After working with the owner to build a solid foundation, the owner was able to create a solid marketing plan and increased their client base immediately.
I'm sharing this story with you because at least 80% of revenues generated in business are directly linked to marketing. If you think about it, most activities that we do in business are focused on getting new business in one form or another. Since marketing is such a critical ingredient for business, one must understand their business to understand how to implement marketing profitably.
When you understand business your marketing efforts will be effortless. To understand business I've listed Nine Basic Business Principles that a small business owner should know and understand before implementing marketing programs. It will help give you clarity in your business so that you will have clarity in your marketing and it will also help you think about your own internal infrastructure so that you can adjust as necessary.
Principle One--Why are you in business?
You should be in business to make money (profit) or if you have a non-profit to serve the community. Next, it's your responsibility to define what making money or serving the community means to you. Having a passion or doing what you love is wonderful; just make sure it's a profitable business. I had a client tell me that she's in business because she wanted to be financially free...guess what that's what we all want! Once we talked a little more, she revealed that she wanted to have kids and she knew she didn't want to be a stay at home mom but also knew that she wanted to be there for her kids. With this information, we worked on creating the infrastructure that will keep her from getting bored and that will allow her the time she needs with a new baby and as her kids grow. Her business will be exactly what she wants vs. another stressor that keeps her from what she really wants. Just cut to the chase and give a solid yet truthful answer.
Principle Two--What business are you in?
For example: If you sell equipment. Are you a manufacturer, distributor, or retailer? Understand what business you're in so that you can make better business decisions. It all starts with understanding your industry, then understanding that industry on multiple levels. Start by getting your NAICS code. You can use it for research, but the process of finding your code proves for good reading and brings about some interesting ideas.
The second piece is changing your definition. Are you in the business of selling door locks or are you in the business of providing security? Changing your definition can open up new opportunities.
Principle Three--Are you in business to make money or to create wealth?
There’s a difference between making money and creating wealth in business. In business making money is under-pricing your services because you need a client or promoting your business but you’re not quite sure of where your going but you’re still making a little money so you must be doing the right things. Basically, you’re making money but it has no value.
Now creating wealth is making money and knowing what to do with it. Creating wealth in business is about setting the right price, picking the right target market, speaking the business powerfully, all those activities a business owner must do to be successful; but we don’t necessarily understand how to put these activities in a format that works for our unique business situation and puts us in a position in the beginning for creating wealth.
Guess what, it’s time to cut through all the clutter and get to the CORE of what it really takes to get your business up and running and posed for not only making money but a business that will allow you to create wealth! It’s time to be SWIFT, get to the CORE, and focus on Execution and Profitability!
Principle Four--Understand the Infrastructure needed to support business activities.
There are tons of ways to start, build, and grow your business. However, one of the easiest, most proven ways to build a business that’s perpetual, meaning everlasting - (I did a radio show on perpetuity Nov 28 last year, so make sure to check it out so you know what I’m referring to ), but the way to build a business that’s perpetual is to build a strong infrastructure that not only prepares your business but also allows your business to make money, become profitable, and grow exponentially.
Most entrepreneurs and business owners don’t focus on this critical area; not because it’s hard but because it requires an intangible process – which means you can’t immediately feel it, touch it, smell it – it takes time to build. So it’s hard to work on things that don’t give us that instant gratification. But, it will give you long-term stability, if that’s what you want. This infrastructure is your armor against outside forces that can deter, hinder, or even break your business success. We call this infrastructure CORE.
Principle Five--Understand the key functions of your business.
When I say function I'm referring to an activity within in your business that supports the development of new products or the sale of your product. Some people see these as departments, but as small business owners it's more effective to think of them as functions since some of us are solopreneurs.
The key functions of business refer to the internal operations of business. The basic functions may include: administration, accounting, distribution, marketing, receiving, inventory, procurement, human resources, management, and production. All businesses have at least 3 of these functions. Make sure you know what functions are needed for your business and ensure you create the right processes for executing these functions to support your business activity.
Principle Six--Having a Business Mindset.
You must think strategically – that’s having a business mindset. Before you make any decisions in business think about the outcome on all levels; For example: Having a business mindset means thinking for yourself vs. letting other people think for you. I’m considered one of those people that you would go to for advice and help but come to me with something. Don’t allow the experts to control your destiny or your dreams, let them help you get there. Take some time to think, document, and research your own idea before asking for help – if you do – you will be better equipped to ask for exactly what you want and getting it.
Principle Seven--Document a Strategic Plan not a Business Plan only
To start you should be focusing on creating a strategic plan not a business plan. Why? The strategic plan encompasses all aspects of your business in an organized manner that is meant to be updated and upgradeable as your business evolves. It contains all the elements of a business plan and much more. The traditional business plan is a requirement from the financial world to receive funding but it doesn’t necessarily contain all the documentation elements you need to effectively run your business. Learn how to document the right things in the right places.
The strategic plan is the true working document to be used as an internal communication tool, a management tool, a planning tool, and a execution tool. Remember the business plan should be used more for a communication tool for funding not to manage your business.
Principle Eight--Understand consumer behavior not just Target Market.
Do you know what motivates people to buy? Do you know what motivates people to buy from you? If not, you have a lot of research to do. Not only do you have to understand who your target market is but you also have to understand their buying behaviors. To start you have to understand consumer behavior and remember you are a consumer so let’s begin with you. Let me give you a case study and keep in mind that you can’t change the dynamics of the case…
So you have to go to two stores, the grocery store is on the right and the discount store is on left. Remember you have to go to both. Let’s say you need to buy deodorant, which store will you buy your deodorant from? Again, you have to go to both.
I’ve done this scenario many times – here’s what happens…
Some people say I’m going to the discount store because the price is better – so I say “the price is the same.” Some people say I’m going to the grocery store because it’s more convenient for me – so I say “but you have to go to both.” Some people say they will go to the grocery because the packaging is better – so I say “the packaging is the same.”
Of course I drive them crazy, The point is – understand the motivation of your target market to buy your solution over your competitor. And the motivations are not always price, convenience, and packaging – it could be many other things.
Principle Nine--Your business should be a Profit-Producing Investment.
Think of your business as an investment. Just like investing $300 a month in a savings account to yield a certain % per year. How much are you investing in you business a year and what returns are you getting on that investment? Do you know how Mobilize Your Money?
Let’s say I’m holding up a $1 bill – most people would say that its value is $1 which is true but if you focus on profits you might say that the value is $1000 because you know hot take $1 and turn it into $1000. It’s really easy to start a business and make money but it’s much harder and more satisfying to build a business that’s profitable over time. Learn how to mobilize your money now! Ask a million questions, learn what to do with your money, learn how to make your money grow.
Also, pricing your solution the right way is critical – are you selling your company short? If you cut your prices make sure you’re not cutting into your profits. Set the right price with good profit margins vs. focusing on making the deal. Some deals are not meant to happen.
There are about 15 more principles I could share but I'm hoping this is enough to get you thinking differently about your business. It's OK to know basic business principles, but when you understand and implement them you will be able to take action and create a results oriented marketing program.
Understand Your Business to Understand Marketing.
- © 2005 Effició, Inc.
- Sherese Duncan is the Author of the Award Winning Ezine, The Street Perspective, a bi-weekly eZine for small biz owners who want straight-to-the-point simple strategies to increase profits and increase cash flows. Sign up for your free profit strategies at www.thestreetperspective.com