Most good businesses that should not be struggling to survive, struggle never the less. It’s difficult to pay their bills or meet their obligations at the end of every business period or season. The big irony of these businesses is that they are sitting on top of a goldmine of resources that can be exploited or activated to produce twice, thrice or quadruple as much revenue or profit in the same period. The average business seats on top between 20 – 50 high-impact “leverageable” that can be activated to boost its productivity. The question is, can they identify these resources? Can they optimise them for maximum productivity?
Also, where are you or your business on this spectrum? Read on to find out:
1. Your Story and Personality:
I bet you never saw this one coming, did you? Let me explain briefly with an example. The word “nerd” is largely a pejorative word for someone who is seen as too bookish and has poor social skills. You probably think you should shy away from such labels, right? A client of mine that is a nerd in the truest sense of the word chose to embrace the label rather than shy away from it, and now makes millions monthly from leveraging this aspect of her personality. She started a company called Nerd’s Paradise, and positioned herself as an expert, teaching and educating people about the benefits of natural living, and now she sells a ton of products month after month. Most of us know of the charismatic entrepreneur Jason Njoku who’s built IrokoTV into a powerful brand valued at $50 million (2015) by positioning himself as the face and voice of the brand. Or even Linda Ikeji, the Blogger Queen, estimated to be worth N3.2 billion, sitting on a leading blog that churns out $65 000 monthly! She’s used her story, and her personality (and yours also) to pocket millions of dollars. You too can achieve this. You have a brand, a product to sell, and an excellently unique personality to build a fascinating brand. Use it judiciously.
2. Data and Numbers:
Consider these two scenarios. Entrepreneur ‘A’ runs his business from the company’s office, he comes to work every day, and sees everything that happens in his business, but doesn’t keep or use the numbers and the various data it produces. Entrepreneur ‘B’ doesn’t work from his business premises, rather he works from an obscure island in the Caribbean, but receives all the relevant data and information about what happens in his business every day. Who do you think will run a better performing business? Of course, it would be Entrepreneur B that works with only data. Data mined from a business can tell its total story – and numbers never lie. By simply installing a system for collecting, processing and analyzing all the relevant data your business provides, you can more than triple its performance.
3. Marketing Budget:
This is closely tied to number 2. The underutilization of marketing spend or budget mostly emerges from the wrong concept of marketing spend. Most businesses view marketing spend as an overhead cost (well, would you blame them? That’s how it’s presented in the Income and Expenditure Statement), and so, they treat it like an overhead cost, trying to generate as little of it as possible. Marketing spend if utilized well, always proves to be an investment, rather than an overhead cost. Costs should be evaluated on how “costly” and should be kept to the minimum required for effective functioning. Investments, on the other hand, should be evaluated on the basis of how “cost-effective” they are, with an eye on discovering the most efficient spend that would bring in maximum results. For instance, if I spend N1000 on marketing and it produced 2 clients, then my cost per client is N500. If I spend N5, 000 on a well-targeted marketing campaign and generate 20 clients, my cost incurred per client is N250. In this case, N1000 was less costly, but also more expensive in the long run, because it was less cost-effective than the N5000 campaign.
If most businesses realize the extent to which they underutilize their customers, and how much that costs them, there would be a revolution in the attitude of businesses to customers. This isn’t only a reference to customer’s spending power, but also their ability to repurchase, refer, recommend, bad-mouth, as well as align and define the whole strategy of a business. If your business treats customers badly or doesn’t collect, analyze, and process data about customers for effective decision making, you may be throwing millions of naira into the Atlantic Ocean without realizing it. No metric (data measurement system) demonstrates this better than the calculation of the Lifetime Value of a Client. A client that spends N2000 on his first purchase, may have a Lifetime Value of N75, 000 or N100, 000. When you understand this, you’ll be able to educate your customer service people that each time they yell at your clients, they are throwing N75, 000 – N100, 000 of your business’s money into the trashcan.
5. People and Talent:
Most Nigerian companies are somewhat structured to underutilize this extra valuable resource. Our environment and culture values hierarchy and respect for elders, superiors, and authority generally. While this is very good, it can also be counterproductive if the attitude is not sufficiently balanced. Most companies, taking this to the extreme, have created cultures where ideas flow only from the top to the bottom of the organization and are implemented without questions, critical evaluation or any form of input from subordinates/employees. It has also led to suffocation of good ideas when they come from lower level employees or those on the wrong side of the corporate political divide. Consequently, we hire good employees and use only their hands and muscles to generate productivity, while we ignore their minds, ideas, and experiences, which are their most valuable contributions. Consider this: the idea for the world’s first externally built elevator was suggested by a janitor (what we know as cleaners or porters) in a hotel. If that had happened in a regular Nigerian business, that idea would have been lost – perhaps forever.
Most managers and entrepreneurs like to believe that they put time to the most judicious use. Often they are wrong. They feel they have heard and learned a lot about good time management. Often they are wrong. Do you do your most productive work at your “best hours”? Have you trained your staff to do the same? Do you spend time on your most valuable customers or you spread your time around the whole list? Do you apportion your time to the most productive divisions, products and markets, or are you always putting out fires in the weak areas of the company? The doctrine of time management is the doctrine of prioritization, and refusing to do 80% of less productive tasks, in order to focus on the more productive 20% factors that make your business fly.