5-Steps to Responding like a F1 Driver
This year I decided to take up a Spark Sports subscription to watch the F1. I’m always bemused when about halfway through a race when fatigue must be an issue, the driver is concentrating at peak levels, the support crew radio in ‘Change to plan E’ and the driver calmly responds.
Seriously, how does the driver remember what plan A to whatever is?
To add to this thought: I wrote this in a NewsBrief over 2 years ago:
“When the economy is booming, everyone is running around like headless chooks being busy and inefficient. Then when times slow, we catch our breath and wonder why we were so inefficient while trying to drum up more business.”
Right now, when I watch the news, 90% of it is doom and gloom. The economic outlook, inflation, high cost of living, mounting debt, the war in Ukraine, when will China invade Taiwan or Kim will misguide some of his nuclear missiles, all of it is bad.
In fact, being a business owner is a little like being an F1 driver. Holding onto your steering wheel at 300km/hr and being ready to respond to change. Are you?
What should you be doing in your business now when uncertainty looms large?
Most of you are aware of the Pareto or 80/20 rule. The practical theory explains that in broad principles 80% of any outcome is a result of 20% of your effort or input. I suggest you adopt the Pareto principle and put it to good use now.
The following five, simple and proven strategies you can implement this week:
Step 1: Tighten your cash flow
This is important as cashflow problems are the #1 cause of business failure. Make sure you are measuring and reporting how long it takes to collect your income (your Debtor Days). Do everything possible to ensure these are not exceeded.
- Invoice on time (or early).
- Call the slow payers before the due date and confirm that payment will be on time.
- Insist on upfront payment for slow payers.
- Stop supplying customers if payment is overdue.
- If a customer is not paying, don’t shy away (if appropriate) from collecting your debt - act decisively, it’s your money.
- Make it easy for your customers to pay (this is a biggie).
- Ask your suppliers for extended payment terms.
Step 2: Apply Pareto to the following:
- What products/services are generating 80% of your Income and Margin?
- What customers are generating 80% of your Income and Margin contribution?
- What suppliers are providing you with 80% of your Income and Margin?
Action Step: Analyse each of the above, it should take you under an hour to do this. What can you do to grow the product or customers or suppliers that are generating 80% of the good stuff? What can you shed out of the business? Develop a laser focus.
Step 3: You don't have enough hours in the day
The common challenge for every working person. There is one and only one real solution to the ‘time scarcity’ problem that will work for 90% of us. And this is understanding what is attracting our attention. The Eisenhower Matrix is an age-old simple model used to help you in identifying where your attention is going.
Action Step: Dedicate 20-minutes once a week to what are the most important activities you need to do this next week and then time-block these.
Step 4: Review your Pricing
Inflation is a silent killer, it creeps up on you and unless you are tracking your Gross Margins and overall Profitability then you will be moving backward. Many (many x 100) businesses are moving backward. They are committing massive amounts of hard work and risk for pitiful gains. There is a high likelihood that you could increase your pricing and margins immediately.
Action Step: Review your pricing this week.
Step 5: Overcommit - plant the seeds
Every business is experiencing the current economic environment differently. In my other business, we had our highest sale revenue ever in October, yet I know others have noticed a big drop-off in demand.
The guarantee we all have is that change is a certainty. Irrespective if you are busy now or not, the chance of an economic slowdown affecting your business is high. Now is the time to cleverly improve your marketing. Few businesses are able to simply turn on a demand tap. Marketing and lead generation takes time to build.
Action Step: Consider nurturing key relationships; investigate improving your SEO; start trial running some paid advertising - figure out what works for you and your business.
Being a F1 racer can be fun, as should running a business be fun. Keep on working on the basics and enjoy the ride. Please reach out to me if you would like any additional help on any of the above.
Business Advisor - Coach
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