December 3, 2024 • 25 mins
On average, business owners work 55 hours per week, take very few vacations and do business while there. Most of us are working relentlessly, always hoping that we'll some how get to a new level next year and begin to reap some personal rewards from our business. But we don't even know what "level" we're on, let alone what it would take to get to the next one.
In this podcast we discuss the Seven Stages of Business Ownership, and how the first four of these got us on the treadmill, and specifically what we need to do at every stage to get to the next one. Stage Four is the "American Dream". Or is it? We'll find out that it's not what we all cracked it up to be, and why Stage Five is the minimum we want to shoot for.
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Episode Transcript
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(00:05):
Welcome back to the Get Off the Treadmill podcast for small business owners and entrepreneurs,
where we show you how to build a successful business and to have a life too.
We're going to dive into another topic that helps us make more money in less time and to
get off the treadmill so we can experience a life of significance.
And now your host and the author of the number one bestselling business book, Making Money
(00:28):
is Killing Your Business, Chuck Blakeman.
Hi, Chuck Blakeman here with you again today.
I am really excited to be talking with you about the seven stages of business ownership.
This is part one.
We're going to talk about the first four stages today.
Why the American dream is a nightmare.
Let's get started.
(00:49):
Most small business owners are not thinking about moving their business from survival through
success to living a life they feel is significant.
They're just too busy managing to get through every day.
A Gallup small business index survey shows that on average, small business owners work
52 hours per week.
One out of seven owners reported taking zero vacation days in a year and nearly one out
(01:11):
of two said that they still answer work-related phone calls and email while on vacation.
These must have been a poll of the lazy ones.
I don't think this is what any of us dreamed about when we started our business, was it?
So why are most of us working so hard and feeling like every year is just Groundhog
Year, never seeming to get to the next level?
Is it because we're not as smart or talented as the other guy?
(01:33):
I don't believe so.
Most of it is simply that we haven't put thought into how to take our business to a
higher level, to maturity.
And by default, we make decisions based on short-term gain.
Most of us could pretty easily identify a quote, stage of life, unquote, that we might
be experiencing, like birth, childhood, graduation, get a job, find a spouse, have kids, or be
(01:54):
the aunt that spoils the kids, produce, retire, but we have no idea what stage of business
we're in.
As a result, the random hope strategy of business guides everything we do.
I'm going to work really hard and I hope something good happens.
We work relentlessly with no clue what stage of business ownership we're really in.
So if we want to be intentional about getting somewhere in our business, we need better
(02:17):
guidance about where we are, what stage is next, and what we need to do to get what
we want.
So the seven stages of business ownership describes how the business is affecting the
owner, which in my mind is the only sensible measure of success for a privately owned business.
As I mentioned in this podcast, we'll take a good look at the first four stages of business
(02:38):
ownership, because these are the four that teach us how we got on the treadmill and how
we became hostages to our business.
Stages five through seven are the ones that get us off the treadmill, so we'll walk through
them in the next podcast.
Let's look first at stage one, startup.
This is the stage everybody dreams about.
We envision the future with bustling streams of customers coming in and out of our shop
(03:01):
and creating rosy spreadsheet projections to reflect that.
On paper, the business model is unassailable and we can't wait to get started.
Stage one has a sense of euphoria for starting to act in your dream.
Dreamers talk, visionaries walk, and you've taken that first big step towards the journey.
So the operative emotion in stage one startup is what?
(03:21):
Fun.
Building spreadsheets that show how much we'll make if we ever do anything.
Pre-searching providers, learning who your market might be.
I've done it 13 times now and it's all great fun.
It's a great stage and should be relished, but not for long.
Startup isn't something you want to drag out.
Get through it as quickly as possible.
In fact, get through every one of the seven stages as quick as you can.
(03:44):
There's no timeline.
I've seen a few businesses go from stage one to stage five in a year.
And also I've seen business owners hang out in a single stage for years.
So get moving and stay moving through all the stages.
Very few business owners expect their business to support them right out of the gate.
More often than not, income from outside the business gives the owner a false sense of security
(04:06):
in stage one and a lack of real intentionality to build a business.
We assume it's supposed to be this way.
And if we rely on some of the really awful advice we get, we're told it could be 18 to
24 months before the business ever breaks even.
So we take that 18 to 24 month window and use every bit of it.
Burning through outside money like there's no tomorrow and feeling just fine about it
(04:27):
because it's supposed to be this way.
It's a self-fulfilling prophecy.
But once again, you get what you intend.
And if you intend to get through the stage faster, you are much more likely to do so.
A great friend of mine and fellow business advisor in Virginia, Eddie Drescher,
told me about one of his clients who had one fitness franchise open and
was about to open another.
(04:47):
The national franchisor had told him it would take 12 to 18 months or
even longer to be profitable because that's how long it took them.
And that's exactly what this guy experienced opening his first location.
But as he was about to open his second center, he told Eddie about this.
And Eddie and his three to five club mastermind group
immediately challenged him saying, who made that rule?
(05:10):
After talking through it at length,
they decided to shoot for profitability in the first three months.
It was crazy.
Instead, the location turned a profit in its first month and stayed close to break
even or a little less in the following few months before regularly breaking even
inside of six months.
Rather than burning cash for 12 to 18 months because he was supposed to,
(05:32):
he intended to do something much better much sooner, and he did so.
The iron of all this is that the franchise then sent him around the US teaching
people how to get there fast.
His advice, you got it, was to ignore what the franchisor was telling them and
set their own timeline.
You get what you intend, not what you hope for.
So let's talk for a moment about speed of execution and
(05:54):
how it relates to stage one and really all of the stages.
I believe strongly that the number one indicator of success in an early stage
business is not how good your product is or how smart your marketing is or
your uniqueness or your funding or
any of those traditional ideas of what makes for success.
The number one indicator of success in an early stage business from research I've
(06:14):
studied, my own experience, and
the experience I've witnessed in hundreds of others is simply speed of execution.
Think of that successful business owner who seems to turn everything they touch
to gold.
Almost certainly they are people who when they get an idea,
move on it almost immediately, and
then use the data to course correct after they get moving.
(06:36):
Most of us spend way too much time collecting data, thinking, researching,
and planning.
We would be better off getting a very basic plan in place and
acting on that, and then perfecting as we go.
So let's not fall prey to the mindset that stage one startup is supposed to last
until we have a perfect plan.
Move on 80% or less of what you think you need to start because
(06:57):
you'll only get the other 20 plus percent after you get moving.
And then get very intentional about getting your business through startup
as quickly as you can.
So how do we know we've moved into stage two survival?
Two ways.
First, because we have paid our first invoice and so
more money is going out than coming in.
We're unprofitable.
That's the first indicator you are in stage two, you're losing money.
(07:20):
Second, you're starting to get squeezed for time as well, not just money.
Stage two survival saps us of both time and money, not just money.
And the operative emotion in stage two has changed from the stage one mindset,
what fun, to a new mindset, I didn't think it would be this tough.
As I mentioned, I built 13 businesses and
in every one of them I ended up feeling this at some point early on.
(07:43):
I didn't think it would be this tough.
As Mike Tyson said, the heavyweight boxer,
everybody has a plan until they get punched in the mouth.
You will get punched in the mouth, and it will probably happen first in stage two.
It's not if, it's just when.
So be like the stream running downhill when it runs into a beaver dam,
it doesn't get emotional, and expect it to get punched in the mouth.
(08:06):
Instead of whining or getting emotionally flooded, pun intended,
it expends all its energy figuring out how to push through the obstacle.
That needs to be us in stage two,
a stream relentlessly running downhill until we get to our ocean.
One of the reasons we should move fast through stage one startup whenever possible
is because that gives us momentum to hydroplane right across stage two as fast
(08:29):
as we can.
Nobody wants to be unprofitable for a long time.
But in most cases, no matter how intentional you are about starting up,
at least a short stint in stage two survival is usually unavoidable.
And to be honest, you might not want it any other way.
That may sound nuts, but as painful as stage two survival can feel,
(08:49):
there are some very significant benefits that can come from stage two
if you go into it with the right mindset.
It's very possible that you can look back on it fondly as the most developmental
stage you ever went through.
Most of the great ideas you'll ever have will come in stage two survival.
Most companies invent things and get patents in this stage than in any other.
Old companies buy new companies because the bursts of creativity and
(09:13):
innovation that come during stage two survival are no longer there for them.
Stage two costs time and money, and also mental and emotional energy.
What nobody bothered to tell you before you started your business is this,
we burn a lot of fuel on takeoff.
An aircraft burns nearly three times the fuel on takeoff that it does
while cruising.
(09:34):
Businesses do the same thing.
The red carpet of success isn't usually rolled out in an early stage business
very often.
If you skip the survival stage, congratulations, that's rare.
But I know I said it in all 13 of my businesses,
I didn't think it would be this tough.
I was burning fuel like mad.
But I'm pretty sure it won't happen in my 14th business, right?
(09:54):
Denial is a river in Egypt, isn't it?
As you burn through the funds from outside the business,
the need to generate funds by urgently driving sales is the sole focus in stage
two.
Stop trying to reduce expenses in stage two, that's for stage four and above.
Instead, expend all your energy finding clients and building revenue.
When I was in stage two in one of my businesses,
I saw my wife Diane turn the heat down.
(10:16):
She said it was an easy way to save money.
I said, don't turn the heat down, I'll just go get another client.
In stage two survival, your lifestyle might have begun to deteriorate or
in the worst case, you're in denial and
living high on the hog from the cash still in your 401k.
All available time is consumed by figuring out how to get the business from stage
two survival to stage three.
(10:39):
Stage two teaches you to be relentless.
But if you're not careful,
this stage will also begin to train you to spend 30 years on the treadmill.
The subliminal message from the tyrant that your business is already becoming is
focus on making money.
It's the right thing to do.
Your business is leading you down a very bad path,
developing a business habit that is killing you and your business, making money.
(11:03):
Of course, you don't see it this way because paying this month's bills
is a critical need.
I did it for my first five businesses, I get it.
And I found that repeating this focus on short term gain over and
over begins to develop the treadmill guy in you that you never intended to become.
You're already on the path to becoming a hostage to your business in stage two.
(11:24):
Stage two survival can also do something very positive for us personally.
If we have the right mindset about it, stage two builds our emotional and
mental muscles like no other stage will.
Survival is the strongest of instincts.
Not only does it drive creativity and innovation in stage two,
it also stretches us mentally and emotionally like no other stage.
(11:45):
And just like with weight lifting, stretching and micro tears in our mental
and emotional muscles make us stronger in every way and
makes us who we will need to be in the coming stages as our business grows.
Neuroscience tells us we don't grow in our flow.
That's a place of productivity, but it is not a place to learn and grow.
We don't learn and grow in our flow.
(12:06):
We grow specifically when we struggle and when we get stretched,
which you'll do a lot of in stage two.
I don't recommend stage two because it's tough, but
because I can tell you that it is a tremendous opportunity for you.
Don't squander it by focusing on just surviving and whining about how tough it is.
Every day we are faced with opportunities cleverly disguised as obstacles.
(12:29):
Look at stage two as an opportunity, not as an obstacle.
Don't run from it.
Embrace it.
Lean into it.
Learn from it.
Get stronger because of it.
And then just like with stage one startup, get the heck out of it as fast as you can.
All right.
So then one day you wake up and discover you're in stage three subsistence.
(12:49):
You look at the last few months of profit and loss and you shout,
holy cow, I'm regularly breaking even.
It had happened once or twice in stage two survival,
but now it's becoming a regular occurrence.
The drain on my retirement account on my credit line is pretty much over.
Well, the first time you realize this, you probably do what I did.
You slump in your chair and stare at the wall of the mixture of disbelief,
(13:12):
exhaustion, and growing excitement.
This business might be viable after all.
Then the celebration begins.
Pop the champagne, head for the islands.
We've got a real business here.
The euphoria you had in stage one startup but lost in stage two survival is back
and back in spades for a very short time.
Yes, it's way better financially than stage two,
(13:34):
but the euphoria doesn't last that long.
Usually subsistence looks great having just emerged from the survival stage.
You go from living in a tent in the desert to a rough cabin with holes in the walls,
a subsistence garden, outdoor plumbing, and a muddy Creek running nearby.
It's not the Taj Mahal, but compared to where you just came from,
it seems pretty grand for a short while.
(13:56):
In stage three subsistence, you're not bleeding financially,
but your lifestyle isn't going to improve right now either.
And it's likely you're spending even more time in the business, but definitely not less.
Fancy vacations or even any vacation may be out of the question in stage three.
The business is just too fragile.
It seems that if you even sneeze, you might lose a customer and right back in stage two.
(14:19):
In stage three subsistence, the emotions shift from,
I didn't think it would be this tough to the full realization you're on the treadmill
with the emotion filled statement.
If I stop the business stops, but that's okay.
We'll take breaking even over bleeding.
And there can be a renewed energy that keeps us going
while we're beginning to figure out how to get off this treadmill.
We built for ourselves in stage three subsistence.
(14:42):
The business focus shifts from sales to honing your craft
and delivering on the products and services.
You worked so hard to sell in stage two.
You're now fully entrenched as the producer, the artisan, the craftsperson,
the lawyer, the dentist, the accountant, you know, the wealth manager, you're cranking it.
Unfortunately, the tyrant that is your business
(15:02):
is still teaching you bad habits in stage three.
You are becoming treadmill guy and quite possibly without even knowing it.
Stage three subsistence doesn't look good for very long
because you get tired of the meager garden that looked great when you first saw it
filtering your water from the muddy Creek,
the wind whistling through the cracks in the cabin walls
and heading for the outhouse in the middle of the night.
(15:22):
It was a great upgrade at the time,
but very quickly you begin to see all the holes in it.
Literally the biggest scariest hole is the inability to relax at all.
Your personal focus on production is absolutely critical
because any snafu can result in the loss of a customer you can't afford to lose.
Stage two survival is right there behind you
(15:43):
waiting for you to slide right back into it.
So you commit to offer the best product or service you can deliver
and you devote all your time to being a fully dedicated professional
or crafts person and you are officially treadmill guy
selling, producing, collecting, paying bills
and doing it all over again and again and again,
(16:03):
maybe for 30 years if you're not careful.
And your personal life is clearly on the back burner
because without this manic focus on the business,
you won't ever have a personal life again anyway.
You wonder if you'll ever get to relax.
At some point in stage three,
days begin to seem longer than weeks and weeks longer than months.
Let's get out of stage three.
(16:23):
Okay, so then something great happens
and you finally get the break you've longed for.
You're about to experience stage four stability
and what you thought was the American dream, a profitable business.
For the first time,
you regularly have money left over at the end of the month, actual profit.
Accountants call that leftover money profit.
I call it freedom money.
(16:45):
Remember by our definition, freedom is the ability to choose
and profit is the only money you get to choose what to do with.
The rest of it is all spoken for by bills,
which includes your own salary.
Freedom money is what is left over
after you pay yourself and all the other bills
and is yours to do with as you please.
Reinvest it in the business, buy a hot tub
(17:06):
or save it to buy a building.
In stage four stability,
the owner's lifestyle has improved dramatically.
A new car, vacations,
usually still short ones to begin with.
Piano lessons for the kids.
It's all coming back into reach.
The operative emotion in stage four stability
shifts from what it was in stage three survival,
which was if I stop, the business stops, that's okay.
(17:28):
To some well-deserved joy from a few months to even a few years.
But over time for the most of us,
we begin to feel some quiet desperation
and the operative emotion settles in as
I'm beginning to feel like a hostage to my own business.
At some point for most of us,
(17:49):
it is no longer okay to be a hostage in our business.
We want something more.
Owning a profitable business
is what we're all taught is the American dream.
A stage four stability business owner
can even take home millions.
Stage four can be a crazy and wonderful time.
Your newfound profit distracts you for quite a while
from seeing any problems with remaining in stage four.
(18:10):
And many business owners never realized stage four stability
has made them hostages to their businesses
and permanently on the trend bill.
So I can understand why we never wake up enough
to move through stage four stability
to real freedom in our businesses.
You've moved from that rickety cabin
to a beautiful house with indoor plumbing
and a grocery store in the corner.
They even deliver.
The lifestyle you've created for your family is great.
(18:33):
You're realizing the American dream.
You've got money, friendly neighbors
and a humming business that keeps the whole thing afloat.
You can buy that hot tub and afford to lose money
while you're on vacation a couple of times a year.
But something is missing in stage four.
You're not really getting the full enjoyment
out of the American dream because of that missing thing.
There just might be a bit of nagging emptiness in stage four.
(18:56):
Over time, you might begin to realize
that what you imagined when you started the business
looks a lot like the lifestyle
your spouse and kids are enjoying.
But the constant nagging of the business for your attention
prevents you from fully enjoying it like you should.
The business is dependent on you in too many ways.
And even if you do get away,
you're greeted by a pile of problems when you get back.
(19:18):
Stage four has a lot of money in it
and you still don't have any time.
Weekends and the few short vacations you get
seem to be times to just recharge
so you can head back into the week with some energy.
But spending your downtime just to recuperate for work
wasn't what you dreamed of when you started your business.
You might begin to wonder if you build a business
or build yourself a job like the one you left
(19:39):
when you first dreamed of freedom
and the ability to choose.
Most stage four stability owners
are only business owners by government definition.
But in reality, they are just income producers
who might have riches, but not true wealth
that only comes with the abundance of free time
to use those riches to build a significant life.
You may not see that you're trapped yet.
(20:00):
The riches, the bling, it's all very distracting
from reality that I'm a fancy rich hostage to my business.
I have experienced that there are two simple reasons
why most business owners never get out
of stage four stability.
First, the business taught you that making money
should be your primary focus in the first three stages.
In the first two stages, this tyranny of the urgent
had you focusing on making sales
(20:22):
and in the next two stages,
it had you focusing on producing, being the craftsperson
all because you needed to make money to pay the bills
and turn a profit this month.
The second reason that we're stuck in stage four stability,
when you finally get tired of sending your family
to the boat on your way to the office, you look around
and you see that other seemingly successful business owners
(20:42):
are all doing the same thing.
There are hard workers who spend more time at work
than the other guy.
If you want a successful business,
their example teaches you that you have to spend
a lot of time at work too.
The business owner who seems to have a lot of free time
and a light heart seems to be a rarity,
even if you know one.
So they must be the lucky exception.
(21:03):
You think what you're experiencing must be normal.
So again, quiet desperation might begin to set in.
I feel like I'm on a treadmill and I don't see a way off.
The business hasn't taught you how to get off the treadmill
and other business owners around you
don't seem to be any different.
Subconsciously, you may become a hostage to your business
with no end in sight.
You begin to wonder if this is just the way
(21:25):
it's supposed to be.
So you might ask, why do I keep using the analogy
to being a hostage?
I think it fits.
A prisoner, which is different than a hostage,
may not control a lot of the present,
but even a prisoner controls their future.
They know what the rules are while they're in prison
and exactly what to do in order to become free.
There's a date to look forward to
(21:46):
when things will be very different.
Not so for being a hostage to your business.
When you're a hostage, the rules are unclear,
are always changing, and the prospect is endless captivity,
never knowing when it might end
or worse yet, how it might end.
When we as business owners focus on making money,
we have no idea where we're going.
And therefore, by default, we can't possibly know
(22:07):
what the rules are for getting there.
Unlike for the prisoner,
the rules seem to be set by others.
They're always changing and there's no end in sight.
And beware the allure of stage four stability.
Having experienced stage four many times in my businesses,
I believe it's the most dangerous stage
for the business owner personally.
It's the first stage where you finally
(22:29):
have something to protect, riches,
ranging from minimal to lavish.
You've sweated bullets to get here
and the urge to escape any future risks
that you experienced in stages one through three
to get to another higher, better stage,
it just keeps you here for the rest of your working life.
Or worse yet, most of us don't even realize
(22:49):
there are other stages beyond this.
This is the American dream.
You believe that stage four is the pinnacle of success.
You're profitable, what more should you want?
The only thing left to do is to see
how much more money you can make
than the business hostage next door to you.
It's truly the most dangerous stage
as evidenced by the fact
that almost every business owner stops here,
not because they have to, but because they choose to.
(23:12):
Without meaning to, you have become treadmill guy.
There's hope, there's a way off this treadmill.
And my experience is that almost every business owner
who has seen the way off and embraced the principles,
practices and tools to get off the treadmill
end up moving from hostage to real freedom
in their business, not from it.
(23:34):
As you've been listening,
you may be thinking about one business owner,
you know, who seems to have a light heart and a quick step
and who can get away from work regularly.
And when she does, she seems to enjoy the time
rather than spending it trying to recover from work.
You keep dismissing her as an exception.
And frankly, that's exactly what she is,
but it doesn't make her a freak.
(23:54):
She's actually quite normal.
And the overwhelming majority of business owners
who have stalled out in stage four are not normal at all.
They're just average.
She's normal.
Those who become freedom woman realize
that the American dream,
as it was taught to us by the industrial age,
that money is all you need to live a fulfilling life
is the lie.
It's not normal to stop at stage four.
(24:16):
Stability is only average.
Almost everybody is doing it
at some point in their business,
but we get stuck there for one simple reason.
We never intended to do anything else.
We bought the lie.
We intended to make money.
And that is exactly what we are doing.
Remember, asking the right question
is 90 plus percent of the answer.
(24:37):
And the right question to ask is,
how do I build a mature business
that makes money when I'm not there?
So far, you've probably focused on the wrong question
like I did for five businesses.
How do I make money?
Well, let's become freedom woman.
You can escape the tyranny of your business
and become normal too
if you'll just change the question in your head.
(24:57):
So in the next podcast,
we'll look at stages five through seven,
and it's all about finding freedom
by changing one question in your head.
We'll call it the big mindset shift,
and I'll see you there.
That wraps up another episode
of the Get Off The Treadmill podcast.
If you found this podcast helpful,
please subscribe and hit the like button
to ensure you are receiving the latest tools
(25:19):
you need to grow your business
and to get off the treadmill.
If you want more information
on the three to five club,
the crank set group,
or to book Chuck as a business advisor,
speaker, or workshop leader,
you can contact us at grow,
G-R-O-W at cranksetgroup.com.
Until next time,
have a great week.
Welcome back to the Get Off the Treadmill podcast for small business owners and entrepreneurs,
where we show you how to build a successful business and to have a life too.
We're going to dive into another topic that helps us make more money in less time and to
get off the treadmill so we can experience a life of significance.
And now your host and the author of the number one bestselling business book, Making Money
(00:28):
is Killing Your Business, Chuck Blakeman.
Hi, Chuck Blakeman here with you again today.
I am really excited to be talking with you about the seven stages of business ownership.
This is part one.
We're going to talk about the first four stages today.
Why the American dream is a nightmare.
Let's get started.
(00:49):
Most small business owners are not thinking about moving their business from survival through
success to living a life they feel is significant.
They're just too busy managing to get through every day.
A Gallup small business index survey shows that on average, small business owners work
52 hours per week.
One out of seven owners reported taking zero vacation days in a year and nearly one out
(01:11):
of two said that they still answer work-related phone calls and email while on vacation.
These must have been a poll of the lazy ones.
I don't think this is what any of us dreamed about when we started our business, was it?
So why are most of us working so hard and feeling like every year is just Groundhog
Year, never seeming to get to the next level?
Is it because we're not as smart or talented as the other guy?
(01:33):
I don't believe so.
Most of it is simply that we haven't put thought into how to take our business to a
higher level, to maturity.
And by default, we make decisions based on short-term gain.
Most of us could pretty easily identify a quote, stage of life, unquote, that we might
be experiencing, like birth, childhood, graduation, get a job, find a spouse, have kids, or be
(01:54):
the aunt that spoils the kids, produce, retire, but we have no idea what stage of business
we're in.
As a result, the random hope strategy of business guides everything we do.
I'm going to work really hard and I hope something good happens.
We work relentlessly with no clue what stage of business ownership we're really in.
So if we want to be intentional about getting somewhere in our business, we need better
(02:17):
guidance about where we are, what stage is next, and what we need to do to get what
we want.
So the seven stages of business ownership describes how the business is affecting the
owner, which in my mind is the only sensible measure of success for a privately owned business.
As I mentioned in this podcast, we'll take a good look at the first four stages of business
(02:38):
ownership, because these are the four that teach us how we got on the treadmill and how
we became hostages to our business.
Stages five through seven are the ones that get us off the treadmill, so we'll walk through
them in the next podcast.
Let's look first at stage one, startup.
This is the stage everybody dreams about.
We envision the future with bustling streams of customers coming in and out of our shop
(03:01):
and creating rosy spreadsheet projections to reflect that.
On paper, the business model is unassailable and we can't wait to get started.
Stage one has a sense of euphoria for starting to act in your dream.
Dreamers talk, visionaries walk, and you've taken that first big step towards the journey.
So the operative emotion in stage one startup is what?
(03:21):
Fun.
Building spreadsheets that show how much we'll make if we ever do anything.
Pre-searching providers, learning who your market might be.
I've done it 13 times now and it's all great fun.
It's a great stage and should be relished, but not for long.
Startup isn't something you want to drag out.
Get through it as quickly as possible.
In fact, get through every one of the seven stages as quick as you can.
(03:44):
There's no timeline.
I've seen a few businesses go from stage one to stage five in a year.
And also I've seen business owners hang out in a single stage for years.
So get moving and stay moving through all the stages.
Very few business owners expect their business to support them right out of the gate.
More often than not, income from outside the business gives the owner a false sense of security
(04:06):
in stage one and a lack of real intentionality to build a business.
We assume it's supposed to be this way.
And if we rely on some of the really awful advice we get, we're told it could be 18 to
24 months before the business ever breaks even.
So we take that 18 to 24 month window and use every bit of it.
Burning through outside money like there's no tomorrow and feeling just fine about it
(04:27):
because it's supposed to be this way.
It's a self-fulfilling prophecy.
But once again, you get what you intend.
And if you intend to get through the stage faster, you are much more likely to do so.
A great friend of mine and fellow business advisor in Virginia, Eddie Drescher,
told me about one of his clients who had one fitness franchise open and
was about to open another.
(04:47):
The national franchisor had told him it would take 12 to 18 months or
even longer to be profitable because that's how long it took them.
And that's exactly what this guy experienced opening his first location.
But as he was about to open his second center, he told Eddie about this.
And Eddie and his three to five club mastermind group
immediately challenged him saying, who made that rule?
(05:10):
After talking through it at length,
they decided to shoot for profitability in the first three months.
It was crazy.
Instead, the location turned a profit in its first month and stayed close to break
even or a little less in the following few months before regularly breaking even
inside of six months.
Rather than burning cash for 12 to 18 months because he was supposed to,
(05:32):
he intended to do something much better much sooner, and he did so.
The iron of all this is that the franchise then sent him around the US teaching
people how to get there fast.
His advice, you got it, was to ignore what the franchisor was telling them and
set their own timeline.
You get what you intend, not what you hope for.
So let's talk for a moment about speed of execution and
(05:54):
how it relates to stage one and really all of the stages.
I believe strongly that the number one indicator of success in an early stage
business is not how good your product is or how smart your marketing is or
your uniqueness or your funding or
any of those traditional ideas of what makes for success.
The number one indicator of success in an early stage business from research I've
(06:14):
studied, my own experience, and
the experience I've witnessed in hundreds of others is simply speed of execution.
Think of that successful business owner who seems to turn everything they touch
to gold.
Almost certainly they are people who when they get an idea,
move on it almost immediately, and
then use the data to course correct after they get moving.
(06:36):
Most of us spend way too much time collecting data, thinking, researching,
and planning.
We would be better off getting a very basic plan in place and
acting on that, and then perfecting as we go.
So let's not fall prey to the mindset that stage one startup is supposed to last
until we have a perfect plan.
Move on 80% or less of what you think you need to start because
(06:57):
you'll only get the other 20 plus percent after you get moving.
And then get very intentional about getting your business through startup
as quickly as you can.
So how do we know we've moved into stage two survival?
Two ways.
First, because we have paid our first invoice and so
more money is going out than coming in.
We're unprofitable.
That's the first indicator you are in stage two, you're losing money.
(07:20):
Second, you're starting to get squeezed for time as well, not just money.
Stage two survival saps us of both time and money, not just money.
And the operative emotion in stage two has changed from the stage one mindset,
what fun, to a new mindset, I didn't think it would be this tough.
As I mentioned, I built 13 businesses and
in every one of them I ended up feeling this at some point early on.
(07:43):
I didn't think it would be this tough.
As Mike Tyson said, the heavyweight boxer,
everybody has a plan until they get punched in the mouth.
You will get punched in the mouth, and it will probably happen first in stage two.
It's not if, it's just when.
So be like the stream running downhill when it runs into a beaver dam,
it doesn't get emotional, and expect it to get punched in the mouth.
(08:06):
Instead of whining or getting emotionally flooded, pun intended,
it expends all its energy figuring out how to push through the obstacle.
That needs to be us in stage two,
a stream relentlessly running downhill until we get to our ocean.
One of the reasons we should move fast through stage one startup whenever possible
is because that gives us momentum to hydroplane right across stage two as fast
(08:29):
as we can.
Nobody wants to be unprofitable for a long time.
But in most cases, no matter how intentional you are about starting up,
at least a short stint in stage two survival is usually unavoidable.
And to be honest, you might not want it any other way.
That may sound nuts, but as painful as stage two survival can feel,
(08:49):
there are some very significant benefits that can come from stage two
if you go into it with the right mindset.
It's very possible that you can look back on it fondly as the most developmental
stage you ever went through.
Most of the great ideas you'll ever have will come in stage two survival.
Most companies invent things and get patents in this stage than in any other.
Old companies buy new companies because the bursts of creativity and
(09:13):
innovation that come during stage two survival are no longer there for them.
Stage two costs time and money, and also mental and emotional energy.
What nobody bothered to tell you before you started your business is this,
we burn a lot of fuel on takeoff.
An aircraft burns nearly three times the fuel on takeoff that it does
while cruising.
(09:34):
Businesses do the same thing.
The red carpet of success isn't usually rolled out in an early stage business
very often.
If you skip the survival stage, congratulations, that's rare.
But I know I said it in all 13 of my businesses,
I didn't think it would be this tough.
I was burning fuel like mad.
But I'm pretty sure it won't happen in my 14th business, right?
(09:54):
Denial is a river in Egypt, isn't it?
As you burn through the funds from outside the business,
the need to generate funds by urgently driving sales is the sole focus in stage
two.
Stop trying to reduce expenses in stage two, that's for stage four and above.
Instead, expend all your energy finding clients and building revenue.
When I was in stage two in one of my businesses,
I saw my wife Diane turn the heat down.
(10:16):
She said it was an easy way to save money.
I said, don't turn the heat down, I'll just go get another client.
In stage two survival, your lifestyle might have begun to deteriorate or
in the worst case, you're in denial and
living high on the hog from the cash still in your 401k.
All available time is consumed by figuring out how to get the business from stage
two survival to stage three.
(10:39):
Stage two teaches you to be relentless.
But if you're not careful,
this stage will also begin to train you to spend 30 years on the treadmill.
The subliminal message from the tyrant that your business is already becoming is
focus on making money.
It's the right thing to do.
Your business is leading you down a very bad path,
developing a business habit that is killing you and your business, making money.
(11:03):
Of course, you don't see it this way because paying this month's bills
is a critical need.
I did it for my first five businesses, I get it.
And I found that repeating this focus on short term gain over and
over begins to develop the treadmill guy in you that you never intended to become.
You're already on the path to becoming a hostage to your business in stage two.
(11:24):
Stage two survival can also do something very positive for us personally.
If we have the right mindset about it, stage two builds our emotional and
mental muscles like no other stage will.
Survival is the strongest of instincts.
Not only does it drive creativity and innovation in stage two,
it also stretches us mentally and emotionally like no other stage.
(11:45):
And just like with weight lifting, stretching and micro tears in our mental
and emotional muscles make us stronger in every way and
makes us who we will need to be in the coming stages as our business grows.
Neuroscience tells us we don't grow in our flow.
That's a place of productivity, but it is not a place to learn and grow.
We don't learn and grow in our flow.
(12:06):
We grow specifically when we struggle and when we get stretched,
which you'll do a lot of in stage two.
I don't recommend stage two because it's tough, but
because I can tell you that it is a tremendous opportunity for you.
Don't squander it by focusing on just surviving and whining about how tough it is.
Every day we are faced with opportunities cleverly disguised as obstacles.
(12:29):
Look at stage two as an opportunity, not as an obstacle.
Don't run from it.
Embrace it.
Lean into it.
Learn from it.
Get stronger because of it.
And then just like with stage one startup, get the heck out of it as fast as you can.
All right.
So then one day you wake up and discover you're in stage three subsistence.
(12:49):
You look at the last few months of profit and loss and you shout,
holy cow, I'm regularly breaking even.
It had happened once or twice in stage two survival,
but now it's becoming a regular occurrence.
The drain on my retirement account on my credit line is pretty much over.
Well, the first time you realize this, you probably do what I did.
You slump in your chair and stare at the wall of the mixture of disbelief,
(13:12):
exhaustion, and growing excitement.
This business might be viable after all.
Then the celebration begins.
Pop the champagne, head for the islands.
We've got a real business here.
The euphoria you had in stage one startup but lost in stage two survival is back
and back in spades for a very short time.
Yes, it's way better financially than stage two,
(13:34):
but the euphoria doesn't last that long.
Usually subsistence looks great having just emerged from the survival stage.
You go from living in a tent in the desert to a rough cabin with holes in the walls,
a subsistence garden, outdoor plumbing, and a muddy Creek running nearby.
It's not the Taj Mahal, but compared to where you just came from,
it seems pretty grand for a short while.
(13:56):
In stage three subsistence, you're not bleeding financially,
but your lifestyle isn't going to improve right now either.
And it's likely you're spending even more time in the business, but definitely not less.
Fancy vacations or even any vacation may be out of the question in stage three.
The business is just too fragile.
It seems that if you even sneeze, you might lose a customer and right back in stage two.
(14:19):
In stage three subsistence, the emotions shift from,
I didn't think it would be this tough to the full realization you're on the treadmill
with the emotion filled statement.
If I stop the business stops, but that's okay.
We'll take breaking even over bleeding.
And there can be a renewed energy that keeps us going
while we're beginning to figure out how to get off this treadmill.
We built for ourselves in stage three subsistence.
(14:42):
The business focus shifts from sales to honing your craft
and delivering on the products and services.
You worked so hard to sell in stage two.
You're now fully entrenched as the producer, the artisan, the craftsperson,
the lawyer, the dentist, the accountant, you know, the wealth manager, you're cranking it.
Unfortunately, the tyrant that is your business
(15:02):
is still teaching you bad habits in stage three.
You are becoming treadmill guy and quite possibly without even knowing it.
Stage three subsistence doesn't look good for very long
because you get tired of the meager garden that looked great when you first saw it
filtering your water from the muddy Creek,
the wind whistling through the cracks in the cabin walls
and heading for the outhouse in the middle of the night.
(15:22):
It was a great upgrade at the time,
but very quickly you begin to see all the holes in it.
Literally the biggest scariest hole is the inability to relax at all.
Your personal focus on production is absolutely critical
because any snafu can result in the loss of a customer you can't afford to lose.
Stage two survival is right there behind you
(15:43):
waiting for you to slide right back into it.
So you commit to offer the best product or service you can deliver
and you devote all your time to being a fully dedicated professional
or crafts person and you are officially treadmill guy
selling, producing, collecting, paying bills
and doing it all over again and again and again,
(16:03):
maybe for 30 years if you're not careful.
And your personal life is clearly on the back burner
because without this manic focus on the business,
you won't ever have a personal life again anyway.
You wonder if you'll ever get to relax.
At some point in stage three,
days begin to seem longer than weeks and weeks longer than months.
Let's get out of stage three.
(16:23):
Okay, so then something great happens
and you finally get the break you've longed for.
You're about to experience stage four stability
and what you thought was the American dream, a profitable business.
For the first time,
you regularly have money left over at the end of the month, actual profit.
Accountants call that leftover money profit.
I call it freedom money.
(16:45):
Remember by our definition, freedom is the ability to choose
and profit is the only money you get to choose what to do with.
The rest of it is all spoken for by bills,
which includes your own salary.
Freedom money is what is left over
after you pay yourself and all the other bills
and is yours to do with as you please.
Reinvest it in the business, buy a hot tub
(17:06):
or save it to buy a building.
In stage four stability,
the owner's lifestyle has improved dramatically.
A new car, vacations,
usually still short ones to begin with.
Piano lessons for the kids.
It's all coming back into reach.
The operative emotion in stage four stability
shifts from what it was in stage three survival,
which was if I stop, the business stops, that's okay.
(17:28):
To some well-deserved joy from a few months to even a few years.
But over time for the most of us,
we begin to feel some quiet desperation
and the operative emotion settles in as
I'm beginning to feel like a hostage to my own business.
At some point for most of us,
(17:49):
it is no longer okay to be a hostage in our business.
We want something more.
Owning a profitable business
is what we're all taught is the American dream.
A stage four stability business owner
can even take home millions.
Stage four can be a crazy and wonderful time.
Your newfound profit distracts you for quite a while
from seeing any problems with remaining in stage four.
(18:10):
And many business owners never realized stage four stability
has made them hostages to their businesses
and permanently on the trend bill.
So I can understand why we never wake up enough
to move through stage four stability
to real freedom in our businesses.
You've moved from that rickety cabin
to a beautiful house with indoor plumbing
and a grocery store in the corner.
They even deliver.
The lifestyle you've created for your family is great.
(18:33):
You're realizing the American dream.
You've got money, friendly neighbors
and a humming business that keeps the whole thing afloat.
You can buy that hot tub and afford to lose money
while you're on vacation a couple of times a year.
But something is missing in stage four.
You're not really getting the full enjoyment
out of the American dream because of that missing thing.
There just might be a bit of nagging emptiness in stage four.
(18:56):
Over time, you might begin to realize
that what you imagined when you started the business
looks a lot like the lifestyle
your spouse and kids are enjoying.
But the constant nagging of the business for your attention
prevents you from fully enjoying it like you should.
The business is dependent on you in too many ways.
And even if you do get away,
you're greeted by a pile of problems when you get back.
(19:18):
Stage four has a lot of money in it
and you still don't have any time.
Weekends and the few short vacations you get
seem to be times to just recharge
so you can head back into the week with some energy.
But spending your downtime just to recuperate for work
wasn't what you dreamed of when you started your business.
You might begin to wonder if you build a business
or build yourself a job like the one you left
(19:39):
when you first dreamed of freedom
and the ability to choose.
Most stage four stability owners
are only business owners by government definition.
But in reality, they are just income producers
who might have riches, but not true wealth
that only comes with the abundance of free time
to use those riches to build a significant life.
You may not see that you're trapped yet.
(20:00):
The riches, the bling, it's all very distracting
from reality that I'm a fancy rich hostage to my business.
I have experienced that there are two simple reasons
why most business owners never get out
of stage four stability.
First, the business taught you that making money
should be your primary focus in the first three stages.
In the first two stages, this tyranny of the urgent
had you focusing on making sales
(20:22):
and in the next two stages,
it had you focusing on producing, being the craftsperson
all because you needed to make money to pay the bills
and turn a profit this month.
The second reason that we're stuck in stage four stability,
when you finally get tired of sending your family
to the boat on your way to the office, you look around
and you see that other seemingly successful business owners
(20:42):
are all doing the same thing.
There are hard workers who spend more time at work
than the other guy.
If you want a successful business,
their example teaches you that you have to spend
a lot of time at work too.
The business owner who seems to have a lot of free time
and a light heart seems to be a rarity,
even if you know one.
So they must be the lucky exception.
(21:03):
You think what you're experiencing must be normal.
So again, quiet desperation might begin to set in.
I feel like I'm on a treadmill and I don't see a way off.
The business hasn't taught you how to get off the treadmill
and other business owners around you
don't seem to be any different.
Subconsciously, you may become a hostage to your business
with no end in sight.
You begin to wonder if this is just the way
(21:25):
it's supposed to be.
So you might ask, why do I keep using the analogy
to being a hostage?
I think it fits.
A prisoner, which is different than a hostage,
may not control a lot of the present,
but even a prisoner controls their future.
They know what the rules are while they're in prison
and exactly what to do in order to become free.
There's a date to look forward to
(21:46):
when things will be very different.
Not so for being a hostage to your business.
When you're a hostage, the rules are unclear,
are always changing, and the prospect is endless captivity,
never knowing when it might end
or worse yet, how it might end.
When we as business owners focus on making money,
we have no idea where we're going.
And therefore, by default, we can't possibly know
(22:07):
what the rules are for getting there.
Unlike for the prisoner,
the rules seem to be set by others.
They're always changing and there's no end in sight.
And beware the allure of stage four stability.
Having experienced stage four many times in my businesses,
I believe it's the most dangerous stage
for the business owner personally.
It's the first stage where you finally
(22:29):
have something to protect, riches,
ranging from minimal to lavish.
You've sweated bullets to get here
and the urge to escape any future risks
that you experienced in stages one through three
to get to another higher, better stage,
it just keeps you here for the rest of your working life.
Or worse yet, most of us don't even realize
(22:49):
there are other stages beyond this.
This is the American dream.
You believe that stage four is the pinnacle of success.
You're profitable, what more should you want?
The only thing left to do is to see
how much more money you can make
than the business hostage next door to you.
It's truly the most dangerous stage
as evidenced by the fact
that almost every business owner stops here,
not because they have to, but because they choose to.
(23:12):
Without meaning to, you have become treadmill guy.
There's hope, there's a way off this treadmill.
And my experience is that almost every business owner
who has seen the way off and embraced the principles,
practices and tools to get off the treadmill
end up moving from hostage to real freedom
in their business, not from it.
(23:34):
As you've been listening,
you may be thinking about one business owner,
you know, who seems to have a light heart and a quick step
and who can get away from work regularly.
And when she does, she seems to enjoy the time
rather than spending it trying to recover from work.
You keep dismissing her as an exception.
And frankly, that's exactly what she is,
but it doesn't make her a freak.
(23:54):
She's actually quite normal.
And the overwhelming majority of business owners
who have stalled out in stage four are not normal at all.
They're just average.
She's normal.
Those who become freedom woman realize
that the American dream,
as it was taught to us by the industrial age,
that money is all you need to live a fulfilling life
is the lie.
It's not normal to stop at stage four.
(24:16):
Stability is only average.
Almost everybody is doing it
at some point in their business,
but we get stuck there for one simple reason.
We never intended to do anything else.
We bought the lie.
We intended to make money.
And that is exactly what we are doing.
Remember, asking the right question
is 90 plus percent of the answer.
(24:37):
And the right question to ask is,
how do I build a mature business
that makes money when I'm not there?
So far, you've probably focused on the wrong question
like I did for five businesses.
How do I make money?
Well, let's become freedom woman.
You can escape the tyranny of your business
and become normal too
if you'll just change the question in your head.
(24:57):
So in the next podcast,
we'll look at stages five through seven,
and it's all about finding freedom
by changing one question in your head.
We'll call it the big mindset shift,
and I'll see you there.
That wraps up another episode
of the Get Off The Treadmill podcast.
If you found this podcast helpful,
please subscribe and hit the like button
to ensure you are receiving the latest tools
(25:19):
you need to grow your business
and to get off the treadmill.
If you want more information
on the three to five club,
the crank set group,
or to book Chuck as a business advisor,
speaker, or workshop leader,
you can contact us at grow,
G-R-O-W at cranksetgroup.com.
Until next time,
have a great week.
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