It is the “Model” of a business that profits, not the business itself.

I’d like to take a few minutes and change your vision of your company or your organization.  I’d like to use 2 examples of businesses I used to own to show examples of how important it is to have a “Model” inside your business.

A “Model” is different than a business plan.  A business plan is just that, a plan.  It’s an execution, a map, a guide.

A “Model” is more of a template.  I like to refer to “Models” as “Working Models”, because when a company governs themselves by a “Working Model” it is far easier to steer the company in a desired direction.  Let me give you 2 examples.

Example 1.

Years ago I owned a small chain of video stores.  In the early days it was quite simple to profit in the video industry.  It went like this.

Buy Inventory.
Open Store.
Make Money.

It was quite simple in the early years.  As time progressed, however, competition grew and you had to begin to engineer profit and compete.  We were holding our own until the big boys showed up, like Hollywood and Blockbuster.  We had to really roll up our sleaves and do some guerilla marketing, if you know what I mean.

One day our movie vendor showed up, took our weekly order for our new releases and asked us what formula we used to pick out what movies we bought and what quanitity we bought.  Being the sophisticated business owner I was back then, I said, “We go by what they did at the box office and translate that into our weekly budget.”  I’ll never forget her response…..

“Would you like to see the FORMULA that some of the big boys use?”

I began to salivate.  She showed us that for every $1 spent in new releases, the big stores could count on a $3 return in 30 days, provided a certain price point was used in each location.  Each price point was picked demographically based on local household incomes.

Of course, I did some quick calculations, changed my order on the spot, and sure enough, we had our best year ever that next year.

Simply put, the “formula” the vendor shared with us that day, was the video industries “Working Model” at that time.

Since that point, I’ve been able to create a “Working Model” in every business I’ve ever owned or managed.

Let’s look at another example of a “Working Model”.

Example 2.

In years past I owned a sign company that sold outdoor and indoor electric signs.  We had 30+ reps accross the country.

We were doing O.K., until one day I sat through a conference in Las Vegas and watched as a 40+ year sign veteran shared how his company did 300% – 500% more revenues than my company with less than half the sales reps.

I sat at this guru’s feet and soaked up every morsel he shared and sure enough, with 15 minutes to go in his talk, he threw out the “formula”, or, “Working Model”.

To understand the impact this had on me, you have to appreciate the “Model” I had working.  Are you ready.  Here it is.

Here was my model.

30+ commission only reps knocking on doors, 5 days a week.

That’s it.  No quotas.  No job description.  Just, work.

Here’s the 40 year veteran sign owners formula, or “Working Model”.

Every rep working for us has to bring in 10 new bids each week or they are FIRED.

That’s it.  It was that simple, but then again, so is Walmart.

That was his whole model, but when you analyze closely what he did, it’s genius.

First thing you have to know is that he was serious.  He shared a few stories of a couple reps that had worked for him and thought they could slip one week with 6 or 8 new jobs to bid.  They found out very quickly that the owner of the sign company valued his overall business over his relationship with that rep, and that rep, of-course, was FIRED.

Within 1 year the owner created a reputation in that company that the whole was more important than the parts.

All his reps let the new reps know immediately that if they did not plan on bringing in 10 new bids each week, that if they ever thought they’d miss, they recommended to that new rep that they probably shouldn’t even start.

Here’s the underlying key point.

He turned his sales organization from an “Activity” model, to an “Accomplishment” model.  That owner KNOWS exactly how much money his company is going to make next month, and next year, because he knows how many jobs he will be bidding on and he knows what % of bids his company averages.

This owner can “RELAX IN THE NUMBERS” of his company.

Needless to say, I flew home, immediately switched my company to his “Working Model” and we went on to double our annual sales 5 of the next 7 years.

A “Working Model” is a template, or formula, that has shown PROVEN results before, that can be super-imposed over your current operation and turn it into a profiting machine.

Take a good hard look at your company.

Does it have a “Working Model”, or is it flying around like a bat.  Is your company just full steam ahead until it’s about to hit something (recession, bills, management challenges) and it just keeps changing direction blindly?

I challenge you to find the working model inside your industry, and inside your company.

Find it, teach it to all management, and RELAX IN THE NUMBERS.

AHHHHHH!

-Ken
Growth Consulting for Today