Business Strategy: Do you know the 5 Critical Actions that allow your Business to Survive and Scale?

by Miriam Gunn | May 29, 2021 | 

 

Do you know which actions are critical within your business strategy to help your business to survive and scale? 

Many entrepreneurs do not have a good strategy for their business.  There are so many variables to keep your eye on—it is easy to get distracted and lose sight of the critical factors to watch. 

As a society, we are deluged with information from every angle— blog posts, podcasts, and videos have so much information. It is easy in a business to find your efforts spread thin as you race from this to that. 

As well, there are many other activities that, while good, are not essential to the success of your business. Things like bonus structures, philanthropic endeavors, and the Christmas party—These are good and important parts of your business ethos, however, they are not essential to the survival or scaling of your business. 

Ask yourself: From a bird’s-eye-view, what are the key components of a business? Of your business. If you understand these and then derive actions from these principles (that you then implement), your business will flourish and you will scale over time.

Here are five actions that will help your business survive and scale! 

 

One: Keep Overhead Down to Protect Cash Flow

 

Overhead is the ongoing business expenses for anything involved in the cost of doing business that is not related to product creation, marketing, or sales. 

For example— staff lunches, replacing computers, purchasing company t-shirts. In short, anything not going towards your sales of products. Other items fall into this category as well, such as office rent, advertising, utilities, insurance, etc. These are all the costs related to supporting the business, but they are not the costs directly associated with creating revenue.

Companies get themselves into trouble when they lose sight of the actions that drain their resources.   

Investopedia wrote a good article on calculating overhead ratios. 

“Calculations of overhead exclude costs that are directly related to the production of the goods or services that the company produces.

Thus, in a toy factory, the skilled workers who make the toys and the tools they use to create them are not overhead expenses. But employees of the marketing department and the promotional materials they produce are overhead costs.”

When looking at your overhead, you have to learn to say “no” to things that aren’t necessary. (A side note, saying “no” is an important thing to do in your life as well. Our lives also seem to collect more overhead than energy to run them. See an earlier post about this here).

Here is the main thing: Is the overhead of your company easily sustainable within the revenue of your business? If not, you need to reduce your overhead or you will eventually run out of money. You will have to begin firing people or may even lose the company.

Keeping overhead down is a critical action within your business strategy so you can survive and scale.

 

Two: Make and Sell 

 

It is so important to make and sell the right product. 

Part of your business strategy has to be the continual assessment of the products you offer and then getting them to your customers.

You want a product that will be useful to people and that consumers will want/need to use. Is it profitable? Is it strong? Is it a product that people will want to keep around? 

How do you know if a product will sell?

Cat LeBlanc, on her podcast, Your Business, Your Rules, states that there are seven main reasons a customer buys a product.  Namely, the product either makes you more money, protects you in some way, makes you feel better, helps you have better relationships, saves time or improves performance, gives you an experience, or helps you look better.  

If your product does any of the above and then is marketed well, you will make money. 

It is important to decide if the product or service you are selling is in demand, and at the end of the day will help you grow as a business. 

Here is the main thing you need to be aware of: Is your product or service one that meets a felt need? If not, you need to develop something else. The market rewards products and services that address a customer’s pain/problem.

 

Three: Prioritize Marketing 

Whether you are a new company, or an established one, part of your business strategy has to involve marketing.  “If you build it, they will come.” is only true in Hollywood! 

If you don’t have a good marketing plan, you cannot expect to sell products. 

Have you ever steered away from buying a product because their branding/marketing was not appealing to you? Or perhaps the company did not have any real strategic plan for their marketing. 

The messaging for the product is what captures your attention, not the product itself. There are plenty of good products that falter, due to poor marketing.  

Business Made Simple has a suite of products regarding marketing and messaging. Their tagline is “If you confuse, you’ll lose. Noise is the enemy and a clear message will make you money.” I couldn’t agree more.

How many times have you seen a billboard and you have no idea what it is for? Don’t make that same mistake with your products. Be so clear that with a 30-second glance, a person knows what you are selling and how it solves their problem.

Here is a company whose marketing is exceptionally clear:

Clearbrand.com — from the first page, you know exactly what they are selling.

Another example of clear marketing: Do you want more traffic?

If you have a great product or service and market it with a plan, you will have customers. 

(Also: It is important to also have a good landing page to test your offering before you launch your product). 

Here is the main thing you need to be aware of: Do you have a marketing plan and is your messaging clear? What is your next step to improve your marketing strategy? These both help your business survive and scale.

Four: Run a Sales System 

 

Is your company holding out for people to purchase just based on the merits of the product alone? Unfortunately, there is too much noise now. Too many options and too much competition for your product to sell based on the item/service itself.

You have to have a sales system.

1. 1. Hire a salesperson 
   2. Hire a sales manager with sales reps 
   3. Add administrative help and a qualifier within the sales department – the biggest boost comes when create a sales pipeline and measure results in each stage 

Part of your sales system involves establishing a sales pipeline.

A pipeline is a series of repeatable actions that take a prospective customer from the point of initial contact to the point of sale. Here is an example of a sales pipeline:

1. 1. Qualify the lead
   2. Send information and schedule the call
   3. Engage in intake meeting
   4. Send a proposal
   5. Enter into the closing sequence

Your sales team needs a path to guide their customers to the point of sale. By creating a step-by-step path that is clear and goal-oriented, your sales team can then increase their product sales. It goes without saying that it is critical to monitor the process of every lead. 

Here is the main thing you need to be aware of: Do you have a plan for developing a sales system and team? Do you have any kind of sales pipeline? Is there any way to improve your existing sales process? A sales process is essential to helping your business survive and scale.

 

Five: Protect Cash Flow 

In my last post Cash Flow and Cash Flow Analysis: 5 Important Questions — Strategic Coaching for Business and Life, I talked in depth about cash flow. Successful entrepreneurs watch their cash flow closely. 

Failure to do so is like turning your back on the ocean. It’s only a matter of time before the tide or an errant wave catches up to you and knocks you down (and often drags you under).  

I started this article with a discussion of overhead versus cash flow.  Without cash, there eventually is no company.  For the beginning company or one in early development, lack of capital is the number one reason for the failure of the company (29% in fact).

Here are 7 questions to ask about cash flow: 

1. How much cash will we need to create this product? 
2. What is our profit margin?
3. When will we start making money? 
4. How will launching this product affect our other revenue streams? 
5. Does losing money on this product generate sales and profits elsewhere? 
6. How can we make this product even more profitable? 
7. What iterations of this product could we sell for more money? 

Businesses that succeed ask these questions before to making the product to make sure they have enough cash flow to make/launch their product. 

Every decision that you make has to go back to these questions: how will this affect the cash flow? And, will this be sustainable to keep this company and product afloat? Without cash flow, there is no way to help your business survive and scale.

Putting it all together

Too many entrepreneurs approach their business rather haphazardly. They react to the tyranny of the urgent and whatever is screaming the loudest. You can operate that way while you are extremely small, but as your company grows, this will not be sustainable.

Failure to address the 5 categories mentioned above will result in lost revenue opportunities and possible destruction of the company.

As you create your Business Strategic Plan, make sure that you include these 5 critical actions to help your business survive and scale:

1. Keep Overhead Low
2. Create a Product that the Market Wants
3. Market that Product with Clear Messaging
4. Implement a Sales System/Team
5. Monitor Your Cash Flow Carefully

If you do these 5 things, you will have a competitive advantage over those who do not, and you will have a company that both survives and can scale over time.

If you find topics like the above useful in the functioning and success of your business, consider hiring LeaveBetter for some additional coaching! Assessment and then action is strategic to the ongoing development of your business and life.

Reach out to me and we can get started working together. As a certified coach and therapist, this is what I do best: Helping people like you achieve the skills and systems you need to win in both business and life.

 

 

If you look at the above list and find these questions helpful in the functioning and success of your business, consider hiring LeaveBetter for some additional coaching. There are many other questions like these in key realms of business development that are strategic to the ongoing development of your business and life.

Reach out to me and we can get started working on that, or on your personalized Life Plan. As a certified coach and therapist, this is what I do best: helping people like you achieve the skills you need to reach your next level in your business and life.

Did you know that cash flow and cash flow analysis might be two of the most important aspects of owning a business? If you don’t think about and pay attention to these factors, there is a good chance your business is going down.

You want to watch cash flow closely.

This is the reason SO MANY businesses fail. It’s not because they didn’t have a great product. It’s because they ran out of money.

Successful business owners/CEOs watch their business cash flow every day. They come up with a cash flow analysis system that makes sense to them and that then dictates their business actions.

Most experts agree that you want a safety net of 6-8 months of cash in the bank so that if you can see that you are running into trouble, you have a long time before the business goes down. Why? Because now you have 6 months to correct the problem.

First of all, what is Cash Flow? (It’s a little dry, so feel free to skip to the next section)

Investopedia.com has this to say about cash flow.

• Cash flow comes in three forms: operating, investing, and financing.
• Operating cash flow includes all cash generated by a company’s main business activities.
• Investing cash flow includes all purchases of capital assets and investments in other business ventures.
• Financing cash flow includes all proceeds gained from issuing debt and equity as well as payments made by the company.
• Free cash flow, a measure commonly used by analysts to assess a company’s profitability, represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.

Another way to think about cash flow:

Cash flow (and by default, cash flow analysis) keeps your business alive:

Cash flow is the money that is moving (flowing) in and out of your business in a month from all sources. Although it does sometimes seem that cash flow only goes one way—out of the business—it does flow both ways.

• Cash is coming in from customers or clients who are buying your products or services. If customers don’t pay at the time of purchase, some of your cash flow is coming from collections of accounts receivable.
• Cash is going out of your business in the form of payments for expenses, like rent or a mortgage, in monthly loan payments, and in payments for taxes and other accounts payable.

You always want to ask: How will this [decision] affect the cash flow of my business?

So many CEOs and owners make these decisions intuitively rather than based on actual numbers. They get excited about an idea or they get a “feeling” about something. Let me speak plainly here: you don’t want to do this.

You want to have actual metrics to help you make these kinds of decisions. The cash flow analysis statement records your company’s cash inflows and outflows at any given point in time. This is one of the most essential elements in your decision-making process. (Check this out for more info).

You want to know how many miles/gallon your car gets and how far is it to the next gas station. People who “wing it” (or try to “hope” their way while the car is on empty—sometimes they get lucky. However, often, you see them on the side of the road, needing someone to rescue them.

Another way to think about this is that money is like your blood, bringing oxygen to the system and getting rid of CO2. Your blood pressure is akin to your cash flow. If it’s too low, you are going to pass out. And if you are out, you are OUT.

 

Five Financial Questions to Ask Before Making a Product Decision:

1. How much cash will it take to bring this idea or product to market?

When you are looking at adding a new product or hiring a new person, you want to ask that all-important question: how will it play out with the money available to me? It may be the right decision, but not quite the right time, depending on what is happening with your cash flow situation.

2. What is the profit margin on this product?

Sometimes products are really good ideas, but there is no demand for them. A product may be in high demand, but the profit margin is so small that you would have to sell a huge volume of them before you would see any real return. Think of things like paper clips or dum-dum suckers. You need to know: can this product make you enough money without you having to bankrupt yourself getting it in front of customers. (Here’s a way to calculate profit margins).

3. When will we start making money on this product? i.e. how long will it take?

If you have adequate cash in the bank (let’s say 8 month’s worth instead of six) and the new product will require very little time to create and little time to promote, then it won’t impact your cash flow. But if it is the opposite, say you only have 5 months worth of reserve in the bank and then the product takes a very long time to create and is expensive to bring to market, then this is a different story. You are playing a high-stakes poker game with your company and you can expect to feel a lot of stress in that process.

4. How will launching this product affect our other income streams?

Will this launch take away time and resources from the income streams that are supporting the life of your company? If so, you need to think twice before taking action. Perhaps the launch needs to wait a bit until more reserves are saved up. Sometimes, companies find themselves in a “do or die” position. At that point, you know your cash flow will be impacted, but there may be little you can do about it.

5. What iterations of this product could we see for more money?

This is one of my favorite questions. Some entrepreneurs have to create the initial product and see success before moving on to the other iterations. Others can see these and plan for them right from the beginning. But what if you can generate five product iterations from one product? Not only does this bring you more revenue, but it also gives your business a sense of continuity and congruency.

Use These Questions to Generate Actual Real Numbers About Your Cash Flow.

Until you get to actual numbers, you are only hoping. The numbers don’t lie.

Don’t find yourself in a tight spot where you haven’t managed your cash flow well. Now you have to let go of valued employees or say no to amazing opportunities. All because you didn’t keep your finger on the pulse of your company’s cash flow.

Keep meticulous track of what is coming in and what is going out and when these things are happening.

An Example

Not too long ago I had a situation where my main source of revenue got delayed. There were some legal issues between two entities that had nothing to do with me, however, one of the companies accounted for 70% of my revenue at the time.

Simultaneously, I had recently invested a large portion of my company’s cash reserves in something that I felt would create significant future revenue opportunities.

Either situation would have been fine separately, but it was the timing of both of them happening at once (the one being something I could not predict).

What this did was make my cash flow incredibly tight.

In the end, it worked out fine, but had the other company delayed my payment several months further, it would have created real cash flow issues for me. It is an understatement to say I was a bit stressed!

That day, I learned my lesson about planning for some unpredictability in my accounts receivable. I restructured my cash flow systems a bit, and I do not anticipate having that problem again.

However, and this is why consistent cash flow analysis is so important—you won’t get caught by the same issue again, but there may be a new issue that crops up. Regular monitoring allows you to keep on top of the cash flow conundrum and succeed in your business. It also provides you with a sense of calm and centeredness that is required for you to win in business and life.

 

If you look at the above list and find these questions helpful in the functioning and success of your business, consider hiring LeaveBetter for some additional coaching. There are many other questions like these in key realms of business development that are strategic to the ongoing development of your business and life.

Reach out to me and we can get started working on that, or on your personalized Life Plan. As a certified coach and therapist, this is what I do best: helping people like you achieve the skills you need to reach your next level in your business and life.