How can we run a business well, do a good business, and run a company well.
Editor’s note: This article comes from the WeChat public account “Little Flying Brother Notes” (ID 🙂 , author: Feng Xian fly.
As an entrepreneur of To B business, or a company executive, how to “run a business well, do a business well, and run a company” must It is an inescapable topic.
I have some thoughts on how to manage the To B business, I will From four aspects, how to do a good job in To B business:
1. Strategic Planning
When referring to the operation of a company or business, the first question to be answered first is, what is the company ’s strategy? Only by knowing the company’s strategy and having guidelines can we design a series of operating arrangements.
What is the company ’s strategy?
You can understand it this way: what solutions your company ’s business uses to solve problems for whom.
For example, A SAAS company ’s strategic positioning is through software + hardware + generation Operational services boost the performance growth of catering companies.
This positioning is mentioned, For whom: for catering companies;
What problem to solve: Solve the problem of business performance growth;
Which plan is adopted: through hardware + software + on behalf of operating services.
Another example: The strategic positioning of a smart tourism integrated service provider in a tourism industry is , Through the integrated management system (including: smart operation, smart marketing, smart management, smart service four aspects), to provide smart tourism overall solutions.
This positioning is mentioned,
For whom: scenic area;
What problem to solve: the problem of the overall solution of smart tourism;
What plan to adopt: comprehensive management system (including: smart operation, smart marketing, smart management, and smart service).
For details on how to sort out the company ’s strategic issues, you can refer to my previous article “How does To B business conduct strategic sorting?” “.
2. Design of performance system
After knowing the company ’s strategy, can you design a business plan next?
Not possible, There is another problem to think about, that is performance The construction of system indicators and the construction of performance systems play a role in inheriting and inheriting the past. How is the strategy achieved? There will be performance on performance indicators.
As the famous management scientist Welch said: Performance management is the whole secret of building a great organization.
So, How should the performance system be designed? This is to answer the question: what is the purpose of running a good company?
I think the purpose of running a good company is to make money.
A company has many purposes, such as: serving customers well, protecting the interests of company employees, etc., but the fundamental purpose is still to make money and let shareholders get more More return on investment.
If you ca n’t help shareholders make money, shareholders ca n’t get more ROI, and the imaginable result is that the company ca n’t continue.
Therefore, It can be said that the Polaris indicator operated by a company is:
The return on investment of shareholders.
We can start thinking from the point of return on investment, and then dismantle the digital indicators to see what variables are affecting the change in return on investment.
Regarding ROI, here are some related formulas:
return on investment = profit / total assets;
return on investment = (profit / sales revenue) ✖️ (sales revenue / total assets);
Sales profit margin = profit / sales revenue;
Asset turnover rate = sales revenue / total assets;
Return on investment = sales profit margin ✖️ Asset turnover ratio.
It can be seen from the above formulas that in order to increase the return on investment, it is necessary to increase the two major indicators of sales profit margin and asset turnover rate respectively.
How to increase sales profit margin?
It can be seen from the formula of sales profit margin = (sales revenue ➖ fixed cost ➖ variable cost) / sales revenue :
1. Increase sales revenue;
2. Reduce fixed costs;
3. Reduce variable costs.
In the course of daily operations, the adjustment and improvement of the three indicators can ultimately increase the sales profit margin.
How to increase asset turnover?
There are four factors that affect asset turnover:
1. Payback period of receivables;
2. Account payable period;
3. Inventory turnover rate;
4. Turnover rate of fixed assets.
In the course of daily operations, the adjustment and improvement of these four elements can ultimately increase the return on assets.
How to adjust and improve the various elements contained in the specific sales profit rate and return on assets to ultimately increase the return on investment?
All departments need to cooperate to complete.
3. The relationship between various departments and cost and profit
The sales revenue variable has the most direct impact on the return on investment. As the sales revenue increases, the return on investment will also increase.
For the to B business, if you want to increase the company ’s sales revenue, then the marketing department, sales department, and customer success service department are the most directly related to sales revenue Of the department.
What is the relationship between each of the three departments of marketing, sales, and successful customer service and sales revenue?
At this time, the formula of sales revenue will be used for analysis:
Sales revenue = new customer revenue + old customer revenue;
New customer revenue = sales leads✖️lead conversion rate✖️customer unit price;
Old customer revenue = customer renewal + additional purchase;
In other words, Sales revenue = (sales lead ✖️lead conversion rate✖️customer unit price ) + (Customer renewal + additional purchase)
of which, sales leads are the responsibility of the marketing department, the marketing department needs to give The sales department provides effective sales leads, the core of the market department assessmentThe indicator is: the number of effective leads provided;
Lead conversion rate is the responsibility of the sales department. The sales department needs to convert the leads provided by the marketing department. The core indicator of the sales department is: the number of customer payments .
Customer renewal + new addition is the responsibility of the customer success department. The customer success department needs to serve the paid customers well to help them succeed and ultimately achieve Renew or purchase again, the core indicator of the customer’s success department is: renewal + new additions.
These three departments are both independent and interrelated.
Independently, each department has different indicators to be responsible, and each department has its own closed-loop indicators to be completed.
It is related that they all have common indicators, sales revenue, and when they are evaluated by various departments, they will have a joint relationship, such as: the performance source of the marketing department There may be some related to the number of paying customers in the sales department; some of the performance sources of the sales department are related to the number of new purchases by customers in the customer’s successful department.
Here I will give an example to talk specifically about the relationship between marketing, sales, customer success service department, other departments and cost and profit, and how they are What should affect the changes in profits in the daily business process?
Financial data of a certain SAAS company, Probably as follows:
The monthly R & D cost is 200,000, the functional department (including administrative and personnel) salary and office rental cost is 100,000, the marketing department salary cost is 50,000, the marketing department promotes The cost is 100,000, the basic salary of the sales department is 100,000, the salary of the customer service department is 150,000, and the sales commission of the sales staff and the management staff is 40%.
From the financial data above, this is a very small startup, so when we do business decision analysis, our time unit is considered in months.
That is the above data, except that the sales commission and the management staff ’s commission of 40% are variable costs, other financial data are calculated at fixed costs.
Therefore, you can calculate: Fixed cost = 20 + 10 + 10 + 10 + 15 + 5 = 700,000;
Breakeven point = 70➗ (1➖40%) = 1.17 million (that is, you need to earn 1.17 million per month to achieve breakeven).
Expense rate spent by marketing department = 15/117 = 13%;
The cost of the sales department accounts for the total revenue = 10 + 117✖️0.4 = 56%;
Customer Service Department spends the total revenue = 15/117 = 13%;
Marketing, sales, and customer service departments account for total revenue = 13% + 13% + 56% = 82%.
It can be seen from the financial data above that for every additional 1 million yuan earned, 820,000 will be spent in marketing, sales, and customer service departments.
That is to say, in the daily operation process, we must find ways to improve the efficiency of the market, sales and customer service departments, reduce costs, and ultimately increase profits. rate.
Others, If the input of functional departments and office rents needs to be reduced;
If R & D investment needs to be cautious, more investment will bring pressure on cash, less investment, no advantage in the product will correspond to the recovery period The payment period and the long-term competitiveness of products bring pressure, and companies in all walks of life can carefully consider according to their own actual situation.
4. Marketing, sales, service Performance planning of various departments
After talking about the relationship between marketing, sales, and successful customer service departments, costs and profits, and what you should pay attention to in the daily management process.
Next, we need to implement the performance to all departments and individuals.
Generally, most people think that the goals of the three departments of marketing, sales and service are arranged by superiors, and the goals of individuals in the department are arranged by the person in charge of the department , Then the assessment will be conducted by the upper level.
Here I want to correct this idea, the actual situation is:
The performance goals of each department are not set and assigned by superiors, but should be the company ’s boss, or the company ’s executives and the heads of each department. Understand the company’s goals and work together to formulate the department’s goals.
Similarly, for individuals in the department, the performance goals are not arranged by the department head, but the department head and the individual understand the company ’s goals and the department ’s Goals, work out personal goals together.
If you act as this 3When one of the managers of each department performs department management, the core work is to achieve a certain goal within a quantified time through the rational allocation, implementation, control, and optimization of related human, financial, and physical resources. .
In the process of achieving your targets, you need to understand the formation of the lineup, the people with the skills, and the resources to achieve you index of.
As stated in Huawei ’s culture:
Cadres ’responsibilities are: platooning, arranging, and accompany customers to dinner. If, You are the head of the marketing department of a SAAS startup.
So, you may arrange for team members who understand event operations to do event operations; arrange team members who understand content operations to do content operations; Team members arranged to do SEM.
Then obtained the number of N market recognition leads of the department within a certain quarter or a certain month.
If, You are the head of the sales department of a SAAS startup.
Then you may arrange for team members who are good at dealing with small and medium-sized enterprises to be converted into SME customers; arrange for team members who are good at dealing with large enterprises to be large enterprises Customer conversion.
Then, in a certain quarter or a certain month, paid conversion of more than N customers was realized.
If, You are the head of the customer success service department of a SAAS startup.
So, you may arrange team partners who are good at cooperating with small, medium and micro enterprises to serve small and medium enterprises; arrange team members who are good at cooperating with large enterprises to arrange services Big business.
Then renewed and added more than N customers within a quarter or a month.
I ’ve talked about the formation of various departments above is simple and idealized. In the actual operation process, there will be more detailed indicators and implementation process Matters needing attention.
In general, as the head of a department, you need to remember that your core job is to: through the rationalization of related people, finances, and resources Allocate, implement, control, and optimize, and ultimately achieve a certain goal within a quantified time.
As a department manager, Except for different people, we must make different performance plans In addition, at the same time, it is necessary to do a good performance feedback. Only by doing a good performance feedback can a closed loop of performance management be formed.
That is, in order to complete their goals, team members have already completed what tasks have been completed and which have not been completed. The manager needs to analyze according to the current status of the team ’s tasks. , And then give the analysis results to help the team think of ways to improve.
After knowing the company ’s strategy, can you design a business plan next?
Not possible, There is another problem to think about, that is performance The construction of system indicators and the construction of performance systems play a role in inheriting and inheriting the past. How is the strategy achieved? There will be performance on performance indicators.
As the famous management scientist Welch said: Performance management is the whole secret of building a great organization.
So, How should the performance system be designed? This is to answer the question: what is the purpose of running a good company?
I think the purpose of running a good company is to make money.
A company has many purposes, such as: serving customers well, protecting the interests of company employees, etc., but the fundamental purpose is still to make money and let shareholders get more More return on investment.
If you ca n’t help shareholders make money, shareholders ca n’t get more ROI, and the imaginable result is that the company ca n’t continue.
Therefore, It can be said that the Polaris indicator operated by a company is:
The return on investment of shareholders.
We can start thinking from the point of return on investment, and then dismantle the digital indicators to see what variables are affecting the change in return on investment.
Regarding ROI, here are some related formulas:
return on investment = profit / total assets;
return on investment = (profit / sales revenue) ✖️ (sales revenue / total assets);
Sales profit margin = profit / sales revenue;
Asset turnover rate = sales revenue / total assets;
Return on investment = sales profit margin ✖️ Asset turnover ratio.
It can be seen from the above formulas that in order to increase the return on investment, it is necessary to increase the two major indicators of sales profit margin and asset turnover rate respectively.
How to increase sales profit margin?
It can be seen from the formula of sales profit margin = (sales revenue ➖ fixed cost ➖ variable cost) / sales revenue :
1. Increase sales revenue;
2. Reduce fixed costs;
3. Reduce variable costs.
In the course of daily operations, the adjustment and improvement of the three indicators can ultimately increase the sales profit margin.
How to increase asset turnover?
There are four factors that affect asset turnover:
1. Payback period of receivables;
2. Account payable period;
3. Inventory turnover rate;
4. Turnover rate of fixed assets.
In the course of daily operations, the adjustment and improvement of these four elements can ultimately increase the return on assets.
How to adjust and improve the various elements contained in the specific sales profit rate and return on assets to ultimately increase the return on investment?
All departments need to cooperate to complete.
3. The relationship between various departments and cost and profit
The sales revenue variable has the most direct impact on the return on investment. As the sales revenue increases, the return on investment will also increase.
For the to B business, if you want to increase the company ’s sales revenue, then the marketing department, sales department, and customer success service department are the most directly related to sales revenue Of the department.
What is the relationship between each of the three departments of marketing, sales, and successful customer service and sales revenue?
At this time, the formula of sales revenue will be used for analysis:
Sales revenue = new customer revenue + old customer revenue;
New customer revenue = sales leads✖️lead conversion rate✖️customer unit price;
Old customer revenue = customer renewal + additional purchase;
In other words, Sales revenue = (sales lead ✖️lead conversion rate✖️customer unit price ) + (Customer renewal + additional purchase)
of which, sales leads are the responsibility of the marketing department, the marketing department needs to give The sales department provides effective sales leads, the core of the market department assessmentThe indicator is: the number of effective leads provided;
Lead conversion rate is the responsibility of the sales department. The sales department needs to convert the leads provided by the marketing department. The core indicator of the sales department is: the number of customer payments .
Customer renewal + new addition is the responsibility of the customer success department. The customer success department needs to serve the paid customers well to help them succeed and ultimately achieve Renew or purchase again, the core indicator of the customer’s success department is: renewal + new additions.
These three departments are both independent and interrelated.
Independently, each department has different indicators to be responsible, and each department has its own closed-loop indicators to be completed.
It is related that they all have common indicators, sales revenue, and when they are evaluated by various departments, they will have a joint relationship, such as: the performance source of the marketing department There may be some related to the number of paying customers in the sales department; some of the performance sources of the sales department are related to the number of new purchases by customers in the customer’s successful department.
Here I will give an example to talk specifically about the relationship between marketing, sales, customer success service department, other departments and cost and profit, and how they are What should affect the changes in profits in the daily business process?
Financial data of a certain SAAS company, Probably as follows:
The monthly R & D cost is 200,000, the functional department (including administrative and personnel) salary and office rental cost is 100,000, the marketing department salary cost is 50,000, the marketing department promotes The cost is 100,000, the basic salary of the sales department is 100,000, the salary of the customer service department is 150,000, and the sales commission of the sales staff and the management staff is 40%.
From the financial data above, this is a very small startup, so when we do business decision analysis, our time unit is considered in months.
That is the above data, except that the sales commission and the management staff ’s commission of 40% are variable costs, other financial data are calculated at fixed costs.
Therefore, you can calculate: Fixed cost = 20 + 10 + 10 + 10 + 15 + 5 = 700,000;
Breakeven point = 70➗ (1➖40%) = 1.17 million (that is, you need to earn 1.17 million per month to achieve breakeven).
Expense rate spent by marketing department = 15/117 = 13%;
The cost of the sales department accounts for the total revenue = 10 + 117✖️0.4 = 56%;
Customer Service Department spends the total revenue = 15/117 = 13%;
Marketing, sales, and customer service departments account for total revenue = 13% + 13% + 56% = 82%.
It can be seen from the financial data above that for every additional 1 million yuan earned, 820,000 will be spent in marketing, sales, and customer service departments.
That is to say, in the daily operation process, we must find ways to improve the efficiency of the market, sales and customer service departments, reduce costs, and ultimately increase profits. rate.
Others, If the input of functional departments and office rents needs to be reduced;
If R & D investment needs to be cautious, more investment will bring pressure on cash, less investment, no advantage in the product will correspond to the recovery period The payment period and the long-term competitiveness of products bring pressure, and companies in all walks of life can carefully consider according to their own actual situation.
4. Marketing, sales, service Performance planning of various departments
After talking about the relationship between marketing, sales, and successful customer service departments, costs and profits, and what you should pay attention to in the daily management process.
Next, we need to implement the performance to all departments and individuals.
Generally, most people think that the goals of the three departments of marketing, sales and service are arranged by superiors, and the goals of individuals in the department are arranged by the person in charge of the department , Then the assessment will be conducted by the upper level.
Here I want to correct this idea, the actual situation is:
The performance goals of each department are not set and assigned by superiors, but should be the company ’s boss, or the company ’s executives and the heads of each department. Understand the company’s goals and work together to formulate the department’s goals.
Similarly, for individuals in the department, the performance goals are not arranged by the department head, but the department head and the individual understand the company ’s goals and the department ’s Goals, work out personal goals together.
If you act as this 3When one of the managers of each department performs department management, the core work is to achieve a certain goal within a quantified time through the rational allocation, implementation, control, and optimization of related human, financial, and physical resources. .
In the process of achieving your targets, you need to understand the formation of the lineup, the people with the skills, and the resources to achieve you index of.
As stated in Huawei ’s culture:
Cadres ’responsibilities are: platooning, arranging, and accompany customers to dinner. If, You are the head of the marketing department of a SAAS startup.
So, you may arrange for team members who understand event operations to do event operations; arrange team members who understand content operations to do content operations; Team members arranged to do SEM.
Then obtained the number of N market recognition leads of the department within a certain quarter or a certain month.
If, You are the head of the sales department of a SAAS startup.
Then you may arrange for team members who are good at dealing with small and medium-sized enterprises to be converted into SME customers; arrange for team members who are good at dealing with large enterprises to be large enterprises Customer conversion.
Then, in a certain quarter or a certain month, paid conversion of more than N customers was realized.
If, You are the head of the customer success service department of a SAAS startup.
So, you may arrange team partners who are good at cooperating with small, medium and micro enterprises to serve small and medium enterprises; arrange team members who are good at cooperating with large enterprises to arrange services Big business.
Then renewed and added more than N customers within a quarter or a month.
I ’ve talked about the formation of various departments above is simple and idealized. In the actual operation process, there will be more detailed indicators and implementation process Matters needing attention.
In general, as the head of a department, you need to remember that your core job is to: through the rationalization of related people, finances, and resources Allocate, implement, control, and optimize, and ultimately achieve a certain goal within a quantified time.
As a department manager, Except for different people, we must make different performance plans In addition, at the same time, it is necessary to do a good performance feedback. Only by doing a good performance feedback can a closed loop of performance management be formed.
That is, in order to complete their goals, team members have already completed what tasks have been completed and which have not been completed. The manager needs to analyze according to the current status of the team ’s tasks. , And then give the analysis results to help the team think of ways to improve.
After talking about the relationship between marketing, sales, and successful customer service departments, costs and profits, and what you should pay attention to in the daily management process.
Next, we need to implement the performance to all departments and individuals.
Generally, most people think that the goals of the three departments of marketing, sales and service are arranged by superiors, and the goals of individuals in the department are arranged by the person in charge of the department , Then the assessment will be conducted by the upper level.
Here I want to correct this idea, the actual situation is:
The performance goals of each department are not set and assigned by superiors, but should be the company ’s boss, or the company ’s executives and the heads of each department. Understand the company’s goals and work together to formulate the department’s goals.
Similarly, for individuals in the department, the performance goals are not arranged by the department head, but the department head and the individual understand the company ’s goals and the department ’s Goals, work out personal goals together.
If you act as this 3When one of the managers of each department performs department management, the core work is to achieve a certain goal within a quantified time through the rational allocation, implementation, control, and optimization of related human, financial, and physical resources. .
In the process of achieving your targets, you need to understand the formation of the lineup, the people with the skills, and the resources to achieve you index of.
As stated in Huawei ’s culture:
Cadres ’responsibilities are: platooning, arranging, and accompany customers to dinner. If, You are the head of the marketing department of a SAAS startup.
So, you may arrange for team members who understand event operations to do event operations; arrange team members who understand content operations to do content operations; Team members arranged to do SEM.
Then obtained the number of N market recognition leads of the department within a certain quarter or a certain month.
If, You are the head of the sales department of a SAAS startup.
Then you may arrange for team members who are good at dealing with small and medium-sized enterprises to be converted into SME customers; arrange for team members who are good at dealing with large enterprises to be large enterprises Customer conversion.
Then, in a certain quarter or a certain month, paid conversion of more than N customers was realized.
If, You are the head of the customer success service department of a SAAS startup.
So, you may arrange team partners who are good at cooperating with small, medium and micro enterprises to serve small and medium enterprises; arrange team members who are good at cooperating with large enterprises to arrange services Big business.
Then renewed and added more than N customers within a quarter or a month.
I ’ve talked about the formation of various departments above is simple and idealized. In the actual operation process, there will be more detailed indicators and implementation process Matters needing attention.
In general, as the head of a department, you need to remember that your core job is to: through the rationalization of related people, finances, and resources Allocate, implement, control, and optimize, and ultimately achieve a certain goal within a quantified time.
As a department manager, Except for different people, we must make different performance plans In addition, at the same time, it is necessary to do a good performance feedback. Only by doing a good performance feedback can a closed loop of performance management be formed.
That is, in order to complete their goals, team members have already completed what tasks have been completed and which have not been completed. The manager needs to analyze according to the current status of the team ’s tasks. , And then give the analysis results to help the team think of ways to improve.