True Product of a Business

“The true product of a business is the business itself.” - Michael Gerber, the E-Myth revisited

Notes

  • The business model is the business
  • The brand is the business
  • Value is based in treating the business as the product

Fatal Flaw of Business Owners

clip_image003The great business idea and energy an entrepreneur brings to a new venture is contagious. The dream of growing a business and having a multitude of customers is fuel for the chase. However, in the pursuit of a vision of services being sold, widgets being made and customers raving over your brand, do not make the mistake that business owners in America make. It was captured best by George Gendron, the former Editor-in-Chief of Inc magazine.

“The dirty little secret about entrepreneurial life in America is that the overwhelming majority of small business owners create zero equity for themselves. You spend a lifetime building a company only to discover, when it is time to sell, that it is worthless.”

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The Eight Ball

clip_image005Your business has to make money. It is the fuel by which it operates. However, what is the exit strategy? This is the eight ball. Keep your eye on it. What is it worth? How do you increase its worth? Here are eight things needed to increase the value of your business:

  1. Systems. What is the predictable result produced from the systems in your business? Can you put one anywhere in the world?
  2. Process. How does your business flow for the customer? Is there an experience within a framework or is it a mere transaction?
  3. Talent. What is the formula for measuring, retaining and attracting the talent which fits in your
  4. Culture. How do ideas, people and energy percolate in your company?
  5. Financials. What is the track record and formula for making money?
  6. Documentation. Is there a cookbook that tells me how to set up what you have in Hawaii if I wanted to?
  7. Branding. What position do you occupy in the mind of the customer? How has this been built? Is it scalable and repetitive?
  8. Robustness. How well does your business run without you? This is the litmus test. If 1-7 are in place, 8 becomes apparent.

Want to get out of the entrepreneur trap? Think beyond revenue. The discipline of focusing on your business as the product itself requires a systematic approach to avoid missing the true value you are building. Learn more through AscendWorks Business Coaching.

June 4, 2008 · Filed Under Entrepreneurship

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