Welcome to the March 2020 edition of our Small Business Advice - designed to provide you with food for thought.
Find a quiet corner, grab a coffee, and make time to take stock and contemplate. Our aim is to provide enough varied content to be able to think differently about your business, to look to the future, and to generate some of your best ideas.
This month: Moving quickly to overcome challenges, embracing your mistakes, and the hidden value of your customers.
YOU SNOOZE, YOU LOSE
A very original approach to hiring people outlined by the Body Shop. As long as they satisfy the (very) basic requirements, candidates will get a job on a first-come first-served basis. The theory here is that the process will help to employ people regardless of their background – and should reward those that showed the most motivation to apply.
The attrition statistics make for a compelling story, but this may not be applicable in all cases. The skill here is in working out what the non-negotiable base competencies are. You need a robust process that is also flexible and simple. As always, it’s about balancing the risk with the benefit.
Two things really stick out for me:
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You need a very powerful vision if you are going to make something fairly radical work. In this case, the belief that “We don’t hire people to make brownies, we make brownies to hire people” is absolutely central to the process.
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When a resource is constrained in your business, boiling down your decisions to the small number of factors that really matter can help you move much more quickly – and to repeat easily.
Simplifying and moving quickly in this way is a powerful way to overcome bottlenecks, but it must be coupled with precise measurement and regular testing to ensure it delivers the right results.
WHAT MISTAKE WILL YOU MAKE TODAY?
If you approach everything expecting it to be perfect, then this article is for you. Perfection is impossible – maybe even undesirable – so you should embrace making mistakes and actively choose the ones you want to make.
Running a business is all about making decisions – and those decisions always come with trade-offs. If you understand this and incorporate it in to your day-to-day process, you will find that you can learn just as much from the failures as the successes.
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“If you’ve never missed a plane, you’re spending too much time in airports.”
Not making any mistakes is a sign of not taking enough risks in your business – and to remain doing the same thing will eventually mean that you fall behind.
The business that takes no risks is taking the biggest risk of all.
Find your balance – take controlled risks that will move your business forward, but know that some will fail. Above all, make sure that you can survive the impact of your failed risks.
RAINY DAY FUND
The expansion of a scheme known as “Sidecar Savings” to allow a savings fund to be built up almost unnoticed is a great parallel for forecasting best practice.
Under this scheme, an agreed amount of money is taken from an employee’s monthly salary and paid in to a savings “jar”. The idea is to take the money before you notice it, and to have it available for whenever you may unexpectedly need it.
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When forecasting, I always advise building in the flexibility that comes from having a “fighting fund”. Something that allows you to react to the unexpected bumps in the road that you can’t predict, and to be able to invest in new opportunities quickly without sacrificing any of your other objectives.
FORWARD ROLLS
The tale of two car manufacturers and their contrasting fortunes at the moment. Why are Aston Martin struggling while Rolls Royce are selling record numbers of cars? It’s hard to put your finger on the reason for the difference in two apparently strong luxury brands, but one theory is the extent to which Rolls Royce has played its luxury card.
“We are not really in the car business, we are in the luxury goods business” says their CEO – as if to highlight the singular focus that they have.
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A business needs to pick a strategy and fully commit to it.
Make sure every decision that is made by every part of the business is aligned to this strategy.
If you are in the luxury business, everything you do needs to scream luxury. If you compete on cost, be consistent with that approach.
Pick one and live it every day.
SAUSAGE ROLLS
The power of innovation from a very unlikely source. Greggs is currently experiencing a period of strong growth – just as many others in the sector are struggling. This hasn’t happened by chance. This is the product of several major investments all now starting to deliver – all alongside the traditional Greggs products.
Opening later to sell food on the go, catching the vegan wave, trialling delivery, and now rolling it out nationwide – all sensible initiatives that are helping to diversify and grow the Greggs business.
The success of Greggs is a fantastic case study in using your data to identify trends and going after them quickly.
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Watch your market at all times. The clues are there – you need to analyse where the market is going, not where it is right now.
To do that, pay attention to the trends in the data – both internally and externally – and act on them.
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Look for those opportunities that are close to your core business.
This will allow you to move much more quickly, it will be better understood by the market, and it will fit with your existing expertise.
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Test everything. Find out which trends are meaningful and which aren’t by conducting trials and measuring everything.
Act fast. Review the data from the trials quickly, tweak your product, and put it in to action as soon as you can.
It doesn’t have to be radical to be effective, but it does have to be deliberate, planned, and backed up by data.
NO SUCH THING AS A FREE LUNCH
An interesting look at the business model of Freemium video games. The conclusion here – that there are some people that pay for the games and some that don’t – may not be surprising, but there a lot of important thoughts on customer insight.
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Don’t underestimate the non-monetary benefits that your customers bring to your business.
Identify your customer types (from your data, naturally) and treat them appropriately. As in the case of Freemium games, customers who spend little are still vitally important for two reasons:
- they can be strong brand ambassadors, and
- they bring critical mass to your product that will drive others to spend money.
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Be careful not to lose the value of those customers who spend less.
Don't try to encourage them to spend more.
Instead, appreciate the value they bring to your business - and nurture it.
ALL THE GEAR, NO IDEA
This 2019 letter from Dan Wang covers the subject of technological development in China at some length. In doing so, it highlights the ingredients that make for rapid progress.
Three elements are needed in order to progress: 1) Tools, 2) Instructions, and 3) Experience of the process.
It’s no use having the recipe if you have no idea where to start, or even what the terms mean.
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Make sure that you set your business up for success by having all three vital elements in play:
Invest in the right systems.
Establish and document your processes.
Prioritise training, retaining, and insourcing the relevant experience.
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There are only three things that your business can be in order to be of value to people. You need to be clear which one you are.
Are you the tools or raw materials?
Do you provide the recipe, instructions or blueprint?
Or are you the expertise – either in doing, or in training others?
Understand your value and how it fits with the other elements to create a truly compelling product or service.
If you’d like to benefit from a sounding board for these - or any other - ideas for your business, why not contact Corner Finance at info@cornerfinance.co.uk or visit us at www.cornerfinance.co.uk
February 2020 Small Business Advice
January 2020 Small Business Advice
