by Dennis Roberts
The primary job role of an enterprise leader is to formulate and deliver the strategic objectives of the business. Where a board of directors is in place this is the primary accountability of the CEO to the Chairperson.
Yet many small businesses are run without any formal planning in place. And you may ask in a rapidly changing business environment how accurate can these plans and forecasts really be. I suggest that a rapidly changing and increasingly complex environment is not the case for ignoring strategic planning but rather the opposite – it suggests a compelling case for thinking more strategically about your business and your objectives.
Small businesses are much more nimble, agile and flexible than bigger institutional corporations. In a toughening economic climate these attributes will confer upon your niche competitive advantages should you be alert for them.
In recessionary times big business strategies include downsizing, divestment and outsourcing of non-core activities. Be alert for these strategic drivers of the big players and position yourself accordingly. What are the signs to look for?
80/20 rule - the pressure on bigger corporations is to (re)focus on the 80% of their business. Any non-core activities or non-productive assets/ activities will come under scrutiny. The beauty of this is that each major corporation will be doing the same thing. You can create a very lucrative niche off the crumbs of bigger business.
Back of house functions – functions that are considered overheads or cost centres or have a significant fixed cost component to them are also ripe for review. Many of these administrative functions will be outsourced, automated or discontinued.
Productivity pressures – as activities are scaled down or farmed out those that remain will inevitably be asked to “do more with less.” Any assistance you can be in helping those remaining on deck will be value creating especially if you can generate your own economies of scale.
Retention strategies – at the front end of value creation are sales and marketing type functions. Business growth strategies shift from acquisition to retention and in many cases from transaction to relationship. Help improve a client’s ability to forma and retain relationships with key accounts. One of the greatest risks in account management is that the values relationship is vested in the individual account manager and not the business. People have relationships with people, not businesses. For the same reason people leave bosses not companies.
People development – it is often considered akin to research and development. In tougher times it goes on the backburner. It is discretionary spending and discretionary spending is the first area to be cut. Rather than simply cut your investment in people development shift the measure of success into some improved performance metric. One of my colleagues once described coaching as being more about discovery than delivery. If this is true for you then treat your investment in people development like you would an investment in any income producing asset – measure your Return on Investment (ROI).
Changing economic circumstances call for changing business strategies. Be proactive and flexible in your approach. You don’t need to play small and bow to the dictates of bigger corporate institutions. Seek out niche opportunities and seize them for it is your speed and agility that is your competitive advantage.
by Dennis Roberts
by Dennis Roberts
What is the appropriate strategy or strategies for growth? Before you answer that question consider what is that you are striving to achieve. Growth strategies come down to one of four options:
· Retention of existing clients
· Upselling existing clients
· New clients acquired by organic growth, or
· New clients acquired by merger or acquisition (M&A).
All of these options are a strategic choice. The growth option you choose will be influenced by your strategic objective and in some cases the converse is also true, ie your path to growth may influence your ability to deliver your strategic objective. For example, if you choose not to poach clients from competitors then it may slow your growth. You may choose not to target clients of competitors for moral or karmic reasons but in any event be aware that targeting clients of your competitors is a viable and legitimate strategy. Many consider it fair game.
What is your choice?
Be wary of any choice to combine growth strategies. Hybrid strategies may work but they add a layer of complexity that small businesses typically don’t do well. Focus on “depth not breadth”. If you execute one strategy really well then you gain leverage for your time and effort, rather than scattering your efforts.
If you have an urgent desire to generate new business and operate with a limited budget then the place to start is “one degree of separation” from your existing clients. Start right where you are by retaining your existing clients. Sign them up again. Upsell them into new products or services. Step out one degree and re-engage past clients. Step out one degree and ask current clients for a referral. Ask this question, “Do you, or someone you know, need this service?” if they draw a blank prompt them with follow up questions, “What about your accountant?” “Your lawyer?” “Your financial planner?” Who else? Note I asked an open question here. “Who else?” is very different to “Is there anyone else?”
The common basis of competition is differentiation. How are you different from your competitor? You must know this, communicate it, and communicate the benefits to your customer. There are very few services these days with insurmountable switching costs. In fact the opposite is true. Many buyers welcome an opportunity to try something new. Dare to be different and celebrate and communicate that you are, it may just give you the edge you need.
by Dennis Roberts
by Dennis Roberts
The end of the financial year is fast approaching and for many business owners it marks the time of year for an annual performance review. The effectiveness of your review process will largely be a function of how well you framed your expectations at the outset. The performance review has two parts – backward and forward. So, if you didn’t frame your expectations well last year then not to worry, lesson learned, you can now set and manage your expectations of the coming period.
I know most forward plans project twelve months ahead. The more strategic your outlook, the further forward your planning horizon. I suggest amidst great uncertainty that you set and measure quarterly performance measures. Small business, short focus. Prepare a 90 Day Plan. You can get quite specific with short term accountability.
The main reason I suggest short timeframes is to shorten the decision cycle. Quick, decisive reviews and action are the order of the day. Few small businesses are afforded the luxury of carrying stock, working capital, non-performing staff or overheads of any description.
Conduct a performance review of both your business and your staff. Prior to meeting for the staff performance review here’s a couple of suggestions.
1. Set the context in terms of time period and scope. For example, say upfront that it is going to be an annual performance review covering 1st July, 2010 to 30th June, 2011. It is a performance review of how well you achieved the duties, measures outlined in your employment agreements, contract or whatever you have documented. The first rule of performance reviews is NO SURPRISES. If you, or they, spend much of the review discussing or debating items of feedback that haven’t previously been aired then you are not giving enough informal/ formal feedback ongoing. If this rings true, learn from it, and change your ways.
2. Invite your staff member to conduct a self-assessment PRIOR to meeting with you. The questions that can prepare are “What worked/ didn’t work?”, “What did I do well/ not so well?”, “What were my major wins?”, “What should I keep doing, stop doing or improve?”
3. Let them talk. If they have prepared answers to the questions above then once they have shared their view then, and only then, can you ADD to the discussion. You may have a different view, and that is OK, but let them hold the floor for a bit.
4. Setting expectations. If someone’s performance hasn’t come up to scratch then state what you expect of them. Provide lots of specific examples. Give generous, objective feedback. Listen a lot. If they have done well, then be lavish in your praise. Remain objective and be specific. The best way to be specific is to give examples.
Pay performance or reward results?
Performance drives results. Performance is the CAUSE, whereas results are the EFFECT. There are two things that drive performance – skills and behaviour. In business measures think in terms of the following – lead generation is the performance driver. Sales revenue is the result. Obviously you want to get results but if you want to influence your ability to get results you will need to stimulate the performance drivers at the causal level.
If someone gets results but you don’t know how then it will make it extremely difficult for you to clone their success or build your business.
by Dennis Roberts
by Dennis Roberts
For quite some time in my client engagements I refrained from asking the WHY? questions. To me they seemed to trigger justification and judgement. For many us our basic emotional drive is to please others. In our pursuit of pleasing others, to win their favour, or our search to feel valued, accepted and even loved, we create a vacuous hole that we desperately seek to fill from the outside.
Often all it takes is a subtle inflection in your tone of voice to convert a sincere expression of interest into probing cross-examination. Why open yourself to justification and judgement?
These days I find wholesome value in asking the deeper question of WHY? Rather than being a Spanish Inquisition triggering justification and judgement I use it to explore the deeper pool of meaning which is the gateway to a purposeful life. WHY? questions lead to an exploration of values, raison d’etre, purpose and meaning.
Whether it be an entrepreneur trying to convert a creative idea into steady cashflow, or a performing artist finding voice and an outlet for artistic self-expression, or a corporate employee searching for a job role to ignite their vocational passion. The WHY? question asked from a place of adventure, intrigue and wonderment engenders a very different response and, I hasten to add, a response that comes forth from the heart. The heart is the dominion of magic. Our search for purpose and meaning in our lives is answered by our connection to heart and spirit. The two realms being inextricably linked.
The more you FEEL your answer, or INTUIT your answer, the closer you are to source, your source. Often the path to discovering what you seek is triggered by posing a different, more compelling question – the exploration of WHY?
There has been much written about positive psychology, values based organisations and authentic leadership. In every instance the key to igniting the passion and creative juices of your staff and your enterprise start with this quest to explore the pool of deeper meaning and entrepreneurial spirit that rumbles within each of us.
It is a conversation just yearning to be had - if you dare.
by Dennis Roberts
by Dennis Roberts
It is an urban myth that you can create sustainable growth in your business. Just as life is followed, or preceded, by death, all growth is followed, or preceded, by periods of stagnation or decline. We have much to learn from the seasons of nature.
It is folly to assume that we can create sustainable growth rates, however we can create a sustainable business that recognises, plans for and adapts to these seasonal ebbs and flows.
Growth will take one of three forms - linear, step function or boom and bust. You may experience any or all over the life of your business. To understand growth is to understand life (and death). It’s all part of the life cycle.
At some point your business may die, or at the very least, experience mini-death (le petit morte) just as the branches of a tree die. You can expedite what occurs naturally just as you can prune the branches of a tree. When you know the cycles of your business you can pre-empt nature by pruning where appropriate.
Let’s explore this growth phenomenon a little further.
Linear (or incremental) growth
This is the basis upon which most business plans and revenue forecasts are created. It seldom reflects reality or seasonality. So what, you may ask? Well, if your revenue forecasts assume steady growth then your resourcing levels will also. This impacts hiring and firing decisions, capital and plant acquisition and expansion, service delivery and all business processes that support revenue growth, client retention and acquisition. Put simply, if you grow faster or slower than expected you are left without contingency strategies to upsize or downsize or take remedial action. It seldom works this way.
Step function growth
Your revenue growth may rise exponentially and flat line for a time. This is often due to seasonal factors, marketing campaigns, product launches and environmental factors. The biggest issue you face is when your organic growth exceeds your capacity to deliver triggering capacity issues. This will require capital investment, labour hiring, outsourcing, business process re-engineering, multi-site expansion and a range of commercial decisions that take you into unchartered territory. When you grow from a one man band with no management infrastructure to having to lead and delegate responsibility the personal challenges rise. It may also trigger a need for debt or equity raisings and greater personal financial exposure. Directors guarantee anyone?
Boom and Bust
This is volatility at its best. Rapid growth followed by either a plateau or downward spike. It is often triggered by turning your marketing pipeline on and off, or your infrastructure not keeping pace. It is easy to invest in the front end of your business, eg sales and marketing because the measures of success are tangible. If you are reluctant to invest in business systems, processes and service delivery capability then you are asking for trouble.
I once worked in the wholesale telco space and witnessed one of our retail customers grow from virtually nothing to $100m in eighteen months by acquisitions and promptly collapsed. The model was not sustainable. The tragedy was that you could see it unfolding before your eyes.
I have been a judge of small business awards and have also worked with small businesses on the brink of collapse. The sweet smell of success or bitter taste of failure is quite intuitive.
How can you better manage your growth?
1. Manage your risk tolerance – most people have a risk tolerance of +/- 10% and entrepreneurs significantly more. What is important here is not your personal risk tolerance but the robustness of your business systems. If you have a high risk threshold and it is not reflected around you, something will break … and it may be you! It is highly desirable to surround yourself with balancing influences not yes men. Engage a coach/ mentor, seek wise counsel from your accountant/ CFO and appoint an Advisory Board.
2. Know when to slow the flow – create your marketing and sales pipelines to be independent of you. As an Owner/ Operator you have the primary role of overseeing business development even if you have sales and marketing people. the buck stops with you as the CEO. If, by good management or good fortune, your lead generation and conversion exceed your capacity to deliver then slow the flow. Don’t turn it off but slow the acquisition.
3. Build robust business systems – you are not your business. Appoint a project team or external consultant to build business systems. This is about working smarter not harder. Build the foundation for your future success. If your marketing budget should be 10% of your revenue then equally a percentage should be allocated to building your backend. How much varies in each case.
4. Build a buffer – expect cost over runs and time delays by as much as 50%. It doesn’t mean blindly tolerate 50% inefficiency in your business but understand that as human beings are estimates are based on best case and life is seldom best case.
5. Keep a tight rein - on your money and your time. At a minimum conduct monthly reviews. Ideally conduct real time reviews. So in order of preference - real time, daily, weekly, monthly. If you don’t have a handle on your monthly performance by the 10th day of the following month you are setting yourself up for a fall. Remember 80% of businesses fail. It doesn’t have to be you.
6. Retain faith in your vision - and back it with the facts. Faith is one thing, blind faith is another. Solicit independent professional opinion, eg coach, mentor, advisory board, accountant. Build a mastermind team around you.
7. Plan you work - it’s actually much more than planning your work. Planning your work suggests time and task management. To succeed in business you really need to think strategically. So whether your plan is one page or fifty pages, it must be strategic. A good strategic plan consists of three core elements in this order – vision, strategic objectives, strategies. Your principle responsibility as the CEO is to formulate this plan and execute it. Do this well and you won’t know yourself as an enterprise leader. Day-to-day challenges will still arise but now you will have a context within which to lead, and not just respond. When Einstein said, “You can’t solve a problem with the same level of thinking that created it” he was talking about your strategic thinking, your strategic plan and your enterprise leadership. I’ve been around the block a few times and this strategic planning and execution element is THE difference between mediocre business and elite performing business.
I hope you have found this article/ blog useful. If you have any questions or issues that I can help you with post a comment or contact me directly.
by Dennis Roberts
by Dennis Roberts
Much of success in business is formulaic. Crack the code, follow the formula and guarantee your success. Franchising is a very popular and proven business model largely because someone has had the creative idea, proven the concept and then copied and cloned the formula.
Sure there is a role for both artist and scientist. The art is in the creative idea, the concept phase and some elements of executing the strategy. For the most part business is a science. So, let’s explore where these well trodden paths lay so that you can make life easier for yourself.
Business Cycles – daily, weekly, monthly, quarterly, yearly. Knowing economic or business cycles, riding them and planning forward for them can make your journey as a business owner/ operator much easier than it otherwise might be. Keep your cycles short, financials self-funding, generate quick payback periods, and plan a quick break even point. Long cycle time is a redundant concept for small business. The world changes too quick for commitments beyond a three year window. There may be exceptions for major lease commitments, plant acquisition or capital works but tread carefully with any long term commitment. If it has a tangible asset backing then it may merit consideration on a stand alone investment basis.
Performance Benchmarking – internal or external. If it’s your own business then your benchmarking measures must pay cursory attention to what returns you might get from investing your money elsewhere. You may play two distinct roles – Owner and Operator. Benchmark them separately, reward them separately. The easiest place to start with benchmarking is you versus you, eg this year versus last year, one product versus another product, one salesperson versus another salesperson. Find the balance between camaraderie and challenge.
Sales Pipeline – the process is the same. Find a successful strategy and repeat it. This is not about reinventing the wheel it is find what works and do it again and again. And if you’re clever automate it. There are two fatal mistakes in small business:
1. Turning off your pipeline when your capacity is full.
2. Not investing time or money in your marketing effort. Marketing precedes selling. Remember that the number one objective of marketing is to generate qualified leads for your sales people.
Decision Making & Review – the more decisions you make the quicker and better you will make them, unless of course you don’t learn your lessons. Engage fresh eyes. An astute coach/mentor will quicken help you identify patterns – of both success and failure. Don’t be the mouse on the wheel. Eat the cheese.
Financials – I’ve written previously that variance reporting or management by exception empowers you to track your performance and take prompt, decisive corrective action. Shift your focus from backwards to forwards. Reconcile past financial results and decisions and plan, forecast and budget forward decisions. Don’t worry if you get it wrong or do it on the back of an envelope for the key is to shift your thinking from past (reactive) to future (proactive). It’s not about getting it right. It’s the orientation and therefore the personal empowerment that you create for yourself when you look forward. If you need to escape your busy day-to-day environment then do so.
I’ve outlined a few basic ideas here to improve your chances of business success. There are many more. If this is a theme that you’d like to explore further then leave a blog post or flag an issue and I’ll do my best to address it for you.
by Dennis Roberts
by Dennis Roberts
When you are the boss of an enterprise it is easy to assume responsibility for making the decisions. It doesn’t make the decisions any easier but the buck stops with you. This is how most owner/ operators work. The position demands that you take responsibility and be accountable. It’s your money so who better to manage it than you?
Well, if you had your money invested in financial securities there is a fair chance you would engage a fund manager, whether it be superannuation or managed investments. You place your reliance upon the professionals.
When you employ staff in a small business environment you are buying the knowledge, skills, talent and aptitude of your staff. Often they are closer to the action than you are. And if you are managing your business wisely that should hold true.
Many years ago I worked in a retail department store. It was a vacation job during university. At first I served customers in our stationery department. It was simply order taking. I later migrated to selling menswear where there was more finesse, and salesmanship.
Have you got your staff simply taking orders and performing assigned tasks? Every job function requires some degree of creative problem solving. People will create work arounds and adapt either their talents and skills to fit the demands of the job or vice versa, they will adapt task to skill.
The real opportunity to step into your leadership potential is to cease playing boss and making the decisions and create a space for your people to make their own decisions. This is art not science. I’d love a dollar for every time I’ve heard, “It is quicker if I do it myself.” It reminds me of the native American Indian proverb, “If you want to go fast, go alone; if you want to go far, go with others.”
What practical steps can you take to create this space for change such that your people assume personal responsibility and autonomy?
- Conduct weekly meetings – set a simple agenda wherein you ask everyone on your team to give updates. Everyone gets to talk. Your role as Chair is to listen more. Agenda items may include: Highlights from last week, wins/ losses, roadblocks to success, priorities for the coming week, acknowledge staff contribution.
- Keep the tone positive, constructive and supportive – everyone is doing the best they can. Ask how can you support them to perform at their best?
- Lead the way – if the room goes quiet when you pose a question, then lead by example. If your staff aren’t used to public acknowledgements then show them how. If all this is new then set the context for your new methods by stating upfront, “I’m going to change the format of our meetings so that I talk less and encourage you to share more.”
by Dennis Roberts
by Dennis Roberts
According to business analysts and commentators, our labour market displays chronic skills shortages. Human resource professionals channel much energy into strategies designed around attraction and retention of talent. The phrase "War on Talent" is freely bandied about.
The dynamics of the labour market are much more fluid and transient than they once were. The average lifespan of the CEO is under three years. So you could safely assume the majority of your employees will have a short tenure. The dynamic that is different within the small to medium enterprise sector is that the CEO is often Owner/Principal. There is a double bind – leaving the job role and selling the business often go hand in hand.
Rather than focusing your energy on retention strategies for your employees, you would be far better served going deeper into the employment dynamic and devoting your time, energy and financial investment into strategies designed to engage your staff in their work function.
At some point your talent will leave your employ, that much seems certain. It is a question of when. Even if you are lucky enough to retain talented employees for longer periods the engagement, development and productivity is still relevant.
Regardless of tenure, your challenge as leader is how get your employee to "bloom" in the short time they are employed by you.
There are two perspectives on talent. Some consider employees, or human capital, an asset and others consider employees to be an overhead cost. Marcus Buckingham suggests your people may play to their strengths as little as 20% of their time. If this is true, then you definitely have your people as an overhead. If it is not true, ie. people are an asset, then your asset is under-performing. You are CEO of the enterprise and may also be Director and Proprietor. In any one of these stewardship roles it is your responsibility to manage your assets and the associated returns they generate.
This area of people and performance represents one area of your business that you can achieve quantum improvement. Very few small business proprietors can claim mastery in the realm of people and performance.
Here are some quick and easy strategies to realise tangible benefits:
Your people are assets – This is a great ideology from which to start. Assets may either appreciate or depreciate, and perform or not perform. Set performance expectations on a quarterly basis. The old annual performance review cycle is far too slow.
Offer to remove the clutter – Research suggests our people spend only 20%, or one day per week, doing tasks for which they have a genuine aptitude. For sure they are busy all the time. You can add real value and unearth strategies to engage and fulfil your staff by identifying roadblocks and helping remove them. In your informal discussions ask, "How can I help make your job more fulfilling, engaging and productive?"
Learning and development is an investment – The investment of your training dollar is either for remedial or developmental purposes. If it is remedial, it may highlight deficiencies in your recruitment practices. Remember the adage "hire slow, fire fast". When assessing any training/coaching programs for your staff, quantify the economic benefits. All investments yield a return on investment. What is yours?
by Dennis Roberts