Focus on These Critical Challenges
You aren’t sure when it happened. But without really being cognizant of it, you have 14 employees. Fourteen people who now rely on you to ‘bring home the bacon’ so they can fry it up at home.

Ouch. You knew things were getting more difficult to manage. It was getting harder and harder to keep up with the flow of work. Your employees were sending you ‘not so subtle’ messages that unless you did something soon to ease their pain, it was you they might be ‘frying’.

You are now the proud owner of a Stage 2 company with between 11 – 19 employees. You just experienced what we refer to as a Flood Zone, one of two ‘chaos zones’ that companies move through as they grow. A Flood Zone requires you to bear up to an increase in the quantity of activity. Your first reaction to a Flood Zone is to add more people. Don’t.

Instead, as you Ramp Up in Stage 2, you need to be focused on Profit/Revenue, getting critical processes in place and avoid the trap of just ‘throwing people at your problems’.
This mistake alone has accounted for too many businesses imploding too soon. There are five critical challenges you face as a Stage 2 leader. In talking to leaders who have made it to Stage 2, they are almost completely overwhelmed.

You probably haven’t spent time thinking about ‘managers’ or shifting the responsibility of managing these 14 people – you are not only trying to keep them on target with projects, but you are still doing everything you’ve been doing since you started your business.

Based on the research we have done, getting focused on five areas of your company will help. I know. You have more than five things you have to worry about.  I get that.  I’d just offer up this approach to the following five top challenges of a Stage 2 leader.

When you get out of bed every morning, spend time organizing your day around these five activities. Make the commitment that you will address each one, at some level, every day.

Challenge #1:  Hiring Quality People. But, Laurie, you just said: Don’t throw people at your problems! I’m not asking you to hire more people, I’m asking you to hire quality people. My guess is you have one or two people on your staff right now that the company has outgrown. They are good people but the company has moved on and they haven’t. Let them go and hire someone you can begin delegating specific tasks to.

Challenge #2:  Improve Sales. You are no longer in survival mode. You have moved into growth mode. That’s why generating revenue through sales is so critical. Follow the money. Enough said.

Challenge #3: Manage Cash Flow. Track it daily if necessary but no less than weekly. Don’t let your expenses get ahead of you. When thinking about spending money on something, take time and ‘inquire’ as to the WHY of your decision. Ninety percent of CEOs think they make good decisions – 60% of them are a bust. This isn’t time to squander resources.

Challenge #4: Recognize the Leadership/Staff Gap.  If you aren’t talking to your staff, individually, on a weekly basis – and I mean having a dialogue about how they are doing, what they need, how you can help them – you are looking at the beginnings of a communication chasm that you won’t be able to bridge. Start talking now – payoff is in spades.

Challenge #5: Limited Capital to Grow. This is a challenge that has dogged you potentially since day one. It is reality for companies in Stage 1 and Stage 2 who haven’t received venture funds. Have you looked at your business model? Do you have a model that creates a recurring revenue stream? Passive income? Have you recently evaluated your pricing model? Don’t get complacent. Worse, don’t spend all your time working IN your business. Intentionally think about your business.
Congrats on making it to Stage 2!

“If you really put a small value upon yourself, rest assured that the world will not raise your price.”  Anonymous

Determining what to charge for your service or product isn’t easy. Most business owners simply take a guess at what they think someone will pay. By doing this, you are already setting yourself up to fail.

As consumers, we interact with the psychology of Price every day. We are programmed to believe that if we pay MORE for something, it must be better. Brand plays a role in this perception. We will accept paying $60,000 for a BMW but wouldn’t think about paying that for a Ford Escape. So the price of your service or product carries with it a great psychological impact. When you pay more, you expect more.

Find out how to determine the optimum price for your product or service.

Your optimum price is the one that affords you the most sales at the greatest profit. Determining this price is a five-step process:

1. Figure out your minimum price.  No matter what it is you are selling, you have to determine what your costs are to produce that product or service. So many solo-preneurs provide a service that starts and ends with them spending their own time delivering that service. However, the mistake many make is they don’t ‘value’ their time so they don’t include it in the cost of producing that service. If you are selling an e-book and the only costs you capture in determining the price for that e-book is getting it set up to be downloaded from your website and you ignore the time it took you to produce that e-book, you will under price it. Be diligent about capturing all the costs involved in producing your product or service so you understand the minimum price you must ask for that product or service. Anything less and you lose money. Anything more is profit.

2. What is the focus of your brand? At some level, every business has a brand. Chances are you may not be a Microsoft or Pepsi, but there is a perception about your product or service out there and you need to be intentional when thinking how you want to be perceived. Are you the gourmet, boutique market or the produce warehouse? If you have a gourmet approach to your service or product you can charge more but as a produce warehouse you will sell more. You can sell a lot for less at a lower profit, less for a lot at a higher profit, or something in the middle. When you are very clear about the value your service or product provides, and you are conscious about explaining that value to your prospects, you are establishing brand perception.

3. Analyze your competitors. As consumers we are price conscious but it’s not the only reason we buy. You absolutely need to know what your competitors are charging. You need to know so you know how to position yourself in your market. You can certainly undercut your competitor or you can match them while offering different benefits that raise your perceived value in a potential customer’s mind. Be realistic when comparing your service or product to a competitors. Is yours superior or inferior or similar? Which of your competitors is doing the best? Is it because of price or something else?

4. Set a price.  If you know the minimum you must charge, you know what your competitors charge and you know what brand image you are trying to establish, set a price.

5. Test, Test, Test.  Don’t think that your first price needs to be your last price. Tinker with it. Try it out. Try it out in different markets. Set different prices when considering your marketing mix (direct mail, website, advertising, public relations) to see how people respond. You may send out a direct mail piece in October to one set of prospects and at the same time, put it on your website in November at a different price. See which one gets the best response.

Even small business owners who have been in business for a long time should occasionally test new prices for existing products.

Product and service pricing is part art, part skill and all perception. A person will pay you the price you set for your product or service if they perceive it is worth that price. And this requires that you know your product or service’s Value Proposition or the reason someone would want what you provide.