How would you say your Business is going?
Are you attracting the right customers? Can you find good people to work for you? Is profitability in line with budget? Have you made enough this year? Is your Business sustainably profitable and valuable?
A successful business, that is sustainable, will continue to grow and prosper in your absence. It will deliver income to you while you are working and when you are not. It may even offer the opportunity to realise its value for you, as a lump sum, on a future exit or merger.
A Sustainably Successful Business has:
- A clearly documented Strategic Plan that articulates the goals of the owners and business;
- An identifiable Brand in the market;
- Clear Rules of Engagement between shareholders;
- A clearly documented Succession Plan that facilitates the attraction and retention quality people and a string, reliable, management team;
- A Culture that Attracts and helps Retain quality people;
- A culture of Continuous Improvement; and
- An Execution mentality.
How does your Business measure up? If it does, well done (but don’t become too complacent). If it doesn’t, it’s not too late.
Owners of Successful businesses know where they want to be – they have an “end in mind”. To use a sporting analogy – If you want to win you need a “game plan” – a clear idea of what you want to achieve (speed, distance, skills, defeating the other team) and how you will achieve it. Business is no different.
To develop, and document, a proper plan you should ask yourself the following questions:
- Where are we now (Business revenue and margins, number of people, customer size and type)?
- Where do we want to be (Business revenue and margins, market size)?
- What do we want to look like?
- What factors within, and outside, the Business will assist us achieve our goals or impede our success?
- What are those critical factors that we need to focus on to achieve our goal?
- What steps must we now take?
The planning process is critical – not only the decisions that are made but who is involved. Planning, if done right, is extremely powerful in aligning the views of the partners and in engaging your key stakeholders – your people, your customers, your family.
But once you have a plan, how will you ensure that you deliver to it? Who will lead the charge? What processes need to be put in place to maintain accountability for delivery? The failure to implement is your greatest threat to success.
People and Succession
The question “What do we look like” considers the number and quality of people that the Business aspires to within an agreed timeframe.
An effective Human Resources strategy must address issues of Succession. Succession allows the Business to continue to grow by delivering the appropriately skilled people necessary to support growth and provides that next level of support for the business owners who continue to be involved in the management of the business. Effective management Succession also allows the Business to refresh and increase its skillset while allowing the owners to slowly step aside and focus on the more strategic matters of the business or allow them more personal time.
Succession strategies, effectively implemented, support the achievement of the financial goals for both the owners personally and the Business as a whole. Succession, handled correctly, is not the threat to a business owner that it is feared to be.
As with developing a strategic plan for the Business – having something written means nothing unless you can execute. Here, Culture, is important.
Your Customers, Your Brand
The question “What do we look like” also considers the desired customer profile and market positioning of the Business.
Understanding your existing customer base lets you know where you are now and assess where you can be in the market. Knowing, for example, that you have a number of customers in one industry sector or demographic may lead you to consider specialisation in that particular area.
Aiming for a certain customer demographic, industry sector or customer size also allows you to right size your Business and up skill your people accordingly. These decisions also assist in determining where your point of differentiation may lie. Interestingly, developing your Business in this way helps you attract and retain quality people.
The Rules of Engagement
Over the past few years we have seen a number of business either fall apart or waste valuable time and money addressing shareholder disputes. Dealing with the Rules of
Engagement early could have avoided this.
By “Rules of Engagement” we mean – a clearly written equity holder agreement that addresses issues of equity, remuneration, and performance; clearly agreed and documented Business management protocols; active management of relationships to avoid politics amongst owners; and a culture of open communication and transparency.
Where business owners have embraced the approach of clearly documenting their agreements and sticking to them they were more likely to succeed in delivering a sustainably profitable Business as they are predisposed to planning and executing to their commitments.
While you look to growing your Business in a sustainable manner don’t lose track of the fundamentals:
- Focus on customers;
- Keep and reward your people;
- Ensure that you have systems in place that can measure and report on the performance of the Business and its people; and
- Manage cashflow – Revenue is vanity, Profit is sanity, and Cash is reality – Cash really is King.
Where to from Here?
Start from the beginning – assess where you are at, set the goals, and build a plan to achieve it. Commit to implementing the plan and investing your time and resources in doing so. Get some help, someone who can help you articulate your plan and bring it together, who can help you understand and work through the issues, and who will help you stay on track and keep you accountable.
Commit to working on your Business – give yourself one full day a month away from the day to day whirlwind. It’s an investment in the future.