If you want to run an effective and efficient business, it’s essential to focus.
At Add1Zero, we’ve challenged ourselves to be very clear on who we serve and why, not simply chasing money. We understand the need to be disciplined and to focus on our niche. For us, that’s B2B services companies in the tech sector who have reached annual revenue in the mid-six-figures and now want to add a zero.
Walking away from potential revenue can be challenging. You’ll be tempted to take on clients who don’t exactly fit your ideal profile. Don’t do it!
The key is to find your niche and define it to the level where not that many people are the right client for you. It can be uncomfortable to niche down that far, but when you do you’ll benefit financially.
As I said to Morris Sims on the Business of Sales podcast, if you try to market everything to everyone, no single company can say to themselves, “Hey, they’re talking about me.” You want the right companies to choose to do business with you, while helping the wrong companies self identify out of your sales process.
You don’t need a million customers to make your business work. What you need to do is find one thing that you do better than anyone else and sell that to the right companies who understand and can benefit from your value.
Find your focus and your whole team will function better
Ideally, you want to have one system and one set of vocabulary you, your team members, leadership, and partners can all agree on and use.
If you’re all trying to use different words and systems, it tends not to work so well.
We run Add1Zero according to the EOS, the entrepreneurial operating system as described by Gino Wickman in the book Traction. This gives us a way of focusing our quarterly meetings and producing a clear list of the issues for the business.
There are several systems for running a business but I do recommend you find one and make it work for you. Stick to one system, and if you make your own hybrid then make sure you document it well.
Staying focused can be a challenge
As an entrepreneur, it can be tempting to take on new opportunities. You can be looking to create, come up with new ideas, and build different businesses.
So I try to work really hard on the business as well as in the business, because that’s the part that energizes me.
It’s important to carve out time to work on focused, long-term objectives and not just concentrate on client (billable) projects.
To be honest, it can be hard to stay focused not because it’s too difficult but because it’s boring. It does help to surround yourself with people that you really trust to act on your behalf.
Don’t start businesses that cannot make money
It can be far too easy these days to set up and try to build a business that ultimately won’t make money.
You can build a little structure, come up with a logo and a website and a lot of ideas, but that’s not a business – that’s really just playing house.
You can quite easily find yourself building $500,000 worth of software for something that nobody ever wanted, and maybe will never pay for. It’s too easy these days to create a solution that’s looking for a problem without even validating a cash flow model. Don’t fall into this trap.
Try not to chase (only) the whales
You should have plenty of opportunities in the pipeline at all times – but it’s important that none gets you too excited, or matters so much that you get stuck in a high-urgency loop of selling. You really don’t want to be on a call where you desperately need to win.
Every call should be a good opportunity, of course, but when you’re really trying to win one particular sale, that note of urgency makes it tough to sell. Customers don’t tend to gravitate towards that.
Unfortunately, smaller companies can find themselves in a mindset where they think they just need one big client, a whale, for everything to be alright.
You should be consistently closing a reasonable percentage of deals and not hanging your hat on that one magnificent call every couple of weeks.
Get yourself into a rhythm where you can repeatedly deliver a product or service that is your niche offering and fill your pipeline enough that no single call makes or breaks your business.
How we know that cash – and cash flow – is king
I had the misfortune of coming out of college just before the first dotcom collapse (2000). The first clean business I started was in 2007 – and that got wiped out in 2009.
Now there’s Add1Zero, which we started in 2019, just before the crisis induced by the COVID-19 pandemic.
People have said to me that economic collapses happen once every 100 years, but we’ve had three in 21 years.
What I’ve learned in that time is that your revenue can go to zero and all your clients can go out of business, so you had better have a lot of cash in the bank.
This time, I’m happy to say, we’ve managed our business in such a way that we kept 150 days of cash in the bank throughout 2020. That allowed us to be a lot more nimble, make better choices and build up a client load without leveraging in the wrong direction.
So your focus should be on revenue
What we do at Add1Zero is enable businesses to be a lot more successful by growing that top line.
Of course, you need to make good decisions on how you spend and save your money, and invest it.
Nevertheless, I maintain that no founder ever woke up in the middle of the night in a cold sweat, staring at the ceiling, asking any question except: “How can I make more revenue?” So that’s where we focus.
I don’t like taking people’s money for advice; I like taking their money for closing them a great deal that brings them more money than we take off the table.
How Add1Zero helps our clients
When we set up Add1Zero, we decided, based largely on my experience, that we wanted to work with companies that are moving out of that founder-led sales zone.
They’ve grown and landed in the mid-six-figures of annual revenue. They’ve got some product-market fit and now want to scale up – and the best way to do this is to build and scale a revenue system.
That’s where our skill set lies, and we’ve built better filtering mechanisms to help us. As we’ve scaled, we’ve developed a limited number of words to describe what we do, so people can know quickly whether that is or is not what they’re looking for.
I’ve been that founder, thinking naively that you can start companies and not knowing how to sell anything. It’s our passion to make sure no founder we work with ever has to worry about cash flow again.