Competition, Growth and the Red Queen

competition and growth

competition and growth

We must all become believers at the Church of Gross Profit

Tracey launched her business about 4 years ago, and in that time she’s built something quite special. Tracey’s business sells a unique home delivered fresh food solution online for busy professionals who want to have a healthy balanced diet that tastes great as well.

Tracey’s business model is in fact so successful that it attracted not only growth but competition. Entrants copy what she’s been doing so well for the past 4 years. Some of those competitors are trying to compete on price, some are offering delivery to different areas of Sydney and others are offering different payment models.

Tracey is annoyed, she’s worried and she’s determined. Annoyed that others are stealing her ideas, worried that they’ll kidnap her customers and determined to fight the bastards. Good for her, and I’m going to fight right alongside with her and teach those upstarts a lesson they’ll never forget.

Good news and Bad news

As always, there’s good news and bad news: The bad news is that it seems that some of these bastards have actually gained a foothold in Tracey’s market, but the good news is twofold:

  • The bastards are demonstrating that there is room in the market. It’s clear that there are a lot more people who want what Tracey has to offer than she might have thought.
  • The bastards are testing some new ideas that Tracey herself has been considering for a while, but now those ideas are being tested free of charge or risk to Tracey’s business.

Tracey’s knee-jerk temptation is to attack. And the obvious attacking strategy is to meet the competitors head on and offer the same things they do. One of those things revolves around delivery options. Tracey’s products are delivered for a flat fee, by courier, on the day of ordering to a limited number of areas of Sydney. It has always been a core principle of Tracey’s, to keep the whole thing super simple. A flat delivery fee fits that principle. The flat rate means the delivery has to be restricted to certain areas of Sydney, or Tracey can’t maintain her minimum margins.

Same day delivery everywhere

But one of the new upstarts is offering same day delivery everywhere in Sydney and Tracey feels she needs to match the competition — that flexibility.

But I’ve advised her against doing so, for one reason and one reason only:

Buying growth always leads to disaster.

Sure, it would be nice to move into the untapped regions of Sydney, but Tracey would only be able to do so by paying a lot more for her deliveries. She’s costed the various options and her delivery costs to those new areas will increase by about $2 per item. $2 Doesn’t seem like much when the average price per meal delivered is roughly $30. But, the fact is that her current Gross Profit Margin (profit per meal) would reduce by 33%. At the moment, she makes about $6 gross profit per meal. With an increase in courier cost of $2 per meal, she would suddenly only make $4 per meal delivered. Doing that spells disaster, as sure as God made little apples.

Not long ago we updated our breakeven calculations for the business and we worked out that at a certain level of sales, the Gross Margin on each item sold had to be at least $5 to be able to break even. At a Gross Margin of $4 per item, Tracey would need to sell 25% more meals just to break even.

The Red Queen never stops running

It’s what someone recently referred to as The Red Queen Problem.

The Red Queen being one of the Queens in Alice in Wonderland who says:

“My dear, here we must run as fast as we can, just to stay in place. And if you wish to go anywhere you must run twice as fast as that.”

In effect what Tracey would be doing by delivering to new areas at the cost of her minimum Gross Margin is running harder, but standing still. No doubt Tracey would be selling more meals if she offered same day delivery to other areas, but in all likelihood, she’d make less money than she is now, she might even lose money. The profitable areas of her business would be subsidising the unprofitable areas and if there was ever an unsustainable way to grow a business, that’s it.

Growth is irrelevant. I’m not sure who ever made growth such a focus in business, but he (and it’s guaranteed to be a he, btw) should have been strangled at birth. The blind focus on growth that we are told to chase in business is crazy. Successful business owners, business owners that build Great Small Business that are Fun and that stand the test of time are devoted believers at the Church of Gross Margin.

I have no doubt that Tracey’s business will be a Great Small business that stands the test of time. Building Tracey’s business model is much more complicated than it looks and consistently making money in this business is a tough  challenge. I’m sure that some of those new bastards are not making money at the moment and that they’ll fall over soon enough. One or two of them might get established and survive, but it’s clear the market is big enough and they’re going to be driving Tracey to innovate and come up with new solutions and new approaches to doing things and that’s healthy.

But buying customers at the expense of Gross Margin, that’s a disaster… I promise you.

For more resources, and reading on strategies for growing your business follow this link to the first of The 7 Big Questions that all small business owners want answered

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Small Business  


 

Resilience is the Key to Building a Great Business

The one thing you need

resilience

My time at Lifeline and what I learnt about business

I was thinking about resilience the other day, it came up in a conversation somewhere.

I’ve said it before… in fact I sound like a broken record sometimes, but being in small business can be tough. The life of a business owner does not generally go over roses and small and large setbacks are part of the territory. Paraphrasing an old joke:” You can divide the business owners of the world in two groups: those who’ve had a serious setback and those who are about to have one”.

I’ve certainly experienced significant setbacks in my career in business over the last 30 years and most of my clients have as well. I’ve come to believe that the difference between those of us who get to build Fun Businesses that sustain us for years to come and those that don’t is one word:

Resilience

This is the Wikipedia definition of resilience: “Psychological resilience is defined as an individual’s ability to properly adapt to stress and adversity. “

To be a successful small business owner I believe you must live higher up the resilience scale than the average person, because the journey of building a small business is full of traps and snags and rapids; full of stress and adversity. A resilient business owner doesn’t sit around and lick her wounds for too long when she’s hit a snag, because she knows she’ll drown if she does..

jacob ohlson A good example of resilience is a friend of mine Jacob Ohlson. His is the founder of Powernet It and he is building a really great business. Jacob is one of the most resilient people I know. Last night he took the CEO sleep out challenge in Sydney, which is all about raising money for homeless people. As it was, it rained all night and Jacob got soaked and freezing and he would be feeling miserable. But I know he’s hard at work, back in his business today… Jacob is resilient (and you can donate to his appeal here)

So if Resilience is key to building a healthy business, let’s explore where it comes from and how we can get more of it.

My romantic business failure

I think am fairly resilient in business myself, or I certainly believe I have been in the past. I’ve experienced all kinds of setbacks when developing my various businesses in the past 30 years. I remember my first exploration of business in the mid eighties, was an unmitigated disaster. I’d started out a boat repair and maintenance business on Sydney Harbour. It was a truly romantic affair, and I felt that this was what I was put on this earth for. The reality was though, that I truly had no idea what running a business meant or how I should go about it. After a year or so, I’d totally run out of money, I was insolvent and I’d generally made a mess of things. So much for romance. I decided to branch out into house carpentry and building from boats, because it looked like an easier path, but I had bills to pay then and there (we’d bought our first home and there was a mortgage to pay). So I decided to get a taxi license, because I could drive taxis in the evenings and on the weekends while developing the building business. The plan worked and I dug myself out of the hole and survived.

So yes I was resilient and my resilience meant I didn’t crumble and I came back for more.

My circumstances were quite fortunate though in many ways. We’d recently emigrated to Australia from Holland. My wife at the time was Australian, we had a big support group in Sydney and she had a job as a teacher with a solid regular income (and we bought the house for $50,000 which we thought was a fortune at the time … wry smile… )

So how do you find resilience when you are not so fortunate?

Resilience when there is no hope

I have spent a number of years working as a Volunteer Telephone Crisis Counsellor in the past 11 years (at Lifeline in Sydney) and I came across people in much much tougher circumstances than I’ve ever experienced. I’ll never forget this one woman who rang in frequently. The woman was known as ‘M’ at Lifeline. ‘M’ was permanently bedridden and alone. She could not get herself to the toilet so a carer would come in a lot of the day. She was increasingly blind and in permanent overwhelming pain throughout her body and she never slept at all; all she could do was listen to the radio all day and night. And yet, ‘M’ managed to make us counsellors smile sometimes and I remember many conversations  with her in the middle of the night sometimes, where I’d come off the phone with a lump in my throat, thankful for the half hour I spent talking with her. ‘M’ was inspiring and amazing, even though, for her, there was no hope, she would never get better, her life would simply get progressively worse and worse until she’d die one day.

‘M’ was more resilient than anyone I’ve ever met before or since, the kind of resilience I don’t think I could ever possess.

But ‘‘M’ and I did have something in common that has helped both of us find resilience in trying times, and that was that we were able to access support. I’ve had people around me who I trusted and cared about, who believed in me and supported me and bolstered my confidence most of my life. Lifeline gave that to ‘M’ in some small way as well. It’s the reason ‘M’ rang Lifeline most days, she just needed to hear that someone cared about her and that she “was doing alright” and just hearing that every day, combined with what must have been an amazing inner reservoir of strength, allowed her to hang in somehow.

Support team

That’s why I believe it’s so important to create a support team around you when you are developing a business. As I said before, setbacks are part of the journey of developing a business and when the setbacks happen they can knock your confidence and your hope. Having people you care about and especially people you respect as equals in business demonstrating that they believe in you will have an enormous impact in how you deal with the setback and how you get back on your feet to fight the next battle.

As a business coach I often find myself taking the role of chief supporter of my clients when the “s%$t hits the fan”. I am convinced that having me by their side increases their level of resilience. I have seen the evidence of it many times. My most successful clients have taken it even a step further and have put together a small team of trusted advisers and mentors  that they can lean on when required. One of my clients has two coaches, a financial management mentor, another mentor who has been wildly successful in the same industry before him, a human resources adviser and a marketing adviser who he leans on from time to time. All of us support him, bolster his confidence, hold him accountable and generally stand by the sidelines, cheering him on. As a consequence, he is probably one of the most resilient people in small business I know.

To build a Fun Business that sustains you for years to come, you’ll need to be resilient, and the best way I know to make sure you are as resilient as you can be is to make sure you have a bunch of great people around you, who believe in you… I promise you.

 

Fun is All That Matters: A Small Business Masterminds Webinar Podcast

Fun in Business

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Becoming a Sales Machine

sales flexibility

Taking sales seriously will change your life.

Are you spending lots of time doing estimates, quoting jobs, writing proposals,  and not winning the work?

Stress It is just so frustrating isn’t it? It gets you down sometimes… What is your strike rate? 20%? 30%? 50%?

How would you like to win twice as many proposals than you currently are without doing more quotes?

Easy… you say… just drop all my prices by 15% and I’ll win everything, but I’ll be losing money hand over fist…

WRONG

Price comes last

Here are the top 9 success factors for winning quotes and proposals:

  1. The client likes you.
  2. The client trusts you.
  3. The client ‘gets’ what you are passionate about and how that relates to them.
  4. The client has experienced your professionalism.
  5. The client understands what your offer is.
  6. The client knows that other people like you (if others like you, you must be good).
  7. The client understands the benefit they are personally going to get from using you.
  8. The client can picture how good they are going to feel when you’ve completed the work.
  9. Your price is right given all of the previous factors.

Have another look at that list and notice that price is at the bottom. Don’t allow yourself to fall in the trap of thinking that you lose sales because of price… If you lose a sale because of price, you simply haven’t done a good enough job of addressing the other factors. Trust me!

The 3 success factors of Sales…

That leads us to the three basic principles of sales that you must get your head around to become more effective at it:

Firstly, in order to sell your service, you have to, sell yourself before you sell your ‘stuff’.

Secondly, selling is a skill, you can learn about it, you can train in it and you can get better at it.

Finally, sales is a function of business just like operations, marketing and distribution. It requires resources and systemisation to work well.

Point number 1 doesn’t need much explanation; clients must buy into you before they buy into your product. If people don’t like you and don’t trust you they will not buy from you. Enough said I think.

So, let me share a little case history with you about a client of mine called George that illustrates points 2 and 3

George learns about sales as a system

carpenter-builderA few years ago I met George, who is a builder in Sydney with a small team of carpenters and labourers on the payroll. George’s wife Lisa runs the office.

George mainly builds in the $500K to $2Mil range, large renovations and some upmarket new homes.

When I met him, one of the biggest issues George faced is how much time is wasted on preparing tenders for architects. His strike rate was about 20% and each tender was taking him around given 20 and 40 hours of his time, Therefore, George spent some 20 – 30 hours every week of the year to win about 6 to 8 projects.

George felt he was stuck and he was frustrated, because he felt he was missing out on the best years of his young kids’ life.

Coming from my own experience as a builder, I explained to him that the most effective way to get un-stuck was to improve his strike rate. If we could improve his strike rate from 20% to around 1 in 3, the impact on his business and his life would be enormous.

A target is set

So George set himself a two-year target to get his conversion rate to 35%. The first commitment he made was to become just as professional about Sales as he was about every other facet of his business.

We started by carefully designing and implementing a sales system that would run like a machine to manage inquiries, leads prospects and quotes.

George and Lisa invested in a high quality CRM system. Soon they were keeping track of prospects and leads at different stages in their sales cycle. Inquiries through email, phone, website, word of mouth and referrals were all entered, tagged, categorized and appropriately followed up in the system by Lisa.

George also wrote a series of scripts for answering telephone inquiries and follow up calls. And finally George enrolled himself in a 6 month sales training program.

A year later George’s strike rate reached 28%. Then he got the rate down to 36% the year after.  Just as importantly though, now that George is so much more professional in his sales approach, he doesn’t feel the need to negotiate on his prices anymore and his margins have gone up significantly.

George and Lisa are a lot happier these days and so are their kids.

The lessons

The three lessons from George and Lisa are:

Firstly: The only way to do sales well is to take it just as seriously as all the other aspects of your business

Secondly: One of the most effective approaches to making more money, finding more time and having more fun in your business is to improve your sales conversion rate.

Thirdly: To do sales well, think systems and think training.

What do you think? Is it time for you to make a commitment to become professional at sales?

My One-Month Transform Your Sales Program is a short, sharp, fun and intensive 4 week program designed to tackle your sales, in one month, and implement a series of effective and simple strategies that will start to transform your business. It starts with an obligation-free half hour Discovery Session via Skype!

Transform your sales in one month! Book in a FREE Discovery Session with me via Skype.

goal setting and planning

Enough And The Business Growth Myth

Or why it’s time to send Richard Branson back to his island

If you enjoy this article click here to get a copy of one of the “The Ten Truths” books for business owners for free

I’ve had an insight in the last 6 months and I have to make an admission:

BSOne of the pillars and accepted principles of my profession of business coaching, is wrong.

  •  Nonsense
  • Twadlle
  • Complete Rubbish

The principle I refer to is this:

“If your business doesn’t grow, it dies”

Every business coach, guru, mentor, consultant, author, academic and MBA student will tell you that this is a foundation principle of business, capitalism and society at large.

choirI admit that until not too long ago, I repeated the same refrain and was an enthusiastic member of the choir. (More about business growth here as well)

Today, I deeply apologise to everyone I have repeated this refrain to in the past 10 years; because I now realise that the principle sounds good, but is wrong… very wrong.

I am reminded of the quote by American Journalist H.L. Mencken :

For every complex human problem, there is a plausible

solution that is simple, neat, and wrong.

I don’t know who first stated that business must grow and (and by extension, that more growth is better than less growth) and I don’t know in what context, but it’s crap.

And what’s more, it’s dangerous crap and has caused all kinds of damage to business owners, their families, their friends and society.

The idea that business must grow or else it will fail doesn’t exist in isolation from a number of other ideas on which we base the management of our society. The idea is closely related to our celebrity worship culture, the western world’s depression epidemic and other mental health issues, anorexia nervosa in young women and the basic belief in our society that nothing is ever enough.

Never enough

fistBecause in 2013, we are never:

  • Thin enough
  • Rich enough
  • Good enough parents
  • Educated enough
  • Successful enough
  • Beautiful enough
  • Clever enough

And we are definitely never good enough as business owners

The measure of success for business owners is whether or not we sell our business for $100Mil or more.

Or more specifically, the role models and shining light examples we are told we must aspire to as business owners are people such as Richard Branson, Steve Jobs, or Larry Page, people who started a business and ended up billionaires. And don’t get me wrong I think they are amazing people, no doubt about it, but I know many other people who I find just as amazing  and just as inspiring and they will never be billionaires, and probably not even multi-millionaires (just owning a house in a major city in Australia already qualifies you as a millionaire).

Let me explain how I have come to the conclusion that business doesn’t actually need to grow.

My favourite client

plumberI have a client who is a plumber and he has three vans on the road and employs 3 people. He might end up employing one or two more people and have one or two more vans on the road in the next few years, but that’s probably where he will stop growing. He may continue to operate his plumbing business for the next 20-30 years and then, possibly, one of his kids might take it over, or maybe one of his employees might.

But in any case, someone will probably run the same business more or less in the same form and the same size for the bulk of this century and beyond.

His business isn’t dying, far from it.

His business is providing him and his family and his employees and their families a comfortable, meaningful, rewarding life. A life that allows him to feel proud of himself, a life that allows him to look after the people he cares about and do the stuff he wants to do.

The little voice on our shoulders

whisperNow I haven’t talked about this with my client, specifically, but I can guarantee you that there is a small part of him at least, the little voice in his ear, the famous critic on his shoulder (mine is called Ted by the way… what’s yours?) that will be whispering: “You suck as a business owner”; “Obviously you aren’t fit to polish a true entrepreneurs boots, because a proper business owner would by now have built the business up to at least 20 vans and he would have set a big enormous goal to be dominating Sydney and Australia in a few years, with offices everywhere and managers and executives … ready for a lucrative take-over by LendLease or some other conglomerate like that”… “You suck”.

What does your little voice whisper to you in the quiet moments?

We are told that we have to have an abundance mindset and that there are unlimited growth opportunities and unlimited money for all of us. All we have to do is think right and have the right attitude. As long as we have the right entrepreneurial mindset, we can all do as the title of one of Richard Branson’s books suggests: “Screw It, Let’s Do It” and we too shall have an island in the Bahamas.

Allow me to be blunt:

 

You will not have an island in the Bahamas, and nor will I…

island

And you know something? That is perfectly OK (they don’t even have 4G reception on islands in the Bahamas anyway, so who needs it?

 

Daring Greatly

Famous researcher, professor at the university of Houston and author Brene Brown says in her book:  “Daring Greatly, How the Courage to Be Vulnerable Transforms the Way We Live, Love, Parent, and Lead”, that the opposite of Scarcity is not Abundance. Brene Brown makes the point that scarcity and abundance are two sides of the same coin. The opposite of Scarcity is Enough.

And it is.

My client the plumber will get one or two more vans, which will allow him to do a certain kind of work and employ a full time admin assistant and allow him to spend two days a week no longer “on the tools” and then it will probably be “Enough”, for him.

That doesn’t mean everyone goes to sleep… of course not… there are all sorts of things that can be improved and run smoother in his business, there are efficiencies to be gained and his people can get better and develop… the challenges don’t stop, life doesn’t stop, but business growth can stop.

The Abundance Fantasy

When we are told to let go of our scarcity believes and the abundance mindset, we are told a fantasy. The pressure to embrace the Abundance mindset, sets us up to feel bad about ourselves, it sets us up for up for failure and shame.

R bransonThere is only room for one Richard Branson and one Donald Trump (thank God) on this earth and 99.99999999999% of the people on this earth are not going to become billionaires.

Neither you nor I will sell our business for $100mil; this article may end up being read by 10,000 people. It is possible that there might be 1 or 2 people in that group who will sell their business for such an enormous amount of money but the rest of us, all 9,998 of us will simply arrive at the end of our lives and have to find another way to measure how well we’ve done with the 70 years we were given.

The entrepreneurial myth

The entrepreneurial myth, the business growth myth has done us all a lot of damage. We walk around feeling inadequate, guilty and ashamed, because deep down we know that we are not going to be the next Celebrity Entrepreneur.  Venture Capitalists are not going to stake us with a few million dollars, only to cash out a few years later. And so we walk around feeling ashamed.

Stop it…

sticky

Enough is a great place to be.

 

As Brene Brown says in her first TED talk:

…You are enough…

 

Cheers,

Roland Hanekroot

BTW, if you do plan to sell your business for $100mil… Good for you, more power to you… You’re enough too!

Call me if you’d like to explore how I can help you have more FUN in your business. Or come to the next Small Business Masterminds workshop… follow this link

Change — Why It’s Hard and Why We Need It

change

Change,

The Comfort

Zone and

The Void

 

 

If you want something you’ve never had, you’ve got to be someone you’ve never been.

Your business is what it is today, because of who you are today.

That means that if your business isn’t yet the long-term sustainable, fun business you’d like it to be, I can assure you of one thing… You have to change.

Change is exciting
Change is fun

And

Change is hard

Story…

Let me tell you a story about myself:

The story illustrates how challenging it can be for business owners to make the changes we have to make to achieve the success we seek.

Some years ago I came to the conclusion that my business (business coaching) wasn’t working and that I was stuck.

I did a lot of soul searching because of the deeply held belief I mentioned before, that your business is what it is because of who you are today. you go first

And so I understood that there was something about who I was being, that was holding my business back.

Confusion

It confused the hell out of me, because I felt so confident and clear, that what I was offering to business owners was a highly effective and valuable and I also felt comfortable that my fee structure was about right for what I offered.

I spent a lot of time working through this confusion and these questions on my own and with my coach at the time and one day (in bed, in the middle of the night) I suddenly understood that: “Vincent has got to go”… Vincent being Vincent van Gogh, the famous struggling Dutch artist.

True Art is not commercial

You see, I’d realised that I had developed a belief and a self-image that was holding me and therefore the business back. The belief was this: True Art, True Beauty is born from struggle. True Art and True Beauty can only be created by struggling artists, because the meaning of life is about struggle… and artists who are commercially successful only produce commercial rubbish… never truly meaningful Art (with a capital “A”).

I had really taken this belief on myself over the years and I considered myself a struggling artist, creating True Art in my work, but without commercial success. I realised that my self-belief and self-image shone through in all my interactions with prospective clients and in how I presented myself. My belief about “who I was being” sabotaged my efforts to turn my business coaching business into a success.

Vincent has to go

vincentAnd when I realised this, I decided that Vincent had to go.

Easier said than done though… Vincent had been a part of me, probably from my early adolescence and now when about to turn 50, Vincent and I were not easily separated. Getting rid of Vincent felt like having to get rid of a part of myself.

I wrestled with how to go about removing Vincent from my life and finally realised that I couldn’t just dump him, instead I needed to build a new self-belief and above all a new self-image.

And I did

This is not the place to go into the detail of how I started creating my new image but I did. The image I settled on and started building was that of a riverboat captain. I take people on journeys after all and river journeys are a wonderful analogy for the work I do with my clients.

captainAnd slowly but surely I started to see myself as the captain… and slowly but surely Vincent receded in the background… and slowly but surely my business became successful.

The moral of the story…

As I said before, your business is what it is because of who you are.

That means that if you want your business to be something else… you need to be something else first.

You simply can’t develop and grow your business in isolation from yourself. Building a healthy sustainable fun business requires you to step outside your comfort zone… and stay there.

When you step outside your comfort zone is enter the void… and the void might sound like a bleak and scary place, but it is the Zone of Endless Possibility and the place where all change is created. (I will talk about the void in a future article)

Where is the comfort zone?

zoneThat begs one last question though… Where is that famous comfort zone and how do you step out of it into the void? Obviously it would be great if there was a line drawn on the floor with the words “comfort zone” on one side, and “void” on the other so you could simply step across the line… Let me know if you find one of those lines, it would make things so much easier.

In the absence of such a neat line, below are the 3 steps, I’ve found in many years of coaching, will not fail to drag you straight across into the void and keep you there:

  1. Set a big goal… a Goal that really stretches you and inspires you and scares the living day-lights out of you all at the same time.
  2. Decide and commit to a deadline for achievement of the Goal, within a visible timeframe (6 months to a year works well in my experience)
  3. Get someone else involved to hold you accountable to the achievement of the Goal and the deadline.

Accountability

The process of committing to something outside of your comfort zone, with a hard deadline and getting someone else to hold you accountable, drives you out of your comfort zone relentlessly and will confront you with the changes you have to make.

As it happens, this is what I do. I am passionate about making it safe for business owners to step out of their comfort zone and stay there.

Because that is how we build successful sustainable fun businesses (And I think even Vincent would agree with that in hindsight)

Cheers,

Roland Hanekroot

Call me if you’d like to explore how I can help you have more FUN in your business. Or come to the next Small Business Masterminds workshop… follow this link to find out more and register… 8 August, our topic is staff… how to get our staff to perform miracles

Further reading:

More about Personal Development and Leadership here

Business Plans that work

A business without a Business Plan

achieves everything in it!

Yet, why do they have so little impact?

We all know the mantra: If you want to have a successful business, you need to have a Business Plan.

A truer word has n’er been spoken, yet does that mean that a business with a “Plan” will by default be successful?

All cows eat grass. This animal eats grass…

ergo it must be a cow!

No, obviously not. Most business plans don’t have much of an impact on the success of the business because nobody in the business feels the “Plan” has anything to do with “what gets them out of bed in the morning”. It is just one of those things that you “ought” to have, all the books say so!

You probably have a “Plan”. It might be based on a “Business Plan Template” you found. You filled in the blanks and fiddled with it a bit. It makes the bank happy. It looks great, it feels good in your hands, and when you finished it, you felt that warm and fuzzy feeling we often mistake for business achievement in the absence of more solid evidence. But when was the last time you even looked at the thing?

First things first

Let’s start at the beginning: Why is it again that we even need a “Business Plan”?

The purpose of creating and having a business plan is twofold:

  • To spell out exactly where the business is headed and how it will get there.
  • To have a fixed set of criteria to “test” every decision in the business against.

If your Business Plan meets both of those criteria, wholly, you can be sure it won’t be kept in the bottom of a drawer. It will sit on top of your desk; it will be dog-eared, and smudged; it will have coffee stains, scribbles and doodles all over it. You will look at it every day and so will everyone else who has anything to do with it.

Business Plans that live

So how do you create a “Plan” that will be so alive?

There are 6 key criteria that a Business Plan must meet for it to truly add to the success of the business:

  1. It must be a “live” document and be kept “live” by the people directly affected by it, today.
  2. It must have been created by the people directly affected by it, at the time of its creation.
  3. It must be created in ways and in terms that are meaningful to the people who have created it and who maintain it.
  4. It must be based on the “Guiding Principles” of the business.
  5. The “Guiding Principles” in turn must flow from the “Mission” or “Purpose” of the business.
  6. Finally the “Purpose” of the business must be a clear expression of the “Values” and “Aims” of the people who ARE the business.

As you can see, this means that before you even start to think about putting a “Business Plan” together, you need to focus inwardly, individually or as a team. You need to get very clear about what “gets you out of bed in the morning”, what the purpose of being in business is at all and how you decide what to occupy yourself with in this business.

Personal Values

A good way to start this process is to do an exercise to determine what your top personal values are. There are a lot of tools available to help you with that process. One of them, a personal values checklist is available on this site on the downloads page. Once you are really clear about your personal values, the values that you want your life to be about, right now, it is time to think about the “Purpose” of your business, and how that purpose or mission connects with your personal values.

Research all over the world clearly shows that a business “Purpose”, “Mission” or “Vision” that is solidly grounded on your own personal values is an absolute indicator of the success of your business. So: WHAT are you in Business for? What is THAT all about? It may be about money, but often it is about so much more than money: What will you get from having a successful business? What will that give you? How will you know that your business is successful, and what difference will that make to you? Or your family? Or your customers?

Guiding Principles

Then it is time for step 3. This is where the actual creation of a purposeful and impactful Business Plan starts. The “Guiding Principles” of your business are the principles that every decision and every action in the business is guided by. It will be the litmus test for everything you do.

If a decision you, or someone else in your business, wants to make conflicts with the “Guiding Principles” there are only two options:

  1. Don’t make the decision
  2. Amend the Guiding Principles

There is no alternative. Putting a set of Guiding principles in place will be one of the most powerful things you will ever do for your business, and once you have them in place they will form page 1 of your Business Plan.

Here are some random samples of “Guiding Principles” I helped clients design in the last year:

  • Our behaviours are: Open, Trusting, Professional and Safe
  • All our processes add value
  • We leave the environment better than we found it
  • We deliver more than expected
  • We deliver when we say we do.
  • Shareholder value is increased every year
  • All our employees will have a stake in the business
  • There is life outside the business for our people
  • We own our competitive advantages
  • We are a positive force in the communities we are a part of.

In future articles I will write about the next steps in the process to create Business Plans that make a difference.

Further reading:
  • “It is not the Big that eat the Small, it is the Fast that eat the Slow” by Jason Jennings and Laurence Haughton
  • “The E-Myth revisited” and “E-Myth mastery” by Michael Gerber
  • “The one-minute-manager series” By Ken Blanchard et al.
  • “First Break all the rules “ by Marcus Buckingham and Curt Coffman
  • “The Fish series” by Stephen C Lundin et al
  • “Maverick, the success story behind the worlds most unusual workplace” By Ricardo Semmler

Top 10 Secrets of Sustainable Small Business Growth

The – absolute – undeniable – must have – rockbottom – can’t do without – believe it or not …

Top-10 Secrets of:

Sustainable Small Business Growth

In good times or bad

When your favorite small business coach started devising this article and blog i had 10 secrets in mind, but as I was writing it grew to 21 secrets and maybe it will even grow some more, so now I will be delivering them to you in installment over the next few weeks… here are the first 7. (More about business growth strategies here as well)

PLEASE!: Take a few minutes and let them sink in. If you are not sure about any of them, drop me a line or call me or argue with me or shout me a coffee and pick my brain, but whatever you do, don’t just glance over them and put them aside!

PLEASE!: Do something with each and every one of these secrets. This is important stuff… believe me, I know what I am talking about here.

Follow these secrets and the ones I will reveal over the coming weeks andtrue sustainable small business growth beckons sure as night follows day…. I personally guarantee it (and to prove it I will even Twitterabout it so…it must be true!)

Here they are:

  1. Know what you are in this business for… and check in with yourself at least monthly that you are actually heading there.
  2. Decide what you are really good at, focus on it, get better at it, strive to be the best at it and do it again and again and again. (And please stop doing what you are not so good at!)
  3. State with absolute clarity to all and sundry what the truly inspiring thing is that your business is about (e.g. “We make the worlds most beautiful tables” or “Our plumbing installations are just plain sexy” or “We provide the best accountancy advice money can buy” or “Every customer smiles when they leave our shop” or “Our dresses will put you in the centre of the room”)
  4. Ask yourself: Are we a “dream come true” for your clients?
  5. Who exactly, precisely are those clients… ? and then become known to those specific clients as a true specialist and expert
  6. What precisely is the benefit those clients get from doing business with me?
  7. State with absolute clarity and conviction precisely what your business stands for (e.g. “Our customers are in safe hands”, “Never do anything to decrease our sense of pride”, “we are never more than 5 minutes late”, “Our installations are thoroughly tested for 24 hours, before handover”) publicise it widely and allow everyone to keep you and your staff acountable to that.

Those were the first 7 secrets…. in about a week the next bunch will be revealed…. in the mean time PLEASE…do something with these… and if you want to talk to me or email about them I’d love to hear…. I am sure that we can have some great discussions about this stuff and I am happy to explain to you in more depth what the meaning of the secrets is…..but whatever you do: Don’t just put it aside to do something with at some other time… Do Something Different…

Hope to hear from you soon.

Roland Hanekroot
New Perspectives Business Coaching
“Take Control of your Business and Your Life”

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