The mantra of big is better is now bust. That headline dash for growth over the last decade has the characteristics of an Olympic luge event.
A headlong rush in arctic conditions to a virtually uncontrollable outcome at the bottom of a very steep mountain.
So, in a business context, one might say this is a self induced explosive rush over the cliff of business probity to failure and bankruptcy.
Too many businesses have lost sight of the fundamentals of sound business management.
This applies to any business whether they are global, national or community based.
Here we explore the ‘Old’ and ‘New’ business models and offer some questions you might need to ask yourself.
The 1990′s Model
Big is better! This is rather like the benefits of Viagra or plastic surgery if you will – which I will leave to your imagination in this more prosaic article.
Yet in the last decade many entrepreneurs, boards of directors, shareholders, owners and managers became fixated on the illusion of growth – rather like a Bernard Madoff or Ponzi scam in reverse.
Why in reverse?
Let’s explore this a bit more. In the Madoff scam the model is – you give for the lure of exotic rewards and I (Madoff) take – you see nothing of what I am doing.
But in a business, it’s more a question of – I give or have to promise the exotic rewards and you take and then you want more.
So to deliver more I have to inflate my business either in reality or in fantasy – by falsifying the figures. Think Enron and any other growth bubbles like dotcom, housing and speculative commodities.
They’re may, of course, have been some help and even encouragement from banks and other lenders such as Venture Capital funds on the way because they were slavering on the same gravy train.
The 2010′s Model
Here of course we can go ‘hair shirt’ and ‘I told you so’ and ”you are just too big for your boots!
But let’s be positive and constructive and map a way forward.
So, what do we find now – December 2010? Never mind the ‘noughties’ mantra – what ever that was.
The drivers of the ‘fools gold’ prosperity have run in to a brick wall.
The ‘growth is everything’ model won’t survive in the current climate of austerity.
Business volume is not the same as profitability.
What does that mean for your business?
Here are some outline questions for you.
1. What are you trying to achieve?
Something to intrigue and challenge you?
A redefinition of current perspectives?
A good life style?
Something to leave to your family?
A premium based exit sale?
2. What is the ‘right size’ is for your business?
Think bottom line profitability not turnover.
Have a clear understanding of what it is that customers value from what you sell.
Understand what the characteristics of a good customer are.
Make sure you sell it at a price that reflects cost and buyer’s perceptions of value.
3. How will you know you’re on track?
What your customers tell you
What your staff tell you
What your performance data tell you
And the Final Message
You are totally unique. This article is just a prompt for some of the things you might want to think about.
- Small Business News: Small Biz Survival
- Google’s Chrome Business Plan – Quentin Hardy – At Your Servers – Forbes