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What is a Business?

If you are not working for somebody else (or don’t want be working for somebody else) then you should be creating a business. I distinguish between a business, here, and a job.

The vast majority of businesses are actually glorified jobs. MOST business owners are great at what they do and not so great at building a business. That is why something like 80% or more of businesses fail in the first couple of years.

The lynchpin to a successful business is to treat it as a separate entity. It MUST exist independent of you. It has to exist and run without your endless effort.

I write about mindset, scalability, planning, and all of these are a part of building your business. But if you are like me you will want all of the pieces to fit into a whole. You should ask yourself: how does building a marketing process relate to the business model, how do both of these relate to core values and what does any of it have to do with innovation?

There is a pretty straightforward answer, and I call it the business machine. All of the other things we do are critically important cogs that must also fit together to create the entire machine.

This is what it looks like:

The business machine diagram. It shows how process, metrics, people leadership and invention all revolve around the core of your business to create the business machine.
What is a Business? 10

The Core:

At the core of every business is what the business does. There are two sections to the core: business model and values, vision, mission.

The first is your business model.

The business model is the definition of what your business does and how your business does it. It is a high level overview with an emphasis on the relationships between all of the parts of the business. It helps you focus on your key differentators.

Read more about the business model here.

The next are your Values Vision and Mission

The values vision and mission are the glue that help you keep your business together. When you share the same values vision and mission it is easier to keep everyone working toward the same goal. Everyone understands their role in your business and can contribute to delivering it.

Processes

The next section is processes. These are critical to your business because they define how you work. For a business to be scalable it must have systematized, measurable, repeatable and automatable processes. If you are making things up each time you do them you cannot scale your business.

Processes also play a key role in retaining people. You should always hire the lowest level of skill possible for a job. The lower the level of skill, the more availability of labor there will be. Labor shortages happen with narrow skillsets, not general skillsets. So the more you focus on processes the easier it is to find (and retain people).

Under processes we look at:

Attract – Convert – Deliver – Complete

These are the four stages of the business machine. It must attract new interested people to your business. Then it must convert those interested people to customers (or clients, I tend to always use the word customers). The next step is to deliver the transformation (customers always buy transformation), whether a product or service (though services should also be products). Then finally complete the interaction, through invoicing, asking for references and referals and re-engaging.

These four steps are essential to any business and the machine must reliably deliver them.

Read more about the ACDC model here.

Design Standard Operating Procedures

Just writing the words standard operating procedures makes me cringe. It just sounds bureaucratic and old. But Standard operating procedures are critical to making your processes work.

Fortunately you don’t have to keep them in dusty three ring binders and you can use digital tools to make them easy to create… but you still need them.

Read more about Standard Operating Procedures Here.

The Journey

The journey or the value journey is how your customer moves through your business. They start as strangers, become a customer and then a raving fan.

The ACDC model maps directly on to the journey, but while the ACDC model is YOUR perspective, the journey is your customer’s perspective.

Metrics

Measurability is essential in building a business. To scale a business, it must be systematized, measurable, replicable, and automatable. This starts with “process” but requires quality metrics. The only way to build a business, improve it over time, and ensure that it doesn’t take over your life is to measure your performance.

Finance

We measure business results in financial terms.  

Even human-centric businesses must earn money. This is because money is how we allocate scarce resources. The function of a business is to business attract solve a problem more effeiciently than someone can solve it themselves. People will dedicate their scarce resources (money) to you because they are better off for having done so.

Therefore you have to measure how much money is coming in as well as how much money is going out. The money coming in should be more than the money coming out because that means you are doing the work you need to do: solving a problem more efficiently than someone else can solve it themselves.

Dashboards

Metrics can become overwhelming so find ways to simplify, aggregate and visualize. Make it easy to review your key metrics.

Human Performance

Develop metrics for how well people are doing within your company, how are the humans performing. This helps you ensure you have the right people and that they are in the right roles.

People

The who of your business is as important as the what of your business. If you don’t have other people working in your business you can never escape it – it is about you. A business that is about you isn’t scalable, isn’t a separate entity and cannot provide you with an exceptional life.

So you are going to have to hire, manage and work with people.

Some of the ways we think about how to manage people are:

Core values assessment (hire for core values)

The key to hiring people is values. MOST entrepreneurs hire for skill, but remember you want to hire for the least level of skill possible for a given task, your work is to work on the processes and make them more efficient so that you can hire a wider range of people.

So, you can teach people to do the work. The question is do they believe the same things you do. If they do they will contribute to your business, if they don’t you will find working with them difficult and they will eventually bring your business down.

So evaluate all of your people according to core values.

Organization design (who does what)

Believe it or not organization charts matter. Well, not the charts but the organization that they represent. Your employees must know what their role is and how the business is structured.

This is not a small thing: if you have a group of people all hired to do “work” and whatever it is they are good at then there is no way to plan. People do what they want to do, not what will move the company forward. This leads to conflict and serious management challenges.

So know your organization.

Performance Review

The trick with performance review is to manage output rather than input.

Leadership

Leadership and management applies as much to yourself as others. Developing an entrepreneurial mindset is key.

Prioritization

Covey four square – urgent and important.

Planning

Quarterly planning guide, rocks and sand.

Strategy

Make decisions about what is and what is not your business, your brand, the way you will run and manage your business.

Delegation

The difference between abdication and delegation, the four stages of delegation.

Invention

Problem Solving

New Business Ideas

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