In step 3 you assess your customer. This is a key step, get it wrong and you may not be able to recover. In fact, customer value proposition and how it translates into growth and profitability for company is foundation of strategy.

Start by asking your self a couple basic questions: To achieve my vision, how must my customers look? Who are target customers that will generate growth and a profitable mix of products/services? Next, ask yourself what is value proposition which defines how company differentiates itself to attract, retain and deepen relationships with targeted customers? There are basically 3 value propositions or disciplines that you can choose from: 1.Cost leadership – In this discipline you choose to provide best price with least inconvenience to your customers. 2.Product leadership – In this discipline you offer products that push performance boundary (i.e. newer and better than competitors). 3.Best total solution – In this discipline you deliver what customer wants, cultivate relationships and satisfy unique needs. In this case, you may not be cheapest or newest, but total package you deliver to customer cannot be matched.

In order to help you determine which of these value propositions you decide on, you may want to work through a value chain: 1. Determine your customer priorities 2. Determine channels needed to satisfy those priorities 3. Determine offering (products) that are best suited to flow through those channels 4. Determine inputs (materials/knowledge etc) required to create product 5. Determine assets/core competencies essential to inputs (ask yourself, in order to satisfy my customer at which processes must I excel? For example, product design, brand and market development, sales, service and operations and/or logistics).

4.Finish business model

The business model shows how all elements and activities of a business work together as a whole by outlining how business generates revenue, how cash flows through business and how product flows through business. By this time, you should understand revenue capability of business, how industry works and your competition, who you customer is, what you are going to offer them and how you are going to offer it. By drawing a flow chart that shows how these activities are linked together you will understand how business activities flow to generate projected profit, which you determined in step 1. This is also a good step to see if something is missing in your analysis.

5.Construct business plan

By time you get to this step most of your work is done. If you are looking for financing, a formalized plan will have to be completed. If you do not need financing, simply make sure preceding tasks are documented so that they can be reviewed and changed as time progresses (strategy is an ongoing process, not a one time task).

6.Learning and growth perspective

In this last step, you ask yourself how/where organization must learn and improve in order to become and remain successful. For example, determine skills, capabilities and knowledge of employees needed, technology needed and climate and culture in which they work.

Spending a significant amount of time in low-return activities Don’t we all know about this one! If you are spending majority of your day completing tasks which are administrative in nature and/or which can be easily completed by other people then you are not putting yourself to best use. For most of us, best value-adding activity we can be involved with is in bringing business in door by building relationships, talking to prospective customers and promoting our business. What value do you put on your time? Assign yourself a competitive hourly rate for market and industry you work in – it might be anywhere from $100 per hour or upwards. Then ask yourself whether you would pay anyone that hourly rate to process accounts or do administrative work. If answer is no, find a way of getting these low-return activities done for a lower hourly rate. Hire a bookkeeper or assistant for a few hours a week, and spend your time doing valuable work.

Not charging enough for what you do. This challenge seems to arise especially for people who sell services. Either we feel embarrassed to ask for amount we want, or we simply accept less money than we need - so we get "some money" rather than "no money". But beware, after a while, working for too little can leave you exhausted and resentful, not to mention impact it has on your profitability. You do not need to defend an increase in your fees either. It is normal business strategy to review fee structures, make changes and advise customers. And contrary to our fears, it is often case that business levels improve after fees are increased. It seems that we attract a whole different class of customer when our fees reflect value we provide.

Not making enough use of technology which could save time and effort. As a business owner, you have a fixed amount of time and energy within which you must maximize your profits. Technology can help you do this in form of autoresponders, voicemail, wireless internet connections, speech recognition software, SMS from your computer and so on. All of these tools are widely available to us, and are designed to save time and effort. Each f us needs to continually look for ways to make business processes more efficient by using inexpensive technology.

One of my clients was able to reduce time spent on replying to customers by 4 hours per week by simply using an autoresponder system. Often problem is that we don’t know what we don’t know. Some wonderful tool might be available but we don’t know it exists. You need to stay on top of latest products by regularly checking in with business and telecommunications sites.

Sticking with outdated business models or plans.

You’ve all heard it before - doing things way they have always been done means that you will get results that you always got. If you are not satisfied with your results then you need to re-look at what and how you are doing things. An astute entrepreneur has a mindset that is always challenging way things are done in business.

Another great way of coming across new ideas is to attend seminars and conferences on various topics. If you get a single idea to put into practice in your business, then that seminar has been worthwhile.

If you are serious about improving your business' profitability (and aren’t we all?), then taking action on these areas will help you make more money and have more fun in your business. And that’s what it’s all about really.