Everyone likes a formula. It makes everything seemingly easier than without the formula (except, of course, if this formula involves math, which is why I’ve avoided writing this article like the plague).
Business is easier and life is easier when we have a yellow brick road to follow. There’s no thinking involved.
When we’re told to just follow the instructions or drop the numbers into the formula, there’s no thinking involved – or less thinking involved. We’re told, “Follow the formula and it’ll work!”
Great! We already know I suck (pardon my French) at math. I’ll give it a go anyway.
What is this magic formula for business success?
I’m getting there. I have to give credit where it’s due and as any good writer would tell you, building up the suspense is key to keeping your audience.
Here’s a great formula: E=MC2
Pretty simple, huh? It only took Einstein how long to come up with this energy and matter formula?
But his formula is a little ‘out there’ for making your business a success, no?
Is Business Success Hit and Miss?
Business success has been a bit elusive these past few years. Some have thrived and grown; others have sunk and disappeared. Is it survival of the fittest? And how do you determine how ‘fit’ your business is?
I thought Greg Habstritt, an entrepreneur for other entrepreneurs, presented a great and simple formula for examining your own business model. He calls it the Value Equation.
On the surface Habstritt provides this formula to examine whether or not your product or service is priced appropriately. (After all, who hasn’t been tinkering with their pricing structures in the past few years?) The American (and world) public has been re-evaluating ‘value’ for every purchase they made since market crash of 2008.
Houses, clothes, groceries, movies, sports, wine and everything else have all been re-evaluated by every buyer for their worthiness. (Please, no Wayne and Garth jokes here as most folks decided many things were not worthy of their shrinking dollars.)
But I think Habstritt’s formula has far broader application. After all, if what you’re asking for in payment for your services does not meet the value perceived by your target audience, it’s end of game. Your business model is kaput.
So without further ado, here it is:
First, remember basic algebra! Add and subtract things before you multiply and divide. Therefore, the slightly-more-complicated-on-the-eyes version looks like this:
- Relevance to Market
- Efficacy of Solution
- Leverage of Reach
- Trust and Credibility
Relevance to Market – The automatic bread slicer is not currently the hottest thing on the planet. Most of those belong to Apple. Key to your businesses success is whether or not the market wants it.
Efficacy of Solution – Geez, that’s a rather jargon-y way of saying, “Is what you make the best solution on the market?” This may be one of the reasons HP dumped their tablet product (and a whole division) a mere six weeks after it had been on the market this past summer. They decided their product couldn’t compete with what Apple had to offer instead.
Leverage of Reach – Aha! This is where I come into the picture! So you have a great RTM. And even better, your EOS is better than Apple’s! What if no one knows? What if not enough people know? What if you’re talking it up to the wrong target market? Your LOR is spreading the word to the most people, in the most target markets, most effectively.
Trust and Credibility – Okay, I think y’all understand these, but just to be sure…. How’s your customer service? Are you delivering what your customers expect? More? If your customers love you, trust you and believe you are the next best thing to sliced bread, you’ve got this base covered.
Applying the Formula
There it is in a nutshell, the Formula for Great Business Success. (I’m a marketer; I’m compelled to add the “great” modifier wherever I can!)
Why do I think this formula’s easy? (Hey, if this non-math girl can get it, so can you!) It’s easy because it breaks down the myriad complications of business to a simple picture.
Is your business lacking in any of those four areas? Let’s start at the top: If your product is a Pentium 486 computer, I’m sorry, that RTM ship has long since sailed. If, on the other hand, you’ve got a chip that processes faster than the speed of light (and no one else does), then your RTM gets a 10 on the 0-to-10 scale!
Where’s the weakness in your business in this formula? That’s the one (or ones) to be addressing now. Get that fixed and you’re well on that Yellow Brick Road to success!