By Sunil SrivastavaFor most small & medium business owners and their management team, it’s often a challenge to take the time to stand back from the daily business operations and be able to take stock of their performance and long-term strategic issues. It is however imperative that they review their progress and understand how to get the best out of their business & implement the steps necessary to make them profitable & prosperous.
What makes a business tick?
Businesses that understand ‘what makes them tick’ are the ones that are most successful and profitable. They also do not develop complicated development strategies. They understand that the best strategies are usually the simplest as they are easier to communicate, understand and implement.
The simpler and easier it is for everybody to understand what delivers profit, the easier it is for them to align and support the strategy. The ability to identify and crystallize the most important performance metrics is a simple & effective way of communicating strategy. It also ensures that everyone is focused on a simple model that drives profit in a consistent & repeatable way. These businesses know the main business drivers and use the most important success metrics to monitor their performance against these drivers, and they use this information to ensure they have:
- winning products or services that people want to buy and will continue to want to buy
- clear objectives simply set out and communicated to all staff to motivate them
- a dedication towards continual improvement
- effective management information and financial control
- efficient services and distribution
- dedicated management with the right information & business responsibilities
- Compliant with regulations and minimum disruption to routine.
Business Ownership & Organization Checklist
Selecting the right business structure is a very important decision for a business owner as it affects personal liabilities, taxation and levels of control in the business. The wrong business & financial structure can act as a constraint on the development of your business and cause problems. Hence
having the right information should enable you to determine the right structure for your business.
Businesses can be Sole Proprietorship, General Partnership, Limited Liability Company, Limited Liability Partnership, C Corp, S Corp, etc. Make sure you talk to an Attorney / CPA to determine the right fit for you.
Use this checklist to determine if the business structure is right for you.
Management & Governance Checklist
A Business owner has to understand the value in their proposition to customers, including the tangible and intangible benefits their products or services provide.
Businesses must establish and manage the process for setting vision, mission, strategy and direction in order to achieve superior performance. These then need to be translated into plans, projects and actions throughout the organization.
Use of this checklist will help you understand the importance of clarity of vision, mission and values in a business’s offering.
Are You Creating Value through Your Business?
Your business has to add value. Make sure your selling price covers all your costs of production and promotion. You cannot sell below cost for very long without going bankrupt. Remember also that working more closely with your customers and suppliers can bring competitive advantage. Understanding the value drivers in your business is essential for maximizing your company’s
Use this checklist to look at the factors that can improve or destroy value for your business.
Are You Proactively & Effectively Managing Innovation?
Innovation is all about continuously moving ‘up the value chain’ and adding value in each and every product and service. Successful businesses understand the importance of innovation and incorporate processes into every aspect of their operation to innovate continuously. Innovation is essential for business survival in today’s highly competitive markets where it is increasingly difficult to differentiate between products and services.
This checklist covers the areas that you should consider to ensure your company manages innovation effectively.
Do you know your Business’s Financial Health?
A mix of daily earnings, equity, long-term/short term borrowing, creditors and lines of credit funds a business. It is important that the right balance is struck between these. Each has a cost and you have to be sure that you understand it and are able to pay it.
Understanding your financial position is an important step in evaluating the health of your business. Cash is the life-blood of any organization and must be closely managed to ensure the business can survive and grow effectively. Understanding the basic concepts of cash flow will help you plan for any unforeseen eventualities that may occur.
This checklist will help you analyze the financial health of your business and help you calculate the financial ratios that you need to know.
Do you know your Business’s Physical Health?
You have invested in physical assets such as machinery and equipment. It is essential that you get the most from your investment, but you must also keep an eye on replacement. Technological change is rapid. You should not allow your processes to become non-competitive. Effective asset management helps to improve productivity and performance and reduce costs. This checklist covers the areas that you should consider to optimize your company’s use of assets.
This checklist will help you analyze the physical health of your business.
Do you know your Market Dynamics?
Information about your market and your competitors will enable you to plan your business
strategy and your business structure better. While it may be difficult to build up a complete picture, you should seek to obtain as much information as you can from your customers, trade bodies, suppliers, competitors and the media. Getting a good understanding of how your market is expected to develop is essential if your business is to make the most of its opportunities and remain competitive.
This checklist looks at the competitive dynamics in your market.
Do you continually improve your business?
Quantity without quality could ruin your longer-term market prospects. Quality is a measure of your ability to meet the needs of your customers in a more cost-effective way than your competitors. Be careful to avoid ‘over quality’. Your products and services need only meet your customers’ needs and what they are prepared to pay, not exceed them.
Best value requires businesses to ensure continuous improvement in their performance,
and to demonstrate a commitment to sustainable development.
This checklist looks at the factors affecting quality in your business to examine where there may be opportunities for improvement.
Is your Team Optimized for Success?
Management is all about achieving success through people. Manage them properly and enable them to maximize their own contributions to the success of the business. Good people management is at the heart of achieving a successful, high performance business.
This checklist looks at the key criteria for achieving success through people.
Are you ready for Growth?
Consider whether you want or need to grow. If you decide to grow then do so in a manner that the business can sustain. Appraise the time it takes for you to bring a new project on stream. Match the market with all the resources necessary to achieve your objective. As markets mature, companies need to find new sources of growth. Businesses that are not growing through new product and service introduction are likely to be in decline, as their existing sales portfolio inevitably matures.
This checklist examines the key drivers for growth and managing growth.
Are you in compliance with Rules and Regulations?
Don’t let regulations put you off. An integrated approach to information will mean that many of the demands of the tax man and others can be met from the same information source that enables you to run your business better. It is important that you comply with statutory and other regulatory obligations. Non-compliance is costly and could put you out of business.
This checklist covers the key areas of compliance that businesses need to be aware of.
In summation, the on-going economic downturn means that now, more than ever, small companies need to take a good look at the fundamentals of their businesses, and understand how they can improve performance, strip out any unnecessary costs and focus on the right strategy to survive and take their businesses forward.
When times are tough, knowing exactly what you are facing and being realistic about what needs to change will put your business in better shape to respond quickly to further changes in the market (be they positive or negative) as they occur. Using these checklists will place you in a better position to understand areas of weakness in your business and your potential exposure to the downturn. However, the key thing is prioritizing which areas require immediate attention
and identifying appropriate actions to deal with them.
Suggested actions you could take:
- Improve your decision making – With all the information & insight you have gathered, value creation & creating a competitive advantage should drive all your business decisions.
- Seek fresh perspectives: Business owners and managers are often so close to the action that they lose objectivity. It might help to talk to a trusted professional such as your CPA, Accountant or mentor.
- Evaluate your Strategy: Now that you have access to more current and relevant data, evaluate your strategy and see if it aligns with your mission, vision and core values.
Two recent articles, Rich Entrepreneur: The Wealthy Aren’t Job Creators, Middle-Class Workers Are by Bryce Covert & The Next Social Contract by Michael Lind that I read have quite succinctly point out why the American middle class is struggling while the top 1% is better off than ever before in history and also call out the fallacy that "the Super Rich (1%) are the job creators".
Bryce Covert writes that "Entrepreneur and self-described one percenter Nick Hanauer warned Congress that rich people like him aren’t the engines of the economy. In a testimony before the Senate Banking Committee, he explained why, in fact, middle-class workers are the economy’s real job creators:
In the same way that it’s a fact that the sun, not earth is the center of the solar system, it’s also a fact that the middle class, not rich business people like me are the center of America’s economy. […]
As an entrepreneur and investor, I have started or helped start, dozens of businesses and initially hired lots of people. But if no one could have afforded to buy what we had to sell, my businesses would all have failed and all those jobs would have evaporated.
He described what he calls a “virtuous cycle” in which middle class consumers have money to buy goods, which increases demand and therefore hiring. The rich, on the other hand, don’t fuel the economy with their consumption in the same way. “I earn 1,000 times the median wage, but I do not buy 1,000 times as much stuff,” he noted."
On the other hand, inspite of record corporate profits and sky high CEO compensations (which only recently are seeing a downswing), as per a New America Foundation report, minimum wage has changed little in the last 50 years. Come on, 50 years and the majority is still making what they did a half century ago? Prices for everything are changing as they are keeping pace with the changing times, then how come we don’t have a "Living Wage"? Shouldn't the minimum wage keep pace with the changing times?
In the op-ed “When Capitalists Cared”, author Hedrick Smith states that “In 1914, not long after the Ford Motor Company came out with the Model T, Ford made the startling announcement that he would pay his workers the unheard-of wage of $5 a day.
Not only was it a matter of social justice, Ford wrote, but paying high wages was also smart business. When wages are low, uncertainty dogs the marketplace and growth is weak. But when pay is high and steady, Ford asserted, business is more secure because workers earn enough to become good customers. They can afford to buy Model Ts.”
He goes on to note that “Other executives bought his logic, and just as important, strong unions fought for rising pay and good benefits in contracts like the 1950 “Treaty of Detroit” between General Motors and the United Auto Workers.
Riding the dynamics of the virtuous circle, America enjoyed its best period of sustained growth in the decades after World War II , from 1945 to 1973, even though income tax rates were far higher than today. It created not only unprecedented middle-class prosperity but also far greater economic equality than today.”
When Hedrick Smith talks about the “virtuous cycle” he is pointing to the fact that employers like Ford, GM, Chrysler, etc. at that time understood the importance of paying their workers a livable wage. A wage from which a worker could raise a family, save for the future and hope to live a virtuous life, meaning they did not need to depend on anybody else’s pity or handout. And he also points out that even though taxes were higher then, than today, it created a very prosperous middle class and thereby upward mobility & greater economic quality.
We now seem to have the case of the “Vicious Cycle”. This phenomenon started quite a while ago and one of the earlier instances were seen after the 2001 dotcom crash. Even during those times, Wall Street Executives & CEO’s got huge salaries & even bigger bonuses. It did not even seem to matter that those same companies are laying-off massive number of employees. The New Straits Time (September 3, 2001) reported that even as companies laid of tens of thousands of employees (CISCO- 8500 Dell- 5,800), their CEO’s John Chambers & Michael Dell made roughly US$157 million & 201 million respectively. And that was just the beginning. A similar scenario was repeated during the 2008 financial meltdown. Even while the whole economy was crashing, massive layoffs were taking place and the Lehman Bros were imploding, senior executives at firms such as AIG, Goldman Sachs, Chase, BOA, Countrywide, etc. were giving themselves huge salaries & bonuses. This transition from “Virtuous Cycle” to “Vicious Cycle” over the past 2 decades has not only led to major layoffs but overseas shipping of most of the manufacturing and support jobs, salaries cut across the board, health benefits & 401Ks decimated.
When employers devalue a workers work and pay them lesser than what they were being paid for the same work even an year ago, what did they think was going to happen? When the worker can only pay for the essentials, their disposable income goes down and they start cutting down on other expenses and this leads to even lesser services or cheaper products from businesses as that becomes the new normal. With cheaper products or poorer services, the workers make even lesser money and in return they can afford even less and hence cut further back on their spending. The bankrupting race to the bottom continues and the “Vicious Cycle” continues until the only ones left are the very rich or the very poor. That scenario cannot be good for the economy. And that’s why squeezing the middle class is not good for the economy.
Most small businesses are built to meet the needs of the communities around them. Many have built a small yet dedicated customer base. But with the easy availability of online shopping and big retailers around them, small businesses can find it challenging to get their message across and attract more customers. Most of the available marketing channels such as online marketing, billboards, TV & radio spots, etc can be expensive to use and complex to navigate. And in seeking high-tech and sophisticated solutions, we seem to have forgotten some simple and easy to community marketing channels. With the holiday season around the corner, these community marketing strategies can be very economical and help small business owners grow their sales and profits considerably.
Partner With Non-Competing Businesses
Study your neighboring businesses and your customer. What else could they be shopping for? If you are the neighborhood convenience store, it is highly probable that your customers are frequenting the nearby salon or garage. Identify some possible partners who are not your competitors and reach out to them. Form a working relationship and create a joint or cross-promotional marketing plan. You can access better advertising platforms working together than on your own, like local TV time or billboards. Pool your resources.
Partner With the Local Newspaper or Newsletter
Almost every city has a local newspaper or newsletter. Partner with them and place informational spots. These spots are very economic. They are delivered to the people who are often your customers. Use this local connection to spread awareness about your business and the service you offer. More often than not, people prefer to shop within their communities for daily necessities and services. The local newspaper or Newsletter can be a simple way to create a lasting connection.
Hold a Raffle or a Contest
Customers love contests and freebies. Have you noticed how quickly the “samples” vanish? So design a few promotions around raffles and contests. Proactively engage your customers. Try to make the contests unique. For example, you could host an eating contest (hot dogs, noodles, pizza, burgers, etc.) or hold a beauty contests. Contests like this will attract customers and increase customer recall. You might even get mentioned in the local news or newspaper creating even more free publicity.
Adopt a Local Charity or Educational Institution
Charitable activities can add a great deal of publicity to a small business. Partner up with a local charity and support their efforts through donations or labor. You can also check out local educational institutions such as schools and community colleges. See what you can do to help. It could be help a soup kitchen drive or the middle school fund drive. Promote the collaboration to their network and yours so that it creates a win-win. This positive collaboration will help you create a lot of goodwill that will translate to increased customer loyalty and profits.
Keep your Website Relevant
Big or small, almost every business has a website these days. The trouble is that they are often cluttered and out of date. A website can be a great tool for promoting a business, if used wisely. You need to make sure that the website is current and reflects not only what is currently happening at the store, but also any future events or promotions. This will keep the website relevant and help promote the business.
Don't forget to make sure that your customers have a fun, positive experience. Business owners, especially small and medium ones, often do not adequately plan ahead. So if there is increased customer traffic, they are not prepared to deal with it leaving customers harried and unhappy. Plan ahead, hire a few extra hands, and make sure that every customer who comes in feels appreciated and taken care of. These are the experiences that a customer will remember, return for, and recommend.
Do you have suggestions that can be added to this list? If so, comment below!
As his fellow panelists sought to sidestep criticisms of the financial industry on the five-year anniversary of the bank failure that kicked the financial crisis and Great Recession into full swing, former congressman Barney Frank asked a
simple question that brought Wall Street’s defenders up short. “To your question about those poor beleaguered bankers who have been forced to do so much,” Frank said, “why are they paying themselves so much money? Where did these enormous salaries come from if they were in fact in such serious trouble?”
Frank was responding to CNBC host Maria Bartiromo’s call to “get beyond the conversation of is Wall Street evil, are the bankers evil and causing pain” and instead look to economic growth as a cure-all for the vast inequality in income
and wealth that has been exacerbated since the end of the recession. (Nevermind that the deregulation of the financial sector is a primary driver of inequality in the U.S.) His question produced several seconds of silence as Bartiromo and
former Treasury Secretary Hank Paulson laughed nervously and looked to Meet The Press host David Gregory for help.
Creating a food or drink product to sell to the mass market can be quite challenging but it can also be extremely rewarding and potentially very lucrative. It takes passion, desire and an almost obsessive interest in all things food or drink to succeed in the industry. That is why Clip Creative a London and Nottingham based creative and PR agency have brought together all of their food and drink marketing secrets and experience to create an innovative infographic that explains step by step how the world of food and drink marketing really works. The first stage of the infographic explains that once you have refined your food or drink product you need to let people know about it. Your target audience will vary from consumers, foodies, buyers from the multiples to industry chefs and many more depending on your objectives. Branding, packaging design, marketing and PR is essential in the creation of a successful food or beverage company as this will elevate the brand image and ensure you generate sales and stay ahead of your competitors.
By Susie MadrakIf only politicians would stop blathering about the middle class and do something for those who are now poorer than ever. If only people could get full-time jobs. Feel all that freedom trickling down:
The economic "recovery" just keeps getting worse for the average worker: U.S. employers squeezed their employees even harder than usual in the first quarter, leading to the biggest drop in hourly pay on record.
Hourly pay for nonfarm workers fell at a 3.8 percent annualized rate in the first quarter, the Bureau of Labor Statistics reported on Wednesday. This was the biggest quarterly decline since the BLS started keeping track in 1947. Some of the drop was payback for a 9.9 percent surge in hourly pay in the fourth quarter of 2012, as employers shoveled money out the door to avoid tax changes they expected to take place in 2013.
But there have been plenty of such quarterly pay increases in the past. Many were even bigger. Some went on for several quarters at a time. And never has there been such a steep pay drop in response as there was in the first quarter of this year.
Smoothing out the quarterly ups and downs doesn't make the picture look any better. Hourly worker pay rose just 1.9 percent in 2012, a pitiful increase that barely kept up with the 1.8 percent gain in the consumer price index. That was the third-weakest annual increase in hourly pay since 1947, topping only the 1.4 percent gain in 2009 and a 1.8-percent gain in 1994.
Two recent articles I found were very interesting and call out the fallacy that "the Super Rich (1%) are the job creators". Bryce Covert writes that "Entrepreneur and self-described one percenter Nick Hanauer warned Congress that rich people like him aren’t the engines of the economy. In a testimony before the Senate Banking Committee, he explained why, in fact, middle-class workers are the economy’s real job creators:In the same way that it’s a fact that the sun, not earth is the center of the solar system, it’s also a fact that the middle class, not rich business people like me are the center of America’s economy. […]As an entrepreneur and investor, I have started or helped start, dozens of businesses and initially hired lots of people. But if no one could have afforded to buy what we had to sell, my businesses would all would have failed and all those jobs would have evaporated.He described what he calls a “virtuous cycle” in which middle class consumers have money to buy goods, which increases demand and therefore hiring. The rich, on the other hand, don’t fuel the economy with their consumption in the same way. “I earn 1,000 times the median wage, but I do not buy 1,000 times as much stuff,” he noted." (read more)On the other hand, inspite of record corporate profits and sky high CEO compensations (which only recently are seeing a downswing), as per a New America Foundation report
, minimum wage has changed little in the last 50 years. Come on, 50 years and the majority are still making what they did a half century ago? Prices for everything are changing as they are keeping pace with the changing times, then how come we dont have a "Living Wage"? Shouldn't the minimum wage keep pace with the changing times?
From "The New America Foundation".
| The Next Social Contract 2013 |
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Yes, business owners, small or big should be concerned with data breaches. In today's digital world, where almost all the business is being conducted with the help of computers, loss of data can bring your business to a standstill. It can also lead to loss of intellectual capital or competitive advantage over others.
Below is a great infographic that will help you protect your business and your future against data breaches & privacy issues.