Knowing what to work on your business is always a challenge. It’s something I’ve experienced, I bet you have too. I love it when I find simple tools that help me make decisions on what to work on in my business. One of the best tools I’ve seen for finding the low hanging fruit in mine or for that matter, anyone’s business, is a program called CoreValue.

Today we’re going to talk about the three most important market drivers and the three most important operational drivers your business has. Although the CoreValue tool measures nine internal and nine external drivers, I find that six of these will move the needle more for your business than the other 12 areas of focus, or at least in about 90% of the time this will be true. So, are you ready to get started? I am.


Transcript

Knowing what to work on your business is always a challenge. It’s something I’ve experienced, I bet you have too. I love it when I find simple tools that help me make decisions on what to work on in my business. One of the best tools I’ve seen for finding the low hanging fruit in mine or for that matter, anyone’s business, is a program called CoreValue.

Today we’re going to talk about the three most important market drivers and the three most important operational drivers your business has. Although the CoreValue tool measures nine internal and nine external drivers, I find that six of these will move the needle more for your business than the other 12 areas of focus, or at least in about 90% of the time this will be true. So, are you ready to get started? I am.

Hey, I’m Josh Patrick the founder of Stage 2 Planning Partners and the Sustainable Business. I also am the creator of Cracking the Cash Flow Program as well as the author of Sustainable: A Fable About Creating a Personally and Economically Sustainable Company.

Let’s start with our market drivers.

First is what I think may be the most important of them all, and that’s recurring revenue. You know creating revenue in the first place is probably the most important thing you’re gonna do when you’re cracking the cash flow code. But most of that first revenue that you’re gonna create in your business, is gonna be what I call one-off revenue, means that it happens once, somebody buys something and they don’t come back again. A recurring revenue is when somebody buys something and they buy it again and they buy it again. Now, in some businesses that’s easy to do in other businesses it’s more difficult to do. But in all businesses you need to have a recurring revenue model.

The second thing which I think is really important is customer diversification. This is especially true in small businesses. I run across this all the time, even in businesses with as many as 200 or 300 employees, where one customer is 50, 60, 70% of the business. In fact, I had one client at one time, that one customer was 95% of their business. Now that’s a huge risk, because if that one customer happens to go away, then you’re out of luck. And it actually happened to a customer of mine who had 55% of his businesses with one customer and that customer brought the manufacturing back in-house and he really had to struggle to keep his business afloat.

Then finally we have margin advantage. What is margin advantage? Margin advantage very simply is what are you doing to have a higher margin in what you do than your competitors do? Let me give an example. I had a client once who was an electrical contractor. His bottom line was 20% in an industry that averaged 5%. So I asked him, I said, “What are you doing “to get that margin that nobody else has?” He says, “It’s really pretty simple. “It’s just how we plan for jobs.” And today that’s known as agile planning or in some cases Scrum, which is a planning methodology to help you increase the velocity. In other words, do the work you’re doing at a higher level and do it faster. Now, if you’re a construction company and you think it’s gonna take you 1000 hours to do the job, and you actually able to do it in 800 hours, that job, you’ve significantly increased your margin. That’s one way of getting margin advantage.

Now let’s take a look at some of the operational drivers.

Number one on my list here is sales and marketing. Without both your company’s gonna flounder. But the other side of the ballpark is you really need to know what the difference is between sales and marketing. Sales is about creating revenue, marketing is about creating awareness. And they’re very different things, although they’re often bunched into one area.

Number two on the list is innovation. Yes, innovation can be systematized but if you’re not innovating internally and externally, which means making your business different and making your product offerings different, eventually you’re gonna fall behind your competitors because they’re gonna keep working on this stuff and if you don’t you’re gonna have some problems.

Finally, in this part of the world is senior management or could be people generally, but senior management is really important once you start getting to 50, 60, 70 employees, because without great senior management, you’re not going to be able to grow your business and you’re gonna end up having a bunch of chaos. Or as Jim Cowles liked to say, “You need to have the right person in the right seat.”

Here’s what I want you to do now. I want you to click on the button below and spend 15 minutes filling out your CoreValue Discovery profile. It’s going to take you a few minutes. It’s free. You’re going to answer 18 questions and you’ll find out what drivers can provide you the best return on your effort.

Hey, thanks a lot for stopping by today. I hope to see you back here really soon. This is Josh Patrick. Thanks a lot and I want to see you back here at the Sustainable Business.

Topics: recurring revenue, Video, Sustainable Business, Innovation, margin advantage, market drivers, sales and marketing, customer diversification, operational drivers, senior management

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