Advisory Insights – Make Your Business Better in 2016

A new year has begun and it is time to implement new plans to make our businesses bigger and more profitable. But what about making our business better? Most businesses could improve their profitability by 2% to 5% by just getting better at what they already do.

Listed below are six actions you can take this year to make your business better. The scope of these actions is intentionally measured. Instead of getting bogged down in long lists of all the things that need to be fixed in a particular area, choose two or three things to attack and then move on to other areas. While it is always better to find and address the most impactful changes, all improvements are wins for your team and help develop a culture of continuous improvement that can build upon itself year after year.

Six Actions to Make Your Business Better in 2016

  1. Identify and address two old habits that are holding your company back from a breakthrough in efficiency. Despite spending hundreds of thousands and sometimes millions of dollars on hardware and software systems to improve efficiency and productivity, many companies continue to cling to old habits and processes. Many times this is due to perceived “uniqueness” of company operations often described as “our business does not work that way” or “we must be able to be more flexible”. Another reason old processes linger is because the process owner refuses to change or is worried that his or her job might be eliminated if the process does change. As the owner or leader, you should set the expectation that letting go of these habits is a high priority, and doing so will free up your talented people to perform higher- value tasks.
  1. Evaluate and discontinue prior initiatives that are not working. As business owners and leaders, we often launch new divisions, products, and services to address evolving market needs. Unfortunately, not all of our bets pay off, but often we let them linger too long, using valuable cash and human capital. In early 2016, take a hard look around your business for products and service lines that are not working and then either make the tough decision to cut your losses or set defined milestones and timelines for improvement and stick to them. Growth and expansion capital is one of your most valuable assets and if it needs to be redeployed to another opportunity, it is up to you as the leader to make that decision.
  1. Address morale issues in 2016. No business can thrive without a strong team pulling in the same direction. Poor morale will result in sabotage of new initiatives, high turnover of your most valuable people, and a general poor spirit throughout the organization. First, consider using a third party professional meeting facilitator experienced in shaping and changing company culture. Second, be willing to accept some hard truths about your own leadership style and be ready to change some things. Finally, listen to ideas from your younger workers. Organizational cultures are changing rapidly as millennials become an increasingly larger percentage of the workforce. Leaders who ignore the priorities and goals of young workers do so at their own peril.
  1. Deal with the “C” players on your team. In addition to addressing morale, also address those members of your team who are not a good fit for your organization. In many cases, the staff holding your company back are good people with good skills, but they are not on board with the direction and/or the pace of change needed to help make your company successful. We often continue to hang on, hoping they will eventually change their attitude, pick up the pace, or adopt the company’s new ways of doing business. If you have discussed these issues with your “C” players and have given them ample time and help to make the appropriate changes, and yet they continue to lag their peers, then it is time to help them find a new place to use their skills. Making decisions to separate someone from the company is one of the toughest decisions that a leader has to make, but it is often necessary to move the company forward.
  2. Address nagging pricing issues. We once visited with a business owner who owns an iconic local brand but whose business was struggling. His cost structure was dominated by commodity-based raw materials and labor, both of which tend to increase modestly each year. When we probed the owner about his pricing strategy, he revealed that he had not raised his prices in almost seven years. This discussion occurred in 2011, just after the great recession, and the owner admirably had wanted to give his customers a break by not increasing prices. As a result, however, he had put his own business at risk, and several price increases became necessary over the next year or more to get them where they needed to be. It’s always easier to put off raising prices;   It is perceived as a high risk event and can be a challenging conversation. However, there is also risk in not addressing the issue, and incremental change is almost always more tolerable to customers than trying to play catch-up.
  1. Brainstorm three new ways to dazzle your existing customers. It is always a good time to go talk to customers about the challenges they are facing, including the challenges they have in doing business with your company. Sometimes very small changes in your processes, communication methods, or reporting can dazzle your customers and create a stronger bond. Go find out what your customers are wanting and then challenge your team to address these issues as quickly and completely as possible.

The beginning of a new year is an excellent time to work on your business and to resolve to deal with those issues that are holding your company back. Grand initiatives and big bets are the great fodder for best-selling business books, but long-term winners address multitudes of small issues along the way to build excellent companies–vow to make the necessary changes in order to be one of them in 2016.