Build a Lasting, Powerful and Agile Business: Trim the Fat
In a recent post Soft Tissue Seth Godin made a great analogy of how businesses are similar to humans but, didn’t properly distinguish between fat and muscle which are both soft tissues. When rehabilitation and medical professionals refer to soft tissue damage we are referring to anything that is not bone, but primarily fascia, nerves, ligaments, tendons and muscles.
Humans need a certain amount of fat to function properly and be healthy; the amount varies between men and women. Too much fat poses many health risks including diabetes, cancer, stroke and cardiovascular disease and early death. To little is also detrimental.
An organization that lets itself be overwhelmed by the small but insistent demands of too much soft tissue gets happy, then it gets fat, then it dies. – Seth Godin
According to Harvard Health fat cells are metabolically active. Fat is a soft tissue that is also an excellent source of energy – ATP that well trained endurance athletes depend on to fuel themselves.
Fat Doesn’t Fly – Dr. Mike Young, Strength and Conditioning Coach Vancouver Whitecaps; NSCA BC Provincial Symposium 2013
As Godin mentioned and Dr. Young in his presentation on training power athletes so eloquently eludes to too much fat will make a person or organization slow, sluggish, unable to respond quickly to imposed demands such as market shifts and could lead to an early death (bankruptcy).
So how can we build more muscle into a business to be more responsive while trimming the fat to a level where the business can outlast its competition?
How to Trim the Fat
Figure out what products or services are main profit drivers and jettison those that are not delivering
Over time businesses become bloated and they shift away from their core competencies in their efforts to keep up with the Jones. Coca-Cola tried this with the new coke formula which was vehemently rejected by the public so they retreated back to their original formula. A pie business gets their fingers into too many pies trying to please everyone, but have maybe five pies which represent 80% of their profits. The other 50 pies eat their profits!
Move or get rid of underperforming employees.
Underperforming employees are another source of excess resource including time and cash . Perhaps everything has been tried to train and rehabilitate them so that they are B+ to A+, but it still isn’t working. See if another role in the organization they are better suited for; if nothing is available it is time to let them go.
Review the budget regularly
Bloated budget! Watch any documentary or interview with Warren Buffet to learn that he believes in keeping the budget very trim, which leaves cash (muscle) to grow the organization. In a tax bracket of 40% a savings of $6 is an earning of $10. Paying consumer credits cards off frees up cash that the credit companies will gladly devour at 18% or more.
Review the budget every quarter to see where an additional 10% of savings can be made. When cash flow is tight do this every month or bi-weekly. Also, always manage with cash flow in mind.
Take care of your team and clients. Cut the fat where people don’t see.
Just like humans, a business has certain needs to operate and deliver the services or products in an efficient and differentiated way. A personal training company once took away the water cooler to save money. The clients and personal trainers were very irate because this action diminished the personal training experience. Southwest Airlines is the only airline to have never laid of employees.
How to Build Muscle
Build a business that is self-funded.
Cash on hand and employees who are willing to do the heaving lifting are is the muscle to build a powerful and agile business. Ensure that some cash is set aside each month for business growth, debt payment, emergencies and savings. For entrepreneurs like myself who are great technicians Sandra Simmons’ in Cash Flow Mojo Software delivers an easy way to do this for a minimal monthly investment of time and cash.
If you need to borrow or get an investment be sure that the revenue generated can pay off the investment in a minimal amount of time.
Find A+ employees or train B to be A+
A software developer would only hire B grade programmers. Find and get them on board, train them and support them well. This takes discipline and patience however the rewards will be there. According to Warren Buffet these people have integrity. High performers are passionate about their jobs and the company they work for.
Get the Right People on the Bus
How to Become Powerful and Agile
In the body we have nerves that deliver the spark for muscles to react and move quickly. The next step in developing a fast and reactive nervous system.
Read, Listen, Communicate, Share and Learn
Invest in educational opportunities. With social media and the internet cost and travel or less prohibitive. Read as much as possible about the business area of expertise as well as outside of it. Subscribe to industry journals, blogs and papers. Connect with people in the same, similar and related fields. Have conversations with them about what they are doing, perhaps an idea will be sparked. Attend conferences, workshops and webinars not just in the business main technical area, explore general business areas as well.
Be Passionately Curious – Dale Carnegie, How to Win Friends and Influence People
Cash set aside can easily and quickly be used to take advantage of any new ideas or opportunities.
Our brain makes more and strengths these neural connections the more we stimulate our brains. Perhaps one day something learned in a conference, conversation or read in a blog will light an idea that will deliver even greater business success. Research is also showing that cognitive activities staves of dementia.
Muscle converts fat to highly efficient energy to create movement. Use muscle for business growth and further cash rewards which continues the cycle of business self-funded business investment. Also, remember to keep enough fat to function properly without diminishing returns.
What are your next steps to building a powerful and lasting business?