Parents, politicians, pundits, pub philosophers. They all have something in common – an arsenal of adages, aphorisms, proverbs, mottos and maxims. But of all the oft-used phrases you’ve heard in your life, which do you think sticks with people most?
- Give a hundred and ten percent
- Never say never
- Game of two halves
- Winter is coming
Well, according to a poll from a couple of years ago, it’s Practice makes perfect.
But how much practice?
Are Malcolm Gladwell’s famed 10,000 hours needed?
In his book Outliers: The Story of Success, journalist and bestselling business author Malcom Gladwell claims practising for 10,000 hours is necessary to achieve world class expertise in any skill.
However, research by Brooke N. Macnamara (Princeton University), David Z. Hambrick (Michigan State University) and Frederick L. Oswald (Rice University) led them to conclude that while deliberate practice is important, it is not as important as had been argued. It seems that a regime of long hours of practice is of limited use if that practice is not the right type.
So what does this mean for those of us in business? Shweta Jhajharia of The London Coaching Group explores what business owners can take from this research; Can fewer hours, really yield better results? Does it mean that simply ploughing hours and hours of work into the business is not the best way to succeed?
What do you need to ‘master’ in your business?
When we work with business owners who are interested in business coaching, they are taken through an ActionCOACH system called the Six Steps to Successful Business. The first step is Mastery, and it is vital.
In order to deliver your service/product profitably and productively, you need enough information to make the best decisions, and that requires identifying what you need to master in your business. This is how you will gain real and lasting control.
There are four main areas of mastery:
1. Direction & Goal Mastery
Knowing where you are going in the short and long term.
2. Money Mastery
Fully understanding and managing the money in your business.
3. Delivery Mastery
Ensuring you provide a real, useful and consistent service to your customers.
4. Time Mastery
Optimising your time so that you ultimately waste less of it and have more of it for yourself.
Let’s focus on the first two; these are where most business owners will get significant results quickly.
1. Direction & Goal Mastery
When achieving mastery, one of the first things you must understand for yourself is why you are becoming a master. This is why we hold our Strategic Planning Day every quarter to help businesses reflect, organise and plan for success.
You will want to answer the following questions:
- What direction is your business headed and what are the milestones you plan to achieve?
- Have you documented your company’s vision and culture statements?
- Do you have a 90-day plan to keep track of your progress over the next quarter?
- Not only this, but do you have a millstones and a plan for yourself?
- Do you have a life plan with your personal goals?
Motivation to achieve your business goals is almost always rooted in them ultimately helping you achieve your personal goals. Once you have an overarching plan for your business, it is almost always astounding how clear the path to success for your business becomes.
2. Money Mastery
Mastering the finances in your business is fundamental to successfully creating growth. Within “money” however, there are three major areas to consider:
These are the most basic things that you need in order to create a financially stable business.
These are knowing things such as:
- Your overhead costs.
- How much on average you make per sale.
- How many sales/customers you need per day/week/month to break even.
- Your cash flow budget and your cash gap – and the strategies required to move it to positive.
- How to create a break-even forecast.
Before you move on to any other form of money mastery, you must first master breaking even. You can use this handy break even calculator to help you understand your business’ break even.
Here is the really juicy part of money mastery. Profit margin mastery is about:
- Having a profit & loss budget (i.e. going beyond your cash flow)
- Through setting profit goals, actually planning for profit
- Understanding that discounting is not the way to achieving increased profit (and why your prices should rise).
- Knowing what the business’s gross profit is and having the strategies in place to increase it
- Knowing what a margin actually is, together with being able to set goals, and having strategies for minimum margin and increasing margins
- Moving the end-goal of all your business activity to be selling your higher margin products/services
- Identifying ideal clients and de-prioritising your C’s and D’s
- Having full control over your business’s accounts – payable and receivable.
More often than not, when it comes to increasing the money you make in your business, profit margin mastery is where the greatest and most immediate results will be seen.
Reporting is critical if you want to be sure that you actually are doing better, and to know when you’re veering off course so you can correct that course early.
- Measuring the 5 levers in your business and using these to create a business dashboard.
- Regularly reviewing the figures in your dashboard and analysing why they have shifted in whatever direction they have shifted. (Are there things you could be doing better? Are there things you should be doing more of?)
- Using these figures to inform your decisions in the future, rather than just relying your gut instinct every time.
- Regularly reviewing your cash flow and profit and loss positions, and being able to predict your future cash flow and profits.
Only through consistent and focused review can you truly be working systematically towards successful and predictable growth.
Of course, finances are not the only thing you need to master if you are looking to truly create growth in your business. However, when it comes to taking a medium-sized business up to the level of big business, money mastery is usually the best and most effective place for business owners to begin.
About the author
This article has been written exclusively for ByteStart by Shweta Jhajharia, Principal Coach and founder of The London Coaching Group. Despite a competitive economy, her clients across sectors consistently achieve measurable double digit growth (over 41%) and are the most awarded client base in UK. Other articles by Shweta include;
- The 4 Rs of getting more business from your existing customer base
- How to turn your customers into your best sales force
- The 3 issues you’ll need to overcome if you want your start-up to reach £1m turnover
- How to grow referrals with Strategic Alliances – And 5 features that make for fruitful partners
- 4 Steps to building your business by hiring ‘ugly ducklings’
- How winning an award can get your business noticed, PLUS 5 ways to reap your prize’s full potential
More help on developing yourself and growing your business
- Developing your startup’s greatest asset – YOU
- How finding a great mentor could help you to grow, and your business to flourish
- How you can build your business in 90 minutes a day
- Barriers to growth – how to identify them and how to overcome them
- How to avoid self-destruction and achieve your business goals
- The 7 qualities every business woman needs