By Bonni Tsuro, Lecturer, Financial Administrator and Accountant

In a tough business market there are always likely to be winners and losers.

Running a successful and profitable business involves having clear strategies. Successful operators have common approaches and behaviours to the way they operate.

Below are 5 simple steps that I have learnt during my short, but adventure filled, career so far. I have had the pleasure of working in industry and education at the same time. The timing could have not been better and I have always boasted to my friends that I’m one of the few individuals who have had the pleasure of having a cake and eating it at the same time (or something along those lines)!

  1. Vision and Mission

When you are in a business, your mission and vision are infinitely more important than the words you say. These two are as important to your survival as air and food. As a business, your vision paints the target and your mission gets you towards that target if not to the target. For businesses to be successful they need to summarise their goals and objectives in mission and vision statements.

The Mission Statement concentrates on the present; it defines the customer(s), critical processes and it informs you about the desired level of performance.

The Vision Statement focuses on the future; it is a source of inspiration and motivation. Often it describes not just the future of the organization but the future of the industry or society in which the organization hopes to effect change.

Once in place this needs to be shared to everyone so that those that share the same vision are drawn in and become aligned to what the organisation intends to achieve. A shared vision involves everyone working together to make improvements. Without buy-in from your employees, customers and other stakeholders it cannot succeed.

Mission statements can be shared in a number of ways including having them printed and placed in key areas of the business. E.g. reception areas, websites, presentations, leaflets and communicated to staff in appraisals. This ensures that the business is constantly reminding its key stakeholders of its intentions as well as avoiding deviations from those long term goals and objectives.

  1. A living and relevant business plan

Successful businesses have a clear and living business plan both for the short-term (often 12 months) and longer-term (three to five years). The key word here is living. Most business plans are fabulously prepared but once approved they find themselves gathering dust and archived in unused files and folders. A live business plan is a formalised plan which is regularly reviewed by owners and management, questioned and amended in the context of changing market conditions and trends. During my current employment I have had the privilege and pleasure of undertaking such an exercise. Drafting a business plan will cause you to think big as well as concentrating on the very minutest details as such small things can make a very big impact if no attention is paid to them during this process.

There should be no ‘sacred cows’ but rigorous questioning of the business model as to whether it is still relevant, with changes being made based upon a realistic and objective strengths, weaknesses, opportunities and threats (SWOT) analysis.

When drafting a business plan, the key questions to consider include:

  • What are my unique selling points (USPs)?
  • Who are my key competitors?
  • What does the business look like now?
  • How is it likely to change?
  • Is my management and staffing structure appropriate to my current and future needs?
  • Should my operation be solely one line of business or can I provide other services?
  • What services can my business provide from its existing property?
  • Based on my existing operation would it be feasible to develop other operations?
  • Does the business need to make property changes or invest in new equipment?
  • Should I be considering an acquisition, merger or sale?
  • What funding options are available?
  1. Strong financial control

Successful businesses monitor financial key performance indicators (KPIs) on a regular basis to enable timely action to be taken to identify and rectify problems or to maximise returns where improved results are highlighted.

KPIs will often include fee rates (pricing), debt ageing and collection, income and costs compared with revenue and cost forecasts, as well as margins by separate business streams.

Good business practice that is carried out formally and consistently by successful business would include preparing and monitoring:

  • A rolling 12-week cash flow forecast.
  • An annual forecast consisting of monthly linked profit and loss account, cash flow and balance sheet forecasts, together with a written summary of the key assumptions upon which they are based.
  • Monthly management accounts comparing actual monthly and cumulative results with the forecast, explaining material variances.
  • Action plans to address material adverse variances or to maximise the benefits that can be achieved from, say, positive sales or margin variances. Names and timescales should be allocated to each action and monitored to ensure achievement.

Successful managers need to constantly look at these KPIs and find ways that will ensure that all KPI targets are met.

  1. The Dashboard – a view from the top

This was a unique idea that my manager came up with after a coaching session. At first I have to admit it sounded weird and I could not see how it was going to help the business. Eventually, after careful thought, I suddenly realised that when you are on the ground you can only see so much. A bird’s eye view on the other hand is a very different view altogether and the Dashboard provides that for most managers.

Using the Dashboard, a manager is able to view all the essential business targets and performances without actually going into great detail.

Just to give you a visual, imagine a car dashboard. Whilst it looks basic at first sight it is an essential tool which helps you identify what speed you are travelling, how much fuel you have got (in some instances how far you have got to travel before you need to refuel), the engine temperature, tyre pressures etc. One does not need to go into the fuel tank and check their engine everyday but provided everything is ok the car would run smoothly. As soon as something requires attention the dashboard will flash the area to focus on and fix.

This is the same with the business dashboard.

Successful managers will use this tool to drive the business forward and ensure that the fundamental aspect s of the business are being monitored and controlled without actually going into all the greater details. It is worth noting that you will still need a experts to monitor the various aspects of the business for the Dashboard to work well just as you would need a mechanic to fix the car to ensure it runs smoothly.

  1. Develop and retain staff

Wage costs can often constitute around 50% to 60% of business revenue. Rising payroll costs have had a significant impact in recent years with increases in the National Minimum Wage, pension auto-enrolment, additional staff training and increasing use of agency staff on organisations like the NHS having caused a dramatic rise in overall expenditure.

High staff turnover is not only expensive, due to related agency and training costs, but also disruptive and therefore, detrimental to the operation of the business.

Successful businesses need to have a practical and targeted staff development programme. Although this may cost more in the short-term both financially and time it will most likely deliver substantial long-term financial benefits coupled with an increasingly motivated, efficient and technically astute workforce. As a business the key principle is to keep your employees sweet. Your employees need to feel relaxed and important. To do these employers can adopt the following.

  • Conduct “stay” interviews. In addition to performing exit interviews to learn why employees are leaving, consider asking longer-tenured employees why they stay. Ask questions such as:
    • Why did you come to work here?
    • Why have you stayed?
    • What would make you leave?
    • And what are your nonnegotiable issues?
    • What about your managers? What would you change or improve?

Then use that information to strengthen your employee-retention strategies.

  • Support employee development. This could be training to learn a new job skill or tuition reimbursement to help further your employee’s education.
  • Communicate your business’ mission. As mentioned earlier, feeling connected to the organisation’s goals is one way to keep employees mentally and emotionally tied to your company. Make sure employees know what’s expected of them and how they can grow within your company
  • Provide some small perks – reward for simple but important tasks. A small gesture of appreciation goes a long way and could be the difference between a motivated stayer and a dissatisfied leaver.

Coach rather than manage – managers tell someone what to do in solving a problem, coaches facilitate and support in helping an individual to solve a problem. When employees take the lead with the guidance and support of their manager, they feel more motivated, empowered and confident in executing their roles. This can lead to long term job satisfaction.

In conclusion, successful business’ need to achieve a balance of all the issues outlined. A perfect vision and mission, happy and empowered employees who are monitored by a proactive manager who is constantly assessing the business through the view from the top, coupled with strong financial controls will ensure the long term stability to the business. This will in turn make the business more successful in what has become a very competitive ocean where even giants are finding it hard to stay afloat.