5 Factors for Business Outperformance

One and a half decades ago, I left corporate world and set up my business consulting and CFO Services firm - Capstone Consulting.

Now 15 years on, I am still working with several foundation clients, continuing an amazing business journey with them. These clients have grown substantially from young start-up businesses to now be worth many millions and still growing. It is a privilege and pleasure to work with them.

Here are some of the strategies and frameworks driving success.

1. Think bigger, because...

Solo businesses are fine; however, as soon as you start to employ staff, the mathematics and dynamics changes.

You are in business to create and accumulate wealth, look after family and staff and ultimately exit.

Accumulating experiential and financial wealth as early as possible gives you more business and life options as time goes by.

Life does not work on the principle "I'll be happy when..."

Market opportunities are plentiful, so figure out which ones to take on.

• Ensure you have a pipeline of customer orders and projects to keep your production and service people busy generating more revenue.
• For sustainable revenue, your target market should be a niche where you can beat your competitors utilising speed, inventiveness, quality and price. One of my clients had first mover advantage in chilled ready to eat meals in 2009. By 2016, the factory had grown from 10 to around 200 staff; revenue grew from $3m to $50m. Profits were reinvested in equipment and property. Oh, we won the Telstra Business of the Year 2016 (medium category).
• Set stretch goals which zoom in on ever presenting opportunities.

Key success factors - agile thinking; opportunity seeking; capabilities development; fast product development and production; high product and service quality; cost control.

2. Invest in Marketing

Before you spend a dollar in marketing, clarify your unique value proposition and how to reflect this in enhancing your brand identity. This is important in both B2B and B2C industries.

In the food company example, the UVP was very high quality products at affordable prices making life easier for today's busy consumers. An upmarket restaurant I worked with, finessed its menu offerings by adding engaging historical and geographic themes and promoted this via social media; increased its revenue by 15% in a crowded market.

Key success factors - clear marketing messages and effective use of marketing media - digital and traditional; win positive word of mouth continuously by consistency delivering value to customers; monitoring Marketing ROI and adjusting; customer focus on value delivery.

3. Invest in Product & Service Excellence

This is the where the rubber meets the road and is the engine room of business success with customers. The core competencies of a business drives its ability to drive value delivery to its customers to achieve outstanding customer satisfaction.

The proof of the pudding is the perceived quantum of value by buyers of your products and services. The buying process and post-sale experience are often overlooked as part of the UVP. To the extent that a firm fails in delivering value, then it is destroying customer loyalty, pricing power and brand power.

In services based firms such as professional services, hospitality and trades, the customer value is tracked from the time of inquiry to beyond delivery. Along the way are the traditional KPI's tracking on time, defect free and on budget services.

In product based firms, innovation is continual with constant feedback elicited from customers. Construction work is similar to manufacturing in the tangible creation sense, yet is project based.

An electrical installation and fitout firm I work with has superior skills in large scale commercial project management - the core competency for delivering value in the form of on time projects which are defect free; thus minimising construction delays.

Quality assurance and improvement processes facilitate increased value delivery.

Technology is now an integral part of product and service value creation. There is a lot of synergistic value yet to be extracted in this arena. Often firms fail to use the full capabilities of systems.

Key success factors - Quality audits and follow up; customer feedback; technology driven automation; standardisation; strong project management; timely cost control; effective use of timely KPI's to manage daily operations; product & service innovation.

4. Invest in People

The people in your firm drive product and service excellence resulting in happy customers.

The quality of the firm's people and culture and people processes drives quality customer service and productivity. Culture is enhanced by careful recruitment and ongoing training and communication.

An upmarket restaurant I worked with had often amusing impromptu customer service rehearsals when the restaurant was getting ready for daily opening. This resulted in customers providing higher Google ratings for customer service; in turn generating more new customer bookings.

Key success factors - staff training with a focus on better customer service, and monitoring and adjusting training; providing a safe environment for staff to learn and apply new skills; HR Strategy.

5. Adjust Strategies

Business owners often run out of steam or ideas as time goes by. The organisation then becomes becalmed and slips back in its drive for excellence meeting customer needs. Opportunities for business expansion go begging as the owners get bogged down mentally and operationally.

Business owners must be willing to seek advice for strategy and change management, hire new management staff to be responsible for specialist areas such as marketing, sales, operations management, HR and financial management. Some of these capabilities can be contracted out, especially if not full time roles.

A structural engineering business expanded its services by promoting a civil engineer who then helped turbo charge the growth of that division. A food manufacturer of Indian cuisine expanded its range to South East Asian dishes which added to its portfolio for both supermarket and flight catering sales. A "conventional" electrical contractor diversified to install digital communications (internet) backbone systems which is now its core specialty offering.

Key success factors - adaptive mindset willing to learn and apply; learning organisation; providing psychological safety for employees in uncertain operating environments (pandemics, economic downturns and more); understanding adjacent products / services markets.

As businesses grow (or shrink), it is imperative for owners and managers to seek good help and advice, which is then translated into implementation of adaptive strategies.

As organisations grow, the strategies used and the capabilities required must be adjusted to ensure that effective resources and capabilities are in place.

Owners and CEO's are sometimes hesitant in taking on additional people resources and delegating. Ultimately, this distracts them from using their managerial skills in maximising business opportunities. The result is lost profits, stress from overwork and overthinking, an lost option creating opportunities.

A financially strong firm can embark earlier in its timeline on investing in new equipment and staff or engage in business acquisition. "Time is money" is an apt saying.

Engineered serendipity is a phrase I use to describe positive action steps taken, which then brings new opportunities somewhere in the future (often sooner than later).

Owning and running a business is much easier when a series of ongoing positive action steps are taken in the context of big picture purpose and goal attainment.

Addendum

How a good CFO helps

1/ In today's business, a good CFO has the following background:

* Trained and certified in commerce - finance, law, technology, HR and management.

* Experience in a wide variety of industries.

* Experience in management, planning, strategy, finance, technology, HR, marketing, operations, administration

* Have excellent communication and interpersonal skills to work with anyone

* Is able to stand in for the owner or CEO.

2/ A good CFO is the trusted adviser for the owner or CEO and has a primary focus of helping the owner manager to succeed in business. The go to lighthouse.

3/ A good CFO respectfully tells the owner when they are off track in decision making and helps to bring different perspectives and options to the management table.

When seeking a CFO, make sure that they fit in with the firm's culture.

All the best.

Frank Choy, 9 July 2022