The Internet has made it possible for nearly anyone to start a business, hang their shingle and generate income. Yet, how many products and services in market replicate existing offerings and generate low sales? Moreover, a staggering number of small businesses (i.e., businesses with less than 100 employees) make less than $1 million in revenue a year.
One of the underlying reasons is that there seems to be a distinct thought process gap between the small business world and that of larger enterprises. It’s called strategic management, or as I’ll call it – managing outcomes.
‘I Want To’ Is Not Enough
CEOs of large corporations react, strategize, and plan from a place of desired outcomes. In contrast, small businesses owners react start with “I want to do this thing.”The want is not enough.
Large corporations, for the most part, know exactly how to manage outcomes. In fact, highly successful businesses only manage outcomes. Why? Out of sheer necessity – public companies have to answer to stakeholders (people who directly benefit from a company’s success) that would burn them at the stake if they didn’t. In turn, CEO’s of larger companies tend to think about business and outcomes a bit differently from that of a small business.
This is a magic formula, but not a get rich quick method. The difference lies in how a CEO of a large firm views the business they run and how they act on their perception. Rarely, do they say “Let’s release a new product!” They often have a team that helps them figure out market needs, how to grow market share and then they invest, produce, and go to market to lay claim to their slice of a market segment. If they have done a good job, Voila! … increased market share follows with a spike in revenue.
So, how can we break the cycle of a small business owner saying, “I want to do this ‘thing’” and shift to “I want to do this ‘thing’ to produce these specific outcomes”? The answer is planning and the management of outcomes.
Plan and Manage Business Outcomes
Planning isn’t just a perspective on product and service development. It also takes into account the outcomes you hope your offerings will create. So, how can a small business owner plan and manage outcomes?
Don’t stop with ‘I want to.’
All too often small business owners create something because they want to or because they have the skill set to do so. A yoga teacher may open a yoga studio because she wants to, rather than leveraging a skill set in existing studios or alternate business models. An architect starts a new firm, instead of partnering with other firms. A tech company create a new product that looks cool. The truth is, you should want to do it, but that’s just the beginning. You must clearly know your market.
Understand your market.
To know if your business or new product idea will be viable in the market, you need to actually understand who you are trying to reach. Will they actually want the thing you are creating? How much they will pay for it? If your idea is viable, and people are willing to pay for it, then it is time to start creating it.
Focus on Outcomes
Solve needs in your market. I generally encourage would-be entrepreneurs to think about their market before they create. Identify the problem and create a product or service solution – not the other way around. If you first look to your desired outcomes– revenue, clients, etc.– before you create and launch, you’re ahead of the game.
So, before you launch your next big idea, simply ask yourself: “Do I want to launch this thing or does the market really need it?” and “If the market needs it, how is the need best served?” Then go on and create.
This article has been edited and condensed.
Makenna Johnston is a business strategist and coach to entrepreneurs who wantto leverage desired outcomes into a strategy that works for their small business. She takes strategy to a new level by discussing managing to outcomes in your business and in life. Before living the Young, Fabulous & Self-Employed TM dream, Makenna received a fancy degree in business and economics from NYU which led her to be a a corporate monkey who worked with Fortune 100s on their marketing and design strategy. These days she lives in a mountain cabin, 8,000+ feet above sea level, in the rocky mountains. Connect with @makjohnston on Twitter.