State of the Business Owner Fundamentals

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2 State of the Business Owner Fundamentals Following the difficult two year global economic downturn, 2011 was a year of moderate growth for small and midsize companies. EMyth and Synotac partnered to survey hundreds of business owners about how they fared in We analyzed the results, and published our findings in our full report available at The Planner and the Pessimist Our findings showed business owners starkly divided into two groups: STATE OF THE BUSINESS OWNER Planners... believe they control their destiny and are busy navigating towards their vision for the future of their business Pessimists... believe the future is dictated by external events beyond their control that limit them from creating the life they want Compared to Pessimists, Planners... Run larger companies Took home more personal compensation Grew faster in 2011 Expect to grow faster in 2012 Planner and Pessimist Traits The Planner The Pessimist Believes they control their destiny Has a coherent vision of the future Regularly tracks business metrics Has concrete plans to move towards their business vision Is innovative with technology 2 I STATE OF THE BUSINESS OWNER I 2012 FUNDAMENTALS Believes the future is dictated by external events beyond their control Does not have a vision for their company in the future Has few or no formal plans for making progress towards this vision Does not regularly consult metrics to track business progress

3 Three Keys to Success We examined over 30 variables to see how they affected revenue growth, then grouped the variables which were utilized by Planner-owned companies into 3 categories we call the Keys to the Growth Engine: Fundamentals Accelerators People The first key - Fundamentals - identifies a simple formula that Planner-owned businesses who thrived in 2011 followed: Vision + Plan + Data = Success Vision + Planning + Data Businesses with a written description of what they want their business to look like in the future grew 50% faster than those who did not. Businesses who tracked business metrics monthly were 80% larger and the owners earned 60% more than those who did not. Businesses that use financial statements to make decisions were 45% larger and earned 60% more than those who did not. The greater the extent of revenue planning, the more successful businesses were in 2011 and the more optimistic they were about STATE OF THE BUSINESS OWNER I 2012 FUNDAMENTALS i 3 STATE OF THE BUSINESS OWNER Fundamentals

4 Vision and Planning The Most Important Leadership Question: Do you know what you want your business to look like three years from today? Vision gives the What. Planning gives the How. The Why comes in pre-work by examining: key #1 Fundamentals Primary Aim (life passion & purpose) Personal Objectives (business vs. job) And during the visioning process with: Mission Statement Company Values EMyth Process Visions and Plans Pre-work: Primary Aim & Personal Objectives Creating Your Strategic Objective (Vision) Dreaming Exercise and Brainstorming Tool Commitment Check Implementation Strategy (key drivers) Leadership System: Company Meetings Management System: Key Strategic Indicators Management System: Employee Development meetings 4 I STATE OF THE BUSINESS OWNER I 2012 FUNDAMENTALS

5 EMyth Vision = Strategic Objective Your Strategic Objective is a clearly written statement of what your business will be when it is complete. It is a detailed picture of what your business will look like, act like, smell, taste, and feel like, and how it will perform when it is done. A Strategic Objective provides a sense of direction and goals for the future, motivation for you and your employees a dream to strive for, and a basis for decision making, planning, and business development activities. Key Points A Strategic Objective is not a tactical business plan. It is the Why and the What. (The How comes later) Communicate it. Keep it alive in the minds of everyone in the company, and keep the company moving toward it. Put it in writing. A clear written statement is essential. Crafting a Strategic Objective statement is a creative task. Your Strategic Objective should be dynamic, subject to revision in response only to major changes and trends in marketplace or customer behavior. key #1 Fundamentals When crafting your Strategic Objective, ask yourself What s the one impossible thing you could do to own your market? Strategic Objective Worksheet The worksheet included with this guide gives instructions on how to craft a Strategic Objective. These steps include identifying: Line of Business and Products/Services Offered Company Size and Growth Objectives Geographic Scope Target Markets, Market Positioning Basis of Competition Timing (when will the Strategic Objective be achieved?) STATE OF THE BUSINESS OWNER I 2012 FUNDAMENTALS i 5

6 Planning key #1 Fundamentals Our study found the greater the extent of revenue planning, the more successful businesses were in 2011 and the more optimistic they were about 2012 Do you lead your management team through an annual planning process? What written tangible and intagible data are you using to inform your planning? EMyth Business Development Model How you approach your business planning is as important as the plan. Are you addressing all the areas of your business? 6 I STATE OF THE BUSINESS OWNER I 2012 FUNDAMENTALS

7 Data - Measuring Key Strategic Indicators What gets measured, matters. Running your business without data regarding your results is the equivalent of bowling blind. Key Strategic Indicators are the: CEO dashboard or report that measures overall progress toward your Strategic Objective. A set of tangible and intangible elements that are described in your Objective. The quantification of your company s condition compared with the key elements of your Strategic Objective. key #1 Fundamentals Selecting Your Key Strategic Indicators Focus on the few (10 12 total) key elements of your Strategic Objective. Report the ones that are tangible (things you can count) such as revenues, profit margin, growth rates, number of locations opened, company valuation, etc. Create a scoring system to quantify those intangible elements that you are unable to measure numerically (count easily): customer experience, employee buy-in, industry reputation, etc. Key Strategic Indicators Worksheet The worksheet included with this guide includes step by step instructions in developing a system to identify and quantify your tangible and intangible Key Strategic Indicators. STATE OF THE BUSINESS OWNER I 2012 FUNDAMENTALS i 7

8 About EMyth EMyth is the pioneer in business coaching and training, delivering transformation through our coaching services for over 30 years. EMyth helps business owners grow their companies through a variety of services, including: Individual Coaching - a comprehensive coaching program that provides the tools, framework, and inspiration needed to transform a business. Group Coaching - combines our proven tools, the guidance of an EMyth Coach, and support from business peers. Corporate Coaching - a customized business development program for companies with a management team looking to grow. Seminars & Special Events - give leaders the opportunity to immerse themselves in the EMyth Point of View at group training and online events. Learn more at Take a free business assessment at or for a free business consultation call About Synotac Synotac is a digital marketing agency that connects companies with their customers online. Synotac helps small and midsize companies to accelerate growth through the following services: Assessments - evaluate how effectively you are engaging customers with your website, mobile technologies, social media and along with best practices to improve your results. Web Redesigns - our strategic and proven process for turning your website into the hub of your marketing efforts. Digital Marketing Program - a unique quarterly progam that keeps you on top of current trends and identifies opportunities to accelerate marketing results. Learn more at Use free digital marketing resources at To discuss your digital marketing needs, call S TAT E OF THE Business Owner 2012 PRESENTED BY

9 Your Strategic Objective Creating the vision of your business as it will be when it is fully developed Definition Benchmarks Your Strategic Objective is a clear written statement of what your business will be when it is complete. 1 It is a detailed picture of the future your vision of what your business will look like, act like, smell, taste, and feel like, and how it will perform when it is fully developed. Read Chapter 13 of The E-Myth Revisited, Your Strategic Objective. 2 Set aside quiet time to think about and discuss your Strategic Objective. 3 Complete the Strategic Objective Worksheet. 4 Draft the written statement of your Strategic Objective. 5 Refine it, discuss it, refine it again, and discuss it again until it is the best possible statement of your vision for your business. Basic Characteristics Line of business, products, services offered Company size (sales, profits, employees) Company growth (sales, profits, production) Geographic scope Markets served Timing, when the business will be fully developed Basis of competition (price, quality, service, etc.) Unique Characteristics Unique products, services Unique marketing Unique presence (look, sound, feel) Unique operations Other unique characteristics Why Do You Need A Strategic Objective? To provide a sense of direction and goals a target for the future. Motivation for you and your employees a dream to strive for. A basis for decision making, planning, and business development activities. Contents of Your Strategic Objective Key Points Your Strategic Objective is a clear written picture of your company s future. It s about one page. It s a commitment to the future, not merely a wish. It has to serve your Primary Aim or it won t be real to you or your people. Write it in two steps: first, the basic description, then the unique,distinguishing features. YourStrategic Objective is stable but not static. Changes are ok, but only occasionally, and in response to major shifts in competition, trends, markets.

10 Strategic Objective Strategic Objective Worksheet 1

11 Strategic Objective Strategic Objective Worksheet Answer the questions on the following pages to help you think through the elements of your Strategic Objective. The questions are designed to stimulate your thinking and help you piece together the mental picture of your business as it will exist in the future. Only Checklist you know your business, your markets, your Basic Characteristics people, and your opportunities. Only you can create your Strategic Objective. It s your vision of exactly how you want your business to be when it s completely done and in place. Feel free to add, delete, change, or even ignore any question if you have something that works better for you. Line of business, products, and services offered Company size (annual sales, annual profits, company value, number of employees) Company growth (sales, profits, production) Geographic scope (business locations markets) Market positioning, target market(s) Timing (years to completion ) Basis of competition (price, quality, service, etc.) Distinguishing/Unique Characteristics Distinctive product/service lines Distinctive marketing Distinctive behavior of employees Distinctive presence (look, sound, feel) Distinctive operations Other unique and distinctive characteristics 2

12 Strategic Objective Timing When will the Strategic Objective be achieved? Line of Business and Products/Services Offered Will the business be a manufacturer, retailer, distributor, service company, or something else? What kinds of products and services will be offered? Company Size and Growth Objectives Annual sales, profitability, return on equity, number of employees, number of outlets, growth rates, etc. 3

13 Strategic Objective Geographic Scope Market areas served, business locations established, headquarters location, geographic coverage area (local, statewide, nationwide, global). Target Markets, Market Positioning Types of customers sought (individuals, businesses, government entities, etc.): General description of targeted customer types (age, income, family status, occupation, education, net worth, attitudes, key behaviors, etc.): Psychographic description of targeted customers (attitudes, decision making process, perceptions, etc.): 4

14 Strategic Objective Basis of Competition What will be your competitive advantage (price, quality, convenience, customer service, advertising, product features, responsiveness, fast delivery, appearance, market coverage, simplicity, reliability, durability, etc.)? Distinctive elements of your product or service: Product/service enhancements (guarantees, service contracts, leases, community benefits, ecological benefits, ethnic appeals, unit sizes, enhanced product performance): Distinctive marketing methods: Distinctive behavior/dress/qualifications of employees: Distinctive presence (appearance, size, sound, texture, smell, colors, shapes, designs, etc.): Think in terms of (1) the senses visual, tactile, scent, sound, and taste, and (2) intangible impressions trustworthiness, reliability, honesty, novelty, etc.): Distinctive operations (superior efficiency, quality control, innovative methods, or technology, special organizational approaches, etc.): 5

15 Strategic Objective Other Strategic Considerations 6

16 Strategic Objective Use the checklist on page 1 and your notes from pages 2 to 5 to write a two to three page draft of your Strategic Objective in paragraph form. After you ve written your first draft, set it aside for a day or two. Then revisit and refine it. Ideally, your final Strategic Objective will be about one page in length. Remember that your Strategic Objective is a high-level overview of your business vision. My Strategic Objective is 7

17 Strategic Objective My Strategic Objective is 8

18 Key Strategic Indicators Tracking the health of your business Definition Key Strategic Indicators are the quantification of your company s condition compared with the key elements of your Strategic Objective. Key Strategic Indicators Development Processes Examples of Key Strategic Indicators Why track Key Strategic Indicators? Sales and profit margins are always Key Strategic Indicators. After that, the indicators are what you say they are. Examples: Helps manage progress toward your Strategic Objective. Takes the big picture perspective and focuses on the truly key components of your strategy. Growth rates Company value Productivity Customer satisfaction Employee morale Industry leadership Reputation in the market Product/service quality Identify the Key Components of Your Strategic Objective. Makes you less biased, more objective in your perceptions of progress. Enables you to quantify intangibles and non measurable results. Key Points Focus on the few key elements of your Strategic Objective. Quantify them. Measure what can be measured. Establish Key Strategic Indicators. (Worksheet) Track and Evaluate. Use a scoring system to quantify intangibles and elements you are unable to measure. Create opposite pair (best case worst case) descriptions for each element of your Strategic Objective. Score them on a scale from to Best Condition Worst Condition Quantification of an intangible result does not make it tangible. It gives you a better perspective, clarifies the result, and makes your understanding more objective. Track and evaluate your Key Strategic Indicators periodically.

19 Key Strategic Indicators Worksheet 1

20 Key Strategic Indicators 1 Identify the Key Components of Your Strategic Objective. Carefully review your Strategic Objective statement and identify its key components. Print your Strategic Objective, then highlight the key components, or copy and paste your Strategic Objective in the space below so you can refer to it as you develop your Key Strategic Indicators. Sales and profit margin will always be key components; others depend on your business. 2

21 Key Strategic Indicators 2 Establish Key Tangible and Intangible Strategic Indicators. List the key Tangible and Intangible Indicators from your Strategic Objective. Tangible Indicators Sales Profit Margin Intangible Indicators

22 Key Strategic Indicators 3 Create a Scoring System for Intangible Indicators. A. Copy the name of each Intangible Indicator from the list on page 2. B. For each Intangible Indicator, write short phrases that describe the worst-case and best-case scenarios. Example: Employee Satisfaction Employees love working here; They feel appreciated and useful Employees hate working here; They feel ignored and unproductive Type Name of Intangible Indicator Here Briefly describe the best-case scenario Briefly describe the worst-case scenario Type Name of Intangible Indicator Here Briefly describe the best-case scenario Briefly describe the worst-case scenario

23 Key Strategic Indicators 3 Type Name of Intangible Indicator Here Briefly describe the best-case scenario Briefly describe the worst-case scenario Type Name of Intangible Indicator Here Briefly describe the best-case scenario Briefly describe the worst-case scenario Type Name of Intangible Indicator Here Briefly describe the best-case scenario Briefly describe the worst-case scenario Type Name of Intangible Indicator Here Briefly describe the best-case scenario Briefly describe the worst-case scenario

24 Key Strategic Indicators 4 Create a Legend Create a narrative for each of the five benchmark ratings (, +5, 0, -5, -10) for all Intangible Indicators that you have listed. An example is provided on the next page. The narratives for and -10 will add more detail to the best-case and worst-case scenarios you described briefly in Step 3. The narratives for +5 and -5 will describe above-average and below-average situations. The narrative for 0 will describe a neutral, average situation: things are not terrible, but there s a lot of room for improvement. The process of writing the narratives will accomplish two important goals: 1. It will help you identify what you do and don t want. Writing down the specifics will encour age you to think carefully about your standards for what you want your business to look like. 2. Once you have documented your standards, you ll be able to communicate them to employees in a simple and consistent way. 6

25 Key Strategic Indicators 4 Key Strategic Indicators Legend Example: Employee Satisfaction Employees love working here; they always feel appreciated and useful. They feel they are part of a great team. The lines of communication between coworkers are always open. They respect each other and disagreements are resolved in a professional manner. In employees opinion, management is doing an excellent job of organizing work and providing resources so employees can achieve the highest possible level of performance. +5 Employees enjoy working here; they often feel appreciated and useful. They often feel they are part of a team. Coworkers communicate fairly well; sometimes breakdowns occur. Most of the time, disagreements are handled professionally, but there are a few interpersonal conflicts. In employees opinion, management is doing a good job: work is organized in such a way that they can usually complete it fairly well. The necessary resources are usually available. 0 Employees neither like nor dislike working here; they think of it as just a job. They sometimes feel they are part of a team; other times they feel like they re on their own with little outside support. Some interactions are professional and respectful, while others are frustrating. In employees opinion, management is doing a fair job, but it could be much better: work is sometimes organized and delegated effectively, but other times it s scattered and confusing. The necessary resources are sometimes available, sometimes missing. -5 Employees dislike working here; they often feel ignored, unproductive, and underutilized. They rarely feel part of a team. There are often communication breakdowns, and disagreements usually escalate to interpersonal conflicts with no useful way to resolve. In employees opinion, management is doing a poor job: work is usually delegated in a scattered and confusing way, hindering employees from completing their assigned tasks effectively. The necessary resources are rarely provided. -10 Employees hate working here; they always feel ignored and unproductive. There is no sense of teamwork. Coworkers have daily communication breakdowns and heated interpersonal conflicts. In employees opinion, management is doing a terrible job: the way work is organized slows employees down and makes it impossible for them perform well frustration is the rule. They are not provided the resources they need to complete assigned tasks effectively. Employees have to frequently double-check with managers to clarify instructions, and are made to feel like they re interrupting when they do. 7

26 Key Strategic Indicators 4 Key Strategic Indicators Legend Type Name of Intangible Indicator Here

27 Key Strategic Indicators 4 Key Strategic Indicators Legend Type Name of Intangible Indicator Here

28 Key Strategic Indicators 4 Key Strategic Indicators Legend Type Name of Intangible Indicator Here

29 Key Strategic Indicators 4 Key Strategic Indicators Legend Type Name of Intangible Indicator Here

30 Key Strategic Indicators 4 Key Strategic Indicators Legend Type Name of Intangible Indicator Here

31 Key Strategic Indicators 5 Create a Key Strategic Indicators Tracking Sheet and a system for tracking and evaluating your business against it. The Tracking Sheet shows the progress of both the Tangible and Intangible Indicators of your business. The diagram on this page explains how the tracking sheet works; once you have reviewed the diagram, use the full-size Tracking Sheet on the next page. Enter the names of The target results for For each Tangible For each Tangible Calculate the differ- your Tangible Indica- your Tangible Indi- Indicator, enter the Indicator, enter the ence between the tors in this column. cators go here. These results from the results from the previous and current Remember that the numbers will come previous period in this current period in this results, then enter top two will always be directly from your column. column. them in this column to sales and profits. Strategic Objective. track your progress. Measurable/Tangible Indicators Indicator Target Result Previous Period Current Period Progress Sales Profit Margin Write the names of The target results for For each Intangible For each Intangible Calculate the differ- your Intangible Indica- your Intangible Indicator, enter the Indicator, enter the ence between the tors in this column. Indicators go here. For rating from the rating from the current previous and current Intangible Indicators, previous period in this period in this column. ratings, then enter your target results will column. always be. them in this column to track your progress. Non-Measurable/Intangible Indicators 13

32 Key Strategic Indicators 5 Key Strategic Indicators Tracking Company Name: Date Compiled: Measurable/Tangible Indicators Indicator Target Result Previous Period Current Period Progress Sales Profit Margin Non-Measurable/Intangible Indicators 14