02 May The Pumpkin Plan: A Simple Strategy to Grow a Remarkable Business
Each year Americans start one million new businesses, nearly 80 percent of which fail within the first five years. Under such pressure to stay alive—let alone grow—it’s easy for entrepreneurs to get caught up in a never-ending cycle of “sell it—do it, sell it—do it” that leaves them exhausted, frustrated, and unable to get ahead no matter how hard they try.After reading an article about a local farmer who had dedicated his life to growing giant pumpkins, Mike Michalowicz realized the same process could apply to growing a business. He tested the Pumpkin Plan on his own company and transformed it into a remarkable, multimillion-dollar industry leader. First he did it for himself. Then for others. So what is the Pumpkin Plan?
- Plant the right seeds: Don’t waste time doing a bunch of different things just to please your customers. Instead, identify the thing you do better than anyone else and focus all of your attention, money, and time on figuring out how to grow your company doing it.
- Weed out the losers: In a pumpkin patch small, rotten pumpkins stunt the growth of the robust, healthy ones. The same is true of customers. Figure out which customers add the most value and provide the best opportunities for sustained growth. Then ditch the worst of the worst.
- Nurture the winners: Once you figure out who your best customers are, blow their minds with care. Discover their unfulfilled needs, innovate to make their wishes come true, and overdeliver on every single promise.
I recently picked up The Pumpkin Plan: A Simple Strategy to Grow a Remarkable Business in Any Field. You may recognize the author from his first book, The Toilet Paper Entrepreneur, a book to inspire those who have always wanted to start a business but don’t believe in themselves enough. Mike says himself that his first book planted the seed, and this book grows it.
Whether your business is struggling or thriving today, you can find advice to help nurture your business. Here are my 3 favorite lessons from The Pumpkin Plan:
1) Gross revenue means nothing when your receptionist makes more money than you do.
When costs are high, it is impossible to bring in huge profits, no matter how great the revenues are. Big sales do not necessarily mean big money. Take Michalowicz’s example of his computer technology company Olmec. In its fourth year, Olmec brought in $1 million in revenue. It may sound like a great accomplishment, but Michalowicz admits he could barely support his family with the money he ended up taking home. One important strategy to cutting your losses is cutting clients. Michalowicz says to make a list of your clients ranked from most revenue to least and then divide the top of the list into two categories: great clients and everyone else. He says to keep the great ones and get rid of the rest. He writes,
As they grow, routinely remove all the diseased or damaged pumpkins.”
2) Don’t waste your time planting seeds that may or may not work out.
As a company, you can’t focus on a broad range of specialties- you must find your best seed. This is where your favorite customers derive maximum benefit from the core process that drives your business. Your core process is a unique offering or niche that must be something your company does extremely well. Remember not to copy competitors, because that strategy won’t work.
(Here at Likeable Local, we focus only on social media software for small businesses and stick to our unique offering and market.)
The Dalai Lama may be knocking at your door, begging to buy shoes from you. But if you make hats (and not shoes), you still need to kill off the relationship.”
Michalowicz stresses the importance of keeping the right clients for your business through his Dalai Lama example. If you do not sell the product or service that a client is looking for, no matter how nice they are or how much money they are offering, you should not take them on. When you focus on your best seed, you have to keep in mind who you are offering the product to and how they can benefit.
3) Under-Promise and Over-Deliver
This way, you have a good chance of pleasing your clients. You’ll also get a lead over the competition because many competitors won’t come through. If you do the opposite and let people down, it ticks them off. When you are able to surprise them with your promptness or by going the extra mile, they are thrilled.
One example of how to do this is if you are giving a client a timeline for a project, you can add a 10% buffer so that you are able to perform on time, as expected or better.
Those are my favorite elements of The Pumpkin Plan. Now it’s your turn. I’d love to hear how you relate these lessons relate to your business strategy. (Or not?!) Please share your thoughts in the Comments sections below!