If you want your business to survive and thrive, make sure new projects and customers are profitable before you commit. TOM McKASKILL explains how you can focus your business on your best prospects.
By Tom McKaskill
If you want your business to survive and thrive, make sure new jobs are profitable before you commit.
When everything is going well and you are exceeding your growth objectives, it is very easy to allow less than marginal business to creep into the pipeline.
Instead of rigorously testing new activities or projects against well established criteria, you can be so mesmerised by your success that you take on business that turns out to be sub-optimal, dragging scarce resources away from better projects and activities.
So how do you temper your enthusiasm and ensure that the business you do take on is profitable and aligned to your growth objectives?
The containment process starts by setting out who you are, what you do well, and where you want to go. The business you sign up today may well have been in the pipeline for several years, most likely stimulated through your earlier marketing efforts. The groundwork was put in place some time ago and you are now reaping the fruits of that earlier work.
Your marketing program plants the seeds of the business that turns up at your door months and years later.
Control starts with marketing. Without long term planning and a well-established articulated focus for the business, it is very difficult to control what business you attract. How you position yourselves in the market, the messages you send out, the partners you work with, and the brand building you do, all influences how prospects see you and why they come to you.
Your prospecting should start with your long-term objectives. This is then translated into the business you want to do to reach those goals. If you know what you are good at, what underpins your competitive advantage, and what generates your highest profit margins, you need to turn that into clearly defined characteristics of the business you seek to undertake.
If you can clearly define the type of business that leads to profitable outcomes, you should then ensure that your marketing and sales activities, as well as your incentive plans, are clearly aligned with those outcomes.
If your marketing program is successful, it will drive the right prospects in your direction. You then need to rigorously filter and screen those to ensure that the ones you spend time and resources on are those that clearly meet your long-term growth objectives.
Even if you are successful at driving the right prospects towards you, too often sales activities are spent chasing blue sky prospects or marginally profitable business because inadequate discipline was established around the qualification and sales progression process.
The aim should be to qualify hard, and then spend more time with those that have a higher chance of success, especially those that drive growth in the direction that is most beneficial to the long term objectives of the business.
Rather than chase 200 prospects, many with only a slim chance of success, try focusing more resources on the 20% that are better aligned to what you do well.
You will be surprised at how much easier growth is to achieve and just how much more profitable your business will be.
Tom McKaskill is a successful global serial entrepreneur, educator and author who is a world acknowledged authority on exit strategies and the former Richard Pratt Professor of Entrepreneurship, Australian Graduate School of Entrepreneurship, Swinburne University of Technology, Melbourne, Australia.
Smart Company is the leading online publication in Australia for free news, information and resources catering to Australia’s entrepreneurs, small and medium business owners and business managers.
