Dallio is the founder of the largest hedge fund in the world, Bridgewater Associates. His business is analysing other businesses and making big bets on behalf of investors. He knows a thing or two about running a business.
In his book ‘Principles’ Ray Dallio sees a business a series of smaller systems and processes that add up to make The System. Well, actually he sees everything as a system but for the sake of focusing this article for the reader we will discuss a fitness business as a System.
A business is a system designed to:‘Benefit your life as the business owner’‘Convince human beings who interact with the business that they have benefited/will benefit from the interaction’
From the Macro to the Micro
Ordering the business this way gives it verticality. The higher up in the chain something is, the more important it is to the success of your business. There should be a line of reason from the very smallest branch all the way up to to the top. If there isn’t then you’re doing something for a reason you don’t quite understand.
The organisational process can be emotionally quite soothing, as all of the noise in your head looks a little more reasoned on paper. However, without a way of tracking the effectiveness of each system and process then it’s nothing but a pretty diagram.
At each stage of the tree there should be a metric you choose as a measure of success for the particular branch. Each metric below that in the tree should be part of the puzzle that contributes to improving the metric above it.
For example – to track the effectivness of your Owner/Consumer Benefit you can reasonably assert that if your total yearly profit is growing then you are succeeding as a business.
That one may be a little obvious but it’s important to keep in mind that without that happening then at least one tree of the systems beneath are not doing their job effectively.
One way that you might increase profit is to get more leads. so a branch below is Getting new leads. To measure this you could look at the number of email opt-ins.
Then you have to ask yourself ‘how do I increase email opt ins’?
Maybe you promote something on insta to get email opt ins – to measure the success of this you cause a specific insta ‘link in bio’ opt in link.
From there you can tweak the bottom of the tree – or split test a few different activities at the lower end of the tree and see which is the most efficient at producing the desired outcome of ‘more email opt-ins’
You also need to understand whether or not the ‘email opt-ins’ strategy is a reliable predictor of ’total profit’ so be sure to see if a change in the that number has a relationship with the total P+L of your business over time, otherwise you could be pouring energy into something that is doing literally nothing to help you.*
*As a side note a ‘link in bio’ is an awful way to generate leads unless you have a following in the high 5 figures and beyond. We are not recommending it here but using it as an easy example.
Just like exercise, the less variables you change the more likely you can reliably tell when something is actually working. If all at once you change your lead acquisition strategy + you sales process + your offering then how can you tell which change worked?
You have to be patient.
The more often you change the macro the less likely you are to expose yourself to a successful outcome.
There are infinite systems you can build into your business to try and move that ‘total profit’ number. Your job as the CEO is to pick the ones that maximise your expertise and skillset, and make them as efficient as possible.
By Alex Williams (Coach at Propane Fitness)
If you would like to get a sense of the systems we would suggest for you then you can always read more of our articles below.