“Without solid foundations you’ll struggle to create anything of lasting value”
Many of us are familiar with the story, from the Bible, of the two men who built houses. One built his house upon a rock and another who built his house upon sand. The house built upon a rock weathered the storm, and the builder was called wise; but the house built on the sand collapsed during the storm, and the builder was called foolish.
The meaning of this parable is quite obvious: proper foundations are necessary. With a literal house, it is unwise to build on sand, because the foundation will be unsteady and the house will eventually suffer some kind of damage. This will waste resources, and all the time and work put into building the house in the first place will have gone for nothing. In contrast, it is wise to build one’s house on a sure foundation; anchoring to bedrock makes a building withstand the test.
And so it is the same in business. Oftentimes we get so excited about starting our business that we fail to put the proper foundations in place, and the result I come across time and time again is that whilst the business is prospering there is little or no negative impact, but when the tide turns and the storm comes in, orders dry up and cash flow is tight, then the unsteady foundations of the business start cracking and in many cases the business doesn’t weather the storm. It’s so sad to see this as some well thought out structured planning at the outset could have prevented this and ensured the business would survive and thrive.
Many of you will be familiar with how I like to relate everything in business to nature and the natural world and the foundations of your business are no different. There are five natural elements found in nature and they each represent a different season of the year and provide a different business focus which is critical to creating the foundations of your business. These elements and their seasonality provide us with a foundational blueprint of how to run our businesses by keeping our people, teams and processes in flow. Each element is inter-dependent on each other and this is why we must have all these five elements aligned if we are to create solid cornerstones for our business. This can be clearly seen in the diagram below of the Five Element Business Focus Model.
Water Energy (Mission):
Water energy has a duality in that it can be fast flowing and powerful or still and peaceful. The water element is associated with the season of winter and is always asking us the question Why? The key business foundation that the water element seeks us to get clarity on is why we are in business. What is the business mission and what is the real purpose of the business. For every business it is essential to have clarity of the mission and why you are in business, as this is the fuel that keeps you going when the going gets tough. Today more than ever customers are seeking to do business with purposeful organisations. Companies that know why they are in business and the real impact they want to make in the world. And interestingly for all these companies it is not profits, although interesting all the research shows that companies that focus on their purpose and impact actually generate 10 times more profit than companies that just focus on this metric.
Wood Energy (Merchandise):
Wood energy is associated with Spring which is a time of new beginnings. It is the season in which we ask What are we doing. In business this relates to what merchandise will be selling, what innovation and products and services will we be offering. It is essential that every business has clarity on what they are offering, because without this clarity the customer doesn’t know what they can buy and so can’t make a purchasing decision. In my experience at the outset keep things simple and just focus on a few key products and services. Get known for delivering these well and then you can expand your product offering. All too often I come across companies with a plethora of diverse merchandise and this just confuses the customer.
Fire Energy (Magnetise):
Fire energy is associated with summer when there is lots of movement and connection. In business the fire element relates to Magnetise and who are the clients you are seeking to attract. Knowing who you want to serve is a key cornerstone of any business and one that often gets overlooked. All too often new business owners want to serve everyone and in the process serve no-one. Getting clarity on your ideal client and niche is of paramount importance in creating a sustainable business. The other advantage of being niched and serving a specific target audience is that you can more easily position yourself as an expert and so command higher fees. Simply by niching you distinguish yourself from the crowds and so avoid your products and services becoming commoditised and therefore competing on pricing with others.
Earth Energy (Monetise):
Earth energy is associated with late summer, a time of slowing down and also of expert timing, of knowing how long to leave the crops until they need harvesting. The earth element is always asking the questions when and where and in business this translates to knowing how to monetise our products and services. Where and when should we be selling and at what price. These are key business decisions that can impact the business success and which we must be continually striving to master. Discount a product too early and we lose valuable income, whilst leaving a discount running too long also has the same effect. The challenge here is to learn how to master the art of distribution so that you maximise the return on your assets.
Metal Energy (Mechanise):
Associated with autumn metal energy is super efficient and effective. It is always asking the question How can we make things more effective. How can we change our procedures to get a better result?. How can we Mechanise operations so they are as streamlined as possible, and so they can be automated. How can we organise things and what systems and metrics do we need in place to monitor performance?. Implementing systems is oftentimes the area that many business owners overlook – after all it is not the most sexy of activities – and yet time and time again systems can save the business time and money when created in a structured and well thought out manner.
Each of these energies and its corresponding “M” activity are key cornerstones to ensure the success of any business. Just like in nature, these cornerstones need to be aligned to keep the business in harmony and when one or more of these cornerstones is missing this is when poor performance and trouble can occur. Just like the house built on the sand when these cornerstones of Mission, Merchandise, Magnetise, Monetise and Mechanise are out of balance then when stormy conditions arrive the business is more likely to implode.