When sales are good; when sales are bad: The owner's self-sabotage

Peter Lynch, the legendary fund manager, said it best. "Losers take the credit in the good times and then blame the market in the bad times. Winners take responsibility regardless of the outcome."

He was talking about investors. He might as well have been talking about business owners.

Ask ten owners how the year is going. The answers fall into a pattern. When sales are up, they explain it as strategy. Their positioning is working. Their vision is being validated. When sales are down, the story changes. The market is soft. Clients are cautious. A competitor is disrupting the space.

Two completely different frameworks depending on whether the number is going up or down. Both cannot be true. Usually, neither is.

Most owners have no idea what is actually driving their revenue, so they credit themselves when it goes up and blame the market when it goes down. It feels honest. It is not. It is the reason most businesses never break through.

Marketing is a system, not a mood.

The confusion starts with a definition problem. Most owners think marketing is advertising. It is not. Advertising is one tactic inside marketing. Marketing is the entire system that brings a stranger to your door and turns them into a paying customer, repeatedly, predictably, at a profit.

If you cannot describe your marketing as a system, you do not have marketing. You have hope. Hope explains why your results are unpredictable. It is not the market that is inconsistent. It is your inputs.

The five levers that actually move the number.

Brad Sugars, the founder of ActionCOACH, built an entire coaching methodology around a simple observation. Every business, without exception, has exactly five levers that produce its revenue and profit. Leads. Conversion rate. Number of transactions per customer. Average sale value. Margin.

He calls it the 5 Ways. Multiply them in sequence and you get your profit. Change any one by 10% and profit moves. Change all five by 10% and the compounding is remarkable. Your revenue does not go up by 10%. It goes up by roughly 46%. And your profit does not follow revenue. It rises by around 61%, because the margin lever compounds on top of the volume gains.

The 10% movement on each lever; 46% more revenue; and 61% more profit: That is not opinion. That is arithmetic.

Take the responsibility. Take the control.

Lynch's line lands hard because it exposes something uncomfortable. If you take credit when things are good, you have to take responsibility when things are bad. The moment you accept full responsibility for your marketing outcomes, everything becomes possible. If you caused the drop, you can cause the recovery.

The owner who cannot tell you which of the five numbers moved is guessing. And the owner who is guessing will always blame the market, because that is the only explanation left when you do not know what your own numbers are doing.

Start this week. Pick one of the five levers. Just one. Measure it honestly. Move it deliberately. Then pick the next one. The market did not decide your revenue this quarter. You did. The sooner you accept that, the sooner you can do something about it.

Look at your last three months of revenue. Can you tell me exactly which of the five numbers drove the result? If not, you are not running a marketing system. You are running an excuse.

Mohammed Shabeeb is the National Director of BNI Qatar and Director–GCC for ActionCOACH Business Coaching.

Originally published on Gulf Times

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