Confident leadership skills, intuitive decision-making, and enthusiastic leadership qualities are all definitely important to building a profitable, stable business.
Because we all understand the importance of these abilities, we’ll take a different track and talk about major leadership decisions that apply to most businesses.
Looking back and reflecting on how and why our company survived and prospered, in good times and bad, I came up with three tips. I think they are significant considerations to any small business. It would have been nice to learn them earlier, but hindsight is always 20-20.
First, let’s start with some history. Over the past decade, our company grew from one to twenty employees. It’s a small business compared to most, but we still had key decision-making to do along the way as we decided what direction we wanted to head in.
Here are three tips to stay ahead of your competition:
#1. Not Being Afraid to Change What You Sell
Within the first few years of being in business, we developed and sold our own website content management system (CMS). Even though it worked well and was profitable, within a few years, it started to transform the company from a marketing agency into a commodity – a hosting and support department.
Maintaining the system was expensive, and the market was continuously flooded with better mousetraps. We decided to dump it, walk away from the recurring revenues, and leverage other industry-leading systems.
We reset our focus on our core business – strategic marketing solutions. Many of our competitors still maintain their own proprietary CMS solutions. The customers of these competitors are now our low-hanging fruit.
#2. Not Worrying About Losing Current Customers
Having loyal to the current customer is a great thing. But it is not always good for your future. We had a nice base of customers who kept us busy, as we were creating print ads and brochures on a daily basis. And we were good at it.
However, the problem was that they wanted to continue buying outbound instead of inbound marketing services. That was not the direction we wanted to take the company in.
If your current customers do not follow your lead, you might not realize that this is hurting you more than you think. If, in the eyes of your customers, you’re considered a job shop, they’re not likely to follow your lead. You’ll spend all your time working on the ideas of the past and spending money developing the resources to deliver those services.
Soon, you’ll be trapped because you didn’t spend enough time leading your company into the future of your industry. You will become a commodity and be easily replaced.
Don’t be afraid to walk away from steady revenues from current customers. Turn your competitors into friendly competitors by referring some of your best customers to them. Your very best customers are the ones who believe in your leadership, and they will happily come along with you for the ride.
#3. Hiring People Before You Have the Work or Money
Let’s take a little quiz:
- Do you sell your services first and then go hire the people so you can deliver?
- Do you oversell the people you already have and then try to squeeze even more out of them to create enough profit for the next round of hiring?
- Do you borrow or raise money?
Answer: For a small business, my answer would be – none of the above.
All three options are risky and take a lot of work. If you sell what you don’t have, you’re a dreamer destined for a harsh reality check. And if you think you can squeeze more out of a team – an amount that is well beyond industry standards – you’ll end up losing the team and struggle with higher recruitment costs and low company morale.
If you plan to grow big fast, then borrowing or raising money may do the trick. The approach that worked for us was simply a line of credit from our local bank. You can start low and increase the limit by an average of 15-25% per year, which for us, was in line with our growth in hiring and revenues. I’d hire the people first.
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