A friend of mine once decided he’d try his hand at consulting. “What’s your objective as a consultant,” I asked. “Simple,” he replied, “to sell more consulting!”
I have to admit that consultants have earned a bad rap with attitudes like this. As a business owner, you’re not going to get value from hiring someone to nod their head and tell how great you’re doing. Rather, a real Trusted Advisor should be able to help reveal issues, obstacles or solutions that aren’t clearly evident to you and that can add to your revenue, your cash flow and your bottom line.
A recent Manchester Consulting Group study of Fortune 100 executives found an ROI of 5.7 times the money paid for coaching services. Imagine paying out $2 and getting $5.70 in return – pretty good odds at the track, but an astounding return on investment for a business!
And Entrepreneur Magazine listed included the following as top reasons business owners hire a consultant:
To obtain specific expertise.
In an escalating market such as this, there are likely areas where you’d like to engage, but don’t have the experience or skills on staff to get the job done. Social Media, product development, or merchandising are areas that few businesses have sufficient expertise in house to be effective, and where hiring a consultant could yield a strong ROI.
To identify problems.
Face it, most of use are too close to our businesses to see all the issues. We might think we know what they are, and can feel the effects of any inefficiencies, but it often takes a more objective perspective to help us see beyond the weeds.
To act as a catalyst for change.
Company cultures, even in the smallest businesses, are inherently anti-change. Oh, we want better results, but want others to change, not to change ourselves. It’s just human nature. An outside advisor can often provide the needed ‘kick in the pants’ to effect needed change.
As a business owner, you want to be the best leader you can be; to evolve and grow. But running a business allows little time for self-growth. A business coach can help you focus on the right areas, and learn best practices quickly. You believe in ‘OJT’ for your staff, right? This is on the job training for you!
To bring new life to an organization.
Even the best teams can get stuck in ‘the way we’ve always done it’ thinking. Brining in an outside expert can often break through old thinking by implanting and nurturing more current processes and systems.
So, there are five reasons why you may want to consider hiring a consultant, coach or advisor. If this makes sense, and you’d like some help finding the right advisor for your needs, well that’s what we do here at Cash Flow Engineering. Just give us a call and we’ll make a qualified recommendation based on your companies size, location and needs.
Remember when you made that decision? Maybe it was a long time ago, or maybe you are still struggling with taking action. Either way, the passion you had is likely still palpable. But is it still as strong?
Now, move back to the present. You’re the owner of your own company. You’ve taken the action and made the commitment. What does your company stand for? What’s its purpose?
You will likely answer that question in a factual, non-emotional way: “Our business exists to provide X to Y.”
The purpose of your business is expressed in your Mission Statement. The Mission Statement describes your target market and the key benefit (or unique selling proposition) that you offer. It answers the questions:
But is that mission in alignment with your passion – the reason you started your company to begin with? That passion – what you want to do, become and accomplish – is described in your Vision Statement.
Vision statements are passionate, future-based and internally focused – they are meant to motivate, inspire, give direction to and unite your employees and team. The Vision Statement answers the question, “Where do I see my business going?” Your mission statement is externally focused. It is about your relationship with your customers, and answers the question, “Why does my business exist?”
Without a vision statement, you can lose your focus and stray from your passion. It’s not uncommon for a business to ultimately become something far different from what was envisioned at the start. For those that keep following their passion, that becomes something wonderful and exciting. But without a clear vision statement, one can lose control. And lack of vision is the destroyer of passion.
How to write a Vision Statement: http://www.cashflowengineering.com/how-to-write-a-vision-statement/
Too often managing cash flow is relegated to the areas of cost control and accounting. In reality, those can only effect cash out, not the real source and key to financial stability, generating revenue, i.e. cash in.
In our 7 Key Numbers management matrix, the first number we teach business owners to watch is the number of leads your marketing generates. This is where all revenue begins – by creating awareness, attracting buyers’ attention, and getting them to engage with your brand. All these are a function of marketing. If as a business owner, marketing isn’t your “thing”, that’s okay… there are plenty of professionals that can manage that for you. The important this is that it is managed – failure to monitor what’s working and what’s not, adjust as needed, and continually measure results (i.e. conversions of leads into sales) will result in poor results and restricted revenue (cash in). Lower ROI = advertising dollars wasted (cash out)!
The concept of Cash Flow Engineering® states that every dollar invested in your company must be viewed as an investment that returns a predictable and measurable return. In years past, ensuring that every dollar invested in marketing was effective was impossible. “Half the money I spend on advertising is wasted; the trouble is I don’t know which half,” said John Wanamaker over 100 years ago. Today, that’s no longer the case.
Fortunately, there are simple ways to monitor, measure and effectively manage your marketing investment. Contract Relationship Management (CRM) programs automate not only reporting, but also much of the function of your marketing and sales – lead capture, nurturing, communications and reporting, optimizing your return on investment, cutting your time, and giving you instantaneous access to data so you can make better decisions, more quickly and in with less time invested.
Of course, revenue begins when a sale is made. But managing the process that captures a lead and delivers that prospect into your sale funnel is critical to ‘cash in’.
Systems are NOT just for big companies. In fact, until you have systems, you’ll never get big.
Take McDonalds as an example. They didn’t get where they are today by having great hamburgers. They got there by having a system for selling hamburgers for pennies and still making a profit on every single one. But here’s the key: They built their system in 1948 in their very first restaurant. They were a small business with a great system, and that’s how they became a big business.
Systems create predictable results. They tell you exactly how much any job will cost you, which means you know exactly how much to charge, how many employees to hire, when to invest in growth, and when the real money will start coming in.
In any business, there are three major activities: marketing & sales, operations and organization, and financial management. All of them need systems and processes. The good news is that creating these systems isn’t as hard as it might seem!
For example, in marketing and sales, CRMs and marketing automation programs help you create processes that lead prospects through the Customer Journey in the most effective route… and increase your sales effectiveness by 300%. Organizational procedures and operational manuals add consistency to even small companies and make it easier to onboard new hires. And if you don’t already have rigid financial management policies, then your accountant isn’t doing their job!
However, systems take time, and when you’re running a small business, time is your most valuable commodity. But look at McDonalds. It was once a small business just like any other. Now you’re five minutes away from one no matter where you are in the country. That’s because they took the time to get their systems right.
We can help you develop systems, but even if you never call us, you should still start building your systems. The more businesses that do this, the more successful we’ll ALL be.
In September, 2001, after the twin towers fell in New York, the owners of Strauss Homes, a large homebuilder in Colorado, thought they were doomed. After all, that event could paralyze a market (and it did for several weeks!) But the CFO had a contingency plan in place for just such an emergency, and the company not only survived, they flourished.
You may not realize it, but 20% of economists are predicting another recession to begin in 2017… and another 30% believe it will begin in 2018!
Whether you believe this or not, the fact remains that all economies – and that means all business – is cyclical. It might not be this year, or even next, but you can bet your bottom dollar that “what goes up” must eventually come down. The big question is, will you be ready?
Successful companies have plans that will allow them to withstand many different types of shocks to their industry and sector. You need to have plans and processes in place withstand an economic downturn (not if, but when that will happen) well before the event happens. It’s critical to develop a planning matrix that considers implementing different strategies given the following economic environments: Operating at the status quo, operating in boom times and operating in a recession.
Rather than simply reacting to changes in economic conditions you will be far better prepared by taking the time to develop a comprehensive planning document that shows specifically what must be done when the economy takes a turn for the worse – or even a turn for the better. With this done in advance, then even catastrophic events like 9-11 don’t have to create chaos in your business.
Do you have enough acorns stashed away to make it through the next economic cycles? Do you have other sources of income? Can you survive a reduction in sales volume? It’s critical to develop a planning matrix that considers employing different strategies given the following economic environments: