Strategy

Get Practical for Real and Sustainable Business Growth

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When you hear the word entrepreneur what do you think about? Who comes to mind? What scenes play out in your imagination? 

Are you taken back to a Gary Vaynerchuk video you watched earlier that day? 

Do you think about what it would feel like to be rubbing elbows with Mark Cuban and Mr. Wonderful on Shark Tank? 

Maybe it’s the Facebook posts of Tai Lopez that you skip over in your news feed? 

Or, it’s none of those. Maybe it’s the process of chasing venture (or angel) capital for an idea and the art of the deal that gets your engine going. 

The point I’m trying to make is that I’m pretty sure there’s a noticeably smaller population of people that hear the word entrepreneur and instantly associate it with the definition of the word practical. 

I’m willing to bet that most of you reading this don’t think of putting in long hours, writing blog posts that go unread for months (or years), showing up to do a Facebook Live every week to an audience of one or two, and writing hundreds of yet to be responded to prospecting emails a month as entrepreneurship. 

The sad thing is that it’s the business builders who understand the reality of their market and who are thinking practically are going to be the ones that win. And, it’s a small proportion indeed. 

Why? 

Because those practical entrepreneurs aren’t distracted and aren’t feeding this romantic disconnect between where they are today and what “could be” for them. The probability of going from where you are today to Taylor Swift levels of success is small. Really, really small. It’s not impossible but it is improbable. This post’s goal isn’t to tell you that you shouldn’t dream big but it is going to help you reframe how you’re building your business so you can attack it practically and build momentum over time. Most importantly I want to help you shake the romantic idea of what it means to be an entrepreneur and instead embrace the work it takes to build a business you care about and that is good enough to contribute to the life you want to build for yourself. 

Whether you’re just starting out or have been at it a while I challenge you to get a little more practical with how you’re investing your time, money, and resources. I challenge you to embrace these three practical tenants. 

1. You’re always going to be racing against obscurity. 

There’s no reason your business shouldn’t be everywhere online. You need to make sure you have a presence in all the places people look for and validate against, information about businesses online. You have to be constantly wearing two hats, the business owner had and the media business hat. From a practical perspective, you are competing against the attention of everyone when it comes to marketing online. You’re competing against someone’s new baby pictures and also against businesses like Tai Lopez who throws six-figures plus per ad on social platforms. That means you are always going to be working on communicating authentically with your audience, striving to build real relationships and interacting in ways that are unscalable to try to rise above that noise. 

It’s going to take work but the tribe that you build, the relationships you develop with your audience will matter more because it’s engagement that will ultimately support the growth of your business. Oh, and it takes time. Lots of time. Fighting obscurity is a momentum game. You have to show up every day because that’s what it’s going to take to get noticed, build trust and create experiences for people that can’t be beaten. 

Practical Pro Tip: Work on creating large pieces of content that you can splinter apart to share on adjacent platforms. For example, if you’re writing blog posts every week maybe you can talk about the topic in a short Facebook Live video or you wax poetic on a microphone about and turn it into a podcast. You get more leverage out of that large piece of content and increase your chances of reaching more people. Try to start a conversation - invite your audience to share their experiences and offer a platform for them to teach something. More engagement means more interest in you which leads to more attention for your business.  

2. Selling is way more work than you think. 

This is one of my favorite things to work on with entrepreneurs. No one really understands how brutal it can be to try to sell a product and sometimes even worse a service. Lots of business builders think that optimizing their site’s SEO, creating a killer About Page and having a clear offer/value proposition means that potential customers will just “get it” and buy. Wrong. It takes time, energy, relationship building skills, and a private-eye level ability to do research to create opportunities to show someone a proposal. Getting practical here means getting comfortable with the fact that you’ll send hundreds of emails that don’t get opened or responded to. You’ll spend hours sending out snail mail marketing materials that end up getting thrown away. And, you’ll get more buyer objections than you thought to prepare for. 

There is hope though. Sales is a game of inertia. When you remove all the personal stuff that goes with selling, like taking people’s rejections personally, from the equation you are left with the beginnings of a system. The more emails you send out the faster you get feedback about what works and what doesn’t. The more opportunities to sell you create the more you’re able to hone your presentation skills. The more research you do about how your product or service could serve your customer the easier it will be to identify potential pain-points and ROI opportunities for your next customers. It takes work though, and going at it for a while with little to no results can be really taxing, even on seasoned business builders. The trick here is to always check in with how you’re framing the work you’re doing and to keep an eye on your macro-view. Just because you get a few “no’s” back to back doesn’t mean you have a bad product or service or that there is no market for you. (I mean if you get multiple dozens of “no’s” you might want to reevaluate what your business is offering or go back to the product-market fit drawing board.) It means you need to revisit what you do, for who, and why they should care. 

Practical Pro Tip: Use tools whenever possible to keep your sales process as neat and as tidy as possible. I personally love Hubspot because I can track emails opens, link click-throughs and add notes on relationships I’m trying to build with people all the time. Also, don’t take local hand-to-hand combat type networking for granted. Showing up at in-person networking events can help you with your presentation skills and help you build relationships that can support the growth of your business. Lastly, DO NOT take this lesson in practicality and just create a canned LinkedIn message and shoot it out to the two thousand people you’re connected to on LinkedIn. Everyone hates them, you look lazy and (at least for me) people will not take you seriously. 

3. Nothing is ever going to be perfect. 

I know this is a tired piece of advice but give me a chance to show you something a little different. Sure, old adages like “perfect is the enemy of good enough” exist and seem simple enough but I’m sure that not enough entrepreneurs really heed this advice. For instance, there is an entire market out there that exists to teach people how to do anything online. I love information products and online courses as much as the next business builder but what I don’t love is the tendency for people to collect course logins like kids (or me sometimes) collecting Funko Pops. (Yes, I collect Batman Pops...I mean he’s one of fiction’s most brilliant strategists.) They do this because they believe that completing “one more” course or getting a little information will finally allow them to perfectly offer, perfect position, and perfectly deliver their value. Unfortunately, that is rarely true and what’s most likely is that they are doing something that feels like work because it’s in the service of building their business but they aren’t actually doing any business building work. 

Don’t let this happen to you. Don’t let weeks, months or even years go by before you build the courage to show someone what you can offer them. 

Don’t let something that feels like work, but isn’t actually work, distract you from going out into the world and building your business. In the LEAN methodology, there’s a lot of weight put on rapid learning, iterating and seizing opportunities to pivot when you’re attempting to provide value for a customer. I’m not saying go out and collect a login to a LEAN online course but what I am saying is that learning as you go when you’re building a business is really ok. I’d encourage it even. Why? Because the opportunity cost of waiting and the sunk costs associated with time and money in a topic you may discover you don’t actually need are huge. So you stumble a few times and lose a customer or two. Big deal, you learned something and can apply that to your next go around. Same goes for any content you produce, no one expects to see super polished right out of the gate. To the contrary actually - raw and authentic win in today’s market.  

Practical Pro Tip: Embrace just-in-time learning. Don’t worry about hoarding every possible skill you think you need right now. Just go! Enter the social platforms, people’s inboxes and your real life interactions with enough information to get the job done in an authentic and meaningful way. You should also choose which tools you want to go deep on carefully. If you’re editing video media, for instance, don’t worry about learning everything there is to know about Camtasia, Adobe Premiere, and Wirecast. Pick the one that you’ll use the most and work on building a functional skill set that will allow you to put out your video content on a regular and CONSISTENT schedule. For everything else, there are YouTube tutorials. Seriously, avoid the feels like work but actually isn’t work trap at all cost. You need to be very careful about how you allocate your time and should always be checking in with yourself to see if what you’re currently working on is actually going to bring some kind of direct value to your customer. 

This was a heavy post so if you’ve made it this far I just want to say thanks and congrats. That’s kind of a big deal. What’s a bigger deal though is that you are hopefully thinking about your business in more practical terms. That’s where you are going to win. Being an entrepreneur right now is a trendy thing. The more entrepreneurs I meet, the more I’m disappointed I am with how diluted their businesses are. People that are trying to build businesses that serve everyone and do everything are not long for this world. 

Focus on doing things that don’t scale right away. Focus on delivering real value consistently for your clients and customers. Focus on building real relationships and investing in your business. That’s the work it takes to be practical and build a business that you are proud of and that provides for you the life you want. An article from USA Today, May 2017, quoted that 20% of businesses survive past their first year. 20%! That’s not necessarily the story that social media tells us with all the “entrepreneurs” and “hustlers” out there. So what does that tell us? It tells us that there is a world of people out there playing business and it’s the few that get serious about being practical every day that really makes it. 

It’s easy to be a wantrapreneur, choose to be one of the 20% and win instead.

PS - Here's my simple call to action. If you're struggling with your entrepreneurial journey and you think a little support might do you some good, go check out the new group program that's launching. Even if it's not for you we can still bond over one of my all-time favorite Disney movies. 

Communicate Authentically for Better Business Results

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Today I want to talk about the impact of communication in your business and work on why taking it seriously is good for business. Being a good communicator impacts everything from marketing and sales, traditionally thought of when it comes to communication, all the way to management and big picture strategy. If you can’t communicate your values, your mission or who you’re trying to serve then how can you expect people to engage with you? I don’t care how tight your business plan is or how dialed in your product or service is - “the best-laid plans of mice and men often go awry” when you have poor communication and information is poorly managed. 

And yes, you were just literary’d

Communication is the mechanism by which any strategy in your business can be successfully and repeatedly executed. Making sure that everyone understands what’s expected of them, yes even setting your customer’s expectations, is just as important as having a good overall view of your business and a great plan in place. Communicating strategically is not just about leaving clear instructions for the next person on the totem pole. It’s about helping your stakeholders understand the why and the story behind the business. That’s what’s going to get them to care enough about who you are, the problem your solving and the value you’re delivering to engage (and keep engaging) with you. It’s also about empowering your customers to be involved in the process and to take ownership of their experience. 

If you and your business can’t communicate simply, clearly, and effectively how can you expect your customers to engage with you. Better still how can you expect all the rest of your partners, vendors, employees and even interns to jump on board with your strategy, make good decisions, and get information where it’s needed. 

Here are 5 tips to better business communication (even if you are a solopreneur)

1. Go all in on trust. 

The act of communicating - sending an email, answering a text, or chatting in the hallway - means nothing if the people you are communicating with don’t trust you. Getting a plan together and expecting that people get on board with you will only work if they trust that your motivations and incentives are aligned with theirs. Crafting a story is only part of the equation when you are trying to create a movement - it has to come from an honest and real source. Creating any strategy can be a messy ordeal sometimes and it is critical that the people that you rely on and that rely on you can trust that you’ll make good decisions if and when the time comes. 

2. Get simple. (Recurring theme throughout this site) 

Communication through an organization does not have to be multi-level and defined by your org-chart. Great communication happens when ideas can freely flow without the fear of retaliation or judgment. That’s not to say that sometimes you won’t entertain a bad idea but supporting the agency of your employees and partners to share is huge. Simple communication channels also mean shorter turn-around times on getting things done. When problems arise they are easier to spot and easier to deal with. 

3. Have a framework. 

When you are trying to communicate with your stakeholders and customers you should have a few buckets to pull from. This creates consistency and it helps you keep your sanity over the long term. Three of my favorites are trying to inspire, educate, or reinforce. Inspiring every once and awhile is important because it can be a means to celebrate accomplishments and to introduce new ideas or changes. I don’t need to tell you that everyone likes to feel important so use messages of inspiration to keep your people motivated and to keep them connected. Education and reinforcement are important because your stakeholders need direction. Now I’m not saying every communication needs to be extremely detailed and outline very precise direction but they should have some substance and it’s important to encourage learning and improvement. 

4. Clear calls to action. 

The inbox is a very special place for people. So when someone does allocate a little time out of their day to open a message from you make sure there is a clear call to action. If you’re sending an email that’s just rambly, offering no real value and with no clear (easy to take) next steps you will not get a response. You may actually be doing a little damage to the relationship you’ve cultivated with the recipient which will impact the probability of them opening your next email. 

5. Care. 

This is a big one and I wanted it to be last for a reason. If you take away anything from this post it’s to realize that when you’re communicating with someone to remember that they are in fact a real person. In today’s business ecosystem it’s easy to get desensitized to the spammy LinkedIn pitches that clutter inboxes. It’s easy to get instantly turned off because you opened a piece of communication that looks like it was written for a generic, systematized and artificial avatar of a customer. This doesn’t just go for email, it goes with any kind of communication. 

If you really care about the engagement people have with your business you have to treat them like people. You have to think about what motivates them and where the value is for them to be on the other side of your message. Just because we’re in an era where most people look for the quick win, what they can take or how to make themselves look better doesn’t mean it’s right. Care about what your customers have to say, have a little empathy for the decision maker you’re trying to reach with your pitch deck, and try to understand how what you say in your marketing materials impacts your potential audience.  

Running a business is already hard so there’s no need to compound that by being a bad communicator. Focus on communicating in ways that are clear, trustworthy, simple, organized and that show that you care and you’ll save yourself all kinds of headaches. We didn’t touch on it much but one of the biggest bottlenecks in any business process is how information is managed - which includes how you communicate. Every time you reach out to someone or post to an audience you have an opportunity to deliver value and build a relationship. You need to take those opportunities seriously because if the people you’re reaching out to don’t get to know you, like you, and trust you they will definitely NOT be giving you their money. 

PS - Here's my simple call to action. If you're struggling with your entrepreneurial journey and you think a little support might do you some good, go check out the new group program that's launching. Even if it's not for you we can still bond over one of my all-time favorite Disney movies. 
 

Your Business Model Blueprint

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You can NOT work on growing your business without first taking a look at your business model.

Your business model is the blueprints of your business. It’s the roadmap. If your business was a human body it would be the circulatory, nervous and skeletal systems...probably. Your heart? That’s your passion which, is also important but it’s not your business model. Your business model is the thing that outlines how your business is going to make money. Which would be the blood (and breathing) if we’re going to stick with this vaguely anatomically correct business reference.

There is a lot of hype about growing a business these days. It’s hard not to jump on the hype train when you see an environment of Tai Lopez Facebook ads, new crypto millionaires every week and guys like Gary Vaynerchuk motivating you to hustle harder than you think is even possible. But, even with all the hype and plugs for mentorship programs (shameless plug: be sure to check out my new group coaching program if you’re thinking of finally taking the plunge) and get rich crypto strategies, lots of people still forget to take a look at their “business’s” underlying business model.

At its most basic purpose, a business model answers the “how” question when it comes to you delivering or creating value for your customers. If you plan on being successful, which most people do, you need to make sure your business is organized and your foundation is solid before you can go off and start executing some the business growth strategies and tactics du jour.

If you don’t take the time to really flush out your business model then running your business ends up being kind of like taking a shower with your clothes on. Sure you’re in there and sudsing up with your favorite lufa but are you really getting clean? Probably not and now that sweater vest is never going to really fit right again.

Below is a quick blueprint you can use to see if your business will function how you want it to when you are ready to start executing your business growth strategy. Not only that but sometimes you are so involved in getting your product or service out, dealing with customers, and making sure you are doing enough marketing that you lose track of how your business is actually working.

Wing’ing it is never a good business model.

Think about these concepts and use them to help tighten your business up - most importantly don’t wear your clothes in the shower.

Customer Value Proposition:

- Who are your target customers?

- What important job are you doing for them? What need are you fulfilling?

- How are you packaging that offering so that it is the most effective way to communicate your value to your customer?

Profit Formula:

- Think about your revenue and where is your profit coming from? What kind of volume do you need to have to reach your profit goals? Are you selling at low prices with the hopes of high volume or high price low volume - does that match your market?

- How are costs allocated? Keep track of your spending!!! Remember your time and overhead count too.

- What is the minimum level of margin you need to earn on each sale to reach your profit goals?

- How fast is the turnaround time on the inputs you need to sustain your businesses activities? Think and plan for those cash flow needs.

Key Resources:

- What are the most important factors in bringing your business and strategy to the next level?

- These include people, strategic alliances, technology, how information flows, distribution channels and any specialized equipment.

- When you map these out it makes executing your strategy a lot more efficient!

Key Processes:

- What are the processes that are repeatable (and eventually scaleable) that you use every day to deliver value to customers?

- What are the metrics you use to keep track of your success? What gets measured gets managed!

- What are the norms in your market or industry? Understanding how business is done in your market will help you get in front of your customers faster and in a way that they are familiar with. It will also help to build your social credibility and proof as a business in your market.

These four major concepts help you better outline the model that your business follows. When you break everything out it will help you better focus and avoid doing things in your business that are wasteful or that even are too far away from what you actually wanted to be doing in your business.

Model first then grow!

How To Be More Productive At Work

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If you’re serious about growing your business then I think you should consider playing more strategy video games. You heard (read) this correct. Whether you’re a Clash of Clans “Clasher”, a multiplayer online battle arena type League of Legends or Dota player, or someone who really likes the speed and variety of Hearthstone; I’m going to argue that all work and no play literally makes Jack a dull business building boy (or girl). In this post, I’m going to challenge you to reallocate the time you spend taking social media and online content consumption breaks during the day to playing more casually strategy type video games.

Really.

Let’s start by acknowledging that most people don’t dedicate every “working” moment of their day to adding to their own (or someone else’s) bottom line. There are lots of studies and frameworks that suggest getting the best productivity out of someone they actually shouldn’t be trying to be productive 100% of the time. There is, in fact, a diminishing marginal return type of effect when it comes to productivity. It’s from these studies that you see frameworks like Pareto, Eating Frogs, Personal Kanban, SMART methods, and the productivity hacking list literally goes on forever.

When it comes to time management and productivity there is no shortage of the ways in which you can organize your day. Regardless of how you organize your day though there is a constant and that constant is some kind of downtime or transitional time. This is where the fun begins.

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I want you to get more play time into your day by using your breaks strategically. Before we can do that though I want to cover why breaks are important in the first place.

Why is it important to take breaks?

1. Taking breaks during the workday help stave off boredom and keep us more focused. Keeping boredom at bay and staying focused is important because it directly impacts the return on the time you’re spending and the quality of the outputs regarding your given task.  Alejandro Lleras a psychology professor at the University of Illinois explains, “…Deactivating and reactivating your goals allows you to stay focused. From a practical standpoint, our research suggests that, when faced with long tasks (such as studying before a final exam or doing your taxes), it is best to impose brief breaks on yourself. Brief mental breaks will actually help you stay focused on your task!”

2. Breaks also help to reevaluate goals. I think it’s safe to assume that we’ve all had experiences where it feels like you’ve been working really hard and are throwing a ton of time into something only to find out you deviated from your original goal or intention by the end. Taking breaks along the way allow you to come back to tasks with a refreshed perspective on the work that you are doing.

3. Some of the best problem solving happens when you’re more relaxed. I mean I can’t be the only one that has his best ideas in the shower or when I’m on a 40-minute drive to and from a client site right?! When we are relaxed our brains can better free connect ideas and concepts because our imagination takes the wheel in our brains associative bits. Focused work actually creates cognitive barriers that can actually impede our natural problem-solving abilities.

4. Breaks also allow for the reduction of stress and the management of morale. When you take a break it allows you the opportunity to escape from the demands of the work at the moment. It allows you the opportunity to take some time for yourself and to engage in some self-care. It’s not uncommon for advice like go outside, get up and stretch, talk to someone, etc. These activities are encouraged because they are proven to drive morale up. When you’re happier at work, you’re more engaged and you feel better about getting through the rest of your to-do list. Not to mention all the quantitative benefits that can be gleaned from happier and healthy workers when you start to factor in things like the marginal product of revenue.

Ok so now that we’ve set the table on productivity and the importance of breaks let’s jump into why playing strategy video games is important.

Casual strategy video games afford the same kinds of benefits as the other, more traditionally,  recommended break time activities. You get all the benefits listed in the 4 points above so I won’t be repeating myself but here’s where the extra benefit comes in.

Video game play has been shown to reduce stress, increase cognitive function, increase resource allocation or management skills, and even help people reframe how they think about time management.

Let’s break each one of those points out briefly:

1. Reducing Stress. Building and growing a business is stressful. Giving yourself permission to stop when you can and schedule in some time for some levity, escapism, and adventure can be good for self-care. Allowing yourself to temporarily step away from deadlines, duties, and responsibilities can improve mood and help facilitate feelings of control which can combat the anxiety that entrepreneurs can experience doing the work to grow your business.

2. Increase cognitive function, resource management and problem-solving. Strategy games have been shown to increase cognitive flexibility. Cognitive flexibility the ability to hold different ideas simultaneously or to be able to switch between concepts rapidly. When you’re building a business you’re often faced with having to make decisions in real time. The more practice you have with juggling different, possibly dissident, ideas the better you’ll be at charting your decision throughline to make better decisions consistently. These types of games also often have players manage resources and solve problems in real time which translate to better real-world planning skills and innovative thinking to move past challenges.

3. Time management. A study (link to study) from psychologists at the Plymouth University actually found that playing Tetris helped to improve self-control. Self-control is one of the biggest points of failure when it comes to trying to hold yourself accountable for your time management systems. In the last five minutes, I’ve checked my phone three times during a time that was supposed to be dedicated to creating this content. Ouchies.Circling back to the list of all the different productivity models will show that breaks are built into all of them. While the timing and durations vary the fact that you need a break to do your best work is a pretty consistent theme. Allowing yourself this structured play time can give your brain a dopamine hit to look forward to instead of incentivizing you to go out and find one during predetermined work periods.

Conclusion

I hope that by the end of this post I’ve challenged you to be a little more honest about how you spend your workday. It’s easy to dismiss the idea that playing games in the middle of the day are a wise use of your workday. It’s easy because there’s a stigma about what work should look like. How can you tell your boss, your client, spouse or to-do list that you’re being productive when someone walks in on you as your immersed in a fantasy-strategy world? Well, that same question can be asked of anyone caught mindlessly scrolling through their phone at work? The rub here is that predetermined work breaks that are designed to keep you engaged in your workday are always going to be better for you over the hundreds of times you’re checking your phone through the day. Especially, if it takes on average about 15 minutes to get back to your work after each break.

Moral of the story, play more games at work to do better work - because science.

You're welcome.

Want to get ahead in 2018? Understand these Five Forces!

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I read an article that took me back to my undergraduate economic/business studies at Bentley University (College when I was there). 

Well took me back to the feelings I had as an undergraduate. 

Allow me to take you back. 

Take you back 10+ years ago to young me sitting in my first Microeconomics class - a class that would yield my lowest grade in my academic career to date might I add. What I remember most about this course were the conversations and the breakdowns between what the book said and how we could apply in real life. I loved this course but I seriously struggled, so much so that the professor actually said I should consider a major change. 

But I stuck with it. I knew, even though I didn’t always get the material at the time, that it was important to know about the incentives that motivated how firms interact with each other and how people interact with firms. Fast forward to now and I’m teaching college courses, mostly economics and finance, including designing original economics courses for business programs. Take that Freshman-Bentley-Econ-Professor-Who-Didn’t-Believe-In-Me! It’s being pragmatic in understanding what motivates people and making everyday economics a skill set that I rely on everyday. Getting to the heart of causality and creating strategies that have real impacts for people and firms. 

Why did I share that with you?!

It’s because of Michael Porter. This article reaffirmed the mission that I have for myself and for Disruptive Strategy. Basically when I grow up (professionally) I want to be in a similar position to him. Porter is a strategist, economist, and professor that has done an amazing amount of work touting the benefits of competitive systems to get and keep economies moving and growing.

Reading this article made me feel like that undergraduate that had a world of possibilities in front of them. It helped me remember that the skills and the tools that I’ve been sharpening over the last decade not only have value but are needed by people and firms because it’s more than what simple Google searches and templates can provide. 

One of my favorite systems of his is the Porter 5 Forces Model and I wanted to share it with you. Since its inception strategic consultants, planners, and advisors have been using this system as a basis to create strategy for firms of all sizes. The kicker is that it’s based in pretty topical economic theory - remember the things that “shift” a supply and demand curve, or how markets find equilibrium, or better still price elasticity of demand?? 

Yup, it all comes from there!

Here’s what you need to know about the 5 Forces Model to be a better strategist: 

There are 5 Forces that drive companies in competitive markets: 

- The threat of available substitutes
- Amount of buyers and their bargaining power
- Amount of sellers and their bargaining power
- Rivalry/competition within a market - number of existing players
- Barriers to enter a market

Substitutes 

When bringing a product or service to market you have to consider the available substitutes. How much do they cost? How close is the experience to your product or service? What might differentiate you or how can you increase your value/perceived value? There are lots of tablets out on the market now but, why do people choose to buy an iPad? Why might someone choose Google’s Nexus 7? How can you position yourself to be perceived as a niche product or service?

Buyers

Can the buyers work together to have an affect on a market? What kind of information are you providing for your buyers? What is the collective experience of your consumer? Do you have a product or service that allows for multiple points of entry at differing price levels? Is the experience so streamlined that consumers can always expect a certain experience? Are you building stakeholders or are just banking on perceived obsolescence? Think your cable company. Odds are if you call complain and leave their prices won’t need to change because there are more than enough subscribers willing and able to pay the prices that they ask for. But, if you everyone in your town/city cut the cord and subscribed to Hulu and Netflix then the cable company might have to listen to the concerns of the consumer. 

Sellers 

Can you benefit from pitting sellers/vendors/distributors against each other for your business? Can you diversify the way you collect your inputs? Are there any suppliers that would help you grow your economies of scale - reducing your average costs over the long term. When you enter a market or are thinking about making your product unique it’s crucial to consider your supply chain. If there are any hiccups or if you choose cheap over value then that might have an effect on the quality or consistency of your own products. 

Rivalries between existing firms 

It’s important to assess where other firms are in your market. What kind of market is it? There will be big differences between how you approach an oligopolistic market vs something where there is a bit more competition. It’s also important to monitor how the market behaves. What I mean by that is keeping track of how things are marketed or how fast products/services change. An example would be Apple’s iPads and iPhones. It used to be that those were launched about annually but because technology is changing so fast it’s moved up to about a 10 month release time for new stuff or at least updates to existing stuff. When doing your branding or positioning seeing what the currents are doing will help you better utilize whatever resources you have available. Nothing worse than marketing in a place where no one is looking. So identify your markets and who consumers as well as firms identify themselves. 

Barriers to entry

What will it take to enter a market or just start a business? What are the costs or investment necessary to be a competitor? Are there any obstacles as far as availability of resources to get you going? What are tax liabilities or government policies that need to be taken into consideration? Nothing worse than being in business for a while then getting slammed with a tax bill that you weren’t even close to being prepared for. Are there distribution channels available for what you are doing or do you have to create your own? You might be in business already and need some help gaining some scope on growing - so it’s important that you understand the questions to ask to get the best information to overcome barriers. 

I know went over these 5 Forces really fast and it’s a lot of questions to ask or even try to answer. There's a benefit though in even starting to think about this stuff. When you start to think about these forces and answers these questions some really neat stuff happens. You start to get really clear on what sets you apart in your market. You start to see what your (real) competitive landscape looks like and you start to see how you can continue to add value to people's lives. 

I just realized how long this post is going, so if you are still with me - you are awesome! Awesome and exactly the kind of person I want being part of this community. I want to do more on creating strategy and using the 5 Forces Model so if you have questions on application or making this more pragmatic please shoot them along by signing up for the Disruptive Strategy Newsletter!
 

How To Get Unstuck: Barriers To Entry Edition

Worried about the obstacles that you’re facing in your business? Odds are those obstacles are the result of not understanding the barriers to entry your business faces - even if you’ve been in business for while. 
 
“Barriers to entry” are way more than business buzzwords that fumble out of the mouths of people playing business. In fact the concept of “barriers to entry” is applicable to more than just starting a new business venture. The last time you probably heard that term was in an economics class in either high school/college or if you’ve talked to me long enough and have listened to my opinions about a few big public businesses. 
 
At the very least, that makes my competitive strategy heart sad.
 
No need to panic though because in this post we are going to talk about why it’s important to think about the barriers of entry and exit in your industry or business and how that can help give you a bit of an advantage. Competitive advantage is not static - you have to keep working at it! 
 
One more quick thing. To all the naysayers out there pining over why their businesses aren’t growing - the pie is not too small. There is enough marketshare to go around for everyone if what you’re offering is valuable! 
 
Especially, those that effectively differentiate, understand their barriers and pick the right niche. So before I start getting push-back on how strategy is just a mental exercise and that it takes big bucks to use strategy effectively just remember that if you can get your business to be laser focused, you’ll always find a rabid and engaged customers.
 
Ok prerequisite rant over.
 
So a barrier to entry is simply defined as a thing you need to do to get your business up and running. Barriers can also be reasons why customers aren’t buying from you. It can be an action, a purchase, government regulations or even experience needed to get you into an industry or to get customers to engage with you. Some industries are more capital intensive than others - think the capital requirements of a car manufacturing company versus the capital requirements of an english tutor. 
 
The other side of that pendulum are industries that require lots of experience or education. Think of the time and experience it takes to be a great doctor and attorney versus more entry level jobs.  Some firms attempt to capitalize on a specific barrier to control what firms can get into their market or industry. They may control the raw materials, contract with wholesalers or distributors, pay big lobbyist dollars to keep regulation in their favor or even control all the media outlets to keep you from advertising.
 
That doesn’t mean you shouldn’t compete especially if it’s what you are passionate about! You just have to figure out how you can differentiate and deliver on the things that make your product or service special.
 
Barriers to entry tend to me a muddled mess sometimes. Start-ups and veteran businesses can stretch themselves too thin when trying to figure out which ones are most mission critical to focus on or to try to create a competitive advantage. Here are a few I like to keep in mind, that are more focused on how you run your business, when I’m thinking about keeping a business competitive in terms of barriers.

  • Network Effects - Think about the communities your stakeholders have created in support of each other and your brand. This can be a huge intangible asset.
  • Proprietary Processes - This is your firm's secret sauce. Do you do something in such a special way that has your clients and customers resonating with not only the result but how you bring that result to them. I have a favorite coffee place and it’s not because the coffee is great but because the coffee servers are great to talk to.
  • Switching Costs -  Cell phone companies are amazing and notorious for this all at the same time. Locking customers into contracts creates a barrier for new entrants or at the very least creates a lag time before groups of potential clients or customers can be reached.

These absolutely apply to customer's willingness and ability to engage with you. Are you making it easy for them to buy from you? To connect with your story or brand? To understand why you are so valuable that they would be doing themselves a disservice by not using you? 
 
Barriers to exit are very similar to entry. Some firms might choose not to play in a certain industry because it would be to hard to exit quickly or smoothly. It can be a challenge to offload plant, capital or equipment when a business closes. Firms might have high financial obligations to their employees might be locked into contracts with their suppliers.
When you are thinking about working on your competitive strategy I wouldn’t sleep on barriers. Better yet I challenge you to take a shot at drilling down into the three that I listed. Can you figure out where your advantage can come from and how you can better differentiate yourself. The biggest takeaway is sorting through all the noise when people talk about barriers to entry. Spreading yourself too thin can tax your resources and your spirit.
 
I would love to hear how you are navigating your barriers to entry? Do you have any insights or questions? My goal is to keep the conversation going and to really get entrepreneurs more in tune with what’s going on around their businesses and not just what’s happening in them. 

Here's What United Airlines Can Teach Us About Customer Service

United Airlines what are you doing?! 

First David Dao, then a scorpion and now an engaged couple are escorted off a plane by a marshall for not wanting to disturb a fellow economy riding sleeping passenger. 

I reiterate, what are you doing?! 

Unfortunately investors (and the market) shrug off bad press a lot faster than the consumers that are the subjects of the press but, the last few weeks have been a great example of exactly how NOT to deliver good customer service. To support that point I’ll defer to the UAL (United Continental Holdings) stock charts and direct your attention to the fact that amidst all the non-apologies, outraged passengers and those “re-accommodated” by Oscar Munoz the UAL stock is still hovering around rolling six month average prices. 

Without spinning off and trying to tackle the complexity of running a successful airline business in a highly price sensitive, highly regulated, low margin and monopolistically competitive market I want to focus on one thing - the customer. 

I want to use the poor behavior of United Airlines as an example of how companies should be treating their customers during less than ideal times. Great customer service will help you weather bad press and it will keep customers coming back. In an industry where the services are pretty much substitutable that extra edge can make a big difference. 

1. Your customers have to come first. 

Your customers are the lifeblood of your business. You’re job as a business owner is to make sure that your customers not only get the service or product you sold them but also an experience that warrants them coming back (and bringing friends). Sometimes though, there are hiccups. Sometimes you run out of products, sometimes you deliver late and sometimes you overbook a flight. That should never be the customer's problem. Remember, they chose to spend their hard earned dollars with you and if something happens that impacts how you deliver your value then it’s up to you to make it right. 

Now with United and David Dao that could’ve meant maybe offering the Department of Transportation’s $1350 maximum if the delay a passenger experiences is more than two hours before moving from voluntary to involuntary denied boarding procedures. If you run into a situation in your business that prevents you from delivering a less than awesome experience then I sincerely encourage you to eat cost of over-accommodating now to make it easier for your customer. It will prevent you from having to backpedal to your audience later hurting your credibility and forcing you to constantly “re-accommodate”. 

2. Consistency matters. 

Most people are willing to try a new product or service at least once. If they aren’t happy with it they explicitly let you know by not engaging with your company again. So, first impressions matter. After that first impression though, for the customers that do come back, they will be expecting some consistency in their experience. That means that as a business owner you have to spend time and energy on making sure that the experiences you’re providing always meet the high standards you have for your business. It’s why your customers keep coming back and why they will trust you when you try to sell them something new. 

If a figurative scorpion happens to drop out of a figurative overhead bin it may be the result of some slacking standards. Possibly. I’ve seen this a ton of times, when a business owner gets a little too busy it can be really tempting to cut, what you think are little, corners. I really insist that you don’t because your customers will notice, they always do! 

The four biggest reasons for consistency then are:

  • it will allow you to collect data that will help shape future decisions about your business,
  • it creates accountability for you and your customers,
  • it helps support your credibility and keeps you relevant,
  • and it supports your efforts in delivering on the mission of your business. 

3. Happy customers make for great brand building. 

Everyone loves a good love story. What everyone loves more than a good love story is when an airlines keeps an engaged couple from arriving at their destination wedding location due to some really bad customer service. Now this story might not drop the stock price but the constant sound bites playing on the radio, TV stations and YouTube channels will not make for a happy image. I’m not saying that when your customers break your policies or are challenging to deal with that you should just let them steamroll you but there’s got to be a better middle ground. I mean, going from zero to air marshal seems a little aggressive. 

If you’re looking to turn your customers into your advocates you have to listen to them empathetically, acknowledge their feedback and look for solutions that are mutually beneficial. When people see your business as one that not only provides a great product or service but one that really cares about the people it serves you get buy in. This is how you build community around your brand and where your ravings fans will come from. 

To build or grow a business that people will emphatically stand behind you have to care about your customers. You have to show them an experience that will make them want to come back. You have to be willing to listen to them when things don’t go quite right. And, you have to show up for them every day. You might not have the budget to outspend a competitor’s marketing or investment in infrastructure and that’s ok. Consumer’s will always do business with the people they know, like and trust before any shiny marketing campaign or new technology. 

10 Quick Actions To Grow Your Business

Grow Your Business.jpg

T-Minus eight days until the 2017 tax filing deadline. I’m hoping at this point you’re not one of the people that’s waiting until the last minute to file because we all know that’s when software stops working, Post Offices run out of stamps and servers are so overloaded that your returns never get transmitted. But that’s not you right?!

Right!

With all that extra time you can work on other parts of your business.

I’ve been running into businesses lately that are looking to get out of the flurry of their day to day to do’s and get into acquiring their next clients or customers ASAP. Which is what I'd like to help you spend that extra time that you have because you won't be scrambling to file your taxes.

Spring, in general, is an awesome time of year for businesses - the flowers start to bud and business owners start to pop their heads up from their desks and realize that maybe they weren’t as proactive as they thought they were going to be through the winter.

So, let’s get to working ON (not in) your business!

It’s my job to make access to better strategy easier and more actionable for you. In the spirit of that, and to kick off Spring 2017 right, I have put together a list of 10 quick actions you can take today to better shape your business’ strategy and to make your business more profitable.

Action 1: Decide who is going to get your focus right now.

You need to be able to articulate those who are the most important in your business right now. Is it a specific kind of customer, a new market segment, the people you’re interacting with online, the neighboring businesses in your community, your fans, etc. Getting clear on who you want to give dedicated focus to will help you better hone how you spend your energy and more articulately measure the return you’re getting on those efforts.  

Action 2: Look Around.

Determine who your most relevant competitors are and understand how they do business. This will help you dial in what makes you special and how you deliver the best value to your customers.

Action 3: Business Aspirations

Get clear on what success looks like for you. Is it a dollar amount, a specific profit margin per transaction or a certain number of customers served? Being clear and SPECIFIC about what success looks like will help you make more consistent decisions in your business.

Action 4: What Gets Measured, Gets Managed.

You won’t know if you are spending your time well if you aren’t keep track of it. The same goes will all your resources. Right now, pick a few things that you think are important and start tracking them. How can you know if your business is on the right track if you aren’t measuring what you are doing?

Action 5: Communicate Your Mission

For your strategy and your business to be successful, everyone involved needs to understand not just what you are doing but why you are doing it. Is your mission and vision written or presented in the easiest most earnest way possible? People won’t support you if they can’t understand why what you are doing is important.

Action 6: Stop Planning.

Strategy is not planning. Strategy is deciding what’s important, creating a way to make systematically better decisions and taking action. Do something right now that will push your business forward in way you can measure that aligns with your mission.

Action 7:  Competitive Advantage.

It’s really tough to be the lowest cost option and the highest quality {insert what your business does}. Don’t worry about chasing market share and start worrying about what you do better than everyone else around you. Make a conscious decision to focus on keeping what’s special about you and communicating that specialness with everyone.  

Action 8: Look For Trends.

Customer’s tastes and tastes are always changing. Look for trends in how people are spending to make sure that you are delivering what they want how they want it.

Action 9: Do All Of Your Branding Assets Align?

Perspective and perception are everything in business. Take stock of what your business culture looks like. Does how you run your business match how you interact with your customers? What about your social media and other web assets - are all of those personas aligned? People are a big part of your strategy and how you present yourself to people matters.

Action 10: Simplify Your Business Model.

Businesses are most profitable when they are easy and intuitive to deal with. Look at how your business functions from start of customer relationship to finish. Are there any steps you can remove, streamline or products/services you can repackage. Your business model is how you make money, it’s important that you make it as easy and as clear as possible for better engagement.

Strategy doesn’t get better of more effective unless you actively work on it. You shouldn’t just be winging it! You might not have time to do all of these right now but pick the ones you think could help you get motivated and taking actions first and knock them out.

Commit a little time to making your business more profitable this year, I mean it’s still only April!

Oh oh oh..before you go, I want to share something with you! If you were wondering if any of the stuff I write about is worth anything I want to share a testimonial with you. This is a business I’ve worked with that’s seen some great results because of the work we’ve done together. It’s super exciting because it means the stuff we talk about (and the stuff I write about) really works!

Last week Nunzio gave a very compelling feature presentation about how he helps businesses maximize their profit. This week I want to share how he has supported Serenity since we started working together four months ago.

The first thing we discussed was setting Serenity apart from all the other yoga studios in the valley. And there are a lot of them! He asked me specific questions to flush out my value proposition and to get me thinking about my mission and vision for the business. Where did I land? Real people, doing real yoga, with their real bodies. Catchy!

Nunzio helped me identify and describe my ideal client so we could brainstorm techniques to sell more services to both current and future customers. We talk regularly about building relationships with fellow community businesses to generate sales and using current satisfied customers to help spread the word. We’re now talking about bringing in new products that I can sell to current customers to increase revenue. Green tea or Luna bars, anyone? He held my hand while I raised prices, he played a large part in developing the script for my commercial and he remains extremely patient with me as I struggle with my technological issues. And, we support all our ideas and decisions with data. The numbers don’t lie.

Drum role please … thanks to Nunzio’s support, I have increased my revenue year over year by 80%! I think that’s pretty impressive!

Finally, Nunzio is the consummate professional. He pushes me outside my comfort zone while also maintaining guardrails to keep me focused. He learned all about the yoga industry in order to provide educated opinions and direction. I am extremely grateful for his support and his positive attitude. Being an entrepreneur can sometimes feel pretty lonely, but it’s nice to know I have someone in my corner who is always watching out for me!


Michele Lyman
Serenity Yoga
— http://www.serenityyogastudio.net/

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!

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.

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. 

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.

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.

How Improve Your Project Management Skills

Whether you are starting a business, working in a start-up business or have been in business for a while I can guarantee, with almost complete certainty, that you have dipped your hands in the murky waters of project management.

I know this because when you break down all the moving pieces and guts of almost any business, what you’re left with is a string of projects. Some successful, some not so successful and every one of them a potential cornucopia of interesting data about your business.

It’s in the data and outcomes from your projects that you will be able to make the important decisions that guide your business through the ebbs and flows of your market. When you don’t manage projects well you run the risk of wasting lots of time, money and energy on things that will never add value to your business or your customers.

That makes for a bad time.

Managing projects can be tricky business. What’s important to measure? What’s not? How are you tracking progress? Who’s accountable for what? Etc. Another part of that trickiness is the fact that there is an industry full of project management support businesses trying to get your attention. These businesses attempt to lure you to spend money on software, training and consulting that promises to fix all of your business woes - and even helps you come to terms with business woes you didn’t even know you had.

What are you, a busy entrepreneur trying to grow a business, supposed to do?

I have a simple framework to help you keep your well intentioned projects on task and on budget.

Before that though I want to share a quick caveat: I don’t think that there is one perfect tool or solution for everyone. I do think that if you look hard enough you should be able to find the tool that best supports the sizes and scopes of your projects. I also believe that the tool you adopt should be creating efficiencies and using your project data to tell stories that you can use to make solid decisions in your business. But, if you needed to start somewhere I highly recommend the Disruptive Decision Framework - this hyperlink will take you to a blog post on this site where you can get your free copy and tells you how to use it. 

1. Is this project really important?

The first step is buy in. Is the proposed project on deck really going to move some needle in your business in any kind of meaningful way? That goes for the good and bad possible outcomes. Has everyone involved reached some kind of consensus on the project’s importance? What (in as quantitative and as measurable criteria as possible) does success look like? If you are a solopreneur talk to someone you trust about what you’re thinking about exploring. Talk to two people. The worst thing you can do as a solo entrepreneur is start down a closed-system project rabbit hole. I’ve seen good businesses and entrepreneurs burn out because they dumped too many resources into a project that wasn’t really important.

2. Outline the project.

In this step you are outlining and identifying all the important milestones you need to hit to get to some kind of outcome. You are also thinking about all the people and resources you’re going to need to support the project as well. Knowing that very few things in life follow any kind of strict schedule it’s important to build in some flex room as you are attempting to get a handle on what the time frames are going to look like as you approach and pass through each of those milestones. It’s also here that you’ll identify the formal scope of the project (what are you hoping to acheive), roles and responsibilities of the people involved at each phase (this counts for you too solopreneur), what information you are going to track and why.

3. Get it on the books.

There’s a good chance that this project is not going to be the only thing your business is working on at any given time. Armed with the knowledge that things don’t always go as planned do your best to schedule your projects in terms of the milestones that need to be completed. This is important because as time passes you’ll be able to balance the demands of your day to day operations with the scope and goals of your project. After it’s on the books go back and work out your outlines for a work plan. It’s great that you gave yourself 3 days to get from one milestone to the next but what are the crystal clear action steps needed to honor that timeline commitment. Vague timelines might be acceptable here but vague workplans are not. Spend time really getting into the nitty gritty of what needs to get done. Whether you have a team or not - getting specific and granular is your best bet at actually getting this work done.

4. Create guiding policies.

Before you start working on your project you need to set up the policies that will be used to manage the project. It’s not redundant I swear. These are the things that help you manage issues in your team, expectations, accountability, quality and so on. Picture the guiding policies for your project as the rules of Monopoly. You know, Monopoly - the game that breaks up families and friendships. That Monopoly. Your guiding policies act as an independent and impartial judge for the times when playing by house rules gets a little out of hand. As the work in your project ramps up managing people's, expectations, responsibilities and the rest of your business could get potentially dicey. Guiding policies act as a way to navigate challenges because you decided them before you started. They can also help to keep you honest if motivation starts to wane as a solopreneur. And, just like any good game of Monopoly you can literally decide to abort a project by flipping the game board over in a fit of power hungry plastic house rage should the need arise.

5. Work, Observe, Record, Evaluate, Repeat (Maybe)

This is where the project rubber meets the road. You are all planned and scheduled up now get to work. As you are making your way through your milestones make sure you stop to celebrate little victories or assess the little challenges along the way. Because you did such a great job with identifying all the quantitative, measurable and trackable data throughout the project you’ll be able to see in real time how the work you are doing impacts your business. You’ll also be able to make decisions about adapting or pivoting your business as the market changes around you. Probably one of the most important parts of this step is being able to recognize when you should just pull the plug on a project. There’s no shame in quitting here - you still learned something that will help better shape your business and by quitting you’ve salvaged any remaining time, money and sanity you may have lost by following through. Individual outcomes might be good or bad but if you’ve designed an experiment or project well you can only get good information from the experience.

6. Deliver and Evaluate

Congratulations! Regardless of the outcome you’ve finished. That means you are hopefully delivering what you said you were going to in a time that closely resembles what you originally quoted. During the process you laughed, cried and communicated lots. After you’ve celebrated your completion it’s time to tear through the data of the project. What parts of your work plan were successful? What weren’t? Where were the bottlenecks? What could you tweak? Was all this work really worth it? Giving your project a proper post-mortem will provide you with insight that will help you get the most out of your next projects. Don’t be afraid of failing or of fallen flat deliverables. You can always tweak your processes and frameworks. Be afraid of putting yourself through the trouble of launching a project with vague ideas, no accountability and no clear way to identify success.

Whatever system you choose to help you manage your next project should touch on these 6 steps. If they don’t then you are missing something. There are tons of resources at lots of different price points but the most important thing to remember is that any of the project management tools are only as good as the information you are feeding them and the commitment you give them. Sounds cliche I know but I can share first hand that I have worked with businesses that have dumped ridiculous amounts of money in project management software that they never used.

Being a tool hoarder is not going to help you do better work in you business.

It's Time To Start Paying Attention To Cash Flow

Odds are you probably have seen a business plan at least once in your life. It could have been a well detailed spiral bound behemoth of a document or even scribblings on a napkin at the bar. (The scribblings are definitely my favorite!) The funny thing is about business ideas is that everyone has the capacity for great ones - I can think of at least three conversations in the last 24 hours that started, “You know what we should do next..”. The problem isn’t the visualization or the concept (OK, maybe that’s the problems sometimes.) it’s the detachment people have from the reality of the financials.

Also taking real action but, for the sake of this post, let’s stick to the gross underestimation of the need for and management of resources in a business. Being an entrepreneur can be an expensive endeavor and that goes for spending money or if you don’t have money spending time which by virtue of opportunity cost can also be measured with money.

Relatively speaking, money is not hard to come by these days. Credit is easier to get and there are amazing resources like Indiegogo, Kiva and Kickstarter to help get your project off the ground. Heck, you can even start a GoFundMe campaign if you want. The problem is that would-be entrepreneurs don’t understand how cash flow works and that it can get kind of expensive to take that napkin from the bar to a full blown business.

For the record, I really do understand that with very little liquidity, some time, and some great use of web resources you can launch a venture with a small budget.

But what next?

How do you plan to use the resources that are coming in the door to keep building your business?  <<Cough Cough>> Remember, making deliberate choices is the heart of strategy...<<Cough Cough>>

Here are a few tips to get you thinking about your cash flows even before you really have them.

1. Get real about your expenses.

When you are small and your funds are commingled it’s easy to rationalize a monthly fee, some office supplies, a subscription, and maybe even rent in a co-working space without classifying them as proper business expenses. You are never too small to take your business idea seriously. Start tracking from the outset and you will be able to make more realistic assessments of the business and be able to allocate future resources that much better.

2. In the same vein as tracking your expenses you should be staying in line with GAAP - Generally Accepted Accounting Principals.

You don’t have to be a CPA to crunch your own numbers but you should have an idea around how and where your figures are coming from. That makes your tax preparers job easier - especially if that’s you. It also makes it easier for you to compare what you are doing to your competitors. If you are just making up accounting metrics and accounting systems on the fly it will compromise the integrity of your financial information. Figure out how your industry tracks their numbers and try to emulate that. It might not always be a perfect fit but you’ll be able to tell how you are doing against your market.

3. Have a collections policy.

Sending out an invoice is great. Getting paid 180 days later is not so great. An economist could argue that people are profit maximizing little automatons and I would say that works for businesses too. Not just in maximizing what we traditionally think as profit but also conditions, environments, and choices that make sticking around easier. What all that means is that you are going to hear excuses as to why people can’t or don’t pay. You may not be able to avoid the headaches that come with being paid on time but with a well thought out and incentivised invoicing strategy. Think “2% net 30” kind of stuff. This will help keep your cash flows relatively predictable so that you can plan around them, in good times and bad.

These three tips are not your conventional cash flow kind of tips. I know. But they are important factors to consider for your business. You can have all the spreadsheets and calculations you like but if it’s not quality information, if you aren’t collecting anything, and if you aren’t realistic about what’s going out the door then you won’t be in business long.

How To Disrupt And Innovate Right Now

Today I want to channel my inner Seth Godin.

(Short posts that generate reflection and inspire action.)  

I want to challenge you to disrupt and or to innovate right now. Wherever you are, in whatever role you serve in your business and in whatever project you are working on as you’re reading this.  

Disruption is not a strategy. It’s is about simplification. Look at your business. Are there any parts of your customers experience that you can simplify or streamline? Is the value you offer simple by design so that your customers know exactly the pain you solve? Can anyone (I mean anyone) understand your pitch? Where can you attack a problem non-conventionally or even contrarily so that your business stands out against your competitors a little more?

Innovation is about efficiency. What can you do that will save your business time, money, emotional energy or even just keep your audience engaged. Innovation happens when you can generate ideas quickly, then test and experiment ideas and finally decide what’s important to your business. Where can you add value without adding costs?

Disruption and innovation don’t have to always happen on a large scale. It’s also not only for technology companies our of Silicon Valley. I challenge you to look at your systems and try to find small changes you can make today that will push you business forward, in whatever way you measure your progress.

 

Focus On Outcomes To Get More Out Of Ideas

There is too much focus on idea generation and idea management and not enough time given to trying things out and actually testing to see if an idea is worth iterating on. Every article and post I’ve seen lately seems to elude that the only way to find success through innovation is coming up with the next newest, brightest, sexiest, or most cost effective idea.

What?!

What happened to the iterative process?

What happened to going out and talking to your customers or potential market to figure out what they wanted?

What happened to doing the work to test whether an idea had merit or could be adapted to succeed?

In order to address those questions entrepreneurs have to first learn (re-learn) how to think about outcomes.

The funnest part about what I do is that I am always getting the opportunity to help entrepreneurs and even politicians understand that strategy is not just about a plan of action or a set of goals you might be working towards. It’s about creating systems to make good choices and to clearly evaluate possible outcomes for those choices. Thinking about as many possible OUTCOMES is such a big part of strategy!

I need you to think back to your high school or college economics classes. You may vaguely remember hearing about oligopolies as a particular kind of way a market might organize itself. It’s not a board game and I’m not going to give you a pop quiz about that particular market structure but what I do want you to try to remember are the concepts around Game Theory.

With me?

Even if you have no idea what I’m talking about I promise it will make sense in a second.

The neat thing about this simple “game” you played in your economics class or that you’ll see in the Game Theory Wikipedia entry is that all the possible outcomes were laid out in front of you. As either a player in that game or as an objective observer of the game, think Dungeon Master if you’re a D&D fan, you were able to always make the choices that were not only best for you but wouldn’t leave you making a decision that could get you into trouble. That’s dominating strategies vs. dominated strategies.

No one wants to be told that they are a bad decision maker but if you are constantly pushing yourself or your team to come up with new ideas you might be falling into bad idea territory. Before you make a commitment to allocate time and resources to idea generation you should evaluate the ideas or business choices that are already on the table. Are you measuring them effectively and can you make marginal changes to increase performance or get to however you are measuring success? Best of all you should be thinking about the outcomes of your ideas or choices.

You’re probably thinking at this point - ok that sounds good but what outcomes should I be looking for? The outcomes you are concerned with are the responses you could anticipate to your choices by your competitors and customers.

How might your customers respond to you offering a discounted version of your service?

Would they still perceive it as valuable?

What about your closest competitor? Would they try to undercut your new discounted pricing to try to stem market share?

Answers to those questions are outcomes. The better you get at trying to anticipate how people and businesses might react to the choices you make with your business the better prepared you will be and ultimately you put yourself in a position to be more profitable. You won’t have to waste time scrambling for the next idea or worry about losing customers because you will have responses and resources allocated/planned for the fallout (good and bad) of any choice that you make.

That’s strategy!

It came from iterating and evaluating not just rushing some new idea to market.

Build A More Compelling Value Proposition

What’s your business’ value proposition? Is it to be the “best” at something? Is it to serve your customers better than your competitors? Is it my favorite value proposition faux-pas, just an explanation of what you do that’s full of 3-Dollar business words like: maximum impact, advisory services, creating synergy, problem-solving, solution ideation, increasing efficiency and allocating resources efficiently?

Awful.

Value propositions are supposed to appeal to the people that you are trying to serve that reaches them at their core. If your value proposition is good enough it will make it through all the noise and advertisements that your customers are bombarded with daily and sit right at the top of the feel good parts of their brain. That’s what a good value proposition does.

A value proposition is not just your mission (missions are super important for strategy to work though). It’s not a catchy tag-line. Well I mean, bad value propositions are. Bad value propositions talk about capabilities, features, and generic accolades.

When you use jargon and fuzzy words to convey your values (or just what you do) you are making it hard for your customers to engage with you. You aren’t pushing the buttons hard enough to move your customers in either a rational or an irrational way. Borrowing some concepts from the economics courses I teach; when you don’t do a good job of aligning what you offer with the tastes and expectations of your customers, you are making yourself substitutable.

Ahhh price elasticity of demand, you are a heartless but fair judge.

Customers are always measuring the value of something against the dollars they have to trade for that something. A good value proposition lets your customers know that they are getting their money’s worth. The real question behind a great value proposition is - How do you communicate the real benefits of what you do and why someone should do business with you?

A good starting point to framing your value proposition is to make a choice. You are choosing to either operate at the lowest possible cost or sell something for more. Sounds simple and probably a little cliche but there are some caveats here that most people don’t think about.

Let’s start with selling for more. When you charge a higher price you are communicating to your customers that you are offering a higher quality product. Your solution is more expensive because it solves your problem better than your competitors. The value you are providing when you are selling for more has to be measurable and meaningful to people. These are two traps you need to avoid to successfully charge higher prices:

1. Meaningless Differentiation.

You are charging a higher price for a reason right?! You need to do your best to make sure it’s a reason that matters to your customers. Seriously, charging a higher price because of some input that your customers don’t really care about or that doesn’t really affect them is not a good way to differentiate. It has to be customer focused!

2. Unsustainable Differentiation.

You have to do your best keep what makes you special for as long as possible. If people are working with you because they like what you are doing, your goal is to grow those connections as wide and as deep as you can. If your competitors start to imitate what you do you’ll risk losing your customer base to lower prices. When they buy from you make sure YOU are part of that value.

On to low cost. Competing for low cost producer is not my favorite way to build a business but in some models it works great. The value you are communicating to your customers here is that they get to have everything they want and keep more money in their pockets. Easiest example to think about is Wal-Mart. To have a successful value proposition in this space the value you communicate has to be extremely specific. There are some traps here too to watch out for as well:

1. Maintaining your lowest cost status.

As a small business or an entrepreneur there’s a lot of pressure to innovate. The problem is that lowest cost producer is a title that’s really hard to keep. Don’t fall into the trap of offering low prices with hopes of that you’ll steal market share away from your competitors and keep them. When you raise your prices, customers who are seeking for low cost will move on to the next lowest price points.

2. Substitutes.

When you enter the low cost/low price game you’re dealing with customers that are looking for the most bang for their buck. Think personal finance tracking apps for smartphones and tablets. There is a lot of competition and a lot of very close substitutes. It can be really challenging to communicate with customers about the value of what you offer when you are trying to scream over everyone else in your marketplace.

As you can see there’s no guarantee of success when it comes to choosing selling at higher prices or trying to compete as a low cost producer. Success comes from the heart of your value proposition. Your value proposition has to resonate with people so that they feel like buying from you matters, be different enough to stand out among your competitors and provide measurable substance.

When you are building your copy talk to people like people.