PreneurCast is a business podcast. Each week, author and marketer Pete Williams and digital media producer Dom Goucher discuss entrepreneurship, business, internet marketing and productivity.
In this episode, Dom continues the Foundations series. This time he talks about one of the most difficult challenges for a lot of small businesses: sticking to your Core Business. He talks about the reasons for doing this, and the benefits it can bring.
Dom talks about reasons to sticking to your core business and its benefits
Transcript:
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Episode 092:
Core Business
Dom Goucher: Hi everyone, and welcome to this edition of PreneurCast with me, Dom Goucher. Just me this week because I’m going to do another one of my Foundation episodes. This week, I want to talk to you about core business. Now, this is not core business in the same way that Pete and I have discussed core versus mechanics before.
If you want to know what core versus mechanics is about, there’s an episode that I’ll link to in the show notes. But very quickly, core versus mechanics- one of our concepts is this idea that you should focus on the thing that adds the most value to your business. That’s the core of your business.
You should be getting other people to do the mechanics, the day-to-day things that you don’t add particular value to. What I wanted to talk to you about this week is actually focusing on the jobs that you take on, the clients that you take on, and the work that you do for those clients, or the products that you produce, the service that you sell, whatever it might be.
And you focus on the thing that is your core business. This is kind of a variant on one of those things that I’ve been saying for some time now, which is just because you can, doesn’t mean you should. A lot of us out there are multi-skilled people, we come from a wide and varied background.
I certainly do. My history has taken in a lot of different things- from my time at Xerox as a Solutions Consultant. I’ve also worked for a printing company. I’ve worked for software companies. I’ve been a teacher and trainer. I now run this digital media company producing digital training materials.
So, I have a wide background and a huge range of skills, but it puts me in a very difficult position- possibly one of the most uncomfortable positions that a business person can be in. And that is the position of being asked to do something that you can do, but you really shouldn’t. And this is that phrase, just because you can doesn’t mean you should.
This is where that applies. Let me tell you a story, and this is probably one of the most difficult things that I’ve ever been through. Very recently, a very, very good friend of mine- somebody that I’ve known for many years, we used to work together- so somebody who really knows me and knows my capabilities came to me and said, ” I have this situation and I need this thing doing.
I need somebody to take on this role to provide this service to my company.” It was something that I am more than capable of, but it was to do with document production, digital document production, document design, publication, that kind of stuff. That is part of my background.
It’s something that I’ve done in the past, and that’s why my friend came to me. But this was a role they wanted somebody to take on, this was a service they wanted to provide. And it was a cornerstone to their business. It was a huge part of their marketing activities. And while I could do it, it wasn’t my core business.
My core business is producing online digital training materials for people, specifically video based training courses. That’s why my company specializing in. We chose to specialize on that, and I’ll come back to the reasons why we chose to specialize in a minute. But we chose to specialize on that.
And so, I agonized over this decision. I shouldn’t have agonized over it, by the way, it should have been a clear cut decision. I should have gone back to my friend immediately and said, “No, I’m sorry, that is not my core business.” But I got sucked into this thing. There’s lots of reasons you can get sucked into this situation.
One of them is because you can. You say to somebody, “Of course, I can do that.” One of the reasons is because you think you need the money- you need to take that next client. So you take that job on because you can do the job. Or you may be in a situation like I was where it was a friend.
A friend comes to you and says, “Can you do this? Can you or your team fulfill this need for me?” But it is a very dangerous situation, because it’s not your core business. And this job was not my core business. I spent some time talking this through to my friend and trying to find a way that I could do it, that my team could help him out.
But in the end, I went back to them and I said, “I’m sorry, this is not my core business and I would be doing you disservice by taking this job on. Because while I can do it, it’s not what I do every day. Therefore, it’s not good for me, and it’s not good for you.”
Now, that was a really, really difficult situation for me. It was a pretty good contract to take. From a money point of view, it was a great opportunity. It was something I could definitely do. So there was that aspect to it. But also, it was my friend who I really, really wanted to help out.
But both from the position of authenticity, and giving my friend the best advice I could, but also the best decision for my business was to turn down that job. Now, why am I saying this? Why is it important to focus just on core business? The thing that you decide you want to do, and narrow that down, really narrow it down.
Well, there’s quite a few reasons. And the first, probably the most important one, is going back to something you may have heard many times in your life, which is “Jack of all trades, master of none”. We are becoming a world of potential generalists.
The ability to learn any subject is becoming easier and easier, and easier. But the willingness to master a subject is actually diminishing. And it will be, in my opinion, the people who master a subject, master a skill that will stand out. Now, it doesn’t have to be an actual skill.
It could be mastering a body of knowledge, becoming an expert in a body of knowledge. But, it could just be as simple as becoming a tradesperson- going through the traditional models of apprenticeship, journeyman, and working through to master of a trade.
But the more of a master of trade you are, the easier it is for you to do that thing. If you keep taking jobs that are not core business, you’re diluting that skill base. You’re moving away from your core competencies. So it will take you longer to do the job.
It will be harder for you to do the job. It will be harder for you to manage somebody else doing the job- if you take onboard the things that Pete and I talk about a lot, like outsourcing work. If you don’t fully understand a job, then it’s hard to outsource it.
But what’s worse is that if you’re only doing this job as a one off because you just took it on, it’s really difficult to actually build your own team up to support it. It’s much more cost-effective to build a team to support your core business. Yes, you could take the job and outsource it, and a lot of people do do that.
A lot of people do set themselves up to manage work for other people, to become a facilitator. Now, if that’s your business that’s fine. Go ahead. But if you don’t want to be a facilitator, if you actually want to run a business product, or core business services, then you need to focus.
Because otherwise, you’re diluting the expertise that you’re building up. You’re diluting the effectiveness of your team. And you’re introducing all kinds of difficulties. For example, stress. If you don’t know how to do a job, or it’s not something that you’ve done time and time, and time again, then you’re introducing stress.
Because the less you know about a job, the harder it is, for example, to cost that job. The jobs that we do— my company produces these digital training courses. And I have a rate sheet. If you ask me for a price, I can literally tell you a way to calculate how much that job will cost you before you start producing the product.
You can literally cost out the job for my company to produce it yourself if you want, or I can give you an estimate very, very confidently, within a high degree of accuracy, because I have a lot of experience of producing this material. I know what it takes. I know how long it takes. I know the skills it takes. I know everything about what we do.
I have become a subject matter expert on producing digital training courses and all their supporting materials. So when a client comes to me, I can confidently answer. Now, that is really, really important from a client management point of view that you’re confident when you respond to the client.
But what’s worse is if you don’t know how to cost the job. Then you could underprice the job. You could underestimate the amount of effort that it takes, because you just don’t know. Or, you could agonize and start doing really complex calculations, and start trying to estimate it out and put yourself under a lot of stress.
Now, what some people do in this is situation is that they procrastinate. They don’t respond directly to the client. They say, “Oh, I’ll get back to you with a price.” Now, that’s not really a good way to deal with a client. And again, you should just come clean. You should just say it’s not my core business.
And similarly, on the stress front, you have the stress of delivering. Let’s say you take that job on. Let’s say you cost that job. Let’s say you win the contract. You’ve then got to deliver. If it’s a one-off that you took because it was somebody putting money on the table, then you have got a really difficult situation.
You may only make a few dollars, or a small margin, because you end up having to outsource the whole job to somebody. So was it worth the stress of bringing on a new contractor, and the managing the person, building the relationship with them, just for one job and a few dollars, or a small margin?
Probably not. You’ve got a massive management overhead whenever you bring a new person into the team. Better to use your existing team, with existing skills. One of the reasons to stick to core business. But also, if you try and deliver in-house, you’ll try and live up to the quality levels that you produce with all of your business, all your core product range.
So if you randomly take on this new person, this new client, you’re representing your business to them. And if you’re not producing your core product, then you’re not necessarily going to do it as well. You’re putting yourself under pressure to perform, and perform in an area you don’t have core expertise, you’re not a master of.
So these are reasons not to take on work that is not in your core business. But the real one for me, the most important one, and Pete and I have talked about this in the past, is this idea of mastery. Because the more that you do something, the more a body of evidence you have that you can do it, both externally and internally.
You build up skills. You build up systems. The more you do a particular task, the more confidence you get. The easier it becomes. The more likely you are to, if it’s such a thing, to achieve a flow state when you’re producing it due to, again, the fact of it being easier, so it’s less stress.
And the more of a body of evidence that you have that you can do this, that you’ve done this a number of times for a number of clients, the more chance you’ve got that you can get testimonials- good testimonials, increasingly more impressive testimonials and examples of what you do.
Then you can put your prices up. So we’re heading back into the 7 Levers. That lever that people find the most difficult, which is put your prices up. Well, this is a way to put your prices up. Interestingly, by doing less, by focusing the work that you do into a specialist topic, you can put your prices up.
Because if you look at any specialist anywhere in the world, the one thing that makes a specialist stand out is that they charge more than a generalist. So don’t be afraid to focus your product or service offering. Become specialists. And also, the marketing becomes easier if you’re a specialist because you’re marketing to a smaller group of people.
You can use more focused language, which is something that again, Pete and I talk about. When you’re marketing to people, you should use their language. If you are marketing generally, you can’t use industry-specific or topic-specific language to resonate with your audience.
Whereas, if you can focus on a group of people, like for example, again, with my company. I can talk about information products, which is the name for what we produce. We produce information products. I can talk to people about the things that they understand like delivering video-based content, delivering transcripts, delivering eBooks, delivering audio versions, organizing the content, giving a structure to the course.
I can talk about delivering the content via a membership or secure access site. All these things are things that in that industry, people know about. They know that they need it. They know how it works. They know what these words mean. Or they’ve at least been told that that’s what they know, and that’s what they’re looking for.
So I can easily target my service to those people. If I was to market myself as a generalist, as a general video editor, or a general audio editor, then I can’t pick out a specific audience. Anybody from any industry anywhere could come to me wanting anything doing.
That, again, would dilute my skill base, makes my life very, very difficult. So that expertise, that mastery, has all of these knock-on effects. But the other one, and just to focus on this for a little bit, is that idea of your team, of the skills of your team and your skills, because if you just focus into a small set tasks, based upon one core product, it’s really easy to standardize the processes.
Really, really easy to standardize the processes. Far easier than if you have 17 clients with 17 different kinds of jobs. Even if it’s regular work, even if you have regular contracts with 17 clients, that’s still 17 processes if they’re doing 17 different jobs. That’s an awful lot of work to produce standard process documentation.
No matter how you slice it, no matter how clever you get— and Pete and I, in our Profit Hacks course, talk a lot of different ways that you can optimize process creation and descriptions, and things like that. And training your team and communicating.
But no matter how you slice it, if you’ve got 17 clients with 17 processes, that’s a lot of work. Whereas, if you have 17 clients but they all want basically the same kind of product, that’s really easy. That’s one process. And whether you work on your own, or you work with a team of people in your office, or spread around the world- a team of outsourcers, these things will make a huge difference.
So focusing on that core business, deciding what that core business is, is really, really important. And something that I mentioned briefly in that little piece there was about the marketing, because once you focus on a particular kind of product in a particular market, or a particular business, or a particular service, the marketing becomes easier and it becomes more focused.
You can talk to the people directly. You can produce a better product which gets you, not only more testimonials, but you’ll also get more referrals. Because it’s easier to ask for referrals. And it’s easier to get better qualified clients via referrals, which is one of those things.
A lot of my past problems when I’ve had clients come to me and I’ve had to say, “I’m sorry, that’s not core business,” is because it’s a misunderstanding via a referral. Somebody has said to somebody, “Yeah, I know a guy who does video,” or, “Yeah, I know a guy that edits audio files.” Let’s just look at how we handle this situation.
Hopefully you’ve got a clear idea of why you want to focus. But rather than just leave you with a problem, I want to give you some solutions. So, let’s look at how we can handle the situation. The first way, and it’s a great way that I came across from a guy called Michael Port who wrote a book that we’ve talked about quite a few times called Book Yourself Solid.
Michael Port talked about always having a referral. And by that, he means if there’s something that you potentially could get asked for, or get asked for regularly but is not your core business, if you know somebody who can deliver that service, get in touch with them. Build a relationship with them.
And be aware of what their core business is, what their ideal client is. And if you come across somebody who approaches you for the service, make that referral. You don’t necessarily have to get anything back for it. You don’t necessarily have to get any kind of a commission for passing on that lead.
Just make sure you have a referral because it gives goodwill to the person that approached you. It gives goodwill to that other service provider. And those two things will come back to you. Either that client will return to you when they do have what is your core business and that they need from you, or you may get referrals from that other provider.
If they don’t provide the service that you provide, they may get approached for that service and they may give you a referral. So always be aware of people that can provide complementary services, or services that are just outside your field and outside your core business.
That’s one way of gently letting people down, which probably the biggest worry, I think, anybody listening to this has. If somebody approaches you, how do you let them go without upsetting them? How do you avoid just saying, “No, I’m sorry, I don’t want your business,” which is not a positive way.
Having this other person as a referral, or having this other service provider as a referral, is a great way. But the other reference I have on this is another book that we talk about, a book by a guy called John Warrillow, which is called Built to Sell. The idea behind Built to Sell is about creating a business that can be sold.
It’s an anecdotal book. It’s a great story to be read. It’s a great perspective on business structure and organizing a business. But there’s a core message in that book, and that is about choosing your core business and turning down work that is not core business, and managing that.
I do strongly recommend that- if this, what I’m talking about now, resonates with you- that you go and read up on that. And I’ll put a link to that in the show notes. So you can go to Audible. It’s a great book to get from Audible. And don’t forget, if you go to AudibleTrial.com/PreneurCast, then you can get a free trial which includes one download of any book.
So if you haven’t tried Audible.com already, you could try Built to Sell by John Warrillow on Audible. He talks about this exact thing. One of the reasons that he talks about it is in context of being able to sell your business. But he talks about all the things that I’ve talked about.
He’s talked about standardizing the processes. He’s talked about managing your team around a focused set of processes. He talks about the ease of describing the product, the ease of describing and marketing things, ease of communicating and managing clients, etcetera, etcetera. So that’s a big, big section in there that I really would recommend that you read.
But for you, as a business owner, once you’ve decided what is core business, what you’re good at and you want to do more of, then here’s a couple of ways, just to finish off today, that you can focus on that core business, that you can help yourself focus on the core business. And the first step for me is to make your marketing messages clear.
This is something that I’ve mentioned indirectly before. Pete and I have talked about this. There’s a guy out there, a copywriter called John Carlton. I saw John speak once at a conference, and he made the entire room stop. There was an eerie silence because he said something that was so unbelievable, so counterintuitive, that literally everybody stopped and paid attention to him.
But it is one of the best pieces of advice I’ve ever seen in any kind of marketing context. And it is that the best value you can give to a potential client is to convince them they don’t need you. Now that sounds a bit odd. But just to explain that and give it some context, what he went on to explain was that you don’t want to attract people that don’t really need what you do.
You don’t want to attract people that don’t need your product. Those are problem clients. They’re either going to want a refund, or they’re going to be unhappy with the service that you provide, or you’re going to struggle to deliver and to delight that client.
Whereas, if upfront you’re absolutely clear about what you deliver, what your rates are, what you charge, how your service is laid out, the thing that they’re going to receive, and what you don’t do and the kind of jobs you don’t want, then you’re clear.
Possibly before they even pick up the phone or send you an e-mail, or fill out an inquiry form on your website. So if, like myself, you’re clear- we build information products. We don’t do little video edits. Yes, we can manage your podcast for you. No, we don’t edit audio files on a one-off basis. We do big project with people.
We will take over. We can manage it for you. That’s what we do. We provide a premium service. If anybody’s seen some of the demonstrations of the things that Pete and I talked about during the Profit Hacks launch- things like the video production sequence, the podcast production sequence- they come from my company.
That idea of the mind map to video, where you just produce a mind map and an audio track, that comes from my company. That’s what we do. But it’s a premium service, and we’re quite open about that. We have no problem telling people about that and pricing it accordingly. And that means that if somebody comes to me, they’re aware that that’s what they’re coming for.
It helps me, it reduces the number of speculative inquiries about small video editing that we get. It doesn’t completely get rid of it, but it just gives me something. But that’s what I’m saying, make your marketing messages clear. Make it clear what you do. Help people to understand that you are the right person for job that they want doing.
And that will help you probably more than anything else. As I said earlier, another thing is that the more that you do, the more work you choose to do in that core business, the more work you’ll get like it, because you have a bigger body of work that is evidence of what you do.
Your testimonials will be based around that kind of work, and your referrals will come from people you did that work for. So you’re just building up- the more you do, the more you’ll get. It’s really that simple. If you keep doing little silly jobs for people, then that person will refer you to their friend who wants a little silly job doing. And that’s the inverse- that creates the inverse problem.
The more you do, the more you get. Focus on the jobs for the core business, you’ll get more of those. And the final one is to mix those two points together, which is be clear on the business you want, be clear on the kind of work that you do, and then go to your past clients that you’ve done that work for and ask them for referrals of that kind.
Educate your client, give them the education- I don’t mean that patronizing. I just mean be clear that you are looking for more clients of this kind. So for me, I would go back to my past clients that I have produced information products for and say to them, “If anybody looks at your information product and says, ‘Wow, that’s really cool.
That’s really high quality and I’m really impressed by the way that it was produced and delivered,’ would you please tell them I did it? Would you please give them my contact details and let them know this is what I do?” That’s it. It’s that simple. Or, I go to them and I say, “I don’t suppose you know anybody who would want a similar product.
Do you know anybody who’s thinking of producing an information product in the next few months?” Because if you’re going to do this, most people plan it out. And I just say, “Do you know anybody who’s talked to you,” because it’s a big networking thing that goes on in my industry.
And I just say, “Do you know anybody? Have you talked to anybody? Did anybody mention it to you? Would you mind giving my details to them, if you think that they’re a good fit based upon the experience that you had, based upon the way that we worked together? Because you as my client know how I work and know the kind of things that I’m capable of.
If you think that they’re a good fit, could you give me their details?” That’s it. And those three tips will help you stay focused on your core business, along with having somebody to refer back to, to refer an unwanted client to, to just keep that good will. That’s my foundation for this week.
And it’s a big one, because I would like to make sure that you, if at all possible, can avoid the kind of pain that I went through by having to tell a very good friend of mine that I can’t do it because it’s not core business. But also, I would like you to be able to focus and grow your business by focusing your efforts on the things that give you the best return, which is back to core versus mechanics.
But specifically, focusing on the jobs and the clients that it’s easiest for you to deliver your best work to. As usual, as it’s just me, this is a slightly shorter show. Pete will be back with us soon. But in the meantime, I would ask if you’ve enjoyed this show or if you’re enjoying this series, or if there’s anything that you want to feedback about PreneurCast, please do.
We love to get your comments through all the different ways you can get a hold of us. If you are enjoying PreneurCast and you think that it’s valuable, the most important thing to us and to our potential audience, is an iTunes review. If you can go to the iTunes Store and put a hopefully positive review in there, that really helps us spread the word.
It helps other people find out about PreneurCast and get the value that you’re getting from these episodes. You can also communicate to us through PreneurMedia.tv, our website that manages this podcast and our other publications. There’s comments below the podcast.
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Or you can reach us through preneurcast [at] preneurgroup [dot] com. So any one of those ways. Do give us feedback. Let us know what you think. Let us know how you’re implementing the things that we talk about and how it’s helping you grow your business and becoming more effective. See you soon.
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Links
Books:
Book Yourself Solid – Michael Port
Built to Sell – John Warrillow
Online:
http://www.ProfitHacks.com – Profit Hacks is Pete and Dom’s course about Productivity, Business Efficiency, and Streamlining your work to increase your Profits
Previous PreneurCast Episodes:
Episode 044 – Outsourcing: Mechanics vs Core Business
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