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What is the True Product of Your Business?

What is the True Product of Your Business?

Do You Ever Feel Like This?

  • I don't have enough time
  • My business depends too much on me
  • I need more working capital
  • I don't have enough personal income
  • I can't find good people
  • I don't have enough cash flow
  • I need more sales
  • I can't develop competent managers
  • My business isn't profitable

You need to take a step back and look at your business with a fresh perspective.  You must analyze your business as it is today.  Decide what it must look like when you're "finished" with it and have it as you want it, and then determine the gap between where it is today and where you need it to be in order to make your dream a reality.  The gap is always created by an absence of systems, the absence of a proprietary way of doing business that successfully differentiates your business from everyone else's.

Your Business is not Your Life

Michael E. Gerber, author of The E-Myth Revisited, says that your business is apart from you.  Your business and your life are two totally separate things.  Your business is an organism that will live or die according to how well it performs its sole function, which is to find and keep customers.  The purpose of your life is not to serve your business.  On the contrary, the purpose of your business is to serve your life.  When you realize this, you can then go to work on your business rather than in your business.

Do You Remember Ray Kroc?

At age 52, Ray Kroc was going to sell a milkshake machine to the MacDonald's hamburger stand.  There he witnessed hamburgers being produced quickly, efficiently, inexpensively, and identically by high school students.  He franchised the two MacDonald brothers' method, bought them out, and today McDonald's has become a $25 billion-a-year business with 14,146 restaurants in the United States.  The average McDonald's restaurant produces more than $667,000 in annual sales and is more profitable than any other retail business in the world with an average 19% pretax net profit.

The True Product of a Business

What does McDonald's sell?  Big Macs, Quarter Pounders with Cheese, and Egg McMuffins?  No.  People don't buy McDonald's products for their high quality.  People buy the experience.  They know what they're going to get each and every time they visit.  French fries are never soggy, because they're never left in the warming bin for more than seven minutes.  Hamburgers always retain the proper moisture, because they're removed from hot trays in ten minutes or less.  The hamburger patties are identical in size and weight and are turned at exactly the same time on the griddle.  Pickles are placed by hand in a predetermined pattern to prevent them from sliding out.  Orders are served in 60 seconds or less.  Well, at least that's the goal.

The true product of a business is the business itself, the entire process by which the business does business.  If your business is truly valuable, it's saleable.  Mr. Kroc transformed McDonald's into a predictable success so that franchisees would buy it.  It had to work so that, once it was sold, it would continue to work no matter who bought it. 

The Franchise Prototype

Your business can also be a franchise prototype, which is a proprietary way of doing business that successfully differentiates every extraordinary business from their competitors.  Your vision, as an entrepreneur, can be formed through the prototype, your desire for order and predictability, as a manager, can be managed through the prototype, and the technical work, as a technician, can be accomplished within the prototype.

How Do You Build a Business That...

  • Works predictably?
  • Works effortlessly?
  • Works profitably?
  • Works without you?
  • Can free you from your business so that you can take your life back?
  • Each and every day?

Pretend Your Business is a Prototype

Think about McDonalds.  The boss isn't usually there.  The employees are 16 years old.  The food is consistent, served quickly, and relatively tasty.  The customers are happy.  How do they do it?  Behind the counter in the kitchen are pictures of each menu item and assembly instructions.  Simple, right?  McDonald's uses systems to follow to ensure consistency, service timeliness, and product quality.  If you pretend that you're going to franchise your business, it will be the prototype or model for 1,000 more just like it.  The prototype becomes the working model.  It's where all assumptions are put to the test to see how well they work before becoming operational in the business.  Once the prototype is complete, the franchisor tells the franchisee how the business works.  The system runs the business and the people run the system.  And you won't always have to be there.

We love to see businesses succeed!  Let us know if we can help you transform your business into a prototype. 

Michael Allen, CPA

Allen & Company, PC

(770) 428-6229 (T)

(770) 425-5481 (F)

mallen@allenandcompanypc.com

www.allenandcompanypc.com

michael.robert.allen (Skype)