A Business That Exists Only in Your Head

Ask the owner of a business that has been going for five years to show you the business, and she will show you the website, the product, perhaps the team. Ask her to show you the business model and there is a pause. It exists. She can tell you about it for an hour. But it is not written anywhere, and neither is the financial model, nor the plan for next year, nor the decision she has been carrying since the spring. The business is real, and it lives in one place, which is her head.

There is nothing wrong with a head. Every business starts there, and for the first year or two it is the right place, because everything is changing too fast to be worth writing down. The problem arrives later, quietly, and it has three parts.

The first is that a business in a head cannot be checked. The owner believes the margin is fine, the best customers are the big names and next year will be a little better than this one, and there is nothing for those beliefs to be wrong against. A number on a page can be compared with what happened. A belief in a head simply gets more confident.

The second is that it cannot be shared. Nobody else can carry a business that is not written down, so the owner carries all of it. The team ask her because only she knows. The bookkeeper sends figures that she alone can interpret. She is the business, and she is tired for a reason that has nothing to do with how hard she works.

The third is that it cannot be left. Not for a fortnight in August, not for a week with a bad back, not for the step back she has been promising herself. A business that exists only in one person's head is a business exactly that person's size, and it stays that size until it is written down.

I spent most of my working life reading businesses on paper, first as an analyst and later from inside the boardroom, and the ones that could be read were the ones that could be run. The ones that could not be read were run by feel, and feel is what the owner has been living on.

The response is the next thirty days, and I want to be plain about what they are and what they ask.

From tomorrow until Wednesday 9 December there will be one essay a day, at nine in the morning, each about ten minutes to read. They are written for someone who has been running a business for a few years, is good at the work, and has never written the business down. The first week is about the house that gets built from the roof, which is nearly every owner-led business I meet. The second is the floor: the business model, the financial model and the operating plan, in that order, with a short piece on the tools that hold them together. The third is what changes about the product and the funnel once there is a floor underneath them. The fourth goes under the floor, to the fears that decided how the house got built, and it ends with a live session on the evening of Wednesday 2 December. The last five essays are about 2027, and the two lines your business could be on by the end of it.

What the month asks of you is less than you might fear. Read the essays. At the end of each week, write one page. By the end of the month you will have the business model on one page, a twelve-month financial model that fits on another, an operating plan that fits on a third, and a decision for 2027 with a date beside it. That is the whole of it. Nothing in this run needs a finance background, and none of it needs more than a weekend of your time in total.

I am writing this partly because of thirty years spent reading businesses that were written down, and partly because of the hundred owners I have asked since. Ninety-eight had no model. Not one of them was careless. They were busy with the roof, which is where the weather hits, and nobody had ever told them the floor was the thing that would let them stop holding the whole house up themselves.

So this month is the floor. Tomorrow, the house, and the order in which nearly everyone builds it.

Continue reading: You Cannot Start With the Roof

The session: The Nine Fears, and the floor underneath your business. Wednesday 2 December, 5pm UK, free

Or start the diagnosis: Take the free 10-minute Entrepreneur Gap scan

The book: The Science of Getting Rich and How to Apply It