Definitions:
Business (busi·ness)
A business is an entity that solves a problem for a qualified buyer.
Qualified Buyer
A customer of a business that can afford the offer, has a need that offer meets, and is ready & willing to purchase it.
Entrepreneurial Poverty
The state of crunched personal cash flow that entrepreneurs often find themselves in as they burn cash to keep their business afloat. Popularized by Mike Michalowicz, Author of Profit First and The Pumpkin Plan
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Keyona Meeks, founder of Rerev, has been the strategic force behind several startups and small businesses, guiding them towards optimized operations and sustainable growth. With hands-on experience in unlocking revenue opportunities and implementing robust Standard Operating Procedures (SOPs), Keyona has empowered businesses to harness technology's potential for efficiency and growth. In this article, she shares her insights on overcoming 'Entrepreneurial Poverty' and how a laser-focused understanding of your ideal customer can be the game-changer in your business journey.
For years, I’ve seen startup founders spread themselves precariously thin on a myriad of efforts- not all of which were actually giving them a return-on-time-spent. Reading the Pumpkin Plan by Mike Michalowicz was a breath of fresh air and I immediately turned into an evangelist. If you run a business, or are even considering it, please read this book! In the article below, I talk about a mixture of my observations as well key themes from the Pumpkin Plan (linked above). May this serve as a gateway to a transformational shift in your business.
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Focus Up by Doubling Down
Up at dawn, working until late. “It has to get done, and I’m the only one that can do it.”
An unfortunately all too common vignette of entrepreneurs burning themselves thin to grow their businesses. Also often in entrepreneurial poverty- maxing out credit cards and asking relatives for money until the next big client.
In working with business owners, startups, and small businesses alike, a central problem that appears in those trying to but not actually scaling is a lack of focus. Entrepreneurial poverty is that sick feeling on the back of your neck that causes a panic-driven flurry of action: “I’ll reach out to that customer” “I’ll go to all the networking meetings in town to build out my pipeline, and then I’ll do an email blast” “I’ll flyer the business district with my services” “Oops, still haven’t updated the site!” “I wonder if the lender would let me change the due date.”
Over and over and over again.
Let me be clear: you are not one more big client away from solving all your business problems. Without a strategic focus, it’s only a matter of time before the panic settles back in.
On my entrepreneurship journey, I felt the exact same way. Constantly chasing to-do’s and in a perpetual panic mode, and honestly when I look back on my time working for someone else, I was doing the same thing. So, it was natural that the same energy and frenetic pace followed me to the next venture.
But with a few mindset shifts, I was able to stop living in a constant state of guilt for not being “caught up”, and start being strategic about what I was doing, thereby giving myself the gift of “no”. Here’s the thing: even if you had all the funding you could possibly want, you would still have a finite amount of time to work with, and so would your team. More people isn’t the answer, and neither is more money. The answer is making the most of the time available, not by trying to do it all, but by doing only the one single thing that has the highest return.
That started with an analysis of what part of my business gave me the most energy and what bought in the most money. Once I answered that question, everything else got cut. If it wasn’t directly related to my central offering, I was no longer discussing it and I wasn’t seeing potential clients about it. If there was a social event for my industry and my ideal clients weren’t going to be there, then I wouldn’t be there either.
This new approach then invited me to become absolutely obsessed with the ideal customers that I did have. How did I get them? What were their biggest needs? How could I deliver my services to them in a more effective way?
Pareto’s Paradoxical Epiphany
Pareto’s principle, also known as the 80/20 rule, suggests that 80% of the results come from 20% of the actions. The efforts I was making, which consumed 80% of my time, contributed to only 20% of my revenue. It was the 20% - the crucial, value-laden, customer-focused efforts - that drove the lion’s share of the success.
So, I applied Pareto’s principle to everything. My offerings, my clients, my networking, my team – if it wasn’t yielding substantial results, it got the cut. There were some difficult decisions and painful goodbyes along the way. But the remaining focus allowed me to start building systems around the one thing I had decided was the most valuable.
Enter the Era of Systems
Systems are the secret sauce of scalability. Without them, you’re constantly at the mercy of reinventing the wheel. With them, your business begins to run like a well-oiled machine. Once my core offering and ideal client were identified, it was time to build a system around delivering that value to the client consistently and efficiently.
Every step in the process was broken down, analyzed, and optimized. Everything from lead generation to customer service was systemized. This was a painstaking process, but it meant that no time was wasted, and each aspect of the business was aligned towards the central goal. The beauty of a system is that it can be tested, refined, and eventually, automated or delegated, freeing up time and resources.
Getting to Know my Customer – Obsessively
The final key was a relentless pursuit of understanding my customer. I dove headfirst into understanding who they were, what their pain points were, and what made them tick. This level of empathy allowed me to connect with them on a deeper level and further refine my offering to meet their needs precisely.
I studied their buying behavior, their preferences, their feedback, and even their complaints. Each piece of information was a goldmine, guiding the evolution of my business. This customer obsession became a central pillar of my strategy, helping to shape not just the product, but also the marketing, the sales process, and the customer service approach.
Core Offering: Building Systems on Solid Ground
In the process of offering my services to clients, my primary role was to construct these business systems for them. I stepped into their shoes, analyzed their processes, and identified areas for improvement. However, as I delved deeper into their operations, I discovered a fundamental issue. You can't build lasting systems on shaky foundations.
I found that attempting to create these systems without a well-defined strategic direction - a direction that is tightly knit around the requirements of the highest-return-on-investment customer - was a recipe for disaster. In the end, these systems would collapse under their own weight due to a lack of a firm footing.
Just as you wouldn't build a skyscraper on sand, you can't build a business system without first having a rock-solid understanding of who your ideal customer is. As the architect of these systems, it was not enough for me to understand my clients' businesses. I had to comprehend the needs and expectations of their most valuable customers.
This revelation made me realize that both my business and that of my clients needed to be rooted in this solid foundation. It wasn't about merely knowing the ideal customer; it was about understanding them in and out, being tuned in to their desires, their concerns, and their experiences.
Ultimately, building a successful system isn't just about optimizing processes. It's about anchoring these processes in the reality of the customer's world. This approach ensures that the systems are not just efficient, but also effective in delivering value to the most critical part of any business - the customer.
This realization not only changed my approach but also the outcomes I was able to deliver for my clients. Today, before we initiate any system-building process, we spend time identifying and understanding the ideal customer. We construct customer personas, study their buying habits, and try to understand their pain points.
The following example is fictional, but the lessons drawn from it echo the real-life situations in my experience with clients. I cannot share a real story due to client confidentiality.
Case Study: StreamLogix - Leveraging the Ideal Customer Profile and Systems for Business Success
StreamLogix, a B2B SaaS company offering logistics management solutions, was on the edge of financial disaster. Its founder, Jake, was stuck in the unending cycle of entrepreneurial poverty, despite his tireless efforts. The company had a vast customer base, but profitability remained elusive.
Realizing that a change in strategy was needed, Jake began by identifying his most profitable customers - mid to large-sized logistics firms that relied heavily on efficient logistics management and required extensive data analytics for their operations. Interestingly, this group made up only 20% of his customer base but contributed to 80% of his revenue, embodying the Pareto principle.
Jake had been trying to meet the needs of an extensive client base, from small businesses to large corporations, resulting in a diluted and less effective service. Recognizing this, he decided to narrow his focus and cater primarily to his profitable mid to large-sized logistics firms.
To streamline his offerings, Jake developed systems and processes around his services. He standardized the software features and packages, creating different tiers that would cater specifically to the identified profitable segment of mid to large-sized logistics firms, including functionalities like advanced data analytics and predictive modeling.
Moreover, he decided to deepen his understanding of his most profitable customers. By conducting surveys and customer interviews, he learned that these firms appreciated not just the basic logistics software but also valued features that could provide in-depth insights and predictive analytics to optimize their operations.
With this newfound knowledge, Jake made several enhancements to his software to meet these needs effectively. He integrated artificial intelligence capabilities for better predictive analytics and provided in-depth training to help his clients better understand and utilize these advanced features.
The results of these strategic changes were remarkable. By focusing on his most profitable customers, establishing efficient systems, and catering to the specific needs of his customers, Jake managed to turn StreamLogix around. Today, the company is a recognized name in the logistics industry for its comprehensive, analytics-driven solutions. Jake, having escaped the cycle of entrepreneurial poverty, now runs a successful and profitable enterprise.
The journey of transitioning from entrepreneurial poverty to sustainable growth is not an easy one, but it's a path that becomes clearer and more navigable when you truly understand the needs of your customer. In the end, knowing your customer is the first step in building a business system that's designed for success.
So, you’ve just unlocked the powerful concept of doubling down on what truly matters for your business - a laser-focused understanding of your ideal customer. But the journey doesn't stop here. To truly rise above entrepreneurial poverty and pave the path to sustainable growth, there's another piece of the puzzle you need to grasp: delegation.
In the companion piece to this article, titled 'From Chaos to Order: Structuring Your Business for Delegation,' (COMING SOON!) we dive deeper into the trenches of your business. We look at why being able to masterfully delegate is essential, how it ties in with your understanding of your business's core, and how you can avoid common pitfalls.
You're not one more big client away from solving your business problems, and you're not one article away from knowing all there is to running a successful business. But you're on the right (very focused 😉) path. Stay tuned for the next article coming soon!
References:
- Suah, J. (2021, September 30). Focusing on my ideal customer was the best decision I made this year. LinkedIn Post, Jeanine Suah
- Michalowicz, M. (2012). The Pumpkin Plan: A Simple Strategy to Grow a Remarkable Business in Any Field. The Pumpkin Plan by Mike Michalowicz
- Newman, A. (2022, January 10). Pareto Principle. Investopedia.