These are the kind notes provided to me following a presentation I gave around Blue Ocean thinking and taking your business out of the red ocean as part of your development plans.
Quick recap
Mike led a discussion on the importance of understanding and improving business numbers, and the need for commitment to achieve business goals. He emphasised the significance of focusing on the most critical aspects of the business, reducing costs, and enhancing or adding value to attract new customers. He also discussed strategies to improve the business’s gross margin and customer base, and the importance of proactive thinking in business.
Summary
Exploring Business Changes and Commitment to ‘Terms
Mike led the discussion on the focus of the call, which was to explore the ‘what’ rather than the ‘how’ of business changes. He emphasised the importance of thinking about the changes needed to move the business forward. He also discussed the desired return on investment from profits, which represents the desired income for the lifestyle one desires, and how it influences various aspects of the business. Mike then asked the participants how committed they were to achieving their financial goals within a desired timeframe.
Commitment to Achieving Business Goals Discussed
Mike initiated a discussion about the commitment to achieving business goals, emphasising the importance of commitment in achieving success. He shared that most businesses stay stagnant and never reach their full potential due to a lack of commitment to change. He also highlighted the importance of maintaining motivation and not getting complacent. Mike then introduced a programme that has been reverse-engineered from success, which can help businesses reach their goals if they commit to the process. He also mentioned that the programme’s success is based on past data and results. The team agreed to commit to achieving their goals, with everyone expressing their commitment as a 10 out of 10.
Understanding your ‘Number’ and Business Strategy
Mike highlighted the importance of understanding the relationship between different numbers in a business. He also stressed the need for a strategic plan to achieve the desired outcome. He encouraged the participants to establish their ‘numbers’ as a starting point for their business strategy.
Understanding Business Numbers and Key Metrics
Mike led a discussion on the importance of understanding business numbers, emphasizing that business is a numbers game played by a team. He introduced the concept of the 7 key numbers in a business, focusing on three of them: revenue less costs, gross profit, and the bottom line profit. He explained that revenue minus variable costs equals gross profit, and gross profit plus variable costs equals revenue. Mike also highlighted the importance of considering both fixed and variable costs in a business.
Commitment, Fixed Costs, and Gross Profit Strategies
Mike spoke about the importance of commitment to your numbers and focusing on what can make a difference to behaviours and actions, particularly in relation to their goals. He highlighted the significance of fixed costs in their business and stressed the need to strive for their goals in full, not just accept part of it. Mike also discussed the importance of focusing on the gross profit and gross margin in a business, and the need to review and minimise fixed costs to maintain a lean business.
Creating a “Blue Ocean” in Business Strategy
The team discussed the need to adapt strategies to better meet customer needs. Mike encouraged them to think differently about growing the business. Mike discussed the importance of proactive thinking in business, emphasising the need to differentiate and adapt to market changes. He explained that businesses often react to competition by lowering prices, which can lead to a commoditised market. Instead, he suggested creating a “blue ocean” by offering unique value propositions that doesn’t rely on price competition. Mike also highlighted the importance of understanding one’s own business and market, and not being stuck in a reactive mindset. He concluded by stating that business isn’t easy, but it is simple, and the goal should be to make it as easy as possible for oneself.
Improving Business Numbers and Embracing Change
Mike shared examples highlighting the importance of understanding and improving business numbers, specifically focusing on gross profit and revenue. He emphasised the need to think differently and embrace change to achieve better results. He also introduced a worksheet to illustrate how improving margins and average order values can significantly reduce the number of customers needed to hit revenue targets. The team was encouraged to consider these strategies to improve their businesses.
Improving Gross Margin and Customer Base Strategies
Mike discussed strategies to improve the business’s gross margin and customer base. He suggested increasing the average order value and improving the gross margin, which would reduce the number of customers needed to achieve the business’s revenue goals. Mike also emphasised the importance of understanding customer needs and offering services that customers may not even know they want. He concluded by highlighting the business’s 7 key numbers, including the number of customers, average order value, and fixed costs. The team seemed to agree with these strategies, although some expressed concerns about their feasibility.
Focusing on Critical Business Aspects and Strategy
Mike discussed the importance of focusing on the most critical aspects of the business and achieving clarity on the business model. He emphasised reducing costs, eliminating unnecessary expenses, and enhancing or adding value to attract new customers.
Mike acknowledged the flip side and the strategy of strategic price reductions employed by companies like EasyJet and Ryanair.
