How would you answer the following question: Next month, would you rather increase sales by 10 percent or develop a new business asset such as a new product or service? Virtually every business owner I ask responds that they would rather see sales go up 10 percent. And, as I lay out in my new book, Start At The End, this answer is the reason why most businesses fail to achieve the success they desire.
Sure, it would be great to increase your sales by 10 percent next month. But in most cases, doing so doesn't guarantee anything in the future. In fact, the following month, sales might decrease by 20 percent. And then you’re right back where you started.
The correct answer is to always be building “business assets.” Business assets are those resources you develop in your company from which you can expect future economic benefit such as revenue growth and increased profits.
For instance, a new product or service can be an extremely valuable business asset. It could provide years of increased revenues and earnings. Likewise, securing new distributors and recruiting and training new employees are valuable business assets that allow your company to grow. But, importantly, creating these assets might detract from your immediate sales rather than add to it.
Essentially, the issue between the choices in the original question boils down to short-term vs. long-term thinking. Business owners need to employ long-term thinking, and specifically, they must start at the end. That is, they need to take a moment to figure out the business they want to build. Not only do they need to identify the financial metrics of their dream business, such as its revenues and profits, but they need to identify the business assets. For example, at the time you eventually sell or exit your business, how big is your customer base, how many employees do you have, how many distributors or partners do you have, what products and services are you selling, etc.?
Without a detailed vision of what you want to accomplish, there’s no way you can actually achieve it. So creating this vision is the first step business owners must take. With this vision in place, the next step is to reverse engineer it.
This is done by working backward. For example, if you know where you want your business to be in five years, figure out what you need to accomplish in the next year to put you on the right trajectory to meeting your five-year goals. Likewise, you can then determine what you need to achieve this month to meet your annual goal. And finally, you can figure out what you need to accomplish this week to meet your monthly goal, and today to achieve your weekly goal.
As you can see, by working backward, you can determine what you need to accomplish each and every day to move closer to achieving your long-term business goals.
Most business owners stop dreaming about the huge success they dreamt of when they first launched their businesses. This is because they get so caught up in the day-to-day struggles of running an enterprise. But doing this nearly ensures you’ll never achieve your goals. Rather, it’s time to start dreaming again, and then, importantly, to figure out and execute on the plan that allows you to realize your dream.
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OPEN Cardmember Dave Lavinsky is the author of “Start At The End: How Companies Can Grow Bigger And Faster By Reversing Their Business Plan”. He is also the president and co-founder of Growthink, which provides products, consulting and banking services to help business owners develop business plans, raise funding and prepare their businesses for sale.
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