Introduction
How Do We “Professionalize” Our Small Business?
The six areas we addressed to professionalize our operation were:
1. Leadership: We cast a vision for our company that included three economic priorities (chapter one) and made sure every role in the company supported those priorities.
2. Marketing: We clarified our marketing message and invited our customers into a story (chapter two) in which their problems could be solved by purchasing our products.
3. Sales: We installed a sales framework that made our customer the hero and learned to craft a million-dollar sales pitch that closed more sales and drove revenue (chapter three).
4. Products: We optimized our product offering (chapter four) and focused on products that were in demand and profitable.
5. Overhead and operations: We kept our overhead lean by running a management and productivity playbook that aligned the entire team by holding only five recurring meetings (chapter five). We made sure every team member had clear objectives and was coached and encouraged.
6. Cash flow: We used five checking accounts to manage the money that came in and protected cash flow (chapter six) above everything else.
If you do not take the six steps that will organize and grow your business, you will continue to struggle with the six reasons most small businesses fail. Those reasons are:
1. A failure to identify and prioritize economic objectives
2. A failure to market products with a clear message
3. A failure to sell in such a way that makes the customer the hero
4. The production of products that aren’t in demand or profitable
5. Bloated overhead because of inefficient management and productivity
6. A mismanagement of cash and cash flow
The Six Parts of Your Small Business
There are six critical parts to a business, just like there are six critical parts to an airplane.
1. The cockpit of the airplane represents the leadership. Essentially, the leadership is in charge of getting the airplane to its destination. The pilot or pilots have to know where the plane is going and reverse engineer its safe arrival.
To grow a business, you’ll need to know how to unite a team around a clear economic mission.
2. The right engine represents the marketing effort, which directly contributes to the airplane’s thrust. When the marketing engine runs efficiently, the business sells more product and moves the business forward. This movement, in turn, contributes to lift.
To grow a business, you will need to clarify your marketing message, so it produces a considerable amount of thrust.
3. The left engine represents sales, which increases the thrust of an airplane even more. Even if you don’t have a sales team, you are likely involved in countless sales conversations.
To grow a business, you will need to sell by making the customer the hero. Most people talk too much about themselves when they sell. Stop. Mastering sales conversations that invite customers into a story will increase the thrust of the airplane even more.
4. The wings of the airplane represent the products or services you sell. If the products or services you sell are in demand and profitable, they will give the business lift, and support the weight of the airplane. Thrust is provided through marketing and sales efforts, but the wings (profitable and in-demand products) make the airplane fly.
To grow a business, you need to know how to optimize your product offering so the airplane gets maximum lift.
5. The body of the airplane represents overhead and operations. If your overhead gets out of hand, the belly of the plane will grow too big, and the plane will crash. Your largest expense is almost always your payroll.
To grow a business, you’ll need to run a management and productivity playbook that ensures every team member is contributing to the overall economic priorities of the business itself.
6. The fuel tanks represent cash flow. With fuel, energy is transferred to all the moving parts of the airplane. Without fuel, the plane crashes no matter how well it is designed. The same is true of cash for a small business. Cash must be managed so that there is enough money to operate, plus plenty of extra in case the plane has to circle the airport a few times to prepare for an emergency landing.
To grow a small business, you’ll need a method for managing money that is simple and easy to use.
To Build Your Business, Create a Small-Business Flight Plan
The point is this: if you’re spending too much time putting out fires and not enough time selling products and interacting with customers, you likely need to professionalize your operation.
1. Review the flight plan in the back pages. Your flight plan includes all the templates you need to implement the six steps.
2. Read about each step and take them slowly. Each step will help you organize your small business and also generate growth.
3. Continue using the six steps associated with the flight plan to operate your business safely and profitably.
1. Leadership
STEP ONE: The Cockpit
Become a Business on a Mission
The primary job of the leader and the leadership team is to clearly define a destination and then reverse engineer a plan to get there. The second job of a leader or leadership team is to keep reminding team members about the destination and constantly make corrections to ensure a successful arrival.
Whether you’re a solo-preneur or run a small business, the Mission Statement and Guiding Principle framework I’ll share with you in Step One will clarify your company’s objectives so you can become a business on a mission.
By completing Step One, Become a Business on a Mission, you will be creating a Guiding Principles package that includes three elements:
1. A Mission Statement that includes three economic priorities
2. Key Characteristics necessary for every team member
3. Critical Actions you can take every day that will unify your team and define your future
The Mission Statement and Guiding Principles Worksheet you will use to execute Step One looks like this:
Business on a Mission, Part One: Your Mission Statement
There are 3 reasons most Mission Statement fail:
1. They do not include specific economic objectives.
2. They do not include a deadline.
3. They do not answer the question “why?”
The Three Components of a Remarkably Effective Mission Statement
The first thing we will need to build a Mission Statement that actually works is to identify key sales metrics that will ensure your business succeeds.
Your mission statement should firstly include three economic objectives. If everybody can understand exactly where the business is going, and that destination can be measured against a quantifiable metric, you’ve stated the mission clearly.
By stating numeric objectives such as “we will double our rate of customer retention” or “we will increase our revenue by 35 percent and increase our profit margin by 12 percent” or, better, “we will sell X number of Y products,” we define a metric by which we know whether we did or did not accomplish our mission. This kind of measurable specificity is necessary to open a story loop that people must take action to close.
Second, it should include a deadline. When you give somebody an important assignment, you must also give them a deadline. Perhaps one of the reasons most Mission Statements don’t include a deadline is because leaders believe a Mission Statement should last forever. That’s one of the worst ideas when it comes to creating a Mission Statement. A second reason people don’t include a deadline in their mission is becasue they don’t want to deal with the disconfort of having to achieve (or not achieve) their mission. The more elusive your Mission Statement is, the header it will be to know if you’ve failed to achieve it.
The thrid thing your Mission Statement should include is a “reason” why the mission is important. So how do we include a “because” in our Mission Statement? We make sure to mention what happens in the overall story of our customer when they encounter our products and services. For instance, if you own a real estate office and want to sell one hundred homes this year, your Mission Statement might end with the phrase: “. . . because every person deserves to walk into a home they love. Including a “because” at the end of your Mission Statement will help everybody involved understand why the mission is important.
Mission Statement Part One: Define Three Financial Priorities
In order to build a business that is dependable, the objectives we prioritize must be economic. If the business does not create profitable revenue, the business will stall and crash. If the business crashes, the mission will not be accomplished, customers’ problems will not be solved, and the entire team will lose their jobs. Very few Mission Statements include economic objectives. I believe this is a mistake. The business exists to generate profit while creating value for customers. This should not be a hidden agenda.
You don’t have to live for the dollar, but you do need dollars to stay alive. Establishing financial priorities in our Mission Statement sets clear goals for the safe flight of our airplane. Always remember you and your team are dependent on the success of this business. It must not crash.
— You and Your Team Should Talk Openly about the Economic Priorities —
The main reason to include three economic priorities in your Mission Statement is to normalize conversations around finances. If you and your team normalize conversations about money, you and your entire team will make more money.
In conversations with your leadership, you should consistently ask and answer questions like these:
• How much money are we making?
• How profitable is the business we are bringing in?
• What was our financial goal this month or this quarter?
• Did we reach that goal? Why or why not?
• How can the company improve? Should we change the economic priorities in our Mission Statement?
• How are the economic objectives not listed in our Mission Statement doing?
— Why Should You Only Include Three Economic Priorities? —
Your small business may have several economic objectives. You may want to sell a specific number of units, maintain a certain profit margin, or increase sales by X. In fact, you should have dozens of economic objectives. The reason we limit our Mission Statement to include only three economic objectives, though, is because the human brain has trouble prioritizing more than three objectives at a time. The adage is true: if you prioritize everything, you prioritize nothing.
To get the most out of your Mission Statement, your three economic priorities should:
• Be specific and measurable,
• Drive company revenue, and
• Drive company profit.
— Why Should the Three Economics Priorities Be Measurable? —
It’s important the three financial priorities in your Mission Statement be measurable because it must be obvious whether or not you have accomplished your mission.
— When Mission Statement Should be Changed? —
When should you change your Mission Statement? Simple. Change your Mission Statement under two circumstances:
• First, when you have accomplished all or part of your mission, and
• Second, when you realize your Mission Statement isn’t inspiring action. Continue to edit your Mission Statement until it inspires a mission, then let it ride.
Mission Statement Part Two: Include a Deadline for Your Financial Priorities in Your Mission Statement
A ticking clock is an incredible device to increase you and your team’s intensity as it relates to hitting those three financial objectives.
After you determine your three financial objectives, include the date those objectives must be accomplished by as the next part of your Mission Statement.
When you include a deadline, your Mission Statement will read something like this:
We will accomplish [your notes], [your notes], and [your notes] by [your notes].
Each of your three economic objectives should share the same deadline. The idea is to choose a date in which you can accomplish everything in your Mission Statement and then dream your Mission Statement up again to continue to inspire growth.
— How Much Time Should We Give Ourselves to Accomplish Our Mission? —
It’s not a bad idea to change the economic objectives along with the deadline every one or two years. If the deadline in your Mission Statement extends beyond two years, you’re going to lose that sense of urgency and importance.
Mission Statement Part Three: Explain Why the Mission Matters
Here are two things your Mission Statement can include to turn your goals into a mission:
• A vision of a better world: Tell us, specifically, how the world will be better if you accomplish the mission. What will people see? What will they feel?
• A counterattack against an injustice: Tell us about the suffering people will no longer have to experience if you accomplish your mission. What broken thing will be restored?
When you include a because, your mission matters, and you and your team will be energized around that cause.
Samples:
• A brewery: We will increase our distribution of beer to seventy-five more restaurants, four more grocery store chains, and twenty-seven bars | by the end of the fiscal year | because everybody deserves access to their new favorite beer.
• A magazine: We will increase our subscriber base to 22,000, our advertisers by 40 percent, and the average customer advertising investment to $22K | within two years | because good journalism can save the country.
• A consulting firm: We will serve thirty new clients, sell five new retainer packages, and receive 98 percent client satisfaction survey results | by December 31 | because everybody deserves the help they need to grow a business.
What Shoud We Do Next After Writing Mission Statement
Once you write your Mission Statement, you’ll want to launch a communication campaign that helps you and your team take action on that statement. And we all know what it takes to remember something: repetition.
Here are four ways to help your team remember the mission:
1. Open your All-Staff Meetings by reading through the Mission Statement.
2. On a monthly or quarterly basis, acknowledge a team member for advancing the mission and tell their story as a way of highlighting the team member and the mission.
3. Ask potential hires to read the Mission Statement and write down why that mission is important to them.
4. Have the Mission Statement written on the wall of your place of business and make a production (and celebration) out of changing it as the mission shifts.
STEP ONE: PART TWO
Define Your Key Characteristics
You and your team will have to develop certain characteristics in order to achieve your mission. In your package of Guiding Principles, these characteristics are called Key Characteristics.
You can think of your Key Characteristics as “core values”. Key Characteristics are more specific; they identify a specific set of skills or personality characteristics necessary to work for your company.
Here are three questions to ask when determining your Key Characteristics:
1. What specific characteristics will each of us need in order to create (or sell) the products that solve our customers’ problems?
2. What characteristics will we need to keep going when the challenges seem overwhelming?
3. What characteristics will we need to create a safe, encouraging culture?
— How Many Key Characteristics Should We List? —
For purposes of simplifying our Guiding Principles, we’re recommending you include only three Key Characteristics in your list. These three Key Characteristics should be specific enough to guide your hiring decisions but universal enough to be true for everybody in your organization.
Here are some examples of the Key Characteristics different kinds of businesses could choose:
Network Marketing Product Rep:
1. Loves connecting with people,
2. Believes their product can change lives, and
3. Is always resilient.
Financial Advisor:
1. Always puts the customers first,
2. Can clearly explain complicated investments, and
3. Enjoys helping families leave a legacy.
Consultant:
1. Terrific at turning knowledge into practical frameworks,
2. Loves networking with people, and
3. Is obsessed with solving clients’ problems.
STEP ONE: PART THREE
Determine Your Critical Actions
Your three Critical Actions should have two things in common:
1. Nearly everybody on the team can do them, and
2. They should directly affect the forward movement that will assist the accomplishment of your mission.
The word “nearly” is important when I say “nearly” every employee could take “nearly” every Critical Action every day.
Your Critical Actions can go a long way in creating a culture, especially if most of your team members are performing the Critical Actions every day.
When people take the same actions together, it creates a kind of bond that results in a tribe. Watch any college football game and you’ll see the Critical Actions fans take in the stands. Whether it’s a certain cheer, a certain dance to a certain song at a certain time in the game, or just a loud booing of the ref when they don’t like the call, these actions create a tribal bond and make a group of people feel like one.
“Solo-preneur’s Online Learning Platform:
1. I call every new customer and thank them for their order.
2. I create one new Instagram post per day offering terrific free value.
3. I fill out my daily planner every morning and decide on what content I need to create that day.
— Samples Business on a Mission Guiding Principles Worksheet —
— What to Do with Your Guiding Principles after You Create Them —
Here are some things you can do with your Guiding Principles so you and your team are more likely to live them and accomplish your mission:
• Review them weekly at your All-Staff Meeting.
• Ask for “shout-outs” in your All-Staff Meeting to praise team members who’ve lived out your Key Characteristics.
• Have your Guiding Principles artistically painted on a wall in your place of business.
• Review and edit them in a special, biannual meeting with your leadership team.
• Announce any new edits or changes to your Guiding Principles with great fanfare.
• Create videos that explain (and demonstrate) your Guiding Principles so new hires can review them.
• Include your Guiding Principles in any recruiting collateral.
2. Marketing
STEP TWO: The Right Engine
Clarify Your Marketing Message
Using the Story-Brank Framework
The first thing nearly everybody does when they start a small business is to hire somebody to design a logo and brand colors. They love their logo and so they put it on a baseball cap and coffee cup and book bag and give the swag out to friends and family. The problem is, having your logo printed on some swag does not increase sales. Getting your brand right without doing actual marketing is like painting the side of an airplane that is not yet engineered to fly.
Creating a logo and choosing brand colors are very important, of course, but there are other things that are more important. Communicating to potential customers that your product will solve a problem they are struggling with and then asking those potential customers to place an order is infinitely more important than putting your logo on swag.
The next two steps represent the right and left engines of your airplane. The right engine represents marketing; the left engine represents sales.
Clarify Your Message and Customers Will Listen
Our marketing effort will focus on one clear objective: to explain what our products have to offer in such clear, simple language that everybody understands why they should buy our products and is motivated to do so.
When we talk about marketing, we’re often talking about our website, lead generators, advertising, and perhaps some signage, brochures, and/or flyers. Those are important pieces of marketing collateral, but the truth is the heart of your marketing is embodied in the words you use on those websites, advertisements, and signage.
Most small businesses think more about how their marketing will look rather than what their marketing will say. This will never work. Why? Because the reason customers place orders is not because a brand design is attractive, it’s because they read or hear words that make them want to place orders.
Your Small Business Will Be Built with Words
One area we often overlook is the words we will use to describe our products. The truth is our business will grow because we’ve used words that make people want to buy our products. If we don’t know how to talk about our products, our business will not grow.
So what kind of words do we need to use to attract people to our products and encourage them to place orders?
If you want to use words to help people understand why your products matter, remember two primary ideas:
1. People are only attracted to information that helps them survive and thrive, and
2. People, for the most part, only listen to ideas that are communicated simply.
Use Story to Create Short, Simple Soundbites
One of the biggest challenges in marketing is to get people to stop tuning us out and actually pay attention long enough for us to communicate why they should buy our product. And the challenge is real.
In the first step, you used the Business on a Mission Framework to invite yourself and your team into a story; now you’ll use the StoryBrand Framework to invite customers into a story that solves their problems and changes their lives.
The StoryBrand Seven-Part Framework
The framework will explain the seven plot points of a good story and deliver seven Soundbites you can use in your marketing. To clarify your message, use the seven Soundbites that invite customers into a story on your website or landing page, in your lead generators, nurture and sales emails, and presentations.
The StoryBrand Seven-Part Framewrok looks like this:
StoryBrand Element One: A Character Who Wants Something
This is the first thing to remember in your marketing: To get attention, you need to identify something your potential customer wants and then talk about it in your marketing collateral. When we start talking about the things our customers feel they need in order to survive and thrive, they start paying attention.
The more specific you are, the more likely you are to open a story loop in your customer’s mind.
ANSWER THIS QUESTION: What does your customers need from your small business?
Once you identify something specific your customers want, you’ve got the first Soundbite you can use in your marketing collateral.
StoryBrand Element Two: Must Overcome a Conflict
To create Soundbites that make people want to buy our products, we’ve got to talk about the problems our customers are dealing with and how our products solve said problems. When we talk about our customer’s problems, our marketing works better and our airplane surges forward.
Here’s the point: People only buy products and services to solve problems. If you talk about the problems your customers experience (that your product solves) you are further opening the story loop that they must buy your product to solve.
ANSWER THIS QUESTION: What are some of the problems your products help your customers overcome?
Now you have the second Soundbite you can use in your marketing collateral.
StoryBrand Element Three: Meets a Guide
When you position yourself as a guide, potential customers recognize you as somebody who can help them. There are two things you need to do to position yourself as a guide:
• The first thing you need to do is express empathy. In your marketing collateral, you want to express empathy with the pain your potential customers are experiencing. Saying things like “We know how it feels to struggle with . . .” goes a long way in positioning you as a guide.
• The second thing you need to do to position yourself as a guide is demonstrate authority. Statements like “We have helped thousands of people just like you overcome X . . .” or “Our award-winning technology has been featured in dozens of magazines . . .” let customers know you are proficient at solving their problem.
When you express empathy and demonstrate authority, you position yourself as the guide in your customer’s life. When customers know that you care about their problem and can help them get out of their jam, they seek you out for help.
There are two Soundbites you want to include in your marketing collateral that will help position you as a guide for potential customers: Express Empathy and Demonstarte Authority.
StoryBrand Element Four: Who Gives Them a Plan
Customers do not want to walk into the unknown. And even though you’ve identified something they want, have empathized with their problems, and have even demonstrated you can help them solve their problems, some still aren’t going to make a purchase. Why? They’re at that point when they have to put skin in the game, and that’s risky.
What do you do to help the customer gain more confidence that they won’t be wasting their money? You place large stones in that river that act as stepping-stones. When the customer sees there is a clear path to cross the river, they become much more likely to place an order. We all know how it feels to want to buy something but have a sense of unease about pulling the trigger. What we need to provide for the customer is baby steps. The stones you will place in the river represent a three- or four-step plan. When you give your customer a three- or four-step plan, they are much more likely to place an order.
A three-step plan like this essentially tells the customer what the future looks like if they work with you. When a customer browses your website and becomes interested in placing an order, it’s the plan that lets them know making a purchase is simple, safe, and easy. Including a plan on your landing page, in your emails, and in your sales presentations will cause a greater percentage of people to place an order.”
ANSWER THIS QUESTION: What three or four steps do your customers need to take in order to buy your product and solve their problem?
When you use this three-step plan in your marketing collateral, your sales will increase.
StoryBrand Element Five: And Calls Them to Action
People don’t tend to do things unless you ask them to do things. And making a purchase is one of those things. So what do you do about it? Call your customers to action with confidence.
In our marketing collateral, there should be a “buy now” button on our website. In fact, there should be many “buy now” buttons and they should flow down the page in every section of our website. They should be bright, bold buttons. Think of the “buy now” button on your website as a cash register. If the buttons don’t say “buy now,” they should say something direct like “schedule an appointment” or “call today.
Many small-business leaders don’t like to be pushy when it comes to marketing their products and services, but I assure you, very few small-business owners come off as pushy. In fact, most small-business owners make the opposite mistake: They are too passive in their calls to action. When we use language like “get started” or “learn more” we sound as though we don’t believe in our products enough to encourage customers to place an order.
ANSWER THIS QUESTION: What will the main call to action be on your website and in your marketing collateral?
When you have clear calls to action in your marketing collateral, your sales will increase all the more.
StoryBrand Element Six: So the Hero Can Avoid Failure
The two categories we will create Soundbites for in order to add stakes to the story are failure and success. If the customer does not buy our product or service, their story will end in failure, but if they do, their story will end in success.
In this section of our BrandScript, we want to create a talking point about what we are helping our customer avoid. People are motivated to avoid discomfort just as much (if not more) than they are motivated to seek comfort.
THE QUESTIONS YOU WILL WANT TO ANSWER TO STIMULATE THE RIGHT TALKING POINTS IN THIS SECTION ARE:
What negative consequence does my product help my customer avoid?
What will people continue to experience if thay do not buy mu product or service?
When you include the negative stakes in your marketing cllateral, orders will increase. People are driven to avoid negative consequences, so including these Soundbites in our brand narrative is going to create a sense of urgency.
StoryBrand Element Seven: And Experience Success
If we want to complete the story we are inviting customers into, we need to tell them about the wonderful, powerful, positive thing that will happen to them if they buy our product or service.
When you talk about the positive ramifications customers will experience when they use your product, you add enormous perceived economic value to your products just by using words.
THE QUESTIONS YOU WANT TO ASK TO HELP CUSTOMERS IMAGINE HOW YOU CAN IMPROVE THEIR LIVES ARE:
What will my customer’s life look like if they buy my product or service?
What benefits will my product or service provide that would add value to my customer’s life?
When you paint a picture of the good things your customer will experience if they buy your products, you increase the perceived value of those products and your orders go up.
Use Your New Message in Your Marketing Collateral
Your new marketing message can be used in all your marketing collateral, including landing pages, lead generators, emails, and even in casual conversation.
The basic principles of the StoryBrand Framework are simple:
1. Reduce your marketing to a series of repeatable Soundbites, and
2. Use those Soundbites on your landing page and your entire sales funnel.
3. Sales
STEP THREE: The Left Engine
Craft a Million-Dollar Sales Pitch
Now that our right engine is generating thrust, we can use the same storytelling framework to fire up the left engine of our airplane. When you add a sales component to your plane, you double the power that pushes you through the air.
Every small-business owner and every account executive or sales rep should know how to craft a million-dollar sales pitch. What do I mean by a million-dollar sales pitch? I mean a sales pitch you can use over and over to make a million dollars, no matter how big or small your business is. If you know how to craft a great sales pitch, you can bring millions in revenue into your small business.
If you have a sales team, you will want the entire team to understand Step Three because when they understand how to craft a million-dollar sales pitch, customers will have a more positive interaction with your brand and sales will increase.
Make Your Calls to Action Clear
Another mistake small-business leaders make when it comes to calling their customers to action is they fail to make the call to action clear. Statements like: “Would you like to learn more?” or “Would you be interested in trying this out?” are actually not clear calls to action. Clear calls to action tell the customer exactly what they need to do to either buy the product or start the process of buying the product or service.
Statements such as: “Can I box this up for you?” or “We can be there on Thursday to install the machine. Do you want to buy it today?” are not statements the customer will be confused about. A good call to action does not give the customer a path to consider, it gives the customer a purchasing decision to accept or reject.
Rejection Isn’t the End of the World
Naturally, if you give customers something to accept or reject, you’re going to get more rejections than you used to get before you included a strong call to action. This is an unfortunate fact. Many people are not going to be ready to make a purchase no matter what you do, and this may lead to an uncomfortable exchange in which they reject your offer.
By changing the subject and getting to know the person you are talking to a little bit, you ease all the discomfort of the rejection. The key to accepting rejection without making it feel awkward is for you, the person who is making the sale, to set the customer at ease for deciding not to move forward. When the person you’re talking to senses you are not the least bit uncomfortable having been rejected, they won’t be the least bit uncomfortable either. In fact, they will respect you more because, unlike most people, you are not afraid to ask for something you want. Rejection is part of life, and, honestly, it’s of no concern to most successful people. The customer isn’t rejecting you, after all—they’re just saying they don’t have the problem you are able to fix. Great. If they ever do have that problem, now they know who to call. And what’s more, if they have a friend who has that problem, they can refer them to you.
4. Products
STEP FOUR: The Wings
Optimize Your Product Offering with the Product Optimization Playbook
What gives your airplane lift? The wings. The right and left engines, as powerful as they may be, will not contribute to lift without a strong set of wings.
Your marketing and sales engines only work if they have product to sell. And what that product is, how it came to be, whether or not it is bundled with other products, and how profitable those products are all contribute to the success or failure of your small business.
When you optimize your product offering for demand and profitability and prioritize products that create more lift, it’s as though you are enlarging and strengthening the wings of your aircraft, allowing it to take flight with greater ease.
Another idea for enlarging the wings of your airplane is concierge service.
How do we optimize our product offering?
There are three exercises you can conduct to optimize your product offering:
• The first is to rate your products for profit. In this exercise you’re going to look at your current offering and get brutally honest about what’s bringing in money and what’s weighing your airplane down. This exercise will help you focus your marketing and sales energy for optimum profit.
• The second exercise involves a product brainstorm in which you see if you can offer new products that will bring in more revenue and profit. This exercise will expand the surface area of your wings.
• The third exercise involves using a product brief to decide what products you should create to grow your business. A product brief is a form you fill out every time you have a new product idea. This form will help you realize whether or not the new product is a good idea or whether you’d be wasting valuable time, costs, and energy trying to bring it into the world.
Step One: Rate Your Products for Profitability
The first exercise we will conduct to both lighten and strengthen the wings of our airplane involves ranking our products in order of profitability, from most to least profitable. Conducting this exercise brings us face-to-face with the truth about which products are really paying the bills.
The exercise of ranking your products for profitability is going to do two important things for you as a small-business owner. When you rank your products by profitability, ask the following questions:
• How much do your raw materials cost?
• How much of your labor costs are directly related to the creation, marketing, and sales of this product?
• Does the product expire and, if so, how does expiring and unsold inventory affect the cost of your product?
This exercise is purely about gaining an awareness of how your company makes money.
Here’s the process you should go through to rate your products:
1. List every product you sell on a whiteboard or piece of paper—if you’re a retailer that has thousands of products, try to list your top 50 or so.
2. Use your gut instinct to list those products in rank order for profitability.
3. Do due diligence to make sure your list is right—truly figure out how profitable your products actually are.
Use the Product Profitability Audit in your Small Business Flight Plan to conduct exercise one:
After we know where our business really makes money and where it doesn’t, we need to ask ourselves some difficult questions:
1. How much bandwidth is being used producing, marketing, and distributing products that are not very profitable?
2. Can we stop selling some of those products?
3. Are the marketing and sales efforts reflective of our profitability ranking?
4. How can we allot more marketing and sales resources to increase sales on our highest-profit items?
Step Two: Add New, Profitable Products to Your Product Offering
The second step is to create more products that are as profitable or more profitable than your highest performers.
When you’re dreaming up a new product, consider this question first: What can I bring to market that will provide the most value to my customer?
There are many categories of products where people will pay a premium, but here are the six categories of problems and product offerings most successful companies produce and categories you can explore to expand your product offering:
1. Making Money: If the product you sell will help people make money, it’s worth money.
2. Saving Money: If your product saves customers money, they will pay you a percentage of that savings. If you are able to broker a deal and save your client money, you can charge a percentage of that savings.
3. Reducing Frustration: If your product is able to alleviate stress and anxiety, you have a great product to sell. People will pay for a sense of peace, calm, and resolution.
4. Gaining Status: If you have a luxury item or product that includes limited access, people will invest in your brand.
5. Creating Connection: If you are able to create a community of like-minded individuals, you have a terrific product opportunity for which there is a human longing.
6. Offering Simplicity: When a customer has a problem, they don’t just want to solve the problem, they want to solve the problem as easily and simply as possible. If you have an all-in service that can solve your customer’s problem with one easy payment or perhaps a subscription method, you’ve got a great product.
— Three Proven Places to Create Profitable Revenue Starting Now —
Now that we know six types of offerings that are always in demand, we must determine how we can package those offerings as products that deliver the most value and have the greatest positive effect on the bottom line of our business. Here are three great ideas:
1. Subscriptions: Whether you sell paper towels, financial advice, pet food, or even human food, turn your product offering into a daily, weekly, or monthly subscription.
2. Certifications: If you’re selling an expertise, consider duplicating yourself in the form of a certification.
3. Package deals: Often your customers don’t just come to you to buy a product, they come to you to solve a problem.
Step Three: Install a Product Brief
A product brief summarizes the scope, goals, and direction of a product. Product briefs are highly customizable and help you organize your ideas, figure out your approach, and guide your product through the development process.
Filling out a product brief launches a process in which you and your team spend a week or two doing due diligence before launching a product or service. During the product brief, you and/or your team analyze whether launching the new idea will interfere with existing revenue streams, confuse customers, be profitable and sustainable, or bloat your overhead – causing more harm than good.
The sort of feedback I get from product briefs looks something like this: If we implemented the proposed idea, we would not be consistent with our big announcement at the beginning of the year. We would confuse customers about who we are and what we do. Worse, we’d take necessary work hours away from the creation of our most profitable products in order to experiment with this new idea.
The point is this: The product brief gives me valuable feedback before I spend time and money (overhead) bringing that product to market.
Getting negative feedback doesn’t always mean an idea should be tabled. Often, pushback provides a valuable list of risks that should be mitigated before an initiative is launched.
— The Product Brief Worksheet —
The Product Profitability Audit and the Product Brief Worksheet are both in your Small Business Flight Plan.
— Your Products Determine Your Progress and Your Profit —
If you do the following three things, the wings of your airplane will be optimized and your business will grow:
1. Rank your products for profitability; consider letting go of products that are not profitable and/or in demand.
2. Introduce new products to your customers that increase your revenue and profit.
3. Install a product brief that ensures new products and initiatives are a success.
5. Overhead and Operations
STEP FIVE: The Body
Streamline Your Overhead and Operations with Management and Productivity Made Simple
If you want an airplane to fly, make the wings wide, the right and left engines powerful, and the body of the airplane streamlined and light. In other words, if you want your small business to make money, make the marketing and sales engines powerful, make the product profitable, and keep overhead down!
So the question is: How to we keep our overhead lean?
For most small businesses, out-of-control overhead comes from a single place: labor. If labor is the biggest expense affecting overhead, then how do we cut overhead? We might suppose that letting people go is the answer.
If you want to decrease the weight of your airplane and streamline the body, open the emergency doors and start throwing seats into the clouds. The fewer people in the body of the airplane, the better. Sadly, for many of us small-business owners, this means getting rid of your aunt who does the accounting, your best friend from high school who helps with your technology, and your nephew out back who cleans all those parts before they get transferred to welding.
Cutting payroll often means cutting off relationships with the people you love, being disowned by your family, and becoming that greedy capitalist who only cares about themselves and their money. I know it’s tough, but you have to do it and you have to do in fast. In the pursuit of greatness we have to be cold-hearted, don’t we?
When your labor is focused on your three economic priorities, more money will flow into the business itself. This in turn allows the wings, engines, fuel tanks, and cockpit to catch up with your bloated overhead. The best way to decrease the size of the body of your airplane is not to decrease it at all, but to make the rest of the airplane larger while your payroll stays exactly the same.
Install the Management and Productivity Made Simple Playbook
To use the Management and Productivity Made Simple Playbook, all you have to do is begin to hold five separate meetings.
1. The All-Staff Meeting
The purpose of this meeting is threefold:
1. Maintain alignment and focus around the three economic priorities,
2. Update the entire team about any department initiatives or successes, and
3. Keep morale up by publicly honoring team members who are demonstrating exceptional work that helps your team make progress toward your three economic priorities.
The All-Staff Meeting is your longest meeting, 45 minutes to an hour. The energy for this meeting should be high and helps you create a family-like atmosphere. A specific template should be filled out before the meeting. This template ensures the meeting is thoughtfully planned so it contributes to the economic priorities.
2. The Leadership Meeting
The Leadership Meeting takes place right after the All-Staff Meeting. This meeting consists of department heads and is designed to talk about the primary initiatives currently in motion as well as address any roadblocks that are holding back your economic objectives. This meeting usually lasts a half hour to an hour, depending on how many initiatives your team needs to cover that week.
3. The Department Stand-up
Department Stand-up Meetings last for less than fifteen minutes and help ensure each department is working on an initiative or initiatives that support the three economic priorities of the business. It is during this meeting that department leaders set the objectives for the coming day and address any roadblocks team members may be experiencing regarding the previous day’s workflow.
4. The Personal Priority Speed Check
Once you have five or ten people on your team and the overall team is divided into separate departments, each director should meet one-on-one with their individual team members each week in a Personal Priority Speed Check. These meetings also last about fifteen minutes and are designed to zoom in on each person’s responsibilities within the context of their team. The Personal Priority Speed Check Template is filled out by the team member him/herself before the meeting. This template ensures the meeting has been thoughtfully planned so each team member feels supported as they contribute to the economic priorities of the overall business.
5. Quaterly Performance Reviews
Your Quarterly Performance Reviews address the number one question most team members have: Am I doing a good job? These meetings are mostly positive but because they are a little longer and because the Quarterly Performance Review Template is filled out by both the team member and department head, an honest conversation is fostered and a natural, healthy environment for coaching and improvement is created.
Who Should Run the Managemenr and Productivity Playbook?
Of the three kinds of leaders you normally find at the top of a successful small business, there is the artist, the entrepreneur, and the operator.
The Artist
The artist obsesses over products and product creation. They care about how a product works, whether or not customers are happy with it, and how it is brought to market. The artist is often a visionary who “sees the future” as it relates to the business and how their products will affect their customers. Without the artist, the company will not change the world or create revolutionary products.
The Entrepreneur
The entrepreneur is always smelling around for revenue and growth opportunities. When they look at the world, they see an opportunity to expand. They often like to take existing ideas, bring them to market, and scale them up. If the company isn’t growing, they aren’t happy. Without the entrepreneur the company will fail to make money on the artist’s vision.
The Operator
The operator loves to organize chaos. They love to organize chaos because they do not like chaos. They want to break down the workflow into predictable systems and processes that can be duplicated so everybody knows what is expected of them, finishes their work, and is rightly compensated. Without an operator helping to run the machine, people get exhausted with the artist and entrepreneur and look for work elsewhere.
The Management and Productivity Made Simple Playbook: A Step-By-Step Plan
Step One: Assign an operator to install the playbook
1. If you are not going to run the playbook yourself, make sure the person who does is a true operator. They should love managing an existing playbook. They should be good with people but should also be truth tellers.
2. Your operator could have the title of COO, President, or Vice President. They could even be a high-level executive assistant if your business is too small for an executive team. You don’t need to overthink this.
3. Know that the person who handles the Management and Productivity Made Simple Playbook will be running your company.
Step Two: Launch the weekly All-Staff Meeting
1. For the first few months, all you need to do is hold the weekly All-Staff Meeting. The weekly staff meeting will remind everybody on your team of the mission and, specifically, the three economic priorities.
2. If you do not know your three economic priorities, go back to Step One in the airplane framework: Business on a Mission. The main reason to have a weekly staff meeting is to review the economic priorities of the business and talk about how the entire team can move them forward.
3. If you do not have a team but work with contractors, ask if they would be willing to attend the All-Staff Meeting. You can call the meeting whatever you want; if contract workers are critical to your success, ask them to attend.
4. Once your staff meetings start feeling good and the business is aligned around the three economic priorities, move on to step three.
Step Three: Add a weekly Leadership Meeting
1. A weekly Leadership Meeting is the least formal of all the meetings but it still has a template that will make sure it’s effective and doesn’t waste anybody’s time.
2. If your business is small, your Leadership Meeting and your All-Staff Meeting may be combined. However, the agenda for both meetings should be different.
3. If your business has a leadership team that is not the same as the overall staff, the weekly Leadership Meeting will help your leaders talk about what each of their departments is working on and invite other leaders to help remove roadblocks.
4. The weekly Leadership Meeting is designed to increase morale and a sense of community among the leaders of the team. This meeting will help maintain team unity from the top down.
5. Consider a quarterly breakfast or lunch for your leadership team. There’s nothing like sitting around a table and sharing a meal to create community.
6. Once your leadership team feels like a good, healthy community, consider launching Department Stand-ups.
Step Four: Add Department Stand-ups
1. Sales, marketing, design, development, production, and customer service are all examples of departments inside of a small, growing business. If you do have departments, go ahead and launch Department Stand-ups. These meetings happen every weekday and are intentionally brief. They’re called Stand-ups because they are not supposed to be so long that people want to sit down. These meetings can take place in person or over conference calls.
2. The Department Stand-up is led by your department directors. If you own the business or are running the business, you should not need to attend these Stand-ups. The template used to run the economic priorities still govern the mission.
3. Using the template is critical to the success of the Management and Productivity Made Simple Playbook. If you do not use the template, the conversation during the Stand-up will wander in unproductive directions.
4. Once your Department Stand-ups are up and running and going well, you can add step five of the Management and Productivity Made Simple Playbook.
Step Five: Add Personal Priority Speed Checks
1. If team members are not sure what their job is and/or whether or not they are performing well, individual and team morale begins to decline. If morale declines, productivity declines with it, resulting in the body of your airplane becoming larger and heavier. Each team member needs feedback in order to do their job well and to feel good about the role they play in the business.
2. One way to make sure team members are getting the feedback they need is to install a weekly Personal Priority Speed Check for every team member in the organization.
3. The Personal Priority Speed Check should be led by each team member’s department head. The spirit of the meeting should be coach-like and encouraging. You will find that morale and productivity increase when you install the Personal Priority Speed Checks.
Step Six: Add Quaterly Performance Reviews
1. Quaterly Performance Reviews are terrific for any size business. Your people need to know how they are doing in the eyes of their department leader in order to feel comfortable and safe at work.
2. Quarterly Performance Review Template sets up an open conversation about how the department head and team member see their performance. There may be areas where the team member feels they are doing a better job than the department head or, there may be areas in which they team member is insecure about their performance while the department leader feels they have done a good job. Either way, every team member craves and deserves honest and encourage feedback and the Quaterly Performance Review is where they are going to get what they want.
3. As a team grows, team members will want more predictability and control over their compensation. You can likely “wing it” when it comes to compensation packages for a while, but be careful. Offering discretionary bonuses and discretionary pay raises can get you into trouble. Every raise and bonus sets a precedent and, with it, an expectation.
4. The first three Quarterly Performance Reviews will help your team member understand what they should continue to do and what changes they might make to enjoy their full opportunity in terms of a raise and bonus. It’s important to know this is the controlling idea behind the entire conversation.
5. When a team member feels in control of their financial future, they are more likely to love their job.
6. Here is a simple breakdown of raises and bonuses that could be made available to each team member: A 1 percent to 3 percent raise can be given to each team member based on their performance. If the overall business hits its stretch goal, up to 5 percent is made available to each team member. Every member on a perfect team on a perfect year would get a 5 percent bonus (of their salary) and a 5 percent raise. That may sound like a lot of money, but if you’re hitting your stretch goals as a business, you’ve got a high-functioning team deserving of financial acknowledgment.
7. In order to run this playbook, your business will need revenue goals and stretch revenue goals.
8. The Quarterly Performance Review and compensation system is a simple, scalable way to handle compensation. It may not be necessary for most small businesses but as you grow, you’ll find the challenge of compensation and performance coming up more often. This simple system should satisfy all of your team members because it allows them to control their financial future, sets clear expectations, and is designed to be fair.
Your Management and Productivity Meetings Are Not the Only Meetings You Will Have
The five meetings included in the Management and Productivity Made Simple Playbook are not the only meetings you will have; they are merely the set meetings you will have within a weekly and annual routine. Some of those meetings may include but are not limited to:
Revenue Meetings
The controller, operator, or some other financial leader in your small business should hold a monthly revenue meeting in which they review last month’s numbers. After reviewing the numbers, two questions need to be addressed: Why and where did we do well? Why and where did we do well? Why and where can we improve? You will find that this meeting gives you great insight into the overall health of the business and directly affects your strategy.
War Rooms
When a specific problem needs to be tackled, it’s often effective to gather the principal team members in a room for a few hours to formulate a strategy in a War Room. If you are relocating or selling off inventory or launching a new product, War Rooms may be necessary.
Leadership Off-Site Meetings
There are times when it makes sense for your leadership team to spend an entire day together to talk about the state of the overall business. These meetings will be led by whoever sits in the operator position and are mostly designed to help them understand how best to move the company forward.
6. Cash Flow
STEP SIX: Fuel Tanks
Get Control of Your Finances With Small Business Cash Flow Made Simple
If you manage the six parts of your business well, it should grow, and you’ll start making more money. This brings us to the final step in our list: Small Business Cash Flow. Even if your business is engineered like the perfect airplane, it is shockingly easy to run out of money and crash your plane.
So, how do we manage money in such a way that we can pay our bills, enjoy a great salary, put some profit away for a rainy day, pay our taxes, leverage our success into a diversity of outside investments, and, most importantly, never run out of money?
The answer: Manage your small business cash flow using five checking accounts.
The Small Business Cash Flow Made Simple Playbook
The five checking accounts you will use to manage your small-business finances flow in and out of each other to create a fluid system that will give you optics, and control, over your money.
Here is a detailed description of each of the five checking accounts and a breakdown of how to use them.
Operating Account
All of the money that flows into and out of your business will flow into and out of this account. This is the main account you will use to pay all your bills, including your personal salary. Yes, you have to establish a personal salary. It’s critical to the health of your business.
Personal Account
Your Personal Account will receive an automated bimonthly or monthly transfer from the business account that will make up your personal salary. How much money you pay yourself depends, and it’s largely up to you.
Business Profit
Your Business Profit Account is where you store the money your business makes that does not need to go back into the company in order to keep it alive. You will establish a high-water mark for your Operating Account. When you have excess money in the Operating Account, you will transfer money into your Business Profit Account. This account will also serve as your rainy-day fund you can dip into if the business suddenly encounters a headwind and starts burning more fuel.
Tax Account
Your Tax Account is where you will put the money you’ll use to pay or pre-pay taxes. This account will serve you in two ways: First, it will give you peace of mind that you will always be able to pay your taxes (while stopping you from spending the money elsewhere) and second, it will act, in some ways, as a secondary safety account.
Investment Holding
Your Business Profit Account is the place where you put money and keep it for a rainy day, but if that account grows so large that it doesn’t make sense to keep all of it as an emergency fund, you’ll move that money into an Investment Holding Account and decide from there what to do with it. Your Investment Holding Account holds the money the company made for you. It’s your money.
How to Install the Small Business Cash Flow Made Simple Playbook
Step One
Go to your bank and open five checking accounts. Those accounts should be your:
1. Operating Account,
2. Personal Checking Account,
3. Tax Account,
4. Business Profit Account, and
5. Investment Holding Account
Step Two
Make sure all the money for your business flows in and out of your Operating Account. All revenue from the business should flow into this account, and all bills should be paid out of this account (except for taxes, which are paid out of the Tax Account).
Step Three
Your bimonthly or monthly salary should flow out of your Operating Account, and that salary should be fixed, just like all your employees’. The benefit of paying yourself a salary is mostly for mental clarity. This way you know what money belongs to you versus what money belongs to the machine that exists to make you more money.
Step Four
Establish a high-water mark for your Operating Account. By this I mean an amount of money high enough to cover the largest hit you might experience that month.
For instance:
• If your payroll is $25K every two weeks, you never want your account to go below $35K or so.
• If you get hit by payroll, you’d be down to $10, but you’d have two weeks to make it up before you get hit again.
Let’s say you look at your account one day and you had $60K in cold, hard cash. That means you’ve got $25K over your high-water mark sitting there doing nothing. What you’re going to do is take the excess $25K and split it between your Business Profit Account and your Tax Account. Simply log on to your online banking portal and transfer $12.5K to your Business Profit Account and $12.5K to your Tax Account. What results is your Operating Account is at $35K while your Business Profit Account increases by $12.5K and you’ve also put away $12.5K for taxes.
Step Five
Business Profit Account should be about six times your Operating Account’s high-water mark.
• Operating Account is $35K
• Business Profit Account’s high-water mark = 6 x Operating Account = $210K
When you have six times your Operating Expense Account’s high-water mark, you have a reserve fuel tank that will allow you six month’s worth of circling the airport in the event of a crisis. With such a rainy-day fund, you can slowly adapt and even pivot in harsh weather or malfunctions in the plane.
What do you do when your Business Profit Account has a glut of cash? Let’s say you check your account and transfer some money so that you have $250K in your Business Profit Account when your high-water mark was $210K. That means your business is now a true, profit-producing machine. This money is all yours.
7. How to Install the Small Business Flight Plan
In the final chapter we will look at the various ways you can implement the Small Business Flight Plan. Regardless of whether you are a B2B business, B2C, nonprofit, solo-preneur, start-up, growth company, or $100-million success story, the Small Business Flight Plan can work for you.
Growing a small business can be an exhilarating journey. It can also be a burden and, quite frankly, a financial disaster that causes misery for years to come. There are many factors that determine the difference, of course, but once you have a good product people actually want and are able to get it to market, much of the rest of the journey amounts to simple business building. I say simple because we make it far more complicated than it needs to be.
The six steps that will help you implement your Small Business Flight Plan will not solve every problem you have as a small-business leader, but they will solve most of them.
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