Leaders need to be accountable! How often do businesses really hold themselves accountable for improvement in results?
The GFC and the associated economic fallout challenged all businesses, large and small, and we recommended they do at least 5 things;
- Manage cashflow
- Retain your best people (and exit the worst ones)
- Retain your best customers (and exit the unprofitable ones)
- Improve your profit (by removing waste and inefficiency)
- Guard your energy (you need it when times are tough)
These strategies provided opportunities for businesses to right-size and remove costs, but most failed to leverage these tactics to the fullest.
The biggest problem in business isn’t having great ideas and great plans – everyone seems to have those . . . The real problem is a failure to execute.
Often the reason is there are few, if any consequences for not executing. The small business owner is accountable only to them self and the manager is accountable to a boss who usually struggles with the whole management accountability thing.
I recommend that your profit be locked in place at the start, then whatever cash and resource’s remains is all you have to run the business. A reverse budget if you like – start with a profit . . . don’t end with it.
This challenging target and new mindset forces the owner / manager to take tough and effective decisions. It is better to make a decision, get it wrong, and make another decision, than to do nothing for fear of getting it wrong. Research shows up to 70% of business improvement initiatives fail, the key is to implement change using proven processes such as the business tools that we provide at Business By Design.
An example is this checklist of opportunities, simply tick if the opportunities that exist in your business and then estimate the annual $$ value for each opportunity. What is your $$ total?
|Tick if its applicable||Waste reduction Opportunity||Estimated Value $||Priority|
|1. Remove poor performing staff|
|2. Remove unprofitable customers|
|3. Remove waste in the sales process|
|4. Remove waste in production process /assets|
|5. Reduce overheads by 10%|
|6. Increase number of sales / customer per month, quarter or year|
|7. Remove inefficient suppliers|
|8. Increase average sales $/transaction|
|9. Improve cash collection process|
|TOTAL POTENTIAL VALUE|
There are early shoots of recovery emerging across the economy. We all need to address these issues now as the last thing you can afford is to put more business through an already inefficient system. You can’t expect to achieve your profit and cash flow potential without this type of comprehensive review.
Then, ask yourself “what barriers are stopping me from making a start on a business improvement program?” Fix whatever issues that come out of this thought process. Keep asking the question until all the barriers are dealt with and then just make a start.
If you don’t start within the next five days you probably won’t . . . If you do, increased cash flow, reduced risk, and the ability to survive and prosper despite continued volatility are your rewards.
If you are not sure where to start or would like to evaluate your business now, then contact the team at Business By Design on 02 66580775 or www.bizbydesign.com.au.