a Complete Business Development Machine
Preface and Book Index
Part 1. Opening Remarks
Part 2. Marketing and Sales
Part 3. Operations
Part 4. More
July 7, 2019
The Reason for Writing the Book:
I’m writing this book to organize my thoughts, document them, and create a repeatable system that will make the process of business development straightforward and manageable for small business owners who wish to grow their businesses and increase its value.
The Purpose of the Book:
This book is about asking the owner of a small (1 to 50 employees) organization that services other businesses to consider making the business itself a valuable asset to sell for an amount that permits them to “do the next thing”. This “next thing” may be: invest in another business, retire, continue to work, give money to your children, some combination of all the above, or something else entirely.
(A.) In this sense, developing a business is very much like designing and building a product, only from this perspective, the business is the product. This is not meant to distract you from (B.), the love of your product or service, but to try to encourage you to consider keeping both thoughts in mind at once. Over time you may find that (B.) naturally subordinates itself to (A.). The better job you do with (B.), the more successful is (A.)
The more excellent your business is the more valuable it tends to be. It all turns out to be quite complementary.
It does require work, but it may not be as difficult as you think.
“Let’s make it the very best product!”
Oh, and by the way, “Enjoy the process!”
It is not possible for me to recognize and thank all those who have contributed to this effort. Hundreds of customers over the past 35 years have been my teachers and mentors, as well as their accountants, bankers, attorneys, and employees. There are, however, several who stand out: Rudy and Alma Puissegur, my father and mother, who were not only my parents, but my employers for the first four years of my career in the Systems World. Ralph Rust, my first accounting professor, who became one of my closest friends; Fred Cubberly, my first and primary instructor in The American Production and Inventory Society (APICS); Robert Chapman, who convincingly demonstrated, after I had been selling for 20 years, that even sales was done better Systematically; and more recently, Michael Obrzut, a colleague who taught me, among other things, the meaning and use of Core Values. It is Mike’s depictions that are used to outline much of the material that forms the chapter headings and sections within each chapter.
Now, I can not end this section without calling attention to and thanking Shane Daily of Shanora, LLC. Without his knowledge, guidance, and hard work in creating this website (which is the platform for writing this book) and teaching me how to use it, I would never have begun. Teaching is a present tense verb; he is still doing it.
It must be stated that none of the information in the book is mine; one hundred percent of it I have learned from others; but still, I believe the arrangement and presentation of the topics may be different from what you may have seen, and therefore we hope valuable.
Finally, underneath all others on this list, because at the bottom of things is the foundation, is my wife of forty-eight years, Coleen, from whom I have learned some orders of magnitude more than all the others combined.
What this book is about
This book is about getting you, the owner of a small business (1 to 50 employees) to see your business as a machine that should, when it is running at its best:
- Satisfy employees and customers
- Earn a profit
- Increase in value.
All at the same time and better than a minimum of 80% of all the other businesses in the market in which you compete.
What this book does not do
Something this book does not do is make an engineer a better engineer; a machinist a better machinist; an architect a better architect,or a scientist a better scientist. It assumes that the owner knows their trade or profession and is already in the top 20% of their peer group.
What it does do
What this book does, or attempts to do:
- Familiarize you with, and possibly teach you, some things about business that you may not have realized.
- Bring some things back to the conscious level of your mind that you may have forgotten, and present them in a way that encourages you to consider them from an entirely different perspective.
- Demonstrate how to see your business from 10,000 feet up (Strategically), while at the same time consider each individual interaction, event, and transaction that is within your reach, and regard and act on that (Tactical) thing with a strategic perspective as a guide.
The method used is the systematic construction and continuous refinement of a Complete Business Development Machine. This machine is used to assist and encourage you, the owner, to consider each everyday problem (a tactical hurdle) within the context of your overall Business Plan (strategy), and solve it with your overall plan in mind. This method consistently applied is like the phrase, “eating an elephant in small bites”.
How to get the most from the book:
- Read it from start to finish. However, if you find yourself stumped on a particular issue, you may seek help in the chapter that covers that issue.
- Keep it handy and use the sections as your ‘everyday problems’ (tactical hurdles) confront you.
- Keep the overall plan in mind.
The concepts considered here are not new; however, the arrangement and application of them I feel certain will make them seem so. I have found that results are best when they are understood as a system consisting of subsystems. There must be a single person responsible for the development, maintenance, and improvement of the system and each of its subsystems. This person must be primarily interested in the growth of the organization and the increase of its value, and therefore, is working primarily “on” the business, rather than “in” it. The process is most effective when guided by clear communication with accountability for each member of the organization.
For our clients, we may fill this roll for owners/CEOs who are frequently drawn into the day to day tactical aspects of their businesses. If you find that you lack the time to direct this process in a manner that you wish to see it done, and you have no one internally capable of doing the job properly, you may consider looking outside. When I work with a client it is generally with an owner, two to four hours per week, to ensure that progress is steady. The key here is steady (not rapidly). In many cases, an attempt to move rapidly will prove destructive. It is imperative for you, as the owner, to be involved. A great many tactical things can and should be delegated, but the Vision, Mission, Core Values, and Strategy must be yours.
Chapters One, Two, and Three are an overview, and provide a context in which we place the system along with its subsystems.
Chapters Four and Five address the role of Marketing and Sales for a small (1 to 50 employees) organization that services other businesses.
Chapters Six through Eleven address the subsystems (the relationship of the Rules to the Principles) and are, to a degree, self-contained. However, taken as a whole, each chapter increases in value as the others are understood and applied. You will find the effect has a cumulative impact in and on your organization as this continuous, iterative process causes a “critical mass” of knowledge to occur in your mind, as well as the minds of your team.
As I realized that many of the ideas discussed in the following pages that are intended for CEO/Owners complement or mirror what began as “Lean Manufacturing,” I adopted some of the vocabulary used by the “Lean” community. This was done intentionally to provide some additional ease of communication on both sides of that ever present “wall” that seems to separate Administration and Operations. Through the use of Principles, Rules, and Tools, I’ve laid out our system in what I believe to be an orderly fashion. I hope you find it helpful.
An Important Question, “Do you want to grow your business?”
I rarely get “No” as an answer to this question. But growing a business is a process that, due to its rigor on the one hand, and general lack of understanding of the requirements on the other make it difficult to answer. Still, it is rare to find one who is committed to make the changes and do the things necessary to successfully achieve growth and increased value of their organization. A colleague of mine, Mike Obrzut, occasionally reminds me that growth requires a good deal of effort, as does maintenance; declination and degradation require very little or none. “We are either growing our business or managing its decline.”
Finally, a thought
In the end, this is simply a system. There are three points about it that will prove valuable:
First, it is not a formula to be blindly followed without thought. It is a framework upon which a creative and intelligent person may build something strong and good that is their own.
Second, it, like any other system, will not perform as well as it could, or will even fail completely, if it is not used properly.
Third, used as intended, it will be powerful.
The table below displays the number of businesses in the United States between $1 and $100M in gross sales. It demonstrates how many of these businesses grow, and categorizes, in a broad sense, the major hurdles that all organizations face that impair growth.
At a glance, your attention may be immediately drawn to the fact that very few businesses advance beyond the $5M mark. There are many reasons for this. We have attempted to group the bulk of them under four categories to provide a context for the discussion that follows.
If you have not considered these things before, you may find this information initially striking, and then quite useful. I hope to draw you into the “useful” stage.
First, let’s briefly consider the data.
- As of mid-July, 2019, using the Reference USA database, we find that there are just over 11,400,000 businesses in the United States between $1 and $100,000,000 in gross sales.
- Around 72% (8,300,000) of these businesses are under $1 million in sales and the majority of them will never exceed the $1 million mark.
- Around 21% (2,450,000) manage to make the leap into the $1 to $5 million sales category.
- Only 3% make it past $5M in sales
- 2% past $10M in sales
- 1% past $20M in sales
- .03% past $50M in sales
I have been following this for the past several years and noticed three things:
- The total number is shrinking. In 2014 there were 12,700,000 businesses in the same range.
- The number of businesses in the lowest range, $1 to $1M is growing.
- The number of businesses in the highest range, $50M to $100M is shrinking.
You may find it encouraging to learn about the things you can do to move your business to the right on this table. That is what this book is about.
Separate yourself from your business
Build a sturdy infrastructure, communicate, and hold people accountable
Bring in good people, put them in the right place, and encourage them to be successful
Duplicate your systems
This Business Development Machine is for the development of the entire business and the increase of its value. The term Business Development is often used in the context of “Sales and/or Selling.” In this case, it does include “Sales,” but it is not limited to it.
The three sets of the gears below, turning slowly and steadily, represent three separate machines. It is these three machines that, when coupled, move the organization to the right in the table above.
Bring the perfect prospect to the Salesperson.
Obtain the business.
Bring the perfect prospect to the Salesperson.
As these three machines merge into one, their components (each gear set, each gear, and each tooth on each gear) with their unique function make the Business Development Machine. Now, functioning as one with the energy and torque supplied by the Leader through the leader’s carefully selected Leadership Team, the organization will grow and increase in value. This will happen at precisely the same rate as the Leader and the Leadership Team are capable of keeping these gears working together, uninterrupted.
Methods of Growth – Organic and Acquisition
Organic growth takes place as you do more work with existing customers, add new ones, and increase the amount of work you do with each new customer that is acquired. Of the two methods of growth, this is the more important. It is worth noting that your systems must be maintained and improved for organic growth to continue.
Growth through acquisition can complement and leverage organic growth if systems are in place to absorb the acquired company. An acquisition can be exciting and wonderful, or terrible; a great deal depends on the quality of the systems of the acquiring organization.
The growth charts below are simply a model for comparison. This topic will become increasingly clear as we move forward.
Rapid growth for the first three years with roughly 20% for years four through eight.
The same growth for the first three years as in the Organic model; acquire an organization of equal size in year four; absorb the acquisition and grow steadily for the next three years; make the second acquisition in year eight.
Comments Regarding the Principles and Rules Upon Which the Machine is Built
The Principles and Rules discussed in greater depth in chapters six through eleven, now being introduced for the first time here, have existed, in their most general sense, for as long as people have been on this earth. There have been other words and terms used to represent their concepts. They have appeared in many variations, depending on the occasion. So I should note that these Principles and Rules, along with the other terms I’ve chosen for the purposes of this book, are not of my making, but they, much like the law of gravity, appear to simply be true. I have, through my own practices, as well as observing of others, accumulated a good deal of evidence to support this conclusion. I am beginning to grasp the certainty of it.
Adhering to sound Principles and following the Rules produce a better outcome than ignoring and avoiding them. I mention this here because it is the use of these Principles and Rules that make building the Business Development Machine straightforward; I did not say easy, but straightforward. The Machine can indeed be built, and it has been my experience that the return justifies the investment.
It is important to understand that this Machine is not, in any respect, restrictive. It does not impair creativity; to the contrary, it provides a structure upon which a seemingly infinite number of variations of products, services, and methods can be assembled and delivered. We are limited only by our imagination. An example of this might be housing, just look around your own town or city, there are many variations that come from a foundation, framing, and a roof.
Twenty Six Rules Introduced
The Purpose of Marketing is to place the right prospect (an “A” prospect) in front of a salesperson.
The definition of “the right prospect” is the person who needs and wants what you sell, and, has the ability to pay for it. It is important to understand both the concept of need and want. If the prospect is sold something they do not need, they will realize it at some point in time and it may undermine your relationship, by degrading trust, an important attribute to any relationship. And it is difficult, or even impossible, to sell something to someone who does not want it. (The decision to buy has more to do with emotion than logic; although an attempt to use logic may be employed to strengthen emotion.) It does you good to assume whatever responsibility you are able, to determine the need of the prospect.
Our Perfect “A” Customer or Client Looks Like This:
- Personal Characteristics
- Organizational Characteristic
Size of the organization: Gross Revenue, Number of Employees, Other
- Size in dollars or maybe numbers of employees
- Length of time engagement or project should last
The “AA” Customer or Client is an “A” Customer or Client that knows other “A’s”
The “AAA” Customer or Client is an “AA” Customer or Client that knows other “A’s” and will provide you with a personal introduction to them.
The objective is to find “As” and turn them into “AAAs”.
Four things to know and be able to clearly communicate:
I. What are you (your organization) doing?
What exactly is it that you do that adds measurable value to your customer and their organization? What is it that makes life better in some fashion for them. Neither you nor your customer may have given the topic any thought. You may believe to even consider such a thing insignificant and silly. You may say to yourself, “We provide them with this product, or this service, what’s the big deal?”, but you may be providing a more valuable service than you realize. In general, the better you are able to understand, just how, what you deliver (whether it be a product or service) adds value to your customer, and communicate it properly, the stronger your relationship will be and the stronger your marketing machine will be.
This may add value through:
1. a problem that you solve directly for them in the production of their product or service,
2. a product that you produce for them that is a component in a product that they produce,
3. a problem that you solve for your customer’s customer via a product you produce or service you deliver,
4. some combination of the above, or something else entirely,
It is worth noting that going through this exercise, it will prove to be useful. This is true because your customers may, not understand, or at least fully understand your value, and to the extent that is true, you are under-appreciated and possibly underutilized and/or underpaid. It is your responsibility to understand this as fully as possible and communicate it in a simple manner that resonates with your customer.
If you answer this question with something like, “We make widgets.”, it could be that you have not fully appreciated your value to your customer. The more organizations there are that make widgets like or similar to yours, the more of a commodity you are, and the job of a commodity buyer is to find the lowest price. This is not a good business model for you.
II. For whom do you do it?
There may be a variety of people and organizations that you serve, but to what person and type of company is your service most valuable? The more specific you are the better.
III. What three things make you unique?
List three things about your product or service that are unique. If you have not given this much or any thought it may require some. Even one is good, but three is better. These three things provide your customer with the reason to buy from you and not your competitor. Simply saying, “We are better.” is not enough; these three reasons speak clearly as to why you are better.
IV. What is your guarantee
State clearly the guarantee you will make that ensures the value to your customer.
If you have never completed this four-step exercise or not updated it recently, you should do it now. Upon completion, you know who to target and you have a powerful story to tell them.
Methods to reach the right person and questions vs. statements.
There are three general headings under which I believe many variations exist to reach your prospective customers. Employing and synchronizing all three of these make the strongest Marketing Machine in the world of a small (1 to 50 employee) organization that serves other businesses.
- Personal or “Person to Person”
- might visit local businesses in your community just to say hello, introduce yourself and possibly even speak with someone in your organization that finds interest in your ability to “make their life a little better”.
- might join an organization that has members likely to be your customers. A few hours each month invested in an organization such as this might prove worthwhile.
- might give presentations consisting of material that an audience would find interesting and useful. There are various organizations that may be in need of speakers and would welcome you. These presentations should provide value to the listener. Ensure that each person leaves with something they can use immediately or at least thinking about something that can be done in the near future.
- A salesperson in your employee.
- An outside representative. This seems best with an individual that is selling to your “A” customer.
- Web Presence
- Social Media
- Email (appropriately done)
- News Letter
- Web Presence
- Direct Mail – yes, direct mail
- Proper packaging
- Proper Content
Section 1. Vision Statement
Section 2. Mission Statement
Section 3. Core Values
Section 4. Strategic Planning
Section 5. Quarterly Objectives
Section 6. Meeting Rhythms
Section 1. Organizational Chart
Section 2. Position Expectations
Section 3. Team Member Handbook
Section 4. Wage & Salary Program
Section 5. Hiring Process
Section 6. Termination Process
Section 1. Vision
Section 2. Strategic Action Plan
Section 3. Team Member Objectives
Section 4. Meeting Rhythms
Section 5. Evaluation of Success & Failures
Section 1. Vision
Section 2. Strategic Action Plan
Section 3. Individual Objectives
Section 4. Meeting Rhythms
Section 5. Scorecards
Owner: 20 Question Checkup
Section 6. Monthly Financial Package
Section 1. Documentation
Section 2. Training
Section 3. Meeting Rhythms
Section 4. Review and Updates
Section 5. More Training
Section 6. Keep Improving
Section 4. Company Objectives Prioritizes (Hedgehog)
Section 5. Add to Objectives and or Delete From List
Are you leading an organization that serves other businesses and has between 1 and 75 team members? Do you have a genuine desire to grow your organization and increase its value? Are there significant hurdles in your way and uncertainty about how to best remove them?...
Section 1. Appendix 1 Terms Defined
Section 2. Appendix 2 Meetings Defined
Section 3. About the Authors
Background of Authors:
Charles H. Puissegur
For the past thirty years I have, in some fashion, been assisting small business (1 to 150 employees) owners improve their companies. I began through selling bookkeeping systems and training customers how to use them while at the same time providing accounting education; later this interest grew as comprehensive computerized accounting and then enterprise resource planning (ERP) systems as they became available. The development of business systems in general has continued to grow. I sold that business in 1992 and have since been involved in helping my clients avoid the mistakes I’ve made and duplicate the things I have done properly. I still manage to do both, but I like to believe that the mistakes are growing fewer and the proper things increasing.
Michael J. Obrzut
Michael currently serves as a Consultant/Board Member and provides companies with guidance in overcoming hurdles of second stage organizations, using financial and operational processes and disciplines to achieve continual growth in value. During Michael’s career he has held CEO, COO, and CFO positions, providing companies with significant versatility and impacting both growth and development. Michael’s background in design, development and implementation of strategic business plans, system infrastructure design, financial models and continuous improvement programs has helped these businesses grow. Business Start-Ups and Expansion, Mergers & Acquisition Negotiations, Budget Development & Management, Accounting & Financial Operations, Management & Development of Information Systems & Infrastructure, and Value Based Management Systems. Michael has experience in the B2B service companies, including the Advertising, Software Services, Web Based Services, Printing and Publishing, and Professional Corporations industries, ranging in size from start-ups to 50 million. Michael has two Bachelors of Science degrees, one in Accounting and the other in Economics. He attended both LaSalle University in Philadelphia, PA and Oakland University in Rochester, MI. He has certifications from the Institute of Management Accountants (CMA) and the American Financial Professionals (CCM), along with state licenses in insurance and risk management.
Section 4. Notes on Structure
Section 5. Tools, Articles, and Graphics