Is Your Business Structure Getting in The Way of Your Success?

by | Oct 3, 2017 | Driving Profit - Main, Finance Articles

If you want to be successful in your new venture, you should pay attention to the modern examples of achievement like Apple, Google, and Amazon and their business structure .

What are these companies doing differently? They have broken down the traditional norms of operation and flattened their business structure into a streamlined, distributed model. This type of system allows them to be faster, more flexible, and to evolve elegantly with changes to the market and their customer base.

Too Many Layers of Business Structure

What is stagnating many of the large, older, organizations is their tunnel vision. Within these companies, there still exists a lot of red tape, which kills innovation and expediency. This inefficient organization model creates a bottleneck for making decisions, requiring too many layers of sign-off before anything can happen.

In contrast, these modern, successful companies have done away with the hierarchy of too many levels of management, and have instead adopted a system of collaboration between departments, and even other organizations. The use of open-systems benefits everyone without the hassle of having to go through so many layers, just to get a quick answer or approval.

Such collaboration breeds diversity and allows for truly innovative options and solutions, which can make or break your success.

The Dinosaurs Have to Go

The big corporations like G.E., General Motors, IBM, and Procter & Gamble, are ancient dinosaurs, with outdated and inefficient decision-making business structure s that will most likely lead to their demise.

Whereas Apple, Google, and Amazon are thriving, due to their trust and reliance on open-systems, and a rejection of bureaucracy, authority, hierarchy, and closed decision-making processes of the past.

These young, vibrant companies are embracing new models of decision-making, and encouraging participation, diversity, new rules, and, to some extent, chaos.

Sometimes, Smaller is Better

Another way these companies are successful is that they operate much like a small business, instead of a large corporation. Real people handle customer service interactions, so that the customer walks away feeling valued and appreciated.

Small companies have to be more flexible, and, sometimes, staff wears multiple hats and are cross-trained for a variety of different tasks. This versatility benefits the entire organization, because there is less delineation between departments and management groups. No more waiting to move forward, because only one person or department can handle the issue; it can easily be re-routed and quickly solved by someone else.

Stop Talking & Listen

Large, outdated companies rarely pursue or put to use constructive criticism. The sad part is, being plugged into channels for feedback allows a company to respond much more quickly to adversity, media fuss, product support, delays or other operational issues. A direct connection to your customer base is key to staying on top of things and managing your brand reputation.

Apple, Google, and Amazon all actively encourage customer feedback, and they immediately put it to good use. Many of their ongoing upgrades, changes, and improvements come directly from customers.

They are using their customers as a huge pool of barnstormers and innovators. Just by listening, instead of dictating, they are benefiting in droves.

The Bottom Line

The bottom line is old, outdated organizational structures and hierarchies are past their expiration date. If you want to be successful and make the most of your new company, model your organization after these high-tech firms that have figured out the formula for big-time success.

By operating as a small company, you allow yourself to be flexible, more innovative, speedy, and collaborative, and this will result in a very positive bottom line for you!

Bert Shlensky Ph.D. is the President of StartupConnection.net.  Bert has over 30 years of experience as a results-driven executive leader. A graduate of Sloan School of Management at M.I.T. He served as the President of West Point-Pepperell’s apparel fabrics for 10 years & President and CEO of Sure Fit Products for 14 years. Having provided counseling to over 2,0000 startup clients- he now focuses on working with select start up and small businesses.

Why Wayne Gretzky and Hockey Say a Lot About Running a Small Business

by | Aug 11, 2017 | Finance Articles

Business risk happens to be a wolf in sheep’s clothing. However, if you give all the sheep hockey sticks and a puck like Wayne Gretzky, that wolf will likely hide behind the goal’s net. No one likes getting hit by the puck several dozen times! But we get it, though: we’re afraid of ticking off that wolf, and lo and behold: the wolf might come out from behind that net and start really nasty grunge fights with each sheep, and instead of a hockey game, we have a slaughter on our hands.

Honestly, Business Risk Is a Lot Like That: an Angry WolfWayne Gretzky wolf

But here we have the key to taming that wolf — we mentioned Wayne Gretzky.

It turned out he had quite the quote that makes perfect sense in hockey —

“You miss 100% of the shots you don’t take.”

When you think about it, that makes perfect sense! And there’s no way around it. Truthfully, if you’re running a business, you have to accept the fact that you’re always going to be facing risk. And if you run away from it, the risk is even greater.

The key to managing risk is to take those chances — and learn from the historical data. Part of the problem is that we think risk is a lot bigger than it actually is. That wolf does look a lot bigger on the ice rink — until you start chucking pucks at him.

Sadly we’re creatures of habit, and before the innovation of technology — the Internet, mobile, Google, Amazon — we didn’t have a lot of “pucks” to chuck at the wolf like Wayne Gretzky would. So we were stuck on the old methods and didn’t want to try something new. And it’s understandable! — after all, we can’t predict much results with new programs or methods, because there’s nothing as far as historical data for us to analyze.

Thankfully, I Have the Goods Here About How to “Take All the Shots” Like Wayne Gretzky and Manage Risk Without Failure:

Here are some tools to keep in mind as you manage risk head-on while moving forward in your small business:

  • Measure, Estimate, Prioritize, and Adapt — Testing and experimenting are the keys to taming that wolf. In fact, we once had a client simply focus on key inventory items, eliminating unproductive factors by just looking at the clicks and monitoring the Google Analytics data. It’s simple. That’s one slap shot you can take like Wayne Gretzky.
  • Follow the 80/20 and 90/30 Rules — Develop your business methodology down to these numbers, and it’ll be a lot easier to forecast results. The 80/20 rule is how you’ll expect 80% of your sales coming from 20% of the offerings you make. So do the math. Likewise, 90% of all perceptions of your product will be realized in your customers’ heads within 30 seconds. So, in other words — make enough shots at the goalie in a short period of time, and you’ll definitely expect a lot of scores.
  • Lastly…. You Will Make Some Mistakes, and That’s OKAY — Why? Because that gives you the opportunity to adapt. After all, the longer you keep making those shots, the more hits you’ll make over time.

In other words: the more business risk you take, the less risk there will be.

It’s Not Easy, and You Need to Exercise Caution, Obviously

Simply be strategic. Don’t go all out. But balance your efforts. After all, Wayne Gretzky didn’t win on sheer will and tenacity alone; he had the skill.

Dr. Bert Shlensky, President of The Startup Connection, directs all small business clients toward maximum sales and profit thanks to his 40 years of high-quality experience. He does this through technological, social, and online integration, supercharging your business success into the next level, so don’t hesitate to sign up for a free consultation RIGHT NOW.

Do You Really Know What Your Gross Margin Is?

Do You Really Know What Your Gross Margin Is?

by | Jul 9, 2014 | Finance Articles

Gross Margin AnalysisThere are lots of great tools, rules, and accountants to help businesses complete and analyze profits, sales, and costs.  Unfortunately, this is an area where clients frequently throw out the baby with the bath water.  They often fail to use Gross Margin Analysis.  Most business people understand the basic rules surrounding Gross Margin.  They just don’t execute them.

Gross profit calculations are best made by item, by category, by customer and many other variables, each of which may be critical to your success.

Gross profit—or “Gross Margin” is simply calculated by the following equation:

Gross Profit = (Sales – Costs) / Sales (more…)

Avoiding the Hockey Stick Plan

Avoiding the Hockey Stick Plan

by | May 7, 2014 | Finance Articles, Operations

Avoiding the Hockey Stick PlanAfter counseling over 1,500 clients seeking to start new businesses, it’s troubling so many of them seem possessed with what can be called the Zuckerberg, venture capital, or hockey stick plan to starting a business.

I typically read 3 to 5 startup business plans a week.  So many are simply outrageous just because of the projected growth curves.

Everyone thinks they are the next multi-million or billion dollar startup.  They find the need to project $15-20 million of revenue in a couple of years to get funding.  This was illustrated recently by the response of a client.  I asked her the basis of her forecast which showed a sales growth rate of 15-20% per week.  When asked about her assumptions she said,

“That’s what the venture capital firms say they want.”

In contrast, many studies of entrepreneurs from IDEO to Malcolm Gladwell contend that slow but steady, multiple product developments, experience, and testing are the best predictors of success. (more…)