Monthly Archive for February, 2011

Focus on the fundamentals for 2011

The beginning of a new year is the perfect time to revisit tried-and-true operating fundamentals that have served businesses well since Og traded skins to Gog for shells.

Regardless of where your business is on the economic recovery time continuum, focusing on these fundamentals, and others, will produce positive results quickly.

1. Declare war on excess inventory. Don’t miss a sale; but don’t let one piece of inventory spend the night in your building unless it’s essential.

2. Review all operational steps, and eliminate or fix inefficient ones. Focus on the pennies; the dollars will take care of themselves.

3. Review all contracts for services received to make sure you still need them. Your customers are doing the same thing, so get ready.

4. Interest rates are still low. Talk with your bankers about adjusting any outstanding notes to the new rates.

5. Keep your bankers informed about how things are going. The title of the shortest book ever written is Loan Officer Courage. An uninformed banker is a scared banker, and no one ever got any help out of a scared banker.

6. Employees spend most of your cash. Have a meeting, and ask them to help you identify ways to maximize margins and cut expenses. Write those things down, and put them into the new budget and your operation. What’s their motivation? How about job security?

7.  If you rent, have a pow-wow with your landlord. Get any concessions you can, and don’t be afraid to be creative. But remember, the more the landlord moves in your direction, the longer the lease commitment will be expected.

8.  Convert non-performing assets to cash, even if you have to short-sell something. What things were worth last year has no bearing on what they’re worth today, and they will be worth less tomorrow. If it’s not performing, cut it loose.

9. Profit is the Queen of business, but cash is King. Tighten up credit terms with customers. Have a meeting with your sales staff to make sure they understand the new policies. Stay close to your accounts receivables – real close.

10. If possible, personally call on every customer soon to have a business visit, not a sales call. Lay out your case for how you will serve them in the coming year, but also reveal what the relationship needs to look like for it to be good for you.  Think partners, not adversaries.

Focus on the fundamentals, and claim your own economic recovery in 2011.

I talked more about focusing on small business fundamentals recently on The Small Business Advocate Show. Take a few minutes to listen and leave your comments.

Focusing on operating fundamentals

More operating fundamentals to focus on

What are your success plans for 2011?

Now that 2010 has switched around from the windshield of our business to the rear-view mirror, let’s take stock of what the year hath wrought. As my friend and the world’s leading expert on business planning, Tim Berry, would say, “Plan vs actual;” compare what you thought you would do – your plan – with what happened.

Your plan could have been as simple as “I plan to survive 2010.” If you’re still in business, congratulations. Or, anticipating limited revenue growth, you may have projected increased profits through expense cuts and finding efficiencies.  How’d you do?

Recently, I asked my online and radio audience to answer this question:  How did 2010 turn out for your business? Here are the results:

Many small businesses are still trying to shake the negative effects of the Great Recession, including 21% who said they were barely able to eke out a better 2010 than 2009. Sadly, a few more, 26%, reported they had yet to experience signs of a recovery.  But a little more than half of our respondents were positive about 2010, with four-of-ten saying they had a good year and 12% actually reporting a record year.

If you’re among those still struggling, here’s an idea: Identify a peer in your industry who is doing better than you and find out what they know, are doing, or what they have that you don’t.  It’s times like these when being part of an industry trade group community turns any associated expense into an investment.  And if admitting out loud that you don’t have all the answers is uncomfortable, remember the lesson from Proverbs 16:18, “Pride goeth before destruction…” They don’t call it “wisdom literature” for nothing.

Tough love alert! As we stand here at this moment, more than 18 months following the technical end of the Great Recession, every day without positive performance by your business puts the cause farther from the external and closer to internal. “Internal” means the effectiveness of your organization, product array, marketing plan, etc., and especially the CEO’s performance - that’s you.

If you’re among the last two groups who were more successful in 2010, congratulations; you’re doing something right. But don’t rest on your laurels or unbuckle your seat belt. There are still plenty of marketplace mines in the macro-economy you could step on.

Remember the letter I have used to describe this recovery: M, for marathon.

This recovery race requires disipline, planning and incremental execution - one deliberate step at a time. You can do it!

Recently on The Small Business Advocate Show, I talked about how to evaluate how your business’ did in 2010, so you can make adjustments and be more successful in 2011. Take a few minutes to listen and let us know how you adapted your business for a more productive 2011. Listen or download here

Leadership: Can you sell your product?

What is a leader? A mentor once told me a leader is someone who can find others who will follow him (or her).

But as we all know, followers can be high-maintenance folks, requiring constant tending to whatever it is that attracts them; most of the time “it” is something intangible.  Napoleon is reputed to have said, “A soldier will fight long and hard for a bit of colored ribbon.”  Intangible.

Leadership, like beauty, is in the eye of the beholder.  So we asked our radio and online audience which of five characteristics is THE most important to being a successful leader.  Two of the leadership traits we offered, courage and perseverance, got the lowest ranking, each in single digits.  The highest ranking went to “ability to communicate,” with about 40% choosing this one, followed by “ethical behavior” chosen by almost one-third of respondents,  and “vision” selected by a little more than one out of four.

At first, I was surprised that courage and perseverance didn’t rank higher, because it is my belief that both of these are immensely important traits of a successful leader. But surprise turned to clarity when I realized that our poll had revealed what we all know but don’t always remember: There are two faces of a leader.  One is the face leaders see when looking in a mirror, and the other is the one followers see. When seeking the definition of a leader, we have to be clear about which point-of-view is being sought: leadership traits we seek in ourselves or the things that attract followers.

The face in the mirror knows courage and perseverance are definitely among the imperatives for leadership success.  But to followers, these are merely raw materials used to manufacture the product they demand of leaders – that intangible “bit of colored ribbon” delivered by communicating a vision that is executed based on mutually held values.

Turns out, being a leader is a lot like being a business owner. To be successful in business, it’s not enough to offer quality products you’re proud of; customers drop the gavel on that judgment. Similarly, it’s not enough for leaders just to please the mirror; followers are the customers of your leadership product.

In order to get others to follow you, both faces of leadership must be in evidence:  Nurture those traits that success requires of you personally, like courage, perseverance, faith, commitment, etc., while simultaneously delivering what followers expect, like ethics, communication, vision and performance.

Are you finding followers for your “bit of colored ribbon?”

Recently on The Small Business Advocate Show, I talked about the two faces of leadership. Take a few minutes to listen and leave your thoughts on leadership. Listen Live! Download, Too!

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