Do you need to reinvent your business? Do you need to reinvent yourself as a leader? Well, being the start of a brand new year, it’s the perfect time for a deeper look into your business, your team and yourself.
Let’s Start with Your Business
With all the advances in technology, emerging economies, artificial intelligence, economic uncertainty, and geo-political events (just to name a few), every business on the planet should be looking at what they need to do to survive, let alone thrive going forward.
Business as usual (BAU) is not going to cut it anymore.
Just look at some of the businesses that are no longer here because they continued on with BAU when the world around was changing… Rite Aid, Bed Bath & Beyond, Party City, Radio Shack, Blockbuster, Kodak, Sears, Pier 1 Imports. All gone because they woke up too late or not at all to changes in their environment.
And in 2023, new bankruptcies were up 30% compared with the 12-month period from September 2022 to September 2023.
How to Adapt as a Leader
Where should a leader then start to look to make sure they are positioned for the uncertainty that we have in front of us? Here are some of the places I advise my clients to explore when we go into Strategic Planning:
- The Pareto Principle (or the 80/20 rule). I guarantee if you look at the numbers, you will discover that 80% of your Revenue comes from 20% of your clients. Also, 80% of your Gross Margin probably comes from 20% of your clients. And 80% of your profit comes from 20% of your clients. When you look at these three lists side-by-side, you will most likely see a story emerge.
The story will show if your top clients by revenue are also your top clients by profit. If they are not, then why? Was it a strategic decision? Are you hanging on to ‘this is the way we have always done it’?
If the list of clients holds true (top revenue producers equal top GM and profit contributors), who are those clients and how do you find more that look like them versus selling to just anyone?
- The Bottom 20%. Explore the bottom 20% of your customer base. Chances are you are losing money on them or barely breaking even. Chances are as well that the bottom 20% chew up a ton of support from your team. Stop wasting valuable time and resources on the bottom dwellers. Raise their prices or fire them.
- Your Product or Service Portfolio. I always look at a product or service offering and categorize into four areas:
- New ideas that need to be researched, developed and beta tested. BAU in a rapidly changing world is why Kodak is no longer here.
- Introducing a new product requires a lot of effort, resources and time and the profit may not be there (yet). However, if you’re not staying ahead of your competition, you will do even harder things like selling off prize assets or laying off great people to keep the doors open.
- Rock Star. Your ‘Cash Cow’. An old marketing adage is to ‘Shoot when the ducks are flying.’ Never discount a good thing. Your Rock Star products or services are what allows you to develop and launch the next wave of products or services that will keep you ahead of the competition. Apple never puts their top products on sale.
- When a product or service has run its course, stop wasting time, money and resources on it. Don’t get all emotional about it. Give a decent burial and move on. Again, with Apple as an example, they are brilliant at moving on (remember the iPod?).
- Leadership requires a balanced look at every part of your business. When times are good, as they have been in the past, we tend to overlook expenses (both fixed and variable) that have grown unchecked (because times were good). We should always be examining expenses and looking for better (not cheaper) ways of doing things.
- Even in times of uncertainty, leaders need to be investing in their people (the only asset that appreciates). Training and development is critical to ensure your people are better than your competition. Equally important is investment in building a great culture as engaged people are more productive, deliver higher levels of service to clients and they stay (which reduces costs in recruiting, hiring, onboarding, training, etc.).
- Plan, Execute, Govern. Build a plan that is going to set you apart from your competitors. One that is aligned with not only the DNA of the company put one that is true to why customers buy from you in the first place. Most companies plan but most companies fail to execute. That is on leadership. Execution requires constant communication. Execution requires constant governance (fancy word for managing the plan like a project).
Need more ideas? Reach out to me and we can talk about how to keep your business out of the dubious company of those that are no longer with us.
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Tags:
Business Development,
Business Growth,
Business Leadership,
Change,
Change Initiatives,
Change Mindset,
Growing a Business,
Leadership