It’s easy to get caught up with lots of ideas and exciting opportunities to pursue in business, but unless you get the business basics right, chasing or implementing the latest whizz-bang idea, management fad or marketing strategy won’t get you the results you’re looking for. Instead, they’ll be a distraction that you can’t capitalise on.
The basics I’m talking about are the three Cs: Clarity of focus, competitive advantage and cashflow. Get the three Cs right first and you’ll be in a better position to make decisions and take advantage of opportunities when they arise.
Clarity is about knowing why you’re in business and what you want to achieve. This means you need to have clear goals that you’re pursuing as the business owner. They might be financial in terms of dollar return on investment, profit or business value or non-financially driven, such as control or lifestyle.
Once you know what you want, you need to have a plan for achieving those goals. Your plan should be specific and address what the business needs to deliver, to allow you to achieve your personal goals. It should also outline the activities you’re going to implement to produce the results that deliver what you need.
A large part of this will be having clarity around what products or services you will sell, and the customers and market segments that you will sell to. Having a clearly defined product/market fit is a key to business success. Many businesses struggle because they try to be many things to too many people.
Conduct a review of your current range of products and services and assess where the sales and best margins are coming from. Many businesses find that 20% of their customers generate 80% of sales, but it’s not unusual to discover that 20% of your products generate 80% of your sales as well.
Clarity of focus also helps you to filter out the noise and stay focused on what you’re trying to achieve, and can be a motivational reminder when you need one.
Why should your customers place that vital first purchase with you and then keep buying from you after that? Even if there’s market demand, you still need a sustainable competitive advantage to convince customers or potentials to choose you ahead of your competitors.
Most small businesses don’t have the market share or buying power to compete on price so they need to focus on value, differentiating features, niche positioning or using your strengths and innovation to distinguish yourself from your competitors.
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