Get Yoda's Wisdom

I'm rarely contacted by a prospective client unless they are in trouble, real or perceived. Most often, their lament is that their growth has slowed or even stopped. And my first question usually is "what's the basis for your growth - that is, why do you want/need to grow?''

Now if that sounds like a strange question, think about it. Growth for growth's sake is meaningless. You should grow for a reason or reasons - gain economies of scale to generate more profitability; or gain the capital to expand our product set, or increase our customer base to create a basis for selling a broader product set into that base, to name a few. Or something as simple as attracting a more experienced management team or even, as a business owner I can take more cash out of the business. There are no meaningless objectives. They are the targets the business aims to meet over time. And it is upon these objectives that the strategies for the business are based. They are what gives the business direction.

A few months back in one of my postings, I attempted to show startup businesses the value of having a business plan. Yet, once beyond the startup phase, few businesses or business owners have a set of objectives upon which they operate and upon which they build strategies, let alone an ongoing business plan. In fact, few, if any small business owners who've been in business for longer than a couple of years, do much planning or objective setting beyond, maybe, putting together an annual budget or forecast. And without specific objectives and strategies, the business, in good times, will wander. And in bad, will flounder.

So when the challenges of an economy like the one we've been in for the last two years occur, the business, in the absence of any firm targets or strategies to get there, begins operating in a "strategy du jour" mode, continually trying to come up with something that works for them, but has no real basis, except trying something new. In the process they waste precious resources and slow "growth" (the only vague objective they might have) even more. As with the old saying, "if you don't know where you're going, most any road will take you there."

As the business owner, what do you do?

Well, do what I do when I first walk into a new client situation and before we go very far into the engagement. I ask them to take a step back and ask themselves the following questions:

• Where do I, specifically, want the business to be over the next 3 years, and why?
• Where do I, specifically, want to be personally, professionally and financially over the next 3 years and why?

I tell them to ask the first question of their key people, as well, especially those in a management role. Get a consensus. On the second question, which, of course, is closely tied to the first, I tell them to ask their significant other or even close friends to help them. Get a consensus here as well.

Just by addressing these simple questions and coming up with some basic, straightforward objectives, the business (and the business owner) now has a foundation and rationale for the strategies it creates and decisions it makes to implement those strategies. It could help better rationalize when, where and how to grow the business as well as potentially exit it. As external factors, like the economy or markets change, adjustments can be made, accordingly, that still keep the business heading in the right direction...for the right reasons.

If this all sounds so mundane and fundamental, it is. But, as Yoda has said many times in these postings, success in most any endeavor - business, sports or life, for that matter, is based on getting the fundamentals right. And they're never very exciting, but they ALWAYS work!

"The Entrepreneur's Yoda" knows these things. He's been there. May success be with you!