Category: Growth Series

Your Challenge in Established Markets

September 19, 2023 / johnhooley

In new and expanding markets, it’s often enough to just show up. You don’t need a strategy because market demand exceeds supply. Customers are more concerned about access and availability than anything else.

But in more competitive environments, like established markets, it’s difficult to grow by being a run-of-the-mill entrant. Now the shoe is on the other foot. Customers have lots of options and are much more selective. If your offer is similar to competitors in this market:

You’ll likely have weak or inconsistent sales.
There’s pressure to compete on price.
Leaders become cemented in their position and difficult to un-seat.
Small differences become important as customers look for reasons to buy from you rather than competitors (distance, personality, appearance).

The problem is that most markets are established and many of the new ones don’t last.

Differentiation Isn’t Skin Deep

September 17, 2023 / johnhooley

Five years ago, I took a sales training course from Blair Enns (Win Without Pitching.) The course focused on how to sell agency services at a premium. One of his criteria for an agency that could command higher pricing was their process. He said, “Your agency must have a process that is so different that it requires weeks of training whenever you onboard a new employee.”

I thought it was an odd characteristic.

Positioning and marketing are all about perception: how the world sees you. It makes sense that you need to differentiate from similar businesses in the market’s eyes. But underneath the hood, a UX designer is a UX designer the same as a grocery clerk is a grocery clerk. If you go into Whole Foods or Trader Joes, there’s a line of people who get their food swiped through a bar code scanner at check-out. The people and process are the same.

In hindsight, what Enns was recommending, in a round-about way, was for the agency to have a distinct strategy.

Good Will Among Neighbors

September 11, 2023 / johnhooley

My family had a neighbor with ground that my dad farmed when I was a kid. The neighbor died in a tragic accident and, the following year, his son decided that he wanted to become a farmer.

My dad told him that it wasn’t likely going to work and that he’d be better off acting as landlord than trying to farm the ground himself. The neighbor’s son decided to go ahead with it anyways, convinced he could figure it out.

My dad gave him some initial pointers, but mostly he withheld guidance and sat back and waited for the neighbor’s son to fail.

Farming is resource intensive, skill intensive, high stakes gambling (and, in my opinion, boring.) It doesn’t matter if you’re smart, because by the time you figure it out, you’ll be long out of business.

Not surprisingly, the neighbor’s son quit farming after a year. What did surprise my dad was that rather than give the contract for his ground back to my father, he gave it to another neighbor who had provided advice and guidance when my dad hadn’t.

Merging to Grow

September 6, 2023 / johnhooley

I spent my Sunday driving back from my parents’ farm in Southern Idaho. As I drove, I listened to a course on business strategy. One of the lessons was on mergers and acquisitions. The main point was that most of the time businesses merge or acquire other businesses for the wrong reasons and research shows that it rarely works. The lecturer said that it’s often a misguided attempt to grow.

On Monday morning, I hopped on a call with a guy named Alan who operates a similar business to mine, in the market I’m trying to enter, but who has been working there for nearly thirty years. Alan is approaching retirement and wants to see his business continue. He told me on that call that he’s interested in merging our companies.

Here’s the initial deal Alan proposed:

His two long term employees would get equity.
He and his partner would retain ownership of the company.
I would take control of the business.
Our two teams would merge.

From his perspective, he thought I would benefit with:

Gaining his client list.
Being able to sell and build off his established relationships and brand.

That’s not attractive to me, but we’re going to keep talking to explore if there’s a way we can both achieve our goals.

What the lecturer recommended for mergers and acquisitions was to calculate the burden of merging. He said that often managers focus on the potential upside of deals- like me focusing on what I could do with Alan’s clients or portfolio. What most folks miss is that there is a challenge and cost to merging. It takes an investment to integrate teams, systems, and resources in a way that is productive. For Alan, if we merged, I’d have to take on the history of his choices: technologies we don’t use, system differences, client choices, and etc.

It’s sort of like considering whether to marry someone and only seeing the potential of that union. If you took a closer look though, you’d realize that marriage means you’ll have to live in a house with six cats, continually clean up after a slob, and keep one eye over your shoulder for that jealous ex who will be released from prison next year.

Value Capture in Farming Equipment

September 4, 2023 / johnhooley

I spent the last week working from the family farm in Southern Idaho. As a teenager, one of my jobs was to change hand lines. Hand lines are sprinkler systems for fields that have to be moved by hand, pipe section by pipe section. It’s tedious and labor intensive work.

In the past twenty years, my dad has replaced all of the hand lines with automated pivots. Pivots are computer operated pipes on wheels that pivot in circles around a connection to a source of water.

For the first half of the upgrades to pivots, my dad used a local supplier operated by a guy named Jack. For the other half, he used someone else over an hour away. Why?

At some point in the years long upgrades of all his fields, my dad noticed that Jack started to price gouge his customers. Now he only uses Jack’s business when he absolutely has to.

Are MBA’s Actually Worthless?

August 29, 2023 / johnhooley

During my entrepreneurial career, MBA’s have been unpopular with most of the other small business owner-operators I know.

Seth Godin kicked things off with a rant on the problems of business schools back in 2007 and launched his own altMBA a few years later. Josh Kauffman picked the idea up and wrote a book, The Personal MBA (which I rather like).

Tim Ferris penned an essay about using the cost of business school to design his own version of an MBA in, Tools for Titans ($120k focused on angel investing.)

“The MBA’s value is only in the network you develop or the clout of the school,” is a common refrain.

Because of this perspective, I never thought much of business school. “Learning by doing” was where I believed real value to be.

Though I still believe in the value of experiential learning, as time has passed I’ve come to question this common judgment of formal education as frivolous.

Vision’s Utility & Self Knowledge

August 23, 2023 / johnhooley

Six years ago, I met an entrepreneur in Philadelphia who was running a mid-sized service oriented business. Over dinner, he shared that at one point he was homeless and sleeping on a park bench. He was still “in business,” he was just running his operation from the library.

One of the recommendations he gave me was to write out my vision for the business and my life. He told me that he did it and nearly every fantastic goal he projected, he achieved. His experience with creating a vision isn’t unique; I’ve linked to a couple of other examples at the bottom of this article.

I’m working on a book on growth strategy for service businesses and, as part of that, I’ve been thinking and writing about visions, both for you (primary) and for your business (derivative.)

Good visions create clear pictures of the future that show what, how, and why your world will be different. But what makes them challenging is that we don’t know what we want.

More accurately, we only know some of what we want and often what we desire doesn’t actually serve us.

For example, I get fired up when I watch mixed martial arts. When I was fresh out of the military I thought, “This stuff is amazing, I should do this.” So I did. Within a little over a year I had my first amateur fight. After that fight, I planned on taking another fight at the next local event in three months. But three months turned to six months because I wasn’t training as hard as I needed to. Six turned to nine months as my training tempo dropped further. Eventually, I realized I didn’t actually like the lifestyle of being a fighter.

Watching fights was exciting. Training three hours a day, six days a week was a grind.

Similarly, with visions, we often make three mistakes. We choose goals:

The Current

August 20, 2023 / johnhooley

I had some beers with a few other entrepreneurs last week. One of them split with his business partner four months ago. He re-partnered with another person from the industry and started over. In four months, they’re just under $20,000 a month in revenue.

“It’s a bit crazy,” he told me, “I remember working for years and trying all sorts of things, first with my e-commerce business and then the last company. This new business is easy. Things just flow. Every sales conversation is positive. It’s like everything in the business is aligned.”

“What’s the difference?” I asked him.

“Selling people what they want,” he said, “I was always looking for a wave of demand. Interest. A trend. This feels like that wave.”

Your execution can be tight, your strategy sound, your culture connected. But none of those has near the same impact on the business as your relationship to the market.

You can’t swim faster than the current.

Why Advice Is and Isn’t Helpful

August 15, 2023 / johnhooley

“When I started ignoring the advice and doing what I thought I should do is when things really started to kick into gear for me,” my friend John told me in between bites on a chicken wing. We were talking shop in a hip, Korean BBQ restaurant in downtown Portland last Wednesday.

I had shared some recommendations I received from a consultant last year concerning a goal we both have and John doubted the advice because it ran counter to his plans.

In the past ten years, I’ve spent around $100,000 in training, education, and working with consultants and coaches.

I would have to agree with John that it’s a bit of a fool’s errand.

There were no post-education inflection points where I learned something that was transformational to the business. In fact, there were several things I learned that when I applied them worked against my goals.

Two Lessons on Values

August 13, 2023 / johnhooley

I’m president of my local Toastmasters club. Every meeting that I’ve attended has started with the president reviewing the Toastmasters’ mission. Under my leadership, we’ve started instead with a brief question or example of one of the club values. There are four values from our international organization parent:

Respect
Integrity
Service
Excellence

I introduced the values at a meeting by asking who knew them? Only one veteran member knew what the values were. When I gave the members the opportunity to speak on the role of values, someone said, “Values are what an organization tells you to try and make you fit into the system they’ve created.” In other words, a top-down attempt at manipulation.

To these four values that Toastmasters International provided, I’ve added:

Acceptance
Fun

I believe the four original values accurately reflect our culture today. However, they’re missing the additional two values which I’ve observed in our club’s behavior. In other words, bottom-up values derived from members.

Five years ago, I set the values of my business:

Freedom
Integrity
Results
Growth

These are a reflection of my personal values. I.e. Top-down.

The past two years, in weekly meetings spanning May through July each year, our team has discussed and refined these values into ten more specific expressions. I.e. bottom-up. Each week, I challenged them with actual scenarios from our work and asked them to derive principles from those scenarios, based on how they thought we should respond. Then we would discuss the long list of principles we all came up with and the pros and cons of each.

Below is what we eventually ended up with:

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