Editor’s note: Bill Warner is Managing Partner of Paladin and Associates“Focus”
You don’t have to talk to an investor or company board member for more than five minutes before the word focus comes up. It is death to any business plan that wanders through a dozen possible initiatives for the business. You will be dismissed if you even hint at hiring people or purchasing equipment that is not relevant to your business. If you are not clear about how your product or service is marketed and sold, the prospects of getting the support you need is zero. The message is: “Be unwaveringly focused.”
What does it mean to be focused? The dictionary definition is: bringing into focus or alignment; to converge or cause to converge; of ideas or emotions. It’s being adjusted, centered, centralized, concentrated, or convergent. In business it means:
Conversely, the dictionary says that being unfocused is: not concentrated at one point or upon one objective. Likewise, the business meaning is:
Let’s go deeper into what this looks like on the business playing field.
Have a focused market you are pursuing
From the onset of a business idea, you must be able to narrow in on a specific market opportunity. If your business plan discusses more than one primary market segment, you are in trouble.
Why? It takes a lot of resources to pursue a single market. For each market segment, you will have to have the right product, marketing approach, sales channel, sales skills, support structure and administration. If you try to go after more than one market at a time, you will be multiplying the resources you will need by the number of markets you are chasing. This adds tremendous risk to your company, increasing the possibility of failure because you are doing too many things at once.
This is often seen by investors and board members, and is usually squashed before it proceeds. Additional market opportunities can be pursued, once the first market is successfully addressed.
Have a focused understanding of your buyer
It is fairly common to see new product or services proposals that paint with a broad brush when describing the exact customer problem that is being solved and who will be the buyer. You must clearly answer the question, “who will buy the product or service, and why?” This requires you to explain the customer problem that you are solving, bringing it down to dollars and cents. The buyer’s return on investment has to be large and fast in order to compete with other buyer priorities. Know how to reach the buyer. Know how to influence the buyer’s decision. Know how they buy. If you don’t know these things, nobody will believe you know how to sell your product or service.
Have a focused product that wins
Your product or service has to be a “winner.” That is, it has to clearly meet your buyer’s needs, be better than all other alternatives available to the buyer, and bring home a high priority “must have” business opportunity for the buyer. Quite simply, if you cannot describe your offering in these terms, you probably don’t have a winner. Your product has to be offered at a competitive price, but also be affordable to develop, market, sell, manufacture and support.
Have a focused marketing plan
Since you have a clear understanding of the buyer, the marketing plan has to create awareness, excitement and interest in order to generate qualified sales leads. Marketing is all about getting sales leads; nothing else counts. If you are using the wrong marketing tools to achieve this, you are wasting money and will not get sales traction. Advertising in publications that aren’t read by your buyer doesn’t make sense. Tradeshows that don’t attract your buyer is a waste of time and money. Don’t spend money on marketing unless you can clearly see how it will generate leads.
Have a focused sales approach
The sales approach has to turn sales leads into closed sales. Selecting the most effective and affordable sales approach will ensure you make a profit. Selling a low priced product through direct sales people is not affordable. Selling direct while using a distributor/dealer channel is redundant and conflicting. Compensation models have to be attractive to sales people. Carefully think through the right sales model for your business.
Have a focused financial mode
Of course, the most mind-numbing part of running a business is making sure the financial model really works, from both a profit and cash flow point of view. Many companies miss the fact that starting a business with delayed cash collections creates a negative cash position when you have bills to pay before you collect the money. Having a cost structure that leaves insufficient gross profit to pay expenses is a non-starter. Spending more on marketing and sales than the price of the product is disastrous. Your financial model needs to be viable and a lot of careful analysis is necessary to avoid running out of money.
Have a focused and experienced management team
There is no substitute for wisdom and experience, and every company should have a healthy share of it in their management team. Companies go through many transitions as they grow. The management team has to know how to deal with the unique business challenges at every transition point. Having successfully managed these transitions many times before is essential for a growing company. Else, the company will stumble their way through them and run a very high risk of failing.
Have an unwavering focus on meeting milestones
Nothing is more powerful than getting business results. If you have developed a high quality product, created a lead pipeline, achieved sales, won awards or gotten a patent, you have been meeting important business milestones. It shows that your whole team is dedicated to getting things done, on schedule, within budget and with high quality. Investors and board members are attracted to teams that are successful.
Focus! Focus! Focus! There is nothing more important to your success. Companies that stay on a focused track will have the greatest chance of success.
Bill Warner is managing partner of Paladin and Associates. You can reach him via e-mail (firstname.lastname@example.org) or phone (919 570-1023).