Crucial Keys to Business Success in 2012
Entering into a new year inspires hope and high expectations for positive change in many entrepreneurs. But by the end of first quarter, at best, this optimism typically falls short. The business owner remains overwhelmed with immediate tasks and problems, no different from the preceding years. It's a cycle that holds true for too many aspiring millionaires, but not one that can't be broken. If you've been doing the same things year after year, expecting different results, it's time to try a new business-planning approach. Start this New Year by stepping away from the insanity and into a plan that works.
"Too many business owners focus solely on their profit-and-loss statements," says Dave Lavinsky, co-founder of Growthink. Since 1999 Growthink has helped its clients raise more than one billion dollars in funding to grow their businesses. "It's critical to focus more on the business assets," Lavinsky says. "What's going to allow you to expand your reach and grow your company?" he asks.
To develop and execute a business plan that will work for you in this New Year, Lavinsky, who an internationally renowned expert in the fields of business planning, capital raising, and new venture development, suggests focusing on assets like your client base, new employees, systems, and partnerships. "Putting your attention purely on profits can take you off track. More profits are nice, but more clients can be leveraged for significant future growth," he says. Focusing on deliverables is certainly important, but planning and execution is what will grow your client base, thus your company.
Lavinsky cites the following elements as key points in an effective business plan if that plan is intended as a blueprint to grow your business. He reminds us that if you aim to use your business plan to attract investors, there are many other financial pieces that you need to include. Make sure to visit GrowThink to learn more about those.
Mission Statement: Lavinsky notes that most businesses either don't have a mission statement or they make it so general that it has no meaning. Think about what you're trying to achieve and include that big vision in your mission statement. Take a look at Growthink's mission statement as a great model.
SWOT Analysis: a comprehensive SWOT analysis (assessing company strengths, weaknesses, market opportunities and market threats) is critical to assess your opportunities, generate ideas and focus on which to go after.
Marketing Strategies: Take a good look at your current marketing strategies. In Lavinsky's experience, most entrepreneurs use only one channel to market their business. "Dig deeper and use different strategies," he says. "Do you use only radio advertising? Spread out your marketing dollars and include things like direct mail, pay per click, print advertising, and other marketing resources rather than just one avenue." Lavinsky suggests that you try a new channel each month and by the end of the year you will have another valuable business asset: proven knowledge of which marketing tactics work and those that don't.
Company Goals" Set goals for a five-year target point. What income level do you plan on achieving in that time? Will you sell the company, remain at the helm, or go public? Plot your course, and then break down your goals and strategies into a one-year plan. Which opportunities are best to execute this year in order to achieve your five year goals?
Business Asset Goals: Formulate projections on customer count, employee count, training, new equipment and other expenditures, like a new facility or office expansion. Be prepared for growth.
Key Performance Indicators: Most entrepreneurs don't track things like visitors to their website, customers in the store, the percentage of sales in the store vs. the website, upsell percentages, number of sales, sales closed, proposals issued, etc. It's crucial to keep detailed metrics so that you can analyze problems. Don't simply look at those top line figures in your P&L, study your KPIs as well. For instance, if your team didn't upsell enough, it may be time to create new sales scripts. For example, if your website isn't converting enough sales, it's time to explore a different conversion tactic.
When determining what to include in your KPI details, Lavinsky recommends that you ask yourself these two simple questions: Of my top five direct competitors, which one would I purchase if I could? Then, what would I want to know to determine the best buy? So, for instance, would you purchase the company with the highest sales conversion rate, best Web stats, perhaps the most stable customer base? Now create a tracking method for those key factors, which are apparently very important to you.
Target Audience: Define your customer in detail to maximize your marketing efforts. "Create your customer avatar," says Lavinsky. "Explore what is important to them, the real reasons they do what they do, and their key problems." Also include demographics such as gender, age, race, geographic location.
With your customer avatar well defined, you can find publications, radio shows, blogs and other well-targeted means to reach out to your customer. You can speak to them more effectively and achieve a much higher conversion rate. Be as specific as possible. Remember the 80/20 rule; 20 percent of customers represent 80 percent of profit. Who is your 20 percent?
Getting too niche? Lavinsky would ask you if you'd rather be a sardine in the ocean or a whale in a pond. "Niche down," he says, "and own your market. Once you do this you can grow into other markets." Also remember that you will still be serving people outside of your niche, it isn't as limiting as you may believe. Lavinsky reminds us that it is easier to start small and expand later.
Facebook is a great example of this is. It started at Harvard, and then expanded to other ivy leagues and eventually into the general populace.
Competitive Analysis: Lavinsky stresses the importance of being prepared for the inevitable—competitive challenges. "Take a good look at your competition and define what steps they could take that would really frighten you. Imagine the worst case scenario and ask yourself if you could deal with it or if your business would be massively hampered," he says. The next step is to determine what you could do under your current circumstances to pre-empt it. "Make the assumption that they’re really good at strategy and that they do smart things," suggests Lavinsky. "Then make contingency plans."
If your competition acquires another company as a part of their growth strategy, for instance, what can you do now to control the impact of such a move? Again, selecting a well-defined niche and becoming known as the best provider in that industry would help to mitigate that risk.
Define your team: "Even solopreneurs should have a team," Lavinsky says. "Don't try to do it all on your own." Consider your virtual assistants and other outside contractors, or employees if you have them. Where do you want them to be one year from now? What skills will they have developed? What training or mentoring is necessary to get them there? Is there anyone who’s not working out? Who do need to grow your company? How can you get those resources in place?
Operations Plan: Finally, Lavinsky cites the importance of an operations plan. Looking at your five-year plan and what you want to accomplish, define your marketing strategies, any additional services or products to offer, and all of your key initiatives for the year. Lavinsky suggests creating a Gantt chart, so that you have a visual for each project.