A Great Economy May Be Hazardous To Your Health
A great economy is a blessing and a curse to every business. We love it when everything is going well and revenue and profit are growing. The danger is you start thinking you have something to do with your success, when in reality, you’re succeeding in spite of yourself.
In this article, I’ll show you six key areas you should be focusing on during great economic times. So when the going gets tough, you and your business are in great shape and can keep the momentum going.
If you’ve ever been mountain biking you know that the flats and mild downhills make you feel like a rock star. You can handle turns really well, you can keep up with pretty much anyone.
But, then comes a steep incline, with lots of roots and rocks, and all of a sudden you are out of breath, sweaty and have to hop off the bike. That’s when you realize you are out of shape and not as good as you think you are.
You Need To Train For The Extremes
If you want to continue feeling like a rock star you need to train. You need to get yourself in shape so you can tackle the steep inclines or the steep declines. Those extremes are when you need to be at our absolute best. That’s when your true fitness and skill comes out.
While running Azzur Group, I noticed that revenue and profit growth covered all sins. It was when things got a little tough at the true business came out and it wasn’t always pretty. In fact, it almost never is.
In order to create a sustainable and scalable business you need to always be learning and in training. You need to always be raising the bar and getting better as an organization.
1. Create a Vision, Shared By All
While times are good, it doesn’t really matter what your vision is. You just roll with it because no matter what you do it seems to work out. The company grows in all sorts of directions when opportunity abounds.
Azzur Group is a professional services business that serves the pharmaceutical, biotechnology, and medical device industries. However, we decided to create an iOS training company, invest in and scale a marketing company, create a back office services company, and probably a few more that I can’t remember.
We made these investments at a time when the company was growing at an exponential rate. No matter what we did the top line seemed to grow. But it only grew in our core business. The tangential businesses barely added revenue and were operating at a loss.
The profits of the core business during the good times were so good that it covered over the sin of losing focus and not sharing in a common vision for the organization.
Indeed, a great company is much more likely to die of indigestion from too much opportunity than starvation from too little. The challenge becomes not opportunity creation, but opportunity selection. ~ Jim Collins
The key is that when things are really clicking, when you are coasting down hill and the breeze is going through your hair, you remain focused or you might hit a bump and end up falling off a cliff.
We recommend a 2-page strategic plan to clarify and simplify your vision. We call the document the Vision/Traction Organizer™. Once your answer the 8-questions, you need to make sure you review it with your team on a quarterly basis to ensure you are 100% on the same page and rowing in the same direction.
2. Get All The Right People On The Bus
When things are going really well, everyone seems to be performing. If they aren’t it doesn’t really matter. They don’t need to be a great culture fit, and they don’t need to be world-class at what they do. They just need to be good enough.
Just like you on your mountain bike. Pretty much anyone can coast on flat ground or a nice gradual decline. You just need to have some balance to stay on upright and on the seat and you’re good.
However, unless you have the right attitude and the right skill and fitness you’ll never make it. ALL your people must fit your Core Values and GWC™ their role. When things get tough, they must fit your culture and the must be able to truly perform in their roles. There can be no exceptions from the highest levels to the lowest levels.
3. Measure Data As A Future View of Your P&L
When things are easy you can get by with just looking at your P&L quarterly or even annually. You are more worried about cash management during growth than establishing the right behaviors that will drive your future.
When things are really working, you don’t need to visit clients or customers on a regular basis, you don’t need to market heavily, you don’t need to operate efficiently and with intentionality.
When the tide changes, however, you can no longer rely on your P&L to drive the business forward. If you do, it will be too late. If you want to be ready for the next steep hill or valley, you need to create the discipline of an activity based scorecard.
By creating activity based scorecards and holding everyone accountable at all times, you will always have a future view of your P&L. You want be caught off-guard when the wind is no longer at your back.
4. You Can No Longer Ignore Issues, You Have To Solve Them
When things are going really well in your business you can get away with ignoring issues. Why solve them and waste all that energy when the money is flowing? You figure it will just solve itself, why bother.
When you are coasting along and not putting too much stress on your bike everything seems to be fine. But when you start putting all that stress on during steep climbs or aggressive descents, any mechanical issues will stop you dead in your tracks.
Solving your issues require you to enter the danger and fight for the greater good. We use the Issues Solving Track™ to teach you the disciplines necessary to solve issues as the arise. Get rid of the skeletons in your closet now, don’t wait until it’s too late.
5. When Things Are Working, Document The Process
Most entrepreneurs don’t value process until they are frustrated. When things are easy how you get the job done doesn’t matter. The only thing that matters is that it gets done, the customer is marginally happy, and you get paid. The attitude is, if it isn’t broke, why fix it and why write it down? It’s too much work.
It’s easy to let everyone run around and do it all their own way when it’s working, although inefficient. However, when it starts to get a little tough and it gets chaotic the inefficiencies will kill your gross margin.
Now is the time to document your Core Processes when things are working. You need to get everyone operating consistently and focused. When you document your Core Processes, you’ll be creating your unique business model that will allow you to scale and get you through the challenges that you’ll inevitably face.
Documenting your processes doesn’t have to be hard. You just need the twenty percent that produces eighty percent of the results.
6. Create a Cadence and a Pulse To Gain Traction
One of the most important things in mountain biking is keeping the same pedal cadence no matter what the terrain. Keeping a cadence, or a pulse, allows you to conserve energy and continuously make progress.
If you don’t retain the cadence, you could be gassed before you finish your climb or going too fast on a steep decline.
When things are going well, you could have the temptation to skip meeting with your team, skip quarterly planning sessions. Why meet? Everything is going so well!
Now is the time to create a cadence and pulse in your business of weekly meetings with a specific agenda that is designed to make sure your numbers are on track, the business priorities are on track, all the people are happy and you are solving your issues.
That cadence needs to include a quarterly and annual pulsing where you are checking in on your vision, everyone has ninety day goals, or rocks that are driving your vision forward and keeping everyone focused.
If you run a seasonal business where things are really clicking during the summer, or you are in a fast growing market, or just a good economy make sure you are getting in shape for when things get harder. During the good times, it’s easy to stay working “in” the business vs “on” the business because “in” isn’t that hard.
Make sure you work “on” the business at all times focusing on the Six Key Components™ of your business:
I help entrepreneurial companies achieve 80%+ in each of these key areas. You can find out where you stand by taking the Organizational Checkup™.
If you’d like to know more about The Entrepreneurial Operating System and Traction: Get a Grip on Your Business you can download the first chapter of the book below.
If you are already implementing the tools of EOS in your business and would like help getting to 80%+ please schedule a call with us at www.o4g.com.
- Accountability Chart (5)
- Business Strategy (1)
- Clarity Breaks (1)
- Core Process (3)
- Core Values (2)
- Delegate and Elevate (2)
- EOS Client Profile (1)
- EOS Implementer (3)
- EOS Rollout (1)
- Focus Day (1)
- Grow or Die (5)
- Hiring an Assistant (3)
- Hitting The Ceiling (1)
- Kolbe (1)
- Leadership (6)
- M&A Fit (1)
- Optimize For Growth (10)
- Quarterly Conversations (1)
- Quarterly Session (1)
- Rocks (1)
- Sales (2)
- Scorecard (2)
- Team Health (8)
- The Entrepreneurial Operating System (7)
- Time Management (3)
- Uncategorized (56)
- Vision Building Day 2 (1)
- Vision/Traction Organizer (2)