Target Allocation Percentages

In the book Profit First, Mike Michalowicz puts out a concept called “Target Allocation Percentages.”

The gist of his system is simple: you have an income account where you collect your cash, and then it’s allocated based on a real-revenue based scheme.  These go into separate accounts.  Seven of them.

He defines real revenue as revenue less contractor and per-job material expenses.

I’m starting a new business and I wanted to just put out what I mean to do.

Profit: 12%
Owners Compensation: 50%
Tax Allocation: 15%
Operating Expenses: 23%

I think that this is more or less realistic.

I’m on a path where I don’t mean to hire additional providers this year. I want to dial in a system with me as a solo entrepreneur. There are a lot of things here that I have to do to make this right.

Every business I’ve built had big goals but we plowed money back into the business. We have hit some big revenue numbers. But then the business consumed everything. So we had to scramble to keep up, and a general malaise got to us.

“Bank Account” financial planning sapped a ton of energy–  the same way that Launch Energy does.

I hired people needlessly. I spent on software. I went to fruitless and non-productive events. I did a lot of that stuff for a long time.  I had money in the bank, strong sales, and for a long time, that masked the problems. But we never got our structure right so we never got to where I needed to go.  What I had built as a business had become an inadvertent Ponzi scheme.  We needed new money to pay back the old stuff.

This time isn’t like that time. I’m putting my faith and trust in systems. 

Tomorrow is a big day for me. I’ve got some things built and completed. I’m going to really begin the work, as the plumbing part of the business is ready to be tested.

The fear and doubt are my constant companions.

Why Launch Energy Is Wasted Energy

I like starting things. And I like finishing them.

But, to me, there’s nothing more tedious than the early stages of building a platform. The “plumbing” I’ve done it about 5 times, and then I’ve “redone” existing platforms another 15 or so times. Each time I do it I’m better at it, but not faster.

Because it’s lonely work. And the details matter.

To set up my new brand, Atom City Labs, I had to:

  • Find a CRM (I used Agile CRM)
  • Build a content strategy (I used Meera Kothand’s)
  • Build a distribution strategy
  • Find a hosting provider (I used Very Fast Host)
  • Find some way to get design done (Canva, this round)
  • Find a theme engine (Thrive Themes over Beaver builder by a nose).
  • Set up a lead magnet.
  • Set up some auto responders
  • Set up analytics
  • Set up a facebook pixel.
  • Set up DKIM / SPF stuff on my domain.
  • Set up some bank accounts
  • Switch bank accounts (Hapo)
  • Set up an accounting system. (TBD: Thinking seriously about going with WAVE).
  • Set up a payment processor (Stripe)
  • Find a signature repository (I used Adobe Sign, FKA EchoSign)
  • Write proposals
  • Get insurance coverage (personal umb
  • Write an About Page, a privacy policy.
  • Some contact forms.
  • Landing pages.
  • Incorporate, get a TIN, get local permits.

The list goes on. Some of that stuff had to “validate” with my domain. Some stuff took a third party’s approval. Like the state of Washington. Other stuff costs money. All of it cost time. It’s a load that a solo entrepreneur pays disproportionately.

All of this work is backfill. It’s a precondition to really earning money. It’s an ante, and it’s a risked bit of time that…if my idea a fails I’ll never get back.

And I want to tell you: it’s agonizing. It’s horrifically tedious work to do because I know how to do it all. I’ve done it before. You can’t really save a lot of time or money by outsourcing it, you just have to slog on.

For me, it takes 3 times more energy to do this type of work than it does to run something. It’s the launch energy that must be done. It’s not serving a client, it’s simply building the systems that serve the business that serves clients.

I’d estimate that it takes 20-30 hours once you know what you’re doing to do this type of work. Half a week’s efforts.

Delegating to an attorney takes about the same time, it’ll be done wrong and cost $1k.

As I’m launching my new company I have had to do this twice. I launched under the auspices of a different entity and shuttered that because (after testing) I learned that my clients needed a product to be in place as a precondition to me being able to serve them. And I had to sell THAT first because without follow up or systems the whole thing would be likely to fail.

So I had to duplicate a fair bit of this work (and pay another $50 to the state of Washington to change my LLC’s name).

Then, in a few months, this same ‘ante’ can be paid if I decide to pivot.

A lot of it is unnecessary, a distraction. A way of seeming busy, and stuff that you can justify that isn’t one of the core activities of a business. (Prospecting, presenting, negotiating, closing and delivering).

Then, this sort of thing happens again.

At Simplifilm, I changed a perfectly “fine” logo. It was a logo built in 2012 and it had a little bit of that era’s “apple” look.

Well, the number of forms, places on our website, the video reveals and the rest made that work take a lot longer than I imagined. And we kept having “both” logos displayed for a long time. For what gain?

No gain.

For me, this type of work is agony. And yet I retreat to it because it’s a version of Bikeshedding.

Writing And Publishing

I have written a lot over the last year. More than the prior 3 years combined.

But I haven’t published much. I can’t get into the speculative reasons as to why that would be, only to say that I’ve been sort of reconsidering my schtick. Who do I even want to be?

It makes no sense to go faster when you have fundamental ennui.

In the last couple of years – I have moved from Portland to the Tri-Cities.  I’ve become…disillusioned with my role as a founder of a video company. I’ve segued my company and “wound it down” and so a lot has changed.  I’ve changed my relationship with my wife, and I see a radically different future.  I had to process what – exactly – that meant.

Now that I have something of a direction, it’s past time to publish.

The timing – for a lot of reasons – couldn’t be better for me.

Business Lessons

I’m starting a new business.

I’ve screwed up nearly everything about my old business and I want to build something that’s worth having for a long time.

  1. Always have enough money on hand to close the business. Don’t risk inadvertent Ponzi schemes.
  2. Always know your YTD, MTD, QTD collected, contracted & completed numbers.
  3. Growth follows ability to deliver, not ability to sell. You can outback your coverage and kill your business easily, especially under 5mm in annual revenue.
  4. Having impeccable standards makes things vastly easier in the long run.
  5. Pricing is everything. It determines how the business can grow.
  6. Automation is everything else. Having systems in place means that you can use them – or not – depending on what you want your business to actually do.
  7. Profits are a condition of doing business. You have to have them, know what they are. This means that you know your time and money debt created by each sale.
  8. A service business must deliver efficiently. You have to offer optimized delivery in order to grow and to create a business worth having.
  9. Pay your vendors early. Only troubled companies fund with float. Profitable companies can effortlessly pay. Plus, when you set the example that you require you’re in compliance with Natural Law.
  10. Tempo and pace matter. You have to deliver the best work in the time available, not the best work with unlimited time. When you do reps you get better at being faster.
  11. Templates matter. Checklists matter. You can go through a pre-flight check for anything – a sales call, whatever.
  12. Pre and postmortems matter. Creating a learning loop makes you better faster.
  13. Belief in your delivery is a key to selling effectively and doing it for a long time.
  14. Don’t forget to ask for help. Have a +/-/= in key areas of your business.
  15. Writing is the road to everything that a business needs. Copy, code, policy all has to be written, so get better at writing.

Thoughts I Used To Think

I’m watching a lot of people fall. I’m not really surprised by any of it. I’ve seen aggressive behavior before. I’ve also (personally) said things that I’d never consider doing these days. Usually flirting or jokes gone wrong, that could make people feel uncomfortable and in hindsight were in poor taste.

I don’t know what the “final” answer is. Is Garrison Keillor’s fall too much? Maybe. Maybe not. I wasn’t there. It’s pretty bizarre to me, his fall.

Is one lousy action, one time, with one person enough to ruin a career?

Does an apology entitle you to anything?

Are there equivalencies?

And, what’s really going on? We see Roy Moore moving the line, conning Christians into supporting Pedophilia (because Mary, the mother of Jesus may have been as young as 12). What will the upshot be?

And, what of people that reform? I don’t have massive skeletons. But I have things I regret saying to others. Times when I surely came off as a creep. I’m not owed the comfort of forgiveness, but what about people who reform, repair relationships and regret the past?

I don’t know the answers. But I’m glad that this is happening because it’s making a better world.

Radical Accountability & Transparency

As I’m rebooting myself, I am embracing transparency. Have no real choice. I feel like it’s a pillar of my life, a building block I need in order to make my life the way I want it. Where I’m calling from.

Selective transparency is just bragging. The worst businesses and lives have areas of success.

Sure, to get a boost of confidence, we can highlight those areas. Yes, there is a point in making us feel better. Most of the time when we talk transparency, we talk about financial numbers. I’m set to make $xx per year, our results were $yy per year.

That stuff really doesn’t matter to me. What matters to me is doing what I have committed to doing on a daily basis. Building a business. Publishing. Living on a calendar. Reading. Resting. Increasing my grip on reality.

Being accountable to a result. Being radically accountable to a plan and process. These things will earn me money.

So the first challenge is to publish on this blog 3 days a week through the end of the year.

Personal Operating System

This year has been a year of reflecting. I’ve filled journals, written tens of thousands of words. Gone through the five stages of grief from moving to Portland (and losing my zeal for my business).

I’ve read more this year than I have in past years. And I’ve licked my wounds (all self-inflicted) to come out on the other side feeling strong and good.

What follows is the need to rewrite my personal operating system.

Why I Need The Rewrite?

There are goals I have that I’m not making progress on. I’ve been coasting. I’ve bought into a delusion. I’ve pursued comforting amusement and ‘stature’ over achievement. I’ve told myself a story that I could do whatever I want.

And, my grasp of objective reality isn’t where I want it to be.

This means that at the end, there is a wide gap between what I mean to achieve in my life and what I’m likely to achieve in my life- unless things quickly are reversed.

I’m 41. And I’ve not really begun to serve in the way I mean to.

I think I’m operating at less than 1% of my capacity. I think I can more than 200x my impact because I have some multiplication by zero effects happening.

What My Operating System Is Now:

I’ve got a mix of things that are working with me.

The normal gen-X stuff: A lazy smirk and a wink. A dash of snark. A little bit of aspirational thinking that doesn’t get translated into results. A burst of creative energy that’s not sustainable, and a cycle of zeal and burnout.

The slacker ethos: I don’t care that much, so I can’t be hurt. Leave before you get left. (The fact is: we’re prevented from doing the real and necessary work, the vulnerable good stuff when we drape ourselves in this bit of delusion).

Too Many Shortcuts The search for hacks and tricks and tactics and shortcuts. Enough hustle to clean up most of the messes I make. Enough good things to keep me from totally crashing. Occasional good years where everything works. A few key relationships that keep me afloat.

Popeye Syndrome: I get my ass kicked for a long time, but I know that in ACT 3, I’ll find some spinach. I get dialed in just in time to “save the day.” Usually. I’ll carry a smug satisfaction through the whole cartoon, a shit-eating grin even when I’m getting knocked around, since I’m denying that this is truly happening to me.

The Need For Affirmation Too often I’ve looked for an ‘attaboy’ without digging in and doing the real work. I wanna be loved! Am I not a blogger? And yet, getting those simple likes/whatever eats into me. So I put out a Bon Mot in a Facebook group and people like it. And I feel good. But that’s so dumb.

Bad Habits It’s been said that the will to win is nothing without the will to prepare to win. 1 I’ve defaulted to a lot of things that don’t support where I wanna go.

Selective Transparency: Which is to say that it’s not true transparency. We crow about where we win, we cover up when we lose. And time goes by and we don’t just do this.

A Run From Reality I have a business that earned some money this year. I’ve gone to great lengths to avoid knowing just how much. There are other areas where I avoid reality. I’ve not embraced reality so I can’t change it. Moving through time randomly.

Focus & Completion Issues I have to be willing to see things all the way through to the end and to find a few hours a week to truly focus. I have to develop that for itself as its own skill, and stick to a system that supports it. Schedule or otherwise, it’s gotta get done.

Relationship Issues Too often, I’ve chased people away that can do me good. Too proud to accept help, but not committed or capable of doing things on my own.

This isn’t a complete list, and I’m concerned more about what I need to do better than what’s working right, right now. I’m unconcerned about what’s working well; in broad strokes:

  • I’m reading
  • I’m doing a good job with my kids
  • I’m seeing what I need to do and creating in my head the life and business I want.

Where I Want To Go:

I’ve clung to an obsolete style that I don’t care about. The old saying: we spend our times working in jobs we hate to buy things we don’t want to impress people we don’t like.

I’ve got this belief that I can 100x myself by changing my way of thinking and interacting with the world.

The end starts with the goals.

  1. A Mission (Or A Couple of Missions) I love entrepreneurs. The independent spark that says “I don’t need to friggin’ work some job. I want to fan that spark till it’s an inferno. I always have seen myself as independent, ever since I was little. My mission Is to serve them.Missions are different than goals. I have two right now:
    • To help 25 Entrepreneurs close a total of $10,000,000 in business.
    • To Bring in $2,000,000 in new business to the Tri Cities Area.

    These should be sane and fun to do.

  2. Orderly Finances: I’m building a new company.. The opportunity to have truly orderly finances is mesmerizing to me. I made a mistake and I never took the time to recover. Now with my wife earning enough (and expenses cut) I have opportunity that didn’t exist a year ago. I have underestimated the power of this. I always went with my gut and was delusional about how much unnecessary risk I was carrying (as well as the returns possible).
  3. Fitness, Man, Fitness I love the feeling when I’m working out (and I’m working out reliably again). I want my body to be fit. And my business, and my life (home etc).
  4. Process Man, Process How we do things is important. What makes our work great?. What goes into that sort of thing.

What I Have To Do:

  1. Figure out some specific goals. I’ve got a mission above, and I’ve gotta

I have to build an operating system that supports that. I have to change my way of thinking, embrace deep work and remake myself into a person that can get this done. This will likely take 18 months. It could take longer.

I have to relearn the way I sell, the way I connect with people, maintain relationships. I have to define what I mean by “integrity,” “focus” and such. I have to drive to my mission and not anything else.

  1. Learn about my strengths. Will do Strengthsfinder, Meyers-Briggs and maybe DiSC again. Will work hard not to game the system. (This will be hard).
  2. Embrace radical transparency. There is a long way to go in my business, and so I have to be open and earnest about everything.
  3. Embrace radical accountability. I have to make and keep my word first to myself, then to my family. I’ve gotta create a scoreboard.

That’s it. This is a 2.0 time for me, or 3.0. It’s a time for a massive reinvention. I’ve had the year to heal and to make forward progress, so now it’s time to make it all happen the way I want.

I’m less certain about what I’m meant to be but I think more dedicated and capable of being that thing. It falls to me to go do it.

On Form and Practice

One of the quests I’ve had lately is to get better at playing Racquetball. I’ve rediscovered it and enjoyed playing the game. It’s mostly a game of skill, and my acute lack of footspeed isn’t a disqualifier like it is in basketball.

I bought a book as an add on from Racquetball Warehouse.It showed that I had a bad swing, and a bad grip. The combination of a bad swing and a bad grip meant that I was torquing my shoulder. The shoulder was hurt a lot.

I had good timing so I was winning some matches.

But I couldn’t play two days in a row. And I was using a TON of energy. So I had to change my grip. It was painful. I had a grip that was ‘not great’ but I was used to it. So I switched to the recommended shake hands grip. I had grabbed the thing.

This far in, I decided to keep going. And so I changed my whole swing. This from the “random” swing that I had to something that was the way it was supposed to work.

A few hundred “drop and hits” later, I had a working swing.

https://m.youtube.com/watch?v=Sk-k7rWUjbE

The biggest difference: with much less effort I’m generating the same power. I don’t yet have the timing dialed in like I did on my “bad” swing, but I can effortlessly hit a good, accurate shot about 85% of what I could hit it at when I was locked in. With good form the margin for error is wider. I’ve occasionally had everything come together and hit serves and shots with really impressive power, harder than I’d ever done it before.

The more astonishing thing was that this didn’t take long. About 3 hours – total – of practice spread out over about 2 weeks. Drop and hit drills from 9 positions on the court, hitting 3 shots (down the line, cross court and pinch).

The current drawback is that I’ll go for stretches of a match and be very “lost” having had old habits show up, and I haven’t dialed in a method to slow down and correct things. This results in stretches of comically poor shots. It’s sometimes hard to diagnose in a match. Going forward I’ll try “early prep, trigger finger, follow through”.

THE PROGRESS

I was much worse for about a week. About the same a week later. Now I’m certainly better than before. Everything is coming together better than it had been. I don’t have shoulder pain and I can play 3 days in row at nearly 42 years of age.

And I’ve only worked on my forehand. With one drill.

The next step will be to do the same thing for my backhand, and then to add the rest of the drills to a practice session.

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