Pivoting and Pop-up businesses are all part of the new normal. They are ways of taking advantage of fleeting opportunities created when the sliding doors of business open and close. But when they are not done strategically, they often fail to generate wealth over the long term.
Most business owners expect their business’s revenue to provide them income and investment capital. Additionally, they expect their business’s valuation to generate wealth realized on the sale of their business. The inconvenient truth is sustainable growth requires all six pillars of sustainable growth working in unison.
The mindset of the whole business, and not just of the owners is what provides the driving force to deliver growth. Humans are not great multitaskers; leaders need to move past their own importance and develop a culture of empowering staff . Leaders need to recognize their efforts and their outcomes, and develop trust between owners and employees. Remember if your business needs the owner to operate, then it has no value without them and hence unsalable.
Your mindset also needs to be entrepreneurial, to be creative and risk averse. Building and relying on decision-making frameworks to increase decision speed, decision quality, and reduce decision risk. Nobody has a crystal ball; we cannot clearly foresee the outcome of our decisions. By utilizing decision frameworks, we can better predict the things that won’t work and the things that are likely to work.
Just because you can does not mean you have too. Business must make the right choices. I learnt an important technique 20 years ago studying Kepner Tregoe problem solving. To solve complex problems, it is important to do some mental housekeeping (clear out the junk) by determining want the problem is not. By knowing what it is not, stops you chasing false causes and gets you closer to what it is. This is no different in business, it is critical to know what your business it is not, and to know what the business is.
Knowing your businesses purpose and strategic path allows you to choose the right sliding door opportunities for your business. Businesses that do not know what they are, or how their money-making machine works will chase every opportunity down the rabbit hole.
Have the willingness, and knowing which opportunities are for your business does mean they are commercially viable. There are many questions in determining the viability of your offerings. Does anyone want your product? How many units can you sell? Where will you sell it? How much will the market pay? Can you supply it at the right price? What is the expected profitability?
Having a quality business plan and strategic plan will provide answers to these questions. It will also provide a new product hurdle rate to insure investments in your business, improve your businesses performance.
This is the space where the sustainable growth rubber hits the road. A businesses ability to sustainably manufacture or resell commitments. Surprisingly, many businesses do not consider the delivery in detail until the sales team have committed the business to deliver. Many businesses launch products or make commits to fulfill contracts but fail to deliver in full and on time. Others overcommit and then work themselves into the ground to deliver, only to see sales in following months drop. Even large business commit to deliver only to find they neither have the capacity or capability to fulfil their promise.
In January 2021 the Pfizer-BioNTech company announced “shipments (COVID19 Vaccinations) were being affected by changes to its manufacturing processes designed to boost production” Six nations have called the situation “unacceptable” and warned it “decreases the credibility of the vaccination process”.
Failing to scale up capacity (equipment, tools) and capability (processes, knowledge, skills) to fulfil on growth initiatives will stunt your business growth. This overreach of your company’s ability to deliver burns out the business and burns the business reputation. Hence, reducing the trust and willingness of staff. It also diminishes the willingness of customers to trust your business with future contract. This inertia often lasts for years. In the real world, this usually means staff turn over and additional cost in rebuilding capabilities and lost profits from underutilized capacity.
Very simply governance is measuring performance, managing risk, and holding people accountable. It’s a business review process. Governance is often neglected by businesses as they seek sales revenue. But it is here where we ask, is the business at risk? Have our management choices worked? If they have not, why, what went wrong and how do we correct it? And are our people performing? It is how you build resilience, continuous reflection and correction builds a culture of knowing bad decisions are fixable.
Most people see this as a highly bureaucratic process. But it does not have to be. It depends on the business and the business objectives. At its simplest, it is a sole proprietor checking his quarterly financials. In a $5 Million turnover business a monthly meeting with a consultant or accountant, or a $200 Million turnover business a formal board meeting. Goverence is the mechanism of getting it done.
As a business grows, it reaches several stagnation plateaus that require an organization restructure and adjustment of the management mindset to continue growth. In broad terms, every time you double your revenue you need to review the business structure and roles of the owner.
Put simply, all business have natural constraints, meaning eventually they experience diseconomies of scale. As revenues grows, the dollar value of profits increases, yet the profitability (% profit) starts to fall. Eventually you work harder for less.
The more revenue to generate, the more equipment you need, the more people you employ and the more your legal and tax position changes. The people you employ need to be coordinated, monitored, trained, output monitored etc. If you do not redesign organizational structure, businesses processes and employees’ roles the business loses focus and will eventually stifle the business ability to grow. Businesses need to continually alternate between increasing revenue and building capacity and capability to sustain growth.
Growing a business is tough but with the above six pillars in place owners can succeed. Owners need to take the lead and implement a framework and culture of;
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