Build a Strong Profitable Company
Strength From Unexpected Sources
What are strong profitable companies built from? It’s a good question.
Here is a curious fact: trees get their substance and strength – their trunks, branches, and roots – directly from the air. Not from the ground as most people expect. It’s actually the air trees breath that makes them strong.
CO² – O² = Carbon
Trees take in carbon dioxide – CO²
they use energy from the sun to pull the – CO² – apart
they keep the carbon molecules – C
and expel oxygen – O² – back into the atmosphere
According to Richard Feynman one of the foremost scientists of the twentieth century: “trees absorb carbon and water from the air and that’s how they get the stuff they are made of.”
How to build a strong profitable company also comes as a bit of a surprise.
Strong Profitable Companies
Get the Stuff They’re Made of by
Solving the Five Universal Problems
When you look at strong profitable companies you can’t readily see the problems they solved and it’s even more challenging to see the processes they used to solve the problems, or even the curiosity that fueled their venture.
If you know what to look for you can sometimes ‘see’ the solutions they’ve implemented. For most of us it’s much easier to see the real-world results they’ve achieved and the assets they own. Just like it’s easier for most people to see the tree than it is for them to wrap their mind around where it came from – out of thin air.
That’s the nature of building a strong profitable company. Just like trees are built from what appears to be nothing, the raw materials that companies are built from are equally hard to see – problem solving and profits.
Some may argue that wealthy investors makes a company, but that is temporary strength. Profitability is what’s important. Even if there was an injection of investment capital at the beginning successful companies have already paid it back or they are well on their way to doing just that – and more. In successful companies the original capital is returned to the investors.
“Small businesses don’t fail for lack of capital.
They fail for lack of brains.
They fail for lack of effort.”
Now that sounds a bit harsh especially if your company is struggling and you’re not sure how to fix it. There simply isn’t much comfort in those words. But, then he goes on to deliver this insight – and it’s well worth discussing.
“Most people just aren’t willing to put in the time to work smart.
They go for it in a lot of cases, but they don’t recognize how much work is involved.”
No doubt about it. It takes time to work smarter, but it also takes an understanding of the challenge. In my humble opinion most people are more than willing to put in the time, but they can’t clearly see the steps that will connect them to their ultimate result. The smart move is not always obvious. It may be to Mark Cuban who has built successful companies before. But the average person trying to build a strong profitable company needs something to focus on. They need help and direction to unlock the full potential of their business. That’s why we created the concept of the 5UPs.
There is a lot of work involved. It is never-ending. As the business evolves the solutions the 5UPs evolve. A description of the 5UPs is just below; you don’t need to address them in any particular order. Pick the one that seems to be the most appropriate at the time and remember that getting the right help at the right time is far preferable to endlessly struggling with symptoms.
Strengthening the solutions the 5UPs problem are the pathway to success. If any one of them lags behind it will stall the growth of the company. As a business-person they always need to be up on your radar.
The Five Universal Problems – 5 UPs
1 – Deliver Value to a Profitable Business Opportunity
The first problem that needs to be solved is finding a profitable business opportunity. There are many to be found even in competitive industries. For example there are plumbers, electricians, mechanics, and truckers that built very profitable companies in their industries.
There are also opportunities in brand new ideas like we are seeing in technology companies.
The main idea is that for a profitable business opportunity there needs to be a large enough target market that’s willing to pay enough money for the value it delivers. The business expenses need to be covered with additional left over for profits. Finding it may mean that you have to pivot or you may have to up your ‘game’ and raise your standards to get into that space.
Once you see it and you’ve dialed your company in on it you’ve solved the first business problem.
2 – Marketing and Finding the Right Customers
The second business problem is marketing to the people who are willing to pay and doing business with them. Marketing is a contact sport and every company needs to have a solid marketing plan that is in action.
Companies need to compete effectively to get their share of the market. When you’re accomplishing that you’ve solved the second business problem.
3 – Organizing all the ‘Moving Parts’ and Details
There are a lot of moving parts and details in any company. The third business problem to solve is how to get everything done and everything done well. Even if you have a profitable business opportunity customers won’t willingly pay for your inefficiency. It just opens the door to new competition.
As the business grows this problem gets more challenging to solve well. It is important to have a sound strategy.
You can’t do it all. Solving this problem involves developing accountability and responsibility in your staff. It’s also about effective delegation. For more on these see these articles Accountability and Time.
4 – Managing and Growing Profitability
The fourth problem is managing and growing your profitability. Just because the company is focused on a profitable business opportunity and everything is being done well doesn’t mean that you can take your eye off the ball.
A strong company is fluent with their numbers and monitors them to ensure the company is tracking in the right direction.
When you forecast and get variance reports that are in line – plus you understand your financial statements and your management team uses key performance indicators then you’ve likely solved this problem.
5 – Momentum
The fifth problems is building and maintaining momentum. This also included problem solving because unresolved problems are often the root cause stalled or failing business.
The positive side of momentum comes from effective planning.
Summary – The Building Blocks of Strong Companies
Business problems aren’t negative. They are just puzzles that need solutions. Everyone has the same basic problems. When the 5UPs are addressed it leads to profits and profits provide the physical building blocks of strong companies. Ultimately that’s the game: creating a solid track record of profits.
The 5UPs to build a strong profitable company: find a profitable business opportunity, create a marketing plan that attracts the right customers, develop a workplan that covers all the moving parts including system details, then build financial information systems and involve your key people in managing profitability, next include solid planning and problem solving to maintain the company’s momentum.
With a track record of solving problems and generating profits you’ll have a company that stands tall and proud like the tallest tree in the landscape. Don’t make it anymore complicated than it has to be. Not every tree is perfectly shaped. Some adapt to strong ocean breezes but they still stand strong and tall. Scroll up and down through the 5 problems and then start strengthening your solutions to each one.
Every company needs to solve them the 5 UPs. Larger companies need stronger more robust solutions to the problems. As the business grows the problems remain the same – it’s the solutions that need to adapt.
Many people struggle in business when they really only solve, or attempt to solve, 3 or 4 of the problems. This will limit the size of the company and make it painful for the customers and employees. A company isn’t strong and profitable until all are addressed.
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