Aaron Hoos

In yesterday’s blog post, 6 invisible problems of success: Why sales funnel overload is a bad thing for your business, I listed 6 problems that you will face in your business if your business becomes an overnight success. In today’s blog post, I’m going to talk about how to avoid these invisible problems.

In short, the problems discussed yesterday were all related to one issue: Becoming so busy trying to sell and deliver your products or services to a larger-than-expected group of people that you completely ignore the rest of your business. The spike in business seems good at first but it’s a short-term bonus that will keep you from focusing on long-term growth… and that is not good. It can even ruin your business.

Here are four ways to make sure your business survives those unexpected spikes.

KNOW YOUR BUSINESS

The first way to keep your business stable (and to keep you from becoming overwhelmed) is to know your business really well. Constantly take your business apart and put it back together again. Know your numbers. How many people do you typically see in each stage of your sales funnel? On average, how much do your newly converted customers buy from you? How much time do contacts take to progress through each stage of your funnel?

Knowing these numbers allows you to see what’s going on in your business at a glance. When your Audience contacts suddenly spike, and if you know that it takes 2 weeks to move someone from the Audience stage to the customer stage, and if you know your ratios, you’ll have a pretty good idea of what will happen to your business two weeks before it happens.

(Note: Don’t just pay attention to the Audience stage. A spike can happen at any point in your business. For example, an endorsement from a respected business leader can suddenly help you convert more Prospects. So you can still be surprised, but knowing your numbers can help lessen the surprise.)

BUILD SYSTEMS

Building systems in your business not only helps you to manage your sales funnel from a distance, it also helps to even out those potentially business-killing spikes in business. Automated systems can include email capture and autoresponders, drop-shipping services, outsourced marketing, and outsourced customer service, just to name a few. Make it a goal to create automated systems for every step of your sales funnel in every stage of your sales funnel. You might not be able to automate EVERY step, but the more you do, the better.

By creating and implementing these systems, you can take a step back from the extreme hands-on, day-to-day marketing and sales requirements so that you can spend more time on load-leveling and problem-solving activities: When your marketing and sales activities are chugging along without your time-sucking attention, you can pour more of your valuable resources into dealing with those sudden spikes when they happen, and you’ll be confident that the rest of your business will continue growing with your minimal attention.

CREATE FLEX AND WARNING SIGNALS

Using your new-found knowledge of your business, and your shiny new business systems, build flex and warning signals into your business.

Flex in your business gives you a bit of a cushion just in case business grows faster than you can manage. An example of a place where flex is helpful is your autoresponder: If you’re currently paying to send out 10,000 emails a week to your list, and you have a list of 9,500, you have a cushion of 500 names. That might be fine. But if you get a huge spike in business and 1,000 people sign up, you might find yourself scrambling to pay for more autoresponder space to meet your growing need. Instead, you should be looking ahead of time at what your options are – how much does another 1,000 emails cost. Or, are there dead emails that can be cleaned up instead.

You don’t want too much flex because you may end up with a lot of unused infrastructure. But some flex is good. Inventory is a good place to build some flex.

Warning signals are specific milestones and actions you need to take as a result. First, list some specific milestone in your business (for example, a 15% increase in the number of contacts in a stage or a 10% improvement in a stage-to-stage ratio). Then, write down what actions you can take as a result (for example, increase inventory by 10% or increase prices by 5%).

DEVELOP CONTINGENCY PLANS

How many times can I beat this drum? Haha. Contingency plans will save your ass again and again. Create lots of contingency plans for the most likely problems you’ll face. List them and figure out how to solve them.

Many of your contingency plans will be started by the flex and the warning signals I just talked about. But it goes beyond that. You should be building relationships with vendors so that they’ll step up and help you if you find yourself in a jam. You should consider the possibility of sending customers to your competitor if you find yourself completely overwhelmed and unable to meet everyone’s needs.

NOW GO DO IT

Okay, I’ve given you some specific ideas for your business. Now it’s time to start working on them. Get to know your numbers, explore some systems options, think about how you can create some flex in your business, and then develop contingency plans. It takes some preparatory work but when your business picks up, you’ll be glad you did it.

A successful business is good… unless the business becomes too successful too quickly. When success strikes suddenly, 6 difficult-to-see problems threaten to destroy your business. Here are the 6 problems that you’ll never see sneaking up on you:

You sell less per person

As the number of contacts in your sales funnel increases, your ability to focus on the relationship with each individual diminishes. Therefore, the percentage of contacts who move from one stage to the next decreases. It’s an invisible problem because you have more people going through your sales funnel so it’s hard to notice that you’re actually doing more work with less success. It’s a serious problem: It impacts your cost structure and you end up spending more time and money per person (when, in fact, your goal should be to spend less per person).

You are forced to spend more on gap filling

In an emergency, priorities change. Last year, when a freak rainstorm flooded my basement, I was willing to pay a considerable amount of money to clean it up — far more than I would normally want to pay in a non-flood situation. Likewise, when the “emergency” is a greater-than-predicted onslaught of sales funnel contacts, you’ll spend whatever is necessary to keep things going, even if it costs considerably more. Some examples include overtime for staff, making more resources and bandwidth available, and rapidly scaling up infrastructure. This is an invisible problem because you don’t always realize that you are reacting. It seems like you’re addressing the need. However, when the dust settles, and your sales funnel returns to normal, you’ll end up with a large bill and plenty of unnecessary infrastructure that you’ll have to support.

You run out of inventory

If you sell products, your inventory is physical stock. If you sell services, your inventory is time (and sometimes information or ability or inspiration). When the number of contacts in your sales funnel increases predictably, you can increase your inventory predictably. However, if your sales funnel increase is sudden, you might not have time to increase your inventory accordingly, and you’ll burn through any excess stock quickly. This is an invisible problem because, on the one hand, it is good to clear out your inventory. But unless you can increase your inventory to the right amount, you’ll end up turning away people who want to buy from you… and this problem can plague you for a while to come as you play “catch-up”.

You’ll lose track of the pulse of your business

Successful people know what is going on in their business at all times. If there’s a small blip in one area of the business, they can focus in on it and fix it. They handle challenges while they’re small, BEFORE they become problems. However, when you’re run off of your feet from a flood of sales, you are no longer fully aware of what’s going on in your business. This may not seem like a big problem, since you’ve always had a handle on your business before, and since this onslaught is probably a temporary bonus. However, the sudden rise in sales can mask the seriousness of the problem: When you’re not aware of your business, you’re not in control of your business. Risks increase while productivity and profitability decrease.

No evangelists

As your business increases — and your busy-ness increases! — it’s easy to ignore the post-sale relationship. After all, you’re so busy dealing with the current situation. That might seem to be an acceptable solution now but it’s a serious invisible problem because it will have a costly effect in the future: You have to work harder for each new Audience member and Lead, so each sale becomes less profitable.

You don’t build for the future; you only react to the present

Scaling a business intelligently is key. You need to make sure that your business grows at the right speed — a slow-to-moderate growth that is manageable. You can build for the future by creating new products, trying out new marketing methods, exploring new partnering relationships. But when you’re overloaded, you end up ignoring these things just to keep your head above water. For a very short term, that might seem like the right decision. However, it’s an invisible problem because it hurts your long-term business: You end up “treadmilling” through the same products to the same people at the same price. There’s no growth because you don’t have time to move your business forward.

These 6 invisible problems of success are serious. They don’t just bruise your business in the short term. Rather, they can permanently harm (or even destroy) your business by keeping your focus on the immediate problem rather than the future opportunity.

Click back here tomorrow and I’ll you how to avoid these problems.

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 this Inc. Magazine interview by writer Clarissa Cruz, food blogger Deb Perelmen answers questions about what it takes to blog and how she grew her food blog into a (nearly) full-time career.

The recipe for building a successful blog is passion + dedication + time + consistency. A valuable lesson for any brand that wants to blog.

Read the interview here: Building a Successful Food Blog.