Building your Recipe for Success

Last week I showed you a picture of the giant pot of sauce that I made in advance of my brother's wedding and I shared some links about the ingredients for business success. But, ingredients are only the start.  You still need to combine those ingredients to make your dish.  All the steps you take ultimately make up your recipe.  Follow those steps well and you should end up with a delicious meal at the end.

Of course, there are different types of recipes for different dishes and often many versions of the same general recipe that make slightly different dishes (think of all the different ways to roast a chicken or make a stir-fry).  In the business world, we can think of a business model in the same way as we do a recipe.  Your business model includes everything it takes to make your product and sell it.  And, like recipes, there are often variations on common types of business models.  Continuing the lessons from my brother's wedding, below are examples of common business models found among the 23(!) vendors that were involved.

Multi-Sided Platforms

Multi-sided platforms connect multiple, independent groups of customers.  The value of the platform is found in the interactions that occur through those connections. Benefiting from the network effect, the more users the platform has the more valuable it becomes.  Multi-sided platforms are a common business model for internet companies.

Among the wedding vendors, the wedding website company called The Knot makes use of a multi-sided platform model.  The Knot's platform connects wedding vendors with couples that are planning weddings.  It offers couples extensive resources about planning their wedding, including planning tools, articles about common wedding related topics, and access to two-way communication with other Knot members.  For couples, this access is free.  The Knot also provides a listing and advertising platform for wedding vendors, allowing them access to couples planning their wedding.  Vendors pay a commission to The Knot when couples purchase their products or services through the website.

By connecting couples and wedding vendors, The Knot is able to provide wedding vendors easier access to a much larger pool of potential customers, attracting those customers with free wedding advice.  The more customers there are on the site, the more valuable it is to wedding vendors, the more money The Knot makes, and the more advice they are able to provide to couples.  A classic win-win situation.

Google is another example of a multi-sided platform, which connects searchers with advertisers by offering the customers a free search engine.  Advertisers pay Google to put their advertisements at the top of the search results for relevant searches.  The advertisers benefit from highly targeted advertising and Google makes money for connecting them with the searchers they want to reach.  The more content that is available and easily searchable through Google, the more people will use it for searches. The more people use it for searches, the more valuable it is to advertisers.

Freemium Offerings

Like the multi-sided platform model, the freemium business model offers a blend of free and paid services.  However, this model differs from the multi-sided platform model.  The multi-sided model makes different offers to different customers on the platform (e.g. wedding advice for couples and targeted advertising for vendors).  In the freemium model, companies offer users a basic service free of charge and charge users for access to a premium version.  This model works when the cost of servicing additional users is minimal and the small percentage of users that pay for the premium version cover the costs of providing the platform.  The benefit of this approach is that it makes it easier to get new customers hooked when they can use limited functionality for free.  Users who outgrow the free offering will often happily upgrade to the paid version.

Interestingly, The Knot is also an example of a freemium business model.  In addition to the multi-sided platform for couples and vendors, The Knot also offers couples a wedding website to help them communicate with their guests and manage registries, RSVPs, etc.  Couples can register for a free website, but the URL is unwieldy and the website has limited functionality.  Couples can upgrade to a premium website to gain access to a customized URL and additional functionality for their website.

Dropbox, which provides a cloud-based file storage and sync platform, is a well known freemium model business.  Dropbox is free to use for a relatively small amount of storage.  However, if you need more storage or more advanced tools for managing access to files, you can pay for their premium offerings.  Because adding more storage to their platform is inexpensive, the customers that pay for the premium service more than cover the cost of providing the service for free.  

The Long Tail

The long tail business model focuses on selling a wide array of niche items, each with a low volume of sales.  Compared with high-volume sales models, the long tail model benefits from lower inventory costs and attracts customers who value specialty items. The internet has been a key factor in the rise of this model.  By decreasing the costs to reach consumers of niche products it has become much more feasible to offer such a wide variety of products.

Among the wedding vendors is a company through which my brother purchased customized, engraved glasses for his groomsmen.  The company, Magic Wood Shop, lists their products on Etsy (another multi-sided platform) and offers a wide array of products (e.g. drink glasses, pocket knives, bottle openers, etc.).  Each product is personalized to order using laser engraving.  Because the same process can be used to make a wide variety of different products, the cost of the machine is spread out and the personalized products can be made economically.  Thus, where other companies focus only on accounts that might order hundreds or thousands of an engraved product, Magic Wood Shop is able to serve customers that may only want a single item.

The Long Tail model has also started to transform the book publishing industry with the rise of direct publishing platforms.  On these platforms, authors can upload their own work.  When a customer orders their work, the platform prints it to order and sends it to the customer.  The author then gets a cut of the sale.  This "print on demand" ability is usable across all of the works that authors upload and the platform incurs minimal cost until the work is ordered, printed, and delivered.  Thus, it can offer a significantly wider selection than a traditional publisher, which tries to anticipate demand and print enough inventory to meet it.

Choosing the Right Model

Choosing the right model for your business can be difficult.  It requires carefully considering your customers, your value proposition, and how your customers will want to pay for that value.  In an upcoming blog post, I'll introduce you to a tool for organizing your business model on a single page, making it much easier to understand and refine as you test your ideas out.

Do you have an idea for a business but aren't sure where to start?  Give me a shout!  I can help turn your idea into a business and set you on the path to building your own, successful business.  Contact me using the form below!

Finding the Recipe for your Business Success!

My brother got married this past weekend!  I tell you this because it makes it seem more reasonable that I made 15 quarts of bolognese sauce (photo below) to assemble into lasagnas over the past week (so many visiting relatives to feed!).  So, you might say I have cooking on the brain.  The truth is, business success shares much in common with cooking.  There are many ingredients and numerous ways to combine them. Some have something unique that you hadn't considered before or that really resonates with you.  As a business person, you need to find the recipe that works best for you, the one that suits your tastes. This week, I have five articles for you to read about the ingredients of business success.  I expect that you will see common themes among all of the articles yet find that each article brings a different and unique perspective.  No single recipe is the right one, it all depends on your goals!

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7 Ingredients for Small Business Success Online 

If you are an entrepreneur and are scaling up your business, chances are you are focusing a good amount of marketing energy on content marketing.  Content marketing entrepreneur Suhaib Mohammed has identified seven "mindsets, traits, and abilities necessary for success online.  Read about why passion, an attitude of service, obsession for the customer and for quality, compelling content, innovation, and consistency all factor into the recipe for success.

Business success with 10 ingredients

Debbie Bixler, who specializes in direct sales marketing training says that a system is the key to success in business. She lists ten ingredients that lead to success. Among her most important: Smile like a tiger - Smiling creates power for you and for everyone around you. Like the way this sounds?  She has 9 more!

Trust is the One Ingredient That Rules Them All

Want to know more about the most important ingredient in business success? Ric Edelman of Edelman Financial Services will tell you 4 ways to acquire and maintain trust. Trust comes in four flavors.  Learn what they are and how to blend them in this insightful article.

Brain salad - The Knowledge You Need to Succeed

According to Siimon Reynolds, you don't have to be smarter than everyone else to succeed in business.  What you need is three types of knowledge.  Do you have specialized industry knowledge?  Do you know how to build a business? Do you know how to get things done?  How good is your brain salad? Read the article to decide how it rates.

Richard's 11 Ingredients for Business Success

Richard Rea is a CPA from Ohio who founded a firm in 1938 which now employs more than 250 people and has multiple offices.  Sounds like he found the right recipe for success.  Work hard, be dedicated, be humble are the first three.  Read about Richard's 11 ingredients and see how you can make your own sauce for success.

Let me know what you think of these links using the contact form below!

Building your Growth Engine

Starting and building your own business is exciting and scary at the same time.  Turning an idea into a business is full of unknowns, chances to learn, and pitfalls to avoid.  Growing a business challenges you to change and grow as a leader as your business changes and grows.  Fear not, you are not alone!  Iconic businesses, like Apple and Ben & Jerry's, were literally just two creative people in a garage trying out an idea. As their start-ups took off, they faced the same challenge that all startup leaders face: how to evolve their leadership style to match their company's evolving needs.  As a great example, read HubSpot CEO Brian Halligan's story about how he had to learn to say no as HubSpot grew from start-up to scale.

Not all businesses grow to the size of Apple, Ben and Jerry's or HubSpot, but significant growth is possible even at smaller scales.  Regardless of the size you aim to be, building your growth engine involves the same progression. There are three major phases involved in starting and growing a business—start-up, scale-up, and build out. In the paragraphs below, I'll walk you through them. For each phase, I point out key tools and techniques that will help you excel at your current stage and set you up for further success as you grow.  You'll see a common theme of constant learning and iterations throughout, even as the focus changes through each stage of growth.  Check them out and reach out to us if you have any questions!

Start Up

In the Start Up phase, designing your business model and proving out your product-market fit are your top priorities.  This requires lots of experimentation and exploration.  Developing a business plan is a good step, though a traditional multi-page business plan is likely overkill.  Instead, try a Business Model Canvas.  These single page business plans allow you to quickly outline the major components of your business, from your core value proposition to your cost and revenue structures.  Our founder, Carl Lorentson recalls, "When I was starting up, these proved to be more useful than the formal business plan I put together in a class I took."  We continue to use them when we are considering new services for our clients because they allow us to efficiently outline the idea and ensure we have a complete offering.

Once your expected business model is defined, you must verify it in the market place.  Iteration and continuous learning are the name of the game.  An excellent approach is the Lean Startup methodology's feedback loops.  This process allows you to learn how your product or service is actually received in the market, adjust your approach, and observe the impact of your changes.  Using iterations to develop a minimum viable product (MVP), refine your business model, or improve internal operations is one of the most powerful habits you can adopt as a business owner.  It's rare that your original idea is the idea that finally sticks.  In fact, many well known companies started as something else entirely.  From Twitter and Paypal to Starbucks and Nintendo, big changes in business focus are common, especially when starting up a new company.

Initial Scale Up

As your product-market fit solidifies and your business model takes shape, you can start to scale up. At this stage, stepping up your marketing to bring in more customers is crucial.  Using social media to amplify your message, especially by using your earliest adopters as evangelists should allow you to quickly bring in more customers, more sales, and more revenue.  Tesla's Elon Musk does this well, consistently using social media to communicate with Tesla customers.

As much fun as more sales and more customers are, you can easily become a victim of your own success as you are overwhelmed by a rapid increase in customers and orders.  Now is the time to add feedback loops that are more focused on your internal operations.  The retrospective approach, adopted from agile software development practices, is a powerful tool to organize your team.  At RIS, we use these sessions internally to constantly evaluate and change how we are working, aiming for ever increasing efficiency throughout our company.  Continually reviewing how the many functions of your company (e.g. marketing, sales, production, shipping, etc.) are working together is a key step to ensuring your success.  Using the same iterative foundation as the lean startup model, this approach is a natural evolution of your business management toolbox to support greater scale.

Growth, Full Scale Up, and Build Out

During scale up, you will bring in an increasing number of customers and continuously refine how you and your team work together to serve them.  As you move beyond scale up, and your company continues to grow in size and you as an owner will become more distant from the on-the-ground decisions that will be made every day.  As you gain employees to coordinate and departments continue to grow and mature on their own, you will once again need to shift the focus of your organizational development to prepare for success as an established company.

Efficiency becomes the name of the game.  Driving out cost and delivering to your customers quickly, effectively, and efficiently allows you to create the most value for both your customers and your bottom line.  Software should be carefully selected and implemented to support all the functions of your business and integrate them.  The principles of Lean Manufacturing come into play as you look to avoid waste and continually work more efficiently.  Again, there are ample examples of the power of lean manufacturing, with Toyota probably being the most famous for adopting its principles to produce high quality products at scale.  The principles apply no matter how big or small your company is.  Finding and eliminating bottlenecks in processes will increase your productivity, profitability, and sanity. The retrospectives that were used during initial scale up should be continued and replicated at the department and team levels to encourage the same continuous improvement that was needed when the company was first starting to grow.  

Additionally, the feedback loops, established when the company first started, remain vital.  Collecting the data becomes more complex as your company grows.  Investing in software systems to provide a complete picture of your business by collecting and aggregating data from all corners is vital.  As your business continues to mature, business intelligence software, data warehouse, and even artificial intelligence could become components of your information systems.

All Grown Up

Once you have gone through these phases, you can hardly be considered a start-up company anymore.  With an established product, strong customer demand, and top-notch people and processes to connect them, you have become a mature company.  Now you get to figure out what's next?  New products?  Acquire other companies?  Sell your business and retire to a beautiful place of your choosing?

You can build a successful business!  We can help!  Find out more about how we can help you grow at the links below, or contact us for a free consultation!

Growing Your Business From the Inside Out

Turning fear into action and weakness into strength, learning how to say no, building multiplex ties, and beware of perfectionism.

Transforming fear into growth

Fear of rejection can become a serious block to success for anyone who needs to ask someone else to take an action, like buying a product or even agreeing to a meeting. Facing this fear and seeing it as the signal for a worthwhile risk can help you transform fear that paralyzes you into action that advances your goals.  "If you’re here for growth and transformation, fear will come up over and over again -- a sign that you’re doing just what you set out to do."  Learn how fear can be your guide using a 5 step plan to embrace it.

It's a strength to know your weakness

According to this article, it's easier to identify your strengths than it is to identify your weaknesses.  With strengths, you can often point to concrete evidence of how your strength created success.  Weaknesses are more difficult to see.  They are more likely to be demonstrated by missed opportunities, which may not be as apparent.  While mild weaknesses may not have much impact on effectiveness, strong weaknesses can act as a fatal flaw that seriously hampers an organization and a career.  Read this article to learn how you can identify your weaknesses and take action to prevent a fatal flaw from limiting your success. 

Yes means yes and no means no

In a growing, thriving company, new ideas abound.  Entrepreneurial owners and employees are excited to experiment and discover. In early start-up mode, saying yes to all ideas leads to success.  As complexity grows, too many ideas, too many directions will swamp a growing business.  Saying no or at least not yet to new exciting ideas will ensure that business growth can continue in an organized and intentional manner.  In this article, HubSpot CEO Brian Halligan shares how he learned how, when, and why to say no as HubSpot grew from start-up to scale and provides guidance on how you can learn to say no too.

Networking Advice:  Beyond Asking "What Do You Do"

When meeting new people in a networking situation, our first instinct is to ask "What do you do?"  The authors of this article contend that this immediately narrows the contact to a focus on work and may not be the best way to develop the stronger connections that will best serve you in multiple arenas of life, including work.  "Research findings from the world of network science and psychology suggests that we tend to prefer and seek out relationships where there is more than one context for connecting with the other person. Sociologists refer to these as multiplex ties, connections where there is an overlap of roles or affiliations from a different social context."  Read this article to learn some new and interesting open-ended questions to try at your next networking event to make better connections. 

Perfection is a trap to avoid

Perfection is an impossible goal.  Yet, a recent study confirmed that many young people are trying to achieve perfection based upon unrealistic expectations about their career, the things they own, and how they look.  The focus on perfection is leading to an increase in depression, anxiety, shame, and guilt. Specifically, the authors found that between 1989 and 2016, college students’ levels of self-oriented, socially prescribed, and other-oriented perfectionism all increased by statistically significant amounts. Recent generations of young people are more demanding of themselves, perceive that others are more demanding of them, and are more demanding of others.  Coupled with research demonstrating the destructive effects of perfectionism on mental health, the findings are potentially a forewarning for schools, universities, and employers who may find managing the welfare of young people becomes increasingly important.This article includes tips for teachers, lecturers, and managers that might help create a culture to alleviate the impact of perfectionism.

Let me know what you think of these links using the contact form below!

Spreadsheets vs Databases, Which Should I Use?

Most people wouldn't cut down a tree with a hammer, but many companies continue to collect and manage their data with tools that are ill-suited to the job. You might think, “well I know how to use a hammer and I don’t have a saw, so I might as well try the hammer."  How far do you think you’ll get?  Is the result going to be what you really want?  The reality is, whether you are chopping down a tree or managing your data, choosing the best tool for the job is the first step toward getting you where you need to go.

There are powerful, standardized data management tools on the market, some are at literally at everyone’s fingertips these days (Excel and Access come with the MS Office suite).  How do you know when to use a spreadsheet like Excel or a database?  How do you decide what sort of database you need?  Should you use a single-user database like Access or a multi-user one like SQL Server?  How do they all work together? Here are some tips to use to make sure you find the right tool for job!

Spreadsheets

Spreadsheets are excellent tools for combining and analyzing data.  Excel, probably the most popular spreadsheet program, has extensive capabilities for visualizing data (charts), analyzing data (statistical analysis), and summarizing data (pivot tables).  Its powerful and relatively easy-to-use formulas make complex calculations and logic possible, allowing you to link data from many sources to find the answers you need.

However, spreadsheets are not such a good choice for collecting and storing data.  Without robust access and editing control, it is easy for any person who is editing a spreadsheet to accidentally delete or overwrite existing data.  Even more problematic, if there are formulas in a spreadsheet, changing its layout can break them and result in incorrect calculations that are difficult to detect and fix.  Finally, the limitation of the flat sheet structure in spreadsheets makes it cumbersome to collect and store data that contains complex relationships.

Do: Use spreadsheets to combine data from multiple sources, analyze your data for a deeper understanding, and visualize and summarize your insights to communicate them to others.

Don't: Use spreadsheets as your data collection tool, your data storage solution, or when multiple people need access to the data.

Databases

Databases, in many ways, have the opposite strengths and weaknesses of spreadsheets.  With a powerful relational model, they can store the many, complex relationships that exist in today's data (e.g. a customer that is also a supplier and/or an employee; products with multiple configurations and styles, etc.).  Robust access controls and a server-based architecture provide simultaneous access to data by multiple people while ensuring that only people with permission can access and change the data.

Unlike spreadsheets, databases can be more difficult to use for analysis and reporting.  Their relational model splits data among multiple tables, and knowledge of special querying languages (usually SQL) are necessary to pull data out.  Most databases do not have built in reporting or analysis packages.  Though there are often related offerings that can bring that functionality (e.g. SQL Server can be used with SQL Server Reporting Services and SQL Server Analysis Services), they take special knowledge and experience to program.  Finally, databases do not connect easily with other data sources, which can make cross-source analysis difficult.

Do: Use databases to capture and store complex data, allow multiple people to access and edit data at the same time, and couple them with statistical and reporting packages to perform very complex analysis or reporting.

Don't: Use databases for ad hoc analysis and querying, charts and graphing, combining data from multiple sources.

Why Not Both?

Spreadsheets and databases both have their own strengths and weaknesses, but they are very complementary.  For day to day data capture and storage, you should use a database.  However, when it comes time to do analysis and dig into your data, making an extract of some of the data in your database and putting it in a spreadsheet is a good option.  The combination of these two tools allows you to collect and store your data in a reliable location while allowing you to dig deeply into your data to find other insights.

When choosing between a spreadsheet and a database, keep in mind their individual strengths and weaknesses and make sure you are using the right tool for the job!  Not sure how to choose for your specific situation?  Drop us a line and we're happy to point you in the right direction!