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A Game-Changing Approach for Artisan Businesses
Embracing the Fix This Next management process
Jacob Curtis
October 15, 2024
Running a small business as a solo entrepreneur can be incredibly rewarding, especially for artisans who pour their passion into creating unique, handcrafted items. However, navigating the complexities of business operations often presents challenges. This is where the principles from the book Fix This Next by Mike Michalowicz can make a significant difference. This article will explore how the strategies outlined in Fix This Next (FTN) can help artisans streamline their operations, prioritize their needs, and ensure sustainable growth.
Understanding Fix This Next
Mike Michalowicz, the author of Fix This Next, is renowned for his innovative approach to small business management. The book centers around the concept that small business owners often get stuck addressing symptoms rather than the root cause of their problems. Michalowicz introduces a hierarchical system, akin to Maslow's Hierarchy of Needs, specifically designed for businesses - the Business Hierarchy of Needs (BHN). This system helps entrepreneurs identify their most critical business needs and address them systematically.
With Maslow's Hierarchy of Needs, if you go without oxygen for too long you die. Once you have enough oxygen and other basic needs, you can move up a level and focus on things like shelter and relationships. But as soon as your oxygen supply is cut off, you must find more or risk dying.
Sales is the oxygen of a business without sales it will die. Only once you gain adequate sales can you focus on other needs like profit and efficiency. As you move through the different stages of business your needs will change and so should your focus. Today, you may need to focus on Profit, but in a year, you may need to move down a level and focus on Sales (during COVID almost everyone had to move down a level and figure out how to get more sales). As your business moves through different economic and maturity phases, you will move up and down the hierarchy.
The FTN Business Hierarchy Needs consists of five levels:
Sales: Generating consistent revenue (the most basic need).
Profit: Ensuring the business is profitable.
Order: Creating efficient systems and processes.
Impact: Making a positive difference for customers and the community.
Legacy: Building a business that can sustain itself beyond the owner (the most advanced need).
The 25 FTN Questions
To help diagnose and address the most critical needs in your business, FTN provides 25 essential questions. These questions are divided into the five levels of the hierarchy:
Sales Questions
Lifestyle Congruence: Do you know what the company’s sales performance must be to support your personal lifestyle?
Prospect Attraction: Do you attract enough quality leads to support your needed sales?
Customer Conversion: Do you convert enough of the right prospects into customers to support your needed sales?
Delivering on Commitments: Do you fully deliver on your commitments to your clients?
Collecting on Commitments: Do your customers fully deliver on their commitments to you?
Profit Questions
Debt Eradication: Do you consistently remove debt rather than accumulate it?
Margin Health: Do you have healthy profit margins within each of your offerings and do you continually seek ways to improve them?
Transaction Frequency: Do your customers repeatedly buy from you over alternatives?
Profitable Leverage: When debt is used, is used to generate predictable, increased profitability?
Cash Reserves: Does the business have enough cash reserves to cover all expenses for three months or longer?
Order Questions
Minimized Wasted Effort: Do you have an ongoing and working model to reduce bottlenecks, slowdowns, and inefficiencies?
Role Alignment: Are people’s roles and responsibilities matched to their talents?
Outcome Delegation: Are the people closest to the problem empowered to resolve it?
Linchpin Redundancy: Is your business designed to operate unabated when key employees are not available?
Mastery Reputation: Are you known for being the best in your industry at what you do?
Impact Questions
Transformation Orientation: Does your business benefit customers through a transformation, beyond the transaction?
Mission Motivation: Are all employees (including leadership) motivated more by delivering on the mission than by their individual roles?
Dream Alignment: Are people’s individual dreams aligned with the path of the business’s grand vision?
Feedback Integrity: Are your people, customers, and community empowered to give both critical and complimentary feedback?
Complementary Network: Does your business seek to collaborate with vendors (including competitors) who serve the same customer base to improve the customer experience?
Legacy Questions
Community Continuance: Do your customers fervently defend, support, and help the business?
Intentional Leadership Turn: Is there a plan for leadership to transition and stay fresh?
Heart-Based Promoters: Is the organization promoted by individuals inside and outside the organization, without the need of direction?
Quarterly Dynamics: Does your business have a clear vision for its future and dynamically adjust quarterly to make that vision become true?
Ongoing Adaptation: Is the business designed to constantly adapt and improve, including finding ways to better and beat itself?
Applying Fix This Next to Artisan businesses
Step 1: Evaluate Your Business Needs
The first step in implementing Fix This Next is to evaluate where your business currently stands. This involves an honest assessment of your operations based on the five levels of the hierarchy.
By honestly answering these 25 questions, you can pinpoint the most pressing issues that need attention.
Step 2: Focus on the Most Critical Need
Once you've identified your business's most critical need, the next step is to focus your efforts on addressing it. This targeted approach ensures that you are not spreading yourself too thin and are making meaningful progress. Here’s how artisans can tackle each level of the hierarchy:
Sales: If your primary challenge is generating sales, consider diversifying your marketing efforts. Leverage social media platforms like Instagram and Pinterest, which are highly visual and perfect for showcasing your crafts. Collaborate with influencers or participate in local craft fairs to increase visibility. Use the Sales questions to assess your lead generation, conversion rates, repeat purchases, margins, and customer acquisition.
Profit: To ensure profitability, analyze your pricing strategy. Are you covering all your costs, including time and materials? Consider implementing a pricing formula that accounts for all expenses and desired profit margins. Additionally, track your expenses meticulously to identify areas where you can cut costs. The Profit questions will guide you in evaluating your wage, profit margins, cash flow management, reinvestment strategies, and cost efficiency.
Order: Creating efficient systems can save you time and reduce stress. This could involve setting up a structured production schedule, automating parts of your business like invoicing and inventory management, or outsourcing tasks that are outside your expertise. Use the Order questions to ensure you have documented processes, efficient operations, reliable support, and contingency plans.
Impact: Artisans often have a strong connection with their customers. To enhance your impact, focus on delivering exceptional customer service and building a community around your brand. Engage with your customers through personalized communication and offer loyalty programs to encourage repeat business. The Impact questions help you clarify your purpose, value to customers, positive impact, customer feedback, and community contribution.
Legacy: Building a business that can operate independently of you is the ultimate goal. This might involve training someone to handle parts of your business, documenting your processes, or even considering a partnership to share responsibilities. Use the Legacy questions to develop a clear vision, groom successors, establish independent systems, build a lasting brand, and create a succession plan.
Understanding the OMEN Method for Measuring and Tracking Results
In addition to the hierarchical approach and diagnostic questions, Fix This Next introduces the OMEN method, a practical framework for measuring and tracking results. OMEN stands for Objective, Measurement, Evaluation, and Nurture. This method ensures that your efforts are not only targeted but also effectively monitored and adjusted for optimal outcomes. Here’s how artisans can apply the OMEN method to their business.
Objective
The first step in the OMEN method is to set a clear and specific objective. This is a goal you want to achieve that aligns with the most critical need identified in your business. Objectives should be SMART: Specific, Measurable, Achievable, Relevant, and Time-bound.
Example: If your most critical need is increasing sales, your objective might be: "Increase monthly online sales by 20% over the next three months."
Measurement
Once you have a clear objective, the next step is to determine how you will measure progress. This involves identifying the key metrics that will indicate whether you are moving towards your goal. These metrics should be directly related to your objective and easy to track.
Example: To measure the increase in sales, you might track metrics such as:
Number of website visitors
Conversion rate (percentage of visitors who make a purchase)
Average order value
Total monthly sales revenue
Evaluation
Evaluation involves regularly reviewing your measurements to assess your progress towards the objective. This step is crucial for identifying what is working and what isn’t, allowing you to make data-driven decisions. Regular evaluation helps you stay on track and make timely adjustments to your strategies.
Example: Set up a weekly review process where you analyze your sales metrics. Compare your actual results with your targets and identify any trends or patterns. Are certain products selling better? Is there a particular time of day or week when sales peak?
Nurture
The final step in the OMEN method is to nurture the process. This means continuously supporting and adjusting your efforts to ensure sustained progress towards your objective. Nurturing involves making incremental improvements, experimenting with new strategies, and staying committed to your goal.
Example: If your sales metrics indicate that social media promotions are driving traffic but not converting to sales, you might experiment with different types of content or promotional offers. Regularly engage with your customers to gather feedback and refine your approach based on their responses.
Integrating the OMEN Method with FTN
By integrating the OMEN method with the principles of Fix This Next, you can create a comprehensive strategy for business growth. Here’s how the two approaches complement each other:
Objective: Align your objectives with the most critical need identified using the 25 diagnostic questions.
Measurement: Use specific metrics to track progress in addressing your critical need, whether it’s sales, profit, order, impact, or legacy.
Evaluation: Regularly evaluate your progress using the hierarchical approach to ensure you are addressing the root cause of issues.
Nurture: Continuously nurture and adjust your efforts to ensure long-term success and sustainability.
Case Study: Implementing the OMEN Method
Let’s visit the hypothetical case study of Sarah, an artisan who runs a small business creating handmade jewelry.
Objective: Sarah’s most critical need was to increase sales. Her objective was to "Increase monthly online sales by 20% over the next three months."
Measurement: Sarah decided to measure her progress by tracking:
Number of website visitors
Conversion rate
Average order value
Total monthly sales revenue
Evaluation: Sarah set up a weekly review process to analyze her sales metrics. She noticed that while traffic to her website increased, the conversion rate remained low. This indicated that while her marketing efforts were successful in attracting visitors, she needed to improve her product pages to convert those visitors into buyers.
Nurture: Based on her evaluation, Sarah experimented with different product descriptions, improved her product photography, and introduced limited-time offers to create a sense of urgency. She also engaged more actively with her audience on social media to build stronger relationships and gather feedback.
Conclusion
For artisans and solo entrepreneurs, the principles outlined in Fix This Next provide a structured approach to business growth and sustainability. By evaluating your business's needs using the 25 diagnostic questions, focusing on the most critical issues, and implementing systematic changes, you can build a resilient and thriving business. The OMEN method offers a practical framework for measuring and tracking your progress, ensuring that your efforts are focused and effective. By setting clear objectives, measuring progress, regularly evaluating results, and continuously nurturing your strategies, you can achieve sustainable growth and long-term success. Embrace these methods, and watch your business flourish.
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Jacob Curtis is a CPA, a Certified Profit First Professional, and a business coach. He started Curtis Accounting Solutions to remove the stress of doing the bookkeeping, payroll, and taxes and to provide practical business advice that helps stores piece together financial freedom. You can schedule a call with him at https://www.curtisaccountingsolutions.com.
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