Today’s question comes from Vijay who is the promoter of a Kolkata based company which he plans to take public over the next 3 years. His question dealt with improving business communication to reach more people. In today’s post I will talk about steps which every modern business should take to keep pace with changing times. Ask a business consultant and he will tell you that these steps are in fact so essential that if a business was any serious about reaching the next stage of its growth, it should have long implemented these.
6 Essential Steps to Improve Business Performance
(1) INNOVATE – Think debate and keep your eyes and ears open. If you cannot think of a way to add more value to your existing business; hire someone who can.
The speed of technological advancement gives nobody the opportunity to relax. Last month I met a young entrepreneur who has connected just about all grocery stores, vegetable and fruit vendors and major mini markets in 5 different localities of Delhi. The plan – connect all these vendors to a common network powered by a front end panel fitted in nearby houses. The object – You don’t need to go out to get your daily needs. Punch a few buttons on the panel fitted next to your fridge and things will be delivered to you. No minimum orders and everything gets delivered by your most trusted fruit and vegetable vendor. What will he charge – 2% of the value of each transaction for ‘connecting people’. These days nothing seems impossible or infallible.
(2) MARKET THE RIGHT WAY – This is the one area where businesses waste maximum amount of their money and resources. This is also where they should spend the maximum amount of their money and resources. If you are responsible for bringing new business then you just cannot undermine the importance of marketing. These days elections are won and lost on that basis.
Unless people know what you do, it’s pointless to keep doing it. Even if you invent something of utmost utility, if you fail to take it to the market in quick time, somebody else will. Don’t sit on your ideas/ products. Develop them and then market them. Finding the right person/ team to do this will be your biggest challenge, may be even more daunting than creating or improving your core business. These days there is a huge industry of media, marketing and PR professionals across print, digital and television. In my humble opinion, 95% of them are clueless about marketing. What’s even more worrying is that some of them are oblivious to this fact themselves. For a monthly contract of anywhere between 50K to 200K these professionals can show your advertisements on the web, book you slots to appear on TV shows and will even write articles in your name for national newspapers. Avoid doing this.
People’s perceptions have undergone a sea change over the last 3-4 years. Nobody fools anybody by cheap marketing gimmicks. You are the best brand ambassador for your business. If somebody manages to convince you that they will sell your business better than you then surely it’s time to change your line of work. Try to spend time with your customers and improve communication.
(3) IMPROVE COMMUNICATION – Never underestimate the importance of being connected with your clients and customers. I will tell you my own example here. Between the years 2011-12, just when I started out on my own, I was so busy with research and with creating something of value that I could not pay any much attention to connecting with my audience. This was a big mistake. With time I learnt the most important lesson of business – people like to work with those who are accessible. More willing than finding the best money manager, consultant or advisor they hope to find someone they like working with.
Be available to spend time with your audience. If you can’t do it yourself, get a team to do it. With all the internet bandwidth and social media, it is the simplest thing to do these days. Everyone is addicted to being wired. It takes about 2 minutes to set up a facebook and a twitter account. With a good mobile device, you can always stay connected to those who bring business to you.
(4) GET ONLINE – Restaurants, clubs, gyms and all other ventures which require the physical presence of a person will survive. All else will finish over the next decade, UNLESS it moves online. No business should pay real estate cost if it can be avoided. Rightly then, Croma has become Flipkart’s display office. People test drive a product at a Croma store and order it online at 10-15% cheaper. This is likely to continue and extend to all of retail. Of course you may find it difficult to sell your product online, especially if your plan is to sell books or stationary. There may be bigger retailers selling similar products at better margins. If you are in that situation, try moving to another business before it is too late OR INNOVATE.
I hear a lot of business owners saying something like – ‘we sell food to the Indian railways’ that’s all, why should we have a website when we have only 1 client, we don’t need to sell online. The truth is that you need it more than anyone else – With only 1 or 2 clients you should be far more concerned about being visible and spreading word about your business. Sooner than later a company which markets its product better than you will get the attention of your only client. These days it’s all about visibility. Remember – you do not market products just to get more clients, you do that equally to retain your current ones, you do that to generate investor interest and you do that to move higher in the pecking order.
(5) CUT COSTS – The age old metric for increasing profitability – Cutting costs. When the CEO says profitability margin is up 5% it could mean 2 things – either sales have increased or that he found a way to cut unwanted expenses. It is the latter of the two that you should focus more upon especially in the first few years of your operations. Younger businesses are particularly prone to subscribing to unnecessary ideas and buying unwanted products. Every 6 months draw a pie chart to check where your money is going. Believe me; the results will be surprising and somewhat hurtful. Unless you do this exercise you will not figure out your expenses.
(6) CONSULT – As you grow and as your business matures, you should start talking to professional advisers. A good lawyer and accountant are an absolute must once you are able to afford them. The sooner you get them on-board the better it is. I met a guy who in the second year of his business realized that a few months back somebody registered his firm’s trademark and trade name. This is something his lawyer could have registered literally for free. Only if he had a lawyer! In addition, it is always a good idea to talk to people in general. Show your product / idea to a select group of people and get their opinion on it. These days a lot of young businesses reach out to private equity investors not only to get funded but often just to get their feedback on business potential.
While initially, these things look needless unfortunately by the time you realise their importance it’s often already late. Any and every contract you sign should be reviewed by a lawyer, no exceptions here. Keep a copy of every bill and every expense you make. Yes, expenses made on credit cards are all tax deductible for business. As a good practice – take a print out of every credit card bill (you will have only 12 in a year!) and circle up business expense items at the end of each month.
You can always reach me over email at – [email protected] or just give me a call at – +91 11 41517078.