Guest blog by Dennis Bridges, MBA
I had an interesting conversation the other day with a friend of mine who owns a small business. His company currently has 10 employees who are all busy generating revenue through a variety of different tasks. Our conversation was focused on how the company was doing. The interesting thing was his answer. “I don’t really know,” he said. Essentially they have just been working really hardon paying everyone salary and slowly eating away at their debt ratio. He actually isn’t sure what services are making them money and which are costing them money, let alone how much.
I would argue that in Edmonton and Alberta – this is fairly common. We’re fortunate enough to be in a business climate where making money is relatively easy. If you work hard and connect with people, you can run a successful business – maybe even a sizable successful business. However, if our climate was to change or competition increased, those businesses would struggle to adjust and remain profitable and potentially fail. Running a lean, sustainable, agile business requires that a business owner answer 4 key questions:
- What services do we offer?
- What value do those services provide to our customers?
- How are they marketed and delivered to our customers?
- What costs are associated with each stage of that process?
The first step to becoming a more sustainable, lean and agile business is defining your business model. Once you have clearly and completely answered these questions, you can establish a system for tracking specific KPI (Key Performance Indicators: labour hours, material costs, conversions, customer satisfaction, etc.) so that you can identify what is and isn’t making you money and begin refining your business model.
The trouble is many entrepreneurs are “too busy” to take the time to answer these questions. They either don’t see or understand that the return on time invested is limitless when working ON rather than IN your business and if done effectively, never stops paying dividends.
Whether you have 0 employees or 1000, take some time today to work ON your business and your career and answer the above questions.
Tune into Mike Mack’s complimentary tele-class on May 23 at 5pm with Leslie Shreve of Productive Day. Learn about networking, LinkedIn and harnessing the power of relationships for your busines success. Click herefor details.