E140: Traction Part 2 – Company Core Focus and 10 Year Goal
This is the second episode of a podcast series I'm doing on Traction, a business book written by Gino Wickman geared towards helping business owners run their companies with more growth and enjoyment. My company is currently in the process of applying the system outlined in the book and the impact is so great that I'm documenting the entire process here in the podcast.
In episode 1 of the series I talked about the importance of setting aside time to think about your company's core values and actually putting those core values into writing. In addition, you need to understand that these are not just feel-good buzzwords that will sit on a piece of paper on the bottom of your drawer, so communicating these core values to your employees and everyone else who help you run the company is of utmost importance.
Once you have that done it's time to set your company's core focus and 10 year goal, both of which will be covered in today's episode.
Your core focus is the reason why your company exists. This one can be tricky since Traction explicitly does not consider money-making as a core focus, and money is the reason why most businesses exist in the first place. But putting money aside, what is it that you want your business to accomplish? What is your company's purpose? What's your passion?
Once you've set your company's core focus, it's time to set your 10-year goal, which should be a BHAG (Big, Hairy, Audacious Goal). This is a length of time most people can't wrap their heads around and possibly skew to either an underestimation or an unrealistic optimism. In this episode I'll tell you how I figured out my 10-year goal and break it down to relatively short-term, achievable goals.
Webinar – 2018 Amazon Launch Strategy
Traction: Get a Grip on Your Business (Amazon afiliate link)
Traction episode 1
Our 2018 $9.7 million forecast
Thanks for listening! Look out for more episodes on Traction in the future. Also, get a chance to win one of our gorgeous mugs by commenting below. Have you set your company's core values? What about focus and goals? Comment away and win!
Full Audio Transcript
Mike: This is Mike, and welcome to episode number 140 of the EcomCrew Podcast. You can go to EcomCrew.com/140 to get to the show notes for this episode. And for this episode we're back with another Traction overview. And this is going to dig into the next part of Traction on episode number 138.
We went over our core values and how that relates to Terran and our company now. In this episode we're going to dig into in the next sections of Traction. So again, EcomCrew.com/140 to leave a comment for this episode. And on the other side this break, we’ll dig right on in to part two of Traction.
All right guys, we're back with another episode as I mentioned on Traction. This is a book that I read in early 2018, actually I think I started cracking open in 2017, but most of it was consumed in 2018. And we're going step by step through that process, how we kind of went through our journey. The last episode on Traction was about our core values. And again, the key thing here is getting this stuff down on paper. Not just for you and not for your management team, but for your entire company, something that had definitely been amiss for me in previous businesses that I've run.
It's easy for you to know what your core values are. It's easy or maybe a little bit less difficult or more difficult I guess you should say to have your management team know about it, but definitely something that most people don't go out of their way to communicate to their entire company, something that was definitely amiss for us. So after defining your core values, the next thing that Traction has you go through is to create your core focus.
And the whole idea here is to discuss why does your organization exist? What is its purpose, its cause, or its passion? And you need to do this in the way that they teach it in the book at least, and we followed this. But to do this by saying it in seven words or less, written simple, it's a big and bold statement, it has like this aha effect, it comes from the heart, it involves everyone, it's not about money and it's bigger than the goal. And then after you do that part it's all about what is your organization's niche.
So when I first wrote this down, it's actually interesting now looking back at our notes of what I had versus what our management team came up with because Michelle, my wife Michelle and our COO Jacqueline were a very big part of forming this or helping form this. But what I had kind of put down was creating raging fans not just customers because to me, the passion for this business isn't necessarily making money for sure. It even says this to make sure this isn't a part of this, but that's definitely not the biggest objective.
Obviously that's what a business is there for. But for me it's way down the list. But the thing that's really interesting to me, the thing that I really enjoy from this business versus other things that we've done is creating these like raging fans not just customers. These are people that typically when someone does say something negative about our business in front of us and jumping on them like rabid dogs to stop them from or put them in their place as someone is upset about something, which is weird.
We’ve actually a couple of times we’ve had to ask people to like back off and say look, like this is this person's experience, and we want to work hard to make sure that that person doesn't feel that way again, or other people don't feel that way. Because the way that they feel is the way that they feel, and some people are scamming you and you're never going to make 100% of the people out there happy 100% of the time, and I'm definitely very understanding of that for being in business for a long time.
But there are times when good people that are smart and not trying to take advantage or just had a bad experience. Maybe their product legitimately got damaged or something in shipping or there's a reason why they make chocolate in vanilla ice cream. Some people just might not like it even though it's a great product, and you put your heart and soul in developing it doesn't mean necessarily that someone is going to like that particular product.
So we get that, and we want to work hard to try to make sure that for the most part that the majority of people do love our products and that they're not just customers but raving fans. And with that, we want to develop products that people want to tell the world about that they're excited about our products. And the other thing I put here was that it gives customers butterflies when they open our products.
I used to feel this way about Apple products. When I used to get Apple products, I used to kind of feel like a little kid in a candy store I guess. So when I used to get these products, I feel like they’ve made a big miss lately. I don't feel that way anymore. I actually joke about this amongst friends or close people of mine, but I actually wrote Tim Cook a letter about this. It’s just an email but something I normally wouldn't do.
But at the last purchase I made from Apple, it was so underwhelming that I was like, you know what like I'm actually going to send the email and I'm sure it will ever be read by Tim Cook certainly but may never get a response and I didn't, which actually was even more telling to me of late where Apple is compared to where they were. But there was definitely a time for many, many years where I would be the guy waiting in line. And I actually never did wait, I actually paid online.
But I would certainly be at my computer at midnight. I can tell you I did that where I was ordering the phone or whatever it was, a computer. I want to be the first one to get whatever new product it was. When I got it I definitely had a feeling like I didn't have with many other things because I'm not a person that really enjoys purchasing things all that often. I’m not a material things kind of person, but I do love my gadgets.
And certainly I felt that way about iPhones and computers for a long time, and I love to recreate that experience for people when they buy our products. Even though they're not technology, but there's a lot of people that when they get our coloring books or our pens certainly feel that way. They told us that and we know that from just other feedback. And it makes me feel really good to do that and we want to continue to do that.
Another product that I felt that way about recently; I haven't felt this way in a long time. But I was lucky enough to be one of the early people to get a model three Tesla, and I certainly feel that way about this car. I mean it feels like a leapfrog type product that it's not just a car but it's a bunch of technology like in a woven into a vehicle, definitely really cool, auto pilot in the screen and all these other things about the car that that just make it feel amazing. I feel like a kid when I got the car and it's definitely cool.
I want to create that experience for our customers. So let's talk about this part for what we ended up coming up with after the team and I talked about it. And we had to cut it down and get this into a smaller fewer words, because we said we couldn't be more than seven words. And I think we actually cheated here and used a couple more words. So our passion is to turn strangers into raving fans through amazing products.
That kind of summarized all of the things that went into this stuff that I kind of put down as really notes. And for the most part, they didn't really change too much here, but they definitely helped put input into getting this into a more concise format. And I think it speaks to exactly what we're doing. Our passion is that. It isn't some of the other things that we talked about, because I kind of questioned this. Was it the technology component or was it e-commerce itself?
But I think that's actually our niche. And that was what they had come up with. So the way I had put it was always being at the forefront of the e-commerce industry. The way that Michelle and Jacqueline helped me reword this was the niche was executing the components of e-commerce with an unmatched level of excellence. So basically what it comes down to is that our niche is in e-commerce obviously, but I think that our niche specifically is to be the leader in e-commerce.
We don't want to just be following what everyone else is doing. We want to be able to be out there doing things that everyone else isn't doing. And because I think that if you're just a follower in e-commerce or in business especially a business that has a lot of technology around it, your lifecycle of what you're doing is always going to be shorter than someone like us that is always out there trying to be the first ones doing stuff and has someone else copy what you're doing.
And obviously we do this podcast and lots of people copy or take a creative inspiration out of what we're doing which is fine, that's why we do it. But and one of the things that is a byproduct of being the leader is having being able to do things like this podcast. So that's actually pretty darn cool. And we help people be a market leader sooner than maybe if you weren't listening to it which is another really cool byproduct.
And we've talked about acknowledging why I love doing this podcast and being able to do that for people, because again I think that this is a wide industry, e-commerce itself. I think that money is not the number one factor for me at this point in the game, and if I'm able to help someone else become a seven figure business owner because of something I get from this, that's pretty darn cool.
So now the niche would be executing the components of e-commerce with an unmatched level of excellence. And being able to do that across all the disciplines, whether it's selling on Amazon or a Shopify’s channel or running Facebook ads or Amazon ads or Google product listing ads, email, through Klaviyo and building an email list and doing segmenting and just sending out email in a very intelligent way and getting a high volume of value out of your news, out of your email list and doing free plus shipping offers and ManyChat bots and all these different factors, being good at all these components, not just one part of it.
The analogy that I use all the time now is playing football. You wouldn't want to play NFL football even against the — let's say it's the best team in the league versus the worst team in the league. And I'll leave all the puns out of this. But let's just say everyone would agree in this example that the best team in the league is team A. And then we can get everyone to agree that the worst team in the league is team B.
Well that's only if they're playing eleven on eleven football. If it's eleven on ten, then you can't win even as the best team in the NFL. If you only were able to put on the field, you lose to the worst team that has eleven men on the field. And the way that I look at that is that we want to be the team that has all eleven men on the field and everyone else out there is struggling to get all those people to show up.
And the men in this case on the field is the different components of e-commerce. So to me that would be again — and it's not necessarily exactly eleven things, but the things I just kind of rattled off which are selling on Amazon, selling on other channels like a Wal-Mart or Jet or Etsy or whatever it might be eBay, Groupon whatever, your own channel at a Shopify store. And then working on SEO and community building, and PPC and Facebook ads, and ManyChat bots, etcetera, etcetera.
We want to be doing all those things right for a couple different reasons. Number one, I think that if you put all your eggs in one basket in business it can be a very dangerous thing. There is a lot of people panicking right now because Facebook ads aren't performing necessarily as well as they had on the past because of some of this data breach stuff that's been going around and privacy issues. So it’s just less people on Facebook and there's more people or just as many people are trying to reach fewer people.
Supply and demand is definitely skewed lately. We've noticed some smaller jobs ourselves but not as much as some people that I've talked to. But for us, it isn’t like I'm worried about us going out of business. I mean it's definitely I'd rather this had not happened, but it isn't like all of our eggs are in that one basket. For us our biggest exposure would be Amazon, which does bother me and we’ll talk about that actually later in one of these episodes.
So anyway that is kind of it for this particular section the core focus. And I want to add another part to this because we're still a little bit under 30 minutes for this episode. So I’m going to combine the next steps. So basically again Traction has kind of laid out and doing this in step by step formats. So the first thing we did was our core values, then it was our core focus. The next thing that we did was to set a ten year goal, and I want to talk about that next here.
And again this is all on the worksheet within Traction and this all will be communicated to our entire company so everyone knows exactly what it is. And obviously, I'm talking about it to the world in this case which is fine too, because there's nothing really here that is a competitive secrets type stuff. And this is kind of what we do on the podcast anyway to make us so unique to everything else that's out there in the podcasting world.
So what do we do to come up with our ten year plan? So the ten year plan really at the end of the day is just laying out year by year what you think you can do revenue wise. You're not going to necessarily put down individual goals or things you think where the company is going to look like or things of that nature. When you're doing this, it's more just what you think your company can look like in ten years.
And this is what Traction refers to as the BHAG and this is a term I've heard floated around out there in the past. BHAG stands for big, hairy, audacious goal. This is what you think you can do in ten years, where can you be in ten years? And for us after playing this out, the number is actually pretty staggering. It's basically we're on track to be $126 million company in ten years, which is a number that for me like kind of threw me a bit off because just like I was never thinking on that scale. I never thought of us being a nine figure company.
But the reality is and I'm going to go through step by step how we got here, but the reality is that if we stick with this for ten years that we can easily get there. I mean it's very obvious that we can get to that point after looking at this which is pretty darn cool. I've had other eight figure businesses before. I've never had a nine figure business, and this kind of inspires me to want to try to do that just to say that that's something else I've been able to accomplish in my life.
So the way that we got there was by looking at our — starting where we're at right now. In this case, we didn’t begin with the end in mind because we had to build up to this and forecast to where we're going to be so that we could have an end and then always begin with the end in mind from there, which is really important I believe when you're building your business up. So last year in 2017 as you guys know, we did roughly five million dollars in sales. So what can we plan on doing in 2018?
We've been on this pace of doubling or tripling every year, so we believe we can do that one more time in 2018. But it isn't just in the past, it was just like I lick my finger and kind of throw it up in the air and be like, let's double this year and that's our goal. There wasn’t necessarily a lot of logic behind it. But this year there was a ton of logic behind it. And if you listen to the episode that I just recently did not that long ago about how we came up with our 2018 forecast, we go into a lot of detail on exactly how that came to be.
So I’ll let you listen to that if you haven’t and just take it from my word that we ended up coming out with about 9.8 million which is just slightly less than doubling from the year before. Now by doubling every year it creates a lot of stress. And this is something that my wife and I sat down and were like this has to be the last year that we do this to ourselves. This is just absolutely crazy. We're at hopefully at a point here once we double again where we want to kind of focus a little bit differently in our company at that point and not have the stress of the cash flow crunch that comes with doubling every year.
We're basically in the situation where the IRS is asking for money that you've never paid yourself and you only see on a form but it's not enabling your bank account. And so this has to kind of change I think at some point. And I think next year is that year for us. So we said, okay, if we do basically double in 2018 and get – I’m just going to use a round number here to ten million. And the next year if we grow at — I say this is funny because it's “only at 50%,” which I realize is crazy because most companies are happy growing at 3 to 5% annually, right? I mean 10%, it’s like are a huge win.
We've been doubling every year and I think that in an environment where we’re used to being at a double, growing by only 50% I think should be relatively easy compared to years past, which again will take a lot of stress off the cash flow crunch part. So if we were to grow at 50% the following year, our sales would be roughly at 15 million, because 10 million roughly — again I'm using rough numbers not to throw out – there is no reason to throw out 9,850,000, and then 14,775,000 and do that for every number along the way, it just gets to worry.
So roughly ten million, 50% more the following year, obviously that's going to be around 15 million. So if we can do that that year, the following year if we do the same thing, if we just grow again only at 50%, we would be at 22 million. And that's something that we can really see as being completely achievable over the next three years. I actually as I look at these numbers and think about it, that number is something I can get my head around very, very easily. I think we could do that and have a better lifestyle in the process.
I think that — I mean nothing is ever easy. I don’t profess to say it will be easy to get to 22 million because I think that's just ridiculous to say that or even think that. But it should be less stressful than the years in the in previous years have been. So if we continue on this path and say okay, well let's assume that at some point we're going to start hitting some head win because studies have shown and other people I've talked to that have been through similar growth cycles and I've been through this myself, eventually they said there starts to be head win in your business whether it's competition or things just change, you lose your competitive advantage, there is a recession, whatever it might be things start to get harder.
So we then went to 40% growth which gets us to 31 million in 2021, and 40% again in 2022, which gets us to 43 and a halfish million. And then we take that growth and slow it down even more to 30%. So in 2023, that would get us to 56 and a half million, 2024 again growing at 30% gets us to 73 and a half million. And 2025, growing now at 20% rationing that down even more gets us to 88 million. 2026, 20% growth is about 106 million, 2027 another 20% growth gets us to $126,854,320.
So it's within sight. This all makes sense. This is something I can get my head around and we can tell everybody in our company this is what we're beating to, this is the drum we’re beating to. Everyone knows this is what we have to look forward to, this is the type of company that we can and should be if we stick on a similar path over the next several years. But the next part of Traction which will be the next episode is your three year goal, which gets us to that 22.1 million dollar number.
And that's the number that we're really going to focus on over the next couple years, because yes the BHOG is 126 million but let's focus on a timeframe that humans can get their heads around a little bit more. For me, ten years from now I never really thought about this, but ten years from now I'm going to be in my 50's which is like kind of a crazy thing to say out loud, something I hadn’t really ever thought about much. I don't think of myself as a 50 year old person. And so it's hard to kind of get your head around all that different stuff. It's tough even thinking about it just because I know like how much more difficult life is physically at 40 versus 30.
It's harder to go out drinking on the weekend with friends. It's harder to recover from physical activity. It's harder to recover from working a long day. All these things become harder and I'm sure isn't going to become easier at 50. So that's something to think about as well. But the three year part is really going to be the next section of this. I'm looking forward to talking about that because it gets pretty lengthy.
The whole idea there is to lay out what you think your company is going to look like, and what are your goals over the next three years, what's going to allow you to achieve that number of hitting in our case of being a 22 million dollar company. So there's not quite enough time left in this episode to get into that. So I’m going to save that for the next one. Hopefully you guys have been enjoying these Traction episodes so far.
I encourage you to go check out the book, definitely something that's been really instrumental in our business in changing things for the better dramatically here at our parent company Terran. So I’m going to sign up for this one, we'll talk to you on the next one soon.
And that's a wrap. I hope you guys enjoyed this part of Traction. We’ll be back with another episode on Traction in the next couple of days. We're going to continue to go through these until we get to the end, digging through all the different layers of Traction and the things that we've done step by step in our business. And hopefully, this will help you along the way as you're trying to get Traction for your own business.
Another reminder, you can go to EcomCrew.com/140 to get to the show notes for this episode. We love getting comments from our listeners. Head on over there to leave a comment today. And until the next episode everybody, happy selling, and we'll talk to you then.
I am absolutely loving this traction series. Just ordered the book and can’t wait to get into it. Thanks Mike and Dave!