Creating a well rounded business
Becoming a well rounded person is an almost universally desirable objective – creating a well rounded business is also a desirable objective. How might you go about the process of creating a well rounded business? After all, you can’t exactly send your business off to finishing school, a gap year, or the big OE (Overseas Experience).
Take some time out and select some areas of your business to serve as initial headings. It’s ok to use a fairly broad brush at this point, you can drill down to more detail later. You’ll probably end up with headings such as sales, finance, accounting, strategy, communications, training, marketing, staff, R+D, plant and equipment, and so on. You’ll need to adjust the headings to reflect your business.
The next step is to rate where you and/or your business is at on a scale of 0 to 100 where 100 is equal to the very best. Because I’m a visual person, I like charts – create a radar chart (aka spider chart, star chart, clothesline chart, umbrella chart), and then from a distance you can see gaps, or signs of unevenness.
In this quick sample chart I built in Excel we can see the business sales are ‘lagging’ compared to marketing – these would be working in concert, and the measures we’ve used are little better than guess work at this point. In general terms it appears our company has got communications, finance, and accounting well in hand, the staff seem trained and ok, however, strategy, plant and equipment, and research and development (R+D) seem to be problematic. This doesn’t mean the business is necessarily in trouble – this is when you would start to drill down and find out more information.
Looking at this chart I imagine it could be of a manufacturing business that has been established for years, with long term staff and experienced management. The low points suggest ‘slipper’ levels of comfort (“We know what we sell, we know our market, we know how to make it and sell it at a good profit, and we don’t need any new computers to tell us this”). The company would probably hold good information about turnover, variable and fixed costs, gross and net profits, earnings, working capital, stock, debtors, cash, creditors etc; and perhaps rather less information about sales and marketing, and less again about the development of new products and/or business opportunities. Anything below 30% requires further investigation, however, none of this means anything is necessarily bad or wrong. It is possible for a well run niche business to have a chart like this, and be very comfortable all around.
Once the big picture is resolved, the next step would be to look at each of the topic areas, and tease out more specific information. In my case I’d chart them again, with subtopics forming the arms of chart. In the case of marketing I’d use the standard marketing mix split – price, place, product, and promotion – and then look at aspects inside of those topics in more depth. As an example, for promotion I’d look at the advertising (press, journal, radio, tv, point-of-sale, web, publicity etc) and see what information was available there, and then I’d take the numbers (0-100) and average them for the point on the chart.
Creating a well rounded business requires you to focus on areas for development without losing sight of the big plan. The object of the exercise is to find areas of your business that could do better, and then work on that area to improve it. It’s vital that you don’t ‘optimise’ one part of your business at the expense of another. In six months time, take another look at the overall business. If you keep the charts and overlay the images, over time you’ll see where the business has become more rounded. There’s a further benefit in this kind of regular review – again, over time – quality is likely to improve.
