This Week@Work it’s time to do an annual stocktake and over the next three weeks we will be revisiting three fundamental questions you need to ask yourself at least every year, to ensure your business stays on course.
First up: Why do you do what you do?
This Week@Work what does it mean to be a leader in your industry? You need to define and measure your specific sphere of leadership to lead your decision-making, manage your resources and align your team. Otherwise, it is just a hollow platitude.
This Week@Work a stepwise analogy makes the point about scaling your business with the systems and processes to prepare for growth, and repeating that process continuously to keep growing your business, sustainably.
“Boring businesses” often go unnoticed but hold valuable lessons in sustainability and success. Despite their lack of media attention and glamour, these businesses demonstrate critical principles that can benefit any industry.
Understanding Boring Businesses
Boring businesses are rarely in the spotlight. Examples include recycling operations or foam fabrication. Foam fabrication, for instance, involves purchasing large bales of foam, cutting and shaping them, and then supplying them to furniture and mattress manufacturers. While these industries may lack excitement, they are essential and well-established, often attracting little new investment or media coverage.
Key Lessons in Longevity
The primary advantage of boring businesses lies in their maturity and stability. These industries are typically entrenched with established suppliers and customers, creating a steady, if unremarkable, ecosystem. For instance, the foam fabrication industry relies on a few large suppliers, leaving little room for new entrants. Similarly, customers in these industries treat the products as commodities, focusing on price and convenience.
The Competitive Edge
In such markets, the key to success lies in efficiency and reliability. Using the foam fabricator example, companies that excelled were those that could deliver quickly and reliably. Initially, the ability to fabricate and deliver foam within a six-hour window was a significant competitive edge. However, as this became standard, the focus shifted to cost control and efficiency.
Embracing Innovation in Boring Industries
Despite their mundane nature, boring businesses present unique opportunities for innovation. While these businesses might be reluctant to invest in modernization, those that do can significantly distinguish themselves. By introducing efficient processes and modernizing their operations, these businesses can attract new talent and investment.
Take Away
Boring businesses, though often overlooked, provide critical insights into business longevity and success. They thrive on stability, efficiency, and cost control. For entrepreneurs, the key takeaway is that success doesn’t always come from exciting industries. Sometimes, the greatest opportunities lie in the most mundane sectors. By focusing on efficiency and embracing innovation, even the dullest business can become a beacon of success.
When starting a business, many people envision a smooth, uninterrupted path to success. The expectation is often that after acquiring a few customers, the company will naturally grow, eventually reaching the heights of financial success and market dominance. However, this idealized view of growth doesn’t match the reality for most businesses.
The Misconception of Linear Growth
Business growth is often portrayed as a simple, linear process in presentations and business plans. These charts typically show a smooth, rising line, implying that growth is steady and predictable. However, this perception is fraught with problems:
Sustainable Growth: A Structured Approach
Sustainable growth requires careful planning, adequate resourcing, and consistent measurement. Here are some key strategies for achieving this:
The Importance of a Strong Foundation
One common mistake among business owners is to focus solely on scaling and revenue growth without first ensuring that the underlying foundation is solid. This foundation includes:
Measuring and Managing Capacity
To manage growth effectively, it’s crucial to measure the capacity of your business accurately. This involves understanding the limits of your equipment, the capabilities of your team, and the overall operational capacity. For instance, if a machine can produce 10,000 units a day, pushing it beyond this limit without additional resources will lead to inefficiencies and potential breakdowns. Similarly, understanding the workload of your employees and ensuring they are not overburdened is essential to prevent burnout and turnover.
Creating Systems for Independence
For a business to thrive, especially as it scales, it must be able to operate independently of its owner. This means creating robust systems that can function effectively even when the owner is not present. Small business owners often focus on growth and revenue without developing these systems, leading to operational challenges and inefficiencies.
Growing a business is more than just acquiring customers and increasing revenue. It involves building a strong foundation, planning for sustainable growth, and managing resources effectively. By understanding that growth is not a linear process and requires careful planning and measurement, business owners can avoid common pitfalls and build a business that is both profitable and resilient.
https://omny.fm/shows/the-money-show/small-business-focus-growth-is-not-a-straight-line
This Week@Work there are fundamental lessons we can draw from trading businesses that apply to all businesses: Balancing supply & demand; customer concentration, and managing working capital.
In today’s rapidly changing business environment, understanding your business purpose is crucial. Many businesses fail not due to lack of effort, but because they lose sight of why they exist. Here’s why having a clear purpose is essential and how it can drive your business towards sustainable success.
The Importance of Business Purpose
A clear business purpose is vital for making informed decisions and leading effectively. In an increasingly complex world, having a defined purpose helps in navigating the numerous variables that affect business choices. Research suggests that the human brain can effectively manage about five variables at a time, which underscores the need for clarity in decision-making. Knowing your business’s purpose simplifies this process by providing a single, consistent reference point.
Consequences of Losing Focus
Many business owners lose focus and fail to maintain the passion that initially drove them. This often leads to stagnation and declining motivation. A business solely driven by profit will eventually hit a plateau, leading to questions about its future direction. Without a compelling purpose, it’s easy to become cynical, negative, and lose control over the business’s trajectory.
The Cycle of Needs and Wants
In the early stages of a business, the drive to meet basic needs, such as generating cash flow, is a powerful motivator. As the business grows and these needs are met, attention shifts to fulfilling personal wants. However, once both needs and wants are satisfied, a lack of purpose can lead to a decline in business value and a loss of inspiration among team members.
Defining and Reinventing Your Purpose
To avoid this decline, it’s essential to define and continuously revisit your business purpose. Some frameworks, like the B Corporation model, suggest balancing profit with serving the planet and people. However, a simpler approach involves identifying the specific problems your business solves for its customers.
Practical Steps to Define Your Purpose
For example, a company that manufactures thermal blankets for transporting pharmaceuticals can frame its purpose around saving lives and maintaining public health, rather than just producing a product.
Maintaining Passion and Focus
Business owners often start with passion and brilliant ideas but can lose motivation over time. To maintain focus, regularly revisit your purpose and ensure it still excites you. Aligning your business with a meaningful cause can reignite your passion and provide a strong foundation for sustained success.
Understanding your business purpose is not just about staying motivated; it’s about creating a sustainable path for growth. By clearly defining the problems you solve and the value you provide, you can maintain focus and drive, ensuring your business remains relevant and impactful in the long run.
This Week@Work define your to power you, your team, your customers and your suppliers to drive progress and profit
This Week@Work business growth demands not only a growth intention, but team buy-in and clear actions to deliver the plan
Finding clients & customers takes time and money. To optimise your return on those let’s look at 3 strategies to land the right fish.