“There are three main business buckets from which all business models are created.” I turned to make sure the room was following. When I was able to make eye contact with each person at the presentation, I continued. “Bucket 1 is your sales bucket.” I drew a large number “1” and then made a line. “Bucket number 2 is your fulfillment bucket.” After the first line, I drew a large number “2” and then made a second line. “And bucket number 3 is the tracking bucket.” With that, I wrote a large number “3” after the second line.

I could tell the room was tracking by quickly observing the numbers 1, 2, and 3 on each of their papers. I’ve found that even the most complex business problems, when properly reframed, can be presented in a very easy to follow function. Then, whatever issues are present, their respective solutions become painfully obvious.

This was no different. I was asked to come in and do a two-day workshop for a marketing company that couldn’t figure out why it wasn’t generating more profit from their sales. The answer had to lie in one of the three buckets. I’ve done this style of presentation a number of times now and at this point in each of the presentations, the group is on the edge of their seat. They’ve typically never heard such clarity pointed at their leadership team. 

I turned back to the white board and wrote the names of each bucket below the numbers and explained each one as I went. “The sales bucket consists of all activities prior to revenue being generated. This could be publishing newsletters, updating the website, making sales pitches, crafting proposals, or doing cold calls. It doesn’t matter. If it’s attempting to create business, then it goes in this bucket. If no one is directly generating revenue, the activities are here. In bucket 1. I want you think about your business for a minute. Make a list of all the activities that go in bucket number 1. Then, next to each activities, I want you to write the name of the person who does them and how many times you want that activity to happen each each.”

I grabbed the bottle of water next to my book, Taboo Business Questions: What’s Haunting Every Entrepreneurs’ Growth, and took a nice long swig. This part of the presentation is my favorite. Almost never has leadership had to do something like this. Yet, it brings out all the issues. 

One leader slowly and reluctantly raised his hand. His suit jacket strained with the limited range of motion allowed from his tailor. I nodded and he fixed his glasses. CFO’s were usually the quickest ones to judge a process as frivolous. His monotone, robotic speech began, “Matt. I have no idea who is responsible for the sales activities. This isn’t even my realm of the business. Do I need to be here for this?” 

I’ve answered this question a few times over the course of doing these types of workshops. I gently responded so as the reiterate the goal and keep everyone engaged. “Leadership asked me to get to the bottom of the profitability issues. I think they asked you first and your response was some version of ‘sell more profitable projects’ which, while probably accurate, wasn’t as helpful as leadership needed. And, I’ll need your help with bucket number 3. If we can dial in on the activities from buckets 1 and 2, we’ll find the answers we’re looking for.”

He nodded in agreement and began scribbling something on his notepad. 

Many CFOs I come across know so much about business that they forget that other business leaders, while highly intelligent in their own regard, need a little more guidance on business concepts that might be thought of as rudimentary for a seasoned CFO. 

I try to never talk down to a business owner and only guide them to the solutions. I’ve found that many business leaders are able to implement the necessary solutions quicker and with more conviction when they arrive at the solution themselves instead of being told what the solution is. I have begun to think of my role as simply creating the environment in which business owners can think more clearly about their business issues without judgment or condemnation. 

It really doesn’t matter what your business model is. This concept applies; breaking down the business’s functions into three buckets brings revelations that can then be addressed and fixed. Some people call this the “ah hah moment.” 

During this two day presentation, we went over all three buckets and the company realized that the tracking bucket wasn’t properly communicating with the sales bucket on the front end or back end of deals. This is a common occurrence in businesses and one that, if left unchecked for any period of time, will become a major business issue. Job costing and project reviews need to happen if not for all projects, at least for a spot check of a few per week. This is what the group came up with as a solution to their problem. 

Understanding your business model is very important. But, what’s more important is understand all the activities that go into your business, being able to visualize them, and clearly identifying who is responsible for what. The question that got this group to the finish was this, “Who is responsible for giving the sales team feedback on actual profitability vs projected profitability?” 

Do you have an issue in your business that you can’t solve? We’d love a chance to discuss with you and see if we might be able to help identify and solve the issue. Contact us today!