There are basic fundamental principles about business that you need to understand. Mastering your business requires mastering the basics. It will drive your business and escalate your success. There will be changes and shifts in market dynamics, legislation, preferences and other factors that influence a business. If you build a strong foundation for a business, we can easily respond to the changes that enable us to handles the downslopes and take advantages of new opportunities.

Business Mastery Roadmap Framework

When it comes to business, five basic things must be figured out.

1. Marketing: Every business needs marketing and sales process. This is the process by which you will reach out to your customers.

For marketing, these are required:

• Customers: Who are your customers and what do they really want? We need to identify their habits, demographics, location and every other specific detail.
• Communication: Create messages that allow you to communicate with your target market from a logical as well as an emotional stand point.
• Connection: Understand how you will connect with your market. It is necessary to connect with them at a visceral emotional level by understanding every little detail about them.

2. Mechanics: Mechanics is about the business and how you run it? It is about the roles, rules and reporting around your business.

• Roles: When you start a business as a solopreneur, you play all the roles but after a certain point—even if you don’t want to—you will have to let go of control and transfer your roles and it might be difficult. It is very important to know how to delegate the right roles to the right person.
• Rules: There are several rules for play in a business. You will have to understand and know all the legal rules and they are different everywhere.
• Reporting: These reports tell how good the business is doing, your accounts receivable and your profit and loss reporting.

3. Money: If we do business correctly, money will just follow. It deals with:

• The Flows: How cash is flowing in and out from your business.
• The Financial Statements: Understanding the financial end of a business. Learn financial terms, ratios and how to read financial statements like the balance sheet, profit and loss statement, and the cash flow statement.
• The Finale: Know your end game. Do you want to sell, pass on, continue to run or let go of your business at some point?

4. Mindset: Mindset is all about- Why we do business?

It is about three things:

• Identity: Who are we and where do we stand in the marketplace?
• Influence: Understanding the dynamics between customers, team members, vendors and other people.
• Impact: The higher purpose of your business. Having impact with your product and services, creating a value that is greater than just goods and services, and creating something mission driven for the community.

5. Model: This is the business model itself. It is how you create, capture, campaign and cultivate value. Value is created by exchanging products and services. Create value for your customers, team, vendors, staff, management, executives, investors and for yourself.

Value is driven by Product, Purpose, Passion & Promise

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— Begin Transcript —

Hey there, I’m Mel Abraham and welcome to this episode of The Entrepreneur’s Solution and in a moment we’re going to take the time to talk about how do you master the basics of your business.

I know some people look at it and go, “Oh, the basics!”

What’s the new thing? What’s the new fad? What’s the new thing on the street that’s going to drive the business home?

Is it Pinterest? Is it Facebook? Is it some other newfangled gadget?

And the fact that matters is that business basics never go away, and that will drive your business and escalate your business when you master it. When you look at athletes, they master the basics. When they master the basics, that’s what makes them star athletes.

So, it’s the same thing here.  So, we’re going to be right back after this brief introduction and we’re going to talk about my framework on mastering the business basics, so we can accelerate your growth in your business.

Stay tuned.

Hi, welcome back, this is Mel Abraham, the author of The Entrepreneur’s Solution and the founder of Business Breakthrough Academy, where we teach you how to design a business and create a life: A life of financial freedom and peace of mind.

And welcome to this episode of The Entrepreneur’s Solution where we’re going to talk about my framework, the framework that I’ve used—that I’ve grown to use—that I’ve learned and it’s evolved over the years, How to Look at Business.

And in the last episode we did talk about this concept of “Above the Line” and “Below the Line”. We talked about the fact that we really need manage two elements:

1. Minimizing the downside risks and
2. Maximizing the upside potential and opportunity

And that’s really done through making sure that we got a good business model. It’s the mechanics of business; it’s “The How” and “The What” we do in business. We talked about the above the line stuff. This is the stuff that really dials it in. This is the stuff about creating your legacy and creating a lifestyle that you want to have; that’s created through the entrepreneur, the entrepreneur endeavor, the business that you have. It’s what’s called meaning.

And it’s this umbrella of meaning that we talked about in the last session, that allows you to make the right decisions in “The How” and “The What” in the below the line. So, we’re going to talk about my model for doing that, assuming that we kind of, looked at the different things as far as its meaning goes.

But, you know, people will look at business and push it away; so its complex, it’s risky, it’s problematic, it’s stressful and yes it can be all of those things, but it doesn’t need to be.

And there are basic fundamental principles about business that when you understand them, when you employ them, when you do them that there are in fact laws that will come to pass. That allow you to really-really build the business or build the business the way that you want.

Nothing is assured, when you talk about business, especially because:

• There’s market dynamics.
• There are shifts in preferences.
• There are shifts in demographics.
• There are shifts in legislation.
• There are shifts in tax law.
• There are shifts in economics that are completely out of your control.

And we need to be able to respond to them. But, if we built the foundation of business on a strong set of pillars, then we’re going to do all right. We should be able to navigate the downslopes and really take advantage of the upswings in business.

So, really when it comes down to business there are only five things. Five things that need to be really figured out and dialed in to make sure that your business is running effectively.

And what these are is:

1. Marketing: Clearly we need to do marketing with the business.
2. Mechanics: It is about the business. How do you run the business? We’ll talk a little bit about these in more detail.
3. The Money part of business: Clearly, we got that money coming in, so what’s the money part of business.
4. The Mindset part of the business and
5. The Model: The business model itself.

And those are the five, what I call the five ends that you need to master in business: Marketing, Mechanics, Money, Mindset and the Model. When those are dialed in and you’ve got those dialed in, this is where you really start to accelerate your growth and scale your business.

So, here’s the thing that I’m going to go through each of these. I’m not going to be able to go into as much depth as I typically go into in my multi-day trainings. But I want to go in and identify:

• What they are?
• What are the things that you need to focus in on?

And give you some bases from which to evaluate:

• What you’re doing?  If you’re in business now, how well you’re doing it.
• If you’re not in business, then how you’re going to define it because that’s the real key with doing this.

And I’m going to give you a way to score yourself at the end of the session and a sheet that you will be able to download to do the scoring to figure out where you are, where you need to focus your energy to build this.

A. So, let’s just talk about marketing for a moment.

Every business needs marketing. When I talk about marketing, I mean the marketing and sales process. Actually, what I think about marketing is: It is marketing and a connection process because I believe in what I call connection marketing. In today’s environment, in today’s world, that’s what people are hungry for, that’s what people are looking for.

Marketing is the process in which you will reach out to your customers, reach out to the people that you can serve with your products and services or the different packages that you have and it’s also the process in which you’ll transfer it to them, you will sell it to them.

So, when I talk about marketing in this context, it’s the marketing and the sales process.

It’s about three things, effectively:

1. Your Customers: Who are your customers?

And you’ll hear this anytime you go into a marketing course or advertising: Who is your customer avatar?

And I know that it may seem, you know “I’ve heard this before, I’ve heard this before”, and the question is, “If you heard it before, do you really understand it?”, “If it’s common knowledge, is it common practice?”

If it’s not common practice it doesn’t matter that it’s common knowledge because the reason that you are hearing it so much, is that it’s important to identify who your customers are.

• Do you really know what your customers want?
• Do you really know who they are?
• Do you know what they do in the mornings when they wake up?
• Do you know?
  • What they eat.
  • What they drink.
  • What they think.
  • Do you know what their pain points are?
  • Do you know where they live?
  • Do you know how they like to access your products or services, the information that you might have?
  • Are they internet savvy?
  • Are they not internet savvy?
  • How much do you know about your customer?

If you look at it and you can’t literally describe your customer and it’s not women ages 35 – 37 that have a bachelor’s degree?

That is too generic, what we are talking about is something that is very specific. That if you described your customer. I literally can get a picture in my mind of:

• What they look like.
• What they do.
• What their preferences are.

And I do that. By being able to define your customers to that kind of degree, to that kind of detail, to that kind of specificity, that’s going to allow you to create messaging in a way that communicates with them which is the next part: Marketing is about customer’s communication and connection.

2. So, the next part of this is: It creates messaging that allows you to communicate with them. Not to communicate with them just from a logical space, in their head, brain-to-brain, but from an emotional space in their body, in their heart, in their soul.

When they look at it, they say, “Ah, this person really gets me. They know who I am. They know what I am about. They’re in my head. They’re understanding my fears.” What I call when we talk about the nine ideals of legacy. What I call understanding their fears, frustrations and fascinations. That, when you communicate the message really drives home the fact that this is for them.

3. And then the last C which is called connection is understanding: How do I connect with them?

How do I connect with them in a world where I think we’ve made the mistake of believing that contacts like texting and email and likes on a page means connection and it doesn’t? It means contacts. Contacts and connections are completely different.

-A connections means that we’ve got an emotional relationship with the person.

We’ve got an emotional relationship with our customers and that emotional relationship with the customer comes from connecting with them at a visceral emotional level:

• By understanding what their fears, their frustrations and their fascinations are.
• By knowing how they live.
• By understanding what they eat.
• By understanding what they think.
• By understanding who’s speaking in their ears and the things that they’re saying.

We can connect with them at a much deeper level. And when you connect with them at a deep level, now you build a relationship with them that is based on loyalty, that’s based on that type of-that level of communication.

So, the marketing piece of this is extremely important. We can talk about marketing tactics. We can talk about, you know, emails, direct mail and display ads and demonstrations. All of those things are marketing, but they’re useless. They are absolutely useless and a waste of money and a time, if you don’t understand:

• Who your customers are,
• How to communicate with them and
• How to connect with them.

So the, first things first is before you start spending any kind of money; before you spend any more money, towards your marketing and your sales process, let’s go back and let’s make sure we understand:

• Who the customers are,
• How to communicate with them and
• How to connect with them as a deep visceral level.

B. The next piece, in my framework is marketing and then mechanics.

-Mechanics about the roles, the rules and the reporting around your business.

Now, many times when we talk about roles, it’s really what roles do you play and when you’re starting out or when you’re a solopreneur you’re playing all the roles.

• You’re the person that’s the creator.
• You’re the person that’s the sales person.
• You’re the person that’s probably the bookkeeper.
• You’re the one that’s doing the collection
• You’re the one that is doing the delivery.

But at some point, those roles are going to shift and the question is What roles should you be playing? What roles do you need in your business?

• Do I need someone that’s a creator?
• Do I need someone that’s an implementer, someone that’s a manager?

And these are going to be based upon strengths that you bring to the table.

For an entrepreneur, the most challenging things for an entrepreneur to do is to let go of control.  Most entrepreneurs that, myself included are control freaks and we need to let go of control:

• To allow the business to grow,
• To allow the business to scale if we’re going to do that properly.

So the question is: What areas do we let go of?

Well, when I say, let go of control; it doesn’t mean that you close your eyes and you never face it again. You’re still going to have responsibility, you’re still going to have accountability, you’re still going to oversee it, you’re still going to keep tabs on it, but it just means that you’re not going to do all of it.

Now, you know, my philosophy is that if it is core to my business, I need to understand how to do it. Then I may delegate it. So, I’ve done everything in my business that everyone else has done and then I pick and choose the things that:

1. I’m good at
2. I need to be really good at

And I’ll build from there and the rest I will delegate out. It’s the same thing with you.

• What role should you be playing?
• Are you playing the right roles?
• Are you in the right seat?
• Are you doing the right things?
• Are you spending a lot of time doing things:
  • That are unproductive.
  • That are not revenue generating activities.
  • That are not value creation activities.
  • That are not customer connection activities.

If you’re not doing those, maybe we need to start re-thinking those roles and how to build the delegation process in place, the accountability process in place to allow you to move beyond that.

Then, there are the rules. These are the rules for play in the game.

• This is about, your tax structuring.
• This is about your entity structuring.
• This is about protecting your assets.
• This is about the rules of how the organization is going to run.
• How the sales process is going to be documented.
• And the accounting systems that are in place.

All of those are the rules of how you play the game and we need to understand those rules. This is a challenge, but this is one where you can bring in outside experts. Bring in the accountants and the attorneys to help you understand the rules for your business.

Now, the rules in each and every state in the US are going to be different. In each and every country in the world are going to be different. So, you need to look at the rules that are specific to where you’re operating and make sure that you don’t run into problem with that.

And then the last piece of this mechanics is reporting. Some point we have to report everything. Whether it’s just you, you need to understand:

• How good the business is doing?
• What needs to be done?
• What reports you need to run?
• Do I want accounts receivable reports?
• Do I need profit and loss reports?

That type of thing. But, even more than that, as the business grows, you’re going to report out to possibly shareholders, other investors, banks, the taxing authorities. You’re going to have to file tax returns, all of those elements are part of the business that I know for creators—it’s like fingernails on a chalk board but they’re necessary.

I can’t tell you how many times I’ve seen entrepreneurs get into business and they forget the reporting requirements, they don’t pay the taxes, they don’t file the tax returns and all of a sudden, they have the IRS on their heels coming after them and shutting their doors and taking their house and yes the IRS can take your house, if you’re not careful.

So, making sure that the reporting requirements are in place, you’re following the rules and you’ve got the roles in place extremely important of the mechanics of your business. So, we’ve got the marketing, we’ve got the mechanics in place.

C. The next piece is this concept of money.

And a lot of time people say, “Shouldn’t money be first?” and actually “No, money isn’t first”. It’s actually, if we look at it properly, it’s the by-product of everything else we do in business.

If we do business correctly, then money will just follow.

But we’ve got to do business correctly. When we talk about money, it’s effectively about three things again:

1. About the flows: Cash flows in and out,
2. The financials: Understanding financial statements and what it means and
3. The finale: What is your end game?

So let’s just talk about flows for a moment, the first ‘F’ in this: It’s about managing your cash flow. Cash flow is the life’s blood of a business and so the real crux of what you’re doing is trying to manage the cash-in and the cash-out. Understanding that without it, it’s like not having any oxygen—the business will die.

So, we’re going to need to understand, what’s driving our cash flow in the sense of product sales, labor costs, rents and overhead, and how we can generate or minimize the cost, and generate and maximize the revenues—the cash flows coming in, collections from the customer, sales to the customer and that type of thing.

But, in order to do that we need to understand the financial end of it. Meaning that, we need to understand the financial terminology, we need to understand that when someone gives us a profit and loss statement:

• What does it mean?
• What do the terms means?
• What does the cost of sales mean?
• What do revenues mean?
• What does days in accounts receivable mean?

All these ratios, return on equity, return on investment that investors and people will throw out:

• What do those mean?
• And how will they help you manage the business?

And so, it’s important for you to really start to understand, “How do I read the set of financial statements?”

Financial statements, there’s really three types of financial statements. There’s the:

• Balance Sheet: Which is just a picture of what I own and what I owe.
• There’s a Profit and Loss Statement: Which is what I spent and where it goes.
• And then there’s the cash flow statement: And that’s the ins and outs of the bank. Really important financial statement, understanding how to read that and understanding what it’s telling.

We’ll go deeper into that stuff in a later episode.

And then the finale piece:

• What do you want your end game?
• Is this the business that you’re trying to build to sell?
• Is this a business that you’re trying to just build and continue to run? That you’re going to pass on to your children, to a partner.
• Or, is this a business that you’re going to run and then at some point, you’re going to get out and let it go away?

And understanding that upfront and it may change over time but at least having an idea upfront will change and shift the decisions that you’re going to make within the business.

So, that’s marketing, mechanics and money.

Now, a lot of people will take their idea and wrap their idea with a marketing, mechanics and money, and they’ll forget these last two pieces.

D. The next piece is really about: Mindset.

Now mindset, we’ve touched on meaning; this mindset is really about why we do business. It’s what establishes the culture in your business. It’s what will create loyalty behind, from your team, from your employees, from your customers, from your vendors and everyone. It’s what really drives the decision and the choices in the business.

And it’s about three things:

• Identity,
• Influence and
• Impact.

Really look at it and say, who are we?, and what are we going to stand for in the marketplace, in the employment marketplace to our employees, to look at businesses such as a Zappos and Tony Hsieh, and how he’s established that business to have a specific identity in the marketplace. And allow people to understand what that identity is in the marketplace and really look at it and say, “We’re here to deliver happiness both to our team, to our customers and all of that”.

And then the next piece is influence. Influence is about understanding the dynamics between people, interacting with people whether it’ your customers or your team members, or your significant others and the people, the vendors and how do we bring influence in there. To influence and to move in the direction and support what we want to do, not from a manipulative standpoint but actually from a place where they’re coming from, a self-actualization that we have the similar set of values and they’re moving towards their values which is fulfilling our values.

And in the last ‘I’ here is ‘Impact’ and impact is all about the higher purpose of having a great impact with your products, your services; beyond just the products and services. This is about creating something that is mission driven, that affects the community. Remember, that I said that businesses are there to support society, create community and live your dreams.

So by the same context, our blessing that comes to us by being entrepreneurs, by having successful businesses we should be making a difference in our society, a difference in our community. So, you look at things like a TOMS shoes, even a Zappos or a Clif Bar for instance gives their employees time off to do community service types of events and allows them to get paid for that.

So, it’s about having a greater impact and creating a culture of that. So, that’s really what mindset is about—it’s the culture, it’s about identity, influence and impact with respect to that.

Then the last ’M’, you know we’ve dealt with the market, the mechanics, the money and now the mindset.

E. The last ’M’ is ‘Model’, the business model that you choose.

Now the interesting thing here is that most business failure is one or two things.

1)     It’s failure in thinking.

2)     It’s failure in your business model.

And so, if you want to get your thinking right, which is what we talked about in the context of the meaning piece as well as the mindset piece—which we’re going to go deeper in some of the other episodes—but then  you want to get your business model right.

Business model: A lot of people when you say business model, that’s how I make money, it’s not how you make money. Business model at a very basic barbaric level is how you make money. But you will not make money if you don’t create value.

So, you’re business model is how you create value. Actually

• It is how you create value,
• It’s how you capture the value,
• It’s how you campaign the value and,
• It’s how you cultivate an environment of value creation.

So, your business model is all about the kind of value you create. And now here’s the other thing is that most of the time when we talk about business model, we talk about value creation; we talk about in the context of it being customer centric and that’s a fallacy also, in the sense that we need to be more holistic, more inclusive in the context of how we create value.

And it’s about creating value certainly for our customers. And we think about it in the context from our customers. We create value by giving in the products and services. But customers, if all they’re coming to us for is the products and services, then really we’re dealing at a commodity base and so what we really need to do is find something beyond that.

That’s what creates additional value. That’s what creates the loyalty and there are a couple of other elements to creating value. Aside from the products and services; it’s about the purpose. What’s the higher purpose of the organization because your customers, your team and everyone will get behind that purpose?

The second, the next piece is about the passion. You may be passionate for it, your customers may be passionate, maybe it’s a green activity, and maybe it’s a vegan non-animal product, non-GMO products. There’s a passion there, there’s a mission, there’s a movement there that people will get behind.

And then the last piece which a lot of companies and businesses fail to realize and it’s so important is, it’s about the promise. And we think about business, when we think about products, when we think about services, it’s about finding a place in the customers heart, in our team’s hearts, in your own heart to be aspirational, to be a bigger purpose that’s going to allow them to say there’s a promise greater than just getting a product or service in this.

So, when talk about value it’s about your product certainly but it’s also about

• Your purpose,
• Your passion and
• The promise that you create.

And the last piece about this value in business model—to be creating value—is really understanding that it’s not really just value to the customers as I said, it’s more holistic.

• How are you creating value for your team?
  • For your employees?
  • For your staff?
  • For your management?
  • For your executives?
  • How are you creating value for your investors?
  • How do you create value for your vendors?
  • And how do you create value for yourself?

And if we are successful, when we are successful in understanding and creating a business model, that builds value and creates value on all of those levels so it’s holistic, now all of a sudden the whole business, the business success becomes the by-product.

When we’re value focused, and we’re in a value exchange economy, when it comes down to anything that we do—any exchange that happens is typically a value exchange. In other words, the person is going to give up something in return for getting something in return and what they perceive is what they’re getting the return is far greater in value than what they’re giving up.

Otherwise the transaction, the interaction will not happen. How do we create value in exchange for value and do it that way?

So, your business model needs to be focused on value creation and value creation not just for the customers, not through just products and services but through purpose, passion and promise also and then also, to your team and your employees and your staff; then also to your vendors, then also to yourself and also to the significant others and everyone that comes in touch with you.

So, that’s really what my framework or what I call the Business Mastery Roadmap Framework is. It’s about understanding and really building your marketing, your mechanics, your money, your money, your mindset, and then the business model—the model around it.

Here’s the thing that I want to do for you, I want you to consider, if you go to this session’s website which is www.melabraham.com/session002, you’re going to able to download a worksheet and here’s what you are going to do in that worksheet. It’s going to give you the instructions there but, you’re going to score yourself on marketing. How are you in your marketing with your customers, your communication, and your connection? You’re going to score yourself.

Then you’re going to score yourself in your mechanics where you add all your roles, your rules in your reporting. Then you’re going to score yourself on the money. How are you respect to with understanding and managing your cash flows; understanding the financials and the finale and you’re going to score yourself on mindset which is about identity, influence and impact. And score yourself on the model which is about creating value, capturing value, cultivating value and campaigning value in that context.

So, it’ll give you a chance to look at your scores in each of the five areas of the business mastery roadmap to see where you need to focus first and where you need to start to build and if your scores are below certain levels. So, go ahead and go to that link, download it, do the work-do the exercise.

I hope that you found this of value. This is the fundamentals; we’re going to go deeper in each of these areas in later episodes. In-fact we’re going to spend a bit of in the business model and all these different areas in later episodes. But I just wanted to introduced it to you and get you used to what it is we’re talking about here.

Hope you found this of value and in this case this is what the basics of your business are. This is what’s going to really start to drive your business. Master the fundamentals, master the basics and you’re going to see; you’ll be able to navigate not only the downslides but you’re going to able to take advantage of all of the upswings in business.  You’re going be able to maximize the upside potential in your business by making sure that you have the fundamentals and the basics in place.

So, again if you haven’t yet, make sure you subscribe to the show, so you get notification of the next episode and you’ll continue to communicate with me.

If you have any questions, please feel free to put your comments and questions below or even send me a question by going to askmelnow.com, that’s www.askmelnow.com and you can leave voicemail with your question. We’ll make sure that we’ll get that question on one of our upcoming episodes to make sure that your question gets answered.

Remember, I want to be your entrepreneurial mentor, you’re not out there alone. This is about building your business at the level that you want to create, the life that you want and bring your dreams to life.

So go ahead and share this with your friends and I look forward to seeing you in the next episode and until we get a chance to see each other again and talk again

May your vision be grand, your journey epic and your legacy significant!

See you soon!!

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Like this? Please share it and help a few more people bring their dreams out of the darkness and give life to them again.  Cheers, Mel

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