I spent a decade bungling around as a part-time entrepreneur starting businesses and “just doing it,” trying to work more hours to ensure success. In the past decade, I decided to bring in skills from other areas of life such as strategy, process improvement, measurement and so on to organize my efforts around goals and raise my chances of success.
Once I put this framework together, a few things happened. I became more focused on my goals and knew where I was in relationship to them. I focused my resources on areas that were important to my goals. I didn’t feel the need to constantly reevaluate what I was doing because I knew that I had regularly scheduled “check-ups.” I also ditched “shiny object syndrome” because I had a defined set of priorities that fit into something bigger. I didn’t need to reach out at every idea that floated past and give it a try — if it didn’t fit what I was trying to do in a rational way — it didn’t get in.
I think the biggest benefit came from switching from planning to preparation. In the military, we created plans for all sorts of possible conflicts. If peace failed, we would break out the plan for that conflict and execute it. But, the plans were basically set up to provide initial guidance on what and who would move where given the resources on hand. Once in place, general outcomes were provided, but the how-to was left up to the people in place. The further away from the start, the less detail was provided. This acknowledged the lack of a crystal ball and meant you could pick the first few moves, but then it would evolve in direction impossible to predict.
Translated into business, this meant I moved away from business plans and adopted a framework based around a business model. I quit worrying about documents that were obsolete before they were half-written and turned my attention to creating a business model that emphasized delivering and capturing value.
In turn, this freed me to become as skilled as possible in the areas critical to my business success. It also meant that I become obsessed with understanding my customers and their needs, emphasized the importance of being nimble and seizing opportunities and the value of being an expert or hiring experts in areas where I was weak.
In the best of Roman or Japanese traditions, I’ve cherry-picked parts of my framework from others (business models) and blended them with my own thoughts to make a whole that has worked wonders for my businesses and those of my clients.
I’m the first to admit it’s not a solution for every business. Tech start ups or disruptive innovators will want to add customer development and lean startup components along with agile development and pivoting. Nor, does it cover flaws such as products that suck (Edsel, New Coke) or service providers that can’t/won’t sell or are trolls that can’t get along with clients.
But, with a tip of the hat to Vilfredo Pareto, the 20 percent of the tools and techniques that I’ve assembled into my framework will work for 80 percent of small businesses.
Simplicity. I used to enjoy building computers, learning millions of details about aviation (I was a pilot in a former life), and so on. But, in the dotage of my middle age, I prefer it when things are simple and just work. With that in mind, my framework has only four components and each of them is as straight-forward as possible.
- Strategy and Goals — hat tip to Sun Tzu, Stephen Bungay, the USMC and Duke University
- Business Model — hat tip to Alex Osterwalder, Yves Pigneur, Steve Blank, Brant Cooper, Eric Ries and Michael Port
- Marketing — my partners at Centripetal Network Consulting (Chris Windley and Chris Butler) and I developed the Digital Marketing Ecosystem and Lead Generation Engine
- Measurement — measurement is all around us — NASCAR lap speeds, flight times, taxes, TV viewership, and so on. Your business should measure what is important to its success.
Strategy and Goals
I’ve spent a considerable amount of time as a senior strategy consultant to the leadership of multi-billion dollar corporations as well as the Executive Office of the President (at the White House). What those organizations have in common are cumbersome methods of creating strategy with lots of pretty charts, baffling matrixes and plenty of milestones.
The diagram above is my entire strategy planning process. Simple. Direct. Focused on results. Makes it more likely that you’ll get the results you’re looking for. Nothing extra. No wasted time or resources.
This process is simple and doesn’t require a lot of time, but the returns are huge. Your company (even if it’s just you) stays focused and you move toward your goals and know what your progress is.
The first two steps flow together naturally. First you define your strategic themes, for instance, launch several new products, open a new market, become the leader in your field for a particular area, triple revenue, double profit margin and so on.
You then take these high-level themes and create from one to three goals that support the themes. Use SMART goals: specific, measurable, attainable, relevant and time-bound. These goals move the theory to the action level and give you something to measure against, budget for, organize your business around and so on.
Your goals then become the foundation of your plans. By plan, I mean a series of steps, times, and resources that you need to consider as you move toward your goals. These work well if you consider them by quarters, instead of longer or shorter periods.
Then you execute and measure.
Quarterly you take time to review your strategy, goals and examine your progress against where you want to be. You adjust and flow through the cycle again.
Annually your review your themes and update, add or remove as needed.
In many ways, this process is like flying a plane on a trip. You plan the mission out, execute and review progress. But, the success isn’t from a great plan, but a proper plan supported by years of training. Preparation ensures success, planning helps. Your business is the same. Once you go through these four steps and internalize them, getting constantly better at them, your success will become more and more reliable.
Why bother with a business model? All you have to do in order to have a business is have something to sell, so why the fuss? For me, it’s not only critical to have a business model, but to commit to running your business in light of your business model.
Your business model breaks your business down into it’s nine key components and subordinates everything to delivering value to your customers. Notice it covers nine KEY components. The elements of your business most important to delivering value to your customers are defined in relationship to each other.
With your model defined, you are able to focus your energy where it delivers the most results. You’ll also avoid the trap of taking unnecessary actions, having features your customers don’t value, and going in multiple directions at once.
Your model helps focus you and your business and makes your goals attainable through the structure of value-oriented actions.
You define what problems you solve or what compelling desires you help your customers reach as well as clearly defining your market segments and the circumstances that they find themselves in.
Maintaining engagement and communication with your prospects and customers and figuring out which channels to deliver your services through flows from the first two segments.
One the other side (left) of the model you define what partnerships, resources, and activities are necessary to create and deliver value.
On the bottom, under the respective halves are the cost and revenue segments, which help you understand the profitability and scalability of your business.
Combined, these nine elements create a laser-like focus on the things you need to do to deliver value and in return, capture value. Your model makes you more nimble as well and enables you to make changes as necessary to stay profitable.
Without revenue your business is a hobby. Revenue requires sales. Sales are fed by marketing. Many entrepreneurs have trouble with marketing and sales (I’ve written about those problems here…) They are two skills that need to be learned and practiced, but finding clear information is challenging.
There are some fundamentals that need to be in place before your marketing can lead to the revenue that will enable you to reach your goals.
Features and Benefits. It’s common for business owners to talk about the benefits of their services, after all they’ve typically put a lot of effort and expertise into creating them! On the other hand, customers want to buy the benefits and outcomes!
Features describe your service, benefits are what your customers receive by purchasing it.
Think of it this way: Features…so that…benefits. You can put a differentiator at the end too. For example — Our accounting services use a secure cloud to store your information so you can get to it anytime you want (and you don’t have to worry about changing programs in the future).
Pain Points and Compelling Desires. Customers only buy two things, your marketing much speak to one or both of them. (I’ve written more about this here — click here to read.)
The benefit of your service has to solve a problems for your customer and almost every problem can be categorized as a pain point or a compelling desire. Your clients want to move closer to a goal or they want to relive pain. Your messaging and marketing must reflect this.
Circumstances. You want to understand your target market and your ideal customers as well as possible. But, once I have that understanding, I consider the circumstances that customers find themselves in. I find it easier to market to my ideal customers by discussing the benefits of my service in solving their problems in a particular circumstance.
Digital Marketing. The Internet is a brilliant tool for small business owners to use for marketing. You can reach your ideal customers worldwide or across town, build a relationship and generate a sale all online.
Unlike traditional marketing or digital marketing from a few years ago, customers have a more indirect path to a purchase. The sales funnel analogy, where you get as many prospects into the “funnel” and a small percentage will purchase.
Now, customers will be considering a host of options from multiple companies and if your marketing and messaging doesn’t resonate and you haven’t built trust, you won’t make many sales.
McKinsey calls the new process the Customer Decision Journey and your digital marketing needs to recognize where customers are on the path and give them the information they need to make a decision which will meet their needs — ideally via a solution from your business.
I break digital marketing down into three steps: get visitors, convert them to leads and sell. These steps marry up with the Customer Decision Journey via our Lead Generation Engine (I’ve written about it here, click to read.)
I use three sources of traffic; social media, organic search and paid ads. Of these, social media is by far the most valuable. Social media lets you build a relationship, understand your clients, deliver tremendous value to give a sense of what your paid services are like and so on. It also gives you the chance to influencer the influencers, the people who your customers listen to when ready to purchase.
Digital marketing, especially social media, is more like a marriage than speed dating. You are building a long-term relationship by delivering value, building trust and listening. If you are pushy or are only focused on you and your business, your results will be stunted.
Why measure? Because, what gets measured gets done.
Each of the three steps above benefits from measurement. Your strategy and goals are tracked for progress, completion and improvement.
Your business model has measurement behind the scenes. Revenue, costs, scale, margin and so on are all measured to understand how healthy your business is and these measures feed into your strategy and goals as well.
Marketing needs measurement to be effective. You need to measure your social media engagement, flow through your lead system, conversion rates, and so on. This measurement will help you understand what is working, what isn’t working and give you ideas to improve your efforts. Without measurement, you will have to make decisions without the full picture and run the risk of over-spending for results or decreased revenue.
I haven’t put much in about measurement, as the measurements you need will depend upon your business and your processes. If it is important to your business, you should probably measure it!
Four simple steps. You can master these without spending years being frustrated by trial and error. If you would like to get a jump start, check out my free report below. Obviously there are many external impacts on your success too, but if you do these four steps well, you will be positioned in the best possible way to succeed.
Michael Nelson ”The Cogent Coach”