The turning of the calendar from one year to another is traditionally a time to wipe the slate clean and start new. We make resolutions, we attempt to remake ourselves, it’s a new year — anything is possible.
So as we head into the holidays where many of us will spend some time away from our businesses, let’s take this chance to clear a few things up.
When we identify roadblocks, eliminate confusion and establish priorities, it releases new energy and engagement for you and your team. Clarity is one of the leader’s most powerful allies. So let’s make clear a few basics.
1. Get clear about what you do.
What does your company do? No, really. If you had to fill in the blanks of this statement, what would you write? “We do ______ for ________ so that they _____?” Are you really clear about the value your customers derive from working with you? Are you specific and concrete about how you achieve that value? Are you putting that message clearly out into the world? If not, it’s time to clear that up.
Getting genuinely clear about what you do helps you to focus on only taking on the work that produces the most value for your clients. It’s okay to say no to work that’s not a good fit for you. If you don’t gel with the assignment, your client isn’t going to gel with your end product.
2. Get clear about who derives the most value from your work.
In the sentence above where you filled in the blanks, how did you answer the second blank? How specific were you? Do you really know your ideal customer well? One guru of service firm growth says if your niche has more than 200 target customers in it, then you don’t have a niche. Have you narrowed your target audience to that extent? Can you and your team see the ideal client coming from a mile away? Ask yourself: How is what you offer and what your clients experience significantly different from what they would get with your competitors?
Being clear about who you are selling to makes your marketing much easier and more effective.
3. Get clear about how you make money.
Most service firms are actually temp agencies (if you bill by the hour, you probably are, too). They make a margin on keeping their employees “billable” and charge clients more than the team members cost. The best indicator of profitability is either staff utilization percentage or total billable hours.
If you work on project fees or retainers, your profit comes from delivering a project at a cost less than the value the client is willing to pay for it. So, tracking the Gross Margin (or Contribution Margin) for each project is key.
Do you know how to calculate these important numbers and track them as well? Does everyone in your firm understand the importance of those numbers? And who is responsible when those numbers are low? Who celebrates the success when they are high?
Getting clear about how you make money and aligning your measurements and accountabilities to those numbers enables you to make more in the long run. The areas you measure are the ones you can improve. Who knows… maybe down the road you’ll even want to raise your prices.
3. Get clear about your role
What’s your job? What should people be asking you about (if it’s not getting done)?
I know. You are tempted to say, “Everything?!?” But being in charge of everything means you are, then, accountable for nothing. If you are doing a good job delegating and holding your team accountable, there are things they get asked about…right? So, is your job whatever is left over? Do you pick up the jobs no one else wants?
That doesn’t sound right. I think your role is to do the work that no one else can do.
Every business owner’s job is different, but there are some things that no one else can own. You need to be the leader; to set the direction, to allocate scarce resources, to have the difficult conversations. There is no one else who is going to do those things.
When you’re clear about your role you can free yourself from doing those things that aren’t your work. When you start doing your work your team will notice…and respond.
Clarity is a business tool. And without it, your job as a leader becomes much more difficult. Your team sees a morass of opportunities and challenges with no clear priorities or path ahead. They get confused. They hesitate. Or worse–they each run off in their own direction. Your job is to provide the clarity, the path through the morass. In the New Year, take a moment to rediscover your path. Find your clarity and share it fearlessly as you enter another year in business.