Are you in control of your business or is it controlling you? If your business is driving you then, unfortunately, you are among the ranks of many business leaders who have yet to realize the power of leverage. Without leverage you will find yourself in a business with unrealized potential or worse in a business where results require long hours of frustration and sacrifice to personal time. So how does a business leader get control of the business?
There are 6 Steps to Creating a Better Business that work without requiring a super-human
effort of its leadership:
- Mastery: Taking full advantage of strategy, time, and money
- Niche: Creating a unique position in the marketplace so that price
is not a competitive crutch
- Leverage: Improving efficiency through systemizing processes
- Team: Getting the right people on the bus and in the right seats
- Synergy: Bringing it all together so that the business runs on all cylinders
- Massive Results: Achieving growth, profitability and life goals
Mastery is all about taking the organization from chaos to order. Time mastery is the most crucial as we can always recover lost income but we can never recover lost time. In order to become effective managing time we need the discipline to focus on the important and forego the trivial and non- essential. Activities can be broken into four categories that must be recognized and managed appropriately:
- Not urgent and not important (time wasters)
- Urgent and not important (spur of the moment attention stealers)
- Urgent and important (priority activities for daily operation)
- Not urgent and important (pro-active, strategic tasks that drive success)
Niche is all about Growth. Once a business achieves a threshold level of mastery in key areas and establishes a reasonable level of profitability, it is ready for the next step. Now is the time for growth through sales and marketing initiatives. The marketing efforts must support an overall strategic position – a value proposition serving a defined market need. Finding the sweet spot in the market that plays to the company’s legacy and core strengths is the key to growth. Defining this niche and targeting and serving customers within that niche is the secret to becoming the “go to” supplier with raving fans that drive growth. Additionally, with a strong niche strategy, a business can raise itself above the low ball pricing tactics of unfocused competitors. An example illustrates the disadvantage that the price discounter faces. Let’s say that a business has gross margins of 40%. If prices are discounted by as little as 10% then sales volume must increase by 33% to maintain the same gross profit dollars. The lesson here is to find your niche so you don’t have to significantly increase volume to overcome the impact of discounts. You have found your niche when customers prefer you at a higher price.
Leverage is all about creating efficiency through process improvement and standardization. In many businesses operating procedures are not established or well documented. To make up for this lack of process discipline, the business often looks to the one expert in the company that knows how to get that one task done right. So what happens when the expert is sick or away on vacation? We all know the answer to that and most of us have witnessed the gyrations then necessary to get the task done. The solution is to systemize all the critical processes in the business. To systemize effectively, standard operating procedures must be institutionalized to facilitate customer acquisition and delivery of quality goods and services. Not all tasks need to be defined step by step in great detail, since there are unusual or non-standard process situations that occur. The objective is to standardize about 80% of the process tasks of a business and “humanize”, or handle by exception, the other 20 %.
Team follows leverage. If business systems are rigorous and well defined but the human resource to properly execute is lacking, then the business will flounder. A business runs on systems but it is the people who run the systems. It is often said that people are a company’s most valuable asset. That’s true, but again, it must be the right people in the right place. In the bestselling business book, “Good to Great”, Jim Collins says “Those who build great companies understand that the ultimate throttle on growth for any great company is not markets, or technology, or competition, or products. It is one thing above all others: the ability to get and keep enough of the right people”. Proper hiring, training, and development will help secure highly capable employees that will get the most out of quality standardized processes.
Synergy is the step where everything comes together. Synergy is often defined as 2+2 =5, or where the total is greater than the sum of the parts. With Mastery, Niche, Leverage and Team in place, a business is positioned for efficiency and performance. However all the pieces must be well integrated for the business to succeed over the long- haul. After the Team stage some businesses, primed for growth, are expanded in size or duplicated in other locations. If this expansion comes before all the previous steps are integrated, then bugs or imperfections that existed are simply multiplied. The synergy step is required to make sure that process, people information systems, business tools, management roles and production are all integrated to ensure that the business works like a well- oiled machine. Expansion can then follow.
Massive Results is the final step. It is here where all the efforts of the previous steps pay off. The business is a thriving business, positioned for robust growth and turning attractive profits. In addition, because of systemization and teamwork, employees at all levels are now less burdened by long hours and due to strong business results should experience improved job satisfaction in all its forms. Most importantly, the 6 step process culminates in a business that realizes the goals of its owners providing for their desired lifestyle and satisfying all stakeholder needs… a result we should all take action to achieve.
Award Winning Business Strategist and Coach.
Helping Professional Service & Project Based Businesses Accelerate Growth.
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