Running a business can often feel like a never-ending series of crises. As an entrepreneur, you might find yourself constantly putting out fires - dealing with angry customers, struggling with cash flow issues, and missing important deadlines. Despite working tirelessly, your business seems stuck in crisis mode, unable to move forward and thrive.
In his book "Fix This Next," Mike Michalowicz introduces a powerful tool to help business owners break free from this cycle of firefighting and set their companies on a path to sustainable growth. The Fix This Next analysis provides a systematic approach to identifying and addressing the most critical issues holding your business back.
The core idea is simple but profound: instead of trying to solve every problem at once, focus on fixing the most important issue first. By doing so, you can create a strong foundation for your business and steadily climb towards success. This book summary will walk you through the key concepts and practical steps of the Fix This Next method, showing you how to transform your business from crisis mode to flourishing enterprise.
The Business Hierarchy of Needs
At the heart of the Fix This Next approach is the Business Hierarchy of Needs, a concept inspired by Maslow's hierarchy of human needs. Just as humans have fundamental needs that must be met in a specific order, businesses also have a hierarchy of needs that must be addressed systematically.
The Business Hierarchy of Needs consists of five levels:
- Sales
- Profit
- Order
- Impact
- Legacy
Each level builds upon the one below it, creating a stable foundation for growth and success. Let's explore each level in more detail:
Sales: The Foundation of Business
At the base of the pyramid is Sales - the lifeblood of any business. Without consistent cash flow, a company cannot survive, let alone thrive. This level is about ensuring that your business generates enough revenue to cover its basic operating costs and provide you with a living wage.
Key aspects of the Sales level include:
- Meeting sales targets consistently
- Attracting quality clients
- Delivering on promises to customers
- Ensuring timely payments from clients
Many entrepreneurs make the mistake of overpromising to win deals, which can lead to costly mistakes and damaged reputations. It's crucial to align your promises with what you can realistically deliver.
Profit: Creating Financial Stability
The second level of the pyramid is Profit. While many business owners focus solely on increasing sales, it's profit that provides the stability and resources needed for growth. Profit isn't just about making money; it's about creating a financial buffer that allows your business to weather unexpected challenges and invest in future opportunities.
To achieve permanent profitability:
- Reframe how you think about profit - it's not just leftover money, but a necessary component of business health
- Calculate a reasonable profit percentage and set it aside before other expenses
- Make adjustments to your business model to support this profit allocation
Order: Building Efficient Systems
The third level, Order, is about creating systems and processes that allow your business to run smoothly and efficiently. A well-ordered business can operate without constant input from the owner, freeing you up to focus on strategic growth.
Key aspects of Order include:
- Documenting work processes and procedures
- Creating systems that support employee autonomy
- Ensuring that critical knowledge is shared and accessible
- Developing contingency plans for key roles, including your own
The goal is to create a business that can function effectively even when you're not there, allowing you to take time off without worrying about everything falling apart.
Impact: Creating Transformative Experiences
The fourth level, Impact, is where your business evolves from merely transactional to truly transformative. This is about creating meaningful experiences for both your employees and customers, turning them into passionate advocates for your brand.
To create Impact:
- Develop a clear and inspiring business mission
- Ensure your employees are motivated by and embody your company values
- Focus on creating exceptional customer experiences that go beyond the product or service itself
- Transform customers into brand ambassadors who eagerly spread the word about your business
Legacy: Ensuring Long-Term Continuity
The final level of the pyramid is Legacy. This is about creating a business that can outlive its founder and continue to make a positive impact long into the future. Legacy occurs when your brand takes on a life of its own, becoming bigger than any individual or product.
To build a lasting Legacy:
- Embed your core values deeply into the business
- Create systems to adapt to future changes and challenges
- Regularly evaluate how your activities align with your core values
- Develop leaders who can carry your vision forward
The Fix This Next Method
Now that we understand the Business Hierarchy of Needs, let's explore the four-step Fix This Next method for identifying and addressing your most critical business issues:
Step 1: Identify Unmet Needs
The first step is to assess your business in relation to the Hierarchy of Needs and identify which needs are currently not being met. This involves a honest evaluation of each level of the pyramid, from Sales to Legacy.
Step 2: Locate Your Vital Need
Once you've identified all the unmet needs, the next step is to determine which one is most critical - your Vital Need. This is typically the unmet need that sits closest to the base of the pyramid. For example, if you're struggling with both sales and profit, you would focus on sales first, as it forms the foundation for everything else.
Step 3: Establish a Measurable Solution
With your Vital Need identified, the next step is to create a specific, measurable goal to address this need. This could be something like "Convert four potential clients into sales each month" or "Increase profit margin by 5% within the next quarter."
Step 4: Repeat the Process
Once you've successfully addressed your Vital Need, it's time to start the process again. Reassess your business, identify the next most critical need, and focus on solving that issue. By repeatedly applying this method, you'll systematically strengthen all aspects of your business.
Applying the Fix This Next Method
Let's explore how to apply the Fix This Next method to each level of the Business Hierarchy of Needs:
Fixing Sales Issues
If your Vital Need is in the Sales category, focus on:
- Aligning your promises with what you can realistically deliver
- Implementing clear payment terms and procedures
- Ensuring your business generates enough revenue to provide you with a living wage
- Attracting and retaining quality clients
Remember, a sale isn't complete until the money is in your bank account. Be clear about payment terms and have backup plans, like installment options, to ensure you get paid.
Addressing Profit Challenges
If Profit is your Vital Need:
- Calculate a reasonable profit percentage to set aside from each sale
- Take this profit out first, before other expenses
- Adjust your business model to support this profit allocation (e.g., streamlining product lines or increasing margins)
- Work towards building a three-month cash reserve
Remember, profit isn't just about reinvesting in the business. It's about creating financial stability and rewarding yourself for the risks you've taken as an entrepreneur.
Creating Order in Your Business
To address Order-related issues:
- Identify and document key work processes and procedures
- Create systems that allow employees to work autonomously
- Ensure critical knowledge is shared and easily accessible
- Develop contingency plans for all key roles, including your own
The goal is to create a business that can run smoothly even when you're not there, allowing you to step away without everything falling apart.
Generating Impact
If your Vital Need is in the Impact category:
- Clarify your business mission and core values
- Ensure employees understand and embody these values
- Focus on creating exceptional, transformative experiences for customers
- Look for ways to go above and beyond in your interactions with clients
The Boonton Coffee Co. example from the book illustrates this well - by prioritizing the customer experience over immediate sales, they created a lasting positive impression.
Building a Legacy
To address Legacy-related needs:
- Regularly evaluate how your business activities align with your core values
- Create systems to adapt to future changes and challenges
- Develop leaders who can carry your vision forward
- Focus on making your brand bigger than any individual or product
Remember, Legacy is about ensuring your business can continue to make a positive impact long after you've stepped away.
Case Studies and Examples
Throughout the book, Michalowicz provides numerous real-world examples and case studies to illustrate the Fix This Next principles in action. Let's look at a few of these:
The Jammed Printer
Michalowicz shares a personal anecdote about a jammed printer that taught him a valuable lesson about problem-solving in business. When his printer jammed, he initially responded by frantically opening and slamming trays, hoping to fix the issue through sheer force. This approach, of course, didn't work.
Only when he stopped, took a breath, and calmly examined the situation did he find the real problem - a small scrap of paper trapped in the feed. This experience paralleled his approach to his struggling business, where he was frantically trying to increase sales without addressing the real issue of profitability.
The lesson: Sometimes, we need to step back from our instinctual responses and take a more strategic, analytical approach to solving business problems.
The Lost Kitchen's Postcard System
Erin French's restaurant, the Lost Kitchen, provides an excellent example of creating Impact through innovative customer experiences. When overwhelmed with booking requests, French implemented a unique system: potential diners must send a postcard during a specific 10-day window in April to request a reservation.
This system not only managed the volume of requests but also created a personal connection between the staff and guests. Each night, the postcards from that evening's diners are displayed, adding a touching personal element to the dining experience.
This case study illustrates how a potential problem (too many booking requests) can be turned into an opportunity to enhance customer experience and create lasting impact.
The McDonald's Franchise Model
Michalowicz uses the McDonald's franchise model to illustrate the concept of Order in business. In a well-run McDonald's restaurant, every employee has a specific role and follows established processes. The restaurant can operate efficiently without the franchisee needing to be present.
This level of systemization and order should be the goal for any business. When your company can run smoothly without your constant input, you've achieved a high level of Order in the Business Hierarchy of Needs.
Boonton Coffee Co.'s Customer Service
The author's experience at Boonton Coffee Co. provides a powerful example of creating Impact through exceptional customer service. When Michalowicz asked for a chai tea, the barista politely explained they only served coffee, suggested a nearby competitor for tea, and even offered directions. He then invited Michalowicz to bring his tea back to enjoy in their café if he wished.
This level of customer care so impressed Michalowicz that he changed his order to coffee, which the barista then provided for free. This interaction demonstrates how going above and beyond in customer service can create a lasting positive impression and turn customers into brand advocates.
Practical Tools and Techniques
Michalowicz provides several practical tools and techniques to help business owners implement the Fix This Next method:
The OMEN Method
When setting goals to address your Vital Need, Michalowicz recommends using the OMEN method to ensure your solutions are measurable:
- Objective: Define the specific results you want to achieve
- Measure: Establish how you'll track progress towards your objective
- Evaluate: Determine how often you'll analyze your measurements
- Nurture: Plan how you'll adjust your objectives and measurements if needed
This method helps ensure that your goals are concrete and trackable, allowing you to clearly see whether you're making progress.
The Profit First Approach
To address profit-related issues, Michalowicz introduces the Profit First approach (which he explores in more depth in another book). The key principles are:
- Calculate a reasonable profit percentage
- Take this profit out of your revenue first, before other expenses
- Adjust your business operations to support this profit allocation
This approach helps ensure that profit becomes a non-negotiable part of your business model, rather than an afterthought.
Systems Documentation
To create Order in your business, Michalowicz emphasizes the importance of documenting systems and processes. He suggests:
- Having employees document their own work processes
- Storing this information in an easily accessible place
- Regularly reviewing and updating these documented processes
This documentation ensures that critical knowledge isn't lost if an employee leaves and allows for easier training of new staff.
Core Values Alignment Check
To build Impact and Legacy, Michalowicz recommends regularly evaluating how your business activities align with your core values. He suggests:
- Clearly defining your company's core values
- Quarterly reviews of how your activities support these values
- Making adjustments when you find you've veered off course
This regular check-in helps ensure that your business stays true to its mission and values as it grows and evolves.
Overcoming Common Challenges
Implementing the Fix This Next method isn't always easy. Michalowicz addresses several common challenges that business owners might face:
Resistance to Change
Many business owners resist changing their approach, especially if they've been operating a certain way for a long time. Michalowicz emphasizes the importance of being open to new methods and willing to step out of your comfort zone for the sake of your business's growth.
Difficulty Identifying the Vital Need
Sometimes, it can be challenging to determine which need is truly the most critical. Michalowicz advises seeking outside perspectives - from mentors, peers, or business coaches - to help gain clarity on your business's most pressing issues.
Temptation to Tackle Multiple Issues
It's natural to want to solve all your business problems at once. However, Michalowicz stresses the importance of focusing on one Vital Need at a time. This focused approach leads to more significant and lasting improvements.
Fear of Letting Go
Creating Order often involves delegating tasks and giving employees more autonomy. This can be scary for business owners used to controlling every aspect of their company. Michalowicz encourages readers to trust in their systems and their employees, emphasizing that this is crucial for sustainable growth.
The Journey to Business Transformation
Implementing the Fix This Next method isn't a one-time event, but an ongoing journey of business transformation. Michalowicz emphasizes that this process requires patience, persistence, and a willingness to continually reassess and adjust your approach.
As you work through each level of the Business Hierarchy of Needs, you'll likely find that your business becomes more stable, more profitable, and more enjoyable to run. You'll move from constantly putting out fires to strategically planning for growth and success.
Remember, the goal isn't just to reach the top of the pyramid once, but to create a business that can continually meet all levels of needs, adapting and evolving as circumstances change. This is how you build a truly sustainable, impactful, and legacy-creating business.
Conclusion
"Fix This Next" provides a powerful framework for business owners looking to break free from crisis mode and build thriving, sustainable companies. By understanding the Business Hierarchy of Needs and applying the Fix This Next method, entrepreneurs can:
- Identify their most critical business issues
- Address these issues in a strategic, prioritized manner
- Create a strong foundation for growth and success
- Move from constant firefighting to proactive business management
- Build a business that can operate autonomously and create lasting impact
The key takeaway is that sustainable business growth isn't about trying to solve every problem at once. Instead, it's about identifying your Vital Need - the most critical issue holding your business back - and focusing your energy on addressing that need before moving on to the next challenge.
By systematically working through the levels of the Business Hierarchy of Needs - from Sales to Legacy - you can transform your business from a source of stress and uncertainty into a well-oiled machine that not only provides financial stability but also makes a meaningful impact and leaves a lasting legacy.
Remember, this is an ongoing process. As your business grows and evolves, you'll need to continually reassess your needs and adjust your strategies. But with the Fix This Next method as your guide, you'll have a clear roadmap for navigating the challenges of entrepreneurship and building the successful, impactful business you've always dreamed of.
So, take a deep breath, step back from the daily fires, and start applying the Fix This Next method to your business. Your future self - and your flourishing company - will thank you for it.