Growing a business requires focused effort
For a few years now, I’ve been consulting with “second stage” companies across the country in support of their business development efforts. In virtually every case, I get to hear all about how much customers love them, how great they think their products and services are, and yet how hard it is to find time to focus energy on taking the business to the next level. With a fair amount of experience supporting entrepreneurs, I’m starting to see some common themes about what holds businesses back.
So for all of you entrepreneurs out there, here are four thoughts that might help prevent you from running the business around in circles and instead focus your energy on leading the business forward:
Growing a business doesn’t make your life easier. Once you have a few million in revenue, you’ll be able to get kick back and play golf every day. The business will run itself. Right? Although that’s what most entrepreneurs believe, it’s inaccurate.
Taking care of the customers you have now is hard enough, but it takes a whole new effort to push the business through a growth phase. I’ve come to believe the growth phase is even harder than the start-up phase. Launching a business is really tough, but it’s also new and exciting. Managing growth is like trying to launch a start-up up while still performing your old job. You have the existing business to run plus the new efforts to address. It’s just that much more complex.
Think about any change you’ve ever made in your life. Did it instantly make things easier? Or, was there a phase of increased stress and work that eventually led to an improvement. Life and business are the same this way.
You need to be more than good. You need to solve a problem. Getting your product or service dialed in so it’s just the way you want it might get a company launched, but it won’t grow the business. Pretty much any company can get about 10 percent of its target market by putting something out there that’s decent. The trick is that growing the business to a 20 percent, 30 percent or 40 percent market share means being more that just good. To gain this kind of market share, you need to make sure your target customer thinks you’re solving a problem.
How many restaurants can you think of that had great food, but didn’t mange to stay in business for more than a year or two? Tons. This is because good food is important, but not the solution. People eat out because they want to have fun with their friends, to be treated like they’re special, to feel cared for, to feel welcomed, to feel hip or sophisticated or energized or whatever that restaurant experience brings to the table. The key is customers want something they can’t get at home. They have a problem, and a good meal out solves that problem. If a restaurant serves solutions along with good food, that restaurant is going to grow and endure.
Not all customers are equal. Business growth comes from increased sales to customers. While some customers are a lot of work, others are a breeze. Some customers want to pay only the minimum, while others are comfortable with bigger ticket orders. The 80/20 rule applies to most customer lists: 80 percent of sales come from
20 percent of the customers. Talk to your staff and make sure those 20 percent of customers who generate the majority of your sales are also getting 80 percent of their effort.
In most business, there’s some small group of customers who are not only not generating a lot of sales, but also creating the majority of the work. That costs money. Be sure your resources are appropriately focused on clients who serve your bottom line, then target your growth efforts to get more of those good customers.
When you’re growing a business, you don’t just want more customers, your want more good customers. Weeding out the unproductive ones will mean you’re less likely to attract more bad customers and also frees you up to pursue more good ones. Know your customers, know the good ones from the bad and be smart about which ones you want to grow your business.
Killing yourself working “in” the business, kills the business, too. Running a business is hard. New challenges arise ever day, and there’s no magic fairy dust that makes them go away. You have to deal with them.
I know it feels like a lot to deal with, but too much time spent with your nose to the grindstone means you could miss the big picture. You might do a great job handling the day-to-day issues. But without taking time to plan, strategize and lead, the business will be left to wander aimlessly.
Schedule an annual planning retreat. You might think you can’t afford to take a day away from the everyday issues. But the reality is, this time is some of the most important time you can take. Think about where the business is going, how it’s changed over the past year and make a plan for where you want it to go.
As a business leader, you must be disciplined in your dedication to being a leader. This means providing vision, guidance and direction. If you’re too busy talking on the phone and answering e-mails, who’s steering the ship?