Aaron Hoos

In a previous blog post, I listed 99 ways to optimize your sales funnel and grow your business. One of the tips I gave was to “Look at businesses you’ve bought from who share a similar business model. Map out their business plan to see how it compares to yours.”

Here’s how to do that:

STEP 1: KNOW YOUR BUSINESS MODEL
First, you need to know what kind of business model you have. If you already know your business model, you can skip this step. However, it might be useful to do it anyway. Although there are different ways to define a business model, here’s a few ways that you can narrow down the search:

• Do you sell products and or services?
• Do you sell something you, yourself, provide or are you a broker/agent/affiliate?
• Do you sell a one-time purchase (i.e. an ebook) or an on-going purchase (i.e. a subscription)?
• Do you sell primarily to consumers or businesses?
• What problems does your product/service solve or what needs does your product/service fulfill?
• What does your target market look like? What does it NOT look like? (i.e. who do you sell to versus who don’t you sell to?)

STEP 2: FIND OTHER COMPANIES THAT YOU’VE BOUGHT FROM
Now that you have some notes about your business model, think about other companies you’ve bought from in the past that are similar. You’ve defined a sort-of “mosaic” and you probably won’t find a company that is exactly the same. Try to find a company that fits parts of this model. In fact, try to find a few companies like this.

And, I’m advising that these be companies you’ve bought from, simply because you’ll have gained a great view into their sales funnel – you’ll have seen every step of their sales funnel from the “inside” of their sales funnel!

STEP 3: COMPARE SALES FUNNELS AND TAKE NOTES
Now, compare their sales funnel with yours and take notes. Use the Sales Funnel Worksheet to track how you entered their sales funnel as an Audience member, how you moved through the Lead and Prospect stage, and finally how you became a Customer. And, if you became one of their Evangelists, track that, too. In particular, take note of:

• How you entered their sales funnel as an Audience member.
• What they said or did that convinced you to listen to them as a Lead.
• What sales techniques and marketing collateral they used to sell you as a Prospect.
• What objections you had and how they overcame those objections.
• How long it took you to go through each stage.
• What actions (“triggers”) you performed to move from one stage to the next.
• How you responded to the product/service when it was delivered. (Was it quick? Did you sense the value you hoped would be present?)

STEP 4: MODIFY YOUR SALES FUNNEL
Draw inspiration from the successful ideas that worked on you – the techniques that moved you through their sales funnel from their Audience stage to their Customer stage – and apply them to your own sales funnel.

If your sales funnel is completely different, consider setting up and testing a sales funnel that is very similar to theirs to test against your existing sales funnel.

Or, start smaller by integrating some of the more successful tactics on a regular basis.

STEP 5: REPEAT
This is one of those exercises where it doesn’t hurt to do it again from time to time. Depending on how often you buy, consider doing this at least once a quarter or even as often as once a month. You’ll progressively improve your sales funnel!

Throughout history, humankind has followed the same cycle again and again: Explorers discover a place, settlers follow, and builders develop that location. People live there for a long time. The the place becomes built up, even to the point of becoming in-grown. Land becomes a premium. Organization and structure reign (and can even oppress). Then, new horizons are spotted and the cycle repeats.

This was the case when humans journeyed out of the cradle of civilization. It was the case as people spread across the continents and the oceans. And it’s the case today as we reach for the stars.

The same thing happens in business with three kinds of entrepreneurs: The explorers create innovative new opportunities, the settlers follow, and then builders arrive later and develop.

• The first wave of entrepreneurs are the explorers who are trying completely new things. They’re creating new spaces. They’re discovering. Think: Ebay, Paypal, Yahoo, Google, Twitter, Facebook… and don’t miss the important lesson that there are other search engines and other social media that were there first but didn’t make this list. And I’m only using a marketing example here, but this explorer/settler/builder model is true in every industry.
• The people we call “early adopters” are actually setters — the second wave of entrepreneurs who see the opportunity explored and know that more people are coming. Think: People who cashed in early on Ebay or sold Google AdWords services. Or, think of Chris Brogan’s position in Twitter or Mari Smith’s position in Facebook. (And again, don’t miss the important lesson that there are other entrepreneurs who tried to settle and didn’t.
• The final wave of entrepreneurs are the builders. They may not do really innovative things but they create systems and structures and franchises so that many others can inhabit these spaces.

What kind of entrepreneur are you? Knowing this changes everything and prompts a number of question: How does it impact the work you do? Where should you invest your time and money? Who should you partner with? How does it influence how you define “success”?

SO WHAT’S NEXT?
If you’re an explorer, you need to be searching for the parts of the map that say “here be dragons.” Consider where are the frontiers are — overall and in your industry — and push them.

If you’re a settler, you need to be thinking about the frontiers, too, but you also need to keep your eye on the explorers. You need to think about how you can get in early.

If you’re a builder, you need to watch the headlines and see what’s coming up on the public’s radar. Get in as early as you can and create franchisable systems.

In a Harvard Business Review blog post, Ron Ashkenas asked the question “Can a Big Company Innovate Like a Start-up?”.

At the time the post was written (a month ago), Google’s Eric Schmidt was stepping down as CEO and Google’s co-founder Larry Page was taking the role instead. Based on the official statements that followed, it became clear that Google was trying to get back to a place of nimble innovation that it once occupied.

On the HBR blog, Ashkenas wondered if it was possible for large companies to achieve the fast, bleeding-edge innovation that start-ups are more commonly known for. And he correctly points out that employees of big businesses probably don’t innovate as often because they have a different set of risk/reward measurements.

WHY SMALL BUSINESSES INNOVATE MORE SUCCESSFULLY THAN BIG BUSINESSES
I see this all the time in the companies of my own clients: The small business entrepreneurs and start-ups are passionate about the business and totally bought-in to the opportunities that exist through innovation. On the other hand, the big business employees are more focused on success in their own specific functions, and in job security, and the CEOs of these companies are often insulated from the innovative side of the business.

As companies grow, they become risk-averse, partly because their employees are no longer bought in to the company in the same way that the early start-up employees were. I’ve been part of start-ups and we were willing to work around-the-clock for next-to-nothing to see the company succeed. There was something thrilling about being part of that creation process. I’ve also been part of big, entrenched companies, and that just doesn’t exist.

Big companies also become risk-averse because their brand has much more equity, and a wound from negative press can cut deeply. Compare that to the start-up that has a brand but very little brand equity. They can make mistakes and they know they’ll get over those bumps.

In the HBR blog post, Ashkenas offers three pieces of advice for big businesses that want to innovate like small businesses: He says they should (1) Set up a venture group, (2) Carve off skunk-works, and (3) Hold innovation contests. (You can read the blog post here: Can a Big Company Innovate Like a Start-up?.)

ADDITIONAL OPPORTUNITIES FOR BIG BUSINESS TO INNOVATE LIKE A SMALL BUSINESS
I think those are great ideas but I also think that big businesses can do so much more: It starts with revising the corporate culture so that all employees are motivated to see the company as a whole succeed but are also willing to accept risk to a greater degree. To make this cultural change, HR’s hiring processes and payroll metrics will need to change. In other words, don’t hire “lifers” who want a salary; hire aggressive entrepreneurs who would prefer to shine while also enjoying a greater degree of control over their remuneration. (I’ve seen this work very successfully in a multi-billion dollar organization).

Another opportunity where big businesses can change is in decision-making. In many of my big-business clients’ hierarchies, decisions rest at the managerial level and the worker-bees end up focusing on job security because they don’t have the authority to take action on innovation opportunities. Grass-roots innovation (the best kind of innovation!) can take place when people have the authority to act quickly.

Which leads me to my next idea: Big businesses need to define innovation appropriately: We tend to think of innovation at the product/service level. However, innovation opportunities exist everywhere. If a front-line staffer discovers a faster way to do their job, they can save the company a small amount of money. But if that innovation is shared among other front-line staff, the company can enjoy larger savings. And that’s just one example. Businesses can innovate in their processes, in their sales funnel, in their technology, and so much more. People will naturally innovate to find ways to make their jobs better; a large organization just needs to pay attention to what its staff is already doing.

Lastly, employees in big businesses are scared of innovating because it could risk their job security. (“What happens if the manager walks by and sees me doing my job this way? It accomplishes the same thing faster but it’s not how I’ve been told to do my job… AND my manager doesn’t have the patience or foresight to allow me to explain why I’m doing it this way”). What businesses need to do is create a framework for evaluating innovation successes and failures in order to empower employees to make changes without fear of reprisal (within reason, of course).

Big businesses can be innovative, and I think they can be as innovative as small businesses. Unfortunately, it requires such a massive cultural shift, I suspect it is next to impossible to achieve.