Business simplified... And why some find it so hard
Business is not that complex. Yet so many entrepreneurs seem to struggle endlessly and thrash around trying to "figure it out."
For years, I operated in this realm of thrashing around, but as of the past few years, my mindset has shifted.
Today, I view business as this very simple thing.
In this post, I am going to break that mindset down for you and share why I think many entrepreneurs struggle so much.
What business is
Simply put, business is finding a way to create products/services and then drive people to buy them.
At the core, that's it.
You don't need some crazy idea of a world-changing business model.
You need something that people want to buy, and then you drive people to buy it.
The different areas of business
Now, within a business, there are a handful of fundamental areas that you must focus on for a business to succeed.
Product Development - This is the creation of your product or service and finding a fit in the market.
Marketing - The purpose of marketing is to drive leads and people toward your products.
Sales - Responsible for converting leads (that marketing provides) into closed customers.
Operations - This includes all of the systems, teams, and technology that you use to fulfill on the promise you just sold to your customers.
Finance - This involves understanding your numbers that drive business and profitability.
Human Resources - This is dealing with all of the people who work in and run your company.
Anything you do within business falls within any one of these categories. And as your business grows, you can isolate any problem into one of these areas.
It's that simple.
Why many entrepreneurs make business so complex and hard
The core reason why most early-stage entrepreneurs struggle to see business in this simple light is that they suck at product development...
While a mastery of all of these skills is important, I would argue that product development is the single most important skill to learn and master.
The reason is that all other areas of business stem from your product.
For example, how can you build a powerful marketing system if you don't have a strong product-market fit?
How can you build a strong operation if you are doing custom work every single time for a client?
How can you build a repeatable sales process when every sale is custom?
The answer is you can't...
This is why so many consultants or agency-model businesses struggle to sale. It is because they struggle to evolve from "consulting" to "product."
And even if they choose to continue doing custom consulting, they struggle to think about their work in these terms and at least package their consulting into standard deal structures.
Can custom consulting still be a "real business?"
Let's talk about a custom software development shop, or a management consulting firm.
These can still evolve to become incredible companies and businesses. BUT in order for that to happen, you must productize everything around the work.
You must systematize how you sell deals.
You must systematize how you deliver work to customers.
You must come up with standard packages and pricing structures.
You must find a "niche" or "Unique Value Proposition" that stands out in the market.
So yes, it is possible for these custom firms to still evolve into real businesses. Just look at the Pivotal Labs, McKinsey, or Bains of the world.
They have grown into massive machines. BUT you must also realize they turned custom consulting into a product.
They have standard ways they bill and sell.
They have standard ways they deliver work.
They have standard pricing and ways that they teach their team to sell deals.
They have unique niches or value propositions that help them stand out.
Consulting can still scale... but I will say that it's not easy.
How to level up your business skills faster
If you are in this world of struggling to really evolve your business, then I would challenge that product development is the number one thing that you must level up to grow as an entrepreneur.
Your ability to build and define a product is the primary domino that will set the rest of your business trajectory in motion.
For example, when I built Lead Cookie, I started off building the product.
Then, I quickly had to figure out how to operationally deliver what we sold.
Shortly after, I began selling this service to people who I knew.
Then I needed to ramp up marketing and lead generation.
As business took off, I needed to learn and understand how to manage finances for a growing company.
This all led to a growing team which meant lots more people and HR problems...
And then the cycle begins to repeat itself as you have to go back and "level up" in each of these areas.
Eventually, I removed myself from sales which meant I had to improve my sales skills so I could have someone other than me run sales.
As revenue and costs grew, we had a lot more money moving around which meant I had to get better at understanding and using it better.
And the evolution goes on...
But none of the other skills could be leveled up if I didn't have a core product that resonated with the market.
Product Development in my new company
For the past 12 months, I have been building up my second company Content Allies.
This company has grown much slower than Lead Cookie did, although this, in many ways, is by design.
For the year of 2019, I focused heavily on product development. This meant figuring out who my target customer was and what services we wanted to deliver them.
Eventually I landed on this value proposition: We turn consultants into thought leaders through content marketing.
In practice, this evolved into 3 core services.
Article Writing
Podcast Production
LinkedIn Content
Each one of those "Products" took me roughly 3 months to build and define processes for.
In all cases, I threw up a landing page and then sold a few customers onto the offering from my existing network.
Then we began to deliver the service and figured out how to build delivery and operational systems.
Once one service was locked in, then I would move on to product development for the next service line.
And now... as we wrap up 2019, I now have 3 core products which is what I have envisioned.
This means that nearly any lead that walks in the door can fit into one of our 3 service lines. This was my intention and why I didn't want to have a one-offer productized marketing service like I previously had with Lead Cookie.
So now that product development has hit a good stage, I am in a spot where I just need to focus on marketing and sales.
Then eventually marketing and sales will generate so much demand, I will have operational, HR and finance problems.
And then it becomes a big cycle of oscillating between these areas.
You are like a performer with spinning plates
My advisor, Alex McClafferty, is a master of metaphors. One that he often uses with growing companies is the visual of the stage performer who is balancing all of the spinning plates.
Each of these areas I described to you before is like one of those spinning plates-
Product Development, Marketing, Sales, Operations, HR, Finance.
As an entrepreneur, you will spend time focusing on one area for a period of time.
While you are focusing on that area, all of the other plates slow down... they start to wobble.
As an entrepreneur, you are like that performer running back and forth trying to catch the plates before they fall.
And as you grow, you will build better systems, or hire people to help you manage these plates.
You may hire a director of operations.
You may install a new accounting software to automate collections.
You may set up a project management system to make things run smoother.
You may document a standard hiring process to prevent bad hires.
You may build spreadsheets or forecasting models to help you plan your budgets.
You are constantly oscillating back and forth across these plates.
But here is the thing...
If your product sucks, then none of the other plates will stand for a second.
This was the skill that held me back for the longest time, and working with my business advisor eventually helped me overcome this.
Business is simple
This post has probably not been mind-bending for you. Not much of what I shared should be very new.
BUT, hopefully it helps simplify what seems like a very complex topic down into very simple fundamentals.
Stop spinning your wheels thinking that your creativity is the solution to every problem.
Just master the fundamentals, and then keep leveling up your skills along the way.
As Bill Clinton would say... "Keep it simple stupid."