The Cornerstones To A Sustainable Business

Serious about your enterprise? Here are the four cornerstones upon which you build any business, yes, including yours. By cornerstones, we mean if you don’t have these in place, growth and profitability are extremely limited.

People

Fundamental Question: Are all stakeholders (employees, clients, shareholders) happy and engaged in the business; would you “rehire” them all?

Business leaders need great people both inside the company and out – investors, suppliers, customers, partners, advisors – as well as a great support network at home. All of these people are critical to the business.

So how do you know you need to make changes on the people side of the business, and in your life, as you streamline your business for growth and increased profits? Two questions:

  1. Are you happy? We’re not talking about some kind of monk-like peace.  This is a more straightforward question. Do you enjoy your work? Or are you experiencing irreconcilable issues with business partners? Is there a specific executive not getting the job done? Is there a team member who disrupts everyone else? Is there a client with too big a piece of your revenue? Is there a supplier not delivering? Is an investor or bank making your life difficult? Are you having issues with a family member or friend?
  1. Would you enthusiastically rehire everyone, knowing what you know today? This goes hand in hand with the questions above (except for family!) and includes not only employees but existing customers, suppliers, and other stakeholders in the business. It’s a painful question that requires one to face the brutal facts and make changes. It’s especially tough when the company has simply outgrown some earlier relationships.

If you fail to address these relationship issues head-on, they will continue to drain your emotional energy, leaving little left to spend on the Strategy, Execution, and Cash aspects of the business. This is why we place People first.  Once you get the right people on the right seats, you can drive your organisation forward with a higher probability of success.

Having the wrong people results in massive inertia and wasted opportunity, so get it right and keep getting it right.

Strategy

Fundamental Question: Can you state your firm’s strategy simply – and is it driving sustainable growth in revenue, gross margin, and hence net profit?

Articulating a clear and differentiated strategy, supported by a strong core culture that can deliver on the brand’s promises, is the key for any company wanting to grow geometrically.

So how do you know when you have an industry-dominating, competitor-crushing strategy? Sustainable top-line revenue growth and increasing gross margin dollars are two key financial indicators. Customers beating a path to your door, dragging along everyone they know, is another. In turn, if you don’t have a killer strategy, your company will face continuous pressures as the market commoditizes your products and services.

The other way to know if you have a strategy? Do you say “no” 20 times more than you say “yes” – no to increasing number of opportunities coming your way; no to the wrong customers for your business model; no to nineteen of the twenty people wanting to work with you (because marketing is getting you a steady stream of applicants!) etc.? We recognize that in the beginning you have to say yes to everyone and everything. But you have to say yes only until you have the luxury to say no. Those with a well-honed strategy know how to say yes and more importantly how to say no. They are clear who their organisation serves, together with the makeup of the people that are to serve them.

Deep strategy work is time-consuming, as the marketplace constantly changes. It is mandatory that the senior leadership team works on it each week, away and free from day-to-day firefighting. How much time are you allocating towards this?

Top strategists are often compared to grandmaster chess players. However, there is a misconception that these players are thinking more moves ahead of mere masters and novices. They are not. Their advantage is having 10 times the next moves in their repertoire, depending on the latest gambit of their opponent. Therefore, get help from mentors, advisors, and consultants who have developed strategies for hundreds of companies – they’ll have more next moves to assist you in developing a competitive strategy.

Execution

Fundamental Question: Are all processes running without drama and driving industry-leading profitability?

Processes, as we all tend to forget and need to be constantly reminded of, are driven by human beings. The best internal systems, best practices, and internal high standards all come back to your People and their ability to execute flawlessly as a team.

More specifically, world-class execution is predicated around three internal disciplines:

  1. Priorities:  Less is more in driving focus and alignment.
  2. Data: Qualitative and quantitative feedback provides clarity and foresight.
  3. Meeting Rhythm: Give yourself the time to make better / faster decisions.

In relation to priorities, we must emphasize the importance of having a “healthy team” that is able to face the brutal facts and support the kind of constructive debate necessary to set the main priority that everyone can support. Yet for many organizations, the focus tends to be diffusely reflected in People juggling a myriad of tasks. This is never the way and shows a lack of internal focus and discipline.

Secondly, consistently collecting data through correct feedback loops allows you and your organisation to make more precise decisions. Thus it is particularly important for the senior leadership team and middle managers to engage in weekly conversations with clients and employees in the process of steering the company in the right direction.

Finally, establishing meeting rhythm is critical across all sectors of the organization as this addresses the communication challenges that exist whenever you get a group of people together. These structured meetings also create space and time for teams to debate and make the important decisions driving the scaling up of the organisation.

Take any one of these three disciplines and bring them to bear in your organisation, especially if you are falling behind in getting things done (execution). Consistently work them, and we promise you, your organisation will become more workable.

Cashflow

Fundamental Question: Do you have consistent sources of cash, ideally generated internally, to fuel the growth of your business?

You can get by with decent People, Strategy, and Execution, but not a day without cash. Cash becomes even more critical as the business ramps up, since “growth sucks cash”. The key is innovating ways to generate sufficient profit and cash flow internally, so you don’t have to turn to banks to fuel your growth.

Progressive businesses keep three to 10 times more cash reserves than their competitors. This allows growth firms to weather the storms.

What do your cash reserves currently look like? Are you consistently dipping in and out of your overdraft, pushing the red line close to where the ‘oxygen in your oxygen tank’ runs out? If this the case (as it is for the majority of businesses) then together with examining People, Strategy, & Execution – attention must be given to your Cashflow and the levers that you can utilise on your way to providing sufficient resources to not only cover day to day operations costs but more importantly to provide the fuel to expansion.

Needless to say, Cashflow is critical!

Lean In And Focus

The four cornerstones, namely People, Strategy, Execution, and Cashflow are critical. They are like gravity.  Ignore them and you do so at your own peril expressed in lost years, profits, stress, and fractured relationships across the board.

Like anything, all great things take time. For many of us, stripping back the company in order to re-align these cornerstones will take time. However, the realignment is well worth the effort. So focus, take a deep breath, and begin to undo what no longer works on your way to building an organisation you and your people can be proud of.