The Illusion of Communication

Many small business owners prefer to accelerate processes by working through planning as the “plan” is put into action. Of course, there are some downsides to this particular method.

I just saw an episode of “Renovation Realities” on the DIY network, which typifies the results a small business owner might see when action is based on pure desire and little forethought.

In this episode, Bruce, the owner of a small restaurant, wants to improve the layout of his dining room. The biggest improvement he wants to make is to the bar area, where he can only sit 7 people. This is a problem because most people arrive in even numbers, so he can’t fully utilize the bar. However, he has no plan, and is not sure exactly how to execute a better-designed bar, even after he tears down the old one.

In the end, a new bar that seats 10 — a gain of 3 extra seats — is put up, but he loses 4 seats in the dining room (they weren’t expanding the total square footage, so that space had to come from somewhere), resulting in a net loss of 1 seat. As illustrated as the show concludes, that one missing seat averages about $200 in revenue a day, or about $1400 per week, or about $72,000 a year.

Posted by Matthew under Communication & Marketing Strategy & Business Strategy | No Comments »

I recently was interviewed by a journalist for BusinessWeek (read article here) regarding how easy (or hard) it is for small business to access credit.

As I mentioned in the article, if you are business and you are looking to survive 2009, I STRONGLY recommend that you try to secure a line of credit, a credit card, a loan, or whatever you can now. As long as your business is in good standing and/or you have good personal credit, you can get it. But as things to on, especially into the second quarter of 2009, I believe the banks will be less likely to loan money. So do it now, while you can!

Posted by Matthew under Business Strategy | No Comments »

2008 was a roller coaster ride (at least the stock market was!) and 2009 appears to be more of the same. As business people, we are responsible for ensuring that our businesses and customers are well taken care. How do we do that when taking care of “ourselves” is hard enough? Good question.

What follows is hardly the answer to such a complicated situation, but I would like to share 4 tips that should help you through 2009 and beyond.

1. Get an Historical Perspective
While we are moving through some uncertain times, there is historical precedent for this. While we may (or may not) be heading into a depression or recession, we can glean some great understanding from what businesses did going into the Great Depression of the 1930s. I recommend that you try to find some information on it that’s relevant to your industry, but here’s a bit to get you started.

2. Don’t Let the Environment Dictate Your Future
I highly recommend reading the book “Good to Great,” by Jim Collins, if you haven’t already read it. In his book, Mr. Collins identifies several companies that were able to go from “good” to “great” (as defined by their stock price). This is relevant to our current economic environment because some of these companies were able to do this despite their situation (for example, Wells Fargo–one of the example great companies–went through their “good to great” transition during bank deregulation. I’m sure no one in the industry at the time was calling that a Golden Era.

3. Learn the Hedgehog Principal
Another great bit of information from Mr. Collins is the concept of the Hedgehog Principle. The principle itself is so named because the hedgehog is a single-minded, yet highly successful animal. All of the great companies outlined in his book were similarly single-minded. While this may seem like an obvious concept, the methods in which the Hedgehog Principle was discovered in the great companies (as well as how it was implemented) was very interesting. I highly recommend reading “Good to Great,” to learn more.

4. Define Your Profit Centers
What metrics do you use to measure your profit centers? Is there a specific system to economic engine? If you don’t know the answers to these questions, I recommend a second book (”Good to Great,” covers this, too, but from a different angle), and that book is “The Art of Profitability” by Adrian Slywotzky. This book lays out about 20+ different profit models, the pros and cons of each, and who uses them and why. If your economic engine is sputtering, it may be time to refine the way that it is running and this book could help you with the tune up.

Posted by Matthew under Business Strategy & Books | No Comments »