The Final 'C' Words - Small Business Companion

C is for… and then on to D!

Competitive Advantage – outperforming the competition should always be a motivation. It informs your strategy and planning process, inspires innovation, and challenges, focuses, and drives the team. This drive must be baked into the cake of your culture, values, core focus,s and long-term strategy – it simply becomes how you roll, day in and day out.

Begin the process by looking in the mirror – a quick internal assessment is a good first step in flushing out issues and opportunities. Identify the low-hanging fruit, the 20% that yields 80%, and commit it to the plan. John D. Rockefeller is purported to have said that “the secret to success, is to do the common things, uncommonly well.” This resonates with me as ongoing critical foundational work – continued steady improvement in all areas, always.

I sometimes wonder if we are so easily distracted by the newest, most bright, and shiny thing, that our attention spans are so short, we are so over-stimulated, that we have lost sight of the critical importance of execution at the highest possible level.

I am an operations person at my core. As a result, I am biased toward quality management and top-level execution in delivering quality products, services, and experiences and doing so effectively and efficiently. It is my default position and will wave that flag until the end.

A strong foundation of execution can be built on – growth, scaling up, diversification, technology, innovation and change, strategic changes, and so on. But without a strong foundation firmly in place, you are building on shifting sands, and the costs can be significant.

Execution, though, is not enough on its own. A company can consistently execute at the highest level and find itself stuck in the murky middle, not growing market share, and not growing the bottom line. This type of status quo positioning does not last forever – grow or die!

Customer Experience – No matter how cool your brand is, how sophisticated your marketing, how strong your pricing strategy is, or how high quality your product offering is, failure to create memorable customer experiences will unravel all your great work. Now, customer experience is subjective and based on individual perception, and, as a result, can be a moving target. Regardless, building customer loyalty ultimately comes down to your ability to go consistently above and beyond expectations.

You have to service the heck out of your customers, create ‘raving fans’, solve problems before they happen, and when they do happen, provide meaningful solutions.  We all know that service recovery is the single greatest opportunity to win customers for life. Failure to do so generates negative word of mouth, which in the digital age, is deadly. Customers choose by Google Reviews, or, if you like, the Voice of the Customer (VOC).

How are great customer experiences created? One word, caring.

Apathy is a killer. Poor attitudes and a sick culture crush the customer service experience. It is incumbent on business owners/leaders/managers to create a customer-focused ethos and to do that, there must first be an employee-first culture (yes there are caveats to this). Unhappy employees cannot create winning customer experiences. Period, full stop.

A culture of genuine concern for customer well-being, led by empowered employees will lead you in the right direction. Yes, there a strategies, plans, and tools to implement, but it begins and ends with caring.

Is the customer always, right? Of course not. There are some customers that you will never be able to make happy, those that are rude, unreasonable,e and abusive to your team members. It is perfectly okay to ‘fire’ those customers after exhausting your efforts to please them. But this is a small percentage of your customer base. Do not let them dominate the narrative.

Customer experience, more than anything, is the foundation of sustainable success and long-term results. It must always be priority one.

When making decisions, there are always three primary considerations – Is it good for the customer? Is it good for the team? Is it good for the business?

Beyond service considerations, customer experience encompasses such elements as design, flow, ‘vibe’, and sub-conscious items including how customers feel and respond to your products and services. Today, for example, customers seek out restaurants more for the complete package, amenities, ‘cool factor’, interior design, and branding, as much or more than the quality of the food and service.

In the age of mediocre at best customer experiences, smart strategies work to create separation in the marketplace through the provision of something better than everyone else.

A holistic strategy for creating winning customer experiences is foundational to your success.

Cash Flow – Dare I state the obvious and say, “Cash Flow is Everything”? Small business owners are generally weakest and lack tools, resources, and guidance when it comes to financial management. They got into the business to follow their passion, to bring meaning and purpose to their lives, not to flex their financial acumen. Financials, as a result, counter-intuitively fall to the bottom of the priority list when of course, they need to be at the top.

Most clients have income statements to review, not always monthly, but they exist. They are often lacking in proper structure and detail to tell a meaningful story as to where attention needs to be paid. Balance sheets are almost never generated, apart from year-end and cash flow statements are non-existent.

Diligent business owners are stressed out and lay awake at night trying to juggle the inflows and outflows of cash, move money around from one place to the next, max out credit cards, overdrafts, and lines of credit, but never have a strong grasp on how to stop this vicious cycle.

To my clients, I first recommend they get a strong bookkeeper and/or an accountant. Timely, accurate, and meaningful financial reporting is critical to decision-making.

Monthly Financials should include an Income Statement (Profit & Loss),a Balance Shee,t and a Cash Flow report with forecasts. Only this provides the complete information needed to learn to manage the business and, hopefully, gain some peace of mind.

Trying to understand cash flow can be like walking through a minefield. Cash flow mainly comes from a few sources, while expenses are numerous. Outflows include accounts payable, payroll, taxes, rent or mortgage, fixed expenses, utilities, legal and accounting fees, interest payments, principal payments, capital expenditures, and more.

Depending on the nature of your business model, Accounts Receivable management is vital. It requires weekly A/R statements, follow-up, prompt payment, a solid deposit system, and firm boundaries. Fortunately, technological advancements have created far more visibility and provide improved tools for A/R management. It still requires focus and dedicated resources to collect what is owed to you.

Perhaps the most confusing items are those passthrough types of items that businesses collect on behalf of governments, hold, and then must submit. This includes GST/HST, PS,T, and so on. Business owners get themselves into a pickle by spending that money and then being short when it comes to submit. Business go under due to this sort of poor management.

Great priority needs to be placed on cash flow management by most businesses and, perhaps, less priority on using the profit and loss statement as the sole source of financial decision-making. If you cannot do it on your own, hire someone to do it for you and insist on your bookkeeper/accountant making this priority #1.

Until next time!