I’m about to teach you two concepts that will rock your world.
They definitely rocked mine.
But before we dive in, I want to make sure you know about the framework I use to build businesses. Otherwise, this won’t make as much sense.
All businesses are made up of 5 Interdependent Parts.
Your business must…
- Create value that your target market wants and is willing to pay for.
- Gain people’s attention and create demand for the value you create.
- Set expectations and transact.
- Deliver that value in a way that satisfies those expectations.
- Cover expenses, make efforts worthwhile, and, if the business will continue, support and reinvest in continued operations.
Okay, are you ready for the first concept?
“What the heck? ‘Coin-operated??’ Is he talking about a laundromat?” – No, I’m not.
These two words should become the battle cry for your business-building efforts moving forward. The idea, which we’ll discuss in-depth in my various programs, is that you put money in and get money out.
It’s that simple.
Now you might say, “I don’t do this just for the money.” Well you know what? Neither do I.
That being said, a business must generate a profit to fuel itself and its operations. Businesses that don’t fuel themselves are not sustainable. We’ll discuss this at length in the future. For the time being, let’s ensure your business is generating the profit it needs.
Here’s a hypothetical example:
- You invest $50 into marketing and *pop* five prospects come out.
- Of those five prospects, two become paying customers.
- Those customers, once the transaction is complete, add $250 to your bottom line.
- You choose to invest $150 of that money back in to marketing and *pop* fifteen prospects come out.
- Of those fifteen prospects, six become paying customers which gives you $750 in profit.
- Repeat the cycle until you’re as wealthy as you want to be.
…you get the idea.
In order for a business to be coin-operated, it must have all five parts properly dialed in. Each must be predictable, lean, and reliable. Parts of the business that produce too little, or, perhaps surprisingly, generate too much output can overwhelm the system.
Here are a couple situations that may feel familiar.
- (Part of the business underperforming) Having the operations to support 5 customers but lacking the customers to generate a sufficient profit.
- (Part of the business outperforming the others) Only being able to serve 5 customers but suddenly having 500 show up wanting service? It might sound like an ideal scenario but scaling up 100x can easily break any system.
Here comes concept number two!
What I’ve described above are bottlenecks; this is another key concept we’ll apply within the framework of the 5 Interdependent Parts of Every Business.
Simply put, a bottleneck is where a business’ output is limited. By fixing the bottleneck, you increase the output of the system.
In the first situation, the lack of customers was a bottleneck that provided insufficient profit.
In the second, the rest of the business not being able to keep up with demand bottlenecked profit as well.
As you can see, fixing bottlenecks is the key to a properly coin-operated business.
I hope these concepts serve you well.
Before we close out, I want to give you a little food for thought – Try to break your business down into its 5 component parts. Do you know where your bottleneck lies?
Want hands on help uncovering the bottlenecks within your own business? This is one of the key steps in my 60-minute Complimentary Session. Apply for a Complimentary Session today right HERE.