Businesses either bring their owners a tremendous amount of freedom and satisfaction or a feeling of captivity and dread.
I started my “business” career as a freelancer and have since worked in marketing agencies as an SEO lead, SEO consultant, and, later, in my SEO agency.
I’ve had the privilege of working with many business owners across a wide range of industries and business models.
While I didn’t always enjoy working within other people’s businesses, the insights I gained were invaluable. Well worth any pain!
What always struck me as inspirational were the business owners who, seemingly, took everything in their stride.
Looming recession? We’ll do what we’ve always done.
Global pandemic? Let’s stick to the plan.
Algorithm update? We’ll publish as usual.
Some business owners are the complete opposite. They wear their hearts on their sleeves.
Looming recession? Cancel all our subscriptions, even if we use the tool daily.
Global pandemic? Fire everyone. I’ll do it myself.
Algorithm update? Stop publishing; stop any investment in links. I’ll spend the next 3 months complaining about Google online.
Two Types of Entrepreneurs: Calm vs. Anxious
Outside my work as a service provider, I’ve long been a builder and seller of websites. In recent years, I’ve been a buyer and investor too.
I’ve been on the receiving end of plenty of challenges and have responded both well (and poorly) to these challenges.
Business can be a gift or a curse.
Freedom or handcuffs.
Calm or anxiety.
So, what’s the secret to calmly building a business that gives the gift of freedom?
There are logical elements at play with the above:
- How financially secure is the owner?
- What sort of cash reserves does the company have?
- What’s their profit margin?
- How does their cash flow look? And so on.
In my experience (and from my observations), entrepreneurs who are at peace with their progress fall into 2 common groups:
- Do they think five weeks or five years into the future?
- Do they focus on leading indicators or lagging indicators?
Five Weeks or Five Years?
The world’s longest continuous COVID-19 lockdown was in Buenos Aires, Argentina. It lasted 234 days. The Great Depression was the longest post-WWII recession, lasting three years and seven months.
As individuals, these periods seem trying but we recover from them.
What is three years and seven months when global life expectancy is 20x that these days and will probably improve in the years to come?
Teams that judge their performance on a five-week timeframe simply can’t win during these periods.
In many cases, five weeks isn’t long enough to brute force the results they need.
But those playing the long game view things entirely differently.
Those five weeks are a mere blip on the radar when they zoom out to where they are currently aiming — five years into the future.
It’s fascinating how some of my far-sighted business friends don’t see the near-term major events as a threat to their business.
The threat, in their eyes, is slowing down their efforts today. To do so would threaten the probability of arriving at their desired destination in five years.
Thinking Down the Line
The longest bear market lasted 630 days. If you check your portfolio returns daily, those 630 days will be painful.
For a large majority of investors saving for retirement, it’s illogical.
Many investors have a plan that involves continuing to dollar-cost average into their chosen asset classes.
Market is up? Buy.
Market is down? Buy.
This is because we know, over an appropriate time frame, the market will be up.
If we know this is true for more passive investments, why are we often caught thinking in the short term about our businesses?
The answer, I believe, is down to a focus on lagging indicators instead of leading indicators.
Leading Indicators vs. Lagging Indicators
Last year, I wanted a personal challenge that had nothing to do with business, money, or my family.
A physical challenge seemed ideal.
In years past, I’d used a sporting event but this time around I chose to cut my body fat to the point of having a visible 6-pack.
The process to achieve this result was simple:
- Eat fewer calories than I burned
- Get enough protein
- Lift heavy things
I tracked these metrics every week, only paying attention to the average. Lifting a lot of heavy things in one day didn’t matter if I wasn’t doing anything for the rest of the week.
Fasting for 24 hours would only make a tiny impact on my weekly calorie average.
My success — or lack of it — was based on those leading indicators.
The promise was, if I hit those metrics, the outcome I sought would come before I knew it.
And it did. I’d been so obsessed with the success of my leading indicators that, in a few short months, I saw my lagging indicator.
I’d reached the lowest body fat percentage of my life.
Delaying Gratification
I grew up in a social circle that gave me a goal-oriented mindset.
The society I grew up in valued the end result; the lagging indicators of success.
Everyone seems to want a big house, fancy cars, expensive clothes, and million-dollar exits. But how many want to put in the work?
As entrepreneurs, we know the power of delayed gratification. Many of our friends can’t understand why we work for years — making virtually nothing — when we could earn a healthy salary in that time.
But those same people dream about the idea of making money while they sleep or traveling the world for months on end.
Yet, as I look around the room at my peers (and myself at times), I see some business owners doing it harder than others.
Removing Anxiety from Volatility
I love online businesses.
They have enabled those of us who, in past eras, had no right to ascend our social class; to skip straight to the front of the line.
Established companies with household names are being disrupted by agile small businesses operating without a fixed address.
Our little businesses can garner enough traffic from Pinterest to earn us a small fortune.
We can outrank S&P 500 companies in Google’s organic search results while they are too busy having board meetings to change course and defend their position.
Some online business models earn through search or social media PPC campaigns while others leverage the enormous audiences of Instagram influencers.
But as we all know, these things can alter quickly too.
Traffic sources change their algorithms, competitors bid up your most profitable keywords, and policies change.
A quick browse of /r/juststart/ shows just how anxiety-inducing business can be if you’re focused on lagging indicators.
“I just lost 80% of my traffic” is often followed by “site traffic recovered after 18 days.”
And, although things change, they also stay the same.
Every Google update brings a deluge of marketing articles from SEO agencies and consultants who explain: “You’ve been doing it all wrong; here’s how to do SEO in %%currentyear%%.”
But in reality, the process barely alters:
- Build quality links
- Publish great content
- Maintain your site well, and
- Serve the needs of your users
Every business has its equivalents; the fundamentals you must complete regularly, over and over again, to get results in the long term.
Chop Wood, Carry Water
A friend of mine introduced me to this phrase. A more complete version is:
“Before enlightenment; chop wood, carry water. After enlightenment; chop wood, carry water.”
Zen Kōan
Like much wisdom, its history is long and debatable, but it’s stood the test of time and is incorporated into many stories and teachings for a reason.
This simple phrase has had a major impact on my mindset when it comes to business — or any time I seek a result.
The fittest-looking people I know don’t change their gym program or diet each month.
They simply pick up heavy things and control their total calorie intake. When they reach their goal, they don’t start eating a heap of food again and quit lifting heavy things.
They continue to chop wood, and carry water.
The most successful niche site owners I know got to where they are by publishing content and building links.
When you’re at the top, it’s easy to get distracted by new niches or other business models, but the real answer is to keep publishing content and building links.
Keep doing what works.
The most successful investors I know found their position in life by investing in assets when they met certain criteria.
If the market drops and there are a bunch of negative news stories out there, they know what to do; they keep investing in assets that meet their criteria.
Imagine a remote mountain cabin, complete with a fireplace but no running water. Your lagging indicators would be a steady supply of wood and plenty of fresh water.
While you could sprint to that goal, it’s exhausting. Over winter, you’d likely burn most of the wood and you might start rationing water.
The person who chops a little wood each day and brings a little more water isn’t focused on how much they have at home.
They’re just doing the work and focusing on the leading indicators they need to live well.
During warmer weeks, they might have more wood and less water. In colder weeks, they may have less wood but more water.
They’ll always have enough of both.
Changing Habits
If we want to create calm in our businesses and enjoy the freedom that business should bring, we need to place a greater emphasis on leading indicators that guide us in our desired direction.
“Impatience with actions, patience with results.”
Naval Ravikant
Spending hours each day checking Google Analytics, monitoring your revenue dashboard, and obsessively refreshing your rank tracker won’t get you closer to your goal.
Constructive tasks that compound over time and lead your business in the right direction are where you and your team must focus.
This allows you to realize success as an internal metric before the traditional measures of success become reality.
It can be found in the things you control, like ‘publish one blog post’ instead of ‘earn $20,000 per month.’
Of course, we can’t ignore the outcomes of our existing work.
Sometimes our work isn’t good enough and needs to improve. Maybe our audience expects something different and we should adapt.
Things change in business so we must take a step back for analysis and strategy.
But we shouldn’t spend all our time watching the lagging indicators and waiting for success.
If we do that, it may well never come.
