Maintain your business and your customer base
We recently stopped by a business that we have been frequenting for 20 years. During our visit we realized that things were exactly the same as they were 20 years ago, and not in a 'good old nostalgic, the way life used to be' manner. Nothing had been upgraded, improved or even maintained over the years. We left with the impression that the owners were trying to generate as much cash as possible until the business was literally run into the ground.
Most businesses have two major assets — their physical plant and their employees. Both of these assets should be used to make your business as profitable and marketable as possible. However, there is a fine line between using your resources effectively and trying to squeeze as much out of them as possible. Wasting money does not help your business, but neither does continually operating on a bare-bones budget over a long period of time.
Physical assets
Physical assets need to be maintained and improved. Drive around and look at your neighboring businesses. Do their buildings look well-maintained and prosperous? Imagine what your customers think when they drive by your office. While looks aren't everything, the state of your building gives an impression of whether you are thriving or floundering.
Your mother was right — what's inside matters, too. Is your business using efficient, cost-effective machinery to create your product? Someone I know was hired as a laborer for a well-known manufacturing facility. On the second day of work he brought in his own power drill. Why? He was tired of using a manual screwdriver when a power drill made the process faster and easier. Ironically, no one at the plant had ever thought of using a different piece of equipment until he showed up with his own tools. Take a walk through your plant and ask your employees: Is there a faster and easier way to make your product?
Human assets
Employee skills also need to be maintained (at the minimum) or, better yet, improved. Remember when computers were first introduced and, one by one, everyone in your business had to learn a new skill? The need and complexity of training has only increased since then. When was the last time you asked your employees which skills (both hard and soft) they wanted to improve or did an assessment of what employee training is needed to enhance your business?
So where are you going to get the money to invest in your plant and people? Scrutinize your expenses to make sure they are being used to maintain and improve your business and your customer base. Many people fall into the trap of buying more, bigger or better than they need. For example, buying a $50,000 truck when a $35,000 model will do everything that you need just reduced your investable funds by $15,000. Your customers don't care about what kind of truck you bought if it doesn't improve the quality or price of your product.
The business that we've been going to for 20 years isn't the only show in town anymore. They have two new competitors, both of which have clearly made recent investments in their property. Customers now have a choice — they can have an exponentially better experience for only a marginal increase in price. The original business will become the choice of last resort before it probably fades away or sells for much less than it could be worth. Smart investments over time can make the difference between customers stopping at your business or driving further down the road for a better value.
Consultant Alison Hinson, owner of Alison Hinson MBA LLC, can be reached at ahinson@midmaine.com.
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