, very, very important. And once again, that’s something you’re going to evolve over time because because the world changes. But knowing what to put in and then focusing on those inputs religiously, you know, you will get the outputs that you want at the end of the day.

And so I think that’s a very important mindset, of a, of a really good sustainable business model. And then finally, I would say you got to keep everything aligned and focused. So all these kind of things we’ve talked about from a system perspective, a metrics perspective, a people perspective, your job as an entrepreneur and CEO is really to keep everything aligned and focus, so that you’ve got your GPS heading on the direction you’re wanting to go, and you’re keeping everybody on that, and everybody’s not going in different directions and everybody’s pushing in the right direction, because if they’re not, you’re not going to be able to execute consistently and you’re not going to be able to know why you’re winning and why you’re losing, and you’re not going to be able to know how to correct things if everybody’s all over the place.

So that alignment piece is very, very important. So much of your job as a CEO is keeping everybody aligned and focused. So you’re all heading in that direction. And you honestly, you feel like you’re repeating yourself over and over again. But that repetition is very, very important because your team is busy and they’re distracted all the time executing on the business. So that alignment piece I think is somewhat underrated. We talked about some of the things are underrated. I think that’s one of the things that a lot of people get wrong and don’t stay aligned and stay focused.

Does the entrepreneur that’s just starting out have to have everything aligned and focused from the get go before they start hiring? No that to me is more of a, you know, phase two scalability kind of thing. Early on, you’re trying a bunch of different things to develop what’s working and what’s not working and trying to prove yourself like, hey, this will work or this will not work.

Tweaking the inputs. Yeah. Tweaking the inputs to understand what the outputs will be generated. And I think that’s where you also have to be very self-aware and very aligned with the data and very aligned with the facts of what’s happening and not lying to yourself, because a lot of, you know, a lot of entrepreneurs, a lot of business owners are self-driven.

They don’t like to fail. They’re going to work harder than everybody else. And those are all great attributes that provide the grit to get through the difficult days and everything. But we can’t ignore the facts, the brutal facts are the brutal facts. And so you kind of have to change the mindset around where, okay, I’m going to hear the brutal facts, even if it’s not what I want to hear, because I’d much rather fail now than waste five years of my life doing something that’s going to fail anyway.

So that mindset change early on, I think, is very important to say, okay, our job is to learn our job to figure this thing out, and we want to do that as quickly as possible and the shortest amount of time with the shortest amount of money, so that we can then invest that time and money on the things that are working and not on something that’s not going to work.

Well, that’s a great Segway. So. So how do you measure the success of the business early on then. Once again, just to reiterate that it’s it’s around iteration failing fast. And then really kind of the goal is always learning. It’s okay to fail. It’s not okay to not learn is really kind of the mindset that it needs to be.

So I’m a big fan of creating mini milestones or I call them gates. It’s like, okay, for the next 60 days, we’re going to try to get one paying customer and we’re going to learn from that experience what works and what doesn’t work. And we’re going to iterate on that to start developing the business model and things around that, to see if it’s working.

Now, you have to be careful on both sides of this equation. You don’t need to get too depressed if you don’t have that. If you learn from it, you can then create another mini milestone to adapt that. There’s times when you get lucky. You may get five customers in the 60 day period. That sometimes can be more dangerous than failing, because there’s that false sense of security around this is easy.

I’ve got it all figured out when in reality you don’t really know how to repeat that process. You don’t really know why you won those five customers. And so once again, the goal there is really more learning and not necessarily hitting the goal that you set out for yourself. And then that will start forming the foundation of your business model that you can start building upon and adding more systems and processes and consistency as you’re learning from these mini milestones that you’re putting in place.

And so I think also to learn and say this is really important, you stay aligned to who you really are and not iterate away from what you wanted to create in the very beginning. And I think that happens sometimes too, and you kind of evolve or meander into a business model or a market or something like that that you don’t enjoy.

It doesn’t align with your why, and you’re not passionate about it. So you kind of lose your North Star, if you will. And so you have to be very careful there. The goal is not to find a win. The goal is to build a business that you love, that you can make money at and add value and not just win.

Because honestly, you probably lose in that scenario because you end up building a business that you didn’t want versus one that you wanted to build in the first place. It sounds there’s like a fine balance there, right, between compromising and and staying on track. That’s right. Yeah. You can’t be everything to everybody. You have to focus and that’s why defining your why, and who you are is really important.

Because you need to write that down. You need to look at it every day. You need to say it over and over. Because we all work hard. We all, we’re go getters. We don’t like to fail. And so we can easily get it, you know, get distracted on just winning when we’re winning at the wrong game. Then we originally set out to play.

You know, you say things like fail fast, right? Let’s talk about some of the mistakes that you might have made. Well, you know, starting your own business, running your own business. What lessons can you share with us today? Yeah, I’ll give you a couple personal examples. You know, I think a lot of times, especially as you’ve had some success, kind of what we were talking about, that can be a really dangerous thing.

You then start moving too fast on something without verifying your assumptions, and you start making all the mistakes that you made early on in your career because you’ve had some wins. I actually started a business in Rwanda, of all places. I’m very passionate about Rwanda and been there multiple times. I have lots of friends over there and I go on a regular basis, and that’s another story for another day and we can talk about that.

But I had a vision of creating a similar business to Fast Slow Motion in Rwanda to serve Africa, because I know they have a lot of the same challenges. They have really talented people. And it’s a it’s an untapped market where we can build sustainable businesses over there and add a lot of value. And I had all the connections.

And so I kind of just I was like, this makes a ton of sense. I’m just going to get up and go do it. So I started a business in Rwanda and then realized, because I wasn’t really paying attention to the brutal facts, is the market in Africa is not developed enough? They’re not. They don’t hire consultants. They can’t afford to buy software, to run their businesses.

They’re just not far enough along yet to value the services that we provide. And when I realize that, I was like, oh, crap, I totally made all the mistakes that I’d already made before and everything we talked about in this podcast, I ignored and things like that. and so, you know, to my credit, I guess I did unwind it fairly quickly, which is extremely painful.

It wasn’t fun. I mean, we had some really good employees over there. I lost a lot of money, you know, it hurt some of my reputation and my pride and all those kinds of things, but I did once I realized the brutal facts, I didn’t keep pretending to myself. So at least I did at that point. But it would have been much wiser on my part to slow down a little bit, look at the brutal facts, look at the business models that were viable, figure things out a little bit more before I jumped in with both feet to kind of create that business.

Another thing I would say that I see often is really not truly understanding that cash is really king. If you can’t generate cash flow and you can’t generate profits, something’s really wrong with your business model, and cash allows you the flexibility to make wise decisions and gives you the margin to make those decisions. So I’m not saying that’s the most important thing, but if you’re not generating cash or don’t have a way to generate cash, or you’re not generating cash like you expected, you really need to to reset because you’re going to be in a position to make really awkward decisions like, how do I raise money, do a mortgage in my house?

Where to what do I do to kind of solve this problem? And it becomes one of those where you kind of keep digging a hole and you’re at some point you’re not going to be able to get out of it. And so recognizing the ways to get to cash flow positive and to start generating cash is really, really important.

And don’t ignore the the signs that you’re getting. It seems obvious, but honestly, I see that as one of the main mistakes a lot of people make. And, you know, that’s the number one reason businesses don’t make it. They run out of cash and they’ve they’ve got to have cash to keep growing and to pay their people and to create a real business model.

Do you know new entrepreneurs? Do they often start out operating at a loss initially, and how long would you suggest they do that? Yeah, I think it depends on your business model. So there are very capital intensive business models. you know, I use the example of Red Mountain Grace where that was going to be a capital. So I always recommend those very capital intensive business models find ways to prove the model without investing too much cash.

But some some are unemployable. If we’re if we’re going to create an airliner and compete with Boeing, we’ve got to have a lot of cash because it’s very expensive to build a plane, you know, those kinds of things. So I think it all depends. So it’s about your plan and being intentional about your plan and then understanding what that plan looks like and how you’re mapping to that plan.

If you’re in a very capital intensive business, more than likely you’re going to have to raise money. And so you got to you got to do cash flow analysis and you got to manage cash flow on a daily basis to understand how you’re trending toward that, so that you have enough runway to get where you start getting revenue coming in.

It’s more about being intentional. I think with that cash flow plan, consulting businesses are really nice. Professional services business are really nice because they generate cash flow quickly. And so those are a lot of times a lot easier to start because you work an hour, you get paid an hour kind of thing and you get that cash flow coming in.

However, you’re only as good as your last project. You know, you typically don’t have a lot of recurring revenue and you don’t have the ability for margin expansion like you do in a product based business. That that’s awesome. John, thank you so much. for your time today. And, John, we always love to wrap up, each episode with a great quote that provides some wisdom about the topic that we’ve been discussing in the episode.

So do you have anything that you’d like to share today? Yeah, sure. It’s actually hard picking one around this topic, because I think there’s a lot of good quotes out there. But, Peter Drucker said ideas are cheap and abundant, but what is a value is the effective placement of those ideas into situations that develop into action. it just aligns with exactly what we’re talking about is it’s all about the execution and the discipline around executing on those those great innovative things that we’re developing in the marketplace.

Love it. Fantastic. Well, that’s it for today’s episode. We hope that the wisdom John shared with you will be helpful as you work to turn your ideas into a successful business. And here at Fast Slow Motion, we really do love to see people build successful businesses that they really enjoy. So remember to subscribe to the podcast on your favorite podcast platform, or you can find archived episodes at fastslowmotion.com/podcast.