Getting Back
to Basics
When facing tough business challenges, it always helps to go back to the basics
What is the Market?
When a business struggles, it's helpful to go back and validate the size of the market opportunity? Is there a big enough market for what we do? Have we identified the right customers? Are there niches that we missed?
Are We Reaching Them?
Assuming the answers for those questions are all "yes," then we have to examine how effective we are at reaching an audience so they know you exist. If they don't know the right things about us, how can we reach them?
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Interested in Buying
Once we know we are reaching the right people, how can we convince them to buy from us instead of someone else?
What's Our Message?
How do we convince people? We need to craft an effective pitch or message. How do we do that? We do that by really understanding what they need and want and showing how we provide it in a unique way
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How Well Do We Serve Them?
Once they reach us, how do we treat them? Is it a positive experience they'll remember and want to share with their friends?
What's it Cost to Serve Them?
Many businesses forget to measure the cost to service, but it is a very important cost to measure. If it's costing you more to serve the customer than you make, we either have the wrong customer or we're over serving them
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What are Our Costs?
How much does it cost to keep the lights on? Pay our employees? Pay ourselves? Pay our bills?
Are We Charging Enough?
We need to make sure that our customers will be willing to pay enough to cover both our variable and our fixed costs. Many times we forget to factor fixed costs into our pricing, and that's a costly mistake
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How Are We Paid?
How long does it take us to get paid? Is it longer than our payroll period? rent? etc? If so, we have inherent cash flow imbalance that we will need to manage
Cash Imbalance
You can still be profitable but be low on cash, especially if you are seasonal business or work with customers with long payment terms. In this case, having enough cash to cover the gap is important
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Do We Track Performance?
If all we are doing is reconciling bank statements at the end of the month, we're not doing enough. We should have metrics for each of the steps we've already covered
What's Our Plan?
If we don't have a plan, how can we know where we're going? If you don't have a business plan, that can cause problems. Even if you have a plan but never look at it, that's just as problematic
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