Immutable Laws for Business Success
How to ensure that you have done everything that is possible under your current span of influence and control.
Because most of the situations do not fix themselves and if you ignore taking the decision and action at the right time — you may take your business to a point of no return, where it must close.
Following are few areas, you need to evaluate and work-on — 39 Immutable Laws
1. Many times businesses lose money in-spite of having an increasing customer base because of negative contribution OR prices which doesn’t cover the total cost of delivering that product or service. Ensure that you have a positive variable contribution — When you find situations with a negative variable contribution, increase the price, reduce the cost of providing the incremental unit or stop offering that product or service. There may be rare exceptions to this rule, but in general, you have got to ensure that you are making money to cover your overhead on each sale
2. In cases you cannot charge more from the customers you need to optimize costs[using the principal of 8 wastages as per lean manufacturing]. This can be done by eliminating all the unrestricted and very less value adding non-people costs [or non-value adding] along with right-sizing the human-power — which may involve taking tough decisions to ask people to go or reduce their compensations. Austerity measures are never easy, but if the alternative is closing your business, it will be better to keep some people employed than for everyone to lose their jobs when the company shuts the doors.
3. Pay as per the criticality of must have services/materials from vendors [ prioritize on the basis of those first to pay, which can make the business close the shop if don’t get] — in order of the essential employees, essential outsourced services/cost of raw materials and essential taxes or interests etc which can get you into deeper financial mess through penalties etc
4. Ensure that you receive more inflow of revenue from those you owe you vis-à-vis paying those you owe. Plan your cash flow carefully
5. Proactively communicate with your creditors and lenders — seek and solicit their cooperation by feasible-transparent communication BY sharing your current handicaps and your payment plans
6. Know what is going wrong create a system to collect negative feedback from your competitors, vendors, customers, employees AND act on it immediately
7. Be a responsible owner, ensure that yours as well as your employees have a viable salary structure during tough economic phase. Don’t siphon all the profit to choke your business
8. If you can’t understand the reason for failing and figure out how to be successful again — engage a professional business consultant. Be open to different and disruptive ideas. Your may have wonderful ideas, but if they are not working then it needs to be modified to incorporate what can make it functional by infusing the outside perspective
9. During toughest of times Invest in Yourself and your team to transform them into an asset, it may seem to like a cost [AND few on these employees you have Invested in developing — may leave your organization]
10. Create a transparent meritocratic reward based on the type of contribution
11. Redesign what you sell to the customer — Engage your customers to discover what they truly want from your business. Then align your product model and marketing plan to suit their demands
12. Use social media and internet for Creating awareness as well as word of mouth publicity for your product/services by investing in low-cost advertising methods — to increase your customer base
13. Redefine and Redesign your maximum value proposition
14. Instead of focusing your resources on how you can be different, try to stick to the basics which your profitable competitors and organizations are doing
15. Brain-storm the ways and implement the ways to bring in cash through increasing sales as quickly as possible
16. Ensure your assets would yield maximum in case you have to fall back on them in case of dire circumstances forcing you to close
17. Identify, Anticipate for as many ways you are likely to fail — then prepare how can you avoid them
18. Tone-up yourself and your organization to handle worst-case scenarios
19. Always make tough decisions, with focus on the bottom line
20. Become a hawk as far as your cash-flow management bis concerned as this the most important of three CEO function. The other being marketing and sales along with nurturing talent