The recurring and fluctuating levels of economic activity that our businesses experience over a period of time can be referred to as our business cycles. Lets say that for most of us, we may have what we can safely call our 'harvest season.' This is the time we experience bounty and it is the best time to store up for our 'lean season.' If you choose not to store up at this period, it may mean some trouble in the future. This applies to whether you have a business or not. Saving for lean times is a smart move for everyone, though it can be a difficult thing to do.
The main stages of the business cycle are growth (expansion), peak, recession (contraction), trough and recovery. At one time, business cycles were thought to be extremely regular, with predictable durations. But today business cycles are widely known to be irregular -- varying in frequency, magnitude and duration.
The continued success of our businesses relies mainly on how we are able to manage these stages. I am tempted to say that our entire survival may hinge on how we manage our recession or down time, but experience has taught me that learning to manage your growth and expansion period is even more paramount to your success -- you may liken this process to laying your foundation. Let me go even further back and talk about (to borrow a phrase from the movie industry) the development stage. This is the stage where you put together your ideas and plan for the business. In most of our businesses (and I am guilty of this as well), we have the perfect idea, but we fail to plan. Failure to plan is a plan to fail, as is popularly quoted! In my main business, I have come to learn that every minute we spend at the planning stage, saves us ten times over when we get to execution of the plan and so allow me to share my experience with you on this.
We worry about the time and money we spend at this stage because we are not seeing any real result. But if you think about it, because we don't have to spend too much money here, we can actually afford to spend more time here comparatively. For instance, you may choose to do your business plan and in the process, think through things you might not have the luxury to think through later! If you think about it, the professionals' just help you put down what you know already and so why not do it yourself if you are low on cash? And besides, no one knows your business as well as you do. An alternative is to access your resources ( by this I mean family and friends) that may help. If we ask, we can usually get this for free from this group. You can go further and tap into their network and though this may cost you some money, it may cost less if the introduction comes from your close network. But I cannot over emphasize the importance of this and it is never too late to go back to it, no matter how far advanced you are in your business. I find that even putting my thoughts down in a diary at the beginning of the day makes me more focused and helps me achieve more in the day. Some research shows that those who use diary accomplish averagely more than those who don't.
Write down your business idea. Think through the opportunity you have identified, the context of the opportunity and who will help you take advantage of this opportunity (these are the main things that go into your business plan and everything else is flesh around the bones, so to speak!). Then think through how you plan to achieve it (your strategy), what you need to achieve it (your resources) and in making this list, I always make room for plan B. How much you need, all the ways to raise the money, how you will spend it and survive over say, three years. Then discipline yourself to stick to the plan.
What is important at this stage is to ask yourself these questions.
(1) Am I passionate about this business?
(2) Can I be the best at delivering this business to my market?
(3) Can I make money out of this business?
If one element of this question is not positive, you might be heading for trouble. This model is called the hedgehog concept. It was popularized by Jim Collins in his book Good to Great, a recommended read.
If you can make money, but you are not passionate about your work, or cannot be the best at it, you are wasting your time. From experience, I think a lot of us get it wrong at this stage and so cannot work up the passion or the business skill or talent to take us through the cycle when we are down. It is the same way for when you are passionate about something but cannot find a way to make money out of it.
When you have satisfied yourself with the above process, find the willpower to stick to it, so you don't lose focus. Too many times, my managers come to me and tell me their brilliant ideas. I like that, I encourage it, but always pass it through this test as you develop your various products. Remember your products are a subset of the whole and they also have their individual cycles as well. The cycles of your products, is what ultimately culminates into your overall Business Cycle.
I have overly emphasized the above because it is the ground work upon which our business is formed and is what affects our future, no matter the environmental conditions. Manage this well, put in structures to manage your growth period and you will be fine to manage your recession time and have a quicker recovery time.
Now lets move up the ladder. The next important element to managing your growth period is structures and systems. As we grow, this becomes one of the major pit holes for SMEs (Small and Medium Scale Enterprises). Our inability to manage this phrase may greatly affect our ability to raise financing through the banks. No bank will give you money if they don't see this happening.
Learn to delegate and monitor what you delegate. The goal here is to set up a system that can run even without you. No matter how small you are, record every transaction in a note book.
Fire/dismiss when necessary. This is more of a female difficulty. As I have learnt my lessons, I have come to learn not to hire anybody I can't fire. If your family will be a problem, avoid employing them. Instead, help find them jobs else where. State the values and rules in the company. Anybody who flouts this continuously must go. Even your own children!
Don't expand too quickly without support systems. This may seem obvious, but it really isn't so obvious, especially when we are experiencing heady growth! It is not every big deal you must go after. Sometimes you must say no. Remember the above three cycles? If it doesn't fit in, or if you are not ready to take it on, don't. Apart from all the factors, you don't want to experience burn out.
As a business person, find a place that you can energize from. The first place to start from is to ensure you find meaning in your work and then you find activities that rejuvenates you. For me it is mainly exercise, dancing, good music, reading and movies! Finding some 'me time' after each day to do one of these centers me for the next day.
Find good connections with colleagues you can share with. The higher you go, the lonelier it becomes. No one understands what you go through or wants to talk about it; sometimes just venting does the trick. A study done a couple of years back by the the McKinsey group, called the McKinsey Leadership Project, found that while men create shallow but very broad network of acquaintances they draw on as resources, women concentrate on only a few deep relationships. This is ok, but not for when you need a network to help you progress. Watch men, they easily take out their business cards. How many women go to places with their business cards? Networking is crucial in this environment. Remember it is an important marketing tool, for people do business with people they know, 98 percent of the time. Get out there and network.
Now lets talk about our real barriers. No one probably thinks about them.
Fear. A good saying is that the real thing to fear is fear itself. I remember reading a book from Donald Trump that talked about aiming high. From his experience, people are more likely to pay attention if you built a building with 10 stores and give you financing than if you went to them for a building with three stores. I am not saying go build a building with 12 stores, I'm just saying that people are more likely to pay attention to big projects than small ones. Of course, managing risks for financiers is important and that is where all the points I raised at the top come to play. Being prepared is critical. Oprah once said that 'Luck is a meeting of opportunity and preparedness' -- I believe this strongly as well.
Personal development. Do you read? Do you take the time to find out about trends, improvements in your field? How can you stay ahead of the competition? Are you good at negotiating? Can you negotiate for trade credits? (convincing your trade partners to give you things on credit). Do you look out for alternatives?
Barriers to business are not about to diminish, if anything, with the bad taste of our recent experience still fresh on our tongues, they are even higher! The question therefore is how we surmount these barriers ahead of our competition.
Lets keep it together.