Maximising Business Potential
I was offering someone some advice about their business. I must say they did ask. I didn’t just wander into an office and start telling them how to run their business, although I have been tempted on a few occasions when it came to customer services (or should that be lack of it). As I said, I was there giving advice, mentoring I suppose some would call it, and I kept a note of the elements I felt were missing or needed clarifying. When I looked at this information, these key points, I felt they may make an interesting note for people thinking of starting their own business or looking for guidance. I noted that I have given advice to many, many businesses over the years and there is a certain commonality in what I need to pass on to others. I certainly believe one can be too involved in their own business and lack the ability to step back and review things logically. All too often in this era of triple dip recession, one is under pressure to keep things going commercially. Their own mortgages and the mortgages of others can weigh heavy on one’s shoulders in such uncertain times. The pressure from knowing that your family and your employees are relying on you to find a way through a down turn in business, a reduction in spending, which is affecting so many companies.
I have been training or working since the early 1980’s, when mobile phones were the size and weight of a house-brick, even before the introduction of computers or digital watches, before Sky and when Virgin had only one meaning and was not connected to the world of media communications, flights and banking. I say this to show that I have many years of experience, been through ‘boom & bust’, although this recession is a ‘bust’ the like of which the world has not seen before. With this experience comes the knowledge that certain corporate elements are common and repeated when given advice, this being underpinned by the experience of creating several companies and I believe over the years I have created a couple of thousand jobs or more. These common elements are below and I hope they are of assistance:
- The whole basis of a business is that you have a concept, idea and/or a vision that has some market value, not just what friends and family say is wonderful. Do some market testing and see what people who have no emotional investment with you think. See what they are prepared to pay. This is key so you know what the production cost for the service or product is compared to what people will pay. One hopes that the difference in the two is in your favour.
- You have to judge the size of the market, is it big enough for you to scale up sales of the product or service. It’s wonderful having a fantastic idea but if only a couple of people want to purchase it then you are onto a loser really.
- Then you must consider the quality of the product and the customer engagement. There’s an old saying about looking after your customers and they will look after you, and it’s very true. You can have a wonderful product but if your customer service is poor then you will not get repeat business. The product itself must ooze quality, shout quality, and be synonymous with quality. Dyson, Apple, Jaguar, and the list goes on. No one thinks of poor quality when a product such as a Swiss made watch is mentioned, everyone thinks good quality, high value, without even knowing how much it actually costs. Some of the product mark ups are 500% and more, just by being synonymous with quality. When scaling up the volume, take personal charge of insuring the quality remains of the highest. Drop the quality and you will surely drop customers.
- Right from the start quality is the key and another phrase I recall from my early years of working, “Quality has to be in everything an organisation is and does”. I was too young at the time to really appreciate what this meant, but now I can tell you that as well as the above, you must have and ensure you focus on quality of:
- Employees – don’t settle for just filling a post. The person or persons you employ have to be exactly right for the company and skilled to deliver the functions you need and to the highest standards. They of course have to fit in with you and any other employees you have but you aren’t there to make friends. Quality of delivery and engagement is going to cost you if you just settle for anyone. Take the time you need to get it right.
- Supervision & Development – employees need one to one time, need performance reviewing so they can improve the service they are delivering, need training, need to have their skills updated, need to have the ability to bring issues to the fore, time to speak about their needs, and time for their manager to refocus the employee on attainable targets. But supervision can be so much more, if you want it to be. You can develop peer supervision, feedback from the people the employee delivers a service to and have the employee contribute to how to improve the company, their particular part of the company. So supervision should be about improving, developing, contributing and developing a sense of ownership from the employee regarding how the company performs – making it their company too.
- Communication – This comes from the top and if necessary get help with this, have poor communication and you will have poor performance. You can have the most wonderful vision in the world for your company but if this cannot be relayed to your employees, if you cannot get your employees to understand your vision, you may well run the risk of failing. Regular team meetings where your vision is promoted, use of supervision as above, but also in how it is broken down into targets for each employee, so they can see what they contribute towards achieving the vision you have. This comes in the form of a business plan usually, that breaks down the overall vision into company targets, which is broken down again into departmental targets, which is broken down into individual employee targets. I have often shown this as a river diagram, with the smallest of tributaries, leading to streams, which in turn feeds into a river, which in turn reaches an estuary, which feeds into the sea – your place in the market. Whatever else you do, if you struggle to communicate, get someone to assist you, it will make or break a business.
- Customer & Stakeholder Feedback – This, as I have mentioned is essential, and by customer & stakeholder I mean anyone you have a contract with such as people buying your product or service of course, but also your suppliers as they have a vested interest in you succeeding, your employees, etc., anyone who has a stake in you succeeding. Getting feedback and using it as a means by which you improve is essential. As Managing Director I would insist, despite the size of the companies, in getting back stakeholder questionnaires personally before anyone else had done anything with them. I had two piles, positive and negative, so I would go through every page of results and comments myself. The positives where great to see but were of little use in improving the company, although they would be fed back to the employees of course. The negatives were the ones I analysed with my PA as they told me how to improve, where we were weak, which department or employee group needed additional support. The negatives steered me in improving quality and these were the ones I wanted, and I would make sure every comment was addressed and the improvements fed back to the person, if we had their details as most information was anonymous. So spend the time and money getting feedback and embrace the negative comments as they are the starting point to improving quality. There are modern surveying electronic tools available now that can keep the cost down too, which I would recommend to anyone.
Business Plan: I wanted to spend a little more time on the workings of this primary communication document. Some companies even try to operate without such plans to communicate the vision. Well, good luck to them as I don’t believe they can achieve their full potential without such a document. You certainly cannot get developmental loans, grants or investment unless you have a structurally sound business plan that not only sells your vision but also sets out the predicted path of the company over the coming year, and forecasting into the next few years. I used to have a 10 year vision, broken down into a 5 year plan in a little bit more detail, and then a 2 year very detailed business plan that was reviewed by the staff and management every September so that we had an accurate next year plan to go into the new year with. The detailed plan showed the path to take to get to the 5 year aims, which created the path to the overall vision, and through supervision everyone had a stake in driving towards the vision, as often they had helped shape what that vision was. I often used profit share to make sure they had a tangible reward in achieving the targets of the company.
Change and adapt, spend the time to analyse and think about market trends. It is essential your company can change, adapt and effectively capitalise on the changing needs and wants of consumers. In some cases companies are so well positioned that through very large advertising budgets, they create consumer need, desire and demands. I am of course talking about iPhone, iPad, iPods and everything ‘i’. They, Apple, have been the masters of creating a frenzied demand and then meeting it with their products, truly magnificent management.
- What outcomes do you want;
- What outcomes do you know you can achieve;
- The Quality;
- The path you want to travel this year and next and what are you aiming at overall;
- The targets you set yourself in terms of growth and sales;
- How will you manage the predicted cashflow (money goes out in large volumes before it ever comes in in sales I can assure you);
This leads me onto that essential element to any business regardless of size; the Grim Reaper to many a business person that failed to take it seriously. Regardless of how good your product is unless you have control over cashflow your business will fail. For example, one of my companies primarily had NHS and Social Services domiciliary care contracts, very large contracts spread across the North of England. To deliver those contracts involved well in excess of 300 staff and the monthly outgoings was easily in the region of £350,000, but it took some commissioners nearly 3 months to pay, one was 5 months in arrears. So we had to save every bit of money as we grew to ensure we had enough surplus to cope with such a huge time gap in money needing to go out in salaries, suppliers, etc., and money eventually coming back in. In the earlier days we even resorted to credit cards to pay some bills, but we did it, we built the surplus as we grew and we made it work. But if we hadn’t planned and predicted where the tight points were going to be, we would have just run out of money. More companies fail because their cashflow dries up than all other reasons put together according to the Chamber of Commerce. Simply put cashflow is the life blood of the company, treat it as such and remember it is almost entirely predictable so no excuses.
As part of the business plan there must be a marketing strategy, as marketing is the means by which you raise awareness of the company and get sales for your products or services. The marketing strategy is key to attaining the companies target and needs to be dovetailed into the business plan. For some companies it is the biggest expense each year but if it yields the returns needed then it is of course worth it. But spend money wisely, I am aware of people spending huge amounts of money on frivolous campaigns and not increasing sales at all. Marketing must be focussed into the consumer group you know purchase your products, using a shot gun approach and hoping for the best will just bankrupt you. When you invest in a focussed marketing campaign make sure you analyse in fine detail the outcomes. Don’t leave it to someone else, as they may have a vested interest in positively skewing the results. If the campaign has not delivered a positive rise in sales, then there must be lessons to learn. If there are positive sales increases then you still need to see if you can maximise this further, or if you repeat the campaign will it give even better yields in sales? As said, analyse this yourself as it may well be the biggest gamble with money that you do. However there are other ways of gaining exposure to the public (makes it sound like I am advertising flashing – which I am not by the way, don’t even own a rain-mac).
As I draw this blog to a close, there are a few points I want to leave you with, some of which I have recently blogged about so I won’t spend too much time or keep you further other than to note:
- Do not suffer fools or freeloaders – there are many people you will come across in business that wangle an appointment with you, offering you services or products you haven’t asked for, ignore them. Concentrate on keeping your overheads down, maximising your profit margin and achieving the goals in the business plan.
- Employees that are not achieving or contributing positively to the business need to move on. Employees are just too expensive to tolerate freeloaders. They are a drain on your budget, drain on your team as others usually have to pick-up their workload, and generally are the root of discontent. They have to go!
- Lead by example in all you do and say. Lead from the front as a positive role model for all your employees. You set what is acceptable and not acceptable, act like a prat and so will your team, act with confidence and your team will too. Set the behaviour that you want your team to copy and act with honesty, with integrity and show respect to others.
- Remember your employees are your most important and often most expensive resource, so do your job as the owner of a business, as a Director of the business, and look after your team, do this and they will deliver the results you want.
I hope the above is useful and of benefit to your business. You can always contact me if you need a hand.
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