Based on his experience as a world-class manufacturer and award-winning fashion retailer, Donald Cooper works with business owners and managers throughout the world, helping them to sell more, manage smarter, grow their bottom line...and have a life! We recently checked in with the speaker and coach to get his insight on running a small business. Here's wha the had to say:
What were some of the most important lessons you had to learn as a business owner during your career?
In my early days I was so focused on creating extraordinary customer value and experiences that I failed to pay enough attention to important things like inventory control and cash management. We're all better at or more passionate about certain aspects of the business but, to be successful, we must proactively manage all parts of the business. We must create compelling customer value and experiences, world-class operating efficiency and a talented and engaged team. The problem is that many entrepreneurs simply don't have the management knowledge and tools, they're pressed for time and they just don't know where to begin working "ON" their business. So they work "IN" the business and hope for the best.
What are your favorite resources for small business owners? Where should they go when they need advice or education?
As a management speaker and business coach for the past 20 years, I've developed my own insights on value creation, proactive marketing, management, winning the talent wars, understanding the math of profitability and creating a clear Vision for the future of one's business. Then, I've created a set of "Business assessment and management implementation tools" that guide clients to take effective action. Those free tools and my 34-page Vision Critical Guide (which is $24) are available at donaldcooper.com/fbt.
What are the most common frustrations your small business clients come to you with? How do you help them?
That's a great question ... but not simple to answer. Business challenges can be market-related, they can be internal operational problems, or they can be fundamental "vision and clarity" problems between family members or partners who disagree on where the business should be going and how it should get there. There can also be a toxic mix of all those kinds of problems wrapped up in one business.
I believe that the biggest challenge facing most businesses today is that there are too many other people selling what they're selling. There's too many of everything except taxi cabs in New York when it's raining. Every market is over-served and under-differentiated. So, mediocrity is no longer an option. To succeed, we must create, deliver and communicate compelling customer value and experiences that "grab" our target customers, clearly differentiate us from our competitors, make us "famous" ... and grow our bottom line. Then, we must achieve world-class operating efficiency.
What areas of management do you think most business owners could improve?
Once again, not an easy question. My grandma Cooper never ran a business but she understood business leadership when she used to say to our dysfunctional family, "We need to get everyone singing from the same hymn sheet." As business owners, leasers or managers, that's our first job ... to get everyone singing from the same hymn sheet. The problem is that in most businesses, there is no "hymn sheet." There is no clarity. The first job of any business owner, leader or manager is "clarity." Nobody talks about this.
There are six specific things that we must be clear about...
1. What we commit to deliver. The compelling customer value and experience that we commit to deliver, every customer, every time.
2. How we will proactively communicate and market our compelling value. There's no point being the best if we're also the best kept secret.
3. What we commit to become. Our clear Vision for the future of our business in three to five years.
4. Exactly how we'll get to that extraordinary future. What must we do each year to get to our Vision?
5. The extraordinary profit that we commit to generate.
6. How we commit to behave along the way. Our values, ethics culture and standards.
If we at the top of the business are not clear about these six things, who else in the business can possibly be? Most businesses lack this kind of clarity. They've created a vacuum at the top of their own business and it's killing them.
Another area in which most businesses could improve is understanding the math of profitability. The approach to profitability in most businesses is, "We'll do our best and hope for the best." Our profit is something we plan for, not something we hope for. Every business should have a three to five year "profit commitment" on one piece of paper.
Business owners generally don't understand the "math of profitability." Here are three questions that I've been asking clients for 20 years...and nobody has know the answers:
1. If you could increase prices by just 5 percent and you're so good at what you do that nobody noticed or cared, what would be impact on your bottom line? The answer is that you could grow your bottom line by 70 percent to 100 percent.
2. If you could increase sales by just 5 percent without blowing your brains out with too much advertising or price cutting, what would be the impact on your bottom line? The answer is that you could grow your bottom line by 25 percent to 40 percent depending on your industry and your gross margin.
3. Finally, if you could reduce operating expenses by just 5 percent what would be the impact on your bottom line? The answer is that you could grow your bottom line by 20 percent to 28 percent.
Nobody gets this "profitability" stuff. We need to be serious students of our numbers. Sit down with your accountant and figure out the exact "math of profitability" numbers for your business.
What are some of the most common management mistakes you see business owners making?
The most common mistake is spending 95 percent of their time working "IN" their business and 5 percent of their time working "ON" their business. It won't run itself. I get my coaching clients to commit to spending at least eight hours a week proactively working "ON" their business, usually in two four-hour chunks. Then, I give them my set of Business Tools that I've already talked about to get them started. The results have been extraordinary for those who have made the commitment.
Why is it important that business leaders have a clear vision of their company's mission?
It's important because you can't get from here to there if you're in denial about where "here" is and you have no idea where "there" is. Our first free business tool is our one-page Business Key Challenge Audit Sheet. It lists 24 typical business challenges, it takes just four minutes to complete and it creates clarity about where the business is now and what needs fixing. The business owner and each member of the management and supervisory team, and a few of the front-line people, complete it and then the boss analyzes the sheets to see where everyone put their Xs. This simple exercise is incredibly revealing as to where are challenges are, who "gets it" and who doesn't and where our efforts need to be focused.
Then, our 34-page Vision Critical Guide delivers a process to create a clear, specific and measurable one-page "operational" three to five year Vision Statement for any business.
I've spent seven years studying the important subject of business Vision and here's what I've discovered. There are two kinds of Vision Statements. "Aspirational Vision Statements" that are vague, general, airy-fairy and generally meaningless statements about what a business aspires to become and then there are clear, specific and measurable "Operational Vision Statements," six points on one piece of paper that inform, focus, challenge and inspire everyone on the team from top to bottom.
Most businesses have the vague, meaningless "Aspirational Vision Statements" and may have paid a consulting firm big bucks for, or they went on a "Management Retreat." Look up the word "retreat" in the dictionary. It means to go backwards. Yet, we go on a retreat to figure out how go forward. It's goofy. There "Aspirational Vision Statements" sound like this...
Our Vision Statement
We love our customers,
We honour the diversity of our staff,
God's a nice person,
The planet's a great place to hang around,
We'll work hard and have fun.
This tells us nothing. It's an embarrassment, but this is pretty much what most businesses have a a Vision Statement. Businesses need a one-page clear, specific and measurable "Operational Vision Statement."
So, if our Vision Statement is a clear, specific and measurable statement of what we commit to become in three to five years, what exactly is our Mission Statement? Our annual Mission Statement is a clear and measurable statement, six points on one piece of paper, of what we commit to do each year to become our three to five year Vision. If we don't do specific things each year, we'll never get to our Vision.
Finally, from our annual Mission Statement comes a detailed annual "Commitment To Action" that states clearly what will be done, by whom, by when, rewarded how. This is the pesky implementation phase where so many businesses fall down. Businesses don't die from a single shot to the head. They die slowly but surely from a 1,000 uncompleted tasks.
How can leaders make sure their teams understand and believe in the Vision and Mission?
First, they should be participating in creating the Vision and Mission. And they understand the importance of their specific role in making it happen. The Vision and Mission are a "secret" in most businesses, seen only by the top three people. This is just wrong. And staff need to know how the business is doing...but most businesses don't share that either. Imagine a sports team playing without knowing the playbook or knowing what the score is. It's a ridiculous thought ... but that's exactly what happens in most businesses. And then they wonder why their employees are disengaged. Go figure.
Then we need to celebrate performance and deal with non-performance. Failure to deal quickly with non-performance is one of the biggest problems in most businesses today.
What advice can you offer business owners on growing a trusted leadership team?
The real battle in business today is the battle to attract, grow and retain talent. Free Business Tool #28 delivers real insight into this challenge, along with Tools #29, #33 and #36. My advice would be, first to create clarity, as I've already talked about and then when you're assigning projects, always ask this simple question, "By when can we agree that this will be completed?" Document the commitment and always follow up. The world is run by those who follow up.
What can business owners do to create an attractive work environment to new talent?
Another important question. "Culture trumps strategy." Creating a culture of clarity, integrity, communication, commitment, joy and appreciation engages new talent and veterans. My free Business Tool #27 describes the 13 keys to creating a "winning culture" and provides a space for you to rate your performance on each of them.
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