By Susan Trivers, for Edwardsturm.com.
Executive owners of small businesses, including family owned businesses, have tremendous opportunities for growth in the next couple of decades. The qualities characteristic of closely held businesses — everyone being intimately connected to the mission, responsiveness and flexibility, internal flows of capital, and engaged ownership — are fertile soil for growth. Nonetheless, there are still pitfalls that owners have to be aware of. Below are the 4 major traps that hold small businesses back from fully exploiting opportunities.
Once you understand these traps, you can act on the alternatives and generate dramatic revenue growth and substantially build owner wealth.
The 4 Traps
These traps are self imposed. Which ones do you recognize as restricting your revenue growth?
- You are trapped by the myth of “low hanging fruit.” First, consider how this would make a buyer feel were he to learn that you are targeting him because you think he’s a low hanging fruit. The implication is that he’s easy, only interested in low value, low quality products or services. “Pick him once a season and ignore him the rest of the year.”
Second, your focus on low-value and low-quality buyers forces your company to create more low quality, low value offerings. You spend money to build this low-quality, low value business, taking your resources away from higher quality and value. You create a never-ending cycle of offerings that appeal to low hanging fruit. Increase your value and the value of your buyers in order to increase your revenue.
- You are trapped by conventional wisdom and “best practices.” Many industries promote and publish the trends that are popular and it’s so easy to feel that “they” must know best. So you do what everyone else does and get what everyone else gets. Remember this: “best practices” are the opposite of differentiation. If you’re doing what is “best,” so are your competitors. Interestingly, the preponderance of experience might demonstrate that the only businesses making money from “best practices” are the ones selling them.
- You are trapped by risk avoidance. Create your risk profile by thinking of a continuum. At one end is complete risk avoidance (1) and at the other end is extreme risk taker (10). If your risk profile is under 6 you are trapped by fear or a desire to never fail. The principle of a relationship between risk and return is immutable. Returns increase as the level of risk increases.
- You are trapped by low ambition. Again, think of a continuum where 1 is “I just want to pay my bills” and 10 is “I want to live an abundant life.” Any executive owner who is lower than a 7 on their ambition assessment is going to see minimal growth, no matter the opportunities that come their way.
Release Yourself from the Traps
The GO (Growth & Opportunity) Curve shows executive owners how to dramatically increase revenue in two ways: 1) offer more “Uncommon” and “Exceptional” offerings and 2) move your buyers and attract new buyers to be regulars and enthusiastic fans.
Since the 4 traps are self-imposed, you have the power to release yourself from them. Here are some actions you can take:
- Decide that you will offer high value and high quality to your best buyers. Ban the phrase “low-hanging fruit” from your vocabulary and your company.
- Make “What value do our buyers get?” the one question everyone asks all the time.
- Create Uncommon offerings. Uncommon offerings are significantly differentiated from those of your competitors and will give you extraordinary profits for 1 year.
- Create Exceptional offerings. Exceptional offerings are unique, high value, and give buyers status, convenience, superior service and the satisfaction of knowing they are one of the few to purchase these offerings. Exceptional offerings will give you extraordinary profits for 1-3 years.
- Instill the desire to create Uncommon and Exceptional offerings in everyone in the company. Encourage all employees to think about what your best buyers would love. There should be no organizational boundaries or restrictions on who can make recommendations for new offerings.
- Disengage from industry associations that promote similarities. Decide that if the industry is taking X path, your company will take the A road.
- Be deliberately contrarian by challenging every bit of conventional wisdom and creating your own lexicon of wisdom.
- Increase your willingness to take risks. Make a list of reasons why you’re at your current risk profile and then write down 3-4 ways that you will push your risk profile higher. An executive owner who seeks dramatic revenue growth has to have a risk profile of 7, 8, or 9.
- Boost your ambition level. There is an enormous difference between setting a high goal and having the ambition to achieve that goal. You can put any revenue number on paper. Unless and until your ambition is high enough to do the work to meet it, that number is meaningless. When you have a higher level of ambition, you will make every decision and choice based on reaching that goal rather than hoping it magically takes care of itself.
The 5th Trap
There’s one more trap that executive owners have to beware of and avoid. That’s the trap of listening naysayers who offer “advice” for your own good.
Some of the naysayers are just pessimistic people and live life thinking the sky will fall at any minute. You probably know some people like this. Often in owner operated or family owned businesses, these are family members or close friends. They work at companies or corporations owned and run by other people and do not have your frame of reference. They like to pass on horror stories they’ve heard from friends or friends of friends. It’s important not to engage with them because they’ll infect you with their own doubts. You must relentlessly ignore them.
A personal example from my experience: I demonstrated with hard numbers to one business owner how, using a new employee, he could increase his revenue by 33% in one year. Despite the hard numbers, this owner talked the idea over with two friends, who said it would be hard to seamlessly integrate a new person into the shop and that it would take some time to train a new front desk person. So he decided to stick with underutilization of his space and 33% less revenue than is possible.
Even more importantly, you must only listen to advice from people who have achieved what you want to achieve, not from people who are confined by the 4 traps. When a fellow owner says, “that won’t work” you know that that person is low on both risk and ambition and likely trapped by low hanging fruit and conventional wisdom. A marketing expert or business coach needs to have a track record of revenue growth through the development and sale of high value and high quality offerings to best buyers. One specific trap is those who offer social media and electronic platforms to grow your business quickly. If they are successful at all, it is because they’re selling to people like you. Ask them how many owners like you have achieved the results they’re promising.
Pursue Growth and Opportunity with Energy and Enthusiasm
Closely held businesses, owned and operated by executive owners, have tremendous opportunities for growth. Be sure you release yourself from the traps and take aggressive and enthusiastic action to maximize revenue growth and build your owner wealth.
Do you have any questions about this? Any comments? Let me know below, I’d love to hear from you!