By Hardik Harsora, Co- Founder of Effex Business Solutions
This article was originally published by Economic Times.com,
Mumbai, March 2017 – It is a dumbfounding piece of statistic that 92% businesses fail to scale. You would think that in line with the popular adage ‘change is the only constant’, this number would get better too. And yet, it is one that has defied norms, and stayed constant through the times.
I know about failure. As a child, I witnessed a lot of it in my family. It molded my perception about risk. But in the 12 years I have spent as a business consultant, I have known enough about success too. I have realized that failure can be a stepping stone to success. Or it can cause people (and companies) to move into a state of eternal inertia.
Fortunately, the leading businesses (the 8%) follow a predictable pattern to achieve and sustain success. Certain aspects set them apart from the remaining 92%.
A business flourishes only when its leaders let it. Leaders who are lifelong learners do not let their preconceived notions interfere with business dynamics. These leaders develop the right habits and keep a business agile in fluctuating business environments. And since an enterprise is a reflection of its leaders, the other stakeholders practice the right habits too. This is a key differentiator of successful companies.
Successful companies understand the mechanics i.e. modeling of their business brilliantly. They possess an astute awareness about why their business consistently delivers (or does not) to its audience. They have in-depth answers to specific questions which other businesses flounder with:
What makes your business profitable?
Which areas of your business are worth scaling?
Which areas of your business should be limited?
Answers to these simple, yet powerful, questions form a business model, which is the foundation of effective functioning. When the model and mechanics are robust, processes built on them make the company take steps which yield impressive returns in the long run consistently.
Standardized business processes
Growth can only be achieved when durable models are scaled up. Standardizing business processes is essential for achieve this scaling. When a business identifies its target audience and how it can solve their problems, standardized business process provides it with the ability to achieve consistency in product delivery and outreach. This, in turn, ensures that the business achieves growth and scales faster.
Focus on sales
Sales are the arguably most important function for any business. Production can be outsourced, as can design. But not sales. Why?
The sales process is different. Along with transactional thinking, emotions contribute hugely to the completion of a sale. Today, people no longer purchase purely because of advertising. They purchase because of trust, which emerges from human interaction.
Hence, the significance of emotion cannot be discounted. It’s important to identify the emotion, the sales cycle, what works and what doesn’t, and then standardize it with surgical precision. This is why sales cannot be outsourced, and needs special attention.
Most plans fall apart due to poor implementation. Implementing everything at once leads to chaos. Successful companies implement processes in a phased manner. Problems arise for them too. But they solve every problem systematically to ensure it does not arise again.
For instance, sick companies might consider sluggish sales to be a price issue. They drop price, which impacts profitability. To increase profit, they might compromise on raw material. Eventually, this leads to inferior quality products. And the sluggish sales problem worsens
Successful companies, on the other hand, gauge by how much they can drop the price, if at all. They also take sluggish sales as an indication to reach out to new markets.
The traits mentioned above are not a one-time affair. When a company scales up, problems of equal magnitude appear. Successful companies work on solving these problems effectively. This enables them to scale to the next level again.
In my years as a business consultant, I have observed successful companies implement these aspects like clockwork, even after achieving dizzying heights. I have helped small and medium enterprises learn and implement these aspects through the Propel Excellence Program, and witnessed them scale beyond expectations. These aspects are not difficult, they merely require a change in mindset. Give yourself time and freedom to change your mindset, and success will inevitably follow your company too.