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6 Strategies to Improve Your Business
There are many specific ways to improve your business or save money, but sometimes it's useful to step back and also consider some strategic ideas about how you look at your organization. As the owner or head of a business, you're responsible for the whole enterprise and its philosophy. Here are some big-picture suggestions for making your business run at its best.
1. Think like an economist.
Remember that everything has a cost, even if it's not apparent right away. Small things add up over time. To know what your true expenses are, you need to quantify everything. For a few weeks, keep a detailed record of every bit of time and resources that are used in your operations. This will allow you to identify waste and inefficiency, and you will be able to better calculate your true cost of providing a product or service. Whether it's time, money, or energy, stop and ask yourself if that task or function is really necessary. What benefit will result from an activity? Will it increase your profit, effectiveness, or productivity? Or are you doing it just because it's always been done that way? Can you arrange work in a way that uses less time and resources? If a process doesn't add anything to your business goals or needlessly complicates things, cut it out.
2. Focus and specialize.
You can't be everything to everyone. Pick a niche, present yourself as a specialist, and price yourself accordingly. Concentrate on your best competitive advantage and use it distinguish yourself from the competition. If you provide additional products or services, see if you can cut them out completely. Failing that, try to outsource those items so they don't become a distraction and drain on your most profitable activities. Do not dabble in areas with which your business is not familiar, unless you are willing to commit the time and resources to properly educate yourself and adapt to providing that service or product profitably.
The best explanation of the power of the 80/20 rule.
3. Use the 80/20 rule.
Also known as the Pareto Principle, this rule states that 80% of results come from 20% of inputs. For example, this means that 20% of your customers are responsible for 80% of your profits. Similarly, your worst 20% of customers cause 80% of your problems. This relationship applies to almost everything. Focus on the top 20% inputs to effect 80% of the results you want. If you like, you can repeat the process several times, to isolate and focus on only the most effective inputs in a particular system. Learn to filter out the 80% of activities and prospects that do not give you the best results.
A very clear introduction to project management.
4. Make a plan.
A house doesn't get built without architectural drawings. A movie doesn't get made without storyboards. Similarly, a succesful business or project will not happen without a proper plan. It doesn't have to be long or complicated; in fact, it's usually better if it's clear and simple. But there has to be some kind of a plan. This goes back to the 80/20 rule above, because decisions made in the first 20% of a project will decide the costs and resources for achieving the remaining 80%. The planning phase is also the time to consider alternatives and contingencies. Once you've worked out what you want, how to get there, and what resources you'll need, then you can focus on executing the plan. Whatever you come up with, write it down. Things are much more likely to get done when they're on paper.
The classic that makes the case for having procedures manuals.
5. Write a procedures manual.
In addition to receiving a quality product or service, customers like consistency. Every time they come to you, they should know what to expect. This is why businesses like fast food chains are so successful; you know what you will getting at any restaurant from that chain, regardless of where it is in the world. Writing a procedures manual forces you to break down your operations into individual steps, which you can adjust for maximum efficiency. This should be an evolving document, incorporating past experiences and lessons learned. Most importantly, such a document lets you take yourself out of running the business. As the business owner, your goal should not be to do the day-to-day technical work. That's not a business; that's just a job you've created for yourself. Rather, you should be trying to create a system into which you can put any reasonably competent employees and have them follow the instructions in the procedures manual without your supervision. Work your way up from creating procedures for the simplest positions to the most complex, until you can finally take yourself out of the manager's role and let the system run on its own.
Shows how to methodically work out plausible future scenarios.
6. Pay attention to the future.
Not only is the world changing constantly, but the speed of the change itself is accelerating. This is most apparent in computer technology, but is also happening in almost every other field. More and more tasks are being automated. Look for new methods and technologies that will allow you to automate your own processes or function more efficiently. Watch these developments because they can be disruptive, but can also open up new opportunities, especially for businesses that remain flexible and open-minded. Try some occasional scenario planning with your staff, and brainstorm how your business would react in various situations. Such an exercise is very useful in making contingency plans and preparing your business to take advantage of future events.
What do you think is the biggest factor in improving business profits?
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