Through my own business exploits and being lucky enough to be around really smart business people and investors over the years, I learned that assessing a company can be easily summarized by using the letter M. I am not sure who originally simplified business tactics into Ms, but there are many. Marketing folks have their M list, investors have theirs and master of business administration types have one too.
Whenever I meet with a new business client or hear a start-up pitch I go through this list in my head:
Market, Mission, Model, Money, Management
No matter your company focus these five Ms cover the entire business. In spite of how you run your company, these concernsmust be addressed if you want to build a sustainable organization.
For a free comprehensive five Ms checklist tool to apply to your business, go to www.ericmeadeconsulting.com/blog. Otherwise here is an overview of the five Ms:
I have witnessed numerous start-ups that rush through the process of validating their potential market. They quickly decide theyhave a viable market for their solution. Blinded by their wonderful idea, they feel other people will undoubtedly buy their product or service. Not so fast! Without an exhaustive investigation of potential buyers of your product or service, all the other work in building a company will be wasted later. Be thorough, thoughtful and discerning about the research. Factors to consider are potential market size, competition, regulatory limitations, your customer demographic and what uniquely sets you apart from other solutionsin the marketplace.
This is my favorite topic of the five. I have observedsuccessful entrepreneurs who have gone through the challenging process of defining a clear reason why they are passionately engaged in their business. These folks have a deep rooted soul in their company that is emulated through everything they do (think Apple, Patagonia, Nike). They stand for something. This work is foundational to any successful company.Their marketing message, the way they hire and the company culture is evident in all areas of the way they do business. Defining clear vision is your true connection to your customer since they buy based on what they believe. A strong mission has clarity of company vision, strategy, brand authenticity, messaging, target market and a plan for scaling the business in the future.
How do you provide your product or service to the consumer? Do you sell direct or do you go through other resellersor distributors? Clear sales channels must be identified and a plan for servicing those channels developed to gain immediate traction. Early in developing a model, thought needs to be given to how you will supply your goods or services as you grow. You may decide to build products yourself and when you hit certain sales targets, switch to outsourcing, which has its own assortment of challenges.
Another one of my favorite topics, since this is where you measure outcomes. Most new entrepreneurs look at their profit and loss statement, go directly to net profit at the bottom of the page and either light up or their shoulders drop in despair. Knowing your finances and how to leverage better gross margins, expense management, and profits is critical. As a business owner, if this is not your favorite topic, you still need to learn it. More importantly than profits,however, is the management of cashflow and the cash balance you can anticipate in the future. I found when running my previous business using a financial proforma to be theclearest tool for knowing exactly if and when I needed more cash and how to manage my way through challenging cash periods.
Last but certainly not least. This is your team, including you. Without a strong leader and great talent, you are left with dysfunctional people. By having a clear mission, you should be crystal clear on what kind of people you want/need on your team. Take the time to hire right. There is not a CEO out there who has hired flawlessly. Many of us have hired too quickly and taken too long to let someone go. Remember the adage: hire slowly, fire quickly…so true. In addition to your inside team, you likely need an outside CPA, attorney, insurance broker, and banker. You should also consider having an advisory team or mentor to support you as you venture into areas that are not as familiar to you. These are all your extended team and still need to fit your mission.
If you are able to concentrate on these five critical M areas of your company, you will have the majority of your bases covered as a winning business.
Eric Meade is the owner of Eric Meade-Purposeful Consulting, www.ericmeadeconsulting.com. Eric was the former owner/CEO of Entre Prises USA, a leading climbing wall manufacturer and is a co-founder and mentor in the outdoor product accelerator, Bend Outdoor Worx. Eric specializes in strategic planning / financial controls / leadership development for small to medium sized businesses. firstname.lastname@example.org, 541-948-0578.