Visualize This…Working on Your Business Rather than in It

Imagine this if you can. You're in your business. You're answering phones, talking with team members, fighting fires, juggling all the elements of your business at once—marketing, sales, management, operations, finances, cash flow, debtors, creditors, suppliers and more. You're extremely busy and you've just realized that you forgot to eat lunch again, and someone unexpected has just walked in the door. Unfortunately, that means you're going to have to spend time with them, instead of completing that paperwork you really wanted to finish. Oh well, you'll take it home and do it tonight. Sound familiar?

This is what working in your business means. You're in the midst of it and trying to handle everything and be everything to everybody.

Picture this instead. You've taken a few steps back from your business and you're looking at it objectively, saying, "Without me, what would happen? What do I want to happen? What needs to be done to free me up from working in it all the time?" If your business were a lump of clay, what would you mold it into?

Just thinking about it, you can sense the huge difference this could make. Imagine taking some time away from day-to-day tasks and looking at your business in the long term. Think of the creative ideas or opportunities you could come up with! This is working on your business. The secret is not to work in your business, but to work on it.

Begin with the End in Mind

Steven R. Covey, in his book, The 7 Habits of Highly Successful People, says to "begin with the end in mind." In other words, whenever you start a process, understand exactly what the end point is before you start.

Think about that in the context of a business. How many business owners actually do that? Why did you go into business? Financial independence? To be your own boss? To spend more time with your family? Is it happening for you? The facts is, most of us jump or fall into business. Before we know it, we are so busy that we have no time to think about what we want from the business, how it will be shaped and what it will be like the day we retire or sell it. End-in-mind thinking makes a profound difference. Let's take two different hamburger restaurants for example.

When Ray Kroc founded McDonald's he had absolutely no intention of working behind a counter. In fact, he never even made a hamburger. He began with a different end in mind. He envisioned thousands of McDonald's stores around the world, each doing exactly the same thing in a predictable manner. Knowing that, he knew he wouldn't be able to work in them, hence they would have to work without him! He then developed processes and systems structured around how to hire people, the color the restaurants should be, the way a restaurant should be managed, right down to the way they should heat their buns. All of this occurred by having a vision, determining what needed to be done to get there, and then carefully going over every little detail.

Contrast that with owners who run a typical hamburger place. They're doing it, doing it, doing it, every single day. And that's precisely because they didn't begin with the end in mind. They set up a business that depended on the owner doing everything. Their only vision was of ordering the goods to make the hamburgers, doing the stock control, frying the fries, grilling the burger, buttering the buns, wrapping it all up, ringing up the sale and hoping to make ends meet at the end of the day.

As Michael Gerber points out in his book The E Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It, it's a myth that most businesses are started by entrepreneurs. Gerber suggests that most businesses are actually started by a person suffering from an entrepreneurial seizure. That is, instead of creating a business that works, we create a business that is us. A business that often becomes all-consuming. And worse yet, when it all becomes too much, we sell our most precious asset for far less than it would have been worth if we had started with the end in mind.

But it doesn't have to be that way. There really is another path. Consider again the true purpose of your business. Once you get the thought processes of beginning with the end in mind going, the true purpose comes out. Isn't the purpose of a business to create life—for you and for the people with whom you interact?

Creating "The Way We Do It Here"

An important step to start working on your business is to simply develop systems for everything. A number of things happen when you do this. First, you don't have to perform the process. Second, it empowers your team members to take on more responsibility. And third, when you systemize, you automatically develop what we call "the way we do it here."

A central theme in Gerber's E-Myth is that most businesses fail or never reach their full potential because their owners spend too much time doing the work that the business does, rather than managing and growing it. Creating a systemized way of doing things not only makes the business run in a totally predictable way, it also makes your business worth much more because it doesn't have to rely on you to operate.

Think about this concept by comparing the local hamburger restaurant to McDonald's. In which company would you rather own stock? McDonald's, most likely. Why? Because McDonald's makes better hamburgers? Probably not. You'd pick McDonald's shares because the company works like clockwork no matter which restaurant you visit. They all have completely systemized processes that make them consistently high quality and very successful.

What Happens When You Get to the End?

If you really can begin with the end in mind, and create a systemized way of getting there, then it means that the business must have an end point. That is, there must be a point when you can stand back and say, "Now it's finally done."

If at that point you decide to sell the business, you're handing over a business worth many times more than when you started, simply because you thought about and developed the systems that allow the business to function successfully without you. And if you decide to stay involved in the business in some way, you know that it can function independently of you. It's not your life. You've developed a business that you're a part of. Yet you're still apart from it.

Walt Disney tells the story of being asked by a child if he drew Mickey Mouse. "I had to admit I do not draw anymore," said Disney. "Then do you think up all the jokes and stuff?" asked the child. "No, I don't do that either," admitted Disney. Finally, the child looked at him and said, "Mr. Disney, just what do you do?" "Well, sometimes I think of myself as a little bee," Disney explained. "I go from one area of the studio to another and gather pollen and sort of stimulate everybody. I guess that's the job I do."

Good thinking Walt! The legacy (the bits of pollen if you will) that Disney left behind still exists today—and will for a long time to come. He created systems and processes that resulted in an indelible "way we do things here" that includes empowered team members sharing a truly magic culture and passion for what they do, and millions of happy customers who come back again and again.

Identifying prospects and converting them into customers can be a costly process. Yet ironically, most businesses rarely try to resell to their current or previous customers. Instead they try to put all of their marketing efforts into the single dimension of generating more new customers. Once a customer has made a purchase from you (that they are happy with), they are the most likely people to buy from you again. This is the second dimension or back end as it is sometimes called.

You will generate more profits when a major part of your selling effort concentrates on up-selling, re-selling and cross selling to existing customers. As Frederick Reichheld points out in his book The Loyalty Effect: "Companies not capitalizing on loyal customers face a dismal future of low growth, weak profits and shortened life expectancy. A 5% increase in customer retention can produce a 125% increase in profitability." And that is what working in the second dimension is all about.

It can be as simple as sending an invitation to your existing customers to stop in and see your new product or service. Another classic example can be taken from the bungee jumping craze.

So you're perched on a ledge 100 yards above a raging river, summoning up the courage to throw yourself off. You're saying to yourself "I actually paid $150 to do this crazy stunt. What was I thinking?" And then someone yells, "One, two three bungee!" and off you go. Within a fraction of a second, flash cameras go off on your right and left capturing your vertical flight, and below you a video camera catches the whole fall for posterity. And of course, you buy the whole package—including a further investment for a mounted segment of an old bungee cord. Chalk up another $150 to up-selling in the second dimension.

Sometimes it's easy to see where second dimension opportunities lie. If you sell carpets, second dimension or "back-end" products could include vacuums or carpet cleaning services. If you sell computers, there's opportunities such as computer classes, custom software and peripherals. An industrial equipment business could use maintenance contracts, supplies or troubleshooting.

Others may find it more difficult or uncomfortable to identify potential second dimension opportunities. A helpful exercise can be to ask yourself, "What business are we really in?" And then shift your thinking a bit to expand the opportunities. For example, if you're in the trucking business do you simply move things with trucks? Or are you really in the business of solving transportation issues? With this simple paradigm shift, you can then start to see the second dimension opportunities: logistics management, alliances with other transportation carriers.

So you can see the potential for generating many times more profit than just the original sale. If your product or service is good, then you are denying your customers the benefit of any new improvements, selections or related services by not letting them know about them.

Contact your business development consultant for help in starting to identify such opportunities for your business.

Is your wastebasket your most used filing cabinet?

Picture the scene—you're in your business (or at home) sorting through your pile of mail, and so begins the wastebasket shuffle?one letter for me, 3 items of junk mail for the trash, one letter for me, 2 items of junk mail for the trash and on it goes. Generally, by the end of this routine, there will be more mail in the wastebasket than in your "to keep" pile.

But here's a new twist. Each time you do this, you could be throwing away valuable ideas and in the process costing yourself time and money!

That's where the wonderfully simple to execute "Useful Box" strategy comes into play. The next time you embark on the wastebasket shuffle, rather than thinking junk mail, shift your paradigm. Instead, view the volumes of material that enter your life as a source of valuable ideas, examples and strategies that you could be using to grow your own business.

A Useful Box is a place where you store ideas (usually generated from advertisements or junk mail) that might be of some use to you when you're developing new marketing ideas.

A Three Step Implementation Plan

Step 1: Keep it simple. Get yourself a decent sized box and store it in a highly visible place in your business.

You know the saying out of sight, out of mind? It's absolutely the case with this strategy. Make sure your Useful Box is visible by all members of the team. This will ensure it is used more frequently than if it is stashed neatly in a cupboard and forgotten!

You'll probably find it too difficult to construct a filing system that will accommodate the variety of examples you'll accumulate. You'll either waste time figuring out where to file, or you'll waste time trying to figure out where it's been filed! We've found that the most effective way is simply to throw it all into a box and rummage through it when you need an idea. Often you'll stumble across something else you can use in the process that you forgot you'd collected!

Step 2: Assess everything you're sorting before it lands in the box, and educate your team to do the same.

Does it have Useful Box potential? Once you're aware of the value of this sort of material, we guarantee you'll start to view everything through a different set of eyes. For example, have you ever stayed in a hotel that had a good customer feedback questionnaire in the room? Or have you ever been to a restaurant that had an unusual competition running? Have you ever been given a business card that really jumped out at you?

Encourage your team to be constantly on the lookout for these powerful tools. Introduce a Useful Box Contributions section into your team meetings. This lets everyone know what material is being added each week and helps the team to become involved. You'll be surprised at how quickly you'll accumulate an excellent range of examples.

Step 3: Use it!

Obvious, yes. And the most critical step. The only way you'll benefit from creating this Useful Box is to make good use of its contents. You'll save valuable time and avoid the challenge of needing to become an instant marketing expert overnight by drawing on the experience of others.

Let's use your own business as an example. You've decided to introduce a structured referral system and you (or one of your team) remember an excellent referral idea discovered last month at the local optometrist. You dig through the Useful Box, find the piece in question, and half your work is done for you. (Review edition #5 of this newsletter for ideas on how to set up a referral system, or ask your business development consultant.)

The other benefit of having an active Useful Box strategy is that you and your team will often come up with more creative suggestions simply as a result of being exposed to so many different ideas and examples.

What Should You Look For?

Basically, anything that catches your eye is Useful Box material. If it grabs your attention, it's working. Chances are it will grab the attention of your customers too.

Brochures, letters, gift certificates, advertisements, magazine inserts, frequent shopper cards, great letters—these are just a few of the formats this material will present itself to you in.

The key content items to be on the lookout for are:

• Offers designed to generate a rapid response or to "act now"
• Differentiation/unique core differentiator strategies
• Customer retention strategies
• Loyalty programs/frequent shopper campaigns
• Referral strategies
• The second dimension (see section above)
• Guarantees
• Gift vouchers (e.g., $X off your purchase)
• Demographic-targeted marketing campaign
• Attention-grabbers/very creative pieces

Be sure to read each article with the mindset "how could this apply to our business." Thinking of it that way will guarantee that you get value. Better yet, take notes as you read and commit to having the ideas implemented by the time next month's edition arrives. Also, make copies for each team member. To really make sure something positive happens, work with your business development specialist to talk your team through the ideas and how to set a schedule for getting them implemented. We're here to help you get started.
Cody LeGrant McKinney, CPA, P.C.