Focus! The Secret of Successful Companies
Focusing on the things that matter is also a valuable time management strategy, as it allows you to free your calendar from busy work that keeps you from pursuing things that move you forward.
As a passionate entrepreneur, your day probably does not have enough hours to get everything done. Between customer orders, the sales tax filing, and the fast-approaching product launch, you have your family and friends who also want a share of your time. The life of a small business owner can be very demanding and sometimes overwhelming.
So, how do successful small business owners manage their workload?
No, they do not delegate the task to their staff. Many solopreneurs cannot afford employees, at least not at the beginning of their venture.
Instead, successful companies and entrepreneurs focus on the things that matter.
In the business context, "things" refer to opportunities in general, such as launching a new product line, selling to a new customer segment, introducing a weekly newsletter, or adding a second store location.
The verb "matter," on the other hand, relates to the profit contribution of these business opportunities. Opportunities with higher profit potential matter to a company more than opportunities with lower profit potential.
The secret of successful companies is to focus on opportunities with the highest profit potential. That implies, however, that you must ignore the others.
Focusing on the business opportunities with the highest profit potential is easier said than done. It requires two crucial components:
you know the profit potential of each opportunity — at least roughly;
you are determined to ignore opportunities that fall short of your profit expectations.
As you may already sense, focusing on the things that matter is hard work. It requires a good dose of discipline, willpower, and analytical skill. But the reward is immense.
How to Estimate the Profit Potential of Each Opportunity?
The trick is to get the estimate directionally correct.
"Directionally correct" means you have to accept that your estimate will not be accurate to the penny - and it doesn't have to be.
Pros capture their estimates in financial models. These models are great at showing the financial implications of a business opportunity on your company's finances. They are accurate enough to size the profit potential.
Financial modeling is not an exact science. What these models require, though, is that you, at a minimum, estimate your future sales and expenses and break them down by month. The difference between your sales and your expenses is your profit contribution. The real benefit of financial modeling is that it forces you to think about the financial implications of each business opportunity.
Getting faster at financial modeling requires some practice. But if you make it part of your business routine, you will see significant improvements in speed and accuracy over time.
Ignore Those Opportunities That Fall Short of Your Profit Expectations
It is tough to say no to those creative ideas that fall short of your profit expectations. I know. First, you must find the willpower to ignore them, and then you must overcome the constant doubting of your decision. In my experience, that's the hardest part of staying focused. A degree of doubt may have its benefits, but it should not interfere with the execution of your business opportunity or, worse, derail you.
A tip I have shared with clients in these situations was to imagine how an unbiased person would evaluate their idea or the progress of its implementation.
Professional investors or business coaches often assume this role in larger start-ups. They assess your progress completely unemotional through mainly your finances.
If you track your plan and unlock the promised profit potential, then everything is fine. But if you fall behind in achieving the goals you have set yourself, they will encourage you to adjust your course. If these adjustments do not produce the desired results, they will ask you to scrap your idea and try something else.
This approach is super tough emotionally but very healthy for your company and yourself in the long run. It forces you to focus 100% on the opportunity. But in case of failure, you quickly move on without wasting too much valuable time and money on a lost cause.
5 Areas Where a Business Coach Can Add Value: Their knowledge, experience, and people skills can make business coaches an effective resource in guiding small business owners through the early stages of their new venture.
As a Solopreneur, Who Do You Ask for Advice? Speaking to a business coach with extensive business experience in various industries could sometimes prevent costly mistakes and save solopreneurs a lot of time — and their company.
If You Can't Measure It, You Can't Manage It
Although most solopreneurs do not have professional investors on their side, who can help them unemotionally assess their progress, you can still copy their role.
I recommend setting up a framework of financial metrics and key performance indicators that allow you to track whether your opportunities hit their targets or fall short of them. Typical financial metrics are sales, expenses, and gross margin/profit contribution.
Key performance indicators, also known as KPIs in abbreviated form, are usually non-financial metrics designed to measure a specific situation. Think of the number of Yelp reviews per month or the number of subscribers to your newsletters.
It is often best to pair financial metrics with one or two KPIs. You should not create too many KPIs as calculating each one takes time and prevents you from helping your customers.
You Can’t Improve What You Don’t Measure: You don't need to rely on your gut feeling to tell if your business is going in the right direction. Shopify provides an easy-to-use dashboard for your online store that requires no configuration. And it is free with your subscription.
5 Reasons Why Knowing Your Profit Is Crucial for Your Company’s Success: Profit is the most straightforward metric that will bring financial transparency to your business and allow you to uncover long-hidden underperformance.
Final Thoughts
Focusing on the things that matter to your company and ignoring all the other opportunities is a proven strategy to keep your cost under control and direct your scarce cash to ideas with the highest profit potential.
Focusing on the things that matter is also a valuable time management strategy, as it allows you to free your calendar from busy work that keeps you from pursuing things that move you forward.
