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.
Business Growth Simplified business philosophy! It is the focus of everything we do. That means we...
Assist small business owners in growing a self-sustaining business.But, what does a self-sustaining business really look like, and how do you know that you’ve created one? The test for a self-sustaining business is pretty easy.
Can you step away from your business today and it will continue to generate a level of revenue and profitability that does not your impact lifestyle or that of your employees?If the answer is YES, then you have created a self-sustaining business. If the answer is NO, then you are not there yet. You are "stuck in nowhere land.” You may be profitable, but your business needs you working in it in order to create the profit!
A Self-Sustaining Business and the Business Growth CycleIf you’ve read my past post on being stuck in “nowhere land” then you already know that we’re talking about the Survival Stage of growth cycle. The survival stage is most likely where you're starting from, but, what does your destination be look like? That would be the Self-Sustainability Stage of the growth cycle.
Why Aren’t More Business Self-Sustaining?The main problem is the things that most people usually use to define business success, good revenue, a solid customer-base, a steady stream of business, and, most of all, good profit, are characteristics of the survival stage. If you had all those things, wouldn’t you think that you were successful? Of course you would. I would say you were successful. However, the success isn’t business success. It’s personal success!!!
What Does a Self-Sustaining Business Look Like?Business success comes with creating a self-sustaining business! So, what does a self-sustainability stage business look like? A self-sustaining business will look very much like a survival stage business. It has good revenue, solid customer-base, steady stream of business and profits, but these things are NOT dependent on the owner. All these things happen because the team has created business systems. Systems allow you to lose key people and add people with little to no impact to the business. Does that sound good you?
Creating a Self-Sustaining Business Increases Business ValueAsk any business broker or trusted adviser involved in selling a business and they’ll tell you business self-sustainability is the #1 thing true investors look for in a business! So, if you want to sell your business or your exit strategy includes sale of your business business self-sustainability should be a goal.This is a big jump for a lot of business owners! But, it is critical if you ever want to have business success and a self-sustaining business. The hardest thing for most small business owners is finding their successor. Handing over the reins to someone else is hard. Especially if you’ve spent a large part of your years building it, but letting go is a necessity if you ever want to sell or step away from your business.
A Self-Sustaining Business Can Be SmallerAnother aspect is that your business may not need to be as big as you think in order to take on this form. Most business owners are amaze to find how big their business needs to at a self-sustaining level. You can calculate the size your business needs to be by reading the post titled How Big Do You Need to Grow Your Business For Self-Sustainability? There is a downloadable form there too that will help you calculate it for your business. So, how do you begin making your business self-sustaining? A good question. You do it by applying our SPARC Business Growth Framework to your business. Just sign up for our DIY Membership and follow the SPARC Roadmap. So there you have it. An simple way to retire from work and live the life you want, and it can be done in 3- 5 years from when you start the business! So, what's holding you back?
I meet small business owners all the time that live this lifestyle. The problem frequently is they don’t realize how close their supposed dream is to a tragic nightmare because what they believe is business success is really only business survival! Here’s what I mean. Many small business owners think because their small business is profitable that they are successful. If you look at the stages of business growth from my previous post At What Stage is Your Small Business Growth? you'll see profitability only places you in the “survival stage”. It is sustainability and/or growth that put you into the true business self-sustainability stage! Too often an owner’s presence is required in order for profitability to be maintained. If the owner takes an extended leave of absence the business’ profitability suffers as a result. This means success is tied to the owner NOT the business! So what? You may say. But, this scenario creates enormous risk for many more people than most owners would care to admit! The owner’s family is at risk, as the liabilities associated with the business may be more than they can financially shoulder if the owner died unexpectedly. The employees’ jobs and livelihood are at risk as without the owner the company ceases to exist. Vendors and customers that rely on the company’s products or services are also at risk. All of this is tied to one person – the owner. You tell me, does having all this risk tied to one person present a problem? So how do you mitigate this risk? By transferring it from the owner and spreading it around within the business? You do this by creating business systems, which is a major objective of the small business growth model self-sustainability stage. Establishing business systems or procedures is not usually a skill the average person possesses. So, small business owners usually get stuck in nowhere land and struggle between survival and success as a result. A big benefit of making this transition is increased value to the company. Systems that create consistent cash flow and profitability for a business are key motivators to real business investors. The ability of your business to demonstrate it can operate without you makes it very attractive to buyers and investors. Making this transition improves your ability to exit your business and maximizes your the return on investment - your business. In fact, DE, Inc. has a FREE eBook that can help you understand what to do to get out from under your business. DE, Inc. gets involved with clients when they are thinking of exiting because they have not set up the proper systems to allow their business to function without them. The reality slaps them in the face when they begin the process and realize their company is worth far less than they thought it is worth because cash flow and profitability are still heavily dependent on their efforts. Few buyers or investors will look seriously at a business built in this manner. Many of the tools on our website help you begin the transition. Do you know a business owner stuck in nowhere land? Share this post with them. They will thank you for getting them on the road toward achieving real business success. How have you seen others or you yourself dealt with this problem? Share your story so that others can benefit!