Business strategy is one of the most misunderstood concepts in the business world. It doesn’t matter if you’re looking at a startup or a billion-dollar business – every type of business regardless of size or industry has trouble nailing this down!
If there’s a hero of all the nine strategies for massive growth, business strategy is that hero.
But what is a business strategy exactly? It’s the plan to get from where you are now to where you want to be in the easiest, most efficient and profitable way possible.
It’s All About You!
In order to develop that plan, you need to first understand what determines your strategy.
What determines your strategy? The answer is YOU. You fundamentally matter. What you want drives the entire business strategy and subsequently the other eight strategies.
Entrepreneurs often get so caught up in the day-to-day of the business that they forget to stop and think about the current state of the business and how to get to that ideal future 5, 10, or even 20 years from the present moment.
Despite this common mistake, it is absolutely vital to do this. If you want exponential growth rather than getting incrementally better every year, you have to take the time to really develop your strategy.
It’s ok if you haven’t done this – it’s not too late to start and reading this blog is a great first step to getting into the right mindset.
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What you want sets the tone for the entire business strategy.
For example, the strategy for the client that comes to me and says, “I want a lifestyle business. I want X amount of money every year that’s only going to require this many clients.” is going to be very different from the one that wants to build a billion-dollar business that impacts millions of people.
Ask yourself, “What is it that I want my business to deliver? What kind of wealth, lifestyle and impact do I want it to make?”
Business is by design or by default. If you fail to nail down what it is that you want your business to be and deliver, and intentionally design the future of your business, you’ll get a default business. This is where most people end up – working really hard only to not get what they want out of the business.
And we definitely don’t want that to be the case.
The Magic Number
Now that we’ve determined that you are the foundation upon which your business strategy is built, let’s talk numbers.
What is the net profit you want out of your business? What is your Magic Number?
Your Magic Number should scare you a little bit. It’s a number you don’t quite know how to get to, but it’s exciting to think about. It can’t be based on a slightly better number than what you made last year – you have to think big for this.
Let’s say you want $1 million net profit in your pocket. This is the amount you receive after wages, cost of goods, taxes and all other costs are all paid for.
If your profit margin is 30%, you’ll need about $3.3 million in gross revenue. For the purposes of this example, let’s say you want to be hands-off and have someone running the business for your day-to-day. We’ll increase that gross revenue target to $3.5 million so you can pay the leaders and executives you hire to actively run the business.
Now you can ask yourself, “Is my business able to make $3.5 million? How would it get there?”
You need to look at all the metrics, opportunities and leverage points that will allow your business to hit that $3.5 million mark.
- Who do you sell to?
- How do you sell to them?
- What’s the size of the market?
- Is it growing or mature?
- What are the opportunities in the market?
- What are your conversion rates?
- What are your average transaction rates?
- What’s the lifetime value of a client?
Where else can you find leverage points to get to revenue that will you give you what you desire? There are always leverage points that CEOs and business owners miss and subsequently end up leaving money on the table because they’re too in the business to see them.
Having a crystal clear strategy to find those leverage points is SO POWERFUL.
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I’ll give you a few examples.
I did a two-day strategy intensive with a client who was doing about $5 million/year. We came up with a very clear strategy to get him $65 million in 10 years. He ended up reaching that number in 8 and got to $100 million in 10 years. It was incredible.
More recently, I did a two-day strategy intensive with a client who was doing $1 million/year and helped him map out a plan to get to $40 million in 5 years. He got there in 3 years!
I’m currently working with a business doing $25 million/year and was massively impacted by COVID-19. They came to me and my team and we rebuilt the leadership team after the shock of the pandemic. We came up with a strategy to divide the business into three key divisions that are working very closely together.
Then we worked out the strategy for each division. In one division alone, which is doing just about $2 million right now, we mapped a plan to get them to $15 million in 10 years. When we first started the strategic process, we couldn’t even fathom that number, but we ended up finding the leverage points that they needed to take advantage of. Their leverage point was that they needed two builders to come on as new clients every year and they’d hit their goals. That’s it.
When you work backwards from your Magic Number, all of a sudden, it becomes very attainable!
Another important factor to consider is, as I mentioned previously, where you are now.
For example, let’s imagine that you’re doing $4 million/year in revenue but your goal is $7 million/year. If your business has consistently and reliably brought in $4 million/year for many years, all you need to focus on is that gap of $3 million.
Your Magic Number is all about reverse engineering that big, bright future, rather than just making improvements on where you are today because you’ll just get more of the same.
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