What we’re going to talk about today is Five Business Fundamentals. In sports and everything, there are fundamental things that you have to do. They’re the basics.
If you watch basketball, there are some fundamentals being used. What do you have to be able to do? You have to be able to dribble, you have to be able to shoot, you have to be able to rebound, transition defense. These are fundamentals. If you are abysmal in some of the fundamentals, it’s hard to succeed. Remember how incredible Shaq was, but what did they do in the fourth quarter of a game, they fouled him like crazy. Why? Because he couldn’t make a free throw. He was ineffective in a close game at the end. The Chicago Bulls exploited that. What did they do? They had three centers, all of which were horrible, but they had 15 fouls that they could do in the closing of the game, and that’s why you never saw them dominate Chicago, even with Shaq and the teams that they had, because when you lack in a fundamental, you will be exposed.
There must be fundamentals that you do well in business. I mean, these are not that hard, but if you miss out on a fundamental there’s an area of just tremendous weakness.
So let’s talk about the five business fundamentals. I’ve done two startups in the last two years, and I work on these fundamentals with my partners. I know if you’re missing one of these pillars, you’re going to get exploited.
Proof of Concept
I’ve said often that ideas all sound really good in my head. Then when I exposed them to criticism, when I exposed them to my business plan, I see gaps. I see mistakes. So what I try to do is take my idea and put it through a micro-test, a very small version of a full-scale launch. Why?
I’m trying to get proof of concept now. I don’t have products, so I have to do what I just talked about. I want to see that there’s going to be some level of traction in the marketplace and there’s going to be a want for what it is.
So you have to vet your ideas, so we start with the idea and the first fundamental is you have to get proof that this idea is just not something in your head that sounds good.
Have a Strategy to Attract Your Target Customer
There are many things that you could do well in business, but I’m talking about the five that, I believe if you fail in these five in the initial phase of a start-up, it’s going to have a hard time surviving.
You’ve got to know how you’re going to attract customers. Who is your target customer? Who’s most likely to buy from you? And how are you going to attract them? What is going to be your advertising? What is going to be your branding position? What’s your USP? Why are they going to buy your product over the competition and how are you going to tell your target customers about your USP?
We do these over and over but just watch TV, listen to the radio. When you advertise, you basically try to draw a contrast between what you offer and what the competition offers, or you want to use something that would attract a customer, for example like All-State does with its “safe driver saves 40%”.
It’s Just a little example, but they’re trying to attract good drivers. You got The General trying to attract a totally different type of customer.
They’re using TV to do that, but you have to have a method by which you’re going to attract your target customers. It’s amazing how people will open up a business and just assume that if you build it, they will come. I have never seen that happen yet, so you have to have a proven strategy to attract customers. I didn’t say marketing plan, because I want you to hear that sentence. Do you have a proven strategy, something that you have tested, to attract target customers?
Your Sales Strategy
How do you get them to buy from you?
I mean, at the end of the day, if they don’t buy what you are selling, you have a failure. I recently offered something and it was crickets. We had no success in our sales conversion. We reached out to our target customer, but we couldn’t convert sales. Why you want to have a proven sales method is because you need to know if your pricing is correct.
You need to know if you have a good sales force or you have a sales method that’s working. You have to convert these leads in your fundamental #2 to sales. There has to be a sales conversion strategy and it must work. It’s critical, these fundamentals, because when things start not working, maybe in the first couple of years of your startup, you can go back to these fundamentals and see where maybe you’re missing it. Maybe your idea wasn’t as good, you didn’t vet it as good as you thought. Maybe your marketing plan, your strategy to attract customers, you never had one in place, so you need to go back and create that. Maybe your sales are extremely weak. A bad sales force, a bad sales strategy, you have the wrong pricing.
Serving Your Customers
Next, you have to service them, so whatever it is you offer, there is a service expectation there. This is just customer service. Warranties, providing service after the sale, etc. Do you have something set up in place? It’s the service after the sale that makes customers become big fans of yours. How do you deal with complaints?
Recently, in the last five years, I had a customer where we kind of got in a disagreement. It eventually landed on my desk and I was pretty firm with her, that I felt like we’ve done everything that we could, and that we were just going to have to part ways. She ended up reaching back to me in an email three years later saying, “I love the way you handled it, I didn’t like it at the time, but you were very straightforward, you didn’t delay, you were very principled in how you viewed it”, and she goes, “I want to use you guys because I know even at the worst, the worst something can turn out, I know how you guys will respond, you’ll respond immediately with great clarity, and your principle and I can live with that even though I disagree with the outcome before I wish it would have been more favorable to me, but you were principled and how you handled it”.
It’s how we provide service. It’s your ability to service your customers good and bad. I mean not every service situation in our business probably works out necessarily the way the customer would like. I say this often, sometimes they share what they thought it was in our contract, and I share with them. I don’t give you what you thought. I give you those bullet points in the contract because when we initially consult with you, you share a lot of things that you would like, and then we put dollar figures next to them. You tend to shrink that scope of work back a little bit, then at the end, you want things to have been in there that you thought we would do. I don’t give you what you thought, I give you what you paid for.
Staffing is critical and it almost touches a lot of these. In other words, if you have a bad sales staff, your sales conversion won’t be good. You won’t be able to service your customers. I have three people that work in our office in one of our companies, and one of them, a numbers person, she’s great at just highly detailed projects for me. One is just a sweet person who just can’t say no or put anybody on hold either. Literally, she takes your phone call, will listen to you, she will handle it, and then boom, shall go to the recording and go pick up another person. That’s how focused she is on making you happy. There was a time when it drove me crazy, but then I kinda listen to the phone call, it made sense. Why I put this person and hold? They’re sharing with you what’s frustrating them. Listen to it in full and then solve it, and she’s great at it.
I’ve learned that I need to have staff in place that are more patient than me. For me, just give me the facts. How can I solve it? I want to solve this fast as humanly possible, but I need to staff my company with talented people to be able to provide the services that we offer and that we charge good money for. If you can’t staff, that’s a fundamental problem, because you’re not going to be able to provide what it is your offering. If it’s a service, you’re probably not going to be able to provide it well. If you’re creating a product, it’s not going to be as good as it could be.