An important part of getting where you want to go is knowing where you are starting from. Without a an honest understanding of where you stand, how will know what needs work?
Over the last few weeks, I’ve talked about purpose and vision. These are the first two cornerstones of your business. This week, I’ll talk about the third cornerstone – your origin point. Next time, we’ll talk about the final cornerstone of your business – the map.
Taken together, these four cornerstones are the foundation you use to build your business. Just like a house that lacks a proper foundation, anything you try to build without them will simply collapse for lack of support.
Origin – Your Current Situation Assessment
We ‘re going to look at each key part of your business (more on those below).
You’ll notice that we will write down your current metrics (revenue, income, employees, etc), but that is all we will do with them. I know what you’re thinking. The whole point is to increase sales and profit, so why am I telling you we won’t be doing anything with these numbers.
It’s because the numbers are the result. They are nothing more than a way to measure your progress toward your vision. The gap between your current sales and your sales goal tells you nothing about what needs to change in your business.
This is the exact trap many owners fall into. They look at their current sales or profits and say they need to improve. Great. Then they get frustrated because they have no idea how to do that.
They have no idea how to do that because they never take the critical step I’m talking about here. They try to change the measurement when they should be trying to change the actions that result in the measurement.
So, let’s look at the operational aspects of the business so we can change the actions.
Here’s how.
First, write down the current values for all the measurable items you included in your vision.
Next, review every part of your business.
For each area of the business (listed below), you will score it on a scale of 0 to 10. On this scale, a 10 means that everything is exactly as it needs to be to achieve your vision. A 0 means there is no hope of ever achieving your vision in its current state.
For each of the areas of your business, you’ll write down your score, along with the answer to two questions:
- What is the rating (0-10) of the current state of your business in this area?
- Why does this part of your business get that rating?
- What needs to change to make the rating a 10?
As you go through this exercise, remember that you need to be able to see your business for what it really is today – warts and all. It can be helpful to ask others for their input. These could be key employees, trusted advisors, or even (shameless plug) your coach.
The Key Areas of your Business
All the key issues in your business fall into one of these areas.
Leadership
Leadership is about understanding and communicating your business’ vision. Leadership is how you, the leader, drive the culture and set the tone for how you do business.
Some questions to consider:
- To what degree are the values and purpose of your business embodied by your employees? By the way you do business?
- Do you communicate clearly and directly, even in difficult situations?
- To what degree do all employees have the tools and feel empowered to do the best work they can do?
Marketing
Marketing is what your market thinks and feels about your business, who you do business with, and how you conduct your business.
Some questions to consider:
- Who, exactly, is your customer today? Not who you want it to be, who actually gives you money for what you sell today.
- What do they look like, demographically?
- What problems / needs do they have that make them want what you sell?
- To what extent does every contact someone has with your business reinforce the experience you want them to have?
- How well do your employees understand the business’ brand? How well do they embody it?
- What problem do you actually solve for customers today?
- How, if at all, are you any better or any different from your competitors?
- What would a customer say about why they buy from you?
- How is this different from your vision?
Finance
Finance is all about understanding and managing the flow of money through your business.
Some questions to ask when rating your financial performance:
- How organized are your financial records? Can you readily access reports about your finances? Are they measuring the financial metrics that matter?
- Do you have effective financial controls in place? Budgets? Tracking?
- How well can the business withstand a financial shock?
- Do you have access to the resources needed to achieve your vision?
Management
Management covers the people and the processes in your business. It encompasses all the systems for getting things done in the business and how you recruit, hire, train, and manage employees.
Some questions to consider:
- To what extent are the processes in your business documented?
- To what degree does the culture encourage employees to be self-motivated and empowered to make the right decisions?
- How effective is your hiring process at finding and hiring the right people?
- To what degree do you and/or your managers mentor employees?
- To what degree do your employees support the company’s purpose and vision? Do they even know the company has a purpose and vision?
Lead Generation
Lead generation encompasses everything your business does to attract customers.
Some questions to help you rate your business:
- Do you know what channels are most successful at reaching your target market? To what degree are you using all those channels?
- How effective is your lead generation process? How efficiently do your systems move people through the lead funnel to a sale?
- Does your marketing reliably deliver well qualified prospects for your sales team to close?
- Do you have metrics that help you check the effectiveness of your marketing activities?
Sales
The sales area of your business is where you convert your prospects to customers.
Some questions about your sales:
- Do you have documented sales scripts and processes? How effective are they?
- Do your salespeople have sales goals? How challenging are they? How often are they met?
- How many referrals do you get from existing customers?
- How many of your customers are repeat customers? How many of your customers buy multiple products or services from you?
Fulfillment
Fulfillment is about how you deliver your product or service and how you provide support and service after delivery.
Some questions to consider:
- How consistent is your delivery?
- To what extent are your customers satisfied with your level of service and your product?
- How committed are your employees to consistently exceeding customer expectations?
- Do you regularly improve or update your product or service?
Putting it all Together
Once you’ve completed this exercise, a picture of your business’ strengths and weaknesses will emerge. You will see some things that make you angry, frustrated, and motivated to make changes. That’s a good thing.
While the negative emotions can be a good motivator to change, don’t ignore the things you are doing well. You don’t want to lose focus on what is working – you want to reinforce and build upon it.
Look at those ratings. Think about what you wrote down in response to why and what needs to change. Look for patterns and common root causes to problems in different parts of the business. Often, a single systemic issue will show itself in different ways throughout the business.
Giving this exercise the time and attention it deserves. Getting a clear picture of what is working and what isn’t gives you the power to change your business. Without this insight, you are just stumbling around in the dark and hoping that something you do works.
Make a commitment to yourself to really do this exercise. If you get stuck, get in touch.
Let everyone know what you learn in the comments.