What is it that sets your business apart from all others? Make sure you have this mastered before you attempt to scale your small business.
In the early days of the dot.com era, I was the general manager of an Internet technology company that was heavily funded by venture capitalists. In those days, people were getting funding for throwing together business plans created over coffee on that same morning. The company that employed me actually had a fairly good concept built around helping people find jobs. One of my educational experiences while at the company dealt with scaling the business before our model was fully developed.
The CEO and the venture capitalists were eager to see progress quickly! The problem in those early days was that we had no structured models to follow. That left us trying to figure out the technology in addition to the model. We were still experimenting with the gears and were actually getting pretty close when the CEO hired a new vice president of sales.
The VP was absolutely convinced that we needed to hurry and hire a sales team. He almost immediately hired between thirty and forty salespeople before we even had the product completed. This team was out contacting businesses—and selling our unfinished product. We were sitting on the edge of a web bubble that was about to burst, and then we threw in an aggressive sales team selling only the prototype of a product. It was the undoing of the company. We ended up with forty sales folks selling forty different products, all unique, all custom. You can imagine the nightmare that ensued.
As the general manager, trying to hold it together, I vowed to never again attempt to scale something before the gears were meshing together. I learned the importance of making sure the process was carefully diagrammed and could flow so that the thing would scale well in the first place.
It’s imperative that you get the sequence right. First, you have to poke around the gears, fiddling with them and making sure they’ll run smoothly. Next, turn the crank! If the inner parts work, turn it again! Make a few adjustments, add a little lubricant, smear on some grease, and change the torque angle. Then turn it five or ten more times. If everything still holds together, keep improving and optimizing it.
Now you can go ahead and scale your product as rapidly as you choose. But don’t think about scaling it before you know what will happen when you turn the crank for the first time. The reason franchises are so successful is because someone has already tested the plan and checked the scalability. Regardless of who does the testing and checking, a franchiser or you, it must be done.
So, you’re all excited to scale your businesses and move to Tahiti, right? Well, not so fast! First, you have to create a business that will make some money. You must first document the processes you’ve found that work and, second, determine what distinguishes your business from all the others. At this stage in the game, it’s really important to watch and learn from other businesses.
When my wife was a teenager, she spent a summer working at Kentucky Fried Chicken. When she first started, her manager had each of the employees go through a training of the procedures that KFC required of its franchisees. You see, the successful fast-food chains have a simple, step-by-step guide for how to make each recipe. When you go into KFC, you expect it to taste exactly the same every time. That’s why you go! With so many employees the company has to provide step-by-step procedures that are quickly taught and easily grasped. In order to make the biscuits, they use a certain bread machine. I suppose the process looks something like this; first, the flour goes in, followed by the shortening and the “spice packet.” The machine is set to turn at a certain speed for so many turns. Then the dough is rolled out to the same thickness and cut with the same size cutter every time. The biscuits are put into the oven and baked at the same temperature every time. When they’re done, butter is carefully brushed over each deliciously flaky biscuit. This was the process followed every time when my wife was making biscuits years ago. More than likely it’s pretty close if not identical to the process KFC uses today. The biscuits still taste good, don’t they? KFC’s Original Recipe chicken is made with a same step-by-step process. KFC was careful to provide the exact procedures to make the chicken, but didn’t tell anyone the exact ingredients of the “secret recipe.”
Bringing the discussion back to my friend, the tile layer, this is one of his main problems. As he teaches and trains employees to work for him, they eventually branch out and start their own tile company—because they’ve learned all his secrets. Is there something unique about your business that you can and should protect? Is it a product recipe? Is it a process recipe? Is it a patent? Whatever it is, find it and use it to help set your business apart from all the others.
Porter’s Points – Secret Recipe
- As you implement your business plan, document what works and what does not. Refer back to your notes often to ensure you duplicate your successes and learn from your failures.
- Keep your plan simple, with step-by-step processes anyone can follow.
- Don’t attempt to scale the business until you have all the components defined and functional, and then increase the speed gradually.
- Identify areas that slow the process down and find a way to speed them up. Document the changes.
- Want it to scale well? Be consistent. Just like KFC doesn’t want variations in their chicken, you do not want variations in your business that hinder scaling.
- Define and protect your “secret recipe.” Protect and control one or more parts of the process very carefully so that others cannot easily duplicate your business.
We’ve now completed Chapter 9: I Never Want to be a Doctor (And Certainly Not a Lawyer!) and are about halfway through blogging the entire contents of Bootstrap Business!