I spend over a quarter of my time each week talking to really smart business owners. The common theme running through these chats has been the necessity to do more with less. Costs are climbing everywhere we turn. Finding and keeping staff are problems many are grappling with too. So what are the smart people doing to help navigate through these challenging times? Here are a few points I have picked up on that could be of value for you.
Replacing “feelings” with “numbers”.
I chat with two very distinct groups of business owners. Those who drive their business by a sense of “feel” and those who rely on data to shape their decisions. Occasionally, there is a blend of the two but in all cases I see a predominant belief. Statements like “trust your gut” and “something doesn’t feel right” come from one group while the other says “the data never lies” or “the numbers just don’t stack up”.
From what I see, those who manage by “feel” look at the top and bottom numbers of a profit and loss account to sleep easy. The data people, on the other hand, seek additional metrics to calm their nerves. For instance, I have one customer who at month end produces a five page slide deck detailing what caused their prior result accompanies by a predicted profit and loss model (with surprising accuracy) for the next three months based on the trends they are seeing. It’s quite impressive.
In these turbulent times, one or two of the “feeling” folks have had to react quickly and aggressively as revenue and profits move dramatically downward. However, some of the “data” driven group owners are tracking the right leading indicators that allow them the time to make the changes they require.
Declining website conversion rates and increasing costs per lead are two indicators in digital marketing that spell trouble ahead. How are your numbers tracking?
Looking for the heavy bag of cement in the boot.
I recently read an article on how to improve the fuel efficiency of your car in times of escalating petrol prices. One mentioned that no car will deliver optimum fuel efficiency with 50kg of hidden weight in the boot. Likewise, a business that has something dragging it down will struggle to fire as efficiently as it can.
Every business has a culture. Whether it’s one to help it thrive is another thing. A number of business owners have mentioned to me that this month has been the time to fix cultural problems. It could have been a team member whose behaviour has gone a bit “toxic”. Or a general lack of urgency across the board. Now has been the time to have these “hard conversations”. Team members have either sorted themselves out or moved on.
Whatever the outcome, the result has been a boost in energy across the wider team. Are there any hidden “bags of cement” slowing down your business that need sorting?
Inflating your tyres to roll along easier.
Let’s continue the car efficiency analogy. A business rolling along on close to flat tyres will struggle. A number of basic tasks can cause this. Answering the phone is one. Sending quotes out is another.
In a time where staff sickness and absenteeism are endemic, a chunk of our client base are focusing on meeting minimum service standards for these basics. Better to do the essentials well than do a whole raft of activities poorly. In this environment, new KPIs are being tracked and what was simply assumed to be working well is now being measured and reported upon.
How are your basics tracking?
And finally Is there enough oil to keep the engine running?
One final car analogy and I am done. Engine oil dip sticks are not always easy to find. But leave the search too long and an engine can stop and be very costly to start again.
The equivalent of oil for a business r is goodwill. Each month your business either burns or creates goodwill among your customers and your staff. Take too much out through poor performance or a bad culture and – just like the oil starved engine – all will end as a sad story that will cost a lot to start again.
A number of business owners I meet are checking their “oil levels” with both staff and customers through internal and external surveys. They have discovered – sometimes to their surprise – key staff just hanging in on a sub par culture they didn’t know existed. Or customers who are struggling with service levels that have dropped away – again without the owner being aware.
Both discoveries have provided much needed warnings to makes fixes before the smoke arrives.
How are you measuring the goodwill level in your business?
I am really fortunate to work with some super smart customers who each month share their experiences in our meetings. I learn a lot each month, but more importantly I hope that one or two of these points may help you during these challenging times. And if you are reading this at 3am seeking answers to the worries keeping you awake – then I truly wish you well. We have all been there.