Some useful and provocative business musings to make your life and business better.
Beware Of Advice From Successful, Lucky Idiots
A strong operator can handle a crappy market.
An amazing market can prop up a sloppy operator.
The right market combined with a strong operator will lead to exponentially better results than either alone. The results won’t be additive, they’ll be multiplicative. This is generally what’s happening when you see truly outsize business results.
For obvious reasons, we want Door Number Three. But if choosing between the first two, the strong operator is probably in the better position. They’ll have a better chance at adapting to whatever comes at them. And the winds will always change over the life of a business.
But here’s where things get confusing…
The sloppy operator won’t usually know their success is due to luck, and will be more likely to attribute their success to acumen. And they’ll be all too happy to share their advice, with the very best of intentions, and almost always while brimming with confidence. Caveat Lector.
Related: The phrase “It worked for me, so I KNOW it will work for you!” is a sign of very sloppy thinking. The best one can say is this: “It worked for me in my situation, so it may very well work for you, particularly if our situations are similar.” The latter doesn’t make for nearly as strong sales copy, alas.
Responsible Owners (Eventually) Focus On Marketing
When you first start your business, it’s a very good sign if you’re getting a fair amount of organic word-of-mouth growth via referrals from your first few clients or customers. In fact, if you’re NOT getting much organic word-of-mouth growth… you may need to look at what you’re offering. Sometimes you may just be in tough market with a limited number of qualified prospects. But it’s also as likely that what you’re offering just isn’t that great.
Now would be a great time to interview your clients, do surveys, and get feedback. (Want help with getting and processing feedback? Check out these articles HERE and HERE.) Without some organic word-of-mouth, it will be too expensive over the long haul to promote without the help of people who genuinely love what you do.
After a while, you won’t be able to rely solely on organic word-of-mouth. While this can and should remain a key source of marketing, at some point you’ll need to master some levers to proactively drive business growth. Relying purely on word-of-mouth will leave you flat-footed if and when the market inevitably changes.
There’s a reason you won’t find businesses with extended track records (10+ years) that haven’t put dedicated resources into spreading the good word. It may not be what you traditionally think of as marketing, but you’ll almost certainly find they’re utilizing at least some of the buckets below.
Here’s a (crudely simplified) chart for how to think of your marketing efforts. You don’t need to be doing all of these, and you certainly don’t need to be doing all of these all the time. But it’s still a useful overview for analyzing your current efforts and seeing if you have any low-hanging marketing-systems-fruit.
1) Marketing to FUTURE Clients
-Getting leads to interact with your content and “know you”
-Clicking on content (blogs, videos, etc.)
-Clicking on website
-Opt-ing into email list in exchange for a high-value “lead magnet,” etc.
-MAIN TOOLS: Facebook and Google ads
-Converting leads to buy something
-Purchasing a low barrier offer or promotion with 100% money back guarantee
-MAIN TOOLS: Retargeting via Facebook and Google ads, Facebook private message chatbots, email marketing, text and phone calls when possible, etc.
Offline Marketing ⇐= Highly underutilized by most brick and mortar/ local businesses
-Newspaper ad buys
-Speaking opportunities (conferences or lunch and learns)
-Cross-promotion with other businesses
2) Marketing to EXISTING Clients
Upsell Opportunities – Internal promotions to existing clients
-Offer complimentary services
-Offer a larger quantity of what they’re already buying
-Offer the chance to buy more frequently
Asking for Marketing Help
-Indirect – Case studies, testimonials, reviews, hashtag challenges on social, etc.
-Direct – Referral programs
–Want some thoughts on creating effective referral programs? Go HERE.
3) Marketing to PAST Clients
Reactivation System – for previous clients with regular on-going dedicated outreach
Want some thoughts on creating effective marketing without feeling cheezy or like a sell-out? Go HERE.
The Only Four Problem Areas In All Of Business
WARNING: Another totally over-simplified yet-still-useful model alert!!!
All problems in business can be traced to one of four areas:
1) People – Do the people you’ve hired have the ability/ competence to learn and consistently execute the systems required to do their job?
2) Systems – Are the systems themselves effective and consistently creating desired outcomes?
3) Training – Have you effectively trained people on your systems so they can perform according to clearly documented standards?
4) Management – Once your able people are trained up on your excellent systems… are they being managed and receiving feedback on an ongoing basis to continually meet standards?
Again… this is a crude and imperfect model. But I’ve found it helpful when troubleshooting.
For instance, at Mark Fisher Fitness, I think we’ve always hired people pretty well. Then from about Year 2 on, we started getting good at documenting our systems. In the past few years, we’ve gotten better and better at clarifying what good management looks like.
But over the past six months, we’ve been deep-diving into the training piece. We’ve certainly done an ok job getting new hires (and job promotions) up to speed in the past. But it’s only now that we’ve adopted it as a discipline that we’ll see major gains in efficiencies and reductions in “unforced errors” from new team members.
(We could zoom out further and say the only TWO problems in business are people or systems. And that wouldn’t be incorrect. But I think the above is a more useful/ actionable paradigm when trouble-shooting.)
Need help choosing the right people? Go HERE
Need help creating systems? Go HERE
Need help managing people? Go HERE
The First Rule Is Don’t Die (Duh.) (… But Seriously.)
The most common mistake I see with relatively inexperienced (or experienced but struggling) business owners is not tracking the hell out of a few key numbers. If this is you, please take action immediately. If you want a quick-and-dirty system, check out this post HERE.
This leads me to my next point…
The first rule of business is to stay alive. And it’s very hard to predict continued survival if you have no sense of how much food, water, and oxygen you currently have, nor any realistic sense of how much you expect to acquire in the months ahead.
Simply put, so long as you have adequate cash you can improve your business, troubleshoot issues, and improve your margins. But once you’re out of cash, it’s game over.
It’s very easy to make an ambitious investment without really thinking through the worst case scenario: making a key (expensive) hire, a large (untested) marketing investment, signing a lease, committing to expensive upgrades to an existing space, etc. But if you’re going to make a serious investment, you’ll want to be sure you’re going to be ok in a worst-case scenario.
Whenever I take a look at projections for clients (or even internally at MFF), I see proof of a trait that few ever know about me; while I’m pathologically happy, I’m also pessimistic as hell. To be fair, this can certainly be taken too far. And there’s always risk required for return. But on balance, I strive to think clearly about opportunities and not be seduced by flashy, sexy ventures outside my circle of competence.
Not only do you need to prepare for the “normal” worst-case scenario, but if it’s an ongoing or large upfront investment, you should also be prepared for a recession that will wipe out 20-30% of your revenue.
- If you read this section and you’re nodding your head along and your stomach is dropping even though you’re already watching this like a hawk… there’s at least a chance you’re overly risk-averse, and this may not be the right advice for you.
- If you read (skimmed) this section but had no visceral moment of self-introspection, you may be comfortable with risk. And while that’s not a bad thing, there’s a higher probability this advice will be important for you to take to heart.
Creating Terms For Success – In Advance – Protects You From Yourself
When you’re considering adding a new revenue stream to an existing business (or starting a new business altogether), it’s helpful to identify terms for success upfront.
By clarifying the numbers required for success, you’ll prevent yourself from falling into a “brain trap” called sunk-cost bias. “Sunk-cost bias” is when you continue making investments (of time, money, or energy) into something that you should logically abandon, because you’re reluctant to lose the investments you’ve already made.
Let’s say you create a brand new service offering for your clients. You spend a ton of time on it, you invest lots of money in designing the service, and after you launch it… it does just ok.
If the revenue is too small of a percentage of what your total revenue, at a certain point it may make sense to minimize the complexity and no longer have that offering. But most people wouldn’t consider doing that. They would push forward with their just ok offering, that is, after all, making some money, even though it’s hardly growing the way you wanted and you’re not getting very enthusiastic feedback.
While I can’t say this is wrong in a vacuum (provided you’re making some extra profit), it’s likely the new service offering is simply a distraction of time and energy. And that time and energy could otherwise be spent improving your core offerings and/or thinking of something else that would be more attractive to your clients and financially lucrative for your business.
By setting out some terms of success upfront, you can avoid this trap. Examples of numbers to track and create minimums around include:
- Revenue by X date
- Profit by X date
- Qualitative feedback scores by X date
- Retention by X date
The exact ones you use will depend on your business and what you offer. This is all relative. For Warren Buffet to make a meaningful move, he has to literally make billions. Conversely, a business owner with a modest business may see a massive increase in quality of life by adding a few extra thousand dollars to their monthly bottom line.
You’ll also want to decide on a reasonable timeline to hit your goals. On the one hand, it’s only natural to need a bit of time to ramp up. But on the other hand, it’s easy to let your new passion project linger on well past the point it would have been logical to put it to sleep. Better to cut your losses and move on to other activities with a better return on your time, energy, and money investment.