We just did some research and I am thrilled that we have active clients from 120 countries from around the world. I’ve probably been to about 37 countries myself, but we have people from 120 countries as active clients or students! They are either focused on personal performance (how do I become the happiest, strongest, healthiest and best version of myself) or they are working on relationships (now that I have honed my life and attained so much, how do I find someone special to share all this with).
My wife often asks me, how can I make your dreams come true? I always tell her, you are my dream come true- just spending each day with you is my dream come true. One of my goals every year is to take one of her goals, dreams, and desires and make it come true. Luckily, she loves animals, so each year we make it a point to go somewhere around the world to find some experience she has always wanted to have.
One of my favorites was when we flew to Chengdu, China for her to go and snuggle a panda bear! We’ve flown to lots of places like Australia for her to cuddle a koala and feed a kangaroo. We’ve also flown to the Bahamas to swim with the pigs, and so on.
Our topic today is optimizing your business. Once you’ve found that special person, you are going to need a way to take care of them and contribute to your community and your family and those you care about. We help you by making it possible for you to build and optimize your business.
Today we shall look at five things that can take you out of business. You can use this more or less as a checklist to make sure none of these things are a current threat or danger to your business.
1. You built the wrong thing
According to research, this is the biggest reason that businesses fail. There is this old saying in movies that if you build it, they will come. That’s not true in business. You can build your passion, your joy or the thing that calls to your heart and the truth is, they will not come.
There is a difference between building what you want vs. what the market or clients want. Most people who fail very early in their business (and it can also happen to longstanding companies that have been around for decades) try to innovate and they accidentally build what they think is important instead of what their clients in the market want.
And so the number one thing you have to do is conduct some research and we have a guide with the exact questions you have to ask to ensure that what you build is exactly what your target audience needs, wants and desires. Needs are like oxygen, you can’t survive without them. Wants are like a house with a nice view, you can certainly survive without it but you really want it! Desires are little things you probably judge yourself for wanting them and you may not tell anyone about them because you think you shouldn’t be wanting them.
As a business, you want to make sure that you deliver on your clients’ needs, wants and desires. But, the first step is that you have to ensure that you have the right set of questions to get a good understanding of the needs, wants and desires of the people your business is targeting. Don’t build your business for the wrong person!
2. You get no traction or have no processes after starting the business
Businesses that don’t get traction often lack a system to get them leads and make sales. We call this lead acquisition and lead conversion. And what we mean is you actually figured out what the industry wants, you figured out what people really desire and you decided you are going to serve it up, you’re absolutely going to deliver for those people, and you go out and do the work.
But, if you think of a scale of 0-10, how would you rate the amount of leads that you have to generate sales for your business? Are you at 4 like a gardener trying to water crops with a leaky faucet? Are you at 7 like a fireman with a powerful hose? Or are you at 10 with leads that resemble a huge volume of water flowing through the Hoover Dam?
If you have trouble getting leads, we have some simple processes we can show you so you can create a raging river of leads.
The second part of this killer of businesses is lack of processes that consistently convert the leads you get into constantly paying customers. If you don’t, I’d imagine getting hundreds of people who show up saying they are interested but you don’t have a process to convert those interested people into paying clients. That would be a shame!
3. Over capacity
You may get lots of traction, and at some point you begin thinking more is better as you grow bigger. The problem with endlessly wanting more is that at some point, you will reach your maximum capacity. We just did a whole month’s training on this. We have businesses that are under-performing (yellow), those with average performance (green), others with above average performance (orange) and finally businesses at maximum capacity (redlining because you are straining the business).
Our first question normally is, where are you on that scale? Are you under-performing, having average performance, above average performance or at maximum capacity? The danger in pushing the business to maximum capacity and keeping your foot on the pedal is that the engine could explode at any time.
How do you keep your business in the area between above average performance and maximum capacity? In that zone, you are doing as much as is possible but at the same time doing what is sustainable without threatening the existence of your business.
And so one of the biggest mistakes people make is pushing their business to max capacity to the point of affecting the quality of their offering. We’ve got to figure out what your max capacity is; that point where your quality is at its highest, customer satisfaction is at its peak, and your revenue (or more importantly profitability) is at its best.
When we can help you keep your business in a place where those three parameters are at their best, yours will be a very healthy business that is growing at a steady pace. Getting too big too fast can kill your business.
4. Looking at the wrong numbers
Paying attention to the wrong numbers can kill your business. For example, someone may tell you that their business is doing great because they are getting $5 million in revenue. Their expenses are $200,000, which is good considering the revenue generated. When asked about profit, the person will tell you $4.8 million since they have deducted the $200,000 in expenses from the revenue.
Pause for a moment and think about it. Do you want this business that gets $5m in revenue each month and has $200k in expenses and $4.8m in profit? Most people would jump at the opportunity to own such a business.
What if I told you that business was less than 30 days away from bankruptcy? You may think that there is no way this business would go bankrupt given its revenue, expenses and monthly profit.
Taking a closer look at the balance sheet of the business can reveal how it is possible for the firm to go bankrupt. For instance, the balance sheet may show that they have $50,000 in cash, their accounts receivable is $4.75 million. Would you still want this business?
That is how business owners get it wrong. They get their financials and look at the profit and go “bingo!” without realizing that they could go bankrupt any time because their cash position isn’t healthy.
A business with $50,000 in cash can go out of business in a month or be forced to take on debt if their payroll is $100k and their monthly revenue is $5 million but most of that money is tied up in accounts receivable. This happens when you are looking at the wrong number (profit) instead of paying attention to cash at hand or in the bank and how they can quickly convert the accounts receivable into cash.
If you are having trouble determining which numbers to track in your business, you can call us and we talk about how we can be of help in managing your numbers and getting you profitable very quickly.
5. Concentration risk
This means you get too much of your business from a single client, your business is highly dependent on a single vendor, your business relies heavily on one person/employee, or you have one software upon which your entire business runs. If your business is too dependent on one of the people/things mentioned above, you have concentration risk.
If that client decides to stop doing business with you, your company is out of business. If all your inventory comes from one vendor and they go out of business or decide to hike the price at which they sell stuff to you, you will go out of business. If something happens to the one person or employee that your business has been relying on, you’re done.
I would use the list above as a checklist. Have I built what I want or what the market wants? Do I have systems and processes in place to get leads and convert them into buyers? Am I operating within my maximum capacity or am I over capacity? If you need help in determining your max capacity and growing it steadily through people, processes and dashboards, we can help. Last month we had a training on people, this month we are looking at processes. Are you measuring the right numbers? Are you too concentrated on a single client, a single vendor or person?
Those are five simple reasons that can take you out of business. If you need help with any of those factors, go to highperformanceventures.com where we have a quiz that you can take to determine how healthy your business is. If you want to take that quiz, shoot me a message that says “business health quiz” and I will send you a link where you can find that quiz.
I hope this has been helpful. I hope you use it. I look forward to seeing you soon for another of these trainings!
To Your Success,