Small Business Drivers Of Value

As I educate and train small businesses across the land in various and sundry places, trade associations and higher education; I am often asked the million dollar question by most entrepreneurs “How does one create and sustain value as a small business?” Moreover, “Where and how does one intelligently invest time, energy in efforts in creating a Unique Value Proposition?”

The answer is actually quite simple and not overly complicated. Hopefully one has conducted a thorough market and competitive analysis at the concept and/or ideation phase of considering the undertaking of launching a business case.

A solution to a problem, or the ability to address a need should have been identified. In the process of identifying your customer and market segment, one should have also conducted enough research to have identified that market as a growth market or “Blue Ocean” opportunity. Doesn’t make a lot of sense to enter a market segment as a “New Entrant” in an eroding market; you are out of business before even getting started.

Revenue Growth

As noted in the infographic, as a new business case 60% of the focus of your time, energy and resources will be spent on generating revenue. Identifying with your “Buyer Persona’s”, and moving with them through the Buyers Journey. Whether that be educating them in the “Awareness Stage” of the Buyers Journey, nurturing them through the “Consideration Stage”, or positioning your product or service when your client/customer is at the “Decision Stage”.

Either way, you must be capable of delivering a differentiated value proposition in order to create and sustain “revenue” for your business. Ongoing and consistent “Cash Flow” that flows to the Top Line or Bottom Line in the form of “Profit” is what the game is all about.

This is your primary focus and where you will spend the majority of your time from Start-Up through Year 2.

Cost Reduction

At the end of year when you sit down with your “Trusted Business Advisor’s” as you should, you now begin to be properly educated and trained on raising your level of “Financial Intelligence”. This is where an additional 20% of your time, energy and efforts will be spent.

Your ability to take in and interpret the data/numbers on your Cash Flow Statement, Income Statement, and Balance Sheet is vitally important and a competency you should be developing.

The behavior of a company’s costs and its cost position are a result of the activities¬†¬†company performs in competing in its market segment. In a meaningful cost analysis, you will learn to identify costs within the day-to-day business activities and not the costs of your company overall. Each value activity has its own costs associated to it, and once you learn how to reduce those costs; you ultimately increase your revenue streams and hopefully your profitability.

It’s all right in front of you in your financials!

Other – Strategy

Now that you are feeling pretty good about yourself and the fact that the business is actually making money and has established itself as a recognized brand in the marketplace – the real fun and hard work begins!

The legendary football coach Vince Lombardi started training camp every year of their dynasty with the same opening statement to his players, “All the hard work and everything that you have done up until this point to get you here as World Champions, will not be enough to keep you here as World Champions. You are going to have to get tougher, smarter and better than you have ever been before if you want to stay here as World Champions”!

The same is true for the great game of business.

You must now spend at least 20% of your time on “Strategy”. How to grow and increase your “Intellectual Property” advantages. What “Technology Enhancements” will make you better and more efficient in delivering your value proposition.

Securing the necessary coaching, mentoring and business/industry education and training to become a true entrepreneur; one who works on his/her business, not in his/her business.

Sustainability Over Survival

This is by no means a comprehensive or exhaustive end-all be-all solution. Launching and standing up a business in today’s global economy is an intimidating and daunting task.

It takes courage, tenacity and an enduring amount of faith to realize a “Vision”; however it can be done by following these few simple steps to “Sustainability Over Survival”.

At Smith Gruppe, we assist our clients in developing a “Sustainability Over Survival” mindset. Our clients not only survive, they “thrive” as a result of our comprehensive Trusted Advisor resources. Call us today for a FREE Consultation at 980-221-9377 or visit us at www. SmithGruppe.com and click on the “Our Services” tab.

 

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