For any business to be successful, they need to have a good plan looking at the 4Ms of business:
- Money. Do you have enough money so that your business is paying its own bills? Or does the owner or investors need to sink their funds into the business to keep it afloat? If you are a startup this is OK and expected—there is a lot of investment required before you make your first sale and beyond. However, for established businesses this may be a warning sign of that one of the other “Ms” isn’t working.
- Manpower. Do you have the right number of people doing the right amount of work? Payroll is typically one of the largest expenses for businesses, but we are often amazed how often businesses get this wrong. Too many high-paid people doing low-level work. Inefficiencies and dead wood. Star employees with untapped talent. As Jim Collins says in his book Good to Great, “get the right people on the bus, the wrong people off the bus, and the right people in the right seats.” Get the Manpower equation right and watch your business grow.
- Marketing. Fancy brochures? Great. Website with Flash? Wonderful. Nobody buying what you are selling? That’s a problem. Beyond the fancy collateral, how often have you stopped to find out why customers buy from you? What is the value you bring to your customers and how much are they willing to pay for it? Have you defined who is your ideal client and how will you reach them?
- Making it Happen. This is your operating plan. Can you deliver what you said you can and how much will it cost to do so? Will there be enough cash to pay the bills? If not, go back to #1 and repeat. Unfulfilled customer orders, bad customer service, poor quality all can drive a customer away. Great customer service is wonderful, but if it costs you more to deliver your product or service than the price you charge that can lead to serious problems.
The rule for the 4Ms is review, revise and repeat. As you kick off the new year, how are you planning for the 4Ms?
Love it! So true – it’s a fine balance between the cost of our providing exceptional service and up to the minute expertise –and– how much we charge. If we charge “what we’re worth” we won’t get people buying. If we undervalue ourselves by too much, people are suspicious. I don’t want to lower my rates just to match competitors, when I KNOW I provide more than they do. But people these days have a problem with spending. So —what to do???
Susana,
It is all about quantifying your value to your clients. If you save them time so that they can be out selling instead of being tied up in “back-office” kind of work, that’s value. If you make them more efficient, that’s value. If you drive cost savings to the bottom line, that’s value. The trick is to (honestly) show the investment of working with you will garner multiple times a return on that investment.
Anyone have other thoughts?