Many entrepreneurs fall into the same cycle. Maybe you have as well! Are you in the cycle of working your fingers to the bone, just to keep your head above water? No exercise? No healthy food? And – let me guess – no time for your family? If that describes you, then you are indeed in the trap, my friend.
Chasing Your Tail
The popular entrepreneurial author Barry Moltz coined a phrase to describe this occurrence: the Double Helix Trap. The trap works something like this – you work as hard as you can, focusing your efforts on servicing your clients. But then sales drop – you are busy serving clients, after all, not selling. So then you do everything you can to boost sales. You network like mad, you call prospects, you do everything to book business.
But then, since you are selling, you are not making money – you need to do the work to make the money, so you are back to serving clients and not selling. You are indeed caught in the trap!
Self-Evaluation Time
There is a way out of the trap, believe it or not. The way out is through the process of asking two simple questions, answering them honestly, and then taking two simple actions.
First, you want to ask yourself, every 90 days, “What’s working?” You will need to list all the things you have been doing in the past 90 days that is making you money. Is there a specific way you are marketing that brings in the most leads? If so, that is working. Is there a specific client who keeps buying repeatedly from you? If so, that is also working. Is there one service or product you have that is bringing in the nicest profits? If so, that is working. Once you identify what is working, you now need to amplify it. Do more of that! You need to think about, plan on, and simply start doing more of what is working.
But this is only half of the equation. The other half is to ask yourself what’s not working. Similar to what you did above, you will need to list all the things you did in the last 90 days that are not working. Is there a specific way you are marketing that is not bringing in results? If so, that is not working. Are there certain clients that you work hard for, yet they aren’t paying you? That, clearly, is not working! Is there a service offering that is just not selling? That is also not working.
With the not-working stuff, you have two options. One is to reduce and eliminate it as quickly as possible. The other is to find a way to modify or change it so that it gets into the working category by the next 90-day evaluation.
Trusting the System
Obviously, this 90-day time-frame analysis system is not scientific. And I’m sure there are a million arguments out there, stating why some things need several years before hitting their peak. (I mean, some fine wines need 100 years to hit their prime!) But the point here is that a lot of parts of your business can be evaluated every 90 days, and these two questions can be asked.
And once you do ask, despite it sometimes being difficult to handle the answers because maybe you really want certain things to work and they are not, you will ask yourself why in the heck you didn’t stop that a long time ago, and do more of the other thing a lot sooner!
Hi, Mike
Thank you for writing Profit First. I read it in the last days and as founder of a small (still) business I found the book incredibly helpful. In the past years I already did pay myself a (small) salary. But I also want to implement the other strategies. I already moved my first profit and money for taxes from my business account to my private account and will open two new bank accounts today. And I made plans to save 10% of my expenses and am working on those. I love the idea of profit first. .
I still have some questions that the book did not answer.
– I coach and sell books. The sales in the winter months often are double as high as in the summer. How do you do profit first in such a situation.
– As I sell books a lot of my income is payments of 5 Euro, 10 Euro, 30 Euro (90% of my payments are smaller than 120 Euro). To do Profit first on 200 little payments would be crazy. Would doing it monthly when I have the figures of the whole month, be ok too?
– Here in Germany 80% of the bills are paid with automatic withdrawal (rent, electricity, even a lot of contractors have the permission to take their money from my account). Only very few bills are paid manually. We pay them every weekend (My bookkeeper works part-time). How do you apply profit first in such a situation.
Looking forward to hearing from you!
And thanks again for the great book!
Kerstin
PS: I live and work on an old ship that my friends and I renovated. So I live like a millionaire (but do not spend as much!) – looking at the water right now.
On a really small scale I found this to be true, not only was one of my ventures not working, but the thought of sorting it was was just another huge task on the list of many. I completed this last week, I knew it would free up time but I was amazed at how much frustration it realised.
With that now gone I can carry on worry-free doing more of the things I need to do to promote my other business. I realised then that this needs to be one items that I cannot afford to get slack on.
Great article really struck a chord with me