Introduction – A Basic Summary of Fix This Next
The Fix This Next diagnostic tool was developed by multi New York Times best-selling author, Mike Michalowicz. His framework draws on the five identified levels of needs shared by every business. These five levels of needs are coined the “Business Hierarchy of Needs”. His goal with the Fix This Next concept: help eradicate entrepreneurial poverty by showing business owners a simple system to uncover their greatest challenge. With this clarity, they can then systematically fix the issues that will yield the greatest impact on improving their business, without burning out trying to fix everything at once.
Next, let’s have a look at the core concept behind the Fix This Next tool, the Business Hierarchy of Needs.
The Business Hierarchy of Needs
(Note: as a certified Fix This Next Advisor, this content is distributed with permission from Mike Michalowicz. You can find more original content at https://fixthisnext.com)
One of the biggest problems entrepreneurs face, is NOT figuring out “what problems do I need to fix in my business?” as most business owners KNOW what’s frustrating them. They know what challenges they have. The true problem is: “of ALL the problems my business is struggling with, WHICH ONE is the most important one RIGHT NOW?”.
When business owners try to fix everything in their business at once, they get overwhelmed. Their efforts lose their effectiveness, because they’re spreading their resources (time, attention, money, personnel, …) to thinly over too many problems. They often end up with band-aid-like solutions that don’t actually fix the underlying cause of their challenges. And many are likely fixing problems in the wrong order wasting their resources along the way, having to redo things, ditching failed projects, … and burning out in the process. This is what Mike refers to as The Entrepreneurial Survival Trap.
How can a small business owner possibly be able to KNOW with certainty, which problem to address FIRST, when there are so many challenges that need solutions?
Urgent versus Important Problems
Some entrepreneurs solve the “easy” challenges first. Or they solve the ones that are URGENT, but not IMPORTANT. Or they focus on the ones that they’re emotionally attached to – letting their ego get in the way of their decision making.
Mike created the Fix This Next Framework based on the natural Business Hierarchy of Needs (I’ll refer to it moving forward as the “BHN”). The BHN takes you from guessing to knowing so you can take fast and deliberate action.
It’s a revolutionary approach because it is built upon the foundational needs of every business, regardless of industry or size, rather than relying on a guess or “gut feeling”. When we focus on putting out the fires that arise (the apparent, urgent issues), we get distracted from fixing the vital need that is actually more important.
You can think of it like constructing a building. You start with the foundation. When the foundation is in place then you can build the first floor, then the second and so on. You don’t start by trying to build the 7th floor, then the roof, then the 2nd floor in random order. Each level must build upon the one below it. And each level must be strong enough to hold the levels to come above it.
The Business Hierarchy of Needs (BHN) Explained
You may be familiar with Abraham Maslow’s Hierarchy of Human Needs (originally published in 1943). According to his theory, there are 5 core categories of human need. The 5 core needs start with the most primitive, basic human needs for survival (food, water, air, shelter), through to more and more sophisticated needs at the top related to self-actualization (morality, creativity, self-expression).
In order to fulfill needs higher up on the hierarchy, we must first fulfill the needs below it.
The same principle applies to the Business Hierarchy of Needs. The five core levels of business needs are: Sales, Profit, Order, Impact, and Legacy. Within each level, there are essential “needs” that must be adequately fulfilled, before you should focus your attention on fulfilling needs at a higher level. In the next section, I’ll go into detail about each of the core business needs.
Business Hierarchy of Needs – Level 1 Sales
In level 1 of the business hierarchy of needs, business owners focus on the creation of cash. Cash is the lifeblood of every single business out there. In fact, if you’re not generating revenue, you do not have a business at all.
The five core needs at the sales level are:
• Lifestyle congruence
• Prospect attraction,
• Client conversion,
• Delivering on commitments
• Collecting on commitments
Business Hierarchy of Needs – Level 2 Profit
In level 2 of the business hierarchy of needs, the focus and attention shift to the creation of stability and resilience through profitability. This is where the rubber meets the road where a business generating lots of revenue can properly manage their cash so that they can build cash reserves, reduce and eliminate debt, and be able to operate in a way that is sustainable. When a business meets all five needs at the profit level, it can scale in growth without financial strain or possible collapse.
The five core needs at the profit level are:
• Debt eradication
• Margin health
• Transaction frequency
• Profitable leverage
• Cash reserves
Business Hierarchy of Needs – Level 3 Order
In level 3 of the business hierarchy of needs, the company works on creating efficiency and ensuring that the business can operate like a well oiled machine. A business that meets all the needs of efficiency is able to run and even grow, no matter who is on the team. It can even thrive without YOU, the owner.
The five core needs at the order level are:
• Minimized wasted effort
• Role alignment
• Outcome delegation
• Linchpin redundancy
• Mastery reputation
Business Hierarchy of Needs – Level 4 Impact
At level 4 of the business hierarchy of needs, the focus shifts to the creation of impact through transformation. Many businesses completely miss the mark here. This level relates to how the business helps transform the lives of its’ stakeholders: clients and customers, employees, vendors, and community.
The five core needs at the impact level are:
• Transformation orientation
• Mission motivation
• Dream alignment
• Feedback integrity
• Complementary network
Business Hierarchy of Needs – Level 5 Legacy
At level 5 of the business hierarchy of needs, the focus moves to the idea of permanence. This is where we ensure that your business and its impact lives on after you move on. This level is particularly important for entrepreneurs who want their business to continue on and thrive for generations to come. At this level we ask the big questions.
Here are the five core needs at the legacy level:
• Community continuance
• Intentional leadership turn
• Heart-based promoters
• Quarterly dynamics
• Ongoing adaptation
The Business Hierarchy of Needs levels shouldn’t be confused with stages of business. The BHN do not represent stages in business growth. They are levels of needs. Your business will not climb the hierarchy in a linear fashion, but move up and down levels as it progresses.
The BHN gets you out of guessing mode and moves you into fast, impactful, deliberate action. It took me the better part of three years to perfect it, testing it out in my own business and with other entrepreneurs through multiple iterations. Once the creator of the system, Mike Michalowicz figured out how to pinpoint what to focus on next, his businesses grew faster and healthier than ever before. Since creating the tool, he’s stopped relying on my instinct alone and have started using this system to listen and respond to my company’s true needs.
Now, when you get stuck, all you have to do is start at the bottom of the pyramid and address the core needs you have not yet met. It’s back to basics. Basic needs, that is. The tool never stops working. You can always return to it to pinpoint your biggest challenge, fix it next, and then pinpoint the next one after that as you build your beautiful business.
The Fix This Next approach addresses problems in the ORDER OF THEIR IMPACT on the business with the consistent focus on moving the business in one direction (to get you from point A towards the company’s vision) in the straightest possible path.
With this framework, you know you’re:
- Doing the RIGHT things
- At the RIGHT time
- In the RIGHT order
Make It A Habit
Just like with other habits, establishing a regular Fix This Next Assessment rhythm in your business is the best way to cement in the process of continual improvement.
One of the best ways to achieve this is to engage the services of a certified Fix This Next Consultant.
As a certified Fix This Next Advisor (and one of the only 20 Founding Fixers in the world), I have been chosen by Mike Michalowicz to work with businesses to help them leverage this powerful system to help them achieve their goals with speed and deliberate focus.
With this overview you’ve had a chance to get a glimpse into the Fix This Next framework based on the business hierarchy of needs. I encourage you to take action. Let’s chat about what this next step could look like for you.