Profiting From Tough Times

Copyright (c) 2009 John Kenworthy

The majority of start up businesses fail within the first year! Many of these should have succeeded. They had a good product or service, an decent marketing plan and committed people. Yet they failed because the business was either unprofitable or, more frequently, ran out of cash. Most of all, they neglected to stick to their values.

Local and international research has found that there are eight key drivers that can improve the productivity, efficiency and profitability of any business. They are:

1. Creating a productive work culture based on shared values. Positive relationships between staff, teams and managers are the foundation of improving workplace productivity.

2. Shared Goals and Vision. Productive organizations know where they are going, what they will achieve and how everyone in the organization contributes to achievement and success.

3. Show positive attitude and superior alignment. The skills and knowledge of people are a company's biggest asset. To put it simply what people know and can do is the difference between success and failure. Making sure that the right resources are optimally used creates profitability. The attitude that people show each day radically impacts an organizations ability to align their resources effectively and efficiently.

4. Influencing, networking and collaboration. Productive workplaces keep abreast of new ideas and technologies and network regularly with others. Effectively influencing stakeholders is key to revenue, collaborations and overall business success.

5. Nature of leadership and management. Research shows leadership needs to be developed at every level of an organisation, not just amongst managers. The flexibility of individual leadership style is the difference between an engaged or involved workforce and a high-stress, low morale, 'jobsworth' inefficiency.

6. Outcomes and tactics. Productive workplaces have structures, systems and processes that are well-organised and adaptable. Successful organizations find the optimum balance of (urgent) tasks and (important) goals.

7. Learning and Review. The organisation that continually learns and shares is agile, flexible and successful.

8. Measuring what matters. Productive workplaces understand and measure the things that make the biggest difference to their business, whether it's customer satisfaction, employee morale or feedback from suppliers. These indicators make it easy for everyone to share goals and work towards them.

All of these drivers are the responsibility of the organisation's leadership. They are 'soft' skills. They have little or nothing to do with your actual product or service.

You have the idea. You know the product or service. You have the skills to bring your business to market. Remember that your survival will have little to do with your great new gadget, but far more to do with your own leadership.

If your new business is struggling in these difficult economic times? The first thing to do is stop blaming the economy.

A vibrant economy may make it easier to make a profit but, like most of the banks and countries suffering right now, just because you can make money in good times does not mean that they have a sound and viable business.

A good business will prosper exceedingly in good times, and survive comfortably during the difficult periods. And this is not some short tern downturn folks, there are fundamental flaws in the financial system that are taking a long time to fix.

Follow the eight keys and ask yourself some tough, searching questions. Start with the foundation of your business - your values. Yes, your own values!

What are my values? What is really important to me? Have I transferred those values to my business? Does everyone in this business (suppliers, customers too) know these values? Do we share these values (that is, do we largely agree that these are both the right values and the same as all stakeholders)?

Are you walking your talk? If you stumble here, there are fundamental flaws that need fixing.

Perhaps you are not sure that this is quite so important? Let me share a purely hypothetical example:

Imagine a financial institution, perhaps a bank. Well known, greatly respected and rich beyond measure. Let's assume for a moment that this bank has declared a set of shared values, values that it regularly talks about and promotes. These values include: "Protecting customers assets", "Open and transparent corporate governance" and, "Providing appropriate returns to all stakeholders" and "Professionalism".

Now imagine, if you can, that this bank is facing some financial difficulties because the economic situation has had some considerable adverse effects on some of its investments. It turns to the government begging for a little cash to tide over a difficult period and is offered a substantial loan to ensure its long term survival, after all it wasn't the banks fault that the economy faltered.

How did they stack up against the values? Professionalism: A short while later, the bank files for bankruptcy protection because, even with the government loan, it seemed that it had lent a wee bit too much money to people who couldn't afford to borrow to buy things that were overpriced and now had even less value. Clearly demonstrated professionalism.

Protection of customers assets: Customers on hearing about the problems decided to cash-in their bonds and investments in the bank to discover that their assets were almost worthless.

Open and transparent: On being quizzed about the investments, business practices and, importantly, what had happened to the massive Government loan, senior leaders of the bank were unable to be at all specific, or even vague about what the money had been spent on.

Returns for all stakeholders: As the bank was sold for a few dollars to another financial institution it transpires that the top management received kind and generous returns for their dedication and efforts. Quite right too that such outstanding managers should be handsomely rewarded for such excellent professional leadership... Making sure that the business complied with the laws, the staff were laid off and received their due salaries. Customers were left with a few cents for every dollar.

Now, in this purely hypothetical situation, would you consider that maybe, just maybe, if the values had been genuine and lived that this imaginary bank would still be in business? Perhaps the promised returns would have been a little lower, the investments made would be a little more cautious. Even if the senior leaders of the bank had chosen to forego their generous bonuses as a token for making a small error in judgment...

Of course, such a situation could never happen in real life, could it?

We can profit from tough times. Even if we only learn the lessons of genuinely sharing values.