Category: Growth Series

2023 In Review

December 31, 2023 /

As the year draws to a close, this final post is a reflection on how my business and I grew this year.

Revenue Expansion
In 2023, we broke through the revenue ceiling that we’ve hovered around for the past seven or eight years. Along with the revenue expansion, our team grew in its effectiveness and we tightened down our operations to be more efficient.

Referral Marketing Strategy
This year I also focused on developing and iterating on a referral marketing strategy. The impact of that was two good fit leads and one business opportunity. This doesn’t sound particularly impressive for a year’s worth of effort, but it’s inline with my expectations for a word-of-mouth marketing strategy for the kind of market we’re entering into (established, with long-time competitors, and customers more sensitive to risk). In other words, it’s a good outcome.

Some of how this looked in practice:

  • I joined four different volunteer groups in two large pools of clients.
  • I formed connections with people who were strategically positioned in the market networks (in this case, people who make recommendations on companies to choose).
  • I sent out a holiday card and newsletter about our team.

One critical lesson that I learned about referral marketing is that it’s messy in its ROI. The goal was to develop leads and market intelligence and I was successful in that, but what I didn’t count on were the opportunities that came out of building that network:

  • I’m talking with a market insider about developing a partnership to launch a software product.
  • I’m volunteering in a group that selects speakers for the largest show in the market. I’m a speaker and this is giving me an inside view of how speakers are selected.
  • I’ve been asked to join the board of directors for the largest organization serving our market west of the Missippi.

It’s a great start and I anticipate that I’ll see higher and higher returns as time passes.

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The Courage to Not Be a Rabbit

December 19, 2023 /

Harvard business strategist, Michael Porter, saw the primary challenge of a business to be escaping competition. Businesses in a market tend to converge in their offerings because improvements easily disseminate among them. They’re all running the same kind of race and whenever something new makes someone a little faster, others quickly copy it.

As an example, I remember when Rob Walling’s email marketing platform, Drip, pioneered visual workflows for email sequences. It was a superior approach that initially gave Drip an advantage. But it was soon copied by all his competitors and he was back in the race.

Porter believed that the only way to escape this dynamic is to run a different kind of race. It can’t just look different, like taking a market position, it has to be different.

If you’re a rabbit in a field of rabbits, it’s choosing to be a turtle instead. You have to sacrifice your speed and lightness for armor. What makes you successful is fundamentally different than what the rabbits are trying to achieve. If they try to copy you by putting a little shell on their fur, it just slows them down and makes them less fit for their purpose.

The ramification for your business is that the only way you can give yourself persistent protection from competitive pressure is to innovate in your business model. Not only must you innovate, but you must be willing to sacrifice what other businesses find essential. And because innovation rarely works initially, you must have resources or an approach that helps you survive all the failures.

It’s a challenge that requires courage, sensitivity, and resilience. But it’s worth considering Porter’s challenge, because limiting competition makes business and growth much easier.

Actionable Time Horizons

December 10, 2023 /

I used to focus on quarterly goals. There were a couple things about the duration though, that didn’t work:

  • My situation would change and make the goal either unachievable or irrelevant.
  • Or I’d lose track of what I intended to focus on as the weeks slid by and louder issues took priority.

Monthly goals, on the other hand, felt too short. Objectives weren’t big enough and the frequent planning made them seem almost arbitrary in what to pursue.

I switched to 45 day cycles (1.5 months) and my execution speed accelerated. I still set quarterly goals, but the focus is more on the 45 day cycle as the vehicle to get there and the 45 day objectives are significant enough that they require strategic thinking to be successful.

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The Skill of Listening

December 5, 2023 /

One of my favorite fantasy series is the Alex Verus novels by Benedict Jacka. There are a variety of reasons why, but one of the interesting dynamics in the novel is that the main character, Alex, is continually outclassed. He operates in a world of magic users who can shoot fireballs and have other similarly fantastic powers. His only magical ability is that he can see a few seconds into the future. Other than that, he’s an ordinary human. However, he leverages his insignificant advantage again and again to overcome more formidable opponents.

The equivalent in business is listening.

Being able to understand where people are coming from and what they want doesn’t seem significant. But we all connect through the imperfect veil of communication, where our intent is eroded by how well we articulate our thoughts and how well the other party listens.

Business is inherently interpersonal. Whether it’s writing a landing page, selling a product, or dealing with a problem employee, your success is magnified or minimized by how well you understand the other person.

It pays to slow down and really try to understand.

Time on the Frontier

December 3, 2023 /

Yesterday, after a Toastmaster’s meeting, I had brunch with a few other club members. One of them, Mario, shared a story about the second business he operated.

In the early 2000’s, the market was in a recession and Mario needed funding for his first business but he couldn’t get it because banks weren’t lending. He sought out alternatives and discovered an association of non-traditional lenders. He was able to find a company in that group who gave him a loan and resolved his cash flow crunch.

As he navigated around his funding obstacle though, he realized that lots of other businesses were facing the same problem. He formed a partnership with one of the lenders in that association and became a capital broker. His role was to “sell” the loans, but it was little more than lead generation. Because of the demand and limited alternatives, he and his partner quickly developed revenue without much work. In 2007, he sold his share of the business just ahead of the next financial recession.

Because Mario explored beyond his own networks, he was able to discover a solution to his problem. Rather than just stopping there though, he was able to envision what could be possible if he used his discovery to help others.

This is a classic entrepreneurship story: opportunity emerging from problem solving on the frontier and realized by leading others to better outcomes.

Are you spending time on the frontier? Are you leading others to the solutions you discover?

The Two Approaches

November 28, 2023 /

There’s a way of running a business that is entirely system based. Every challenge is resolved through structure.

If you’re not making enough profit, you apply a financial framework. If you have interpersonal conflict between team members, you apply a six-step algorithm. If a team is under-performing, you apply an improvement plan.

This systematic approach to business is highly effective.

However, there’s another way of running a business where the solution to every challenge isn’t a system. It’s a way of operating where people solve some of the problems. It encourages initiative and innovation and is risk tolerant.

The first approach is management. The second is leadership.

To grow to any level of scale, management is required. To realize the highest potential of your business, leadership is required.

You don’t have to be a leader to be successful. It’s not the key ingredient. But it is the secret sauce to making things easier and having a greater impact.

Getting Lucky

November 26, 2023 /

There’s a lot of luck in business. One of the practical ideas concerning how to work with luck is Jason Roberts’, “luck surface area.” His idea is that your luck increases by pursuing a passion, developing an expertise, and talking about it with lots of people. The key being that you talk with lots of people.

Another perspective on luck aligns with the quote by Thomas Jefferson, “I’m a greater believer in luck, and I find the harder I work the more I have of it.”

Hard work doesn’t create luck, but hard work that results in many different work products, especially in different domains, can create opportunity.

Western philosophy originated in harbor cities of the Aegean. Merchants traded all around the Meditarranean and came into contact with art, science, and ideas from more isolated societies. They acted as connectors and filling that role created the ground for insight and innovation.

Diversity of networks and experience is a practical strategy to create “lucky” opportunities.

As a simple example, this weekend, I worked on a project. During the course of the work, I realized that I was applying a tactic that I learned at a software developer conference four years ago. A little bit later, I realized that I was applying an idea I learned from a lifestyle business conference last year. In the moments when I learned those tactics, I had no expectation that I would actually use them because I had other goals that I was focused on.

As entrepreneurs, we often make decisions through the lens of efficiency. You could make an argument that I shouldn’t have spent time at a software conference when I wasn’t actively developing a software product and shouldn’t have been at a lifestyle business conference because I don’t operate a lifestyle business.

However, there’s an extremely valuable place in business for inefficiency.  In big businesses, they call it research and development, for investors it’s venture capital, and for your small business it might mean “wasting” a weekend in an adjacent network.

A More Useful Perspective on the Peter Principle

November 21, 2023 /

There’s a concept called, “The Peter Principle,” that is often used to describe the reason for someone’s lack of success. From Wikipedia:

“The Peter principle is a concept in management developed by Laurence J. Peter which observes that people in a hierarchy tend to rise to ‘a level of respective incompetence’: employees are promoted based on their success in previous jobs until they reach a level at which they are no longer competent, as skills in one job do not necessarily translate to another.”

Wikipedia

The shorthand is that people rise to the level of their incompetence. It’s used to ascribe reason to the limit of someone’s accomplishment.

A less cynical way to think about it though, is that people rise to the level with which they have the opportunity to grow. Or that people navigate their course until they meet an obstacle which requires growth.

Last week, I asked our team to take on a project that they had never done before, but that I know we have the capability to do. They hemmed and hawed, expressed doubt, and confusion, and looked to me to provide the path forward. They wanted a leader to layout a plan for them.

But I didn’t take on that role. Instead, I gave them space and a little coaching so that they could develop the plan themselves. On Monday, they were stuck. A week later, they’re making progress.

Initially, they hit that Peter Principle limit. Then they started to develop the skills needed to form their own plan. Eventually, they’ll become adept enough that this sort of situation will no longer be an obstacle and then we’ll discover what the next opportunity for growth is.

Pride

November 19, 2023 /

Larry Wall, the originator of the Perl programming language, famously proclaimed that the three virtues of a great programmer where laziness, impatience, and hubris.

Lazy programmers write code to make things easier, impatience causes them to anticipate problems, and hubris makes them create programs of such quality that they’re difficult to criticize.

You can’t control fortune. Sometimes the market smiles upon you, sometimes everything breaks at the exact same time.

But a useful goal to pursue is to be able to be proud of your work.

For a developer, that might be an elegantly coded solution. For an entrepreneur, it’s a series of smart decisions. For a business manager, it’s a system that is squared away and a cohesive team to run it.

As an owner-operator, you’re part entrepreneur and part manager and it’s worth striving to be proud of your work in both dimensions.

Warning Orders

November 14, 2023 /

Yesterday, I participated in a leadership meeting for my local Rotary Club. The club has faced several challenges post Covid and the meeting’s scope concerned how to navigate those challenges. One of the key issues identified was the cost of AV for the weekly lunches. It’s not clear why, but AV costs have escalated in the past year (a broad industry trend beyond our club).

One of the ideas to address this high fixed cost was to purchase AV equipment and have Rotary members run it each week. This would be fairly quick to implement and cost under $1000. The drawbacks were that we had to find a group within the club to learn and manage the equipment and we had to be able to store the equipment somewhere.

An alternative idea was to offer sponsorship to a local AV company, bring them on as members, and have them run the meeting at cost. The drawbacks to this were that the market dynamics make it so that AV companies probably don’t need marketing (pricing is up, their services are in demand) and it sets a precedent that some “volunteers” are paid.

The purpose of the meeting was to develop a plan to address issues, but it wasn’t clear which of these solutions we should pursue. This is a crossroads which is probably familiar to you. You have a clear goal, but not a route to achieve it, just a few ideas.

For example, you might want more leads so that you can grow your business. You have some ideas about how you might get more leads, but you don’t really know which one to execute on.

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