I’m sure there is no-one reading this article or even nearby who doesn’t understand the metaphor of strong foundations for supporting mighty buildings being the foundations of a mighty business!
But as ancient as that metaphor might be, it is as true.
The more I learn about how Entrepreneurs Circle views the foundations of a mighty business, the more I see how my advice and methods of delivering it are aligned with their tools.
That’s why I’ve joined their team to provide strategic advice and support to entrepreneurs who are eager to grow their businesses.
The 9-Step Masterplan is literally a step-by-step plan to follow for helping you achieve the business you deserve for all your hard work so far. It consists of three levels, containing 3 steps each and I’d like to explain the first level as I see it.
Level 1 – the foundation
The Office for National Statistics showed that in the UK in 2022 the business ‘death’ rate was higher than the business ‘birth’ rate. In fact, in the South East region alone whilst around 44,000 business started up, some 49,000 closed down. ons.gov.uk
The Oxford Mail reported in November 2023 when these figures were released, that around 560 businesses in Oxford ceased trading in 2022.
And according to Mike Michalowicz in his book, ‘Fix This Next’ 88 per cent of business owners make less money than if they were employed in the equivalent job and 91 per cent of business owners are actively trying to fix something in their business 100 per cent of the time…
That’s why you need a strong foundation upon which to build your business! If the base of your business is unstable, then you will be constantly trying to fix something.
So, in the foundation level of the EC Masterplan, we look at four fundamental questions – questions I have been asking entrepreneurs for many years:
- What do want from your business?
- What level of profit do you need to be able to achieve your wants?
- How many customers do you need to generate that profit?
- What’s the best strategy to find and retain those customers?
In other words – WHY do you need your business? WHAT do you need to do? HOW can you get there? The foundation level of the EC Masterplan tackles all this…
At this point it would be remiss of me not to mention how long it takes to work through the levels of the EC Masterplan. I’m an advocate of the 30, 60, 90 day planning routine, and so all the steps in each of the levels can fit into those timescales, it all depends on how you want to take it on.
Your life plan – The first step of the foundation level
It is essential that if you follow any step-by-step plan that you don’t skip any steps, and that’s especially true for the EC Masterplan! If you do skip ahead, you risk your foundations being rocky and we know where that leads!
The first step in level one is about clarifying your plan for life. Here are the key actions that enable you to do that in a concise way:
1. Define your T.E.R.M.S – This is an anacronym for Time, Effort & Energy, Resources, Money and Sanity. How much of all these things are you prepared to put into your grand plan for the ideal business?
2. Creating your life plan – What does success look like for you? The aim is to include in your plan; everything you want to be, do and have in your life. Add in a timescale to these desires and you have a SMART roadmap to focus on. Once you have this clarity of vision it’s time to quantify it by adding in the cost. Everything in your T.E.R.M.S. can be costed, and the total we call your T.E.R.M.S. number. Tis number tells you how much money you need to provide your desired lifestyle.
3. Manage your time properly – How much time do you spend working IN your business opposed to ON your business? I’ve talked and written about time management in the past and yet we all, including me, occasionally fall victim to one of the traps! The aim of an entrepreneur is to spend less time working in a job, so to shift the balance you have to begin by managing your time effectively. Controlling your own distractions and those that come from external sources, and vitally, finding time away from the job to spend it on the business instead.
With step one complete, you can move on to step two, your numbers…
Your numbers – Step two of foundation level
This step aims to help you understand your business’ financial position and how to deliver your life plan.
Referring to your T.E.R.M.S. number as defined in step one as the amount of money required to fund your future lifestyle, we now need to figure out what your business needs to do to generate that number and provide that money. Once again there are three key actions for defining the ‘what’:
1. Review your profit and loss numbers – You need to understand where your business is now, what the finances look like at the moment, so you have a clear understanding of how far you have to go. You know the end goal is your T.E.R.M.S. number and life plan, so reviewing your P&L gives you your starting point.
2. Create your seven key numbers – These key numbers are essential in understanding where you are right now, how your business is performing:
- Profit
- Operating expenses
- Gross margin
- Cost of sales
- Revenue
- Average order value
- Number of customers
3. Plot your future numbers – Here we look at your ‘legacy’ numbers and the pathway to a ‘new dawn’. We’ll start to build out your financial plan.
I do understand that this particular part of step two might be difficult, given that the numbers are based on your current business model, and we’re talking about adapting that for improvement, but the business model canvas covered in the next step helps with these constraints.
Your path – Step three of foundation level
Your path is the most effective way to deliver the numbers…
Steps one and two are concerned with the why and the what of growing your desired business, and step three is all about the how – HOW does your business generate the numbers necessary to deliver you a lifestyle you desire?
1. Map out your business model canvas – You already may be familiar with the one page business model canvas I often refer to. It’s a simple document that you fill in with 9 building blocks:
- Customer segments
- Value proposition
- Channels
- Customer relationships
- Revenue streams
- Key resources
- Key activities
- Key partnerships
- Cost structure
2. Create a strategic plan – Simplify your plan for strategic sales and marketing, by narrowing down to the activities that are most effective for growing or changing any of the elements in your seven key numbers.
3. Create a financial plan – What costs are essential in running your business? What does your financial forecast look like? Financial planning is a specialist topic, but you can create a clear plan by outlining your revenue streams, expenses and cash flow that you can update on a regular basis.
And that’s Level One ‘The Foundation’ (steps 1-3) of the EC 9-Step Masterplan!
As always, I hope that I have been able to provide some insight into the steps it takes to start you on the path to a growing business that provides your desired lifestyle. If you’d like to talk about how to fit all this growth planning into your working week or month let’s have a conversation. If you’re comfortable with foundation level and are eager to learn more about the second level – execution, I’ll cover that in the next article.