Since moving to downtown Portland, Oregon, a few years ago, I’ve enjoyed watching some very tall buildings being built. I noticed how the construction crews dig a deep hole and pour a lot of concrete that is reinforced with steel rebar and other structural supporting devices. I’ve been amazed by how much work goes into the foundation before the visible structure of the building is begun. Of course, I realized that a solid foundational structure was necessary to build a stable building, but I hadn’t realized the investment of time and resources that goes into that solid foundation.
Like a tall building, a strong business that will weather storms needs a solid foundation. But unlike a building, where the foundation is designed to last for the life of the building, a business foundation needs to be continually examined for cracks that might create an unstable situation. These cracks in the foundation of a business are often caused by not adhering to the basic fundamentals of business success. These cracks start off small and then tend to grow with neglect and time.
Here are seven fundamentals that every business should adhere to in order to maintain a strong foundation.
Strategy
It is critical to your business success to develop and communicate your strategy. It is also important to continue to examine your business strategy to determine if it is relevant in the current business environment. The business strategy you created for your business when you started may not be as effective in today’s fast-moving and evolving business environment. A business is a living and breathing entity that must evolve and change with time as well as environmental, governmental, and economic conditions. These outside forces beat on the business, like rain, sleet, and snow do on a building. Without a dynamic business strategy to weather the storms of constant change in business, your business will struggle and could decline.
I define strategy as finding the need of your customer and then organizing your business to meet that need in the most efficient and effective way possible. Due to the various events affecting business today, it is important to determine whether your business strategy is still important to your customers today. To do so, you must be communicating with them—often. Too many business owners go along conducting their business as usual without reaching out to their customers to see if they are truly meeting their needs and solving their problems. Then these same business owners are surprised when they lose that customer to the competition who has been communicating with them. The best advice is to keep your strategy simple and to communicate with your customers often.
Create a vision of your future
I have seen many organizations that have not clearly defined their vision or direction for the company; when this happens, the employees generally come up with their own version. More often than not, the employee version is different than where the owners of the company want to go. A strong business foundation has a clear vision of the future. This clarity is critical to your success. The most successful businesses that I have encountered have a strong and compelling vision for their organization. They know where the organization is going and have planned for their future success. They do not leave it to chance.
Without a clear direction for your organization, it will never arrive where you want to be in the future. It’s the same as a journey. If you don’t know where you want to travel to, then it’s hard to get there.
Start by deciding where you want your business to be three years from right now. What do you want the organization to look like? How big will it be? How much revenue will you generate? What will be your net profit? How big will your market share be?
It’s good to ask yourself a lot of questions about how you envision your business to look in the future. Then work backwards from there. If you want your business to be in a certain position three-years from now, where would you need to be in two years? Working backwards again, where do you need to be a year from now in order to put you on the path for your two-year and three-year vision of the future.
Communicate your strategy and vision
In order to get everyone in your organization pointed in the same direction, you must clearly communicate the vision of the organization. It does the organization no good to keep the vision confidential only for the executive team. The number one reason employees don’t share in a company’s vision is that they don’t know what it is.
Your vision must be shared with everyone. How else will we get everyone heading in the same direction? Most important, employees want to be a part of something that is bigger than themselves, and a clearly articulated, compelling vision can give them what they are looking for.
Create a plan of action
A plan of action is necessary to avoid two common problems. One common problem is that a year seems like a long time, so you wait to get started on achieving your one-year vision. The alternative problem is that achieving your vision seems overwhelming, so you might procrastinate starting.
This is why you need a plan to bridge the gap between your current state and your desired future. You can chunk your one-year vision down into a plan of action called 90-day goals. To accomplish your one-year vision, each person needs 90-day goals. Creating a dynamic vision for the future of the organization is like putting everyone in the same boat, on the same river, and the 90-day goals get everyone paddling in the same direction.
Pay attention to your numbers
The numbers drive everything in your business. Without a complete understanding of the numbers, you cannot effectively evaluate how your business is doing.
I flew an airplane for a number of years and to ensure a safe and successful flight, I had to pay attention to the instruments on the dash of the airplane. It wasn’t wise to fly by the seat of my pants and simply hope that everything would work out. The instruments meant life or death in an airplane and knowing how to read them and what they meant was critical to survival.
Unfortunately, many business owners are not paying close attention to the instruments on their business dashboard—the profit and loss statement, balance sheet, and cash flow projection. It is imperative to know and understand your numbers and to take a deep dive into what they mean. Too many business owners rely solely on their profit and loss statement to determine how their business is doing, but that instrument is a lagging indicator. Usually by the time you get the results it’s too late to make any changes. Your cash flow projection is one instrument on your dashboard that looks ahead.
Marketing and sales generate cash
In my experience, if a business is having a cash flow problem, it’s tied to a lack of effective marketing and sales. That’s because cash flow is a lagging indicator of your marketing and sales efforts. Recently, I was working with a business that was losing money every year and operating on a marketing and sales system that had been installed many years before, when all they had to do was answer the phone when a customer called. They were making little effort to market their business and made no effort to reach out to their customers. When we shifted their focus to proactive marketing and sales, their cash flow improved significantly.
Marketing is about capturing your customers’ attention. Your marketing needs to be focused less on your mythology or how you do things and more on why you do it and the benefits and results for those who will purchase your product or service. As a business owner, you need to create a marketing plan that will get you noticed by your target audience.
Once you have attracted your potential customer to your business, you need to get them to buy your product or service. This is where your strategy really starts to pay off. If your strategy has been to find your customers’ needs or wants and you have organized your business to meet those needs or wants in the most efficient and effective way possible, then the selling stage should be much easier.
If you want to be highly effective at selling to your potential customers, it is necessary to have a sales plan for how to engage and lead the customer through the sales process. If you want consistent results with selling, then create and document an effective sales plan that can be followed by anyone doing the selling.
Revenue growth should not be left to chance
It’s simply amazing how many business owners leave their revenue growth to chance. What do I mean? I mean that far too many business owners do not approach their customers or potential customers proactively. Instead, they react—by waiting for the customer to call them. You cannot wait for the business to come to you; you must go and get it.
Communicate with your customers more times than you think you should. If you are not communicating with your customers, your competition is. Be proactive by reaching out and building the relationship with your customer, asking how you can better meet their needs. Show interest and a desire to help them to be successful.
There are many opportunities to improve your business success. These are just a few of the basics. Your business success is up to you. Now is the time get back on track.
For more information on how to create a successful business in 2022, reach out to me at 503-312-3145 or email me at garyfurr@garyfurrconsulting.com
You can also visit my website at http://www.garyfurr@garyfurrconsulting.com
Listen to my podcast Turning Complexity into Simplicity®
For more on this topic, you can find the book, Acceleration!, a collection of advice from a group of six business advisors and consultants across three continents and four countries who specialize in working with small and medium enterprises, available on Amazon.
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