Fix This Next summary

If you’re like most business owners, your typical day is likely consumed with putting out fires. You’re trying to appease that vocal customer ranting about your product. Payroll’s due at the end of the week, but you have a cash-flow problem. And once again, you’ve missed a deadline for an important client proposal.

No matter how hard you work, your business never moves beyond crisis mode. What you need is a tool that’ll end the firefighting and put you on the path of sustainability.

That tool is the Fix This Next analysis.

Once you know how to identify which business problem to tackle first, you’ll have the key to help your business move forward. You’ll be free to put down that extinguisher and enjoy the benefits of a flourishing company. All it takes is the Fix This Next four-step method detailed in the following blinks.

In these blinks, you’ll learn

• what a jammed printer can teach you about running a business;
• why you should aspire to be like the owner of a MacDonald’s restaurant; and
• how postcards transformed a dining experience.

Are you familiar with Maslow’s hierarchy of needs? It’s a pyramid-shaped diagram, divided into five horizontal layers, that depicts our needs as humans. The bottom layer, the pyramid’s base, represents our physiological needs – like food, shelter, and sleep. The next layer is safety. Then comes belonging. Then esteem. And finally, at the top, there’s self-actualization.

To ascend from one need to the next, you have to satisfy at least some of the needs below it. So, if you don’t have nourishment and somewhere safe to live, you’ll have less capacity to pursue belonging. If you don’t have friends and relationships, you’ll have trouble gaining esteem. And so on.

How does this apply to business? Well, businesses also have a hierarchy of needs. And by understanding this hierarchy, you can make strategic decisions that take you out of crisis mode and retire your firefighter role.

The key message here is: You must tend to your business needs from the foundation up.

So what does the Business Hierarchy of Needs pyramid look like?

At the base, you’ll find Sales – meaning the cash you generate. Whether you’re selling air-conditioning or running a nonprofit, you need money coming in. Otherwise, your business will expire just like a human without food, as in Maslow’s physiological layer.

Sitting above Sales is Profit, which gives you stability and allows you to scale. It’s akin to safety in Maslow’s pyramid. Once you have profit, your business has reached a stage where it’s no longer just covering its running costs.

Profit supports Order, the next layer of the pyramid. Order represents effective business systems that make your company efficient and create staff autonomy. Order aligns with Maslow’s belonging – finding love through family, friendships, and communities.

Perched atop Order is Impact, which shifts your business interactions with clients from mere transactions into transformative experiences. This is the equivalent of having confidence, a sense of self-worth and self-respect – or, as Maslow called it, esteem.

Finally, the Business Hierarchy of Needs is crowned with Legacy, which ensures your business lives on after you’ve retired. This aligns with Maslow’s self-actualization – the qualities that connect us deeply to our humanity.

The Business Hierarchy of Needs forms the basis of the Fix This Next tool. In the blinks ahead, we’ll explore each need in more depth. But first, let’s look at the four steps you can follow to get out of crisis mode and make more effective business decisions.

When operating in crisis mode, you feel pressured to fix all your issues at once, from growing sales and recruiting staff to squashing your competition. But this won’t necessarily make your business thrive. In fact, you’ll likely find yourself in even more debt, as you become stretched ever thinner. So resist the urge to act. Rather than trying to do everything at once, take a moment to locate your business’s weakest link.

Imagine you’re playing a game of tug-of-war – but, rather than using a rope, you’re using a chain. Now imagine that, mid-tug, one of the links in the chain breaks. It doesn’t matter that you’re stronger than your opponent. It doesn’t matter that you were winning. The game is now over because the chain is broken. 

Your business is that chain, and the best way to stay in the game is to find its weakest link and keep it from breaking. 

The key message here is: Find and fix your biggest business problem to move it forward.

Your weakest link is your Vital Need – the need in your business pyramid that must be met so that it can support the needs above it. Luckily, you can identify your Vital Need in just 15 minutes using the Fix This Next four-step method.

The first step is to look at your business in relation to its Hierarchy of Needs and identify all the needs that currently aren’t being met. This will be clearer once we’ve explored the characteristics of each need in the following blinks.

The second step is to evaluate which unmet need sits closest to the base of your pyramid. This is your Vital Need – the most foundational need that must be addressed before it can support the needs above it. For instance, maybe you’re not making enough sales to pay off your debts, which is preventing you from generating profit. This means the Sales segment of your pyramid isn’t strong enough to support Profit, which sits above it.

The third step is to establish a measurable solution for the problem and action this goal until the need is adequately met. For example, you might set a target of converting four potential clients into sales each month to achieve profit.

Finally, the fourth step is to start the process again to identify the next weakest link to be addressed. By repeatedly applying this method, you’ll systematically strengthen all the links in your business, ensuring it operates sustainably. 

What does the word “sales” mean to you? If you’re running a commercial business, it might mean getting your products into customer hands. If you belong to the not-for-profit sector, you might be thinking about fundraising targets. No matter what kind of business you’re operating, you need money. And that money must come in just as consistently as the meals you eat to stay alive.

Even if your team meets its sales targets each month, it doesn’t necessarily mean you’re satisfying your business needs. It’s far more complex than that. If you’re constantly taking out loans to cover costs like payroll, or you’re not attracting quality clients, you’re building your business on quicksand.

And that’s why the foundational layer of the Business Hierarchy of Needs is Sales.

The key message here is: Bringing in sufficient cash creates a solid business foundation.

Leaders of fledgling businesses often make mistakes when it comes to Sales. Overly ambitious, they might make promises to clients that they can’t deliver on. This happened to Michalowicz in the early days of his first business, Olmec Systems. He was installing a huge order of VoIP phones – a kind of phone that can work over the internet. Mid-installation, he realized the technology wasn’t designed to do what he’d promised it would. As a result, he lost vast sums of money and was almost sued.

The ability to deliver on your business commitments is fundamental for Sales. Just look at the 24/7 Wall St. list of most hated American companies, and you’ll see the ramifications of letting customers down. Always align your promises with what you can realistically deliver. Otherwise, at best, you’ll lose a repeat client. At worst, you’ll find yourself in a similar position to Michalowicz.

But it’s not just you who needs to deliver on promises to build that strong Sales foundation. Your customers do, too. A sale isn’t a sale until the money is in your company bank account. So, to ensure your customer pays, clearly communicate your payment terms, and have a procedure in place – like installment options – as backup.

Finally, it’s crucial that your business makes enough sales to provide you with an income. Many entrepreneurs forgo a salary in the early years. But if you want your business to be sustainable, it must cover the costs of your basic needs, too. Otherwise, neither you nor your business will meet the foundational layers of either pyramid – meaning you’ll never get beyond crisis mode.

When it comes to money, most of us have a very annoying habit. We spend every cent that falls into our hands. The more we have, the more we spend. And while this is great for the economy, it doesn’t necessarily do us any favors.

For business owners, this spending often takes the form of diligently reinvesting profit back into the business. More money means more scope for more products, and therefore more sales. But an increase in sales doesn’t necessarily lead to more profit, especially if costs go up in order to deliver. If you want your business to be sustainable, you must prioritize profit over reinvestment.

The key message here is: Reach a state of permanent profitability by reframing how you think about profit.

Entrepreneurs typically think that profit means generating money through sales. But in reality, profit is money that can be taken out of the business and spent however you like. This can be anything from paying off a personal loan to buying a motorbike. After all, you are the shareholder of your business. Profit is the reward you get for the risk you’ve taken by investing your money.

Profit – the second layer of needs in the pyramid – isn’t just about making money. It’s about creating financial stability, which is crucial if you want to scale your business without being overwhelmed by debt. With additional money up your sleeve, you have a financial buffer to get you through any unexpected changes. This gives both you and your employees the confidence to shift out of that survival mode.

To create permanent profitability, you need to stop seeing profit as the crumbs left behind when all other financial needs are met. Instead, calculate a reasonable percentage of profit to put aside. This should be enough to help wipe out debt and create cash reserves to cover all expenses for three months.

Next, take this percentage out of your sales income first. To achieve this, you’ll probably have to make some adjustments to your business to support the amount you calculated. For instance, it might mean limiting your product line, or increasing your margins.

It’s tempting to throw everything you have into expanding your business. But this won’t make it profitable. What’s more important is working toward sustainability, which is the gift that profit brings.

You might be startled to learn that our bodies are actively fighting off cancer all the time. It’s normal to have uncontrolled cellular activity inside us. Generally, our bodies eliminate those rogue cells before they cause any problems. It’s only when our bodies fail to do so that we become ill.

Businesses experience the same challenge. They constantly encounter issues that need to be dealt with, so the company can continue operating effectively. But if these issues go unnoticed, or if they’re ignored, they can become unruly, cause the business major damage, and even spell its end.

To avoid a terminal business issue, you must meet the next need in the pyramid – Order. And to achieve order, you need business systems.

The key message here is: Create order in your business by designing systems that support autonomy.

Take a moment to think about the McDonald’s restaurant franchise. All employees have a specific role to fulfill by following a process. And all of those processes are happening without the franchisee on site. You won’t find them working the grill or even in an office out back. They simply aren’t there.

Wouldn’t it be amazing if your business could run without constantly needing your input? Well, once you’ve completed the Order layer, your business will operate so autonomously that you’ll be able to take a whole month off without any serious ramifications.

So, how do you meet the needs of Order?

The answer lies in creating business systems to boost efficiency and ensure that work doesn’t bottleneck. Odds are, you already have a lot of systems in place in the form of routines and procedures. For example, your accounts department probably follows a series of steps to issue an invoice. If more than one employee has this knowledge, your business isn’t at risk of losing money if that employee is away. Which is why it’s crucial that your staff identify and document their work processes. Once this is done, make sure the information is stored somewhere accessible. That way, if someone is absent, another employee can follow their processes to get the work done.

The more important someone is to a business, the more crucial it is that systems around their work are in place. That includes you, as the leader. When someone else can step into your shoes, it means you can take that coveted month off every year to follow your other dreams.

Located in Freedom, Minnesota, Erin French’s restaurant, the Lost Kitchen, has a unique booking system. If you want to enjoy her intimate farm-to-table experience, you must send her a postcard during the first ten days of April. Then, cross your fingers and hope that you’re among the lucky few invited in the year ahead.

French put this postcard system in place to manage bookings after the restaurant gained international acclaim. With only one dinner service per night and room for just 45 people, staff were initially overwhelmed with booking requests. But French saw this headache as an opportunity to enhance the dining experience, making it more personal. So, after the April closing date, postcards are randomly chosen and allocated a booking. Then, each night, staff put the postcards on display while preparing for dinner service. This simple act created a connection between them and their guests.

The key message here is: Your business creates impact by evolving from the purely transactional to transformative.

Impact, the fourth level of the pyramid, represents creating transformation – for both your employees and for your customers.

Impact occurs when your employees are motivated by the power of your business mission. When this happens, they transform into brand ambassadors, embodying your company values. To achieve this, your business mission must be clear, and it must speak to true value that employees – and customers – can connect with; in other words, not just the price of company stocks.

Also, it’s important to think about the experience your customers have when engaging with your company. This was specifically driven home to Michalowicz when he ordered a chai tea at Boonton Coffee Co. The friendly barista told him they didn’t make tea – just coffee – then suggested he visit a nearby competitor. He even offered directions before inviting Michalowicz to bring his tea back to the café, if he wanted. Michalowicz was so impressed that he changed his order to a coffee, which ended up being on the house.

Experiences like this one have a huge impact. Boonton wasn’t just selling coffee; it was providing customers with a cozy experience. And it’s that kind of interaction that keeps customers coming back. It’s also what transforms them into brand ambassadors – people who tell their friends and family about the great product or service they’ve received.

When the Fox Broadcasting Company canceled Brooklyn Nine-Nine in May 2018, its fans flooded social media with heartbroken posts. Using a petition, they asked Fox to reverse the decision. And just one day later, NBC TV Network picked up the show. Its community of fans had saved it from extinction.

Legacy, the fifth and topmost level of the Business Hierarchy of Needs, occurs when a brand takes on a life of its own. This is what happened with Brooklyn Nine-Nine. The show’s continuation mattered so much to fans that they were willing to fight for it. If that meant another network taking it over, so be it. It wasn’t Fox they cared about – it was the show.

The key message here is: Legacy ensures your vision will live on when you retire.

You may not think that your business is capable of winning your customers’ undying loyalty. After all, not that many companies have the glamor associated with the TV industry. But all businesses can achieve Legacy, which stems from Impact. Once you’ve placed the core values of your business at its center during the Impact phase, your business is no longer about you or even about your products. It’s about the mark your business leaves on the community.

Achieving Legacy means ensuring you have systems in place to deal with future change. If you want your business to outlive you, it’ll have to adjust to the technological and social developments that occur over time. Netflix is a fabulous role model when it comes to this evolution. A company that once mailed movies to your home is now delivering them via the internet. Who knows what it’ll offer customers in the future – perhaps an interactive experience downloaded straight to your brain!

To guide the evolution of your business over time, it’s important to evaluate how its activities are supporting your core values quarterly. Going off course every now and then is inevitable. But by making a habit of regularly reviewing your position, you’ll be able to correct course before you travel too far in the wrong direction.

Create a structure that empowers the leaders in your company to become brand ambassadors, too. If they’re living your vision while you’re still on board, you can feel confident they’ll continue to do so while you’re enjoying a well-deserved retirement.