Back to Business Basics – Seven Very Different Businesses Face Similar Issues

BacktoBasics

Battling with some aspect of your business? You are not alone!

Recently, Ralston Consulting Inc. conducted a daylong business check-up seminar, working one-on-one with owners of seven different firms. The businesses couldn’t have been more varied -scientific research, apparel manufacturing, retail, medical practice, document production, arts instruction and consulting. Regardless of the industry or length of time in business, the same themes appeared – themes we see again and again in our practice, in startups and in divisions of billion-dollar corporations.

NO ONE HAS ENOUGH CAPITAL TO SPEND THEIR WAY TO RICHES.

Being undercapitalized seems to be near universal, and is not, in itself a bad thing. Ventures with seemingly unlimited capital (as in the dot-com debacle) can lose sight of their net profit picture, and crash in their attempt to buy up the market. While limited capital stimulates innovation, having no capital reserves at all paralyzes a business. Owners must have strong command of cash flow and other aspects of financial management, as well as an ability to innovate for profitable growth.

DO YOU CONTROL THE FLOW OF NEW CUSTOMERS?

Can you turn the marketing “tap” on and off? Most of the businesses we meet are concerned that they are not in control of reliably getting new customers and new business.

  • Who are your prospects?

  • Where are they?

  • How do they know about you the moment they realize they need an offering like yours?

  • How do they make their buying decisions for your product family?

  • How do they get it from you once they buy it?

Answer these questions, and then develop your marketing and sales process accordingly.

MEASURE TWO OR MORE INDICATORS TO GET CONTROL

If you measure only one thing, you will lose control sooner or later. An automobile driver must manage speed, fuel, and direction if he or she is to reach the destination. For instance, revenue must be measured against something else, such as gross profit margin, net profit, production defect rates and customer retention. An increasing market share is good news – until you discover that your competitors are abandoning the market and the total market is tanking.

BALANCE WORKLOAD TO CAPACITY

Once you control the flow of customers, match the workload generated by your marketing and sales activities to your capacity to deliver with adequate quality, on-time. Too much work is as bad for a business as not enough work. Want to grow while minimizing loss of customers or staff? Increase capacity, then increase workload.

TEST THE ADVICE (AND THE ADVISORS)

Our best advice is to trust, but verify. Hire advisors based on actual reference checks of their clients. Discuss if the advisor delivers on their promises. Network to see if you can talk with one of their clients who wasn’t listed on the advisor’s reference sheet. In starting with a new advisor, set up a test project and pay attention to how things go. Do not dismiss early discrepancies between what is promised and what is delivered without examination. For existing advisors, especially where you have a nagging doubt about their performance but have dreaded the hassle of finding a new advisor, get a second opinion from a credible, impartial source.

CHALLENGE YOUR OWN ASSUMPTIONS

Perhaps the most important advisor to challenge is you. Test your own assumptions and strategies, especially where things are not going as planned – maybe your way isn’t the best way. While a good work ethic is great, if your solution to everything is to work harder and do it yourself, you are unlikely to sustain growth. Maybe it is stating the obvious, but to sustain growth, things must get easier and not harder, the bigger you grow. Back up and examine the structure or system for self-defeating flaws. Evaluate hiring and training practices to ensure you have the right people for the job. In short, always strive to be effective, rather than simply busy.

KNOW WHEN TO FIRE YOURSELF

Consider three roles: Owner, Manager, and Technician (worker). Most owners were “technicians”, first. That is to say that they once did the job they now manage. Now, great technical skill does NOT equate to stellar management skill or business acumen. As your company grows, you still must govern the direction of your business. However, if management or business is not your strong suit, you may want to consider changing your title from CEO to Founder, and hire professional management with a track record of growing companies your size.

BUSINESS SUPPORTS LIFE, AND NOT THE OTHER WAY AROUND

Remember why you started the business in the first place? How is it going? If you are like many business owners, somewhere along the way the dream got lost, and the business started owning you. It is never too late to regain your perspective and take action to reset your priorities.

For those just starting their businesses, be really clear about why you want to do so. A startup is NOT a solution to short-term problems or a lousy boss. In the beginning (i.e. the first TEN years!) your business – if it doesn’t fail outright – is likely to offer less security, longer hours, fewer holidays, less money and far more stress than many jobs out there.

If you are STILL bent on being an entrepreneur, then roll up your sleeves and do your homework. Find a product or service that is truly in demand in a growing market, put together a business strategy, plan, advisors and financing, and have a long talk with your spouse and personal network to rally the support you will need to successfully realize your dream.

© 2005 Ann and Gary Ralston, www.ralstonconsulting.com, 614-761-1841.

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ANN RALSTON

T 614-761-1841 ext 2
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GARY RALSTON

T 614-761-1841 ext 3
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Date: Sunday, August 18th, 2019 - 06:30:00am



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