Find out how everything going on below the surface can make or break your bottom line
Photo by Alexandra Rose on Unsplash
Profitably growing a small business comes down to some very simple building blocks.
On a very basic, high level, one could say that business is influenced by some factors that repeat themselves over and over across all industries and sizes of businesses. These laws – supply and demand, for example – can be studied, and you can go to university for years to master all of these theories and learn the latest methods to position your business for success.
And yet, we still see business owners struggling financially, despite all of the training, and studying, and content out there that they can consume.
Small business owners often get stuck
As their business grows, the complexity grows. There are more moving pieces to juggle: a team, assets, projects, processes, production, supply chain, customer service, …
There are more places that money can seemingly disappear. So while these business owners are successful, and have a great product or service, their business can still be struggling to survive.
I’ve spoken with a few business owners recently and I saw a common theme arise. These business owners were frustrated, because the skills they needed to start-up and launch their business, are different than the skills they need now to profitably and sustainably grow it. What they were doing to get started, is no longer working and they’re not getting them the results they’re looking for.
The needs of the business change as the business grows
And while many business owners, who have started a business because they have exceptional expertise in a specific area or a great product to sell, have had success so far, not every business owner necessarily has the specific skill set to know how to navigate the waters of a growing business.
Your business can be compared with an iceberg
We all know the story of the Titanic. The judgement lapse that caused a huge ship to sink in the frigid waters of the Atlantic could possibly have been avoided, had the staff been more aware of the magnitude of the iceberg’s foundation under water.
(Photo by davide ragusa on Unsplash)
What’s above the surface
The top part of the iceberg is what we see above water. It’s the brand that consumers are familiar with. It’s the visible part of the business that we market. It’s what people can see, without knowing much about you yet. It’s like the first impression. Or the first date. But the business is made up of so much more than this.
What consumers experience once they start to work with you
The mid section of the iceberg is what is right under the surface of the water. It’s only visible once you dive in. Your customers only get to experience this level of intimacy with your business once they have purchased from you or they’re interested enough in what you have, that they start to do their homework. It can be exposed in the form of reviews, references, ratings, and exposure from past clients on social media.
It’s your expertise, skill, ability to do what you say you’re going to do, and the quality of your product or service. Without a great product or service, it does not matter how great your marketing and branding is. Poor quality and inability to fulfill a customer’s needs will lead to a very unsustainable business model.
It carries more weight than the tip of the iceberg. You CAN sell an amazing product for a long time without beautiful brand imagery and expensive advertising campaigns (although those things do help). But it is a recipe for failure if you market a product or service that doesn’t deliver.
The foundation of your business
The largest and most complex par of the iceberg is its foundation. It’s the part of the business that is deep down, buried far under the surface of the water.
The business foundations are the gears and engine and that will allow the business to thrive in a crowded and competitive marketplace. It’s your business’ ability to be agile and keep up with changing market conditions. It’s your ability to be innovative and do things cheaper, faster and better than all your competitors. And this is the part that many business owners struggle with. These are the systems and processes that you put in place as the business begins to grow. And these are the things that can make or break your bottom line.
If your foundations aren’t working effectively, then it doesn’t matter how much revenue you pump through the system, because the monster (your operations) will eat through it without batting an eye. And you’ll be left standing there wondering what the heck you’re doing wrong. Because despite the fact that everything looks great on the outside, you’re still struggling when it comes time to pay your taxes or meet payroll.
The dead weight of inefficient operations can be enough to bring down a giant (remember Kodak?). So while many business owners are chasing shiny objects, focusing all of their budget and resources on improving surface level parts of their business, they have a brick tied to their ankle and they’re going to sink under water.
If you’re interested in improving the efficiency and effectiveness of your business, here are my top tips to get you started:
You will find it hard to make any meaningful decisions if you’re not basing them on facts. Gaining insights into the performance of various key indicators that are relevant to your business will the be most effective way to discover what is working, what isn’t, and what the highest priority is to fix to move forward.
Plan, do, check, act – over and over again. If you have a solid continual improvement strategy in place you will be strengthening your defences against your competition. Make it a priority to do things better than everyone else and never get complacent by resting on your laurels while the competition comes up with better and more innovative solutions.
Streamline Streamline Streamline
You can save time and money by simplifying your workflows and processes. The more you streamline, the faster and cheaper you can get results. The goal is to get the best result while using the least amount of resources as possible, while still maintaining a high level of quality. Savvy business owners review their processes on a regular basis to adapt to emerging technologies. In addition, through simplification, you can focus on doing less better, which enables you to scale what’s working well.
Master Your Money Management
Historically, financial statements and reports are often hard to understand and provide you with “old data”. They are reporting on things that have already happened. Projections are only as good as your ability to execute precisely according to your plan. But how do you manage your cash in real time and know if you’re turning a profit at a quick glance? Adopting the Profit First method of cash management takes the guess work out of your bottom line and provides you with a quick start to improving your profitability right away.
Grow an Empowered Team
The business owner who tries to do it all is the business owner who will burn out. You may think that you’re the best at doing things in your business and you may fear that others won’t do things exactly how you want them done.
But it you want to enjoy the benefits of having flexibility and time freedom (two of the top reasons most people start a business for themselves in the first place) you have to master the art of handing off responsibility. You can not do it all, at least not for long, and who wants to have to do it all anyway? You want to be focusing on the things you LOVE doing and have a team of skilled, competent and trustworthy people to support you in achieving your goals.
An empowered team, vs one that isn’t empowered, will be responsible for outcomes, as opposed to simply completing tasks. You want to avoid having to micromanage your team and solve all of their problems for them. One way to do this is to provide them with the tools to get the job done and clearly communicating their decision making authority.
For example, if one of your team members is a client care / customer service specialist, make sure they know what budget is available to them to deal with client conflicts. This way they know, if they can resolve a conflict easily by issuing a refund, or providing an extra month of service at no charge, or other remedies up to a certain dollar amount, they have the authority to make that call on their own without having to come and speak with you about it. Ensure they’re tracking stats around these incidents (frequency, dollars spent, …) and review it with them once a month, or every quarter. Adjust these limits as needed as you go. It will remove you from the decision making process, which could otherwise be creating a bottleneck in your business.
Removing yourself as much as possible from the day to day operations is key to scaling and growing your business quickly without burning out.
Hungry for more?
If you’re interested in discovering how to improve your revenue, profit, and impact so you can do more of what you love, let’s chat! You can send me a message here on LinkedIn or book a consultation.