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As we move through the business cycle the question of whether the business should grow will come up. The prospect of growing the business can be scary to a business owner, it costs money, it’s hard work are often reasons given to not grow the business. However if you have a strong product, good systems and strategies then you are already well placed to grow.
So how do you address the concerns that are holding you back from growing?
If you believe that you can’t grow because you are irreplaceable then by default you will not grow as you are the greatest obstacle. This requires a change in mindset as you slowly let go of the reigns. Putting strong systems and process in place will relieve you of some of the burden but also give you security that the business is operating as you would like.
If you want to grow you can not do everything yourself. Employ people who compliment you skills. If you are a strong marketer but weak in the numbers then recruit a strong accountant or CFO. Don’t be afraid to outsource some parts of your business but a word of warning, ensure that your requirements are being delivered. Employing or outsourcing does not lessen your responsibility but it does reduce your workload.
Growing a business is hard, but so was getting started. It will bring a new set of challenges and require a different set of skills. Embrace the change and grow with the business, engage experts or a mentor to help you through. As you grow keep your eye on the business and adjust things as you go. Your involvement will be different but if you employ the right people and share your vision with them you will be amazed what they could achieve. The power of many may (and often does) find better ways to do things benefitting all.
In summary it is natural to be nervous about growth and taking new things on but if you face the fears head on you can succeed. The hardest step was getting started you are already half way there.
When looking at succesful businesses there are a number of things they do really well. They generally have a vision of where they would like to take the business this is supported by a robust plan. Additionally there is a strong execution culture that gets things done and allows for robust monitoring and measuring of results plus a revision process that leads to the plan being adjusted.
It all sound so simply: we have a plan and get on with doing it, yet business constantly fails at the execution step. Why?
Often the vision and plan of the business is written by the owners (or consultants) of the business without adequate buy in from the staff or workers who have to execute the plan. Without the buy in if the staff the execution will be poor and the plan is unlikely to succeed.
Poor communication. Too many times I have seen business owners proudly talk about their vision for the business but when I ask them if they have shared it with the staff they tell the staff don’t need to know its our vision. If everyone is not headed in the same direction your chances of success are compromised, communicate what you want to achieve with your business.
Poor co-ordination between different parts of the business. If improved cash flow is an important target but the sales force keeps offering credit then the goal will not be achieved. The goals need to be aligned.
Inadequate monitoring. It is important to measure the key milestones to success and adjust the plan according to the findings. Blindly heading to a target may result in you being so off course there is no chance of success.
In summary to achieve your business goals do not forget the importance of the execution phase. Monitor your progress regularly and adjust systems & process as required.
For those of you who have read my blog before you would know there are three main drivers of business profitability (revenue, efficiency & costs). Today I am going to talk about a process you can use to reduce the costs of your business.
The best place to start of by reviewing your monthly profit and loss statement. If you are not producing one I suggest you get started waiting until the end of the year for your accountant to produce one is simply too late. Most accounting software (MYOB, Xero etc) can do this for you easily.
Review all the costs in your business and look for areas of improvement or cost blow outs. Compare costs versus last year and see what has increased. Ensure you still need the expense, there is no need paying for ten phone lines if you only need four lines.
Set targets that are attainable and sustainable and are consistent with your overall vision. Assign responsibility to the appropriate staff member and hold them accountable to achieve the desired result.
Once you have reviewed you costs and found areas of improvement develop your implementation strategy and aggressively execute it. Communicate changes to your staff so they know what is happening and why. Measure progress (those P & L’s again) and adjust your strategies accordingly.
A word of caution your marketing budget is an investment in your future. Simply cutting your marketing expense to save costs will most likely have a long-term impact on sales. Once again measure and monitor your marketing spend to ensure it is working for you, but don’t stop marketing just to save cost.
In my travels I constantly come across business people who are struggling with the process of managing a business. In the past they were the business, the growth they have achieved and the staff they have put on have complicated the issue. Like most things there is no easy answer but there are some steps you can do to make it work better.
1. Communication – Inform the team regularly of your objectives and plans. It will help them with their decision-making and ensure everyone is heading in the same direction.
2. Define your core values – Your core values become your compass and should be constantly referred to as decisions are made.
3. Focus – We all suffer from time constraints so focus on the really important issues that will deliver the best result.
4. Clearly define roles – This allows everyone to get on with the job. If you as the business owner get too involved employees will learn to become dependent on you limiting both the employees and the business potential.
5. Learn from your mistakes – It is impossible to get every decision right. So when things go wrong, review what happened with the team and take what you have learnt forward.
6. Enjoy your wins – Celebrate as a team your successes and wins. This creates a positive attitude which will lead to more success.
If you are suffering that challenge of managing your business think of the positives as the problem is generally caused by the growth of your business and if you put a few simple things in place you can enjoy the benefits of this growth.
One of the great challenges of modern society and business is the ease of access to information. Whether that is through the iPhone, iPad, laptop or desktop information is readily available and if you are blogging, twittering and emailing you receive a constant stream of new information.
This is becoming a real challenge, how do you keep on top of all the new information and still get things done! Like anything else you need a bit of discipline and make a time and place for each activity. Spending too much time on Facebook when you should be working is a recipe for disaster, but checking a few times a day for short periods is OK and not to time consuming. Surfing the next is a good way to find out new things but if you keep chasing rabbits down holes you won’t achieve anything.
So how do you get on top of technology and make it work for you:
- Be disciplined and don’t fall into the trap of “playing” when more important things need to be done
- Resist the need to constantly read emails.
- Turn off the email alert tone. It will stop you looking at your computer or phone, the email will still be there.
- Set a time limit for internet use and only look up information you need.
- Treat reading emails like reading the mail. Set times aside for emails and try to stick to it (some experts advocate two windows a day if you can keep to this you will free up heaps of time).
- Delete unwanted emails immediately.
- If you read an email and can action it, do it. This will save reading an email multiple times.
- Keep you in box clean & tidy (use files) this will make it easier to find and action things.
Try and not be a slave to technology but use it to make like easier.
There is a lot of negative sentiment in the market place at present whether it is the impact of the carbon tax, increased council rates, groceries or the threat if increased interest rates. One result of this negative sentiment is that individuals and business have stopped spending. This has resulted in a slowdown in retail sales, see David Jones result reported yesterday, and a slowdown in business investment in training, marketing etc. What we are seeing is a slowdown in spending on discretionary items (although I would question whether training & marketing are discretionary).
How we as business people respond to this change in the market place may well define our future. We can not control these changes but we can certainly respond to them. It is all about attitude; the negative attitude is to squirrel away money for the rainy day and watch our businesses decline, while a positive attitude actively looks for opportunities to change.
How can we reduce our environmental impact and at the same time reduce cost and grow (read the book by Jon Dee called Sustainable Growth). How can we set our business apart from the mainstream ensure and our staff are engaged so that our customers love dealing with us and coming back for more. We can do this by being positive and actively looking for opportunities and ways to improve our business and by actively investing in our businesses. Investing in energy efficient lighting will reduce costs in the long-term, training our staff will result in a better customer experience and provide an incentive for staff to stay.
Economic conditions may be tough at the moment but it is up to us as individual to find a way forward, to have a positive attitude and looks for ways to improve or grow. If we don’t we can’t blame anyone else but ourselves.
Australians in generally and Small Business owners have recently had a major shift in their cash focus. For a number of decades up until the GFC Australians were spending more than they saved. This drove economic growth and was funded by debt which in turn was encouraged by low-interest rate. Since the GFC the spectre of increasing interest rates has been hovering over our heads, resulting in Australians becoming net savers once again. Reducing debt and slowing economic growth particularly for retailers.
Reducing your debt can be a good thing as it reduces exposure to interest rate increases and in the long-term frees up cash that is currently spent on interest. My medium to long-term concern about this strategy is regarding the expenditure that is no longer being made. If the savings are being made through efficiency gains or better use of resources then great, but if the savings are via reduced customer service, training, marketing or business growth then I have some concerns.
Every business needs to constantly invest in the future, in improving the offer we already have, in growing our customer base or developing new products or markets. If we stand still then our competitors will pass us by. We have seen this time and time again with new technology or processes superseding old. Products go out of fashion or become obselete for example if you manufactured typewriters 40 years ago and didn’t evolve you would now be out of business today.
My fear is that business, especially small business, has reduced its collective investment in the future to pay off current debt. If everyone in the market place did this then the status quo would remain, but if your competitors continue to invest and improve their products where will that leave you in 5 years time. You may have reduced your short-term debt at the expense of your long-term customers.
Running a great small business is not easy and the failure rate is too high. These businesses fail for a number of reasons but it often because the owners have not thought through what they want out of the business and how they want it to operate and in the end the business is running them around, rather than them running the business. As a business coach I often get asked what are the key things required to be successful in business. While there is no silver bullet I believe you need the following:
1. A business plan. This does not need to be a book that sits on the shelf gathering dust, a simple plan on a page in most cases will be enough. Without a plan you have no path to the future.
2. Review how you want to operate and then document it. By having procedures and a system it ensures everyone understands when and how things need to be done. This includes customer greetings, the sales process, invoicing and debt collection. Over time as the business grows and changes refine this procedures to reflect the new operating model.
3. Understand and monitor your accounts versus your budget. How can you make good business decisions without the correct financial data. Keep your accounts up to date and accurate and then use this information to make your forward business decisions.
4. Cash flow. Ensure you have enough cash to meet both your personal and business requirements. Watch inventory and debtors to ensure that too much money is not tied up in non productive assets. Adjust your plans according to your cash flow forecasts, there is no point in planning a huge marketing program if you don’t have the funds to pay for it.
5. Only employ people with the right attitude and develop a professional and happy work culture. Look for people who will help you grow and be succesful and don’t fall into the trap of employing people just because you like them, they must add value to the business.
6. Don’t be afraid to ask for help from people with skills you don’t have. Actively network and talk to people about new ideas and changes in the economy or technology.
7. Balance you work and personal life. Keep both physically and emotionally healthy by exercising and learning new things, as soon as you stand still someone will pass you by. Ensure you are enjoying life and work which will give you the energy needed to succeed. If you are not enjoying things make changes.
Successfully running your own business is not easy it takes dedication, commitment and persistence. There are steps you can take to help you on the way to be a success.
Have you ever thought about what is the difference between ordinary businesses and exceptional ones? Why do some business people seem to have all the luck, while others just keep doing the same old thing? The answer is how quickly they respond to the opportunities that come their way. That is when an opportunity arises they move swiftly to take advantage of it before their competitors.
How do you spot these opportunities? You need to use all the resources available to be constantly on the look out. For soloists that is you (and your contacts) but for everyone else you must motivate and incentivize your staff to spot opportunities. You need to educate them and encourage them to become opportunity spotters rather than simply employees who turn up for their pay. Give them feedback on the progress of the opportunities and how it has helped improved the business.
If you do this firstly your staff will become more engaged in the business and secondly your business will be primed to spot the next opportunity.
Over the years there has been much research into the value of various marketing methods. These methods move in and out of popularity but there is one method that remains tried and true. The power and influence of friends. Not your Facebook friends, although this may be the case, but the friends of the consumer or your potential client. Various studies have identified the following statistics:
- 65% of consumers say when they are contemplating the purchase of a product or service they know little about they seek advice from their friends.
- 57% of consumers believe that advice from their friends or relatives is inducement enough to try a new product
- 46% of consumers say they get information about new trends by observing what their friends are doing and what products they are using
These statistics highlight the importance of word of mouth publicity. Everyone looks to their friends for inspiration and trust their thoughts and advice. So every time you are interacting with a customer, or potential customer, you are also interacting with their circle of friends.Do you consider this when you are strategizing about your business? Is this part of your marketing mix? And if not should it be?
