What is your business’ biggest current Vital Need?

[Pesso]

Hey Square Readers,

We hope you picked up a copy of our fourth book, Fix this Next by Mike Michalowicz, and are excited to dive in!

This book is all about learning to prioritize the problems and issues your business faces, in order to start fixing the most impactful ones first. By taking care of these, you can shift your strategy from putting out fires to making fundamental changes that improve the overall health, longevity, and profitability of your business.

Just like Maslow’s Hierarchy of Needs shows the concept of what humans need in order to survive and thrive, Michalowicz’s Business Priority Pyramid shows the same for your business. You need sales in order to get profit, which you need in order to focus on efficiency, which you need in order to have true impact on your customers, which you need in order to leave a legacy. 

The author also has a free evaluation and other resources on the Fix This Next website.

The first step is to identify which is your most Vital Need. To discover this, the author recommends finding the lowest need on the pyramid with the most boxes unchecked in his checklist (at the end of the post). Be sure to head over to Page 13 of the book to read more about what each of the points mean, so you can complete yours!

We’d love to hear your answer in the comments:

• First, copy & paste the checklist from the end of this post into the comments, and check off the ones that you’ve mastered. 
• Then tell us: What is your current Vital Need, the lowest on the pyramid with the most boxes unchecked?

Feel free to share any other thoughts you have about this book. We can’t wait to hear your thoughts in the comments below!

View and Subscribe to all threads about this book.

Happy reading,

Pesso

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Checklist to Identify your Vital Needs:

THE 5 CORE NEEDS FOR SALES

__ Lifestyle Congruence 

__ Prospect Attraction 

__ Client Conversion 

__ Delivering on Commitments 

__ Collecting on Commitments 

THE 5 CORE NEEDS FOR PROFIT 

__ Debt Eradication 

__ Margin Health 

__ Transaction Frequency 

__ Profitable Leverage 

__ Cash Reserves 

THE 5 CORE NEEDS FOR ORDER 

__ Minimized Wasted Effort 

__ Role Alignment 

__ Outcome Delegation 

__ Linchpin Redundancy 

__ Mastery Reputation 

THE 5 CORE NEEDS FOR IMPACT 

__ Transformation Orientation 

__ Mission Motivation 

__ Dream Alignment 

__ Feedback Integrity 

__ Complementary Network 

THE 5 CORE NEEDS FOR LEGACY 

__ Community Continuance 

__ Intentional Leadership Turn 

__ Heart-based Promoters 

__ Quarterly Dynamics 

__ Ongoing Adaptation

[mpmpmp22]

This was fun but also challenging too! See below for the checklist that I went through. 

THE 5 CORE NEEDS FOR SALES

 x  Lifestyle Congruence 

__ Prospect Attraction 

__ Client Conversation 

 x  Delivering on Commitments 

 x  Collecting on Commitments 

THE 5 CORE NEEDS FOR PROFIT 

 x  Debt Eradication 

__ Margin Health 

__ Transaction Frequency 

__ Profitable Leverage 

 x   Cash Reserves 

THE 5 CORE NEEDS FOR ORDER 

 x  Minimized Wasted Effort 

 x  Role Alignment 

 x  Outcome Delegation 

 x  Linchpin Redundancy 

__ Mastery Reputation 

THE 5 CORE NEEDS FOR IMPACT 

 x  Transformation Orientation 

 x  Mission Motivation 

 x  Dream Alignment 

 x  Feedback Integrity 

 x  Complementary Network 

THE 5 CORE NEEDS FOR LEGACY 

 x Community Continuance 

 x  Intentional Leadership Turn 

 x  Heart-based Promoters 

__ Quarterly Dynamics 

 x  Ongoing Adaptation

My biggest need ended up being Profit. Sales was a close second and I think the two work hand in hand together so once sales increase, profit will too. This will be good to check back in on 6 months to 1 year time to see what changed and stayed the same!

Excited to see what other members share! What about yours @Pesso?

[Pesso]

Thanks for sharing and kicking us off here, @mpmpmp22 ! 

Always good to start from the bottom of the pyramid and work your way up, so Sales is a good place to start! Next week we'll dive into setting goals for the Core Needs using the OMENs format from the book, and then start working to Fix them. Super excited to see how everyone's approaches go.

[mpmpmp22]

Love a good goal setting session! 

[TCSlaguna]

I love the Business Priority Pyramid. Order is a difficult thing to perfect, it needs to constantly be assessed and adjusted. But as mentioned, role alignment and outcome delegation are key. 

[Pesso]

Thanks @TCSlaguna !

I'd love to see yours, if you have time! What's your vital need according to the Pyramid? What Core Needs need fixing in your business?

[DinaLRosenberg]

Looking at this list it's all about minimizing wasted effort. There are a lot of times we are duplicating effort across staff.. a lot of this can be solved with better communication among staff members...

For example: this past week we had an online order come in. The order was pulled but the associate pulling didn't; mark it in "progress".  The next day, another associate came in and proceeded to pull the order again, not realizing it was already in progress. This order had multiple items, one of which was a custom piece. The first associate had already set the ball in motion for the creation of the custom piece. In addition to the custom piece, the order had an item in it that we only had one of, (and that one was already pulled), the associate spent a ridiculous amount of time looking for that item. Then the associate called the customer and proceeded to refund the customer $150 for the piece that they could not find even though it was pulled.

Sadly- this type of thing happens all the time and it comes down to communication.

How can this be fixed? Well, Square can fix the with a notes field in orders and a notes field in inventory.

With a notes field the first associate would have written in notes that the custom piece was already in motion. With a notes field in items, the location of the pieces could have been detailed.

Thankfully we were able to invoice this customer for the refunded items- I don't even want to calculate the amount of fees we paid because of this.

Communication is critical- we need somewhere to "warehouse" our communications within Square. Without it, it isn't a true small business solution.

[Tamyra_Paunchy]

Love this idea. Haven't run across the issue of partially filling an order and needing the notes field just yet but I can totally see that happening, especially when more than 1-2 people are working to fill orders. Great idea. Sometimes we do move things though! And it'd be great if there was the option in Square to not only mark an order as filled or complete but note where it's stored/moved to (we have multiple coolers), etc. and who processed it. 

[Pesso]

Thanks for sharing this, @DinaLRosenberg !

Oh jeez, that sounds ridiculously frustrating. I'm so sorry that happened. 

I sent your feedback and requests directly to the invoices team and the item management team, and they appreciate the feedback and request! Hopefully this will come to some changes and improvements here. 

[Tamyra_Paunchy]

Interesting list. My first thought was to scan and find cash. Wherever that was I know I need it. HA! But then I started thinking...maybe it's NOT cash that I need because here cash shows as being generated by sales. In my case, at least right now, I have sales and orders that I cannot even fill (sometimes for months at a time) because I don't have cash for packaging and ingredients! So in that case I think what I'm actually missing from the pyramid is profit. Not enough margin built in? Grrr - I knew the journey wasn't going to be easy but sometimes I think - I did not prepare enough for the biggest of challenges. 

[DinaLRosenberg]

If you have the orders & sales but don't have the liquidity to purchase the supplies for the orders you definitely need to look into your margins. 

[Tamyra_Paunchy]

Yes! We have thousands of $$s in orders, some from as far back as July that we're not able to fill because we don't have the $$ to re-up on supplies. And I do not have $$ for help/employees so bless their hearts, my parents are the other part of the 'we' in my team for now. It's usually wholesale orders we're unable to fill because the margins are much thinner there but I'm told it's almost impossible to scale without going the wholesale route. So frustrating.

If I sell a $6 bottle of lemonade at the farmer's market that's just over a 50% margin for me but I can't make more than $500 in a day (before labor for future staff) at a market 1-2 times a week. If I sell a wholesale order, however, it may be $8,000-15,000 but I cannot sell wholesale for $6. I sell at $2.77 to the distributor who then marks up to $4 and the retailer resells at the same $6 in-store, on-shelf. But now I'm down to 10-15% margin. 😞 

I think - ok. Maybe it's just too soon to scale. I'll wait until I find cheaper packaging and then try again. Nope! Calling and emailing around the country (and Canada) for packaging. Best way to get a discount - volume. The more you buy, the more willing suppliers are to give discounts. Same with ingredients. 

And around and around in circles I go. 😮 

[DinaLRosenberg]

Say you were to get an AmEx, would you be able to leverage their 30 day cycle to get out the wholesale orders? What payment terms are you giving to your wholesale customers? Would they be open to Net 15? it sound like you need a biz line of credit. But those are hard to get from the bank... (we got ours but honestly we got it because we were in biz for 4 years and with that bank for the same amount of time).

[Tamyra_Paunchy]

Yes, I thought about this last week and applied for a line of credit for the first time, but through Bank of America which I've only had a business account with for about 6 months. Too soon they said. 2% 15 net 45 are the payment terms with both distributors right now and only 1-2 times have they actually paid in 10-15 days. Most times it's closer to 60 before they pay, which also makes it hard. Distributors are huge, nationwide companies. They tell you what the terms will be and very rarely if ever negotiate. But yes! It's good to know I'm on the right track. I think some sort of credit card of line of credit to help me with the float between orders is what I need. Without it, I worry I'll start to lose customers next because of empty shelf space while they wait weeks for orders I don't have cash flow to fill. Thanks again!

[Pesso]

Hey @Tamyra_Paunchy -- thanks for sharing!

It could be Profit, but it could also just be in the Sales section of the Pyramid.

I'd love to learn more here. When you say you have thousands of dollars in orders but not enough money to buy the supplies to fill them, what exactly is happening?

1. Are you collecting in full in advance as soon as they place the order?
2. Is the money you're taking in from the order enough to cover the expenses of supplies?
3. Is the money you're making from an order being put aside to fill the order, or is it immediately going to cover previous debt/expenses?
4. Are you charging enough / are your prices high enough to cover your expenses?

[Tamyra_Paunchy]

Hi Pesso! Thanks so much for being willing to talk me down off the ledge, though I feel like I've hijacked the thread. While I wish I could collect funds in advance - this would make things so much easier - I cannot do that anywhere but with online sales I've found. Large distributors and even wholesale direct customers will not pay in advance. Been there, tried that. The money I'm taking in is enough to cover the order BUT it's barely enough and it won't cover things like overhead expenses or labor. That, I think is where I'm falling short. Money that comes in 45-60 days after an order is not able to be put aside in its entirety for the next order. Some of it goes to covering overhead which we fall behind on a lot because to someone's point above, I don't think there's enough margin built in for packaging, ingredients, certification costs, services, supplies, labor, AND overhead. So then I have to pick and choose and constantly short one of those areas. The problem though is that I'm already charging the most I can reasonably charge, wholesale, for a 12 ounce beverage. I'm essentially asking the distributor to pay almost $3, the retailer to pay just over $4, and the customer to pay $6-7 for a can of soda's worth of lemonade (that costs me just over $2 to make). Beyond trying to lower expenses (which can only happen through volume increases for supplies) I am just not sure which part of the pyramid would be the best use of time. The bottom two layers definitely need work but in what way and proportion... Maybe that's on the Fix This Next website. I'll look. lol. 

[Pesso]

Of course, @Tamyra_Paunchy ! You're absolutely not hijacking the thread -- this is exactly what this thread is for!

Thank you so much for clarifying -- that definitely helps me understand a lot more. It sounds incredibly stressful to not be able to get ahead on things, worrying about every cent, and not being able to fulfill the orders your getting.

I highly recommend reading the Sales section of the book, pages 53 to 88, if you haven't already. The author talks about finding the right customers for your business, rather than just selling to anyone you can. 

I'm definitely not going to tell you what to do, but it does seem like maybe going for wholesale accounts like this might not be the right step for a business like yours right now? It sounds like in this phase without that much cash flow, you might need more profitable sales with better terms. Wholesale is a hard game when you don't have massive cash reserves to sustain you.

When we had our ice cream shop, we started with a similar strategy of wholesale and retail. We just weren't equipped to sell wholesale. We were too small, our margins too thin for the prices they needed, and couldn't keep up with demand. We focused instead on growing our retail sales and lowering our costs, and then our profit soared and our stress levels plummeted. 

Even though you said you can't make that much total money from farmers markets, it sounds like your profit ratio is a lot higher there and in other retail (online, etc), your expenses are a lot lower, and you're able to fulfill those orders. Focusing on expanding retail, and potentially hiring to do so, might get a business like yours over this hump and put your business in a more sustainable place to grow and THEN get into wholesale later if you're still wanting to do that. I think it's absolutely possible to scale without wholesale!

Let me know your thoughts, and always happy to talk through this more!

[Pesso]

Hey Square Readers!

Now that we've established our Vital Needs, let's dive into setting goals to actually fix them!

Jump into the next discussion thread, learn about the OMEN method of goal setting, and share your goals for your Core Needs.

Can't wait to see what you come up with!

@mpmpmp22 @Tamyra_Paunchy @DinaLRosenberg @TCSlaguna 

[Doran]

2023 has really taught me I need a new location.  I love the downtown spot that I've dumped tons of money into but with the building next door collapsing in the storms earlier this year and the owner having no desire to fix it... I realize it is killing my business.  Walk-in sales are totally gone.  The business across the street is closed.  

So I'm trying to decide if I want to join a local medspa that would give me access to more facial clients but I'd have to let go of retail sales.  I could work fewer days and make the same income I'm used to.  That would give me more time with my daughter.

Or find a new location that is a little bigger so I can rent out facial space to other estheticians and keep retail sales.  But I'd have to work 7 days a week or learn to hire a front desk person or two... something I haven't had success at. 

[Pesso]

Thanks for sharing, @Doran !

Ah dang, I'm so sorry that's happening. That sounds incredibly frustrating to have something so far out of your control affecting your business so much. It's a shame when a neighborhood changes so dramatically from a storm or other disaster. That's so hard to have your walk-ins completely gone from that, and feeling the need to move. How long has that been happening? Do you think it'll improve at all?

That's such a challenging decision to have to make to completely change your business model. There's no easy answer there, and it all depends on what your goals and priorities are. Spending more family time sounds great, but losing that income stream from retail could be tough. 

What are you leaning towards? Definitely keep us updated!

[Doran]

It just keeps getting more confusing.  The landlord finally started repairs two weeks ago but has now stopped and listed the building for sale.  For an insane amount.  

So I definitely need to move.  I have two years left on the lease but NO traffic now.  Business is down 78% from last year.  

I'm at a loss for what my next steps are.  I'm just out walking the neighborhoods I'd like to be in and searching online for anything that might be available soon.