Riddell: Three resolutions for every business
December 28, 2016
I had an interesting conversation the other day with a small business owner.
It seems that he was dealing with a nagging and persistent doubt in the back of his mind over how to better run his business.
While being quite conversant and well read in many aspects of business theory, he felt almost overwhelmed by the quantity of information combined with his uncertainty in how to use it. This conversation initiated a suggestion for an end of the year column focusing on my recommendations for the three most important actions every entrepreneur should focus on for the New Year.
In responding to this request, I would be remiss if I did not first point out two underlying personal beliefs that form the basis of most of my small business/entrepreneurship articles.
Companies comprised of committed leaders and talented employees are the only ones that will prosper in today’s competitive economy.
The first is that business, in and of itself, is not very complicated nor difficult to understand. You find a need and satisfy it in such a way that the amount of money that a customer pays you for the product or service is greater than what it costs you to produce the product or service.
The second is that every business's success is driven by the ability to attract and retain talent. Innovation, creativity, drive, a desire to contribute, and a desire to satisfy can only originate from talented people. Companies comprised of committed leaders and talented employees are the only ones that will prosper in today's competitive economy.
So, with these two maxims as a foundation, I have three simple recommendations for New Year resolutions guaranteed to help any owner or manager.
The first one involves making the effort to put into place a process that allows you to measure the satisfaction of your customers. Don't make it too complicated; just figure out a convenient way for them to let you know how you are doing vis-a-vis their expectations and what it is that you could do better. Use this information to enhance and solidify your relationship with them.
The second recommendation is to pay attention to an old standby regarding cost structure: keep your fixed costs down and your variable costs up. This rule proves itself time and time again and rigorous attention to it allows every entrepreneurial manager to sleep better at night. The fewer dollars bound up in your fixed costs, then the lower your pre-determined financial obligation that you must meet each and every day, week, and month.
Buying and Selling processes
The third recommendation is to take time to truly understand that "Cash is king," and then set about changing your organization's buying and selling processes to reflect this understanding. Lack of cash, not lack of profit, is the single biggest cause of a business's failure yet so many entrepreneurs and small business owners/managers never get control of this business dynamic until it is too late.
I am quite sure that not a single one of these recommendations for New Year's resolutions is new or earth shaking information for anyone. And then again, in business there really is not that much that is new or earthshaking. But following the request of my friend, I hope these recommendations might be seen as clear distillations of some previously unclear business concoctions. Happy New Year!
Following a successful international business career, John Riddell turned his attention to small business/entrepreneurial pursuits that included corporate turn-arounds, start-ups, teaching, authoring business and sports columns and serving as VP for the Chattanooga Chamber of Commerce directing its Center for Entrepreneurial Growth. He can be reach at firstname.lastname@example.org.