Ok, over the past 4 weeks I have laid the foundation for successfully growing your small business and becoming an entrepreneur. So what’s next? Well, you might think understanding each stage of the growth cycle would make sense. On the surface this is a good place to start, but I find most small business owners are mired in the survival stage, or what I call “no man’s land,” so I want to start there. You can get a better idea of what I mean by “stuck in nowhere land” by reading my previous post of the same title. It does a very good job of sharing why small business owners get stuck at the “survival stage” of the growth cycle. To get unstuck you need to understand the goal you must achieve to get to the self-sustainability stage.
To create company systems that will consistently and predicatively produce profitability.If that seems like a big task, it is. But, the objectives are very clearly defined. Just follow the directions provide in the Small Business Growth Matrix! If you’d like a further explanation of where to focus in the survival stage read the post 8 Things You Can Do to Achieve the “Survival” Stage of Small Business Growth. Notice most of the objectives center on getting yourself untangled from the day-to-day business. What I often find isn’t that the systems don’t exist. They’re just not formalized and the owner doesn’t feel comfortable letting go and delegating. Notice the problem here isn’t a business/company factor. The business stuff is easy. Write the process down. Teach someone else to do it. And, turn it over to them from this point forward and monitor it through some form of regular reporting. Easy enough, right? Sure, until you add the emotional attachment many owners have to their business. Often the business is a source of their self-identity! Now making the necessary company changes is not so easy! It has taken decades to master the skill of being able to assist a business owner through this transition. I can tell you having assisted in dozens of cases it can take years to get them to this point. Some owners never make it. Usually this is because they can never get past the business as being their identity. They never seem to define a strong enough personal goal to motivate them to make the personal change. Do you have the have the personal goal that will allow you to get to the other side, or you’ll struggle until it becomes a crisis? Our personal and business goal assessment is a tool I have specifically designed to assist with this process. If you don’t have a powerful enough motivation yet I would highly recommend that you check out this tool. So, if you have the motivation to change personally, and you have the roadmap of what objectives you need to achieve to get there, what else do you need to get started? For those that have made it to the other side of survival, what help you get across the chasm?
small business growth cycle. You also understand that each phase has a specific goal on which you must focus. This week we want to begin looking functionally at what you should do within the survival stage. Because revenue is one of the most critical measures of growth let’s start by looking at sales. First you need to know the goal of the survival stage is:
Consistently achieve owner established profit requirements.With this in mind what should your sales objectives be and what can you do to begin creating sustainability within your sales operation? Notice the emphasis on sustainability here. The small businesses that get stuck in no man’s land get stuck there because they haven’t established growth through the survival stage with an eye toward sustainability. Here are some objectives that will help you move through the survival stage without getting stuck!
Document Everything You DoYou should do this to account for everything that works and everything that does not. This will be important as you begin growing. You will add more sales reps at some point, which means you need to train them. I often find that there is never time when you get to that point. The owner has so many things going on that they can’t get it committed to paper so that it can be shared with others. So, every sales rep ends up going through the same learning over and over. This is not a scalable sales model and slows growth. Document what you do. Then someone can go through your notes. Organize the good stuff. List the things to avoid. Both will accelerate learning with the sales team and your sales growth when the time comes.
Validate your market researchYou didn’t just run out and start selling. You did your research of the market. You looked at what the market wanted and what the competition was doing to come up with your product or service. Sales is where the rubber meets the road. As you begin selling you’ll get real-world feedback to your research and decisions. This is another reason to document. See what assumptions that you made that were right and which ones need to be adjusted. The end result is a better marketing plan and product which will manifest itself in more sales!
Determine Your Conversion RateWe’ve all heard the adage “sales is a numbers game.” This is very true, so you want to pay close attention to how many leads it takes to get a proposal and how many proposals it takes to close a sale. Before you start all of this is just a guess. Now it’s time to determine exactly what the “numbers” are for your business. I wrote a more in-depth post on this titled Is Your Revenue Underperforming if you’d like to get more familiar with the “how to” of sales funnel. You can learn how to set up your sales management to run by the numbers using our training program Selling by the Numbers – Creating Predictability in Your Sales & Marketing.
Learn the objections and develop ways to overcome objectionsTo become an entrepreneur you need to develop a thick skin as people will tell you NO all the time. You will get better with handling these no’s as you begin listening the objections people give you. Over time you know that you’ll begin to hear the same objections over and over again. You will also develop ways to defend your position on many of these objections. I go back to the first action. Document the objections and how you defend your position on each. Again, this helps you transfer your knowledge to others as you bring on more sales reps as your business begins to grow.
Use customers input to improve your pitchWhen you first start selling, you make assumptions on why you think customers will buy. After you begin making sales you have a better source – your customers! So, ask them!!! Most businesses are amazed by what they hear when they ask the question “why do you buy our product or service?” Get enough of the same answers and patterns emerge. If you use this information in your marketing message you’ll begin to find more customers like the best ones that you really want.
Creating Sustainable SalesThe whole point to all of these objectives is USE THE INTANGIBLE RESOURCES you have to improve your business! As you move your business up the growth cycle you will learn more about every aspect of yourself and your business. The better you become at sharing this knowledge the more it becomes part of your corporate knowledge and ultimately culture. Most businesses that don’t find ways to share corporate knowledge find themselves reinventing the wheel over and over again. This stifles growth. You, as the owner, get dragged into things you don’t need to be involved in because nobody else has the knowledge necessary to make decisions or get the work done. Before you know it you’ve reached your limit and your business stagnates because of you! The ideas offered here apply to every part of your business, not just sales. But, sales is where growth starts so sustainability needs to be a part of its focus. For more on this topic I recommend downloading a copy of our eBook How to Get Out From Under Your Business - Creating Sustainable Business Success. If sustainability is critical to success, what have you begun doing begin creating sustainability in your sales function?
A previous post I shared was on what your marketing in the foundation stage needs to strategically focus on. With breakeven systematically achieved, it’s time to focus on profitability which is the goal of the self-sustainability stage of the growth cycle. Marketing’s primary objective here will be to generate leads. Often this is a struggle for small business owners, but it doesn’t have to be. These are the 3 things you need to do to strategically align you marketing with achieving consistent profitability:
- Calculate and monitor your marketing efficiency and effectiveness
- Scale your current marketing plan based your marketing key performance indicators (KPI)
- Add marketing campaigns to your marketing mix to meet any shortfalls
Calculating Your Marketing Efficiency and EffectivenessThese to KPI’s are not foreign to you if you are Tuning Your Revenue Engine. They are 2 of the critical marketing calculations. If you are unsure how to do these calculations check out our training program Calculating Your Revenue Engine’s Horsepower. Marketing efficiency tells you how well your marketing resources are working for you. You want this number to be low. The lower the better as it tells you it is costing you very little to generate leads for your product or service. Marketing effectiveness on the other hand tells you how well your message is targeted. That is, are you saying the right things to the right people to generate leads. If you find your marketing effectiveness is too low then our Developing Your Brand Position will help you hone your target market and message to that market. Managing these two indicators correctly can help you improve profitability. They also provide you with the information you need for the next step in the process.
Scale Your Current Marketing PlanOften small business owners skip this step. As a result they lose out on a lot of extra leads, and end up spending way more than is necessary on their marketing. Based on your KPI’s you should be able to determine how much you need to turn up the spigot to hit your lead goal. Look at the reality of this and your budget to determine if this is realistic or not. I am not advocating only doing what you have been doing, but maximize your return on investment (ROI) here before you begin testing new ideas. If the goal is to be profitable you want to minimize expenses. So, do what you can using what you know works, then move on to trying the new stuff!
Add to Your Marketing MixSales is the name of the game when it comes to business growth. You can’t sell if you’re not generating leads. At some point you will exhaust what your current marketing efforts can generate. As you will add additional campaigns make sure that they are part of an integrated marketing plan that brings in the additional leads you need. But, wait to begin this process until you’ve completed the first two steps. As you add new campaigns you will test and monitor as necessary. More often than not your marketing efficiency and effectiveness will be worse than your other efforts. This is why I recommend waiting to move into this realm, and do so slowly and cautiously. I frequently find small business owners move into new marketing efforts and slide back into the foundation stage as a result. They can’t figure out why. But, when we check their marketing KPI’s it is clear that they are generating leads less efficiently as they were. This means it’s costing more to get the business. More expense means less profit. So, move carefully into this aspect of the self-sustainability stage and make sure you can measure it as you do. For those of you that find yourselves at this growth stage join us to learn how to begin applying Tuning Your Revenue Engine to your business. Just click the button below to register for our next scheduled Masterclass.
Consistent profitability is the goal of the survival stage. So, your operational focus needs to be increasing efficiency and productivity. If you can do what you do faster, you can improve cash flow which in turn helps profitability. But, that means you already know exactly what you are doing so you can refine and fine tune! This is one of the reasons that the 4 areas of operational focus during the foundation stage I discussed in the previous post are so important. If you don’t already have a standard method that assures quality and customer services systems to deal with exceptions it becomes nearly impossible to fine tune your operational focus. Frequently I find small businesses stuck here trying to understand how to grow their business. Part of their struggle is the inability to scale to meet the need with growing sales. They spend so much time trying to solve quality issues, or finding the right production resources that they stay stuck in “nowhere land.” If you haven’t established set protocols for your operational focus then your business growth stops until your operation catches up. By having operating procedures that are followed you…If you remember from the tuning your revenue engine model, you recognize the benefits here. The purpose of the model is to help you identify your chokepoints so you can open them and increase throughput. This in-turn increases cash flow which is always has good results. So returning to last week, where many people believe that those objectives of operational focus are too early in the growth process. If you wait, you stall the survival stage. As a result many never find their way out and are stuck here for 10, 15, 20 years or more. Now, don’t get me wrong, your business is profitable here. But, it requires your full attention if you want it to continue to be profitable. What I am advocating is a proactive approach that allows you to have continued growth while build a self-sustaining business. Our eBook “How to Get Out from Under Your Business” will provide you a more in-depth view of creating sustainability in your company. So, don’t delay getting things structured in operation. Start this from day 1. Then when you get to the survival stage you can get operational focus on tuning your revenue engine to increase efficiency and improve cash flow. If you need more help in this area I would recommend that you check out the business solutions section of our website.
- Know what to expect based on past performance
- Can rapidly train new resources to add needed capacity
- Begin refining the system to do things faster and more cost effectively.
In a previous post titled Getting Beyond the “Survival Stage” of Growth in Your Business, I touched on the process by which you begin building systems which your business can operate on its own. Here I want to focus on how you actually do it. First, the process is pretty simple:
- Do It
- Document It
- Test It
- Train It
- Delegate It
Do ItThis is the easiest step. Once you’ve completed something enough times you’ve settled on a process that works. You’ve worked out the kinks. You know the objections. You know the gotchas. This is usually where most people stop. I see this all the time. When I ask, the owner will tell me “nobody can do it except me!” That’s because you stopped at step 1 in the process!
Document ItThis means writing down what you do. It’s a good place for a checklist. I recommend a workflow diagram as well as many people learn better by seeing a visual picture. I fall into this category. I can read a page over and over and not get it. Show me a picture and I can do it like I was doing it for years! Here is an example of where someone thinks they’ve got it documented and they don’t. A packing slip shows someone what needs to be shipped right? It shows what someone ordered. The warehouse person just needs to read the packing slip and put everything in a box right. Wrong!!! How should the box be filled? What needs to be put in the box to assure that the content doesn’t get damaged? What about labeling the box, how is it done correctly so that it makes where it’s supposed to go? If this other stuff is not part of the checklist/instructions you are assuming that everyone has the same knowledge as you. If they don’t who knows how things will turn out!
Test ItThis step frequently gets skipped. Just because it’s written down doesn’t mean it works. Testing it makes sure someone can read the instructions and get the desire outcome by doing the steps. As many years as I have been doing this I still get caught. I’ll write a procedure and nobody can understand what I meant in step 4. When you ask people are usually willing to tell you what confused them. Correct it and move on.
Train ItTraining seems trivial in many cases, but you’ll get better results if you do. It’s not just about teaching someone how to do something. It’s about connecting with the person. Showing them that what they do is important enough to take time to work with them. You also learn a lot about a person while working with them. You get to know their learning style. How they process information. You may also get to know what other talents they have that you didn’t even know they had. This could prove advantageous later on, but if you don’t take the time you’ll never know!
Delegate ItThis is ultimately where every owner needs to get – delegation!!! It is a skill that is lacking in many small business owners. If you’ve never been a manager in a big company you may never have had to delegate before. But, ultimately you will need to delegate everything you do in your business. If you don’t you’ll always be tied to it! This is one of those areas where we frequently get involved with owners. Often it’s not the mechanics of the process the gets them stuck. It is their mental state – the inability to let go! It’s not hard to understand why. Their business is like a child that they have grown themselves. It’s hard for a parent to let their child wander off on their own!!! If have struggled with this, share your story of how you overcame the challenge. If you are unsure of where to go next, contact me. We deal with this issue all the time and we’ve developed some powerful tools to assist you in your transition.
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