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Are We Making Money Yet?

How many times does a small business owner ask himself if he is really successful before slipping back into the daily grind of trying to make a buck. In many small businesses it is a daily ritual. “Why does it have to be this way?” Arguably money in hand is a clear indication of success learned from an early age. Parents often say, “If you do your chores your can have an allowance.” As we grow up and go into business our parents become customers and our allowance becomes revenue. Our completed chores are necessary product or services that customers want and will pay for. We are simply conditioned to respond.

Money becomes the symbol

Finding acceptance in the market comes from successful sales and building loyalty. Money is a symbol of that success and is a primary evaluation tool. More money equates to more market share at face value. Unfortunately pure revenue doesn’t take into account costs associated with production and distribution. Many small businesses simplify the relationship between what comes in and what goes out leading to short-term focus. Adapting our chore analogy, the child performs a function and expects immediate payment or gratification. The problem with this type of linkage is limitation creation. A business that operates for cash-now can’t build necessary supply chain relationships, grow larger customer bases, or operate with sustainability in mind. Just in time becomes the main business driver not growth and enhanced value. The result is decreasing revenues, unhappy employees, and inability to execute against corporate vision.

Birds in the bush are okay?

Where are the birds?

Where are the birds?

A paradigm shift in thinking leads to far more success than trying to cash out every day. Small business can benefit from strategic planning to leave birds in the bush rather than always trying to capture one in the hand. The use of a business plan, sales and marketing strategies rather than just tactics, and leveraging of partnerships are great ways to start building for the future. Limited budgets and high expenses are excuses rather than obstacles to overcome. In essence, the only limitation to success is within your own mind. How and why are up to you.

Complexity, a Business Value?

Nice shed...Really?

Nice shed…Really?

Let’s start with this story. Outside in the heat of summer a dad and his son are building a shed and it is not going well. Pieces of hardware, wood, and connectors are strewn across the hot cement of the patio leading to flaring tempers, harsh words, and sloppy assembly. Dad is trying to understand the “application” of the step-by-step directions which might as well be in Greek although claiming to be easy to understand. His son is bored, wanting to do something else but feeling obligated to help out. The stage is set…

“Please give me the hammer and those nails,” said Dad. His son retrieved the required items and waited for his next command. To speed things up, several steps were thrown together leading to a construction crossroads where Dad decides to have his son hammer the nail in for him. He gives the boy the hammer and tells him to proceed while looking at the directions one more time. The boy eager to please hits the nail that is absentmindedly held by Dad and crushes his fingers. Both participants are quite alarmed with the results and react accordingly. You can fill in the rest.

Much like building a storage shed a business needs to evaluate process, personnel, and execution against desired results. Complexity plays an important role in developing key methods within any business model. Too much complexity will end in business paralysis and loss of revenue. Too little will lead to ad hoc procedures that may be detrimental, unsafe, or unwise when used on a regular basis. The wise business owner decided how to build smart and profitably while addressing potential negative outcomes.

Another example is how many businesses add more services creating a shotgun approach in the hopes potential customers will buy “something” rather than focusing their product line built on core competencies, long-term initiatives, and stakeholder value. Consultancies thrive on driving overly complex “process-based” solutions for business issues that really don’t answer the key question and create more issues down the line. This method has led to a pessimistic attitude about the value of consultants. The old adage, “don’t worry about how to do it or why, just hit the nail the head” is applied to many business problems. The business owner wants to see results rather than be mired in defining and executing process creating ad hoc non repeatable actions. On the other hand, necessary complexity can build a practice that will enhance efficiency and promote sustainability. Discerning the value of change in the business model  has to become a core strength to promote long-lasting benefit. Perhaps Dad with his wounded hand and his son with damaged pride would have been better off hiring a contractor to build the shed and played catch instead.

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