How To Keep Track Of Money In Your Business

When was the last time you really looked at your finances? It’s tax season right now so I’m sure you’ve been a little extra sensitive about where your money is coming from and where it’s going but, checking your online statements from the bank or credit processing company does not count. 

Better question – are you still on pace to make/earn/generate whatever income you quoted for yourself in those initial projections in <insert time of start here>? 

Are you tracking everything or is it more of a check book balance ballet? The checkbook balance ballet is a display of grace, creativity and checkbook ninja’ing that makes you proud that you made it to the end of another month, quarter or even week.  

Last question I promise, do you actually understand how QuickBooks works or are you just winging it? I would rather hear that you are keeping track of expenses in a raw unedited list of an Excel file instead of winging it through QuickBooks. 

One of my favorite things to hear about a business’ finances is when I hear owners and entrepreneurs tell me they are too busy to worry about the minutiae details of the finances and that as long as there is cash in the register they are doing OK. 

Those individuals couldn’t be any more wrong. 

This post is aimed at being your businesses minimum viable finance fundamentals crash course and it is going to teach you how to organize and what to look for in your Income Statements (Profit/Loss) and your Statements of Cash Flows. These steps and tips will help you plan better so that you are spending better (read: more efficiently). It’s also a good idea to know when your endeavor is hemorrhaging resources so that you can do some entrepreneurial triage and get yourself back on track. 

Cash Flow Statement  

A Cash Flow Statement (CFS) measures the amount of cash and cash equivalents that are coming in and going out of your business. A CFS literally follows the money. No, your bank account statements, check register, or receipt tapes are not CFS’s. All the information that those sources and sources like that provide should be housed in one easy to find and easy to read place. Remember it’s all liquid resources, no Accounts Receivable or Accounts Payable here – just cold hard cash (flow). 

Here’s what cash flow will look like. First it starts with your cash on hand for the period you are measuring like days, weeks, months, quarters, etc. Then you should break it out into three big sections. Cash flows from operations, finance activity, and asset activities. Within each one of those sections you will be listing the cash-ins then cash-outs and a subtotal for each section. (Positive cash flow implies more cash in than cash out which is a good thing most of the time.)  Lastly you tally the three sections add in your beginning of period cash and what you are left with is your cash at the end of the period all nice and tidy right?! Not always. Now that you have an idea of what the statement will look like let’s break out those sections. 

Operations

This is the cash that comes in or goes out that is directly related to the core business operations. The biggest cash-in you will probably encounter is the income/revenue received from sales or services offered. After that common cash-outs will be stuff like: rent, utilities, payroll, and inventory. If the expenditure has anything to do with the core business operation and it was paid in cash it will be categorized under operations. 

Asset Activity (Economic Investment)

This is the cash flow activity surrounding bigger ticket items. These are things that would be categorized as plant, property or equipment. Let’s take a look at an example. Say you sold an old delivery van so that you could buy a new oven for your bakery. It would be a cash-in under Asset Activity for the sale of the delivery van and a cash-out for the purchase of the oven. If those were the only two transactions that period and you had cash left over you would have a positive cash balance in this section. 

Lastly is Finance Activity

This is the cash activity that relates to how you are using your money. If you took out a loan and have to make payments every month. That would be a cash-out. If you are an S-Corp or an LLC and you pay dividends or make disbursements to the shareholders that is a cash-out.  If you issued any stock or sold any bonds to raise money then those activities would be cash-ins. 

The goal for the CFS is to stack the information from period to period next to each other. You want to be able to look for trends, patterns, or things that are out of the ordinary. This will be able to help you find spots where you could potentially save money or give insight on where your money is going every month. One of the most popular things I hear from entrepreneurs is that they feel like they pour huge sums of money into their businesses and then look around and are unable to fathom where that money went. Your CFS will show you exactly where all that money went. 

Profit and Loss Statement/Income Statement  

An Income Statement or Profit and Loss Statement (P/L) is a financial statement that outlines your business’ revenue and measures it against your expenses. The goal is to find out how profitable your business is for that period and the periods to follow. It’s a crucial planning tool because it shows you exactly what your business is doing and whether or not you are sticking to the budgets you started your entrepreneurial adventure with. The P/L can also help you keep tabs on things like rates of product returns, and making sure that your costs to bring your product or service to market don’t get too out of control. This is different than the CFS because it takes your Accounts Receivables and Payables into consideration as well as a few other non-cash accounting measures like depreciation. 

There’s a little more involved with the P/L so let’s jump right into what goes into it. Then, we can talk a little more about how to use both of these statements to keep your business running like the well-oiled machine you thought it could be at the start. 

Net Sales

The net sales figure represents the amount of revenue or income generated by the business. The dollar figure recorded here is the total sales, less any product returns or sales discounts.  This is what you want to keep an eye on if you are starting to look at how fast your business is growing.

Cost of Goods Sold (COGS) 

This represents the costs directly associated with making or acquiring your products or services. Costs include materials purchased from suppliers used in the creation of your product, as well as any internal expenses directly expended. If you are a service based like a cleaning business costs might include the supplies used to get to the final deliverable. 

Gross profit

Gross profit comes from subtracting the cost of goods sold from net sales. It does not include any operating expenses or income taxes. Focusing on how much your Gross Profit is changing over time in its own amount as well as in relation to your Costs of Goods Sold can be important to follow. Financial goals can be to manage and maintain your gross profits as you scale your production up. 

Operating expenses

These are the everyday expenses incurred in the operation of your business. Some of these categories will even match some of the items in your CFS. In this sample, they are divided into two categories: fixed expenses and variable expenses. 

Payroll and Salary

These are the salaries, wages, and payroll plus bonuses and commissions paid to your staff. It’s for full time and part-time alike. 

General, Selling, and Administrative

This item is made up of all the direct and indirect selling expenses and the administrative expenses associated with being in business. These could be costs associated with advertising or marketing your products or services, travel, meals, equipment rental, and printing costs. It’s an umbrella for everything that’s not Operating, COGS, or Payroll.  
Rent: These are the fees incurred to rent or lease office or industrial space.
Utilities

These include costs for internet, cable, heating, air conditioning, electricity, phone equipment rental, and phone usage used in connection with your business. 
Depreciation

Depreciation is an annual expense that takes into account the loss in value of equipment used in your business. Examples of equipment that may be subject to depreciation include copiers, computers, printers, and fax machines.
Miscellaneous Expenses

Expense items that do not fall into other categories or cannot be clearly associated with a particular product or function are considered to be other overhead costs. These types of expenses may include insurance, office supplies, or cleaning services. It is crucial that you outline each of these costs as sub-items below this heading. 
Total expenses

This is the summation of all expenses incurred in running your business. It does not include any taxes or interest expense on interest income if there is any.

<Take a breath> A little recap. 

If you are following along, you have outlined the quantity of sales that have come in. Then you subtract away the cost of making the sales to get to Gross Profit. Then you subtract away all the rest of the expenses and costs of doing business in general and that leaves you with another magic number – Net Income Before Taxes. This, like Gross Profit, is another place you want to keep an eye one. An example of something that you may encounter is your Gross Profit is increasing but your Net Income Before Taxes is staying the same or getting worse. Big Red Flag! When you see that it’s time to get back into those expenses and CFS for the period and investigate where all your potential profit is going. Ok, on we go…

Net Income Before Taxes

This number represents the amount of income earned by a business prior to paying income taxes.  I had to state it like this just for the sake of good form. 

Taxes

This is the amount of income taxes you owe to the federal government and, if applicable, state and local government taxes. Pro Tip: Don’t sleep on your taxes. I’ve seen instances where the IRS can and will issue liens on bank accounts. That makes operating your business very tricky if you don’t have access to your accounts. It makes paying employees even trickier. Stay on top of your reporting or get some help with it. The IRS aren’t the bad guys (not all the time anyway) and they are willing to work with you but you have to have your act together. 

Net income

This is the amount of money the business has earned after all your expenses, interest payments and paying income taxes. This is wrongfully the first place a lot of businesses look to figure out the health of the business. Don’t let this be you. It’s also easy to see extra money and just put it in your pocket – also a bad idea. You have to evaluate the opportunity costs of using that Net Income in a variety of ways. Sure your pocket is one way but so is reinvestment, increasing the pay of your employees, paying down and debt more rapidly, or just saving it for a rainy day. 

Lastly if it’s negative then you definitely need to dig back into these financial statements and figure out where your resources are going as well as ways to increases those sales numbers at the top. I don’t want to spend too much more time in these statements though – think of this as a reawakening to your financial management responsibilities. Let’s get into some metrics you can use to gage the health of your business without worrying about flipping through each line item of each statement.

You may have noticed that there was no talk of the Balance Sheet. Not because you shouldn’t like or care for the balance sheet but because when you are in the trenches and trying to make changes on the fly you will need the most up to date information possible. You are going to want to keep an eye on the speed at which money is coming in and out of your situation. The Balance Sheet is more of a long term snapshot. Just like with the P/L and the CFS, there is a template for the Balance Sheet and some information on Balance Sheets in the Resource Section at the end of this book. 

On to the ratios. 

The two types of ratios that are really important for figuring where you stand and how to plan are efficiency ratios and liquidity ratios. How this is going to go is I will give you a brief description and then the ratio. The idea is that you start using these ratios to not only track your own progress but that of your industry. You can get some industry ratios from places like census.gov and others by doing simple searches in Google. 

Quick Ratio

Is a measure of a company’s ability to handle debt if it needed to, or its short term liquidity. The higher the ratio the more liquid the firm - which is a good thing. 
= Current Assets - Inventory/Current Liabilities
Debt to Equity Ratio 

This measures your leverage. It’s how much debt have you used to help your company grow. Having and managing debt can be a good or a bad thing depending on how you handle it. The important thing is keep track of what the ratio is doing over time as well how you servicing your debt. More debt might not always mean more growth. 
= Total Liabilities/Owners Equity 

Interest Coverage Ratio

This is an interesting one. In the planning process it’s easy to get caught up in showing that you can cover and debt that will be issued. It’s equally, if not more, important to make sure that you can cover the interest payments that go along with that debt. Here the rule is a ratio of 1 or more means you can service all your obligatory interest. 
= Operating Profit/Interest Payment

Collection Period

This ratio will help you keep track of how long it takes clients or customers to pay. The longer the period the more working capital you may need to support your business while waiting for payment. Remember efficient businesses don’t really use much extra cash. It can also help keep your payment policies tracked and enforced. 
= Ending Accounts Receivable/ Revenue per Day

Lastly ROA and ROE

Both of these ratios will help you get a sense of how much return you are getting out of your Assets (A) and your Owners Equity (E). As you keep track of this you will be able to see how capital expenditures are affecting your bottom line or if you are really using everything you have to it’s best potential. Having the money to buy stuff is great but buying stuff alone is not going to make you money. You need to manage the stuff and the people in charge of that stuff appropriately. 
= Net Profits/Assets and Net Profits or/Owner's Equity

Now this is not the conclusive list. These are a few key ratios you should start with when you are snapping out of the entrepreneurial honeymoon. From here it will help you to pick the spots in your financials that you want to focus on and work on to make stronger. These are some of the ratios that can help you see patterns for better or worse before the raw data might indicate. The statements these variables come from also vary in length and complexity. You need to keep on top of this so that you can confidently focus more time on doing the work that matters most to the people you serve. 

Otherwise, you might not be in business for as long as you planned. #moneymatters

How To Keep In Touch With Your Customers

In this post I want you to think about the people that buy from you.  If you're just starting out or are restarting don't fret, this post is also for you.  The questions I challenge you to think about are:

How are you keeping in touch with your customers?

Are you getting regular and timely information out to your customers that’s relevant to their experience – like impromptu closings?

Are you engaging in a way that is more than the traditional marketing touch points?

More than just flyers, coupons, surveys, and talking to the customer on the way out?

More than TV/Radio commercials, possible news interviews, and even the occasional hosted special event?  

You will move yourself to the back of the memory-and-relevance-bus because your customers, even your best customers, aren't connecting with your brand outside of the basic exchange of goods and services for money experience. If you settle for just a basic vendor experience you will only be relevant in your stakeholders mind when your offering satisfies their need – not bad but you should be striving for more.

The type of business you run doesn’t matter when it comes to staying in touch with the people that support you. You are just creating excuses if you can’t engage with your customers because you’re a small restaurant, café, bookstore, pet walker, or even an electrician. The idea is that you can always provide value for people and establish yourself as a resource wherever your customer is in the buying cycle.

“I am already getting the sale. Why do I need to engage them? Isn’t the fact that they bought from me and will possibly continue to buy from enough? “

Short answer is no. Longer answer is nooooooooooooo!

A report put out by Bain & Company in 2011 reported that customers that engage with brands regularly spend a lot more money in those businesses. That is to say that customers that have meaningful engagement, above and beyond your traditional marketing touch points, reported increases in revenue between 20%-40%. That’s huge if you want to keep your business growing. Not only that, the reach grows exponentially as more and more people see your customers engaging with you in a very public way.

I can already feel your eyes starting to waver because you know what’s coming next.

Social.

Social Media, every business guru’s favorite topic. Maybe you’ve found some success or maybe it’s been a huge waste of time. Either way you have set up your accounts and get to it when you have the time. Most likely, and sadly, only if you have something to announce to your followers. Stepping up on your social soapbox to only announce when things are happening for you is not a great use of resources. You won't be able to cut through the noise.

My personal favorite social media faux pas is logging into Facebook and by the time you walk away from it two hours have elapsed – I call this “social media time traveling”. This is not a full on tutorial about social media and you should use whatever platform works best for you to engage with your customers. This post is about getting to the heart of what you are going to do to create some benchmarks to measure yourself against and some concepts to put into practice.

Here’s the plan for kicking up your customer engagement and ultimately kick up those revenues.

1.    Decide what you are measuring when you start a campaign.

Are you trying to grow by acquiring email addresses to market to later? Is your goal just to spread awareness? To get people to talk to you? Then track those Facebook comments. (Be wary of “Likes”, more doesn’t mean that it is a reflection of authentic engagement)

2.    Come to terms that engaging with customers is going to come in a full range of experiences.

It’s going to take work and it should feel like you are having a conversation with your audience. Think about your favorite YouTube channels – odds are they make you feel like you are part of their community every time you watch their shows.  This also means you have to be an amazing listener. You need to be able to understand their needs and wants just as well as what gets them excited and is interesting to them.

3.    Mobile is only getting bigger.

You don’t have to go out and create a new app (unless you want to) but whatever medium you use should be mobile friendly. Facebook groups, Twitter, and even Instagram are checked every minute of every hour so make sure you are reaching out with value and not spam.

4.    Everyone needs to benefit. Remember your customers or potential customers are always going to be looking for value.

So you need to do more than just spam your happenings. Find things that your customers can relate to outside of your product or service and spread the love.

5.    Listening is the opposite of just constantly shouting at your audience.

Listening is about trying to keep people talking to you after the sale. It’s about collecting information about your user’s experiences (great and not so great) and about showing them that you are making real efforts to take that information and improve the experience. 

Lastly, stand for something that’s more than your sales. Get involved in your community and get to know people in a way that has nothing to do with selling to them. Engaging your customer and being a resource for them outside of the sales cycle will keep you in their conversations beyond the immediate need you serve.

Remember: 

“Profit in business comes from repeat customers, customers that boast about your project or service, and that bring friends with them.”

-   W. Edwards Deming

How to Get More Done In Your Business

Don't get stuck staring at the loading screen in your business. 

Don't get stuck staring at the loading screen in your business. 

There are lots of ways you can organize, operate and deliver value as a business. You can be an independent online business, an Amazon seller, a cooperatively owned farm, a brick and mortar restaurant, or a residential cleaning company to name a few. If you can identify a problem and offer a solution that people are willing and able to pay for, you have yourself a business. Even though businesses come in all shapes and sizes, for all the different problem-seekers and solution-offerers that exist there is something that connects them all.

That common thread that ties all of these business together is the drive to produce the best quality product, service, or experience using as few resources for as much profit as possible.

That was a mouthful.

Yes sustainability, honoring mission, and providing value are also big drivers for business but to keep operating, on average, it takes bringing dollars in the door. Then using those dollars in the best way you possibly can to continue to bring the next dollars through the door.

This post is going to provide you with some tools to help make sure you are being as efficient as possible.

Start by segmenting each department or operational area of your business into projects. Boil everything down to the most basic functions in the business. Making something simple but not simpler should be reminiscent of methodically putting together your childhood science fair projects or at least putting together IKEA furniture (way more fun than the furniture though). The term we use to describe this process is Project Management. Project Management is all about planning, organizing, monitoring, and allocating resources to successfully complete a specific outcome.

Operationally, most businesses are made up of lots of projects – some short term and some long term.  Take this process and adjust it so that it best works for you – here is your crash course in project management.

1. Start with the cash flow. More specifically where cash is going and how it is being used in your business. Some easy ways to bring these costs down are to re-evaluate your shipping costs, credit card processing and insurance or liability needs.

2. Manage your businesses schedule. One of the biggest drains on resources and reason businesses hemorrhage money is over-staffing.  If you are a one person operation, audit your time hour by hour to see where you get the most return on your time. If you have employees it means possibly trimming those hours. Are you paying the right people to do the right job?

3. Plan how your product or service goes from client engagement to final delivery and map out all the costs and tasks along the way.

If this is feeling a little overwhelming try breaking down each department or group of related activities and treat them like individual projects. Then find the goal of each project by asking:

1. Does this department or group of activities have specific or measurable goals? What are they?

2. Does this department (now project) contain all the related tasks to reach those goals?

3. Is there a clear start and end point in the process?

4.Is this so important or different that it needs to remain a standalone project? If not where can I combine these activities to be more efficient?  

Now you have your project defined and it’s time to set it up.  Here is a format to help you define what you need within each component of your business. It’s called the Triple Constraint:

1. Time Constraint: When does the outcome need to occur or is required?

2. Budget Constraint: What funds or resources are available to get the desired outcome?

3. Performance Criteria: Are there any barriers or quality issues related to producing the outcome.

For each project set up charts to track progress and measure from week to week, month to month and quarter to quarter.

Here is a personal example –

Sometimes, I hate doing the administrative work associated with running my consulting business. I wish I could just spend my days talking to people and lecturing to my students. But, invoices need to be sent out. So I have set up some constraints for the A/R or Invoicing Project in my business. This will ensure that I utilize my resources as efficiently as possible. For my time constraint I block off a chunk of time on Monday’s biweekly to go over and review invoices that need to be sent out. I physically and mentally limit myself to 1.5 hours maximum in dealing with this. If it needs to take longer I’ll pick another favorable time and do it then. My time, like yours, is important and after 1.5 hours I probably need to be somewhere else.

Budget Constraints are interesting for me. I tend to be a softy when it comes to invoicing and each week give myself an allowance for discounting. That’s part of the budget as well as the monthly fee I pay for Freshbooks, my invoicing and financial management service. Freshbooks is where I keep a good chunk of my client invoicing and billing information and is something I highly recommend to everyone.

That leaves me with quantifying and measuring performance. For my invoicing project this gives me the opportunity to see my billable hours or any other client services and measure them against the past. I can see how many invoice related communications are sent, follow up with old invoices as well as send out new ones. It also gives me the opportunity to review for errors or test new tactics to try to get my invoices paid faster and more accurately.

A real life fumble on my part was leaving the wrong mailing address on my invoice and losing out on a client’s payment for over a quarter – that’s how long it took for the Post Office to get the client's letter back to them. Quality of information and process is super important – otherwise you end up like I did and carry an opportunity cost on receiving that late payment.

Now it’s your turn. Start small and try to build momentum by breaking down one of the things you need to get done in your business into a single project. It’s not going to be perfect but taking the time to break down what really needs to get done, how to measure success and how to build systems around the stuff that you can. Taking the time to do this work will also help you get out of your own way so that you can do more of the work that matters to you and to your business.

Why Blue Oceans Matter In Your Business

Blue Ocean Strategy is one of the business buzzwordy concepts that’s actually worth knowing about if you’re trying to authentically bring your business into the world. Its a methodology and planning process that was penned and cultivated in a book, Blue Ocean Strategy, by a couple of strategists and professors from INSEAD (international business school) by the names of W.Chan Kim and Renee Mauborgne. They combed through mountains of strategic decisions made by firms over the last century and boiled them down into a strategic framework that you can use to help better position your business.

It’s an awesome idea and a great way to visualize how your business is making strategic decisions.

At the heart of it, Blue Ocean Strategy is all about finding the open and untapped waters of your market. You are literally looking for either new markets or under-served markets that you can pivot your business into and hopefully capture.

To quote one of my favorite authors and TED Talk speakers Malcolm Gladwell - you are giving your market some “extra chunky” (Here’s the TED Talk if you’re curious but make sure you come back!)

What this blog post is going to do is break out the major concepts of the Blue Ocean Strategy framework. This is not so much a review of the book but it will hopefully help you getting into a mindset that helps you find ways that you can differentiate and find a competitive space. That new mindset will give you the opportunity to offer a very specific and niche value.

The first big concept in Blue Ocean Strategy is working on Value Innovation. Value Innovation is not an easy thing to pull off as it’s simultaneously finding ways to offer more value while lower costs. One tools that you can use to help find your Value Innovation is something Blue Ocean Strategy calls the Eliminating-Reducing-Raising-Creating Grid. This grid is a tool to help you organize your business so that you can flush out where you can differentiate against other businesses in your industry. You are listing the factors in your business that follow the prompts in the grid and taking a strategic look at what’s happening outside of your business.

After you work on ways that you might be able to find your Value Innovations there is a four principle framework that will help streamline your strategy process. These principles will help you focus the factors you flushed out and really hone in on how you can position your business so that you are serving your own blue ocean.

1. Rethink your market boundaries.

Where can you create an uncontested (low competition) market? It’s not always easy to move away from trying to make your slice of the pie bigger and work on baking an entirely bigger pie. There’s no reason you can’t go out and redefine who your market is.

2. Think of the big picture.

Everything is variable in the long term so you need to think about what your business might look like a few years down the road. It will help in the planning process in the short term if you have an idea of the culture, processes, and value you want to offer in long term. Everyone wants profit so don’t just try to plan for that - this process will blow up in your face.

3. There’s always a little risk in this but you have to start thinking about offering value beyond what your customers think they need.

You are in business to provide a solution to a particular problem or set of problems. To find your blue ocean you have to try to get your finger on the pulse of the next set of needs your customers are going to have. How can you add value to what you are already doing so that your offerings are so full of value that you can’t possibly be substituted out.

4. Get your strategic sequence right.

This is not an overly complex sequence and it’s really powerful. It’s three big questions and if you are unsure or answer “no” to any of them you have to go back and rethink it through. The first is, are you offering the most value as possible, economists would call this utility? After that is the price you are asking aligned with your product or service for your market? Lastly, can you produce it at low enough costs to get to the profit goals you have set up for yourself and the business?

The last part of the Blue Ocean Strategy has to do with how you execute and implement. It relies on and utilizes tipping point point leadership and the development of fair processes. To boil those into the most actionable and digestible nuggets possible you should be thinking about how you can ignite the values and beliefs of your stakeholders and use passion to ultimately spread strategy. You get to leading with passion and conviction through trust. That’s where fair processes come in.

Fair processes happen when your stakeholders, employees, or partners trust that you will make the right decisions in terms of moving the business forward. What are the things that you can do to show the people that rely on you that you deserve their trust and have the compassion and drive to move your strategy forward.

Blue Ocean Strategy is a really robust framework and it would definitely take more than just one blog post to really do it justice. My hopes here were to present you with a different way to think about how you are bringing your strategy to life. How can you infuse a little Value Innovation, tipping point leadership, fair practice, and the four principles above into what you are doing everyday to push your business forward.

4 Strategy Mistakes To Avoid

We all make mistakes in our businesses - no surprise revelation bomb there.

Part of growing a business is constantly learning from past decisions. It’s about getting savvier about the information you collect so you can continue to serve your market well. Making mistakes in your business isn’t inherently bad though. It provides an opportunity to collect feedback, to adjust a product or service, or to get your business back in line with its values and mission.

Making mistakes gets to be bad for your business when they are constantly costing you dollars, goodwill and market share. Making lots of mistakes makes it harder for your customers to know, like, and trust the experience you are offering.

I can’t stop you from making mistakes in the future (I wish I could do that for me!) but, I can give you a little insight around the most common mistakes businesses make in terms of strategy. This post is going to walk you through some of the most common strategy mistakes and how to avoid them. My goal is to have you evaluate your entrepreneurial efforts and be able to actively recognize falling into any of these strategy blunders.

When you can see a strategy mistake coming you can work smarter to correct it and continue to move your business in the direction you want.

Common Strategy Mistakes

1. No strategy at all.

This is number 1 on the list for a reason. Having no strategy is the worst mistake you can make in your business.

Why?

No strategy means you are just arbitrarily making decisions about how you are bringing value to your customers and how you are deciding how to spend your time, money, or effort. It also means that you are only measuring broad business performance indicators like “sales” or “revenue”. Using those measure isn’t bad but when you aren’t measuring them for any part This is the same thing as hearing someone say that their strategy is, “to be the best”. It sends shivers down my spine.

When you have no strategy you allow your business to be subject to the ebbs and flows of every single consumer and you run the risk of wasting resources. How can you be competitive if you aren’t working on getting the most value out of your own time, money, or effort?

2. Getting your business or industry wrong.

As an entrepreneur you are probably really close to the work that you do. That’s awesome because that means you are committed to deliver as much value as possible! That makes defining the market you actually serve hard to identify - especially when every resource you read talks about the importance of identifying your perfect niche.

It’s important to take a step back and look at the market you serve in terms of the alternative choices your consumers have to engaging with your business. Here’s an example: if you are in the “paint and sip” business you aren’t just competing against other “paint and sip” businesses you are competing for all entertainment dollars. Consumers that spend $25 - $45 per ticket per person could also spend that money on: dinner and drinks, taking in a live show, going to an IMAX 3D movie, etc.

Being able to communicate your value and create strategies that will help you capture those entertainment dollars is what you should be focusing on - not what you think you direct competitor is doing (at least not all the time).

3. Are your strengths really your strengths.

Generally businesses fall into one of two buckets. They are either awesome at delivering the best experience possible for their customer or they are really great at delivering value as efficiently as possible. All businesses have to do a little bit of both but there are only so many resources that get to be divided up during the day.

You can’t focus all your effort on your customers and all your effort on being as efficient and as effective as possible. You can’t be all things to all stakeholders so you have to objectively evaluate your business and pick out your strongest capabilities. You can’t have competitive advantage if you are trying to be the best at everything all the time. Also if you still think, “trying to be the best” is strategy please go back and read the first point.

4. Listening to all your customers.

Feedback is an amazing tool for helping you and your business be as valuable as you possibly can. Making constant changes based on all the different feedback you are getting will wreak havoc on your business and on your strategy. Strategy, and your business, shouldn’t be about making everyone happy. Your business will find its best successes by choosing a very deliberate market to serve and then committing to serving that market well.

It’s really easy to get distracted when it comes to strategy because the allure of doing more to appeal to more with the hopes of earning more is a hard bias to shake. Lastly, if you are listening to every customer all the time how will you really be able to test anything in your business. It takes time to build interest and to get people to know, like and trust you.

Constantly changing parts of your business can send an inconsistent message to your customers - which does not bode well for building loyalty and advocacy.


Creating strategy and communicating it well throughout your business is hard enough already. Don’t make it harder by making these mistakes!

5 Tools I Use To Grow My Business

Welcome to 2017!

I know that today is the observed holiday but I couldn’t help myself, I had to get to my desk and get started. I had a little extra spring in my step as I made my way to the office this morning because I was excited to answer a question that I get all the time from entrepreneurs and business builders. That question:

How do you keep your business going and get everything you need to do done when you’re a small team or even just a team of one?

I know a lot of you out there have set goals, resolutions or even just intentions for your businesses this year and I want to continue to support you in reaching those goals in any way that I can. So, I’m going to peel the curtain back a bit on my business and talk about the five resources I use to keep me moving forward in my business that you can use too.

Again to be super clear, these are tools that I use everyday and that I tell people about when they ask. None of the links I’m sharing are affiliate or paid  for in any way, just pointing you to where you can learn more.

1. Evernote -  https://evernote.com/

There are a ton of posts and articles on the internet that talk about the greatness of Evernote. I don’t want to bore you with another review. What I want to do is talk about how practical and essential this app is for me, and could be for you, every week. One of the necessary evils of growing a business is that you’re going to take and host meetings. Some of them will be amazing like, meeting with clients if you are a coach or consultant and some of them will be less amazing like, meeting someone for a “networking” coffee only to have them try to pitch you the whole time on a service you don’t need. Recording your thoughts, conversations and follow up actions in a way that’s easily organizable, time stamped and searchable is huge. For me this app is more than just a place to write ideas to go back to at a later date they are repositories for business development information I use everyday. I track client conversations, write my blog posts and use them as a home base for the projects I need to keep track of in my business. Plus with the premium you can make documents, pictures you take, scans, etc searchable - how cool is that!

2. Hubspot Sales - https://www.hubspot.com/products/sales

Building a business probably means that you are sending a ton of emails out everyday. I know it can be really frustrating to send them out and then just wait. Not really sure if your emails landed where they were intended or if they were read at all. With Hubspot Sales you can send your emails out and actually see if/when they get opened and even track click throughs. It’s a little sneaky but I love it and I think you will too. Hubspot also has a decent CRM to help keep your prospects and sales pipeline organized. It’s also got a really neat Google Chrome and GMail extensions that will push you notifications so you don’t have to keep checking in on the app/site. The free version gets you up to 250 open notifications per month and then you can upgrade from there. If you rely on email for the bulk of your business development then something like this can be really helpful because you can better time and position your follow up emails or the other steps in your sales pipeline.

3. Buffer - https://buffer.com/

There are a lot of social media aggregators and planners out there today. Buffer is one that I started using when they were pretty young and have grown with them. Buffer is a huge resource for me because it helps me plan my social content for the day or week. You can set the share frequencies, choose how you want links to show up and it gives you decent analytics. If you are a small team or a team of one then you know how tough it can be to prioritize being active in social and balancing everything else you need to get done in a day. While there is NO SUBSTITUTE for real interactions you can plan the things you want to share and then carve out smaller chunks of time to go out into the web and be a real person. Social moves fast and is still a really relevant place to be. Buffer makes it easy to keep your face showing up in people’s feeds. The free version lets you plan 10 social posts I believe and then you pay up from there.

4. Any.do/Cal - http://www.any.do/

Any.do and Cal are sister apps that live on your phone and the web. It’s a to-do and calendar duo that helps extend the functionality of what a calendar app like Google Calendar can do when you’re trying to fit in all the little stuff that needs to get done in a day that doesn't really need a full on calendar entry. I love Any.do because you can create all kinds of categories and reminders that will integrate well with the calendar. You can save files, set location based  reminders and all kinds of other neat customizations. Cal also pulls the data from your Google Calendar in so you can keep everything really organized and in one place. It’s really intuitive which is important for me because it means it’s easy to edit, check off and adjust on the fly. There is a free version but for $26.99 for the year you get all kinds of goodies including one of my favorites is a prompt everyday to plan my day.

5. Trello - https://trello.com/

I love Trello because it can be whatever you need it to be. It can be a project manager, an extension of your to-do list or even a place to host processes that you create for your business. In Trello you create “boards” and within the board you can break them out into actions, sub-actions, leave notes, assign people and even store documents. Because I use Any.do for my main to-do list and planning I use Trello more for creating project management timelines and benchmarks. It’s great for taking big ideas and them breaking them down so that you can actually get work done. I use it as a place to keep my vanilla processes too. I can create step by step outlines for things like New Client On-boarding and even Blog Posts. Trello saves time and creates consistency for my workflow because all that information is in one place and contains processes that I use all the time. It’s also really good for small teams that need a place to collaborate and communicate through the work process. It also integrates with a TON of stuff like all-things-Google, Dropbox, Slack and all the Evernote. (I’m big on stuff that plays nicely together.)

That it!

Those are the five tools or resources that I use everyday in my business. They help me stay organized, keep track of what I have going on and keep me doing work that is pushing my business forward. I believe they can do the same thing for you. There’s a catch though, these resources are not silver bullets. They aren't going to do your work for you but they will help keep you organized and help you set finish lines up for yourself. That’s really important because in order to make progress in your business you have to be able to start something, finish it and move on to the next thing. So often I see people stuck in this quagmire of tasks they are always working on and never create the momentum they need to really grow because they are stuck always working in their business.

Take some time, set them up and then get to work trusting that your systems will support you along the way. Your business at the end of 2017 will thank you for it.

4 Ways To Start The New Year Off Right

For the last post of 2016 on the Disruptive Strategy Co. Blog I’m shooting for a callback to the blogs of yesteryear. (For those that don’t remember yesteryear, it was a Wednesday and I mean the cool thing blogs did from 2000’s to about 2013.) Today’s post is a round-up of posts/articles that I think are really useful in helping you kick 2017 off right. There’s a ton of great stuff out there about business development, goal setting and entrepreneurship so rather than adding more to the pile I thought I would help you spend less time searching for what to do next and more time taking action.

Plus, I mean, there are only so many articles you can read about planning before you are essentially numb to all things New Year Resolutions so hopefully this list mixes it up for you.

Below are four posts/articles from across the web that I believe are worth your time and that if executed on will help you get farther than anyone else inspired by the New Year. (The links to the articles are in the sub-headings.)

1. 7 Steps to Achieving Any Goal in Life - Entrepreneur

This is a great article because creating SMART goals get’s a lot of lip service but not in a really useful way. Let me explain. SMART goals: specific, measurable, achievable, relevant, and time-bound goals are easy enough to understand conceptually for people. That’s usually as far as most people get in trying to set goals. They understand that this is an important framework but often overestimate their own abilities and set expectations so high that the goals they set get abandoned. This article makes SMART goals SMARTER by adding a few extra letters to help keep you on track and actually achieving your goals. The E gives you the opportunity to evaluate your progress along the way, acknowledging that goal setting is more than just a two step process - set and achieve. The R gives you permission to re-adjust because life isn’t always as easy or predictable as you think it’s going to be. If you’re setting goals this week this post is a great way to help frame what you’re working towards.

2. 6 Ways Work Environment Shapes Your Productivity - Fizzle

In this podcast the folks at Fizzle talk about how where you work impacts the quality of that work. You might not think about it but, your environment plays a big part in the amount of stuff you get done in a day. If you’re looking to start the New Year off with a productivity sprint then you should definitely give this a listen. (I think they are the perfect blend of entertaining, engaging and instructive.) They talk about the importance of separation, making changes, organizing your browsers, ergonomics, clutter and lighting. Take control of your space to get better results with this podcast.

3. Forget the Resolutions - Write Your Personal Manifesto - Strategy + Business

This one is for those of you that have plans of continuing to take action long after the January New Year Resolution Honeymoon phase passes. It’s also not a “quick” exercise. Going through this process if going to take time but it’s going to help you find the warm squishy core of what’s important to you and bring it up to the surface so that you can keep it top of mind. This manifesto that you build for yourself is going to help you stay motivated and fuel you when it feels like the hits from 2016 are continuing to push their way into 2017. (RIP George Michael)

4. How to Create a Social Media Content Calendar for a Year - Social Media Examiner

Whether you’re a small business, a corporate ninja, a weekend warrior or a person with an internet connection you need a social media planning tool to help you avoid being “that” person that shares a little too much in their feeds. If building a brand is important for you in 2017 then you’ll want to make sure that you’re giving your audiences the quality and consistency that will keep them coming back every day/week/month. This post will walk you through creating an excel calendar that works in holidays and lets you see how your content maps out thematically throughout the year. If you’re serious about going pro in the New Year you have to stop winging it. Winging it takes time and attention that you need to be investing in the value you are delivering.

Bonus (Video) Post

5. Shia LaBeouf “Just Do It” - YouTube

“If you’re tired of starting over, stop giving up.” That is my favorite quote from this one minute video. I know that this was one of the biggest memes of 2016 but at it’s core he’s right about a few things when it comes to motivation and getting stuff done. Everyone needs a little jumpstart now and then and while there’s no direct takeaways from this maybe Shia’s message will give you the boost you need to take massive action.

I hope that you make the most out of this “dead week”. 2017 is essentially here and I hope that I’ve saved you some search time so that you can start to dig into the work that matters. See you in 2017!

Oh and...

JUST DO IT!

(Sorry couldn’t help myself.)

Your Strategy Is Not Your Mission Statement

Your strategy is not your business's mission and it’s not your values.

Those types of business development concepts help to shape business strategy but, they are not themselves your strategy. The choices you make around things like who your customers are and are not, that’s strategy. The markets you choose to participate in, that’s strategy. Lastly how you are going to provide so much value that you can’t be ignored, that’s strategy.

Strategy has to (at least in the beginning) be deliberate.

When there is a disconnect between your strategy and what’s going on in your market you end up with a growth problem. The growth problem is your inability to take the actions you need to take to go out and get the right kinds of customers for your business. You start chasing everyone in the hopes of improving top line revenue.

Yes, there is a wrong kind of customer.

As an entrepreneur you have to deliberately choose how you are going to try to get new customers, measure  your efforts as you attempt to land those customers and continue to develop how you communicate to your customers. If it feels like a lot it’s probably because your strategy and the behaviors/systems you have in place to grow your business are misaligned.

Let’s start aligning.

Growing your business in a way that supports your mission and vision is what, in my opinion, most independent businesses want. You want to feel good as you’re growing your business. You have to move beyond just looking for those good feelings and clearly identify:

1. The specific need you provide for.

2. The specific customer you provide for.

3. Communicated (sold) in a way that is most responsive to your specific customer.

4. Continue to learn and develop your skills as a business developer.

Notice that none of those points have anything to do with mission or vision. Your mission is why you are doing what you do as an entrepreneur. It’s your motivation. Your strategy and business development behaviors are your how. Both of those need to be on the same page to be most effective.

Think about any high end ultra-premium car. Do they try to sell to anyone who may be in the market for a car? No! They are trying to appeal to a very specific kind of buyer. Their strategy to do so is perfectly aligned with their sales behaviors. The result? A market that will healthily bear the sales of the Ferrari 488 GTB starting at $249,150.

Sounds simple when you read it, right?! At the core of aligning your strategy and your business growth is your behavior. Are the sales behaviors and sales tasks you create in your business reflective of your ideal customers and market? Or, are you just out there selling to anyone that is willing to listen or read?

Everyday you are going to run into changes in your customer’s tastes and expectations. Technology will change. Culture changes and markets evolve. Your sales and growth behaviors need to adapt with the changes that are happening around you. If you have a clear strategy that you revisit often it will be easier to keep the integrity of your mission or vision. You’ll be constantly working at it and responding to change almost as quickly as it happens.

This is my challenge to you as the year comes to an end.

Think about how you are currently trying to find growth for your business. Do your day to day sales activities align with your business’ strategy? If they don’t you should really spend some time to get clear on the value you offer and to whom you offer it. Then build your strategy and sales activities from there.

How To Get The Most Out Of Your Annual Review And Planning

A lot of people think that this is the time of the year when stuff starts to slow down in their businesses. I get it. Lot’s of decorating, holiday traffic messes and shopping to be experienced. I think the exact opposite though. Well, not about the fun holiday stuff but about what the end of the year means for your business. When it comes to what you’re doing in your business and planning for it’s definitely go-time.

Getting your team or even just your thoughts together for an annual planning process is an awesome thing to do this time of year. It helps flush out new ideas, figure out what works, and gets your business to the starting position for 2017. I know it might feel like extra work but you’re already tidying up your business for year end so, you might as well sneak in a post-mortem while the environment is right.

Speaking from personal experience, it’s not always sunshine and rainbows to go through a process like this but it is worth it. It’s an opportunity to shine a bright light on the things that worked (and maybe didn’t work) so you’re 2017 doesn’t look like this again: 

I hope I didn't lose you after that clip!

Below you will find a few pitfalls to avoid and some helpful tips on making your planning and review process as effective as possible.

1. Avoid only planning for big benchmarks and outcomes.

Planning for big moments to hit in your business is more bad than good. It’s great because it gives you something to aspire too. It’s awful because you will probably do nothing until a week before the deadline and then spend a crazy amount of time and energy in underachieving and successfully burning yourself out. Instead focus on behavior, actions, or even the development of systems that will continue to push your business forward. Outcomes are great to keep in mind or even to plan to get to - but the point is that you have small chunks of actions in almost 2 week increments to help guide you to get to your big outcomes. It’s OK if you don’t make it too - make this year the year of adaptation and the art of the pivot!

2. Not everything needs a revamp.

All too often I see businesses chalk up last year as a loss and to decide to take a fresh look on  EVERYTHING. Stop it! When evaluating the previous year make sure you try to find and focus on things that worked. Think about the time and energy it will take to change everything, not to mention that it will be a totally untested set of processes. It’s ok to want to do better and to try to adjust to make up for lost time, money or opportunity. Just make sure if you are revamping anything you are setting up some way to measure those changes. Another crazy idea, do more of the things that worked great! Make sure you are rewarding team members, customers, and even well-wishing-supporters along the way.

3. Don’t just ask people for their opinions.

If you are part of a team that’s bigger than you it’s important to get feedback. Critical and objective feedback. The kind of feedback that takes time to prepare in advance. Just shotgunning a meeting and asking people on the spot about their experiences creates awkward social interactions, non-honesty, and feedback that’s not filtered as clearly as it could be. Give your people a heads up and give them specific items to bring to the table - play to your team's strengths! Everyone that’s sitting at your meeting table is a rockstar and will add value to the coming year’s plan if you create an environment for them to be successful. If you are a solopreneur you should set separate chunks of time to tackle specific issues. Trying to do it all in one sitting is a recipe for missed opportunity and will leave you mired in “should haves” and “could haves.”

4. Your annual plan should have things that people not only can do but will continue to do in the following weeks.

Annual plans are like New Year’s Resolutions in that if you don’t make them well you won’t follow them after the 10th or so of January. Focus on changing behavior and worry about the attitude or mindset later. So piggybacking off of an earlier point create actions that your team or you can work into your schedule every day that is not just extra work! Extra work gets left behind for what people perceive is more important and no one wants to try to operate by a plan that they aren’t connected to on some level.

We are still in the pre-2017 window. If you’re still batting around the idea of an annual plan make your way through these steps and get all your stakeholders on board. It will make for a more meaningful plan and one that you get to review in its entirety come 2017.

Simplify Your Mission To Create More Value

It’s the end of 2016. Regardless of the type of year you’ve had up (maybe more downs than ups) to this point, this time of year is always a good time to reconnect with why you’re doing what you’re doing. It’s a great time of year to simplify, plan and connect. That means it’s also a great time to work on your business’s mission.

The process of working on your mission is a process I’ve developed and also use quite a bit. I wanted to make sure that I was taking my own advice and that it made sense before I just started dropping what could be conceived as just trite generic business guru nonsense. Not giving you nonsense is really important to me because mission is one of the strategy concepts that gets lost in buzzwords, jargon, and empty language.

Your mission, your why, is supposed to be the guiding beacon for your business. How then can you run a sustainable business if what you say you do is very different from what you actually do?

You can’t.

In terms of thinking about 2017, it’s still early. Very early. This provides you with an opportunity to dig in a bit through the month or in some quiet thought whenever you happen upon this post. What you’re digging for is clarity for two of the simplest and most difficult questions about your business:

1. Who are you serving?

2. How are you serving your customer in a way that matters?

Easy right?!

Now comes the part where I challenge you. You’re going to see some bullet points that I believe are the most critical things you should be considering when you are (re)sculpting your mission and setting up your business for 2017. Remember, it’s your mission that will weigh in on every decision you make, every resource you allocate and how you serve everyone of your customers.

1. Who are you serving?

Get as specific as you can and try to make it about one person.

  • What are their experiences?
  • Where are they emotionally?
  • What kind of values to they have?
  • What are their demographics: age, professional level, marital status, etc.
  • What kind of social or cultural environments do they exist in?
  • What is important to them?
  • What are they afraid of or what’s frustrating them?
  • AVOID AT ALL COST PHRASES LIKE: “small business owners”, “stay at home moms”, “entrepreneurs”, “people looking for a restaurant”, “students”...You get the picture, right?

2. How are you serving them in a way that matters?

You created your business because you identified a problem and figured out a way to offer a solution. It gets easy to get bogged down by all the day-to-day to-do’s to lose sight of why a customer would still choose you.

  • Why do your customers choose you? (Price is the worst thing to compete on by the way.)
  • Is your solution simple to understand and implement?
  • Is the problem you’ve identified changing with customer tastes, expectations or improvements in technology?
  • Is there something so special about what you do that it would be tough for competitors to imitate?
  • Are you serving customer needs or wants? (Your customers motivations will be different for each.)
  • Are you clear on how your customers measure success? Is it money saved, time saved, headaches avoided, education provided, etc.
  • Are you providing a solution that resonates or matches up with who you’ve identified your best customer to be?

I know making trade-offs and focused decisions are hard but when you are clear on who you serve and who you don’t serve your business has an exponentially greater chance at success.

After you think about those questions for a while and get your thoughts articulated your last task is to distill all that information into a sentence or two. Your mission should not be a paragraph or worse an entire page. It’s also not the how to manual on how your business does the business of its business. (Yes, I did that on purpose because a  good mission statement is serious business.)

If you’re looking for a little inspiration one of my favorite mission statements of all time comes from Starbucks. Pulled from their corporate website the Starbucks mission is:

To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.

That’s a mission statement. Yours might not be as eloquent as that one on your first go around and that’s OK. Working on crafting your mission so that it reflects you and your business might take time. What’s important is that your mission means resonates with you and stands for something in your business. Get there and you’ll be ahead of most entrepreneurs I know.

3 Tips For Better Year-End Strategic Planning

This is a fun time of year for me. This is the time of year when I get to read, talk about and experience the wonders of all kinds of year-end strategic planning (and review) processes. It’s a blast because, for the most part, most people get it terribly wrong. They get it wrong because they follow dated template frameworks that don’t apply to their businesses, seek answers to self-referential questions and spend hours doing something that feels like work but will probably never have any real impact on their business.

My goal in this post is to give you a few quick and dirty concepts you need to consider to get the most out of your strategic planning process this year - hopefully not just a template. So before you tape your over sized Post-It notes to the walls or crack that new box of dry erase markers let’s talk about a few things.

1. Your strategic plan is not your step-by-step how to run your business manual for the next year.

It’s also not a budget. You need to think about strategy more simply and in terms of the choices you need to make that will get your business in front of the people that matter most - your customers. While budgets, cascading goals, benchmarks and actions are important it should all stem from the choices you make about the specific customers you serve and how you will serve them better than anyone else next year.

Take Away: In the strategic planning process don’t let your thought process or conversations go down day-to-day operations rabbit holes. Save the breaking down of specific responsibilities, tasks, benchmarks for later. Use something like the Balanced Scorecard (link takes you to Balance Scorecard website) to help focus on the broader financial, operational, people and customer perspectives.

2. Your strategy (or strategic plan) is not going to be perfect and that’s OK.

You’re strategy can and probably will change over time and that’s a good thing. You’re eye on the prize needs to revolve around revenue (not just controlling costs) and your customers. You want your business to be able to adapt to the changing needs and expectations of your market while honoring your vision. That means there’s always going to be a little bit of uncertainty in your planning. Give yourself permission to be OK with uncertainty as long as you’re setting up benchmarks along the way to test your strategy assumptions about your customers and the market you’re serving. If you were as addicted to Gordon Ramsay’s “Kitchen Nightmares” as I was you’d know one of the things he commented on most was the inability of restaurateurs to update their menus. So, to quote Chef Ramsay, don’t be an “idiot sandwich” and shoot for less-than-perfect.

Take Away: Don’t fight over what you can’t predict. If you run into spots where assumptions feel murky because they are based on future outcomes then you should set up times to revisit in the follow up in the next weeks/months/quarters. Conversations about what you can’t control can be draining and detract from the process.

3. Start quantifying.

Getting to the heart of making good decisions means getting to the heart of the data in your business. I’m sure (hoping really) that you had goals set for yourself through this past year. List them out and how close you were/are to achieving them. What do your sales figures look like? How big is your market? What are your margins? Who are your best customers and how many of them did you serve? When going through the strategic planning process it’s easy to get distracted by the big broad brushstroke topics. It’s easy to set goals of just “doing more” of certain activities in the next year. What’s hard is getting to the nitty gritty of your business. It’s getting real about what worked and what didn’t in a quantitative way and being honest about how you spent your time/resources/money this year. No one likes to admit to making bad choices or mistakes but you need to get real about where you are now if you’re going to give yourself a fighting chance to get better. Remember, when it comes to data and planning - garbage in = garbage out.

Take Away: Have the data of your business ready before you go into the strategic planning process. Spend some time getting re-acquainted with what’s going on in your business. This is more than just running some blanket financial statements. Look back at what you decided were key performance indicators in the past and, as honestly as possible, figure out where you stand today.

Whatever your strategic planning process looks like it’s my hope that you think about the three concepts I’ve listed above. At the heart of this process you’re announcing what’s important to your business and customers, setting goals and priorities and trickling that information down into the eventual actions and benchmarks your business needs to take to be successful. Please don’t just use some generic out of the box framework because it feels easy. Make sure the frameworks and tools you choose are relevant and will authentically support your business.

Launch Your Minimum Viable Business

Have a business idea that’s been nagging at you for a while?

I mean really nagging.

I mean the kind of nagging that inspires you to go out and buy a domain name or two for your new idea. The kind of idea that has you tinkering with websites that teach you to master the arts of coding, designing and copy-writing for free. The kind of business idea that had you go out and lock down all the social media profile names and @-handles you could think to secure. The kind of idea that you’ve been talking about and “planning” to do for a few months (up to years) now.

It’s the kind of idea that energizes you and exhausts you all at the same time which means - you’ve done literally nothing or almost nothing to date. Unless, you count the friends and family that obligatorily “Liked” your Facebook Business Page because you sent them an invite that one time.

If this is you and you’re tired of being in this space then you are in the right place. In this post I’m going to help you find and launch your Minimum Viable Business.

First a definition.

I am defining a Minimum Viable Business as a business that provides just enough of a specific value so that you can identify who your customers are, sell to them, support them and learn from them to figure out if your business has legs to grow - with as few moving parts in the process as possible. It’s a process that will help you best communicate the specific and measurable value your business delivers.

For those of you that are already reading all things entrepreneur I can already hear your retorts.

You might be thinking that this sounds an awful lot like getting to some kind of minimum viable product. Well, if you’re thinking that, you’re partially correct. The minimum viable product life of sitting through Steve Blank like presentations, LEAN Launchpad Accelerators and the waves of endless build-learn-iterate spreadsheets is not something I’ll be subjecting you to. With the Minimum Viable Business process it’s not only about the gathering validated learning, it’s also about getting clear about why you’re building this business, identifying the real benefits your customers will receive and building the systems to keep doing it.

So, here is an easy to follow outline of the Minimum Viable Business process that you can start using today to help bring to life what’s been swimming in your brain for a while.

1. I hate to do this but I am going to start by referencing Simon Sinek’s work about getting to your why.

I know, every business blog does this but it’s because his work is so on the nose. Your core beliefs are going to guide and influence every decision you make. Your motivation for building this business is also going to seep through every conversation you have about your business. If you aren’t authentic about your purpose and what you believe in then it’ll be really hard to convince people to trust you enough to give you money to solve their problems. It sounds super cliche but people really don’t buy what you do, they buy why you do it. You need to as honestly as possible get to these why’s:

  • Why are you starting this business?

  • Why is this problem worth solving?

  • Why are you best suited to solve your customer’s problem?

  • Why should anyone care about what you’re doing?

  • Why is what you believe in important? (For you and your business.)

If you answer these honestly (I recommend going a few why’s deep on each answer) you can start to see that you have the beginnings of a pitch for your business. The kind of pitch that people would be willing to listen to because it’s compelling and honest - not just a list of features.

2. Getting really clear on your target market is next on the list.

What does the ideal customer look like for your Minimum Viable Business? The more specific the better. There are lots of resources that go to great lengths to help you identify your target market but to keep you from spinning off into days/weeks/months of more stuff to learn and keep you distracted I want you to just answer this one question:

What is the smallest and most narrow group of people that exist that would get the most amount of value out of you and your business?

Let’s say you’re thinking about being a real estate professional and have just passed your licensing exam. You’re thinking about targeting brand new parents. If your description of your ideal customer stops there then it’s time to roll up your sleeves.  I want you to go deep on “new parent” ideas. How new? Do they have any other kids? What kind of places are they coming from? Is this a first home purchase for them? Are they Millenials? If I were thinking about the market for new parents and real estate I would going until I have something like this:  

I specialize in helping Millennial first time parents get out of the rentals (or parent’s basements) their new families have out grown and into their perfect first homes, not necessarily their forever homes. These first time parents are 30-something professionals that care more about the school system than they do about their morning commute and are looking to move out of a city/metro neighborhood and into a suburb. As a 30-something professional they probably have student loans they’re dealing with and are earning somewhere between $60,000 - $85,000/yr with possibly less than stellar credit.

Of course you can keep going and I encourage you to. The more specific you can be about who you serve best the better you can fit your why to them. When you’re doing this you’re also not spending time “researching” all the ways you can reach the Millennial market. That means you can allocate that extra time to getting in front of the people you most want to serve and (because of your why) delivering more value than any other real estate professional can for them.

3. What is the real value you’re delivering?

For this step we are skipping clean over the part about the mechanism by which you deliver value and going straight into what life looks like for your customer after they buy your stuff. The reason for the skip is that everyone’s delivery is going to be a little different depending on the types of products and services you are selling. You should be able to not only imagine but describe the value your business brings to people. Are you saving them time? Helping them land their dream job? Allowing them to do their work faster? Giving them confidence in their style? Your Minimum Viable Business should be focusing in on one really specific problem that your business solves in a specific way. Think about any home DIY project that requires a hole in the wall. If I have to go to the hardware store to buy a drill, it’s not because I need a drill (want maybe) it’s because I need a hole in the wall. What’s the “hole in the wall” your business leaves people with after they buy from you? Do your best to quantify this value as well.

4. What’s your secret sauce?

Secret sauce is also known as competitive advantage. The heart of this questions lies in getting to what it is that you do that is better or that matters more than any of your potential competitors. No, having great customer service or “working harder than the competition” are NOT competitive advantages. We are looking for the specific stuff that makes you better.

Odds are that if you’ve been thinking about your business for a while then you’ll have thought of a few other businesses that might do what you do. Now that you’re so close to going out in the world and serving your market we need to work on what makes you, your business or your process unique.  What is special about how you deliver value? Is your secret sauce in your process? Is it the fact that you understand your market better than anyone in a specific way? Is it that you created a system that gets to some kind of result faster than your competition? Are you making life easier for your customers in a certain way by granting them access to a resource that you can get cheaper than anyone else? Thinking about these questions and questions like this will help you get to identifying and ultimately communicating your secret sauce.

5. Get selling!

This is where the rubber meets the road. Up to this point you’ve worked on getting clear about why the world needs your business, what you’re delivering and how to communicate why your customers need you. Now you need to start the sales process. Selling doesn’t have to be scary but it does have to be consistent. The best way to make it consistent is to follow some kind of process. If you’re struggling with where to start I have a simple sales process for you:

  • Prospect - You have your description of your ideal customer/target market. Now start putting together a list of people or businesses that can benefit from using what you have built.

  • Connect - This is the part where people get stuck the most. Working in your business is easy when all of your focus is on internal development, plans and processes. Connecting via email, social or even a call is one of the first times you are putting yourself out there and it can be intimidating. This is where the conversations start and value get’s exchanged.

  • Present - Presenting doesn’t have to mean that for every new client or customer you have a brand new slideshow to present. It can be the routine you use to describe how you bring value to your target market. It’s in the presentation that you’ll be able to better interact with your potential client or customer and address their specific concerns and needs.

  • Propose - Make sure that you clearly outline how what you do will specifically benefit your prospect. This can be a formal written proposal created for your prospect or even a verbal agreement that is then followed up with some kind of short form terms or receipt.

  • Close - Ask for the sale. The Minimum Viable Business model only works if you can take a prospect through your sales process so that you can get to an ask. Getting a “no” is not a bad thing, it’s a measurable outcome that you can use to help shape your business. Use the feedback you get from the ask to better inform how you are proposing to deliver value and to the types of prospects you’re asking.

  • Deliver and Support - Might seem a little obvious but at this point if you have successfully gone from prospect to client or customer you have to do your best to deliver what you promised. Your solution doesn’t have to be perfect and if you were honest with your prospects through this process they will know that but they will expect that you can deliver on what you said you can deliver. After that make sure that you check in with them to ask about their experiences, continued needs, areas from improvement, etc. The people that do business with you are going to be your best source of information as you grow out of your Minimum Viable Business and into a sustainable one.

6. Keep it simple and keep track!  

I have talked and worked with business owners who drag their feet when it comes to selling their stuff because they think their solution and brand isn’t perfect enough yet. In the Minimum Viable Business process you should worry less about your branding, your letterhead, the fonts you chose for your homepage and more on the actual work. Can you sell your idea and your solution with the current level of tools you have available.

At this point you’ve been introduced to all the concepts you need to take your idea, your passion really, off the back of the napkin and bring it to life. It’s not scary! You must be deliberate about the early choices you make though. There are lots of little cracks that can swallow your time, money and energy so you have to be careful. You can’t allow yourself to lose chunks of time to working in the business - just get it good enough so that you can communicate your why, your value and why your customer should care. Then ask!

The last little bit is to do your best to keep track of the work that you’re doing. Especially in the sales process. Your early “closing ratio” shouldn’t matter much, that’s not the point of keeping track. The point of keeping track is to help you better identify patterns. Patterns that you can use to better iterate on your product or service, patterns to help you better serve your ideal customers and patterns to help you better deliver on the heart of why you thought your business was a good idea in the first place.

My call to action for you, a challenge really, is to stop tinkering and waiting for the “right” time to start. You’ve got more going for you than you think when you frame your business as a Minimum Viable Business so just get going!

Keep it simple, keep it valuable and keep it moving!

Stop Hiding Behind Your Business

I have been having the same kinds of conversations lately with the businesses I’ve been helping. I believe it’s because the businesses I’m working with have seen some growth and are all doing the exact same thing right after their growth experience. They are retreating into their offices and hiding behind the glorious (positive) data they have collected. I absolutely respect the sanctity of the growth process but, getting out from behind your computer screen and continuing to be out in the world making things happen just can’t stop!

I love data.

I will be the first one to tell you that I get a little bit of a thrill working my data into a model and then working on either creating some kind of inference or using derivatives to look for points of maximum/optimal return. But there comes a time when even the best modeling can’t guarantee business success - especially if that model you just built is a permanently positive linear one.

For all my creative independent businesses out there - I promise, that’s the last of the math talk.

I also love people. I love mission. I love seeing customers and clients getting value out of something I put into the world.

In order to create positive momentum in your business you have to go out and do the things you say your business does. You can’t just tinker.

This post is a cry out to any entrepreneur who has seen a little growth or momentum recently. Any growth. It could be an increase in view, subscribers and of course sales. My plea to you is to avoid the temptation to tinker. Avoid diving into your spreadsheets and falling to the business romanticising trap - the Business Ghost of Christmas Future Fallacy is what I’m calling this.

Having a plan and checking the results your actions have yielded against benchmarks for success is important. But a check-in is really all it should be. Here are a two tips to keep your inner quant at bay while you are out there in the world hustling in your business to succeed.

1. Commit to only changing one thing in your business model/process at a time.

This is how testing works. You go out and try to do something awesome for people that need what you are offering. If you feel like something isn’t working or could be working you make a single change and then get back out there. As you collect more experience and take more actions you’ll start to get a feel for the impact that change had - eventually deciding if it was a winner or not. This works best when you give your ideas some time to grow and your business enough time to get a little traction. I can’t tell you the perfect amount of time because every business is different. I can tell you that a week is probably too short and a two year period is probably a little too long. Check in systematically in that window a few times.

2. Stop running your business in terms of one-offs and winging.

Tinkering thrives in environments that lack structure. I’m not saying that every component of your business’ processes have to be etched in stone. What I am saying is that you need a routine. Tinkering happens because it feels like work and you have the potential to discover something interesting that might push your business forward. It’s not work that is going to directly grow your business through (most of the time). You know what will push your business forward - having processes or systems that take the winging out of your business. To beat the hour-eating-tinker-monster first find out what the important parts of your business are that need to happen on a daily, weekly, and monthly basis. Build a process for as many of them as you can that includes putting time into your schedule to plan, execute and review. This will lead to less one-offs and more focus. You’ll also find that your productivity will start to get a little better because you are worrying less on what to do and more on going out and doing.

Like I said earlier, I love data. You can’t get stuck in the data though. You have to create a plan that means something to you and then trust yourself (and the plan) enough to go out and keep bringing something awesome into the world. Whether you feel it or not all businesses have a bit of inertia to them. Great strategy is about building on the positive inertia so that you never stop moving forward.

How Do I Price My Product?

Buckle up boys and girls. This is going to be an epic deep dive into the different ways you can price your products or services. Pricing is an interesting topic and there's a ton of advice out here on the internet. The funny thing is that "other advice" doesn't really do a good job of setting up the frameworks so that you can compare how different pricing strategies work or can even change over time given the conditions in your market.  

When it comes to driving your business’ success, how you price plays a major role. Your prices communicate your value, can illustrate your quality amongst your competitors, and even influence what the market is willing and able to pay for what you’re offering. The problem with finding what the “right” price is for your business is that there is no magic formula. That’s where this article comes in. This article is going to outline some of the bigger objectives of pricing right and then offer you pricing strategies you can implement today. Your job is to figure out where your business model falls within the objectives and then pick a pricing strategy to run with.

Let’s lay some foundation points first:

  • Buyers are intrinsically motivated to get the most value for their dollar based on cultural, social, personal, and psychological influence. Buyers need to know, like and trust you. So work on understanding your target audience to best communicate your value to them.

  • Most buyers will go through this process:

    • Identifying their problem.

    • Doing some kind of research (yes even simple chats with friends count).

    • Evaluate their solution choices.

    • Make a purchase decision.

    • Have a post purchase response (think in terms of buyers remorse vs raving advocate).

  • As a seller you need to have the mindset that you are trading some kind of value for dollars. You are motivating buyers by fulfilling some kind of specific need. Those needs can range from being the low cost provider to offering the highest quality product.

  • Guessing is the worst thing you can do in your business when it comes to pricing.

  • Prices don’t have to be set in stone forever. They can change over time but remember your prices strongly communicate how your business is doing so change with purpose.

What Motivates a Seller

Below you will find some of the biggest motivations that drive seller behavior. The best advice I can give is to read each of these motivations with your business model in mind. Think about where in the market you want your business to compete and where you think you’ll have the biggest chance at finding success. Every seller will hit each of these points with varying levels of intensity. The important thing is to understand what should motivate you and to look at what you are doing in your business to bring those motivations to actions and outcomes.

  1. Maximizing profit. This can be a long or a short term goal and it has to do with how you have aligned your costs and production process. Every business should want to maximize profits. The special sauce here is understanding that high prices do not always translate to higher profit.

  2. Maximizing unit sales. This can be for both a maker and a do’er. As a seller you should always be striving to work at delivering the best work you can in the time you are allowing yourself to do it. Once you're comfortable a level of production work on continuing to build your capability and grow your capacity.

  3. Capture market share. More market share leads to more advocacy, more sales, more authority, and a growing community. You don’t have to be the biggest business on the block to be the most popular.

  4. Create barriers to entry. When you think of pricing and profits the more profitable your business the more incentives you will give businesses to try to jump in and steal your Kool-Aid. Finding your competitive advantage and holding on to it is going to make it hard for that to happen.

  5. Best quality or be exclusive. Creating a culture around your business and brand will help keep your customers or clients from making snap judgements based on price alone. You need to be aware of the low-price-low-quality stigma and if you are low price be prepared to combat it with a flurry of “innovation” based support.

  6. Using the loss leader strategy carefully. It can be tempting to start slashing prices to get traffic to your site or store front. Be careful about the message that sends and how often you use this tactic.

  7. Trial purchases. As a seller you might want to encourage your customers to give a trial a shot. The guys over at Fizzle did an awesome job of communicating and executing this concept. The best thing I can do is tell you to check out their splash page.

There are probably a few motivations that I missed but those are the biggest and most prevalent ones that sellers have to try to juggle when figuring out how to price their products/services and even running their business. You have to care about all of these things not just about what your profit or revenue looks like all the time. It’s ok if one or two resonate with you a little more than the others. Use what drives you most as you start to think about how you are going to price going forward.

Pricing Strategies

Now that you’ve reflected and mastered what motivates you as a seller it’s time to find the pricing strategy that fits best with what motivates you and your business model.

Cost-Plus Pricing - *Full Disclosure: Not my favorite because most people use this wrong* Cost-plus is a pretty straight forward approach in terms of pricing and it’s also one that lots of people default to. Just because it’s easy does not mean it’s right or right for you! All you do is figure out what the per unit cost of what your good is or of what your equivalent service is and add a fixed percentage to it as profit. So, if you are selling something that costs $100 to make and sell and you want to make 15% profit on each unit your selling price is now $115. This really only works in super niche, unique or noncompetitive markets. It’s not my favorite because as a seller you aren’t really doing any of the work you need to do to align your prices with the needs and wants of the buyer. It also doesn’t lend to the seller working to deliver more efficiency because the profit just gets tacked on to whatever the cost to market is.

Price Skimming - This is a fun problem to have. As you sell more and more of your stuff you’ll need more and more inventory or resources to deliver. As you continue to build capacity and your capabilities you are going to find efficiencies. As a seller you get to translate those efficiencies into lower prices for your consumers. This works really well with manufacturing and technology typically because you are playing with classic economies of scale. You are lowering your prices (lowering profit per unit) with the goal of moving more units than your competition. If you are a service provider or are selling an information based product this probably isn’t the strategy for you because continuing to skim prices over time might lead to unwanted perceptions of your brand and product. To make this work well you need to make sure that your quality is always staying the same or increasing (you might hear the buzzword: value innovation). When customers feel like they are getting cheaper prices and cheaper quality it doesn't go over so well.

Penetration Pricing - This is great for new businesses and it’s a pretty straight forward strategy. You enter the market at a lower price than your competitors and then increase prices over time. This is your typical trial offer. You entice buyers or users with a low cost of entry and then do your best to deliver as much value as possible with the hopes that those customers will stick around and continue to engage. Also works well when there are subsequent offers or upsells as part of your customer experience. The best success happens when your business is tied to a very specific experience or problem. I love this approach because you are communicating to your potential customers that you are so confident they will find success/be happy they will continue to come back and engage with you. Plus, if it was one of the few times that it’s not a good fit your customers only paid a discounted price so they are less inclined to be as upset (even less vocal) because the stakes were so low for them to try you out.

Prestige Pricing - Malcolm Gladwell does an amazing job explaining this concept in terms of Grey Poupon in one of his TED Talks that I linked here. With this strategy your goal is to create the perception of quality and exclusiveness. Higher prices here will imply higher value but there’s a catch. The price alone isn’t going to impress the average buyer. The packaging, copy, branding, and experience around the good/service needs to align with the higher price you are demanding. You have to create a prestigious experience for the buyer. This is a great strategy for service providers and information products because you are delivering a very specific solution or specific information that will solve your customer's pain points. The more specific your service the more expertise or experience is needed to deliver that information and in terms can command a higher price.

Bait and Hook. This sounds like what happens in the bar scene on the weekends but it really is a pricing strategy. With this strategy you are charging a low price for the initial purchase or interaction and then much higher prices for either replacement parts or supplemental services/products. The razor blade industry does amazing here. Think about the last time you bought a razor and what that price was. When you went back for more blades did you notice how much more expensive they were compared to the initial razor purchase. That is a classic bait and hook. The same goes for the average ink-jet printer. This works well if you can be fairly sure that your initial customers will continue to interact with you after the shock of learning about the higher prices the next time they engage with you. As a seller you need to be able to communicate the value of those subsequent purchases. If you fail to do that you’ll end up with customers like me that see the higher prices of the replacement razors, skip that purchase, and just buy another new razor start up kit.

Price Promotions. This is when you temporarily give out coupons or rebates to reduce your prices when you: introduce new offerings, are trying to attract buyers from other businesses, or you have extra inventory that you are trying to get rid of. These promotions work really well when you create mini campaigns around them for special occasions. This strategy is like a kinder gentler bait and hook. You have to be careful with price promotions - customers will only tolerate them for so long. If you coupon too often or too steeply your customers might think that your work doesn’t deliver the value your price says it should. Think of this as a strategic tool in your pricing tool kit.

Phew! I hope you are still with me :) So up until now you’ve been thinking about what motivates you as a seller and some different approaches to pricing. The last piece of the puzzle is talking about the customer’s perceived value.

Customer’s Perceived Value

This conversation wouldn’t be complete without touching on perceived value. As a seller, maker, do’er or marketer you need to understand a little more about what drives customers. There is a pretty easy measuring stick for this and it’s one that will also help you work on your copy when you are communicating your what makes you so awesome to your audience.

The metric is figuring out what the price or cost of the best alternative is and adding the difference in value that your work brings to the customer. If it sounds a little fuzzy it’s because it is. Unfortunately though, it’s one of the best ways you can work to differentiate yourself and figure out how your customers perceive the value that you offer. Another way to think about it is to think about what your customers are missing out on if they choose to go with your best competition...actually that’s an easier way to think about it. Use this metric as a way to take your markets temperature on what you are offering and comparing that perceived value to what’s out there.

It’s important to understand what you’re really good at (competitive advantage) and to be able to communicate that in a way that will best serve your target audience. Perceived Value is not just buzzword fluff and it’s not something that you should just skim over. When you are thinking about how your business stacks up against your competitors or how you are looking to be different start at your core. Your core capabilities are the things you have to do every day to get your work in the hands of the people that need it most. Think carefully about how where you are special or unique throughout that process and why that matters to your customers. Take me for example. There are lots of Professors, Small Agencies, Management Consultant Firms, and Freelancers out there that do what I do. We all have access to the same kind of information and tools (relatively). What sets me apart is my process and how I do my best to deconstruct concepts and problems so the business I work with can take action right away. That’s my competitive advantage - plus I hate when similar professionals hide behind academia or corporate boardrooms because they think they are the only ones that can decipher and implement strategy.

Phew (again)! If you are still with me then you have a solid set of tools to start really thinking about what sets you apart, what motivates you and how you can start to tinker with your pricing model. This stuff takes practice so just start! If you are looking for a little something extra to help you get started you can check out the free Disruptive Decision Framework down below.

Don’t forget to check back in with me too! I want to hear about your successes, struggles, and questions as you start to get objective and deliberate about your business. 

What Business Consultants Don't Want You To Know

Don't get distracted by the fluff! 

Don't get distracted by the fluff! 

Business strategy is great to talk about around the water cooler and looks good on paper better on paper. But, is that where it ends in your business? I sure hope not. There are already way too many wantrepreneurs in the world right now. If you’re talking about doing stuff and not actually doing stuff then you probably won’t be around for very long.

How then do you give your strategy and your business the best chance at success?

It’s in the execution.

I have a few strategy secrets that I want to share with you. They’re the kind of secrets that “consultants” don’t want to share because it’s what they use in their “coaching”. Yes, egregious use of “” but I’m not mad about it and it’s going to happen a lot in this post.

I’m putting all the untrained and inexperienced “business consultants” who charge for strategic planning on blast right now. I’m putting you on blast because strategy is not something that should be locked in the safe at the end of the day and it’s not information that should be kept behind long contract obligations and expensive retainers.

Before I get really salty on the hucksters out there I want to just take a moment to share the positives of working with quality professionals. Working with a strategy or business development professional is great because they can potentially bring in a new perspective, insight, and infrastructure when helping you build a strategic plan. They are the ones that help make complex concepts simple and actionable for you and wherever your business is at the time.

Let’s get to dishing on some of those insider secrets I mentioned earlier.

The first thing that you can do to give your strategy (and business) a fighting chance is be extremely clear on who gets to make decisions. Not only the who but, what kind of decisions they get to make and why their input is critical. You are literally describing and clarifying the rights that the decision maker has. You want to call them rights because it will help bring the expectations to a crystal clear level and you will avoid problems around who owns that decision.

Here’s why this is important:

1. Help people that you rely on understand how their day to day decisions affect your business's bottom line. Feel free to get brutally honest and transparent about the real costs.

2. Helps increase the way information moves through your business. This is super important even if you are a solopreneur.

3. Helps with delegation of tasks, resources, and responsibilities. Again even if you are a small business, (even a one person shop) deciding where to spend your time is critical. To decide well you have to clearly define what kind of decisions get made in the business, when they happen, and how you follow up on those decisions.

The next and final ingredient in the secret strategy sauce that “consultants” will charge you for is helping you understand how information flows through your business. You might not think that is important but in order to help push your business forward, having quality information that’s reliable is crucial - winging it doesn’t make businesses go.

Well go for very long any way.

You need to be collecting the right kind of data. Decide what matters most and track those things. You would not believe how many times I witnessed businesses just throwing away their end of day sales numbers. If you are a retailer or a service provider how can you make good decisions is you don’t have an accurate picture of one of the most important pieces of information your business collects - how much have you actually sold today!

Here’s what you need to think about in terms of information flow:

1. Look at your organizational structure. Is how you run your business day-to-day, week-to-week, and month-to-month providing you with good operational data when you make your decisions? If not time to reorganize.

2. Are your incentives aligned properly. Even when you are a business of one if your incentives don’t match your workflow or needs it’s easy to get lazy. Lazy leads to bad information and bad information leads to bad decisions.

3. Get cross-functional. Are you looking at your business from a holistic enough lens? That might sound “fluffy” but when you are trying to make decisions that will make your supply chain more efficient it’s important to measure that against the entirety of your business. Do you use all the information your business collects to make decisions?

4. It’s easy to just keep your head down and keep working. Are you picking your head up enough so that you can look around and make sure the information you are collecting and using is relevant?

Those are the biggest things to consider when you are trying to shepherd your strategy to  success. Consistency is important. All the other parts of the strategic planning process can be worked on over time. Keeping your competitive advantage, finding the cheapest suppliers, and making sure your margins are not pricing you out of the market can be tweaked in the very short-term. Setting the stage for good information flow and better decisions are changes in behavior take a little more time, effort, and follow through.

So go decide some stuff and make your business a strategy executing machine!

How To Make Better Choices

**Steps on to soapbox.**

I’m getting a little tired of the entrepreneurs and the would-be business coaches/consultants that are minimizing the importance of strategy. I keep bumping into claims that business plans and strategic plans are a waste of time. A waste of time? Why are entrepreneurs just sprinting to a MVP? Is it because iterating makes you feel like your business is doing something?

I’m all for minimum viable products but that doesn’t mean your work shouldn’t be thoughtful, deliberate, and value-creating. Lately objections to competitive strategy I’ve been getting are when someone from this camp claims that their lean strategic approach is the only way to deal with the volatility/uncertainty/complexity/ambiguity of today’s marketplace. (That’s the VUCA acronym for all my strat-nerds out there.) I believe, not always but most of the time, entrepreneurs are using this kind of strategy argument as a cop-out.

What?!

I get it. It’s fun to tinker. Strategic thinking takes time, research, and is a little unsexy sometimes. Not to mention the need to be consistent and systematic with how your firm makes decisions. I’m 100% for “failing fast and failing often” but I guess I would add “failing deliberately” to those first two fail prefixes. Why “failing deliberately”? Because it means you tested something specifically, collected some data, and made a choice. Here are four steps, concentric circles, or tips about how you should frame strategy.

Strategy at its core is about making choices. Planning is great but it’s the actions that are taken after everyone agrees on the plan that really matters. There’s a very real breakdown that happens when you come up with the plan and then never do the work to realize the goals or <insert success metric>. There’s also a lot of power in choosing what not to do. Channel your inner economics student/professor and try to remember all those talks about opportunity costs. It’s real and it’s a thing.

When you take a step back from the core it’s about understanding how your business is positioned in its market. This is where your business’ malleability and your market’s predictability get pulled in. How quickly can you continue to align yourself with the tastes and expectations of your target market? Do you even know who your target market is and why they should engage with you? How are your competitors reacting to the choices you’re making? Are you really getting the most out of your supply chain? Immediate follow-up answer: Yes, every business (even solo-service-providing-consultant-freelancers) has a supply chain.

Another step back from that should be around how you are communicating with your stakeholders. Anyone that is engaging with you or that you want to be engaging with is a stakeholder. Why should they listen to you? Why should they care? Your strategies success hinges on your ability to tell a story that matters. It’s that story that will drive your actions, the actions of your employees and even the actions of your customers. You need to be able to communicate in a way that makes them feel like their roles matter. Engaging with you matters. Buying your product or service matters (and also provides lots and lots of value).

The last step back has to do with planning. Planning is part of strategy. Planning is NOT strategy. Planning also isn’t perfect. It’s hard to predict the future, it’s a volatile world out there. It’s important that you think of planning as a way of surveying a landscape. It’s a way of taking stock of what you have, all the “stuff” that makes your business work. You’re looking at things like capabilities, talent, money, time, social media celebrity status and trying to organize them in a way that will get your business to achieving it’s goals in terms of mission and profitability. What comes from planning is a framework for making choices and a way to evaluate those choices as you go.

Strategy is an interesting mix of science and art. It’s also hard and scary sometimes. A good strategy will push us to be a little uncomfortable and as Malcolm Gladwell says a little disagreeable. That’s where strategy differs from planning - the act of doing something! Making choices systematically can be tough and not always what you think running a business should feel like. I’ll end borrowing from Roger Martin encouraging you to make deliberate decisions around deciding where to play and how to win as you’re trying to get the most out of strategy.

**Steps off soapbox.**

If you're still stuck or wondering how you can start to make better choices in practice right now you can download a FREE resource I made for just this occasion. It's called the Disruptive Decision Framework and all you have to do is sign up and I will hand deliver a copy to your inbox. 

Here's Why You Can't Fake Agility In Your Business

What does it mean when an entrepreneur or business owners says that their business is agile?

Does it mean anything?

It does.

Business agility is a way of describing how quickly and efficiently your business adapts to changes in tastes, expectations, and needs in your market. It also describes your ability to create change in your market. The fervor over agility started in tech/software companies and is being applied to businesses in almost every industry and sector.

Being agile, in my opinion, is as important as focusing on being cost effective, delivering the most value and constantly creating an awesome experience for your customers. As an entrepreneur at heart, you have a natural inclination to being agile - it’s how you keep your business moving forward.

If you’ve been following me for a bit you know that I am not a fan of buzzwords. When it comes to business agility I turn down my jargon-filter a bit because being able to change in your market and make good decisions in your business is a big part of good strategy.

Sadly, just like any good business concept this too gets butchered in the corporate world. Faking agility is probably the worst thing your organization can do.

Here are 5 tips to help you spot an agility faking organization or team.

1. No real buy-in from your team or staff.

This is where everyone is on board in public and when an opportunity to change comes up there’s nothing but static. How can you be agile when you’re support staff is constantly complaining about the constraints of their roles? Change is hard. It’s easier to just keep your head down and work like you always have. It’s that familial force that impedes your agility. Watch for the overly enthusiastic in person that show signs of underperformance on the front lines. It’s up to you as a leader to create an environment where the people you count on are invested in you or your business’ value to get to real buy-in.

2. Calling yourself agile but not adopting the agile mindset.

Being agile in your business means that your mindset and your business model shifts a bit. Being agile means you are spending time developing communication, collaboration, feedback and even incremental delivery processes. Pro-Tip: It’s focusing on the process that matters here - lip service = no real buy-in. (See #1.) Seriously, focus on the process.

3. Always serving up the same product or service.

Competitive advantage is a fickle muse. It’s not something that you get once and then you’re done. For your business to be agile you need to be able to take time and evaluate what your market is doing. A big question to answer is: “Is my business still solving a relevant problem?” It can be tough though, there’s always a little resistance when you’re standing on a precipice of change. Don’t fear change and don’t fear failure. It’s in both change and failure that you will keep figuring out how to best serve your customers and most importantly how to keep creating value for them.

4. No active leadership.

A big term in agile business principles is the idea of the scrum. Since I’ve been playing rugby for so long this is one of my favorite parts of being agile. An agile scrum represents your team or the project you’re working on. Part of being in a scrum means that there is a designated leader or owner for the scrum. It doesn’t have to be the same person all the time and the person in charge of the scrum is really more of a facilitator. The benefit to having a lead in the scrum is that someone owns the project. It’s the accountability that helps drive your business or projects forward. Without a facilitator you have the potential to have projects make little to no progress and eventually fall off the face of the planet. Leadership should be rotated and it’s leadership that will continue to support everyone’s buy-in.

5. Killing creativity.

Being agile includes giving people permission to explore. To do that in your business it’s important you don’t create too many processes or systems to get permission or consensus at every single step in the process. While I totally support process and systems - too much of it can be a really bad thing. There has to be a balance. Don’t fall into the trap of getting so caught up in designing how you are going to be/measure/implement your business agility that you forget about applying the core principles of giving people freedom to go out and look for opportunities. The more logistical hoops you create the slower the innovation, the more opportunities you miss, and you are creating an environment for change to be really hard.

If you do the opposite of these 5 tips you’ll be in good shape. Agility is about helping people share a mindset and nurturing your business so that you can continue to make great stuff for people. An implied part of being agile is your willingness to never stop learning. It’s being open to new things that will help you see opportunities to better for your customers and clients.

Use Strategy To Focus Your Business Planning

Continuing to deliver your value better than any/all of your competitors can be one of the hardest ongoing challenges any business owner can face.

That’s competitive advantage and it’s one of my favorite parts of strategy. It’s one of my favorite because it forces you to consciously decide what you’re going to do in your business and more importantly what you are NOT going to do. If you think about strategy in terms of a set of boundaries for your company it will help you focus all of your business planning and business actions to make sure you are doing your best to keep your business growing.

I know what you’re thinking (some of you anyway): “I’m too small to think about strategy.” “Strategy is too broad a topic and it’s not worth thinking about.” “I’m too busy to think about changing my business plan.” “My business is running fine.” And my favorite, “I have a strategy in my head that I’m working on”.

If you thought or are thinking of anything along those lines I’m going to just straight up tell you; you're wrong. Wrong and probably wasting time, money, and burning yourself out.

I want to outline three big questions that you can use in your business planning process to help you fight off the temptation to do “everything” just because you think it’ll bring in some extra revenue. These aren’t questions that you just answer once and then your done either. It’s important to check in every once and a while to make sure that you are keeping up with the tastes and expectations of your customers as well as what your competitive environment looks like. Remember, competitive advantage has to be actively worked for because the your market will constantly be evolving.

1. Where are you competing?

This question is tackling what market opportunity or opportunities are worth working towards. Another way to think about it is to think about the pain that your business is offering a solution for. It’s important to ground your thinking around how you can better serve that market over your competitors. To do that you need to make sure you have the appropriate resources and abilities. You might have the best and most profitable market opportunity in your head but if you can’t get it to market effectively then you need to keep distilling that idea down to a scale or scope that makes sense for you.

2. How do you compete?

After you have identified a pain you are going to solve better than anyone else (market opportunity) you need to work on how you are going to compete. Are you going to offer the best customer service, the cheapest price, or just crush-it with value. I hope it’s the value part. To engage your customers they are also going to need to like and trust you, at least enough to give you a shot in the first place. How and what you communicate is just as important to the customer as the solution they are buying from you. You are looking for capabilities and resources (also read: knowledge or specialization) that will give you an advantage in serving your very specific market opportunity better than anyone else.

PRO-TIP: Better doesn’t mean cheaper necessarily - working for a cost/price advantage is a very specific way to build a business. If you aren’t sure of the best way to price I wrote an epic pricing post here to help you through specific pricing strategies.

Ok, so the first two questions are centered around Strategy Formulation. You flushed out the pain you are attempting to solve along with how you are going to do it better than anyone else. Strategy Formulation is not all there is to strategy and this is where most people stop or get stuck. It’s why strategies don’t work out or business plans start to become more of a burden to maintain instead of an actual resource to help you keep building your business.

3. How are you going to execute?

This is how you are going to organize your time, money, people, and resources to take the strategy you’ve developed and bring it to life. The business buzzword here is - implementation. Here is where you try to map out and identify your motivations, incentives, how you are going to organize your business (processes) and even what leadership in your business looks like. This applies for big businesses and probably applies best to the solo entrepreneur because it’s this implementation that will keep you accountable to your customers and yourself. This is the nitty-gritty. You are going to be working on the processes that will push you business forward. The best advice I can give here is to keep it as simple as possible. Take a look at your business and build the action plans or lists for all the functions of your business. This even includes something like an editorial calendar for your content marketing. A simple editorial calendar is a brilliant system that will help you manage your time and stress so that you don’t have to worry about what to produce next.

Now that you have an idea of the three fundamental questions let’s cover a few traps that businesses can fall in when they are working on strategy.

  1. Bad Strategy + Good Implementation = Doing the wrong thing really well. = Wasting Time and Money

  2. Good Strategy + Bad Implementation = Doing the right thing poorly. = No to Slow Growth

  3. Good Strategy + Good Implementation = Doing the right thing really well. = Sustainable Growth and Profitability  

It doesn’t matter if you’ve been in business for years or are just starting out. Taking the time to really think about strategy is important. You need to work out how you are going to take what you have access right now and use it to deliver more value than anyone else. Here’s the kicker: It will all change. Understanding your customers motivations and pains will help you to keep your strategy growing as your consumers are growing. Business plans and strategic plans are living breathing resources - not just stuffy documents voted on at board meeting. Get specific on how you allocate your resources and how you are serving your market.

Oh and for the love of Mike you should be writing this all down! Think of these processes and action plans like a recipe to your most favorite meal. You want to make sure that every time you step into the kitchen you are making your favorite dish just the way you like it - every time. Consistency matters when you are trying to get an audience to know, like and trust you. More on that later.

Then, rinse and repeat.

If you are still feeling like you don’t know where to start you can download my Disruptive Decision Framework free! It’s a resource to help you visualize your strategy and give the strategic part of your brain a little jumpstart. You’ll also get access to the Strategy School Newsletter that’s full of extra strategy action nuggets every week.

How To Think Your Way To Better Business Results

I’m going to be tip-toeing the jargon-buzzword line just for a second here. It’s worth it I promise. This post is all about creative agility and how developing your creative thinking muscles is one of the biggest assets you can carry around with you in your strategy toolbox.

Creative agility is the ability or the process of seeing problems or challenges in your business and taking the time to vet out ALL possible solutions (even the seemingly ridiculous) before deciding on a course of action. Being creative isn’t just about creating something, it’s also very much about how we think about the challenges your business faces everyday. It’s also a practice in authenticity. Working as your truest self and do the work that you believe matters most, not just what you think will make you the quickest buck.

When you are working on your business strategy you are using the resources you have to provide some kind of value to the people you are trying to serve. You are faced with all kinds of constrictions, deadlines and communication hurdles. Practicing creative agility helps you reframe what’s going on so that you can get to as many possibilities as you can and then deciding from there the best course(s) of action. Your strategy has a lot of moving parts to manage. It’s important to find the right balance for your strategic aspirations so your vision, the people you serve, your managers(even if you are a business of 1), and your resources are all aligned to be as awesome as possible.

Here are some tips and exercises you can work on to start building that creative agility muscle. It takes practice and creative thinking is a deliberate kind of thinking. You can’t force it and you most certainly can’t fake it. When you start to think more creatively you’ll be honoring the most authentic parts of your business and your strategy. Plus you’ll be more fun to be around at parties, which is a good thing right?!

1. Frame the problem, issue, or “why”?

Being able to tackle issues creatively requires a bit of focus. You have to have a specific end in mind as you are starting in on this process. You don’t have to have all (or any) of the answers at the start but your energy will be best spent when you have an idea of what the end looks like.

2. Embrace the idea divergence.

Give yourself time and space to think freely. Don’t let traditional barriers or approaches guide how you approach your problem. Get ridiculous, get unconventional and get improbable. This is the time to come up with any and all solutions no matter the cost, relevance, or efficiency. As you are brainstorming the only limiting factor you should hold yourself to is a time limit. With a time limit you are making sure that you don’t just get stuck coming with ideas so you can keep the process moving.

3. Establish your processes.

After you get all your ideas out in the open and articulated it’s important to have a process for getting through them. You want to systematically widdle down to a handful of ideas for serious consideration. This is the point where you start to add back some of the filters you took off through your initial brainstorming process. I would encourage you to only consider back the filters that are absolutely essential and continue to play with ideas or solutions that might seem non-traditional or that are different to currently available solutions.

4. Focus on making your customers look good.

I know it’s almost common-sensical to say that you should be focusing on creating value but I want to frame it from a different perspective. Don’t necessarily think that value-add solutions are your winners. Instead focus on making your customers look good in front of their social groups. Shift your attention just a bit to not just making people better off but making them look good. The way your business is perceived shifts a bit too. People want to engage with the businesses that are the most authentic and that create the greatest connections. Having a genuine interest in your customers after they buy definitely qualifies for both those categories. Most importantly, it ups your trustiness.

Creativity is more than just sitting around and waiting for inspiration to jump out of your computer screen. It takes deliberate work. You can give yourself a nice little head start and a safe/positive place to think if you put these four points into action. Understanding the components of how strategy is created and implemented is half of the equation. Getting people to resonate with your mission and to support that strategy is the other half and it’s your creativity that will draw them in.

I think if I were to have one last point. A bonus point, perhaps? It would be this:

5. Have fun with it.

There are a lot of businesses that take themselves too seriously. Yes, there is a place for big box distribution/manufacturing firms where the profit is in the volume shipped and the savings created by having an airtight process. That’s not most businesses and probably not you. Have fun with your creative process if for no other reason than to show your customers that there is a real person on the other side of the screen, receipt, product or service. When you allow yourself to get out of your own way and drop your guard you are able to better invite people to be a part of your community.

Get out of your own way and stop using templates or systems for strategy that you don’t really believe in. That’s not how you get to good strategy and you won’t be able to run the business you really want to run. Instead, get a little creative and be a little more authentic in your strategy creation process.

Your business will thank you for it!

 

Understand Your Market Or Fizzle Out

When it comes to starting a business, growth hacking your business or even just trying to launch something new in your business there is one piece of the equation that (in my opinion) does not get enough attention. Entrepreneurs and business owners are so fixated on getting the first iterations of their products, ideas, or services out of the door that they fail to assess the depth of the market they are serving.

An awesome idea with no market or a market that is on the verge of some kind of pivot makes for a bad business.

There are two things that are as good as fact when it comes to building a business:

1. Your customer’s tastes and expectations will constantly change.

2. There is no such thing as long term or sustainable competitive advantage.

It’s because of those two things that you really need to be able to identify your market/industry and to try your darndest to get a handle on what’s happening around you so that you can best position your business for success.

I know. You’re thinking that you don’t need a deep dive into understanding your market or industry because you know your customers and are solving a problem they have.

Great but...

  • Do you have any idea what your competitors are doing?
  • Do you know what your market is expected to do over the next few weeks, months or years?
  • Do you know what the demand determinants are for your customers?
  • Have you positioned your business such that it you’ve added to the barriers to entry that already exist?
  • Are you adding value or different from similar industries, products or services that might already exist?
  • Do you know what the most important external drivers are that motivate your customers to take action or engage with you?
  • Are you measuring success in a way that will keep challenging your business growth?

One more and then I’m done.

  • Do you know how your cost structure measures up to that of your market?

I could keep going but, I think you get my point. Understanding your customers and the world around you is imperative to keep your business moving in the right direction. It might feel like just a busy work exercise but it’s not! The better you know your business’ environment the more quickly you’ll be able to spot trends, you’ll be able to react quicker a your customer’s tastes and expectations change, and you’ll be able to ask good questions to get good feedback from your customers.

There’s no worse feeling than pouring your heart and soul into something only to have no one buy. I know because it’s happened to me once or twice in my early days. It happened because I skipped trying to understand my market and assumed that I knew what was best for my customers.

Besides answering the questions I listed above here are 3 things you can do right now to get a better idea of what’s happening in your market.

1. Go to the Bureau of Labor Statistics and look at trends in people’s discretionary spending.

Here’s a link that goes straight to the Consumer Expenditure page http://www.bls.gov/cex/ It might sound dry but after you figure out your demographic you can learn a lot about what is important to people by taking a look at their spending. Probably the most important thing is to see if people are already spending money on your solution - great way to look for validation. You can also tap http://www.census.gov to get more on drilling dow into the specifics of who your demographics are and how they behave. Yay “.gov”’s!

2. Break your target market into segments.

Think of segments as buckets that are full of different “people who...”. If your product/service is for small businesses then you should break them out into “small businesses who....have a physical location, have under 10 employees, need a business plan, etc.” That will help you as you are trying to quantify your market and your market’s behavior over time. Get specific and deliberate about who you are serving and it will help you make the most out of your time, money and emotional resilience in your business. Remember, tastes and expectations are always changing and they might change in different sizes, rates, or scopes.

3. Figure out what the experts are saying about the future of economic activity.

Yes, this step is about making your way through some economic data but I have a link that will make it manageable for you. This article from Kiplinger is a good place to start because it hits all the major economic indicators and offers links back to their sources so you can continue to dig around. Market and economic outlooks are important because they will give you some insight into the future of your customers needs, confidence, and spending. All very important information when you are trying to compete to get their discretionary dollar’s attention as economic conditions ebb and flow. Here’s the link back to the article: http://www.kiplinger.com/tool/business/T019-S000-kiplinger-s-economic-outlooks/

Most of the businesses I run into don’t give this type of thinking and planning enough attention because they believe they are too small to be affected by their “market”. Please don’t make the same mistakes. You are making decisions in your business everyday and the quality of those decisions are a direct impact of the information you use.

Stop winging it, stop wasting time, and start spending more time getting to know your customers/industry.