Are you leading a business, new or old?
I’ve done both: I’ve started businesses from scratch and I’ve also taken over leading a business that was already a few years into the game.
Either way, the difference between success and failure is what you and your team are working on…and when!
Caution: If you entrepreneurs out there don’t grasp this, your business is very likely to fail (especially my friend who’s spending a couple of hours a week figuring out Quickbooks instead of focusing on making money!).
My marketing-guru friend and previous business partner Eben Pagan inspired the money-making pyramid (he called it the “productivity pyramid” in his awesome GetAltitude “Top Gun For Entrepreneurs” program — it’s a neat visual using a pyramid to illustrate what’s most important to work on in a business.
I’ve riffed a bit so blame me (not Eben) if you don’t like my “Money-Making Pyramid” version.
The concept is simple. A business has all sorts of things going on in it, but none are more important than “money-making” (for you non-profits out there, just replace “money-making” with your main value measurement (e.g. Bill & Melinda Gates Foundation might use # of lives saved).
The money-making pyramid I use has three pieces:
What are the activities in each section you ask?
Glad you asked.
Let’s use an example of a fictitious business…a commerce Web site that lets people buy and sell used goods — let’s call the business “Commerce Locker ” (I actually own CommerceLocker.com and almost launched a business around it).
Commerce Locker takes a commission on each sale.
So let’s create a pyramid for Commerce Locker.
In short, Commerce Locker needs buyers and sellers to come to a Web site and transact in a manner profitable for the business.
Let’s break down the 3 items I just mentioned:
That leads us to question #2.
Let’s simplify the Buyers & Sellers and just call that “Sales & Marketing.” So, we’ve got two main activities that are key to Commerce Locker.
Without Sales & Marketing and Product Development, nothing else in the business matters?
Now is where Commerce Locker needs to answer questions about those two activities:
Sales & Marketing — “What is needed to drive traffic of buyers and sellers to CommerceLocker.com?” and
Product Development — “What is needed to develop a Web site that facilitates sales?”
For driving traffic to the Web site, Commerce Locker likely needs such items as:
For developing a Web site, they need things like:
Note to entrepreneurs: This is why your first hires/time spent typically needs to be on Product Development (aka Engineering) and Sales & Marketing (as opposed to Finance, Operations, Legal or Customer Support).
Any time away from the money-making is going to put your business at risk!
Finally, once Commerce Locker is nailing the money-making, then you move to the final activities needed for a business…these are things that will support and administrate the money-making.
Here, the key question to ask is:
What is needed to keep all of this money-making organized as we grow the business.
Answers will include:
This Is Not Black And White: There’s Lots Of Gray Area
Life is rarely black and white, and the money-making pyramid is no exception. Here are some examples:
The message is clear: try to focus your time and energy on the activities highest up on the money-making pyramid…don’t get caught up in the Support/Administrative tasks at the expense of the money-making!Tweet 1 Comment