Feedback: How to Focus on What Your Business Really Needs to Be Successful (Part 1)
Ever wished you had a crystal ball? Just gaze into it and the future of your business is revealed. Like what you see – keep doing what you’re doing. Don’t like what you see – now you have a chance to make it better. If only. . .
Actually, you do have a crystal ball.
Well not an actual clear round rock, but your business is giving you feedback – are you listening?
Sadly, most small business owners are not.
Wouldn’t you jump at the chance to know:
- How to focus your time
- How to get the greatest impact with your money
- How to avoid a potential crisis
- How to reach your goals
- How to know if that major project was worth the effort
I could go on and on.
So why does this valuable feedback go ignored and unloved?
Because it’s called accounting and we are conditioned to hate it.
Most small business owners think bookkeeping tedious, boring, and only good for getting the year-end tax return done. They think as long as there is cash in the bank business is good.
I have a bit of tough love for you. If you are thinking this way, then you are not in business – you just own your job.
A massive disruption is happening.
Computer programs are able to adjust their programming based on experiences without human involvement. Surgeons can operate on a patient from a thousand miles away. Houses can be 3D printed.
Every industry is going to feel the impact of technology in ways just a decade ago seemed impossible. You can put your head in the sand, or embrace change as a bringer of opportunity.
You can no longer be just an average player and have a successful business.
The decisions you make have to be a good fit for the current needs and future goals of your company. You cannot just follow the heard. This is why it is so very important you listen to the feedback your business is giving you.
It is time for accounting and bookkeeping to take its place in the sun!
In the past, only businesses that could afford to pay between $120,000 and $255,000 for a controller had access to the valuable feedback accounting gives.
Those days are over.
Cloud-based, mobile software has opened up opportunities for small businesses. No six-figure controller salary required.
The key to unlocking all the valuable feedback goodness is in the set-up.
Today’s software and apps are designed to get you up and running in just minutes. Sounds great. But, all those done-for-you set-up features are designed to work on any business. They're generic, and generic isn’t going to give you controller-quality information.
Lewis Carroll said it best, "If you don't know where you are going, any road will get you there."
A business has to have specific long-term goals. Long-term goals give purpose and direction to the work you do each day. Without them, you end up wandering through your day working on what other people think is important.
It’s time to get strategic.
To have a successful business you have to know where you want to go because this will define what kinds of feedback you need from your business. Without this process, all the fancy information software and apps give you is just noise. To be valuable, feedback has to have a specific purpose.
There are two classic but very effective strategic tools that will guide you. One is PEST analysis and the other is SWOT analysis.
First, do a PEST analysis.
It's an evaluation of your business environment.
Laws, regulations and industry best practices are always changing. You want to be aware of what changes are currently being enacted, and what potential changes are out there. Keeping in touch with industry associations and peers is a great source of information. For example – banking regulation changes have had a major impact on home loans. If your industry is tied to housing this has definitely impacted your business.
The economy is always in a cycle of expansion and recession. Some industries do well in expansion some in recession. What economy benefits your industry? Does the economic outlook favors your industry or not?
Consumer preferences change. Wal-Mart, the retail darling of the 80’s and 90’s, is now playing catch-up to Amazon because they overlooked customers’ desire to buy online. In fact, 2017 is projected to have more retail store closings than any past year due to the rise in online shopping.
Society’s values change. Just look at the growth in the organic foods sector. Consumers are valuing healthy foods more, and McDonald’s is feeling the pinch.
I've already covered this one so I will leave you with one thought – driverless cars.
Next do a SWOT analysis.
This is an evaluation of your business.
These are areas where your company excels. What is it that you can do better than your competition? Is it a better product, better customer service, better distribution network, better skills, better access to resources, better experience?
This is the opposite. In what areas are you and your company vulnerable to competition? Do these weaknesses need to be corrected or compensated for?
Take the business environment information you gathered from your PEST analysis and see how it complements your strengths. Look for potential ways to change, update, or improve your business. Take some time to fully explore the possibilities for new goals and strategies. When you spot a change in your business environment that works well with your strengths you have a potential competitive advantage that will set your business apart.
Take that same business environment information you gathered from your PEST analysis and look for potential ways it could negatively affect your business. This can actually be a very positive process. Identifying potential threats gives you a chance to take corrective action before a crisis develops. Also, this can save you from committing resources to activities that don’t have future potential.
Now you have data about your business and the environment it operates in. You should have a list of strategic changes you need to make. There is just one piece left to investigate.
What are your commitments outside of your business? Business is just one area of your life. Zig Ziglar is famous for teaching about the wheel of life. It has seven spokes --with your business as one of them-- that you need to keep in balance to have a fulfilled life. You can focus on one spoke at a time, but not for too long. If this is new to you, Google it because it gives a great perspective on how business can and should fit into the rest of your life.
If you want to stay motivated and fully committed to running your business you have to consider how your business goals affect the other areas of your life. On the other hand, you can’t use the other areas of your life as an excuse for not taking action in your business. This should be a non-judgmental process. So be candid and honest with yourself. You don’t have to show this to anyone else.
Once you work all the way through the process you should have a list of potential goals for your business, with a pretty good idea which are your top three choices. (Any more than three goals and you risk losing focus!)
Now you are ready to start looking at some details and making tactical decisions for your business. That I will cover next week in Feedback: How to Focus on What Your Business Really Needs to Be Successful Part II.
I encourage you to download the workbook below to help you make your analysis. It will take you step-by-step through the process and give you a place to collect your thoughts and data.
I would love to know your opinion so please leave your thoughts in the comments below.