How to start a SMALL business that doesn't FAIL and makes you financially free
Summary
TLDRThis video script explores the challenges of starting a small business, highlighting the common pitfalls that lead to failure within the first few years. It delves into the 'fatal assumption' made by many entrepreneurs, who often excel in technical work but struggle with the managerial and visionary aspects of running a business. The script introduces the concepts of the entrepreneur, manager, and technician within each business owner, and outlines the growth phases of a business: infancy, adolescence, and maturity. It emphasizes the importance of adopting a franchise prototype model to build a system-dependent business, and concludes with the business development process involving innovation, quantification, and orchestration to ensure a scalable and successful venture.
Takeaways
- 😨 High Failure Rates: 50% of small businesses fail within the first year, and 75% fail within the first five years.
- 🛠️ Technical Expertise Misconception: Being skilled in a trade doesn't equate to understanding how to run a business that specializes in that trade.
- 🔮 Entrepreneurial Vision: Entrepreneurs are visionaries who see opportunities and innovate, but they often struggle with the day-to-day operations of a business.
- 👨💼 Managerial Organization: Managers are practical, keeping the business running smoothly and organized, often cleaning up after the entrepreneur's chaos.
- 👷♂️ Technician's Execution: Technicians are the doers who focus on the immediate tasks at hand and may struggle with the broader vision of the business.
- 👶 Business Growth Phases: Businesses typically go through infancy, adolescence, and maturity phases, each with its own challenges and requirements.
- 🤹♂️ Overwhelmed Owner: In the infancy phase, the business owner often juggles multiple roles, leading to exhaustion and potential failure.
- 📉 Delegation Challenges: During adolescence, poor delegation and management can lead to business chaos and the owner feeling the need to retract control.
- 🚀 Maturity as a Starting Point: A business can be designed to operate as a mature entity from the outset, with clear systems and processes in place.
- 🔄 System Dependent, Not People Dependent: To achieve a mature business, create systems that ensure operation and success are not reliant on specific individuals.
- 📊 Business Development Process: The process involves innovation, quantification, and orchestration to refine and standardize business operations.
Q & A
What is the common misconception among people who start a small business based on their technical skills?
-The common misconception is that understanding the technical work of a business is the same as understanding how to run a business that performs that technical work. Many fail to see that being skilled in a trade does not necessarily mean one knows how to manage or grow a business in that field.
Why do many small businesses fail within their first few years according to the transcript?
-Many small businesses fail because the owners, often technicians by trade, do not realize the difference between doing the technical work and running a business. They often become overwhelmed with tasks they are not skilled in, leading to poor management, exhaustion, and ultimately, business failure.
What are the three roles that every business owner embodies, as described in the script?
-Every business owner embodies the roles of an entrepreneur, a manager, and a technician. The entrepreneur is the visionary and innovator, the manager is concerned with smooth operation and order, and the technician focuses on immediate tasks and getting things done.
What is the 'fatal assumption' that the script refers to, and how can it lead to business failure?
-The 'fatal assumption' is the belief that being good at a job within a company means one can successfully start and run a business in the same field. This can lead to failure because the skills required to be an employee are different from those needed to manage and grow a business.
What phase of business growth is characterized by the owner handling all tasks, often leading to exhaustion and failure?
-The 'infancy' phase of business growth is characterized by the owner handling all tasks, which often leads to exhaustion and failure due to the overwhelming workload and lack of delegation.
What is the key difference between a business that is people-dependent and one that is system-dependent?
-A people-dependent business relies heavily on the expertise and specific skills of its employees, making it hard to scale. In contrast, a system-dependent business is built on established processes and procedures that can be followed by anyone, regardless of their experience, allowing for easier replication and scalability.
How can a business owner avoid becoming the 'idiot boss' they once despised?
-A business owner can avoid becoming the 'idiot boss' by understanding the importance of systems and delegation, and by not allowing their personal biases or lack of knowledge in certain areas to interfere with the efficient running of the business.
What is the 'franchise prototype model' and how does it help in creating a successful business?
-The 'franchise prototype model' is a business model that focuses on creating a systematized business that can operate without the owner's constant involvement. It helps in creating a successful business by ensuring consistency, scalability, and the ability to replicate the business model across multiple locations.
What are the three steps of the business development process mentioned in the script?
-The three steps of the business development process are innovation, quantification, and orchestration. Innovation involves seeking ways to improve business operations, quantification measures the effects of changes, and orchestration involves implementing successful innovations as standard operations.
Why is it important for a business owner to view their business as a product on the shelf?
-Viewing the business as a product on the shelf helps the owner to focus on creating a system that can operate independently, ensuring consistency and quality regardless of who is working within the business. This perspective is crucial for scalability and creating a business that can be easily replicated or franchised.
What is the significance of the 'business development process' in building a mature business?
-The 'business development process' is significant in building a mature business because it provides a structured approach to continuous improvement. It allows the business to adapt to changes, measure the success of new strategies, and solidify effective practices into standard operations, leading to a sustainable and successful business model.
Outlines
🚀 Starting a Business: The Reality and the Fatal Assumption
This paragraph addresses the daunting statistics about small business failures and introduces the concept of a 'fatal assumption' made by many entrepreneurs. It suggests that being good at a job does not equate to understanding how to run a business doing that job. The narrator shares a personal anecdote about the realization that starting a business is not just about escaping a bad boss, but understanding the business model. The paragraph sets the stage for discussing the three roles within an entrepreneur: the entrepreneur, manager, and technician.
👥 The Three Roles in Every Entrepreneur: Visionary, Manager, and Technician
The second paragraph delves into the internal conflict of running a business by describing the three distinct roles that every entrepreneur embodies: the entrepreneur as the visionary, the manager who maintains order, and the technician who gets the job done. It uses the analogy of a person on a diet to illustrate the struggle between these roles. The entrepreneur is always looking for opportunities, the manager organizes and plans, and the technician focuses on the immediate tasks. The paragraph emphasizes the importance of understanding these roles to avoid common pitfalls in business management.
🛠️ The Growth Phases of a Business: Infancy, Adolescence, and Maturity
This paragraph outlines the three stages of business growth: infancy, adolescence, and maturity. In infancy, the business owner juggles all tasks, leading to exhaustion and often failure. Adolescence is marked by the business owner seeking help, which can lead to poor management and a loss of control. Maturity, although not reached by all businesses, is characterized by a business that operates smoothly and can grow without the owner's constant intervention. The paragraph highlights the importance of understanding these phases to build a sustainable business.
🔄 The Transition from Technician to Manager: The Risks and Realizations
The third paragraph focuses on the transition from being a technician to becoming a manager, which is a critical phase in a business's growth. It discusses the risks of delegating tasks without clear direction and the realization that employees may not share the same level of commitment or understanding of the business as the owner does. The paragraph emphasizes the importance of having a clear vision and strategy to guide the business through growth and to avoid the trap of owning a job rather than a business.
🌟 The Entrepreneurial Perspective: Starting as a Mature Business from Day One
This paragraph introduces the concept of starting a business with a mature perspective from the outset. It uses examples of successful companies like McDonald's, Disney, IBM, and Apple to illustrate businesses that were designed to operate as mature entities from the beginning. The paragraph discusses the importance of having a clear vision and acting on it from day one, as well as the need to see the business as a system that produces results for customers.
🛑 The Importance of Systematization: Building a Business That Operates Independently
The fourth paragraph emphasizes the need for systematization in business to create a model that can be replicated and scaled. It suggests that businesses should be built to operate without the constant interference of the owner, much like a franchise. The paragraph discusses the necessity of creating checklists, manuals, and systems that allow even those with minimal qualifications to perform tasks effectively. It stresses the importance of building a system-dependent business to ensure success and scalability.
📈 The Business Development Process: Innovation, Quantification, and Orchestration
The final paragraph outlines the business development process, which consists of three steps: innovation, quantification, and orchestration. Innovation involves seeking ways to improve the business's service to customers. Quantification is about measuring the effects of changes to understand what enhances business performance. Orchestration is about implementing successful innovations as standard operations. The paragraph concludes by summarizing the key points discussed in the video and reiterating the importance of a systematic approach to business development.
Mindmap
Keywords
💡Small Business
💡Entrepreneur
💡Technical Work
💡Manager
💡Technician
💡Business Phases
💡Franchise Prototype Model
💡Systematization
💡Innovation
💡Quantification
💡Orchestration
Highlights
50% of small businesses fail within their first year, and 75% fail within the first five years.
The book 'The E-Myth Revisited' by Michael E. Gerber offers insights on why small businesses fail and solutions to avoid failure.
Many small business owners start their ventures based on technical skills rather than business acumen, leading to a 'fatal assumption'.
The transition from employee to entrepreneur often results in becoming an 'idiot boss' due to a lack of business management skills.
Small business owners are often three personas in one: entrepreneur, manager, and technician, each with different needs and perspectives.
The 'fat guy and skinny guy' analogy illustrates the internal conflict between immediate gratification and long-term goals in business.
Businesses typically go through three growth phases: infancy, adolescence, and maturity.
In the infancy phase, the business owner often handles all tasks, leading to exhaustion and potential failure.
Adolescence phase involves delegation but can lead to chaos if not managed properly.
Maturity can be achieved from the start of a business with the right entrepreneurial perspective and planning.
Successful businesses like McDonald's, Disney, IBM, and Apple started as mature companies with a clear business model.
The franchise prototype model is a systematized approach to running a business that can be replicated across multiple locations.
Building a system-dependent business, rather than one reliant on specific people, is key to scalability and success.
The business development process involves innovation, quantification, and orchestration to refine and standardize business operations.
Innovation in business is not about the product but about improving the systems that serve the customers.
Quantification involves measuring the effects of changes to understand what improves business performance.
Orchestration is about implementing successful innovations as standard operations across the business.
Transcripts
there's a scary reality about starting a
small business 50% of small businesses
fail within their first year 75% of
those that passed the first year fail in
the next 5 years how are you going to
beat those odds how can you create a
business that doesn't fail runs smoothly
and gives you the time and money to
enjoy life that was the question
spinning around my head until I found an
answer through Michael E Gerber's book
The emth Revisited why most small
businesses don't work and what to do
about it if you're thinking about
starting a business or if you have
started one but feel stressed and busy
all the time then this video is for you
this is one of those books that I wish I
had read before starting my business
okay let's get started part one the
Fatal
assumption this is you you work in a
company for somebody else you're good at
your job damn good you are one of the
best employees but things aren't going
well for you you might not feel
appreciated or you don't feel like you
are paid enough one day you're at work
and for some reason you don't like your
boss's Behavior maybe he said something
or did something the reason doesn't
matter much you just didn't like it
suddenly a voice in your head said why
am I working for this idiot guy I know
the job better than he does this
business would collapse if I weren't
working here why don't I start my own
business
and be my own boss from that day on you
just couldn't stop thinking about
creating your own business the
entrepreneur in you woke up and wasn't
going back to sleep the excitement of
being your own boss and becoming
independent was irresistible you had to
do it so you start your business but
here's the thing you didn't realize yet
you were about to go from hating the
idiot boss to becoming the idiot boss
yourself including myself most people
start a business this way before
starting they were doing some technical
work for a company and one day they
decided to start their own business but
this is a recipe for failure because the
person who starts a business this way
makes a fatal assumption and it's this
the technical work of a business and a
business that does the technical work
are two totally different things just
because you understand the technical
work of a business doesn't mean that you
understand a business that does that
technical work just because you are a
skilled video editor doesn't mean you
know how to create and run a video
editing business unfortunately most
people fail to see this this happens to
millions of technicians daily a barber
opens a barber shop a hairdresser opens
a beauty salon and a musician opens a
music store the tragedy is that when the
technician Falls prey to this fatal
assumption the business that was
supposed to free him enslaves him he
used to do one job when he was working
for somebody else but now besides that
job he has to do 10 other jobs that he
has no idea how to do one day you wake
up and realize that you don't have a
business you have a job and it is the
worst kind of job you were running away
from your boss but now your business is
your boss and it is the worst kind of
Boss soon the job you used to love
becomes the job you hate the journey
that started with excitement turns into
Terror exhaustion and failure in the
next part you will understand why this
happens and how to avoid it part two the
entrepreneur manager and the
technician everyone who goes into
business is really three people in one
an entrepreneur a manager and a
technician the easiest way to understand
this is if you've ever been on a diet
everyone who has tried dieting knows
there's a fat guy and a skinny guy
inside them skinny guy know what you
have to do to get skinny diet and
exercise all you have to do is chisel
skinny guy out of you like a marble
statue but fat guy doesn't want to go on
a run fat guy likes junk food you can
work out later maybe tomorrow or never
anyone who has ever experienced the
conflict between the fat guy and the
skinny guy knows what I mean you aren't
just skinny guy or fat guy you're both
when you're skinny guy you're always
making promises es for the fat guy to
keep and when you're the fat guy you're
always making promises for skinny guy to
keep if you've ever felt like fat guy
and skinny guy you know that you can't
be both someone has to lose and they
both know it well that's the kind of war
going on inside the owner of every small
business but it's even worse because
it's a three-way battle between the
entrepreneur the manager and the Technic
unfortunately it's a battle no one can
win understanding the differences
between them will quickly explain why
first is the entrepreneur the
entrepreneur is the Visionary the
dreamer this is who was inside you
daydreaming looking at the clock
imagining a better life they live in the
future never in the past and hardly ever
in the present they are your innovators
and always best at working with the
unknown engineering chaos into harmony
they have a strong need for control
because they need the control of people
and events in the present to make their
Vision or dreams come true
this causes a big problem they live in a
world made up of too many opportunities
and everyone around them is just slowing
them down this means they usually do
whatever it takes to make their projects
move forward even if they have to bully
harass or scream at their employees to
entrepreneurs most people are problems
that get in the way of their
dreams next is the manager the
entrepreneur has the Future Vision for
the business but the manager within you
keeps the business running smoothly in
the present they are practical the
manager wants to keep things organized
and in order it's their job to clean up
the mess of the
entrepreneur if you're like me you have
a junk drawer in your house it might be
in your kitchen in a desk or office but
there's a drawer that's just full of
random items you don't know how it got
there but one day you woke up and it was
full of junk rubber bands old mismatched
Keys a broken watch batteries that might
be dead and always some loose screws and
nails waiting to poke you when you reach
inside this is what the manager sees
when he sees an entrepreneur's business
they can't work in this mess he sees a
junk drawer that needs to be cleaned and
organized instead of everything being
shoved into a drawer or tossed into
piles a manager would go to work with a
label maker everything has a place and
everything should be put back in its
place keys are on a key ring screws and
nails are in plastic bins labeled screws
and nails batteries are tested and then
either thrown out if they are out of
power or put into clearly labeled bins
by size managers treat people and tasks
in a business the same way they handle
junk drawers they plan for problems to
happen everyone has their place and
their jobs to do and they make sure it
happens the technician if you're
watching this video and you want to quit
your job you are a technician
if you've ever thought to yourself if
you want it done right do it yourself
you are a technician technicians love
the feeling of getting things done
having their hands on projects and
living in the present they don't care
about the future of the business or the
problems of yesterday they just want to
get to work they want to know how to do
it and they want everyone to get out of
their way everyone gets in the
technician's way the entrepreneur
creates new and interesting work for the
technician but they are always
interrupting or distracting the manager
is also a problem because they want to
make technicians part of their system if
it were up to the technician they would
go to work every day and never worry
about the future this is the worst
mentality if a business is going to
survive for many years in your life you
can probably see these three characters
in action you can see how one part of
you craves a sense of order while
another part of you dreams about the
future you can see how another part of
you can't stand being ID and jumps into
work and feels guilty if he isn't doing
something all the time so to sum up this
part there are three people in you the
entrepreneur the manager and the
technician the entrepreneur dreams the
manager worries about everything and the
technician gets the job
done part three three phases of a
business businesses grow just like
people there are three stages that a
business will grow through infancy
adolescence and maturity infancy the
technicians phase this is how most
businesses start as a technician L
business you are finally free of the
boss it's an exciting start that's about
to be exhausting you are now going to be
a master juggler every day from now on
you will be juggling balls in the air
doing all of the work inside your
business one ball is managing the
business's money and the other ball is
selling your products and services all
while juggling advertising marketing
legal fees and taxes in the infancy
stage all you do is work work and more
work hours are long you might work 12 to
14 hour days you work every day 7 days a
week even at home you're working you are
totally invested in your business but
there's a big problem there's more work
than you can handle you work harder you
put in more time but you can't juggle at
all balls start to drop and hit the
floor you can only work so hard
alone infancy ends when the owner
realized es that the business cannot
continue to run the way it has been in
order for it to survive it will have to
change when that happens when the
reality sinks in most business failures
occur the technician locks the doors and
walks away the rest go on to
adolescence adolescence the manager's
phase this is the moment when you decide
to finally get help with your business
every business that lasts must grow into
the Adolescent phase every business
owner who survives needs help what kind
of help does an overloaded technician
get technical help someone who can do
the work that isn't getting done which
is usually the work you don't like to do
if you like sales you bring in someone
to build the product if you like
production you bring in a salesperson if
you don't know who to bring in it's
usually an accountant because most small
business owners hate accounting so you
hire your first employee Harry Harry
knows accounting he's an experienced
hard worker Harry has been crunching
numbers longer than you've been alive
he's worked in businesses just like
yours all his life and now Harry is
going to find out the deepest secret
you've been hiding he will soon discover
that you don't know what you are doing
day one on the job and Harry goes to
work on your books he's looking over the
mountain of spreadsheets printouts and
paperwork you've given him and in a
moment it hits you you don't have to do
that job anymore you can now be a
manager and not just a technician
a few weeks later you realize Harry can
do more than just accounting he can
answer the phone he can work with
customers he can tidy up the storefront
he can do a little bit of everything
life gets easier with Harry you start
taking longer lunch breaks and relax a
bit but there's a problem you let Harry
take over tasks inside your business
instead of telling Harry what to
do this is a dangerous game because if
you aren't telling Harry what to do he
does things his way this means your
business is slowly changing from the way
you did things to a new and
unrecognizable business Harry needs more
help so he hires new employees because
you are so busy working and growing the
business they answer to Harry instead of
you you keep this up because it frees
you up to do what you love until
problems start happening mistakes start
piling up unhappy customers start
complaining that things aren't the way
it used to be deadlines get missed this
poor management begins to take its toll
you begin to realize that no one cares
about your business the way you do you
begin to realize that you never should
have trusted Harry you never should have
trusted anyone you should have known
better as the balls continue to fall at
an overwhelming rate you
realize no one is willing to work as
hard as you work no one has your
judgment or your ability or your desire
or your interest if it's going to get
done right you're the one who will have
to do it walk into any adolescent
business and you'll find a busy owner
they are trying to do everything even
though they are paying workers to do it
the more the owner does the less the
workers do because you don't know how to
do it any other way every adolescent
business reaches a point where it pushes
Beyond its owner's comfort zone you lose
control over your business and can't
even manage your Harry when Harry came
you just threw things at him and ran
away but Harry has needs too he needs
more Direction he needs to know why he's
doing what he's doing he needs to know
where the business is going and what's
the overall strategy if you can't manage
Harry how are you going to grow instead
of growing the business you'll say
forget this we'll go back to the old way
when it was just you and you alone we
won't worry about all these employees
and expenses so you shrink down the
business where you feel comfortable but
you don't realize that you have already
been there you have already been small
and you couldn't do it so you shrink
down the business where you feel
comfortable things go fine for a while
but one day you wake up and realize I
don't want to do this anymore you're
lying in bed and don't have the energy
to get up then you turn to your partner
and say I'm not feeling well I think I'm
sick I don't want to go to work and your
partner says the quiet truth out
loud but if you don't go and work no one
else
will right at this moment you realize
you don't own a business you own a job
and it's the worst job in the world
because if you take a sick day you don't
get paid if you don't show up today
there's no one who will do the work for
you and you can't sell this business to
anyone because You' just be selling them
a job you hate when the dream is gone
the only thing left is work you might
ask what will happen if I don't go small
and keep
growing well you'll eventually
self-destruct let's say Against All Odds
you survive because you're stubborn and
determined to stay in business you do
whatever it takes to keep the lights on
and you have to be working all the time
you're consumed by the business day
after day is the same you never change
the business doesn't fail your body and
mind do you get sick you get hurt but
you keep going you're like a fan that's
been left on 24 hours a day and with one
final wee the fan blades stop spinning
this is how most small business business
owners feel today but it doesn't have to
be this way there's a better solution up
until this point we have described the
problems that cause most small
businesses to fail in the rest of the
video we'll talk about the solutions it
starts with the maturity phase maturity
how to create a business that doesn't
fail it's not guaranteed that all
businesses that go through infancy and
Adolescent end up at maturity if you're
lucky you might reach this stage but
here's the key point
maturity is not the final result of the
previous two phases you can skip them
and start as a mature company from day
one yes you heard it right you can start
as a mature company from day one famous
companies such as McDonald's Disney IBM
and apple didn't end up as mature
companies they started as mature
companies a company can start as mature
if the entrepreneur has an
entrepreneurial perspective let let me
explain this perspective with an example
Tom Watson of IBM said from the
beginning I had a clear picture of what
the company would look like when it was
finally done I had a model in my mind of
what it would look like a dream a
picture then I realized that unless we
acted that way from the beginning we'd
never get there IBM had to act like a
great company before it became a great
company the entrepreneurial perspective
asks the same question as Tom Watson of
IBM how must the business work from an
entrepreneurial perspective business is
the product not whatever the product is
produced in business this doesn't mean
the entrepreneur doesn't care about the
product they do but they have a more
holistic approach here is how the
technician and entrepreneur perspectives
differ the entrepreneur sees the
business as a system it produces results
for the customer the technician sees the
business as a place for him to work to
make him money the entrepreneur starts
with a Clear Vision and then Works
backwards words to make that Vision a
reality the technician doesn't have a
vision they just have work to do and
money to make today the entrepreneur
sees the business through their
customer's eyes the technician sees the
business through their own eyes to the
entrepreneur a new customer is a new
opportunity to the technician a new
customer is a problem because it means
more work here's the thing you can't
teach the entrepreneurial perspective to
a technician don't even try what you
need instead is a business model that
allows the entrepreneur within you to do
what needs to be done at the same time
that business model should satisfy the
needs of the technician and the manager
a business model that satisfies the
needs of all three is called a franchise
prototype in the next part I will
explain this business model in
detail part four franchise prototype
model the easiest way to understand this
business model is just to look at
McDonald's please keep in mind that I'm
not telling you to get into the
hamburger business we are talking about
their business model here now you can
say many things about McDonald's you can
say their food isn't healthy you can say
that people shouldn't eat junk food but
what you can't say is they don't deliver
on their promises because they do they
have a system that works like a Swiss
watch this is because every step of the
business was tested tweaked and improved
until it could be copied in every
McDonald's restaurant food is made and
served the same way across the globe
frozen meat patties are the same size
and shape pickles are put on buns in the
same patterns so they don't slip off the
sandwich fries are kept warm for 7
minutes before they get soggy and food
will be served to customers in 60
seconds or less basically every problem
has been thought through documented and
systematized in a way that you can take
any 18-year-old from the street and he
would be able to do the job now how can
you create such a system in your
business first you have to change your
perspective about what a business is the
problem isn't your business it never has
been the problem is you it has always
been you and it will always be you
nothing will change until you change
your perspective about what a business
is and how one works second every day
should be spent working on your business
not in it see your business as a product
on the Shelf see it as a machine with
interconnecting parts and ask yourself
how can I get my business to work
without me how can I get my people to
work without my constant
interference how can I systematize my
business in such a way that it could be
replicated
5,000 times so the 5,000th unit would
run as smoothly as the first pretend
that you are going to franchise your
business pretend your business is a
model that you will copy and create
5,000 more businesses like it not almost
like it but just like it perfect clones
after asking all these questions you
will realize that you need to create
systems for everything you need to
create a system dependent business not a
people dependent business if your
business success depends on hiring
experts it will be extremely hard for
you to succeed experts are hard to find
and are expensive instead set up systems
in such a way that even someone with the
lowest qualifications can do the job
effectively this doesn't mean you go and
hire just anybody from the street for
example if you need an accountant you
still need someone with accounting
knowledge however if your business
system is built well you will not need a
top expert a less experienced accountant
can also do the job well this is what
the author means by building a system
dependent business to build a system
dependent business you need checklists
for every task you need how-to manuals
with step-by-step instructions so that
anyone can do what you do I know this is
a boring part and I hate to do it but it
is absolutely necessary if you skip this
step you will waste so much time and
fail I have personally skipped it and
hired people and here is what happened
since I didn't have the proper system
they couldn't do the job 100% they could
only do 90% of it and I had to help with
the last 10% now imagine you have hired
10 people and have to help each of them
with the last 10% this will probably
consume all your time again I have made
this mistake and I've seen others hiring
a bunch of people and then after a short
while firing them all for the same
reason I just
described so you need to build the
system first now some of you watching
might might say what the hell is this
system you keep talking about so let me
give you an example imagine you're
opening a cake shop each position in
your shop would have a detailed job
description this Clarity ensures that
every worker knows exactly what to do
and how to do it from buying the
ingredients to keeping the shop clean
sweeping floors scrubbing pans and
handling transactions at the register
for Bakers there would be clear
guidelines on how to bake the cakes the
temperature settings for the ovens how
long each type of cake should bake and
the secret recipes that make your cakes
special after all it's not just any cake
shop it's your cake shop it's your
prototype you want your cake to look and
taste the same it should deliver a
consistent experience to the customers
building the Prototype of your business
is a continuous process it's not like
you do it once and finish the author
calls this a business development
process which we will cover in the next
part
part five business development process
this process consists of three steps
Innovation quantification and
orchestration Innovation is asking the
question what systems can we improve in
our business to help our customers
please keep in mind it's not the product
that requires Innovation but the way
your business operates and sells its
products and here's the thing you don't
need to implement big Innovations for
example what color suit should your
employees where to make the most sales
is it a brown blue or black suit for 2
weeks test it you might find that even
your best salesperson makes less money
when they wear a brown suit and your
worst salesperson sales almost doubled
when they wore a blue suit here's
another test to try instead of greeting
customers the old way by asking may I
help you say hi have you been here
before this simple change switches the
conversation from a yes or no question
to an invitation to talk if they say
they've been to your store before great
we're so glad to have you back here's a
special offer we're running for our
repeat customers if they haven't been to
your store before welcome we have a
special discount for new customers it's
small tweaks like these that can have
dramatic changes for your business but
how can you find out if the Innovations
and the tests you did are
working this is where the quantification
comes in which is the second step in the
process this means you're going to find
the data of your business instead of
vague feelings you'll know for a fact
how the business is performing after
making a change think back to the
different colored suits you can track
and see how much money was made by each
color if sales increased by 16% for
salespeople wearing blue suits this
becomes the new uniform the trick is to
track data for a short time to get a
baseline so you know what's normal in
your business then you make a change if
the data shows the business improves you
keep the change
otherwise keep things the way they were
or try another test after you're
finished with your tests you decide what
to keep this final step is called
orchestration you take all of the
Learned lessons from Innovation plus
proof from quantification and create a
new system for your business if you
found out that black suits and this new
greeting doubled your sales then your
standard uniform becomes a black suit
and you teach all of your employees to
greet customers asking if they've been
here before you didn't guess you tested
it you proved it you repeat this process
for every step of the business to create
a system that can work for
anyone this was the last part let me
recap everything we covered in this
video we started with the Fatal
assumption just because you understand
the technical work of a business doesn't
mean that you understand a business that
does that technical work every
entrepreneur is three people in one the
entrepreneur manager and the technician
each wants different things and they
pull you in different directions the
entrepreneur is the Visionary and
innovator the manager wants smooth
operation and Order and the technician
wants to focus on immediate tasks and
nothing else business phases infancy the
owner handles all tasks leading to
exhaustion and failure adolescence
delegation begins but poor management
leads to chaos and the owner is forced
to shrink down the business maturity
maturity isn't the end result of the
previous two phases you can start a
mature business from day one you have an
entrepreneurial
perspective franchise prototype model
this model focuses on creating a
business that can operate without you
like a franchise to build such a model
you need to build a systems dependent
business not a people dependent business
you need to see the business as a
product and work on your business not in
it finally we talked about the business
development process which consists of
three parts innovation continuously
seeking ways to improve how the business
serves its customers quantification
measuring the effects of changes to
understand what improves business
performance orchestration implementing
successful Innovations as standard
operations thanks for watching I hope it
was a useful video
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