This past weekend was the Independence day holiday in the US.  That got me thinking about why I started my business in the first place, and why I bet most of you either have started or want to start your business – independence.

Independence.  From a boss.  From a paycheck.

Today’s Tip is all about a trap that far too many small businesses fall into.  A trap that undermines your independence and puts your business at risk.

The trap is allowing any one customer (or supplier, or distribution channel) to get too big.

Independence means not being reliant on someone else for survival.  The best way to do that is to diversify so that no single person’s actions can harm your business.

A lot of small businesses – especially service businesses – I know get started because they have one big customer, without whom they would be out of business very quickly.  To some extent, that situation is hard to avoid, but is one that should always be watched very closely.  If you find yourself in this position,  getting free from it should be your top marketing priority.

It’s obvious that if one customer accounts for 90% of your revenue and they stop buying from you, you’re in big trouble.  The same is true if all of your products come from one source, or virtually all of your sales come through one channel.  What is a little less obvious is this.  The situation is almost as dire if any one customer, supplier, or channel is responsible for 30% or 40% of your sales.

The rule of thumb I use is to limit any one source to no more than 20% of my revenue.  When anyone controls more than 20% of my income, I start to get nervous.  If they make it to 30%, finding a way to dilute their influence becomes an urgent priority.

Why?

Because, if 20% of my business vanished, I would survive.  Life would become a bit uncomfortable for a while, but the business would get through it.  If much more than that vanished, the survival of my company would be much more doubtful.  I suspect yours would be in trouble, too.

The next time you are looking at your financials, take a close look at where the money is coming from.  If you find too much of it in one place, diversify.

Profit - That ever elusive end goal we are all searching for.  I’m sure to many of you profit is simply what Wikipedia defines it as:

“Profit generally is the making of gain in business activity for the benefit of the owners of the business”.
Makes sense to the business side of my brain.

But I’d like to change that up a bit, and talk about profit as more than just positive income.  I think that any gain in life, personal and professional, can be a profit.  And when you understand how every gain in your life affects your entire being, you’ll understand the importance of learning to set goals and follow them through.

So get your journals out, turn the TV off, and don’t think about your emails piling up.

In order to really get what you want, you first need to define what is really important to you.  Decide now what profit means to YOU, and be as clear and exact as you can.  If you are unclear about what you are looking for in your career, or any area of your life, how can you expect to achieve it?  This is perhaps the most important thing you can ever do for not only your business, but yourself as well.  Talk to any successful person on the planet, and they will tell you that they knew, long before they achieved their success, what they wanted.

Once you have figured out what matters to you, you then write out what needs to be done in order for you to achieve those goals.  Every contact you must meet, every action you must take – even figuring out “bumps in the road”; all of that should be thought through before you begin you journey!  Think of this as a long road trip – you need to figure out where you want to go and how to get there before you pack the car up!  Otherwise you will end up “driving” aimlessly around the big picture.

Once you sit down and envision what you want to achieve, you begin to move quickly towards you goals.  Just taking that first step leads to unstoppable momentum, so you better be ready to start achieving!

Every day you should at least do a little something that will lead toward your goals.  This will create habit, making you feel the need to do something everyday.  Of course the opposite is true.  If you take one day off, then it will be that much easier to take the next day off, then the next and so on.  So make today the day to start….and don’t ever stop!

As you being to cross goals off your list, don’t forget to reflect about what you have accomplished in the past.  Think about all the times you set out to do something – a new sport, new job, college- and think about all the ways you were able to achieve those past goals.  Besides giving you more confidence in yourself, these past goals may also help you to get past those sticky spots.  Then expand this to think about what you can do in the next year, 5 years, 10 years that would have huge impacts on your profits.   This may sound like the last step, but with goals, you should always be reevaluating what you want and how to get it!  Life is full of changes and curve balls, and our priorities are always shifting.  So don’t just sit down one time and plan your life out.  Do this often.  Set dates on your calendar to “check-in” with yourself.

And I can’t stress enough that this process is all about progress, NOT perfection.  You’re not going to achieve every goal right away.  But you can’t get frustrated.  The key here is to always be moving forward- especially if you feel like you’re moving backwards.  As long as you are getting out there and staying true to yourself, there can’t really be any mistakes in life.  It just may be that the path has changed a little bit –but that doesn’t’ mean that you won’t get to the end!  As I mentioned in a previous entry, failing only give us the opportunity to start again, but with a lot more insight!

Money.

It makes the world go ‘round. It’s the be all and end all. We work for it, spend it, and can’t live without it. Right? Well sure, there is a need for money. However if your end goal is to have gobs of it, then you will never be successful. Period.

To be the most successful person you can be, and run the number one business in your market, you must be passionate about what you do. Money is only a means to an end, passion is the end goal.

It’s passion that drives you to create the best product, the best staff, the best company. It’s passion that creates customer evangelists. It’s passionate employees that can’t wait to get to work so that they can get more people excited about what you do.

Most of the entrepreneurs that I have met all were working in a different industry from the business they created. They all had a passion for something, such as a hobby, but they worked at something else in order to live and pay bills. It was that passion, combined with indifference for their job, that lead them to their new endeavor.

The road to success can be a rough one for entrepreneurs, but it is passion that keeps you going. So if you’re one of those people who dread the alarm in the morning, and that commute, and that boss…then sit down and think what you love doing. Then ask yourself how that love can translate into a career.

Start with passion. End with Passion. And money will be there in the middle!

I came across this post over the weekend…

Yanik Silver’s 34 Rules For Maverick Entrepreneurs

Yanik is a very successful direct marketing “guru” in copywriting and information products. Of all the people out there trying to sell you stuff, he’s one that is worth taking a good look at.

If you do nothing else, print out his list and hang it over you desk - it’s really good advice.

Richard St. John presents an excellent summary of what it takes to succeed.

Check out this video of his talk at TED.

Which of these words describe what you’re doing in your business?