How many times have you said, “If only I knew then what I know now”? Most of us realize hindsight is a valuable thing. So why, as business leaders, do we jump to making a decision before we fully understand the potential consequences of our actions? Time is money, sure, but not defining the endgame before investing can mean that the investment doesn’t yield the intended return.
As a growth strategist, I often encounter leaders who have moved forward with a resolution to a problem or invested in a new system before understanding all of the implications – and ended up paying the price. It is a ready-fire-aim approach. There is great value in figuring out the exact target you want to hit before you pull the trigger.
Here are four common scenarios that would greatly benefit from starting with the end in mind.
- Who should your company sell to? For many, the answer is anyone who has a checkbook! But all kidding aside, not all customers are created equally. The best customer is not necessarily the one who takes all the new products and pays on time, although that is certainly helpful. It is the customer with whom you make the most money, can grow with over time and who values the benefits your company offers. If you had 10 more customers like your best customer, what would your business look like? Before you turn your sales force loose, define which customers would most benefit your business.
- What system should you buy? A client recently bought a CRM system. While it is a popular one, it is also expensive, and its bells and whistles mean that more fields must be filled in by more people, requiring more dedicated time to make it useful. Guess how that is working out? You know as well as I do that new systems often fail to meet their payback models because they are not used as projected. When you buy a new system, the first question needs to be “What do WE need it to do to add value to the company?” and it needs to be asked and answered before you ever invite a vendor to “tell us what your system can do.”
- What person should you hire? One of the toughest things to get right can be deciding whom to hire. For that reason, the Helzberg Entrepreneurial Mentoring Program (a group that I belong to as a mentor) has a saying: “Hire slow and fire fast.” Hire slow means be sure you know what you need and be relentless about sticking to it so as not to make mistakes that are disruptive to the business.The organization must be clear on not just what kind of skills are needed and what its culture fit is. The organization has to know where it is going and what kinds of capabilities are needed for it to be successful on its journey. Maybe you are in the retail business, but in today’s world of omni-channel shopping, you need digital technology skills. You are competing with Amazon even when the customer is standing in front of your display as they “showroom,” looking up the product online via smartphone to find out where to get it cheaper or what other colors it may come in if they order online. What you will need in the future is not what you needed in the past. To get the most value out of a new hire, know where you are going so you can hire someone who can get you there.
- Should I sell my business? This is the big one. When should I sell my business? Who is the right buyer? For many small business owners, this is a constant, if not urgent, stressor. It is tough not get wooed by a buyer and a transaction. I have watched several very smart HEMP mentees be very successful with their exit strategies by knowing exactly what their endgame is and whether the deal met it or not. The key is to understand the motivations and expectations of both parties before the numbers are ever discussed. Start by determining what you want the outcome of the transaction to be (and I don’t mean money).Are you looking for a steady paycheck and plan to stay with the business? You better negotiate under what conditions the new buyer can separate you from your business. Are you hoping they will invest in your vision for growth? You need to understand where they think the growth will come from. Maybe they think your company can easily be more profitable with more controlled spending and modest growth is acceptable while you want capital to develop a new system that will catapult the company to new heights. Don’t even talk numbers until you both agree on what you want out of the relationship.
Leaders who start with the end in mind, thinking through the implications of specific decisions and investments, not unlike playing a game of mental chess, will have fewer surprises and, in my experience, a higher ROI. Take the time to aim before you fire, and you will hit the target much more often!
For more information about the Helzberg Entrepreneurial Mentoring Program (HEMP), visit www.hempkc.org.