Wednesday, February 3, 2016

Five Ideas To Save You Fifty Grand

April 1st will mark the third birthday of Endurance Corner LLC. This week I’m going to outline the decisions that cost us the most money in our start up phase. These themes pop up in many areas of my life so, I hope, you can learn from our experience.

The original concept for starting EC was to help people. I'm not sure if I've ever told you but a personal goal is, over my lifetime, to reach one million people with a message about using personal athletics to change the direction of their life (one article at a time).

In wanting to help people, I need constant reminders that making things "easy" isn't a help! Most of the money that I have wasted so far (I'm sure that more mistakes are to come) is due to a misunderstanding of human nature.

#1 – Cash flow determines financial success
The financial success of a business is determined by the cash flow that it can generate. At the end of 2008, I made a decision that I’d stop financing our losses. That created a crisis, which forced us to restructure ourselves and, ultimately, become viable.

Coming back to the mission to help people, it is easier to help people (coaches, team members, blog readers) from a stable financial base. My early mistakes nearly blew the entire gig and I'm not out of the woods yet.

#2 – Focus technical spend on personal productivity and customer satisfaction
This is one area where I made the right call. It is possible to spend a FORTUNE on web design and technical features. As well, the more complex your design the longer it will take you to launch. Our concept to launch period was six months.

Get yourself up and running as quick as possible then listen to your team.

#3 – Overheads limit freedom
The lower the fixed cost nature of your operation (and life) the greater the freedom you have to change and adapt to market conditions.

To lower the financial risk in my life I consider my monthly expenses and how I might be able to turn the line items into income.

Some examples:

  • Mortgage Expense => Property Income
  • Training Peaks Accounts => Training Plan Sales (less than $20 by the way)
  • Salary => Profit Share (our team shares my financial interest in areas they control)
  • Health Club Fees => Coaching Income

Most of the pressure in my life comes from choices that I’ve made which increased my fixed costs. These choices are NOT necessary for my personal happiness. The items that make me happy are independent of my fixed costs (and I know it).

You will notice that the moments where you are most happy are the moments where you feel free.

#4 – We rise to expectations, not compensation
In my life (school, work, sport), the periods where I have made the most rapid progress have been where my life was simple, low-paid and highly focused.

A story!

There has been talk in triathlon circles about the recent change to the prize money and Kona qualification rules. In case you haven’t heard, there is a new requirement to be within a certain %age of the winner for prize money and a Kona slot. Let’s consider the practical implication of the changes:

  • The requirements imply that an elite athlete has to be within 6 MILES of the race winner to earn prize money and within 6 KILOMETERS to earn a Kona slot.
  • The surplus prize money remains in the prize purse, giving an incentive for the best athletes to race often and race fast.
  • Nice people (some are my pals) are going to miss out on prize money.
  • The twenty fastest athletes in our sport (the professional pros) will benefit financially.
  • The elite field may shrink in Kona but the field strength will remain unchanged.

Back to EC, the quickest way to change results was to adjust the incentive structure and expectations within the business. I suspect that the WTC’s change will have a similar impact – some people will leave and other people will improve.

In my prize money example, a lack of communication probably hurt a few feelings. I need to do a better job with communication as well.

When you write about your business, be careful and remember that we read with our own voice, not the author’s.

#5 – Add value
Success flows from work; not planning.

I need to continually focus on adding value to the team. The trip to Noosa was enjoyable but there was a cost from being on the opposite side of the world from all but six of our team.

I have been trying to figure out how we leverage the experience base of our team and alumni. I receive tremendous benefit from being the “hub” but the team’s ability to leverage off each other is under-exploited. If we can crack this issue and host a group of friends then that would create value and stickiness.

When I ran my Tri Forum (a public message board), there was a large amount of sharing, and connections, between the members. I wonder if the lack of connection is scale. I thought that a private board would generate a higher participation rate but, perhaps, there is a minimum number of participants required to get things flowing.

I've been asking folks for ideas so we will see what's possible to increase the connections. We are training together in Tucson this week and over half of the camp has trained with me before. The greatest complement an athlete can pay us is coming back for a second, or third, or fourth, or fifth... camp!

Back next week,

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