Time for a refresh?
By James Murchison - Director at Murchisons
Is your business starting to feel dusty? Perhaps it’s time for a refresh! Even if timing isn’t perfect, take a step back and think of your relationship with your customers and how you can inject some new life into what you do.
Every business reaches a point in its life cycle where things are tired and in need of a refresh. It’s necessary to take the time to ask yourself ‘Are we getting a bit dusty?’
We often see companies getting to this point only when they start losing customers and some simply pare back their marketing efforts in an attempt to fix this.
Companies often say they don’t want to get bigger, just more profitable, then other priorities naturally tend to take a lead and it could be five years’ time before they have to reignite everything because revenue has dropped. They may lose a customer and to replace one is expensive, so it’s easier and more profitable to generate extra work from an existing customer than it is to try and win new work. The input is greater and the risks of losing are higher.
Some years ago within the accounting industry there was some discourse concerning the cyclical relationship between accountants and businesses. According to the theory, the first two years of this relationship carried the greatest risk of losing a client. From this point until the five year mark, the risk remained but had steadily decreased. From the five to 10 year period relationships tended to be fairly stable and risks related to the ability of the Accountant to grow with the client. After 10 years, the biggest risk to the relationship is succession issues.
The cycle of this relationship is something akin to this:
• Two to five years: “We’re good at the moment, as long as we treat each other well and take care of this relationship.”
• Five to 10 years: ‘Hang on, are we growing together or should we talk to someone else?”
• After 10 years: “Are we still aligned even with a change of personnel and changed priorities?”
You may want to launch a new product or service, are looking to go into a different area or to bring on someone young and dynamic to help you generate growth. It could be succession related where you develop part of your business plan concept that needs a refresh – everything comes back to the plan. Discipline is key; keep coming back to the plan! Start with asking ‘Where are we now?’ ‘What is the real issue?’ ‘Why are we doing this?’ If it’s successful, why change it unless you want to be more successful?
If the cracks are starting to appear, don’t get caught up in missions and your vision, get caught up initially in how we stop those cracks from happening.
One of our clients was incredibly profitable when it suddenly found itself at a break even. They had expanded into other countries, so we were fascinated to see what had gone array.
After seeking the services of an advisor, the Directors had decided that they should concentrate on their work and leave the running of the business to a General Manager. This did not work and there were plenty of reasons why. The business strategy and their employees were “tired” and in this case the employees were protecting their positions.
Senior management was reluctant to refresh the staff, primarily because of the expense involved. The cost of change was substantial. Finally, the Directors decided to bite the bullet and adopt change. They did it progressively, all in line with a plan and in unison with their employees. Over a relatively short period of time, an amazing thing happened: the whole company just seemed to lift.
When you review the cost of change you need to work to a plan. The plan should look at the “pay-back” period and the expectant outcomes. This business continued to grow and 20 years on the enthusiasm and innovation continue to be part of its core culture.
If you'd like professional and tailored advice for your own business, please give us a call on 02 9959 5599