Service based businesses are pretty much made up of the same ingredients. Many business owners tend to get stuck only focusing on one of the pillars, which prevents them from taking their business to the next level. I have broken down the ingredients here so you can ensure you have a strong and healthy foundation in your business, which will lead your company towards growth.
What are the things you think of when it comes to growing your business? If you’re like most business owners, you tend to immediately gravitate towards Sales & Marketing. But what if I told you you’re not looking at the full picture? Just like there are several pillars to look at to make up a happy and fulfilling personal life, there are several pillars that need to be looked at to create a healthy and strong foundation in your business. Wait, why am I now talking about a healthy and strong foundation in a business when the topic is growing a business? That’s because there is a direct correlation between having a strong foundation in a business and it’s ability to grow.
In this article, I am going to help you understand this correlation and I will identify what the 5 pillars are that make up a strong and healthy foundation in your service based business. We’ll break down these pillars even farther to help you understand why certain pillars get all the glory and others are neglected, and why this is preventing your business’s ability to get to the next level.
CASE STUDY: $8.5 MILLION REVENUE INCREASE
DUE TO A STRONG FOUNDATION
Before I jump into what the pillars are, I want to illustrate what it looks like when you don’t have a strong foundation in your business. In 2013, I began working with a company in the home improvement industry. They had already been in business for 14 years which is an incredible achievement, especially for a home improvement company located in an area heavily saturated with direct competition. Not only were they able to survive through the recession, but their annual revenue was $4 million. However, their revenue was not consistent and over the course of the years, they were never able to get past the $4 million mark. You may be saying to yourself, “I wouldn’t want to grow if my business generated $4 million each year!”… but they did. They had a few things going for them including a couple of rockstar sales reps, who were able to turn and burn, and they were willing to make the investment into their sales training. However, they had several areas that needed improvement but didn’t recognize the need to improve these other areas. As the business grew, there were never any definitive departments established nor definitive roles for the staff. Office employees were wearing many hats that overlapped with each other and there were no hard lines to what the expectations were. Every day was a new day to reinvent the wheel and a lot of time was wasted on mundane tasks because there were no established processes or workflows.
Over the course of the next year, I focused on establishing actual departments with processes, workflows, and expectations. I created the systems for their primary lead generation departments including telemarketing and trade shows. I customized their CRM and Project Management softwares, implementing and managing the flows still being used to this day. I continued to identify inefficiencies within their operations, technology, and raised the standard for what was expected from the staff. Once there were clearly defined roles and departments with the right people managing the right tasks, the company’s net revenue began to skyrocket. A strong foundation was getting built because we began looking at more than just the Sales pillar. The stronger foundation afforded them with the opportunity to add even more revenue generating departments, which resulted in an $8.5 million revenue increase.
For 14 years, this home improvement company was unable to get past the $4 million revenue mark. They were focused just on the Sales & Marketing pillar, there were no definitive roles or department structure, and they didn’t have the right people in the right spots. Within a few years, their revenue steadily increased from $3.8 million in 2014 to $6 million in 2015 to $8.6 million in 2016 to $12.9 million in 2017, with continued growth. This was achieved by taking a few steps back and establishing a healthy and strong foundation within the business, giving the company the ability to grow.
WHAT PREVENTS BUSINESS OWNERS FROM SEEING THE BIG PICTURE?
What are the two things business owner place value on? The answer is — Money & Time. The 5 pillars are broken down to demonstrate how they support the two categories most business owners seem to value the most.
Money: The Money pillars include Sales & Marketing and Finance. Sales & Marketing gets all the glory because it’s easier to identify your ROI and Finance does because we are conditioned to know that Accounting and Finance is a critical part of business. If a business owner is looking to grow their business, the first places they go is to their financial planner and a Marketing strategist, typically. While this may generate some extra income for your business, there are still 3 pillars that are not getting looked and they are related to saving you time AND money. Neglecting the other pillars creates the weak foundation.
Time: The 3 pillars associated with creating time within your business are the Operations, Technology, and Internal Relationships. These pillars are often overlooked and are seriously undervalued, but why? The most obvious answer is it’s not as easy to measure your ROI. In fact, if you don’t have proper business training and experience, you will likely not have any clue as to how you are supposed to be able to identify what is, and is not, working for you in these areas.
As a business owner, when you started your company you were the one doing everything yourself. You knew your field of expertise and understood what needed to be done to handle the few clients you had. However, as you progressed, did you refine your business processes? Have you upgraded your CRM as your clientele increased? Do you know if your day-to-day operations are handled in the most efficient manner? Are you sure you have the right people handling the right tasks? How well did you train them or are they just figuring it out as they go rather than following a structured process? Did you really pass on all your knowledge and how did you do that? Are you sure that training was retained and is followed consistently? The point is, you may have grown but did your business as an entity grow with you? There are 3 stages in a businesses growth: Infancy, Adolescence, and Maturity. You are most likely in the Adolescent stage but just as you were refined as you grew, the components within your businesses pillars need to be refined with each stage as well.
THE 5 PILLARS THAT MAKE UP A STRONG FOUNDATION:
Let’s look at just the infancy stage of a business and identify a few of the components within each pillar.
Sales & Marketing: This is the place I think all business owners start. You first focus on your external foundation because you need to look like the expert. You get a business email account setup, invest in a simple website, get yourself some business cards, and probably set yourself up with a few social media profiles. Depending on the industry you’re in, you’ll either work from your home office, invest in a work share space, or you might invest in an actual brick and mortar location. You’ll need to understand exactly what it is you do and who you provide it too. What the avenues are you plan to take to raise awareness that your business exists and the avenues you will use to generate leads. This is the fun and sexy part of starting a business and some people are never able to grow because they stay focused on this pillar alone, and stay stuck in the infancy stage. Since this pillar is critical with starting the business and it’s easy to measure your ROI, this pillar get’s a lot of attention and tends to get refined as the business grows since its’s looked at often.
Finance: Anyone that went to college, and even in high school, are programmed to understand that Finance is a major pillar in both business and in life. We easily correlate this to Financial Planning and Accounting which are two areas most people don’t have enough experience or know-how to mange it themselves, so a professional get’s hired. The types of things this professional is helping you with is identifying what your income sources are, assisting with tax preparation and planning, analyzing your sales and keeping an eye on your Accounts Receivable and Accounts Payable. No one wants to be responsible for their demise because they simply weren’t handling their money properly, so this is an easy pillar that get’s invested into and get’s refined over time, with the help of a professional.
Technology: Along with finance, technology is another pillar that makes people uncomfortable. It’s overwhelming what all the options are so instead of handling this ourselves, we tend to hire an MSP (managed service provider), expecting they will lead your company in the right direction for it’s technological needs. WRONG! Your MSP is managing the devices that keeps your business protected and secure like your firewalls and VPN. They troubleshoot if you experience software issues and will reset your company password when you forget it after a holiday weekend. But what they are not doing is ensuring the systems you are using is appropriate for your needs. What CRM do you use and is it being used effectively? What is the internal user experience for entering a new job or following up on an activity? What about your hardware? Do you have people working outside of the office? Is their experience different than when physically in the office? Are you utilizing all of the resources you do have? Are you unnecessarily paying for multiple systems when you really only need one? Your MSP is NOT managing these things but since the technology pillar is still a relatively new concept, we assume an IT company handles everything having to do with IT. Most likely they have not evaluated your operations or made strong technical recommendations based upon your current needs with service and support options that can be added later to support your growth.
Internal Relationships: I bet you’re thinking to yourself “shouldn’t this be Human Resources?” and the answer is NO. Human Resources is related to managing your staff including their benefits & compensation and ensuring they comply with company standards. Internal Relationships on the other hand is related to individuals from all levels within the business, including you as the business owner. This is a relationship just like any other and to ensure its healthy and working efficiently, you need to look at more than just experience, benefits, and compensation when adding to your staff. Too often a business owner will quickly point the blame to their staff if something goes wrong. However, it’s often that the business owner overlooked a deeper issue. Self awareness seems to be a hard pill to swallow and just like not everyone is cut out to be a parent, not everyone is cut out to run a business. Thinking you know everything or not respecting your staffs input to issues encountered will result in an inefficient workforce who will most likely take advantage of you any way they can. In some cases, individuals are hired specifically because they are weaker and cheaper and a more dominating business owner gets their way but only out of fear. This, of course, is a recipe for disaster and will create more work for everyone as time moves forward. What are your core values as the business owner? Are you hiring a staff with similar core values? Hiring the right people for the right tasks is a skill and since its expensive and timely to rehire, business owners are often left with settling for less. Just like in a romantic relationship, you get what you settle for. Building strong relationships with your staff enhances their confidence to communicate solutions and you’ll receive greater commitment since there is an actual relationship. You’ll also discover what motivates your employees, as individuals. One employee may want a bonus for their effort where another just wants a day off, depending on what they value (time or money).
Operations: I left this pillar as the last one, even though hands down it is the most important. It’s the most important because it connects to all of the pillars and is the central point. This is an area that is seriously undervalued and this responsibility tends to inappropriately fall into the hands of anyone who seems to have any organizational skills whatsoever. “Figure out a way we can do this,” is something you may have said to an employee a time or two. As time passes and new people are hired, the wheel keeps getting reinvented, you have to invest time into training because most likely there isn’t anything documented and if you do, it’s outdated and hard to find. How long does it take to find anything in your file structure? What is the process when there’s a prospect? A lead? A new client? An existing client? Turning in a contract? Collecting payments? Ensuring theres enough prospects even in the pipeline? Who is involved with the different departments in your business? Do they understand how their role plays into the bigger picture? Do they even know what the bigger picture is? Does everyone know what’s expected of them on a daily and weekly basis? Does your staff get their tasks done in a timely and efficient manner? Businesses that lack a solid foundation with their operations are likely experiencing highly stressful and disorganized days. You are the business owner but you’re still stuck managing the day-to-day activities because time is not used efficiently and operations are dependent on your direct follow through.
HOW TO BUILD A STRONG FOUNDATION IN YOUR BUSINESS:
Figure it out yourself: Go through the 5 pillars and identify what the components are within each pillar. Break the components down by stages and identify which stage your business is in. Focus on developing a strong foundation within all 5 pillars and recognize what needs your attention. Who is responsible for each component, what do you expect from it, and when do you expect it by? Measure its progress on a weekly basis to identify what changes need to be made as it progresses. Week by week, following up on those changes to ensure you’re heading in the right direction.
Hire a Coach or Consultant: Coaches and Consultants typically specialize in a specific component within a particular pillar. For example, a sales coach who is good at streamlining your sales funnel and lead generation avenues, or a sales consultant who can actually develop, implement, and manage your sales process. What about a digital marketing strategist or financial strategist. These professionals are focused on a specific niche which provide results in only one, or a couple, of the components.
Hire an Outsourced COO: A COO has experience and knowledge within each of the pillars and can easily identify the inefficiencies across all of the components. Your business may not be in a position to hire a COO outright, so an outsourced COO will still award you with access to the expertise, knowledge, and experience but for a fraction of the time and for a fraction of the cost. Evolving Enterprises is an outsourced COO service provider with 19 years of experience, creating a healthy and strong foundation in service businesses… like yours.
If you are a business owner looking to grow your business, feel free to contact me with any questions!
Tiffany has been successfully helping businesses grow since the early age of 16 years old. She quickly discovered her ability to identify inefficiencies and improve operations in an effort to decrease stress and improve the overall quality of work life, which she noticed was lacking in her first place of employment. She went on to start her own in-house ballroom dance business which she ran for 5 years.
After graduating from GMU with a bachelor’s in business management, she accepted a position at a construction company acting as the Director of Operations to which she re-engineered the entire foundation, increasing the company’s annual net revenue from 4 to 12.5 million dollars.
Tiffany owns Evolving Enterprises with her husband, Rick Carroll, and their mission is to raise awareness and educate business owners on how to establish a strong foundation in their businesses, and the importance behind it, using Evolving Enterprises proven Foundation Building methods.
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