The 7 Steps To Freedom Step 1: Key Factors For Business Success (2)

The bigger picture of forming a business in general terms. With comments for content creators.
(According to Chapter 2 of 7 Steps To Freedom by Benjamin D. Suarez)

Table of Contents

Chapter 2: Educate Yourself About The Key Factors That Determine Business Success

The Most Important Factor of Business Success

It is , drumroll please… SALES. About 69,999 businesses out of 70,000 fail every year because they produce a product first and sell it later. Great products are very common, but sales ability is rare because:
1. Salesmen are looked down upon by society
2. Salesmen are abused by government and public and media
3. Sales are hard and require specific knowledge without which you fail.

Content creator interpretation: This is the reason that influencers like Joe Pulizzi say we should gather an audience first I believe, because it takes time to provide value and gather trust with your audience, which is so essential for the selling part, which is extra hard. (As you can see Monetization is on the 6th and last step of the “Content Inc. system outline“)

The 12 Key Components Of A Business Are

If your business is failing [For many of us not yet taken off] – One of these 12 components is to blame in Ben’s 21 years of experience.
They are stated veeeeeery generally. To be elaborated later on (guess you will have to stay tuned for better understanding 😉 ).

Content creator interpretation: Before product launch, half of these are irrelevant. So, for your convenience, I have separated them according to my judgement into those that should be handled after product launch(advanced) and before launch(beginner). For now there’s not enough detail to act on them, so just make a mental note of those that you somewhat tend to and those you don’t completely.

1. Written Business Constitution (Unsure)
2. Goals and objectives (Before launch)
3. Effective human resources (After launch)
4. Effective systems(4:53-5:51) (Before launch)
5. Effective customer relations (Before launch)
6. Enforced deadlines (Before launch)
7. Predicting financial status on monthly basis (After launch)
8. Effective revenue generating system (products, promotions, quality prospects, media to reach prospects) (After launch)
9. Equipment (Before launch)
10. Building facilities (After launch)
11. Inventory material systems(Warehousing/Stock I assume) (After launch)
12. Security against criminal government and competition (Legal mostly I assume) (After launch)

The 9 leading killers of business - TRICCLIRS

Content creator interpretation: If you still have no product, just skim these for later reference when you have one.

Taxes – Can swallow 60% of revenue easily, monitor them to make sure you don’t overpay.
Rent – Whether you have sales or not, rent is constant, so don’t rent a too big office space.
Interest – Make sure you have enough profit to cover a loan’s interest before you take one.
Criminals – E.G. Employees stealing, government bribing, suppliers over-billing. Be alert to those and prevent them.
Costs – When dealing with 100,000 orders, a few pennies per order can lead you to the red. Pay extra attention.
Legal – Legal expenditures and lawsuits, be cautious with those.
Inventory – If inventory is low, may need to refund orders. If too much may lack money for promotions. Keep it balanced
Receivables – Always know who owes you and how much and collect aggressively, do not alienate customers though, it’s a balancing act.
Sales – No sales – no income. Always watch sales.

THE 10 BASIC PRINCIPLES OF THE NET PROFIT GENERATION SYSTEM

Content creator interpretation: The same as TRICCLIRS, these seem more advanced, to be used after launch. Just skim them for now, if something is not clear let it go (Some of them seem like Chinese to me too 🙂 ). If there will be something worth focusing on, I’ll probably mention it in later posts.

1. Profit = Total $ from Sales minus Fulfillment cost & Marketing cost & Fixed overhead & Income taxes
2. Total $ from Sales is determined by: Demand, promotion effectiveness, prospect quality, media efficiency

These 4 are actually principles 3-6 and are explained there.
3. Demand = Need for the product + Perceived product value relative to cost +
Customer trust in the company + Delivery time of the product
4. Promotion effectiveness consists of: Attention grabbing power, ease of understanding, word selling power, graphic and illustrative selling power, ease of ordering, cost efficiency of the promotion (What deal is the customer getting on the product) and the offer.
5. Prospective customer quality is determined by: Did he buy in the past? How recently? The more recent the better
How much did he pay? The more the better
6. The media’s efficiency (on which you promote) is determined by:
Cost per exposure. Percentage of prospects reached
Contingency mediums of the media
*Response medium to order the product
*Payment medium to order the product
*Product delivery medium

7. Sales generation system’s (SGS) profitability is determined by selling price minus direct product cost
more formulas are presented in step 2
8. Predicting future sales amount is possible when you made just 10% of them.
9. Direct response audience groups consist of:
Non prospects, prospects and respondents (Inquiries, buyers, multiple buyers, customers and expired customers. Also sometimes there are “duplicates” which are the same person under different names because of change of address etc.)
10. Frequent buying increases the chance of even more frequent buying

Success Factors FILLABLE Workbook

If it feels like you’re drinking from a firehose after reading this post, it makes sense because it mostly gives you general ideas.
Nonetheless, these principles may prove useful later on, so to help you better learn them I’ve made a 1.5-page FILLABLE workbook that I estimate takes about 5 minutes to fill. Check it out below, and on to the next chapter of the book we go.