Each Of The Following Causes A Cash Flow Problem Except Critical Success Factors

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Critical Success Factors

Focusing on the things that make the biggest difference in your future prosperity.

(Note, although this article was written in early 2002, it is totally relevant. Right now.)

About three weeks ago, I was surprised by this headline in the morning paper:

“Fed Says 9/11 Hurt Economy.”

Wow!

“What did I miss here?” Was it news? USA Today thought it was. I was shocked that the Fed saw fit to publish this.

And this week, another one: “NBER Confirms Recession.”

Hey Greenspan! Go out and talk to people. People all over the country are telling me that they will consider it a victory if they escape this year. If it’s not a “recession”…

But have you ever wondered what it would take to end a recession? Not a textbook answer: two consecutive quarters of growth. Ever wonder what causes those back-to-back quarters of growth in the first place?

The economy picks up when enough people get tired of rejecting the economy.

Companies need things. They need new people or new services like marketing and sales. Some need a new space or new equipment. You might say something like “We really need this or that, but we won’t spend another dime until the economy improves.”

So we suffer from a cascade effect where you wait for someone else to make the first move — and the economy spirals down — getting worse and worse — until…

Until people start saying, “I’m tired of this,” or “I can’t wait any longer,” or “Let’s go.” And as if by magic, people start spending money again and poof – the recession is over.

I’m a growth strategist — helping people find the best way to build their business and make more money. I would like to know when this recession will end, but I am not an economist and that is too difficult a question. Instead, I ask how much longer people can sit on their feet before they finally get so tired that they have to act again.

I expect people to get to that point early next year. Although the Fed just officially announced it, many companies declined in the third quarter of 2000 and have not recovered since.

Aren’t you tired of doing nothing? Don’t you want to start building your business again? Of course you are. What do you think everyone else thinks?

(Side note: This forecast is consistent with the “professionals” who say the recession will end in mid-to-late 2002. That will only happen if businesses and consumers start spending early in the year.)

So what are you going to do about it? What will you personally do to end the recession?

What will you do to start earning again? (I agree with President Bush. You don’t have to put that flag down, but the most patriotic thing you can do right now is start spending money. If enough people take that leap of faith, the global economy will take off like a rocket.)

Will you be ready?

Now is a good time to prepare for the next time people decide to start “doing business” again.

Last month, I outlined a way to refine and even rethink your business strategy. Here I will quickly review the key factors that will ensure your success.

A plan designed as a platform for growth and profit must consider each of the following key success factors:

Monetary factors: positive cash flow, growth in revenue and profit margins.

Acquiring new customers and/or distributors — your future.

Customer satisfaction — how happy are they?

Quality — how good is your product and service?

Product/service development — what’s new that will increase business with existing customers and attract new ones?

Intellectual capital — increasing what you know is profitable.

Productivity – how efficient are you? How effective?

Strategic relations — new sources of business, products and external income.

Attracting and retaining employees — your ability to expand your reach.

Sustainability — your personal ability to sustain it all.

For each factor, ask these three broad questions.

1. What can you learn from last year’s experience in this factor?

What did you do well? What worked? Always start with this question. Why? Because it is positive. Because! It’s shocking how naturally people gravitate toward the negative. Even when I ask — literally — what you did right, more than half the time people respond with something they did wrong.

How can you do more of the “right” things? How can you make them even better? How can you apply what you’ve learned in this area to someone else?

Only when you exhaust this series of questions, ask what did you do wrong? Not to beat yourself up – to make sure you don’t do it again and figure out ways to fix or improve the process.

Then ask what is missing. What can you add that will improve your efficiency.

(Efficiency can be expressed as the ratio of OUTPUT to INPUT. Efficiency, on the other hand, is how many INPUT actions you take per unit of time. For example, you can increase the number of calls you make per hour — that’s increased efficiency. You can increase sales volume for the same number of calls — that’s increased efficiency.)

Random examples of things that might be missing include consistency in marketing, new products or services, multiple salespeople, a source of new leads, an employee (or self) development plan.

2. What are your goals related to this factor?

Setting new goals can change your business in itself. Your goals should be bold and dynamic — big enough to inspire you and everyone around you. Goals work best when they are objective and measurable. And you have to believe that they are achievable – no matter how difficult or impossible they seem.

Some examples of bold goals: dominate your niche market; double last year’s sales; top of the list in terms of mind-share; 100 percent repeat customer purchases; three new products developed and delivered by the middle of the year; customer problems are solved in half the current time, a career for every employee, enough money to cover all business emergencies.

3. How will you achieve these goals?

A successful plan to achieve your goals has several components:

Who will be responsible for each goal? Not you? then which executive? Which managers? Which department?

Some factors map directly to a specific department, such as revenue owned by sales and marketing. But factors like intellectual capital or customer satisfaction – don’t fall neatly into one department.

Nevertheless, one must still ‘own’ the factor. Guess who. If no one person is responsible – guess what – it won’t happen.

Whoever accepts responsibility for a particular goal should answer the remaining questions.

Which strategies and tactics have a good chance of achieving the goal?

If you’ve set bold goals, you probably don’t know how to achieve them yet. This is what primarily makes them brave. For now, you’ll have to invent some answers and live with the uncertainty.

And while there are no guarantees of success, any goal should have an identifiable path with a reasonable probability of getting you there. That path will define one or more initiatives and milestones that you can put on your timeline.

What structural and procedural changes will you make in relation to this factor?

Some examples are adding two salespeople or a new assistant. You might establish new reporting lines, eliminate paper correspondence, win over a competitor, or have a new monthly business quota. Each structural and procedural change will give birth to its own initiatives, which you will also determine in time.

Does this initiative need new people? Do you need new job descriptions or add managers? If you have to add people, put all the financial issues back into your budget.

Taken together, all factors, objectives, responsible parties, initiatives, structural changes, deadlines, measures and milestones make up the strategic plan for the year.

Can you live without addressing each of these factors?

Of course you can, but can you progress?

Yes — you can do it too. But it will be harder.

Let’s face it: some companies sell the same product year after year without any change. Check out WD-40. They completely own the DIY lubricant niche — all they have to do is take orders and keep the shelves stocked. But their growth rate was a negative 4.6% last year. They are obviously overlooking one or more critical factors.

So yes – you have to consider every key success factor – even if you don’t do anything about it, you have to think about it.

Increase sales but ignore service – what will happen to customer satisfaction? It will likely drop, affecting repeat sales, your reputation in the market and ultimately new sales.

Improve product quality but neglect employee retention? What will happen to the quality next year? It will probably fall. And then what will happen to sales?

As you can see, improving each factor synergistically contributes to the survival and prosperity of your company.

Can you do everything at once?

Most businesses don’t have the resources to do that, so something has to give — right…

Or you can make another discovery.

This time, make a planning breakthrough — one that commits you to a certain level of progress for each of the critical factors.

This planning task is not as big as you might think from reading the above. Regardless, you may still think you can’t afford the time…

Look – any hobbyist can grow a business when the economy is booming, but it takes purpose, inspiration and attention to detail to increase profits while the rest of the world is in recession. Having a strategic plan — a plan that takes into account all the key success factors — is a surefire way to turn the odds in your favor.

(To learn more about these critical factors, get a copy of my book, Faster than the Speed ​​of Change – on our business training website – makes a great holiday gift for entrepreneurs too.)

–PL

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