Grow your business

Today I wanted to share with you a simple question to spark you to increase the value of what you offer your customers or clients.

This question is: How can you increase the received value of your core product or service without increasing your costs?

You’ll notice a new term here, “received value”. In a very real way the value of what you deliver is directly impacted by how your clients perceive and USE your product or service. Anything you do that enhances how they perceive your product or service… or improves how they USE it to get a better result, enhances your product or services received value.

So how can you enhance your received value?

Here are two quick case studies of clients we’ve worked with in our Business Consulting Program. One is for a product-based company, the other is for a service-based company.

See if you can model this idea and use it to enhance your received value. Remember, the higher your received value, the greater the pricing premium you can legitimately command, and the greater your competitive advantage is in your market.

Case Study One: Windswept Marketing Inc.

Windswept is a specialty item manufacturer (branded shirts, bags, pins, etc.) It does work for businesses who want items for a special promotion, for tradeshows, and for its team to wear.

Over the years, Windswept has built up a reputation for being a place to go to for fresh ideas for interesting specialty items. A client would come to Windswept, and they would put together a custom sample of several ideas for the client to choose from. Some of the clients would buy, others wouldn’t.

The received value was low because the client didn’t understand the huge value that Windswept was doing behind the scenes to create, design, and manufacture the samples. It wasn’t that the client was intentionally taking advantage of things, it just didn’t understand the value

After a recent consulting program mastermind session Windswept designed a multi-step process it will walk a client through to do an explicit, branded “Custom Design Process” with the end result being the client getting a “Custom Concept Prototype”. This new process won’t increase costs for Windswept (they’re already doing the process, just informally and without getting any credit for it.) The key is that it will increase the RECEIVED value for Windswept’s client.

I mentioned this in an email to you all about 12 months ago and promised to let you know later the impact of this and the other consulting program ideas on the bottom line for Windswept.

In Brian’s own words here has been the impact:

“In the first 6 months of the program I’ve stepped out of over 90% of our operations and we’ve increased doubled our profits!”

(To see a video interview with Brian sharing his experiences in the program just click here.)

Case Study Two: Emerge Occupational Therapy Clinic

We’ve been working with Emerge in our Business Consulting Program now for over a year. They have a thriving clinic helping children with physical and behavioral needs.

One of Emerge’s challenges is how does it scale the expertise and talent of its owner, Bonnie. Bonnie has years of experience working with kids. She is good, very good, at the clinical work.

Taking this concept of “received value” to a service business is even easier than for a product based business. Bonnie will create a specialized “New Client Evaluation and Treatment Design Process” that will help her systematize the strategies and techniques she has already internalized to get such amazing results for her clients.

Not only will this process-based approach help her to train her clinical team to do better work, it will also make visible the immense value her team brings to its clients.

This is a huge win-win.

The Bottom Line

The bottom line is that by looking for ways transform what you do into a defined Core Value Process™, you’ll increase the received value of your product or service, often without increasing your costs. This means better margins and a more sustainable market advantage. Not a bad blend is it?

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Earlier today I was reflecting on two client conversations I had with clients who were in the process of raising money. I spent about 40 minutes on the phone with one of our clients who is raising $800,000 for a business start-up and I’ve traded several emails with another client who is raising $5 million for a commercial real estate project.

So I thought, since the universe seems to be telling me that this is an important subject right now, what are the 3 most important pieces of advice I could give to you on the subject of raising money for your business or investment projects.

For most people raising money for a business or investment project is a scary, unpleasant, overwhelming process. But for a few people who have developed the expertise and honed their experience, it’s just a fun game.

Here are the three most important money raising tips I can share with you.

Tip #1: The 11th Hour Principle

I want to share with you the single most important thing to keep in mind when raising money that lets you know you’ll be able to raise your money. I call it the “11th Hour Principle” and basically what it says is that the biggest amount of your money will come in at the last moment.

Why? Why don’t people ahead? Why don’t they make their decision to fund your deal weeks in advance of the deadline? Why don’t they get their wire transfer in the day they make their decision instead of the day the fund closes? Because my friend, they are just like you and me.

People act when they feel urgency. I’m the same way. I pay my tax estimates on the day they are due… I pay my property taxes just in time not to get dinged for the 10% penalties…And, gulp, sometimes I buy Heather an anniversary card the morning of our anniversary. (Please don’t tell her that last part!)

So when raising money you’ve got to create urgency, and this means setting deadlines. Now to be smart, make your deadlines feel real but have some room in your documents to extend the closing date if you need to.

Also, understand that raising money is best done in a concentrated short period, not over months and months. Spend a month preparing for the all out blitz you’ll do (making sure to listen to your attorney and not do a general solicitation and get yourself in trouble with the SCC, but I digress) in a tight, compact, frenzy filled 14-45 days.

Does this really work? You bet it does. I’ve used this concept to raise tens of millions of dollars, and my good friend and Maui Advisor Bill Shopoff has used this strategy to raise HUNDREDS of millions of dollars.

Don’t fight human nature. Use the power of deadlines and the 11th Hour Principle to help you raise your money.

Tip #2: Get your “summary” to one page.

No more executive summaries of 23 pages! NO! No! No.

>From now on you will create a 1 page deal summary of your business or investment project.

Each paragraph will be at most 2-3 sentences long, and each paragraph ideally less than 5 lines tall.

This is tough, but it can and MUST be done. (I’ll give you a second page to show a simplified chart of potential returns.)

Give them:

·   Paragraph 1: the context of the opportunity (e.g. it’s a cash flow commercial real estate deal… it’s an equity play on a business start up…)

·   Paragraph 2: the reason why it’s such a great deal (e.g. We’re buying a building at 32 cents on the dollar… We’re expanding our business operations and have signed LOI for $4 million in sales…)

·   Paragraph 3: What you want from your investors (E.g. we are raising $3.5 million of capital from accredited investors with a minimum unit of investment of $50,000…)

·   Paragraph 4: actually not a paragraph but a chart of the numbers (i.e. the returns)… often done best by showing how a sample “hypothetical” $x invested would generate in return…

But David, what about my 3 page market analysis, and my 2 page cash flow proforma, and my 1 page GANT chart of timeline, and my 4 page Table of Organization, and my—NO! No! No.

One page of text, with optional half page of numbers… no more.

All the other “data” can be given to interested investors LATER.

Tip #3: Run through the finish line.

One of the most common mistakes I see is that people stop their fundraising too soon. Please, hear me on this one (it has cost me MILLIONS to learn this lesson the hard way, but hey, be stubborn if you want.)

·   Raise more money than you think you’ll need

·   Don’t count it as raised money until you see it in your bank account (Or in the escrow account)

·   Don’t stop your fundraising until you’ve collected all the money you need and then a little bit more… You can always return the last money in with a hang dog expression and say sorry, they were too late… Side benefit to this is that you’re setting the stage for the next money raise you do.

I hope you put these 3 tips to great use in your financial life.

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Have you ever thought about the most expensive mistake that most business owners make?

If you had to, what would you say that is?

I was thinking about that very thing today and wanted to share my answer with you.

I think the biggest mistake that most business owners make when they work to build a business, not a job is that they try to grow and scale their company built just on “Team” alone.

I call this the “Knight In Shining Armor Syndrome”.

They look for the perfect team member to come into their business to help them run the business.   Sometimes they find just the right person, although usually they don’t.

If they don’t find the right person, then 3-6-12 months later they are left with a business that is messier, struggling, and lots of clean up to do.   And they swear they’ll never do that again… and just settle for a smaller, less profitable business than they could have.

If they DO find the right knight, at some point in the ensuing 1-3 years usually something happens in that person’s life.   (E.g. their spouse gets transferred and they move… they have a personal challenge and they turn into a problem employee…)   Or what can sometimes be worse, the business becomes increasingly dependent on them and you the business owner feel more and more beholden to them and vulnerable to their whims.

Instead I want you to build your business based on the 3 essential ingredients of all scalable businesses:

Ingredient One:   Team.

“Wait a second David!   You just don’t build on team….”   Actually, I said don’t build SOLELY on team.   You NEED team. You need strong players.   You just can’t build a championship team SOLELY on a star.

Think about Michael Jordan and the Chicago Bulls.   The first few years Jordan played for the bulls they were a “one star” team.   It was only when they got more great players around them (Pippen, Rodman, etc.) and implemented a whole system of play (ala Phil Jackson) that they started winning championships.

Ingredient Two:   Systems.

Systems are the repeatable processes and procedures you need to capture the know how of the business in the business and not just in people’s brains.   Systems are the tools your team uses to get consistently strong results.

Systems can be checklists, scripts, samples, templates, or even software solutions.

But having a great team and strong systems isn’t enough to let you succeed in growing and scaling your business long term… you need one more ingredient.   This is the ingredient that most entrepreneurs never learn about…

Ingredient Three:   Controls.

Controls are the specialized systems that your team uses to make sure that things are being done the right way and that you’re running in the green.

There are three types of controls.

Visual Controls (think scorecards or checklists).     These controls help you SEE that you’re on target (or sound the alarm that you are off target.   E.g. A company dash board; a budget to compare expenditures against; a fulfillment checklist where people sign off on each step; etc.

Procedural Controls (think process rules to make sure things happen right way).   Procedural controls include things like financial controls like a formalized purchasing system; a process for sales people to get approval for concessions to customers; etc.

Embedded Controls (think those controls that you don’t even see, but still protect your business.)   Examples include:   standardized contracts; not accepting cash on an airline for snacks (nothing that can be stolen that way); etc.

A Powerful Analogy to Help You Successfully Scale Your Business

The analogy I’ll share is that of a stool.

If you build your business only based on Team, you’re foundation is a one-legged stool.

You need all THREE legs of the sound stool (Team, Systems, and Controls) to have a solid foundation to scale your business from.

I hope I sparked some deep thought on your part for the weekend.

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Ever worked to put together a win-win business partnership or joint venture? I did a Q & A call with our consulting clients yesterday and this topic came up (in the context of a JV with various health clubs as a sales partner in a long term JV.) So today I wanted to share with [...]

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Thanks for all the positive feedback on the recent posts. I guess it really struck a nerve with a lot of you. I decided   share 7   important tips on building wealth independent of your business: Risk comes from not knowing what you’re doing, so pay the price to learn what you’re doing! Sounds [...]

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