Creating a Profitable Economic Engine in your Business

Money makes your business go round.

Many small business owners in South Africa start out as technicians who transition into entrepreneurship, for the sake of this article let us call them ‘technipreneurs’. These individuals excel in their respective fields, such as plumbing, where they are recognised as the best in town. Frustrated with working for someone else and realising they’re essentially making their boss wealthy instead of themselves, they decide to take the leap into business ownership.

Confident in their technical expertise and fuelled by the certainty of being the best in their field, they boldly resign from their jobs and embark on the journey of entrepreneurship.

However, this confidence is built upon a fatal assumption — the belief that proficiency in their trade automatically translates to expertise in building and managing a business within that trade.

Unfortunately, this is not the case. Let us put this concept in perspective, to be able to do the technicality of your trait, you need to study, do your trade test, and pass apprenticeship. It takes more or less 3 to 4 years to get your technical qualification before you can do the technical job properly.

The reality is that the technical skills to do plumbing are different from the technical skills to start, manage and grow a plumbing business.

Nobody cares how good you are in your technical trade. The only thing that matters is whether you can generate new business and convert the new opportunities into actual money in the bank. I have mentioned this to many a technician and it astonishes me how offended they get with this statement. Then I continue to explain ‘if you cannot generate new business, will you have money in the bank?’. As they are thinking about this statement I continue ‘and if there is no money in the bank, there are no customers, and if there are no customers, to whom will you deliver your technical expertise?’.

As harsh as this reality is, it is the truth and one of the biggest reasons why small businesses struggle. 80% of my business coaching clients struggle to generate new business. I have learned over the years that these technipreneurs gets offended by my statements because they find their identity in their trade. They refer to themselves ‘I am a plumber’. The problem is your mindset, rather than your ability.

When you start a business you should think like an entrepreneur, and not a technician. Therefor find your identity in entrepreneurship, rather than your technical trade.

The entrepreneur understands that it does not matter how technically good you are, it matters whether you can generate new business.

To build a successful business you need to understand how your businesses’ sales cycle will generate and convert new business.

The sales cycle consists of the following:

(1) Value Proposition

Firstly, you need to identify the target market, their needs and what they’re willing to spend money on.

(2) Competitive Advantage

After understanding your target market and knowing what they will spend money on, you need to create a value package that addresses their needs, which offers more value than your competitors.

(3) Unique Selling Proposition

Having a unique selling proposition is the cherry on the cake to your value proposition and competitive advantage. Spend time to figure out what makes you unique, by asking customers or clients why they chose to do business with you.

(4) Profitable Pricing Strategy

The next step is to ensure that you have a profitable pricing strategy that will result in profits in the long run and a clear breakeven goal.

(5) Production

Last but not least, you need to spend time on your production line to streamline production and minimise costs.

Now that your sales cycle have been setup, we can progress to look at the economic engine of your business.

Setting up the economic engine

The economic engine consists of five parts:

#1: The sales cycle

This has now been fully discussed above.

#2: Branding

A clear understanding of the sales cycle will make your branding process much easier. A good brand tells a prospect exactly what you do within 5 seconds.

#3: Online presence

After the branding creates the perception of what you do within 5 seconds, the online presence follows the foundation of the branding.

In todays day and age each business must have the following online presence:

- Website

- Google profile and Google maps listing

- LinkedIn page

- Facebook page

#4: Marketing

The foundation of your marketing is your online presence. The goal of your marketing is to generate new business opportunities and will consist of three different variations:

- Brand awareness campaigns

- Advertising

- Networking

#5: Sales

If your marketing is successful, you need to backup the hard work with a well thought out and authentic sales pitch.

To build a successful business is a combination of things that works together. You need a clear business strategy and a solid economic engine.

We assist small to medium sized businesses through business coaching, and enterprise development initiatives to build and grow their SME’s. As part of our service offering we assist businesses with logo, branding and website development services. For more information you can visit our website at https://www.mysme.co.za/business-coaching/.

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