What Should YOUR Next Step Be? (Transcript)
How can you possibly decide which advice to take or what’s your best next step?
If you’ve ever struggled with this, I can relate. And… I can also help.
Turns out, there’s a framework for exactly this. A simple, 2-step process for figuring exactly which aspect of your business you should work on next in order to reach the next level of growth… and I’m going to walk you through everything in this episode.
This is a transcript of Work Less, Earn More, Episode 61. Listen to the episode here.
Gillian Perkins:
We became entrepreneurs because, more than anything, we want freedom. We want to be in control of our own schedule, income, and life. But unfortunately, that isn't always the reality of being a business owner. I'm Gillian Perkins, and I'm on a mission to take back entrepreneurship for what it's supposed to be. In every episode, I'll share with you how to get the most out of every hour you work, so that you can work less and earn more. Let's get to it.
Hey there everyone, and welcome to this week's live session. If you are wondering what your next step should be to grow your business, then today's episode is for you. I'm going to teach you how to use the chain link framework so that you can figure out exactly what the weakest area of your business is, and decide what your next step should be to be able to use your time and use your resources as efficiently as possible, and make the biggest progress, experience the biggest growth, experience the biggest results with your business.
This is going to be a very interactive episode. If you can, I would highly recommend that you pull out a pencil and paper, or open up a Word document, or even a text document on your phone, and you take some notes because you'll get the most out of it that way. But, at the same time, if you are taking a walk right now, or driving in your car, or something like that, that's all right, you can still listen and follow along that way and complete this exercise later on.
What is the chain link framework? Well, it is a way of thinking about your business as a chain. A chain with links is essentially a very simple type of machine. I'm going to read you, here, the definition of a machine. The first definition is “an apparatus consisting of interrelated parts with separate function, used in the performance of some kind of work.” Okay, and that very aptly describes your business, doesn't it? Your business has all these different interrelated parts with separate functions, and they work together to accomplish some type of work. The type of work that your business does is it provides some sort of a result for your customers, and it produces financial output for you. The second definition of a machine is “a mechanical apparatus or contrivance, a mechanism.” That's also what your business is, it's a mechanism that accomplishes that work that I just mentioned a moment ago.
So your business is this machine, but here's the thing about a machine. If one part is broken, or one part is weak, it weakens the entire machine because the machine is made of these different interrelated parts. When we think about a chain, a chain is a very simple type of machine so it's a very easy way to imagine this analogy, and understand how a weak link can weaken your entire business.
When you think about a chain, the typical type of work that a chain does is it lifts weight or it pulls weight. You can have a chain with some incredibly beefy links on it, that could pull a lot of weight. But, if even one link is very weak, it's made of thin metal, it's made of wire or something like that, then it is going to weaken the entire apparatus. And now, the entire chain can only pull a much smaller amount of weight.
The exact same thing is true in your business. Your business has these different interrelated parts, these different parts that need to work together in order to move the weight that you're trying to move with your business, in order to create those results for your customers, in order to make that many. If one part of your business is weak, it is going to hold the whole operation down. That's what the chain link formula describes, it describes your business as a chain so that we can examine these different links, what they are, how they're working together, and we can assess which one is really the weakest, which one might be holding you back.
All right, I'm going to go ahead, for those of you who are watching the video, I'm going to be sharing my screen with you. You should be able to see my screen now. We are going to work on this together. Like I said, you can just follow along with the audio if that's what you have available right now. However, if you are listening to the audio version of the podcast later on, if you'd like to get access to future video versions of the podcast, then be sure to head to startupsociety.com and learn how you can become a Startup Society member, because that is where we live stream the video version of this podcast.
The Link’s
All right, here on my document we are going to start with the first link of the chain. The first link of the chain is going to be your product. This is what your business sells. Your business has to sell some sort of product in order to make some sort of profit. It also has to sell some sort of product in order to create a result for your customers. It could be a service, it could be a digital product, it could be videos online, it could be advertising space for advertisers, there's so many options. But, your business is going to have a product. This is essentially the first link of your chain.
The next link is visibility. Visibility describes how well known your business is, at least amongst your target customers. Do people know that your business exists? If they don't know it exists, they can't buy your product, no matter how amazing your product is. This is also a link that needs to be strong.
The third link is sales. You need to have a sales system in your business to connect your product with your customers, to tell your customers about it, and help them understand why they would want your product, what they could get out of it. And if your sales systems are strong, then you make the sales. If your sales systems are weak, then what is going to happen is you can have an amazing product, but no one will be purchasing it because they won't understand why they need to purchase it.
The fourth link is your team, or HR, human resources. These are the people who help you run your company, who help you do the work, who help the other parts of the company, these other interrelated parts of the machine, to do their functions. They're the engine that's driving the whole machine.
Next up for number five, we have contracts. Contracts, or your legal side of your business, these are the things that give you legal protection. When you're first starting out, this part isn't always that important, but as your company grows you're exposed to more and more legal risks. And, if you have a weak legal side of your business, if you have weak contracts, then what can happen is your business can experience legal troubles. You could be sued, you could have all sorts of liabilities that, if left unchecked, can cause big problems. We need to make sure that this is also a strong component of your business.
And then, the sixth and final piece of this puzzle, the final link in your chain, is your financial management. And, we need to have financial management in order for your company to be strong because you're going to start making money, and you're going to have expenses. And, if your expenses are too large, or your income is too low, then you'll be losing money every month and your business will eventually have to die, because it will not be able to stay alive if it's being starved for cash in that way.
Now you can see here, these six different links of the chain. These are six essential components for your business to be strong, to be able to do that work, lift that weight of earning you money, getting results for your customers.
The bigger discussion we're having here is really about what should your next step be. What do you need to do in order to take your business to the next level? What do you need to do to increase your profits or serve more customers? In order to answer that question … I'm sure if you're an entrepreneur you're probably an idea person. You probably have a lot of different ideas about different things that you can work on, different things that you could spend your time on, and most likely one of your toughest challenges is just deciding which of those options you should pursue. However, this framework is going to be useful, even if your problem is entirely the opposite in that you're lacking ideas.
What we're going to do is we are going to score your business on each of these six different links of the chain. Whichever one is the weakest link is going to be the area of your business that you need to strengthen in order to be able to grow your business and take it to the next level. That's because whichever link is the weakest is the link that is holding you back. It's the link that is going to break if you try to push your company beyond that point. It's the link that is restraining you from being able to pull even more weight with your business. Let's give this a try, and see how it works.
Product
Starting with your product, how good is your product? We can give this product a score somewhere between one and 10. Maybe it is a one, maybe it doesn't even exist yet. Maybe it's a 10, maybe it's the most wonderful product, that is the product that can change people's life in the most dramatic way, and is a very high quality. You're going to be giving your product some kind of score. For the sake of this example, let's say it's a six. Your product is pretty good, but it could stand to have some improvement. Now, let's also talk though, before we move on from this, about how your product being weak could hold you back. Let's say your product was just a three. It was all right, but it has a lot of issues, not very good quality, and maybe it doesn't solve a really big problem.
Now, even if the rest of your company's really strong, even if you have a ton of visibility, everyone on the planet knows you exist, you have an amazing sales team that knows how to just really convince people to buy this thing, you have a strong team, good people working for you, you are legally ready to go, completely set. And, you have a genius managing your finances. If your product is very weak, if it's only a three, eventually that is going to hold you back from being able to grow any further because word is going to get out that your product is not very good, that people don't like your product. You're going to be getting tons of refunds, unhappy customers, bad reviews. Even if your sales team is amazing and the rest of your company is as well, you're really going to struggle to grow beyond a certain point.
That is why we need to work on our product. In my example here, I've given it a score of six. We're going to continue to work through the other five steps of this chain link. And then, at the end here, we'll talk about then what to do with this information once you've scored yourself.
Visibility
The next one is visibility. How visible are you right now? With a one being nobody knows that your business exists, that your product exists, you're running your business out of your mom's basement but you haven't even told your mom about your product, and a 10, on the other hand, is literally everyone on the planets knows you, and has a favorable impression of your product. For the sake of this example, let's give it a four. We're going to say that you have a score of four for your visibility. Now, if you have lacking visibility, if people don't know you exist, then this will really hold you back because it means that people can't buy your product.
I've said it so many times before, but people can't buy your product if they don't know it exists. No matter how good it is, no matter how much they would love it if they heard about it, they don't know it exists, they can't buy it. If you are lacking in your visibility, it's going to hold your entire company. Again, you could have an amazing product, you could have the best sales team that is very persuasive, a great team, you could be legally set and ready to go, you could have a genius managing your finances. But, if your visibility is not there, then people can't buy your product and you're not going to make any money or help any customers.
The episode you're currently listening to was originally offered as a live stream inside Startup Society, our training program for digital entrepreneurs. Each week in the program, Gillian teaches a live workshop for Startup members, including a teaching segment like what you're listening to right now, a tutorial segment that demonstrates how to take action on the lesson, and an open Q&A period where Gillian and guest experts work directly with each member. Members also get access to Startup Society's library of business training courses, monthly coworking sessions and other events, and our private community forum.
If you're looking for affordable business training, mentorship, and accountability, then visit startupsociety.com/podcast to learn more about the program, and apply to join. Now, here's Gillian with the rest of today's episode.
Sales
Okay, next up we've got sales, that's the third link of the chain. Sales, this is the process that you use to persuade people to buy your product. It's how you communicate with prospective customers about what your product does and how it can help them, and ultimately get them to purchase it.
Now, your sales could be a process that you have set up online, an automated process. It could be a sales team, or it could be more of a physical process. But, what is your sales system? Now, how you can evaluate the ranking for your sales system, how good your sales system is, is by what percentage of your leads are you converting into paying customers. If 100% of the people who are interested in your product, and who visit your website or walk into your business, if 100% of them buy, then you are a 10 out of 10. On the other hand, if 0% of people are buying even after they learn about your product, then you would be a one. What is your sales ranking right now? How good is your sales system?
Now, I do want to clarify here that a four would not correlate to a 40% conversion rate, because a 40% conversion rate would be incredibly high. You should definitely give yourself a nine out of 10 if you are converting 40% of your customers. Just to give you a ballpark range, to give you a little bit of context, typically 1% conversion rate is, on the average, low side. And then, a three to five percent conversion rate would be pretty average. Anything over 10 would be considered very, very good. If you're over 10, give yourself a nine for sure. If you are converting around that two to five percent range, then you'll want to give yourself a six, seven. And, if you're converting less than 1%, then you'll want to give yourself a one, or two, or three. You can evaluate yourself. For the sake of this example, I'm going to say that this company has a sales score of seven.
Team
Let's move on to the fourth link of the chain, and that is your team or human resources. Now, your team is the group of people that work for your company. They could be contractors, they could be employees, but they're the people who are really running the machine, they're the engine to the machine. They're the people who will be running your sales process, who will be helping you get more visible, who will be creating your product, creating those contracts, managing the finances. How strong is your team? Is your team a one? This could be the case if it's just you, you don't have any help at all, you're completely out of time. And, you're not very good at what you do. On the other hand, you would be a 10 if you had a group that is the perfect size, and is very efficiently and effectively getting everything done that they need to get done. For the sake of this example, I'll say that this company here has a team that gets a score of five.
Let's just talk real quick about what would happen if you had a team that's lacking. If your team was lacking, you didn't have enough people, or your people were not doing good enough quality work, then that would mean that every other part of your business would suffer because they would not be effectively utilizing the machine. They wouldn't be doing a good job making the product, and that would reduce the quality of the product. They wouldn't be doing a good job helping you get visible, so people wouldn't know that you existed, and so on. I think you can see how that affects every part of the process.
Contracts
All right, and then we've got contracts as the fifth link of the chain. Contracts, or legal, this is how legally protected and secure your business is. Obviously, if you have all of your legal contracts very tight, and you have all the contracts you need, that would be a 10. On the other hand, if you don't have any legal protection at all, and you haven't taken any of these precautions, then you'd be down at a one. For the sake of this example, let's say that this company is at a three.
As for how this could negatively affect your company, as I mentioned earlier on, when you're first starting out you might not notice any ramifications at all for lack of legal protection. But, as your company grows more and more, you will experience greater and greater liabilities due to, at least, the increased exposure. When more people know about your business, there are more potential threats to your business, more people who might want to take advantage of you, or cause harm to your business. Because of this, you need to make sure that you have this legal protection, or else you might end up being sued, you might experience large penalties, or fees, or fines. People might get hurt, also. So we want to make sure that everyone is protected and secure, so that the company doesn't experience a big financial drain or other significant problem.
Finances
All right, the sixth chain of the chain link framework is your financial management. This is how well you're managing the money that is coming in and going out of your business. You might be doing this yourself, or you might have some help from an accountant or a bookkeeper, or you might have a dedicated CFO, chief financial officer, in your business that does this for you. Most people who are listening to the podcast probably do most of their financial management themselves. So the question you can ask yourself about this is how knowledgeable, and how well are you applying the knowledge you have of managing your finances?
If you don't anything about bookkeeping at all, you aren't even saving your receipts, you are just adding the money that you make into your personal bank account, or maybe just into a box of cash that you keep, then I'd give you a one for financial management. On the other hand, if you have detailed, perfect books, and you have a great financial advisor, and you are very skilled at managing your own finances, you thoroughly understand how accounting works, and you are applying accounting principles to your business, then you could give yourself a 10. Where do you fall on this spectrum? For the sake of the example, I'm going to say that this company is at a seven.
Okay, now you've compiled all of these numbers, you have scored yourself on each of these different links of the chain to determine which parts of your business are stronger, which parts are weaker. Now, as you think about all the different things that you could do to grow your business, all the different tasks you could work on, all the different projects you could take on, you're going to need to think about which category which of those tasks and projects falls into. You've got this task on your list that says, “Film a YouTube video.” Okay, so which category does that fall into? Well, that would be visibility, most likely. It also could fit into the sales category, but most of the time YouTube is used for visibility. Another project you're considering is creating a new online course. Okay, so that would be product. Another task on your list might be to hire a new team member, so that would obviously fall into the team/HR.
How They All Work Together
These are all different things that you could spend your time working on, different things that you could devote resources, including your time, but also things like your money and your energy, to doing. There is this concept that, whenever we choose to do one thing, we are choosing to not do something else. We only have so many resources, and we are going to be devoting those resources to one project or another, to one endeavor or another. We have to make that trade off, we have to decide how we're going to allocate the resources we have.
Now, you might have all the time to do everything on your to-do list right now, and if so, that's awesome. It's a great place to be. But, even in that case, there are many other things you could be doing, that could be on your to-do list, that you simply haven't considered doing, or have decided against doing. You've already made some of these qualitative decisions. But, let's say that you have a few more things on your to-do list than you have the time to do, or at least on your potential project idea list. You need to organize them based on this, and think about which of these chain links it will be helping. And then, we need to focus on whichever chain link is the weakest.
Right now, in this example right here, it's the contracts. Now as I mentioned, contracts become more important as your company grows, so this could be a bit relative to your company's size. If you're just starting out and you're already at a three, that might be sufficient for your level of business, so that's something you should be aware of. But, if your contracts are something that you are aware need to be strengthened, that you're behind where you should be for your size and your growth with your company, then that is what you'll need to work on next.
In this example with the contracts at a three, if this was a brand new company that was just starting out, that might be sufficient. In that case, you'd move onto the next piece of the puzzle, the next chain link, the lowest scoring chain link, which would be your visibility. Which we scored, for this company, at a four. That is their next weakest chain link. What that means is that their product is better than people know, that their sales team is doing a better job of selling their product than there are prospects to sell it to. That their team is doing a fine job, and isn't the thing that's holding them back, that their finances are being quite well managed, not holding them back.
What is holding them back, in this case, would be visibility. That means that each week, as in this entrepreneur's case, each week as this entrepreneur is planning out their tasks and their projects, each month, each quarter, as they are deciding what they are going to focus on, as long as this scoring remains the case, they need to devote the majority of their resources to visibility, so that they can increase the score and this link of the chain can stop holding them back.
Thanks for listening to this episode of Work Less, Earn More. Before we wrap this up, listen in to this question a Startup Society member asked during the live stream.
All right, I hope that you found this helpful and that this made sense to you. And, that you see how using this framework can help you to understand exactly what you need to focus on in your business, where your time will be best spent, where your resources be best allocated.
First question comes from Vera Ortiz. And Vera said, “My question is when you are five videos and 55 subscribers into your YouTube channel, and able to make one video every two weeks, should I hurry creating a lead magnet to start collecting emails? Or, create affiliate marketing videos which would take longer to do?”
Vera, you can really effectively use this framework to figure out the answer to your question. Where are you weak right now? It sounds to me like right now you are weak in the visibility area, since you only have attracted 55 subscribers so far. We want to, first of all, focus on the videos themselves because that is what can really help to increase your visibility. If you were going to double down on your video quality, and if possible your video frequency, so that you can get more visibility on YouTube, start attracting more people to your business.
However beyond that, between the two options you suggested, creating a lead magnet or creating affiliate marketing videos, which you even noted would take longer to do, I would definitely recommend that lead magnet first. Because, well for several reasons. First of all, it's going to be easier for you to do. Second, by doing that early on, you are going to be able to get the time benefit of it. What I mean by that is as people start to find you, you will be able to capture those leads. If you create this form later on, you'll have missed out on all those leads you got in the past. Third, people will subscribe to your newsletter, will opt in for your lead magnet early on. But, if you try to do the affiliate marketing, you're going to be making a very, very small amount of money and it will just take a very long time for that to grow.
What you need to focus on is creating that lead magnet, and then creating the best videos you can, and as frequently as you can, so that you can start attracting those leads. Because later, you'll be able to sell those leads products that will have a much bigger impact on their lives, and will earn you a whole lot more money than just trying to make a quick buck with affiliate marketing right now.
All right, well that is everything for today. Thank you so much for joining me for today's episode. If you found this episode helpful and you would like to participate live in future recording sessions, then be sure to visit startupsociety.com/podcast to learn more about all the benefits of membership and apply to join.
Finally, it would be a big help if you left Work Less, Earn More a review on Apple Podcasts. Not only will this help us reach more people, but it's also going to give you the chance to potentially win a 12-month membership to Startup Society. All you need to do to enter is post your review on Apple Podcasts, then email a screenshot to contact@gillianperkins.com. Thanks again so much for listening, now let's wrap this up. I'm Gillian Perkins, and until next week, stay focused and take action.
