PROFIT RADIO - "A Network of Entrepreneurs for Entrepreneurs"
Here we are at the beginning of 2021 and hoping to put 2020 behind us. Unless you were one of the lucky owners who had the right offer at the right time, the majority of entrepreneurs took a big hit last year. It is forecasted that business revenues for 2020 is 1/3 of 2019! How many owners do you know that are already out of business?
This series of shows are not about good news. We are very pessimistic about the immediate future - the next 6 months. That emotion is based on the arbitrary nature of global lockdowns. In fact we address that in our Thursday show: "Beating The Lockdown ...While You Still Have A Future".
This season we will share 4 decades of experience on the 3 Types of Businesses, based on performance, and what you can do about it. Today's show is about refusing to let forces outside of your company put you out of business.
LISTEN > ENGAGE > APPLY
Let's start this at the beginning. When we were doing our initial research in the early 2000's on fast and sustainable growth from cash flow, we developed a model for evaluating businesses. It was based on on it's performance relative to it's capability. In other words what were they doing with what they had.
Once the model was complete we built a consulting practice around it and the first phase was to validate our research. Part of that process was to review research on the same topic from other credible organizations. That is when we started a relationship with the Kauffman Foundation. One project they had just finished for a group of local governments was on the types of successful small businesses to attract with grants, tax abatements, etc. These were small, fast growing companies that would provide a solid tax base and jobs.
The study called those companies HIF's (High Impact Firms) and how critical to a healthy economy they were because of creating 95% of new jobs. The further challenge of attracting them was they represented only 5% of all small businesses. We took that research and compared it to our Library of Best Practices for Fast Growth Companies, creating the 5.15.80 Performance Model. The top 5% dominate their markets and their core concern is SUSTAINING success – to a Break Out through a major reinvention.
The middle 15% represent firms doing OK but unsure about how to take the company to the next level. Their core concern is how to Break Through.
The remaining 80% represents businesses that are struggling to compete in the current environment, they are one or two moves away from disaster. Their focus is how to Reset the business and fight another day. Their core concern is how to consistently achieve BREAKEVEN.
Our concern in this series is the 15%, not how you get here which we are covering in the 80% series; the focus now is how to ACHIEVE market leadership.
Key Issues - Owner Perspective:
What You Need to Know
The 15% firm is defined as a company that is one or two steps away from the 5%. They need to focus on (1) researching the market to identify high growth opportunities (companies with unmet or under met needs with solid financials), (2) specializing the offer (narrow cast to micro-segment the targeted market) to solve unique problems, and (3) make a significant investment in marketing and sales. Our research showed more companies went out of business in this stage than any other because of the destruction of working capital – the inability to grow fast and under control.
The core issue is to get hockey stick growth there must be an investment in branding, marketing, and sales.
Our assumption is capacity issues were addressed as the company moved from the 80% to the 15%.
BreakThru to PROFIT: 3 Critical Elements
What You Need to Do
We are your single, one stop source for business success, period, end of story.
Make sure you leave some thoughts in the comment section below. I am interested in continuing the conversation.
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