Sunday, November 1, 2009

Personal MBA Update - Ready, Fire, Aim

The Personal MBA Update - Ready, Fire, Aim by Michael Masterson: This book was awesome. Plain and simple. It was one of the best books I have read on the topic of entrepreneurship. It wasn't just a touchy feely go out and do it type book. The book had great lessons and practical advice on how to best achieve entrepreneurial success, not just as a start up but as you mature your business. I particularly like the books focus on selling, marketing, and strategies for increasing profits. I found myself testing my own random business ideas against the criteria and recipes for success of this book to see if I truly have good ideas and more importantly if the ideas have the potential to make money. For me I felt as though I took more out of the first stage entrepreneur advice, but that is probably because that is the stage I am trying to reach. I think that the book could prove valuable to business owners and executives alike as it also offers practical advice for those seeking to grow their business and move it into the next stage of business maturity. This is one of those books that I may not remember all the great lessons packed inside, but when I go to start a business the book will be one of the first resources I grab to ensure that I am focusing my efforts for success.

Whether you're thinking about starting a new business or growing an existing one, Ready, Fire, Aim has what you need to succeed in your entrepreneurial endeavors. In it, Masterson shares the knowledge he has gained from creating and expanding numerous businesses and outlines a focused strategy for guiding a small business through the four stages of entrepreneurial growth. Along the way, Masterson teaches you the different skills needed in order to excel in this dynamic environment.

While some of the concepts covered may seem novel, all of them have been proven to work time and again. Among other things, you'll discover:

Why selling is your first business priority and the one thing you should never stop doing

The handful of numbers that are critical to every business

When to cut your losses short and when to let your winners run

The front-end/back-end method of doubling profits easily

Why having a Plan B is as important as Plan A, and when and how to create it

The difference between pushers, thinkers, organizers, and sellers, and how to attract the ones you need for your business

Over the course of his remarkably successful career, Michael Masterson has helped start and develop dozens of multimillion-dollar businesses, including one whose revenues exceeded $135 million and another still growing at $300 million. Now, with Ready, Fire, Aim, he'll show you how to make your way to the top by designing powerful marketing campaigns that will regularly outsell your competitors; implementing innovative operational procedures that will reduce costs and hassles; and using the revolutionary power of the Internet to reduce customer complaints and increase profits.

To start and grow multimillion-dollar businesses over and over again you have to master certain skills. Ready, Fire, Aim reveals what those skills are and shows you how to quickly master them. Filled with in-depth insights and expert advice, this remarkable guide for entrepreneurs gives you a blueprint for business and financial success that will allow you to enjoy life to its fullest.

Here are my notes from the book:

Part I: Being all that you can be
Introduction: The very best job in the world:
- Three most important decisions in life are 1. what you do 2. where you do it 3. with whom you do it Plus #4 when you work and when you don't
- no consideration is more important that who you work with

Getting to the next level:
- The four stages of business development: 1. Starting out zero to $1M 2. Fast growth 1 to $10M 3. Adolescent stage 10 to $50M 4. Maturing state 50 to $300M
- Stage I:
main problem - you don't really know what you are doing
main challenge - making the first profitable sale
main opportunity - achieving a minimum critical mass of customers
- Stage 2:
main problem - you are only breaking even or losing money
main challenge - creating many additional profitable products quickly
main opportunity - increasing cash flow and becoming profitable
- Stage 3:
main problem - your systems are strained and customers are noticing
main challenge - turning the chaos into order
main opportunity - learning how to establish useful protocols and manage processes and procedures
- Stage 4:
main problem - sales slow down or stall
main challenge - becoming entrepreneurial again
main opportunity - getting the business to run itself

Why Employee Size Matters:
- 4 Stages: 1-7-49-344 Employees

Becoming a five star business genius:
- For a business to grow to $100M-$300M it must be good if not great in these areas: 1. coming up with new and useful product ideas 2. selling those products profitably 3. managing processes and procedures efficiently 4. finding great employees to do the work 5. getting people, procedures, products, and promotions going
- To successfully start a business all you need is to 1. know how to make a sale 2. be able to put that sales process into action
- Natural inclinations of an entrepreneur: 1. They are attracted to challenges 2. they enjoy being in leadership roles 3. they are passionate about their ideas
- Natural skill of entrepreneurs: 1. well organized 2. good analytical thinkers 3. they are good at sales 4. good at taking initiative
1. coming up with ideas
2. selling products
3. managing systems
4. developing superstars
5. taking action

Part II: Stage One: Infancy
The supremacy of selling:
- without sales it is very hard to sustain an ongoing business
- Jim Koch and the Sam Adams story
- 4 aspects of entrepreneurial success: 1. A seller: someone to market the product 2. An improver: someone to improve the product 3. An organizer: someone to make sure things flow smoothly 4. A pusher: someone to get people to do what they are supposed to do
- Priorities should be:
1. selling 2. pushing 3. improving 4. organizing
- There is a direct relationship between the success of a business at any given time and the percentage of its capital, temporal, and intellectual resources that are devoted to selling
- Stage I business priorities: 1. get the product ready enough to sell it but don't worry about perfecting it 2. sell it 3. then if it sells make it better
- Making the first sale is critical for two reasons: 1. you need to create cash flow to keep your business going 2. you will never know whether your unique selling proposition (USP) is good until you test it in the marketplace
- The sooner you learn the answer the better and less costly!

Your optimum selling strategy and the 4 fundamental secrets of selling your first product:
- Your optimum selling strategy (OSS): 1. Where are you going to find your customers? 2. What product will you sell them first? 3. How much will you charge for it? 4. How will you convince them to buy it?
- Best advice: Do what everyone else is doing! In the beginning at least.
- How to pick a start up product: 1. What products are hot? 2. Determine if your product fits that trend 3. If yes you are set to go if not go to 4 & 5. 4. Come up with me too product versions of several hot products 5. Improve them in some way by adding features or benefits the originals lack.

Mastering the copy side of selling:
- 4 marketing concepts: 1. The difference between needs and wants 2. Difference between features and benefits 3. How to establish a unique selling proposition (USP) 4. How to sell the USP
- USP: 1. Make it some way better 2. Make it seem better
- quote page 100
- 3 aspects of a solid USP: 1. The appearance of uniqueness 2. The big promise 3. Specific claims 4. Proof of those claims
- advertising cheat sheet on page 107

Secondary yet important priorities for stage one businesses:
- Mentoring and being mentored
- Teaching your team
- Setting business targets
- Page 117 last paragraph

A quick review of the problems, challenges, and opportunities faced by the stage one entrepreneur:
- Don’t waste your time on corporate marketing, sell your product not your company
- Don’t waste your money on invisible (to your customers) business extras like office space, furnishing, equipment and the like
- Don’t be misled by phony business experts
- Be proud of your business acumen not arrogant about your business ideas
- Ask advice from smart people
- Don’t ever believe you know more than the market
- Make sales your company’s top priority
- Learn everything you can about sales and marketing
- Discover the optimum selling strategy
- Understand how pricing and other aspects affect sales
- Give you marketing team one and a critical mass of qualified customers
- If possible use direct mail or email to discover OSS
- In testing price to determine OSS favor the down side
- Don’t invest a lot of inventory before you have figured out OSS

Stage II Childhood:
From $1M to $10M and beyond:
- “Innovation distinguishes between a leader and a follower,” – Steve Jobs
- If you get caught in stage I you have a self employment company vs. equity business
- Every time your business changes so must its leader – YOU
- Most companies that go from 1M to 10M do so within 5 years. Why so quickly? Because they made the fundamental change from 1 product to marketing many products.
- Aggressive proliferation of new products
- The primary factor in stage II growth is the development and marketing of new products. The faster you can develop and sell those new products the fast your business will grow
- Front end sales come from those people who have never bought anything before
- Back end sales come from existing customers
- The purpose of front end is to get a new customer the back end is to produce a profit
- Axiom page 144

Innovation is the key to second stage growth:
- Innovation is rarely new its noticing trends and getting ahead of them to create the tipping point
1. The secret to breaking into new markets or reviving a flagging business is to create tipping point products
2. The secret to creating them is to find hot products in rising markets and come up with some way to make them new and different
3. You can make lots of money on the back end with ordinary products as long as you sell them to existing customers
- quote pg 154 at bottom
- New product ideas: work as a member of a team. Don’t fly solo
- Formula of creative brainstorming:
1. A quorum of three: 2 is better than one 3 is better than 2
2. A maximum of 8: there is a limit to the number of people who can effectively operate
3. A limit of time: Parkinson’s law
4. Established goals: what is your specific objective
5. High standards: keep asking how can we improve upon that?
6. A code of equality
7. Strict rules: a. specific suggestions b. no specific criticism c. be positive d. encourage the weak and cut the windbags short
8. A culture of creativity
- Magic Product cube: cubes have 3 dimensions 1. Price – inexpensive, moderate, expensive 2. Product type – golf clubs, golf paraphernalia, golf balls 3. USP – you have 3 golf pros who will endorse you Tiger etc. This means you have 3X3 or 27 possible products
- The 24 hr rule for preserving the inspiration of genius 1. The entire brainstorming session must be tape recorded 2. When a tipping point idea is suggested a short advertising piece must be written in 24 hrs.

- When innovation and speed are combined the results can be astonishing
- 80% of G=IV2 where G= second stage growth I= innovation V= velocity
- Axiom page 168
- Innovators should be passionate about: love good ideas, hate sluggishness, enjoy the process
- “money loves speed”
- Accelerated failure and ready fire aim
- By accelerating failure we can accelerate success. Over time increase success vs. failure
- 8 guidelines to speed up implementation of good ideas: 1. Explain the key concepts 2. Support management 3. Walk the walk 4. Establish parameters 5. Get agreement 6. Accelerate gradually 7. Provide support as you go 8. Follow the program

Getting Ready:
- Ready questions: 1. Do I have a good idea 2. Does it feel like it will work? 3. Are my sales targets real? 4. Can I afford to test the idea? 5. Do I know the basic tasks that need to be done? 6. Do I have the people who can do them? 7. Do I have plan B an exit plan in case my good idea is a bad one?
- quote 183
- gut instincts are really subconscious suggestions that arise from all the patterns we’ve observed. They will tell us more than we can logically know because they represent more information that our brains can logically process.
1. Ask yourself how much it will logically cost to make the product come to life. Take that and double it
2. Figure out how many units it will sell and cut it in half
- Ready Aim Fire business proposal pg 193

What are you waiting for? Get started already:
- 2 reasons most good ideas never get implemented: 1. A desire for perfection 2. Little chores

Aiming the product:
- Ready aim fire ultimately results in higher quality products because there is less money and time wasted on features, mechanisms, and details that customers don’t really care about
- Fewer resources at the ready stage means more available at the aim stage
- A tale of incremental degradation – the candy example page 210
- Business people fall into two categories. Those who believe the universe is limited and disconnected and those who believe its unlimited and interconnected. One hoards and one expands.
- The golden rule or the rule of gold
- Remember that most of your profits will come from back end products which means the easiest way to grow your company is to develop long term relationships with customers and good products
- If it ain't broke….fix it. By broke I mean sales. Trash ones that don’t sell and fix the ones that do sell.

Aiming the Marketing Part I:
- Step I: Exercising the righteous demons
- Myth 1: it is good to sell things that people need, like grain and milk, but it is bad to sell things that people don’t need like TIVOs and gambling vacations
- Reality: More than 90% of what people buy is based on wants not needs
- Myth 2: It is good to sell things as long as you don’t charge much more than they are worth
- Reality: What does value really mean?
- Myth 3: It is good to make good things better but it is bad to sell them
- Reality: Give me a break
- “Don’t be ashamed of doing to thy neighbor which you secretly want done to you.” Golden rule of Marketing Genius is treat your customer as you want to be treated.
- Step 2: Shooting revenues through the roof with 3 basic approaches:
1. You can sell the product to more people
2. You can get your customers to buy more products
3. You can charge more for the products you sell
- Customer service made easy and profitable:
1. Knowing what customers really want
2. Finding out how you can do that for them
3. Talking to them about what you are happy to do
- Step 3: A crash course in sales and marketing
1. Your customers don’t care about you or your business. They are about themselves
2. A small portion of your customer base is giving you the lion’s share of profits
3. Understand why your customers buy from you
a. to feel good about themselves
b. to solve a problem
4. Almost every sales transaction begins with the process of generating leads
5. Learn multichannel marketing
6. Follow the golden rule of marketing genius: treat your customers as you want to be treated
7. Understand the secret of the four legged stool:
a. the big idea b. the big benefit c. the big promise d. proof
8. Understand that customer complaints and objections are the key to selling better
9. Maintain a “no dead end” policy regarding your products. Every sale is a link in a system of links that go on forever
10. Take advantage of customer inertia. Establish a bill til forbid relationship
11. Understand the 80/20 rule
12. Understand the USP of each product
13. Every product line needs its own branding
14. Never lose your marketing edge
15. understand the secret of the core complex. Think of your customers personality as an onion
16. Practice reciprocity with your customers
17. Understand that intimacy is the key to a customer’s lifetime value to your business
18. Be confident and enthusiastic when you sell
19. Don’t push or bribe your customers
20. Develop and mature a marketing culture that emphasizes 3 sentiments: providing benefits to the customer is the heart of product development, providing value is the heart of sales transactions, sincerity is the heart of all communications.

Aiming the Marketing Part 2:
- Understand the buying frenzy
- Increase your profits by stimulating your customers natural wants and turning them into a buying frenzy
- If you convince a customer to buy when they need it you have a loyal customer but if you can persuade him to buy every time that he wants it then you have a human ATM.
- The Law: The likelihood of a customer buying a product is inversely related to his need for it.
- The Corollary: The less a customer needs a product the more likely they are going to buy it.
- 3 factors that stimulate buying frenzies: 1. Feeling like I have more money than I need 2. Being exposed to psychologically effective selling signals 3. Good feeling from buying.

Ready Fire Aim in action:
- various stories

A quick review of the problems, challenges and opportunities faced by the stage 2 entrepreneur:
- Pages 272-277

Making the Stage III Transformation:
- In stage II new employees are added by subordinates creating a communication gap for the first time.
- Corporate execs are different than you but you need them because you can’t change your company without them
- The rule of 3! Each manager should be required to give you only 3 numbers month
- 1. Change yourself. 2. Change or hire great people to run your business

Change into a Corporate Leader:
- Six skills for a Stage 3 business: 1. Controlling operations 2. Managing your managers 3. Communicating your vision 4. Networking for joint ventures 5. Negotiating deals 6. Being good at hiring

Filling your Stage III business with stars and superstars:
- Myths and realities:
- Myth: Employees need job descriptions to know the scope of their responsibilities
- Reality: Job descriptions are not necessary
- Myth: Employees are always motivated by money
- Reality: Money isn’t even the second most important motivating force
- Myth: To win loyalty you must make them owners
- Reality: Most don’t want to be business owners
- Myth: Flat organizations create happier and more effective employees
- Reality: Employees like hierarchy
- Myth: Make work fun by filling it with amusements
- Reality: Fun comes from good work not from distractions
- Myth: A good boss is a sensitive boss willing to respond to personal problems
- Reality: Mixing business with friendship is always a bad idea
- Myth: A good boss listens to employee complaints and responds to them
- Reality: Some complaints are better ignored

Bottlenecks, Bureaucracy, and Politics:
- Terms page 322
- Ostensibly politics and business have the same purpose: go make the world a better place. But their methodology is different. Politicians don’t start doing good until they get their power. Business people can’t get their profits until they do their good.
- Quote pg 332

A quick review of the problems, challenges, and opportunities faced by the Stage III entrepreneur:
- Pages 334-337

Part Five: Stage IIII Adulthood
The last big change:
- Opportunities: 1. Selling your business privately 2. Bringing it public 3. Stepping back and becoming chairman of the board
- Role I: The employer role
- Role 2: The manager
- Role 3: The business builder
- Role 4: The wealth builder

Acting as your company’s main investor:
- Bottom line page 356

No comments: