Making Business Strategy Simple
by Jacob Aldridge, International Business Advisor
Last month I discussed why “Growth” is the most dangerous word in business because it sounds so obvious while being far too vague to actually inform your business planning.
To help better communicate your strategic ideas, I then introduced the concept of Capacity Planning and your business ‘Cup’ – how much revenue you can generate in your business today.
This then boils all strategic decision-making down into one simple choice: right now, am I “filling my current cup” (increasing revenue, reducing inefficiencies) OR am I “growing my cup” (increasing your capacity to generate future revenue)?
Now let’s go down one more level of decision-making: The 6 Ways to Fill Your Cup, and the 6 Ways to Grow Your Cup.
Yes, it can be that simple! All of the million ideas you have to improve your business? They fit into this small list. You don’t have to do them all, and yet I wonder if there are some ideas here that you haven’t considered?
The 6 Ways to Fill Your Cup
- Better Analysis & Financials
From management accounts to real-time KPI dashboards, in a world of data how well do you truly know your internal operations? What revenue benefit will you receive when your leaders can pinpoint inefficiencies with laser focus, and in real-time to make the necessary change?
- Better Capability
Does your business have the right people doing the right job at the right time with the right skills? Individual training plans can be systemised across your organisation to increase individual capability, and therefore your talent and results as a whole.
- Better Sales System
The average salesperson wins 1 out of every 3 proposals. Many business owners achieve more, bringing their expertise and passion, but then struggle to hand this responsibility to anyone else because there’s no actual strategy or system. How would winning 2 out of 3, or 9 out of 10, change your bottom line?
- Better Brand & Marketing
Most businesses don’t do marketing well, because they don’t think it will make a difference. Investing in a clearer Brand and then integrating that with a consistent marketing strategy will improve your lead numbers, conversion rates, average client value, and loyalty. Ka-ching!
- Better Culture
You know the output difference between someone who cares about your business and someone who is punching the clock. If you’re not building your own culture, someone else is building it for you – and instead of being a commercial boost, it could instead be a drag on all of your plans.
- Better Operations
As companies move from a ‘Doing’ business into a ‘Process’ business, around the $1.5 million revenue mark, the entire nature of their Operations changes. The way things used to profitably operate slowly derails, unless you evolve your workflows, responsibilities, meeting schedules, training plans and more. Then at the ‘Capability’ and ‘Strategy’ phases, it all changes again.
The 6 Ways to Grow Your Cup
- More People [Resources]
If you hire another person, the capacity of your business to generate revenue will increase. That should be true for every role, from admin to sales to management, but is most obvious for technician jobs where a new person (or new resources) can directly create dollars.
- More Products
How much larger is McDonald’s now that they can sell fries with a hamburger? How much more money could you produce if your best customers were buying multiple products or services from you? And remember the rule – your second product is always more profitable.
- More Channels
Great channels to market, in particular strategic referral partners, are like hiring additional salespeople – without having to pay them a commission! With a steady flow of pre-qualified, pre-sold leads coming to the business, your current team’s ability to generate more money is greatly enhanced.
- Better Pricing & Packaging
If you doubled your prices immediately, you would also double to size of your Capacity Cup. Of course, you might lose 95% of your customers as a result. But what’s the sweet spot? What price point, service package, or client journey could you implement that would maximise the revenue and profit return of your clients?
- Better Client Base
Speaking of clients, when was the last time you sacked a few of the worst ones? The 80/20 Rule suggests that 20% of your clients are responsible for 80% of your profit (and I’ve seen ratios that are even more concentrated than that!). What impact would it have if 100% of your clients looked like your best 20%?
- New Paradigm
Lastly, most valuably, and most commonly ignored: in what belief system do you and your leadership team operate? If you live in the Old Paradigm of fear, blame, and victimhood then even the greatest business strategies will only help so much. Move to a New Paradigm of abundance and responsibility, and watch your Cup grow and flow into the future.
There is more to life and business than money. But for those who blindly believe that Culture eats Strategy for breakfast, I would observe: “Without Strategy, Culture Starves”.
Actions
- Which simple choice are you making today?
Are you “Filling the Cup” or “Growing the Cup”? Does your team know?
- Where do you begin?
At the next level of detail, what are the priorities for focus or change? Where do they fit in those 6 options?
- What happens next?
Are some of the strategic projects listed here new to you and your business? What opportunities might they create, as part of your future Capacity Plan?
Next month I will talk about how entrepreneurs normally find Strategic Planning to be an obstacle between Inspiration and Execution, but how finding shortcuts to action usually means worse results in the long run.