Summer is over. The kids are back in school, fall sports are in full swing, and football is on TV again. This is a perfect time to evaluate your business to ensure you’re taking steps necessary to achieve your 2018 financial goals. Today’s article is a reminder of how your business makes money and the obligations at each level. Focus on being the best at each level, and you will be successful.
How YOUR Business Makes Money
It doesn’t matter if you are a major corporation with tens of thousands of employees, or a sole proprietor working for yourself. The way your business makes money is the same. If any part of this process breaks down, you will not be profitable. The entrepreneur might be doing all these roles, while major corporations may have multiple people at each level. Either way here is the nature of business, and how YOUR business makes money.
A business exists for the sole purpose to make money. It’s great if your business also helps the community and does charitable work, but if the business doesn’t make money eventually it will cease to exist. Because of the very nature of a business, it needs to either grow or it will die. Only 12% of fortune 500 companies in 1955 were still in the fortune 500 in 2015. Strong companies are out of business, because they didn’t grow and became obsolete. This is even worse for small companies when they let the fear of growth hold them back.
The executive leadership of a company is responsible for the company making money. They determine growth strategies and make large business decisions. When a company struggles, or fails, it generally isn’t because the person on the shop floor failed. The executive management has to be forward looking. What is good enough for the business today isn’t going to be good enough tomorrow. At the fast pace that business grows, it is important for executive management to continue looking to the future.
Executive leadership at major companies can make the mistake of doing business as usual. This is even more of a threat of small companies or “solopreneurs.” Often times an entrepreneur starts a business because they are really good at providing a good or service. They can see success early and want to continue doing what make them successful. They can easily get bogged down in their daily grind and not take a moment to observe, and adapt to changing business trends. This can lead to them being obsolete in a short amount of time, driving the failure rate of new businesses.
Managers lead teams of individuals to create products. They “manage” the strategies and business decisions that the executive management make. Managers define, organize, and manage the execution of tasks. They work the front lines with the individuals that create the products and provide the services. I’d like to stress the importance of this position. The managers role in making money is to find productive and efficient ways for accomplishing the company’s strategies. The more effective and efficient teams are, the less production costs there are, and the more profit a company makes.
For any work to get done, someone has to do it. Individuals are the ones answering the phones, working assembly lines, cleaning hotel rooms, and serving our food. Without these people, managers have no one to manage, and executives have no one executing the strategy, and the business fails. Products and services are not produced. To take this even further, your company’s products and services are only as good as the people producing them. If you have poor individual employees, you’ll have poor products. If you have the best individual employees, you’ll have the best products.
This Week’s Challenge
Take time to recognize the importance of every level in your business. If you are the entrepreneur, you have to fill all these roles. A business cannot succeed without someone filling all these roles. Create a professional development plan for all levels of your company, and commit to being the best. It is the only way to achieve true security in your business and livelihood.
If you would like to discuss more ways to help your business grow or if you feel you have a specific problem that needs to be addressed, please reach out to me!