We are on week three of our business strategy bootcamp. Week three is “Define the Company.” When you sit down and try to do this for your business, you will find out it is actually quite challenging. So let us get started answering the question, “What is a Business?” Watch now!
PDF Worksheet: https://wolvesandfinance.com/wp-content/uploads/2019/11/Ep-3-Worksheet.pdf
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To put this in context, last week we talked about your goals. This week is about defining your business. In the following weeks of this Business Strategy Boot Camp, we will be taking that business entity and positioning it in an area of competitive advantage. This week is a very important step. If you do not have a firm understanding of what makes up your business, you will not be able to move it forward to where it needs to go.
The easiest way I have found to define a business is the Five W’s. Who, What, When, Where, Why. We are going to answer these five questions, but I am going to have you answer them in a very specific way. What I am doing is encouraging you to be very specific about how you define your company.
The first thing I want to emphasize, is that every business is in the business of sales. This includes for-profits and non-profits. If you do not have positive cashflow, you do not have an organization. It will be so helpful for you later on, if you define your business in the context of selling.
- Who is selling?
- What are you selling?
- When are you selling?
- Where are you selling?
- Why are you selling?
Already, you can see we are starting to focus the definition of your business organization.
Let us start with the first W: Who. Every business represents a transaction between two people, the business and a customer. We will define those two people as our Who. Let us start with the business. The question “who is selling?” is referring to the head of a business or the CEO. Who is your figurehead? It is NOT referring to the sales department. Because on a broader scale, when someone buys something from your business, they are buying from the person at the top. Their expectation is that leader will run an effective organization that can fulfill their order. They are not really buying from the sales person. It is ultimately the CEO who is selling.
Now let us talk about the customer. I am going to keep this fairly general, because we could spend three months talking about defining your customer. There are a lot of tools and techniques out there to develop an avatar for your exact customer. That is very useful, but for this exercise we are going to keep it general. Because when everyone thinks about their ideal customer, they usually think the same thing. Your ideal customer will be someone with available budget, that is a raving fan, repeat customer, that wants exactly your product, with minimal effort, and is willing to pay a premium for it. That is pretty much everyone’s ideal customer in a nutshell. So your CEO and your ideal customer makes up your Who.
Next W: What are you selling? You should have already addressed this in your goal when we talked about whether you sell a good or a service. Pull out what you wrote from your worksheet last week, and review those questions. The problem with a lot of companies is they sell a lot of different things, and they are always expanding their product lines. It is so much easier to manage a business that is focused. See if you can answer this question for your company. When people think about your company, what are you selling? What product comes to people’s minds? And is that product what you want to be selling? There is no right or wrong here. You are just trying to define what your company is about, because our task is to define a strategy for this product. If you are selling hair products, you are going to have a different strategy than if you are selling legal services. If you are selling both hair products AND legal services, that will be more challenging to come up with a compelling business strategy. But if that is the business you want, than go for it. This is up to you and your dreams.
The next W is “When are you selling?” This is important because there are so many different options today on how you set up your business. Are you selling 24/7, 9 to 5, only 4 hours a day, or only at scheduled appointments? You might be an accountant that only works one quarter a year during tax season. Depending on your goal, there are many different ways to run your business, but it is very helpful to write down exactly what you are going for.
The next W is “Where are you selling?” This is a question I feel people do not spend enough time thinking about. This is the one question that is hard to change once it is established, because you start setting up your life around a specific location. Ask yourself the question, “Where do you want to live?” Really spend some time thinking about this question. A lot of people just end up living wherever they end up, but you will be happier if you are conscious about the location of your business. A lot of industries are also localized in certain locations. So if your business is in the wrong spot, it is going to be harder to make money. You also need to think about what elements of your business are online and performed remotely, and what needs to be handled locally.
And the final W is “Why are you selling?” This is your mission statement. This is the Why behind your business. This is something almost every company gets wrong. People usually write Mission statements about how your company is improving your customer’s lives. Wrong. That is not really the reason why you are selling.
I knew you were going to have trouble with this, so I tricked you. Last week, I had you write down your goal. You wrote down your personal motivation that was driving you to run this business. I am guessing your goal had something to do with making a lot of money. Guess what? I am betting your customer has the exact same motivation. You are not there to make people’s lives better. You are there to make money. And your customer is there to also make money. So there is a selfish motivation that we never really talk about in our mission statements. Let us be really honest, because we are developing your strategy and it is not going to help if you dilute yourself about your real motivations.
Just to be clear. Do not write as your mission statement as the reason why you are selling is because you are a selfish jerk. You have to wordsmith this a little or the person in your marketing department is going to have their head explode. My point is that you recognize the profit driven motivation as part of your “why.” Money is not a bad thing. Money is a signpost that is showing you where value is being created in society. Money is not something we should be running away from. It is something to be celebrated. So when you are writing your why, look back at what you wrote for your goal. That is your why for you and your customer.
In the description below this video, there is a PDF document you can download with questions to help you think through this. This should only take you about 30 minutes. Just think about your business and see if you can define the Five Ws.
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Neither Zach De Gregorio or Wolves and Finance Inc. shall be liable for any damages related to information in this video. It is recommended you contact a CPA in your area for business advice.