Over the years I’ve learned a bit about business, small businesses, and MSP business in particular. While I’m not exactly an expert, I’ve seen some things…
Today’s post is about the top 5 things you need to be competent in to run a successful small business. You don’t need to be an expert across the whole range, but you need to know enough to interpret what’s going on in several facets of your business. Check out this week’s Ramble that talks about these 5 Pillars. You can also read below for more detail.
It’s also worth noting that this isn’t entirely Managed Service Provider (MSP) specific either. Running any business requires the owners and executives to have a working knowledge of several things with experts really bringing the deep knowledge as needed.
The five pillars are:
- Sales & Marketing
- Finance
- Operations
- Strategy
- The core of your business offering
As an owner and entrepreneur you start off owning each of these buckets of work. Chances are you are between good and great at one to two of them, okay at another one to two, and probably not great at whatever is left. In order to be successful, especially in your startup/early stages, I believe you need to be good to great at one or two and decent at the rest. You’ll find that you can power through for some time, but you will end up in a pinch point where your weak areas are as you try to grow.
When I think back to my earliest days in running my business I was really good at the tech stuff (#5) and pretty good at talking to people and closing sales (#1). I wasn’t good at any of the other stuff. It’s the whole E-Myth thing. When someone good at the technical aspect(s) of their job branches out to do it as a business they often don’t inherently know the “running the business” side of things. If you haven’t read the E-Myth Revisited, you should. It’s a great book about building process and understanding the business side of your business.
Over the course of the next several posts I’ll be covering these topics in a little more detail, but for today let me share my thoughts on what decent looks like in each of these categories.
Sales & Marketing
On the sales side: You need to understand how to take a lead from initial conversation to a closed deal. You also need to have a good handle on the different stages of the sales process, even if they’re not perfect yet. You also need to be able to track where each of your leads are in the process so you know when things are likely to close and you need to onboard your next client.
On the marketing side: You need to be good enough at asking your friends, clients, and other folks for referrals and you need to have at least a “business card” website so people know that you exist for real. The quantity of the content isn’t critical, but having a web presence and a way for people to contact you is.
Much of your early stage sales and marketing come from referrals which are easier and faster to close. Eventually you will need to start building out a marketing plan as you grow, but referrals are a great place to start.
Finance
Understanding the basics of finance is critical to your early success. You don’t need to to be a CPA, but you do need to be able to invoice, receive payments, and operate your business financial accounts properly. I would also recommend that you learn to read your Profit and Loss (P&L) statements, and understand the margins in your business.
One way to sum this up is that if you can send invoices, get paid, and know how much money you’re making without relying on looking at your bank balances you’ve got a decent start. You do also need to know how to manage the cash in your bank accounts, though I don’t know that I need to explain that.
Operations
AKA how you get things done. This one varies based on your business, but this is all about the core processes in your business. If you can make decisions and develop the day-to-day processes that you use within your business you’re on the right path. Eventually, you won’t wear all of the hats, so as you start to grow it’s important to build/install systems (likely a combination of operating procedures) to make it possible to hand off tasks as desired.
One of the early things to consider here is hiring your first employee(s). What will getting them up-to-speed look like? How will you get them productive inside your business quickly?
Strategy
You need to be able to define who you are as a business and where you want to take it. As a business owner you need to be able to paint that picture and get others to believe in the direction of your business. This includes your employees, clients, and any financial backers. Once you know who you are and where you want to go you can focus on how to get there.
If you can’t describe what you do at a high level and where you want to take your company in under 5 minutes you need to spend some time here.
The core of your business offering
This one should be something you’re already good at, and know how to deliver. Even if you can only deliver it by sheer force of will, this is something you need to be very good at to start. Especially if you’re a solopreneur (running the business all by yourself).
If you bought into the business, or are developing a product this might be a tad different. That said, if that is you, you do need to have a good handle on whatever your offering will look like and how to deliver it to your clients.
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That’s it. Pretty simple, right? Obviously, it’s not. You need clients, you need leads, and you need to be able to pay your mortgage/rent and buy food along the way. The businesses I’ve seen that found success were good at four to all five of these things. The best part is, if you own the company you can focus on what you’re good at and hire others to do the stuff you aren’t. If I had to prioritize, aside from #5 (your offering), I’d say get your sales and finance dialed in next, followed by strategy, and operations. You can do a lot of good work by sheer force of will and brute force, but at some point you will need to get to operations if you are hoping to grow.
I hope you found some value in this post, and stick around as I’ll be sharing more and more thoughts as I continue to write on this blog.