As business owners we live in uncertain times. What impact will government regulation have on businesses, especially the small business sector. As I thought about this topic three of key strategies begin to develop in my mind that will help us win.
First we need to position our business for success, focus in on the essentials, and finally invest in efficiency. Let’s break each area down.
What do I mean when I say we need to position ourselves for success? It’s getting back to the fundamentals of business. Do you have a solid financial plan that will allow your company to remain strong and healthy? Far too often as I work with businesses, especially those in the small to mid-market sectors, there is little thought given to budgeting and forecasting. Decisions are frequently made based on a gut feeling and not on factual data.
Why is this? It’s simple, financial management is hard to put in place when it’s never been done before. It’s even harder for owners to hold themselves accountable to their own budget. However, what you will discover is budgeting and forecasting brings clarity of purpose to an organization. It brings you back to the core mission of your company by making sure your spending is aligned with your goals. Solid financial management will allow you to identify what drives profit. You may be surprised to learn what product or service lines drive the most to your bottom line.
Now that you know which of your products and services are making you money, you want to do a couple of things. First, let’s make them even more profitable. How? Evaluate the process involved in delivering the product or service. Look at where there are bottlenecks. Is there too much paper floating around or sales being lost due to lack of follow up. Look at your inventory levels. Are you carrying too much or too little? Unless there is a very good reason for doing so, do not waste cash on stocking a larger than necessary inventory. Work with your suppliers and begin managing them. Is there chaos in the service process with either too few or too many hands in the mix. Evaluate everything including the sales cycle, customer support and service processes. Nothing is out of scope.
Efficiency is often defined as eliminating waste however, it’s more than just that. I look at it as gaining optimal effectiveness. So we look at everything from business and production processes to staff. I typically start this process by interviewing each staff position to identify what they do and from that develop a process map. With a process map you can begin to see where things slow down and where there are gaps that need attention. You also get the added benefit of determining staff engagement.
When looking at efficiency, you must look at your staff. Do you have the right skills in the right places? Often we place people in position they are not good at or we don’t give them the support necessary for them to succeed. We know who our “stars” are so what are we doing to help them reach the next level. Focus on these people. Invest time and money in them. Know what drives and motivates them and keep them engaged. They will help you will much of what I’ve mentioned in this article.
Finally, invest in the key things you’ve identified that will bring greater efficiency and profitability. Bring in the people and the systems you need to help make it possible. By not taking this step, you will have wasted a lot of time and money doing the above things and gaining nothing out of it. You must invest in your business. I’m not suggesting you run to the bank to seek excessive funding. You will have identified cost saving in the process above. Use those savings to invest. This process is not an overnight fix. It will take time, it will take determination, and it will take a willingness to make tough choices.
Home Team Enterprises specializes in these services. We can help you through the difficult times you face and help you come through to the other side with greater profitability, improved customer satisfaction and a more engaged work force.