Three necessities for taking your business to the next level
Quarter 1 of calendar year 2015 has started and many businesses are hoping to accomplish everything they planned for during the next calendar year.
This often includes increases in revenue and improvements in their bottom line. Budgets have been put together with projected year-over-year revenue growth, and cost-cutting measures have been put in place to strengthen profitability.
These activities are typical business goals, but business owners and managers should also put together a detailed and comprehensive plan to take their business to the next level.
The next level can mean different things to different businesses, but almost all businesses wanting to reach that next level need to: significantly increase and enhance their position in the market; build the best team possible; and drive innovation by stimulating creativity.
Similar to the top 25 teams in college football during the NCAA season, the business world is constantly changing, with some businesses building a legacy by continuing to win and move up while others fall behind by racking up losses and becoming less relevant.
The Apple iPhone is a great example of a product that has allowed Apple to initially capture and hold onto a significant portion of the U.S. smartphone market share since the first one was sold in June 2007. Apple was able to build a better product with more innovative features than its competitors, which allowed it to quickly increase its position in the market.
Attaining more market share begins with creating a product and/or service that will provide customers with a better solution to their problems than competing companies are offering at a fair market price. Business owners and managers must consistently outperform their competition and ensure the company never stops improving. A stagnant company that is producing a product or providing a service that is no longer relevant will not survive over the long term. A recent example is RadioShack’s inability to stay financially solvent due to declining sales resulting in withering market share.
To grab more market share, business owners and managers must focus on providing a better product or service than they have provided in the past, and ensure their solution is pertinent to the needs and tastes of current and prospective customers.
Building the best team possible includes recruiting the best talent at all levels within the organization. From the receptionist up to the CEO, every employee can impact both top-line revenue and bottom-line profitability in multiple ways, and each employee represents the organization as a whole day in and day out.
Currently, competing employers are hiring, and top talent can be lured away if high-performing individuals are not well compensated and not provided with a concrete vision of where the organization is going and how that individual fits into the long-term plan for the company.
For example, think of a college football team without a strong head coach to take the lead on putting together a strong coaching staff, recruiting the best players, and convincing both the coaching staff and players to play their best week in and week out.
To win in business means to recruit top talent, give them the resources to be successful, and ensure the fundamentals of business — exceptional customer service, strong focus on doing the right thing, and constant and never-ending smart innovation — are always followed in all circumstances, whether good or bad.
Innovation is defined by multiple sources as a “new idea, device or process … that can be viewed as the application of better solutions to meet new requirements or existing market needs.”
Business owners and managers need to drive innovation by stimulating creativity within their organization. They need to make sure the compensation and performance management systems recognize and reward those employees who engage in innovative behavior. Leaders also need to implement systems that empower their employees to present and try new ideas, challenge what has worked in the past, and make suggestions to change processes.
An innovative company becomes more effective and efficient with better products and/or services that provide its customer base with improved quality, durability and price. Innovative companies stand out and push the needle on preconceived notions — think Google and Amazon. Google is great at Internet searching and Amazon is great at Internet shopping, but both companies continue to innovate with ideas like self-driving cars for Google and perishable grocery home delivery for Amazon. These companies stretch themselves because keeping up with a changing world is no longer optional.
Companies that fail to seize market share, build a great team and innovate by stimulating creativity will fall behind competitors that have taken the initiative to plan for and do these things. Business is constantly evolving as technology advances and changes in consumer taste drive innovation and change.
Henry Ford took advantage of the automobile replacing horse-drawn carriages. Ford had the courage to envision a future unlike what had been previously experienced and also made his automobiles in such a way that created efficiencies and cost savings he could pass on to his customers.
As the world evolves so should each business, and it is up to business owners and managers to identify these changes and respond accordingly. The response should not just be at the owner and manager level but from all employees throughout the organization.
Creating a vision that sticks and convincing employees to change even when the business is currently experiencing financial success can be difficult, but it is required in order to keep up with competitors and, more importantly, realize the full potential of the business.
Kevin Patterson is an audit senior manager with the local office of accounting firm BDO USA LLP. The views expressed are those of the author and not necessarily of BDO. The comments are general and not to be considered specific tax or accounting advice and cannot be relied upon for the purposes of avoiding penalties. Readers are advised to consult their professional advisers before acting on any items discussed herein.