Every Business Needs SOMFAT for Fun and Profits
What does SOMFAT have in common with a lean and profitable business?
In the never-ending quest for the Holy Grail of business models, there can be temptation to cut corners and skip the basics needed to build solid foundations.
No one in his or her right mind would build a castle on the sand if the sand was close to the shoreline and proved unstable.
Yet, small and large business owners make this mistake each day in building their business base on little, if any solid model or foundation of structure and systemisation.
While hoping to make profit from their zeal and passion for something close to their heart or hip pocket as it were, many business owners and investors fall short in their quest. Unfortunately this is often a very expensive lesson.
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Japanese engineers prove risk adverse
One example of effectiveness in light of risk and circumstances are the engineers who apply their trade in the unstable natural landscape found in the country of Japan.
Japanese engineers are amazing in what they have done since the 1950s in re-designing a war torn country and constructing some of the true marvels of modern buildings, bridges and large to medium city architecture.
Their recommendations to the Japanese government in building safety into projects are world-renowned and thus the confidence to build one of the most expensive projects which is the new airport and landing runways off shore from Tokyo.
Much like the design of the re-claimed land around the new city of recent decades, Kyoto, the waters and foundation of this new airport and offshore landing runways are not based on solid ocean floor foundations, but re-claimed man made landings.
The Japanese government is continually re-engineering at an annual cost of multi billions to re-secure solid footings on the floor of the ocean of this re-clamed land that benefits Japan, yet under very challenging topography and at high cost to the Japanese economy.
Why? Because the original plan was based upon securing solid “grounding” in the sand of the ocean floor and given time, has proved unstable enough to have a safe runway and in which, may drop under the water line in the years ahead.
At present, the runway base has dropped three meters and is slowly dropping each year. While still effective as a landing airport, the hand writing is on the wall as to how long this can be used and how safely.
Obviously, there is a cost of “operational excellence” in light of tens of billions invested already. The Japanese government must “feed” the project under maintenance dollar budgets in order to retain the use of this airport or it will be lost to the sea again.
Olympic athletes get thin to win
Another example of foundations and systems that serve us is that of Olympic athletes.
We know that they often times have body fat to muscle ratio compositions as low as four per cent by the time they are ready to compete in their top level sport. In fact, an amazing body to fat ratio if you stop to really think about that percentage and the fine tuning of this to run any athletes body in the intensity of competition.
The non-athlete or viewing crowd of on lookers would be unaware that 'some fat' in the system of every serious athlete is absolutely critical to his or her performance plan.
Without 'some fat', they could not be the lean competing machines required in the sporting arena to win at what we now know as "all costs".
The balance between muscles and fat in an athlete’s body is an illustration of the delicate balance of major and minor systems required in any business to run effectively mush like a sporting athlete.
There are many lessons we can learn from competitive sport and translate into the business world. Like all great sporting stars, we can use some fat in our business plan to make sure we have the best chance of a successful and growing business.
Systems run business and people run systems
Having been hired upon graduation from University into a Fortune 500 company environment, I can now easily recall one of the brightest minds in training concepts and applications from my early corporate days.
An corporate executive and trainer based out of Boston by the name of John Ford III...an unassuming gentle man of perhaps five foot seven in height, but when he spoke, people listened with great interest in his ideas in the company as he has an easy but effective means in getting his message across.
John was cut from the ivory tower model of the day dressed in button down blue and white oxford cloth shirts, pin striped dark business suits, burgundy and black tasselled shoes from Bally and he had his hands on the pulse of "in the field" sales executives in the USA, Canada, Europe and abroad.
John was very conceptual in his strategies and teaching to the new kids on the block. He had a unique corporate and real world perspective backed with an Ivy League University education and MBA.
I recall a three-day training workshop with him in San Francisco and than another time in Washington DC in which a handful of us as national senior account executives were learning strategic account sales and service ideas.
Team role-plays and case study presentations further enhanced the applications to our customer needs and then developing new solution based models to their problems with our products and services on offer.
John was very passionate about this area. He stressed a concept over and over that I had never heard anyone say before and the impact hit home, "Systems run business and people run systems”.
I nearly wrote off the page as I wrote the statement down again.
As it were, it was a new corporate philosophy for a company founded in 1934 and very successful in supplying products to the US Army, Navy, Air Force and further products to Boeing Aerospace and corporate 1000 companies alike.
This philosophy proved most effective in their field of information technology service and sales and continues today as an international company operating in many countries.
A landmark statement and one I have found to true over many years.
Ten Years Later - another insight
Michael Gerber, a northern California small business consultant published a book in 1988 called, The E Myth (Harper Collins). It wasn’t long before Michael became a sought after speaker on small business. The message of his research based around why most small to medium size businesses fail and what to do about it.
Having an insight into his work and agreeing with his philosophy, an opportunity presented itself to promote an event with him in mid 1992.
Michael was speaking to about a 120 small to medium sized business owners at a conference venue adjacent the Hyatt Regency Hotel at Camelback and 32nd Avenue in Phoenix, Arizona.
I was sitting in the back watching Michael passionately telling his stories of successes and failures of small business owners when all of a sudden.....BOOM, an idea flies into my mind, in fact, a blinding flash of the obvious (a BFO as commonly referred to in the training industry) from a concept learned many years earlier.
I was re living a message first presented by John Ford in San Francisco as it related to large business applications. This message was ringing true again from Michel Gerber, the author of the run-away best selling book of the day, “The E-Myth”.
"Systems run businesses and people run systems”.
Learning from corpotate mentors like John Ford and business author Michael Gerber is eye awaking. However, like most MBA students, re-calibrating and offering a different take on the original concept message or model was what I was committed to do for myself.
After many months of research, fine-tuning my draft model and than testing it with numerous US and Austraian businesses in the early 1990s, I created an amalgamated concept and a business model we branded as our SOMFAT business model.
Our SOMFAT model has been tested many times since than and produced untold results for our clients and service partners.
Volunteer organisation success story
It was this very model I used to rebuild the 15 year old National Speakers Association Speakers Chapter in Sydney Australia into the largest professional speakers membership based chapter of 65 worldwide.
While a base had been built over many years prior to my service, the chapter was somewhat sleepy to the market and in fact, delivering value to its’ own members.
By the end of 2001, the Sydney NSW Chapter had retained a significant base of original members while attracting a swag of new members. An annualised new growth rate of 38% in sued between 2000 & 2001.
Not to be cast off as 'lucky' as a one off experiment, our executive team of volunteers applied the SOMFAT model again with new membership growth reaching a 34% annualised growth rate, aretention of over 75 % of all previous members and a postive cash flow on nearly $ 11,000 net cash to bank after all expenses.
Hence the question, “What would two years of growth at 36% annualised do to your business?”
In essence, the SOMFAT business model focuses on the areas of Sales, Operational Excellence, Marketing, Financials, Administration and Technology.
The key is to make sure those six areas operate effectively with the right people running them and in a manner that supports the actions and strategy of the business or the owners of the business.
Let us examine the model a bit more effectively and see how it relates to your business or operations with your team.
S stands for Sales
Without sales, there are no profits.
However, ever-increasing sales can present business operators with enormous challenges, primarily because there is a lack of formal training in these areas. A passionate belief in a product or service does not equate to understanding how to market and sell them.
Time and money invested in learning how to market and sell products and provide good service can equip businesses with effective strategies that can gain major results quickly.
O is for Operational Excellence
No matter how much you sell, your business is usually judged on its ability to deliver the goods or services it sells and with that WOW factor many of us hear about, yet rarely experience.
The sale is not the end of the transaction; it is the beginning of a relationship with a customer.
Operational excellence has helped to build McDonalds to the global business presence around the world it is today.
It isn’t the taste of the burgers that keeps McDonalds in business, but the combination of many ‘mini systems’ that equate to an excellent operational machine, 18 hours a day, 7 days a week year in and year out.
M is for Marketing
Marketing is an area that can confuse and frustrate business owners during the life cycle of any business. There are various effective marketing models available to small business and many depend on the level of experience of owners.
Understanding the model that is right for your business is fundamental to getting the most out of your marketing campaign and goes beyond any advertising, customer service or loyalty programs. This is critical to the continued viability of any business and future growth.
The planning of any marketing campaign should emphasise the individuality of the business, the business brand and, when possible and proper to do so, use of the personal identity of the business operator as the face of the business.
F is for Financials
The old adage, ‘it isn’t what you make that counts, it’s what you keep’ is the bottom line of every business.
The greatest challenge for any business is becoming and remaining financially viable, particularly while cultivating new markets or developing additional products.
Tom Cruise stared as the main character in the 1997 movie Jerry McGuire.
His catch phrase early on in the movie that soon went international was “Show Me The Money”.
Jerry was finally on the same page as his client when he realized that the bottom line of his clients’ objectives were just that, to “show his client the money” when he was discussing a new sporting contract.
A philosophy all business operators need to adopt, if they are going to survive, is to show the customer great value, great support and great service, and in return they will show the business the money and cash flow to grow.
A is for Administration
In Michael Gerber’s book, ‘The E-Myth’, he highlights three personality types of business owners, predominately in small to medium sized business: The Entrepreneur, The Technician and The Manager, a little of which he says is in each of us.
It is not unusual for one of these personalities to be less dominant. For instance, if you are not a great manager, then outsource everything you can to an outside business entity or find a person within your company who is an accomplished administrator.
T is for Technology
Today it is relatively inexpensive to employ the latest technology in your business. So many options abound in mobile phones, portable computers, printers, internet services, e-commerce, broadband, portable digital assistants, and the list of choices grows each day.
The latest technology can help make full use of your time so that you can pursue all opportunities in your market. Your time is money; therefore money invested in this area can leverage your time and save on operational expenses.
By expanding this simple business model, you will circumvent lean times and work towards the future with great anticipation. In short, add SOMFAT to your business diet this year and watch your business waistline expand quickly.
About the writer / author
Rob Salisbury, B. Com, CSP has addressed over 450 Australian companies and over 2000 teams / events in the U.S. New Zealand, Singapore and SE Asia over the last 20 years.
Rob served as 2001 to 2003 President of the NSW National Speakers Association and five years as a Director on the Australian National Speakers Board. An industry recognised sales and marketing strategist, he was tranferred from sunny Scottsdale, Arizona in 1997 to Sydney Australia.
For more information, contact Rob in Australia at 0412 414 835 or our web site at www.strategicresources.com.au or
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