News & Events
4 most critical business elements and the order you need to learn them
- May 6, 2016
- Posted by: Leigh
- Category: Business
I’ve already written about how a product-first business development model will kill your entrepreneurial dream, but that doesn’t mean you need to start with customer acquisition and then build your product out when you’ve got people banging on your door.
There’s more to building a sustainable online business than getting cash in through one door and sending products out the other (though that’s not a bad place to be). In fact, there are two other key elements — namely processes and people — you need to focus on when building and scaling your business.
And here they are in order of importance:
Least Important Element: Your Product
This is going to get under some people’s skin here, but it’s true: your product is the least important element of your business.
I’ve written about it all before, but the basic gist of it is, is that you can overcome shortfalls in your product with great people, great processes, and a killer marketing funnel. In fact, if you’ve got great people, great processes, and a killer marketing funnel, it doesn’t really matter what you’re selling. You could be selling the exact same product as your competitor and still beat them.
Yes, having a great product is awesome. Having something truly unique that stands out in the crowd and solves a high pain-point issue with ease and skill that really makes a difference to someone’s life is rewarding and fulfilling, but it’s also unnecessary.
In a choice between spending your last $5,000 on fine-tuning your product and building one of the other three elements listed below, I wouldn’t waste 30 seconds thinking about the product.
Second Least Important Element: Your People
This is also more controversial, but it’s true: whilst the people you hire for your business are more important than the product you sell because the support they offer and their hard work can overcome deficiencies in a product, they’re also less important than your sales funnel and your business processes and systems.
Yes, having a team of independent-thinking, motivated, action-orientated, movers and shakers is great, it’s also not necessary. MacDonalds is a multi-billion dollar company run by 15 year olds. They’re not driven, they’re not motivated, they’re not passionate about reheating dyed-brown ‘meat’ patties and slapping them in between buns that are so sweet, they’re almost classified as candy. They turn up, do their job, collect their pay cheque at the end of the week and give their friends free soft drinks when they come through the drive through, yet MacDonalds is making more cash than most other food businesses in the world.
The reason they can get away with having less-than-stellar employees is they’ve got the second most important business element down to a tee.
Second Most Important Element: Your Processes
The second most important of the four critical business elements is your business processes and systems. The reason it’s number two on the list is that tight business processes and systems can overcome limitations in both your product and your people.
You can overcome limitations in your product with:
- Exceptional customer support systems
- Unmatched delivery times and options
- Precise manufacturing standards that produce a consistent quality product, every time
- Wider availability and more immediate access
- More efficient business processes that allow you to deliver the same product for less than your competitors
And so on, and so on.
Finely tuned business processes will help you overcome limitations with your people by ensuring they don’t need to be motivated, driven, independent thinkers who can produce exceptional results with limited resources. If your processes and systems are tight, your team don’t have to think, they don’t have to guess, they don’t have to do more with less. All they need to do is follow the systems and processes that have been laid out before them and your company will run like a well-oiled machine.
Most Critical Element: Sales and marketing
I’ve said this all before: sales and marketing is the single most important part of any business. If you can’t get cash in through the front door, nothing else matters. You will not have a business.
Yes, Seth Godin has said that “Marketing is the price you pay for creating an unremarkable product”, but for someone to remark about your product, they need to know about it first. And if you can’t reach your target market and convince them to part with cash and at least try your product, there’ll be no-one to remark about your product.
- A great marketing funnel can make up for shortfalls in your product by being better at convincing your target market that you’re better at solving their problems than your competitors.
- A great marketing funnel can make up for shortfalls in your team by giving you enough cash in the bank to take your time to hire A-Players and rockstars.
- A great marketing funnel can make up for shortfalls in your processes and systems by giving you enough time up your sleeve to address your business process limitations and get things tightened up.
In short, if you’ve got a kick-ass marketing funnel, you’ll have the time you need to fix everything else, or pay someone else to fix it. If you don’t, your business will die.
Why? Because nothing overcomes a poorly performing sales funnel. You can have a great product, a motivated team, and tight processes, but if no-one is coming through your front door and handing over cash your business, none of those things will make matter.
NOTE: There is one exception to this; when you build a product that’s so revolutionary, so extraordinary, so incredible that solves a pain point so strong and solves it in such a unique and powerful way that people are searching for it before you’ve made it, and there’s no other solution on the market.
If you can do that, then your sales and marketing funnel doesn’t come first. You can build the product and people will come flooding through your doors.
BUT, the if you’re building a product like this, you going to need either extraordinary insight into human suffering, have an incredibly unique insight into how to solve a HUGE problem that no-one else can, or technical skills that put you in the top 1% of your industry.
If you’re starting out in the world of lifestyle design and are overwhelmed with the hundreds of different things you need to learn and the limited amount of time you have to learn them, don’t be. You don’t need to stress about learning all the different elements at once before you jump in.
Start with the most important thing first: sales and marketing. Once you’re confident you can get people to buy what you’re selling, start looking further down the line: processes and systems, people, and then your product.
Doing this will take the stress out of building your online business and get you living a location-independent dream sooner.