The difference between your business and someone else’s business
by Chia-Li Chien | Oct. 31, 2013
We already know every business has its own unique culture, determined by the personality of its team, location, industry, customer audience, and other factors that may or may not affect profits and business value.
It’s also true that each business has its own internal processes. Systematized proprietary processes are valuable intellectual property and necessary to your business. Your unique processes and systems can help make your business more valuable.
However, if your processes are not systematized, you may want to consider an overhaul to build value and increase efficiency. If your processes can’t integrate with your other systems such as accounting or order fulfillment, you’ll have inefficiencies that result in higher costs passed on to your customers.
And if you have very high volume seasons, without systematized processes, your company may be hindered in handling the good problem of a flood of business. If there is lack of underlying processes in your core competency, the result could be varied outputs, creating an inconsistency in profitability.
The right processes in place create more opportunities and uncover pockets of money.
If automation is not a possibility yet, start with a paper process. It can help you streamline your internal process and eventually increase the efficiency within your team. Having any type of streamlined process will enhance the consistency of your overall quality for delivering your service and ultimately increase your profits.
Maximize your intellectual property—your unique know-how. At the end of the day, it is where your business wealth lies. It's something you must capture over time so you can increase the value contained in your business.
Processes in place and systemized? Check. So what’s next in building business value? Determining your unique profit formula.
A uniquely you Profit Formula
Let’s take a look at “Luna’s” company. Luna has been in the therapy business for ten years, working in the education system, and has enjoyed steady company growth. However, her largest and only client did not consider her bid for the 2009-2010 school year. Plus, her business was beginning to feel federal cuts in Medicaid payments.
Her highly concentrated customer base definitely damaged her business from a profit formula perspective. Through my Profit Formula, we created and repackaged seven additional revenue sources along with two other entities to comply better with new government regulations.
As a result of a profit formula change, her business grew an additional 165% in revenue and gained an additional 100% in net profit in 2010.
Entrepreneurs often tell me, “I know I have to be strategic in profits and differentiation, but I just don’t have the time being strategic requires.” If Luna did not take the time to be strategic, she probably would not have experienced the growth of her business. Without a profit formula change, her business might be gone today, especially after the recent recession.
But for now, let’s look at another difference between you and the other business—Pull Marketing.
Deploy Pull Marketing in a way that is uniquely yours.
Effective Pull Marketing means to deploy transparent market makers. A Market Maker is an entity that has your exact target customers. In other words, they’re well established in your market space. Market makers can include strategic alliances, specific interest trade groups, or even just another complimentary business. They are all around you.
Let’s take a look at “Steven’s” company. Steven has been in the training business for twenty-five years, and wants to sell his business in the next fifteen years. During 2009, there were significant consumer cut backs in spending for training. In addition, Steven sold his classes one seat at a time, with no consideration of his Market Makers.
With my guidance, Steven defined five Market Makers based on specific market space and products. Steven focused on pursuing only one Market Maker during 2010. By mid-2010, Steven actually contracted with two Market Makers.
As a result of deploying two Market Makers, his business grew an additional 25% in revenue and gained an additional 100% in net profit in 2010.
Some entrepreneurs tell me, “I don’t have the cash flow to hire a professional like you” But, if Steven had done nothing about his business situation, he probably would still be struggling to survive, frustrated after a down economy.
Put your Market Makers in place while keeping in mind that every business is unique. Your KPI’s show you and your investors your strengths and differentiators. Read on—
Key Performance Indicators (KPI’s)—Numbers that are uniquely you
When it comes to numbers, most people find it difficult to relate to what those figures actually mean. Numbers are designed to help you make the RIGHT decision. To help you make profits. KPI's are a set of numbers manageable enough to help you make the right decisions.
“Dan,” who had a building contracting company struggling to streamline the bidding process to increase profitability and uncover opportunities, identified the KPI's most useful in making decisions. Since to reach his annual projection, Dan needed to deliver eighty home sites a month, we determined that each of his two supervisors would be responsible for forty home sites. Each site would have to deliver ten homes per week, or two a day.
Dan had never considered having as a goal such small numbers. I asked him if two homes a day per supervisor was achievable, even in any type of economy. He answered “absolutely!”
As a result of deploying his KPI's, his business grew an additional 100% in revenue and gained an additional 100% in net profit in 2010. Not bad in a turbulent real estate market!
So, you ask, why can’t entrepreneurs just use some specialized software to track KPI's? Well, you can use software to track KPI's and I encourage that, as long as you know what sets of KPI's are best for your business and what actions or adjustments are associated with these KPI's. Then there is nothing wrong with the use of software. My process helps my clients define the right sets of KPI's.
Uniquely you for profits that are uniquely yours.
Try not to get caught up in comparing yourself to other business owners, your competitors, or a business not even in your industry. Focus instead on building on the strengths and differentiators along with the Market Makers that are uniquely you, using Profit Formula, Pull Marketing, and KPI’s.
Then, as you build profits and increase business value, you’ll be able to create a life now and in the future that is uniquely yours, just as you picture it, just as you envision it.
About Chia-Li Chien
Chia-Li Chien, CFP®, CRPC, PMP; Chia-Li “like JOLLY,” Succession Strategist of Value Growth Institute, dedicated to helping private business owners increase their company equity value. She is the award-winning author of the books Show Me The Money and Work toward Reward and a faculty of the American Management Association. Her blog and newsletter was named a Top Small Business Resource by the New York Times You’re the Boss blog. Contact her at firstname.lastname@example.org or (704) 268-9378 .