Starting businesses is fun. Growing them is also fun but it’s hard work too, especially if you want to grow them profitably.
One client of mine, who is a serial entrepreneur, has a handful of businesses in various stages of start-up and operation. But they were running out of time and money, worn ragged by demands of each business and unable to eke out growing profitability because they couldn’t focus on a single thing. Although I was initially focused on their sales funnel for two of their businesses (obviously), we ended up looking at the bigger picture of ALL of their business(es) to find ways to make them all more profitable.
Here’s a chart I put together to help my client analyze the demands of his time and attention on each new or existing business.
UNDERSTANDING THE TIME-AND-ATTENTION DEMANDS CHART
Across the top, the chart lists three key functions of the business: Administration, Marketing, and Deliverables. The three functions are divided up into 5 segments with “P” for passive on one side and “A” for active on the other. Down the left, are the businesses, business ideas, or projects/initiatives that are being analyzed.
For our purposes, let’s use the following broad definitions:
- Administration includes the various “housekeeping” functions that keep a business running.
- Marketing includes all of the sales and marketing efforts to move your contact through the sales funnel to the point of purchase.
- Deliverables include the things a business does to provide the products or services it sells, such as manufacturing, assembling, shipping, analysis, etc.
(Yes, there are other ways to divide up the business but this provides a quick-and-dirty thumbnail sketch that is suitable for our purposes.)
An example of a passive business:
A business might be passive in the Administration section if everything is outsourced and automated. A business might be passive in the Marketing section if they have a lot of word-of-mouth marketing or advertising that is running without much input from them. A business might be passive in the Deliverable section if they sell digital content.
An example of an active business
A business might be active in the Administration section if it requires a lot of hands-on delegation and management. A business might be active in the Marketing section if they have a lot of social media marketing that requires constant participation and engagement. A business might be active in the Deliverable section if they provide services that require the full attention of the owner – like consulting, freelance writing, or graphic design
I’ve created the above 2 fake examples below:
Now that you know what the chart is about, it’s just a matter of figuring out where the time is being spent for YOUR business. (Or, in the case of business ideas, it’s just a matter of figuring out where the time is GOING to be spent).
These are just estimates to get a general idea of your time. This isn’t an exact science but it is still revealing. Think of each of the five “P” to “A” segments as something like:
ANALYZING THE TIME-AND-ATTENTION DEMANDS OF MY CLIENT’S BUSINESSES
First we drew the chart for his 8 businesses (actually, businesses 1-5 exist and businesses 6-8 are in progress). In the example below, I have removed the names of my client’s businesses and just numbered them.
Then we went through each business and figured out how much time he was spending on Administration, Marketing, and Deliverables.
Administratively, he’s getting his business in order by trying to consolidate and automate his administrative functions. Unfortunately, it’s his marketing and deliverables that are killing him. He’s marketing almost all of these as separate brands with little cross-over or overlap. That means 8 different identities on Twitter, 8 different Facebook pages, 8 different identities in other marketing channels. And on the deliverable side, he’s spending A LOT of time delivering his services, with each business demanding his full attention to provide paid services.
This amount of active administration, marketing, and deliverables might be fine for a business that employs several people or is able to outsource more, but my client is an entrepreneur with some outsourced administration, but he loves to market his businesses himself, and it’s his expertise that is being hired. That means a lot of HIS time in marketing and deliverables.
I’ve highlighted the two key problem areas – he’s spending so much time trying to market and deliver services for 8 different brands.
No wonder he’s feel like he’s running around, and no wonder his profitability is suffering!
Of course, this time-spent is only one side of the equation. Cash flow and profitability should also be taken into account. Businesses that provide more cash flow or profitability to the business owner should be allowed to take more time and attention than those that do not.
So, here’s what we did to solve it this serial entrepreneur’s problem:
Businesses 1 and 2 provide the most cash flow and profitability. Those ones are going to be the key. We also determined that Business 4 could have a positive impact on cash flow and profitability in the near future.
Our goal there was to find ways to reduce the active demands of Administration and Marketing. (You can see our results where I’ve grayed out the previous demand and put the new one in blue. It’s not always possible but it can be done.
Next, we explored some ideas about consolidation. Business 3 is closely linked to Business 2 so there was an opportunity to combine them together. Both Business 2 and Business 3 had a lot of deliverable demands, and my client was worried about losing the income, but since he didn’t have a lot of time to provide the deliverable anyway, we don’t think he’ll see a significant drop. I think he’ll actually see an increase income because he can focus. Business 8 could also be consolidated into the Business 7 brand.
Then, we had a brainstorming session to explore how his new businesses should be focused more on passive administration and passive deliverables. And even if they required some initially active marketing in the beginning, the goal should be in the near-term to make the marketing as passive as possible, too.
The result? My client has gone from 8 businesses that were requiring a lot of his time to 6 businesses that are requiring moderate amounts of his time. This is not a perfect picture but it’s a step in the right direction.
The goal for every business is to move toward the passive side of each of these business functions. That doesn’t necessarily mean that the perfect business requires NO effort for administration, marketing, and deliverables, but rather that these are managed in a way that take less and less time and attention with the goal of providing greater profitability.
Tomorrow, I’ll give some ideas about how your business can increase the “passivity” of each of these three business functions.