Business 101
Businesses look wildly different from the outside. A dental practice, a haulage firm and a software company appear to have nothing in common. Underneath, they run on the same six parts, and every one of them fails in the same way when a part is missing.
This matters because owners do not usually have a business problem. They have a problem in one of the six, and they have been trying to fix it by working harder in a different one.
What the model is
Six parts, and each one has to work well enough for the others to matter.
Market. A defined group of people with a problem, enough of them, able to pay. If this is wrong, nothing downstream can save it.
Marketing. Something that reliably makes those people aware of you and interested. Reliably is the word that does the work.
Sales. A repeatable way to turn interest into a signed order at a price that works.
Delivery. Doing the thing, to a standard, repeatably, without you personally holding it together.
Money. Charging enough, knowing your numbers, collecting the cash, keeping more than you spend.
Leadership. Someone deciding where this is going and holding people to it, including themselves.
They run as a chain, and the smallest link sets the size of the business.
Why it matters to an owner
Owners over-invest in the part they came from. A technical founder polishes delivery, because delivery is where they are comfortable and where they get praised. A salesperson founder wins work the business cannot deliver and then blames the team. Both are working hard on the part that is already strong.
The business grows to the size of its weakest part and stops. It does not announce this. It just plateaus, and the owner responds by doing more of what they are good at, which is precisely the thing that will not move it.
The parts also fail in characteristic ways, and the symptom rarely appears in the part that is broken. A market problem shows up as a sales problem, because good salespeople cannot sell to people who do not have the problem you solve. A money problem shows up as a delivery problem, because underpricing forces you to rush jobs. A leadership problem shows up everywhere at once, as inconsistency: standards that apply on some days, decisions that get revisited, priorities that change with whoever spoke to the owner most recently.
Leadership sits underneath the other five for that reason. It is not one of the links in the chain, it is what decides whether anybody ever gets round to fixing the narrow one. Plenty of businesses know exactly which of the six is weakest and have known for three years. That is not an analysis failure.
A worked example
Illustrative, but this shape turns up constantly. A design-and-build firm turning over £600,000 with an excellent reputation. The owner scores the six with his number two, separately, out of ten. Market 7, marketing 3, sales 6, delivery 9, money 4, leadership 5.
Ninety per cent of work arrives from one architect who has referred them for eleven years. That is not a marketing strategy, it is a single supplier of everything, and it will end the week that architect retires.
Look at what each point of improvement costs. Taking delivery from 9 to 10 means better kit, more training and more supervision, and it changes nothing about revenue because delivery is not what is limiting the business. Taking marketing from 3 to 6, which means a proper website, a named source of enquiries beyond the architect, and someone accountable for it, changes what the business is capable of.
Money at 4 is the second finding and the cheaper one. No job costing, so nobody knows which work makes money. Pricing set by what feels acceptable rather than what the numbers require. Fixing that does not need a single new customer, and on a £600,000 turnover, two points of margin is £12,000 of profit for the cost of the discipline to measure it.
The plan that comes out of this is unglamorous: marketing and money for twelve months, and deliberately nothing on delivery, which is the part the owner most enjoys and most wants to improve.
It is worth being clear about what that costs him personally. Twelve months of working on the two parts he is worst at, in the areas where he has least confidence and no natural interest, while the part he is proud of gets no attention at all. That is why so few owners do it, and why the ones who do tend to pull away from competitors who are technically just as good.
The mistake most owners make
They buy tactics before they have fundamentals. New branding on a business with no defined market. A CRM for a sales process that does not exist. Automation of a delivery process nobody has written down. Each purchase feels like progress and none of them fix the missing part.
They also confuse being busy in a part with that part working. Posting on social media is activity in marketing. It only counts if enquiries arrive and you can trace them. Quoting constantly is activity in sales. It only counts if the conversion rate is one you would defend. Ask of every part: what number proves this is working, and can I see it this month?
The other one worth naming: we do not need sales or marketing, we are referral-based. Referrals are a channel, and if it is your only one, you have a business with a single point of failure that you do not control and cannot switch on when work is thin.
How to apply it this week
- Score the six out of 10, alone, in ten minutes. Market, marketing, sales, delivery, money, leadership. First instinct is usually right.
- Get your number two to score them separately. Where you disagree by three or more points is more useful than where either of you is right.
- Take the lowest score, not the most interesting one. If two are level, take the one furthest upstream, since a weak market makes everything downstream harder.
- Define the single number that proves it moved. Enquiries a month. Gross margin. Quotes converted. One number, checked monthly.
- Put two hours a week on it for a quarter. Blocked in the diary. Two hours a week for thirteen weeks will move a 3 to a 5 in almost any business.
- Check nothing you are currently doing is adding to your strongest part. If it is, stop it. That effort is not producing anything you can bank.
The questions to sit with
- Out of 10, which of the six is your weakest, and how long have you known it was the weakest?
- Which part do you spend most of your own week in, and is it the one that needs you?
- If your single biggest source of work disappeared on Monday, what is the plan?
- What have you bought or built in the last two years that was a tactic sitting on top of a missing fundamental?
This is the map behind the 6 Steps. It is deliberately simple, because the value is not in the sophistication of the model. It is in accepting that the part you least want to work on is usually the one holding the whole thing at its current size.
