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SUCCESS STRATEGIES: Change is Good

August 1, 2006
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A mind is a lot like a parachute-it only works if it opens. If you really want to increase profitability and cash flow in your business, then you must welcome change. You must help your organization become a learning company that seeks ways of doing things better and faster while improving quality and productivity.

Unfortunately, many entrepreneurs are resistant to change. But it's important to keep in mind that what you think about is what you become. If you really want to become more profitable and improve the ease of operations in your company, you must first shift your focus away from these limiting beliefs:

  • "We are a unique, one-of-a-kind business with no competition."
  • "If I can't fix the problems, how can anyone from the outside help?"
  • "We are working on improving; the plan is in my head."
  • "My competitors are no better off than I am. No one is making any money these days."
  • "If I avoid fixing the problems, they will go away by themselves."
  • "We have survived tough times before, and we can just ride this out."
  • "All I need is more sales to make more profit."
  • "I don't have time to improve; I'm too busy."
  • "If I get that one big order or customer, everything will be OK."
  • "If I solve that one big problem, everything will be fine."

Do these sound familiar? Eliminate these limiting beliefs, and you will be ready to take the next step to improve your company's people, processes and profitability.

Focus on Operations

Ever wonder how a company can start out with one or two entrepreneurs with a vision and passion-then, 10 or 20 years later, have thousands of employees and billions of dollars in sales? What did these companies do to become so successful? Were they smarter than you? Did they work harder than you? Did they have better equipment or people? No. They used better tools to drive operations (people and processes). Operations represent 60-80% of all your costs, but they are not really understood by American businesses.

For decades, the Japanese have focused on operations that have driven innovation and a culture of never-ending improvements. Operations are a competitive weapon. How can these weapons be used in a small company with a handful of employees and limited resources?

The first rule of business for each of the five companies I've founded was: If we can't produce a profit, we will not survive. To me, profitability became one of the most important issues that I focused on each day. Start asking yourself, "Is that employee, activity, service, process or product profitable, or does it drain profitability?"

Remember, it is not how much money you make that matters, but how much profit you keep. Instead of growing the top line, spend time focusing on the people and processes of your business. How well are your processes and people managed and measured? Do they add value? When employees perform the same process, do they produce different levels of quality, output and productivity? Are some employees better than others? If you are suffering with tight cash flow, stress, exhausted lines of credit and stagnant top-line growth, then you have weak operations.

What can you do to quickly change the course of your business and your future? The first step to rapid improvement is to start asking your employees what the problems are in the organization. Gather a cross section of 5-10 employees for three one-hour brainstorming sessions over a two-week period. Ask everyone this key question: "If you had a magic wand and could wave it over a problem to make it disappear, what problem would you choose?" Keep going around the table at each meeting until the group can't think of any additional problems. Most groups uncover 50-100 key problems that the company's ownership wasn't aware of.

Once you have a final list of problems, choose the three that are costing the company the most money and start to solve them. In the next column, we'll discuss how to start and run action teams, which function to solve problems quickly.

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