I was asked at a recent meeting, ‘What are the biggest challenges faced by Small and Medium Enterprises?’ and ‘What are the biggest capability gaps restricting the success of owner and operators?’
“Focus, Attitude, Mathematics, and Execution (FAME),” I replied.
Business success does not require an MBA, despite what Universities claim.
It comes down to a very simple mathematical equation: Profit = Revenue – Costs.
Getting the right answer requires FAME.
Businesses fail to maintain or grow market share without the most important factor: focus on the customer. I know that it sounds clichéd but it remains true.
Focus is also required for successful implementation of your business plan, with measurable goals, ensuring that every action is designed to achieving them.
People like to do business with people they like; it is an attitude thing.
I am talking about your attitude and that of your team. Once you have created the focus, you must inspire trust and empower your team.
Paying a wage or salary simply buys people’s time and physical presence. You must earn their active engagement. Happy staff lead to happy customers, and happy customers return and spend more.
I have seen plenty of management fads come and go, everything from ‘Total Quality Management’ and ‘Six Sigma to Learn’ to ‘Just in Time,’ to mention a few.
They contain good principles, which, if applied well, can improve the financial performance of a business.
Business success depends on basic mathematics, and hence do not be suckered by iPad toting consultants using the latest buzzwords.
Just remember the simple equation mentioned above, maximise your revenue and minimise costs. Know your breakeven point, make sure you do what you do as efficiently as possible, know what your margins and mark ups are, and search for that point of difference that enables you to charge more than the competition.
Execution is everything. I have not yet met an SME owner who did not have a plan.
Of course, some never wrote them down and some were not necessarily the best plans in the world but all of them had a plan.
It is the execution gap that destroys business success; translating the plan into action should follow the good old Monday Morning Test: ‘What should I do each day and week to achieve my goals?’
If your business plan and cash flow forecast that your revenue would be $500,000 this financial year, that would become your goal.
In order to reach that goal, how many sales calls do you need to make each week, how many face-to-face meetings should you have with current and potential customers each week? How many sales proposals, valued in dollars, should you submit every week?
Executing actions that help you reach your business goals is where business success really comes from. Create a weekly scoreboard and ensure that you and your team meet each week to review progress and work out what needs to be done to achieve your targets in the ensuing week.
Schedule some time in your diary and undertake a fundamental review of your business, its current and your desired future status. Thereafter, decide on the actions that you should take to implement them.
Injecting FAME into your business will give you the best chance for success.
Adrian Dixon is Management Consultant at Valued Added Management based in Auckland. He is a member of the panel of judges for the Indian Newslink Indian Business Awards 2013. Email: firstname.lastname@example.org