In my newsletter of September 8 I first introduced the concept of the 5-stage framework for assessing how well your business is doing. This week, we’re going to take this one step further to see how we can use the framework to not only assess performance, but also how to use the model to plan.
What’s in a name?
Having catchy names for your products is critical – they’re memorable and create a sense of identity. Here’s the 5-stage framework I introduced a few weeks ago:
I’m still looking for a catchy name for this framework. My current candidates are:
- The 5-Stage Business Development Framework (5BDF)
- The 5-Stage Business Building Framework (5BBF)
and more variations on that theme. As you will see from the rest of this newsletter, the framework is tremendously useful for planning your business activities, so I really like the idea of a “framework”.
For now, I’m going to use 5BDF – if you have any suggestions for a catchy name please let me know!
Assessing your business health
If your business is not doing as well as you would like it to, the first step is to assess how well you’re doing in each of the 5 stages.
I use a 5-step scale as follows:
- +3: things are fantastic; the world is my friend.
- +1: things are good
- 0: sometimes good, sometimes not so good
- -1: this ain’t good at all
- -3: a disaster; the world is ending
Note that there is no +2 or -2. Now rate your business in each of the 5 stages using the scale above. Most of the businesses that I work with assess themselves something like this:
In the diagram above I’ve also used colors so that I can quickly see where I need to focus.
How does this help?
This is not a terribly sophisticated tool – but for a small business you definitely don’t want a lot of overhead. At a glance, we can see where we’re doing well and where we need to pay attention.
Adding the first level of detail
We’re going to turn the 5BDF into a planning tool by adding some rows beneath the main timeline. The first row we’re going to add is called Key Activities. (I’m not yet happy with that name either but I’ll fix that later.)
The idea with the Key Activities row is to capture the key things that you’re doing – or need to do – in each of the 5 stages. The best way to start is by asking yourself questions – here’s what they look like for the Marketing stage:
By answering these questions we can get a pretty good idea of what we should be doing in each stage. For example, in the Marketing stage you may have something like this:
A sample set of questions
To get you started, here’s a sample set of questions you will need to answer in each of the stages:
I introduced the concept of “simple” and “complex” sales in the previous newsletter; in case you missed it:
- Simple sales are sales where you spend little or no time interacting with your client to make the sale. Info products (ebooks) typically fall in this category.
- Complex sales require some degree of interaction between you and your client. The more complex and expensive your product, the more time you will need to sell it.
Now add metrics
In any business the most precious resource you have is time. You don’t have time to waste; you need to spend your time on the stuff that delivers the highest return in investment; and you need to know where to focus right now, this week or this month.
Marketing can be an incredible time suck without a lot to show for it. I write articles on Medium – but these do not generate a lot of leads or sales. So I only publish articles there when I have spare time, or publish articles like this one when I think it is of value to the community there.
The key to making sure you’re spending time on stuff that delivers value is to measure how effective each activity is. To do that, we need to track the metrics that matter.
Here’s a sample of how I track my marketing:
As with Key Activities, some questions will help you determine what your Metrics should be. Here are some questions to get you started:
Finally, plan your focus
The last step is to determine where you need to focus your time and attention next. There are two questions that you need to answer:
- What’s the most critical problem to solve?
- Where am I going to get the highest ROI?
There’s usually a lot of critical problems to solve and it can be difficult to predict the ROI. But your time is limited so you have to make a choice.
What I’ve found most useful is to choose one thing from each of the five stages, and then pick one of those to work on until its done.
In the diagram below, I’ve done two things:
- I’ve combined my Key Activities and Metrics rows so that I have a very compact view of what I’m doing in each stage and how I’m going to measure success.
- I’ve also added a Next Up row where I identify the next challenges I need to overcome.
The key to getting stuff done is to pick just the few items you can focus on next and working on those until they’re done. You will see from the diagram above that there are only three things that I’m going to focus on: my website, my LinkedIn marketing activities and designing and setting up a campaign in my lead nurturing phase.
Keep the number of items you’re working on small. Get those done, make sure you have metrics to make sure you can measure how successful the work was, and move on to the next item.
Which way is best – forward or backward?
You do marketing (creating awareness) so that you can gather leads. You nurture those leads so that they buy from you. And when they buy, you better have your product ready.
So where do you start? Do you get your product ready, then make sure you have your lead nurturing set up before you start marketing? This is the backward approach – start with the goal and work backwards to get everything in place.
The alternative is to work forwards. Start with your marketing. Then, as soon as you get your first leads, you work like mad to get your lead nurturing in place. And when the first clients are ready to buy, you scramble to get your products in place. And the back office infrastructure so you can accept payments and deliver your product or service.
Each approach has pros and cons. Working backwards is safer and less stressful – but you can fall into the trap of trying to get everything perfect before opening up your marketing. And of course – if you’re in the early stage of a business – you can run the risk of building stuff that people don’t want.
Working forwards is a lot more stressful – but it can be faster to get results and more importantly, feedback from the market. If you start with marketing you can quickly determine what works and what doesn’t, and how you need to change your messaging (and the eventual product or service) based on market feedback. The disadvantages of course include continuous stress, and if you don’t like stress you’re likely to deliver something that is sub-par.
The approach you choose will depend on your personality, your appetite for risk and the time that you have for fighting fires. My personal preference is to work backwards because I believe that I have a reasonably good understanding of what my market needs. Your mileage may differ.
I’d be very interested to hear how useful you find this tool and methodology – I’ve been teaching it to a number of early-stage businesses now and it seems to deliver a lot of value. Let me know!