Source: inBusines Greater Phoenix
Among the “top 10 best strategies for business success” a business owner can follow is surrounding oneself with the right people to get the job done. But to do that requires, first, determining what those jobs are. What has been identified is the following 10 areas of action that are equally critical to the success of a commercial enterprise. No ranking of importance is intended; rather, these are presented in the order they may most commonly be encountered.
1. Planning, Planning, Planning
“You need a destination and you need a map to get there.” That is the role of a business plan, explains Bob Wilson, co-principal of Stoney-Wilson Business Consulting, which specializes in helping small and medium-sized companies with their banking needs. Key to the exercise is an honest SWOT analysis — strengths, weaknesses, opportunities and threats. Wilson notes that other people will want to see the plan — such as lenders, insurance companies, bonding companies — but emphasizes, “The primary reason you’re writing it is for you; it will be your bible on how to get where you want to be.”
A business plan helps the business owner to think through issues and understand problems. It’s the shorter-term plan — 12 months — as compared to the longer-term strategy plan. The shorter term enables greater accuracy in completing the action steps to achieve the key initiatives, Wilson explains. The company’s co-principal Julie Stoney recommends the plan focus on only three to five key initiatives, as each initiative will require several steps. Among the steps for “growing the business,” for instance, may be acquiring a complementary business, developing new product lines and franchising.
Knowing the competition is an important component of a business plan. “In order to compete, you must understand what the competition is doing, such as pricing and service levels,” Stoney says. “It will also help you identify if there is something complementary that your business should be doing. You can identify holes in your own organization or in the industry you can address, and satisfy a need.”
Also helpful to a business owner is an advisory board. “With an advisory board, the business owner surrounds himself with expertise in a lot of areas, and it becomes his touchstone on a go-forward basis,” Stoney says, noting that many business owners have no one to turn to. “An advisory board also increases accountability to the business plan — what’s been said, what’s been done, new steps.”
2. Funding a Successful Business
Adequate and appropriate funding is an ongoing necessity for a healthy business. “With a growing company, it’s always a matter of ‘when,’ not ‘if,’” notes Jerry Mills, founder and CEO of B2B CFO, which provides financial and strategic solutions to small and mid-market companies. In addition to planned growth strategies, he refers to such things as a Department of Labor audit, Environmental Protection Agency regulations and significant increases on healthcare or liability premiums as he points out, “There’s always some surprise out there that we don’t know will happen.”
For this reason, he advises business owners to develop a relationship with their bank before the need for a loan arises. Observing that it’s typical to rush to the bank with an urgent need in an emergency, he says banks “don’t work well in that situation,” and cites the Dodd-Frank Act and other regulations since 2008 that banks must follow and that make lending more difficult for them.
Recommending community banks as easier to work with than national ones, Mills suggests seeking a loan or a credit card when the business does not need it, and using it just to develop credit and a personal relationship with the bank. This is a strategy he recently followed for his own company. “My company has no debt, but there are things we will want to do in the future. I asked for a credit card and got one within 20 minutes. We’ll buy things with it and pay the charges when they’re due.” Having established credit with the bank is handy when the business needs money that might be harder to get, such as working capital. “It makes it easier for the banker to say, ‘Yes.’ When he goes to the loan committee, he can say he’s known you for a long time, and you’ve always over-performed.”
3. Branding, Marketing & Image
Branding and marketing is an essential part of business, says Beau Lane, CEO of full-service strategic marketing agency LaneTerralever. “It’s how the world views you; it’s their emotional connection to what you’re selling.” In today’s always-on and connected world, there are more channels to reach people, but Lane notes the essentials are still in good communication. “Take the time to understand your customer and consider how your customer reacts to what you’re saying.” It’s best to be simple, direct and defined in terms of what is being communicated. In spite of short attention spans, smaller screens and limited time, Lane says, “What’s exciting and challenging in today’s world is, there are more ways to have that interaction with the customer.” Plus, the digital world enables businesses to track results and see customers’ behavior and how they are reacting.
But before anything else, Lane emphasizes the importance of strategy as a foundation for any marketing effort. “It’s easy to create marketing materials, but the magic comes if you have strong strategy behind that, that’s focused on objectives you have and targeted to customers you’re trying to attract.”
Social media can be a tremendous asset to any business by building a network of followers, friends and supporters it can count on, but, Lane cautions, there must be value provided in the relationship. “It’s successful if you’re contributing to a dialog or adding value to what you’re offering in the marketplace, but it can be harmful if your content has no value.” And while it can foster and continue a relationship, it is no substitute “for two people looking each other in the eyes,” Lane says. Describing business as a “contact sport,” he says relationships and trust are necessities — and they are best built face to face with people.
4. Sales to Drive Revenue
A new technology or “best” of a product or service may be the foundation for establishing a business, but when the market gets competitive or the business hits a plateau, the predictability of cash flow becomes unpredictable. Sales is the side of being in business that provides predictable revenue growth, but sales trainer Mike Toney, founder and CEO of Conquest Training Systems, notes there are three methodologies: transactional, focused only on a quick sale and closing the deal; trusted advisor, working with a customer on a problem the customer recognized; and strategic partner, bringing a solution to a problem the customer had not known he had.
Toney shares six important aspects of sales. These are “Society” — knowing who is being targeted and who is the ideal client; “Silo” — identifying the niche(s) the business can dominate; “Solution” — recognizing the problems the business can solve that no other businesses can solve; “Strategy” — developing a plan; “Structure” — accountability, management and compensation of the sales force; and “Systems” — the methodology that the business deploys.
A common problem, according to Toney, is having the wrong type of salesperson for the desired role, such as a transactional sales representative in a strategic role. Noting that most salespeople will show up to “sell” themselves to fill the job, Toney observes, “Most owners don’t know how to hire.” It’s important to not have a “softball interview” but to put pressure on the applicants so that they can’t stay in their safe mode. The owner can learn more about the salesperson by seeing where he or she “cracks.”
But even before that, the owner must be able to articulate exactly why his company exists; for instance, whether its strategic purpose is the solve a problem or to move product.
5. Managing People, Process & Benefits
What makes a business successful, says Stephanie Waldrop, principal of Employee Benefits International, “has a lot to do with its ability to attract and retain quality employees who will be the face of the business.” A benefits program as part of a company’s compensation package is a tool to build loyalty within an employee pool. “It shows how much an employer cares about them. And employers who care get employees who care.”
A lot of attention has been focused lately on healthcare, as discussed in the three-part healthcare series that concludes in this issue. But specific benefits aside, Waldrop states, “The No. 1 thing employees want in a benefits program is stability.” It’s important for employers to have a strategy to create that stability, from managing cost to creating a three- to five-year plan of what they want the program to look like. “This allows them to avoid a knee-jerk reaction, such as slicing benefits to offset a renewal increase.”
An employer can achieve a win-win by surveying the employees as to what’s most meaningful to them — but limit the choices to items the employer has already determined are within his budget and he’s willing to act on.
Also, there are benefits an employer can offer at no cost to the business, sponsoring them but making them available on a voluntary basis. Items such as life insurance and income protection may be available only in an employer setting, or be richer than what is available outside of that setting, Waldrop explains. “[Providers} assume higher participation rates because it’s a group setting and done through a payroll deduction.”
There are other elements of company culture not tied to benefits, Waldrop points out. Among them is arming employees with training so they’re empowered in the position they’re charged with. “Employees feel better about what they do if they’re properly trained and empowered in that role.”
Another plus is making employees feel a part of the company’s success, such as offering profit sharing or bonuses based on hitting the company’s revenue and retention goals. These can be structured to fit within the employer’s budget and proportionate to the individual’s pay level. Says Waldrop, “The motivation to find the ‘yes’ answers and ‘can-do’ responses for clients will make all the difference in the long run.”
6. Operations & Accounting
“Accounting is important when you’re starting a business. You’ve got to know what you’re getting yourself into, and numbers can help you figure out if it will be overwhelming, if you can handle it, if you need help,” says Chuck McLane, lead managing director at accounting firm CBIZ.
Focusing on addressing the tax side of accounting, CBIZ managing director Zandra O’Keefe shares, “Financial statements show the health of the business. They are the basis of tax planning and tax prep.” Planning encompasses building wealth, paying taxes, providing benefits to employees, and compliance measures — and compliance, she notes, is an area that is always evolving, which is why she emphasizes the importance of having competent people in-house to help the business stay on top of compliance measures as well as to be able to “follow the cash.”
“Make sure you understand the ins and outs of cash and the timing of that. That’s crucial,” says McLane. Creating a model of the cash flow enables a business to get a better sense of the timing of inflows and outflows, so that when money comes in, the business owner does not distribute too much too early and then not have enough when debt repayment comes due or for deductions for fixed income, or payroll or sales tax, or other obligations. In a nutshell, “Income does not mean cash, and vice versa,” O’Keefe says.
Dealing with customer debt is another issue. How risky is the client? Should the business collect a retainer up-front? “It’s important to understand the norms of the industry,” McLane says, noting this, too, will help the businessperson understand the broader picture of what the business’s cash requirements will be over time.
There are also a few specific tips O’Keefe and McLane feel are important to share. “Get an EIN (Employer Identification Number) instead of using a Social Security Number, because of the threat of identity theft. When you give 1099s to vendors at the end of the year, use your EIN and business name,” O’Keefe says.
“Keep your business account separate from your personal account. A lot of small businesses start with the personal credit of the owner to give the starting point. But it’s important to have the discipline to separate the two, to keep track of the flow of funds — even if you have to do a transfer of funds from personal to business,” McLane says.
“Talk with an attorney about the business structure that would be best, when you choose your type of business entity. There are compliance issues around fringe benefits and tax level. For instance, in a partnership, the partners do not get a W2, and they can’t participate in an employee cafeteria plan — in fact, if they do, it would become taxable for all the employees. Entity selection is critical,” O’Keefe says.
“For financial reporting, establish good policies and procedures from the beginning. Have consistent policies and procedures in place, so that as you add people to the organization, you will continue to record transactions in the same consistent manner,” McLane says.
7. Retaining Customers, Maintaining Communication
Customer service is the differentiator, says Tyler Wirtjes, GoDaddy vice president of customer care. “Whatever you build today, in 60 days 30 companies can copy that product. But they can’t duplicate the people — the interaction with your customers that you put in place to have that contact with your customer.”
The No. 1 focus should be trying to build a relationship, not just complete a transaction, he says, adding, “I think that’s sometimes forgotten.” This may mean going a step beyond whatever prompted the initial contact. Using his company as the example, he says that, in solving a customer’s issue, the service consultants ask the customer what he’s trying to accomplish with his business, so as to understand how he’s relying on GoDaddy. “Find out why they’re using you,” he says. “Help them find whatever success you can in using your product or service. That’s when they get emotionally attached to your company.” This is important in proactive contact as well as in reactionary response to complaints.
Wirtjes acknowledges that technology enables many functions to be automated, such as virtual assistants programmed to handle FAQs. “Artificial intelligence has come a long way over the last 10 years.” But what sets a business apart is delivering a personalized experience. For this reason, even a real person may not accomplish that relationship-building if the “conversations” are too rigidly scripted. “No one wants to call up and talk to a robot that’s actually a human but you think it’s a robot,” Wirtjes says.
Thanks to social media, complaints and issues today travel fast. Ignoring them can hurt a business’s brand, but dealing with them can, potentially, promote it. Explains Wirtjes, “If you take care of them in the public forum, you can gain followers to your brand or service or product because of the way you engage with customers and the way you solve their problem.”
8. Technology that Matters
“Technology is important for its ability to help all businesses scale — to provide repeatable and consistent results with what they do for their customers,” says Clint Harder, chief technology officer and senior VP of product strategy at OneNeck IT Solutions. He also points to the advantage technology brings by enabling business owners and executives to connect directly with [all the people they do business with] — customers, partners, vendors.”
Cloud outsourcing has become appropriate for businesses of all sizes, Harder observes, explaining that instead of a business consuming technology with its own capital and bringing it into its physical location, the cost is an operating expense remotely delivered.
Under the broad umbrella of “technology” are items developed for specific types of businesses or industries, and the smaller companies that do not have a department dedicated to researching and updating advances that could be useful to them “get that type of advisory and forward-looking education from vendors they partner with for their IT,” Harder says. Professional services organizations, whose inventory is people and time, require a program to help manage labor costs and billing rates as well as needs around document management. Retail focuses more on business processes — inventory of merchandise, manufacturing cost, delivery systems to get goods to locations. And getting detail-specific within industry-specific, Harder notes that dealing with certain types of oil wells requires specific engineering technology software and hardware.
“Technology” also encompasses the type of service OneNeck provides — helping run all the other technologies that support specific applications. The point is to protect and monetize the data. Says Harder, “Everything else can be bought in a commoditized component basis as an operating service, such as data co-location or cloud computing.”
Noting that core company information technology becomes purely obsolete in five years, and has degraded capability — although is still functional — in just two to three years, Harder says, “Using the cloud puts the obsolescence risk on the provider rather than on yourself.”
9. Personal Decisions, Actions & Energy
People who are successful are generally never satisfied with the status quo; they need to keep creating. But Patricia Noel Drain — speaker, author and business mentor — counsels, “Make sure you’re satisfying your needs when you’re leading the company. Forgetting about yourself and only taking care of others is not being a good leader.” She recommends, in fact, “Put yourself on your calendar.” And when pushing out of the comfort zone, the most important thing is to “stay true to you. Consider, ‘Does this feel good to me?’ If not, you’re going down the wrong path.” To grow their business, she’s found that people have to be happy in it.
The oft-quoted advice is “Work on your business, not in it.” Creating systems for all aspects of the business operation enables the business owner to delegate responsibility, and Drain notes that creating systems is what creates the value in the company. “Determine where you build the systems based on your own passion. This elevates you to still be the visionary for the company.”
Of course, recruiting, motivating and retaining great employees is important. Drain underscores a difference between great and mediocre as she articulates, “Make sure you have systems in place to retain your really great employees.”
And with the systems in place and great employees on board, Drain says, “If you want to take the business to the next level, you have to get out of your own way.”
10. Mentoring & Community Involvement
Visibility and connections enhance the growth potential of a business. Community involvement provides opportunity for a businessperson to benefit in both areas in addition to helping make a positive impact on the community he or she is part of. Christy Moore describes it as the “power of having deep relationships and connections with other community leaders, so they can leverage that connection to help with whatever they’re trying to achieve.” Moore, executive director of Valley Leadership, notes that mentoring is key as it brings together emerging and seasoned leaders. “It allows the mentor to leave a legacy behind and have a significant impact on an individual, and the mentee gains wisdom and insight from a seasoned professional.”
The purpose of Valley Leadership’s program is to educate people about community issues; it is not a formal mentoring group. But mentoring and connections are a key focus and a significant reason to get involved. “We bring together diverse groups of individuals who may not otherwise meet or interact,” Moore says. Participants gain a better understanding of varied community and business sectors and different — even opposing — perspectives. Furthermore, project groups within each leadership class — who work together to accomplish a sustainable community project that fulfills an identified need — are purposely composed to comprise what the field of energetics calls a “full brain,” combining people whose strength is in social thinking, conceptual thinking, analytical thinking and structured thinking.
Working on their community project helps participants develop self-awareness — “one of the most-cited leadership skills,” Moore says — which helps them become even stronger leaders. “As you build your network, you’re enhancing your connections, which you can leverage to achieve more for the community and yourself,” she says.