If you’ve ever wondered how to make smarter business decisions, this post is for you. When you make better decisions, you provide more value to your clients and prospects. The trick is realizing which decisions impact your clients, and which play into vanity metrics that don’t help clients or improve your business’s bottom line.
When you’re faced with a decision big or small, just ask yourself whether the outcome supports one of these key components. This strategy works whether you’re thinking of selling a new product, rebuilding your website, hiring an assistant, or paying to attend a seminar.
In the book The Personal MBA, you’ll find tips and questions to help you evaluate everything from dealing with controversy to improving your business’s systems.
1. Value Creation
The value you create can take on one of several different forms, but the purpose is always the same: to make someone else’s life a little bit better. – Josh Kauffman
The first step in creating a successful business is to find out what people need or want, and offer it to them. How can you make your client’s life better? That’s the value you’re creating, and the commodity you have to trade.
Once you’ve got something of value to offer, you have to let people know about it. Keep in mind that marketing and selling are two different things. Marketing is what you do to find prospects. Once that prospect is interested in what you have to offer, you can focus on selling. But how can you compete for a prospect’s attention in today’s crowded marketplace? It’s a matter of being more interesting or useful than the competition. It all comes down to how you frame your offering.
It’s not necessary to do extraordinary things to get extraordinary results. – Warren Buffet
The essence of sales is helping a prospect understand why your service is worth paying for. There are two main ways to accomplish this:
- Value-Based Selling. Here, you’re making a sale based on the value of what you provide, not what it costs. This may be a key point if your competition can offer the same product or service at the same price. Two skills you need to succeed in value-based selling are listening and asking good questions. Once you understand a prospect’s needs, you can present the best solution. If you present a solution before finding out what they really need, you’re not selling based on value.
- Education-Based Selling. Here, you’re investing time and energy into a prospect to make them a smarter consumer, and more likely to buy from you. Of course, this means you need to put your money where your mouth is. If your prospect asks you a question, you should be able to answer it. This approach can take more time than value-based selling.
4. Value Delivery
Being on par in terms of price and quality only gets you into the game. Service wins the game. – Tony Allesandra
Once you create a valuable product, find the right prospects, and convince them to buy, you have to deliver what you promised. This means paying attention to every part of the process. In other words, your job isn’t done once your prospect has paid you. You have to follow through and answer any remaining questions they have, and make sure they get what they paid for. If you can do these things, you’re more likely to get good word of mouth from your new client/customer.
The best way to ensure this happens every time is to systematize your business. This ensures every client/customer receives the same level of service. Best of all, if you’re successful enough to hire help, it means they can follow the same steps you do to provide the value that interested your prospect in the first place. Even though it seems like extra work, systematizing will save time and effort in the long run.
Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery. – Charles Dickens
Finance is more than balancing a checkbook. It’s about using numbers to decide whether you’re running your business the right way. What’s the “right way?” A business needs to bring in enough money to justify the time and expense of keeping it up and running. If your business does that, congratulations! If your business isn’t there yet there are four ways to increase your revenue:
- Get more customers.
- Increase each customer’s average transaction size.
- Increase the number of transactions per customer.
- Raise prices.
For most businesses, at least one of these options is do-able with a standardized, systematized method of prospecting and marketing.
Putting It All Together
If you read through all five parts, you may be thinking, “That’s great…but what do I do with this information now? I’ve already built my business.” That’s true, but you’re eventually going to be faced with decisions big and small. Refer back to these 5 key components when you have an important decision to make. If you’re thinking about changing something about your business, ask yourself if that change supports one of these five key parts of a business. If it doesn’t, or you find yourself reaching to justify it, you should probably spend your time and money elsewhere.
This strategy works whether you’re thinking of moving offices, hiring staff, rebuilding your website, or going to a conference.
- Value Creation: Does this change help me discover what people need? Does it add value to what I do in the consumer’s eyes? Is that added value something they’ll be willing to pay for?
- Marketing: Does this change help me reach the people most likely to work with me? Will it build demand for what I’m offering?
- Sales: Does this change help me convince a prospect to become a client?
- Value Delivery: Does this change help me deliver value in a more appealing way? Does it make follow-up easier and more consistent?
- Finance: Does this change help my bottom line? Does it reduce my expenses? If not, does it offer enough potential benefit to offset the cost I have to pay right now?
credits: The Personal MBA, Pinney Insurance