STOP CHASING THE WIND potx

STOP CHASING THE WIND
Don't wait for more customers, maximise your business profits today!
By Scott Richards
~~~
Smashwords Edition
Copyright © 2013 by Scott Richards. All rights reserved.
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Disclaimer
All information herein is educational and not advice. It is general information and has not taken into
account your personal circumstances. Please seek independent financial advice regarding your own
situation, or if in doubt about the suitability of an investment. The value of any investment and the
income derived from it can go down as well as up. Never invest more than you can afford to lose
and keep in mind the ultimate risk is that you can lose whatever you've invested. While useful for
detecting patterns the past is not a guide to future performance. Some figures are forecasts and may
not be a reliable indicator of future results.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN
LIMITATIONS. NO REPRESENTATION IS BEING MADE THAT ANY STRATEGY WILL
OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES.
All rights reserved. This Document may not be reproduced or transmitted in any form or by any
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Table of Contents
Foreword
Great Business, Poor Financial Controls
Consider discounting

What does financial management look like for the typical small business?
Step 1: Develop a clear mission; build brand value through focus
The elements of your mission:
You don’t have a business; you have a brand
Building brand equity
Delivering on expectations, keeping promises
Step 2: What are your Critical Numbers?
Measuring the Only Really Important Thing – Your Return on Effort
The lifetime value calculation
A SWOT analysis
Step 3: Systemise & Strategise
The turnkey solution
How do you build a business that works without you?
What is Strategic Thinking?
Step 4: Find Your Unique Competitive Advantage
Looking at an online business:
Find your unique competitive advantage
Communicating your Competitive Advantage
Scenario
Step 5: Implement and Reflect
What is working? What needs improvement?
About Beyond the Numbers
Small Business Financial Strategists
Foreword
Sunday morning is your favourite time of the week. Every Sunday you go down to your local coffee
shop for breakfast and to read the paper. However, just as you are heading out the door the phone
rings. You answer it.
“Hi, I have just called to inform you that if you come down to Generous Joe’s shop within the next
30 minutes you could win $100. To win $100 all you have to do is roll the dice and roll a six. Are
you interested?”

What is response? Are you willing to give up breakfast to drive 30 minutes for the possibility of
winning $100? My guess is that a few people would make the trip but most would continue with
their breakfast plans.
However, before you get out the door the phone rings again.
“Come quick! One of your staff members says he is going to hand out $20 notes to the next five
customers who come into the shop!”
What is your response now? You go straight to Generous Joe’s shop to try and win the $100. Of
course you don’t. You would go straight to your shop to save your money.
You may think this scenario is a little absurd. However, this happens all the time in small business.
A business will spend all their time chasing sales, while money is being given away from other
areas of the business. They are on what I call the small business carousel: forever moving forward
but never actually getting anywhere with many ups and downs.
A business will have an excellent product or service but they don’t have the right strategies to hold
onto the cash as it comes into the business. Many times the business owner does not even know
why they are losing money and will continue to chase more sales to make more money.
Please don’t misunderstand me. I am not against trying to increase sales. Marketing is extremely
important and should be in everything you do in business. However, marketing with poor financial
control is futile. It is like chasing the wind.
This e-book is for those business owners who need to regain financial control of their business.
They want to stop handing money out and start maximising their profit at the level they are at now.
When the business has financial control increasing sales won’t like be chasing the wind but will be
profitable and rewarding.
This e-book outlines the process I used to help a business put strategies in place to maximise their
profit. These strategies increased their profit by 560% from $32,000 to $211,000 in just twelve
months. Unfortunately, there was no one silver bullet but a process of continual improvement. I
continue to use a similar process when working with small businesses. If you would like to learn
more about how I can help your business maximise its profit then please visit
www.beyondthenumbers.com.au.
All the best,
Scott

Great Business, Poor Financial Controls
There’s a great challenge facing business owners today: It can always be found cheaper online.
That’s the new rule for the new internet age of business. And while you offer something of value,
your prospects are willing to pay shipping and handling if they can shave 20 or 30 percent off the
price you charge. Just ask Harvey Norman or Dick Smith Electronics or Borders. Business models
are hard to change – and the tendency is to cut prices and cut costs to meet the ‘new rule’. Which
raises another challenge: how do you avoid going under water by taking these actions? A real
problem when many business owners today don’t really know how their business is travelling day-
to-day.
US author Michael Gerber of E-Myth fame talks about the “Entrepreneurial Seizure”, where you as
a business owner fall victim to the “most disastrous assumption anyone can make” about going into
business. It is an assumption made by all people who have some skills and who go into business for
themselves to leverage those skills. That “Fatal Assumption” (Gerber’s words) is: “if you
understand the technical work of a business, you understand a business that does that technical
work. And the reason it's fatal is that it just isn't true.”
In fact, it's the root cause of most small business failures. Most people are not all that literate in
financial management. Know the difference between cash and profit? Direct and fixed costs? How
to manage your accountant? Surprisingly, many business owners say no to these questions.
Without financial management, you are driving a car without a dashboard.
In today’s highly competitive climate where the internet is forcing the hand of business to be price
competitive, SMBs can be blind-sided by financial statements and reports. They get the statements
from their accountant and focus only on what they need to pay the tax office.
Few will actually do any financial analysis.
Most people don’t particularly like or understand financial management. They leave it to others.
That’s a problem. In recent times customers are taking longer to pay, thus constraining cash flow.
The sale is not made until the money is in the bank.
Getting the SMB to do any real financial analysis such as a debtor analysis, forecasting cash flow,
and accounts receivable is crucial. We can make it easier by graphical interpretation, using for
example accounting software packages.
Setting prices in a competitive framework requires analysis. Matching prices to competitors may be

necessary but discounting can be dangerous to the financial health of a SMB. Some business
owners discount without fully appreciating the impact on profits. You need to have a significant
increase in volume.
Consider discounting
Many business owners see this as a weapon to bat off competitors and to attract customers. Few,
however, appreciate the impact of discounting on their bottom line.
For the average business a 10 percent discount would require something like a 30 percent increase
in volume to maintain profit levels.
Pricing is very much a strategic financial issue. You have a business to run and it needs to make a
profit. Exactly how much profit you want to make, and by when, should show up in your overall
strategic objectives.
The message: start looking at and beyond the numbers. With accounting software and the
requirement for at least quarterly BAS/GST returns you will more than likely have a system that
can produce timely and accurate financial statements. If you already produce proper reports why not
use them to make more money. The traditional key reports are the balance sheet, which gives a
picture of how well your investment in the business is performing; your income statements which
informs you on cost of doing business, your gross margin and profits; and, finally cash flow budget
which gives you a forecast of where your cash crunch times are likely.
While the traditional reports are important in financial management they sometimes don’t provide
enough information to help your business to grow exponentially. Later in the book I discuss the
lifetime value of a customer. With your accounting software you are able to find out how much on
average a customer spends and how often. You can also use the software to test the Pareto principle
(the 80/20 rule) to get your best customers. Armed with this information you will be able to make
more focused decisions that will lead to greater profits.
What does financial management look like for the typical small business?
Financial management in a typical small business is about looking at the history of your actual
sales. However this is not enough. It is important to look at your actual sales so you can accurately
estimate your output and assess the differing sales between your various products and services. Also
it’s about determining how much profit you’ll make by selling Y amount of product at X amount of
dollars over the same amount of time. Discounting may be one way to meet the competition but if

you can’t increase volumes you might consider trimming some fat away, either though hitting fixed
costs, inventory or less profitable lines. With financial analysis you may discover that there are
some products or services that are costing you more to provide than you can ever recoup.
You will want to run some different scenarios to determine the outcome of various price points for
your product or service. Not all business owners will opt for a discounting solution. When your
customer feels that the value they’re receiving from you is worth more than the money they are
exchanging for it, there’s no real competition. You should be able to find a price that will work both
you and your customers.
However, the successful small businesses know that financial management is more than just profit.
That true financial management is maximising your cash flow. Profit is obviously a large part of
maximising cash flow. Cash flow also involves managing accounts receivables, stock, loan
repayments and asset replacement. Every business owner needs to know that it is possible to go
broke making a profit.
Business should not be all that difficult.
<> You need timely information and a system to produce reports.
<> Today business needs to invoice quickly and have an efficient collection method. You need to
follow up.
Scenario
The business was great at what they did. The provided quality products and their customers
received great service. In fact they had many raving fans.
However, the business did not have the strategies in place to hold onto the money coming into the
business. They had grown organically over the years. Procedures that generally worked while they
were small were now creating giant leaks in their profitability. While they were a small business
anything that was not right could be easily spotted and fixed straight away without too much drama.
However, the failures in the procedures became magnified but harder to control as they grew larger.
I have seen this many times over the years in small businesses. The business will start off as a
husband and wife operation. The way they do things are fine as they are both committed to the
business and they can fix any problems easily as they aren’t too big. However, as they grow and
hire more staff those flaws in those procedures become magnified. They no longer have the
financial control over the business that they used to have. Before long they find they are less

profitable then when they were small because of the poor financial controls.
The previous year the business made a net profit of $32,000 on a turnover of $1.7 million. This is a
low net profit % of just under 2%. By following a process and implementing profit strategies, the
following year the business made a profit of $211,000 on a turnover of $1.8 million. The net profit
% increased over 6 times to just over 12%.
In the following sections we will use this scenario to outline the steps taken to maximise the
business’s profit. You can follow these same steps to significantly improve your profitability and
take financial control of your business. I would also recommend seeking help from a professional
business advisor. A great business advisor will help you make more money, improve your cash flow
and give you a significantly better business-leisure balance.
Step 1: Develop a clear mission; build brand value through focus
The mission is the ultimate purpose to be achieved by the business. The fans of Star Trek will
remember their five year mission: to explore strange new worlds, to seek out new life and new
civilizations, to boldly go where no man has gone before. This mission is clear, easily understood
and provides guidance to those who are responsible for its fulfilment. Captain Kirk could use this
mission as a reference point in all decisions he made.
The business I worked with had been established for a number of years and already had a clearly
defined mission. The mission was clear and well communicated to everyone. This made decision
making, implementing strategies and communicating the need for these strategies much easier.
However, this important step is often overlooked by small business.
If your business does not have a clear and articulated mission you need to prepare one before
following the rest of this process. You will use the mission as a guide when analysing the critical
numbers of your business. Your business’s mission should be specific, easily understood and not
too long.
The elements of your mission:
<> Define your customers – Be very specific. Too many businesses try to capture as many potential
customers as they can. Consider factors such as the common problem they have, where are your
customers and their income level.
<> Define your products or services – What are you selling that is solving your customer’s
problems? How are you positioning those products in the market?

<> Sales or Profit objectives – Create specific and attainable goals.
Example: Here is my mission from when I first started. The mission has changed as my business
evolved. However, it gave me a clear focus and a reference point when making decisions.
To provide quality business advisory services to small to medium sized businesses in the North
Brisbane area. Business advisory services will help the business make more money, increase cash
flow, improve sales and enable a better business-leisure balance. Profitability is to be at least equal
to permanent position salary by the end of the second year of business.
I also defined certain key terms:
<> Quality will mean a high standard and not focused on cost.
<> Small to medium business will include Mum and Dad businesses not in manufacturing and have
been in business for at least 5 years.
<> North Brisbane will include up to half an hour drive from home.
<> Current salary is $80,000. This is to be adjusted with experience and market pressures.
You don’t have a business; you have a brand
Your customers don’t see your business; they don’t really care about your ‘mission’; they ‘feel’ the
experience of dealing with your enterprise and they ‘think’ brand. Your brand is not just your logo
and tagline. If the sum of all the interactions, thoughts and feelings of the brand form the perception
reality of the brand, then ultimately every single thing communicates the brand.
This premise is fundamental to determining brand success. By realizing that everything
communicates, then you realize that the role of communicating the brand to its audience is not just
the role of a marketing department or an advertising agency.
It takes every interaction at every level. From the way a shop assistant delivers a service in a
department store, to the way a person signs for a loan document to buy their first home from a bank.
People, paper, websites, uniforms, product disclosure statements, forms, and systems operations
everything forms an impression that results in how a person thinks or feels about a brand.
This is why a laser focused mission is vital to your business. The mission is your reference point
that ensures all your marketing and communications is consistent. It is this consistency that
customers want; they are comforted to know that their current experience will be the same as their
last experience if they enjoyed it. By using a mission your decision making will become easier,
more effective and efficient. For example, you will know if a marketing opportunity will target your

ideal customer.
Building brand equity
Example: The case of the missing coffee
How come when I go to a café that sometimes when I get bad service I don’t mind, but I when I go
to a different café and get the same bad service it really annoys me.
This morning I went to a café that I’ve been going to for years, and today, they young girl who took
the order forgot to order our coffees. Its morning and I love coffee! I called her over and asked her
politely if she’d put the order through, and she’d forgotten.
Then our breakfast came, I received nice scrambled eggs, my son got his poached eggs, but my wife
received nothing. She’s forgotten to order my wife’s breakfast. We asked for the order and we
waited a little bit before it arrived.
It’s a regular café for my wife, so the sum of all her previous experiences outweighed this singular
poor experience of service. It meant that the café’s brand had generated an amount of equity in her
mind that allowed her to excuse poor service on this occasion. However, if she goes back next week
and experiences a similar performance, at what point does the negative impression outbalance the
positive in her mind?
Delivering on expectations, keeping promises
The weekend before, I was at a quite expensive café, no table service and nobody at the register
with three people lining up for service.
Waiting for a few minutes only to be interrupted by a stressed out looking waitress asking me to
move out of her way. Why did this upset me more then not us not receiving our order at the other
café?
It’s because I’m not a regular, my experience set is limited and people are quick to judge. And this
initial experience compromised my sense of expectation. I could not justify the wait (and attitude)
to the expectation of service and price.
Without a bank of positive experiences to draw back on, I was quick to judge and quick to leave.
You don’t get a second chance at a first impression. So the brand comes to life at every single touch
point, every single time. In the way the coffee is made, the attitude of the staff the overall package
of the experience because everything communicates. Can you see how that bank of good
experiences for the client is worth brand equity? That is, real goodwill value? (See later on the value

of Lifetime Customers)
What do you want communicated about your brand?
Step 2: What are your Critical Numbers?
Some business owners go for the cost cut as a makeover strategy. Every expense to a business is
listed as a cost (overhead) in the budget. When increased profitability is called for, quite naturally
the owner focuses on the list of ‘expenses’ attached to the business. The easiest thing to do is to
reduce expenses and move dollars down to the bottom line. In fact such behaviour does not require
any special talent, effort or increased analytical skills. Typically, the greatest cost savings are made
in the first year. So what will happen to this business every subsequent year?
For instance, compelling suppliers to provide cost savings of 10% across the board would add
$38,000 more profit at the end of one financial year. Whilst this is some sort of financial
achievement it is rather short lived. Indeed, the impact of such behaviour is most vividly felt in the
second and subsequent years where the same amount of ‘squeezing’ brings diminished returns and
noticeably reduced quality of service and/or product to customers, thereby adversely affecting sales.
I have seen a remarkable number of small businesses (and large) fall into this pattern and have the
life choked out of them.
Slashing overheads is a time consuming task and doing so can serve to weaken the unique selling
proposition of a business by cheapening quality of services or products. What’s more, all customers
have a threshold of how much dilution in service or product they will tolerate within a business. An
annual drive to ‘cut back’ eventually sees a business reach that point.
Generally, there is a noticeable speeding up of customer desertion rates and an ever more rapid slide
in turnover. But what is certain is that all businesses on this drive do eventually perish. Sadly, the
many who then attempt to sell out before they ‘hit the wall’ also discover a double whammy – that
is, as sales slide, so too does the capital value of a business.
There is an alternative approach that builds structural health into a business and solidly grows sales.
It requires developing a new perspective in thinking, a modicum of patience, and the belief that this
alternative is also a time-tested method (albeit by fewer proponents).
Measuring the Only Really Important Thing – Your Return on Effort
What is important is your return on investment (ROI). After all, the only real reason you’re setting
up, running and managing a social media campaign is to make money, right? As there are very few

costs associated with social media campaigns, it’s about return on effort where each hour of your
time costs a certain amount.
So, you need to measure your time and convert that to a dollar cost and then measure the leads /
sales you are getting from the campaigns you are doing.
One of the principles that we assert here is that it’s not about the next sale to a customer; rather a
customer has (or should have) a lifetime value. That’s the amount of revenue you’ll generate from
one customer over the lifetime of your engagement with them minus your costs to acquire them and
then service them over time.
Let’s say you’re a mobile phone service provider and you know that the average customer spends
$100 a month on your service. Over the course of 12 months, you generate $1,200 from the typical
customer. But that customer doesn’t stay with you for just 12 months; they stay with you for 3.5
years. The revenue you generate from them over the time that they remain your customer is $4,200
($100/month x 12 months x 3.5 years).
There is a cost to service that customer each year for the time they remain your customer. Assume
that each year this amounts to $30 per month. The cost to service them over the span of time as your
customer is $1,260. ($30/month x 12 months x 3.5 years).
The lifetime value calculation
In the most simple calculation, this would represent a customer lifetime value of the revenue
generated by that customer over the 3.5 (or the average lifetime of a customer) years = $4,200
minus the cost to serve that customer over the 3.5 years = $2,940. If the cost of acquiring the
customer is say 10% of customer lifetime value, you might spend close to $294 in marketing costs
to gain a new customer. That’s normally referred to in marketing texts as Cost per Acquisition or
sometimes called Cost per Sale.
This is a good, basic formula for understanding the metrics of your social media ROI. Note
however (as many business owners will already know) as a general rule of thumb for most
businesses that it costs three to five times as much to get a new customer as it does to keep an
existing one. That’s part of the reason most businesses focus so much time and money on customer
retention – it pays to keep existing customers happy.
A SWOT analysis
A SWOT analysis should be at the core of any marketing project or plan: Every market has

Strengths, Weaknesses, Opportunities and Threats. There are always unexpected outcomes in
business, sometimes impossible to plan for. But there is no excuse for not examining – upfront – the
possible threats and trends in the marketplace that may be working against your business plan.
<> What are the trends in the marketplace?
Which trends favour your business case?
Which trends are against your business?
<> Is your current product range adequate to cope with the threats?
<> How are your competitors competing with each other?
<> How will this hinder or enhance your plans?
<> What is the trend of your target demographics in the area? Is it supportive of or counter to your
business case?
Online research is integral to planning. Read local newspapers and speak with business people in
the area. A look at the local retail market will give you a sense of the demographics of the area.
Scenario
The first thing I did was to discover what the critical numbers for the business were. I needed to
find out what the areas I could change were and what the areas I couldn’t were. I didn’t want to
waste time trying to change something that I couldn’t change. I also wanted to see what was
happening according to the numbers and not what people thought was happening. I have found that
there can be a big difference between the two.
Basically, I did three things to analyse the business.
1. Prepared a new budget. The original budget had been set at least 3 months before the new
financial year. Two months into the new financial year and circumstances had changed that the
original budget was not particularly relevant. This also provided an opportunity compare the
expenses against the mission. I also prepared a cash flow budget because revenue was seasonal and
we needed to prepare for the times when hardly any cash came into the business.
2. Analysed the past four year’s financial statements looking for the profit drivers and any
noticeable trends. The business had three main products. When I analysed I found that two of the
three products were not making a profit. This was not unexpected as they were used as feeders into
the main profitable product. However, with this information we were able to set a target of break
even for these products.

3. Compared the financial accounts against the closest industry standards I could find. This
highlighted areas that we were doing well and areas that we could improve in.
After gathering this information I was able to find the critical numbers for the business. I could then
start to develop strategies that would improve not just one area but make small improvements to
many areas. The increase in profit didn’t come from just changing one thing. It involved developing
strategies for many areas that I will describe below. However, what I found was that by the end I
was making more money in areas that I hadn’t changed because of a snowballing effect.
The critical numbers will vary slightly between industries. Here are a few of the critical numbers
that I worked on.
1. Invoicing and collecting customers money
2. Reducing expenses e.g. Phone costs
3. Reviewed the purchasing procedure
4. Better cash flow enabled to pay annually and save thousands of dollars per year.
Many business owners are tired and frustrated from working long hours and seeing very little
reward from their hard work. The one thing these business owners have in common is that they
don’t know the CRITICAL NUMBERS for their business.
These business owners rely on instinct or what they have done in the past to make their financial
decisions. However, this can be a recipe for disaster. According to ASIC Insolvency statistics the
top reasons for companies failing are poor strategic management, poor cash flow and poor
financial control. Put simply, they didn’t know the CRITICAL NUMBERS for their business.
Step 3: Systemise & Strategise
If you want to grow revenues you need to be able to work on strategy; to do that you need to ensure
that your business systems are in place. We’re not talking about a new telephone answering systems
we’re talking about making your business a turnkey business
Until McDonald’s first hit the market under the guiding hand of former milkshake machine
salesman Ray Kroc, no one had previously unleashed the power of a business system so perfectly
crafted that it required no tinkering, no debugging, and no trial and error.
The McDonald’s Effect is a phenomenon made possible by the vision of Ray Kroc who saw that a
well-oiled business, such as the one run by the McDonald brothers in San Bernardino, California,
could be expanded into a viable franchise with thousands of different owners. Kroc perfected every

detail of the McDonald’s procedure in a prototype store. Taken to its ultimate conclusion, a perfect
system and set of procedures has the ability to replicate itself thousands of times – as McDonald’s
exemplifies.
For business people planning to grow beyond their personal management style or limitations, this
concept is well worth understanding and appreciating. You don’t want to feel your running in the
same spot; not gaining any ground, do you?
Ray Kroc understood that in order to make money out of McDonald’s, there had to be systems and
procedures in place to allow replication of this proven operation. Neither Ray Kroc nor the
McDonald brothers could become the key workers. There had to be a prototype that could act as the
model for replication and expansion. For the business to thrive, Ray Kroc had to put in place not
just systems and procedures, but employees and some organizational structure around them. If
McDonald’s was going to thrive, Ray Kroc had to find other people to do the work. But once the
prototype was effective, Ray Kroc and the McDonald brothers would no longer work in the
business. In effect, the employees do the technical work – both manual and managerial – and the
owners are left to do the strategic thinking.
Of course the Kroc approach is not restricted to a food retail store – it can be applied to virtually
any business case. An effective prototype is not just a well-oiled machine but it is a business that
finds and keeps customers – profitably – better than any other model of the business, i.e. its
competitors. And then the prototype is put in the context of a larger, expanded business.
The turnkey solution
When you buy a new car, you don’t expect to have to open the bonnet and fiddle around with the
bits under the hood. You should just turn the key and start driving. That’s what the word ‘turnkey’
means. In the business world, it refers to a system so perfectly crafted that it requires no debugging
or fiddling with, or any sense that things won’t work from the outset. Just turn the key, and start
making money. If your business is starting to feel more like a rut than a business, then it is time to
find a new way of doing business: the turnkey approach.
A turnkey system is any method or procedure that simplifies or automates part of the business,
making it easier for ordinary people to operate.
This is the essence of what author Michael Gerber calls the “prototype”. Gerber is an entrepreneur
guru and the author of the book titled The E-Myth. He often talks about how 80% of businesses fail

in the first five years. Most people become sick of working for their idiot bosses, as they call them,
so they decide to start their own business and they end up becoming the idiot boss. Instead of
working five days per week for a guaranteed pay cherub they now get to work six to seven days per
week and often for no pay cherub”. For those who have been in business you may be able to relate
to these sad statistics.
In his book, Gerber walks you thought the steps in the life of a business – from entrepreneurial
infancy through adolescent growing pains to the mature entrepreneurial perspective: the guiding
light of all businesses that succeed – and shows how to apply the lessons of franchising to any
business, whether or not it a franchise. Most importantly, Gerber draws the vital often overlooked
distinction between working ON your business and working IN your business. This is core to our
work in this book which is, ultimately about freedom, not servitude to a business.
A true business is a profitable enterprise that will work ideally without you. Most people do not
really have a business; they just have another job that creates a lot more stress. The idea of a real
business and Robert Kiyosaki talks about it in the “Cash flow Quadrant” is becoming a business
owner where you have an organization or business that will work without you having to be there. In
other words, if you wanted to go away for six months you could and it would still bring in a passive
income. Most people do not know how to set up businesses like that.
Just as McDonald’s stores have replicated themselves tens of thousands of times over around the
world, a business run itself on a turnkey basis if it has the right systems and procedures in place.
This systems approach to business allows a small business owner the means to finally integrate his
activities via a set of systems and procedures. For a manager, the systems approach provides the
order, the predictability that is so important to the running of his or her business. For a proficient
technical specialist or professional business operator-owner, it provides the opportunity to have
systems and procedures attended to by other people; so that he can be free to do the things he loves
to do – the ‘technical’ work or the strategic work.
How do you build a business that works without you?
Every business has its own unique characteristics, but there is always a flow of work that goes to
make up the overall business. Your task as the business owner would be to identify and build your
own systems. These systems need to be written in the form of a ‘procedures and tasks manual’
(sometimes these are called ‘operations manuals’). Every segment of your business has definite

procedures that make up the work flow. These procedures must be totally consistent with the
strategic goals of the business that have already been set.
Just because you are armed with a business plan or a set of strategic goals does not mean that
running your business will be any easier. There is work to be done to get the systems, procedures
and organizational structure right. Ray Kroc sweated over this for a considerable time before he was
confident that a franchise operator could come in and switch on the lights and power and deliver the
same high-quality hamburger time and time again. Every detail of the business has to be handled,
examined, improved and documented.
Up to now, whether it’s making a sale, negotiating with a supplier, or keeping track of expenses
you, as the business operator, have just got the job done. This is fine if the business is just you. But
when there has been growth and you are ready to go into ‘systems and procedures’ then a change
are needed.
This exercise requires all key people to be involved. It requires each person to ask the questions,
‘What would best service our customers here? How could I streamline or change the practices in
order to give the customer what they want most easily while at the same time maximizing profits?’
To help kick off this systems and procedures process, ask yourself do you have the time, the skills
and the capacity to execute on these activities in order to arrive at developing a “perfect” business
model? Or, you could plug into an existing system. Such systems are of course, already the domain
of franchise systems. But they also exist in many network marketing businesses too.
What is Strategic Thinking?
It’s surprising how many business owners overlook the importance of doing some solid research,
analysis, and old-fashioned thinking on this topic. Don’t let this happen to you. Here’s how you can
define a positioning and differentiation that will work for you.
First of all, what exactly is “strategic thinking?”
To think strategically requires founders and key team members to continually assess your business
and your industry, and to apply new business insights. The goal is to use these insights to reinforce
a company’s differentiation in the marketplace to achieve competitive advantage. You need to think
strategically before your team can move on to the long or short-term strategic planning. You need
both of these to make smart decisions on a daily basis. If you don't know where you're going, you'll
have a hard time getting there!

Here’s how to get started:
Evaluate your business
<> Do your research. Look for alternative, diverse sources of information about your company,
your competitors, and your industry
<> Connect the dots. The goal is to piece together the right information from a variety of sources
to generate new insights
<> Take time to reflect. Start-up culture glorifies the iterative fail-fast, move-fast mentality. This
is not what strategic thinking is about. Even if you can only steal a few minutes a day, take time to
reflect upon what you've learned from your work that day.
Devise your strategy for execution
<> Go with the flow. Don't think that this is your strategy-for-all-time. Even while you're planning,
stay flexible.
<> Act quickly. When you see opportunity, be proactive.
<> Set your roadmap. You may have a chart of the projects you need to get done to stay on task,
or a checklist of actions you can take immediately. Either way, you'll need a cheat-sheet so you can
incorporate your new insights into your decision-making.
<> Communicate your strategy to your team to make sure everyone’s on the same page
Allocate resources
<> Decide wisely. Use your insights, not just raw information, to make decisions
<> Prioritize. You can’t say yes to everything or you’ll be spread too thin.
<> Zero in: Resource allocation also applies to the priorities you set for your team and your other
limited resources such as capital. Don’t let team members or staff goes off wandering in the
wilderness either.
<> Delegate. Take a page from big-business tech and use resource capacity planning to manage
your employees' time. This will help you keep track of who has a full workload and who has time to
work on a project.
Although "strategic thinking" can sound intimidating, or even like too much of a luxury in our
action-oriented world, following these steps can help you incorporate new insights into your
existing business and workflow. Start-ups are supposed to be lean and agile, and with a little
strategic thinking, you can make the most of both attributes.

Step 4: Find Your Unique Competitive Advantage
Looking at an online business:
When I ask people who their online competitors are, they usually list a few companies that are local
competitors and who have websites. This is a common error. Often, your online competitor is not
even selling the same items as you – they are not business competitors, but provide competition for
position in search results for certain keywords.
Let’s look at the local cane outdoor furniture retailer. Your online competitors are the sites that
appear when someone searches ‘cane furniture’ or ‘cane outdoor furniture’ or ‘cane furniture
Sydney’. In some cases these results may not even be sites selling the same goods as you. There
may be the ‘cane furniture appreciation society’ or the ‘cane furniture importers group’ or ‘how to
make your own cane furniture’ websites. While these organisations are not trying to compete with
you on a business level, they may be the top ranked sites in the search engines for those keywords
and as such are your competitors.
Find your unique competitive advantage
Having a good, effective salesperson matters. Having a great website matters. These all matter. But,
none matter as much as the company's ability to answer the question, "Why buy from us?"
Ultimately, the foundation of every customer purchase is something amazingly simple: competitive
advantage. People buy the products and services they do because they see a real and compelling
advantage over all other available choices.
The problem is that too many business owners don't really understand what their real competitive
advantages are. Or, just as often, they think they know but they're wrong, or they have an idea but
don't convey that idea clearly and consistently. This leads to confused customers and missed
opportunities and money wasted on advertising and sales that's getting the message wrong.
Too often, companies base their marketing and sales messaging on their own hunches, assumptions,
perceptions, and the year-to-year inertia of, "What's worked in the past?"
To truly hone in and identify your competitive advantages, you need to bypass all this and go to the
most important source of knowledge about your business: your customers.
Getting professional advice here can be valuable. The “Rolls Royce” is conducted, double-blind
customer research is the best way to find out what customers really think about your business and
to find out why they buy from you (or from your competition).

That truth can often be surprising. An IT outsourcing company that prides itself on its technical
expertise might discover that its customers prefer its 24-hour availability. A lawn care service might
think that its updated equipment is its competitive advantage, when the real reason customers
choose it is because it provides high-level personal attention to its customers.
Finding your competitive advantage can take time and can often be a humbling experience. After
all, to discover how your customers really perceive your company can (and should) alter your whole
marketing strategy. But if you want to ensure your advertising spend isn't wasted money, this
knowledge is essential.
Communicating your Competitive Advantage
After you've identified your company's key competitive advantages, it's time to craft some new
marketing and sales messages, also known as "competitive advantage statements." These need to be
concise, memorable, measurable, and highly relevant to consumers every word needs to resonate
and remind customers why they should want to buy from you instead of the competition.
Too many businesses talk about vague generalities and clichés like "quality, service and value."
These terms don't mean anything to your customers, and they've largely become meaningless from
overuse.
Instead, get specific. Show or explain to your customers in real, colorful, measurable terms how
your business delivers quality, service, and value in a way that is most relevant to what the
customer wants to get from your product or service.
An example of competitive advantage statements could be:
“Our Food Service company delivers fresh produce to the top five largest restaurants in Sydney”
Commit some time and effort to identify your true competitive advantages. Hone in on what your
business does best, what your brand stands for and find out why your customers truly choose to buy
from you, and then trumpet your new messages to the world!
Scenario
I will look at what needs to be done. I will prioritise based on impact and cost and then start
working on the highest ranked one or two. Then work my way through the list. The list sometimes
won’t stay the same but it will change as you come across issues that you didn’t anticipate.
Now that I had my strategy on what I was going to work on I began to work on how I was going to
implement. The first step was to always work out a way to measure. So I had a baseline of where

we were at before we started implementing. Many times I found that productivity increased as soon
as we began to measure.
I started with something small. This was an easy task that built my confidence and made others
aware that I was serious about improving the profit through better productivity. After you have
implemented a strategy you must continue to measure and compare against your baseline. If the
strategy hasn’t improved anything then you must find out if it is the strategy or if it is being
followed correctly. If it is the strategy then change it and measure again. If it isn’t being followed
correctly find out why. Is it poor communication of the strategy? The personnel don’t have the
ability to implement the strategy, etc.
Step 5: Implement and Reflect
In my experience, I’ve found that most businesses don’t need new ideas. They need to implement
the ideas they have within a strong framework to be effective. Over 80% of new management
strategies add no value or very little value to a business. Is this because the strategy is bad?
Most probably not. The problem is that it isn’t the right strategy for their business. Unless you
complete the first four steps you will not have a strong framework to implement your systems and
strategies. When you do try something and it doesn’t work you may not be able to uncover the real
reason for its failure. The failure to measure and analyse would cost businesses thousands of dollars
each year. Too often as humans we make assumptions without any real proof which can lead to
poor decision making and blaming the wrong thing when it goes awry.
Entrepreneurship; a business mindset is not genetic. It has nothing to do with your chromosomes or
inherited traits. Entrepreneurs are not born; they make things happen because of their will to
succeed and skills and knowledge. And you can learn and enhance the skills that make all
entrepreneurs successful.
The question is:
<> “What do I need to do to improve my entrepreneurial skills to maximize my chances of
succeeding?”
<> That’s the right question because successful entrepreneurs learn to develop and strengthen their
skills. Don’t give up on yourself before realizing that you can develop these skills. Becoming a
successful entrepreneur is within your grasp if you really want to make it happen.
According to Dr. Michael Gordon, the head of Trump University School of Business if you want to

be a successful entrepreneur, you need to be able to:
<> 1. Assess the present situation. Hone your ability to observe, collect information, and
understand the opportunities and threats that can impact you and your business-to-be. Factor in your
own personal strengths, skills, experiences, challenges, and resource limitations. If you begin with
the wrong assumptions, you will invariably get the wrong answers. Note the mantra: ‘Garbage in –
Garbage out.”
<> 2. Go after bold visions. Having gone through a reasoned assessment, you are in a position to
establish clear, measurable goals. Be bold! You can accomplish considerably more than you realize.
And it takes about the same amount of effort to go for the gold, for the big dream.
<> 3. Be unstoppable. Focus your attention on the timely execution of every milestone on the path
to your goal. You and your team will face many obstacles along the way, but you will not let these
stumbling blocks stop you. Just show up and get it done period.
<> 4. Negotiate firmly and think “win-win.” Every interaction between people can benefit from
proficiency at win-win negotiation. You can accomplish what you want and still retain a productive
relationship based on mutual understanding and accommodation.
Here are the ground rules:
<> Listen and understand, before seeking to be understood.
<> Focus on interests, not positions.
<> Insist on objective criteria (not feelings or thoughts or ideas).
<> Invent options for mutual gain.
<> 5. Make good decisions. The ability to make good decisions is essential to success in business
and personal life. Decision making can also be learned and enhanced. The process begins with
clarifying the decision statement; then defining what the right decision must accomplish;
developing and evaluating alternatives; examining future consequences; and finally, making a
reasoned choice. This is a process you can learn and apply to systematically improve your decision-
making ability, as well as become a better problem solver. You don’t have to wing it.
<> 6. Mobilize resources. You can’t accomplish anything without understanding how to leverage
resources, which, in the entrepreneurial vocabulary, are anything, absolutely anything that moves
your venture further and faster with the least risk possible. Categories of resources include:
physical, financial, infrastructure, people, knowledge, and your own unbridled imagination.

Maybe you need some tools to help go to a whole of business review.
What is working? What needs improvement?
Adding value; increasing profits is the name of the game; but there is another dimension: what
needs to be done at a more personal level. Successful entrepreneurs come from an extremely wide
range of personality types. But a study from Saras Sarasvathy, at Darden School of Business, found
that the single common thread among successful entrepreneurs is their ability to compensate for
weaknesses by finding the right people to fill in the gaps.
This means a few things. First, you need to really know yourself, because that’s the only way to
understand where your gaps lie. Second, you need to have access to a wide network of people. You
can’t find someone to fill your gaps if you don’t have a big group to choose from.
<> But the third thing you need is the ability to attract the people who would fill your gaps. Those
people have to want to work with you. The best way to attract these people is to differentiate
yourself. You want to attract someone who has a special quality that you need, which means you
have to show him the special quality that you bring to the table. It’s harder than you think. You have
to typecast yourself.
<> You can learn a lot about this style of personal management from Hollywood, where actors who
typecast themselves are more successful than those who will play any role. This rule also applies to
business. You cannot be a star performer at everything. If you don’t specialize, then you can’t be a
star performer at anything. You have to specialize to be a star at work.
<> In order to specialize, you have to know what you are not going to do. And then you have to
have the self-discipline to say no to business that requires you to work outside of those boundaries.
<> Now, when you think about what you want to be known for, make sure it’s something that will
serve you well over time. “Social media expert,” for example, will sound as lame in five years as
“web site expert” sounds today. It’s so broad that it’s absurd.
<> Every time someone asks you “What do you do?” you need to reinforce your genre and your
differentiator.
<> Often, we don’t notice what we’re great at. Yet, where we are least like everyone else is where
we are most likely to attract people.
This is a fluid process of constant improvement. So ask yourself, is there a need to go back to any
of these steps?

About Beyond the Numbers
We specialize in helping businesses turning their hidden assets into cash flow, then maximizing the
money the business keeps.
Small Business Financial Strategists
Beyond the Numbers works with business owners who are tired of working long hours for little
money. Typically the primary focus of their business is to win more sales and hope their business
will turn around. This rarely works.
We specialize in helping businesses turning their hidden assets into cash flow, then maximizing the
money the business keeps. We use our unique system that we have developed over the past ten
years.
Here's what just one of our clients had to say
“Our business needed some outside advice, and so we approached Beyond the Numbers. Scott gave
us a simple, easy to understand analysis of our business figures. He suggested some great ideas on
where to improve and new $ targets, that are achievable. He has the knowledge, experience, and an
honest caring approach to business advice. I would thoroughly recommend him to any small
business person.”
– N Harrison Shower Enclosure Service.
For more information on how to build a successful business you can find us here:
Website: www.beyondthenumbers.com.au
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