Is Your Biz a Greedy Beast?

Scroll down ↓

[This is what was hot on the blog a year ago today]

When I work with a new marketing client, one of the first things I do is go deep into their business model.

This intrigues some…and pisses off others.

“Listen up,” I’ll hear, “we’re not paying you to fix our business, we just need more people coming through the door.”

To which I reply:

Let me ask you a question. In my car, I have a box. Actually, it’s a very sophisticated machine. Downright visionary. It took a boatload of money to create and a few years of work by me and my team. I believe in it wholeheartedly.

Now, this machine, it’s got a slot on the top with a printed label next to the slot that reads ‘Insert $100.’ And, here’s the fascinating thing, every time you insert a $100 bill, it gives you back $90. Now, didn’t we know this machine would end up doing this until we’d actually finished creating it. It was supposed to give us back $120 for each $100 we put in.

The first time we tested it with a $100 bill, we thought it was just a calibration error. So, we dropped in another…same result. So, here’s my question, knowing what you now know about this machine, would you keep feeding it $100s?

For some people, it clicks right away. Sometimes, it takes a few beats.

Many businesses think they have a marketing problem, but what they really have is a business model problem. They’ve created what I call a greedy beast. It may be based on a fundamental solution or idea that was sound, but somewhere in the execution, things went astray.

And, left unchanged, their greedy beast eats money for lunch, leaving them losing money with each sale.

If that was your business, would you want to drive MORE traffic, MORE prospects and MORE sales?

The obvious answer is…HELL NO!

Because the faster you feed a greedy beast, the faster it eats itself and you alive.

The less apparent answer, though, is…maybe.

If the reason you’re losing money on each sale is because you can’t bring your cost structure down to a level where each sale is profitable until you scale to a certain volume, and you’re capable of hitting that tipping point, you might be well served by sucking up the losses in the name of a viable longer-term equation.

Problem is, many businesses never do this analysis.

They assume they need to feed the beast more aggressively, without understanding when and why the beast either giveth…or taketh.

So, what’s the takeaway?

Before you go running to ramp up or fix your marketing, take a bigger step back and ask whether your problem is really a business model problem. This is especially important if you’re in a business that did well for years, but has seen a recent decline.

Demand changes over time, the need for solutions evolves, pain points move and even established businesses need to move with them.

Make sure you fix the beast before you end up feeding it its own limbs.

Join our Email List for Weekly Updates

And join this amazing community of makers and doers. You know you wanna...

26 responses

26 responses to “Is Your Biz a Greedy Beast?”

  1. Excellent analogy. I guess ‘Blue Monday’ was New Order’s greedy beast – http://www.copyblogger.com/love-can-tear-you-apart/

  2. I see it over and over again – marketers complain that they need more traffic, but the problem is they ARE getting traffic, they just don’t know how to convert it.

    You hit the nail on the head, Jonathan.

    Best,
    Ana Hoffman

  3. Jonathan…Couldn’t agree more…Recently had a client with the same attitude…They had fundamental problems with product creation and sourcing as well as order management and fulfillment…Margins were crappy…I’m curious, do walk away from the prospects that don’t get it?

    • Jonathan Fields says:

      Hey Shaun,

      If they’re not willing to acknowledge there’s a bigger biz problem, then yes, I walk away. I don’t want to enable or accelerate a losing game or tell people I can fix something they’re not willing to admit is broken

  4. Laura Click says:

    I love this post! I think that this explains what is at the very heart of marketing – problem solving. Before you can market any business or product, you have to determine what can be done to improve the process, the service, the product. You’re right, many businesses just don’t get that. They just want you to redesign the Web site or develop a social media strategy without looking at the bigger picture. You can drive Web traffic or customers to a business, but if there are product or service flaws, it will just flop. Businesses that truly “get” it are the ones that are truly a gem to work with. With those businesses, you actually have the opportunity to make a difference.

    Good stuff!

  5. Dan says:

    Jonathan- What a great post! Sometimes it’s the simplest of parables that teach the lesson universally, thoroughly, and clearly. BTW- I really enjoyed your presentation the other night on the A-List Blogger Bootcamp. I always look forward to your posts.

  6. Naomi Niles says:

    Another reason reason why doing major SEO and buying PPC campaigns doesn’t make a lot of sense if no one’s actually buying anything in the first place.

  7. […] Is your small business a greedy beast? Are you losing money on every sale or every prospect? Is your fundamental business model at fault so that you are forever putting more money in on marketing and other efforts than you will ever get out the other end? Are you thinking that somewhere, somehow there will come a time when you’ll reach enough sales to fix that problem? Are you sure? JonathanFields.com […]

  8. Daniel Sims says:

    This post becomes more epic if you remember time = money. A ton of nooby bloggers pour tons of hours into social media with a small result, yet, they keep going at it. Heck, I have to rethink my marketing plan after reading this post.

  9. Dale says:

    Have worked for a company which was physically messy.. management constantly complained about sales, $$, struggle for target etc. As an experiment we spent a day cleaning up the physical environment and guess what???? People started coming in, buying product, booking events etc – shifted the focus from more more more advertising to cleaning up our act and hey presto. Think this also fits with the content here – businesses focusing on what they think is important is sometimes NOT.

  10. […] Is your small business a greedy beast? Are you losing money on every sale or every prospect? Is your fundamental business model at fault so that you are forever putting more money in on marketing and other efforts than you will ever get out the other end? Are you thinking that somewhere, somehow there will come a time when you’ll reach enough sales to fix that problem? Are you sure? JonathanFields.com […]

  11. Bert Garcia says:

    I love this post! I think that this explains what is at the very heart of marketing – problem solving. Before you can market any business or product, you have to determine what can be done to improve the process, the service, the product. You’re right, many businesses just don’t get that. They just want you to redesign the Web site or develop a social media strategy without looking at the bigger picture. You can drive Web traffic or customers to a business, but if there are product or service flaws, it will just flop. Businesses that truly “get” it are the ones that are truly a gem to work with. With those businesses, you actually have the opportunity to make a difference.

  12. Great metaphor, Jonathan.

    I think, when trying to figure out if it is the business or the business model that is broken, the biggest challenge is reading the market. The business might not be at a break-even level of sales, but is it because the business isn’t working well internally, there isn’t a market for that product or service, or there isn’t a market because of the way THIS company is delivering their product or service?

    Reminds me of Seth Godin’s The Dip. Important concept: being able to distinguish if you are in a dip, a cliff, or cul-de-sac. But the challenge is finding the wisdom to tell the difference.

  13. Listened to @peldi from Balsamiq speak at LessConf yesterday, and he talked about how his 2 major focuses are #1 – creating a great product, and #2 – good customer service.

    He said everything else falls in line from there. He doesn’t do analytics, keep metrics, worry about SEO, or anything else…just those 2 things.

    His business is doing 7 figures.

    Sometimes, it pays to get back to the basics.

  14. Dave Navarro says:

    Dead on.

    I have the same conversation with people who want to launch new products – they want to launch because they need more money, but in a lot of cases what they really need to do is adjust their sales funnel first and optimize their selling processes so they’re getting more out of things than they put into it.

  15. This is an excellent message with a great story. I have found myself wondering why many of my prospects get frightened to pay my measly retainer, which has me asking them where are they deriving profits.
    In my business, I put a lot of my income back into the business in order to try to ramp up future profits, but I pay close attention to each investment. If things do not look right, I cease investing – whether it be direct mailings or banner ads on websites. It is slightly distressing to see others not take the same look at their own business. Instead, we see businesses just generally cost-averse, which does not seem healthy.

  16. I see this all the time in clients who want to know how to build their lists, use Facebook and Twitter to get lots of followers, but who have little to sell, underprice their products and services, and have no plans or programs for retaining the clients they do get. So long as self-employed people treat business as a dirty word, they’re doomed to under-earning and over-working.

  17. Loretta says:

    Love your analogy! I definitely don’t want a greedy 100 dollar bill eating beast in my business model!

  18. suvie says:

    Great post, I often feel like many of the tasks
    I do online are like grunt work, and like you I agree
    it was not the way I wanted to run an online business,
    I wanted everything more easy and automated.
    The 2 out 3 rule sounds good to me, I will be implementing that now,
    I was never sure what ratio to use for mailings.
    I have tried, failed and gave up, but now I am back to try again,
    with a new passion so hopefully I can find the way that works for me this time,
    thanks for this post, it really helped me

  19. Steven Hubert says:

    Fine and well. But which guru is gonna smack you upside your head with a plan to be trusted? Answers, replies are totally welcome!

  20. As someone who has been imprisoned in the corporate world for too long and is now starting a business, this is a great piece of advice to keep in mind. I’ve seen way too many companies (big ones too) that build a business plan and then treat it as if it were set in stone. No changes. No re-evaluation. Nothing.

    Hope to avoid this same pitfall!! Thanks.

    • Change is a fact of life. Often you can see principles do work. Being adaptable is one of them. After many years of doing the same sort of stuff and getting similar, dissatisfing results, I read the E-Myth Revisited (Michael Gerber). I’m about to read a follow up called E-myth Mastery. As you are starting out & before you waste too much time, I recommend checking these out, in the order mentioned. I’m hoping to re-engineer my practices and I like what I’ve seen from E-Myth. (I’m not getting comped for this mention)

  21. Mardah B says:

    Before you can market any business or product, you have to determine what can be done to improve the process, the service, the product. You’re right, many businesses just don’t get that.

  22. Jonathan,
    I am also solving a problem with my blog. I have a steady flow of traffic I need to find a way to convert what I am getting into sales and longtime relationships.

    I have been seeing a steady growth in income so far but I am always trying to find ways to improve.

  23. Courtney says:

    The “ready, fire, aim’ classic response. Understanding processes and a business taking time to truly get their own makes a huge different in profits. After you test, then you test some more.

  24. Amy Putkonen says:

    I agree with Courtney – Ready, Fire, Aim. Sometimes its more like ready, ready, ready, ready…no fire, no aim.