We are navigating interesting times right now. You may be asking yourself, how can my business survive and/or thrive during this time?
If you were to ask yourself, what is the next problem you must address in or opportunity you must meet in order to grow your business, would you know the answer? And, how do you know it’s the one thing that would move your business forward right now?
As a Fix This Next Advisor, I recently had the opportunity to speak with Mike Michalowicz, author of Fix This Next who shared how he used to get stuck in a continuous run of problem-solving in his business by relying on his gut instinct to know what to focus on or fix next in his business.
He shared about how our gut instinct isn’t reliable when it comes to our business.
To solve that problem, Mike developed a model based on Abraham Maslow’s hierarchy of needs, which states that there are five categories of human need.
From the most basic and essential needs for survival to the highest needs for happiness and fulfillment: physiological, safety, belongingness, esteem, and self-actualization.
In order for us to attend to something higher on the list, we first need to make sure that our needs are met in the categories below it.
So, for example, before you can focus on meeting your needs for love and belonging, you first need the basics: air to breathe, adequate hydration and nutrition, and a safe place to sleep. It’s pretty tough to deal with your self-actualization when you’re hangry and tired.
Looking at Maslow’s hierarchy of needs, Mike realized that it has a direct correlation to entrepreneurial progress: what drives your business, what keeps your company trapped, and how you fix the roadblocks along the way to achieve the highest levels of success as you, the entrepreneur, define it.
The key to climbing the hierarchy is simple: fully satisfy your business’s current level of needs, not by rushing to the apparent daily demands, not by addressing advanced needs before basic needs, and certainly not by trying to fix everything at once. To do this, we will use what Mike calls the Business Hierarchy of Needs.
The Business Hierarchy of Needs levels breaks down like this:
At this foundational level, the business must focus on the creation of cash. Just as humans can’t survive without oxygen, food, and water, if you don’t have sales, your company will not be able to survive for long. Heck, without sales, you won’t have a business at all.
The five core needs at the sales level are:
• Lifestyle congruence
• Prospect attraction,
• Client conversion,
• Delivering on commitments
• Collecting on commitments
Here, the company’s focus shifts to the creation of stability. Here, our businesses’ needs line up pretty closely with our human needs for health, financial stability, and a secure and safe environment. Massive revenue doesn’t mean much when you have no profit, no cash reserves, and are drowning in debt.
The five core needs at the profit level are:
• Debt eradication
• Margin health
• Transaction frequency
• Profitable leverage
• Cash reserves.
At this level, the focus is on the creation of efficiency, and the needs are related to ensuring that everything runs like clockwork. With all of its organizational efficiency needs met, your business can run—and yes, even grow—no matter who is on your team. It can even grow without you, the entrepreneur.
The five core needs at the order level are:
• Minimized wasted effort
• Role alignment
• Outcome delegation
• Linchpin redundancy
• Mastery reputation.
The focus now is on the creation of transformation. Many businesses never properly address the needs at this level, because they either don’t know this level exists, or misunderstand what it’s all about. When we think of impact, we think of how our business impacts the world. However, the needs that must be addressed at this level are related to client transformation, and how your company aligns with your staff, vendors, and your community, not to the wider world.
The five core needs at the impact level are:
• Transformation orientation
• Mission motivation
• Dream alignment
• Feedback integrity
• Complimentary network
At this highest level, the focus is on the creation of permanence. Ensuring that your business and the impact it delivers will live on after you move on requires that specific needs are met. If you want your business to continue to thrive for generations to come, you’ll have to consider the big questions, such as your long-term vision for your company is, and how your business will adapt to changes in your industry, in consumer demand, and in the world.
Here are the five core needs at the legacy level:
• Community continuance
• Intentional leadership turn
• Heart-based promoters
• Quarterly dynamics
• Ongoing adaptation
To be clear, the Business Hierarchy of Needs levels does not represent stages in business growth. They are levels of needs.
Your business will not climb the hierarchy in a linear fashion but move up and down levels as it progresses. Like building and renovating structures, you don’t just go up. You go back down to the foundation, shore it up, so you can build higher.
So, for example, while you may be dealing with a need in the SALES level, that does not mean your company is still in the SALES stage. You are simply strengthening the foundation.
The Business Hierarchy of Needs gets you out of guessing mode and into fast, impactful, deliberate action.
It took Mike the better part of three years to perfect it, testing it out in his own business and with other entrepreneurs through multiple iterations.
Once he figured out how to pinpoint what to focus on next, his businesses grew faster and healthier.
Since creating the tool, he’s stopped relying on his instinct alone and has started using this system to listen and respond to his company’s true needs.
Now, when you get stuck, all you have to do is start at the bottom of the pyramid and address the core needs you have not yet met.
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The tool never stops working. You can always return to it to pinpoint your biggest challenge, fix it next, and then pinpoint the next one after that as you build your beautiful business.