Business failure is a subject most of us would rather avoid. But I prefer to avoid the trial and error which otherwise might stifle your growth potential, derail your ambitions or worse, result in business failure.
Over the past 20 years, I’ve worked with thousands of business owners, leaders and entrepreneurs. Some of those individuals faced critical challenges to their business and others faced significant opportunities to grow their business. I’ve distilled this insight into seven guiding principles to help shape your thinking into what it takes to grow your business, and in doing so, minimise your chances of business failure.
As you read the seven guiding principles, score the current performance of your business against each on a scale of one –ten. How will your business shape up?
How to minimise your chances of business failure
#1 Simplify your business model
We have an innate ability to over complicate and over-engineer life, and this certainly applies in business. A question I frequently ask is: ‘would you describe your business as being like a tugboat or an oil tanker?’
In the early stages, business is fast, agile, responsive, and able to move quickly (the tug boat). The challenge is that over time we introduce complexity: additional layers of people in the organisational design, multiple sign-off processes and procedures, measures and metric overload, an unhealthy obsession for governance, reports for the sake of reports, decision-making by committee, and – perhaps worst of all – bureaucracy that makes it difficult for a customer to do business with you (the oil tanker).
Is your business a tugboat or an oil tanker?
Perhaps utopia is to have the scale and size of an oil tanker, yet the mentality and agility of the tugboat! Great businesses and their leaders are great simplifiers; they seek to un-complicate and de-clutter.
#2 Understand your primary business purpose
Strategically the primary purpose of a business is to Acquire, Maximize and Retain the right customers. Everything that contributes to this is an investment. Anything that doesn’t is a cost!
This should be your key principle that underpins your entire business growth model. Aligning all your available resources (people and financial investment) to this principle will create the focus and momentum for accelerated growth.
Imagine you completed an audit of every process, system, and procedure in your business, and as part of the exercise, you asked the following question:
‘Strategically, the primary purpose of a business is to Acquire, Maximize and Retain the right customers. What’s an investment and what’s a cost in our business?
What’s helping and adding value in delivering this goal? What is detracting our focus and even worse derailing us?’
This single exercise alone will help simplify your business and ensure you maintain ‘tugboat status’.
#3 Adopt ‘outside-in’ thinking
Great businesses think ‘outside-in’, with the customer being the focal point of everything they do and how they do it. They are passionate about looking at themselves through their customers’ lens.
Culturally, they are self-challenging, asking probing questions:
How easy are we to do business with?
Are we genuinely delivering world-class customer experience?
What will our business need to look like, feel like, and act like in 5 or 10 years to be relevant and agile to the changing needs and wants of our customers?
#4 Implement checks & measures
Having ‘checks & measures’ in your business allows you to make proactive, informed and empirically validated decisions about how you can deliver accelerated, sustained, and profitable business growth. But the challenge for most businesses is threefold.
First, some businesses don’t have performance measures in the first place.
Second, they measure the wrong things.
Third, they’re not paying attention to what the measures are telling them.
Focus on the measures that matter in your business as these will inform your decision-making and ultimately help you drive your business forward.
#5 Be disciplined in your execution
Consistency of action, consistency over time.
This is the difference that makes the difference.
(I’m so passionate about this one – check out my blog; Why disciplined execution is key to success)
You can spend an eternity creating the best strategy, and on paper, you should be a phenomenal business, but you fall on disciplined execution.
I’ve witnessed so many businesses achieve accelerated growth but delivering sustained, and profitable growth requires a whole new set of skills and disciplines.
Focus, rigour, and boundless levels of energy, commitment, and resilience to name but a few. But perhaps most importantly, it requires alignment of all individuals behind a common purpose and ambition.
How good are you and your business in the discipline of disciplined execution?
#6 Prepare for the unknown
Prepare for the unknown or as I call it, productive paranoia. Great leaders can zoom out, take a helicopter view of their business, and when required, zoom in drilling into the detail. Zoom out, then zoom in!
we lose our most significant customer?
a competitor makes a game-changing move that affects our potential to grow?
one of our key people leaves?
new legislation is introduced, how will it change our distribution channels?
Productive paranoia prepares you for the unknown. By running ‘what if’ scenarios, however improbable, will help you identify and combat possible roadblocks and curveballs, which could otherwise appear from left field.
If plan A doesn’t work, there are 25 more letters in the alphabet! What is your plan B? Your plan C? Or even your plan D?
Mohammed Ali once said, ‘The fight is won or lost far away from witnesses. It’s won behind the lines, in the gym, and out there on the road, long before I dance under those lights.’
Are you spending too much time working ‘IN’ your business and not enough time working ‘ON’ your business?
#7 Harness the Proud Factor
When your people are out on a Friday evening with friends, and their friends are griping about their work, do your people say ‘you know what, I’m sorry you’re in that position because I work for a great business and I am proud of working for them?’
Businesses with the ‘Proud Factor’ can underpin the reliable, predictable and admired exceptional customer experience it promises to its customers. Customer experience is a competitive battleground, and you can find a leading position, with points of differentiation, if your people have the Proud Factor.
Are your people proud to wear your company badge?
So, there you have it, seven guiding principles to minimise your chances of business failure
How did your business shape up against each one?
Did you score better on some than others?
Remember, there is no such thing as a closed window of opportunity; it just takes action to open it.