I am often asked ‘What are the Critical Elements of Business to Focus On?’
My considered response is simple but effective:
- Make profit this month (not next month and not next year) and
- Bring in More Cash than you Pay Out this month (which means that your overdraft is down or your cash balance is improved, either being acceptable)
The results to my suggestion are invariably knowing smiles and nodding heads.
Usually, it does lead to response and further dialogue along the lines “I know that, but what do I do to ensure those two things.”
To which I respond: Focus & Take Action on the Five Critical Areas of Your Business.
- Vision & Mission. Have absolute clarity on your reason and purpose for being in business. You need to have a vision which is your driving purpose for being in business. It is only in the short-term that people have difficulty in generating their own pay or making a living. Your vision is unique to you and should have a time horizon of three to five years as a minimum.
Your mission is what you will do with the business to ensure that your vision is realised.
- Sales & Business Development. Nothing happens without a sale, but make sure that you are making the right sort of sales to the right sort of customers – at the right margins and prices. Also remember that it is important to focus on nurturing and retaining your customers. Sales are immediate; customers are for life. You want both.
- Finance & Accounts. Stay on top of the accounts and finance.
That is not to suggest that you actually need to do it yourself: ideally, this is an area that you will out-source to an employee or an external professional who has the skills and competence to manage the finances, both on a day to day basis and on an annual/multi-annual basis.
Know how and when invoices and accounts are issued to customers. And how and when cash is collected. Know and understand key monthly figures like turnover, profitability, working capital management as well as financing needs and requirements. Review financial statements regularly, not just annually.
- Team & People: Everything that happens in a business impacts in two areas:
- Finance, and
It helps when you recruit the right people: because you have a clear specification, clear accountability and communication. Once your people know what has to be done, how it is to be done and the results expected, it is time for you to get out of the way.
A team only becomes a team when there is clarity on objectives (Vision & Mission), clarity on responsibilities and clarity on results achieved, with accountability.
- Systems & Methods: You cannot do everything yourself, but as the owner, you have ultimate responsibility for managing everything that happens.
The best way to ensure consistency in every aspect of your business is to have clear systems on what is to be done, who has to do it and the standards to which they must operate. When wondering where to start, apply the Pareto Principle, the 80:20 Rule: focus on the critical areas.
All of the above makes one whopping great assumption: you have the basics covered i.e. you already know and have in place best practice in relation to the core operations of your business: delivery of product and/or service. After all, that’s why your customers come back and why people pay you.
Finally, you don’t have to do it all alone. Find someone else who has been successful in your area of business and learn from their mistakes.
Use a Business Coach to help you get to the top quicker. And remember, you are the only one that can determine what success means for you. My advice is: focusing on the above five critical areas will help you achieve success quicker.
Please feel free to contact me if you have any questions on how business coaching can help you realise your goals. I’d be delighted to speak with you.
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