Key Issues for Business Today

This article deals with some of the key issues facing businesses today:

Performance of people

No matter how we come at it, the performance of our own people is still the most important aspect to any organisation’s success. And yet, in my observation, it’s the one area that we continue to struggle with most. Many of the big organisations are throwing significant resources at the Why, What and How .. they have the resources to do so … but even they are still struggling with this, because it’s everyone’s performance that contributes to the success of the organisation. The body of work on human performance is enormous (signifying the importance of the issue and our continual struggle to conquer it) but one thing strikes me above everything else …. Every person within the organisation must be involved in a process to improve human behaviour . It’s not just a session, not just a document, not just information, not just surveys … but a fully fledged ongoing process … well laid out, well communicated, well tracked and with full commitment from the organisation. It’s costly though, in time and money, but imagine the impact that even a 1% uplift in human performance across the board does for the organisation.

Vision, Mission, Values, Credo

When these four things are handled well, it can almost create success of itself; when not, it’s a fundamental flaw in the organisation. Few organisations handle this well. Sure, many organisations have them written down somewhere but that’s often the extent of it. There are two aspects to this: How clear are each of these four and are they actually ‘lived’? The second is one of the most fundamental ingredients of success.

Vision: What’s the endgame? What’s it look like in the end? Where is it heading? Has everyone bought in to it?

Mission: What’s the purpose of the organisation? (And avoid “To be a leading provider of ‘x’ …”. Make it real to everyday people).

Values: What are the agreed values to underpin everyone’s behaviours?

Credo: What one thing is the reference point for all behaviours? What is in the ‘gut’ of the organisation? As examples “Performance matters”, “No excuses”, “Have a go”, “Total honesty” … something that people can seriously connect with in what they DO.

In all of these, avoid fancy words and phrases, don’t worry where the commas go and don’t think that creating them once will make an ongoing difference (revisit them regularly for relevance). New people coming in have also got to be drawn into all of this, with the words being used often and sincerely, to translate in to behaviours … that’s the whole point. As an aside, if those ‘at the top’, don’t live all of this, not only will others not live them either, but they are likely to go completely the other way due to the hypocrisy they experience.

Points of difference

Not strengths, but genuine and fundamental aspects of the organisation that make it different to every other. Strengths are what gets an organisation into the arena; they don’t win the game. Ask the question in this way, “What makes you staggeringly different to your competitors?” By asking it like that it stops the answer being just a statement of what the organisation is good at, rather than different, and it prevents ‘vanilla’ answers. Too often, there isn’t an answer to the question (or the organisation convinces itself there is, but there really isn’t). Sure, it’s very difficult to create the answer to this question but therein lies one of the most important aspects for future success. That’s the thing … CREATE the answer and build it into the organisation moving forward. The next problem is when this is successfully created and implemented, it won’t last because competitors will copy it quickly, so it has to be re-created consistently .

Inability of organisations to be all things to all people

This is simple … don’t try. No organisation can be all things to all people … and will fail if it tries. Select the high impact targets and behaviours and stick to them. This applies to people within the organisation as well.

Shortage of time

We are busy in this world .. busier than ever. Hours worked, emails, calls, tasks, traffic, information coming at us, technology moving at light speed, white noise, etc. We are all time poor. It’s a matter of not trying to solve that … unless you’re going to retire and live on an island. Shortage of time is to be managed, not cured. Put your time where you know you should and don’t sweat the rest. And if you feel out of control (and I’m observing that many do) take a day off to genuinely consider how you’re ‘running’ your life (and not just your professional life), make some choices then change it up from the very next day forward. If you don’t think you have time to do that then re-read this paragraph. And change the concept of ‘work / life balance’ to doing what’s important to you, your family, your colleagues and your friends.

Revenue and Margins

It’s getting harder to drive revenue up and maintain or grow margins. Pressure on price is massive now. The internet and globalisation have increased competition to levels that some organisations don’t even realise yet. Some of the smaller organisations, because they are resourced at lower levels, are the last to find out how these aspects are changing and affecting their performance, and that’s a fundamental challenge for their very existence …

how are they going to compete in future with the rapidly growing larger entities that are ‘consuming’ competitors? Some may not be able to and that is (sadly) a fact .. they will need to find a niche somewhere else. Get big or become a niche. A bigger organisation negotiating with a smaller organisation is going to win, purely on size. If your organisation is in that boat, you need to change tack or get into a bigger boat.

Digital marketing and the social media have already changed the face of marketing itself. The entire marketing industry has changed (almost overnight). The good news is it has become significantly cheaper to market an organisation (c.f. TV advertising, newspapers, etc.) but it requires completely different expertise to do so. There is no choice in this … and that’s the opinion of many experts … establish a presence on this front or face the consequences inside the next three years. So, again, smaller entities will be challenged by the absence of expertise … but they can at least harness the skills of a teenager / early 20’s person re the social media and find ways (maybe collectively with other organisations who don’t compete with yours) to digitally market yourself. You may have to think outside the square to handle this but it IS possible. It’s certainly not going to go away.

Financial management

This is particularly relevant to the SME’s. Let’s make this simple … if you don’t do all of the following, you’re asking for trouble:

6. Fully fledged Profit & Loss budget , month by month, line by line, seasonalized (meaning don’t just divide the annual number by 12 and apply it to each month), signed off and agreed by all key personnel within the organisation by the end of May for the coming financial year.
7. Cash Flow budget for the coming 12 weeks, week by week, line by line, estimating the Cash balance at the end of each week.
8. Profit & Loss Reports , monthly, including year to date, within three weeks of month’s end, against budget, against same periods last year, showing variances.
9. Cash Flow Reports , weekly, against budget.
10. A productive working relationship with an Accountant (not just having Tax Returns done at the end of each financial year). Engage an Accountant who will partner you, not just react to you … and one that’s cost effective.

If all that seems a very time consuming and expensive approach to take to financial management, consider the reality of the statistics that there has been an upward trend in small businesses going bankrupt since 2008… … and poor cash flow management is being blamed. An average of 44 small businesses in Australia were closing their doors each day, according to the Australian Bureau of Statistics at the end of 2013. Better get across financial management or not much point being good at anything else.

Challenges for business with multiple private owners

When there is more than one business owner, there are challenges to be faced. Who makes the decisions? How are disagreements dealt with? What if one doesn’t ‘perform’? How are different personalities deal with? How are owners paid? What happens if it all goes pear shaped? How does someone exit the business (role and / or equity)? Etc.

The following are absolute necessities to make multiple ownership work:

• In depth discovery before going into business with anyone to establish alignment of goals and values .
• Properly constructed Shareholders Agreement , covering the fundamental workings of the business, as well as exit arrangements.
• Alignment of goals and values of any additional owners who join, over time. This begs a question for many businesses … What if any of these have not been dealt with? Answer … Get across them now (and best to use external expertise in doing so). If doing this exposes problems and challenges, then that’s ok … be mature about it and set about communicating effectively to deal with the issues. This will take some time but it’s worth it in the end. The worst outcome if these are not all dealt with is a falling out between owners and that normally turns ugly.

Should you go into business?

There are absolute and fundamental questions that anyone should answer before going into business (or examine if already in ownership):

1. What are you planning to do? When and why are you changing your life for this, and is anyone coming along with you? This goes to goal setting, mission statement, partner alignment and risk assessment.
2. What are you Strengths, Weaknesses, Opportunities, Threats and Constraints? This goes to a detailed, realistic assessment.
3. What funds are you going to need to start and grow your business, where are they coming from and what repayment terms will you want? This goes to funding, finance, budgets and cash flow forecasts.
4. What business structure are you going to use, will it allow for future growth and partners, and who will advise you on these and other issues? This goes to structure, obligations and advisors.
5. Where will you operate from, what processes do you need to produce your good or service and what systems and records will you use? This goes to premises, processes, systems and record keeping.
6. What are you going to sell, why will customers buy it from you instead of someone else and what is the future of your product / service? This goes to products, services, selling proposition, competitors, research and growth.
7. What price are you going to sell your product for, what will it cost you to make, what profit do you want to make and what will you do with the profit? This goes to price, budgets, cash flow, reinvestment and owners’ return.
8. Who are you going to sell to and who are you going to use to sell your product? This goes to target customers, staffing and suppliers.
9. Where are your customers, what device will they use to find you and what processes / devices are you going to use to find them? This goes to customer focus, marketing and social media.
10. What are you going to use to track your progress, who will assist you in this and when are you going to track it? This goes to bookkeeping, accounting, coaching / mentoring, meetings and communications.
11. Who will be your next employee / partner and what attributes do they have? This goes to growth requirements and aspirations.
12. What do you want your business to be worth when you sell and what is your exit strategy? This goes to ‘payday’.

If you cannot answer all of these questions you may not be ready to go into business. If you cannot answer all of these questions and you are already in business you best get across them now.