HOW A SMALL BUSINESS GROWS
Key Takeaways -
- Many business owners are focused on revenue and don't place enough focus on margins. It's not what you make...it's what you get to keep that counts!
- Make sure that we're focusing on our most high value activities.
- In three to five years, are people still going to need what you do?
- You have to stay strong enough, long enough to win.
- Download the first 2 Chapters free - Fix Your Business
Today, we're talking with best selling author Melinda Emerson. She's a small business expert that was named by Forbes magazine as the #1 woman for entrepreneurs to follow on Twitter.
She advises Fortune 500 companies like Visa, American Express and FedEx on how to market to small businesses, and she teaches over three million readers every week on how to use digital marketing effectively. Welcome, Melinda.
Thank you so much for having me.
Well, I'm excited about this conversation. I was recently reading one of your best selling books, "Fix Your Business", and in the book you provide business leaders with a step by step system to help them build a flourishing and highly profitable company.
Can you give us a high level summary on the 12 principles or as you call them, the 12 P's covered in this book?
Sure. The 12 P's of running a successful business are really just based on my experiences working alongside small business owners, coaching small business owners, and just really what I have seen, what works best in businesses that thrive and grow.
And the 12 P's is almost like my personal manifesto for what I think it takes to run a successful business. I'll break them down for you now.
The first P is preparation. I don't believe that entrepreneurs don't know what's going wrong in their business. I believe they have and decided that they're ready to fix it.
So when I say preparation, it's really about making the decision that you're ready to fix your business because you know what is wrong. It's time to fix it. And that's why the first P is all about this.
The second P is purpose. And when I think about the purpose of a business, it's really the businesses' "Why?" story, if you will, why did you start this business? But more than that, why should you still be running it?
Are you running this business because you don't know what else to do? Because you thought it would make lots of money? Like why are you running this business? Why does the world need this business?
And sometimes when a business is stuck, they have to go back to this place because sometimes the reasons why you started a business have nothing to do with the reasons why you still need to be running it.
But the other thing that's interesting to me about purpose is it's really like your mission, vision and passion all rolled into one.
Number three, the third P is people. And it's funny because I don't think I know an entrepreneur doesn't have a story for me about their employees, right?
But I once had an H.R. person tell me, when you have people, you have potential for problems.
But here's how I view people problems in a business. I believe there's four types of people problems: The first people problem usually is you need people and you don't have them, right? You are one killing yourself.
The second problem is you got the wrong people working for you, right? So give your best friend or your cousin a check, don't give them a job. They're not the right person for you. Go through an actual rigorous hiring process so that you get the most qualified person to work for you.
The third people problem that I often see is we as small business owners, we hire people, we throw them the keys and basically say good luck. You don't take the time to onboard them or really train them. And then we have the nerve to get upset when they don't perform, which is like kind of madness.
You know, if we can take anything away from what corporate America does, we need to spend more time training our folks to do things our way.
And the statistics ferret this out. The more time you spend with the new employee, the more likely it is the employee is going to stay. So it's in our best interest to make sure that people know exactly how to do their job.
But then there's the fourth people problem that entrepreneurs rarely see, and this one is like, what is it like to work for you? Are you a good boss? You bad boss? Are you the kind of where everybody knows what kind of day you're having?
Fifty percent of all business problems are not so well hidden personal problems, and they often show up in the people challenges in a small business.
Now, number four is profit and profit is how we keep score in business, because I don't care about what you make. I care about what you keep. And too often we as business owners get really focused on revenue and do not focus enough on margins.
We do not focus on the net present value of money, the time value of money and really understanding cash flow and cash management, making sure that we can take all forms of money.
So these are the kinds of things that we get into in the profit chapter in the business.
The fifth chapter is processes. Now, if you don't document how your business runs, how are you ever going to train these employees you want to hire?
You only have to look at what the routine processes are in your business and document them. And then you need to, as the business owner, look at whether or not you really should be entering your own data in a QuickBooks, or should you be paying somebody else to do that because your time is billable. It's 500 dollars an hour, right?
As business owners, we need to make sure that we're focusing on our most high value activities. But too often we're doing basic administrative stuff that we should have no business doing.
Then, the sixth P is going to be awesome because it is all about productivity. And productivity is how you can leverage technology or an app to save you time and money.
And one of the cool things about my book "Fix Your Business" is I set up a website called fixyourbusiness.com, where I actually lay out my favorite tools.
I think the biggest challenge now is that there are so many tech tools, people get stuck because they don't know which one to pick.
So, if you're a small business, I've taken the time to kind of ferret that out for you so you can head on over to fixyourbusiness.com and learn more about the technology that I think.
But there's some easy ways you can automate marketing, you can automate email, you can automate invoices. You don't have to manually send somebody an invoice, you can have an app do that, your payroll.
You know, there's all kinds of things that you could do so much faster with technology, your customer relationship management software, all these kinds of things you can use to leverage.
And then once you get through the first six, the last six are all about taking your business to the next level. I think the first six are about the fundamentals of a business, but the next six are about really, really revving up the engine in your business.
So Chapter 7 is about performance. And when I say performance, I'm really talking about measurement. What are you measuring in your business?
As a matter of fact, are you measuring anything in your business?
When was the last time you looked at your Google analytics?
Your email open rate? Your cost per sale? Cost per lead?
You know, all of these things can help you figure out if you're getting your money's worth from what you're doing.
And then, after performance, we look at product. Product is really all about looking at your current products and services and figuring out where is your business positioned in the marketplace and whether or not your business is relevant for the future.
You know, in three to five years, are people still going to need what you do or are they still going to buy it from you at the price you sell it at?
I mean, is there some technology that's come in to the marketplace that's going to put you out of business or majorly shrink your business?
I mean, it's really about staying on top of the industry trends and making sure that you are not a taxi driver when Uber and Lyft come out.
You want to just make sure that you're paying attention and talking to your customer base about their current and future needs so that you can anticipate them and be there.
You want to build partnerships with your customers. You don't want to be just selling stuff, because if you're just selling them, so they will buy it from anyone.
And so, you want to make sure that you're keeping up with the pulse of what's going on in your industry so that you don't get left behind.
And then the ninth P in the "Fix Your Business" book is all about presence, and I'm talking about your brand presence.
And that could be online or offline if you've been in business for a while.
When was the last time you updated your logo? Or given your business card or website a new color story?
And let's talk about your website. That is your number one sales tool. Is it open for business? Is it welcoming?
Do you have an irresistible free offer on your website that you can use to capture people's email addresses?
Do you have an email nurture sequence or a sales funnel running so that you can nurture your relationship with the people who come to your business, or come to your website?
The Tenth P is prospects, and that's really all about lead generation, having an organic sales process and really thinking through how to hire your first sales person if you don't have one already because it's a critical hire. If you hire the wrong person, honestly, you can bankrupt your whole company.
The Eleventh P is planning. So you want to really think carefully about what you want to accomplish and what your sales process is, what your sales cycle is and how you're going to compensate this person before you ever think about putting up an ad on Indeed or on LinkedIn to find a great sales person.
But it's important because you do need someone in your business thinking about how your business makes money other than you.
And then the Twelve P is perseverance and the reason why perseverance is so important.
Because not everybody is cut out to be an entrepreneur. We live how most people won't, so we can live how most people can't. But you have to persevere and get there.
There is absolutely an upfront hazing process involved in running a small business.
So you want to make sure that you are positioned to take a punch, take a hit, lose a big client, have your key employee quit on your hardest day, or to have your biggest customer move on to another vendor.
All of these things are real and they happen. And you have to stay strong enough, long enough to win.
And that's what perseverance is all about.
And that's really what the 12 P's of running a successful business are all about.