What business are you in? That might seem like a strange question to ask anyone involved in early childhood education. After all, the sector name says it all, doesn’t it? If that isn’t enough for you, then take a look around. We have children, we have facilities, and we have trained education professionals. So, why am I asking you to tell me which business you are in? Well, the answer is important for a number of reasons. Firstly, it is a good thing if we know what we are doing, and if our colleagues know as well, so that we can all work towards a common end. It’s not much good organising a rugby match, only to find that half of us are playing union while the other half are playing league. Secondly, we need to know what we are offering, so that we can tell our customers. This is particularly important when it comes to our unique selling proposition (USP), that key piece of information which helps the customer to understand the things which set us apart from our competitors. Then there is a third reason, which I will come to shortly. So far, so good. However, it is worth thinking a bit more deeply about what our business is actually all about. Sometimes, there is more going on than meets the eye. Fast-food giant McDonalds is an interesting example of where public perception and reality diverge. Your local McDonalds outlet sells burgers, fries, and other ready-to-eat items. That is how they make their money. You order their nosh, they take your dosh, and everyone is happy. McDonalds makes a big deal about its food, so this makes sense as a business model. They have extensive processes and procedures to ensure fast, consistent, and reliable service. But is it as simple as that? Maybe fast-food is just an excuse to draw you in. Maybe they are in another business, entirely? Some years ago, my wife’s sister took a holiday in south-east Asia. Great opportunity to try the local food, right? Guess where she ate every night? That’s right, she ate at Maccas. Why? Food safety, peace-of-mind, something familiar, a taste of home. So, maybe McDonalds real business is something around being a trusted provider, offering refreshments in clean surroundings, with sit-down facilities, and playgrounds for the kids? Maybe it is even more basic than that. Maybe, at the ‘gut-level’, we are talking about selling happiness, shared experiences, full bellies, and fun times? Moving away from your local McDonalds restaurant to corporate level, maybe it is actually about none of these things. What if I told you that corporate McDonalds is really in the real estate business? That’s right, McDonalds entity McDonald's Franchise Realty Corp. was created for the purpose of owning prime real estate, leasing it to franchisees, and having the option of reselling the land at some future point in time. Providing the McDonalds name, systems, and advertising is a way to generate income for the franchisees, so that they can pay the franchisor for lease of the land. Yes, there are multiple revenue streams (other than leasing) that corporate-level McDonalds taps into, but don’t think that they rely simply on a percentage of store turnover in order to fund their massive empire. Lease payments are a profitable, regular, and dependable way to make money, as opposed to a small slice of overall burger sales, which relies heavily on variable and volatile consumer-driven behaviour, and the strength of the economy. Corporate McDonalds knows what business it is in, and the local McDonalds restaurants know what business they are in. So, does something similar apply to ‘regular’ businesses? Not surprisingly, the answer is ‘yes, it does!’ Entrepreneur and writer Jeff Haden tells the story of his wedding photography business. For many years, Haden thought that he was in the business of taking perfect pictures at weddings. After all, he was a photographic technician, an expert with experience in using cameras to take ‘the perfect photograph’. One day, he was struggling with a particular lighting problem, when his wife came in. When Haden explained what he was doing, his wife said, “You realize you're the only person who sees that. No one notices but you." After a moment, she continued, "I think you've forgotten what you really do. You're not in the 'perfect photograph’ business. You're in the emotions business. "Your job is to make couples and their families feel they're in good hands, that you'll be the one vendor they can trust to be professional and courteous and kind and understanding ... and later deliver photos that will always remind them of their special day. What business are you actually in? By Phil Sales March 2023 { 36 }
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