Focusing on the things that make the biggest difference to your future prosperity.
(Note that even though this article was written in early 2002, it is totally relevant. Right now.)
About three weeks ago I was struck by this headline in the morning paper:
“The Fed says 9/11 hurt the economy.”
wow!
“What did I miss here?” Was this news? USA Today thought so. I was surprised that the Fed saw fit to announce it.
And this week, another: “NBER confirms recession.”
Hi Greenspan! Go out and talk to people. All across the country, people tell me that if they break even this year, they will consider it a victory. If that’s not a “recession”…
But have you ever wondered what it takes to end a recession? Not the textbook answer: two straight quarters of growth. Have you ever wondered what causes those back-to-back growth quarters in the first place?
The economy arises when enough people get tired of the economy being rejected.
Companies need things. They need new people or new services like marketing and sales. Some need new facilities or new equipment. You might be saying something like, “We really need this or that, but we’re not going to spend another penny until the economy improves.”
So we have a cascading effect where you’re waiting for someone else to make the first move, and the economy spirals down, getting worse and worse, until…
Until people start saying, “I’m tired of this,” or “I can’t wait any longer,” or “Let’s go.” And like magic, people spend money again and poof! The recession is over.
I’m a growth strategist: I help people figure out the best way to build their businesses and make more money. I would like to know when this recession will end, but I am not an economist and that is a difficult question. Instead, I ask how much longer people can sit in their duffs before they finally get so tired they have to perform again.
I hope early next year people will get to that point. Although the Fed has just made it official, many companies went out of business in the third quarter of 2000 and have not recovered since.
Aren’t you bored with all the doing nothing? Don’t want to start building your business again? Of course yes. What do you think others think?
(Side note: This forecast is in line with the “pros” who say the recession will end in mid-to-late 2002. That will only happen if business people and consumers start spending early in the year.)
So what are you going to do about it? What are you going to do personally to end the recession?
What are you going to do to start making money again? (I agree with President Bush. You don’t have to put up that flag, but the most patriotic thing you can do right now is start spending money. If enough people take that leap of faith, the global economy will take off like a rocket.)
Are you going to be ready?
Now is a good time to prepare for the next time people decide to start “doing business” again.
Last month I outlined a way to polish and even rethink your trading strategy. Here I’ll quickly go over the critical factors that will ensure your success.
A plan designed as a platform for growth and profit must consider each of the following critical success factors:
Monetary factors: positive cash flow, revenue growth and profit margins.
Acquire new customers and/or distributors: your future.
Customer satisfaction: how happy are they?
Quality: How good is your product and service?
Product/service development: what’s new that will increase business with existing customers and attract new ones?
Intellectual capital: increasing what you know is profitable.
Productivity: how efficient are you? How effective?
Strategic relationships: new sources of business, products and external income.
Employee attraction and retention: Your ability to broaden your reach.
Sustainability: Your personal ability to keep it all running.
For each factor, ask these three broad questions.
1. What can you learn from last year’s experience on this factor?
What did you do right? What worked? Always start with this question. Why? Because it’s positive. That’s why! It’s shocking how people are naturally inclined towards the negative. Even when I ask, verbatim, what did you do right, more than half the time people respond with something they did wrong.
How can you do more of those “right” things? How can you make them even better? How can you apply what you learned in this area to another?
Only when you have exhausted this line of questioning, ask: what did you do wrong? Not to beat you, to make sure you don’t repeat it and figure out ways to repair or improve the process.
Then ask what is missing. What could you add that will improve its effectiveness?
(Efficiency can be stated as the ratio of OUT to IN. Efficiency, on the other hand, is how many IN actions you perform per unit of time. For example, you can increase the number of calls you make per hour, i.e. a higher efficiency (You can increase sales volume for the same number of calls, i.e. higher efficiency.)
Random examples of things that might be missing include consistency in marketing, new products or services, more sales staff, a source of new leads, an employee (or self) development plan.
2. What are your objectives related to this factor?
Setting new goals can, on its own, transform your business. Your goals should be bold and dynamic, big enough to inspire you and everyone around you. Goals work best when they are objective and measurable. And you must believe that they can be achieved, no matter how difficult or impossible they seem.
Some examples of bold goals: dominate your niche market; double last year’s sales; top of the list in prospect mind swapping; 100 percent customer repurchases; three new products developed and shipped by mid-year; customer problems solved in half the current time, a career path for every employee, enough cash to cover any business emergency.
3. How are you going to achieve these objectives?
A successful plan for reaching your goals has several components:
Who will be responsible for each goal? Not you? so which executive? What managers? What department?
Some factors are directly assigned to a specific department, such as revenue from sales and marketing. But factors like intellectual capital or customer satisfaction don’t fall neatly into one department.
Even so, someone still has to ‘own’ the factor. Find out who. If no one person is responsible, guess what, it won’t happen.
Whoever accepts responsibility for a specific goal must answer the remaining questions.
What strategies and tactics have a good chance of achieving the goal?
If you’ve set bold goals, you probably don’t know how to achieve them yet. That’s what makes them bold in the first place. For now, you’ll have to make up some answers and live with the uncertainty.
And while there are no guarantees of success, each goal should have an identifiable path with a reasonable probability of getting you there. That path will define one or more initiatives and milestones that you can put on a timeline.
What structural and procedural changes will you make in relation to this factor?
Some examples are adding two salespeople or a new attendee. Maybe you set up new reporting lines, eliminate paper notes, acquire a competitor, or have a new monthly business fee. Each structural and procedural change will generate its own initiatives, which will also be timed.
Does this initiative require new people? Need new job descriptions or add managers? If you have to add people, re-include all financial considerations in your budget.
Taken together, all the factors, goals, responsible parties, initiatives, structural changes, timelines, actions, and milestones add up to a strategic plan for the year.
Can you live without addressing each of these factors?
Of course you can, but can you thrive?
Yes, you can too. But it will be more difficult.
Let’s face it: Some companies sell the same product year after year without making any changes. Look at WD-40. They are complete owners of the do-it-yourself lubricant niche; all they have to do is take orders and keep the shelves stocked. But its growth rate was negative 4.6% last year. Obviously, they are neglecting one or more critical factors.
So yes, you need to consider all the critical success factors, even if you don’t do anything about it, you need to think about it.
Increase sales but neglect service: what will happen to customer satisfaction? It will likely go down, affecting repeat sales, your reputation in the marketplace, and ultimately new sales.
Improve product quality but neglect employee retention? What will happen to quality next year? It is likely to go down. And then what will happen to sales?
As you can see, the improvement of each factor contributes synergistically to the survival and prosperity of your company.
Can you do everything at once?
Most companies don’t have the resources for that, so something has to give, right…
Or you can create another breakthrough.
This time, create a breakthrough planning, one that commits you to some level of breakthrough for each of the critical factors.
This planning task is not as big as you might think from reading the above. Anyway, you may still think that you can’t afford the luxury of time…
Look: any hobbyist can grow a business when the economy is raging, but it takes purpose, inspiration, and attention to detail to grow profits while the rest of the world is in a recession. Having a strategic plan, one that considers all the critical success factors, is a surefire way to improve the odds in your favor.
(To learn more about these critical factors, grab a copy of my book, Faster Than the Speed of Change, on our business training website—it also makes a great holiday gift for entrepreneurs.)
–PL
