Are you working harder than your business, or is your business working harder than you? If you are working harder than your business, you are among the many self-employed who have succeeded in purchasing a job for themselves!
Do you aspire to be an entrepreneur? Then you must figure a way to create a business that works harder than you, so that you can use your spare time to launch other business endeavors or to enjoy the lifestyle that typifies the successful entrepreneur – time with family and time for personal leisure pursuits. So how does one get their business to work harder?
There are 6 steps to creating a profitable business that works without you having to be there every day:
Each of the six steps builds upon the previous. Here is a high level jet tour of the six steps.
Mastery: from chaos to order
Time is our most valuable asset. We can regain lost income, but can never regain lost time. There are four activity categories into which we can invest or waste our time:
1 and 2 are time wasters for the business owner. 3 and 4 are the difference between working in your business and working on your business. 4 is working in what I call the Zone and should represent 80% of your time. Working in the Zone will prevent many of the urgent/important from occurring.
Do you know where your business is financially? What is your breakeven? How about your cash flow – can you predict it? What is your profit position – how accurate and real-time is your information? Is your most valuable tangible asset (your business) increasing or decreasing in value? Is your business consistently delivering your value proposition to the marketplace in such a way as to not just satisfy your customers, but create many raving fans? This is called the WOW factor. And finally, are your business goals aligned with your personal goals so that when your business is working harder than you, you are living your desired lifestyle?
Niche: effectively marketing your USP = predictable cash flow
Discounting your prices in the face of competition is devastating to your bottom line. Let’s, for example, assume that your gross profit margin is 40%. If you discount your prices by 10%, your sales must increase by 33% to maintain the same gross profit dollars! How does one avoid such damaging action? -By creatively crafting your marketing around your USP (Unique Selling Proposition)!
Done correctly, this will carve a niche in the marketplace that you alone occupy, thus insulating your business from the discounting frenzy produced by a market crowded with competitors.
Leverage: creating efficiency = more time for the owner
If you are the typical business owner, you are the hub of a wheel. The spokes are the channels of decision making from all aspects of your business. Get the picture?
In our desire to control our business we have imprisoned ourselves, the owners. Additionally, because we have not implemented written systems to run our business we have become vulnerable to certain key individuals within our organization. These key players are very good at what they do and if they leave the company, the consequences will produce a significant setback for the business.
The answer is to systemize the routine and humanize the exception. Systems should run the business and people should run the systems. The Japanese taught us this hard lesson in the 80s. Systemize your business and you will leverage your capacity as the owner. Until systems run your business, you have a job. You will never be able to extract yourself to work on your business instead of in your business. Lifestyle improvement will remain an unreachable dream.
Team: having the A-Team run your business = structuring for growth
Ask business owners what represents their greatest headache, most will tell you “employees”. You’ve heard it said: “People are a company’s most valuable asset.” That is not true! The right people in the right positions are a company’s most valuable asset.
In the book “Good to Great,” Jim Collins writes: “Those who build great companies understand that the ultimate throttle on growth for any great company is not markets, or technology, or competition, or products. It is one thing above all others: the ability to get and keep enough of the right people.” (See my article titled “I Just Can’t Get Good People” printed in the June 15th Norman Transcript)
Synergy: a well oiled business machine = freedom!
This is when 2 + 2 = 5. Too many business owners after experiencing a little success try to expand through duplicating outlets or franchising before they have successfully completed the four previous steps. As they grow, because of insufficient systems and/or the wrong people on their executive team, cracks start to appear in the foundation.
So they retreat and go back to when it was only one business location that they can control with their presence. In fact, if the owner carefully built a strong foundation on the four previous steps, the cumulative effect of this smart work will be significant income with time to enjoy it. Congratulations – you now no longer have a job! You are a successful entrepreneur!
Massive Results: diversification through multiplication or acquisition
As a result of what you have learned by taking your business through this process, coupled with the time and money to leverage, you can create multiple steams of income and wealth by multiplying your business concept or acquiring other businesses and taking them through the six steps. Or, you can retire with a lifestyle that is the envy of most.
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Where’s My Cash Gone?