What Business Foundation are you Laying Down?

When I work with clients on growing their business, a key part of the process is identifying and laying down the business foundation that will be essential growth and success.

You may say, why a foundation?

Well, everyone knows of businesses that have grown fast and then gone bust in a moment. Recent high profile examples are:

• Theranos: (Elizabeth Holmes)
• WeWork: (Adam Neumann)
• Quibi: (Meg Whitman)
• Jawbone (Hosain Rahmann)
• Pets dot com (Julie Wainwright)
• FTX (Sam Bankman-Fried)

I let you google their rise and demise.

As with any building with poor foundations, cracks in a small part of the foundation will lead to the WHOLE building being impacted.

The same is true in business.

But without exception ALL of these companies had foundations that could not support the businesses that they were creating. A lesson for us all, and I want to highlight the salient lessons that I believe are critical to have in place to grow business sustainably and profitably.

1. Make sure that your business (value proposition) is clear:

This was so true for WeWork, who 'blagged' billions from investors in creating a rental model for companies that was in a same league as companies such as Regus, Impacthub and Techspace.

Although they had some key service innovations, the business model was largely on getting rent collections from companies and filling spaces at their premises. When the pandemic hit, the business lost even more money and eventually failed.

Pets dot com failed because it thought that people wanted to order pet supplies from them online rather than get it from their local supermarket. Poor market research did not establish the pain point of this huge market.

So you need to ask yourself this question.

What is the pain that you are solving? And how can you solve it? More importantly, will people be willing to pay you a fee that you can make a decent profit on.

2. What is the business culture and values that underpin your business growth:

If you do a deep dive study on many of the businesses that we have highlighted, poor leadership and ethics underpinned their demise. If you create a culture of bullying, lying, subtefuge, duplicity and falsehoods, then you will reap what you sow. Elizabeth Holmes and San Bankman-Fried philosophy of 'Fake it until you make it', demonstrates the falsehoods of hubris that is out of control.

Invariably these organisations have a network of leaders who have the same values and ethos to propagate the falsehoods. Folks, it is shaky ground!

So you need to ask yourself this question:

What are the cultures and values process that I have in the business to ensure that we do not end up in employment tribunals, social media or newspaper outlets?

3. What are the processes and systems to give you real time access to how the business is performing in financial and non-financial areas?

Without exception creating, recording and analysing data from all aspects of the business is essential for growing a sustainable business. FTX was a multibillion business run on 'spreadsheets'. Wework had no oversight or accountability to the excessive spending of Adam Neumann on 'non-essential' business expenses.

Jawbone's business had very poor gross margins because they could not differentiate a clear value of why somebody should buy their product compared to competitors. When the customer sees not advantage in buying your products compared to a competitor then the future is bleak, due a war on price being the only differentiator. Your systems need to tell you the truth quickly.

One key process that most businesses do not have is either good external advisors or non-executive directors who are able to ask the difficult questions and to hold executives to account. All the above businesses needed great people around 'charismatic' leaders to help them to ensure they stayed on track.

So you need to ask yourself this question:

Are the processes are systems that we have in the business enable us to monitor the key performance indicators in real time as well as hold the team to account on performance?

I know there are more and this is a starter for ten.

Reach out if you want to know how our clients have successfully adopted these strategy and tactics to achieve double digit growth and profitability. Click on the link here to have a FREE chat.