PDF Summary:Ready, Fire, Aim, by Michael Masterson

In Ready, Fire, Aim, veteran entrepreneur, multimillionaire, and best-selling author Michael Masterson presents a strategy for building and growing a profitable business. He explains that successful, multimillion-dollar businesses progress through four stages of development: launch, expand, optimize, and sustain. Each of these stages presents different challenges and objectives that entrepreneurs must prioritize to ensure continued growth and profitability.

This guide walks you through Masterson’s strategy for navigating the four stages of development, covering how to:

• Align your first product or service with what customers want and effectively market it.
• Generate ideas for additional products and services that increase your earning potential.
• Structure your management team to handle business operations effectively.
• Drive long-term growth and profitability.

Additionally, we’ll clarify his ideas with research and advice from entrepreneurs and management professionals, and we’ll provide actionable methods for implementing his suggestions in your own business.

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A Five-Step Process for Testing Marketing Strategies

Like Masterson, Levinson (Guerrilla Marketing), recommends testing different marketing strategies to determine the most profitable course of action for your business—he offers a five-step process for achieving this.

1) Create a marketing calendar: Include all relevant details to help you plan and track your marketing activities, such as the timeline, budget, and costs for each marketing method.

2) Define what you want this marketing method to achieve: What specific action do you want customers to take in response to this method? For example, you email a newsletter with a discount code because you want customers to click on that link and complete a purchase.

3) Direct customers to take this specific action: Incorporate a simple instruction that tells customers exactly what you want them to do. For example, “Call this number,” or “Respond to this email.”

4) Integrate a tracking code into this instruction: This will help you identify how customers respond to this particular method. Use different URLs, toll-free numbers, or coupon codes to track each of your methods.

5) Measure your profits: First, total your marketing expenses for this method. Then, total the sales value that this particular method generated. Finally, deduct your marketing expenses total from your sales value. For example, your marketing expenses for this method were $500. This method generated $1,500 in sales, resulting in a $1,000 profit ($1,500 - $500 = $1,000).

Stage 2: Expand

Once you’ve pinned down your marketing strategy, determined which product or service version appeals most to customers, and successfully generated sales for this offer, you’ll be ready to expand your business and your earning potential. Achieve this by focusing your resources on creating a broader range of offers—targeting your existing market, new markets, or both—and marketing them to both existing and new customers. Masterson explains that this strategy improves your chances of long-term success by:

• Helping you acquire new customers across different markets
• Providing new opportunities for you to profit from your existing customers
• Generating more sales, increasing your profits, and providing a steady stream of income to fund the ongoing growth of your business

(Shortform note: Business experts agree that expanding your product or service line can attract a wider range of consumers and enhance brand awareness, resulting in increased sales and financial stability. However, while this approach sounds good in theory, many companies have failed to successfully create and market new offers, as exemplified by Coca-Cola's unsuccessful foray into the wine industry in 1977. To avoid similar failures, follow the market research strategies covered in Stage 1 for each new offer you plan to create. This will help you effectively manage the decision-making process for expansion and increase your chances of success.)

In addition to improving upon best-selling products and services in your industry, Masterson suggests three methods to generate ideas for offers that appeal to both existing and new customers:

1. Leverage your expertise and resources.
2. Take advantage of emerging technologies or market trends.
3. Focus on supplementary offerings.

Let’s explore each of these methods in detail.

Method #1: Leverage Your Expertise and Resources

Masterson’s first method for generating ideas for new products or services is to leverage your expertise and resources. This involves drawing upon your existing knowledge, the tools and technologies you have access to, and the networks you’ve established to brainstorm and identify offers that are uniquely tailored to your strengths.

Example: If you researched child development before launching your organic plush toy business, you could use your knowledge to create a line of educational toys that promote critical thinking. Or, you could use the supplies and tools you use to manufacture your plush toys to create a complementary line of matching baby clothing or bedding.

(Shortform note: In addition to drawing upon their existing expertise and resources to create new offers, businesses can also leverage their brand equity. For example, Xiaomi grew to become the world’s leading consumer internet-of-things company by forming alliances with partner firms. Xiaomi offered these partner firms significant value in the form of physical and intellectual resources such as research, development, and manufacturing resources, as well as brand capital—the firms benefited from access to Xiaomi’s millions of existing loyal customers without having to go through the long process of building a customer base and developing trust.)

Method #2: Take Advantage of Emerging Technologies or Market Trends

Masterson’s second method for generating ideas for new products or services is to take advantage of emerging technologies or market trends. This involves actively monitoring the latest developments in your industry and brainstorming innovative ways to capitalize on them.

Example: For your organic plush toy business, you could use virtual reality technology to create a line of augmented reality toys that run on rechargeable batteries. Or, you could capitalize on the growing demand for sustainable products by creating a line of toys made from recycled materials.

Build Detailed Future Scenarios

Osterwalder and Pigneur (Business Model Generation) offer advice for capitalizing on emerging technologies and trends: Create future scenarios that may impact the way you operate. These scenarios will help you prepare adaptation strategies and generate innovative ideas for groundbreaking products and services.

To create realistic future scenarios, you need to understand the business environment within which you operate and the various forces that influence it:

• Market: Which market segments are growing or require attention? Where are customer needs not being met? What issues are driving change? Why are customers switching to competitors? What are customers willing to pay for?

• Industry: What other companies do you rely on and how do they impact you? Which stakeholders influence how you operate? Who are your competitors and what are their strengths and weaknesses? Who are the new players in the market and what are their strengths and weaknesses? Which products and services could replace yours?

• Key trends: Which new rules and regulations will affect how you operate? Which technological trends could threaten or enable your business model? Which societal and cultural shifts or trends will influence buyer behavior? What are the demographic trends for your market?

• Macroeconomic: What overall global market conditions could affect your market? How easy is it to obtain funding? How does the public infrastructure affect your market? What’s the price trend for the resources you need to operate?

Method #3: Focus on Supplementary Offerings

Masterson’s third method for generating ideas for new products or services is to focus on supplementary offerings. This involves brainstorming add-ons and accessories that provide additional functionality or benefits that enhance the overall value of a core product or service.

Example: Add-ons and accessories that could enhance the value of your organic plush toys include clothing sets to dress them up, furniture sets to create different scenarios, storage solutions to keep them organized, and organic detergents to keep them clean and soft.

(Shortform note: Geoffrey Moore (Crossing the Chasm) provides advice for coming up with supplementary offerings: Provide a whole product for your customers. He explains that core offers typically only provide part of the whole solution that customers need—for instance, when a business sells printers (the core offer) without the peripherals or ink cartridges. To identify your whole product, Moore suggests that you consider everything that your offer depends on or has to interact with in order to solve your target customer’s problem. Then, either provide the whole product yourself or form alliances with other companies that can provide the missing pieces.)

Stage 3: Optimize

Once you’ve expanded your product lines and increased your profits, optimize your internal systems and procedures. Achieve this by structuring your management team to handle day-to-day business operations. Masterson explains that this strategy improves your chances of long-term success by ensuring that all business functions run efficiently without your direct attention. This reduces costs and increases productivity and profits. It also allows you to focus on pursuing opportunities that fuel the ongoing growth of your business.

(Shortform note: In addition to the benefits outlined above, efficient operations also ensure customer satisfaction, positive reviews, and a reliable source of revenue. Management experts Ken Blanchard and Sheldon Bowles (Raving Fans) explain that customers form expectations based on their past transactions with a business—and they expect future transactions to be just as good, if not better. This means that businesses must set processes in place that allow them to provide a consistent and reliable service—otherwise, they risk disappointing and losing their customers.)

Structure Your Management Team

Masterson suggests that you follow five steps to structure your management team:

1) Outline all of the tasks involved in running your business and note the departments and managers who are accountable for them.

(Shortform note: Business strategy experts suggest creating a thorough outline to fully understand your operations. In addition to Masterson’s advice, note the specific people responsible for carrying out each task, what triggers them to take action, and what they specifically do. Interviewing the people involved in each task will help you to gather all of the necessary information.)

2) Group the tasks into operational functions (for instance, accounting and inventory management) and marketing functions (such as market research, advertising, and customer service).

3) Assign an overseeing manager to handle all operational functions, who will report directly to you.

(Shortform note: Business experts suggest that you research the different types of organizational structures and consider factors such as the size of your business, the complexity of your operations, and the industry you operate in before grouping tasks and assigning managers.)

4) Appoint separate overseeing managers for each of your product or service lines. They’ll report directly to you. They should assign their own marketing managers, sales managers, and product development managers. For example, one overseeing manager would appoint a team of managers to handle plush toys, while another overseeing manager would appoint a different team of managers to handle plush toy storage solutions.

(Shortform note: The organizational structure Masterson advocates here is a product-based structure. This structure can be advantageous for businesses with many offers because it encourages each department to develop specialized skills that help shorten research, development, and marketing cycles for each specific offer. However, it can also result in higher costs due to resource duplication across multiple divisions, and it may foster an unhealthy culture of competition rather than collaboration if overseeing managers prioritize departmental profits over company-wide success.)

5) Set key objectives for each overseeing manager and request regular progress reports.

Advice on Setting Objectives

While Masterson suggests that you set objectives for your managers and monitor their progress, he doesn’t provide practical advice for completing this step. Therefore, we’ve adapted a goal-setting process from Measure What Matters to help you define and measure your business objectives.

1) Define your company’s overall goal: This is your vision of where you want to be in the next five years. It needs to be clearly defined and action-oriented. For example, generate annual revenue of $500,000.

2) Identify individual objectives: Each of your managers need to identify their objectives. The objectives they define for themselves must align with the company’s main objective. For example, your sales manager might set an objective to acquire X number of customers by the end of the year.

3) Define your key results: Your key results must be measurable sub-goals toward achieving your final vision. They need to include specific results and deadlines. To identify your key results, ask yourself, “What steps do I need to complete to reach my objective?” For example, your sales manager’s key results might be to increase online sales by five percent every month, increase offline sales by 10% every month, and so on.

4) Regularly check progress: Checking the progress of each key result provides valuable insights that will help you to stay on track—it helps you assess the effectiveness of your current strategy and provides an opportunity to revise or update your key results. The frequency of your check-ins depends on the length of time needed to achieve each key result.

Using this process to define both your long-term and short-term goals will ensure that all of your managers are:

• Focused on one final objective

• Aligned toward achieving this objective

• Accountable for the progress they make toward achieving this objective

Stage 4: Sustain

When you’ve structured your management team to handle operations, sustain your business’s long-term growth and profitability. Achieve this by relinquishing your role as CEO and instead acting as an adviser or investor for your business. Masterson explains that this strategy improves your chances of long-term success by enabling you to focus on high-level tactics that drive the continued growth of your business.

(Shortform note: Several business authors suggest that entrepreneurs can sustain growth by relinquishing their CEO roles. Jim Collins (Good to Great) suggests that great leaders build companies that can thrive without them—they achieve this by identifying and grooming successors to take over their CEO roles. Verne Harnish (Scaling Up) explains that entrepreneurs can free up time to focus on strategic planning by creating leadership teams that can take over day-to-day operations. Bo Burlingham (Finish Big) argues that entrepreneurs should plan to exit their companies from the very beginning by building strong leadership teams, developing succession plans, and preparing their companies for sale or transfer.)

Masterson suggests three tactics to consider:

1. Build strategic partnerships.
2. Acquire other businesses.
3. Go public.

Let’s explore how each of these tactics can help drive the growth of your business.

Tactic #1: Build Strategic Partnerships

Masterson’s first tactic, to build strategic partnerships, involves forming alliances with other businesses to achieve mutual benefits. This tactic can drive the growth of your business by helping you increase your market share, access resources, share costs, or reduce risk.

Example: Your organic plush toy business allies with a popular children’s clothing brand. The partnership allows you to leverage the clothing brand’s distribution network and customer base to boost your sales. Moreover, the partnership enables the clothing brand to offer a unique and complementary line of products to its customers, enhancing its brand value.

(Shortform note: Osterwalder and Pigneur (Business Model Generation) expand on this by explaining that there are four different types of strategic partnerships: 1) partnerships between non-competitors (eBay and Paypal), 2) partnerships between competitors (Apple and Microsoft’s patent-licensing agreement), 3) joint partnerships to develop new products and services (Ford and Toyota develop hybrid trucks), and 4) buyer-supplier partnerships (Samsung supplies Apple).)

(Shortform note: Innovation expert Rosabeth Moss Kanter (Think Outside the Building) compares strategic alliance relationships to marriage—like marriage, many strategic alliances fail to live up to expectations. In other words, both suffer from a high failure rate. However, Kanter argues that strategic alliances are more likely to succeed if businesses focus on creating strong foundations built on shared values and mutual benefits

Tactic #2: Acquire Other Businesses

Masterson’s second tactic, to acquire other businesses, involves purchasing or merging with other companies to extend capabilities. This tactic can drive the growth of your business by helping you expand your product or service offerings, diversify your revenue streams, access new technologies or intellectual property, or secure talented employees.

Example: If your organic plush toy business acquires a small toy manufacturer that specializes in sustainable toys, you can leverage the specialized skills of the manufacturer’s employees to expand your product line. Moreover, you can gain access to the manufacturer’s network of suppliers and retailers to reach more customers and increase sales.

Effective Collaboration Drives Growth

Though business acquisitions and mergers have the potential to drive growth, business consultant Regis McKenna warns that poor collaboration between the involved businesses often results in failure. He suggests two ways to ensure effective collaboration and maximize the potential benefits of a merger or acquisition:

1) Adequate separation. Both businesses must retain enough autonomy that they each have their own supply lines, customers, and unique culture. He warns that without adequate separation, the culture and resources of the acquiring business tend to crowd out those of the acquired business, such that the acquired company’s strengths are lost.

2) Adequate communication. While maintaining autonomy, the two businesses also need to communicate enough that they both have a clear understanding of who is responsible for what. McKenna warns that when businesses try to collaborate without adequate communication, important tasks are often left undone because each business assumes the other is taking care of them.

Tactic #3: Go Public

Masterson’s third tactic, go public, involves selling shares of the company to raise funds. This tactic can drive the growth of your business by providing access to a large pool of capital that you can use to fund research and development, expand operations, or pursue new business opportunities. Additionally, it can increase your visibility and credibility in the market, which helps attract new customers, suppliers, and strategic partners.

Example: By going public, your organic plush toy business gains access to funds to invest in high-profile marketing campaigns that increase your visibility. This makes it easier to secure cost-effective suppliers to make your products and to ally with popular retailers to sell your products.

(Shortform note: Businesses commonly go public through an initial public offering (IPO), which can be a lengthy and expensive process. An alternative approach for going public involves using a Special Purpose Acquisition Company (SPAC). A SPAC is a shell company that’s created specifically for the purpose of raising funds through an IPO. The funds are then used to acquire an existing company and take it public, bypassing some of the traditional IPO requirements and potentially offering a faster and cheaper path to going public. This approach can be particularly attractive for companies that have unique assets or operations that may not fit neatly into traditional investment categories.)