Don’t Force It: Timing is Everything


Athletes will often hear their coaches tell them to “not force it.” This is pretty common and when mistakes happen on the field or court is usually because somebody “forced it.” Forcing it is trying to create something out of nothing or win the game in a single play. This may be a quarterback throwing a ball into triple coverage in the back off the end zone or a baseball player missing three straight pitches trying to hit a homerun when a single will do. Trying to do too much with what you have can be a fatal mistake in sports, life, or business.
 
When formulating a strategy for your business there are several routes you can take including cost-leadership, differentiation, and an integrated approach. Each of those have different drivers of success and business models will be developed to support your strategy, product, and function within your respective industry. But having a solid strategy and business model may not be enough; in business timing may be everything.
 
Strategic industry and market analysis involves feeling out the external environment for consumer attitudes, preferences, and demands. This is probably the hardest thing to gauge for a firm. It is easy to think a consumer could use something or even want something in the future but is now the right time? Right here is where the firm has to really keep itself from forcing it, because doing so could be a catastrophic mistake.
 
For example let’s look at the Palm Treo smartphone. First released in 2002 these were way ahead of their time with many features the original iPhone had upon its first release in 2007 and the Blackberry before that. Palm had a first-mover advantage and a relatively solid business model but didn’t survive until smartphones became main-stream. Now it is nearly impossible to find someone who does not have a smartphone. The funny thing about Palm is that they were not lacking in features but just seemed to have mistimed their introduction to market. Upon their release the smartphone was not something consumers were looking for. Blackberry and Apple eventually followed up with similar and improved upon products that left Palm behind when consumer demand grew.
 
This illustration shows that strategy, product, and business models can be for naught if the timing is not right and we force action before the market is ready for it. It is vital for entrepreneurs everywhere constantly be scanning in order to time the market just right going forward.

What is the Purpose of a Business?


What is the purpose of a business? This question has been asked over and over again with varying answers. If you are sitting in a business school lecture you may hear many say, “To make money.” While this answer is correct in its own way, it may not tell the whole story.
 
As part of a business plan, strategies and models are created. These nearly always include a value proposition. Value is defined by the consumer and it is the job of the business to create the value that consumers are seeking. Whether this is long-term or short-term is also determined by the consumer. So, it could also be concluded that the purpose of a business is to provide sustainable value to its intended customer. Achieving what Peter Drucker said, “To create and keep a customer”
 
Phillip B. Crosby, author and quality management expert, once said the following concerning a company’s purpose, “A company’s purpose is to give people worthwhile lives by providing the opportunity for meaningful work, a decent living, and an opportunity to make a contribution to others. In pursuit of this purpose, a company has to make money, it has to grow, and it has to be successful.”
 
Crosby also states that making money is crucial to a company’s purpose but does not list it as the foremost purpose of the company. Making money is the means to an end or so it seems by his remarks. The company is responsible for creating meaningful work that not only brings value to the consumer but to employees and partner companies. Obviously that cannot happen if the company is not growing or producing profit.
There are still many other opinions of what the purpose of business is but I think we can draw some major themes from the few we have already mentioned.
 
1. A business must be successful at generating profits
2. The purpose of a business spans far beyond the sole objective of making money
 
New businesses drive economic growth, increase quality of life, and spur innovation. As we all undertake new ventures it is important for our visions and missions see beyond the objective of making money. There is an interesting chain that exists in the few examples we have shared. Money cannot be made without providing a product or service that consumers value. Without money it is impossible to provide meaningful work and decent lives to those involved with the business. So is it is the purpose of a company to simply make money? Absolutely, without it cannot fill the other needs for which businesses exist and provide us with the products and services we value. At the end of the day, businesses drive our lives, just as we drive them.

Don’t Confuse Your Strategy with Your Business Model


If you want to read about business strategy you probably do not need to look very far. Vast amounts of articles, blogs, tweets, and books have been written about the topic, some credible and many not. As most of us have probably noticed, strategy has become a bit of a buzzword in recent years and throwing it into conversation suddenly makes your point credible and valid. It has become an excellent “name-drop” of sorts in business conversations.
 
So, what is strategy? How is it related to your business model?
 
A watered-down definition of business strategy is, the actions taken by a firm to gain and sustain greater performance than their competitors.
 
A business model defines how a firm intends to make money.
 
How do strategies and business models differ? First and foremost it is important to understand that strategy is relative. While a business model determines how a firm will make money, a business strategy determines how a firm will make more money than its competitors. In this sense a business model does not directly factor into responses for external factors and precede true strategic initiatives such as first-mover advantages, differentiation, and cost leadership. At the end of the day, the business model is a tactic or supporting player in an overall strategic initiative.
 
Netflix is a good example of the differences between business models and strategies. Netflix began in the late 90’s as a DVD rental company which would mail movies to your home for a flat rate each month. Their business model was built around high availability and low-cost distribution. Essentially they made money by increasing subscription sales and creating a better distribution method which was more convenient for movie renters. Now their strategy has evolved over years (as any strategy should) but let’s focus on their most recent strategic initiatives. As of late Netflix has been a leader in transition to instant streaming video, leading a strategy to be a first-mover and cost leader. But what is most fascinating is Netflix’s response to match such competitors as HBO. Netflix has begun to create its own original TV shows which are available as live-streaming and all episodes are available at once instead of releasing new episodes each week or so.
 
The business model has not changed. Netflix still is making money through subscriptions but how are they seeking superior performance to competitors? They have created a strategy of getting away from DVD rentals, focusing only on live-streaming capabilities, and innovating through technological advantages and superior content availability. This is represented by the move to make its own original TV shows and making itself available on multiple devices with higher quality software capabilities. What has not changed is its strategy to remain a leader in easy distribution.
 
Netflix exemplifies evolving strategies while maintaining a relatively constant business model. As stated before it is important to recognize the relationships that exist between business models and business strategies and that they are not the same thing. Confusing your business model you recently developed for a viable strategy can be disastrous for business but a great business model implemented as part of an overall strategy can lead to amazing results.

Top 86 fastest growing companies in Utah

If you live in Utah, especially the Utah Valley area, you see new businesses popping up all the time. Betty next door just thought up the cutest new baby headband and they’re selling like hot cakes or Ryan at church just quit his career because his marketing company is doing so well.
Well quite a few of these companies are really successful, nationally speaking. Inc. 5000 just put out their top 5000 fastest-growing privately held businesses in the nation for 2014 and 86 of them are Utah born, 14 making it in the top 500.

86: Connexion Point
104: Alliance Health
124: VRx
149: Buy PD
150: Goal Zero
218: Universal Synaptics
224: PcCareSupport
254: Boostability
264: Simplicity Laser
331: eLearning Brothers
335: HireVue
339: OnSite Care
392: JayBird
408: Peak Capital Partners
545: Icon Homes
552: Zarbee’s Naturals
604: Silencerco
614: Facility Nexus
621: Pluralsight
632: Glover Services
710: Citadel Insurance Services
851: CPC Diversified Fund
862: Four Foods Group Holdings
863: Edge Homes
1024: Inthinc
1027: Candlelight Homes
1038: Landmark Home Warranty
1103: Vetora
1139: Cariloha
1157: InsideSales.com
1167: Zija International
1211: 3 Key Elements
1220: Enve Composites
1226: Safe Money Millionaire
1468: Executech
1492: iDrive Logistics
1497: Health Catalyst
1531: Lawn Butler
1592: Creminelli Fine Meats
1604: Home Base Appraisal Management
1636: Subzero Engineering
1649: ApplicantPro
1680: Five Star Franchising
1709: Aquatherm
1718: You Need A Budget
1873: Blade HQ
2109: Clearlink
2138: TrueNorthLogic
2146: Vitality Medical
2148: HealthEquity
2181: Dish One Satellite
2185: Premier Plastics
2236: BodyGuardz
2289: Veritas Funding
2301: Got Your Gear
2392: Conservice
2475: Alpine Technical Services
2565: Cytozyme
2585: Packsize International
2595: DigiCert
2686: Costa Vida
2871: Mindshare Technologies
2887: Intermountain Electronics
2943: Parallel HR Solutions
3085: Nammo Composite Solutions
3182: We R Memory Keepers
3294: Fishbowl Inventory
3363: VLCM
3446: Hycomp
3696: U.S. Translation Company
3743: eFileCabinet
3848: Candle Warmers Etc.
3996: SwipeClock
4163: Spectra Management
4257: Academy Mortgage
4271: Spring Works Utah
4334: England Logistics
4417: Leonard Consulting
4446: The Summit Group
4474: Cuisine Unlimited
4510: OptionsAnimal
4595: BidSync
4727: Resource Management
4789: ThomasARTS
4804: Veracity Networks
4875: VitalSmarts

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How the SBA Can Help You Get Your Business off the Ground

It is no secret that the U.S. government is a massive buyer of services and commodities. Government contracting exceeds half a trillion dollars each year and a major focus by the government, through the Small Business Administration (SBA), is that a portion of these funds be dedicated to small businesses. Currently, “the government-wide procurement goal is that at least 23% of all federal government contracting dollars should be awarded to small businesses (sba.gov).” The 23% mentioned here is in regard to prime contracts. Often prime contracts for large dollar projects will require that the prime or general contractor subcontracts small businesses at percentages higher than the 23%. In fact this percentage can be as high as around 80% of the work or procured items must be provided by small businesses.
 
So what does this mean for your startup? This emphasis on small business by the federal government means there are a lot of opportunities for small businesses. In fact, any government procurements between $3,000 and $150,000 are set-aside for small business prime contractors (sba.gov).
 
Your small business has two routes through which it can tap into these funds the government sets aside for small businesses. First, is to become a prime contractor and the second is to subcontract with a prime contractor. Both can be very profitable for your young business and provide early cash flow for future expansion.
If such opportunities fit your profile, visit SBA.gov to learn more about how you can be considered for government contracts. As well the website has databases for both prime and subcontract listings where you can search by your expertise, location, and other criteria.
 
While government contracts have a large upside, they also have their caveats as well. Generally, they are more heavily regulated, require more extensive external reporting, and business processes can be directed by the government.
 
Small business opportunities are many through government contracts and, despite caveats of working with the government, can provide great opportunities for building a foundation for your small business and potentially future expansion.

Look at Both Sides of the Income Statement

Whether it is continuous improvement efforts or your business is struggling, it necessary to look for ways to improve business. Under each circumstance the focus and knee-jerk solution tends to be increased efficiency through cost cutting strategies. While cost cutting helps, it usually does not solve all problems for a business and eventually becomes more and more cost cutting activities. In such a case the cost cuts are only a quick-fix masking other issues found on the “other side” of the income statement.
 

Cost Cutting Can Be Just a Band-Aid to Bigger Problems

 
High costs can drown a business, we all know that but cost cutting is something businesses are usually always doing in order to be as efficient as possible. In times of struggle or even failure cutting costs buy time but usually do not solve deeper issues.
 
By only cutting costs the focus is exclusively placed on expenses while revenue is forgotten completely. It takes both to lead a profitable business. The knee-jerk reaction to look at costs may prove to be a Band-Aid to larger issues related to customer retention and acquisition. Such a cover-up blinds us from these other sources of inefficiencies found on the revenue side of the income statement.
 
Only cutting costs may also make a current problem even worse. By cutting costs, business functions have to be removed which leads to a lower quality product or service that may end in lost customers on the fringe of your customer base.
 

Analyze Cost and Revenue Drivers

 
A proper analysis to improving business must include both your expenses and your revenue. Looking at both cost drivers and revenue drivers you will identify any possible cause of inefficiency in your business model. Quick fixes of cutting costs will help but only delay greater issues down the road when customer base disappears due to outdated products, poor pricing strategies, lack of customer incentives, and low customer acquisition rates.
 
Issues are too often much greater than simply one side of the income statement. As business leaders we must avoid the knee-jerk reaction to only analyze a single side, which usually is cost. Analyzing both will create not just solutions to current problems, but will provide sustainable growth into the future.

When Should I Update my Business Plan?


 
All over the internet, including our own previous blog posts, business plans are referred to as “living documents.” That is a document which is modified, updated, added to, or even changed entirely. A common reference that is considered a living document is the United States Constitution, which is constantly being interpreted and, more uncommonly, added to or changed. Business plans should be used the same way.
 
Business plans should be considered living for several reasons but I think the biggest reason is the fact that much of the business plan is a lot like a forecast. Anyone who has done any forecasting in their career knows one simple fact: Forecasts are always wrong. Does that fact make forecasting unnecessary and ineffective? Ask those people who create forecasts or managers who make decisions based upon forecasts and they will tell you, “Absolutely not.” Forecasts are essential and useful. So, without plugging the necessity of business plans too much; business plans, like forecasts, are useful and effective tools not only in the development stages, but also during the entire life cycle of the organization.
 
That leads us into our title question, when should we revisit and update our business plans? The simple answer would be always. It is probably unrealistic to expect that we will be formally revising our business plan always but we should have a systematic approach to this process. Find what works best for you and your start-up, whether it be yearly, monthly, or quarterly updates. The key is that the business plan is used as a strategic planning and performance measuring tool. A systematic approach and timeline to revisiting your business plan will help you accomplish those effective uses of your business plan.
 
There are times when the business plan should be revisited outside of the scheduled times. This can be due to external or internal factors. Examples include,
 

  • New competitors enter market or previous competitors begin to obtain greater market share
  • Changes in economic environment/government regulation
  • Changes in supplier or contracted agreements
  • Growth accelerating at higher than planned rate/increased staffing needs
  • Changes in major buyers
  • Expansion into new areas
  • Technology upgrades
  •  
    These are only a few of many potential scenarios where it would be wise to revisit and update your business plan. The point being is that the business plan should be considered living and be updated at least once a year or more. Also external or internal factors may dictate updating your plan at an even greater frequency. In a young start-up’s life this is fairly common.
     
    Constant changes do not negate the need for a business plan. They create the need for flexibility and business plans are as flexible as we make them. But be prudent to not over-do it when it comes to modifying a business plan. Doing so would actually negate the idea of having a plan to work against. Done properly, revisiting your business plan consistently and in key moments will help your business adapt and prosper throughout its life-cycle.

    What Are Investors Really Looking For?


    We all have ideas. Some of us are looking to take those ideas and create a business from them, and many of us finding ourselves sitting in front of investors trying to gain their support for our business ideas. The idea of this has become so common and popular that there are TV shows dedicated to entrepreneurs sitting in front of
    investors to pitch their ideas.
     
    While some ideas might be crazy and unprofitable, many are fantastic and have the potential to become a viable and successful business model. So why don’t we all get capital when we are looking for it? Is it because our idea is terrible?
     
    More often than we think it is not because of a bad idea but because of a lack of proof that our idea will be executed into a strong revenue model.
     

    The Next Big Thing Is More Than a Good Idea

     
    Investors are looking for a return on their investment. Their decision is based not only if they think you’re product will sell but if you have a proven plan to sell it.
     
    This is where the routine business functions come in such as finance, marketing, sales, manufacturing, and others. Without these success is basically impossible. Not only should plans be made of how to start your business in these aspects but how these will run from a day-to-day operational standpoint down the road.
     

    Show Investors How Your Product Will Reach Consumers

     
    When we find ourselves in front of investors our first instinct is to spend all our time selling them on why people will buy our product. Is this a bad thing? No. Is it all we should cover? No way. Not only should we show them why people will buy it, but we should show them how our product will reach those consumers. Many sells pitches lack this very important element in the eyes of the investor.
     
    During this time explain to them your revenue model. Include channels through which people will buy your product such as personal stores, other retail outlets, or online. Include cost structures of procuring and shipping your goods and how your pricing strategy will still bring profit. To sum this up, investors need to know the why and how people will buy your product.
     
    As we started, we all have ideas which can turn into a profitable business. Initial failure does not necessarily mean we have a bad idea, it may just mean we need to refine how we execute. Taking the time to clearly outline an execution model will lead to more investors taking our ideas seriously and more consumers buying our products.

    Three Keys to Defining Employee Roles

    Chances are your start-up’s employee list includes yourself plus maybe a handful of other employees. That means a lot of work of varying nature has to be split among a few different people. Combinations of marketing, finance, development, planning, etc. have to be done by potentially the same individual.
     
    Such a scenario is unavoidable early on but that does not mean that job roles cannot be defined. A lack of definition to job roles at any stage leads to disastrous results. It is not a matter of if it will catch up to you; it is a matter of when. With this mind it is important to define three things associated with any individual within the company. They are the tasks associated with the position, the responsibilities, and specific success
    metrics.
     

    Position Tasks

     
    Position tasks is straight-forward. It should be clearly defined day-to-day activities that a person will carry out on a daily, weekly, or monthly basis. These tasks combine to create some kind of deliverable the individual is expected to produce. Clearly defining these tasks not only gives the employee a sense of what they do but also how it should be accomplished.
     

    Responsibilities

     
    Responsibilities could be summed using other words such as roles or deliverables. Essentially these are the expectation set for an employee. At the end of the day what do they need to deliver in order to ensure company success. Examples could be specific reports, efficiencies, or product developments.
     

    Success Metrics

     
    Tasks and responsibilities have no worth if they cannot be measured. When defining individual roles it is important that a standard be set for what needs to be delivered, when it needs to be delivered, and what it should cost. And of course, accountability must be expected for this to function properly. Good success metrics will not only promote individual growth but will increase organizational performance.
    It is never too early to begin defining roles using these three criteria. It will help your start-up and those who make it become everything they can be.

    Not Just About the “Like”

    “Social media are not the powerful and persuasive marketing force many companies hoped they would be…”

     
    Gallup Inc. summed up their recent report on social media and its influence on buyers’ decisions with those words. The report shows that 62% of consumers say social media has no effect at all on their purchasing decisions. That is staggering considering the amount of time and resources many companies, especially startups, are investing into social-media marketing campaigns. So what does this mean for companies going forward? Let’s dig into Gallup’s report a little further.
     

    Social Media Marketing Shouldn’t Be Just About the Numbers

     
    “Of the consumers who reported “liking” or following a company, 34% still said that social media had no influence on their purchasing behavior, while 53% said they had only some influence.”
     
    Many of us are probably guilty of simply seeking a substantial social media following by simply focusing on quantity. But just because somebody “likes” a Facebook page does not mean that they are more likely to purchase from that company. In fact, polls find that people are still more likely to seek advice from family, friends, and experts before they seek advice from a Facebook page. This isn’t all that shocking, but by simply focusing on the number of “likes” companies are missing the greatest potential social media has to becoming a force within marketing strategies.
     

    People Talk

     
    The old-fashioned tune still rings true, people talk. Conversations among friends and family are still the driving force in customer persuasion. Social media facilitates these types of conversations and provide an opportunity for companies to take part in the conversation. As Gallup says, “Yet, many companies continue to treat social media as a one-way communication vehicle and are largely focused on how they can use these sites to push their marketing agendas.”
     
    Social-media marketing should be a conversation that companies appear honest and informational without pushing an agenda too rigorously.
     

    The Need for More than Social Media

     
    One last interesting idea presented by Gallup is obvious, yet very important. Customer engagement needs to take place online and offline. Gallup states that time and time again that the success of customer engagement is determined by how well they “align all their touch points.” Customer purchases are still driven more by in-store displays and interactions than social media and will probably remain this way.
     
    A large part of marketing is creating an experience for the customer through your product and service. It still remains difficult to do so through social-media channels. As we shape our social-media strategies, we must understand that social media is only a small portion of an overall strategy that must include the creation of a customer experience. The priority must be quality over quantity so that our online and offline interactions match to create a single, memorable experience that users will share with their family, friends, and acquaintances. Possibly through social media outlets.