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5 Questions Every Business Owner Should Answer Before They Try To Grow Their Business

Actually, starting a business is pretty easy these days.

Figuring out how to sell something, something you know how to deliver or something in demand, isn’t that hard or expensive anymore – if, your goal is to simply bang out a living and get by.

kenteegardin via Flickr

If, however, your goals are a bit more ambitious, say to grow an asset that you might sell, become wealthy or dominate an entire industry, then you better be prepared to do things a little differently than most.

Below are five questions that, when answered intentionally and addressed constantly, will keep you rooted in the place where real growth and world domination occurs – in the realm of the customer.

1) How can we make our value proposition as simple as possible to communicate?

Of course, this assumes that you have a truly unique point of differentiation, one that allows you stand out over and above anyone that dares call themselves your competition.

But, possessing this core value proposition isn’t enough. You must also find a way to communicate it in a simple and consistent manner. A phrase, one word perhaps, a metaphor – lacking these, you’ll find it hard to garner the kind of momentum that real growth and strong branding requires.

I’ll boldly suggest that the name Duct Tape Marketing carries the kind of simple message of difference that you’re looking for. A great deal of the success of my venture is due to the pure luck of associating that metaphor with my systematic approach to small business marketing.

2) What additional streams of revenue can we develop from our core offerings?

Many companies fall into this one quite by accident, but real growth comes from seeing what you do well and proactively building additional streams of income, residual or otherwise, into your business model.

Over time this is a very powerful way to build an asset. When you can point to revenue coming from many converging streams you build a buffer against a sudden market or competitive change.

Look at every product or service you offer and start ask yourself what the next natural sale could be. For example, if you offer an online training program, could you offer a live workshop and then an ongoing maintenance program? If you’ve discovered how to do something well, could you teach others in your industry how to do it well and generate addition revenue while elevating your status in your industry?

3) What does our total customer experience look and feel like?

It seems like most businesses focus attention on all of the elements that get the phone to ring, but spend very little time diagramming exactly what happens during the sales process, the product or service delivery process or anything that might happen down the road that would stimulate repeat sales and referral introductions.

By mapping out the entire process of marketing touchpoints, all the places where your company does or should come into contact with customers and prospects, you can design a total brand positive experience – the kind that gets people talking about how you’re different.

Stop and ask how you could be easier to do business with. How you could do something that not only wows, but also inspires. What could you do that would make your customers smile? How could you surprise them?

4) What resource gaps do we need to fill right away?

In order to build an asset you’ve got to stop doing things that don’t make you money, that rob you of time needed to practice your high payoff activities, and that you simply don’t do well. You’ve probably still got to get many of those things done, but by others.

Map out how you will hire, outsource and retain the resources needed to fill your current gaps.

Do you need someone to take over your bookkeeping? Do you need a graphic designer on staff? Do you need a VA? Should you hire a VP of Operations?

Have you stopped to figure out what your time is worth? Have you determined what a unit of labor produces for your business? There’s a wonderful book by Greg Crabtree called Seeing Beyond the Numbers that teaches a tremendous lesson on how to calculate labor as a lever rather than a cost.

5) What mutually beneficial partnerships could we develop right away?

To me, this is perhaps the most potent and most underutilized mindset of all. To a large degree I’ve built my brand by creating content that others want to share and perhaps 50% of my revenue is derived directly through these relationships.

Strategic partnerships have a tendency to multiply quickly. If you can associate your brand with the right three or four partners, you can develop a kind of momentum that attracts many more.

This is an element that should not be seen as a nice bonus left up to chance. This is an element that must be an essential part of your quarterly planning process. Maintain a short list of attractive strategic partners at all time and go to work on building a plan to recruit, introduce and amplify a mutually beneficial program of relationship and community building with these partners.

Seeing Beyond the Numbers

Marketing podcast with Greg Cabtree (Click to play or right click and “Save As” to download – Subscribe now via iTunes or subscribe via other RSS device (Google Listen)

Woodlouse via Flick CC

Traditional accounting practices, or at least the ways that many business owners interpret the data from those practices, often lead business to the brink of extinction.

Far too often business owners trick themselves into believing their business is healthy, when in fact it’s one bad month away from disaster. Or, they become so focused on beating the IRS in the tax game that they miss the entire point about building wealth.

In this episode of the Duct Tape Marketing podcast I visit with Greg Crabtree, a CPA who’s spent most of his career helping business owners see beyond the numbers that blind and focus on the simple numbers that help unlock business potential.

Crabtree’s book – Simple Numbers, Straight Talk, Big Profits!: 4 Keys to Unlock Your Business Potential – should be required reading for every business owner on the plant.

In Simple Numbers you get some very practical talk about how to manage your business based on the numbers that count.

Today’s break even is 10% Net Profit.

You get a salary on what you do and a return on what you own. So many business owners confuse profit with revenue or treat profit as salary. A salary is what a job pays. If you’re not focused on creating a net, after tax, after salary profit then all you’ve created is a job.

Taxes have become the tail that wags the dog. Business owners jump through tremendous hoops in order not to pay taxes – including doing things that rob from the future of the business. Crabtree advises that we need to stop focusing on the tax implications and focus on the true financial dynamics of the business. We need to take the energy we spend on not paying taxes and go make money.

Another crucial number that Crabtree reveals is something he calls the Labor efficiency ratio – Hiring people can either lift a business or sink it. But, good labor is a lever if you understand how to calculate what every dollar of labor produces in terms of profit.

You must understand how to hold your labor cost accountable for profit. Once you can do this you can set what you need in terms of additional revenue and additional profit for each hire.

Crabtree has created a number of tools for better understanding both labor cost and profit.

The last issue we discuss is cash flow. Many business owners struggle with cash flow. The thinking is that I must manage cash flow before I can think about profit. I believe and Crabtree certainly supports this notion, that if you focus on profit, you’ll fix cash flow.

The real problem with cash flow is that people don’t get cash flow considerations in the right order. On average 40% of your profit must be paid in taxes – that needs to come out first. Far too many businesses sink on this number because they consume based on total profit.

Simple Numbers is a very accessible read and just may do more towards helping business owners come to grips with the right numbers and right priorities than any other book on the subject. Go get it and make everyone in your organization read it!

Then start having discussions about labor productivity and profit at your next all hands meeting.