Is It Time To Refocus Your Business?
“The only thing that’s constant is change,” the old saying goes. If you’ve been in business for any length of time, you know how true this is.
Successful businesses that stand the test of time inevitably are those that best learn how to deal with and profit from change. Many times, this means taking a step back and refocusing on your business. This refocus may encompass every possible area of your company – goals (both business and personal), customers, markets, products, prices, profits, etc.
Recession-proofing your business
The economic environment of the past couple of years has certainly presented enough change and challenges to last many owners a lifetime. As we continue to claw our way out of the economic doldrums, now may be an especially good time to focus on ways to recession-proof your business before the next downturn.
“When times are good, everyone thinks it will go on forever, but the past couple of years have proven that’s not the case,” says Lisa Aldisert, a self-employed management consultant based in New York City. “I’m in the process of trying to recession-proof my business right now.
“For example, I was able to let one of my two part-time assistants go by consolidating tasks with the one who has strong technical and administrative/detail skills, areas where I’m not as strong. Part of refocusing should be asking yourself when does it make sense to pay someone else to do $15 an hour work if it frees you up to spend your time on tasks that lead more directly to sales and increased profits? Determine what it is that you personally do best, and focus your time and energy on that.”
Ernest Oriente, a self-employed professional business coach based in Park City, Utah, couldn’t agree more. He calls this concept “focusing on your genius work – the work that only you can do, or that’s the highest and best use of your time. For me, that’s working with current clients, meeting with and speaking to prospects, and publishing my e-newsletter. For everything else, I use $10-15 an hour support people, so I can maximize my time at $500 an hour.”
Where should you refocus?
As we near the mid-point of the year, here are a few areas where you might want to spend some time refocusing:
• Personal satisfaction and goals – Running a business, especially as a solo entrepreneur, can be all-consuming, squeezing out family and other interests outside the business. The sad part is that so many business owners aren’t aware of it when the balance between business and everything else in life gets out of whack.
That’s why this is perhaps the most important area for periodic refocusing. “Simply step back and ask yourself ‘Do I have the right balance between a great business and a great life?’” suggests Oriente. “Are you having fun and making good money in your business? Do you have time to pursue interests other than just working? Can you attend your child’s soccer game or ballet recital?”
• Growth and expansion – For many self-employed professionals, the time will eventually come when you have to decide whether to stay solo or hire your first employee(s). Fred Williams, owner of The Fitness Clinic in Ft. Lauderdale, Florida, reached this juncture about 10 years ago when, as a personal fitness trainer, he began thinking more seriously about his personal future.
“As a fitness trainer, I could only meet with so many clients in a day, so my income potential was limited,” he explains. “It was fine for a single guy, but I figured I’d have a family some day and realized I’d want to make more to be comfortable.”
His first step was to open a small facility where clients could come to him to work out, rather than him driving to their homes. “It added some overhead, but I more than made that up immediately in time savings.” This made the next step possible, which was buying a full-fledged gym and merging his clients with those members. Four years later, The Fitness Clinic now has 12 employees and about 400 members.
• Customer base and pricing – As businesses grow, they often find they have to leave behind some of the customers they started with. “Take a fresh look at your customer base and ask if you’re still serving the right customers,” says Aldisert. “It may be time to bump it up a notch in terms of working with more profitable customers. Determine whether you should even consider ‘firing’ your bottom-tier customers – for example, maybe your bottom 10% of clients in terms of profitability.”
Pricing is another area that needs constant attention, says Aldisert: “Self-employeds commonly underprice their products and services, usually because they’re afraid they might lose customers if they charge more. But also remember that there are ways to make more money other than raising prices, like maybe lowering prices to raise volume, or tightening your focus to a more narrow niche where you can be the expert and charge a premium.”
• Sales and marketing – As a solo fitness trainer, Williams says he never really thought much about advertising, because he got plenty of referrals and good ‘word-of-mouth marketing’ from his clients. But after watching revenue fall last year due to the general economic slowdown and the appearance of two big competitors within a mile of his location, he decided it was time to get serious about marketing.
“I was surprised at how affordable direct mail can be,” he says. “We’re mailing a full-color piece to 2,000 carefully targeted homes for about 35 cents per piece, and that includes creative, buying the list and postage.” Williams says he’s also advertising in the homeowner’s association newsletters of communities within a couple of mile radius of his location, another very inexpensive medium.
• Products and services – Take a hard look at exactly what it is (whether a product or service) that you provide to your customers. Or as Aldisert puts it, “evaluate your core competencies” – what it is that you do or provide that represents a unique selling proposition (USP) for your business.
“Self-employeds and small business owners can’t try to be all things to all people,” she stresses. “You should always be looking to narrow your niche or target market further. Ask 10 or 20 of your best customers what it is about your business that really adds value, or specifically why they buy from you.”
Williams concurs: “To be successful against our large competitors, we have to make sure our members perceive value in the services we provide. I constantly ask myself ‘If I were a member here, would I be happy and does my membership represent good value?’ At The Fitness Clinic, our motto is ‘More Than Just a Membership’ because I believe that’s how our members must view things if we (the business and the members) are going to be successful.”
• Strategic alliances – Oriente is a big believer in the power of business strategic alliances. “Building alliances with complimentary businesses can help self-employeds and small business owners gain critical leverage and visibility for getting new customers and earning more money,” he says. “It doesn’t have to be complicated – it’s really as simple as CPAs and attorneys making referrals to each other.”
“Strategic alliances are increasingly important for small business owners,” says Aldisert. “They can enable you to expand the scope of what you do without adding more resources and overhead. For example, I have an alliance with a sales training company that benefits both of our businesses. Think how you can cultivate strategic alliances as a way to recession-proof your business.”
• Financials – Do you need to build up a little more cash reserve? That’s simple, says Oriente: “Take steps now to either spend less money or make more.” He also says to make sure you’re crystal clear on your credit and collection procedures. “Define the standard for your clients. For example, we invoice and are paid in advance for our coaching services.”
For Williams, staying on top of the financials means doing it yourself. “I’ve always done the bookkeeping and accounting myself. With accounting programs like QuickBooks Pro, you can generate a monthly profit-and-loss statement in seconds.”
Even if you don’t do it yourself, make sure you are familiar with the details of your financials, and that you have markers in place to stay on top of financial trends in your business. “And make sure you’ve got a good CPA, and don’t hesitate to ask lots of questions,” Williams adds. “Some owners hesitate to spend an extra $100 for an hour of their CPA’s time, but that can be money very well spent.”
Ask the tough questions
Finally, says Aldisert, ask yourself some tough questions, like: Why am I in business? What’s my purpose in business? Can I use what I’m doing in business to help springboard into other opportunities, maybe even non-business? Is my business venture permanent, or is it just something I’m doing temporarily (like after a layoff)? And is what I’m doing really a business, or is it just a hobby?
“When you honestly answer questions like these, you may uncover new opportunities, challenges and direction for both your business and personal life,” Aldisert says. “This is why it’s so important to take time periodically to refocus and recharge.”
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Don Sadler is an Atlanta-based writer and editor specializing in issues of interest and relevance to small business owners.
