Five Reasons Exponential Growth Can Be Elusive

Toby founded a small construction company that does quality commercial work. While his company’s growth has been extraordinary, he is concerned that it doesn’t feel like he’s “broken out” yet. And his biggest worry is that he doesn’t see how he’s going to achieve the scale that he desires. In fact, there are signs that his growth is starting to flatten out. Toby is struggling to understand what is lacking in his approach to building his business. This is a very common problem for many small businesses where the founder has lofty aspirations . . . and even loftier expectations. Let’s look at some of the more common reasons that growing to scale is such a challenge.

  1. Lack of Differentiation – We win when we are able to offer a product or service that is materially different than our competition. Toby thinks his services are differentiated, but in reality they aren’t in a substantive way. He insists that he offers the best customer service of anyone in the market – but that’s a claim that all of his competitors make as well. What should Toby do to tweak his products and services so that they are in much greater demand? He should start by gaining a better understanding of his customers and prospective customers. Exactly what are the problems they are encountering with their construction projects? What are the most important things they want from their contractor? Toby needs to spend time interviewing as many people as he can to identify what the customer wants in the most granular fashion possible. Then he needs to refine his product/service suite to deliver what he has been told. Too often, we think we know what the customer wants – or what we think is best for the customer – rather than actually asking them over and over.
  2. Deficient Strategy – A Strategy Cascade starts with Winning Aspirations that leads to Where to Play, then How to Win, then Capabilities Needed and ends with Management Systems. Many small businesses have a poor to no strategy at all. Many entrepreneurs think tactically rather than strategically. Toby has this affliction. When asked, he says his strategy is to regularly attend various networking functions and try to identify business people who may be undertaking a construction project. Then he intends to do his best to convince them to use his firm. Unfortunately he has no real plan to get from Point A to Point B.
  3. Small Thinking – Toby says within seven years he wants to build a business with $10 million in annual sales. He’s already at $3.5 million. My question is – why only $10 million? Why not $100 million? I’ve met very few entrepreneurs that have BHAG – Big Hairy Audacious Goals. Look, there’s nothing wrong with growing a business to a respectable level. But if one of the objectives is to scale-up in a major way, thinking really big is requisite. Toby should start by dreaming as big as he possibly can, then work backward to see what will be needed in the way of resources to realize his massive dream.
  4. Working “In” Instead of “On” the Business – In addition to small thinking, entrepreneurs often spend too much time working “in” their business instead of “on” it. Toby is involved with every cost estimate. He spends a lot of time on job sites and performs the final interview of every employee that is hired. There’s no question that he’s a “hands-on” business person – and he’s very proud of this fact. In this case, Toby is his own worst enemy. He hasn’t yet learned that it’s imperative to delegate if he wants to scale his company. When a company is very small, the founder must spend a great deal of time as a jack-of-all-trades out of necessity. But this isn’t sustainable if real growth is to be achieved. The entrepreneur who can scale his or her company in a serious way has figured out how to stay focused on the big picture and leave the smaller details to others.
  5. A Lack of Patience – I’ve said many times that it’s difficult for fast-moving, hard-charging entrepreneurs to be patient people. I have had this problem my entire career. Nothing ever happens as quickly as I want. Toby gets antsy when his business isn’t performing to his expectations. Part of the problem is the lack of a Big Vision and a coherent Strategy Cascade. When a comprehensive business plan is created, it includes a timeline that can be monitored allowing for refinement of the plan to stay on track. Toby will become much more patient when he’s working his plan and can see how his performance is matched with his timeline.

There are other reasons that a business fails to grow and scale. But meaningful differentiation of products/services; a well-designed strategy; thinking big; spending enough time working “on” the business, and maintaining patience, are critical elements to the scaling equation.

You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Click here to listen to Audio Episode 93 – Chicken Feed.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

A Boomer’s Advice to Millennials

Baby Boomers and Millennials. Two massive generations – 74.9 million Boomers and 75.4 million Millennials, and as different as night and day. But then, most generations are quite different. And I’m sure that every older generation shakes its collective head about the younger generation. The music, the attire, the idioms and the social mores are all puzzling to both. There’s no doubt from a work perspective that Boomers and Millennials aren’t always on the same page. For the sake of generational harmony I want to offer some ideas that hopefully will be helpful in bridging the gap.

  1. Use the phone. As a Boomer I’m a telephone guy. I use e-mail extensively but have learned that it’s not always the right communications tool for every situation. Why? Because it’s one-dimensional. E-mail – and I include text messages, Facebook Messenger, LinkedIn messaging and Snapchat in this category – is dangerous for complex subjects that requires interpretation, and for situations where there is the potential for conflict. I’ve seen too many instances of hurt feelings stemming from what someone read (and misinterpreted) in an e-mail. Many of my Millennial friends and colleagues aren’t as inclined to use the telephone. I urge them to do so when the subject needs more than just a factual recitation.
  2. See people in person. No, this advice does not contradict what I previously said about using the phone. The personal touch is all about building relationships and culture. It’s much harder to do sitting behind a desk or a computer screen. I really enjoy getting out of my office multiple times during the day and going to see someone else in person – inside and outside our office. This gives me a chance to “read” the feelings of another person with whom I’m interacting. And I can clarify anything about my communications when I notice puzzlement or discomfort emanating from the other party. By the way – if I can’t meet someone in person, I’d much rather connect via a videoconference than just an audio phone call for all of the same reasons.
  3. Build relationships. Meeting people in the flesh is all part of the relationship building process. And relationships are the lifeblood of success in entrepreneurship. I subscribe to the philosophy that I want to avoid trying to “sell” anything to someone else. Instead, I want to be in a position to help them “buy.” I strongly believe that this is much easier to accomplish through relationships. Ultimately the foundation for my relationships is service. I want to serve other people in whatever way I can without the thought of quid pro quo. I’ve seen firsthand how the world embraces this. When I do good for others without any expectation from them in return – great and wonderful things happen to me. It’s that simple.
  4. Develop resilience. Millennials, guess what? We Boomers may have been too protective of our offspring when they were young. Life isn’t fair and the same goes for business. When we avoid all thoughts of victimization and concentrate on perseverance we eventually succeed. Quitting is not an option but being smarter than the problem is. Get up off the ground, dust yourself off and figure out a different way to get the result you are seeking.
  5. Differentiate. Speaking of a different way, the world keeps becoming more competitive. It’s more important than ever to find a way to differentiate our products, services and even ourselves. This means becoming more creative, more innovative and more customer-centric. Believe me when I say that understanding true differentiation requires a lot of heavy lifting. Those who think this is a relatively easy task are missing the fact that there’s a great deal of nuance in differentiation. This means that the customer must really perceive the value of differentiation – it doesn’t matter that’s how we see it.
  6. Be prepared to sacrifice. We all want work/life balance. But I’m sorry to say that it’s not always possible. As Boomers, it was ingrained in us that hard work was necessary to get ahead. That meant “paying our dues” and making many sacrifices early in our career. As Millennials, you may not have to be as obsessed as were we. However you will have to make sacrifices at some level to achieve great things. We worked hard and a lot. You will need to work hard, but you can also work smart. The key today is to replace working a lot with working smart.

Baby Boomers and Millennials have much to learn from each other. I believe that the advice I’m offering as a Boomer transcends generations. Hopefully you will find it helpful in your life.

You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Click here to listen to Audio Episode 68 – Danger Will Robinson; Danger!

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

Moats

We know from our history lessons that in medieval days, members of noble families often lived in castles. These fortresses were imposing in appearance and have stood for centuries – a testament to their design and construction. Castles were actually built over a 900-year timeframe which in itself is truly amazing. These structures were protected by a wide range of defenses including various forms of artillery, arrows, boiling oil, tar and sewage, and there are even reports of diseased dead bodies being catapulted at assailants. Finally, deep wide ditches were dug around many castles and filled with water, requiring access via drawbridges. In fairy tales we heard about moats being home to alligators, crocodiles and other horrible monsters though it’s doubtful that in real life moats were populated in this fashion.

So what’s your moat? Strange question you ask? I’ve written several times in the past about how important it is that entrepreneurs differentiate themselves from their competitors. In 2007, Warren Buffet was speaking to a group of University of Florida MBA students and had this to say about differentiation.

“I don’t want a business that’s easy for competitors. I want a business with a moat around it. I want a very valuable castle in the middle. And then I want…the Duke who’s in charge of that castle to be honest and hard-working and able. And then I want a big moat around the castle, and that moat can be various things.”

“The moat in a business like our auto insurance business at GEICO is low cost. I mean people have to buy auto insurance, so everybody’s going to have one auto insurance policy per car basically, or per driver. And…I can’t sell them twenty…but they have to buy one. What are they going to buy it on? They’re going to buy it based on service and cost. Most people will assume the service is fairly identical among companies, or close enough, so they’re going to do it on cost, so I gotta be the low cost producer. That’s my moat. To the extent my costs get further lower than the other guy, I’ve thrown a couple of sharks into the moat.”

Thinking about differentiation in terms of a moat is a slightly different perspective than I’ve had in the past. I’ve viewed differentiation proactively and as an opportunity to exploit. Buffet seems to be seeing it from a defensive standpoint – thus his moat analogy. Either way, we get to the same place. There has to be a reason that people want to do business with us beyond our charm and good looks.

I am advocating for a combination of defense and offense with respect to differentiation. On the one hand, I’m looking for products and services that have high barriers to entry. Perhaps this is due to substantial capital requirements; extremely complex aspects to the product or service; maybe it’s a patent; or perhaps there’s a vertically integrated process that is extremely difficult to replicate. All of those factors become the moat. They make it hard for competitors to easily jump into our space and make inroads.

Now let’s play offense. Simply keeping our competition at bay doesn’t ensure success or profitability. It’s what we do inside the castle that really counts. We can sit on a throne, eat rich foods and get fat (dumb and happy), or we can exploit the opportunity we have to function in an arena where competition may not be as intense. This might take the form of developing a premium product, or a marketing strategy that creates FOLO – the Fear of Losing Out. Maybe exploiting the opportunity looks like the streamlining of an internal process that produces even greater profits. The point is that with a moat in place we are able to take our endeavor to an even higher level than ever before.

Differentiating ourselves as entrepreneurs is essential to our success. Doing so with a dual strategy of building a moat and exploiting the opportunity allows us to play defense and offense at the same time.

 You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Click here to listen to Audio Episode 29 – Lost Art.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

moats

The Three-Legged Stool

We entrepreneurs have no shortage of books and other resource materials at our disposal to understand how to win in today’s environment. We’re barraged with a multitude of tips, tactics, strategies and a host of other concepts. Everyone has an opinion, and everyone insists theirs is the right way. Ask any coach or consultant and undoubtedly each will have their own secret sauce. I have no issue with any of this and believe that this diversity of ideas is healthy for entrepreneurship as a whole. Fortunately no one individual has it all figured out . . . so we continue to seek. As one of the “seekers” I might as well add my thoughts to the mix.

My approach involves a three-legged stool, and it’s a very simple calculus. The first leg is that of Culture. For most of my career I wasn’t very focused on Culture and we certainly didn’t do much to promote it. Our Culture just kind of happened in a laissez-faire manner. Oh sure, we had a company picnic every now and then as well as a Christmas party; and from time-to-time we would undertake a community service project. But for the most part it was nose-to-the-grindstone – chew ‘em up and spit ‘em out. However, I’ve learned a lot over the past few years and I’m now drinking the Culture Kool-Aid – lots of it. Why? Because I’ve found that Core Values matter. Not just to the company but to each member of our team. And we really live our Core Values every single day. As a result, we now have a team of people who have a common alignment and purpose. We are able to connect with millennials and Boomers alike and productivity has markedly increased. While Culture is more than just Core Values, they serve as the foundation for a Culture.

The second leg of the stool is Product. With the strengthening of our Culture we’ve become more creative and innovative with respect to the products and services we provide. The positive environment that has emerged in our companies has enabled us to shine a spotlight on our Product set. We’re constantly making tweaks every chance we get to differentiate from our competition that which we offer. “How is it different?” has become our mantra. We’ve become much more targeted with our marketing and sales effort in a manner that complements our Product refinement. A clear focus on Product has been the impetus for a much more strategic approach to decisions that we make as opposed to the small-ball tactics that we used to deploy.

Finally, the third leg of the stool is Customer. Many companies pay lip service to their customers. Everyone recognizes that without customers we don’t stay in business very long. But to succeed entrepreneurs must go far beyond basic customer service. We must do the deep dive into understanding what makes the Customer tick. It’s more than just needs and wants . . . it’s also a more comprehensive understanding of buying patterns and lifestyles. It’s about anticipating what the Customer will value. Thus, the value proposition becomes the Holy Grail. How does the customer experience attain complete and total satisfaction?

Maybe I’ve oversimplified this, but everything else seems incidental beyond Culture, Product and Customer. Without a strong Culture how can we possibly create a great Product and take care of the Customer? Without a great Product, our Culture begins to crack as team members become demoralized and the Customer eventually suffers. And yes, without the Customer, there’s no point in a Culture or a Product.

Culture, Product and Customer. A three-legged stool that looks simple, but is strong enough to support a long winning streak for us as entrepreneurs.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

3LeggedStool1

Prom Night

The Holy Grail for business start-ups and mature organizations alike is customer procurement. Winning customers at a sufficient pace is critical to the survival of every company and especially for those at the fledgling stage. And yet I can’t tell you how many times I’ve seen entrepreneurs focus more on other aspects of their businesses rather than making sure they have enough customers to keep the doors open.

There’s no doubt that we must have a minimally viable product that our customers want to buy. And implementing a wide variety of systems and processes is also an important factor. But without the customers, everything else is moot. To find the customers and convince them to spend their money with us requires pulling out all of the stops. Top notch interactive websites, regular informational blogs, referral programs, social media, drip marketing, multi-media advertising and positive publicity are building blocks toward customer procurement. Yet, even with full implementation, the customers may not come in numbers or as quickly as are needed. What to do? Go back to the basics and fundamentals.

Think back to prom night – what was happening? Girls had their hair done. Guys were renting tuxedos. Corsages and boutonnieres were purchased; makeup was applied, and shoes were shined to a fine gloss. In other words, we were all trying to look our very best. Think about this with respect to our products or services. Have we done everything possible to look fantastic to those outside our company?

Do prospective customers clearly understand our value proposition? How strongly are we able to demonstrate that our product or service solves a problem and preferably one with which a lot of pain is associated? This is a major failure for a vast number of companies. Their product/service might be nice to have, but the customer can’t find a compelling reason to purchase it. Think Colgate Kitchen Entrees. Never heard of this? You’re not alone. The folks that make Colgate toothpaste thought it might be a good idea to launch a line of frozen dinners. Customers could eat a Colgate meal and then use Colgate toothpaste to brush their teeth. What kind of a value proposition is that?! If we can’t nail our value proposition then neither can our customers.

Customers have many choices when purchasing a product or service. Entrepreneurs sometimes become so enamored with their own ideas that they fail to objectively assess the competition. I’ve certainly been guilty of this myself in the past. I would pooh-pooh a competitor and rationalize that our approach was far more sophisticated and desirable. And yet, I didn’t ask the bottom-line question of what customers liked better about the competition. We may have a product or service that truly is twice as good as anything else on the market, but unless we can make a clear and concise case for differentiation, we’ll be stuck with the rest of the pack. Effectively communicating product or service differentiation means life or death in the business world.

A strong uptrend for customer procurement will happen if we practice the basics and fundamentals. This can be accomplished by presenting our product or service in as attractive a manner as possible; when we have a killer value proposition, and when we effectively communicate how we’re different. Doing all of this will ensure that we’ll be the hit of the party.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

prom night

To Proposition or Not To Proposition

The other day I was talking with an entrepreneur about his company. For a number of years he had achieved a reasonable level of success with the manufacture and sale of a particular product. But more recently his sales had trailed off and he was becoming worried. He made very telling statement, “the product is the same as it has been for the past 15 years – I don’t understand why people aren’t buying it in the quantities they once did.” Framed in this manner, the problem is obvious. But how often do we march on oblivious to the changes that are occurring around us?

I asked the entrepreneur to explain his value proposition, a question that was followed by silence. He admitted that he really hadn’t thought about it for quite some time (actually it had been several years). The bottom line was that his customers no longer saw the value in his product the same way as they had in the past. Tastes change. Competition is fierce. Customers can sometimes feel like they are being taken for granted. Unless we make an effort to continually understand why our customers buy our products or services, we aren’t in a position to make the tiny tweaks or major overhauls that are necessary to maintain our winning streak.

Conventional wisdom says that a value proposition is a promise of value to be delivered. Obviously there’s a lot more to it. A restaurant where we eat sometimes seems to be having a bit of a struggle with its value proposition. I suppose that the proprietor could say to me the customer, “You pay me money and I’ll cook your dinner.” Technically that’s a value proposition – but a pretty bad one. The website for this restaurant references “a special dining experience.” There are some other superlatives in the “About” section of the website, but nothing that would really grab you. There are a lot of little things about this place that demonstrate a lack of focus on a strong value proposition. The prime rib is fatty and gristly; the wait staff isn’t trained to make sure that a diner’s glass of tea or water is always full – even if it’s not their assigned table; likewise, empty plates aren’t cleared by the bus staff while guests are at the table (only by the primary server), and finally, service can be a bit slow at times.

A value proposition needs to reflect the culture of the organization. In the case of the restaurant previously mentioned, there doesn’t seem to be a culture of attention to detail. This restaurant probably gets 95% of the dining experience right, but doesn’t seem to care enough to nail that last 5%. If I owned the restaurant, I would re-tool the culture and become fastidious about the little things. My ultimate value proposition would be something like this: “Most restaurants can cook you a meal. We focus on that last 5% to make your dining experience 100% perfect.” Then I’d follow that with a further explanation – “your drink glass will never be empty; we select only the highest quality beef, pork, poultry and fish; our wait staff will always be looking for ways to serve you – regardless of whether or not it’s their assigned table.” Not only does this clearly state what value we’ll be delivering, but it also defines the points of differentiation with competing venues.

A good value proposition is clear, inspiring and differentiating. To avoid becoming irrelevant, entrepreneurs must continually review and refine their value propositions.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

old diner

The Enemy?

Evil, dirty, underhanded, devious, conniving, despicable, dishonest, cutthroat, backstabbing, snobbish, arrogant, lying and cheating. These are terms I’ve heard applied to competitors over the last 40 years. Without a doubt I’ve missed some. What emotions are evoked when you think about your competitors? Some entrepreneurs I know have pure hatred for the competition and others display a great deal of fear. Why do we associate such negativity to our competition?

The amateur psychologist in me believes it has something to do with our childhood (don’t all of our issues?). On the playground we engaged in competitive duels involving kickball, dodge ball, four-square and other gladiator-like activities. Losers were vanquished with taunts and teasing. When we were older, competition for relationships with the opposite sex was intense. When a sought-after girl or boy chose someone else, we were crushed and dejected. Fast forward to today and it’s no wonder that we often see our competition as the enemy.

But do we really benefit from viewing our competitors in this manner? Competition is actually a wonderful thing. Let’s look at several of the reasons why.

  • Competition stimulates creativity and innovation. Every day we know that our competitors are working overtime to develop new products or services. To keep from being left behind we do the same. New discoveries are made out of this process that may generate greater profits and capture a larger market share.
  • Best practices emanate from a competitive environment. Let’s face it; we don’t have all the answers. So, observing how others do things and testing our approach accordingly can lead us to implement better systems and processes. Without competition what would be the incentive to improve?
  • An inefficient market is the byproduct of competition. Some competitors are stronger and some are weaker. If every competitor was equally strong how would anyone win? The concept of winners and losers is critical to a healthy yet inefficient market.
  • Hand-in-hand with the inefficient market theory is the opportunity for differentiation. This is good for the consumer and it’s outstanding for the entrepreneur. Why? Because we have the opportunity to create a level of variety that may appeal to more customers. It’s not just about “better;” it’s also about “different.” If every boutique sold the same black dress, doesn’t it stand to reason that a boutique selling a purple skirt might win a few more customers than the black dress sellers?
  • Competition helps to broaden the talent pool. It provides career paths for the workforce into which we as entrepreneurs can tap. We can create cultures where people want to work, giving them the chance to grow and advance their careers. And in the process we get to attract the best and the brightest.

For years we’ve enjoyed good relationships with our competitors. We view them with respect and in some cases, admiration. Other terms come to mind as well; friendship, collaboration, empathy and gratitude. Collaboration you say? Yes, we’ve often referred customers to our competitors when we couldn’t meet their needs and they’ve done the same for us. In 2008 a Maine portable restroom business owned by Jeff Bellino burned to the ground. Who came to the rescue? Bellino’s competitors! They provided portable restrooms, toilet tissue and chemicals so that he could keep going while he rebuilt his operation. Competition is at its healthiest when competitors have each other’s backs in a time of need.

When we embrace the notion of strong and healthy competition we enhance our chances for success. There’s no doubt that competition makes us better entrepreneurs in every respect.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

gladiators