Continuing on from the last issue where we commenced a review of minimum requirements. A buyer must gain from buying your business before s/he considers the cream in your offering. These include:
- Competitive edge
- Business model
- Cash flow
- Customer base
- Legal structure
- Business team
- Financial backbone
As part of Scalability, the last issue we considered the need for your business to be repeatable. Here we continue with the scalability requirements of teachable and valuable.
Do you have consistent business rules about your processes? Are you the only person who can make the decisions on a case by case basis? Like, is it a bad hair day and everyone can get stuffed, or I had a great night last night and bonuses all around? Are you the only person who can make things work? Do you need other clever people, or have you broken the work down to easily executed and managed pieces?
Right around the world business surveys show there is a shortage of talented people, and the situation is just the same in Bali. So it is necessary to ensure ordinary people can be hired at scale to do the work. Automate what you can build decision rules into your systems to ensure consistency.
How can you make tasks simpler?
So lesser-skilled people can do them? One client is a fashion retailer and receives clothing along with a delivery docket. The delivery docket lists each style and then has boxes in a grid pattern to show the quantity of each size/ color combination. The supplier is familiar and comfortable with this tool but it is hell for the retailer staff who has to translate it into individual stock keeping units (SKUs) needed for entry into a package like QuickBooks. Unless you have someone with a very smart mind doing this work then you will get frequent mistakes. That’s what our client had if she had someone else do the work. So we re-engineered the information flow and used simple tools to help.
Now, the supplier receives a purchase order with the individual SKUs and quantities, in Excel. The electronic document is loaded from the email into a database with one click, and the database translates the SKUs into the box format of sizes and colors the supplier loves. No need for retyping the order details, so a productivity saving for the supplier. Once the product is made, the same database converts these boxes into the client’s SKUs as a delivery docket.
This Excel Delivery:
This Excel delivery list is emailed to the client and once again a one-button click loads the receiving information into the client database package. Now the client software shows the quantities received outstanding purchase orders. The receiving staff only has to compare quantities of SKUs on a form on the screen, no confusing translation or input required. Once the receiving validation is complete, another click and the received quantities are automatically added to QuickBooks and a list is prepared and emailed to the supplier of any receipt discrepancies. Productivity savings big time but, more importantly, the task has been simplified and is much more easily reachable.
Failing of Entrepreneurs:
A common failing of entrepreneurs is to cling to the skill set they know well, keeping those tasks to themselves when these are the very tasks they need to teach to others. You can’t scale in this instance. An impossible situation then develops when owners, as the experts, are requested by customers personally. Thus, the business becomes centered around owners, and a business that is too dependent on its owner is not sellable.
Valuable to your customers –
what makes your product or service valuable to your customers? Do you deliver creative products and innovation? Where are you vulnerable to competition?
Not only do you need to deliver value to your product or service, but you need to tell a great story about it. A story that is consistent and authentic. Everything about your business, your products, your sites (physical and web), your people and their personalities and skills, your processes tells a story. If it’s a great story it’s the same story, it’s consistent. The story helps sell what people are truly buying, which is about how they feel. A great story helps your customer feel great.
And if it is an authentic story, if the promise it offers holds true, then you have an opportunity to survive and grow. An average product with a great story will help your business survive far better than a great product with a mediocre story.
When I first came to Bali!
When I first came to Bali I met a woman who had been sent here by a new start-up business called Novica. Their business model was to put people into developing and exotic countries to source decorator products and personal accessories, for fast courier delivery to consumers. The Novica representative also wrote stories about the artist, about Ibu Wayan who made this artifact – her family and how she lived and what the sale of the product meant for her and her family in putting the kids to school.
All this went on the website with the item – a bio and photo of Ibu Wayan. What was Novica selling? To my eye, they were selling a dinner conversation as much as an artifact. Of course, there was a core business system that worked consistently in delivering a quality product fast. But the story took the product from a commodity to a much more valuable, satisfied, and expensive feeling in the buyer.
This story has been so successful in its consistency and authenticity that the Novica website now shows they are in association with National Geographic.
Quoting Amazon’s CEO Steve Bezos, you need to have something “deeper-keeled” — differentiated technology, excellent execution, customer loyalty – so you will be able to continue to motivate your staff, engage your customers, satisfy your shareholders, and flourish as a business. In our plant nursery analogy, replace deeper-keeled with deep-rooted and you see the importance of your core differences being much less susceptible to fashion, to economic cycles, to being more sustainable in the longer term. That is the brand delivery. But you also need a great story that is consistent and authentic, and that is your brand promise.
If you want to really succeed in your business, clear the decks and focus on the one thing that sums up your mission. In the next issue, we will continue with this scalability requirement, look a lot deeper into creating a business with value, a business that you can sell.
Is there an aspect of developing a successful business you would like me to write about?