The “Business of Business” has ten fundamentals that if perfected, will help improve your chances for success. Athletes have coaches, fans, press, and opponents to quickly remind them when they slip in their sport’s fundamentals. Business owners have customers, employees, shareholders/investors, and competitors to remind them when they ignore their industry’s fundamentals.
The game of business is pretty simple in its most basic form. A 24 hour, credit card only, drive up gas station versus a 24 hour full service, additional services for truckers, restaurant, convenience and tourist store, franchised gas station. The core business for both is the selling of gas to customers. The additional services, benefits to employees, customer niches, variety of items in inventory, types of investors, etc. all add layers of complexity.
Complexity is neither good nor bad; it is just more challenging to manage. Watch the news, and you will hear about businesses restructuring to get back to their core business because they have lost their identity in the marketplace.
A client of mine called me in to help him sell his business. When I asked why? He explained that he was dissatisfied and unhappy coming to work. As we talked further, we discovered that only part of the business was the source of the unhappiness – sod. The core business was trees, shrubs, and indoor-outdoor plants. He got into sod when a customer asked if he could get some for his yard. While the sod stood in the parking lot for the customer to pick up, other customers asked if they could buy some sod too. Each year for the next 5 years, the amount of semi loads of sod increased until sod became a major part of his business. What started out as a goodwill gesture for a customer became a dirty, unsatisfying, unhappy part of his business. He wanted out! Luckily, our conversation allowed us to clarify what needed to be sold. We spun off the sod business to an employee wanting to work in the sod business. My client got back to his core business and a happier state of mind.
Here are the general business fundamentals. It’s a good starting point for you to brainstorm with and identify specific fundamentals for your business.
1. Understand what your core business is in its most simple form. Knowing the costs and margins of the core allow you to determine the costs and benefits for the add ons to the core. Complexity costs more and should reward more.
2. Understand the layers of complexity you are adding to the core and who is benefiting from these.
3. Pick 5 to 7 areas of your business that are critical to your success and track them. The old adage “that which is measured and tracked improves” is true. Create benchmarks and a culture that continually strives to improve. The summary report is often called a business dashboard.
4. Establish “Win-Win” relationships with your customers. Any customer who wants to bleed you dry, refer to your competition. This is easy to say and hard to do.
5. Pay attention to details within the process of delivering your solution to the customer. Attention to detail is usually what we tip on, and your profit margin is your tip. This is not about being perfect, it is about having a great relationship with your customers.
6. Keep your prospecting funnel full. Be Proactive not Reactive. Always keep your eyes peeled for your next customer. Determine how much time and resources are needed each week to keep your business busy. It’s a very bad feeling when you don’t know what prospecting activity fills the funnel, but you have to cut back on your prospecting activities.
7. Each week take a half-day to Work On Your Business versus Working In Your Business. Working On your business includes thinking about, what are the trends within my industry, how does my pricing compare to my competitions, what kind of technology innovations are available, is my business structured properly, what is going on in my community, am I missing opportunities, is the business on goal for my 5 Year Plan, etc.
8. Know the financial health of your business. Depending on your business cycle, you should have daily, weekly, or monthly report. One of my clients uses her payroll periods for updates. Labor is her critical resource and knowing after each pay period where her projects are important to know the health of her business. Pick 5 to 7 financial items to track your success. Benchmark these with your goals and budgets. Develop similar items for your supervisors.
9. When hiring, choose someone who will help your business grow. If possible, hire someone who is better at a task than you. Compensation should include an element of performance pay either individually or as a company. Raises based on ongoing employment can create two problems. The first is you will have a tendency to underpay at the beginning and overpay towards the end of employment. Leaving only the middle half to a third of employment where compensation matches performance. A pay for time served strategy will not allow you to recruit and hire the best. Think less time-line and more share the business benefit as it happens. If an employee works extra to expand a customer’s business with you, know what she would want as a thank-you. Performance-based compensation requires you to know your margins, which is not a bad thing.
10. Work on your management and leadership skills. Remember, the hat you wear most as the owner is that of manager/leader. These areas include time, prioritization, decision-making, people skills, vision for a business, presentation of self and business, and community involvement. There are many books out there in these areas. Find a mentor (does not have to be in your industry) who is willing to talk with you about the above.
- Spotlight3 weeks ago
Meet Abdelkader Bachr, The Entrepreneur Who’s Disrupting The Digital Marketing Industry
- Spotlight3 weeks ago
Stumbling Upon Your Passion: An Interview with Daniel Christoff
- Finance3 weeks ago
“Do Not Be Worried About What’s Happening In The Economy Right Now” – Says Forex Expert Jesus Sauceda
- Marketing1 week ago
10 Winning Digital Marketing Tactics for Restaurants and Food Businesses
- Technology2 weeks ago
Finternet of Things: How the IoT Transforms the Banking Industry
- Health2 weeks ago
Vitamin Supplements – A Pill Is Not Always The Answer
- Entrepreneur3 weeks ago
7 Questions For an Aspiring Entrepreneur to Ask Themselves
- Technology6 days ago
6 Best Practices to Align Web Development with SEO