The Flywheel Principle for Success (& how tradies can use it!)
Relentlessly feeding those key flywheel inputs will deliver you steadily accelerating profit growth.
The idea of the flywheel is very simple, just a large wheel that's hard to get going, but it stores energy, and it’s very hard to stop!
Keep pushing, and the flywheel continually builds momentum. Used in business, when you go for volume on the right activity targets, it starts to generate its own momentum.
That’s when you can start to reap benefits from ‘being in business’, instead of just ‘being your own boss’!
When we look a little deeper at the flywheel concept,
you can see how it helps drive growth and strategy for any business.
The business flywheel harnesses the dynamic of implementing strategy through thousands and thousands of consistent actions all aligned in the same direction. When you choose to chase 'the numbers' on activities that keep focus on filling the top of the funnel, this will feed momentum into the flywheel, and in turn these results are driven by and reinforce each other, and provide the energy for long-term business growth.
Better customer service leads to more customer visits;
more customers lead to increased volume of sales and attract more referral and
quote opportunities. The higher volumes allow you to get better economies out
of fixed costs like vehicles, distribution centres, servers needed to run the
websites, high performance CRM and phone systems.
By then you will need to simplify many steps by using better apps and tools. This greater efficiency then enables the company to improve profitability further, which lets the company be more selective within their specialised field (your marketing system will do this).
And here’s an example!
It starts with measuring and analysing.
If you know your 'outbound phone calls-to-inquiries' ratio, your 'inquiries to quotes' ratio, and your 'quote conversion' ratio, you can plan the results you want.
Say you specialise in a particular type of installs mainly to offices in high rise buildings. If your team make 100 sales calls out and get 30 interested people, 15 of whom ask you to quote, and on average you are winning 5 out of 15, then you know exactly what will happen if you make 200 calls out. It equals 10 new customer jobs.
To get to the next level of Success:
The team will now realise they're playing a game they can win.
Improving the team's skills in each of the 3 ratios described above will further accelerate the Flywheel.
This is how you turn simple business procedures into massive momentum towards success. And it just goes on.
Now you’re really flying, can you push your prices up 5%? And with your much larger volumes, can you now push purchases and costs down 5%? Because those two simple moves combined will push your Gross Profit up by 20%!
When you let the flywheel do the talking, you don’t need to put a lot of 'effort' into communicating your goals to the team. And it becomes an enthusing challenge to chase the potential by meeting the targets for the input activities.
So you get yourself good systems to follow in:
- Promoting your business
- Asking for the order.
- Following up all your quotes.
- Getting jobs done on time and budget.
- Delivering excellent customer service experience.
- Systematically asking for referrals and testimonials.
- Managing the ongoing relationships you build with your customers.
Doing it ‘by the system’, consistently, is what pushing the flywheel is about. You have to make sure these things become a habit. All the plans in the world won’t really help you, if your habits don’t help you to do what has to be done.
Getting the habit is what makes business a lot less like work, and a lot more like building an awesome machine, a work of art.
It will give you more meaning and bring you longer fulfilment, a bit like the difference between your ‘life’s work’ and your ‘day job’!