This is the second in a 5 part series of articles about improving your business. it is aimed at those people who run a small business but could just as well apply to anyone earning an income. In the article I’ll focus on one or two main points around the theme but remember there is a lot more to explored in each topic.

The 5 topics that I will cover in these articles when it comes to business are:

1. Reason

2. Revenue

3. Resources

4. Risk

5. Reduction

These topics are drawn from the mentoring model I use with my students and is somewhat unique to other methods that are common place. This means you’ll need to prepare yourself for concepts that are very different from ‘industry standard’ so I encourage you to keep an open mind on what I present here and at least test it against your current version of business reality. Please feel free to provide any feedback on what I present here either in a comment or to me directly. I welcome all feedback and opinions. All I ask is that you be respectful because if you don’t I reserve the right to remove or ignore such comments.

If you haven’t done so already, I encourage you to read the first part in this series – Reason – to give you a better context of my thought process. Also don’t forget that this is only part 2 of 5 in series and I’d encourage you to read them all and then let me know what you think.

Now part 2 – Revenue

Once people have the reason why they are in business the next question to ask is how they plan to generate revenue? The reason that you should focus on revenue is that revenue is about unlimited opportunity. If you focus on expenses and cost cutting there will always be a limit to can be done here, however there are no limits when it comes to revenue. You can generate revenue from multiple streams, multiple products, multiple locations, etc and there is always opportunity to generate more revenue, you simply need to put in the effort. So don’t let anyone tell you that there is not the opportunity to earn more revenue. There is, any the blocker is simply the work involved to achieve that. However, if you are already clear about your reasons in business then you are willing to do what it takes to generate the required revenue. It is no longer hard work, it is simply what you need to do to achieve your goals. That is why I say that you need to get your reasons in business right first.

When it comes to revenue there are really only two important questions that need to be answered. The first is:

Are you selling something people want to buy?

You can have the greatest product in the world (in your own mind) but if no one wants or needs it you really aren’t going to sell a hell of a lot are you? Along with considering whether people would buy your product you also need to consider whether people will continue to purchase it. Have a look at desktop computers as an example. Yes, people still buy desktops however they are purchasing fewer and fewer in favour of things like tablets and mobiles. So the percentage of people who want to buy a product like a desktop computer is actually declining. To have strong revenue in a business you really should be looking for products and services that are in or will be in high demand rather than decline.

The second question, just as important as the first is:

Will people actually pay you for what you are selling?

Lots of people want a high performance supercar like a Lamborghini Aventador but few have the means or the willingness to pay the significant price tag for something like this. Let’s again look at technology offerings here. One of the reasons that people regularly choose tablets and mobile devices is that they are generally cheaper than desktops. They are also typically available on a monthly instalment plan for a low per month cost. The fact that over time these costs may up to more than the cost of a desktop belies the fact that most desktops are a total upfront cost while a mobile device is the total cost spread over a few years which people are happy to pay. Part of the concept around payment is not only about the amount they are willing to pay but also how that payment will be transacted.

If the answer to the above two questions can be demonstrated in the affirmative the next consideration when it comes to revenue is how you plan to increase this because at the very least, the longer you are in business the more your expenses will increase and if you plan to expand your business you are going to need more revenue. It is therefore important to always be planning for revenue growth.

At its most basic:

Revenue = units sold x unit price

Given that formula, it seems pretty simple to work out how to increase revenue. Most people would say that you increase units sold or you increase unit price over time. Doing either of these will certainly increase revenue but it will only increase it linearly. What many overlook in this simple formula is the opportunity to increase revenues exponentially. The way that you do that is increase both units sold and unit price simultaneously. Remember, your aim in business is to maximize the revenue you can generate for your efforts (i.e. investment).

Doing so should be what you are aiming to achieve when it comes to revenue. This is really going to provide you with the growth engine your business deserves and allow you to achieve your goals. However, doing so is not simple or straightforward, it is hard work and requires a well-developed plan but it is certainly attainable. If you approach revenue with the aim of increasing both units sold and unit price and maybe only achieve an increase in one then you are no worse off than if you only focused on that now are you? If you want to really be successful in business look to accelerating your units sold and the unit price, simultaneously. That should always be your goal.

There has never been a better opportunity than there is today to increase the units sold. The reach of Internet provides a business with access to almost every person on the planet, instantaneously. If you want to grow your revenues you really need to be offering something via the Internet. As for increasing the unit price that is also easily accommodated in this Internet age. Platforms like Azure, WordPress, Amazon and the like allow you to quickly and easily build products and services. They allow you to create mobile apps, they allow you to create web services for any demographic and they do this all without the need for huge investments in infrastructure. Tools like Google Analytics, Ontraport, Infusionsoft and the like make it easy to understand what you market wants and will pay for. Metric collection and analysis has never been easier.

I hear the argument from many people that the only opportunity they see to remaining completive is for decreases in unit pricing. If you are in a commodity market I agree, but why do people buy high end luxury cars? Why doesn’t everyone drive the cheapest car they can find? Why do makers like Aston Martin and Rolls Royce continue to prosper even in poor economic conditions? It is because they understand their market. They understand the emotion of their product and they build products people are willing to pay for. Don’t fall into the trap that just because your peers are talking down the opportunities in the market there isn’t revenue just waiting to be collected. Remember, money is the easiest thing to get more of in the world. You just have to put in the work, because for most, it simply doesn’t magically appear.

So there you have it, the second item I’d suggest you consider when it comes to business, how you plan to generate ongoing revenue for the business. If you have no path to revenue growth then you really don’t have a business and you test that revenue path by answering the two questions I proposed – Does the market want you sell? And secondly, are they prepared to pay for it? If you can annunciate those in the affirmative then the next target to aim for is to generate exponential revenue growth by selling more items and selling them at higher prices. Achieve that and revenue will never be an issue. However, it won’t simply drop in your lap, it requires a lot of time and effort but never the less should be your goal.

Once you have your reason and revenue sorted the next item to focus on is resources which I’ll cover in the next blog post in this series. Remember, I’d love to hear what you think about my ideas here. Have it got it right? Have it got it wrong? Do you have you own twist on this that works for you? I’d love to hear, so feel free to comment or contact me directly (director@ciaops.com).

Image courtesy of luigi diamanti at FreeDigitalPhotos.net

This is the first in a series of blog posts about improving your business. This method is based on the mentoring techniques I use with my students. It could just as well be applied to anyone who draws an income, however it is really aimed at those people who run a small business. The idea is to look at single concept in each blog post rather than getting to bogged down in the full concept. If you like what you read let me know and I’ll keep expanding on these topics in time.

The 5 topics that I will cover in these blog posts when it comes to business are:

1. Reason
2. Revenue
3. Resources
4. Risk
5. Reduction

You need to be prepared for concepts from the ‘other side of tracks’ here. I see so many others providing business growth solutions and advice which in my opinion simply don’t work. They over look the fundamentals and try to get people to apply complex marketing and sales techniques on a shaky foundation. That means their chances of success are low, which again is what I see. My aim in these post is to provide you the foundation of what you should consider before looking to other solutions of business growth. Once you have these good foundations then and only then can you add the additional offerings I see out there in the market and then their chances of success are almost guaranteed.

So let’s kick off with the first part – Reason.

Here’s a little experiment I’d suggest you try. I call it my ‘BBQ test’ but it works equally well anywhere. Next time you are talking to your peers ask them why they do what they do. Ask them why they run their business? Most importantly listen closely to exactly what they say and the words they use because that will tell you a lot about their business and themselves.

Most of people whom I mentor on business or ask this question of (say 75%) simply look at me blankly when I ask and can provide no real reason for why they do what they do. Most simply do what they do every day purely because it’s the routine they have become used to. In other words they are operating on auto-pilot. This means that they are travelling on a journey without knowing the destination or any points along the way. How can you get somewhere without knowing where you want to get to? Seems silly but most people in business (and perhaps life) really have no clear idea or plan of what they are looking to achieve with their lives.

The next 20% or so do have a reason why they do what they do and will cite things like ‘more’ money, ‘better’ lifestyle, ‘extra’ freedom but all these terms (more, better and extra) are indeterminate. What does ‘more’ money actually mean? One dollar more? 10,000 dollars more? 100,000 dollars more? See what I mean? If you don’t define exactly what ‘more’ means then you fall into the trap of acceptance and that acceptance can be quite mediocre. ‘Oh, I earned a dollar ‘more’ than last year so I reached my goals’. Acceptance is purely and simply a cop out, worst of all you are lying to yourself and creating a situation where you are remaining unfocused because your mind is trying to tell you one thing to mask what your gut is really telling you. Acceptance is living a lie and wasting energy on excuses which really should be focused on achieving your goals but it is certainly the easy path that many take. In short, most are afraid to actually define their goals specifically because if they do they may fail to achieve them. Well guess what? Not specifically defining your goals will guarantee that you don’t achieve them and isn’t the chance of trying and failing better than not trying at all?

The remaining 5% of business owners know EXACTLY what they are after. They want to pay off their mortgage in 5 years, they want an Aston Martin DBS, they want to work 4 days a week to spend more time with their kids, or $1 million, and so on. See the difference? Each of these goals can be precisely measured and the progress towards mapped. It doesn’t matter what the goal is, what matters is that it is specific. Every person will have different goals because it is what is important to them, not to anyone else. You’ll also find that these people have multiple goals that allow them to continue to achieve even when they reach an initial goal. What this 5% have in common is that they have at least one very specific and personal goal they are looking to achieve, that gives them the focus and drive. That in short, allows them to stand out from the other 95% of the population and achieve what they want out of life.

It is important to remember that the way you make a living is separate from the person who you are. Your business is not, and should not be you. It should be a means to and end that resides outside that occupation, yet how many people do you know where their occupation totally defines who they are and in fact consumes their life? They are always so ‘busy’ with their business they have little time for family, friends and actually living? As I’ll cover in the upcoming resources blog post we are all given the same amount of hours in the day, yet an indeterminate amount of time on this planet. How you use your time is up to you, but remember, once spent you will never get that time back.

When people come to me seeking help with their business I start by asking them what they want from their life because that helps set the direction. if it isn’t there then it no use applying any other techniques. Once they have these goals they can then start mapping out a career path that allows them to achieve this. If you don’t have your reasons straight you will find it much more difficult to get through the inevitable tough times because your goals are not tangible enough. You’ll be surprised at the difference having very specific goals can have on your motivation and way you look at business. Of course your goals will change over time and as the situation changes, however they should always be there, like a guiding light to focus you on the task at hand. To focus you on leading the life you want, not simply working for works sake.

So ask yourself why you do what you do? What purpose in life does it serve? Chances are, if you don’t know and can’t annunciate it to others clearly you are putting any success down to luck which is generally not very good or very determinate. Opportunities come at the strangest times and in most cases unfocused people are never ready for them so let them pass in the mistaken belief they will come around again. Relying on luck is a loser’s game. Remember, Las Vegas was built on losers where the only winners are generally the casinos who remain very focused on what they are trying to achieve.

You can of course have multiple reasons for doing what you do but you won’t get anywhere unless you have at least one. That’s all it takes to get the ball rolling, one simple yet specific defined goal will give you direction and purpose. Once you do you’ll be surprised at how quickly that goal can be achieved and then you’ll need to find another, which is a good thing because it means you are progressing and more importantly living the life you want. That is the key to success and perhaps more importantly happiness, achieving your goals and then settings new ones. It can become quite intoxicating after a while once you starting checking off achievements in short order. The clearer and more defined goals are, the easier they are to achieve. Simple.

As I said in the beginning, if you don’t believe me about having a reason for doing what you do go and ask your peers and listen closely to their responses. I’d be pretty certain that at best you’ll here generic phrases like ‘more time’, ‘extra money’, ‘increased freedom’ but ask yourself whether this is in fact true for these people? I’d contend that if you look closely it isn’t and that they in fact don’t really know what they want and simply default to work because they know no better.

So don’t fall into the trap of doing something without a reason. Be very clear in what you want to achieve. Know your end destination because only that allows you to successful start on the path in that direction.

If you have any question or comments on this please don’t be shy to let me know. If you are interested in the formal mentoring programs I offer also please don’t hesitate to contact me. Remember, this post only scratches of the surface of what having a reason is all about and should only be thought of as a starting point for further exploration but hopefully it has provided you something to ponder on. If it does, then I have achieved my aim.

Watch out for the next part in this series – Revenue.

Image courtesy of luigi diamanti at FreeDigitalPhotos.net