Laws of Business and Gravity

the rutter Program Notes – 23JUN09 0600 (-4UTC)

This is the rutter radio live on BlogTalkRadio, I am William Eastman, Managing Partner for US Operations at Applied KnowledgeLabs.

Today's show is the first in a series of 8 shows based upon our upcoming book - the code4growth – the revolution of business ownership.

You talk with us directly by clicking “chat now” or dial in at 347.215.7471.

Yesterday we briefly covered today's agenda, the Laws of Business. Like the Laws of Physics, there are business rules that are universal and violated at your own risk.

3 major Laws of Business

• Systems
• Cycles
• Control

Systems: treating/improving one part of the business doesn't mean a fix for all, a company's performance is the sum of the parts – a sum of it's processes.

Cycles: all living objects are influenced by the cycle of birth, growth, decline, and death; companies are nothing more than social networks organized for economic purposes and live under the same rules.

Control: the issue is not whether to control or not control, it is about what to control; all systems require methods of control to survive and thrive.

Systems (and Processes)

• Financial – end of period measures used to evaluate past performance, and real-time measures that link decisions to current performance.
• Strategy – creation and enhancement of brand through a yearly plan, and aligning the organization to achieve the plan objectives.
• Sales – acquisition of new accounts, and growth within existing accounts and reestablishing relationships with former customers.
• Production – production of products and/or execution of services, and development of new products and services.
• Relationships – bringing in new players (employees, partners, suppliers), and managing the performance of existing relationships.

Cycles

• Dream2Plan – identification of competitive advantage in a targeted market, selection of a business model to exploit competitive advantage, creation of brand identity, build first product/service, quick to market.
• Go-Live – create brand identity, reduce risks of purchasing from new company through executive selling, find marquee accounts, create sufficient and predictable cash flow.
• Next Act – reevaluate competitive advantage, business model, and brand identity; create growth plan, determine capacity improvements, allocate budget, upgrade operations.
• Big Fast – scrutinize costs, accounts receivable, quality defects, and service complaints; focus on maximizing efficiencies.
  
• Stable – eliminate unnecessary costs, upgrade policies and procedures, maximize all margins; decide on the future – sell, reinvent, or decline?
• Reinvent – unlock innovation within the company; team employees with customers, suppliers, and subject matter experts to upgrade/create new products and services and/or upgrade internal processes.

Control by Stage

1. Direct Supervision – only the owner can transform the dream/business idea into reality, owner as the hub of a wheel, active engagement in all aspects of the startup.
2. Direct Supervision – owner directly supervises core processes – sales and financials, owner is engaged in the sales process either as lead salesperson or used strategically by sales force to build relationships.
3. Process – owner creates intermediate management/supervision, focuses this group on creating best practices for all processes to optimize resources.
   
4. Results – owner focuses on metrics identified in strategic plan and manages next level through results against goal.
   
5. Team Work – bringing together subject matter experts and stakeholders to innovate all essential aspects of the business.

This seems like allot of information, but it really isn't. If you read between the lines, each growth stage has it's own situational and specific demands on the business owner and executives. That is why our approach is take it one at a time and simply a winning Growth2Capacity plan.

Remember to checkout tomorrows broadcast on the characteristics of successful entrepreneurship. I will recount our experiences with building businesses around the world.