I am continuing a three-part series on the reason why businesses succeed. If seven out of 10 businesses will not last ten years, what can we do to increase our chances? Check out Part 1 where we discussed the first three:
4. Diversified Customers, Services or Products
A few years ago, I started working with a company that had 75% of their revenue was with one client. We regularly ran numbers to see how long our cash would last if we lost them as a customer. We developed a business plan so that we could withstand the loss of this client more easily. A few years later, they did leave as a client but were only 12% of revenue at the time. Although it isn’t fun to lose 12% of revenue, it is not detrimental to the business.
The same concentration can happen with services and products. Over time competition can make this more challenging, so we must be prepared to develop new services and products to stay ahead of the competition.
I found these quotes about future technology that lacked some foresight and allowed competition to overtake them.
- “There’s no chance that the iPhone is going to get any significant market share.”
- Steve Ballmer, USA Today, April 30, 2007.
- “There is no reason for any individual to have a computer in his home.”
5. Hire the Right People
Have you ever hired the wrong person? According to a 2017 CareerBuilder survey, companies lose an average of $14,900 a year on every bad hire. Nearly three in four employers (74 percent) say they’ve hired the wrong person for a position. Then once we do retain the right people, the training is not done well enough for them to do a good job.
One method to help make sure you have the right person for the position is to use the Kolbe Right Fit method. The employer fills out a survey on the qualities desired for the position. Kolbe focuses on four main categories – Fact Finder, Follow Thru, Quick Start, and Implementer. When hiring a Controller for my organization, I wanted someone high on Fact Finder and Follow Thru.
Once you have a person hired, make sure you have outlined the tasks, processes, and training that you want them to do. Use a task management system like Asana to keep track. You can add documents, put recurring tasks, and make comments back and forth. It helps you and the employee know what they should be doing and helps you remember what was assigned.
6. Systematic Processes and Habits
As we grow, we have to develop systems and processes that make it easier for people to follow. You have to train and build the innate habits in people to perform the most efficiently. What do I mean about making them habits? Most of what we do comes from automatic routines that we do without much thought. Once someone has done something over and over, they hardly have to think about it and can focus their mental energy on more complicated tasks. With regard to any processes that you want to document, I recommend making it part of the daily, weekly, or monthly routine. I find that the Full Focus Planner is a great tool that helps with this. It helps you and employees break down key goals into quarterly, weekly, and daily tasks. Every day I focus on my “Big Three”.
Another use of software like Asana, as mentioned above, is that when tasks are recurring, after awhile, employees know what they need to do regularly and by when. The process steps can be documented very clearly within the software, and this makes it easier for someone else to do the task if needed. Also, now it is easier to record videos and screen share training for employees to learn key processes. When a company is growing quickly, processes change regularly, so you need any easy way to document changes that are easy for everyone to see, make comments, and adjust when necessary. Allow employees to be open to changing process or questioning an old process.
Next week, we will conclude our series on the top reasons why businesses succeed. Stay tuned.