This week let’s get back to looking at the strategic objectives within each business function as you move your business along the growth model. So, far we’ve looked at marketing and sales. Now let’s see how to build a great operation.
No matter what business you’re in, there are some key factors that you must address from an operational focus 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 foundation stage is because they support growth. If you don’t build a great operation at this stage, then it consumes you latter as you try to support what you do later as sale grows and generates more work in the future.
If you’re not sure of the major objectives in the foundation 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!
Understanding Breakeven
This first objective is focused on the primary goal of the foundation 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 foundation stage is to build a detailed plan of what needs to happen to consistently breakeven every month. Here is why! If you do build a system for breakeven 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 Helps Build a Great Operation
Any time I ask a new client about outsourcing to build capacity they grimace in agony. More small business owners fail at outsourcing than should because they don’t give vendors quality specifications! By leaving too much to chance you set yourself for surprises and ultimately more work for your business.
If you have a product that you manufacture quality assurance comes in the form of a specification. You se it as a plan to build a product. Then you use it to measure the quality of the delivered product.
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.
Build a Great Operation with Customer Service
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 months if not years to recover from a bad decision here.
Market Feedback Gives You Input to Build a Great Operation
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 Foundation 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 getting to self-sustainability 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. Don’t develop bad habits now in your employees that become difficult to break once established.
Take the road less travelled by growing your business using a defined process. Too many businesses fail because they don;t take the time to learn this simple formula. If you are just getting started or struggling in the foundation 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!
[…] is one of the reasons that the 4 areas of operation focus during the existence stage I discussed in the last post are so important. If you don’t already have a standard method that […]