About Erica Olsen
Erica Olsen is a principal of M3 Planning, making strategy a reality for entrepreneurial-spirited organizations. Her company runs MyStrategicPlan.com, a web-based strategic planning site for small and medium businesses. She is also the author of the book, Strategic Planning For Dummies.
Strengthening Your Strengths
More than likely you have explored your home business' strengths at least once over the last few years, (or several times if you have ever hired a consultant). Embracing business best-practices guides you to look at the strengths of your shop, especially as you put a 2007 strategic plan together. But from a strategic perspective, you are not interested in a laundry list of everything your home business does well. In fact, sometimes this can bog the planning process down.
You want to identify the strengths that matter. (Let's call these key strengths.) Everything else is just icing on the cake. Finding these key strengths can be like panning for gold. You sift through the sand to find the most valuable nuggets. Uncovering those nuggets, those core activities, processes, products, services and intangible assets that propel your company forward is critical to the success of your organization and its growth. Here are four different places to look for your key strengths. Use the examples and questions to identify a handful of your strengths to help guide your strategic plan.
Finding meaning:
Do not let the title of this section scare you away. No intense therapy session is needed to dig into defining the purpose of your business. You may or may not have a mission statement for your home business, but somewhere on paper, or in your thoughts, you know why you started your business. Here are a few questions to get you started:
- What is the purpose of your business?
- What business are you really in?
- Why does your business exist?
Home businesses are founded for reasons as varied as something to do during retirement to making the world a better place (aka Zentrepreneurism). Challenge yourself to answer the above questions honestly and with conviction. To jump-start your thinking, here are some examples from organizations large and small:
- To solve the growing diabetes crisis
- To capitalize on a real estate growth trend
- To work for myself
- To provide quality window and door products better than anyone else
- To make fitness a way of life for everyone by making it fun, easy, and accessible to all
- To make my community a better place to live, work and recreate through publicly accessible open space
- To provide people with a great place to work
Putting all the semantics and flowery words aside, state the purpose of your business in a few short sentences.
Getting motivated:
An intangible, but powerful, force in all companies is the motivation of its employees or proprietor. While this may seem like an odd place to look for your key strengths, consider that nothing gets accomplished without some sort of human intervention. Most likely, your employees have the choice, or the opportunity, to work anywhere. Yet they work for your organization. Why? What brings them to work everyday? What brings you to work everyday? What are you passionate about? Without passion or motivation, nothing gets done.
Consider the example of a small, privately held construction company that specializes in the construction of water and wastewater treatment plants. The company's employees are passionate about building world-class water facilities. In fact, one employee told me he loves going to work every day and could not imagine doing anything else. Because of this key strength, the company is the "contractor of choice" of many public agencies in its region.
You and your employees are the organization's biggest assets. Find out what keeps them and you going so you can feed that fire. Here are most important questions to ask:
- What do you pound the table about?
- What motivates you to do your business?
- What makes you get out of bed in the morning?
- Why do your employees work for you?
If I asked you how you make money, more than likely you would reply by explaining the types and number of products or services you sell. While this is correct, look at your revenue generation from a different perspective. Resist looking at your income statement for the moment. We will look at a strategy best-practice to gain some insight into what really drives your profit engine. The best-practice is to think about your revenue in terms of profit per "X" such as:
- Profit per customer or client
- Profit per customer visit
- Profit per employee
- Profit per order
- Profit per product or service
- Profit per product or service line
- Profit per region
- Profit per billable hour
You might be tempted to look at the list above and decide that several of these are your profit engines. However, the challenge is to determine which one is actually the best revenue driver for your business. That is to say, they may all bring money into the business, but one will have the biggest impact. Looking at your revenue generation from this perspective is just like panning for gold. You do not need to change your activities, but you might need to look at your pan from a different angle to see the nugget.
Consider a regional retail chain, which focused on the individual revenue and margin of each store. Therefore the owner thought his profit engine was simply profit per store. Of course the individual profitability of a location is critical and makes sound financial sense. But from a strategic standpoint, think about how shifting from the perspective of profit per store to profit per customer might change some activities. Now instead of stores competing, they collaborate. Not only do the employees behave differently, the customers feel a difference and so does the bottom line.
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