Two Reasons to Read This: Customers + Money

As simple as this all sounds, you might be amazed at how many business owners and business leaders in companies and nonprofit organizations make this complicated.  You need two things to start and grow a business--customers and money, in that order.

In a high-powered board of directors meeting last month, I asked the well-educated, experienced business leaders, What is the first thing you need to start a business?  One voice quickly said, "a business plan." Silence followed. There were only two possible answers and they got it wrong.  No, my wise leaders, I said, we start with customers.  Those are people who know you, believe in you and tell you that your service or product is so good they will buy it if you start a business.  Then you get the money, from your own pocket or you may write that business plan to get it from a business investor.

The best business plan I've seen in action--for every size of business, is one page and visual.  Matter of fact, it's so clear and simple it fits on the screen of your Palm or other handheld information tool.  It shows you where the money is and how hard or easy it will be to make it.

In the time it takes to finish this blog, you can create your own Business Action Plan.  Start with one sheet of paper and draw a box (4 lines).  Now divide it into quadrants. (That’s two more lines, one vertical in the middle and one horizontal in the middle to form four boxes all touching each other.) Name the vertical scale customers:  Current Customers and New Customers/Prospects. Make the horizontal scale product/services:  Current Products/Services and New Product/Services.

So the four possible combinations -- the labels for each of the four quadrants, look like this:
Current Customers buying Current Products/Services
Current Customers buying New Product/Services
New Customers/Prospects buying Current Products/Services
New Customers/Prospect buying New Products Services

Every day, in the drama and decisions of your business, you work with these  fours scenarios in terms of what it costs you to do business and how much work it takes to achieve a certain level of income and profit.  The objective of the game of business is to move from the box you are in now to the one with the best customers and most profit. Where do you make the most money?  Right, if you pointed to the quadrant where current customers, who know and trust you, buy more of the current products and services offered now, proven to work over time and you have success stories that support this.  Those are the testimonials and referrals you are putting on your website and in your proposals.

In which quadrant do you see the risk at the highest level and where you may work for some time, living off of your savings or a business loan?  Right again if you said, there in the quadrant with the new customers or prospects who barely know you, buying a service or product that you just invented or just added to your business.  Isn't that the way it is with most new business start ups?  Specifically, a lot of new customers trying out new services and products?  Every business that started and made it remembers those days.  That's the toughest row to hoe.  Why buy an unknown from someone you don't know?

The point is, it is all about customers.  And that takes us back to the article that Michelle Nichols writes this week for BusinessWeek Online.  In her column, The Holy Grail of Sales, she presents a fresh, clear way to pick three paths in your search to achieve more money and more customers at the same time.  Her story starts out with a client wanting to know how to sell more and make more money.  He thinks there is something special about that.

In addition to a constant stream of intensely practical information which you can -- and should, put into action immediately, we count on Michelle to make us laugh and make us better at the most important elements of business -- connecting with and through customers.  Sign up for her free newsletter on her website Savvy Selling International.

Comments

[Lewis Green]

Georgia,

Thank you for helping your readers gain perspective on starting a business: At L&G, we take a similar approach by advising our clients to first identify their target market (narrowly focused) and then create a business plan. However, I take issue with your one-pager. Most investors I know would not take kindly to a one-page business plan, which sounds like the halcion days of dot.coms, and we all know how that worked out. Investors expect business plans to be detailed and forward-looking, with emphasis placed on sales and marketing, management, projections and an exit strategy.

[Georgia Patrick]

Lewis Green is right about investors, other than yourself and your close friends. The people in business to invest money and make money tell us they read hundreds of business plans a year and they tell us what those plans look like. Yes, they are many pages. The start for any journey is a single step. A one-page plan with the essential information is a good first step. Most of the time, the investor for the small business is the owner and his or her family, friends, and those who have lived in the same town with them. Do you know how many will tell you they started and made a good life without writing a business plan? Back to Lewis. In today's business environment, it would be good to see a business plan with all of those elements he includes in his plans for his clients. We agree that would be terrific.