Microbusiness Mentor

I don’t know about you, but I often feel isolated as a small business entrepreneur. Sure, I have hundreds of contacts on LinkedIn and Facebook. Apparently more than 1200 people find me interesting enough to follow on Twitter (give or take a few spambots and p0rnbots).

But this isn’t the same as connecting with people in a substantive level every single day. Some of us crave this more than others. I am one of those people who like to think about life’s questions and who view entrepreneurship as part of my “Hero’s Journey” and how I “give back” to the world during my time here on earth.

Like many of you, I am juggling entrepreneurship with parenthood. I consider myself lucky that my son is going to school for 3 days a week at 2 hours each of those days: this is the only “predictable 6 hour time window” where I can accommodate schedules, appointments, and intense bouts of writing (I’m also writing a book this year – my publisher gave me 1 year from time of signing the contract to complete 60,000 words by end of 2010). This is of course, barring my son catching a bug from kids at school and having to stay home, in which case my work week becomes “not-so-much-work” week.

So it is not surprising that after a while, I start feeling lost.

It’s something I’ve come to expect on a periodic interval, maybe once a month, or every other month, I will wonder whether what I am doing would mean anything at all. If I do not address this somehow, this feeling takes over and distracts me from being productive and running my business.

Here are 5 ways that I’ve managed this “feeling lost” and become productive again:

1. Remember why I’m doing any of it.

Why do I bother risking as an entrepreneur? Working irregular hours? Demanding my brain to work harder than those who clock a 9-to-5 job?

For me it’s about teaching people how to accelerate their results and success by offering my shoulders for them to stand on. I may not be quite a “giant”, but I will get you there faster than allowing you to make costly mistakes on your own for years at a time.

2. Schedule a conversation I crave.

Like I said, I need deep conversations from time to time. This can be a highly analytical exchange with a colleague on leadership issues and entrepreneurship issues. This can be a highly philosophical discussion about whether God is necessary and/or sufficient for meaning in life.

For example, last weekend we met up with one of my husband’s coworkers for brunch and the three of us covered a lot of philosophical ground.

I’m not saying that you should get philosophical – unless you crave these types of conversations. I’m saying whatever type of dialog you need – whether this be hard-thinking or hard-belly-laugh… make a point of scheduling one.

3. Take some time off.

I’m bad about this one…. I will keep postponing and procrastinating giving myself any time off to decompress!

But there are days when you just want to “not work” for a few hours, and that’s OK… seriously, the world will go on, your business will continue to exist for those few hours, and you will not be a bad lazy human being.

It’s helpful to have a running list of “what to do” in these situations. Is it taking a walk? Watching TV (sometimes I do this as a deliberate way to induce a comatose state on my brain)? Reading one of those novels where the cover models are busting out of their super-tight frilly frocks while wrapped around men with longer hair then yours could ever grow?

4. Look at something that motivates you.

For me, this is opening my business P&L statement and analyzing my revenue earnings and the types of revenues I’ve earned. For some reason, seeing those numbers there is at once motivating and stress-inducing – but it is more motivating than stressful so I do it.

You may want to read an inspiring quote or look at a motivational poster instead!

5. Do something physical.

Getting your hands busy and body moving is a great way of re-engaging yourself without continually using your mental and emotional reserves. This is also the only way that my house ever gets cleaned!

Feeling lost is really a symptom that you have disconnected from your center – or your grasp on your ideals or your self. It’s a sign that you need to take some time out and say “hello!” to that important person in your life – the person who is powering all the many wonderful things you are doing – YOU.

Image by Nimalan Tharmalingam (UK)

For all small business owners and entrepreneurs starting out – before you get lost in the “how do I do it” question – here are even more important “foundational” questions to answer and be very clear on!

1. Know exactly why you are going into business, or engage in a specific business-related activity.

“I need to make a bit of money on the side” (for example, if you are a freelancer) and similar statements are not specific or exact enough.

I describe one of my business-related activity – my participation on the Outright.com entrepreneur community – as “I want to be known as THE no-nonsense, go-to, truth-telling, based on hard-earned and hard-learned experience small business adviser on Outright.com.”

2. Know exactly how you are going to make your money.

In other words, the revenue model. You don’t need to know all the details right now, but at least have an idea of short term (this month, next month) – mid term ( next 6 months) – and long term (2nd year of business). My time-line runs shorter because of the nature of small businesses, our “long term projections” do not run 5-10 years like big biz. We need to be agile!

3. Know how much you are willing to pay for mistakes, and how much you are willing to pay avoid making them.

I keep saying “coaches, mentors, advisers”, and I mean it, because I have seen how important it had been for me when I first started out with zero knowledge of starting a business or any experience. It was one of the key reasons why I went from bootstrap to 6 figures in less than 2 years.

Many see coaches and advisers as expensive, but I see the years I need to spend learning what they already know and the mistakes I would make as the type of expenses I would rather pay someone else to make, then teach me how not to make them.

4. Know where your business fits into your life, not the other way around.

This is the toughest but most important for the long term. We can get consumed by our businesses especially if we love what we do – and this is usually the case – then we forget why we are in business for ourselves and we end up building ourselves a miserable job that we no longer look forward to do.

I am still learning this one

What about you? What types of foundational questions do you ask yourself, to stay aligned on purpose and true to course?

You have probably heard sayings about how successful people have mentors and coaches and are members of mastermind (MM) groups.

But I wonder – just as coaches and mentors should come with a label that says “results may vary!” (or even “results not typical” like those infomercial program fine print at the bottom of the screen) – mastermind groups vary in quality and effectiveness as well.

Mastermind groups are often misunderstood and not created optimally – as I have learned from personal experience!

The people who are selected for masterminds must be at a comparable caliber of business achievement with slight deviations in business result. Members should have similar drive and goal standards. If these pieces are missing, the mastermind will not work to the members’ benefit. It’s a bit like playing tennis – you improve when you play with someone slightly better or much better than you – not someone who is a beginner, even if you are a beginner.

If you are a pro and you want to help others, then you can be a great mentor or coach. If you are a beginner, you want to learn from people who have done what you want to do, so you do not have to make the same mistakes!

In the past when I have been in similar groups I was often one who had already created a successful business, and other members were at the step of creating one or still figuring out what their business idea was. Even if I was looking to start a new business, I want to be amongst people who are starting their 2nd or 3rd of even 5th business – not 1st.

As a result, I found the meetings informative (I can always learn something from others) – but not truly educational for me to move forward in a meaningful way. When I have to pay money for it, then it becomes a waste of my hard earned dollars. Even if I didn’t have to pay for it, I do not want to waste precious time!

Another factor of a mastermind group is the facilitator’s skills. There are some who do not know how to run a mastermind group, and they appear to let the meeting wander in whatever direction the members move the meeting. Again, if this is the set-up of the mastermind (“we are here for creative brainstorming, so we are going to let ourselves wander and see where the conversation takes us”), then this is expected. On the other hand, I doubt that time-limited entrepreneurs like myself will have the patience to attend a meeting we thought had a clear agenda with defined goals, and we show up for a meeting where anything goes.

This is one of the reasons why I create mastermind groups with a specific “revenue achievement” pre-requisite. It is not so much about the dollar amount, as the amount of skill, drive, experience, and resourcefulness behind that revenue achievement. Someone who has a $500 a month business is at a different level than someone who has built a $5000 a month business, or someone who has taken a $5000 a month business to a $50,000 a month business.

If you have been a MM member – what makes the group work? What makes the group not work?

If you haven’t been a MM members – what would make you want to join one?

Image by Rodolfo Clix

How much “asset” (liquid and otherwise) do you need to retire?

I have been thinking about this question especially when I keep reading articles about how people can no longer retire and the economic uncertainties, etc.

I have a pretty boring and conservative plan – pay off mortgage, save for child’s college, save for retirement – I get the WHAT – but the HOW is where I get confused – how I would go about getting there.

Don Current tells me that I am on the right track!

Boring and conservative may not make you rich quick, but it will make you rich consistently. You should be saving 10 to 15% of your pre-tax income for retirement. You should be placing it in good solid mutual funds that have a strong history of performance over time. And THAT is the key… over time. Yes the market is bad now, but history tells us that over the long haul, it’s the best investment you can make. You also want to diversify your retirement savings. Prior to retirement, make sure you have it spread equally between mutual funds in four categories – Growth, Growth & Income, International, and Aggressive Growth. If you want to go more conservative go with Balanced in place of Aggressive Growth, but the farther you are from retirement, the more important that Aggressive Growth category is, because that’s where the action happens.

I am hitting 40 soon and do not know “how far” I actually am from retirement. That may be one of the reasons why I feel like I am working with an unknown target. I can just say “I want to retire at 60″ and set my own targets.

Last year I made my asset allocation more conservative due to market fears, which I know is not the best thing to do, people were saying that was the best time to buy cheap. I may now reallocate the assets based on your advice for aggressive growth and trust that statistics will be on my side.

Don also suggested that I needed to know how I much I need to live on each year of retirement, and divide that number by .06 (in other words, need to get a 6% return on invested $). This then allows me to live off the interest without touching the principle, barring hyperinflation or other extenuating circumstances.

I think the fact that I am 38 and already worrying about retirement shows how brainwashed I have been by the media hysteria of how many baby boomers are getting into trouble as they head into retirement and realizing that they need to head back out and make a living – they can no longer afford to retire!

I also had a question about Roth conversions, and specifically: Is it worth the tax liability to convert to Roth IRA?

I have been reading about Roth IRA conversions and how it makes sense, but then I asked my CPA and he felt that in my case it was not worth the tax liability to convert.

Wray Rives, CPA told me that my CPA has a point! Wray said:

The upside to a Roth conversion is your future earnings in the IRA will be tax free when you begin withdrawing them at age 59 1/2 or later. Withdrawals from a conventional IRA are taxable in the year you take the distribution.

The downside is the money you take out of the conventional IRA to put into a Roth is taxable. The government has given you something of a concession in that you can spread the tax burden out over 2 years 2011 and 2012, but you do basically have to pay the tax up front.

I had done what Wray had suggested – I asked my tax adviser who has no financial conflicts of interest since he would not earn a fee converting my IRAs and he had told me that he did not feel it was worth the tax in my case to convert at this point.

But this doesn’t mean that I can’t open up (prospectively not as a conversion) a new Roth IRA! I went online and opened a new Roth Ira for year 2010!

What about you? Are you already planning for retirement? And those of you who are converting versus not converting – why are you NOT converting if you have the option?

My Outright.com colleague Jennifer Escalona said that a recent study showed business owners who started in these tough economic times fare well in the long haul.

This makes total sense to me.

It’s very easy to make the leap and get fantastic results when times are lush with opportunities and everyone is flush with cash and we all gather around the fields of possibilities to sing kum-bay-ya.

It is MUCH HARDER to be gutsy and take action when opportunities look to be drying up, most are drowning in credit card debt, and people gather around the unemployment lines to lament over job loss (sometimes, home loss).

Business owners who KNOW HOW to weather the tough economy are the ones who start their business using a model that takes the economic downturns and upturns into equal consideration. Those who THRIVE are the ones who either -

1) has a business service or product specific to the effects of the bad economy – look at bankruptcy lawyers and credit counselors for example

OR

2) created a business model that adapts to the environment such that they are able to create a profit margin and sustain their business during the storm AND have a way of adapting yet again when business improves and the consumer mindset may also shift.

I suspect most of us who thrive in today’s times are doing it by reason #2 above.

I wanted to throw in yet another example – there are realtors who are now making profits from short sales and still flipping real estate. It is controversial and criticized but again it is an example of those who somehow continues to look for market opportunities no matter if scores of their realtor colleagues are struggling and even going broke.

So my question to you, my microbusiness / small business entrepreneur colleagues, is:

How recession proof is your business model?

Image by Luiz Cavalini Jr.