When Money Flows, Innovation Dies : In the book, 9 Lies That Are Holding Your Business Back, Steve Chandler and Sam Beckford challenge the belief that it takes money to make money. That an infusion of unearned money (like easy access to loans) may actually prevent new business owners from asking questions that contribute to growth and innovation. Interesting huh? So how can you apply this to your ‘established’ business? Consider the following.
When money flows into your business effortlessly from banks and customers, it’s easy to ignore mistakes, take the path of least resistance, and live with problems. But as the economy declines, banks reduce access to loans and credit lines, and customers make us work harder for every sale, it becomes harder to ignore. It forces owners to create real changes – or go out of business.
Some have closed, but many have chosen a different path. Instead of blaming the economy, waiting for things to turn around or simply giving up, these entrepreneurs are doing what entrepreneurs do – they put on their creative hats and made the decision to rethink, restructure, refocus and rebuild.
Many of these businesses will more than survive the current recession; they will come out ahead in the long run. They learned from past mistakes – and will do it better this time around. And since the health of the US economy is so vitally dependent on small businesses, there may be a silver lining after all.
So if you are looking to turn things around, recognize that it’s time to stop putting ‘band-aids’ on your business – and commit to real change. Often the problems you have, like eroding sales and profits, long hours with little pay, or poor cash flow, are symptoms of bigger issues in your business. Get to the root cause – and fix the real problems.
Are you ready to build a better business? Here’s a few things to consider.
Get Rid of the Dead Wood. Employees are an asset, but only if they produce results. You need to be willing to let go of the people in your company who don’t. You know who they are — they show up, collect a paycheck and add little or no value for your customers, other team members or your business. They zap your energy and kill morale. So why do we settle and hang on to under-performers?
Sometimes it is fear of the unknown – Johnny may be lazy, but at least he shows up. Sometimes it’s a sense of obligation – how can I fire my cousin or brother and still face my family? Sometimes it’s because we feel we can’t – in all the years he’s worked here, I have never once told Johnny that he isn’t performing to my expectations. And sometimes we just feel too overwhelmed and feel we don’t have the time to hire and train someone new. Whatever your reasons, you have a choice. You can fix the problem (help Johnny become an asset to the team) or make him go away.
Fire Deadbeat Customers. Again, you know who they are. They only buy with discounts or purchase low-margin products, pay late or after numerous collection requests, complain often and treat your team poorly. What you earn from your ideal customers subsidizes your ‘less than perfect’ ones. Why let them hang around to zap your profits and team’s morale? Fire them and replace them with customers who value what you do or sell.
Apply Innovation In All Areas of Your Business. Many owners associate innovation with new products or inventions. Innovation, by definition, is the introduction of new things or methods and it’s important if you want to achieve sustainable growth and profit. The key is to apply it to all areas of your business – from marketing and sales to customer support and delivery and team building. It’s simply a matter of continuously looking for better ways to do what you do. An email campaign that consistently delivers quality leads is innovative. A re-packaging of products or services to improve margins and sales is innovative. A system for consistently hiring quality people is innovative. When you make innovation a priority in your business, it pays off on the bottom line – and may actually make it more fun.
Make Productivity Matter. Busy is not the same as productive. Productivity is about producing effective results (outcomes) in the most efficient way – with the least amount of time and effort. Do you measure and look for ways to eliminate waste, increase outputs or reduce hours associated with daily tasks or service delivery within your company? Do you have systems for the critical activities and consistently look for ways to streamline or improve them? If you want to increase your margins, without raising your prices, take a hard look at your productivity levels and the ‘waste’ in your business. It’s a goldmine for many small businesses.
Plan, Measure and Systematize Your Marketing. A lot of small business owners view marketing as a necessary evil – know they need it, but often struggle to get it right. So when money gets tight or owners get busy, marketing takes the hit. Unfortunately, it comes at a big cost – sustainable growth and profit. So why is that? First, some lack a strong marketing foundation – clear targets, the right products and services for them, and compelling messages to get them to act – so it’s harder to do marketing. An integrated and consistent effort produces a better ROI but it requires a little planning. Second, some fail to measure results so they don’t actually know if their investment (time and money) is delivering a return. When you know what something costs, but can’t put a value (new customers or sales) on it, it’s easy to simply eliminate or cut back. Third, most marketing for small businesses is not systematized. There is no efficiency and most important, no consistency – so it costs more and is far less effective – an obvious frustration.
Focus More on Profit Than Sales. It may make you feel good to hit that target sales plateau or be able to tell others you did $1 million, $5 million or $10 million in sales. But if those sales are not providing you with the profit to sustain growth, increase your personal income and deliver the lifestyle you want – why bother? As a business owner, you take all the risks. Your business must make a profit to stay in business. Your customers, family, employees, and vendors are depending on it. Remember, sales growth is important, but profit and cash flow are king!
Kill the Paradigms. What beliefs do you hold to be ‘true’ that really aren’t? We all have some – those little self-sabotaging thoughts that act as constraints in our business. Here’s a few examples… It’s impossible to earn a profit in this economy, I can’t get good help, customers are never satisfied, customers only care about price, marketing doesn’t work, I can’t get my people to do anything unless I’m there watching over them. Any sound familiar? The problem with paradigms like these – they give you an excuse to settle for less, accept mediocrity or give up completely. Don’t let attitudes held by others, but not supported with fact, hold you back.
Now It’s Your Turn. You have the potential to create a better business or achieve your biggest dreams – IF you want it bad enough and are willing to do something about it. To quote Tommy Lasorda, ‘the difference between the impossible and the possible lies in a person’s determination’. Make the commitment to change, innovate and grow – seek help if you need to — then do it!
Joan Nowak is a Small Business Profit Builder, seasoned Business Coach, and creator of the Hybrid Coaching System for small businesses. For additional resources and ideas to grow your small business, visit http://HybridBizAdvisors.com. While you are there, join her mailing list to get her monthly eNewsletter and receive a free copy of her eBook, Mastering the 7 Elements of Business Success.