“It’s almost like a management report card. By getting a valuation done on some periodic basis, it can give a business owner a sense of how much their business increased or decreased during some certain time period.” – Alex Kindler
BB, the legendary copywriter and one of my biggest clients, is a constant articulator of powerful, business-building ideas. Recently, in a memo to his senior executives, he discussed the difficulty of starting and growing new businesses, and offered a brilliant synopsis of “what it takes to make (such) businesses work.”
“You have heard about the Four P’s of salesmanship: Promise. Picture. Proof and Payoff. Those are very effective guides in creating sales packages that produce. But I have five more P’s I’d like to share with you. These could be helpful in launching and/or growing your business.”
BB’s Five P’s of business-building are…
1. Program: You need a business model that works – one that can produce reliable, long-term profitability with an acceptable level of investment and risk.
2. Product: You want to sell products that are easy to sell the first time and even easier to sell thereafter. In other words, you want to sell products that give people what they are looking for at a price they can rationalize.
3. Prospects: You need people to sell to. And you need a sufficient number of them to meet your business’s long-term goals. They have to be plentiful. And they have to be profitable. Where do you find such quality customers? Mailing lists? Websites? Keyword searches? Telephone calls? Finding potential buyers is a big part of any business.
4. Proposition: Every market is unique. So is every product. Figuring out the optimum way to sell your unique product to a given market segment is your first and most important priority. Until you do that, you can’t produce profits.
5. People: Every business, no matter what it does, where it’s located, or how automated its processes are, depends on people to create and maintain its profits. Taking a business to the next level – even to keep it from falling backward – is most easily accomplished by the hiring, promotion, training, and nurturing of a team of key people who can work skillfully and efficiently. You have to find them and then motivate them and then hold on to them.
To BB’s very good list, I would add four more P’s that you have to pay attention to…
6. Promotions: Discovering the right proposition for your business is the first – but only the first – priority of selling. To be able to keep your business profitable, you have to be able to produce a continuous flow of successful, customer-grabbing promotions (sales offers that attract attention, offer benefits to the customers, and persuade them to buy your products). A business that can’t produce breakthrough promotions on an ongoing basis is a business that is doomed to mediocrity or even failure.
7-9. Procedures, Protocols, and Processes: If you get the first six P’s working right, your business will never suffer from a lack of sales. But if you don’t have effective operations – order-taking, fulfillment, accounting, and customer service – your profits will always be half of what they should be, and your stress will be double what it needs to be.
Take a few minutes right now to rate your business according to the nine P’s. Answer the following questions:
- Can you describe, in 25 words or less, the basic selling program that is responsible for 80 percent of the growth and profitability of your business? What is the primary way you convert prospects into buyers? How do you maximize the lifetime value of your buyers?
- How are your products better and/or different from those of your competitors? Why are they easy to sell? Why do your customers keep on buying them?
- Who are your best prospects? Where do you find them? Can you afford to acquire them at the price you are currently paying? Is there a sufficient number of them available at that price?
- Which of your offers is best at acquiring first-time customers? What is your most profitable offer for existing customers?
- Among your current employees, who are the superstars? Who is your superstar in marketing? Sales? Product development? If you are one of your company’s superstars, who are you mentoring so that you can be replaced when the time comes?
- Could you create your company’s next breakthrough sales promotion? If not, who could you turn to? Do you have a machine that regularly creates successful marketing campaigns to fund your growth? Or are you dependent on an aging promotion?
- Does your business run smoothly? Are orders processed quickly? Do you have good accounting? Do you get commendations from customers for your good customer service? Or are there problems that, despite years of effort, haven’t gotten any better?
Give yourself a letter grade for each of these aspects of your business, based on how you think you compare to other companies in your industry. Be tough but fair. Give yourself an A if and only if you are among the very best. You will probably end up with just one or two As, and a smattering of Bs and Cs.
I did this exercise with Walt P. yesterday. We’ve had great success in bringing his business from nothing to more than $200,000 in 14 months. But problems are arising, as they do when growth is fast. Yesterday, those problems were weighing heavily on our minds. “Let’s take an hour and analyze the business,” I suggested, “using this simple system.”
We gave it the following report card…
We have a good idea how to make the initial sale (where to go to find prospects, how to intrigue them, how to sell them the first time) and how to sell them after that.
We have great products. Really great products. Walt creates them, and he understands what makes a product great.
So far, we are only scratching the surface in terms of identifying good media for our advertising. We are gradually expanding our marketable universe each month by about 2,000 prospects, but we should – and will one day – be growing our prospect file by 10 times that number. That is something we have to work on in a serious way.
The offer – what you charge for your product, the payment terms, and the guarantee – is critical to any business. In Walt’s business, we have a very good idea of what that should be. That idea is based on my experience – more than 10 years in the industry – and from being able to see what our competitors are doing. There are certainly things about the offer that we can test – particularly in the area of continuity sales – but, for the most part, we believe we understand how to form our selling propositions.
The employees that we have are very good, but to do a better job of expanding the business’s marketable universe and improve operations we will need two more superstars. Getting them is our top priority right now.
Walt and I work together on most of the leads, and then pass them along to a copywriter we’ve been mentoring for several years. The combination has been terrific. Our response rates are as good as we can hope for. We see a need to hire a junior copywriter to be tutored by our protégé so we can continue to produce more copy. But we feel confident that we have the creative power to produce good promotions now and in the future.
Procedures, Protocols, and Processes: D
Right now, because of the surge in business, we are doing a bad job of entering and fulfilling orders. We have to move our fulfillment out of house and learn to manage service companies. We also have to get our accounting and customer service departments working more smoothly. We need a VP of operations – someone really good and very detail-oriented (because we aren’t) – and we need that person ASAP.
Based on that quick assessment of the business, it was easy for us to see the importance of hiring two more superstars – one to help us get operations in order and the other to take a lead in marketing so we can grow our prospect file as it needs to be grown. If we make it a priority to fill these two positions, we can have it done in 30 to 45 days, and then begin the process of integrating and educating our new people. In six months, if all goes well, we will be ready for the next step up – to the $5 million level.[Ed. Note: Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]