Another Post - Strategic Planning

It's been a while. One thing I've definitely learned about this blogging thing is that you've got to commit to a schedule of writing or it will tend to drift. I guess that's true for everything.

I'm right in the middle of a fun process at Everon - Strategic Planning. I'm not sure that most people would consider strategic planning a fun process, but it should be if it's done right.

At most big companies, I think strategic planning has turned into a nasty process of politics and people trying to hang on to their budgets and headcounts. At an entrepreneurial company, the strategic planning process is where you come up with your wildest dreams and goals and figure out if you can craft an organization and strategy that is capable of achieving them. This is where your entrepreneurial blood should really get pumping!

Among the things we are considering right now:

-How will we maximize the current business we are in on a national level?
-Will we open a second office in another part of the country?
-Will we launch a second business (or at least an additional major line of services)?
-What is our current Brand Promise? How has it or should it change?

This is all fun stuff! This process is an opportunity to take a fresh approach and think as if we are starting all over again. It's critical that everyone take the time to do this on a regular basis, both at your business and in your personal life. Take the time to reinvent your future!

MRC

Our industry is changing fast...it's about time!

It's interesting to see all of the attention being paid to our industry over the last few years. I believe that our industry was probably the least sexy industry you could think of from its inception until 2000 or so. I would say garbage collection is less sexy, but at least that industry has made some people a ton of money!

Why the suddent attention? The prevelant business model in our industry is chaning from an hourly consulting model delivered in person to a "managed services" model delivered for a flat fee, often over the Internet.

The theory that this will create a dramatically more scaleable and interesting business is what attracted me to starting Everon and is currently attracting many others to our industry. It's also bringing our industry a new level of professionalism, higher quality people, and investment.

IT'S ABOUT TIME!

This industry is huge. Depending on which statistics publisher you believe, the SMB marketplace spends somewhere between $50B and $300B annually in the United States. And yet it's been a sloppy, unprofessional industry for years. Why?

The hourly consulting business model doesn't work very well when working with small businesses. You can't charge them enough on an hourly basis to build a good business, and the jobs are so small that you end up chasing your ass around town all day trying to make a buck. That's a deadly combination! And it makes it impossible to attract the highest caliber people.

New business model = potential to finally make money = smart people, professionalism, and investment money.

MRC

Work the Web

Ok...I admit...this post may seem like it should have been made in 1995. I'm not really onto something new here, but I still think the majority of business are missing the boat when it comes to the web.

You really MUST be doing everything you can to have your business take full advantage of the web and it's many advantages.

Why are most businesses missing the boat? For one thing, most businesses are small businesses that don't THINK they have the resources or technical expertise to make a serious push onto the web. Second, most people are still feeling a bit turned off by the .com explosion; many believing that everything was just hype.

IT'S NOT HYPE!

If you haven't heard, advertising on the web is absolutely exploding right now. If nothing else, the web has proven to be an incredibly effective, affordable, and measurable way to connect buyers and sellers. At a minimum, every business needs to be investing as much energy as possible figuring out what the web can do to connect to new customers.

I stressed the word THINK above because most small businesses are intimidated by technology and think it is too expensive. This of course means opportunity for Everon, but that's not the point. Technology is not that complicated any more...dig into it and you will learn it and it will change your business!

Take Everon as as example. This is a business that is traditionally built on referrals and cold-calling. However, those methods alone are not predictable enough or in high enough volume to meet our growth objectives, so we looked to the web.

We brought in someone whose full time job is to get leads from the web, and we are now up to 100 inbound leads per month on a regular basis. That number is incredible for us. Even more incredible is that our total spend to accomplish this is a fraction of traditional methonds that don't produce anywhere near the same results.

The person we brought on to do this job had no prior experience with using the web to get clients, but is a smart, aggressive person with a desire to learn. I'm sure you have one or two of those in your business as well!

Make a commitment to work the web and get started today.

MRC

The Tough Stuff

Deciding who to fire during tough times is not a fun task. This is particularly true when you've got a small, close team that gives it there all every day.

I ready Richard Branson's Autobiography - Losing My Virginity - in which he says that he's always been so afraid of letting someone go that he makes someone do it for him. You're taught in American business circles that you have to be tough to be a good businessperson; Richard obviously doesn't subscribe to that B.S. He cares about his people and doesn't enjoy the thought of letting anyone go, even if they probably deserve it. Don't tell him you have to be tough to be successful!

I don't have it nearly that bad. I don't mind letting someone go at all if they deserve it. But if I have to let them go because of my mis-management or poor business performance that is out of their control - it sucks.

I guess that's why I earn the big bucks. Yeah...right.

Teams & Topgrading

I've heard it said a thousand times, "Venture Capitalists invest in teams, not ideas." While I'm sure it's that they invest in a little of both, I now understand the value of a great team more than ever.

As Everon grows, my job is becoming more and more of a glorified HR manager. The reason for this is that, as a service business, our company is 100% reliant on great people to grow and prosper in our marketplace.

While the need for great people is particularly true in our business, it is also true for any business. I can't recall the exact quote, but Bill Gates said something along the lines of "Take away the top 20 people at Microsoft, and it would be an average company."

Can you imagine?! The founder of CEO of arguably the most successful company of all time says that just a handful of people makes the difference between Microsoft being an average company vs. the market dominating gorilla that it has become.

It seems shocking, and maybe he is exagerating slightly, but I don't think he is way off. If you look around at any company, organization, social group, government, etc., it is only a handful of people that truly drive change and growth. The rest of the people are following their lead.

It takes a tremendous amount of energy, charisma, and drive to push an organization forward, particularly one of great size. Very few people have the capability or desire to do this hard work day in and day out. Jeffrey Immelt at GE claims that he has worked 100+ hour weeks for the last 20+ years, and that he has loved every minute of it. While we are all impressed with his paycheck and power, how many of us have the drive and stamina to do the same?

So my challenge, and the challenge for the CEO of any fast growth company, is how to find and develop the best people. I've realized that I have a natural gift for attracting good people - most entrepreneurs do - but that will only take me so far. At some point I won't be able to interview every employee that comes in the door; I need a system that is consistent and predictable and can work for anyone.

That brings me to Topgrading.

Topgrading is a term developed by Brad Smart, PhD. Brad is the guy who worked with Jack Welch at GE to create his people development processes - a model that should be studied by anyone running a business.

Topgrading is a system that allows a company to consistently find and develop A players, while removing B and C players from the organization so they can go work at your competitors! It seems like a pretty tough, Darwinian approach, but I'm not sure that any other system works as well in a market as competitive as the business world.

You can get more information and the book at www.topgrading.com.

MRC

The Folly of Trying to be a Low Cost Provider

This may be one of the most important lessons I've learned yet. The frustrating thing is that this one should have been commone sense; I should have known this one without having to go through the pain of experience.

But I didn't, and I'm sure many of you don't.

How am I so sure? Because I can see it in the marketplace that I'm currently competing in every day.

The lesson is that it's almost impossible to win in business by playing the "I'm going to have lower prices than my competitors" game, and yet it's the way that the majority of businesses in the world try to compete.

I know...I know...some of you are reading this and screaming, "What about Walmart and Southwest Airlines?" I hear you. I admire the heck out of both of those companies. In some rare cases, it is possible to use price as your primary strategy, but I stress rare.

And I would argue that even Walmart and Southwest are having problems with this model. Walmart in particular is facing a ton of lawsuits by employees that are tired of working at slave wages and benefits to allow Walmart to continue to be the low price leader.

The far majority of businesses out there aren't venture-backed high-flyers run by brilliant, seasoned entrepreneurs, they are small business started by hungry, hard-working people that left their jobs because they wanted some freedom and a shot at the American Dream. And most of them are service, not product, businesses.

Unfortunately, the way most of these ambitious entrepreneurs start is by assuming that the best way to compete in a competitive market and win their first handful of customers is by offering prices that are discounted to the market rates. In most cases, this sets them up for an eventual disaster.

Think about. If you are in a service business, which most of you are, lowering your prices means the following:

1. You must work longer and harder to get the same revenues in the door
2. You can't hire top quality people because you can't pay them well (including yourself!)
3. You have high turnover and training costs because people leave often for better salaried positions
4. You can't afford to give your customers any room to negotiate with you on prices (which people love to do even if you are low priced!) because your margins are already so thin
5. You have nothing left at the end of the day to invest in making your business better
6. You are stuck with a customer base that is focused on price and does not value you for anything beyond that

The absolute best outcome of this situation is that you get so much business because of your low prices that you are working your tail off and making barely making the salary you used to have at your old job. Congratulations.

The most likely scenario is that you will work so hard for so little money to the bottom line that you will quickly get bitter and burnt out, then run out of the small amount of money you had to start the business before you get the chance to raise prices and fix your business.

Now, I know that some of you are still thinking that you can make low prices work. But why try?! I think it's the laziest way to differentiate your product or service. Rather than improving what you are delivering so that you can justify higher prices, you are taking the easy road (in the short term, very hard in the long term!) and lowering your prices.

I'm sorry if you don't agree with me now; you will at some point!

MRC

PS - I highly recommend reading "How to Sell at Margins Higher than Your Competitors" - available at the major bookstores.

Your Most Precious Asset


I'm referring to time. Time is the most valuable thing you have to give, and yet for many people it is incredibly underappreciated.

I've always been very aware of the value of time, but this past couple of years has taught me more about time's worth than I could have ever imagined. I'm currently the CEO of a quickly growing company, I have two children under the age of two, and I'm doing my best to hang onto my social life and hobbies. I can read your minds...some of you need to refer to my last post about waiting for a perfect time in life to start a business! It's been a great couple of years, but I'm quickly having to learn some new time management skils.

One of my favorite quotes is from Benjamin Franklin:

"Dost thou love life? Then do not squander time, for that is the stuff life is made of."

I first heard that quote when I was in my early teenage years, and it had a real impact on me. It helped me be comfortable with the fact that I had to follow my own path in life and pursue things that really motivate and inspire me.

Now that I'm up to my neck in the realities of running a business and growing a family, the same quote keeps me aware of the fact that I should live every minute with intention. I'm doing my best to focus on getting the "Number 1's and 2's" on my list done every day, and not worrying about this "3's and 4's". This is, of course, easier said then done.

How does this impact you, the entrepreneur? I have two suggestions:

First, work every day as if you are going on vacation tomorrow. Isn't it amazing how much you get done the day before you go on vacation? Work to create this sense of urgent focus every day. Focus on your biggest, most important challenge and work it to completion before moving on to less critical tasks.

Second, carefully consider the opportunities you decide to pursue. Although we are all captivated by the newspaper headlines that tell of businesses that net their founders a gazillion dollars within a year, these cases are extremely rare. Most businesses will require five years or more to get established, which means you'll only have time for so many start ups in your career. Make sure the opportunities you pursue are really meaningful to you and have big upside potential.

Time to go,

MRC