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Business Development and the Measured Steps to Success

Oct 11, 2007
Most businesses start with an idea that involves doing something for a profit. When one does something for a profit, technically one is in business.

Someone figures how to do something better, quicker, cheaper, faster. The basics or underlying dynamics of how this business idea works is called the business model. A more explicit and detailed description of the model is called a business plan.

The first step is the model and it is the most crucial. If the business model cannot generate profitability, it won't work. If the assumptions of the model are wrong, it won't work. If the model is incomplete, it won't work. If the model needs financing and has no way to get it, it won't work. And so on.

So getting this first step right is imperative. Get it wrong and the business goes in the wrong direction and probably all is for naught.

On the other hand, if all goes well and business plan looks viable, the new venture is off. Most businesses start small with the owners working and maybe adding an employee when needed. As a problem is encountered, it is solved and the quest continues.

Layer upon layer of solutions and process are thrown together and at some point it becomes obvious it is a mish mash and there has to be a better way without reinventing the wheel. And there is.

It's called best practices and it means the best way of doing something. It's what successful businesses know and do making them more efficient and effective in delivering value. Those businesses that do things less efficiently and effectively deliver less value, are less competitive and eventually go out of business. They don't get to play the game.

Best practices is sometimes also known as infrastructure and it simply is all the support systems and processes needed to carry out the company mission and business plan. These can include communications, technology, software, accounting, human resources, sales and marketing, strategy, etc.

Businesses that do their homework well and join together their business model with good infrastructure and best practices create the potential to grow. It's as if getting the business model and the infrastructure right is a ticket to play in the big game. Whether you agree or not, those are the facts.

But also note that nothing is guaranteed. Nor implied. Simply being in a position to grow does not mean growth and success. But at least at this point one gets a ticket to play the game.

Conversely,if a business does not get the model and infrastructure right it cannot grow and generate significant assets. If profitable, it will only be marginally so.

This company does not get to play the game. If your company is stuck in the business model or infrastructure black hole and can't get out it's probably best to consider downsizing and reducing costs. Stay with quality and there will be some margin. Not much growth potential, but hopefully some margin. Or look for a job.

But if you and your model are savvy enough to get to this point you will then want to develop your growth strategy.

The emphasis on growth almost always focuses on marketing and human resources.

In the marketing strategy there has to be a feedback loop to let management know what customers and clients are thinking. This feedback loop creates the basis for innovation and delivering more value.

In human resources the issue is productivity and how to reward it.

Relax. All of this is really not so complicated.

What is deceptive is how much perseverance it requires to execute a business plan. The sheer volume of problems and obstacles makes it more of an endurance test than an obstacle test.

But not to worry. Breaking each problem down into components and working on each component is a very quick way to get results. Piece by piece.

It is especially important to manage your cash flow in this growth mode. Watch the receivables. Many is the company whose growth was out of sight but poor cash flow did them in. If you are on a path to fast growth, be sure your projections include end of month cash balances.

It is also helpful to run through some scenario plans. What is the best case and worst case scenario for your strategy? Usually the end result is somewhere in the middle. Usually. Often by looking at scenarios you gain insight so it is well worth the effort.

Managing this growth you have created is the next stage. It can be fun, exciting, profitable, frustrating, impossible and fruitless; and sometimes all at once. Managing growth is a series of juggling acts that attempt to keep many balls up in the air at once.

As unappealing as it sometimes seems growth is where it's at in business. Growth is good. Growth is fun.

How long until your company can reach the growth stage?

Some newer tech and Internet companies can mature to a growth stage in several years. Older, traditional service businesses may take a decade or more in the trenches before hitting a solid growth stage.

But even with growth in the end there is always the end. The owner that anticipates how she would like to step out of the business is the one that is not surprised in the end at what happens. By not focusing on your outcome from the beginning you simply take your chances. There is no middle ground.

As the competition thins, strategy is where the real competitors duke it out. Those companies that align their model,infrastructure and strategy in place hit the market sweet spot. Their growth can be exponential. It is not only possible but probable since they have done the basics well. They have the foundation. If their business model is solid they are off to the races. It becomes a matter of executing the business plan.

At any rate, there you have it. It doesn't always work this way but it usually does. Each business is unique and circumstances may vary. This is the way the percentages break out. Like or not, those are the odds.

First find out where you are. Then what do you want, and then how do you get from here to there?
About the Author
Jack D. Deal is the owner of Deal Business Consulting. Related articles may be found at http://www.jddeal.com and http://www.freeandinquiringmind.typepad.com
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