Part 1, Strategy
Living your business strategy is the first article in a series that explore the four pillars of a successful business. These pillars, based on the book, Scaling Up by Verne Harnish helped me increase my revenue and profits 10 fold. With the business roller coaster ride of the past three years combined with the unsteady retail economy, this is the perfect time to get back to basics and I am bringing you with me.
Scaling Up as well as Traction by Gino Wickman became my how-to guides over the past 12 years for building a business that is sustainable and scalable. The things that I have learned allowed my store to weather the Covid shutdowns and the wild swings in sales that followed. I am revisiting Scaling Up this year to inspect my business’s foundational pillars. Those pillars are:
Strategy — Creating a business growth strategy that you can live every day.
People — Leading is about letting go and building a team – How to foster A players.
Execution — The plan is only as good as the execution.
Cash — Manage your cash flow, manage your growth.
Without a goal and strategy to get there, it is hard to purposely grow and sustain that growth. Ideas and opportunities that crop up can lead you in conflicting directions, to the point where you lose your identity as a business. Unfocused businesses find themselves expending too much energy for little effort, having too many projects going at once, the team is apathetic and not in line with the company vision, and the principle of the business is drained of energy. When you have a strategy, aligning your goals to your everyday actions and decision brings clarity and energy that makes your strategy a living one. That creates a strategy for growth.
Building a strategy for your businesses doesn’t take a master’s degree, it doesn’t even take a business class at a community college. What it takes is a bit of deep diving and lots of honest conversation with the key people in your organization. You may even have a strategic plan tucked away in your brain and it’s time to bring it out and put it on paper.
The most challenging part of creating your strategy is defining your business. Who are you and why are you doing this?
The personality of your business and your values define your vision and mission. From there your strategy is born — not the other way around. If you go in the wrong way, you will find yourself making decisions that are counter to why you are in business and the passions that got your there. Do not skip this step!
Do You Know the Core Purpose of Your Business?
In the insightful industry, odds are you know the emotional heart of what your do and the next step is to connect that to why you started this business, understand what you really care about, and what you and your business contribute to the world. All of these factors add up to the core of your business, the seed that you grow from, that sets you apart from your competitors, and the energy that keeps you going when you want to give up.
Your core purpose can also be seen as your “Why.” Simon Sinek, author of Start with Why, has the most watched TED talk “How Great Leaders Inspire Action,” where he talks about getting to your why, or your core purpose. It is important to know what you do and how you communicate it, but understanding and communicating why you have your business is the heart of it. It’s the glue that holds everything together and will inspire your staff, customers, and growth.
Getting to your core purpose is a simple concept but may not be an easy process. It is one question that you ask yourself about what your company does to get deeper and deeper into your core answer. Do the following exercise and ask the second question at least five times to get to the core why. When you get to the answer that can go no deeper, ask it one more time. What does your company do? Why is that important?
Once you get to your why, it’s time to visit your core values. Your core values are what will keep everyone connected in the difficult times and the high energy, high growth times. The core values, when your whole company lives them, will keep your employees focused when you are out of the office for extended periods of time. Your values are not a lecture series of moral tales, but a short series of words that describe what is most important in your company. For example:
- Zillow core values: Move fast, think big, own it. Zillow Group is a team sport, turn on the lights, winning is fun, act with integrity.
- Zen Planner core values: O – Outstanding service, H – Honor, A – Anticipate, N – Nimble, A – Active.
Values are what you are already living in your business. Before you start the list of values you think you have, ask your staff and maybe your best customers, what values you show (good or bad) as a business. Now compare that to what values you desire to have and how they measure up to your why. What needs to change to represent the core values that are most important to you and the why of your business?
Strengths, Weakness, and Trends (SWT)
It’s time to officially start recording your strategic plan by writing out your why and your values. Now on the next page, get real about your strengths, your weaknesses, and the trends you are seeing in your market (SWT). This may seem a little backward from other business guides, but I like to get a little real before I get a little dreamy. If I do this exercise first and then do it again after the next few steps, a light will shine on my blind spots. I learn so much about what I have not been paying attention to.
START WITH writing what you see trending in your market. This is a brain dump, a Google search, and a conversation with others in your field. What are the trends? What are customers buying/not buying? What are the new products on the market? New colors, economic factors, local issues?
NEXT, CREATE two columns and record the strengths and weaknesses of your business. Make sure to include your own strengths and weaknesses, those of your staff, your location, the economy, your market, your business model, etc.
Once you have your SWT, you have an easier path to see what makes you different from your competitors. This gives your “what” and “how” and helps you marry it to your WHY, creating your unique value proposition or X factor.
Flip to another page in your plan and start recording the next steps: Who your customers are, what you are selling to them, how you are delivering your brand (products) to them, and your X factor (your competitive advantage).
Who are your customers? Mission critical here. Knowing your customers is as important as knowing your why. Your customers must match your why, they must hold the same values, or they won’t connect with your products. Take a moment and write out the story of your core customers. Hub Spot has some wonderful resources for creating customer profile templates.
You will be profiling three areas: demographics, psychographics, and behavioral makeup.
Demographics are the age, sex, job, income, education, and family status. Psychographics or their psychological makeup entail lifestyle, goals, pains, habits, values, and interests. Depending on your business model and the maturity of your business and customers, you may also want to define their behavioral makeup which consists of engagement, readiness to buy, purchasing history, product usage, satisfaction, loyalty or account age, and attention required.
Review your product mix and best sellers, classify what you are selling your customers. Does this match your why and your customer demographic? Is there anything out of scope? Is there anything missing from your product mix?
Every business has a brand promise, implied or expressed. This is how your products are delivered. Own your brand promise or it owns you. What is your brand promise? What is the public expressed promise? What is the implied hidden promise that your customers have come to expect? It may be your store is a refuge from daily stress, it may be your staff is knowledgeable, or it may be the variety of products or the specificity of products. Understand how you are delivering your why to your customers.
Think About it This Way…
Let’s say the restaurant around the corner has the best Greek salad. Their manager and owner know they have this reputation, but the new cook doesn’t know and they forget to tell them. The new cook is more focused on making the average Gyros top-grade and is not giving love to the Greek salad. Over time, sales drop off because the Greek salad lovers are not coming back due to a poor quality salad. Customers didn’t say anything, they just didn’t come back, and management was confused and scrambling to bring customers in. The implied brand promise silently was broken.
To find your X factor, you start by comparing yourself to your competitors. That may feel vulnerable. You may feel you have to chase every weakness and beat your competition on every front. Release yourself from the fear of missing out. This competitive advantage — X factor — helps you pinpoint what you are amazing at and keep your focus there. People, products, operations, and pricing are the four areas to review in comparison to your competition. What makes you unique in each of these areas? Pick one competitor to compare to each area and how you are different. Commit to three to five differentiators as part of your strategic plan to hone in on and invest in.
Now that you have dug into your who, what, and how it’s time to add them to the first page of your strategic plan. Now flip back to your strength, weaknesses, and trends SWT page and see if they still ring true. Are there any more trends that you missed the first time? Are there strengths and weaknesses you didn’t see initially? Are there weaknesses that are actually strengths and vice versa? Adjust your list or make a new one and compare. What was in your blind spot? What did you learn about yourself?
From the first page of your plan and the SWT, you will quickly find the three objectives you must do in the next 12 months to fully align your business to your why and grow to the next step. A best practice is to have all of your other goals and projects aligned with these three objectives.
This is the tip of the iceberg for creating a robust strategy for your business. In Scaling Up there are more parts of the strategic plan and every year I would add another aspect to strategy building. Trying to do it all at once without a coach caused me to fail immediately. Doing one thing well will get you 100% farther than trying to do too many things and failing at all of them.
If you like what you read in this article, do yourself a favor and grab the book Scaling Up by Verne Harnish, and visit the site to download the one-page strategic plan referenced in the book. You may even want to get yourself a business coach to help you organize your thoughts and dig into how you can work on your business instead of just in it. This investment usually has a big payoff.
There are also many resources free and paid where you can learn more about growing your business:
- SCORE is a group of experienced mentors who volunteer to help small businesses like yours.
- SBA has many free programs online and in person to help small businesses grow. They can also help connect you with the economic development organizations in your state.
- Goldmans Sachs has a grant program for online and some in-person programs around the country.
- EO Accelerator program has a reasonably priced year-long entrepreneur training program.