Human nature is inescapable, and we all experience its challenges from time to time. We do not mind doing a task that has to be done when it is easy, when we are interested in it, or when it does not get in the way of what we really want to be doing. But, when a task is difficult, out of our comfort zone or not interesting to us, our likelihood of doing it well decreases dramatically. Entrepreneurs are no exception, but in order to attain long-term business success, we must learn how to do the difficult, tedious tasks.
If we are not diligent, we may find ourselves making excuses, denials, and rationalizations instead of doing what we know we should. This can run counter to our own best interests. To quote a famous cartoon, “We have met the enemy, and he is us.” (Pogo, Walt Kelly).
We all know about the high failure rate of start-ups. There is also a high rate of businesses that have had initial success then closing. The owners were unprepared for and unwilling to do the things that a profitable, well-run company requires. They did not understand that early achievement does not guarantee on-going success.
Wins do not always lead to more wins – they can instead, sometimes lead to complacency. Building and maintaining long-term success takes on-going effort and skill. If you want to be better, you have to do better. Here are 3 places to start.
For the following three questions, the answers should all emphatically be “YES,” but you should also be able to back up your assertion with facts.
- Do you act like your money matters?
- This one seems like a no-brainer, but the truth is many owners do not fully know how to read or understand their financials. This means many do not know how to manage, plan or implement change based on numbers rather than guesses and feelings.
- What are your margins? What is your break even? What does it cost to run your business daily? What is your loaded labor rate? What is your bid to award ratio? What is your cash flow cycle?
- Do you act like your employees matter?
- Most employees need active management. Telling them what to do, walking away and expecting them to do it without training, oversight, and follow-up is not management. Sitting in your office and saying, “They know what to do, why won’t they do it?” is really saying, “I don’t want to do my job. Why won’t they just manage themselves?”
- What is your utilization rate? What are your turn and churn ratios? What does it cost you to hire and train a new employee? Are your managers managing or are you a fireman, babysitter, and policeman? What is your productivity rate? Again, knowing your numbers is an important aspect to long term business success.
- Do you act like your product and customers matter?
- You are in business to sell something to someone. Owners can lose sight of that truth, especially when they have met some of their goals. Product and customers become secondary considerations, rather than primary. It is a rare company who can survive a decline in product quality and customer service.
- What are your rates for waste, scrap, and rework? What are your warranty costs? What is your market absorption? Can you define your demographic? How diversified are you? What do your customers want that you do not sell? Do you know your inventory turns by product line? What are your costs to carry inventory?
If you want to achieve long-term business success, you have to do the work; there are no shortcuts. A business must be built on the firm foundation of good leadership, discipline, and execution. Success is not final; there is always something else just over the next hill. It is there, but you will only see it if you are looking for it.
At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information: