One thing is certain – this year will be different to all the years that have gone before it (note – it always is!). So, how can we maximise the chances of business success this year?
Here are some ways to do this.
- A Deep Dive Into Your Business
You might think you know your business well – after all, you “live it” every day. But where 3 or more people are gathered together, there shall be politics, and it’s possible – even likely – that some of your people are hiding things from you. Either bad things that they’re worried will affect them when you find out, or good things they don’t want you to know and so set the targets a little higher.
Spend the next week talking, one-on-one, with as many people in your business as you can. People at all levels (this part is essential – don’t just speak with your management team).
Ask each person their opinion as to what is good about the business, what is bad or needs improvement, what are 3 things they would like the business to start doing or just do more of, and what are 3 things the business should stop doing. And finish by asking them if there’s anything else you should know.
You could be surprised by some of the answers.
Spend the following week talking with your customers and suppliers (again, try to speak with different levels of people at these), asking essentially the same questions. And don’t forget to spend time with your independent / non-executive directors and/or advisory board members, too. They will generally have some great insights.
Having done the interviews, create a table of all the points raised and weight them according to likely impact on the business.
- Map Your Deep Dive To Existing Strategic Plans
We all know our strategic plan is wrong.
How wrong? It generally depends on when we last ‘dusted it off’ and updated it. This should be an ongoing thing and, at least, discussed at each board meeting to do a high-level ‘sanity check’ but it’s generally not.
So, taking all the input from your interviews, see how this fits with your strategy and what changes you need to make, including adding anything from what you’ve been reading / hearing in your market and about your competitors (existing and potential). Update your strategy document and circulate this to your executive team for their input. Revise again, if appropriate, and repeat.
Once you have the updated document agreed with the executive team, circulate this to your board for their further input and consideration. Discuss any proposed changes with your executive team to reach a final version that the board approves.
Then summarise the strategy changes to your entire team, thanking them for their input. They need to know and you need their commitment.
- Map Your Deep Dive to Existing Processes & Procedures
Not all the points raised in your Deep Dive will be about strategy, of course. Many will be related to current practices – the way you do things today. Often, things that have been done in a particular way for years, simply because they evolved that way.
Change those that need changing and remember, there are no ‘sacred cows’ (or, at least, there shouldn’t be). Some of the changes might streamline things, while others might even add processes (are you seeing enough of your customers and suppliers, for example?).
Speed is important here – make the changes and adjust as necessary when they’re operational. Oh, and remember to update your processes / procedures manuals (you do have this, don’t you?).
- Check Your Culture
Yes, some of the points raised if people are being honest – and you really want them to be honest, without fear of any recrimination – may relate to your company culture.
Understand them and see what you need to change. Toxicity in your company culture can, like the proverbial bad apple in the barrel, spread and make everything bad, so do what’s necessary to remove any potentially bad spots.
- Check Your Marketing
Has your Deep Dive and any resulting strategy changes raised any points that need a rethink of your marketing direction or your ideal customer avatar (ICA)?
Remember, marketing message, channels and ICA are all interlinked, so any changes to one will often mean changes to others.
- Check Your Dashboard
Your dashboard ensure you can easily check the ‘vital signs’ of your business.
I would suggest you track at least the following on an ongoing basis:
- Sales (today, this week, this month, this quarter and year-to-date, with comparisons against the same month, quarter, year for the previous year and average of the past 3). Be able to break these down by division / department, product / brand type, all the way to individual product.
- Gross profit margin percent for the same periods and breakdown. Also, a check on any exceptions (low and high – the latter might be due to finger trouble and over-billing a customer, so you want to catch this quickly).
- Bank balance. A real-time feed from your bank, if possible, along with a note of any payments issued and not yet processed by the bank and of any expected credits due, too.
- Tracking your DSO (Debtors’ Days) is important, not just for current cash-flow but also as an early-warning system of any debtors that might be experiencing problems. If a regular payer is outside normal terms, this needs to be flagged, for example.
- Track this in terms of value, days’ sales (to contextualise it) and stock age, as well as showing what’s on order and when it’s due. Be able to display the results for increasingly smaller blocks of stock – from overall, to division/department level, type and individual item. Depending on your business, stock items can devalue very quickly or more slowly, but you need to track these – they don’t just tie up working capital but can need to be written down if they’re about to be superseded or made unsaleable for other reasons (shelf life, for example).
- Being aware of what your current status is with your suppliers. Show when amounts fall due and flag any that are overdue as well as those that have been paid but not yet processed by the bank – this can help you avoid problems with your suppliers.
- Quotes / proposals issued. Having a view of what’s in your pipeline is really important and can prompt you to take action if, for example, a significant deal seems to be taking too long. It also helps you understand what the trends are and whether your inventory levels (current and planned) are appropriate.
This “early warning system” can really help your business if you use it well. Of course, there are other metrics to be tracked, albeit not on a daily / real-time business. Russell Streeter, author of “Your Best Year in Business,” suggested the following be considered (I would do so by way of monthly reports):
- Lead generation – how often are you getting new customers, and how?
- Customer conversion rate – what percentage are you converting from interest to sales?
- Transaction value – is your average transaction value adequate for the cost of a transaction, and can you increase the average value?
- Transaction frequency – how often do customers buy and can they buy more often, preferably at a higher value?
- Profit margin per transaction / customer – can you offer additional products / services to customers to not only increase the average transaction value but the profit margin, too?
- Customer retention / churn – how long do your customers stay with you, and how can you minimise losing customers?
- Referral rate – how effective are you at getting customers to spread the word about your business, and how can you increase this? One element of this that many companies use is tracking their Net Promoter Score, but this is a topic all on its own.
Adopting this approach to business this year, starting with the Deep Dive, will really help you position the business for greater success, despite the VUCA times in which we find ourselves.
#BusinessFitness #Business #CEO #Culture #Growth #Leadership #NewYear #Opportunity #Planning #Risk #Strategy #Success #VUCA #Winners
Some of my other recent articles that might help, too, include:
- Leading Your Business Successfully in a VUCA World
- 4 Ways Your Strategy Plans Could Be Derailed Next Year
- CEOs – 6 Important Questions to Ask Yourself Before Next Year
- Planning for 2022 – 5 Priorities for CEOs & the Board
- Is Your Business Ready for “The Perfect Storm”?
- Pointers to a Successful Future for Your Business
- Is This the Most Important Leadership Skill for Success?
- 2022 – Looking Ahead – Top Trends Facing Business