“If you don’t know where you are going, any
road will get you there.”
Unfortunately, today’s businesses,
companies & retailers don’t have a GPS offering directions.
But, no matter what you’re doing today, you
need to stop, take stock and decide – what you’ve always done – but what you
should be doing to run a successful business.
Back in the 1990s, my CEO boss was fired
and I was “invited” to leave with him.
With a daughter entering an out-of-state college, it was panic
mode. While searching for a job, a
contact at a large corporation asked me to give him a proposal to manage a
series of meetings for his company.
Writing the proposal for him was easy; coming up with my fee for the
assignment was difficult. So, I asked
friends, most had no idea. When one
heard the client’s name, she said “charge a lot.” And, I responded, “What’s a lot?”
Well, I got the assignment. And, in the next 12 months, I acquired
additional clients and had to hire staff and rent office space. It was then that I realized rather than
finding a job, I had started a company!
Now what?
I did not plan on starting a business and I had no training for it!
During this discovery process, I realized most
of us have little education or training about how to run a business. Most of us are professional specialists with
little to no business knowledge. That’s
one reason most small businesses go out of business.
Fortunately, I had many mentors to guide me
as I built my company in scope and in number of employees. I ran in to cash flow problems more than once
in the first 10 years.
Based on my experience, here are some key
questions for small business owners:
1. Do
you know how to read your financial statement?
Do you know what it tells you?
2. Do you monitor and project your cash flow?
3. Do
you know how to establish financial systems to protect against fraud and
embezzlement? Use a Certified Fraud Examiner to establish your financial
system. Trust but verify your staff.
4. Do
you know what your staff/employees cost?
Are you looking at total cost: salaries, FUTA, SUTA, health care,
retirement, etc. In my case it was 2.5
times salary.
5. Do
you know the tipping point between profit and loss? In a service business like mine, anytime my
personnel costs exceeded 60% of total revenue, I was losing money. As an agency friend told me, “it’s better to
be a half-staff short than a half-staff long.”
When I started pushing close to 60%, I knew it was time to find another
client and/or reduce staff numbers.
6. Do
you know how to take advantage of the internet and big data to benefit your
brick & mortar operation? Your
customers and potential customers expect your company to be internet-savvy.
Blame it on Amazon! If you’ve ever
purchased something via Amazon, you know they send reminders saying ‘because
you liked x, y or z, you may like this.”
Just the other day, my wife received this email from Bed, Bath &
Beyond.
Interestingly, my wife who had been
complaining about her pillow but hadn’t acted on it. Think of its power for the
store. It “drove” her to the store to
purchase a new pillow. That is the power
of the internet and the use of Big Data to personalize messages to your
customers.
7. Do
you worry about competition from Big Box Stores? Remember, your staff can be your competitive
advantage ... IF ... you hire right and develop the skills/expertise they need
for your to prosper.
8. Do
you have an exit strategy? When it comes
time to “get out of business,” how will you do it? Just close the doors? Turn it over to a family member? Sell it to someone? One of my mentor’s told me “every business
owner should assume he/she will sell it at some point. So, build your company, its systems and its
profitability with a buyer in mind.”
And, when it’s time to sell, hire a business broker to sell it for you.
9. Does
your business focus on a specific area?
Or, are you more of a generalist?
(Tom Shay shares his story of his retail store. Should he sell only one brand of paint thus being an "XYZ brand store" or should he sell multiple brands and be a "Paint Store?".) When I first started my own association management business, a
company offered me a contract to research and write a company brochure. I asked a mentor for guidance: “Steve,” he
said, “do what ever rings the cash register.”
I followed his advice with success for 25+
years: I managed associations (my core business); managed meetings; implemented
public relations campaigns; gave paid presentations; led team building
exercises; facilitated strategic planning and more.
What’s going on with your company, business
or industry? What are you doing? Are you ringing the cash register or wringing
your hands wondering how to survive?
10. The
key question for all of us: “What Business Are You In?”
My oldest brother ... an orthodontist ...
showed me the way. He straightened teeth
(what he did). But he recognized he was
in the business of creating happy smiles.
So, he created a SMILE MAKER persona and used it on his business cards,
in his ads, on his license plate and even the name of his boat! By the
Way: My brother also shared that dental school only taught him how to be a
dentist and did NOT educate him about how to manage a dental practice. He had to learn that on his own to survive
and thrive Much of his business strategy and success came from a Study Group
created by and facilitated by one of his major suppliers.
When facilitating strategic planning, I
include focus on a 2-part question:
• “What
do you do?
• What
business are you in?”
A year ago, I asked “what business are you
in?” during a planning session of a multi-million dollar company. It got interesting responses:
• The
retailer and distributor members of the task groups thought the company should
be focusing on solutions, helping
businesses be better businesses, etc.
• Meanwhile
the participating company staff responded “but, we’re a manufacturing company!”
My response to them: “Manufacturing is what you do not what
business your are in!”
And, I added, if you don’t help your
retailers improve their businesses and they go out of business, how much longer
will your manufacturing company survive??
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