By Blake DuBose and Mike DuBose
As 2011 dawns, lights of hope are appearing at the end of the tunnel. South Carolina’s economy improved in 2010 and will continue its slow recovery 2011, according to a forecast released in December 2010 by University of South Carolina economists at the Darla Moore School of Business.
However, serious monsters still threaten the American economy (e.g., a $14 trillion deficit, Washington political gridlock, high unemployment, complex healthcare bill, shaky stock markets, financially draining wars, nuclear nuts in Iran and North Korea, etc). All have the potential to send shock waves through the media, decreasing consumer confidence and spending.
Many businesspeople who survived the great recession of 2010 are asking, “What’s next?” While we are far from perfect, we want to share what we are doing in our four companies as we plan for the future.
Pause: Now is a good time to step back, take a deep breath, and critically inspect your business, employees, and customers. Nothing should be considered sacred, and no stone left unturned. If you want to build a great business that has a good chance of success, have everyone in the company read Jim Collins’ bestseller Good to Great, then use it as a springboard toward your goal of creating a great company.
Conduct an assessment: Ask each employee several questions one-on-one: What did we do right in 2010? What were our stumbles? What are opportunities for improvement? What should we start doing? What should we stop doing?
Then, take a close look at each of your employees. Are they performing at peak efficiency, adding value to your business, and contributing to high customer satisfaction? Are they happy and satisfied in their positions? If not, what could leaders do to improve their happiness? (Research—and experience—show that happy employees are more efficient and effective.) We have posted a simple interviewing form that we recently utilized in such interviews online at www.duboseweb.com.
Next, look at your customers. Are there any labor-intensive, low-profit, stressful customers that require a lot of handholding or cause staff frustration? Consider disengaging from them (in a professional manner) so you can concentrate instead on high-profit clients. Analyze all your business activities and conduct the same profit analysis. You can’t do the same things in 2011 that you did in 2010 and expect different results! Focus most of your energies on core business activities that have proven to be profitable, but also experiment on a smaller scale with innovative activities that generate new streams of revenue. You must innovate or die.
Before you plan, you need to know where your business has been, what worked and did not, and what your strengths, weaknesses, opportunities, and threats are (this is called a SWOT analysis). Sometimes, it’s best to bring in an independent, unbiased consultant to help everyone see how the business truly operates and assist in developing a plan for the future. We use consultant Don Jenkins with The Leaders Advantage (www.leadersadvantage.us). To get all business leaders and staff started on the journey up Mt. Success, everyone should read Patrick Lencioni’s parable The Five Dysfunctions of a Team.
Develop a strategic plan: Based on these assessments, think about where you want to go next and how to get there (there is a good article located on our website that can guide you in developing your plan). A strategic plan does not have to be a long document, and may be as short as a few pages. In fact, Larry Bossily, former vice chairman of General Electric and author of the bestseller Execution, said that GE’s multibillion dollar business plan covered a time span of less than three years in less than 25 pages! The key is having a plan in the first place. Don’t let your business operate like rudderless boat drifting aimlessly on windy seas, chasing any dollar that presents itself. In our companies, we are driven by our purpose, mission, vision, and management plans, not the dollar. While making a profit is very important, it should not be your mission or purpose.
Seek input: Once you have developed a draft plan, ask employees for input. Ideally, you want an open work environment where they feel safe and comfortable giving their candid advice, criticism, and feedback. They should feel like owners of the business and that their contributions are valuable. Publish the final plan and share it with all your employees. Review it with them once a month and “inspect what you expect.” A plan is only as good as the checks and balances that ensure it is executed. Be flexible, but stay the course unless new conditions present themselves. Many business owners spend more time planning their vacations than charting their business destinies—you don’t want to lead your business by the seat of your pants!
Develop a budget and cash flow chart based on the plan: Once your plan is complete, then create a financial roadmap for 2011. We forecast out two years, but an annual budget will suffice. Use zero-based budgeting to challenge each revenue and expense—just because you had an expense or revenue in 2010 does not mean it should reoccur in 2011. With so much uncertainty, it’s best to be conservative on revenues and liberal on expenses. Ensure that you focus on your core business, but innovate and experiment in diversified areas that are connected to your plan to increase revenue streams (and thus stability). If possible, maintain three months’ worth (preferably more) of company savings and sufficient bank credit lines to carry your business through any lean months. If you have conducted an accurate cash flow analysis, you will know in advance when the rain will come!
Structure an effective and efficient business: After analyzing your employees, situate staff and leaders in the best positions for them to succeed and to support your strategic plans. If you find that some employees are not functioning at an acceptable level, coach them, and if they do not improve, document your efforts (to avoid EEOC complaints) and help them find jobs with other organizations. The One Minute Manager by Ken Blanchard is an excellent book on handling staff issues. You want a “lean, mean machine” that produces high-quality products and services that exceed customers’ expectations. Business staff must work as a cohesive team to do fewer things really well versus lots of things fairly well.
Lock in low prices: Now is a good time to look for deals on supplies, rent, and other business needs and lock in good prices for the long haul. However, be sure you have an exit plan in case things go south—you don’t want a vendor’s failure to harm your business!
Team up with competitors and similar vendors: Identify vendors who provide services similar to yours and determine if you can cross-refer clients whom you cannot serve. For example, if your facility is booked for an event, why not scratch your competitor’s back and send them the business? The customer will be happy and the competitor may send you business in return.
Don’t run scared! Businesses filled with pessimistic employees and leaders simply do not produce at high levels. They often feel that things are going to be bad regardless, so why try? Insecurity, paranoia, and fear can kill or disable a business. Therefore, it is very important that leaders create a fun environment where they serve as cheerleaders. While employees must recognize the reality of bad situations, leaders can inspire staff to feel like they can “go where no man has gone before” (as they say on Star Trek). Great leaders bring out the best in their people by helping them see that they can accomplish great things.
Plan to fail: Be on guard, be humble, and be aware that even the best businesses can fail. No one is invincible. As the Biblical scripture says, “Pride cometh before a fall.” Be optimistic but realistic. Look for any threats or faint signals that problems are coming; then, do something about them!
2011 will not be an easy year, but there are some signs that times will improve. Businesses often cut trainings, meetings, and travel funds when times are bad. Our Columbia Conference Center is already seeing hope in increased 2011 meeting and conference bookings, which suggests that we have been through the worst of our economic bleakness.
You and your staff must maintain unwavering faith to succeed. The bottom line: It takes a lot of hard, smart work rowing in the same direction by a united team to survive and better yet, thrive!
