When most people think of "marketing," they think of the glamorous, glossy world of advertising. It's a common misconception, but one that could spell doom for your business. To understand why, you have to first understand how advertising fits into The Seven Centers of Management Attention™ business success model. This model helps you see your business as an organized unit comprised of seven sub-systems. In The Seven Centers, advertising is part of the Lead Generation Center - not the Marketing Center.

Why? Because simply put: advertising is not marketing.

It's Easy to Waste Advertising Dollars

Think about all the hype surrounding Super Bowl television ads. People say that they are the best. But are they? Really?

About 100 million people watch the Super Bowl each year; it's one of the most popular American television events of the year. So let's say that your business is in the United States, and that your target market is comprised completely of US residents. If you advertised on the Super Bowl your ad would be seen by roughly a third of the US population. But the question is: how many of them are in your target market? Do the people in your target market even own a television? How many of them like sports? How many of them like football? How many of them watch the Super Bowl? How many of them actually watch the commercials during the Super Bowl? Would the cost of this ad really be worth it? How do you know?

That's the trick. You have to know something about your target market before you spend a dime on advertising. Imagine that you spent $2.6 million on a Super Bowl ad (that's how much a 30-second spot cost last year), only to find out that barely 10% of your target market watches the game. If you can afford to throw that kind of money at that small of a percentage, stop reading now and start pumping that cash into the economy!

The rest of you need to do your homework first.

The Power of Marketing

The truth is, not everyone is a customer for your products or services. What your business sells may be perfect for some people, but completely inappropriate for others...and just so-so for others. In The Seven Centers of Management Attention model, Marketing is about understanding your customers. It's the research and analysis of your customers that identifies who they are, where they are and why they buy from you.

And that's the key: you need to know your customers. You need to know the kind of customers you want to attract to your business. You need to understand the demographics of your target market: their age, gender, occupation, income, education, marital status, location, race, ethnicity, etc. And you need to understand the psychographics of your target market: their self-perceptions, personal values, environmental perceptions, behavioral perceptions, functional needs, purchase preferences, etc.

Do you know any of that about your most probable customers? If you don't, you need to find out before you spend a dime on lead generation activities.

Effective marketing depends on identifying the customers and prospective customers who will produce the best results for your business, and then focusing your marketing activities (including advertising) on them.

The more you accomplish in the Marketing Center (the more you know your customers) the less you will have to do in the Lead Generation Center (where advertising comes into play.) The more you accomplish in the Lead Generation Center, the less you will have to do in the Lead Conversion Center... See where this is going?

So when you get right down to it, how well you know your most probable customers can make or break your business. And that's why marketing is so important. A bit of research at the beginning of your sales cycle can save you time, money and headaches down the line.

Sun Tzu, a brilliant Chinese General, military strategist and author of The Art of War, is often quoted as saying: "Know thy self, know thy enemy. A thousand battles, a thousand victories." Well, I'd extend that to marketing: Know thy self, know thy market. A thousand lead generation activities, a thousand sales.

Need help with marketing? Join us November 13 & 14 in California for our Marketing Intensive Seminar with special guest Duct Tape Marketing found John Jantsch.

Further Reading

Gratification Mode and Purchase Preference

Developing Your Unique Brand

Strategize Like a General

Most companies organize around personalities rather than around functions.

That is, around people rather than accountabilities or responsibilities.

The result is almost always chaos.

-Michael Gerber, The E-Myth Revisited

One of the exercises we ask business owners to participate in at our Seminars involves drawing their organization chart. The result of this exercise is fascinating.

Some people just pick up their pens and within a few seconds, they've drawn out a neat, structured hierarchy of boxes and positions. Everybody has a place and a part to play.

But some people become panic-stricken: you can literally see the sweat form on their brows! Why? Because they've just realized that they don't have clearly defined roles within their company. Their organizational chart looks more like a spider web: a mess of lines, boxes, job titles and names. Everything overlaps. It's confused.

This is usually the point when the business owner recognizes the fact that it's their name in most of the boxes; that essentially they're doing most of the work!

If this is you, don't worry — you can work your way out of it. Keep in mind that your organization chart is an essential, central and critical piece of documentation in your business. If it's been a while, perhaps now is the time to revisit your chart and take a strategic look at your organizational structure.

What is the Organization Chart Supposed to Do?

Your organization chart is like the grand schematic of your business.

• It's the visual representation of your strategy.
• It's the chart of the systems in your business, stated in terms of the results they obtain.
• It's the picture of an organism that is working in concert for a common objective.
• It clarifies the broad accountabilities of every position in your company and their interrelationship.

Remember, if your business is to thrive, you need to find other people to do the tactical work so your time is free to do the strategic work. Your organization chart is the means through which that crucial transition can be made.

Four Tips To Creating Your Organization Chart

1. There is no box on the chart labeled "Owner." If you are an owner, you need to occupy one or more boxes on the chart and play by the same rules you would have for any other employee.
2. Every position on the chart reports to one (and only one) manager. Giving two or more managers the power to direct the activities of one employee is an invitation to miscommunication and chaos.
3. Make sure you divide up the work according to what the business needs. Don't try to design a position to fit the particular talents of one individual. If (when) that person leaves, you'll have to start all over with a new chart because you won't be able to find a replacement.
4. Instead of using titles, designate positions in terms of the results they will obtain.

Keep an Eye on the Future

Once you have a working organization chart, the next step is to figure out how that chart is going to serve the future of the business. We refer to this as Double Vision: keeping in mind how the present is going to serve the future. As you build your business toward your Strategic Objective, think about how your organization chart needs to morph and evolve in order to serve that vision.

Now take a few minutes to draw your organization chart (keeping in mind our four tips). What does this exercise tell you about your business? What did you learn? Tell us about it!

Imagine that you're considering a remodeling project to turn your dining room into a sun room. You ask several remodeling companies to come to your house to discuss the project and give you an estimate. You show each of them the space you have to work with and ask them to tell you what possibilities they see in the space.

The first one replies, "We can make this whole wall glass."

You ask the same question of the second and he replies, "We can knock out the walls and rebuild this into a sun room."

You ask the third representative the same question. He replies, "This room could be really special. I'd like to create a space that's illuminated with warmth and sunlight; a space that will lift your spirits each and every time you set foot in here."

Which of these companies would you want working on your home? The one who will put in some glass or the one who's creating a special place that will lift your spirits? I know which one I'd prefer: the one who inspired an emotional response from me. The one who, through his interactions with me, conveyed his Company Story.

What's Your Company Story?

When we use the term "Company Story," we're not talking about the biography of your company or the logical, sequential time line of how you got to where you are today. When we say Company Story, we mean the story that illustrates the essence of what your business is all about. It is a tale of passion, motivation and opportunity. It's the inspiration that recruits, sells and impacts all your constituencies the way you always intended.

Your Company Story brands your business as something exceptional in a market of mediocrity. It differentiates you from your competition in a true and meaningful way. Think about the world's most successful big businesses. They started from the same place you did. They created stories that became legends, stories that built a following, and understanding of the spirit of the company.

Telling Your Story

Your Company Story isn't a tag line. It's not about saying "we're the best at this" or "we specialize in that." It's about telling your story so that the only conclusion your audience can possibly make is that you really are the best without actually spelling it out. You must live and breathe your Company Story. You should exemplify your story in everything you do.

Your Story isn't just one story—it can be many stories that make up the whole. It's the moments in time that illustrate what you're all about. If you can capture those moments and use them to communicate who you are, you'll elicit the emotional response that will turn a prospect into a client, a potential employee into a loyal member of your team and create a brand of which legends are made.

Take E-Myth for Example

Recently one of our Mastery Impact clients (based in the U.S.) decided to take a trip to Brazil. He was so enthusiastic about the work he was doing with E-Myth that he didn't want to postpone any of his coaching sessions during his trip. But without a land line or cell phone, regular telephone communication seemed impossible.

After some brainstorming with our IT department, we came up with a solution: Skype. Skype is free software that allows you to make phone calls over the Internet. By using Skype on his laptop, our client was able to continue his regular one-on-one telephone coaching sessions as he floated down the Amazon River, and his coach got to listen to the sounds of the rain forest in the background.

So how is that part of our Company Story? I could have just told you: "We transform businesses worldwide." But that wouldn't have put a face to the idea that we're committed to our client's no matter where they are on the planet. It wouldn't have illustrated the lengths we go to in order to be "worldwide." Again, it's not about hitting somebody over the head with a statement; it's about communicating in a way that undeniably leads your audience to the conclusion you want to convey.

It Starts From Within

Your Company Story is also one of your most powerful internal training tools. It helps your employees understand the why behind your business: why the company was started, why you do the things you do, why you have certain systems in place. It helps bring the concept of your brand promise alive and helps business leaders create a "game worth playing" for the entire team.

Going back to the remodeling example. The person making the bid may not be the owner of the company, but if the managing leaders of the business have done their job, I'll hear the same Company Story from him as I would from the owner. If your employees understand the why of the business, if they can convey your Company Story, you've just put yourself ahead of the competition.

Further Reading
Making Allies of Your Customers, Vendors, and Community

Flickr Photo Credit

Have you ever found yourself cursing your employees? "If only they weren't so *insert expletive here* stupid! I tell them to do X, and they do Y. I tell them to do 50, and they only do 10."

People problems are the #1 frustration in nearly every business I've worked with. Over the years, I've worked with business owners from just about every industry, and I've heard nearly every single one of them say: "If only I could clone myself!"

Really? Do you really want a clone of yourself working at your business?

What my clients often don't realize is that Entrepreneurs make terrible Technicians. And if they ever did actually manage to clone themselves, they would have another, equally talented competitor open up in their area!

Getting Employees to Do What You Want

The real issue is: how to get your employees to do what you want them to do. And how do you get them to do it right the first time? Isn't that what every business owner really wants? Technicians who do not just what you tell them to do, but they do exactly what you want them to do. And they do it the way you want it done. So how do you do that? How do you get your employees to do what you want them to do?

You can't.

You can't get people to do anything!

Heck, it's hard enough to get yourself to do anything, let alone get someone else to do it. (Don't believe me? Ever try sticking to a diet? Or what about that New Year's resolution?)

Systems Dependent, Not People Dependent

But you have to do something! So what do you do? If you can't get your people to do anything, how do you get anything done?

Simple: Your business should be systems-dependent, not people-dependent.

The systems run the business, the people run the systems. With the effective implementation of the right systems, you can get results through your people. Every time.

The trick is to create an environment in your business where "doing it" is more important than not doing it. You have to create an environment where "doing it" is a way of life for your employees, and simultaneously, you have to create an environment in which the idea behind the work is more important than the work itself.

Do you understand that very simple concept? It's not the work that's important. What's important is the concept that drives the work in the first place.

It's Not About the Means, it's About the Results

People don't walk into a hardware store because they need a shovel; they walk into a hardware store because they need a hole in the ground.

People don't buy coffee because they want a cup of coffee; they buy coffee because they want a tasty pick-me-up.

People don't go to the hospital because they want to see a doctor; they go to the hospital because they want to be healed.

It's not about the means, it's about the results. The idea behind the work your employees do is more important than the work itself, and you have to make sure your employees understand that and live that every day.

A Simple System to Start the Process

Here's a simple tool you can use to begin the process of developing just such an environment. It's a system called the Employee Development Meeting. It's a meeting that your managers hold every week with each employee who reports to them. It's a one-on-one, face-to-face meeting, scheduled in advance, and it's everyone's #1 priority.

The Employee Development Meeting (or EDM as we like to call it) is a short, 30-minute meeting that the manager schedules with each employee. The manager sets out an agenda for each meeting, and uses the meeting as a forum for discussing issues, problem-solving, conflict resolution, and planning. It's a chance to discuss and follow up on the work the employee has been doing, prioritize goals, make agreements about work to be accomplished, discuss exceptions, exchange information, and clarify results. The EDM is an opportunity to help keep your employees on track.

It's also a huge time-saver. Having a problem with employees bugging you all the time? Do they continuously come to you and ask: "What do I do now?" "Is this right?" Simply ask them if it could wait until their EDM. Nine times out of ten, the problem can wait.

Most importantly, the EDM is a medium to help every single person in your business confront and overcome obstacles. The EDM will help everyone be at their best.

But you don't have to take my word for it. Quantify how well your systems are running right now. Measure how many "people" problems pop up each month, each week, each day. Then implement the EDM for a month, and run the numbers again. I bet you'll be pleasantly surprised by the results.

If you can implement the EDM in your business it will become the backbone of your management system, and it will make all of the other systems in your business work more effectively. The effectively implemented EDM will help you create a highly motivating, productive environment in your business. In time, instead of cursing your employees, you'll be praising them.

On October 16 and 17, E-Myth is offering a Management Intensive Seminar that will teach you how to build a sensible systems strategy plan with our universal business development model. You will also learn about our most popular management tool, the Key Frustrations Process, a tool to help you turn common frustrations into opportunities.

Don't think of management just as positions in your company; management is vitally important work that needs to be done in every business, every day

'The Manager' is that part of you that creates order, does the planning, organizes the work, makes the checklists, serves as a mentor and achieves results through others. The Manager's outlook should be realistic and pragmatic, qualities essential in business. We find that a solid management perspective is commonly missing in small businesses today. To understand why, you must first understand the nature of true Managerial work.

True Managerial Work

At E-Myth, we categorize tasks as being done in one of three perspectives; Entrepreneurial, Managerial or Technical. True Managerial work bridges the space between the entrepreneur's vision for the company and the daily technical efforts moving the business toward that vision. Effective managers, those who can motivate employees to reach their full potential while working on beneficial tasks, are instrumental in building turnkey, systems-dependent businesses.

The vision of the Entrepreneur is the foundation for the systems-development and people-development strategies that carry the business forward. The Technician's perspective in us has the task of rolling up our sleeves and getting the job done. Employees can seem very busy but without understanding the results they are accountable for, and how it links to the purpose of the business - all that busy work won't go toward building anything great.

Your Internal Manager

Your internal Manager is the conductor directing the orchestra of musicians who perform great symphonies and masterpieces.

The musicians look to the conductor to cue the musical entrances, to guide the dynamics of the group and to keep the rhythm. The conductor works to balance the group and direct individual participation in the performance, based on his or her interpretation of the music. It is much the same in business.

The Manager interprets the needs of the company based on the entrepreneurial Strategic Objective (or business vision) and creates the systems essential to the growth and development of the company. The development of the systems enables each employee to understand the value of their contribution to the whole. The Manager creates the way to establish consistent, predictable results. But without direction, training and mentoring, a system will not produce a masterpiece.

Just as musicians look to the conductor to keep the group intact and direct the performance, so do employees look to great leaders and entrepreneurial Managers to keep the objectives and promise of the company clear and on track.

It is your responsibility then, as one with the Managerial perspective, to harness the vision and create clear actions, strategies and systems that will carry-out the promise, fulfill the business objective and create a high performance environment in which all employees thrive.

As a business owner and leader, how do you bring out your best internal Manager? What systems have you created to support the managerial work of creating systems and developing people in your business? Do you have any advice for others? Tell us about it.

And if this concept strikes a chord, consider joining us this October for the two-day Management Intensive Seminar.

For most of us, our business is separated from our home life. If we have a bad day, we go home and vent to our loved ones, maybe get a little sympathy and then move on. But what if your family and your business are one in the same? What if you can't vent at home because the person you vent to is your business partner?

Business can be challenging; but a family business--well that can take "challenging" to a whole new level. A lifetime of shared experiences creates a complicated history even for the most "functional" of business partners. And let's face it; nobody knows just how to push our hot buttons like family! It's easy for family members to get bogged down in inter-personal and communication breakdowns issues that can seriously get in the way of business.

So how do you rise above the family landmines and focus on business? Here are three tips from E-Myth Business Coaches.

1. Business is Business

Much of the strife in family business occurs because the lines between personal and professional become blurred. Keep in mind that your business is a separate entity. As much as your business means to you, it is not an extension of the family.

E-Myth Tip: Don't discuss business after 6 pm. Yes, it's that simple. This is going to be a serious challenge for some of you, but it's really important as you separate your family life from your business life to set some strict guidelines. Remember, business is business. Don't take it home with you!

2. Clearly Define your Roles

Whether they're CEO, CIO or CSC (Chief Stock Clerk), family members fulfill roles in a company just like any other employee. Each family member must have clear accountabilities for their role(s) in the company. To be successful, and to fulfill your Strategic Objective, the company must get specific results from every employee--including your family.

E-Myth Tip: Every employee should report to one manager. In family businesses, managerial responsibilities are often blurred because roles aren't clearly defined and sometimes spouses or family members occupy the same place on the organization chart.

Keeping with the family analogy, think of managing like raising a child. If you tell a child one thing, and your spouse tells them another, how does the child know what they are supposed to do? Mixed messages lead to trouble. The same thing goes for an employee, and it's especially important when the employee is reporting into a family situation. It's vital to have a clear management structure so your employees know exactly who they report to and what's expected of them.

3. Communication is Key

From an E-Myth Business Coach:

I worked with a husband and wife team who, on the surface, seemed to work pretty well together. Each had their own strengths and weaknesses; and they were both actively involved in the business. Outside of work they did a good job of carving out time to be together and they enjoyed their free time, but their problem came as soon as they set foot in the office. The minute they got to work, they stopped communicating! This isn't an unusual thing for a family business; I've seen it time and time again. The key is to recognize that there's a breakdown in communication and to take the steps to open that communication channel. For this couple, the big shift came with the implementation of a regularly-scheduled management meeting. A meeting not between husband and wife, but between two managers...

E-Myth Tip: Create a structure for communication. Set a weekly management meeting with a clear agenda and action items. If you've created and communicated the businesses' Strategic Objective, and each member of your management team (and family) has clearly defined roles and accountabilities, they should walk away with simple and results-oriented "To-Do Lists."

Further Reading

Beating the Perils of Partnerships: How to form a more perfect union

Exit Strategy - Don't Tax Your Family

Our article Simple Search Engine Optimization discussed how to increase the 'findability' of your web pages. This article discusses a file called 'robots.txt' which can keep search engines away from certain public pages and which can direct search engines to your public sitemap.

Block the Bots

Many websites will have public pages that should not be visible in search results, such as cobranded promotions with discount prices, expired offers, code, style sheets and broken pages. Truly sensitive material should always be served from behind login/password challenges, but promotional pages can inadvertently be indexed, and discount codes can be distributed more widely than was originally intended. How can you keep pages away from the major search engines? By telling them what they can and cannot inspect using a file named robots.txt.

robots.txt

'robots.txt' is an optional text file that can be placed in your website's document root directory. If it exists, the robots.txt file of any website can be viewed simply by typing the domain URL plus '/robots.txt', e.g., http://www.nytimes.com/robots.txt. Software crawlers (or robots) from many search engines (including Google's googlebot, Yahoo's slurp and MSN's msnbot) will read robots.txt and use the contents as instructions for indexing a website's contents. There are no rules forcing crawlers to use robots.txt, so there are no guarantees that indicated files will stay hidden, but the major search engines make use of robots.txt.

At any given time there may be thousands of active search crawlers, finding and saving information deemed valuable. A software robot that can deeply inspect a list of websites is relatively easy for a programmer to write, and searching websites en masse is commonly done, e.g., spammers will search for email addresses and copycat vendors will collect prices and republish product data. The take-home lesson is that there is no privacy of information for your public web pages, but a well-crafted robots.txt file can keep selected pages off the big results lists.

Examples

Here are examples of robots.txt instructions. Individual search robots (user-agents) can be specified or all agents can be indicated with an asterisk (*). The first example allows all search robots (user-agents) to inspect and index the whole site. This is equivalent to having no robots.txt file:

The next example instructs all search robots to ignore the whole site.

Let's say your website has product discounts for your partner companies on the pages below; one discount for company Alpha and another for company Beta. Here's a way to keep those discount pages out of major search results listings:

Easier than listing every page is to hide whole directories. The next example acts for all Alpha and all Beta pages, and everything in the /partners directory:

Also useful is this HTML element:

  <META NAME="robots" CONTENT="NOINDEX, NOFOLLOW, NOARCHIVE">

This meta tag can be placed on individual pages and can provide another layer of protection. Not all web crawlers recognize this meta tag, but it will keep Google, Yahoo and MSN from indexing, following or caching pages. This meta tag can be redundant, but may be useful if robots.txt is temporarily missing, contains typos or if directory structures change.

Sitemaps

A representation of your website can be built into a special 'sitemap' XML format and referenced in your robots.txt file. A sitemap presented to a search engine crawler will allow for fast, accurate indexing of your site's content. CNN's robot.txt shows use of sitemap references.

Further Reading

Robot Exclusion Standard

Robots.txt at Wikipedia

Google's Webmaster Guide

Sitemaps

Site Examples

The New York Times

The Wall Street Journal

The White House

McDonald's Restaurants

Several times a year, we offer public seminars for small business owners ready and willing to work strategically on their business in a supportive environment here in the Sonoma wine country. I have been involved with these events the last few years and am consistently inspired by the entrepreneurs I meet. Their dedication, motivation, and enthusiasm are contagious, and for two days I get to witness the unfolding of their business visions and help create a community of small business support and counsel.

One very bright and talented business owner I met at our last Leadership Intensive Seminar, Kimberly Wilson, offered to share her experience on our blog. I hope you find her story as inspirational as I do.

My E-Myth Journey

by Kimberly Wilson

The E-Myth Revisited has been my small business bible since I was introduced to it during a class at the Women's Business Center in 2000. While creating a yoga studio (now with three locations) from my living room in 1999 to a 4,000 square foot 3-level facility in the heart of DC's artsy Dupont Circle, I used the principles of this book to grow.

The two biggest messages that I've taken away over the years is the importance of creating a consistent experience for your clients and that if you create a business that can't run without you, you don't have a business, you have a job.

As a fan from afar for many years, I was delighted to find that E-Myth offers 2-day workshops focused on this gem. I've watched the schedule over the past few years and eagerly signed up for July's session many months ago when I found an opening in my schedule. Getting away from my business for a few days is not usually a problem, thank goodness, but I do find myself online and checking in as often as possible. Hopefully that will change as the business continues to mature. Below are some ways in which I hope to deepen the lessons of E-Myth as I continue to grow as a leader of a business that can easily run without me.

"A Ha" Moments

My first "a ha" came when our facilitator introduced the staff from E-Myth Worldwide by the result that they bring to the organization. For example, the graphic designer ensures the website is visually appealing. This helped fuel the next big "a ha" that staff should be shown how their position is supporting the customer experience and fulfilling the show. This ensures they don't feel like a cog in a wheel, but rather an integral piece of the end result. When working with consultants or staff, it is best to focus on clarity of results, not hours.

The facilitator asked us what our business promised. Hmmm, great question. I noted that my studio, Tranquil Space, promised a lifestyle-focused holistic escape from life and tools to bring tranquility into everyday life. We don't sell yoga, we sell an experience. I then was left to define what exceptional customer service looked like in a yoga studio. How can we best deliver in a unique, extraordinary way?

The notion of a brand promise also spoke to me. How do our customers feel about us? How can we ensure that we engage emotionally with our clients? We encourage the setting of an intention at the beginning of class, deliver a consistent yoga experience with hands-on assists, spray lavender-scented aromatherapy during relaxation, and offer tea and cookies after class. Asking staff how we can continue to offer this experience better than anyone else was also a great idea. Since they are the eyes and ears of the day-to-day experience, they always have a lot to share.

My Director of Operations came with me and we struggled with writing the "New Co" Strategic Objective. This is how the business will look when it is complete. We enjoyed the big picture thinking process and are still refining it. Thinking of the studios as well-functioning machines minus the current headaches is a fun, liberating, and scary process.

The pre-Leadership Intensive Seminar packet was a helpful tool to get into the mindset before arriving. I did the homework with another couple who joined us for the workshop and we found the process to be rewarding. I loved addressing what I do and don't want in my life and filling out the Personal Objectives worksheet that focused on 6-month, 1-year, 5-year, and 10-year goals.

Putting it into Practice

I continue to struggle taking time to work on my business rather than in my business - despite being in business for nine years. I am preparing for a team retreat where I will stress the results of everyone's role and the brand promise that we stand for at Tranquil Space. While writing this wrap-up of my experience at the E-Myth Leadership Intensive, I reviewed my 6-month goals written just a month ago and found that I am moving in the direction of them all and a few are already completed. To put the notion of working on my business into action this week, I plan to peruse my "ideas" folder to lay out some innovative marketing ideas and projects that will help keep Tranquil Space doing what it does best - serving up tranquility to stressed out Washingtonians in an inspirational way!

Kimberly Wilson is a teacher, designer, author, activist, and entrepreneur. She is the founder of Tranquil Space Yoga, designs TranquiliT Luxe Lifestyle Wear to offer comfy eco-conscious clothing, and penned Hip Tranquil Chick to share how to lead a mindfully extravagant life. Visit her at kimberlywilson.com.

We at E-Myth Worldwide place a high value on strategic thinking. Business owners can reap significant benefits by defining a long-term Strategic Objective, designing targeted strategies to reach that objective and implementing those strategies using tactical methods that will move the business towards the goal. We know this approach works, but how do business owners design and build out their strategies?

This article discusses a well-known matrix to assess your industry's potential for profitability, and discusses military history as a source for strategic guidance to help your business march ahead briskly.

Porter's Five Forces

Michael Porter is a professor at Harvard Business School, and in the late 1970's developed a framework now known as Porter's 5 Forces Analysis to understand the 'attractiveness' (profitability) of a given market by measuring the intensity of current competitive pressures. These 5 forces closely affect a company's ability to serve customers and make a profit:

• The threat of substitute products. If closely-related substitute products exist, then customers can be more easily persuaded to switch brands, especially if prices change.
• The threat of new competitors. Areas of business with high profit margins will attract firms eager to compete. Many new entrants in an industry effectively decreases profitability.
• Competitive intensity. The intensity of competition of established rivals is of major importance determining attractiveness of most industries. Barriers to entry in the form of recipes, special formulations, patents, copyrights, etc. can help in this ares.
• Customer bargaining power. Customer ability to bargain will apply pressure to a company's prices, and will impact the marketplace's sensitivity to price changes.
• Supplier bargaining power. A company can be pressured by those vendors supplying goods and services to the company and to the industry. Industry profitability will suffer as supplier bargaining power increases.

Of course, not all companies in a given industry will achieve equal profitability, as companies differ in business model, strategy, access to resources and ability to execute. And as these 5 forces vary dynamically, a company will need to regularly assess and update its approach to the marketplace. The cycle of process innovation, orchestration of changes and measurement of effectiveness will need to regularly be applied.

With a Strategic Objective identified and an honest assessment of the marketplace completed, you are ready to define strategies to move ahead. We will assume that you have embraced E-Myth's Seven Centers of Management Attention™ as a business model, and that you will develop a strategy for each of those categories. What rules of strategy can be applied to good effect?

Strategize Like a General

Many influential business teachers and practitioners have adapted strategies of armed conflict and applied them (with appropriate revisions) to the business world. Many concepts of battle and business parallel one another, and so can some lessons of armed conflict be applied to commercial contests. Note that these military strategies will apply most often to your positioning with respect to your competitors, not to your customer interactions.

Sun Tzu

The Art of War is Sun Tzu's definitive exposition of military strategy written in the 6th century BCE. Ongoing interest in the work comes from military theorists as well as business scholars. The book stresses subtlety and deception, making indirect advances and the cloaking one's true intentions. Much of the text discusses engaging the enemy without giving battle, relying on outsmarting the opponent and thereby avoiding unfavorable engagements. The tenets expressed in the book have found wide utility in various competitive enterprises.

"So it is said that if you know your enemies and know yourself, you will fight without danger in battles. If you only know yourself, but not your opponent, you may win or may lose. If you know neither yourself nor your enemy, you will always endanger yourself."

Knowledge of the field, of yourself and of your opponents is central to success. Another of Sun Tzu's points is that good strategy requires quick, effective response to ever-changing conditions. A simple plan may work in isolation, but competing plans interfere with one another, creating less predictable outcomes. One must always be ready to re-evaluate the competitive landscape.

Captain B.H. Liddell Hart

Sir Basil Henry Liddell Hart was an English military historian who greatly influenced the 20th-century development of strategic theory. He spent time in the trenches during the First World War and was driven afterwards to understand why casualties had been so very high. He began publishing his works in 1920's, based on a set of strategic principles:

• Adjust your ends to your means
• Keep your objective always in mind
• Choose the line of least expectation
• Exploit the line of least resistance
• Take a line of operation which offers an alternative objective
• Ensure that all plans and dispositions are flexible and adaptable to circumstances
• Don't throw your weight into a stroke while your enemy is on guard
• Don't renew an attack on the same line (or in the same form) after it has failed

Captain B.H. Liddell Hart believed that direct attacks against a firmly-entrenched opponent almost never work and should never be attempted. He also held that to defeat an opponent one must first throw him off-balance, which must be done before the main thrust of a campaign can succeed. He eventually formalized his theories of the Indirect Approach and the Expanding Torrent effect.

Indirect Approach and Expanding Torrent

The Indirect Approach advises against launching simple frontal attacks in favor of using surprise and flanking maneuvers to gain control of opposing positions. Successful use of the Indirect Approach requires delegated decision-making, as conditions on rapidly-changing ground require on-the-spot choices.

The Expanding Torrent effect describes the concentrated, expanding force applied to points of weakness identified in the Indirect Approach. Speed, exploitation of disruption and enabling those on the ground to act autonomously are crucial to success. The aim of the Expanding Torrent effect is to achieve confusion, disruption and demoralisation. Ironically, German military leaders embraced Captain B.H. Liddell Hart's theories, applying their Blitzkrieg strategy (an Expanding Torrent) against Britain and the Allies during World War II.

Synthesis

At E-Myth we believe that business owners should have a strategy for each of the Seven Centers of Management Attention. For example, in Lead Conversion, Liddell Hart's precepts can be used to inform a robust strategy with respect to your competition.

• Stay within your financial means
• Use innovative closing methods that competitors aren't using, e.g., coupon specials or free tech support.
• Identify and use tactics that deliver optimal return on investment
• If prospects resist buying, be ready with alternatives
• Give your sales people some flexibility in pricing
• Stay away from tactics that have not performed well

Liddell Hart's approach can of course be applied to the other six areas requiring strategic planning. And once you have formed strategies for your particular industry and marketplace, stay alert to changing conditions and be ready to revise your tactics based on current and anticipated conditions.

Further Reading

Porter 5 Forces Analysis

Foundation Strategy Group

McKinsey: Thinking Strategically

Strategy & Tactics for Sales Teams

The Art of War

Military Strategy

Miyamoto Musashi

Carl Von Clausewitz

We recently received a request from one of our readers to write about how to take the first steps toward becoming a franchise. I immediately thought of my friend Dino Dakuras, a restaurateur who has taken the E-Myth principle of the Franchise Prototype to heart in the process of franchising his own business. Since he's so passionate and articulate about his business, I asked Dino to address our readers' question; here's what he had to say.

How I Started My Franchise Business

It all began in November of 2000 when I opened Dino's Chicago Express in Augusta, Ga. I was young, I had big dreams and big hopes, and I understood that anything worth getting required consistency and hard work. After my first year in business I realized that to grow my business I needed to find ways to simplify it -- and that's where E-Myth came in.

I read The E-Myth Revisited and instantly understood the importance of working on your business and not in your business. Shortly after reading the book, I realized that in order to succeed I needed to build a concept that could run itself -- and the only way to do that was to build my business as if I were going to franchise it, even if I didn't.

Over the course of a year, I got organized. I had my staff spend hours building specific manuals for everything from training, prepping, setting up and handling customer issues to taking pictures of what food should look like going out. I spent thousands on registers that would simplify order taking and allow for better flow and consistency, and I even put in video surveillance.

I documented manufacturers and distributors and organized my ordering in such a way that I would know about price increases, decreases and any items that were out of stock. (To this day neither of my restaurants has ever told a customer we are out of something.) I even found a company to package all of my recipes. In addition, we created lists that allow for cleaning, checking numbers, food costs and percents -- all important when it comes to managing your business.

The implementation of these systems has allowed us to not only grow, but get through the tough times of business. I am honored to say that in 8 years, we have never scored less than 100% on a customer satisfaction food score.

So where am I going with all of this?

Franchising is about having a product that can be duplicated while maintaining the consistency that made it successful in the first place. The only way to do this is to set up procedures and guidelines.

There are many companies out there that are willing to go through the franchising process for you, but unless you have done the research on what is expected from you as a future franchisor, you run the risk of failing. Hard work alone will not get you where you need to be, but smart, hard work can.

Dino's 7 Tips to Start the Franchising Process

1. Make sure your concept can be franchised by researching other companies that are similar to yours. Look for the reasons they were successful and where they could have improved. A strengths, weaknesses, opportunities and threats (SWOT) analysis is perfect for this.
2. Spend the time to set up your company to operate without you -- right now. If it can't run without you, it won't be a franchise. This will not only give you well needed days off, but the opportunity to work on your business and not in it.
3. Trademark your name. This is a long process and you might not be successful on your first try. As a matter of fact, I had to change my company name to pursue my franchise dreams.
4. Get help. Once you and your attorney feel comfortable with a name that will work, search for a franchising company that will fit your needs. I personally went with a company that will not only set up the documents, etc, but will also help market and sell my franchises.
5. Get capital. If they say it will only take $60,000 to franchise, make sure you have double that number. More companies fail before they have a chance to succeed due to limited funds.
6. Set your goals high, but not too high. What I mean by this is build your franchise company slowly and in such a way that it will be stable. My goal is 25 stores in 5 years. Moreover, don't be upset if some franchisees fail, because they will, it is just the nature of business.
7. Be flexible. Realize not everyone is the same and understand that regardless of what mistakes you make, they will only lead to better decisions in the future.

The insight I offer here is only a small piece of the pie, based on my own experience. I suggest that you read as many books as you can. Talk to people who have been there and done that. Talk to the people that have helped you get to where you are; if it wasn't for them, you wouldn't be thinking about franchising.

Lastly, make no mistake: becoming a franchise won't be easy. Determine your success not by how many franchises you have sold, but by how many lives you have changed along the way.

There are many great quotes out there, but I agree with Michael Gerber when he says

The greatest business people I've met are determined to get it right no matter what the cost.

I'm assuming if you're reading this you are one of those people, so dream big and reach high and as Zig says, "I'll see you at the top."