This week let’s get back to looking at the strategic objectives within each business function as you move your business along the growth cycle. So, far we’ve looked at marketing and sales. So the next logical step is to look at operations.
No matter what business you’re in, there are some key factors that you must address from a production perspective or business growth will eat you for lunch! There are 4 areas one or more of which are almost always missing when I begin working with a new client.
- A detailed understanding of what it takes to breakeven
- Complete your installation/delivery SOP’s (quality assurance)
- Establish a customer service policy and framework to support it
- Provide market feedback for product/service improvement
The reason these things are so important in the existence stage is because they support growth. If you don’t address them at this stage, they will consume you in the latter stages as you try to support what is already out there and new sales from growth at the same time.
If you’re not sure of the major objectives in the existence stage, take a look at the post titled, “Is Your Startup Focused on the Right Objectives?”. Remember you don’t have to be a startup to find yourself at this stage of the growth cycle!
This first objective is focused on the primary goal of the existence stage – breakeven. Many small business owners don’t even know this number, much less have a plan to get there!
My assignment for all clients at the existence stage is to build a detailed plan of what needs to happen to consistently breakeven every month. Here is why! If you do this you can delegate this responsibility to someone in the company and not have to worry about it day-to-day any more. This frees you up to focus on more critical aspects of the business, like beginning to focus on profitability and how to get there consistently.
Consistently Assuring Quality
Any time I ask a new client about outsourcing to build capacity they grimace in agony. More small business owners fail than should. The reason is they don’t show their vendors what a delivered product or service should look! They leave too much to chance and then are surprised by the result they get.
If you have a product that you manufacture quality assurance comes in the form of a specification. It’s a plan the product is built to and that the delivered product is measured against.
For a service this is an operating procedure as to how a service technician or rep would deliver what you sell. Now you can evaluate what was delivered as can the customer. If it matches with what your marketing materials and contract state, you can cover yourself from unexpected complaints.
Why do you need customer services at this stage of the game? Because if you are not thinking this way from the beginning, you will create problems before you even start.
A customer service policy is actually a critical part of defining the “persona of your business!” It tell potential customers exactly how you will treat them. If you say you provide superior service in your literature, you’d better deliver on that promise or you will have an even a bigger problem – a bad reputation in the market!!!
Internally it tells your employees what is expected of them and sets the tone for their performance evaluations. This is what allows you to hire better employees by showing the expectation upfront and giving you a set of criteria from which to evaluate new hires. There is nothing worse than get bad hires from the start. It can take years to recover from a bad decision here.
You made some assumptions when you got started. As you begin to close business listen to the feedback during delivery. This is good feedback on how you can provide more of what the market wants.
In the past post title “Listening – The Best Marketing Skill in the Existence Stage” I talked about the importance of listening to the market. This is a good way to get that feedback without spending more money to get it. Your installers or service reps are engaging with the customer.
Don’t be afraid to ask them what they think! If you are, then you’ll miss out on an opportunity to grow faster. Good feedback at this point will allow you to adjust as you move into the survival stage. The more ready you are at this point the faster you can move through this stage. This is often the difference between get to success stage in 3 years instead of 5. So, how fast do you want to be there?
Putting It All Together
Now, a lot of people will say, “Dino, this is way too soon for this stuff.” But, I disagree. If you wait until later you will not have time to think about this stuff or will have to stop forward progress to deal with it. Also, you will develop habits within the employees that are much more difficult to break once they are established.
Growing a business is a defined process, but it’s not the path frequently taken. That’s why so many businesses fail. If you are just getting started or struggling in the existence stage, I would recommend that you read our eBook title The Startup Guide to Business Success. In it you will discover some of the less know things that can be the difference between success and failure in a business. Don’t leave your business to chance. Learn what you need to have the success you seek!