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Tweetables:
Set a clear business purpose. [Click To Tweet].
Have your own blackbox. [Click To Tweet].
Recognize change, adapt and innovate. [Click To Tweet].
A great name is a great asset. [Click To Tweet].
Get your customers in the center of your business. [Click To Tweet].
Plan with the end in mind. [Click To Tweet].
Do you prefer text? here you go…
James Schramko here with another Wealthification module and this one is about strategy.
Knowing Your Purpose
The purpose of your business is to create and retain a customer. We need to focus on marketing to get the customer and then we can re-market that customer on staying and then we can make use of innovation to make sure that our business is still very effective and attractive for our customers.
Something we need to do is to be very clear on the purpose of our business. What are we in business for? What is the point? Are we doing this to create an asset? Remember, wealthification is the process of creating a profitable business that can fund your lifestyle. Once we’re clear on the reason why we have a business, we can dig into the next level.
Design Your Business
How do you want your business to work? You can actually design your business before you build it and that’s a revelation because a lot of people go out there, start something, get going and build it up but they never actually sit down and think about what they’d like in advance and you can do that. So how do you want your business to work? Do you want to work from home? Do you want to have an office? Do you want to travel? Do you want to stay put? Do you want to be by yourself or would you like a team around you? Are you going to build a sales army?
What you need to do is to have a planning session. Perhaps pull out a whiteboard, sit down and map it out but decide now what you want to build.
Pick A Business Model
The next step is to create the business model. This is the part; this is the engine that will drive your business. You can change it as you go and very rarely will you end up in the same business that you start but you need to select the business model. There’s a few ways to get ideas about this.
You can observe other people’s businesses and see if you like their model, you could try few for yourself or reflect back on the business models that you’ve enjoyed being a part of and find ones that fit the business design that you’ve selected.
Choose a business model, or two and sometimes three but generally, having more than three or four gets a little bit tricky especially when you’re starting out. For me, I like a business model that works without me to some extent and I like a business model that’s virtual. I like working from home but I like having a team and its ok for them to work in their own homes – which gives us a lot of leverage but still the power of having a great group of people to work with.
Do You Have A Defensible Position?
The next step is to score your business model and just make sure that it’s right for you and one of the important criteria that I look for is a defensible position.
When you operate on the internet for example, the internet has a very low barrier for entry. It’s so cheap for someone to get started online. One of the barriers to entry that makes it hard for someone is knowledge or experience, assets – so the more something costs the less people that can get involved with it. It’s not enough to just say ‘we have great service.’ That’s definitely not defensible.
You want if you can, to create some sort of blackbox which is a specific strategy of having an unidentifiable advantage that nobody else can see or reverse engineer.
This could be some special software. It could definitely be an internal procedure or process that other people do not get taught. You’ve got to figure out why your business is special or unique in some way – to stop people coming and copying you if possible.
Now if it’s not possible, there are still a few things you can do to become defensible. Firstly, you can inject a bit of personality into your business, especially you because there’s only one of you. The other thing to do is to just move fast. If you’re coming to the market with something that other people can copy, make sure you move quickly and you use the start up techniques to stay nimble.
Startup Techniques You Can Use
Even established businesses can use startup techniques and this is how you do it:
You come up with your theory about what you think is going to happen. You go to the market with a minimum viable product which is the minimum possible product or service that you can put out to get going and then you measure what happens when you release that product and see what you can learn from it.
I’m talking about a minimum viable product and build, measure, learn loops this comes from The Lean Startup which is a great book on this topic. As you scale your business, you keep doing this – build, measure, learn loops.
So you put your product out there, see what happens, see how it compares, with measurement, against what you thought would happen, and learn from it, and keep refining.
The refinements are called pivots. Now if it’s working, you can just keep doing what you’re doing but generally you’ll need to change something. The sorts of things you can change are:
Who are the customers for your product? Maybe it’s someone different from what you thought. Maybe you changed the price points or maybe you changed the marketing channel and switched from business to consumer to business to business or the other way. Perhaps you even changed the product. You make it bigger, smaller or different in some way. You could change the type of service or product that you offer all together. Or you might bundle it and expand the offer or you could shrink the offer, just take a little piece of the product and sell it as a smaller component. The key is keep adapting.
The other important point about startups, is to wherever possible, avoid taking funding. You don’t really want investors because that is compromise. Firstly, you’re going to have reduced percentage of the profit and when you do the wealthification steps, you will be profitable. Secondly, you’re going to have compromise in the form of decision making. People who invest money generally want to tell you how it’s going to run and they’re quite happy to kill of a business to pull out the money that they’ve invested if they need to make a profit and you definitely don’t want a desperate or urgent investor. So if it’s at all possible, own 100%.
The most important skill you can have is to recognize when things need to change, and make the changes and measure, and then adjust. So make sure you take lots of measurements and make excellent decisions based on what has happened in the past. And that is the key to good decision-making.
What’s In A Name?
What you call your business is very important.
If you can get a great brandable name for your business, then it is memorable but also effective because it clearly communicates to your target audience what it does. I’ve got a terrific name for my link building service, called Linkjuice and that is actually the industry name for what happens when a site passes power from one web site to another. It’s a transfer of linkjuice so customers know exactly what that service does.
When I want to name a product, I do a quick Google search and I check to see if I can find a domain name for that product. I also want to make sure there’s no back record or bad history with that name so that I’m not stepping into a minefield. Sometimes people ruin a business, let it lapse and then years later, someone else will get it but still find all this bad history about it.
Now a lot of ideas will have been taken when you search for names. This is a great research opportunity to see what you can learn from it. What did they do with that domain? Did they have the same business model as you? Are they in the same market? And what can you do differently to them to get a better advantage? Or have they executed your idea even better than you thought you could? And is there a barrier to entry for you coming into the market with a twist or doing something a little bit cooler? A great name is a great asset, and it’s definitely going to help you when it comes to sell your business.
Veneering
An awesome strategy is veneering and this is where you take something that’s working well already and you innovate and you put another version of it out there
Let’s say that your original business is like the engine of a car. What you can do is create a layer on top of that. We’ll call it the body of the car and we can paint it with all different colors. We now create something that is saleable but we can keep the original business and that is what the power of this is. In fact, we may even sell the business and retain a supply contract from our original business. I apply this once I have a successful business in place.
Let’s imagine that you provide a service and then you create a second business that resells your original service but under a different brand name. You can now have someone come along and buy that reselling service from you and you can still supply that person because they’ll have a margin for them. That way, you could do this over and over again and if you sell a business once every year but you get three years multiple of earnings, then you can actually have nine years of income in just three years and that’s the power of veneering.
Put The Customer In The Center
Another great strategy when you’re selecting business models is place the customer in the middle of your business and I call this the chocolate wheel.
Your customer is in the center of the business and you build modules all around them and these modules are stand alone between each other but they are also complementary.
Think about a car dealership, they have a service division, they have a parts division, they have a sales division and they have a finance division so somebody could come in any one of those parts of the business and experience the other part and be cross promoted. So now your one customer can generate multiple profits from your business because they experience all the different products from within your business.
So get your customer in the center. Treat them really well and build modules around them and make sure your business models if they can be complementary then you will maximize that investment in getting the customer the first time and from then on your repeat and referral sales are paid for and your profit goes up.
Innovate To Gain Advantage
Innovation is important because this is how you create advantages over your competition.
Typically, you’ll ask yourself questions like how can we do better? Why are we doing this? Could we do it a different way? What are other people doing? Surely, there’s someone in the world who’s doing this better than us let’s think about what they’d be doing. I’m pretty sure they’d be reading books about it, they’d be looking at trade journals, and definitely attending events, and they would certainly be in mastermind groups sharing high-level secrets. Innovation is the key to staying on top of your competition, because they can only ever copy where you’re up to today, but they don’t know what’s coming around the corner tomorrow.
Make Use Of By-Products
Another element to look for in your products are by-products.
So as you’re making your strategy, just think, can you create products that feed another product of yours? The perfect example of this in my business is a website customer because website customers generally want to get traffic to their website -which is a perfect lead into my search engine optimization services so by-products are awesome.
In the timber mills, they create sawdust and that sawdust can be used to make insulation products. In beer factories, they actually create yeast extract. Which is turned into a wonderful black spread called Vegemite which Australians love (and every other country dislikes). But the point is it’s easy for them to get the starting raw material because someone else created it for them. Now when you bring this back to your business, when one of your business divisions creates a by-product for the next business division, your marketing is paid up and ready to roll.
Have An Exit Strategy
Finally, you should plan your business with the end in mind.
And some of the things that people will be interested in when they want to buy your business are: will it work without you? Can it stand alone? Because if your business does not work without you then you actually have a job and not a business. If your business is profitable, that would definitely be attractive because it’s more exciting to buy a business that makes money than one that loses money. How systemized is your business? Are there checklists and standard operating procedures? Does it have people who know what to do? If you do these things well, if your plan your business in the beginning, thinking that you may sell it one day down the track then you can probably sell your business from multiple earnings. You may get 2, 3, 4, 5, 6 or even 10 times your profit earnings for the year to an interested buyer.
Wealthification is just one of the many courses inside SuperFastBusiness.com. Join me inside this Internet Business coaching community so that I can help you profit faster: Click Here
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