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Productivity is meaningless until you define what you’re trying to produce.
This episode kicks off a short series about productivity. Today we’re talking about clearly defining what you’re trying to produce in order to be able to measure productivity.
The different areas to which this applies:
- Financial
- Time
- People
- Products
- Business Outcomes
Financial Goals
One of the things we should be thinking about more is profit, not just more revenue.
- Revenue can be important as a crude metric for analytics, such as the size of your business or market share. However, there is no magic of revenue, only profit.
If you want to sell a business, the value of the company is a multiple of profits in 3 years time, not just cashflow now.
- It’s important to have profit targets as well as revenue targets.
- Cashflow is different than profit and loss.
Your business’s profit is now your personal income to play with.
- For example, if your e-commerce business makes ￡100,000 per year in revenue, that is nothing like the profit it makes. Depending on how you run your business, you may be able to take 20% of that for profit, most of which will need to be re-invested in your business in order for it to grow.
Time
“Lack of time is lack of priorities” Tim Ferriss
Quality time is important.
- One of the aims of budgeting your time needs to be spending quality time outside of your business.
It’s also important not just to find more time to work but find the time when you can be more productive in your work as well.
You need to differentiate between strategic use of time, such as time spent in a mastermind, consultations, or planning meetings, versus tactical and implementation.
- If you spend too much time planning and not doing, it’s just a fantasy.
- This is where a lot of newbies get stuck.
There’s a great book called the Agile Planning Book, where I read “flex scope, not time”.
- You need to be strict in the time you allocate for a certain task or area of your business.
- Instead of adding more hours at a goal, flex the scope to make it more manageable for the amount of time that you have.
- Over time you will achieve what you want, it may just take you longer.
If in doubt, have just one goal per day.
- I think for me personally, the mental overwhelm kicks in quickly if I try to do too much in one day.
- In order to determine what your goal should be for the day, ask yourself: “If I get to the end of the day and I’ve only accomplished this task, will I be satisfied with my day?’
People
Build a team, rather than micromanaging people who can solve immediate problems.
- I’m very guilty of hiring people to solve immediate problems.
- Because I’m thinking so short term, I don’t end up developing expertise and relationships with people.
- Instead, create a team of people to work together to solve the problems.
Build business partnerships. Don’t just fill a hole in the supply chain.
- Your suppliers in China are one of the most important things in your business.
- They are interchangeable to a degree, but if you build a great relationship with them, the relationship in itself adds value to what you have.
Build a client base, not just a load of one-hit customers.
- This is difficult to engineer on Amazon, but not impossible.
- If you’re building an e-commerce business as a whole, this is the direction you should be working towards.
Markets
Don’t think of product research, think of markets you can dominate.
- Don’t try to sell products. You need to find markets where you can identify a person and their pain, and then try to solve that.
Don’t aim to find a market where you can find X amount of unit sales per day.
- Instead, aim to dominate a market.
- This means that you are larger than the largest seller by a substantial margin, mostly by revenue.
Products
Differentiate your product by creating defensibility. Don’t ever just churn out “me too” products.
- These products will be attractive and simple, but there won’t be much profit if any.
Take the time to understand your consumer and make what they need that they can’t get elsewhere.
- Make sure you start with the consumer and make what they want.
Remember the old adage: “Don’t create products then try to attract customers to buy the products. Create produces in order to serve your customers. The real value is in your customers.”
Business Outcomes
If you want to build a sellable business, don’t just go for cash flow.
- The ability to delay gratification is important to win much bigger than those with a smaller mentality.
Build a real brand, with positioning in your customers’ minds. Creating positioning is more than just a logo and packaging.
Build a business you enjoy running. If you don’t enjoy your business, you’re going to have a miserable time building it.
Enjoy the process of building the business.
- If you’re all about making the money as soon as possible, you’re going to be anxious and driven by the wrong things.
Wrap Up
Productivity is meaningless until you define what you’re trying to produce.
After you define this, you can measure people, products, and processes against your outcomes.
That’s when the power of elimination can come in.
Watch my full discussion of The Power of Intelligent Goals
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