Six Key Aspects of Business Advice

What does it take to succeed? That’s the question all motivated business owners ask themselves. There are basically six key aspects of business advice that will guide business owners to success, and which will equip you — the accountant/business advisor — for success as you advise business-owner clients.

Key Business Advice #1

There are really only two business strategies in the world.

1. What you sell to customers is benefit-driven, and you need to add value to your customers.
2. What you sell is price-driven, and you need to increase your efficiency.

If your business is both benefit- and price-driven, you need to separate your efforts into two businesses. For example, a typical accounting business offers forward-looking planning services (benefit-driven) and traditional compliance services (price-driven). Dividing these efforts into two businesses gives each a chance to thrive. If the accounting firm keeps the businesses as one, the firm will likely, by default, focus its energy on the most habitual practice — usually compliance work — leaving the planning services lacking in leadership, energy, and focus.

Key Business Advice #2

There are only four ways to grow business profit.

The four paths to profit are based on this simple truth: total revenue – total cost = business profit. Therefore, to grow business profit, you must increase revenue, decrease costs, or both. Following are your four options.

Increase Revenue

1. Get new customers.
2. Do more transactions with your existing customers.
3. Increase price/value of each transaction.

Decrease Costs

4. Become more efficient.

Decide which of these four options is the most important or best option for growing your business profit and lead your company in that direction.

Key Business Advice #3

Implement a continual process to reduce waste within your business by looking for the “Seven Wastes.”

1. Waiting: Where do things wait, slow down, or happen really slowly?
2. Defects: Where do things regularly go wrong or break?
3. Process: Where are there wrong processes, no processes, or outdated processes?
4. Over-engineering: Where do we overdeliver, or do too much for the money?
5. Inventory control: Where and why do we have too much stock, too much work in progress, or overdue debts?
6. Motion: Where do we have poor production flows or communication flows?
7. Transport (outside the business): Where do we have poor logistics and communication flows?

To analyze your business using the Seven Wastes, create a team of five to 20 people from different departments and with differing experience levels. This team will be tasked to identify and correct one or two big inefficiencies and many small inefficiencies. Not only will your business become more efficient, but your team members will develop a greater connection with one another and your business will experience a positive net impact that goes beyond increased efficiency.

Key Business Advice #4

Consider whether your business will deliver growth with tangible or intangible resources.

From the 20^th century to the 21^st the business world has seen a significant shift from tangible to intangible. Tangible resources previously deemed necessary for growth include machines, equipment, buildings, and employees. Twenty-first century businesses increasingly focus on intangible growth resources, such as technology, process, data, and subcontracted work.

Today, more than 80 percent of the average business’s value is intangible. Business owners must consider or reconsider how they can most effectively deliver growth. Companies like Uber and Airbnb are perfect examples. The world’s largest taxi company owns no taxis, and the largest seller of hotel rooms owns no hotel rooms.

For business owners to succeed they must think virtual, outsourcing — intangible.

Key Business Advice #5

What you can measure, you can manage.

Measuring is a good way to show that something matters. There are three types of business measurement:

1. Past: accounts — monthly, quarterly, annual
2. Future: forecasts — cash flows, working capital requirements, etc.
3. Present: key performance indicators (KPIs) — Measure what is strategically important to the business.
   1. Why measure KPIs?
      1. It drives team behavior.
   2. What should a business measure?
      1. Accomplishments toward strategic direction.
   3. How and who should a business measure?
      1. Be creative with measurement and use it to create accountability.

Key Business Advice #6

Culture eats strategy for breakfast.

Business leaders need a vision, a plan, and desire. They also need to understand that team engagement has replaced authoritarian leadership in the 21^st century. Help your business-owner clients combine collaborative culture and process and let go of “command and control” leadership.

To build a successful and collaborative culture, business leaders need to communicate better and more often — as much as ten times more than they think they need to — on the key culture elements of vision, plan, and mission.

1. Vision – Where are we going?
2. Plan – What is your job? — a question for each employee.
3. Mission/purpose – Why this business matters.

Business leaders who want to create a successful culture and increase profits will need to follow these five steps:

1. Have a vision and a mission, and establish company values.
2. Have a plan.
3. Implement the plan, which takes desire.
4. Continue to control the direction of the company, which requires a sustained desire.
5. Throw off discouragement, which requires continued strong desire.

 Better leadership is a choice.

Paul Latham is a serial entrepreneur, a chartered accountant, and a founding member of HaydenRock Solutions. Paul originated the business planning process which is today at the core of The HaydenRock System™. Those processes were developed with the aim of helping business owners clarify their direction and maximize their business potential.

See webinars presented by Paul and other CPA Leadership experts: Webinar Catalog