If you missed the 1st blog of this series, you can read it here. In my initial blog, I left you with 2 questions and a note:
Questions: Are you (and your business) willing and able to change or evolve your business to ride the tide?
Note: Willingness is an internal capacity (self and within the business), Ability is external capacity.
I want to explore this some more. I’ve mentioned the current buzzword, ‘pivot’. It’s the term being used to talk about how businesses have managed to change their business models in order to be able to operate or survive during the pandemic and lockdown. Some businesses pivoted by going completely [digital] online or changing parts of their operations, whilst others became an entirely different business all together. Now, I think we can all appreciate that it doesn’t work that way for every business but I want to believe that most businesses have capacity to ‘pivot’ to some lesser or greater degree. So let’s get into it.
As I’ve noted; willingness is influenced by internal factors and ability is influenced by external factors.
- Internal capacity in this context is both individual and organizational. This capacity is about individuals in the business, acknowledging, accepting and working together towards the desired evolution and change. This is the first step. You have to get all the stakeholders buy-in. Typically this will be the business owner(s) and employees.
- External capacity speaks to what is practically feasible based on the resources and physical capacity you have which are typically around capital and expertise.
I cannot stress enough that you need both capacities to evolve or change your business successfully. The bad news is, we don’t often have both capacities ready, and usually not at the same time. The good news is you can create these capacities. I am not talking about Organisational Change Management here because a) nobody has the time for a long drawn out process b) time is of the essence so refer to a).😉
Willingness: Creating internal Capacity
This is an exercise that you need to complete to help you determine your [business] readiness for change.
Here’s my 6 step thought process:
- Current Status (bad news vs good news) – List all the positive aspects or resources of the business that are still working in the current environment? List all the negative aspects and the resources you need for the business to operate in the current environment. The negatives will give you an indication of what you need to fix, replace, purchase, etc. It’s the start of understanding not only the cost of the change but also it may help you with step 2.
- New Business – Define what the new business model will be. What is the new/improved value proposition you will be offering the customer? Who is the customer – is it still the old customer or is it a new customer or both? You would think this would be step 1 but I believe, after the initial assessment you are in a better position to develop a business concept that is more viable for your circumstances.
- How you fit – Especially if your business requires other people (employees) to operate, write down each persons role and responsibilities in the ‘new’ business. This will help you identify the right people for any new or modified roles and the skills gaps you need to fill. This applies to you too, the entrepreneur and business owner. You too may need a skills upgrade.
- Training & Learning – Identify the type of training or learning that all the stakeholders need because of the change. This might seem like it’s just going to delay things but it is important to make sure you have equipped yourself and your team with the necessary skills to do the job even if the training is at an accelerated pace. Without training, you might find that change causes frustration within the team and with your customers too. You might think your idea is failing when it’s really a learning curve you need to overcome.
- Implementation – Note down how the implementation process will go. Include your outreach efforts; how you will communicate with your customers (marketing & customer service) about the ‘new’ business. Consider also how it affects your supply chain if relevant.
- Monitor & Improve – Once you get started, do not forget or underestimate the value of monitoring your progress. You can only improve as you learn from your mistakes. Put in place measures that will enable you to monitor and assess how you are progressing so you can make changes quickly and effectively. For instance, implement regular employee and customer feedback surveys so you can respond quickly to feedback (positive & negative).
When you have all this written down, it should give you a clearer picture of the internal capacity to implement the changes required. You can identify the strengths and weaknesses and make a decision about how to either take advantage of them or to address them.
Ability: Creating external capacity
You may be fortunate to discover that the changes you need to make in your business will not require large capital expenditure and the expertise/skills required are already available inhouse. That way, it may be a relatively straightforward reorganization of your current setup. On the other hand, you may find you cannot make changes without injecting money into the business and possibly adding new skills to the team. You might realize you need new specialised equipment, software, training, etc in order to successfully implement your new strategy or business model.
In the first instance, it’s a no brainer, you can go ahead and make changes. In the second instance, it will require more creativity and external support to put things in place. So how can you create this external capacity?
Careful Spending – Buy vs Lease. Hire vs Contract. Only spend money that you really have to spend. If you need office/retail space, explore options that allow the most flexibility to start. If you need an expert in a specific field, consider contracting them for fewer hour/days when you really need them until you are sure you can make a longer and more expensive commitment. Do you need to buy the delivery truck or can you lease it to start? These are just some examples of the questions to ask yourself before spending money and especially committing to long-term contracts that may cost more to get out of when you need to.
Collaborations & Partnerships – Always look out for synergies. Find businesses that can complement yours and be willing to share the pie. By pooling resources (capital & expertise) and adding more value to your product/service offering you may find that you can achieve more and work smarter. Successful collaborations & Partnerships require an open mind and willingness to compromise – not your principles or ethics but the way you do things. Partnering with others can be a source of innovation. Many times, entrepreneurs and business owners hold onto their business so tightly because they want to say “it’s my business” or “I want all the profits” even when the business is barely surviving. A well-considered partnership can bring amazing value to the business. You might be sharing the ‘pie’ but it is a much bigger pie than before.
Reinvest – My partner and I have always made it a priority to save and invest. We have an automated order that puts money away every month even in a bad month when cashflow is bad. If you do have savings, this is the rainy day (year) you’ve been saving for. If you had not been saving or investing, let this be a lesson, that it is an important practice and habit to cultivate.
Debt Finance / Credit – No, these are not swear words. Debt has a bad reputation. To be fair, the reputation is rightfully earned. But there are also some good reasons to have it. Debt can be useful if taken for the right reasons, with fair terms and most importantly with responsible intentions. Living in South Africa before immigrating to Canada, I found that both business people and banks were very risk-averse: entrepreneurs did not want to borrow and banks did not want to lend anyway. This can be stifling when you are trying to start or grow a business. Clearly map out your business and most importantly identify and be brutally honest with your cash flow projections. Based on that, apply for financing or a line of credit if you need it. Debt only becomes bad when you don’t pay it back and it’s absolutely painful when you have used the funds irresponsibly or unproductively. Avoid at all costs, unproductive debt. Only borrow money that, in its use, it will make more money. For instance, borrowing money to pay office rent would not be productive debt if an office is not essential for you to be able to run your business.
At this point, you should have established if you are ready to pivot, to what extent and you have the beginnings of a plan on how you will implement it all. I would recommend doing this brainstorming exercise with other people you trust and especially those who tend to have a different approach to how you usually do things. It’s very difficult to change your usual way of thinking without someone else to help you see things differently.
Next week I’m going to cover 2 topics in 1 blog: Digital & Convenience & Health & Safety.