Hard to believe but 98% of US companies employ less than 100 people. Take a look at the table below created from the latest US Census data. The green cells represent the companies employing 99 people or less or 98.1% of US companies, 6 million out of 6.1 million (who run a payroll).
Only 116,000 companies employ 100 people or more. And as you can see the vast majority of companies employ nine people or less.
To scale these companies (and of course the other 2%), the simple formula that most entrepreneurs seem to ignore is quite simple.
- Define the Positioning that you wish to dominate in the prospect’s head (Positioning Al Ries Jack Trout).
- Build a Strategic Plan including detailed policies (actions) covering the next 3 years that articulates by department how you will achieve that.
- Build a set of financials that includes P&Ls, Cash Flows, and Balance Sheets that are a corollary of the policies outlined at point 2.
- If required, raise money to fuel the financials outlined at point 3.
That’s it. Easy.
So let’s explore a little more detail behind this formula and some tips to articulate a winning strategy with impeccable execution.
Positioning Tips – Unreasonably Important
- Who you are is everything. It defines the product or service you build. It’s who you recruit. It’s what you measure.
- Most Positioning Statements are meaningless bland gestures (tough love). They fail to articulate within the Statement what makes you remarkable. They fail to articulate the key Competitive Value Proposition you bring to the table to improve a customer’s world. Recent examples I like –
- Toast- By serving as the restaurant operating system across dine-in, takeout, and delivery channels, Toast helps restaurants streamline operations, increase revenue and deliver amazing guest experiences.
- Salesforce – Salesforce is the customer company. We make cloud-based software designed to help businesses connect to their customers in a whole new way, so they can find more prospects, close more deals, and wow customers with amazing service.
- CustomerGauge – We’re CustomerGauge, the leading SaaS provider of Monetized Net Promoter® and customer retention software, and we’ve been making companies easier to love since 2007. We promote an atmosphere of honesty, accountability and transparency from the top-down.
- Strategy is what you leave out. I was at a recent Cloud Orchestration developer conference and it was clear that you can’t go after every position in that market. You need to curate. You need to decide which part of the universe you can bring your unique value. Where can I win?
- So you really need to understand the needs of the market, the competitive landscape, and your competitive value proposition to imagine your positioning.
Build a Strategic Plan
- Once you are clear on what you want to be, it’s much easier to build policies and tactics to get there. The most successful Strategic Plans are successful not just because they are powerful positioning statements but because your tactics are layered, multi-dimensional and reflect the patience of someone who cares about reaching a goal (Seth Godin).
- Involve all key managers in crafting the operational plans. This guarantees that operational departmental priorities are aligned with the strategy.
- The Plan must articulate the resources required including people, systems and equipment. Details and timing of tactics matter.
- Identify a few essential multi-departmental projects that will drive operational excellence e.g. implementation of a costing model to produce profitable pricing models, expansion of ERP systems, development of comprehensive training and development programs to nurture your talent.
- Bring all these operational policies together in a cohesive financial plan that delivers on your financial objectives.
Funding Your Dream
- Having gone through this process it will be self-evident that your strategy is self-funding or requires more fuel.
- If it does require further funding at least now you have a compelling story to present.
- You will be in a position to articulate to funders, the size of your markets and your competitive value proposition. You’ve done the research and can highlight the Potential Available Market (PAM), Total Available Market (TAM), Serviceable Available Market (SAM), and Serviceable and Obtainable Market (SOM).
- You have a compelling story about how you will achieve it and how you will spend the money. You would be amazed at the number of entrepreneurs who struggle to articulate in detail how they would spend the $20m they want to raise!
- Of course, you could also scale back your ambitions until it is self-funding but that’s your choice.
Good luck scaling and remember the three-point plan Positioning – Strategic Plan – Robust Financials in that order.
At TPP we work with clients to scale organically and by acquisition. Reach out at Ian@TPPBoston.com to start a discussion.