The Three Percent Solution - Pt 1

We’ve long known that true financial independence only occurs for about 3% of the population. Similarly, I believe, that only 3% of all registered businesses ever achieve their potential greatness and success.

Some businesses let small issues take over while others become mired with a lack of focus. Some even let world economies dictate their prosperity. An elite group of entrepreneurs and business people chart their own path and create their own success. This group practices what we call “3%” behaviours. These behaviours separate them from the other businesses in their industry and create unparalleled success.

What are these 3% behaviours? What secrets do these successful businesses use they?

• take Strategic Action
• have Solid Structure
• resolve Issues creatively
• eliminate Chaos
• embrace Opportunity
• focus on People, Product, Profit
• elevate staff knowledge
• revise and review plans
• create momentum
• evaluate staff
• niche products or service
• take time to plan

This article reveals the top 5 behaviours and how to use them to your advantage.

Behaviour One: Take Strategic Action

While critical to success, this is the least common trait we have found amongst business owners.

Most often, owners or managers find themselves constantly fighting to keep their heads above water when it comes to “things to do”. Examples of tasks that seem to bury us are e-mail, telephone calls, unforeseen issues, internet searches, etc. The reason we get buried in these tasks is that they are never ending. Just when we finish one email response another comes in.

Strategic Action means doing things smarter by applying rules and protocols to how we do what we do. As leaders we have to stop exercising reactive action and start utilizing strategic actions.

One of the simplest ways to switch your strategy is to pre-plan what you are going to do each day, before the day starts and then don't deviate unless its a real emergency. If you are not a list person and this is a new or unproven concept to you, start by planning a single day. If you are seasoned list person tackle three to five days.

How To: To make a list system work for you, apply some strategic logic to your list.

Start by writing out a list of the key (bigger) tasks that need to be done. (Use a white board or flip chart) Once you have the list, sort the items based on the following criteria:

The Last Day Test
If I were to go on extended holidays tomorrow, what items on this list would HAVE to be done? These are the items that must be at the top of the list and should be performed early in the day when you have the most energy and focus.

The Financial Test
What items will yield me the greatest economic return of my time? These items may be tied in importance to the Last Day items. They should be items that yield direct financial benefit such as proposals, invoicing, and customer follow up.

The Hand-Off Test
What task could others do more economically than I could do it myself? Entrepreneurs often get caught up in the old adage “no one can do it as well as I can”. In fact, a good professional can often do it both as well and faster. This can save you time and money and allow you to focus on the top two category items (above).

To determine whether a hand-off is practical, follow this guideline:

Determine the value of your time to complete a task and then compare that the revenue lost as a result of doing the task.

The cost of the task is not what you pay yourself, its what your client pays for each hour of your productive time and is reflected as follows:

Revenue per hour of my time,
Times the number of hours required to complete a task
R x H = Time Value

Using this equation, lets assume I am building my own website. I know that it takes me about 2.5 hours per page and I want to build 2 pages.

The time value for me to build these two web pages is:
Billable rate x hours = cost 150.00/hr x 5 hours = $750.00

The hand-off comes when I either hand off the task to one of my staff who has web skills, or hire a contractor. For example: Contractor rate x hours = cost 30.00 /hr x 5 hours = $150.00

In this scenario, the direct benefit of handing the task off and billing my clients for my productive time is $600.00 in net revenue. Always consider the value of what you can do compared to the cost of others performing the same task and wherever feasible hand-off high cost, low yield tasks.

The Real Value Test
What could be dropped with little or no consequence? Once you have sorted and valued your tasks, it’s time to start looking at what you and/or your staff do each day with a critical eye. What tends to happen over time is that we take on new tasks, services or client protocols without looking at what we currently do, what has value to the customer, and what we could easily stop doing that nobody would notice.

For example, if you have 500 clients and only 2 need a return envelope with their statement, I would go with the other 498 as the defining factor. Stuffing the envelope may seem like a low impact activity to your bottom line, however, when you look at it critically we find: 500 envelopes x 3 seconds per envelope + 54 cents per envelope = a cost of 270 for the postage, a cost of 15.00 per month for the envelopes and a cost of 15.00 per month for the time to stuff the envelope. The total cost per year is: 3600.00. If you offer online, electronic or telephone payments this cost may not need to be incurred.

I am not suggesting you finish this article and immediately set about cleaning house on all the things you think are low value. Instead, look strategically at lower value aspects of your business and then ask you clients what they need to be satisfied. You will find advocates for every service you offer, so be strategic about which ones you drop.

Regardless of your perceived value of an offered service, always ask your clients what they think of the change before you do it. Then, before the change occurs advise your clients ahead of time. A good rule of thumb is to issue a change in service notice 3 moths prior, send a follow up 2 months prior, a final notice a few weeks prior, then drop the service.

Behaviour Two: Core Structure:

One of our larger clients, a national retail chain, has been hit hard by the current economy, with sales in some stores declining up to 50%. In such times, workforce adjustments are a reality. Therefore, with our guidance, the client streamlined its’ workforce.

The next step we took was to look at what we call the “core structure” of the organization. We started with a SWOT (strength, weakness, opportunity, threats) analysis for the organization. We then used the collected information to develop and refine their core structure. A strong core structure is important because it provides clarity to both staff and clients about your organizations’ purpose, direction and culture.

Core structure contains the following elements:

• The Vision Statement
• The Mission Statement
• The Operating principles
• Goals and Objectives
• Processes and Procedures
• Policies
• Performance Management (including leadership skills)

I often say a leader without a vision is on a pleasant walk to nowhere. Your vision provides clarity about your business’s future state of reality. It says who you will become in the future. In other words, “what would this company look like when it is fully matured?”

Your mission tells clients what you do or offer each day that adds or delivers value to them. It tells them why they should come to you over your competitor.

Your businesses’ operating principles are supporting statements that create a clear understanding of how you do business. Topics for these statements usually include our values, our relationships, excellence in service etc.

Your teams’ goals and objectives are central to any forward movement. If you have spent the last few years in hover mode collecting cash, congratulations! Now, it is time to start thinking about where you are going and how you are going to get there.

Your processes and/or procedures are the methods or steps required to do a task or responsibility in your business. Defined processes are important because they allow you to train and direct your entire team in consistent manner, enhancing client expectations and streamlining the service they will receive.

Your policies are the glue of your organization. If you have an effective set of policies, they should be dog-eared and worn by constant use. A poor set of policies sits on a shelf to be used only in emergency. Policies should be reviewed often and updated regularly. A policy is, it is a context statement that identifies the general aspect of the task, the process or procedures that are required, authority for the task, and a consequence should the task not be done correctly.

Performance management encompasses what you do to direct, disciple and delegate to your staff, as well as evaluations, and social interactions in your workplace. Without performance management, your team can feel unfulfilled and directionless. Managing performance will be the topic of a future article.

All of these elements together create a clear understanding on the part of each employee of where you are going, what it will look like once you get there, what they are expected to do to help you get there and how they and your clients will be treated, each day.

Core structure is the starting point for developing a strong business identity.

For a graphic example of what Core Structure looks like, visit the resources section of our website.

Target your advertising

Once you have your internal house in order, start looking at how you work your business outside of the walls of your location. I know from experience that there are a lot of slick salesmen out there trying to sell newspaper, radio, web-based and other advertisements. Be cautious of the quick sale/quick profit pitch of a quick-buck sales rep. Before you ever advertise, consider the following:

1. What is my target audience, and how do I reach them directly?
2. What does my target (ideal) client read, watch or do in their spare time?
3. In the past, when I have advertised, what method has brought me the most traffic?

You should only engage your advertising engine once you have considered how to effectively reach your client. If you are currently advertising, remember you are the master of your account. Regularly review the traffic you receive from each advertising medium and make changes when necessary.

Strategic Networking

Once you have your advertising in check, start looking at other methods of marketing your business, beyond conventional means. For example, do you belong to networking groups, chambers, professional organizations, associations, charities, social networks? All of these are effective tools for marketing your business. However, the challenge is to pick the best one or two that seem to offer you the highest return on investment (time).

When my wife, Jennifer, and I started WOW a few years ago, we were sucked into the vortex of “networking groups.” At one time we were involved in almost a dozen groups. In fact, we often didn’t have time to work in our business because we were so busy “working our business”. Jennifer is now down to two groups and I have also chosen two. We manage our networking to give us the best expose to our preferred clients.

When you engage in a group, think about the same types of questions you would ask when advertising, because networking is advertising. Make sure its’ effective and has the potential to yield results. If not, redirect your efforts and time somewhere where it will support your long term success.

Regardless of the challenge of our current economies, effective three percent behaviours are ones we consciously and strategically undertake to position ourselves and our business in the best place to receive and develop business success. If you want help positioning yourself, visit our website and download some of our free tools and resources or call us for advice.