By Alan Wozniak, CEC, CIEC
Just like a basketball coach starts every season with a game plan to win a championship, entrepreneurs need a solid game plan to build a healthy business that can thrive in today’s market.
78.5% of small businesses survive their first year, 50% fail by year five and 70% by year ten. If you want to avoid these disturbing tactics, it’ll require a lot of ingenuity, spirited initiative, and planning.
Keep reading to learn how to draw up a sound game plan to help you build a thriving business that can even weather the toughest of times.
What Does a Healthy Business Look Like?
Zig Ziglar once said, “You can’t hit a target you can’t see, and you can’t see a target you don’t have.”
Understanding what a healthy business looks like will allow you to manifest a company that embodies the right characteristics for success.
During a routine physical exam, your doctor will perform a series of tests to check various vital signs to assess your overall health. They’ll monitor your blood pressure to evaluate your risk of heart disease, measure your BMI to determine potential obesity conditions and continue throughout your body to identify any issues that may require further attention.
Similarly, a healthy business is the same way. If you’ve ever seen the Shark Tank series, investors like Mark Cuban and Kevin O’Leary are asking probing business health questions to quickly determine a startup’s health.
For example, they’ll ask questions like:
- How much revenue do you make? This helps determine your company size and analyze growth potential.
- What is your profit margin? Profitability is a great indicator of a healthy business since it means you’ll have cash reserves to weather bad times or slow seasons.
- What is your customer acquisition cost? The cost to acquire a customer acquisition cost helps you predict future finances. If it costs you $10 to get a $20 return for each customer, you’ve got a 2x ROI on your ad spend.
- What is your unique selling proposition? A compelling, unique selling proposition helps you differentiate yourself from competitors in the space. Businesses that leverage the Blue Ocean Strategy can get into an untapped market space where demand is created rather than fought over. This allows companies to set their own prices and avoid competing on price alone.
- What is your growth strategy? A marketing and sales plan gives business owners a clear plan of attack to grow and scale their company. Without it, they’re likely to fall short of the innovations and advancements made by their competitors.
- What is your team like? A team and culture can either wreak havoc or inspire a productive workforce. Business leadership is needed to help motivate and set a company standard for excellence.
Create Your Business Plan:
Creating a business plan is like building a blueprint for your dream house. You wouldn’t start building a house without a plan, and the same goes for starting a business. A business plan outlines your goals and strategies for achieving success.
A well-thought-out plan sets you up for success since it can help secure funding, attract customers, hire the right candidates, and guide your decision-making. This dynamic document is perfect for fleshing out your ideas and identifying potential problems.
Perform Market Research:
Entrepreneurs make the mistake of focusing on their products or marketing before thoroughly understanding their competition. 42% of startups failed because of a lack of market need for their product. Thus, identifying a need for your offer and understanding how your competitors operate is crucial.
Sam Walton, the owner of Walmart, would frequently visit his competitor’s stores to observe their merchandising techniques and pricing strategies and observe their operations. He’d even talk to their customers to find out what they liked and didn’t like about their shopping experiences.
A market research strategy like the SWOT analysis helps you identify your own strengths, weaknesses, opportunities, and threats. You’ll gain a high-level overview of the internal and external environment surrounding your business and identify areas to capitalize on in the marketplace. For example, the founders of Airbnb noticed that hotels in San Francisco were booked due to a design conference. Thus, he realized the need for alternative accommodations, which led to the innovation of an app that let others rent out their properties.
Get Your Finances in Order:
Launching and growing your business requires a significant financial investment. You’ll likely need access to capital, loans, investments, or revenue. For a business to be healthy, it must generate more than enough revenue to sustain operations and turn a profit that can be reinvested for future growth. Developing a budget will help you accurately track expenses and revenue.
Build a Team:
As your business expands, you’ll want to delegate your day-to-day operations to a team of trusted people. It’s crucial to find a group of A-players who can embody your sense of spirit and exhibit a willingness to complete the task no matter what it takes.
That said, there are plenty of resources you can turn to build your team of A players:
- Job boards: Hiring platforms like Glassdoor and Indeed allow you to post jobs, screen resumes and conduct video interviews.
- Social media: LinkedIn and Facebook are growing hubs for finding potential employees. Post a LinkedIn job or search through professionally organized groups to find the right candidates.
- Freelance platforms: Sites like Upwork and Fiverr can be perfect for hiring short-term projects. You can outsource tasks like social media, customer service, bookkeeping or marketing.
Building a healthy business takes more than just a great idea – it takes a solid game plan and a dedicated team of A-players who share your vision and passion. Delegating day-to-day operations to a trustworthy team allows you to focus your attention on the big picture and grow your business to new heights. With our business playbook, you’ve got the fundamentals to weather the ups and downs that lie ahead.
Contact Business Health Check for a free Business Health Assessment and free Coaching session Booking Calendar – Executive Coaching (businesshealthmatters.org)