What’s holding your business back?
There are businesses out there whose growth is stagnant. They’ve often enjoyed considerable success, yet after a period of time inertia sets in. This inertia means that they (generally) remain profitable, but they don’t grow, build or improve on past results. This isn’t to suggest for one minute that these business owners aren’t successful. They’re an intelligent group of people who have achieved significant business success. They’ll also continue to be successful – it takes skill to keep a business anywhere near its peak.
An example of a business we’ve seen lately is a consultancy business that had no profit growth from 2008 through 2013. At a level this isn’t a bad thing because they’ve successfully dealt with some difficult economic times. However, the uncomfortable truth is that they’ve missed a significant opportunity to grow.
They were stuck with a mindset of “hunkering down and getting by” – this caused them to miss opportunities that were passing them by. Working together, we’ve helped them to move to a mindset of actively looking “for the next market change”. This has seen their net profit increase by 200% from 2013 through 2015 (their profit has tripled).
The first step for them was reviewing where their business had come from, and celebrating their past successes. This review highlighted the core competencies which they needed to remain strong on, and where their business sits on the Business Growth Curve:
With this understanding, it became clear:
- What’s holding them back from that next level, and
- The core competencies they need to build in their business.
What’s holding you back
The consultancy business was successful, like many other New Zealand businesses, for two main reasons. First, they put in the hard yards and worked many, many hours. This enabled them to compete with the “big boys” – their hard-work meant they could deliver more at a lower price. Second, they focussed on customer service, something their bigger competitors lost sight of.
These two success factors were ultimately holding them back. The long hours masked a considerably lower profit margin than the competition. This meant that if they tried to grow, the lower profit margin would make them unprofitable. Additionally there was a reluctant to grow because, in the words of the business owner, “staff don’t look after customers as well as I do”.
What’s needed to get to the next level
For the consultancy business, while they needed to rectify the issues holding them back, they also needed to build their core capability so they’re able to reach the next level. For them this meant the business owner getting out of the way and letting key staff step up. It also meant better delegation and daily visibility of the KPIs that were core to the business.
What they’ve done
What the business has done is to identify:
- Where they’re at (stagnating with a lack of inertia)
- What’s holding them back (low margins and distrust of staff)
- What they need to do to reach the next level (the business owner getting out of the way and KPIs)
This has seen them go from maintaining the status quo, which they’ve done for 5 years, to tripling profit in three years.
How we help
For businesses who are looking for some direction on how to grow, the first step is catching up with us for a no obligation 90-minute business discovery session. This session will highlight some of the aspects of a business that might need some attention. To find out more get in touch with Hamish, Pritesh, Riann, Jay, Shreyas or Eugenie at iif Chartered Accountants. We’re Wellington based, but help customers around the country build better businesses.