The next excerpt is from Michael Glauser’s new book Main Street Entrepreneur. Buy it now from Amazon | Barnes & Noble | iTunes
As a business owner and business consultant, I’ve learned there are always methods to produce big-time results with small means. I start each project by concentrating on two important concepts: effectiveness and efficiency. Effectiveness is achieving critical objectives for growing your business; efficiency does it with as few resources as possible.
Here’s a straightforward analogy to illustrate both of these concepts. Suppose you have a bee buzzing around your kitchen that’s driving you crazy. Your objective is to eliminate it (effectiveness). One solution is to seize a sledgehammer from the garage and begin swinging away. While this process will eventually kill the bee, it requires a whole lot of energy and can do serious harm to your kitchen. The more prevalent solution is to start out chasing the bee around your home with a fly swatter, that will also kill the bee but nonetheless requires some effort on your own part. A third solution is merely to open a door and allow bee fly away. While all three solutions work in eliminating the bee, the 3rd is the most efficient. It needs less time and fewer resources.
Applying this analogy to business, the sledgehammer solution is extravagant and excessive. It’s what big corporations and governments often do. The fly swatter solution may be the status quo. It’s what most companies do. Opening doors is what entrepreneurs do. It’s not because they’re geniuses — it’s because they often lack funding and also have to use other methods to get things done. You may be very creative when you yourself have to be, and there are several methods to open doors while creating a business. Below are a few examples from the frozen dessert company we built and sold.
Among our biggest challenges was creating our very own proprietary type of nonfat, low-calorie products that tasted great. We needed a study lab to get this done, and they’re very costly. Building our very own was the sledgehammer solution. Renting one was the fly-swatter option. Since we’d limited funds, we had a need to open a door. What we did was partner with an area university that had a state-of-the-art dairy lab. We let graduate students assist as interns on the project and paid the university a little monthly fee to utilize the lab. Ultimately, our cost to create 30 excellent flavors was far below the industry standard.
Another challenge was producing our products. The sledgehammer solution was to create a multimillion-dollar plant. The fly-swatter solution was to rent space within an existing facility. What we did was partner with a big grocery chain that had just built a state-of-the-art ice cream plant. They produced our products for a set fee per gallon above their cost and allowed us to market our products within their grocery stores. It had been a win-win strategic partnership.
The last example involved changing our name in a sales region. We started the business in Utah, but as we expanded out from the state, we weren’t in a position to secure a federal trademark for our brand. We finally obtained a fresh federal trademark that people used to expand outside Utah, then we went back and change our name in the initial region to complement. We were concerned our sales might drop if customers thought we were a fresh business with new owners, so initially we got bids for an average media campaign to describe our name change that included radio, TV, and print ads. It had been an extremely expensive sledgehammer solution.
Then we’d an idea. Instead of getting a one to two 2 percent response rate from expensive advertising, you will want to hand out free product inside our stores to your existing customers and everybody else who arrived? So we put banners on all our stores having said that “FREE YOGURT FRIDAY NIGHT” and told all our customers about the function and our new name. We finished up feeding a large number of people, and the media arrived to cover the frenzy free of charge. Consequently, our name change was communicated in a positive way and our sales went up. We finished up doing the promotion each and every time we opened a fresh store. It was an effective, low-cost technique for grand openings.
Successful business builders don’t just start lean-they continue steadily to orchestrate marvelous efficiencies while growing their business. This sharp eye for “creating more from less” offers a significant competitive advantage. Being the low-cost operator within an industry lets you: 1) maintain market prices and reap larger margins than your competition or 2) decrease your prices and quickly grab market share. So identifying and maximizing resources has to be a continuing part of your strategy. Having caused a huge selection of entrepreneurs, I’ve come up with a powerful planning process that keeps you centered on your purpose and makes resource maximization important.
Revisiting your “why” reminds you of your purpose for building your company to begin with. If you don’t do that often, it’s easy to stray from your own firm foundation. In Focus on Why, author Simon Sinek skillfully argues that lots of large corporations have lost their way — Walmart, Starbucks, Dell — and struggled to make contact with their purpose. Others, like Southwest Airlines, have kept their original engaging purpose from day one. While your purpose is relatively stable over extended periods of time, it could change. You always have to know why you’re doing what you’re doing.
Your “what” defines the sort of company you’re likely to build inside your “why.” It’s a vision of what you would like your company to maintain 2-3 years. Exactly like an architect creates a lovely rendering of a building to be constructed, it is advisable to create a graphic of the business you’ll build. This “what” will include the merchandise you’ll create, the markets you’ll serve, the teammates you’ll hire, the clients you’ll acquire, the revenue you’ll achieve, the margins you’ll obtain, etc. While your “why” remains fairly constant as time passes, your “what” can transform every few years. For instance, Apple has changed its “what” several times, from computers to music devices to phones and watches, nonetheless it has always stayed within the “why” of innovative technology which makes our lives better.
Now it’s time to define the “how,” or the precise objectives you need to achieve in the short set you back approximate the vision you’ve created in your “what.” I call this a one-year execution plan. They are the big rocks you need to move this year to attain the two- to three-year vision you’ve defined for your company. I find that 4-6 major goals or initiatives are about right for confirmed year.
These have to be specific milestones, like increasing sales by thirty percent, adding three services, opening two additional locations, and so forth. After defining these key outcomes (effectiveness), you have to spend at least as enough time planning how you’ll achieve these results with reduced resources (efficiency). This is actually the task most companies gloss over, but in the event that you spend as enough time deciding how you’ll efficiently reach your goals as you do on setting them, you’ll become very proficient at maximizing resources.