Know the Difference – Grow Your Business
There is a lot of Business Buzzword Bingo out there around these two words, but they are too important to your success to get them confused.
Strategies answer “How”
Specifically two “how” questions; “How do we make money?” and “How do we lead?” Your strategies cover how you think you’ll make money over the next one to three years.
Direct Revenue – Each way you make money should be described as a separate Direct Revenue: strategy, as long as you market and invoice for it differently. If you market furniture differently than floors or to a different audience, list these as separate Strategies for how you make money. If you invoice differently for restoration then for new construction, or to a different audience, they are separate Strategies. Sofas and chairs with different prices but that are marketed to the same audience are one Direct Revenue stream – furniture.
We have multiple Direct Revenue streams – 3to5 Clubs for business owners worldwide, books, workshops, keynotes, one2one consulting and online apps. Since your Strategies should list how you will make money for the next one to three years, we also list some things we aren’t doing yet but plan to add to our quiver over the next three years. Some businesses will have just one or two Strategies – like 1) plumbing repair and 2) new construction plumbing. Or even just one – mortgages.
Indirect Revenue – A second type of Strategy. For small and local businesses, we should largely replace the word Marketing, with the phrase Indirect Revenue. Big business spends a lot of marketing money on things like “brand recognition”. For most of us, we need to think of marketing more as Indirect Revenue. If you can’t track revenue clearly back to your marketing, think twice about doing it. You can’t afford brand recognition; your marketing should cause people to buy stuff.
How We Lead – The last kind of Strategy you need to articulate – a simple 1-2 sentences or a short list of words how you intend to lead your business. It’s very important to have a simple leadership Strategy that guides the way you make decisions.
All of this should take no more than two-thirds of a page. If you get wordy, you’ll never apply this. Complexity breeds confusion.
Objectives answer “Who”, “What” and “When”
Objectives are radically different than Strategies. Once you know how you make money and how you lead, your Objectives will put rubber on the road. Strategies are not measurable and don’t assign responsibility or concrete timelines. But Objectives should ALWAYS be measurable, assign responsibility and define exactly when they should be accomplished. Your Strategy says How you make money; your Objectives make it real.
Take each of your Strategies and attach Objectives for who owns them, what exact amounts or numbers will define success, and when you will have them done. A Strategy would say, “we make furniture”, but the corresponding Objective would be “We made 2,000 chairs in 2012 and will increase that by 50% in 2013, to 3,000 chairs. John is responsible for the marketing, Fred for the production, Sally for the etc., and we intend first to increase by 250 extra chairs produced by March 30, 2013.”
If you can’t measure it, know who owns it, and say when it will be done, it’s not an Objective. If you can, and you run your business with the intent of completing each Objective attached to each Strategy, you’re likely to be successful. Make sure you have at least one annual Objective to get you off the treadmill – “I worked xx hours a week last year, and intend to work xx hours (less) this year. I’ll be 20% of the way there in the first three months.”
A Little Bit Every Week
If I could just get business owners to set aside a couple hours a week to push their intentional Objectives forward, instead of following the Random Hope “we gotta make some money this week” plan, we would have a lot more successful businesses out there.