Business success is achieved by focusing on three core zones. If it were a Venn diagram, it would look like this:
Let’s take a close look at each of those core zones.
Think of your business success like a set of traffic lights. What do green lights all the way look like? This is having a clear destination of where you want the business to go and a plan for how to get there efficiently.
This destination is often aspirational but it cannot be vague in any way. The future state of your business must be articulated in a clearly laid out plan. This plan is based on monthly financial targets and, when you hit them, signals business success. When money enters and leaves your business is just as important as how much enters and leaves your business.
No plans survive contact with ‘the enemy’ (and by this we really mean markets, customers and operations). The reality for all business owners is that your financial forecast and business plans do not survive contact with the real world. Therefore, your business needs to have an up-to-date and accurate picture of its current financial reality and how this compares to its financial plan. Which parts of your plan are ‘green’ and which parts are ‘red’? The simplest way to answer this is with a monthly budget-to-actual comparison.
This is where strategies turn ‘red’ into ‘green’. Your budget-to-actual comparison will show you which parts of your business are ‘red’ and which parts are ‘green’, as planned.
The beautiful simplicity of this comparison is it shows you the parts of your business that require your attention to ensure success. You need only focus on how to turn the red areas back to green.
But, there is a trap. Success will not be achieved if you don’t focus on all three of these zones. Concentrating on one or two will just not cut it. Businesses that fall into this trap can become one of three things: Disheartened, a Drifter or a Dreamer. You can see these marked on our diagram, too. Here’s what they mean:
This is when a business knows what ‘green’ looks like; they know their current state but don’t take the time and effort to alter their plan by putting in strategies to turn the red into green. They see their beautiful plan turn red, take no action and therefore get disheartened.
This is a common trap businesses fall into. They have a clear idea of their current business state and the business environment. They adjust their business all the time, reacting to this current reality. But, because they don’t have a clear plan for where they want to take their business (what their ‘green’ looks like) they tend to waste time and resources drifting from one place to another and never get forward momentum.
The dreamer is another popular business trap for the unaware. These businesses have a very clear idea of where they want to go and have a clear plan on how they are going to get there, but they don’t take the time each month to get in touch with the current financial reality of their business or the wider business environment.
These businesses are always planning to do great things but rarely do, because like their friends the drifters, they tend to waste time and resources floating from one idea to another without any measure of success or failure. As a result they tend to go around in circles without any progress.
A successful business operates in the ‘sweet spot’ of always knowing their ‘target state’ (what green looks like), their ‘current state’ (the reality) and strategies to turn the red areas into green.
If you would like to know how Reep can help you hit your business ‘sweet spot’ by unlocking its hidden growth potential and financial success, please get in touch with us at www.reep.com.au.