The great thing about being in the midst of a strong business cycle is that you can focus on the future instead of dwelling on the present (or worse, the past). The bad part is that we all know that economies cycle up and down. After we have enjoyed a bit of success, we start to worry.
I was thinking about this while sitting in traffic the other day. Why do some people weave in and out of traffic to get down the road faster? Is it worth it?
There is a Sales analogy in here somewhere.
When it comes to business, some of us are conservative and try to stay in one lane most of the time. Some of us look for openings and slip in when no one else is looking.
Drivers that can look farther ahead and execute well can take advantage of openings that others may let pass. Some folks are poor drivers and make a mess of trying to push ahead. Others have the wrong car – not enough acceleration, perhaps.
We can train people to be better drivers. We can put them in faster cars.
Or, we can navigate the less clogged side roads, travel at different times, or change our destination to avoid the traffic. Shouldn’t we do all of these?
In business terms, I find that you need to master three things in order to grow profitably: 1. Understand your customers and what’s really important to them, 2. Understand your cost of doing business, and 3. Relentlessly market to keep your pipeline full.
You already know what happens if you don’t:
Misunderstanding what’s important to customers leads to low margins. You will price to your expectations instead of theirs. In other words, you will lack the confidence to focus on the customer’s real priorities and allow yourself to believe that price is all that matters to them
If you don’t know what it costs to deliver, you will be much more likely to let scope creep eat away at your profits. You will tend to “just throw this in” to try to create more value to customer (or avoid an uncomfortable conversation about what your agreement entails) instead of simply asking for the additional fee.
And, if you fail to consistently market yourself, the lack of prospects will drive you to sell from fear. Every completed sale will be a life-saver; every lost deal will be a death blow. You will slash prices to win business because you don’t know when the next opportunity will come up. Low margins, no pipeline, and scope creep will trigger a death spiral of ever-increasing problems.
As business owners and sales professionals, we should always be concerned about what we don’t know and how it will affect what we think we know. The less we take for granted, the safer our decisions will be.
Here are five steps you should be taking towards growth and profitability – now and forever:
- Get your pricing structure under control. Know your costs. Understand margin. Account for seasonality. Track it.
- Now, increase your expected margins. Are you as good as you say you are? Then ask for higher fees. If not, get better. Work on your confidence!
- Take your product to the marketplace. This is the hardest step for small businesses. I am amazed at how often I find that companies have reached a plateau because the key dealmakers don’t talk to prospects. Pick up the phone; get out of the office; talk to people!
- Increase your digital marketing footprint. Create reasons for prospects to find you. This is not a one-time effort. Marketing is forever.
- Slow down. Have smaller conversations with prospects that lead to bigger ones. Don’t ask for the business the first call. Have something valuable to offer for the second call, then the third.
“Tom, I don’t have time for all this.” [cue frustrated scream]
Of course you don’t. You haven’t convinced yourself that you can or should grow your business profitably. Maybe you don’t feel you deserve this?
The hardest thing for my clients is to finally realize that they have control over the success or failure of their businesses. Once they grasp that, once they see the relationship between their actions (or inactions) and results – wonderful things start to happen.