By now we’ve all heard that the definition of insanity is doing the same thing over and over again and expecting different results.
But if so, then why do business owners do the same things every week, month and year and expect revenues and profits to grow?
Below I’ll give you two quick exercises to stop this insanity and immediately start growing your revenues and profits.
The First Exercise
Make a list of the three things that worked really well in your business over the past year and the three things that haven’t worked well. Then, start doing more of the three things that worked well.
Seems simple, doesn’t it?
But the vast majority of business owners do the opposite. That is, they keep focusing on trying to make things work that aren’t working. Rather, focus your energies on ideas and strategies that have worked well in the past.
For example, if you brought in a lot of money from a sale you did a few months ago, maybe you should figure out how to offer a new sale every month. Or, if training your salespeople six months ago led to a sales increase, maybe it’s time to do another training session.
Unfortunately, when we were kids in school, our teachers taught us to work on our weaknesses. Rather, in business, we should focus more on our strengths; what we’re good at and what’s working. Doing so will bring you a ton more success.
The Second Exercise
Write down your ultimate goal for your business. For example:
- Do you want to sell it in five years?
- Do you want to take it public?
Next, write down what your business looks like at that time:
- What will your revenues be then?
- How many employees will you have?
- How many customers?
Now that you have an idea of the business you are trying to build and what it looks like, you have a chance of actually creating it (before you didn’t). So, you’re off to a great start.
Now, to build this business, here’s what you need to do:
- Figure out what you need to accomplish in the next year to put you on the right trajectory to meeting your ultimate goal.
- Determine what you must accomplish in the next quarter to put you on the path to meeting your annual goal.
- Determine what you must do in the next month to be on the right path to accomplishing your quarterly goal.
- Decide what you must accomplish in the next week to be on track to hit your monthly goal.
In my book I call this process “reverse engineering success.” That is, once you know where you want to be in the future, you can work backwards to determine what you must accomplish in shorter and shorter time periods in order to get there. Then, you can adjust your schedule to ensure you complete these short-term goals that allow you to realize your long-term vision.
- Repeat the actions and strategies that have worked well in the past. They are proven winners, and deserve your attention.
- Start at the end. If you don’t know where you want to go, you’ll never get there. So, figure out where you want to take your business.
- Work in reverse. Figure out what you need to accomplish each week and month to progress you towards your ultimate goal.
- Organize these shorter-term goals into a business plan for you and your team to follow.
Do these things and you’ll start to see your success soar!
Stressed Photo via Shutterstock
Excellent piece…. The main reason why small biz do not move on to the next level is due to inadequate planning. No matter how small your business is, you need to plan and create room for development.Knowing where your small biz is gonna be in future is like knowing the end of a movie and you are trying to rewind to the beginning which is gonna be easier for you cause you already know where you are headed. And remember your business cannot be everything. Take time to find out your target market. Your product cant satisfy everybody. like the writer said earlier, we should focus on our strengths and at the same time work and leverage our weaknesses. Thank you for sharing Dave. I would be glad if you could guest post on my blog. i am certain my readers would gain from your wisdom. (twitter:@ayamtheone)
Great comment, Sadiq. I love your analogy about knowing where you’re going in your business is like knowing the end to a movie and rewinding it. This is so true. This is the first year that I know exactly where my business is going. I have an extremely clear vision for it and I know exactly how I want it to end. Knowing this gives me confidence and assurance in the steps that I’m taking know to get it there, which is something I haven’t had before.
Great article and well written. The advice seems too simple, but many don’t realize they are not doing it. Going through this exercise will reveal what needs to get done to achieve the goals written down. focus on the strengths and get help (hire or outsource) on stuff you are weak on. Thanks for sharing.
Great to see someone starting from the end. That is a huge step in determining what you should be doing now.
However, I recommend you look beyond the business. As a SMB owner/entrepreneur, your lifestyle will be intimately tied to your business — rather you are hands on or hands off in 3, 5 or 10 years.
I started with what I personally want for myself — then calculated what the business needed to look like to achieve that goal. From there and some math, you can plot revenue goals, target margins and other items.
Lastly, as you work backwards, don’t stop at the big picture items. Failuing to drill down into the details can stifle development.
For example, if you need to grow revenues by 300% to meet your goal. How mnay new customers or units sold does that take? What if you tweaked your margins? How does that impact the plan.
Great post, Dave. In the early years of my business, I was that insane one, chasing my tail expecting to get something different. It wasn’t until I decided to do the complete opposite of what I was comfortable with that I began to see significant changes and growth in my business. Making that shift and seeing the changes is all that it took because now I’m addicted to pushing myself to go outside of my comfort zone. As long as I keep stretching to reach new milestones, I’ll never return to insanity. Thanks for sharing your insights on this topic. I appreciate it!
1- You need to spell check. Right down? You mean Write down.
2- The colloquialism that insanity is defined in such a way is a bit overused, no? Considering that this emerged as an obscure literary reference, I don’t think it applies here. Business operates by doing the same thing well every day- offering great goods and services to consumers. Without these basics, a business will not see profits, no matter how they think they’d like to obtain them.
3- This looks like a list that people thinking of starting a business might use, not actual business owners actively engaging in business. Where’s the deeper insight?
Thanks, surfergirl. We fixed the typo – sorry, those things happen.
Yes, it’s true that a lot of things have to come together for profit.
However, I think his advice is right on. A successful business at its heart starts with evaluating what works and what doesn’t, and with goal setting. There are plenty of established businesses floundering because their owners never take the time to evaluate what’s working and what’s not, set goals and do other basic things. Just watch an episode of Restaurant Impossible or Bar Rescue.
When you’re in the midst of the maelstrom that most small business owners’ days feel like, it’s harder than it sounds to step back and focus on the things that matter.
Thank for a great post, Dave.
I love your idea of going back to see what worked.
What REALLY worked.
It makes sense.
Why didn’t I think of that?
The Franchise King®
Thank you all for your comments (and to Anita for fixing my typo). I hope you all have a breakout year in your business!