The difference between success and failure can be a very fine line in business. As a Managing Director of Executive Sounding Board Associates Inc., a firm specializing in turnarounds, restructuring and crisis management, my goal is to provide our clients experiencing various business problems a second chance to achieve success, with the hope that the leadership teams of these companies will be smart enough and willing to take advantage of the unbiased guidance we provide.
 
Before the leaders of companies approach me for assistance, their companies were often wildly successful at some point. So, where did they go wrong, and how did they miss the warning signs?

To follow are some thoughts and observations that may help your organization and company avoid business pitfalls, identify and address the negative warning signs, and continue on the path to generating positive cash flow and stellar returns.

Focus – Remember What Made You Successful

Companies and their leaders sometime lose their focus. It’s easy to do with the pressures of running the day-to-day operations of any company as the business and administrative demands grow. In the early days, when the entrepreneur and/or corporate executives were building their companies, they maintained a watchful eye on the company’s income statement and operating performance. They aggressively attacked budget to actual performance variances, assessing when sales returns were higher than budgeted expectations, etc. Then when times are good – during growth spurts – the tendency by management is to not attack as hard to understand and address such variances and to give employees, customers and suppliers a bit more slack.  Don’t get me wrong, this is fine as long as it does not last for a prolonged period of time. More importantly, believe it or not, it is also okay to have a product or service that is a “loss leader” as long as it does not become the majority of the company’s sales mix. But it’s important to maintain the focus and the uncompromising standards that initially drove your business to success, as these standards will ensure your success in the long run.

Vision

One of the main differences between companies that continue to succeed, grow and prosper, and those that have transitional issues is the long-term and short-term vision demonstrated by the leadership team. A majority of the time, my clients have lost their way for any number of reasons. But, in all cases, being able to continually set a company vision both in the long and short term, is paramount to overall business success. It’s also important to be mindful of the  difference between the view of your business from the 30,000-foot level (the vision and strategy level) and the business’s operational effectiveness, which is the execution of the day-to-day goals (1,000-foot level).

Michael Porter does an excellent job articulating this difference in his paper “What is Strategy?” published by the Harvard Business Review. Operational effectiveness is in essence effectively managing the day-to-day, a critical component to succeeding. However, if the company leaders and board members are not continuously relooking and reevaluating the vision and strategy of both sales and operations, the ultimate viability of the company at some point will come into question.

Make sure you set aside some time to “catch a breath” and extract yourself from your daily tasks to think about and consider the big picture.

Keep an Open Mind

Head coaches of major league franchises are opinionated and stubborn individuals – after all, they did not make it to that level of success by being wallflowers. However, one of the true differences between entities that continue to succeed and those that stagnate is that leaders of growing and successful organizations possess a superior ability to keep their minds open and delegate responsibilities. These successful leaders understand the importance of allowing those around them to exercise judgment and decision-making prowess. 

I grant you that it is somewhat of a cliché, but companies will never grow beyond relatively local boundaries if their leaders do not possess the insight and confidence to delegate to others. For example, it’s unbelievably difficult for a manager in Chicago to effectively manage an operation in California without delegating responsibility to the day-to-day team on the ground. The same applies to growing a company internationally.

Expect Excellence; Accept Nothing Less

Zig Ziglar, a motivational speaker and author, says that "If you are going to be the janitor, be the best janitor that you can be." His message is simple: Never settle for mediocrity. Once you start accepting mediocre performance or results, it affects the entire personality and culture of the company and its employees.

Seek Support From Your Vendors and Suppliers

Though the market has recently showed some positive signs overall, there is still a large sector of the economy that is unsettled. As a result, more and more suppliers are willing to provide some extra support for companies that have been long-standing customers. That’s not to say you should stretch your suppliers until there is no more elasticity, but rather, do not pay an invoice before it is due unless your business receives an appropriate cash discount. It’s critical that your entire organization’s leadership team is not just paying on invoices to the “squeaky wheel” vendor. Rather, make sure you and your management team work together to obtain maximum value and optimize your company’s cash flow.
 
Assess Your Lending Relationship

Today more than ever, the character of the borrower is among the most determining factors when seeking financing from a lender. Most lenders would rather retain a borrower who has been with them for a while because, pardon the cliché, the devil they know is better than the unknown. If you have been with your lender for a while and have exceeded your metrics, it is likely time to meet with them to determine what more they can do for you to assist your business. Believe me, no lender wants to tell their superior how they will have to replace the loan outstandings of a high quality borrower. Remember, if you are a strong borrower, keep close to your lender and expect more from them.

It’s Always About the Value Proposition

Whether it is working with your customers, suppliers, employees, lenders or stakeholders, consider what drives value – not only for you and your company, but also for those on the other side of the transaction. People have suggested that one of the things we do well as consultants is to place ourselves in the other person’s shoes. I am able to assist my clients in understanding what it takes to develop and maintain true win-win relationships for their businesses. If one extract’s maximum value at the expense of another, ultimately the other party, over time, will remember the unjust way they were treated. There’s no better situation than when both parties in a relationship succeed. It’s the formula for continuing prosperity.

Two Final Thoughts 

In a time when there are tremendous pressures for business owners and leaders, unfortunately the tendency or opportunity to take shortcuts resonates more and more: I have a lithograph on my wall that says, “When it comes to matters of style, flow with the current; when it comes to matters of principle, stand firm like a rock.” Ultimately, the people you come in contact with will appreciate this approach to business more than you know.

In today’s ever-changing and complex environment we are, for the most part, “on” 24/7; I am reminded of hearing two sportscasters talking about the complexity – as it relates to a football offense – when one turned to the other and said, “What is so complicated? You throw a football, you catch a football. You hand a football to the runner and he runs.” While it’s a bit tongue-in-cheek, it’s also true. I believe it is important for business leaders to keep their concentration and center of attention on remembering the basics of their business: keeping it simple and doing it well – not making things more complicated than they need to be or appear. If the products and/or services are good, the value provided and received is good, and the customer is treated well and is pleased, it lays the foundation for long-term success.

The characteristics and qualities outlined and pondered within this article are the traits and foundation that keep companies successful both today and for the future. They make organizations successful, while avoiding mediocrity leading to growth, profits and cash flow.

Want to talk about it further? Debate the merits? Contact us below.